Santa Cruz City Council
May 27, 2025

CITY COUNCIL AGENDA
Regular Meeting - May 27, 2025
12:00 P.M. CLOSED SESSION, ZOOM/COURTYARD CONFERENCE ROOM 12:45 P.M. ORAL COMMUNICATIONS, CONSENT, CONSENT PUBLIC HEARINGS,

GENERAL BUSINESS AND PUBLIC HEARINGS, ZOOM/COUNCIL CHAMBERS Council meetings are hybrid, and may be viewed remotely, using any of the following sources:
 Click on Zoom link (no time delay): https://zoom.us/j/94684401344  Online at http://www.cityofsantacruz.com/government/city-council/council-meetings  Online at Watch – Community Television of Santa Cruz County  Comcast Channel 25
Or: Call any of the numbers below. If one is busy, try the next one.  1-833-548-0276 (Toll Free)
 1-833-548-0282 (Toll Free)
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 1-669-900-9128
 Enter the meeting ID number: 946 8440 1344
 When prompted for a Participant ID, press #.
 Press *9 on your phone to “raise your hand” when the Mayor calls for public comment.  It will be your turn to speak when the Mayor calls on you. Press *6 to unmute yourself. The timer will then be set.

Correspondence to be included in the agenda packet must be received by 5:00 pm on Monday, May 26th
PLEASE NOTE:
 Council may take a break(s) as needed.
 Requests for extra speaking time on items other than Oral Communications must be made by 5:00 p.m. on Sunday, May 25th by emailing the Mayor and the City Clerk.

Approval will be confirmed via email.
[email protected] [email protected]
May 27, 2025 City Council 2
The City of Santa Cruz does not discriminate against persons with disabilities. Out of consideration for people with chemical sensitivities we ask that you attend fragrance free. Upon request, the agenda can be provided in a format to accommodate special needs. Additionally, if you wish to attend this public meeting and will require assistance such as an interpreter for American Sign Language, Spanish, or other special equipment, please call the City Clerk’s Department at 420-5030 at least five days in advance so that we can arrange for such special assistance, or email [email protected]. The CalRelay system number: 1-800-735-2922.

Si desea asistir a esta reunión pública y necesita ayuda - como un intérprete de lenguaje de señas americano, español u otro equipo especial - favor de llamar al Departamento de la Secretaría de la Ciudad al 420-5030 al menos cinco días antes para que podamos coordinar dicha asistencia especial o envié un correo electrónico a [email protected]. El número del sistema Cal-Relay es: 1-800-735-2922.

Agenda and Agenda Packet Materials: The City Council agenda and the complete agenda packet containing public records, which are not exempt from disclosure pursuant to the California Public Records Act, are available for review on the City’s website:
www.cityofsantacruz.com/government/city-council-meetings and at the Office of the City Clerk located at 809 Center Street, Room 8, Santa Cruz, California, during normal business hours.

Agenda Materials Submitted after Publication of the Agenda Packet: Pursuant to Government Code §54957.5, public records related to an open session agenda item submitted after distribution of the agenda packet are available at the same time they are distributed or made available to the legislative body on the City’s website at: www.cityofsantacruz.com/government/city-councilmeetings and are also available for public inspection at the Office of the City Clerk, 809 Center Street Room 8, Santa Cruz, California, during normal business hours, and at the Council meeting.

Need more information? Contact the City Clerk’s office at 831-420-5030.

Closed Session
12:00 PM
Statements of Disqualification
Closed Session

1. Real Property Negotiations (Government Code §54956.8) Property: 1070 River Street
APN: 008-661-18
Owner: City of Santa Cruz
City Negotiator: Bonnie Lipscomb
Negotiating Parties: City of Santa Cruz and Arts Council Santa Cruz County
Under Negotiation: Price, terms of payment, or both
May 27, 2025 City Council 3
City Council
12:45 PM
Call to Order
Roll Call
Oral Communications Announcement – Members of the public may address Council on matters not on the agenda, but within the jurisdiction of the Council. 30 minutes is allocated for Oral Communications. No extra time for groups will be granted.

Oral Communications
Presentations

2. Mayoral Proclamation Declaring May 27 - June 1, 2025 as Santa Cruz Pride Week

3. Mayoral Proclamation Declaring May, 2025, as Older Americans Month Presiding Officer's Announcements
Statements of Disqualification
Additions and Deletions
City Attorney Report on Closed Session
Council Meeting Calendar

4. The City Council will review the meeting calendar attached to the agenda and revise it as necessary.

Consent Agenda

5. Minutes of the May 13, 2025 City Council Meeting (CC) LOCATION: None
Motion to approve as submitted.

May 27, 2025 City Council 4
Consent Agenda (continued)

6. Commission for the Prevention of Violence Against Women (CC) LOCATION: Citywide
Motion to approve Vice Mayor Kalantari-Johnson’s nomination of Andrea Ludwick to the Commission for the Prevention of Violence Against Women.

7. Historic Preservation Commission (CC)
LOCATION: Citywide
Approve Vice Mayor Kalantari-Johnson's nomination of Greg Larson to the Historic Preservation Commission.

8. Children’s Fund Oversight Committee (CC)
LOCATION: Citywide
Approve the at-large appointment of Pamela Velasquez to the Children's Fund Oversight Committee.

9. Cooperative Retail Management Business Real Property Improvement District Assessments for FY 2026 (EDH)
LOCATION: District 4
Motion to:
1) Approve the FY 2025 Annual Report and FY 2026 Plan prepared by the Downtown Management Corporation;
2) Adopt the Resolution of Intention to levy a Cooperative Retail Management Business Real Property Improvement District Assessment for FY 2026 and schedule a public hearing for June 10, 2025 on the levy of the assessments for FY 2026; and
3) Adopt a resolution amending the Fiscal Year 2025 budget to increase Kiosk Maintenance (Fund 123) expenditures by $16,500, offset by revenue collected in Kiosk Maintenance (Fund 123).

May 27, 2025 City Council 5
Consent Agenda

10. Downtown Association: Parking and Business Improvement Area Assessments for FY 2026 (EDH)
LOCATION: District 4
Motion to:
1) Approve the annual report and work plan prepared by the Downtown Association for FY 2026; and
2) Adopt the Resolution of Intention to levy a Downtown Association Parking and Business Improvement Assessment for FY 2026 and schedule a public hearing for June 10, 2025 on the levy of the assessments for FY 2026.

11. Award a Contract to Gallagher Benefits Services, Inc. for 2024 Compensation Study (HR)
LOCATION: Citywide
Motion to award a contract to Gallagher Benefit Services, Inc. in the amount of $231,900 and to authorize the City Manager to execute an agreement in a form approved by the City Attorney. The Human Resources Director is authorized to execute amendments within the approved budget.

12. Authorization to Exceed $100,000 for Legal Services (HR) LOCATION: Citywide
Motion authorizing the City Manager, or their designee, to execute agreements with Burke, Williams & Sorensen LLP, in forms approved by the City Attorney, and approve payments exceeding $100,000 legal services for Fiscal Years 2025 and 2026.

13. Authorization to Exceed $100,000 for Investigation Services with Oppenheimer Investigations Group, LLP, Related to Respectful Workplace, Harassment, and Discrimination Complaints (HR) LOCATION: Citywide
Motion authorizing the City Manager, or their designee, to execute agreements with Oppenheimer Investigations Group, LLP, in forms approved by the City Attorney, and approve payments exceeding $100,000 in the aggregate for third-party investigation services related to workplace harassment, discrimination, and respectful workplace complaints for Fiscal Years 2025 and 2026.

May 27, 2025 City Council 6
Consent Agenda

14. Proposed Amendment to the Planning Commission Bylaws Regarding Meeting Start Time (PL)
LOCATION: Citywide
Motion to amend Article VIII – Meetings, Section 1. Time and Location of Meetings of the Planning Commission Bylaws to add the provision that the Chair of the Planning Commission may have the option to begin the meeting no earlier than 6:00 pm upon recommendation of the Planning and Community Development Department staff.

15. Contract for Septic System Replacement Services at Lower DeLaveaga Community Park. Environmental Determination: Categorical Exemption 15301(d), Existing Facilities (PR)
LOCATION: District 1
Motion to:
1) Adopt a resolution to amend the FY 2025 budget to appropriate funds in the amount of $163,080 from existing Parks and Recreation Capital Improvement Program project balances to resource the repair of the Lower DeLaveaga Park septic system;
2) Award a contract for services to procure and install a new septic system at Lower DeLaveaga Park to Tom’s Septic Construction, a subsidiary of The Don Chapin Company, Inc. in an amount not to exceed $132,750; and
3) Approve the CEQA determination contained in this agenda report, including the application of the following categorical exemption: CEQA Guidelines Section 15301 (Existing Facilities).

16. Resolution for Grant Anticipation Notes to Fund Repairs to West Cliff Drive (PW/FN)
LOCATION: Districts 3 and 6
Motion to approve a resolution authorizing the issuance and sale of up to $22,000,000 in grant anticipation notes to provide financing for the West Cliff Drive emergency repairs, and authorizing execution and delivery of related a note purchase agreement and related documents and actions.

May 27, 2025 City Council 7
Consent Agenda

17. Measure E Oversight Committee (PW)
Location: Citywide
Motion authorizing the Mayor to appoint three staff-recommended members to serve on the Measure E Oversight Committee: Water Commissioner Julianne Rhodes and Transportation and Public Works Commission Vice Chair Susan Gilchrist and Commissioner Scott Harriman.

18. West Cliff Drive 60-Inch Reinforced Concrete Pipe (RCP) Headwall Repair (c402409) – Notice of Completion (PW)
LOCATION: District 6
Motion to accept the work of Access Limited Construction (Oceano, CA) as completed per plans and specifications and authorize the filing of the Notice of Completion for the West Cliff 60-Inch RCP Headwall Repair (c402409) and authorizing the Public Works Director to sign the Notice of Completion as the Owner’s Authorized Agent.

19. Senate Bill 1 Road Maintenance and Rehabilitation Account (RMRA) – FY 2026 Funding (PW)
LOCATION: Citywide
Motion to adopt a resolution approving the FY 2026 allocation of SB 1 Road Maintenance and Rehabilitation Account funds and authorize the City Manager to submit the project list to the California Transportation Commission.

May 27, 2025 City Council 8
Consent Agenda

20. Second Amendment to Professional Services Agreement for City of Santa Cruz Watershed Lands Forest Management Project – Newell Creek Tract Phase 1 (WT)
LOCATION: County
Motion to:
1) Authorize the City Manager to execute Second Amendment to Professional Services Agreement for City of Santa Cruz Watershed Lands Forest Management Project – Newell Creek Tract Phase 1 with Auten Resource Consulting in a form approved by the City Attorney; and
2) Find the Agreement to be exempt under the California Environmental Quality Act (CEQA), allowing staff to file a Notice of Exemption.

End Consent Agenda
Consent Public Hearings

21. Establishment of Downtown Density Bonus Fees and Charges (PL) LOCATION: District 4
Motion to adopt a resolution creating the fees and charges for projects using the Downtown Density Bonus.

22. 2nd Reading and Final Adoption of Ordinance No. 2025-10 Rescinding Santa Cruz Municipal Code Section 21.07.020 Pursuant to a Settlement Agreement that Protects Tenants at the St. George Apartments (CA) LOCATION: Citywide
Adopt Ordinance No. 2025-10 rescinding Santa Cruz Municipal Code section 21.07.020 pursuant to a settlement agreement that protects tenants at the St. George Apartments.

May 27, 2025 City Council 9
Consent Public Hearings (continued)

23. 2nd Reading and Final Adoption of Ordinance No. 2025-12 to Amend the Zoning Designation of the Northern Four Acres of 2394 Delaware Avenue From R-1-5 (Single Family Residence District) to E-A (Exclusive Agricultural District); 2nd Reading and Final Adoption of Ordinance No. 2025-13 to Amend the Zoning Designation of the Southern Approximately 6.3 Acres of 2394 Delaware Avenue From R-1-5 (Single Family Residence District) to R-L (Multiple Residence – Low-Density District); and Resolution for Local Coastal Program (LCP) Amendments to Certify the Northern Four Acres of 2394 Delaware Avenue Into the LCP, Including Assignment of the Coastal Appeal Zone Level of Permit Authority and Assignment of the Agriculture/Grazing Land Use Designation, and to Amend the Text of the Agriculture/Grazing Land Use Designation Description within the LCP Land Use Plan (LCLUP).

Amendments to the Subject Site’s Zoning, Certification Into the LCP, and LCLUP Text Amendments Are Part of the LCP Implementation Plan and LCLUP and Require Approval by the California Coastal Commission Prior to Taking Effect Inside the Coastal Zone (PL)
LOCATION: District 6
Motion to:
1) Adopt Ordinance 2025-12 amending the zoning designation of the northern four acres of the subject site;
2) Adopt Ordinance 2025-13 amending the zoning designation of the southern approximately 6.3 acres of the subject site;
3) Adopt a resolution to certify the northern four acres of the subject site into the Local Coastal Program (LCP), including assignment of an Agriculture/Grazing LCP land use designation and Coastal Appeal zone permitting authority and making associated amendments to the Local Coastal Land Use Plan text; and
4) Adopt a resolution directing the City Manager to submit to the California Coastal Commission the ordinance rezoning the northern four acres of the subject site and the resolution to certify the northern four acres of the subject site into the Local Coastal Program (LCP), including assignment of an Agriculture/Grazing LCP land use designation and Coastal Appeal zone permitting authority and making associated amendments to the Local Coastal Land Use Plan text.

May 27, 2025 City Council 10
Consent Public Hearings (continued)

24. Approval of 2025-2030 Consolidated Plan (Con Plan), 2025 Program Year (PY) Annual Action Plan (AAP), 2025 Neighborhood Revitalization Strategy Area Plan, Community Participation Plan Amendment, and Fiscal Year 2025 Budget Adjustment (EDH)
LOCATION: Citywide
Motion to:
1) Adopt a resolution for the City’s 2025-2026 U.S. Department of Housing and Urban Development (HUD) Annual Action Plan (AAP) and 2025-2030 Consolidated Plan (Con Plan); amend the Citizen Participation Plan for the City’s Housing and Community Development Program; direct staff to submit the 2025-2026 AAP and 2025-2030 Con Plan, which includes the 2025 Neighborhood Revitalization Strategy Area (NRSA) Plan, to HUD; authorize the City Manager to sign an application for federal funding assistance for the 2025-2026 program year; and authorize the City Manager or his designee to execute program/project contracts, loan and grant agreements and related loan documents with Community Development Block Grant (CDBG) and HOME Investment Partnerships Program (HOME) sub-recipients and contractors in connection with Consolidated Plan (Con Plan) activities proposed in the 2025-2026 Annual Action Plan (AAP) and any subsequent revisions to the 2025-2026 AAP .
2) Adopt a resolution amending the Fiscal Year 2025 budget to reduce the total HOME Investment Partnerships Program (HOME) award to the Downtown Library and Affordable Housing Project approved under Annual Action Plan (AAP) Program Year (PY) 2024 and make funds available for inclusion in AAP PY 2025.
3) Approve the California Environmental Quality Act (CEQA) determination contained in this Agenda Report. The Council’s action are exempt from CEQA review under (1) Class 1 Categorical Exemption (14 CCR 15301) for existing facilities, and (2) Common Sense exemption (14 CCR 15061).

May 27, 2025 City Council 11
Consent Public Hearings (continued)

25. 2nd Reading and Final Adoption of Ordinance No. 2025-11 for the Downtown Plan Expansion Amending the Santa Cruz Municipal Code and Zoning Map and Direction to Submit Local Coastal Program and Local Coastal Program Implementation Plan Amendments to the California Coastal Commission for Review for Amendments to and an Extension of the Downtown Specific Plan, Including for Areas South of Laurel Street, Roughly to the Roundabout at Pacific and Center Streets, and Making Related Changes to the General Plan, Local Coastal Program, Beach/South of Laurel Plan, and Zoning Code and Map. Applicant: City of Santa Cruz. CEQA: Downtown Plan Expansion Environmental Impact Report (PL)
LOCATION: District 4
Motion to:
1) Adopt Ordinance No. 2025-11 deleting an obsolete zone district and making other conforming amendments, amending certain policies related to parking in the Downtown, and amending the Zoning Map which are parts of the Local Coastal Program (LCP) Implementation Program (IP); and
2) Adopt a resolution authorizing the City Manager to submit proposed amendments to the LCP Land Use Plan and to the LCP IP to the California Coastal Commission for final certification.
3) Direct staff to submit the above ordinance and resolution to the California Coastal Commission for certification, together with the other resolutions and amendments previously approved for the Downtown Plan Expansion.

General Business

26. Independent Police Auditor Report 2024 (CM)
LOCATION: Citywide
Receive the annual report from the City’s Independent Police Auditor, OIR Group.

May 27, 2025 City Council 12
Public Hearings

27. Public Posting of Vacant Funded Positions and Recruitment and Retention Efforts in Compliance with Assembly Bill 2561 (AB 2561) (HR) LOCATION: Citywide
Receive the information report on the City of Santa Cruz Vacancies and Recruitment and Retention Efforts Pursuant to Government Code Section 3502.3.

28. Heritage Tree Mitigation/Replanting In Lieu Fee and Tree Bond Update (PR)
LOCATION: Citywide
Motion to:
1) Adopt a resolution updating street tree replacement in-lieu fees, and rescinding Resolution No. NS-30,071; and
2) Adopt a resolution updating mitigation measure requirements for the removal of a heritage tree or heritage shrub pursuant to Chapter

9.56. May 27, 2025 City Council 13
Public Hearings (continued)

29. Zoning Ordinance Amendments Related to Objective Design Standards for Multifamily Housing updates, Parking, Bicycle Parking and Facilities, State Density Bonus, Reasonable Accommodations for People with Disabilities, Licensed Community Care Facilities, LowBarrier Navigation Centers, and Historic Structures on Mission Street; a General Plan Land Use Chapter Text Amendment; and Amendments to Titles 10 and 15 of the Santa Cruz Municipal Code Related to Standards for Driveways, Daylighting, Bicycle Parking, Electric Vehicle Charging, Loading, and Bicycle Facilities to Better Meet the City’s Policy Goals and Objectives and to Align with New State Laws (PL/PW) LOCATION: Citywide
Motion to:
1) Introduce for publication an ordinance amending Titles 10, 15 and 24 of the Municipal Code related to Parking, Bicycle Parking and Facilities, State Density Bonus, Licensed Community Care Facilities, and Low-Barrier Navigation Centers.;
2) Introduce for publication an ordinance amending the Local Coastal Program (LCP) Implementation Plan (IP) and Title 24 of the Municipal Code related to Objective Design Standards for Multifamily Housing, Reasonable Accommodations for People with Disabilities, Licensed Community Care Facilities, Low-Barrier Navigation Centers, and Historic Structures on Mission Street;
3) Adopt a resolution amending the General Plan Land Use chapter text; and
4) Acknowledge the determination that the proposed amendments are covered by the Environmental Impact Report prepared for the City’s General Plan and approved in June 2012 and find that the changes are also Exempt under California Environmental Quality Act (CEQA) Guidelines Section 15061(b)(3).

May 27, 2025 City Council 14
General Business

30. FY 2026 Proposed Budget (CM/FN)
LOCATION: Citywide
Conduct the Fiscal Year (FY) 2026 Budget Hearings, receive information from staff for the City’s requested budget across all departments and the Capital Investment Program, and provide feedback for preparation of the FY 2026 Adopted Budget.

The proposed Fiscal Year 2026 Budget can be found here:
https://www.cityofsantacruz.com/government/citydepartments/finance/city-budget/fiscal-year-2026-budget.

Any funding approved by the Council will not be implemented until the required meet and confer process is completed in accordance with City obligations under the MMBA and before any contract returns to City Council in open session.

Adjournment

INFORMATION ITEMS PREVIOUSLY DISTRIBUTED TO CITY COUNCILMEMBERS None issued.

MAYOR'S PROCLAMATIONS
ADDENDUM TO CITY COUNCIL AGENDA - MAY 27, 2025

31. Proclaiming Wednesday, May 14, 2025 as “Arbor Day at Bay View Elementary School” and encouraging all students, educators, and citizens to celebrate by planting trees, learning about our natural world, and taking action to protect our environment for today and in the future.

32. Proclaiming Sunday, May 18, 2025 as “Sempervirens Fund Day” and encouraging all citizens to honor this milestone by taking a moment to enjoy the magnificence of the redwood forest.

May 27, 2025 City Council 15
MAYOR'S PROCLAMATIONS (continued)

33. Proclaiming May 18, 2025 as “Kuumbwa Jazz Day" and encouraging all residents to join in celebrating this remarkable institution and its invaluable contributions to jazz music in our community and recognizing and commending the enduring impact that it has had on our cultural vibrancy.

34. Proclaiming the week of May 18–24, 2025 as “National Public Works Week” and urging all citizens to join me and representatives of the American Public Works Association and government agencies in activities, events, and ceremonies designed to pay tribute to our public works professionals, engineers, managers, and employees and to recognize the substantial contributions that they make to protecting our national health and safety and advancing quality of life for all.

Advisory Body Appointments
The following positions are either currently vacant or the terms are due to expire.

Council will make appointments at a future meeting.

Board of Building and Fire Appeals One opening – 4-year term, at-large nomination.

County Latino Affairs Commission One opening – 4-year term, at-large nomination.

Enhanced Infrastructure Financing
District Public Financing Authority
Two openings – 4-year terms, at-large
nominations
Historic Preservation Commission One opening – 2-year term to be appointed by Mayor Keeley.

May 27, 2025 City Council 16
Public Hearing
If, in the future, you wish to challenge in court any of the matters on this agenda for which a public hearing is to be conducted, you may be limited to raising only those issues which you (or someone else) raised orally at the public hearing or in written correspondence received by the City at or before the hearing.

Any person seeking to challenge a City Council decision made as a result of a proceeding in which, by law, a hearing is required to be given, evidence is required to be taken, and the discretion in the determination of facts is vested in the City Council, shall be required to commence that action either 60 days or 90 days following the date on which the decision becomes final as provided in Code of Civil Procedure Section 1094.6 Please refer to code of Civil Procedure 1094.6 to determine how to calculate when a decision becomes “final.” The 60-day rule applies to all public hearings conducted pursuant to the City’s Zoning Ordinance, Title 24, Santa Cruz Municipal Code. The 90-day rule applies to all other public hearings.

Meeting Type
Holiday
Jewish Holiday
Regular Meeting
Special Meeting (will be added as scheduled)
Study Session (will be added as scheduled)
Budget Hearing
May 28 Council Chambers Budget Hearing Study Session
Courtyard Conf. Room Closed Session - Closed to the Public Council Chambers Council Regular Meeting - Open to the Public June 19
Courtyard Conf. Room Closed Session - Closed to the Public Council Chambers Council Regular Meeting - Open to the Public July 4
Courtyard Conf. Room Closed Session - Closed to the Public Council Chambers Council Regular Meeting - Open to the Public Courtyard Conf. Room Closed Session - Closed to the Public Council Chambers Council Regular Meeting - Open to the Public September 1
Courtyard Conf. Room Closed Session - Closed to the Public Council Chambers Council Regular Meeting - Open to the Public September 22/23
Courtyard Conf. Room Closed Session - Closed to the Public Council Chambers Council Regular Meeting - Open to the Public October 1/2
Courtyard Conf. Room Closed Session - Closed to the Public Council Chambers Council Regular Meeting - Open to the Public Courtyard Conf. Room Closed Session - Closed to the Public Council Chambers Council Regular Meeting - Open to the Public November 11
Courtyard Conf. Room Closed Session - Closed to the Public Council Chambers Council Regular Meeting - Open to the Public November 27
November 28
Courtyard Conf. Room Closed Session - Closed to the Public Council Chambers Council Regular Meeting - Open to the Public December 14/15
December 25
City Council Meeting Calendar for 2025
December 9
City Hall Closure - Thanksgiving Day
City Hall Closure - Day After Thanksgiving Day
June 24
September 9
September 30
City Hall Closure - Juneteenth
August 12
June 10
City Hall Closure - Labor Day
August 26
July 8 and 22 Meetings Cancelled
City Hall Closure - Independence Day
December 23 Meeting Cancelled
City Hall Closure - Christmas Day
Rosh Hashanah (City observed - sundown to sundown)
October 14
October 28
City Hall Closure - Veteran's Day (observed)
Hanukkah (City observed - sundown to sundown)
Yom Kippur (City observed - sundown to sundown)
November 18

4.1 MINUTES ARE UNOFFICIAL UNTIL APPROVED BY COUNCIL
City of Santa Cruz
809 Center Street
Santa Cruz, California 95060

MINUTES OF A CITY COUNCIL MEETING
May 13, 2025
2:00 PM
Mayor Keeley opened the City Council Closed Session at 2:05 p.m. in a public meeting via Zoom and in Council Chambers, for the purpose of announcing the agenda, and receiving public testimony.

Roll Call

Present: Councilmembers Trigueiro, Brunner, Newsome, Golder, O’Hara; Vice Mayor Kalantari-Johnson; Mayor Keeley.

Absent: None.

Staff: City Manager M. Huffaker, City Attorney T. Condotti, Deputy City Clerk Administrator J. Wood, City Clerk Administrator B. Bush.

Statements of Disqualification – None.

Public Comment
Mayor Keeley opened the public comment period at 2:05 p.m. The following people spoke:

Unidentified person spoke regarding item 1.4.

Kevin Cummings spoke regarding item 3.

John Dougherty spoke regarding item 3.

Mayor Keeley closed the public comment period at 2:14 p.m., at which time the meeting was closed to the public and Council adjourned to the Courtyard Conference Room.

5.1 May 13, 2025 CITY COUNCIL MINUTES 7907
Closed Session

1. Conference with Legal Counsel – Liability Claims (Government Code §54956.95) 1) Claimant: John Michael Justice
2) Claimant: State Farm General Insurance Company
3) Claimant: Jack Michael Hain
4) Claimant: Sophia Olivia Ross
5) Claimant: Joshua Castillo-Rosales
6) Claimant: Angela Savage
7) Claimant: David Turner
8) Claimant: Christian Anthony Hamilton
Claims against the City of Santa Cruz
Council received a status report, took up under agenda item 10, and no reportable action was taken.

2. Real Property Negotiations (Government Code §54956.8) Property: 49 B Municipal Wharf (Olita’s)
APN: 007-371-01
Owner: Olita’s Cantina & Grill, LLC
City Negotiator: Bonnie Lipscomb
Negotiating Parties: City of Santa Cruz, Steve Elb, and Martha L. BarreraChavez Under Negotiation: Price, terms of payment, or both
Council received a status report from the City Negotiator, and no reportable action was taken.

3. Conference with Legal Counsel - Existing Litigation (Government Code §54956.9(d)(1))
GVC St. George, LLC v. City of Santa Cruz
(United States District Court Case No.CV-07695-BLF)
Council received a status report, and no reportable action was taken.

5.2 May 13, 2025 CITY COUNCIL MINUTES 7908
City of Santa Cruz
809 Center Street
Santa Cruz, California 95060

MINUTES OF A CITY COUNCIL MEETING
May 13, 2025
2:30 PM
Call to Order – Mayor Keeley called the meeting to order at 2:46 p.m. in Council Chambers.

Roll Call

Present: Councilmembers Trigueiro, Brunner, Newsome, Golder, O’Hara; Vice Mayor Kalantari-Johnson; Mayor Keeley.

Absent: None.

Staff: City Manager M. Huffaker, Assistant City Manager M. Templeton, City Attorney T. Condotti, Director of Public Works N. Nguyen, Assistant City Attorney C. Bronson, Chief of Fire R. Oatey, Chief of Police B. Escalante, Director of Finance E. Cabell (via Zoom), Director of Information Technology K. Morgan (via Zoom), Director of Parks and Recreation T.

Elliot (via Zoom), Deputy City Clerk Administrator J. Wood, City Clerk Administrator B. Bush.

Mayor Keeley reordered the agenda to hear item 5 first, followed by Oral Communications and item 4.

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

Oral Communications
At 2:53 p.m. Mayor Keeley opened Oral Communications for members of the public who wished to speak regarding items not listed on the City Council agenda.

Unidentified person spoke regarding Three Princes of Surf Point and summarized some stories he is including in the book he is writing.

Unidentified person spoke regarding the Downtown Library Housing Project.

James Ewing-Whitman spoke regarding the City of Capitola, and the Republican form of government.

5.3 May 13, 2025 CITY COUNCIL MINUTES 7909
Oral Communications (continued)
Lee Brokaw spoke regarding the wharf contractor, the soda tax lawsuit, utility increases, and stated he shops outside of town since there is traffic on Laurel Street.

Kevin Norton spoke regarding his concerns regarding mental health in the area and stated investing in public infrastructure could help.

Unidentified person spoke regarding maintaining a standard of living.

At 3:07 p.m. Mayor Keeley closed Oral Communications.

Presentations

4. Mayoral Proclamation Declaring May, 2025, as Jewish Heritage Month Councilmember Golder read from a proclamation declaring May, 2025 as Jewish Heritage Month. Rosalind Shorenstein with Temple Beth El spoke.

5. Mayoral Proclamation Declaring May 18—24, 2025, as Public Works Week Councilmember O’Hara read from a proclamation declaring May 18—24, 2025 as Public Works Week. Director of Public Works N. Nguyen spoke.

Presiding Officer's Announcements
Statements of Disqualification – Councilmember Brunner announced she will be recusing herself from items 23, 24 and 25 in an abundance of caution as they relate to her employer. Councilmember Brunner later recused herself from item 20 for the same reason.

Additions and Deletions – None.

City Attorney Report on Closed Session – See page 7907 for the report.

Council Meeting Calendar

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

5.4 May 13, 2025 CITY COUNCIL MINUTES 7910
Consent Agenda
Councilmember Golder made a comment on item 9.

Councilmember Newsome made a comment on items 12, 14, and 15.

Councilmember Brunner made a comment on item 15.

Councilmember Trigueiro made a comment on item 11 and pulled item 9 for further discussion.

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

Unidentified person spoke regarding item 8.

Mayor Keeley closed the public comment period.

MOTION: Councilmember O’Hara moved, seconded by Councilmember Brunner, to approve the remaining Consent Agenda.

ACTION: The motion carried unanimously with the following vote.

AYES: Councilmembers Trigueiro, Brunner, Newsome, Golder, O’Hara; Vice Mayor Kalantari-Johnson; Mayor Keeley.

NOES: None.

ABSENT: None.

DISQUALIFIED: None.

7. Resolution Extending the Emergency Declarations in Connection with the 2022/2023 Winter Storms and 2023/2024 Winter Storms (CA/CM) LOCATION: Citywide
Resolution No. NS-30,479 was adopted extending by sixty days the Local Emergency Declarations in connection with the 2022/2023 and 2023/2024 winter storms.

8. Minutes of the April 22, 2025 City Council Meeting (CC) LOCATION: None
Motion carried to approve as submitted.

5.5 May 13, 2025 CITY COUNCIL MINUTES 7911
Consent Agenda (continued)

9. Collective of Results and Evidence-based (CORE) Investments FY23-24 Annual Report and Award (CM)
LOCATION: Citywide
MOTION: Councilmember Trigueiro moved, seconded by Councilmember Golder, to:
 Accept the Collective of Results and Evidence-based (CORE) Investments Annual Report for FY23—24 (July 1, 2023-June 30, 2024) and status update on FY26—28 (July 1, 2025-June 30, 2028) CORE contracts;  Authorize the City Manager to execute Memorandum of Understanding (MOU) with Santa Cruz County, and direct staff to collaborate with the County to finalize agreements for all grant awards and set-aside funds that were approved by the City Council on November 19, 2024;  Establish an ad-hoc committee to explore the City's future role in the CORE program after the current three-year cycle concludes, including development of options for an independent City community funding program for Council consideration;
 Establish an ad hoc committee comprised of Councilmembers O’Hara and Trigueiro and Vice Mayor Kalantari-Johnson to explore the City’s future role in the CORE program, including development of options for an independent City community funding program for Council consideration; and  Direct the ad hoc committee to collaborate with the Board of Supervisors’ subcommittee, currently composed of Supervisors Cummings and De Serpa, to ensure alignment and coordination across jurisdictions.

ACTION: The motion carried unanimously with the following vote.

AYES: Councilmembers Trigueiro, Brunner, Newsome, Golder, O’Hara; Vice Mayor Kalantari-Johnson; Mayor Keeley.

NOES: None.

ABSENT: None.

DISQUALIFIED: None.

5.6 May 13, 2025 CITY COUNCIL MINUTES 7912
Consent Agenda (continued)

10. Liability Claims Filed Against the City of Santa Cruz (FN) Motion carried to reject the liability claims of 1) John Michael Justice, 2) State Farm General Insurance Company, 3) Jack Michael Hain, 4) Sophia Olivia Ross, 5) Joshua Castillo-Rosales, 6) Angela Savage, 7) David Turner, and 8) Christian Anthony Hamilton, based on staff recommendation.

11. DeLaveaga Golf Course – Range Net and Chain Link Replacement (c302213) (PR) LOCATION: District 1
Motion carried to:
 Authorize the issuance of an Invitation for Bid (IFB) for the DeLaveaga Golf Course – Range Net and Chain Link Replacement (c302213) and award the contract. The City Manager is hereby authorized and directed to execute the contract in a form approved by the City Attorney. The Director of Parks and Recreation is authorized to execute change orders within the approved project budget; and
 Approve the California Environmental Quality Act (CEQA) determination contained in this agenda report. The Council’s action is exempt from CEQA review under (1) Class 1 Categorical Exemption (14 CCR 15301) for existing facilities, and (2) Common Sense Exemption (14 CCR 15061).

12. Pacific-Beach Roundabout Enhancements Project (c402507) – Authorization to Advertise and Award (PW)
LOCATION: District 4
Motion carried to:
 Approve the plans and specifications for the Pacific-Beach Roundabout Enhancements project (c402507) and authorize staff to advertise for bids and award the contract. The City Manager is hereby authorized and directed to execute an agreement in a form approved by the City Attorney. The Director of Public Works is authorized to execute change orders within the approved project budget;
 Adopt Resolution No. NS-30,480 to amend the FY 2025 budget to appropriate funds in the amount of $70,000 from the Liability Fund to complete construction;

5.7 May 13, 2025 CITY COUNCIL MINUTES 7913
Consent Agenda (continued)

12. Pacific-Beach Roundabout Enhancements Project (c402507) – Authorization to Advertise and Award (PW) LOCATION: District 4 (continued)  Adopt Resolution No. NS-30,481 to approve the plans and specifications for the Pacific-Beach Roundabout Enhancements Project; and
 Find the project categorically exempt under CEQA Guidelines 14 CCR section 15301 (Class 1 categorical exemption for existing facilities).

13. Flyers Energy LLC - Authorization to Approve Change Order to Purchase Order (PW)
LOCATION: Citywide
Motion carried to authorize a change order with Flyers Energy LLC (Auburn, CA) in the amount of $50,000 for City fleet vehicle and machinery fuel purchases.

14. Bay Drive Protected Bike Lanes and Pedestrian Path (c402304) - Budget Adjustment (PW)
LOCATION: Districts 3, 4, 5, and 6
Resolution No. NS-30,482 was adopted amending the FY 2025 budget to revise source of funding and values for Bay Drive Bike Lanes and Pedestrian Path (c402304).

15. Rail Trail Segments 8 and 9 (c401804) – Approve Contract with Consultant to Assist with Right-of-Way Acquisition (PW)
LOCATION: District 2 and 4
Motion carried to:
 Award a contract to Bender Rosenthal Incorporated (Sacramento, CA) for the Rail Trail Segments 8 and 9 Right of Way Acquisition phase in the amount of $115,273.40 and reject all other proposals; and
 Authorize and direct the City Manager to execute an agreement in a form approved by the City Attorney. The Director of Public Works is authorized to execute contract amendments within the approved project budget.

5.8 May 13, 2025 CITY COUNCIL MINUTES 7914
Consent Agenda (continued)

16. Ratify Purchase of Two Pump Drives for the Felton Booster Pump Station (WT) LOCATION: Citywide
Motion carried to:
 Ratify the purchase of two pump drives for the Felton Booster Pump Station from Graybar Electric (Dublin, CA) in the amount of $130,017, and authorize the Water Director to execute change orders within the approved budget; and
 Approve the California Environmental Quality Act (CEQA) determination contained in this Agenda Report. The Council’s action is exempt from CEQA review under the Class 2 categorical exemption (2 CCR 15302; exemption for replacement or reconstruction).

End Consent Agenda
General Business

17. An Ordinance Rescinding Santa Cruz Municipal Code Section 21.07.020 Pursuant to a Settlement Agreement that Protects Tenants at the St. George Apartments (CA)
LOCATION: Citywide
Assistant City Attorney C. Bronson spoke and responded to Council questions.

Mayor Keeley opened the public comment period. There were no speakers.

Mayor Keeley closed the public comment period.

MOTION: Councilmember Newsome moved, seconded by Vice Mayor Kalantari-Johnson, to introduce for publication Ordinance No. 2025-10 rescinding Santa Cruz Municipal Code Section 21.07.020 pursuant to a settlement agreement that protects tenants at the St. George Apartments.

ACTION: The motion carried unanimously with the following vote.

AYES: Councilmembers Trigueiro, Brunner, Newsome, Golder, O’Hara; Vice Mayor Kalantari-Johnson; Mayor Keeley.

NOES: None.

ABSENT: None.

DISQUALIFIED: None.

5.9 May 13, 2025 CITY COUNCIL MINUTES 7915
General Business (continued)

18. Community Risk Assessment, Standards of Cover, and Deployment Analysis Report (FD)
LOCATION: Citywide
Chief of Fire R. Oatey introduced the item and responded to Council questions.

David Rocha, Consultant with AP Triton, gave a presentation and responded to Council questions.

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

Becky Steinbruner
Mayor Keeley closed the public comment period.

MOTION: Councilmember Trigueiro moved, seconded by Councilmember Brunner, to:
 Adopt the Community Risk Assessment, Standards of Cover, and Deployment Analysis report as the Fire Department’s service review study; and  Direct staff to utilize the findings and recommendations from this study to inform and guide future policy decisions, operational improvements, and resource allocations.

ACTION: The motion carried unanimously with the following vote.

AYES: Councilmembers Trigueiro, Brunner, Newsome, Golder, O’Hara; Vice Mayor Kalantari-Johnson; Mayor Keeley.

NOES: None.

ABSENT: None.

DISQUALIFIED: None.

At this time, Council heard item 22.

5.10 May 13, 2025 CITY COUNCIL MINUTES 7916
Consent Public Hearings
Mayor Keeley opened the public comment period. The following person spoke:

Kevin Norton spoke regarding item 20.

Mayor Keeley closed the public comment period.

MOTION: Councilmember Golder moved, seconded by Councilmember Newsome, to approve the Consent Public Hearing Agenda.

ACTION: The motion carried with the following vote.

AYES: Councilmembers Trigueiro (with the exception of item 19), Brunner (with the exception of item 20), Newsome, Golder, O’Hara; Vice Mayor Kalantari-Johnson; Mayor Keeley.

NOES: Councilmember Trigueiro (item 19).

ABSENT: None.

DISQUALIFIED: Councilmember Brunner (item 20).

19. 2nd Reading and Final Adoption of Ordinance No. 2025-07 Amending Santa Cruz Municipal Code Chapter 9.90, and Policy Update Pertaining to AB 481 Military Equipment (PD)
LOCATION: Citywide
Motion carried to adopt Ordinance No. 2025-07 amending City of Santa Cruz Municipal Code (“SCMC”) Chapter 9.90 “AB 481 Military Equipment Use,” adopting an amended Military Equipment Use Policy (Policy) and, incorporating the addition of section 705.10 Use in Exigent Circumstances, and amended inventory of military equipment as defined by Assembly Bill 481.

20. 2nd Reading and Final Adoption of Ordinance No. 2025-08 Adding Chapter 5.84 "Vibrancy Ordinance" to the Santa Cruz Municipal Code (EDH/CN) LOCATION: Citywide
Motion carried to adopt Ordinance No. 2025-08 adding Chapter 5.84, “Vibrancy Ordinance”, to the Santa Cruz Municipal Code.

5.11 May 13, 2025 CITY COUNCIL MINUTES 7917
Consent Public Hearings (continued)

21. 2nd Reading and Final Adoption of Ordinance No. 2025-09 Amending the Santa Cruz Municipal Code Chapter 18.49 "Public Safety Impact Fees" (FD/PD) LOCATION: Citywide
Motion carried to adopt Ordinance No. 2025-09 amending City of Santa Cruz Municipal Code Chapter 18.49 “Public Safety Impact Fees,” modifying section

18.49.050 Exemptions.

General Business

22. State of Child & Youth Well-Being Report 2024/2025
LOCATION: Citywide
Vice Mayor Kalantari-Johnson introduced the item.

Nicole Young, Owner/Principal Consultant with Optimal Solutions Consulting, gave a presentation.

Youth Liaisons Sammy Lambert, Scarlett Folger, Ben Sommerville, and Alan Lee spoke.

Vice Mayor Kalantari-Johnson opened the public comment period. The following people spoke.

Unidentified person
Garrett
Kevin Norton
Vice Mayor Kalantari-Johnson closed the public comment period.

MOTION: Councilmember Golder moved, seconded by Vice Mayor Kalantari-Johnson, to accept the State of Child & Youth Well-Being report for 2025.

ACTION: The motion carried unanimously with the following vote.

AYES: Councilmembers Trigueiro, Brunner, Newsome, Golder, O’Hara; Vice Mayor Kalantari-Johnson; Mayor Keeley.

NOES: None.

ABSENT: None.

DISQUALIFIED: None.

Recess - The City Council recessed at 4:56 p.m. until the 7:00 p.m. session.

5.12 May 13, 2025 CITY COUNCIL MINUTES 7918
City Council
7:00 PM
Call to Order – Mayor Keeley called the meeting to order at 7:00 p.m. in Council Chambers.

Roll Call

Present: Councilmembers Trigueiro, Newsome, Golder, O’Hara; Vice Mayor Kalantari-Johnson; Mayor Keeley.

Absent: Councilmember Brunner (disqualified from participating and acting on items 23 – 25)
Staff: City Manager M. Huffaker, City Attorney T. Condotti, Director of Planning and Community Development L. Butler, Deputy City Manager/Director of Economic Development and Housing B. Lipscomb, Senior Planner C. Stanger, Senior Planner S. Neuse, Deputy City Clerk Administrator J. Wood, City Clerk Administrator B. Bush.

Mayor Keeley reordered the agenda to hear item 24 first, followed by items 23 and

25. Public Hearings

23. Downtown Plan Expansion, Extending and Amending the Downtown Specific Plan, Including for Areas South of Laurel Street, Roughly to the Roundabout at Pacific and Center Streets, and Making Related Changes to the General Plan, Local Coastal Plan, Beach/South of Laurel Plan, and Zoning. Applicant: City of Santa Cruz. CEQA: EIR (PL)
LOCATION: District 4
Director of Planning and Community Development L. Butler introduced the item.

Senior Planner S. Neuse and Bill Wiseman, Planning Practice Leader with Kimley-Horne, gave a presentation and responded to Council questions.

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

Chris Murphy
Keresha Durham
Frank Barron
Kris Monroe
Kathy Haber

5.13 May 13, 2025 CITY COUNCIL MINUTES 7919
Public Hearings (continued)

23. Downtown Plan Expansion (PL) LOCATION: District 4 (continued) Public Comment (continued):

Kyle Kelley
Gary Reece
Jake Martinez
Michelle Bassi
Angela Chestnut
Bryan Shields
Hector Marin
Gillian Greensite
Rob Oliveros
Unidentified person
Joe Quigg
Unidentified person
Kristen Brown
Ron Pomerantz
Gary Patton
Becky Steinbruner
Robynne Blume
John Dougherty
Theo Kell
Jocelyn Wolf
Laurel Bard
Gavin Roth
Nyanko Nyasu
Riley
Unidentified person
Lainey
Emily Christensen
Laurie Eagan
Elise Casby
Lawrence Wilson
Zack Davis
Brian Windsor
Elaine Johnson
Ellen Adams
Unidentified person
Unidentified person
Anita Hertel
Mayor Keeley closed the public comment period.

5.14 May 13, 2025 CITY COUNCIL MINUTES 7920
Public Hearings (continued)

23. Downtown Plan Expansion (PL) LOCATION: District 4 (continued) MOTION: Councilmember Newsome moved, seconded by Vice Mayor Kalantari-Johnson, to:
1) Adopt Resolution No. NS-30,483 certifying the Final Subsequent Environmental Impact Report (EIR);
2) Adopt Resolution No. NS-30,484 adopting the Findings of Fact, Mitigation Monitoring and Reporting Program, and Statement of Overriding Consideration for the significant and unavoidable impact to Historic Resources;
3) Adopt Resolution No. NS-30,485 amending the 2030 General Plan and General Plan Land Use Map;
4) Adopt Resolution No. NS-30,486 amending the Local Coastal Program (LCP) Land Use Plan and the LCP Land Use Map;
5) Adopt Resolution No. NS-30,487 amending the Downtown Plan, which constitute LCP Implementation Plan (IP) amendments, with the following amendments to Chapter 4, Section K of the Downtown Plan;  14.a.i Option A: Bonus Floor Area Ratio (FAR).

Up to 75% additional FAR on top of the base FAR, and up to an additional 75% in height not to exceed 145 85 feet. Projects may choose to use some or all of any bonus for which they qualify.
 14.a.ii Option B: Unlimited Floor Area Ratio (FAR).

For development proposals that limit height to the height limits of the Downtown Plan (50, 70, 85 feet), excluding noted the exceptions to the height limits as consistent with the Downtown Plan in Chapter 4, Subsections J.1, J.3, J.6, J.16, or K.8 or SCMC Section 24.12.150 – Height Limit Modifications, elimination of the maximum FAR standard.

5.15 May 13, 2025 CITY COUNCIL MINUTES 7921
Public Hearings (continued)

23. Downtown Plan Expansion (PL) LOCATION: District 4 (continued) MOTION (continued):
 14.i.i.1:

Special attention shall be paid to the structure to address issues such as massing, building shadows, transition to lower intensity uses, and skyline views from a distance. The upper-level tapering standards in Section K.5 above or similar approaches can be used as guidelines to address these issues. The Architectural Review Committee shall review proposals and provide recommendations as it relates to these objectives.
 14.i.i.2:

The tallest portion of the structures, measured to the top plate, shall be no more than 12 8 stories and 145 85 feet tall. Rooftop structures may exceed this height limit in accordance with the allowances established in SCMC Section 24.12.150 and in the Downtown Plan Chapter 4.
 14.i.i.3:

Based upon a request by the developer and a recommendation from the Planning Commission, the City Council may approve greater heights or stories in order to achieve superior building design, such as improved skyline aesthetics, enhanced rooftop access, improved solar access, or other similar features, as demonstrated at a public hearing and when approved by a majority of City Council. Structures using this discretionary provision to exceed the 85’ height limit, unless otherwise expressly allowed in the Downtown Plan Chapter 4, Subsections J.1, J.3, J.6, J.16, or K.8 or in Santa Cruz Municipal Code Section 24.12.150, shall not allow for an additional story, shall be limited to architectural features that provide for improved skyline aesthetics, and shall comprise no more than 20% of the site area.

5.16 May 13, 2025 CITY COUNCIL MINUTES 7922
Public Hearings (continued)

23. Downtown Plan Expansion (PL) LOCATION: District 4 (continued) MOTION (continued):
 14.i.ii For sites utilizing Option B

14.i.ii.2: Based upon a request by the developer and a recommendation from the Planning Commission, the City Council may approve greater heights or stories in order to achieve superior building design, particularly in terms of such as improved skyline aesthetics, enhanced rooftop access, improved solar access, or other similar features, as demonstrated at a public hearing and approved by a majority of City Council. Structures using this discretionary provision to exceed the 85’ height limit, unless otherwise expressly allowed in the Downtown Plan Chapter 4, Subsections J.1, J.3, J.6, J.16, or K.8 or in Santa Cruz Municipal Code Section 24.12.150, shall not allow for an additional story, shall be limited to architectural features that provide for improved skyline aesthetics, and shall comprise no more than 20% of the site area.
 Approve the recommendations for Downtown Density Bonus options for onsite, off-site, land dedication, and in-lieu fee alternatives for the provision of affordable units with the following revisions to the in-lieu fee option and add Section 14.h.ii.2:

In-lieu fees must be applied to preservation or development of at least as many affordable bedrooms as required by the market rate development and must be committed to projects that will preserve affordable housing or that will receive entitlement within five years of building permit issuance for the market rate project. The Council may extend the expenditure timeline at a formal Council meeting if extenuating circumstances exist.
6) Adopt Resolution No. NS-30,488 amending the Beach/South of Laurel Comprehensive Area Plan, which constitute LCP IP amendments; and 7) Introduce for publication Ordinance No. 2025-11 amending the Municipal Code including the zoning map, as proposed in the attached documents, which constitute LCP IP amendments.

5.17 May 13, 2025 CITY COUNCIL MINUTES 7923
Public Hearings (continued)

23. Downtown Plan Expansion (PL) LOCATION: District 4 (continued) FRIENDLY AMENDMENT: Councilmember O’Hara requested to add to the motion:

Direct staff to return to Council no later than November with:
1) A proposal to evaluate an expansion of the Downtown Density Bonus citywide, including leveraging the Architectural Review Committee outside of the Downtown Plan Expansion area; and
2) A proposal to develop an objective design standards toolkit to ensure our standards are readily accessible by developers and members of the public and can be updated on a regular basis to respond to evolving community perspectives on design values.

Councilmember Newsome and Vice Mayor Kalantari-Johnson accepted.

ACTION: The motion carried with the following vote.

AYES: Councilmembers Trigueiro, Newsome, Golder, O’Hara; Vice Mayor Kalantari-Johnson; Mayor Keeley.

NOES: None.

ABSENT: None.

DISQUALIFIED: Councilmember Brunner.

5.18 May 13, 2025 CITY COUNCIL MINUTES 7924
Public Hearings (continued)

24. Ordinance to Amend the Zoning Designation of the Northern Four Acres of 2394 Delaware Avenue From R-1-5 (Single Family Residence District) to E-A (Exclusive Agricultural District); Ordinance to Amend the Zoning Designation of the Southern Approximately 6.3 Acres of 2394 Delaware Avenue From R-1-5 (Single Family Residence District) to R-L (Multiple Residence – Low-Density District); Resolution to Amend the General Plan Land Use Designation of 2394 Delaware Avenue from L (Low Density Residential) to AG (Agriculture/Grazing) and LM (Low-Medium Density Residential) and for Related General Plan Text Amendments to the Description of the Agriculture/Grazing Land Use Designation and Land Use Action LU 1.1.4; and Resolution for Local Coastal Program (LCP) Amendments to Certify the Northern Four Acres of 2394 Delaware Avenue Into the LCP, Including Assignment of the Coastal Appeal Zone Level of Permit Authority and Assignment of the Agriculture/Grazing Land Use Designation, and to Amend the Text of the Agriculture/Grazing Land Use Designation Description within the LCP Land Use Plan (LCLUP). Amendments to the Subject Site’s Zoning, Certification Into the LCP, and LCLUP Text Amendments Are Part of the LCP Implementation Plan and LCLUP and Require Approval by the California Coastal Commission Prior to Taking Effect Inside the Coastal Zone. (PL)
LOCATION: District 6
Senior Planner C. Stanger gave a presentation and responded to Council questions.

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

Doug Engfer
Mayor Keeley closed the public comment period.

MOTION: Councilmember Golder moved, seconded by Vice Mayor Kalantari-Johnson, to:
 Adopt Resolution No. NS-30,489 amending the general plan land use designation of the site and make related general plan text amendments;  Introduce for publication Ordinance No. 2025-12 amending the zoning designation of the northern four acres of the subject site; and  Introduce for publication Ordinance No. 2025-13 amending the zoning designation of the southern approximately 6.3 acres of the subject site.

5.19 May 13, 2025 CITY COUNCIL MINUTES 7925
Public Hearings (continued)

24. Ordinances to Amend the Zoning Designation of 2394 Delaware Avenue (PL) LOCATION: District 6 (continued)
ACTION: The motion carried with the following vote.

AYES: Councilmembers Trigueiro, Newsome, Golder, O’Hara; Vice Mayor Kalantari-Johnson; Mayor Keeley.

NOES: None.

ABSENT: None.

DISQUALIFIED: Councilmember Brunner.

25. Leonard Street General Plan Land Use Map Amendment. CEQA: General Plan 2030 Environmental Impact Report. Applicant: City of Santa Cruz (PL) LOCATION: District 1
Senior Planner S. Neuse gave a presentation.

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

Emma
Kate Achiles
Mayor Keeley closed the public comment period.

MOTION: Councilmember Trigueiro moved, seconded by Vice Mayor Kalantari-Johnson, to adopt Resolution No. NS-30,490 recognizing the environmental determination and approving the proposed amendment to the General Plan Land Use Designations for 111-119 Leonard Street, changing the designation from Mixed-Use Visitor Commercial (MXVC) to Low-Medium Density Multifamily Residential (L-M), as directed by the City Council.

ACTION: The motion carried with the following vote.

AYES: Councilmembers Trigueiro, Newsome, Golder, O’Hara; Vice Mayor Kalantari-Johnson; Mayor Keeley.

NOES: None.

ABSENT: None.

DISQUALIFIED: Councilmember Brunner.

Adjournment – Councilmember Golder moved, seconded by Councilmember Newsome, to adjourn. By consensus City Council adjourned at 10:04 p.m.

5.20 May 13, 2025 CITY COUNCIL MINUTES 7926
Respectfully Submitted:

Julia Wood, Deputy City Clerk Administrator
Attest:

Bonnie Bush, City Clerk Administrator
Approved:

Fred Keeley, Mayor

5.21 City Council

AGENDA REPORT
DATE: 05/12/2025
AGENDA OF: 05/27/2025
DEPARTMENT: City Clerk
SUBJECT: Commission for the Prevention of Violence Against Women (CC) LOCATION: Citywide
RECOMMENDATION: Motion to approve Vice Mayor Kalantari-Johnson’s nomination of Andrea Ludwick to the Commission for the Prevention of Violence Against Women.

BACKGROUND: The Commission for the Prevention of Violence Against Women is comprised of members who have been nominated by each member of the Council. When a new member is elected, or if there is a vacancy for any reason, new commissioners must be nominated.

DISCUSSION: Due to the resignation of Shiri Gradek, Vice Mayor Kalantari-Johnson has a nomination to the Commission for the Prevention of Violence Against Women, which Council must vote to approve. Councilmember Kalantari-Johnson would like to nominate Andrea Ludwick to serve on the Commission for the duration of Commissioner Gradek's term ending January 31, 2029, eligible for reappointment.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: Not applicable. Does not require CEQA review as it does not meet the definition of a 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.

HEALTH IN ALL POLICIES (HiAP): Though this administrative process of appointing members to CPVAW is not directly related to Health in All Policies, the City recently adopted an ordinance that implemented a stipend for members serving on commissions, which aligns with the equity pillar of Health in All Policies.

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 Impacts.

6.1 Prepared By:

Bonnie Bush
City Clerk
Submitted By:

Michelle Templeton
Assistant City Manager
Approved By:

Matthew Huffaker
City Manager
ATTACHMENTS:

1. ANDREA LUDWICK APPLICATION.PDF

6.2 6.3

6.4 City Council

AGENDA REPORT
DATE: 04/28/2025
AGENDA OF: 05/27/2025
DEPARTMENT: City Clerk
SUBJECT: Historic Preservation Commission (CC)
LOCATION: Citywide
RECOMMENDATION: Approve Vice Mayor Kalantari-Johnson's nomination of Greg Larson to the Historic Preservation Commission.

BACKGROUND: The Historic Preservation Commission members are appointed directly by members of the Council.

DISCUSSION: Due to a resignation, Vice Mayor Kalantari-Johnson has a nomination of a commissioner to the Historic Preservation Commission, which Council must vote to approve.

Vice Mayor Kalantari-Johnson would like to nominate Greg Larson to a term ending January 31, 2029, with eligibility for reappointment to another term.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: Not applicable - Does not require CEQA review.

HEALTH IN ALL POLICIES (HiAP): Though this administrative process of appointing members to City advisory bodies is not directly related to Health in All Policies, the City recently adopted an ordinance that implemented a stipend for members serving on commissions, which aligns with the equity pillar of Health in All Policies.

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:

Bonnie Bush
City Clerk
Submitted By:

Michelle Templeton
Assistant City Manager
Approved By:

Matthew Huffaker
City Manager

7.1 ATTACHMENTS:

1. LARSON APPLICATION.PDF

7.2 7.3

7.4 City Council

AGENDA REPORT
DATE: 05/05/2025
AGENDA OF: 05/27/2025
DEPARTMENT: City Clerk
SUBJECT: Children’s Fund Oversight Committee (CC)
LOCATION: Citywide
RECOMMENDATION: Approve the at-large appointment of Pamela Velasquez to the Children's Fund Oversight Committee.

BACKGROUND: The members of the Children's Fund Oversight Committee are appointed atlarge by the City Council.

DISCUSSION: Due to a resignation, there is one seat open for the Children's Fund Oversight Committee, which is to be appointed at-large. The City Clerk's Office has one application on file.

If the City Council appoints the sole applicant, Pamela Velasquez, she will complete the remainder of the unfinished term, which ends January 31, 2026, and is eligible for reappointment.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: Not applicable - Does not require CEQA review as it does not meet the definition of a Project.

HEALTH IN ALL POLICIES (HiAP): Though this administrative process of appointing members to the Children's Fund Oversight Committee is not directly related to Health in All Policies, the City recently adopted an ordinance that implemented a stipend for members serving on commissions, which aligns with the equity pillar of Health in All Policies.

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:

Bonnie Bush
City Clerk
Submitted By:

Michelle Templeton
Assistant City Manager
Approved By:

Matt Huffaker
City Manager

8.1 ATTACHMENTS:

1. VELAZQUEZ APPLICATION.PDF

8.2 8.3

8.4 City Council

AGENDA REPORT
DATE: 05/08/2025
AGENDA OF: 05/27/2025
DEPARTMENT: Economic Development and Housing
SUBJECT: Cooperative Retail Management Business Real Property Improvement District Assessments for FY 2026 (EDH)
LOCATION: District 4
RECOMMENDATION: Motion to:
1) Approve the FY 2025 Annual Report and FY 2026 Plan prepared by the Downtown Management Corporation;
2) Adopt the Resolution of Intention to levy a Cooperative Retail Management Business Real Property Improvement District Assessment for FY 2026 and schedule a public hearing for June 10, 2025 on the levy of the assessments for FY 2026; and 3) Adopt a resolution amending the Fiscal Year 2025 budget to increase Kiosk Maintenance (Fund 123) expenditures by $16,500, offset by revenue collected in Kiosk Maintenance (Fund 123).

BACKGROUND: On February 8, 1994 the City Council adopted Ordinance 94-06 adding Chapter 5.06 to the Santa Cruz Municipal Code establishing the Cooperative Retail Management (CRM) Business Real Property Improvement District (District) and levying assessments on the properties along Pacific Avenue pursuant to the Parking and Business Improvement Area Law of 1989 for the purpose of establishing a Downtown Hospitality Program. In 1996, the area was expanded to include side streets between Cedar and Front Streets and some downtown alleyways including Plaza, Locust, Commerce, Elm Lane, Birch Lanes, Pearl Alley, Lincoln-Cathcart and Pacific-Front alleyways. In 2023, the area was expanded to include all real property used for commercial or business purposes on parcels with street frontage on Cedar Street, Front Street, the south side of Mission Street and Water Street, and the north side of Laurel Street.

The CRM District is managed by the Downtown Management Corporation (DMC) Board of Directors which includes three property owner representatives, three business owner representatives, two City Councilmembers, and the Economic Development and Housing Director as Chief Financial Officer.

9.1 In accordance with State law, the DMC is required to submit an Annual Report/Plan for each year in which assessments are to be levied in the District. The attached Fiscal Year (FY) 2025 Annual Report and FY 2026 Plan prepared by the DMC is provided for Council consideration.

DISCUSSION: The FY 2025 Annual Report and FY 2026 Plan does not propose any changes to the CRM District area. The District includes properties used for commercial or business purposes with frontage on Pacific Avenue between Water Street and Laurel Street and those with frontage on the side streets and alleyways between Cedar and Front Street and properties with frontage on Cedar Street, Front Street, the south side of Mission Street and Water Street, and the north side of Laurel Street. The assessments are based upon the linear foot frontage and lot size and building size of the real property used for commercial or business purposes, including rental residential, within the CRM District.

Each parcel’s assessment is calculated as follows:

Linear Feet Frontage x Linear Feet Frontage Rate = Linear Footage Assessment Lot Area Square Footage x Lot Area Square Footage Rate = Lot Assessment Building Square Footage x Building Square Footage Rate = Building Assessment Linear Footage Assessment + Lot Assessment + Building Assessment = Annual Assessment The CRM assessment formula allows the Board to recommend an annual adjustment in the rate based on the Consumer Price Index (CPI). The annual CPI adjustment as of February 2025 is

2.7%, therefore the rates per square foot will increase as follows:

FY 2025 Rates

SERVICE
ZONE
Comm Bldg
SF Assmt
Res Bldg SF
Assmt
Parcel SF
Assmt
Pacific Ave
Frontage
Assmt
All Other
Frontage
Assmt
Pacific Ave
Parcels $0.0735 $0.0735 $0.0831 $7.2082 $5.4062
All Other
Parcels $0.0551 $0.0551 $0.0623 $0.0000 $5.4062
FY 2026 Rates

SERVICE
ZONE
Comm Bldg
SF Assmt
Res Bldg SF
Assmt
Parcel SF
Assmt
Pacific Ave
Frontage
Assmt
All Other
Frontage
Assmt
Pacific Ave
Parcels $0.0755 $0.0755 $0.0853 $7.4028 $5.5521
All Other
Parcels $0.0566 $0.0566 $0.0640 $0.0000 $5.5521
FY 2026 Planned Activities:

The Annual Report/Plan outlines the DMC’s FY 2026 planned activities, budgeted expenses and revenues and contributions from sources other than the assessments levied.

The DMC Board of Directors recommends continuing the Downtown Ambassador Program contract with the Downtown Association with the goals of encouraging a positive experience on

9.2 the street; providing proactive assistance to visitors; providing eyes on the street to report disruptive or criminal behavior; and reporting and resolving vandalism, graffiti, waste, and cleanliness issues. The program will provide one Operations Director and sufficient Ambassador hours to walk the CRM district from 10am - 6pm, 7 days per week and staff the Information Kiosk during peak hours.

In FY 2025, the City plans to contribute $26,500 toward the DMC’s biohazard removal service contract and to provide the same funding level in FY 2026 should costs overrun the projected budget for those services.

The DMC’s plan has been approved by the DMC Board for FY 2026. Following City Council approval of the DMC Annual Report/Plan, a resolution declaring the intention of the City to levy and collect assessments within the District must be adopted. The resolution will also set a public hearing to be held on June 10, 2025. Notice of the public hearing will be given by publishing the Resolution of Intention in a newspaper of general circulation in the City once, at least seven days prior to the public hearing. The law also requires that no sooner than 10 days after adoption of the resolution of intention, the City Council must hold a public hearing at which time it is required to take public testimony and receive protests pertaining to the proposed assessment.

Written and oral protests, if any, may be made in accordance with Sections 36524 and 36525 of the Law. City Council may then adopt a resolution levying the assessment only if there is not a majority of the property owners opposed to the levy.

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

HEALTH IN ALL POLICIES (HiAP): The proposed Council action and services provided by the DMC through the annual workplan align with the HiAP goals of equity, community connectedness, and increased economic vitality in the CRM District.

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: Yes FISCAL IMPACT DESCRIPTION: The City owns property within the boundaries of the District. The assessment for City properties in FY 2026 is $91,317.65, which is approximately a $65.00 increase. The increase is based on the 2.7% CPI adjustment and additions/deletions of City property. The General Fund (Fund 101), Parking Fund (Fund 741) and Housing Successor (Fund 281) contribute to the assessments and have been included in the FY 2026 budget request.

In addition, for FY 2025, staff recommends a budget adjustment of $16,500 to contribute towards the DMC’s biohazard removal service contract. The expenditure will be offset by rent already collected in the Kiosk Maintenance Fund (Fund 123) from Café Extension Fees. Staff also recommends providing the same funding level in FY 2026 should costs overrun the projected budget for those services. This recommendation is included in the department’s FY 2026 budget request.

9.3 Prepared By:

Rebecca Unitt
Economic Development
Manager
Submitted By:

Bonnie Lipscomb
Deputy City Manager
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. ANNUAL REPORT AND WORKPLAN.PDF

2. RESOLUTION.DOCX

3. BUDGET ADJUSTMENT.PDF

9.4 Downtown Management Corporation
FY 2025 Annual Report
FY 2026 Plan
DRAFT

9.5 2
Introduction
The Downtown Management Corporation (DMC) oversees the Cooperative Retail Management District (CRM), covering Pacific Avenue from Water Street to Laurel Street, and the side streets off of Pacific Avenue. The CRM District is an improvement district funded by an assessment levied on property owners in this geographic boundary to fund enhanced programs and services focused on a clean, safe and welcoming Downtown.

The objectives of the DMC, as stated in the bylaws, are:
• To improve public perception of downtown Santa Cruz by enhancing safety and security; • To provide information and direction to shoppers and visitors in downtown Santa Cruz; • To provide a visible presence in downtown Santa Cruz to observe and report street disorder.

The DMC is governed by a volunteer board of directors that includes two City of Santa Cruz Councilmembers, the City’s Economic Development Director, three business owner representatives, and three property owner representatives. This work plan has been developed by the Board and staff to serve as a roadmap to guide the activities and resource allocations of the Downtown Management Corporation for fiscal year 2026.

9.6 3
Downtown Management Corporation
FY 2025 Annual Report and FY 2026 Plan

1. Are there any proposed changes to the Cooperative Retail Management Business Real Property Improvement District (CRM)?
The CRM assessment formula allows the Board to recommend an annual adjustment in the rate based on the Consumer Price Index. The annual CPI adjustment as of February 2025 is 2.7%, therefore the rates per square foot will increase as follows:

FY 2025 Rates

SERVICE ZONE
Comm Bldg SF
Assmt
Res Bldg SF
Assmt
Parcel SF
Assmt
Pacific Ave
Frontage
Assmt
All Other
Frontage
Assmt
Pacific Ave
Parcels $0.0735 $0.0735 $0.0831 $7.2082 $5.4062
All Other Parcels $0.0551 $0.0551 $0.0623 $0.0000 $5.4062 FY 2026 Rates

SERVICE ZONE
Comm Bldg SF
Assmt
Res Bldg SF
Assmt
Parcel SF
Assmt
Pacific Ave
Frontage
Assmt
All Other
Frontage
Assmt
Pacific Ave
Parcels $0.0755 $0.0755 $0.0853 $7.4028 $5.5521
All Other Parcels $0.0566 $0.0566 $0.0640 $0.0000 $5.5521

2. Describe the improvement activities that were provided for the year.

Please see Attachment No. 1.

3. Describe the budget for the improvements and activities.

Please see Attachment No. 2.

4. Describe the method used to levy assessments for FY 25.

The assessments for FY 25 are based upon the linear foot frontage, lot size and building size of the real property used for commercial or business purposes within the CRM District. The individuals or entities subject to the proposed assessment shall be those persons or entities who own commercial or business real property within the assessment district which have frontage on Pacific Avenue, downtown side streets and downtown alleyways and properties with frontage on Cedar Street, Front Street, the south side of Mission Street and Water Street, and the north side of Laurel Street. The proposed assessment shall be payable in two equal installments due on or before July 1st and January 1st. New property owners shall not be exempt from levy of the assessment.

Rental residential property is assessed at the same rate as building square footage.

Owner-occupied residential properties in the district are exempt from the assessment.

9.7 4
Each parcel’s assessment is calculated as follows:

Linear Feet Frontage x Linear Feet Frontage Rate = Linear Footage Assessment Lot Area Square Footage x Lot Area Square Footage Rate = Lot Assessment Building Square Footage x Building Square Footage Rate = Building Assessment.

Linear Footage Assessment + Lot Assessment + Building Assessment = the annual assessment
Assessment Rate Linear Feet Frontage Lot Area Square
Footage
Building Area Square
Footage
Pacific Avenue $7.2082 $0.0831 $0.0735
Side Street and
Alley
$5.4062 $0.0623 $0.0551
Rental residential square footage is assessed at the same building square feet rate

5. Show the amount or any surplus or deficit revenues carried over from the prior year.

The FY 2025 Operating Budget is estimated to have a fund balance of two thousand six hundred ten dollars and eighty-four cents ($2,610.84).

6. The amount of contributions from other sources, if any.

The Economic Development Department provided administrative support in the form of membership mailings and the coordination of regular meetings of the DMC Board of Directors.

In addition to the proceeds by the CRM Assessment District in FY 2025, the DMC received a contribution of $26,500 to the biohazard removal contract from the City.

7. The proposed work plan for the next fiscal year.

The following proposed activities were approved by the Board of Directors at the May 15, 2025 Board Meeting for Fiscal Year 2026. The Board voted to allow the activities and reserve funding to be revisited throughout the year for reallocation as needed as conditions change and based on actual costs for services and for the City to provide supplemental funding in the amount of twenty-six thousand five hundred dollars ($26,500) for the biohazard removal contract if cost exceed the anticipated budget. See Attachment 2 for the proposed work plan budget.

Downtown Ambassador Program
The DMC Board of Directors recommends continuing to contract with Block By Block Inc., through the Downtown Association of Santa Cruz (DTA) to provide Downtown Ambassador Services within the CRM district for FY 2026. DMC will allocate three

9.8 5
hundred fifty-eight thousand four hundred twenty-three dollars ($358,423) for the 12- month contract.

The Ambassador Program provides one Operations Director and sufficient Ambassador hours to walk the DMC district 10am - 6pm, 7 days per week and staff the Information Kiosk during peak hours.

The Ambassadors will provide the following services:
a. Offer and provide assistance, information and directions to visitors of the downtown.
b. Provide a uniformed ambassador presence by walking the service area. c. Inform persons as to Santa Cruz Municipal Codes on standards of conduct with the goal of achieving compliance.
d. Promptly report disruptive or criminal behavior to the appropriate public agency and cooperate as necessary for enforcement.
e. Notify appropriate authorities to respond to medical or mental health emergencies.
f. Pick up trash such as newspapers and small debris.
g. Address light litter and graffiti and report large graffiti, spills on sidewalk, and other conditions that may impact public safety to the appropriate department if unable to remediate.

Downtown-Beach Shuttle
The Beach-Downtown shuttle replaces the Santa Cruz Trolley program and will provide transportation for thousands of visitors between the beach and downtown during the summer months. The program restarted in 2023 after pausing following the 2019 season due to the pandemic. Shuttle operations are funded through a combination of sponsorships, advertising revenue, fares and grants. DMC Board of Directors believes that the number of visitors that the shuttle brings to the CRM district is beneficial and warrants a contribution of $10,000 to shuttle operation costs.

Biohazard Removal Services
The work plan includes the continuation of a maintenance contract for ninety thousand dollars ($90,000) to provide biohazard cleanup services for public and private property in the CRM District.

Pet Waste Bag Dispensers
The work plan includes continuation of maintenance for the five pet waste bag dispensers in the district and purchase of at least 2,000 bags for an estimated cost of one hundred fifty dollars ($150). The waste bags were installed as a pilot program to monitor any changes in behavior from conveniently located bags in high traffic areas in an effort to reduce after-hour calls for pet waste pick up and reduction in daily collection numbers.

The bags have been utilized by the community and minimal vandalism has occurred to the dispensers.

9.9 6
Attachment No. 1
DMC FY 2025 Work Program
The objectives of the DMC, as stated in the bylaws, are:
• To improve public perception of downtown Santa Cruz by enhancing safety and security; • To provide information and direction to shoppers and visitors in downtown Santa Cruz; • To provide a visible presence in downtown Santa Cruz to observe and report street disorder.

The DMC Board of Directors, pursuant to its bylaws, consists of nine members, including:
• Three representatives of the City: Mayor and Vice Mayor (or their designees) and Director of Economic Development Department.
• Three downtown property owners or designated agents.
• Three downtown business owners or designated agents selected by the DMC Board of Directors.

Downtown Management Corporation Board of Directors FY 2025 Chris Murphy, Business Representative
Elfin Saffer, Business Representative
Ian McRae, Business Representative
Kris Reyes, Property Owner Representative
Ryan Coonerty, Property Owner Representative
Renee Culver, Property Owner Representative
Bonnie Lipscomb, Director, Economic Development
Scott Newsome, Councilmember
Shebreh Kalantari-Johnson, Councilmember
Downtown Ambassador Program
In the FY 2025 workplan the DMC Board of Directors
continued the contract with the Downtown Association
of Santa Cruz to provide hospitality services in the
district for a fifth year of service.

The Ambassador program has been designed based on
best practices of Downtown Management
Organizations, with the specific and unique needs of
Downtown Santa Cruz in mind. The primary objective
of the program is to foster a welcoming and friendly
environment in the Downtown and to provide support
to the business community. The program provides one Operations Director and sufficient Ambassador hours to walk the DMC district 10am - 6pm, 7 days per week and staff the Information Kiosk during peak hours. The Ambassadors are tasked with offering assistance and directions to visitors, providing eyes on the street to report disruptive or criminal behavior, picking up trash and debris to promote cleanliness downtown, and reporting graffiti, sidewalk spills, and other conditions to the proper departments or agencies. The Ambassadors also maintain close relationships with the merchants in the district to provide information and address concerns to support their success downtown.

9.10 7
Biohazard Removal Services
Uncle Poop’s Pet Waste Removal provides daily biohazard removal services in the CRM District. The contractor travels the entire CRM District every morning looking for waste on public and private property and removing it. The contractor also responds on-call to promptly clean up messes. This service has resulted in cleaner sidewalks and has relieved business owners of the burden to pick up waste in their alcoves and entry ways.

Related Services That Enhance the Downtown Ambassador Program City Services
The Downtown Police Patrol enhances the efforts of the ambassadors. The Downtown Police Officers are in communication with the Ambassadors daily to monitor issues impacting the downtown and maintain communication between the businesses.

Homeward Bound Program
The City’s Homeward Bound Program provides funding for bus tickets to people in need after verifying that they are returning to family, medical services or employment.

Downtown Outreach Worker
The Downtown Outreach Workers (DOW), a social worker funded equally by County Mental Health and the City of Santa Cruz, has been extremely effective in identifying and assisting people with social and mental health problems and in referring them to needed services. The DOW works closely with the ambassadors, police and downtown businesses to increase the awareness of the position and to provide assistance to the business owners with social problems occurring in their premises and in the downtown generally. The DOWs work seven days a week and serves as a case manager to provide ongoing support to individuals to assist them with medical services, transportation and housing.

Downtown Association
The DMC continues to collaborate with the Downtown Association of Santa Cruz (DTA) on creating a clean, safe and friendly downtown. The DTA sponsors orientation workshops for new downtown employees and invites the police and the downtown outreach workers to attend and to provide information on services.

The DTA also operates the Downtown Information Kiosk which is located at 1130 K2 Pacific Avenue. The professional, friendly staff provides information to thousands of visitors and locals on area services, events, downtown opportunities and directions. They answer numerous questions including information about the public property ordinances in the downtown. Staff keeps a watchful eye on the area surrounding the kiosk and works cooperatively with police and downtown outreach workers.

9.11 8
Attachment No. 2
Downtown Management Corporation
Estimated Operating Budget FY 2025 and Proposed Budget for FY 2026 FY 25 Estimated
Actual FY 26 Proposed
Revenue
Assessment 437,741.80 454,310.35
City Contribution 26,500.00 26,500.00
Interest 45 50
Beginning Reserve 751.04 2,610.84
Total Revenue 465,037.84 483,471.18
Expenses
Ambassador Program 349,000.00 358,423.00
Insurance 1,497.00 1,500.00
Tax Preparation 1,680.00 1,700.00
Taxes 100.00 100.00
Downtown-Beach Shuttle 10,000.00 10,000.00
Pet Waste Bag Dispensers 150.00 150.00
Biohazard Removal 100,000.00 90,000.00
Total Expenses 462,427.00 461,873.00
Net Income (Loss) 1,859.80 24,209.02
Accumulated Reserve 2,610.84 21,598.18

9.12 RESOLUTION NO. NS-XX,XXX

RESOLUTION OF INTENTION OF THE CITY COUNCIL OF THE CITY OF SANTA CRUZ

TO LEVY COOPERATIVE RETAIL MANAGEMENT BUSINESS REAL PROPERTY IMPROVEMENT DISTRICT ASSESSMENTS FOR FISCAL YEAR 2026
WHEREAS, in accordance with California Streets & Highways Code §36533, the Downtown Management Corporation has prepared an annual report/plan to the City of Santa Cruz for the Fiscal Year (FY) 2025/26 pertaining to the Cooperative Retail Management (“CRM”) Business Real Property Improvement District (“District”); and WHEREAS, pursuant to California Streets & Highways Code §36533, the City Council has heretofore considered that annual report/plan and by motion approved the report/plan; and WHEREAS, Santa Cruz Municipal Code §5.06.030 provides for the levy of semiannual assessments within the CRM District pursuant to the formula set forth in this resolution.

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

1. The City Council hereby declares its intention to levy and collect, on a semiannual basis, assessments within the District for the FY 2026.

2. The City Council hereby declares and finds that the proposed assessment is based upon a proportionate degree of special benefit derived by each owner and tenant of business real property in the CRM District.

3. The FY 2025/26 Annual Report/Plan filed with the City Clerk by the Downtown Management Corporation of Santa Cruz contains a full and detailed description of the improvements and activities provided to the CRM District in the FY 2025. In addition, the report specifically identifies the boundaries of the CRM District and the proposed assessments to be levied upon the businesses within the CRM District for the FY 2026.

4. The assessments for FY 2026 are based upon the linear foot frontage, lot size and building size of the real property used for commercial or business purposes within the CRM District. Rental residential property is assessed at the same rate per building square foot. The annual Consumer Price Index adjustment is 2.7% (February 2024 to February 2025), resulting in an increase of the per square foot rate as follows. For property fronting Pacific Avenue, the rates will increase from $7.2082 per linear foot on Pacific Avenue, $5.4062 per linear foot for all other frontage, $.0831 per lot square foot and $.0735 per building square foot to $7.4028 per linear foot on Pacific Avenue, $5.5521 per linear foot for all other frontage, $.0853 per lot square foot, and $.0755 per building square foot.

For property fronting side streets and alleys, the rates will increase from $5.4062 per linear foot, $.0623 per lot square foot, and $.0551 per building square foot to $5.5521 per linear foot, $.0640 per lot square foot, and $.0566 per building square foot. Frontage on side streets and alleys include properties located: on Cedar and Front Streets and located on Soquel Avenue; on Center Street between Cedar and Mission, Mission, Locust, Cooper, Church, Walnut, Lincoln, Cathcart,

9.13 RESOLUTION NO. NS-XX,XXX
Elm and Maple Streets; Plaza, Locust, Commerce, Elm and Birch Lanes; in Pearl Alley; in Lincoln-Cathcart and Pacific-Front alley ways.

5. The Santa Cruz City Council will hold a public hearing in the City Council Chambers, located at City Hall, 809 Center Street, Santa Cruz, on Tuesday, June 10, 2025, to receive any oral or written protests or endorsements pertaining to the proposed levy of assessments, the amount of the proposed assessments, the proposed improvements and activities to be funded with the revenues derived from the proposed levy of assessments, and/or the proposed boundaries of the District. The form and manner of protest shall conform to the requirements set forth therefore in California Streets & Highways Code §36524 and §36525 and legislation enacted pursuant to Proposition 218.

6. The City Clerk is hereby directed to give notice of the public hearing referenced in paragraph 5 by publishing this Resolution of Intention once in a newspaper of general circulation in the City of Santa Cruz once, at least seven days prior to the public hearing.

PASSED AND ADOPTED this 27th day of May, 2025 by the following vote:

AYES:

NOES:

ABSENT:

DISQUALIFIED:

APPROVED: ______________________________
Fred Keeley, Mayor
ATTEST: _________________________________
Bonnie Bush, City Clerk Administrator

9.14 City of Santa Cruz

BUDGET ADJUSTMENT REQUEST
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Appropriate funds from Cafe Extension Fees to help fund biohazard removal service. 123-51-80-1504-44501 Fees-cafe/retail extensions 16,500 16,500
123-51-80-1504-54990 Miscellaneous supplies and services 16,500 16,500
0 Jennifer
Shelton
Digitally signed by
Jennifer Shelton
Date: 2025.05.08
11:17:08 -07'00'
Bonnie
Lipscomb
Digitally signed by
Bonnie Lipscomb
Date: 2025.05.08
15:05:52 -07'00'
Emily
Burton
Digitally signed
by Emily Burton
Date: 2025.05.09
10:38:50 -07'00'
Elizabet
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Digitally signed by
Elizabeth Cabell
Date: 2025.05.09
10:41:32 -07'00' 9.15
City Council

AGENDA REPORT
DATE: 05/08/2025
AGENDA OF: 05/27/2025
DEPARTMENT: Economic Development and Housing
SUBJECT: Downtown Association: Parking and Business Improvement Area Assessments for FY 2026 (EDH)
LOCATION: District 4
RECOMMENDATION: Motion to:
1) Approve the annual report and work plan prepared by the Downtown Association for FY 2026; and
2) Adopt the Resolution of Intention to levy a Downtown Association Parking and Business Improvement Assessment for FY 2026 and schedule a public hearing for June 10, 2025 on the levy of the assessments for FY 2026.

BACKGROUND: In accordance with State law, the Downtown Association (DTA) is required to submit an annual plan for each year in which assessments are to be levied in the Downtown Parking and Business Improvement Area. The attached plan, prepared by the DTA, fulfills the requirement for Fiscal Year (FY) 2026 and is being submitted for Council approval. The City acts as a fiscal agent on behalf of the Downtown Association, but is not a member of the Downtown Association, nor is the City involved in the preparation of the plan.

DISCUSSION: The business improvement assessment formula allows for an annual Consumer Price Index (CPI) adjustment in the rate. The annual CPI adjustment as of February 2025 is

2.7%; therefore, the rate per square foot will increase from $0.55 to $0.56. The plan also outlines the DTA’s FY 2026 planned activities, budgeted expenses and revenues, and contributions from sources other than the assessments levied. The DTA will continue to provide clean, safe, and welcoming services through the Ambassador and Information Kiosk programs. The DTA will also continue to support business owners and our local economy through Downtown marketing and community events, advocacy, and membership business services.

The DTA’s plan has been approved by the DTA Board for FY 2026. Following Council approval of the plan, a resolution declaring the intention of the City to levy and collect the assessments within the Parking and Business Improvement Area must be adopted. The resolution shall also set a public hearing to be held on June 10, 2025. Notice of the public hearing will be given by publishing the Resolution of Intention in a newspaper of general circulation in the City once, at

10.1 least seven days prior to the public hearing. At the public hearing, written and oral protests, if any, may be made in accordance with State Street and Highways Code Sections 36524 and 36525. Prior to the public hearing, protests may be submitted to the City Clerk’s Office.

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

HEALTH IN ALL POLICIES (HiAP): The proposed Council action and services provided by the DTA through the annual workplan align with the HiAP goals of equity, community connectedness, and increased economic vitality for the downtown business improvement area.

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: There is no fiscal impact to the City. Revenues collected from the assessment are turned over to the Downtown Association to be spent for promotional activities in the Parking and Business Improvement Area.

Prepared By:

Rebecca Unitt
Economic Development
Manager
Submitted By:

Bonnie Lipscomb
Deputy City Manager
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. ANNUAL REPORT AND WORKPLAN.PDF

2. RESOLUTION.DOCX

3. BUDGET ADJUSTMENT.PDF

10.2 Downtown Association of Santa Cruz
FY 2025-2026 Work Plan
Approved by the Board of Directors on May 6, 2025
Introduction
The Downtown Association of Santa Cruz is a 501c(6) member benefit organization established to promote the Downtown business district. The organization’s mission is to provide effective leadership to create, promote and sustain downtown as a unique and economically viable business, entertainment, social and cultural center.

The Downtown Association operates a merchant-based Business Improvement District (B.I.D.) funded by a special assessment on those operating businesses in the district. The organization is governed by a volunteer board of directors, elected from, and representing, the assessed members of the district.

Staff includes an Executive Director, Brand Director, and part-time Membership Champion.

Through our contractor, BlockbyBlock, the Downtown Association also has a full-time Operations Director, and staffs the Downtown Ambassador Program along with the Downtown Information Kiosk. Additionally, the work of the association is augmented by interns, social media partners, volunteers and contractors from time to time as projects warrant.

This work plan has been developed by the Board and staff to serve as a roadmap to guide the activities and resource allocation of the Downtown Association for fiscal year 2025-2026.

Year In Review
Last year was the first full year that the Downtown Association was able to provide services utilizing Business Improvement Assessment fees approved by Downtown business owners midway through fiscal year 2023-24, which now fund the following four core areas:

10.3 1. Clean, Safe & Welcoming Programs: In addition to receiving support from Business Improvement Assessments, the Downtown Ambassador and Information Kiosk programs are supported by significant funding from the Downtown Management Corporation. The Downtown Association contracts with BlockbyBlock, which runs Ambassador operations for 150+ downtowns across the country, to provide these services. Our Downtown Ambassadors run a hospitality program assisting visitors, and also take charge of daily litter, remove graffiti, report public maintenance issues to the city, and connect people in need to social services, in addition to connecting businesses to resources, as evidenced by the impressive statistics below. The association maintains close working relationships with the Santa Cruz Police Department and Encompass Services Downtown Outreach Workers, as well as the City Manager and Office of Economic Development, who provide critical support to our Ambassadors and downtown’s safety and cleanliness.

2. Marketing: The Downtown Association of Santa Cruz actively markets Downtown Santa Cruz as the primary shopping district for Santa Cruz County through outreach to local residents and to visitors from Monterey, San Benito and Santa Clara communities. In order to reach a diverse and engaged group of visitors to the downtown district, the Downtown Association uses a multi-faceted approach to marketing that utilizes digital marketing (including social media boasting over 28,000 instagram followers, influencer

10.4 partnerships, website and digital newsletters “e-news”) as well as many in-person community events increasing foot traffic to downtown streets and businesses.

With the help of an engaged Board of Directors, the Marketing Committee also churns out new promotion ideas each year to bring more people to Downtown Santa Cruz, including recently launching Harvest Festival with the Santa Cruz Community Farmer’s Market to draw hundreds of people Downtown in the fall, and amping up the full calendar of holiday activities that encourage local shopping for the holidays including bringing back Free Holiday Movies in partnership with the Del Mar Theater.

3. Member Networking & Support: The association works to keep downtown business owners, managers and employees connected and informed primarily through our weekly Business News which is distributed via email and Facebook and read by hundreds of Downtown business owners and staff each week. The association publicizes its Board of Directors’ committee meetings to encourage members’ volunteer engagement. The Downtown Association also hosts quarterly business mixers for its members. It leads an annual public safety meeting with SCPD, Downtown Outreach Workers and Downtown Ambassadors. The association also represents “now hiring” Downtown businesses at area job fairs, and promotes available positions during our Downtown Day welcoming UCSC students in the fall, and during our Teen Job Training workshop in the spring, which results in dozens of hires for downtown businesses.

4. Advocacy: The Downtown Association maintains collaborative working relationships with organizations across Santa Cruz county, particularly with those that also serve the association’s members, such as the Santa Cruz County Chamber of Commerce, Santa Cruz County Business Council, Visit Santa Cruz, Workforce Santa Cruz County and the Small Business Development Center of Santa Cruz. Advocacy activities last year included updating the mural at the wharf roundabout, directing millions of tourists to eat, shop and play Downtown with refreshed, inclusive imagery from the original artists (pictured.) In the year ahead, the association looks forward to supporting the completion of the city’s Downtown Play & Paseo Project.

10.5 2025-2026 PROGRAMS

DOWNTOWN AMBASSADOR PROGRAM
The Mission of the Downtown Ambassadors is to be the best part of people’s day in Downtown Santa Cruz.

The Downtown Ambassador program is largely funded by the Downtown Association’s partnership with the Downtown Management Corporation.

Since 2018 the Ambassador program has been a vital element of downtown management, and of businesses’ and visitors’ downtown experience.

Providing a welcoming presence in the downtown is the core function of the program, but the impact and benefits reach well beyond. In addition to serving visitors by providing local information, recommendations and directions, the Ambassadors serve as a liaison with city agencies, contractors, service providers and others involved in Downtown management, maintenance, social services, and public safety.

Regular coordination with the Public Works downtown maintenance team, the sanitation department, waste removal services, and property owners adds a level of efficiency and accountability in addressing the ongoing and growing cleaning and maintenance needs of downtown’s built environment. The Ambassador team communicates both through the City of Santa Cruz’ Community Request for Service Portal (CRSP), as well as by selectively escalating issues of pressing concern via direct communications with relevant city departments.

Communication with the Santa Cruz Police Department, County Mental Health liaisons, Downtown Outreach workers, and with members of our community looking for, or in need of services, extends the valuable impact and reach of the program.

Ongoing engagement with Downtown Businesses and with district residents also does a lot to build community in the Downtown.

BRAND MANAGEMENT AND DISTRICT MARKETING
Promoting Downtown has long been a core purpose of the Downtown Association. The Downtown Association of Santa Cruz manages the Downtown Santa Cruz brand and promotes the businesses, events and elements that support its visibility and appeal, including:
● Continual alignment of social media and digital marketing ● Brand management across all promotions, events and communications ● Ongoing encouragement of brand alignment with our members and collaborators The brand is conveyed through all of the association’s marketing efforts, designed to bring people to the district and enhance the experience of everyone spending time in Downtown Santa Cruz.

10.6 SOCIAL MEDIA & DIGITAL MARKETING
All of the association's promotional efforts direct visitors to downtown businesses and to the Downtown
Association’s website, which remains current with
Downtown events, activities and a complete and
expanded directory of businesses. Our social media
presence has over 45,000 followers, and continues to
gain popularity on Instagram, Facebook and Twitter. The social platforms have provided an outstanding way to
reach Downtown Santa Cruz fans with the many specific
events, activities and business promotions in the district.

DOWNTOWNSANTACRUZ.COM
The Downtown Santa Cruz website is a cornerstone of
the association’s marketing. Utilizing a platform designed for downtowns across the country, the site has enhanced SEO, and provides a wealth of information and resources for visitors, locals and for the Downtown Santa Cruz
business community. An online events calendar lists daily activities, concerts, plays, festivals, book readings,
classes and everything else happening for the public in the district. A comprehensive business directory helps
direct people to the food, shops or services they’re hoping to find. The site also provides valuable information to help the association’s business members find the resources they need to be successful in Downtown Santa Cruz.

DIGITAL E-NEWS
Our e-newsletter, This Week Downtown, with a reach of over 5,000 residents and fans, provides a weekly highlight of what’s happening downtown, from the big ticket events, to the more obscure, plus information about new businesses, deals, and interesting happenings.

BUSINESS DIRECTORIES
Each of our member businesses is listed on our online DowntownSantaCruz.com Business Directory. We also publish and distribute 65,000 copies of a popular fold-out illustrated paper Map and Directory with listings of all the retail, restaurants and services in the district, and maintain three freestanding business directory wayfinding signs on Pacific Avenue.

DOWNTOWN PROMOTIONS
Throughout the year, the Downtown Association typically promotes special and themed activities, building on successful events and inventing new activations. Popular community events include Kids Day, Wine Walk, Monthly Sidewalk Sales and of course winter Holiday traditions.

10.7 Downtown Sidewalk Sales
On the last weekend of each month, from March through Black Friday Weekend, the retail shops spill out onto the sidewalk for great month-end sales.

Where’s Waldo
Where’s Waldo is a great local summer activity that brings Waldo seekers around Downtown and into stores on a month-long scavenger hunt. The Promotion culminates with a special event at Bookshop Santa Cruz with prizes and Waldo himself.

Ice Cream Month
Each year we host a coloring contest and invite Santa Cruz artists of all ages to color their own exciting ice cream treat. Winners are selected in a variety of categories with a grand prize of ice cream for a year at all the favorite Downtown ice cream spots.

Back to School
Our back to school promotions celebrate students from kindergarten to postgraduates. Our targeted promotions for UCSC slugs and Cabrillo students aim to introduce our area’s newer residents to Downtown shops, restaurants, events and attractions.

Downtown Trick or Treat
One of our community’s favorite Santa Cruz traditions is Downtown Trick or Treat. Once again the Downtown Association will partner with our business members and the Santa Cruz Police Department to invite the community downtown for a fun, safe trick-or-treating good time.

Downtown Wine Walks
These Popular events are a great opportunity to showcase the local Appalachia and introduce wine lovers to new retail spots Downtown, and bring them back to visit their favorites. Presented twice a year, in November and in May, the Wine Walk is a great opportunity to bring visitors from around the Bay Area to spend a great afternoon in Downtown Santa Cruz.

Harvest Festival
This family-friendly event hosted in partnership with the Santa Cruz Community Farmer’s Market brings together a wide variety of local performers, artisans, food vendors, farm stands, classic carnival games and crafts. The Harvest Festival is a celebration of community; a chance to come together and appreciate the simple joys of the season.

Downtown Holiday Parade
The Official Kick Off to the Holiday Season
happens on the first Saturday in December as the
Downtown Holiday Parade marches, rolls, pedals,
dances and sings up Pacific Avenue, bringing out
thousands of locals, and amazing cross section of
our community, and of course, the big finale of the
Santa Cruz High School Cardinal Regiment Band
followed by the man of the Hour atop a shiny, red,
antique Santa Cruz Fire Engine.

10.8 Free Gift Wrapping
To show how much we appreciate the choice to shop local and support Downtown businesses, the Downtown Association of Santa Cruz partners with the Santa Cruz Elk's Lodge to offer free gift wrapping on select days during December.

Reindeer Roundup
The holidays provide many opportunities for Downtown promotion. Similar to our Summer Where’s Waldo Scavenger hunt, the Reindeer Roundup brings families into stores throughout the month of December, helping Santa find his team.

Golden Envelope with Surprise Elf!
The Downtown Association rewards downtown holiday shoppers who are supporting local businesses during Black Friday weekend, including on Small Business Saturday. Sharing the fun on social media, our holiday elf surprises shoppers making purchases at participating retailers with Golden Envelopes filled with surprise gift cards.

Santa on Pacific Avenue
Those who have visited Santa on Pacific Avenue for a photo op know that the experience is not matched anywhere. These relaxed visits with our very special ambassador to the North Pole have reached a level of legend among local kids, parents and grandparents.

Free Holiday Movies
The Downtown Association partners with Del Mar Theater to offer free family holiday movies on weekends in December, also raising donations for Second Harvest Food Bank.

Kids Day Downtown
Dozens of children’s community organizations
provide free activities during this fun street fair.

Kids Day welcomes thousands of local families to
Downtown for entertainment and great specials in
our Downtown shops and restaurants.

Partner Events
In addition to producing events in-house, the
Downtown Association sponsors and supports
the production of a number of events throughout
the year that promote the brand of Downtown
Santa Cruz. Included in these events are Earth
Day, First Friday Santa Cruz, Dance Week Santa
Cruz, Santa Cruz Juneteenth, the Santa Cruz
Pride Parade & Festival, and more. Our new
Street Festival Subsidy program, which provides financial and organizing assistance, also boosts foot traffic on side streets off Pacific Avenue, with community-building block parties like So Fresh Clothing’s Fitted & Kicks, Penny Ice Creamery’s Hoops & Scoops, Yoso Wellness Spa & the Annex’s Waves of Wellness, and Redwood Record’s Cedar Street Fair.

10.9 DOWNTOWN DOLLARS
Our Downtown Dollars program keeps tens of thousands of dollars in Downtown every year.

Accepted at 85+ businesses in the district, Downtown Dollars make great gifts and are available for purchase at Bookshop Santa Cruz, Pacific Cookie Company, the Downtown Information Kiosk, and online. Downtown Dollar gifts encourage local spending.

DOWNTOWN INFORMATION KIOSK
For over a decade, the visitor information center in the kiosk located at 1130K2 Pacific Avenue, at the intersection of Soquel Avenue in front of New Leaf Community Market, has been a Santa Cruz institution. The location provides valuable information and resources to visitors and locals, while promoting businesses and activities throughout the district. The cost of operating the kiosk has been offset by donated rent from the City of Santa Cruz Economic Development Department.

DOWNTOWN ADVOCACY
The Downtown Association maintains current knowledge of organizations and agencies that support doing business Downtown, and connects downtown businesses to resources. Downtown Association staff and Board members also serve as informed representatives of the downtown business community, on relevant issues, to the City Council, city management and other organizations interested in contributing to the business climate or community events in Downtown Santa Cruz. The Downtown Association’s ability to effectively represent the business interests downtown is dependent upon strong relationships with the many communities who use and support Downtown, as well as listening to our business members.

MEMBERSHIP EVENTS
One of the greatest assets of Downtown is our
business community leaders, who bring their
passions and talents downtown and open their doors
to the public, defining the common experiences of
Downtown Santa Cruz. The Downtown Association
recognizes this asset, and fosters the connection of
its members, and their ability to support each other,
by hosting networking events designed to bring
members together and enhance the sense of
community. The Association also offers grand
opening ribbon cuttings to new business, and hosts
informational meetings to educate and engage the
business community on current issues.

10.10 EDUCATIONAL WORKSHOPS
The Downtown Association hosts workshops and partners with other business service agencies to provide information, tools and knowledge that will help our members succeed.

Other Special Initiatives
Cognizant of the numerous large, mixed-use retail and residential developments underway in our district, the Downtown Association of Santa Cruz seeks to have an ongoing voice in the character of downtown. The Downtown Association supports a 10-minute walking city, uses complimentary versus competitive to existing businesses, family-friendly attractions and experiences, as well as privately-managed public outdoor spaces, which are widely desired by downtown’s patrons.

Creating play spaces for children downtown is also an ongoing Board priority.

Conclusion
The Downtown Association of Santa Cruz is a pillar in promoting, managing, and advocating for our city’s core while supporting the community of neighborhood business leaders who make Downtown the attractive, unique, fun and lively place it is today. The Downtown Association is also an active participant in making our district cleaner, safer, and more welcoming, and in building the economic vibrancy of the Santa Cruz community.

10.11 RESOLUTION NO. NSRESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA CRUZ TO LEVY

DOWNTOWN ASSOCIATION PARKING AND BUSINESS IMPROVEMENT
ASSESSMENTS FOR FISCAL YEAR 2026
WHEREAS, in accordance with California Streets & Highways Code §36533, the Downtown Association of Santa Cruz has prepared a report to the City of Santa Cruz for Fiscal Year (FY) 2026 pertaining to the Parking and Business Improvement Area assessments for the Parking and Business Improvement Area; and
WHEREAS, pursuant to California Streets & Highways Code §36533, the City Council has heretofore considered that annual report and by motion approved the report; and WHEREAS, Santa Cruz Municipal Code §5.05.030 requires semi-annual assessments to be imposed within the Business Improvement Area pursuant to a formula set forth in Municipal Code §5.05.040.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA CRUZ AS FOLLOWS:

1. The City Council hereby declares its intention to levy and collect, on a semiannual basis, assessments within the Parking & Business Improvement Area for FY 2026.

2. The proposed activities authorized by Santa Cruz Municipal Code Chapter 5.05 are described in the Downtown Association of Santa Cruz report.

3. The annual report of the Downtown Association of Santa Cruz is on file with the City Clerk.

4. The proposed assessments will be calculated under the formula for assessment found in Santa Cruz Municipal Code §5.05.040. This formula is based on the square footage of benefitted businesses, the type of business, and the zone in which it is found. The annual Consumer Price Index adjustment is 2.7% (February 2024 to February 2025), resulting in an increase of the per square foot rate from $0.55 to $0.56.

5. The Parking and Business Improvement Area is generally bounded on the East by the San Lorenzo River, on the West by Cedar Street, on the South by Laurel Street and on the North by River, North Pacific, and Water Streets. The precise boundaries of Zones 1 and 2 are shown on diagrams contained in Santa Cruz Municipal Code Chapter 5.05.

6. The Santa Cruz City Council will hold a public hearing in the City Council Chambers on Tuesday, June 10, 2025, to receive any oral or written protests or endorsements to the regularity or sufficiency of the Business Improvement Assessment. If protests complying with Streets and Highways Code §36524 and §36525 are received from the owners of businesses which will pay fifty percent or more of the total assessment, the procedure will be terminated and will

10.12 RESOLUTION NO. NS2
not be reconsidered until one full year has elapsed. Protests may be made at the public hearing or any time prior to the City Clerk’s Office.

7. The City Clerk is directed to give notice of the public hearing to consider the levy of business improvement assessments for FY 2026 by publishing this Resolution of Intention in a newspaper of general circulation in the City once, at least seven days prior to the public hearing.

PASSED AND ADOPTED this 27th day of May, 2025, by the following vote:

AYES:

NOES:

ABSENT:

DISQUALIFIED:

APPROVED: ____________________________
Fred Keeley, Mayor
ATTEST: ____________________________
Bonnie Bush, City Clerk Administrator

10.13 FY 2024/25 FY 2025/26

REVENUE
Ambassador Services (DMC Contract) $337,000 $358,423
Business Improvement Assessment (BIA) $420,000 $380,000 Events & Sponsorships $40,000 $45,000
Advertising & Other $55,000 $65,000
Total Revenue $852,000 $848,423

EXPENSES
Staffing
Ambassador Program & Kiosk Operations $378,412 $393,542 District Marketing, Advocacy & Business Support $276,591 $284,889 Total Staff Expense $655,003 $678,431
District Marketing
Promotional Expenses $45,000 $40,000
Activation / Event Expenses $55,000 $50,000
Marketing Total $100,000 $90,000
Beautification $25,000 $15,000
Overhead $45,000 $50,000
Other $25,000 $12,500
Total Expense $850,003 $845,931
NET $1,997 $2,492
Downtown Association of Santa Cruz
Workplan Budget

10.14 City Council

AGENDA REPORT
DATE: 05/08/2025
AGENDA OF: 05/27/2025
DEPARTMENT: Human Resources
SUBJECT: Award a contract to Gallagher Benefits Services, Inc. for 2025 Compensation Study (HR)
LOCATION: Citywide
RECOMMENDATION: Motion to award a contract to Gallagher Benefit Services, Inc. in the amount of $231,900 and to authorize the City Manager to execute an agreement in a form approved by the City Attorney. The Human Resources Director is authorized to execute amendments within the approved budget.

BACKGROUND: In 2021, the City of Santa Cruz completed a comprehensive Compensation Study to evaluate the competitiveness of its pay structures compared to 12 surveyed public sector agencies. Compensation studies inform labor negotiations, classification reviews, and compensation adjustments. In the 2021 study, several classifications remained unmapped or marked as having “insufficient data” due to the unique nature of services the City provides— particularly in areas such as parking operations, specialized utility roles, and parks and recreation functions not commonly found in peer agencies.

To better understand the limitations of the 2021 benchmarking and mapping approach and to ensure alignment with workforce expectations, the Human Resources (HR) Department led a Culture as a Competitive Advantage initiative in 2024. This effort engaged employees, supervisors and managers across departments to gather insights on the City’s compensation philosophy and concerns about how benchmark data was applied and mapping methodology. A consistent theme that emerged was the need for a more inclusive and comprehensive methodology—one that better captures the full scope of City classifications and recognizes the distinct service delivery model of Santa Cruz.

A critical component of the compensation study is the mapping of City classifications to appropriate benchmark positions in the labor market. From a human resources and compliance standpoint, this process must be grounded in the actual job duties, minimum qualifications (MQs), and knowledge, skills, and abilities (KSAs) defined in the official job descriptions—not solely on desires or perceptions of job value. Accurate mapping ensures that compensation decisions are legally defensible, aligned with professional standards, and consistent with labor relations obligations. While HR greatly values this input and is incorporating staff insights into the 2025 study approach, it is equally important to emphasize that final benchmarking and

11.1 mapping decisions must reflect HR’s technical expertise and responsibility to uphold fairness, consistency, and compliance with compensation best practices.

DISCUSSION: HR is launching the 2025 Compensation Study to build on the foundation of the 2021 study while addressing these identified gaps. The new study will provide updated market data, revisit benchmark agency selection, and explore alternative strategies—such as creative work schedules and non-monetary benefits—to support employee recruitment and retention in a high-cost region. This study will also develop methodologies to evaluate classifications previously excluded due to insufficient data, ensuring a more equitable and data-informed compensation framework.

Compensation studies serve as vital tools for public agencies, offering insights that guide:
 Fiscal sustainability and long-term workforce planning;  Equity in pay and access across job families and demographic groups;  Strategic labor negotiations;
 Competitive positioning to attract and retain skilled employees; and  Alignment of compensation with organizational culture and values.

On June 10, 2024, staff issued a Request for Proposal (RFP) HR-0142 seeking qualified vendors for the 2025 Compensation Study. The RFP was posted on the City’s website and OpenGov Procurement. Proposals were due by 4:00 PM on July 18, 2024. An evaluation committee made up of subject matter experts for adherence to RFP requirements, vendor background, qualifications, team qualifications expertise and experience reviewed ten proposals.

Having met and conferred in good faith with Service Employees International, HR recommends the award of this project to Gallagher Benefit Services, LLC (Gallagher). The HR Department is recommending approval of Gallagher to conduct a comprehensive citywide compensation study.

The purpose of this project is to evaluate the City’s current compensation structure—including salaries, benefits, and non-monetary incentives—against comparable public sector agencies, building on findings from the City’s 2021 Compensation Study. The study will focus on market competitiveness, improved benchmarking and mapping, and innovative compensation strategies, particularly important in addressing the high cost of living in the region.

The selected vendor will:
 Conduct data collection and analysis across selected City classifications, including those previously marked as having insufficient market data.
 Benchmark total compensation (salary, benefits, incentives) and recommend adjustments to ensure equity and competitiveness.
 Analyze benefits and explore alternative non-monetary strategies (e.g., four-day workweeks, telecommuting, wellness programs).
 Engage stakeholders through meetings and focus groups to inform findings and recommendations.
 Provide detailed reports with data-driven recommendations to align compensation practices with best practices, labor law compliance, and the City’s organizational goals.

11.2 Finally, decisions related to scope will not be implemented until the required meet and confer process is completed in accordance with City obligations under the Meyer-Milias-Brown Act and the Citys labor contracts or Memorandum of Understanding.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: Not applicable.

HEALTH IN ALL POLICIES (HiAP): The City of Santa Cruz is committed to advancing equity, sustainability, and employee wellbeing through its Health in All Policies (HiAP) framework. A comprehensive and equitable compensation system directly contributes to these goals by supporting financial security, workforce stability, and organizational trust.

Compensation plays a key role in health outcomes by influencing access to housing, healthcare, nutrition, and overall quality of life, especially in high-cost regions like Santa Cruz. This study supports HiAP by:
 Addressing the cost-of-living pressures that affect physical and mental wellbeing.  Exploring innovative, non-monetary compensation approaches such as flexible work schedules and wellness benefits that support work-life balance and employee health.  Informing policies that help the City attract and retain a diverse and healthy workforce capable of delivering essential services to the community.

By aligning compensation strategies with health and equity outcomes, the City continues to embed HiAP principles into its organizational practices and long-term workforce planning.

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: Funds are available in the HR department operating budget through the City’s cost allocation plan and funded by the general and enterprise funds FY 2025 and FY 2026 budget for the 2025 Compensation Study.

Prepared and Submitted By:

Sara De Leon
HR Director
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

None.

11.3 City of Santa Cruz Professional Services Agreement for Comprehensive Compensation Study May 2025 (Form Rev.05/25 ) Page 1
Professional Services Agreement With
GALLAGHER BENEFIT SERVICES, INC.

For COMPREHENSIVE COMPENSATION STUDY
THIS PROFESSIONAL SERVICES AGREEMENT (“Agreement”) for professional services is made by and between the City of Santa Cruz (“City”) and Gallagher Benefit Services, Inc. (“Consultant”) (each is referred to individually as a “Party” and collectively, as the “Parties”) as of May 1, 2025 (the “Effective Date”).

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

SECTION 1: SCOPE OF WORK
Consultant will furnish services as defined and described in the Scope of Work, included in the Consultant’s Proposal for Comprehensive Compensation Study dated January 6, 2025, attached hereto as Exhibit A and incorporated herein.

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

Consultant shall not undertake any work beyond the Scope of Work set forth in Consultant’s Proposal for Comprehensive Compensation Study dated January 6, 2025 in Exhibit A unless such additional work is approved in advance and in writing by City. City shall compensate Consultant for such additional work on the same basis as provided for in Section 4.

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

Consultant shall meet with Sara De Leon, Director of the Human Resources Department, hereinafter called "Director", or other designated and authorized City personnel, and/or third parties as necessary, on all matters connected with carrying out Consultant’s services described in Exhibit A. Such meetings shall be held at the request of either Party. Consultant shall obtain City’s review and acceptance of completed work monthly, or at other intervals as may be mutually agreed upon during the term of this Agreement. Review or acceptance of Consultant’s work by City or its designee shall not relieve Consultant from responsibility for errors and omissions in Consultant’s work.

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

The Director may authorize a City staff person to serve as their representative with respect to this Agreement.

Consultant’s work shall be reviewed at such intervals as may be mutually agreed upon between the Parties. The City will be the sole judge of acceptable work, provided that such approval will not be unreasonably withheld or Docusign Envelope ID: C81708C6-9982-406F-948E-DC14CBFF7EE4

11.4 City of Santa Cruz Professional Services Agreement for Comprehensive Compensation Study May 2025 (Form Rev.05/25 ) Page 2
delayed. If the work is not acceptable, City will inform Consultant of the changes or revisions necessary to secure acceptance.

SECTION 4: FEES AND PAYMENT
For services actually performed, the City will compensate Consultant at the rates set forth in the Fee Schedule detailed in Consultant’s Proposal for Comprehensive Compensation Study dated January 6, 2025 in Exhibit A and in accordance with the terms set forth therein. Payment for Consultant's services in carrying out the entire Scope of Work shall be made within the budget limit, or limits shown, upon Exhibit A. Markups shall not be charged for any approved sub-consultants or subcontractors.

Consultant agrees that the payments to Consultant specified in this Section 4 will constitute full and complete compensation for all obligations assumed by Consultant under this Agreement. Such payments shall be considered the full compensation for all personnel, materials, supplies, and equipment used by Consultant in the Scope of Work. Where conflicts regarding compensation may occur, the provisions of this section shall apply.

Variations from the budget for each task which are justified by statements indicating personnel time expended and submittal of a revised budget are only allowed with prior City approval; however, in no event shall the total fee charged for the Scope of Work set forth in Exhibit A exceed the budget of $231,900 without advance written City authorization in the form of an amendment or change order.

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

All invoices shall contain the following affidavit signed by Consultant (if individual) or by an authorized representative of Consultant (if Consultant is an entity):
"I [or as an authorized representative of Consultant] hereby certify that the charge of (Insert invoice amount) as summarized above and shown in detail on the attachments is in accordance with the terms of the Agreement by and between the City of Santa Cruz and (Insert Party Name) dated (Insert Agreement Date), and has not been previously paid." This Agreement is contingent upon the appropriation of sufficient funding by the City for the Scope of Work covered by this Agreement. If funding is reduced or deleted for the Scope of Work covered by this Agreement, the City has the option without penalty or liability to either terminate this Agreement or to offer an amendment to this Agreement indicating any reduced amount.

SECTION 5: TRAVEL REIMBURSEMENT POLICY
The City shall not be responsible for any travel, meal, or lodging reimbursements to Consultant and/or Consultant’s employees unless otherwise specified in the Scope of Work. The total fees and costs of Consultant’s services shall not exceed the amount described in the Fee Schedule.

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

Docusign Envelope ID: C81708C6-9982-406F-948E-DC14CBFF7EE4

11.5 City of Santa Cruz Professional Services Agreement for Comprehensive Compensation Study May 2025 (Form Rev.05/25 ) Page 3
SECTION 7: TERM AND SCHEDULE
The term of this Agreement shall commence on the Effective Date of this Agreement and terminate on June 30, 2026, or upon completion of the Scope of Work, whichever is later.

Consultant shall begin the Scope of Work as specified in a written authorization (e.g., Notice to Proceed) to perform services issued by the City. The written authorization to perform work shall not be issued until after this Agreement has been approved and executed by the City.

The Work Schedule for completion of the work shall be as shown upon Exhibit A. In the event there are major changes to the Scope of Work, the schedule for completion as stated in Exhibit A may be adjusted with the City’s approval to allow Consultant a reasonable period of time within which to complete any additional work which may be required as a result of the changes to the Scope of Work.

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

The City reserves the right to obtain the item(s) and/or services covered by this Agreement from another source during any on-going suspension of service due to the circumstances outlined above.

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

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

The City may, at its option, allow Consultant to cure its failure to perform within 10 business days (or longer period authorized in writing by the City) from the date of the City’s termination notice. The termination shall be become effective if Consultant has not cured within the specified time period to the City’s satisfaction.

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

Consultant must provide a written notice of termination to the City not less than 60 calendar days of the effective termination date.

Upon notice of termination by either the City or Consultant, the Consultant will immediately act to not incur any additional obligations, costs or expenses, except as may be reasonably necessary to terminate its activities. The City’s only obligation to the Consultant will be just and equitable payment for services authorized by, and received to the satisfaction of, the City up to and including the effective date of termination less any amounts withheld. All finished or unfinished work or documents procured or produced under the Agreement will become property of the City upon the termination date. In the event of Consultant’s failure to perform pursuant to the Agreement, the City reserves the right to obtain services elsewhere and Consultant will be liable for the difference between the prices set forth in the terminated Agreement and the actual cost to the City. Termination of the Agreement pursuant to this paragraph shall not relieve the Consultant of any liability to City for additional costs, expenses, or damages sustained by City due to failure of the Consultant to perform pursuant to the Agreement. City may withhold any payments to Docusign Envelope ID: C81708C6-9982-406F-948E-DC14CBFF7EE4

11.6 City of Santa Cruz Professional Services Agreement for Comprehensive Compensation Study May 2025 (Form Rev.05/25 ) Page 4
Consultant for the purpose of set-off until such time as the exact amount of damages due City from Consultant is determined. After the effective date of termination, Consultant will have no further claims against the City under the Agreement. No other compensation will be payable for anticipated profit on unperformed services.

SECTION 9: INSURANCE
Prior to the beginning of and throughout the duration of the Agreement, Consultant will maintain and comply with the Insurance Requirements as set forth in Exhibit B. Consultant will insure the City against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder. The insurance coverages required shall not in any way limit the liability of the Consultant.

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

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

Except for the indemnification obligations and except where caused by the gross negligence or willful misconduct of Consultant, its officers, employees, agents, or anyone acting on Consultant’s behalf, Consultant’s liability to the City, and any other party for any losses, injury or damages to persons or properties or work performed arising out of or in connection with this Agreement and for any other claim, whether the claim arises in contract, tort, statute or otherwise, shall be limited to the amount of the total fees due to Consultant from City, for the particular services giving rise to the claim.

EXCEPT FOR THE INDEMNIFICATION OBLIGATIONS AND EXCEPT WHERE CAUSED BY THE

GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF CONSULTANT, ITS OFFICERS, EMPLOYEES, AGENTS OR ANYONE ACTING ON CONSULTANT’S BEHALF, CONSULTANT SHALL NOT BE

LIABLE FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL, OR PUNITIVE DAMAGES, INCLUDING

LOST PROFITS, SUSTAINED OR INCURRED IN CONNECTION WITH THIS AGREEMENT, WHETHER OR NOT SUCH DAMAGES ARE FORESEEABLE.

SECTION 11: EQUAL EMPLOYMENT OPPORTUNITY/NON-DISCRIMINATION POLICIES City’s policies promote a working environment free from abusive conduct, discrimination, harassment, and retaliation; and require equal opportunity in employment for all regardless of race, religious creed (including religious dress and grooming practices), color, national origin (including language use restrictions), ancestry, religion, disability (mental and physical), medical condition, sex, gender (including gender identity and gender expression), physical characteristics, marital status, age, sexual orientation, genetic information (including family health history and genetic test results), organizational affiliation, and military or veteran status, or any other consideration made unlawful by local, State or Federal law. City requires Consultant to comply with all applicable Federal and State and local equal employment opportunity laws and regulations, and Consultant is responsible for ensuring that effective policies and procedures concerning the prevention of abusive conduct, discrimination, Docusign Envelope ID: C81708C6-9982-406F-948E-DC14CBFF7EE4

11.7 City of Santa Cruz Professional Services Agreement for Comprehensive Compensation Study May 2025 (Form Rev.05/25 ) Page 5
harassment, and retaliation exist in Consultant’s business organization. The City’s current Equal Employment Opportunity and Non-Discrimination policies to which this Section applies may be viewed at http://www.codepublishing.com/CA/SantaCruz/?SantaCruz09/SantaCruz0983.html and http://www.cityofsantacruz.com/home/showdocument?id=59192.

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

SECTION 13: AMENDMENTS
This Agreement may not be amended in any respect except by way of a written instrument which expressly references and identifies this particular Agreement, which expressly states that its purpose is to amend this particular Agreement, and which is duly executed by the City and Consultant. Consultant acknowledges that no such amendment shall be effective until approved and authorized by the City’s authorized representative. No representative of the City is authorized to obligate the City to pay the cost or value of services beyond the scope of services set forth in Exhibit A.

Such authority is retained solely by the City Manager, Director, or their designee. Unless expressly authorized by the City Manager or Director, Consultant’s compensation shall be limited to that set forth in Section 4.

SECTION 14: MISCELLANEOUS PROVISIONS

1. Project Manager/Key Staff. Director reserves the right to evaluate and confer with Consultant regarding the project manager or other key staff assigned by Consultant to perform the work under this Agreement. Consultant shall replace the project manager or key staff upon Director’srequest due to Director’s concern about their performance.

Otherwise, no change in assignment by the Consultant may occur without prior written approval of the City.

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

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

In the event that Consultant or any employee, agent, or subcontractor of Consultant providing services under this Agreement is determined by a court of competent jurisdiction or the California Public Employees Retirement System (PERS) to be eligible for enrollment in PERS as an employee of City, Consultant shall indemnify, defend, and hold harmless City for the payment of any employee and/or employer contributions for PERS benefits on behalf of Consultant or its employees, agents, or subcontractors, as well as for the payment of any penalties and interest on such contributions, which would otherwise be the responsibility of City.

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

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11.8 City of Santa Cruz Professional Services Agreement for Comprehensive Compensation Study May 2025 (Form Rev.05/25 ) Page 6

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

Consultant shall be as fully responsible to the City for the negligent acts and omissions of its contractors and subcontractors or subconsultants, and of persons either directly or indirectly employed by them, or acting on Consultant’s behalf pursuant to this Agreement, as it is for the acts and omissions of persons directly employed by Consultant. Consultant’s obligation to pay itssubconsultantsis an independent obligation from the City’s obligation to make payments to the Consultant.

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

7. Conflicts of Interest. Consultant agrees to comply with conflict of interest lawsin performing the work and services under this Agreement. Consultant covenants (on behalf of Consultant and Consultant’s employees, agents, representatives, and subcontractors) that there is no direct or indirect interest, financial or otherwise, which would conflict in any manner or degree with the performance of services required under this Agreement. Consultant acknowledges and agrees to comply with applicable provisions of conflict of interest law and regulations, including the CA Political Reform Act, (Gov’t. Code §§1090, 87100), Levine Act (Gov’t. Code §84308), and the City’s conflict of interest code. Consultant will immediately advise City if Consultant learns of a conflicting financial interest of Consultant during the term of this Agreement.

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

Consultant acknowledges and agrees that the work product shall be considered a work made for hire within the meaning of the patent and copyright laws of the United States; and Consultant agrees that all copyrights which arise from creation of project-related documents and materials pursuant to this Agreement shall be vested in the City and Consultant waives and relinquishes all claims to copyright or other intellectual property rights in favor of City. Any work product related to this Agreement shall be confidential, not to be used by the Consultant on other projects or disclosed to any third party, except by agreement in writing by the City, or except as otherwise provided herein.

Consultant’s final deliverables shall comply with Section 508 (29 U.S.C. Section 794d) accessibility requirements, as applicable. Notwithstanding any other provision of this Agreement to the contrary, Consultant shall retain the rights in any pre-existing standard drawing details, designs, specifications, databases, computer software, proprietary information, documents, templates, and any other property owned by Consultant on the date of this Agreement or developed outside of this Agreement.

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

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11.9 City of Santa Cruz Professional Services Agreement for Comprehensive Compensation Study May 2025 (Form Rev.05/25 ) Page 7
b. To the fullest extent permitted by law, Consultant agrees to indemnify, defend, and hold harmless City, its officials, officers, employees, and agents, from any and all claims, demands, actions, liabilities, damages, or expenses (including reasonable attorneys’ fees and costs) arising out of a claim of infringement, actual or alleged, direct or contributory, of any Intellectual Property rights in any way related to Consultant’s performance under this Agreement or to the City’s authorized intended or actual use of Consultant’s product or service under this Agreement. This provision shall survive termination or expiration of this Agreement. c. If any product or service becomes, or in the Consultant’s opinion is likely to become, the subject of a claim of infringement, the Consultant shall, at its sole expense: (i) provide the City the right to continue using the product or service; or (ii) replace or modify the product or service so that it becomes non-infringing; or (iii) if none of the foregoing alternatives are possible even after Consultant’s commercially reasonable efforts, in addition to other available legal remedies, City will have the right to return the product or service and receive a full or partial refund of an amount equal to the value of the returned product or service, less the unpaid portion of the purchase price and any other amounts, which may be due to the Consultant. City shall have the right to retrieve its data and proprietary information at no charge prior to any return of the product or termination of service.

10. Confidentiality.
a. Consultant shall not acquire any ownership interest in data and information (“City Data”) received by Consultant from City, which shall remain the property of the City. Certain information may be considered confidential (“Confidential Information”). Confidential Information shall mean all information or proprietary materials (in every form and media) not generally known to the public and which has been or is hereafter disclosed or made available directly or indirectly to Consultant through any means of communication, either verbally or in writing even if it has not been designated in writing as “Confidential” to Consultant in connection with this Agreement. Unless otherwise required by law, Consultantshall not, without City’s written permission, use or disclose City Data and/or Confidential Information other than in the performance of the obligations under this Agreement. As between Consultant and City, all City Confidential Information shall remain the property of the City. Consultant shall not acquire ownership interest in the City’s Confidential Information. b. Consultant shall be responsible for ensuring and maintaining the security and confidentiality of City Data and Confidential Information, protect against any anticipated threats or hazards to the security or integrity of City Data and Confidential Information, protect against unauthorized access to or use of City Data and Confidential Information that could result in substantial harm or inconvenience to City or any end users; and ensure the proper return and/or disposal of City Data and Confidential Information upon termination of this Agreement with notice to the City.
c. Consultant shall take appropriate action to address any incident of unauthorized access to City Data and Confidential Information, including addressing and/or remedying the issue that resulted in such unauthorized access, notifying City as soon as possible of any incident of unauthorized access to City Data and Confidential Information, or any other breach in Consultant’s security that materially affects City or end users; and be responsible for ensuring compliance by its officers, employees, agents, and subcontractors with the confidentiality provisions hereof. Should confidential and/or legally protected City Data be divulged to unauthorized third parties, Consultant shall comply with all applicable federal and state laws and regulations, including but not limited to California Civil Code sections 1798.29 and 1798.82 at Consultant’s sole expense.

Consultant shall not charge City for any expenses associated with Consultant’s compliance with these obligations.
d. Consultant shall defend, indemnify and hold harmless City, its officials, officers, employees and agents against any claim, liability, loss, injury or damage (including attorneys’ fee and costs) arising out of, or in connection with, the unauthorized use, access, and/or disclosure of City Data and/or Confidential Information by Docusign Envelope ID: C81708C6-9982-406F-948E-DC14CBFF7EE4

11.10 City of Santa Cruz Professional Services Agreement for Comprehensive Compensation Study May 2025 (Form Rev.05/25 ) Page 8
Consultant and/or its agents, employees or subcontractors, excepting only loss, injury or damage caused by the sole negligence or willful misconduct of the City. This provision shall survive the termination or expiration of this Agreement.

11. Consultant's Records/Audits. Consultant shall maintain accurate accounting records and other written documentation pertaining to the costs incurred relating to this Agreement for examination and audit by the City, State, or federal government, as applicable, in compliance with Gov. Code §8546.7 for a contract in excess of $10,000, or in compliance with other applicable federal laws (e.g. 48 CFR 31) or regulations for a period of three (3) years from: the date of the final City payment for Consultant's services, or from the date of final disposition of real property or equipment acquired with federal funds, or date of the termination of this Agreement, whichever is later. If Consultant engages a subcontractor to perform work related to this Agreement with a cost of $10,000 or more over a 12-month period, such subcontract shall contain these same requirements. This provision shall survive the termination of this Agreement.

12. California Public Records Act. City is a public agency subject to the disclosure requirements of the California Public Records Act (“CPRA”). If Consultant’s proprietary information is contained in documents or information submitted to City, and Consultant claims that such information falls within one or more CPRA exemptions, Consultant must clearly mark such information “Confidential and Proprietary,” and identify the specific lines containing the information. In the event of a request for such information, City will make best efforts to provide notice to Consultant prior to such disclosure. If Consultant contends that any documents are exempt from the CPRA and wishes to prevent disclosure, it is required to obtain a protective order, injunctive relief, or other appropriate remedy from a court of law in Santa Cruz County before the City is required to respond to the CPRA request. If Consultant fails to obtain such remedy within the time the City is required to respond to the CPRA request, City may disclose the requested information without any liability. Consultant further agrees that it shall defend, indemnify and hold City harmless against any claim, action or litigation (including but not limited to all judgments, costs, and attorney’s fees) that may result from denial by City of a CPRA request for information arising from any representation, or any action (or inaction), by the Consultant.

13. Compliance with Laws. All activities of Consultant, its employees, subcontractors and/or agents will be carried out in compliance with all applicable federal, state, and local laws and regulations. Consultant further agrees to comply with the covenant of good faith and fair dealing and other provisions of Santa Cruz Municipal Ordinance chapter 3.09, or otherwise Consultant may be subject to penalties including being declared an irresponsible contractor.

14. Licensure. Consultant agrees that Consultant, its subcontractors and/or agents (if any) has/have complied 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:
• Consultant, its subcontractor(s) and agent(s) or its business is/are located in the City of Santa Cruz; • Will perform actual work in the City of Santa Cruz for 6 or more days annually; or • Will use company vehicles to deliver within the City of Santa Cruz for 6 or more days annually.

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

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

16. Prevailing Wages for Public Work. To the extent that the work or services to be performed under this Agreement may be considered a “public work” (construction, alteration, demolition, or repair work) pursuant and subject Docusign Envelope ID: C81708C6-9982-406F-948E-DC14CBFF7EE4

11.11 City of Santa Cruz Professional Services Agreement for Comprehensive Compensation Study May 2025 (Form Rev.05/25 ) Page 9
to Labor Code section 1720 et seq., Consultant (and any subconsultant performing the work or services) shall conform to any and all prevailing wage requirements applicable to such work/and or services under this Agreement. Consultant (and any subconsultant) shall adhere to the prevailing wage determinations made by the Director of Industrial Relations (DIR) pursuant to California Labor Code Division 2, Part 7, Chapter 1, Article 2, applicable to the work, if any. All workers employed in the execution of a public works contract (as such term is defined in California Labor Code section 1720 et seq. and section 1782(d)(1)) must be paid not less than the specified prevailing wage rates for the type of work performed. (CA Labor Code sections 1720, 1774 and 1782.)
To the extent applicable to the scope of work and services under this Agreement, Consultant agrees to be bound by the state prevailing wage requirements, including, but not limited to, the following:
a. If a worker is paid less than the applicable prevailing wage rate owed for a calendar day (or any portion thereof), Consultant shall pay the worker the difference between the prevailing wage rate and the amount actually paid for each calendar day (or portion thereof) for which the worker(s) was paid less than the prevailing wage rate, as specified in Labor Code section 1775; b. Consultant shall maintain and make available payroll and worker records in accordance with Labor Code sections 1776 and 1812;
c. If Consultant employs (and/or is legally required to employ) apprentices in performing the work and/or services under this Agreement, Consultant shall ensure compliance with Labor Code section 1777.5; d. Consultant is aware of the limitations imposed on overtime work by Labor Code sections 1810 et seq. and shall be responsible for any penalties levied in accordance with Labor Code section 1813 for failing to pay required overtime wages;
e. Consultant shall post a copy of the applicable wage rates at each jobsite at a location readily available to its workers.
f. Any failure of Consultant and/or its subconsultant to comply with the above requirements relating to a public work project shall constitute a breach of this Agreement that excuses the City’s performance of this Agreement at the City’s sole and absolute option and shall be at the sole risk of Consultant. Consultant on behalf of itself and any subconsultant, agree to indemnify, defend and hold harmless the City and its officials, officers, employees, and agents from and against any and all claims, liabilities, losses, costs, expenses, attorney’s fees, damages, expenses, fines, financial consequences, interest, and penalties, of any kind or nature, arising from or relating to any failure (or alleged failure) of the Consultant and any subconsultant to pay prevailing wages or to otherwise comply with the requirements of prevailing wage law relating to a public work.
g. Consultant acknowledges that it and/or any subconsultant may not engage in the performance of any contract for public work unless currently registered with the DIR and qualified to perform public work pursuant to Labor Code section 1725.5 [with limited exceptions from this requirement for bid purposes only under Labor Code section 1771.1(a)].

17. Storm Water Requirements. To the extent applicable to the Scope of Work under this Agreement, Consultant, Consultant’s employees, subcontractors, and agents are required to abide by the applicable City of Santa Cruz Storm Water Best Management Practices (BMPs) for the duration of the work. The City’s mandatory Storm Water BMPs, which are listed according to the type of work, operations, or business, are located on the City website at: https://www.cityofsantacruz.com/government/city-departments/public-works/stormwater/bestmanagement-practices Docusign Envelope ID: C81708C6-9982-406F-948E-DC14CBFF7EE4

11.12 City of Santa Cruz Professional Services Agreement for Comprehensive Compensation Study May 2025 (Form Rev.05/25 ) Page 10

18. Dispute Resolution. The Parties agree to attempt in good faith to resolve through negotiation any dispute, claim or controversy arising out of or relating to this Agreement. Either Party may initiate negotiations by providing written notice in letter form to the other Party, setting forth the subject of the dispute and the relief requested.

Promptly upon such notification, the Parties shall meet at a mutually agreeable time and place in order to exchange relevant information and perspective, and to attempt to resolve the dispute. In the event that no resolution is achieved, and if, but only if, the parties mutually agree, then prior to pursuing formal legal action, the parties shall make a good faith effort to resolve the dispute by non-binding mediation or negotiations between representatives with decision-making power, who, to the extent possible, shall not have had substantive involvement in the matters of the dispute. To the extent that the dispute involves or relates to a public works project, the Parties agree to attempt to resolve the dispute by complying with the claims process as set forth in Public Contract Code sections 9204(e), 20104-20104.6, but without waiving the requirements of the California Tort Claims Act, Gov’t Code section 810 et seq. unless otherwise agreed to by the Parties.

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

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

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

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

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

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

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

26. Notices. If either Party shall desire or is required to give notice to the other, such notice shall be given in writing, via email, and concurrently delivered by: (a) personal delivery, in which case notice is effective upon delivery; (b) overnight courier (i.e., Federal Express) with charges prepaid or charged to the sender’s account, in which case notice is effective when delivered; (c) priority U.S. Mail, in which case notice shall be deemed delivered Docusign Envelope ID: C81708C6-9982-406F-948E-DC14CBFF7EE4

11.13 City of Santa Cruz Professional Services Agreement for Comprehensive Compensation Study May 2025 (Form Rev.05/25 ) Page 11
on the second business day after the deposit thereof with the U.S. Postal Service. Notices shall be addressed to recipient as follows:

To CITY:

Human Resources Department
Sara De Leon
809 Center Street, Room 6
Santa Cruz, CA 95060
[email protected]
831-420-5042
To CONSULTANT:

Gallagher Benefit Services, Inc.

Georg S. Krammer
2121 N. California Boulevard, Suite 350
Walnut Creek, CA 94596
[email protected]
510-274-2760
The Parties must provide notice of any changes to the above information in writing at least ten (10) business days before the change is effective.

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

28. Warranty of Authority. The signatories to this Agreement warrant and represent that each is authorized to execute this Agreement and that their respective signatures serve to legally obligate their respective representatives, agents, successors and assigns to comply with the provisions of this Agreement. [SIGNATURES ON FOLLOWING PAGE]
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11.14 City of Santa Cruz Professional Services Agreement for Comprehensive Compensation Study May 2025 (Form Rev.05/25 ) Page 12
Approved As To Form:

By: _____________________________ Date: __5/14/2025________________ Office of the City Attorney

CITY OF SANTA CRUZ
By: _____________________________ Date: __________________ Matt Huffaker
City Manager
Date: __________________
Title: Managing Director
CONSULTANT - GALLAGHER BENEFIT SERVICES, INC.

By: _____________________________
Georg S. Krammer
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5/19/2025

11.15 City of Santa Cruz Professional Services Agreement for Comprehensive Compensation Study May 2025 (Form Rev.05/25 ) Page 13
EXHIBIT A: SCOPE OF WORK, FEE SCHEDULE, WORK SCHEDULE
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11.16 City of Santa Cruz

COMPENSATION STUDY
PROPOSAL RFP# HR-0142
July 18, 2024
Gallagher, formerly known as Koff & Associates
GEORG S. KRAMMER
Managing Director, Compensation and Rewards Consulting
2835 Seventh Street
Berkeley, CA 94710
[email protected]
Tel: 510.658.5633
Fax: 510.652.5633
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11.17 ©2023 Arthur J. Gallagher & Co. All rights reserved. 2 July 18, 2024
Ms. Sara DeLeon
Human Resources Director
809 Center Street
Santa Cruz, CA 95060
Dear Ms. DeLeon:

Thank you for the opportunity to respond to your Request for Proposals for a Total Compensation Study for the City of Santa Cruz (“City”). We are most interested in assisting the City with this important study and feel that we are uniquely qualified to provide value to your organization based on our experience working with other cities, counties, special districts, joint-powers associations, and other public agencies, and of course the City itself over the course of several years, including the Citywide compensation study in 2021.

Gallagher, formerly known as Koff & Associates, (“Gallagher/K&A”) is an experienced Human Resources and Recruitment Services firm providing human resources services to cities, counties, special districts, courts, educational institutions, and other public agencies for over 40 years. Our team has achieved a reputation for working successfully with management, employees, employee representation, and governing bodies. We believe in a high level of dialogue and input from study stakeholders and our proposal speaks to that level of effort.

Our team’s extra effort has resulted in close to 100% implementation of all our classification and compensation studies.

Gallagher/K&A ensures that each of our projects is given the appropriate resources and attention, resulting in a high level of quality control, excellent communication between clients and our office, commitment to meeting timelines and budgets, and a consistently high-caliber work product.

As a Managing Director of Gallagher/K&A, I would assume the role of Project Director and be responsible for the successful completion of project. I can be reached at our Berkeley address and the phone number listed on the cover page. My email is [email protected].

This proposal will remain valid for at least 90 days from the date of submittal. Please call if you have any questions or wish additional information. We look forward to the opportunity to provide professional services to the City of Santa Cruz.

Sincerely,
Georg S. Krammer
Managing Director, Compensation and Rewards Consulting
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11.18 ©2023 Arthur J. Gallagher & Co. All rights reserved. 4 Contents
Firm Background Information............................................................................................... 5 Firm Qualifications, Expertise, and Experience ................................................................... 6 Team Qualifications, Expertise, and Experience ...............................................................10 Technical Approach and Work Plan...................................................................................12 References.........................................................................................................................22 Contractual Considerations................................................................................................25 Signature Page ..................................................................................................................28 Appendix ............................................................................................................................29 - Project Team Biographies
Cost proposal provided under separate cover
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11.19 ©2023 Arthur J. Gallagher & Co. All rights reserved. 5 Firm Background Information
Gallagher, formerly known as Koff & Associates, (“Gallagher/K&A”) is a Type C Corporation and a full-spectrum, public-sector human resources and recruitment services firm; Gallagher/K&A has been assisting cities, counties, special districts, joint powers associations, courts, educational institutions, and other public agencies with their human resources needs for over 40 years and we have offices all throughout California, the Western Region, as well as across the nation.

Services for the City will be provided from our Berkeley address at 2835 Seventh Street, Berkeley CA 94710 and several satellite office across the country. Our phone number is (510)658-5633. We have 205 consultants located in 14 offices across the United States and Canada.

There have not been any defaults in the past five years in our performance of an agreement or project which has led the other party to terminate the agreement.

Litigation
Arthur J. Gallagher and its affiliates may be involved in multiple court actions at any given time proportionate for a broker of its size and profile. It is not feasible to efficiently provide detailed information on all lawsuits against AJG as requested, or necessary in evaluating the organization since this is the nature of the insurance brokerage business.

AJG also considers these matters confidential. Any material items are noted in reports to the SEC, which are available under Investor Relations; SEC Filings at investor.ajg.com.

Link to investor relations - https://investor.ajg.com/home/default.aspx Arthur J. Gallagher & Company, is a publicly held corporation, and confirms strong revenue every year. We not filed for bankruptcy in the history of Firm. To view the past year’s annual reports, please visit https://investor.ajg.com/financial-reports.

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11.20 ©2023 Arthur J. Gallagher & Co. All rights reserved. 6 Firm Qualifications, Expertise, and Experience
Gallagher, formerly known as Koff & Associates, (“Gallagher/K&A”) is a full-spectrum, public-sector human resources and recruitment services firm; Gallagher/K&A has been assisting cities, counties, special districts, joint powers associations, courts, educational institutions, and other public agencies with their human resources needs for over 40 years and we have offices all throughout California, the Western Region, as well as across the nation.

We are familiar with the various public sector organizational structures, agency missions, operational and budgetary requirements, and staffing expectations. We have extensive experience working in both union and non-union environments, working with City Councils, County Commissions, Boards of Directors, Boards of Supervisors, Boards of Trustees, Boards of Education, Merit Boards, and Joint Power Authorities.

The firm’s areas of focus are classification and compensation studies (approximately 70% of our workload); executive search and staff recruitments; and organizational development/assessment studies.

Without exception, all our classification and compensation studies have successfully met all our intended commitments; communications were successful with employees, supervisors, management, and union representatives; and we were able to assist each agency in successfully implementing our recommendations. All studies were brought to completion within stipulated time limits and proposed budgets.

Our long list of clients (please see https://koffassociates.com/our-clients/) is indicative of our firm’s reputation as being a quality organization that can be relied on for producing comprehensive, sound, and cost-effective recommendations and solutions. Gallagher/K&A has a reputation for being “hands on” with the ability and expertise to implement its ideas and recommendations through completion in both union and non-union environments.

Gallagher/K&A relies on our stellar reputation and the recommendations and referrals of past clients to attract new clients. Our work speaks for itself and our primary goal is to provide professional and technical consulting assistance with integrity, honesty and a commitment to excellence. We are very proud of the fact that in working with hundreds of public agency clients and completing hundreds of classification and/or compensation and other types of studies, we have only had a handful of formal appeals in our entire history.

Especially when it comes to compensation, we know we are dealing with people’s livelihoods and we take that very seriously. We are human resources professionals by trade and at heart and always keep the human aspect at the forefront of our problem solving methodologies.

Our guiding principle of assisting public agencies for the greater good of their people and the communities they serve has been the backbone of our culture of integrity and ethics. Our values of being public-spirited, resourceful, curious, and courageous help us succeed in being very client- centric, fully invested in our work and finding the best solutions for our clients, and in applying a synergistic approach to all of our projects.

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11.21 ©2023 Arthur J. Gallagher & Co. All rights reserved. 7 About the Larger Gallagher
Value Proposition: The ability to deliver
comprehensively structured human capital solutions to
clients is Gallagher’s signature in the marketplace. At Gallagher, we want to know what makes your
organization unique. We listen intently to learn about
your culture and priorities and delve deeply into all the details that matter when balancing human capital
needs with financial sustainability. This single-minded focus on excellence — characterized by innovation and
creativity — is the driving force behind every Gallagher engagement.

Company History: Arthur J. Gallagher & Co. opened
its doors for business in 1927 and is still “growing
strong” because of a practiced ability to help clients
think ahead. Founded by its namesake who was
previously the leading producer for Chicago’s largest
insurance brokerage, Gallagher is now one of the
world’s largest human capital, insurance brokerage
and risk management services firms. Headquartered in
Rolling Meadows, IL, we have operations in 33
countries, and extend our client-service capabilities to more than 90 countries through a global network of
correspondent brokers and consultants.

Since 1961, we’ve been helping clients overcome
business barriers and create new opportunities to costeffectively attract, retain and productively engage the best performers in their field. Gallagher started trading on the NYSE under the symbol AJG in 1984.

Company Culture and Philosophy: The ideals,
principles and values embodied by the founder whose
name still appears on our door are part of our corporate DNA.

Gallagher’s approach to business, cultivated through
three generations of family leadership, has always
centered on creating relationship value as true partners to our clients.

Gallagher’s interactions with you will be straightforward and candid. By earning the trust of our clients, we’ve sustained a reputation for ethics and a commitment to transparency that continue to contribute to our growth. In fact, Gallagher was the first insurance broker named to the Ethisphere® Institute’s annual list of the World’s Most Ethical Companies in 2012 — and has earned this recognition for twelve consecutive years, through 2023. This is a tremendous achievement: annually, less than 150 companies based in 24 countries and representing 57 industry categories received this honor. Gallagher is the only insurance broker to have ever been recognized (World’s Most Ethical Release).

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11.22 ©2023 Arthur J. Gallagher & Co. All rights reserved. 8 The high standards of conduct we’ve set for our external professional relationships are the same rules we follow internally. The Gallagher Way, a one-page document that outlines our 25 shared values, was written in 1984 but is just as culturally relevant today. It speaks to the value of relationships and several tenets set guidelines for ethical behavior. Gallagher combines innovative solutions, thoughtful advice, and honest business practices to minimize risk and help fuel your success.

Human Resource and Compensation Consulting Practice: Gallagher’s Human Resources & Compensation Consulting practice, of which the former K&A team is now a part, empowers clients to attract talent, manage staff, develop leaders, and reward success—leveraging the power of Gallagher and wisdom of experience to produce an engaged and productive workforce. Tapping into expertise that spans the spectrum of human resources at every level, we can assemble flexible compensation and consulting solutions that improve efficiency and fiscal sustainability.

Our practice is a combination of some of the most respected names in human resources and compensation consulting. Bringing together experts from compensation, performance, search, survey, and leadership fields, Gallagher empowers clients with tools for the entire lifecycle of employment management.

Our services include:
• Classification and Compensation
• Employee Engagement
• Executive Compensation
• Organizational Development
• HR Management
• Search and Interim Placement
• Custom Salary and Benefit Surveys
• Governance Consulting
We have not had any defaults in the past five years in our performance of an agreement or project which has led the other party to terminate the agreement.

Litigation
Arthur J. Gallagher and its affiliates may be involved in multiple court actions at any given time proportionate for a broker of its size and profile. It is not feasible to efficiently provide detailed information on all lawsuits against AJG as requested, or necessary in evaluating the organization since this is the nature of the insurance brokerage business.

AJG also considers these matters confidential. Any material items are noted in reports to the SEC, which are available under Investor Relations; SEC Filings at investor.ajg.com.

Link to investor relations - https://investor.ajg.com/home/default.aspx Arthur J. Gallagher & Company, is a publicly held corporation, and confirms strong revenue every year. We not filed for bankruptcy in the history of Firm. To view the past year’s annual reports, please visit https://investor.ajg.com/financial-reports.

Prior work for the City of Santa Cruz
Gallagher, under the former Koff & Associates firm name, has provided the following services for the City during the past three years:
• Total compensation study: In 2021, Gallagher/K&A (K&A at that time) completed a total compensation study of 84 benchmark classifications, representing the City’s occupational Docusign Envelope ID: C81708C6-9982-406F-948E-DC14CBFF7EE4

11.23 ©2023 Arthur J. Gallagher & Co. All rights reserved. 9 families. The study included a review of base salary for the benchmark classifications, as well as a survey of benefits offerings. The study was led by Katie Kaneko, Managing Director (the Consultant that performed the survey is no longer with our firm). • Classification and compensation study of the Sustainability & Climate Action Manager position/classification: In May 2023, our firm submitted a classification study report for the Sustainability & Climate Action Manager classification. K & A’s recommended retitling the classification to Sustainability and Resiliency Manager. The study was conducted by Sarah Nunes, Consultant, and managed by Katie Kaneko, Managing Director. • Classification Studies – Various: In March 2024, the City contracted with Gallagher/K&A to conduct various classification studies for Fire EMT classification, GIS, and a Project Manager series as Priority #1 projects, with Priority #2 and #3 projects to follow. Priority #1 projects have all been concluded. The studies are being conducted by Kelly Barns, Associate Consultant, and managed by Georg Krammer, Managing Director.

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11.24 ©2023 Arthur J. Gallagher & Co. All rights reserved. 10 Team Qualifications, Expertise, and Experience
Our team consists of 37 employees as shown below in our organizational chart.

All members of our team have worked on multiple comprehensive compensation studies and are well acquainted with the wide array of public sector organizational structures, compensation structures, classification plans, as well as the challenges and issues that arise when conducting studies such as this one for the City.

KEY PERSONNEL
Our project team will be led by Co-Project Directors Georg Krammer (Managing Director) and Maggie Williams-Dalgart (Project Manager). They will coordinate all of Gallagher/K&A’s efforts, attend all meetings with the City, and be responsible for all work products and deliverables.

CONSULTANTS
Lindsay Christopher (Senior Consultant), Monica Garrison-Reusch (Consultant), Arlene Gibbs (Associate Consultant), Janna Dinkelspiel (Associate Consultant), Nicole Wynia-Eide (Consultant), Lauren Grant (Associate Consultant), Kelly Barns (Associate Consultant), Cindy Harary (Consultant) and Renate Tiner (Consultant) will conduct classification analysis and interviews with employees and management, compensation data collection and analysis, internal job analysis, and develop recommendations and implementation strategies.

WORKLOAD
We currently have a team of 25 HR consultants and five administrative support staff – resources that we are able to pool based on each project’s needs, to execute projects and to meet clients’ needs and expectations. Each time we are selected as the successful bidder on a project, we strategize to determine project timelines, deliverable deadlines, and the Docusign Envelope ID: C81708C6-9982-406F-948E-DC14CBFF7EE4

11.25 ©2023 Arthur J. Gallagher & Co. All rights reserved. 11 resources that are required to produce the deliverables as promised. We are poised to accommodate the City’s classification and compensation study and plan to devote the necessary resources for the successful execution of the project.

Biographies of the specific staff who will be assigned to this study can be found in the Appendix.

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11.26 ©2023 Arthur J. Gallagher & Co. All rights reserved. 12 Technical Approach and Work Plan
The City requests assistance to conduct a comprehensive compensation analysis of the current compensation structures within the City of Santa Cruz. The study will evaluate the competitiveness of employee pay scales, benefits, and other compensatory and noncompensatory elements against similar classifications in comparable municipalities/entities and evaluate the current market standing compared to the 2021 Compensation Study's benchmarked and mapped classifications.

Per the Q&A we understand the City is open to a benchmarking approach versus surveying all classifications. The City has also indicated a desire to ensure full mapping of all classifications in the system and best practices to meet that goal. In the last study, 84 classifications were benchmarked. Other classifications were mapped to the benchmarked classifications based on similar scope and responsibility, typical duties, requisite knowledge, skills, and abilities, supervision received and exercised, internal relationships and other relevant characteristics of the classification.

The City employs approximately 900 regular employees and 250 temporary employees in 326 job classifications that are currently organized in fifteen (15) job families or categories including: administration, economic development, engineering, finance, fire, human resources, information technology, library, parking, parks and recreation, planning and development, police, refuse, public works, and water.

The City includes eight (8) recognized employee groups and one (1) unrepresented group, including:

Employee Group Number of Classifications
Firefighters 7
Fire Management Association 2
Police Officer’s Association 5
Police Management Association 2
Service – Regular 139
Service – Temporary 21
Supervisory Employees 44
Mid-Management Employees 91
Unrepresented 15
The goal of the study will be to review the City’s compensation structure for the studied classifications and to conduct a compensation market survey (salaries plus benefits) using a set of appropriate comparator agencies. The identification of comparator agencies, benchmark classifications, and benefits to be collected is an iterative process that includes all stakeholders. We have found this open discussion philosophy to be critical to our success for organizational buy-in. Once the external data development is completed, we will make specific recommendations for internal equity for non-benchmarked classifications and classifications without a large enough market sampling.

The compensation study will contain specific recommendations regarding the integration of all study classifications into the City’s compensation structure, with the goal of developing a clearly designed, internally equitable format that is flexible for career opportunity and future growth. Our study will make recommendations regarding a salary structure that takes the Docusign Envelope ID: C81708C6-9982-406F-948E-DC14CBFF7EE4

11.27 ©2023 Arthur J. Gallagher & Co. All rights reserved. 13 City’s compensation preferences into consideration as well as the appropriate placement of each classification on the City’s salary schedule and within the respective bargaining unit.

The study includes a significant number of meetings with the Study Project Team, Human Resources, employees, union representation, and the City Council, as desired. We have expertise in labor/management relations and understand the importance of active participation by all stakeholders to ensure a successful outcome. The meetings and “stakeholder touchpoints” that we recommend ensure understanding of the project parameters, enhance accurate intake and output of information, and create a collaborative and interactive approach resulting in greater buy-in for study recommendations. This interactive approach has resulted in almost 100% implementation success of Gallagher/K&A’s studies.

The majority of our clients are unionized and our larger city, county, and special district clients typically have multiple unions. Due to the multitude of stakeholder groups who are affected by any compensation study Gallagher/K&A conducts, our team understands the importance of accurate and validated data that withstands any scrutiny, effective and ongoing communication throughout each effort, and collaboration with the various stakeholder groups to ensure organizational buy-in to our findings and recommendations. We have developed a unique methodology of stakeholder “touchpoints” and collaboration that has made us highly successful and effective and has earned our team respect, agreement, and understanding from all stakeholders. In addition, we adjust and customize our methodology based on each individual client’s unique needs and circumstances.

We also recognize that both the City and union representatives have obligations to employees and members to ensure that any study is conducted in a fair and equitable manner. Our project work plans are designed for transparency and we strongly encourage dialog with all stakeholders on study deliverables so they in turn can express their concerns; we all have a shared goal of ensuring the process followed is fair and equitable.

This intense and comprehensive stakeholder engagement and our transparent study processes are also a mechanism of quality control. The fact that our information, data, and recommendations have to be able to withstand utmost scrutiny by diverse stakeholders requires an in-depth multi-step quality control process for deliverables. This involves Gallagher/K&A team member validation of compensation data, Gallagher/K&A Project Manager review of all compensation analyses, recommendations and deliverables, and finally Gallagher/K&A Principal (Project Director) review of deliverables before submittal to the client.

STUDY OBJECTIVES
Compensation Objectives:
• To make recommendations regarding a list of appropriate, logical and defensible comparator agencies, benchmark classifications, and benefits to be collected prior to beginning the compensation portion of the study;
• To collect accurate salary and benefit data from the approved group of comparator agencies and to ensure that the information is analyzed in a manner that is clear and comprehensible to the Study Project Team, Human Resources, management, employees, union representation, and the Council;
• To carefully analyze the scope and level of duties and responsibilities, requirements for successful work performance, and other factors for survey classes, according to generally accepted compensation practices;
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11.28 ©2023 Arthur J. Gallagher & Co. All rights reserved. 14 • To review the City’s compensation structure and practices and develop compensation recommendations, that will assist the City in recruiting, motivating, and retaining competent staff;
• To develop solutions that address pay equity issues, both internally and externally, and create a market adjustment implementation strategy supporting the City’s goals, objectives, and budget considerations;
• To design a compensation system that addresses structural (job classification) pay equity issues by applying internal equity principals including compensating substantially similar work equitably, mitigating compaction, and establishing appropriate differentials between classification levels in a series.
• To create a comprehensive final report summarizing the compensation study approach and methodology, analytical tools, findings, and recommended compensation structure; and;
• To ensure sufficient documentation and training throughout the study, on methods used to determine appropriate salary ranges, methods for logical progression within the salary scale for each classification, and other practices, so that our recommendations can be implemented and maintained in a competent and fair manner.

Overall Objectives:
• To review and understand all current documentation, rules, regulations, policies, budgets, procedures, class descriptions, organizational charts, memoranda of understanding, personnel policies, wage and salary schedules, and related information so that our recommendations can be operationally incorporated with a minimum of disruption; • To conduct project start-up meetings with study stakeholders to discuss any specific concerns with respect to the development of compensation recommendations; finalize study plans and timetables; conduct orientation sessions with management, union leadership, and staff in order to educate and explain the scope of the study and describe what are and are not reasonable study expectations and goals; • To work collaboratively and effectively with the City and its stakeholders while at the same time maintaining control and objectivity in the conduct of the study; and • To provide effective ongoing communications throughout the duration of the project and continued support after implementation.

METHODOLOGY / WORKPLAN / DELIVERABLES
This section of the proposal identifies the actual work plan. We believe that our detailed explanation of methodology and work tasks clearly distinguishes our approach and comprehensiveness.

TOTAL COMPENSATION STUDY:

Milestone A: Project Kickoff Meetings, Initial Documentation Review, and Determination of Survey Elements
This phase includes identifying the City’s Study Project Team (Human Resources, management, employee representation, etc.), contract administrator, and reporting relationships. Our team of Project Managers and Consultants will conduct a briefing session with the Study Project Team to explain process and methodology; create the specific work plan and work schedule; identify subsequent tasks to be accomplished; reaffirm the primary objectives and specific end products; determine deadline dates for satisfactory completion of the overall assignment; determine who will be responsible for coordinating/scheduling Docusign Envelope ID: C81708C6-9982-406F-948E-DC14CBFF7EE4

11.29 ©2023 Arthur J. Gallagher & Co. All rights reserved. 15 communications with employees, management, union representation, and the Council; and develop a timetable for conducting the same.

Included in this task will be the gathering of written documentation, current class descriptions, organizational charts, salary schedules, budgets, employment contracts, personnel policies, previous compensation studies, and any other relevant documentation to gain a general understanding of City operations.

City terminology and methods of current compensation procedures will be reviewed and agreed to. We will discuss methodology, agree to formats for compensation results, identify/confirm appropriate comparator agencies, benchmark classifications, and benefits to be surveyed. We will respond to any questions that may arise from the various stakeholders.

Communications and Engagement Plan
We will develop a communications and engagement plan to foster organizational buy-in and acceptance of study outcomes and consultant recommendations throughout the project by District stakeholders including employees. The goal of the communications and engagement plan is to build positive and effective relationships with the study stakeholders, to achieve consensus whenever possible, to strive to understand and take into consideration stakeholders’ ideas, opinions, desires, and issues, and to fully address their concerns. The variety of communication and engagement channels will help inform, consult, involve, collaborate with, and empower City stakeholders, and ensure that our methodology and “stakeholder touch-points” are followed and executed at each study milestone.

We are committed to working closely with City study advisors (Human Resources, District leadership, employee representatives, if any, and other stakeholders) to understand the needs of the mutual constituencies (employees) and to ensure that the Study Project Team, Gallagher/K&A team, management, and any employee representatives meet the highest standards of stakeholder interaction, including communicating clearly, politely, honestly, and promptly, and treating everyone fairly, equally, and with respect.

List of Comparator Agencies, Benchmark Classifications, and Benefits to be Collected During the initial meeting with the Study Project Team, we will discuss and agree to the compensation study factors. We will confirm appropriate, logical and defensible comparator agencies that will be included in the external market survey, which will be the foundation for ensuring that the City’s compensation plan is competitively aligned with the external labor market. We will also confirm those classifications that will be surveyed in the market (i.e., benchmark classifications), with the intention of internally aligning the remaining classifications with those that were surveyed. Finally, we will determine the list of benefits that the City wants to include in the total compensation data gathering process.

1. Determination of Comparator Agencies
The determination of comparator agencies is a critical step in the study process. Per the RFP, the City has the following comparator agencies, which were used in the 2021 study:
• City of Alameda • City of Daily City
• City of Milpitas • City of Monterey
• City of Mountain View • City of Palo Alto
• City of Salinas • City of Sunnyvale
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11.30 ©2023 Arthur J. Gallagher & Co. All rights reserved. 16 We typically recommend using 10-12 comparator agencies for all survey benchmarks in order to achieve statistical significance. Given the wide range of services offered by the City (fire, police, water, wastewater, libraries, solid waste), and the lack of data for certain benchmarks in the 2021 study, ensuring an adequate number of matches for the benchmarks may prove challenging with the current list of comparators. Should the City be interested in additional consultant recommendations regarding comparator agencies, Gallagher/K&A would conduct a quantitative analysis, reviewing a number of key factors to assess organizational similarity and comparability.

Our recommended methodology is to engage management, Human Resources, employee representation, and the City Council, in the review and decision-making process of selecting which comparable agencies are to be used PRIOR to beginning the study. Our experience has shown that this is the most successful approach.

The factors that we typically review when selecting and recommending appropriate comparator agencies include:
• Organizational type and structure – While various organizations may provide overlapping services and employ some staff having similar duties and responsibilities, the role of each organization is unique, particularly in regard to its relationship to the citizens it serves and level of service expectation. During this iterative process, the City’s previous list of comparators and the advantages/disadvantages of including them and/or others would be discussed.
• Similarity of population served, City demographics, City staff, and operational budgets – These elements provide guidelines in relation to resources required (staff and funding) and available for the provision of services. • Scope of services provided – While having an organization that provides all of the services at the same level of citizen expectation is ideal for comparators, as long as the majority of services are provided in a similar manner, sufficient data should be available for analysis. When reviewing this factor, the City’s unique services would be evaluated in order to ensure that the majority of comparators provide the same services. This ensures that each comparator yields a sufficient number of matches for the City’s jobs. • Labor market – The reality of today’s labor market is that many agencies are in competition for the same pool of qualified employees, because large portions of the workforce don’t live in the communities they serve, are accustomed to lengthy commutes, and are more likely to consider changing jobs in a larger geographic area than in the past. In addition, working-from-home opportunities and hybrid work schedules have further changed the landscape of supply and demand of talent.

Therefore, the geographic labor market area (where the City is competing for talent) is taken into consideration.
• Cost of living and cost of labor – The price of housing and other cost-of-living related issues are some of the biggest factors in determining labor markets and the appropriateness of comparator agencies. When the identified survey market includes comparators that are located outside of the City’s geographic area, we analyze cost of labor to ascertain whether there are significant differences and, if so, we are able to apply geographic cost-of-labor adjustments factors to the market data to ensure and apples-to-apples comparison.

One alternative to adding comparator agencies to be used for all benchmarks is to survey additional comparators only for those more specialized or less common benchmarks/classifications, such as water or solid waste. Though these certain Docusign Envelope ID: C81708C6-9982-406F-948E-DC14CBFF7EE4

11.31 ©2023 Arthur J. Gallagher & Co. All rights reserved. 17 benchmarks might have a slightly different labor market, this approach increases the likelihood of obtaining adequate data for all benchmarks.

2. Determination of Benchmark Classifications
In the same collaborative manner as described in Step 1 above, we will work with the City’s stakeholders to select those classifications that will be surveyed. “Benchmark classes” are ordinarily chosen to reflect a broad spectrum of class levels. In addition, those that are selected normally include classes that are most likely to be found in other similar agencies, and therefore provide a sufficient valid data sample for analysis.

Internal relationships will be determined between the benchmarked and nonbenchmarked classifications and internal equity alignments will be made for salary recommendation purposes.

Due to the fact that the labor market typically yields reliable data, we typically recommend using approximately 60-65% of all classifications as benchmarks Gallagher/K&A is proposing an expansion of the number of benchmark classifications from the 2021 study, which represented approximately 30% of the City’s job classifications. To ensure sufficient market data is collected for jobs representing the many services and programs offered by the City, Gallagher/K&A recommends approximately 50% of current classifications be surveyed (160 benchmark classifications). The benchmark classifications would include all director level classifications, representative mid-management and supervisory classifications in a range of occupations, and other job classifications representing the fifteen (15) job families.

3. Determination of Salary and Benefits Data to Be Collected In addition to base salaries, benefit data elements for a total compensation study normally include at least the following (which are generally available to all staff in a specific job classification):
• Monthly Salary – The top of the published salary range. All figures are presented on a monthly or annual basis. We normalize the salary data to reflect number of hours in the work week and/or roll-up of retirement or other benefits in base salaries. • Employee Retirement – This includes two figures: the amount of the employee’s State or other public or private retirement contribution that is contributed by the agency and the amount of the agency’s Social Security contribution. • Insurance – This typically includes Health, Dental, Vision, and other insurance coverage.
• Leave – Other than sick leave, which is usage-based, leave is the amount of days off for which the agency is obligated. We will discuss with the City whether leave days/hours should be converted to direct salary cost in dollars or represented in days/hours.
 Vacation: The number of vacation days after five years of employment.  Holidays: The number of holidays (including floating).  Administrative/Personal Leave: Administrative leave is normally the number of days available to management staff in lieu of overtime. Personal leave may be available to other groups of employees to augment vacation or other paid time off.
• Deferred Compensation – We report any employer contribution made on the employee’s behalf, whether an employee-matching contribution is required or not. • Other – This category includes any other benefits that are available to all employees within a classification and not already specifically detailed.

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11.32 ©2023 Arthur J. Gallagher & Co. All rights reserved. 18 • Non-Compensatory Elements – Per the RFP, the City would like to include other survey elements to capture non-monetary benefits and policies provided to the workforce in the labor market, e.g., flexible work schedules, telecommuting, wellness programs, etc.

Milestone B. Market Survey Delivery
Gallagher/K&A does not collect market compensation data by merely sending out a written questionnaire. Our experienced compensation analysts conduct all of the data collection and analysis to ensure validity of the data and quality control. We collect classification descriptions, organization charts, salary schedules, personnel policies, budgets, MOUs, and other information via website, by telephone, or email directly from each comparator agency.

We then compare job description to job description and not just job titles, therefore ensuring true “matches” of at least 70%, which is the threshold we use to determine whether to include a comparator classification or not. As mentioned above in the classification methodology above, our job analysis method is the whole position analysis approach, which we apply here as well.

We also schedule appointments with knowledgeable individuals at each comparator to answer specific questions. We find that information collected using these methods has a very high validity rate and allows us to substantiate the data for employees, management, and governing bodies.

Data will be entered into spreadsheet format designed for ease of interpretation and use.

Information will be calculated based upon average and median figures allowing the City to make informed compensation decisions. Other elements of the compensation survey report are agencies surveyed; comparable class titles; salary range maximum/control point; number of observations; and percent of the City’s salary range above/below the market values.

In addition, we will include any type of statistical representation and analysis that the City desires such as 60th, 70th, or any other percentiles per the City’s compensation philosophy.

Benefits data will be displayed in an easy-to-read format. You will receive three sets of spreadsheets per classification, one with base pay, one with the benefits detail, and one with total compensation statistical data. In addition, we are often asked to collect “additional” benefits, which we typically report on a separate spreadsheet.

We will also develop a report regarding non-compensatory benefits, including background and a summary of findings.

Milestone C. Draft Compensation Findings/Stakeholder Review and Feedback As part of our transparent approach and communication strategy to ensure organizational buy-in to the study, we share the market survey with the organization. We first distribute our draft findings to the Study Project Team. After their preliminary review, we will meet with the Study Project Team and other stakeholders (including Human Resources, management, employees, and/or employee representation) to clarify data, to receive requests for reanalysis of certain comparators, and to answer questions and address concerns. This provides an opportunity for our team to engage with study stakeholders in a collaborative manner. If questions arise, we conduct follow-up analysis to reconfirm our original analysis and/or make corrections, as appropriate.

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11.33 ©2023 Arthur J. Gallagher & Co. All rights reserved. 19 Milestone D. Development of Recommendations, Final Reports, and Presentations Analysis of Internal Relationships and Alignment
To determine internal equity for all studied positions, considerable attention is given to this phase of the project. It is necessary to develop an internal position hierarchy based on the organizational value of each classification. Again, we utilize the whole position analysis methodology as described earlier.

By reviewing those factors, we will make recommendations regarding vertical salary differentials between classes in a class series, for example, as well as across departments.

This analysis will be integrated with the results of the compensation survey and the City’s existing compensation plan.

The ultimate goal of this critical step in the process is to address any potential internal equity issues and concerns with the current compensation system, including compaction issues between certain classifications. We will create a sound and logical compensation structure for the various levels within each class series, so that career ladders are not only reflected in the classification system but also in the compensation system, with pay differentials between levels that allow employees to progress on a clear path of career growth and development.

Career ladders will be looked at vertically as well as horizontally.

Compensation Structure Development and Design
We will review and make recommendations regarding the City’s salary structure (set of salary ranges, salary differentials, range width, steps within ranges, and/or alternative compensation plans) within which the classes are allocated, based upon the City’s preferred compensation model. We will also work with the City on their compensation philosophy as it relates to market position and the formulation of their compensation plan. This analysis will result in external pay equity, solutions to address any pay equity issues, and an implementation strategy supporting City goals, objectives, and budget considerations.

Draft recommendations will be discussed with the Study Project Team and management for discussions and decisions on overall pay philosophy and the practicality of acceptance and prior to developing an Interim Report.

Final Report
A Draft Interim Report of the Compensation Study will be completed and submitted to the Study Project Team for review and comment. The report will include:
 An executive summary of the compensation study results;  A set of all market data spreadsheets;
 A proposed compensation structure;
 A proposed salary range placement document;
 A procedure to address employees whose current base pay either falls below the minimum of or exceeds the maximum of their newly assigned pay range;  Implementation options surrounding our recommendations; and  A guide for implementing, managing and maintaining the compensation system.

Once all of the City’s questions/concerns are addressed and discussed, a Final Classification and Compensation Report will be created and submitted in the City’s preferred format. The Final Report will incorporate any appropriate revisions identified and submitted during the review process.

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11.34 ©2023 Arthur J. Gallagher & Co. All rights reserved. 20 Final Presentation
Our proposal includes multiple meetings and regular oral and written status/progress updates to the Study Project Team. Regarding the involvement of the City Council, we recommend at least one initial meeting to confirm the comparator agencies to be included in the study, one interim study session (to discuss the initial findings of the compensation study), and one final presentation of our Final Report. Of course, we are flexible regarding having more or less interaction with the Council, based on the City’s preferences.

EXPECTATIONS OF CITY SUPPORT:

In order to conduct this study in the most timely and cost-effective manner, we ask for support in the following areas:
• Timely provision of written documentation, such as current class specifications, union contracts, organizational charts, budget documents, salary schedules, past studies, etc.; • Assistance in the notification and scheduling of initial kickoff and other meetings and the provision of adequate interview tools and resources;
• Meeting agreed-upon timelines.

In terms of time commitment for City staff, we understand that the City hires an outside consultant to conduct and coordinate the entire effort. Therefore, it is our goal to reduce the time commitment of City staff as much as possible and to only request assistance in the coordination of some of the steps in the process, such as scheduling meetings, disseminating information, and in general, being a channel of communication between our firm and employees.

COMMUNICATION WITH THE CITY:

Our typical communication model includes at least weekly or biweekly written status updates, or virtual meetings, to keep the City informed on where we are during each phase of the project.

In addition, the study includes a significant number of meetings with the Study Project Team, human resources, management, employees, employee representation, and the Council, as desired. The meetings and “stakeholder touch-points” that we recommend ensure understanding of the project parameters, enhance accurate intake and output of information, and foster a collaborative and interactive approach that will result in greater buy-in for study recommendations. This interactive approach, although time-consuming, has resulted in almost 100% implementation success of Gallagher/K&A’s studies.

POST-STUDY CONSULTATION AND SUPPORT:

We are committed to providing the City with the highest-quality product and service. Providing ongoing consultation and support after study completion is a service that is included in our professional fees and a continued relationship-building aspect of our client relationship that we highly value.

We often find that clients will call or email with follow-up questions and to discuss certain aspects of the study, ask why decisions and recommendations were made, and other important components of the study. We consider post-implementation support as part of our customer service.

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11.35 ©2023 Arthur J. Gallagher & Co. All rights reserved. 21 Should the City request any additional meetings and/or training after completion of the study and/or other specific, identifiable work efforts, such as single-position compensation reviews or conducting annual surveys, we would honor our composite hourly rate for actual hours worked. However, from experience, we expect that most follow-up support will be conducted via telephone and email and this is absolutely included in our project fee for this project.

STAKEHOLDER ENGAGEMENT:

We believe in an interactive and collaborative process with the whole organization and in a high level of stakeholder contact and interaction to ensure organizational buy-in to the study throughout the entire process. Following are the major milestones at which we touch base with Human Resources, employees, managers, employee representation, and other stakeholders, as appropriate:
• Initial study kick-off meetings with stakeholders;
• Stakeholder input regarding a list of appropriate comparator agencies, benchmark classifications, and benefits to be collected;
• City stakeholder review of compensation study data and contact with them to address any challenges to the market comparables we identified;
• Stakeholder input on internal salary relationship analysis and recommendations; and • Stakeholder input regarding final compensation plans and structure recommendations.

These steps will ensure that the study results in a product that is accepted and trusted by all levels within the organization. Beyond sound mechanics, our approach includes sufficient communication steps to ensure that the study methodology is understood and the results are regarded as expert, impartial, and fair.

Work Plan
Our professional experience is that compensation studies of this scope and for this size organization take approximately five to six months to complete, allowing for adequate compensation data collection and analysis, review steps by the City, stakeholder engagement, the development of final reports, any appeals, and presentations.

We believe the City’s proposed timeline is attainable, barring the need to extend timelines due to stakeholder feedback or other policy considerations. We propose commencing the project in early September 2024 and anticipate completion by the end of January 2025.

The following is a suggested timeline (which can be modified based on the City’s needs):

MILESTONES COMPENSATION STUDY COMPLETION
BY
A. Project Kickoff Meetings, Initial Documentation Review, and Determination of Survey Elements Weeks 1-4
B. Market Survey Delivery Week 5-14
C. Draft Compensation Findings/Stakeholder Review and
Feedback of Market Data Week 15-17
D.

Compensation System Design, Internal Alignments,
Development of Recommendations, Final Reports, and
Presentations
Week 18-22
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11.36 ©2023 Arthur J. Gallagher & Co. All rights reserved. 22 References

AGENCY & PROJECT CONTACT
City of Santa Cruz
Classification Studies, from 2011 to 2018.

Ms. Cathy Bonino
Principal Human Resources Analyst
(831) 420-5045
[email protected]
City of Concord
Total Compensation Study, completed 2019 and 2021,
another study, completed 2023.

Total Compensation Study, completed 2016.

Ongoing classification and compensation work since
2016.

Ms. Jasmin Loi
Director of Human Resources
(925) 671-3310
1950 Parkside Drive, MS/30
Concord, CA 94519
[email protected]
City of East Palo Alto
Classification and Compensation Study, completed
2020.

Ms. Irene Camarena
Human Resources Manager
(650) 738-7300
540 Crespi Drive
Pacifica, CA 94044
[email protected]
Note: Ms. Camarena is now HR Manager at City of Pacifica but can serve as a reference for the work we performed
while she worked at City of East Palo Alto.

City of Laguna Beach
Total Compensation Study (Police Management &
Fire), completed 2021.

Total Compensation Study (Police), completed 2019.

Mr. Gavin Curran
Director of Administrative Services
(949) 497-0315
505 Forest Ave,
Laguna Beach, CA 92651
[email protected]
City of Long Beach
Management Compensation Study, 2022
Joe Ambrosini
Director of Human Resources
(562)570-6140
411 W. Ocean Blvd, 10th Floor
Long Beach, CA 90802
[email protected]
City of Mountain View
Citywide total compensation study in 2021.
(Gallagher/K&A was recently retained to perform
citywide total compensation studies once more).

Lindsey Bishop
Human Resources Manager
(650) 903-6056
500 Castro Street
Mountain View, CA 94041
[email protected]
City of Palo Alto
Classification Study, completed 2020.

Various Compensation Studies from 2009 through
2018.

Ms. Sandra Blanch
Assistant Director, Human Resources
(650) 329-2376
250 Hamilton Ave.

Palo Alto, CA 94301
[email protected]
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11.37 ©2023 Arthur J. Gallagher & Co. All rights reserved. 23 City of Pismo Beach
Classification and Compensation Study, completed
2009.

Total Compensation Study, completed 2021.

Mr. Jorge Garcia
Assistant City Manager
(805)773-7928
760 Mattie Road
Pismo Beach, CA 93449
[email protected]
City of San Diego
Citywide Total Compensation Study, completed 2018,
2019, 2020, 2022, and 2023.

Police Officers Compensation Study, completed 2017
Citywide Total Compensation Study, completed 2015.

Ms. Abby Jarl-Veltz
Assistant Director, Human Resources Department
(619) 236-6314
1200 Third Ave., Suite 1316
San Diego, CA 92101
[email protected]
City of Seal Beach
Classification and Compensation Studies, completed
2016 and 2017.

Mr. Patrick Gallegos
Assistant City Manager
(562) 431-2527
211 Eighth St.

Seal Beach, CA 90740
[email protected]
Town of Los Altos Hills
Total Compensation study, completed in 2022.

Total Compensation Study, completed 2021.

Compensation Study Update, completed 2018.

Compensation Study, completed 2014.

Sarina Revillar
Administrative Services Director
26379 Fremont Road
Los Altos Hills, CA 94022
650-947-2512
[email protected]
Water District Experience / References
Coachella Valley Water District
Classification and Compensation Study, 2023.

Mr. Bill Walters
Human Resources Administrator
(760)398-2661 ext. 2372
51501 Tyler St.

Coachella, CA 92236
[email protected]
Central Fire District of Santa Cruz County
Compensation Study, completed 2021.

Compensation Study, completed 2018.

Ms. Gena Finch
Human Resources Director
(831) 479-6842
930 17th Ave,
Santa Cruz, CA 95062
[email protected]
Coastside County Water District
Completing Total Compensation Study in June 2024.

Classification and Compensation Study, completed
2017.

Ms. Mary Rogren
Assistant General Manager
(650) 726-4405
766 Main St.

Half Moon Bay, CA 94019
[email protected]
Mid-Peninsula Water District
Classification Study, completed 2017.

Total Compensation Studies, completed 2010, 2014,
2016, 2017 and 2018.

Ms. Tammy Rudock
Managing Advisor
(925) 523-8712
[email protected]
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11.38 ©2023 Arthur J. Gallagher & Co. All rights reserved. 24 Several Classification and Compensation Studies,
completed between 2006 and 2010.
happy to remain a reference for us in her new role at
Pakpour Consulting Group.

Santa Clara Valley Water
Ongoing Classification and Compensation Projects.

Classification Study (Clerk of the Board), completed
2017.

Executive Compensation Studies, completed 2013 and
2015.

Ms. Ingrid Bella
Employment Services Manager
(408)630-3171
5750 Almaden Expressway
San Jose, CA 95118
[email protected]
Ms. Patrice McElroy
Deputy Administrative Officer
[email protected]
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11.39 ©2023 Arthur J. Gallagher & Co. All rights reserved. 25 Contractual Considerations
We will be pleased to sign the City’s professional services agreement for a Compensation Study. We respectfully request that the City will allow for a period of negotiation of certain terms in the professional services contract related to liability, indemnity, insurance, and other terms.

We have found that we have always come to an agreement with all our clients in the past and appreciate the City’s flexibility in reviewing certain terms in a collaborative fashion between our legal counsels.

The following are terms we would like to review with the City if we are fortunate to be selected for this project:
• Gallagher is pleased to submit this proposal to client. While this proposal is not meant to constitute a formal offer, acceptance, or contract, notwithstanding anything to the contrary contained in the proposal, Gallagher is submitting this proposal with the understanding the parties would negotiate and sign a contract containing terms and conditions that are mutually acceptable to both parties. • Gallagher is not a federal contractor or subcontractor. Therefore, Gallagher cannot agree to federal contracting provisions contained within the RFP.

Santa Cruz City Comprehensive Compensation Study (1)
• 4th Point (Last Para) (PDF page 16) - This section needs modified so that no prior approval of personnel is required from the City. Gallagher will provide notice of substitutions after they occur. Gallagher can agree to a reasonable time period to provide such notice and will use good faith efforts to ensure that the City is satisfied with any replacement personnel assigned.
• Section 5 (First para) (PDF page 21) - Gallagher cannot agree to be bound by the terms and conditions referenced in this section until it has had the opportunity to review. • Section 5.7. (PDF page 22) - Indemnification should be limited to grossly negligent acts and omissions, breaches of the contract, intentional misconduct, or violations of law. • Section 5.7. (PDF page 22) - Note: A limitation of liability of fees paid needs to be added to the indemnification provision. Please work with your operations manager to obtain this language. This is true unless you have received an exception for this Client.

Santa Cruz City PSA Template_-_State Advocacy and Lobbying Services • Section 4 (Last Para) (PDF page 3) - The non-appropriation of funds provision needs to make clear that Gallagher will still get paid for satisfactorily completed work up until the date it receives notice of non-appropriation or until the termination date listed in such notice, whichever is later.
• Section 8 (5th para) (PDF page 4); Section 14 (8) (PDF page 7); Section 10(a)(PDF pages 7 – 8) - This section should make clear that Client shall own all final deliverables provided to Client by Gallagher as part of the services provided under this Agreement, provided however, Gallagher shall retain sole and exclusive ownership of all right, title, and interest in, and to, its intellectual property and derivatives thereof which no data or Confidential Information of the Client was used to create and which was developed entirely using Gallagher’s own resources, including any and all pre-existing or independently developed know-how, methods, processes and other materials prepared by Gallagher. To the extent Gallagher’s intellectual property is necessary for the Client to use the deliverables Docusign Envelope ID: C81708C6-9982-406F-948E-DC14CBFF7EE4

11.40 ©2023 Arthur J. Gallagher & Co. All rights reserved. 26 provided under this Agreement, Gallagher grants to Client a non-exclusive, royalty-free license to Gallagher’s intellectual property solely for Client’s use of such deliverables. • Section 10 (PDF page 5); Section 14 (3) (PDF page 6) - Indemnification should be limited to grossly negligent acts and omissions, breaches of the contract, intentional misconduct, or violations of law.
• Section 10 (PDF page 5); Section 14 (3) (PDF page 6) - A limitation of liability of fees paid needs to be added to the indemnification provision. • Section 14(1) (PDF page 6) - This section needs modified so that no prior approval of personnel is required from the City. Gallagher will provide notice of substitutions after they occur. Gallagher can agree to a reasonable time period to provide such notice and will use good faith efforts to ensure that the City is satisfied with any replacement personnel assigned.
• Section 14 (8) (PDF page 7); Section 10 (b) (PDF page 8) - Gallagher may retain copies of its work product that contain Confidential Information for archival purposes or to defend its work product, and in accordance with legal disaster recovery and records retention requirements, store such copies and derivative works in an archival format (e.g. tape backups), provided that the information will remain Confidential as long as it is retained. • Section 14 (10)(c) (PDF page 8) - Gallagher can agree to notice within 72 hours after confirmation of breach.
• Section 14 (11) (PDF page 8) - Unless otherwise required by applicable law, Gallagher cannot agree to permit City to audit for 5 years after the agreement ends. City can audit during the agreement.
• EXHIBIT D (PDF pages 16 - 18) - Below are Gallagher's insurance representations based on AJG Risk Management policies. These are not changed on a client-by-client basis.

It is our practice to provide the coverage below in lieu of the City contract insurance language.

We therefore propose to replace the insurance language in the RFP’s sample agreement with coverage language provided by Gallagher as follows (we attach our Memorandum of Insurance for your review as well):

Gallagher shall at all times during the term of this Agreement and for a period of two (2) years thereafter, obtain and maintain in force the following minimum insurance coverages and limits at its own expense:
• Commercial General Liability (CGL) insurance on an ISO form number CG 00 01 (or equivalent) covering claims for bodily injury, death, personal injury, or property damage occurring or arising out of the performance of this Agreement, including coverage for premises, products, and completed operations, on an occurrence basis, with limits no less than $2,000,000 per occurrence;
• Workers Compensation insurance with statutory limits, as required by the state in which the work takes place, and Employer’s Liability insurance with limits no less than $1,000,000 per accident for bodily injury or disease. Insurer will be licensed to do business in the state in which the work takes place;
• Automobile Liability insurance on an ISO form number CA 00 01 covering all hired and nonowned automobiles with limit of $1,000,000 per accident for bodily injury and property damage;
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11.41 ©2023 Arthur J. Gallagher & Co. All rights reserved. 27 • Umbrella Liability insurance providing excess coverage over all limits and coverages with a limits no less than $10,000,000 per occurrence or in the aggregate; • Errors & Omissions Liability insurance, including extended reporting conditions of two (2) years with limits of no less than $5,000,000 per claim, or $10,000,000 in the aggregate; • Cyber Liability, Technology Errors & Omissions, and Network Security & Privacy Liability insurance, including extended reporting conditions of two (2) years with limits no less than $2,000,000 per claim and in the aggregate, inclusive of defense cost; and • Crime insurance covering third-party crime and employee dishonesty with limits of no less than $1,000,000 per claim and in the aggregate.
• All commercial insurance policies shall be written with insurers that have a minimum AM Best rating of no less than A-VI, and licensed to do business in the state of operation. Any cancelled or non-renewed policy will be replaced with no coverage gap, and a Certificate of Insurance evidencing the coverages set forth in this section shall be provided to Client upon request.

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11.42

This Memorandum of Insurance serves solely to list insurance policies, limits and dates of coverage. Any modifications hereto are not authorized by Gallagher or the Insurance Companies.

ARTHUR J. GALLAGHER & CO.

MEMORANDUM OF INSURANCE
This Memorandum of Insurance (“Memorandum”) is produced as a matter of information only to authorized viewers for their internal use only and confers no rights upon any viewer of the Memorandum. This Memorandum does not amend, extend or alter the coverage described below. Copyright 2005, Arthur J. Gallagher Risk Management Services, Inc. (“Gallagher”). Gallagher grants permission to you to view, copy, print and distribute the information found on the Memorandum website (“Site”) provided that the above copyright notice appears on all copies, that use is internal to you or for personal noncommercial informational purposes only, and that no modification is made to any materials. Any modification, use, reproduction or distribution of this Memorandum, the Site or its contents must be first approved by Gallagher in writing. You will not suffer or permit any unauthorized use of any Gallagher trademark, service mark or logo. This Memorandum, the Site and its contents, including but not limited to text, graphics, images, software, copyrights, trademarks, service marks, logos, and brand names (“Content”), are protected under both United States and foreign laws, and Gallagher or its affiliated entities retain all right, title and interest in and to the Content, all copies thereof, and all copyrights and other proprietary rights therein. The information contained herein is as the date referred to above. Gallagher shall be under no obligation to update such information.

DATE: 9/29/2023
INSURED:

Arthur J. Gallagher & Co. and its subsidiaries
2850 West Golf Road
Rolling Meadows, IL 60008
Insurance Companies
A: ARCH INSURANCE COMPANY
B: THE CONTINENTAL INSURANCE COMPANY
C: XL INSURANCE AMERICA, INC
D: FEDERAL INSURANCE COMPANY
E: LEXINGTON INSURANCE COMPANY
F: XL SPECIALTY INS. COMPANY
G. ILLNOIS NATIONAL INSURANCE COMPANY
H. INDIAN HARBOR INSURANCE COMPANY
The policies of insurance listed below have been issued to the “INSURED” named above for the policy period indicated. Notwithstanding any requirement, term or condition of any contract or other document with respect to which this Memorandum may be issued or may pertain, the insurance afforded by the policies described herein is subject to all the terms, exclusions and conditions of such policies. Limits shown may have been reduced by paid claims.

CO.

LTR.

TYPE OF

INSURANCE
POLICY
NUMBER
POLICY

EFFECTIVE
POLICY

EXPIRATION
LIMITS
(In USD unless otherwise indicated)
A Commercial General
Liability
Occurrence
Per location
Aggregate
41GPP4938416 10/01/23 10/01/24 General Aggregate 4,000,000 Products - Comp/Op Agg 4,000,000
Personal and ADV Injury 2,000,000
Each Occurrence 2,000,000
Damage to Rented Premises
(Each occurrence)
1,000,000
A Automobile Liability
Any Auto
41CAB4939016-MA
41CAB4938316-A/O
10/01/23 10/01/24 Combined Single Limit 5,000,000
Bodily Injury (per person)
Bodily Injury (per accident)
B Excess/Umbrella Liability
Retention: $10,000
7034611269 10/01/23 10/01/24 Each Occurrence 25,000,000 Aggregate 25,000,000
A Workers Compensation
and Employers Liability
41WCI4938116-A/O
44WCI0501916-FL
10/01/23 10/01/24 Workers Comp Limits Statutory
EL Each Accident 1,000,000
EL Disease - Each Employee 1,000,000
EL Disease – Policy Limit 1,000,000
C Property US00112916PR22A 10/01/23 10/01/24 Blanket Bldg. & PP 10,000,000 D Crime/Fidelity Bond
(Employee Dishonesty)
J06039418 09/01/23 09/29/24 Single Loss Limit 15,000,000 E Errors & Omissions
(Primary Policy)
014629885 10/01/23 10/01/24 Per Claim and Aggregate 12,000,000 F Errors & Omissions
(Excess Policy)
ELU192671-23 10/01/23 10/01/24 Per Claim and Aggregate 10,000,000 G Errors & Omissions
(Excess Policy)
FI0121923 10/01/23 10/01/24 Per Claim and Aggregate 15,000,000 H Cyber Liability MTP903416504 05/01/23 05/01/24 Limit of Liability 10,000,000 Description of Operations / Other Information: See ADDITIONAL INFORMATION on the following page.

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11.43

This Memorandum of Insurance serves solely to list insurance policies, limits and dates of coverage. Any modifications hereto are not authorized by Gallagher or the Insurance Companies.

ARTHUR J. GALLAGHER & CO.

MEMORANDUM OF INSURANCE

ADDITIONAL INFORMATION

GENERAL LIABILITY POLICY
ADDITIONAL INSURED – MANAGERS OR LESSORS OF PREMISES *
Endorsement Form # CG 20 11 04 13 modifies insurance provided under the following:

COMMERCIAL GENERAL LIABILITY COVERAGE PART

SCHEDULE

1. Designation of Premises (Part Leased to You): ANY PREMISES OR PART THEREOF LEASED TO YOU.

2. Name of Person or Organization (Additional Insured): ANY AND ALL PERSONS OR ORGANIZATIONS

CONTRACTUALLY REQUIRING ADDITIONAL INSURED STATUS AS THE MANAGER OR LESSOR OF PREMISES TO YOU.

3. Additional Premium: INCLUDED
(If no entry appears above, the information required to complete this endorsement will be shown in the Declarations as applicable to this endorsement.)
WHO IS AN INSURED (Section II) is amended to include as an insured the person or organization shown in the Schedule but only with respect to liability arising out of the ownership, maintenance or use of that part of the premises leased to you and shown in the Schedule and subject to the following additional exclusions:

This insurance does not apply to:

1. Any "occurrence" which takes place after you cease to be a tenant in that premises.

2. Structural alterations, new construction or demolition operations performed by or on behalf of the person or organization shown in the Schedule.

WAIVER OF TRANSFER OF RIGHTS OF RECOVERY AGAINST OTHERS TO US - WORKERS COMENPENSATION,

GENERAL LIABILITY AND AUTOMOBILE LIABILITY
We waive any right of recovery we may have against the person or organization where required by written contract because of payments we make for injury or damage arising out of your ongoing operations or "your work" done under a contract with that person or organization and included in the "products-completed operations hazard". This waiver applies only where required by written contract as specified and approved per contract.

PROPERTY
This policy insures against “All Risks” of physical loss or damage, except as excluded, to covered property while on Described Premises, provided such physical loss or damage occurs during the term of this policy. Coverage is subject to policy deductibles, terms, conditions and exclusions. Loss Payable clause included for whom Insured has agreed to per written contract. *All other Additional Insureds requests requires Legal approval and issuance of a Certificate of Insurance. *For special requests, such as a WET SIGNATURE, please contact the appropriate team: P&C – Doreen Morris or Renata Grzeskowiak; E&O – Frederick Arkin or Mari Maceri; Cyber – Jeremy Gillespie or Ariel Magrini.

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11.44 SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE

THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS.

INSURER(S) AFFORDING COVERAGE
INSURER F :

INSURER E :

INSURER D :

INSURER C :

INSURER B :

INSURER A : NAIC #
NAME: CONTACT
(A/C, No): FAX
E-MAIL ADDRESS:

PRODUCER
(A/C, No, Ext): PHONE

INSURED
COVERAGES CERTIFICATE NUMBER: REVISION NUMBER:

IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must have ADDITIONAL INSURED provisions or be endorsed.

If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s).

THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS

CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER.

OTHER:
(Per accident)
(Ea accident)
$
$
N / A

SUBR WVDADDL
INSD

THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS

CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. $
$
$
$ PROPERTY DAMAGE
BODILY INJURY (Per accident)
BODILY INJURY (Per person) COMBINED SINGLE LIMIT

AUTOS ONLY

AUTOS ONLY AUTOS NON-OWNED OWNED SCHEDULED

ANY AUTO

AUTOMOBILE LIABILITY

Y / N WORKERS COMPENSATION
AND EMPLOYERS' LIABILITY OFFICER/MEMBER EXCLUDED?
(Mandatory in NH) DESCRIPTION OF OPERATIONS below
If yes, describe under

ANY PROPRIETOR/PARTNER/EXECUTIVE
$
$
$ E.L. DISEASE - POLICY LIMIT E.L. DISEASE - EA EMPLOYEEE.L. EACH ACCIDENT EROTH- STATUTE PER
(MM/DD/YYYY) LIMITS POLICY EXP(MM/DD/YYYY) POLICY EFFLTR TYPE OF INSURANCE POLICY NUMBER INSR
DESCRIPTION OF OPERATIONS / LOCATIONS / VEHICLES (ACORD 101, Additional Remarks Schedule, may be attached if more space is required)

EXCESS LIAB
UMBRELLA LIAB EACH OCCURRENCE $ AGGREGATE $
$
OCCUR
CLAIMS-MADE DED RETENTION $
PRODUCTS - COMP/OP AGG $ GENERAL AGGREGATE $ PERSONAL & ADV INJURY $ MED EXP (Any one person) $
EACH OCCURRENCE $ DAMAGE TO RENTED
PREMISES (Ea occurrence) $ COMMERCIAL GENERAL LIABILITY CLAIMS-MADE OCCUR GEN'L AGGREGATE LIMIT APPLIES PER: POLICY PRO- JECT LOC

CERTIFICATE OF LIABILITY INSURANCE DATE (MM/DD/YYYY)

CANCELLATION

AUTHORIZED REPRESENTATIVE
ACORD 25 (2016/03)
© 1988-2015 ACORD CORPORATION. All rights reserved.

CERTIFICATE HOLDER
The ACORD name and logo are registered marks of ACORD
HIRED

AUTOS ONLY
10/3/2023
Arthur J. Gallagher Risk Management Services, LLC
300 S Riverside Plaza Ste 1500
Chicago IL 60606
312-704-0100 312-803-7443 [email protected] Lexington Insurance Company 19437 ARTHJGA113 XL Specialty Insurance Company 37885 Arthur J Gallagher & Co and its Subsidiaries
2850 West Golf Road
Rolling Meadows, IL 60008
Underwriters at Lloyd's London 15792 809046053
A
B
C
Errors & Omissions
Excess Errors & Omissions
Excess Errors & Omissions
014629885
ELU192671-23
FI0121923
10/1/2023
10/1/2023
10/1/2023
10/1/2024
10/1/2024
10/1/2024
Per Claim/Aggregate
Per Claim/Aggregate
Per Claim/Aggregate
$12,000,000
$10,000,000
$13,000,000
Coverage extends to: Gallagher Benefit Services, Inc. 2850 West Golf Road Rolling Meadows, IL 60008 Gallagher Benefit Services, Inc., is an insured under the policies referenced above. The definition of Insured in the policy extends coverage to all employees while acting within the scope of his or her duties as such as an employee of Arthur J Gallagher and subject to all policy terms and conditions.

Evidence of Insurance
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11.45 ©2023 Arthur J. Gallagher & Co. All rights reserved. 28 Signature Page
Gallagher, formerly known as Koff & Associates, intends to adhere to all of the provisions described.

This proposal is valid for 90 days.

Respectfully submitted,
By: GALLAGHER, FORMERLY KNOWN AS KOFF & ASSOCIATES,
State of California
Georg S. Krammer July 18, 2024
Managing Director, Compensation and Rewards Consulting
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11.46 ©2023 Arthur J. Gallagher & Co. All rights reserved. 29 Appendix
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11.47 ©2023 Arthur J. Gallagher & Co. All rights reserved. 30 Project Team Biographies
Georg S. Krammer, M.B.A., S.P.H.R.

Managing Director
Georg brings over 25 years of management-level human resources experience to Gallagher, formerly Koff & Associates (K&A), with an emphasis in classification and compensation design; market salary studies; organizational development; executive recruitment; performance management; and employee relations, in the public sector and in large corporations as well as small, minority-owned businesses.

After obtaining a Master of Arts in English and Russian and teaching credentials at the University of Vienna, Austria, Georg came to the United States to further his education and experience and attained his Master of Business Administration from the University of San Francisco. After starting his HR career in Wells Fargo’s college recruiting department, he moved on to HR management positions in the banking and high-tech consulting industries. He spent five years in the private sector where he served as an HR Manager, and Administrative Officer, and then HR Director before entering the public sector in his current consulting role. With his wide-ranging and deep experience as a well-rounded classification and compensation expert, his education in business and teaching, his depth and breadth of experience with public sector HR needs, programs, and functions, Georg’s contributions to Gallagher’s variety of projects greatly complements our Human Resources and Recruitment Services team.

Georg has spearheaded several hundreds of classification, compensation, organizational, strategic planning, etc., studies for hundreds of cities, towns, counties, and special districts throughout the State of California, and the Western Region, and has contributed to more than quadrupling the size of Koff & Associates as a result of the success of his projects and the subsequent expansion of the business through referrals from satisfied clients. Georg joined K&A in 2003, served as its Chief Executive Officer from 2005 to 2021, was instrumental in K&A’s joining Gallagher in 2021, and has been serving as Managing Director since then.

Georg will be key personnel and serve as the Co-Project Director for this project; he will coordinate all of K&A’s efforts, will attend all meetings, and will be responsible for all work products and deliverables.

Maggie Williams-Dalgart
Project Manager
Maggie brings over twenty (20) years of public sector human resources experience, most recently managing the City of Anaheim classification and compensation program. Maggie has conducted several hundred studies in the areas of classification, compensation, and staffing, and brings a wealth of knowledge drawn from current public sector employment practices. In addition to classification and compensation expertise, Maggie’s experience includes collective bargaining, labor contract administration and labor costing, policy development and implementation, discipline and performance management, and recruitment and selection.

Prior to joining Koff & Associates in 2021, Maggie served as President of CalPACS, a regional internetbased salary and benefits survey website for local agencies in Southern California.

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11.48 ©2023 Arthur J. Gallagher & Co. All rights reserved. 31 Maggie holds a Bachelor’s degree in History of Public Policy from the University of California, Santa Barbara, a Master’s degree in Public Administration from the University of Colorado, Colorado Springs, and possesses certification as a Senior Professional in Human Resources (SPHR).” Lindsay Christopher
Senior Consultant
Lindsay’s professional qualifications include ten years of experience working in the public sector, mostly with Alameda County. In her role as Human Resources Analyst, she was responsible for classification and compensation projects, as well as recruitment and selection, in a Civil Service, meritbased, environment. Prior to joining Koff & Associates, she worked at the East Bay Regional Park District, where she continued to focus of classification and compensation projects.

A Bay Area native, Lindsay earned her B.A. degree in Sociology with a concentration in Criminology from San Jose State University.

Lindsay will provide Senior H.R. Associate support throughout this effort, including classification analysis, interviews with employees and management, compensation data collection and analysis, internal job analysis, development of recommendations, and implementation strategies.

Monica Garrison-Reusch, B.A., M.B.A.

Consultant
Monica has over 15 years of human resource program experience, all of which have been spent serving as either a team consultant or project manager on projects working with public sector agencies. Monica’s primary professional focus over the last several years has been on classification and compensation practices.

Prior to joining K&A in 2016, Monica performed classification and compensation consulting services as either a team member or project manager on varied projects including large scale studies done for the Counties of Madera, Sacramento, Bernalillo (in New Mexico), and the California State Department of Personnel Administration. Monica also developed and served as a Co-Trainer for a two-day course on Classification and Compensation.

Monica’s depth of experience allows her to provide a broad range of human resources services to public agencies. She specializes in compensation projects focusing on both base salary and total compensation analysis studies. Monica has also worked on project teams conducting classification studies and organizational analysis, including performing the full range of classification analysis and conducting in-depth survey and analysis of organizational structures and past organizational practices.

She earned an MBA with an emphasis in Marketing at Golden Gate University and a Bachelor of Science in Business Administration from the University of Southern California.

Monica will provide Senior H.R. Associate support for this project, including classification analysis, interviews with employees and management, compensation data collection and analysis, internal job analysis, development of recommendations, and implementation strategies.

Arlene Marks Gibbs, BS, MPA, SPHR, IPMA-CP
Associate Consultant
Arlene Gibbs possesses over thirty years of Human Resources management experience including spending over twenty years in the public sector working for both large and small education, municipal and special district organizations in California.

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11.49 ©2023 Arthur J. Gallagher & Co. All rights reserved. 32 Her public sector experience includes serving as the Chief Human Resources Officer for San Diego State University which is the largest California State University campus with over 6,700 faculty and staff. While at San Diego State, Arlene led the HR Directors Committee for the 23 campus system of HR service delivery. Her experience also includes senior and executive HR management roles with several small and large public agencies including the City of San Jose, the City of Tustin as well as air and water/wastewater special districts.

Arlene’s experience includes all facets of Human Resources, Employee & Labor Relations. She is an experienced labor contract negotiator having negotiated many public sector labor agreements while serving as the Chief Spokesperson/Labor Negotiator. In addition, her experience includes managing recruitment and selection processes for all types of public sector positions, handling employee benefits functions, responding to labor and employee relations issues, coordinating classification and compensation studies, complying with labor laws, conducting personnel investigations, and managing a wide variety of general human resources functions.

Arlene holds a Masters’ Degree in Public Administration from California State University Northridge and a Bachelor of Science Degree in Business Administration with an emphasis in Labor Relations from California State University Long Beach. She also is certified as an IPMA-CP and as a Senior Professional in Human Resources (SPHR).

Arlene has also led and participated in local, regional as well as statewide efforts in small and large agencies with the League of California Cities, IPMA as well as serving as a resource for City, County, State and Local Boards, Councils, Committees and Commissions. Arlene will provide Senior H.R.

Associate support throughout each effort, including classification analysis, interviews with employees and management, compensation data collection and analysis, internal job analysis, development of recommendations, and implementation strategies.

Janna Dinkelspiel
Associate Consultant
Janna Dinkelspiel came to Koff & Associates in August 2022 with over 15 years’ experience in private and public sector human resources. Most recently Janna was a Senior Employee Relations Analyst in a municipality where she gained well rounded experience in recruitment and retention, employee relations, labor relations, policy development, performance management, training and development and classification and compensation. Janna was the City’s subject matter expert for classification and compensation while conducting and implementing three large-scale compensation studies for the City, as well as assisting the executive team with creation of a compensation policy.

Janna has a degree in Business Administration from the University of Washington and holds a Senior Professional Human Resources Certificate from HRCI.

Nicolle Wynia-Eide
Consultant
Nicolle Wynia-Eide has over 25 years of experience in the Human Resources profession including work in Classification and Compensation, Total Rewards, Benefits, and general human resources administration, the majority of which was in public sector. She has experience in designing and conducting small and large scall classification and compensation studies, pay equity evaluations, and organizational development.

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11.50 ©2023 Arthur J. Gallagher & Co. All rights reserved. 33 Prior to joining Koff & Associates in 2023 she was a Senior Classification and Compensation Consultant for a large nonprofit health care agency. Her public sector roles have included Human Resources Analyst for the City of Beaverton (Oregon) and 13 years working with and then supervising the Classification and Compensation team for the City of Portland.

Nicolle has a degree in Biology from Lewis and Clark College and a Human Resources Certification for Portland State University. She earned her Certified Compensation Professional in 2007 and her Senior Professional Human Resources Certificate (SPHR) in 2012. She is also a member of World at Work.

Lauren Grant
Associate Consultant
Lauren’s professional qualifications include over seven (7) years of experience in public sector classification, compensation, talent acquisition, and talent management. She has led classification and compensation activities for Oregon's largest post-secondary institution and was responsible for recruitment, selection, classification, and compensation for Oregon's largest housing authority and affordable housing provider. Lauren joined Koff & Associates in April 2023.

Prior to public service, Lauren worked as an HR generalist in the hospitality industry and provided HR support to local nonprofit organizations. She also brings experience in HR analytics and organizational development, as well as labor and employee relations, communications, and engagement.

Lauren earned her B.S. degree with majors in Human Resources Management, Management & Leadership, and Psychology from Portland State University, where she graduated summa cum laude.

She holds certifications in strategic workforce planning, people analytics for HR, and competency modeling, in addition to her SHRM professional certification.

Kelly Barns
Associate Consultant
Kelly Barns brings over 19 years of experience in a variety of leadership and technical public-sector human resources and risk management roles, from Analyst to, Risk Manager to, Assistant Director and Director of Human Resources in municipal government. While a well-rounded practitioner, with broad and deep knowledge and experience in talent acquisition, labor relations, classification and compensation, policy and contract development, performance management, employee engagement, Leaves and ADA administration and management, training and development, legal compliance, business strategy and change management, workplace investigations, health and safety, workers’ compensation, employee benefits, liability administration and management, and universal Human Resources and Risk Management administration. Kelly joined Koff & Associates in March 2022 and has had the privilege to work with and support special projects and studies for several cities, counties, and various municipalities and special district clients.

Kelly has a degree in Business Administration and Management, is a Human Resources Certified Professional through International Public Management Association of Human Resources (IPMA-CP) and has a Senior Professional Human Resources Certificate (SPHR). Kelly has had the opportunity to serve on committees and boards, focused on a variety of human resources, risk management, and business strategy affairs and goals.

Kelly provides Human Resources Associate support throughout each project role, primarily consisting of project and technical support in, classification analysis, interviews with employees and Docusign Envelope ID: C81708C6-9982-406F-948E-DC14CBFF7EE4

11.51 ©2023 Arthur J. Gallagher & Co. All rights reserved. 34 management, compensation data collection and analysis, internal job analysis, and development of recommendations. Kelly has a passion for engaging, collaborating with, and supporting clients, strengthening employee relations and community partnerships. Kelly has been dedicated to helping organizations and leaders navigate through change and define and implement their Human Resources strategies; in addition to promoting a culture of continuous opportunity and helping people to be inspired to innovate and make an impact on an organization’s most valuable asset, it’s people.

Cindy Harary, B.A.

Consultant
Cindy’s professional qualifications include over 37 years of experience in the Human Resources field, primarily in classification and compensation. She spent the first 11 years in the public sector working for the City of Whittier, California, where she started out in their Public Works Department before moving to the Human Resources Department. She gained experience in classification and compensation, recruitment and selection, employee training and development, labor relations, and general human resources administration.

For the next 16 years, Cindy worked as a Human Resources Consultant for a consulting firm where she specialized in conducting classification and compensation studies for multiple public sector agencies including cities, counties, and special districts as well as several private sector clients. Some of the Orange County Cities she worked on in partnership with other consultants at that firm were: Cities of Brea, Laguna Beach, Lake Forest, La Palma, Los Alamitos, Placentia, San Clemente, Stanton and Tustin.

In Los Angeles County, her work includes the Cities of Corona, Downey, El Monte, Manhattan Beach, and Upland. Finally, in San Bernardino County she has worked on the City of Rancho Cucamonga.

Cindy joined Gallagher (formerly Koff and Associates) in 2015, working on Classification and/or Compensation studies. Cindy earned her B.A. degree in Broadcast Journalism at California State University, Long Beach.

Cindy will provide Human Resources Consultant support throughout this effort, including classification analysis, interviews with employees and management, compensation data collection and analysis, internal job analysis, development of recommendations, and implementation strategies.

Renate Tiner, B.Sc.

Consultant
Renate’s professional qualifications include five years of both non-profit and private sector Human Resources experience before joining Gallagher. Starting in Human Resources administration and rising into Human Resources management, she gained experience in full-cycle recruitment, orientation and on-boarding, Health and Safety, Worker’s Compensation, licensing and accreditation, policy development, and general Human Resources administration. Renate has a total of 12 years’ experience. Renate joined Koff & Associates in 2017, working on classification and compensation studies.

Renate earned her B.Sc. degree in Psychology from the University of Northern British Columbia, in Prince George BC, Canada. She was a Canadian Human Resource Professional (CHRP) Candidate before moving to the United States. She will provide H.R. Consultant support throughout this effort, including analysis, interviews with employees and management, compensation data collection and analysis, internal job analysis, development of recommendations, and implementation strategies.

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11.52 ©2023 Arthur J. Gallagher & Co. All rights reserved.

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11.53 City of Santa Cruz

COMPENSATION STUDY COST
PROPOSAL RFP# HR-0142 –

UPDATED
January 6, 2025
Gallagher, formerly known as Koff & Associates
GEORG S. KRAMMER
Managing Director, Compensation and Rewards Consulting
2835 Seventh Street
Berkeley, CA 94710
[email protected]
Tel: 510.658.5633
Fax: 510.652.5633
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11.54 ©2023 Arthur J. Gallagher & Co. All rights reserved. 2 January 6, 2025
Ms. Sara DeLeon
Human Resources Director
809 Center Street
Santa Cruz, CA 95060
Dear Ms. DeLeon:

Thank you for the opportunity to respond to your Request for Proposals for a Total Compensation Study for the City of Santa Cruz (“City”). We are most interested in assisting the City with this important study and feel that we are uniquely qualified to provide value to your organization based on our experience working with other cities, counties, special districts, joint-powers associations, and other public agencies, and of course the City itself over the course of several years, including the Citywide compensation study in 2021.

Gallagher, formerly known as Koff & Associates, (“Gallagher/K&A”) is an experienced Human Resources and Recruitment Services firm providing human resources services to cities, counties, special districts, courts, educational institutions, and other public agencies for over 40 years. Our team has achieved a reputation for working successfully with management, employees, employee representation, and governing bodies. We believe in a high level of dialogue and input from study stakeholders and our proposal speaks to that level of effort.

Our team’s extra effort has resulted in close to 100% implementation of all our classification and compensation studies.

Gallagher/K&A ensures that each of our projects is given the appropriate resources and attention, resulting in a high level of quality control, excellent communication between clients and our office, commitment to meeting timelines and budgets, and a consistently high-caliber work product.

As a Managing Director of Gallagher/K&A, I would assume the role of Project Director and be responsible for the successful completion of project. I can be reached at our Berkeley address and the phone number listed on the cover page. My email is [email protected].

This proposal will remain valid for at least 90 days from the date of submittal. Please call if you have any questions or wish additional information. We look forward to the opportunity to provide professional services to the City of Santa Cruz.

Sincerely,
Georg S. Krammer
Managing Director, Compensation and Rewards Consulting
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11.55 ©2023 Arthur J. Gallagher & Co. All rights reserved. 3 Cost Proposal
We have often found our process requires a very high level of time commitment, which sometimes results in a higher proposal cost. We believe that our methodology and implementation success rate is attributable to the significantly greater level of contact we have with employees, employee representation, management, and the governing body. The time we commit to working with employees (orientations and briefings, meetings with employees via personal interviews, sharing of compensation survey data, etc.) results in significantly greater buy-in throughout the process.

In fact, our firm has only had a handful of formal appeals to any of our studies in over 40 years in business. It has been our experience that the money and time invested in stakeholder communication throughout the study are money and time saved during implementation. Our goal is to conduct each study the right way the first time. Numerous times our firm has been hired after an agency has gone through an unsuccessful study whose results were rejected or appealed and whose implementation was very controversial. Whenever our firm was hired after such an unfortunate experience, study stakeholders were amazed at our open and inclusive process, our efforts to elicit equal stakeholder input, and our development of recommendations that were accepted as fair and reasonable and understood by management, employees, and the governing body. Our clients always provide feedback that our process is professional, comprehensive, understandable, timely, and inclusive.

Due to a shift in our industry to conducting studies virtually and our own efforts to be as green a business as possible (which our public agency clients always appreciate), our cost proposal assumes that all meetings and presentations will be conducted virtually/remotely and no onsite travel to City offices will occur. Should the City desire onsite meetings, we will be happy to provide our per diem cost for onsite meetings based on travel time and market rate travel cost at the time.

Cost proposal continues on the following page.

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11.56 ©2023 Arthur J. Gallagher & Co. All rights reserved. 4 MILESTONES COMPENSATION STUDY AMOUNT BILLING

STRUCTURE
Ongoing Project Status Meetings throughout the Study,
Including:
• Project Management: Establish timelines, milestones, and regular progress updates.
• Compliance: Ensure all recommendations comply with
relevant laws and regulations.
• Conduct meetings, workshops, and focus groups to gather feedback.
$6,000
Invoice #1: 20% of
Project Fee upon
Contract Execution
- $46,380
A.

Project Kickoff Meetings, Orientations,
and Determination of Survey Elements,
Including:
• Task 1 from RFP: Research & Data
Gathering.
• Communication and Outreach including
identification of key stakeholders and
development and/or coordination of a
communication plan, and presenting
materials orally and in writing to varying
stakeholders.
$11,900
Invoice #2:

Completion of
Deliverable A -
$46,380
B.

Market Survey Delivery, Including:
• Task 2 from RFP: Analysis &
Recommendations.
• Market survey includes: up to 160
benchmark classifications, up to 15
comparator agencies to address the
City’s various unique services, and total
compensation including benefits.
• Compensation recommendations
include all 326 of the City’s
classifications
$158,000
Invoice #3:

Completion of
Deliverable B -
$46,380
C.

Draft Compensation Findings/
Stakeholder Review and Feedback,
Including:
• Receiving and responding to questions
and concerns from all study
stakeholders involved in the study.
$40,000
Invoice #4:

Completion of
Deliverable C -
$46,380
D.

Development of Recommendations,
Final Reports, and Presentations,
Including:
• Compensation Study Report
• Non-Compensatory Study Report
$16,000
Invoice #5:

Remaining Project
Fee - $46,380
Total Fee for Compensation Study $231,900 $231,900
Expenses are included in the project fee N/A N/A
Expenses include but are not limited to duplicating documents, binding reports, phone, supplies, postage TOTAL PROJECT COST $231,900 $231,900
Our cost proposal does not include time to support the City during any labor negotiations that may follow this study. If we are needed for this work, our composite hourly rate will apply and we will charge on a time-and-materials basis.

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11.57 ©2023 Arthur J. Gallagher & Co. All rights reserved. 5 Signature Page
Gallagher, formerly known as Koff & Associates, intends to adhere to all of the provisions described.

This proposal is valid for 90 days.

Respectfully submitted,
By: GALLAGHER, FORMERLY KNOWN AS KOFF & ASSOCIATES,
State of California
Georg S. Krammer January 6, 2025
Managing Director, Compensation and Rewards Consulting
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11.58 ©2023 Arthur J. Gallagher
& Co. All rights reserved.

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11.59 City of Santa Cruz Professional Services Agreement for Comprehensive Compensation Study May 2025 (Form Rev.05/25 ) Page 14
EXHIBIT B: INSURANCE REQUIREMENTS
Consultant shall procure and maintain insurance against claims for injuries to persons or damages to property and otherwise which may arise from or in connection with the performance of the work under this Agreement and the results of that work by Consultant, its agents, representatives, employees, or subcontractors.

A. CERTIFICATE REQUIREMENTS
The City will be issued a Certificate of Insurance (a Memorandum of Understanding will not be accepted) with the following minimum requirements:
• Certificate(s) will show current policy number(s) and effective dates, • Coverage and policy limits will meet, or exceed, requirements below, • The Certificate Holder will be City of Santa Cruz, Risk Management, 1200 Pacific Ave., Suite 290, Santa Cruz, CA 95060,
• Certificate will be signed by an authorized representative, • An endorsement, if required below, will be provided to show the City, its officers, officials, employees, and volunteers as additional insureds on the Commercial General Liability, 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
Consultant acknowledges that the insurance coverage and policy limits set forth in this section constitute the minimum amount of coverage required. If Consultant maintains broader insurance coverage and/or higher limits than the minimums shown below, the City of Santa Cruz requires and shall be entitled to the broader insurance coverage and/or higher limits maintained by Consultant. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City of Santa Cruz.

Coverage will be at least as broad as:
• COMMERCIAL GENERAL LIABILITY (CGL): $1,000,000 PER OCCURRENCE; $2,000,000 AGGREGATE Proof of coverage for $1 Million per occurrence and $2 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. • PROFESSIONAL LIABILITY (ERRORS AND OMISSIONS): $2,000,000 PER OCCURRENCE OR CLAIM, $2,000,000 AGGREGATE.

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

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

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11.60 City of Santa Cruz Professional Services Agreement for Comprehensive Compensation Study May 2025 (Form Rev.05/25 ) Page 15
The Worker’s Compensation policy must be endorsed with a waiver of subrogation in favor of the City for all work performed by the Consultant and its employees. (Not required if Consultant provides written verification it has no employees) - If Consultant has no employees, Consultant shall complete and sign a Workers’ Compensation Exemption Declaration and Release of Liability.

C. OTHER INSURANCE PROVISIONS
The insurance policies are to comply with the following provisions:
• ADDITIONAL INSURED STATUS
The City, its officers, officials, employees, agents, and volunteers are to be covered as additional insureds on the CGL policy with respect to liability arising out of work or operations performed by or on behalf of Consultant including materials, parts, or equipment furnished in connection with such work or operations, products and completed operations. General liability coverage will be provided in the form of an endorsement to Consultant’s insurance at least as broad as ISO Form CG 20 10 11 85, or if not available, through the addition of both CG 20 10, CG 20 26, CG 20 33, or CG 20 38; and CG 20 37 (if a later edition is used).
• PRIMARY COVERAGE
For any claims related to this Agreement, Consultant’s and all subcontractors’ insurance coverage will be primary and non-contributory as respects the City, its officers, officials, employees, agents, and volunteers. Any insurance or self-insurance maintained by the City, its officers, officials, employees, agents, or volunteers will be excess of Consultant’s and all subcontractors’ insurance and will not contribute with it.
• NOTICE OF CANCELLATION
Each insurance policy required above shall state that the coverage shall not be canceled, except with notice to the City.
• WAIVER OF SUBROGATION
With the exception of Professional Liability insurance, Consultant hereby grants to the City a waiver of any right to subrogation, except as otherwise not applicable, which any insurer of said Consultant may acquire against the City by virtue of the payment of any loss, including attorney’s fees under such insurance. Consultant agrees to obtain any endorsement that may be necessary to effectuate this waiver of subrogation, but this provision applies regardless of whether or not the City has received a waiver of subrogation endorsement from the insurer.
• EXCESS LIABILITY/UMBRELLA INSURANCE POLICIES
Consultant may use excess liability/umbrella policies to meet the required liability limits on the condition that they provide all of the insurance coverages required herein, 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 Consultant’s primary and excess liability policies are exhausted. • SELF-INSURED RETENTIONS (SIR)
Self-insured retentions must be declared to and approved by the City. City may require Consultant to purchase coverage with a lower retention or provide proof of ability to pay losses and related expenses.

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11.61 City of Santa Cruz Professional Services Agreement for Comprehensive Compensation Study May 2025 (Form Rev.05/25 ) Page 16
The policy language shall provide, or be endorsed to provide, that the self-insured retention may be satisfied by either the named insured or City.
• ACCEPTABILITY OF INSURERS
Insurance is to be placed with insurers with a current A.M. Best’s rating of no less than A: VI, unless otherwise acceptable to the City.
• CLAIMS MADE POLICIES
If any of the required policies provide coverage on a claims-made basis:

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

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

3. If coverage is canceled or non-renewed, and not replaced with another claims-made policy form with a Retroactive Date prior to the contract effective date, the Consultant must purchase “extended reporting” coverage for a minimum of two (2) years after completion of contract work. • VERIFICATION OF COVERAGE
Consultant will furnish the City with original Certificates of Insurance including all required amendatory endorsements (or copies of the applicable policy language effecting coverage required by this clause) and a copy of the Declarations and Endorsement Page of the CGL policy listing all policy endorsements to be approved by the City before work commences. However, failure to obtain the required documents prior to the work beginning will not waive the Consultant’s obligation to provide them. The City reserves the right to require complete, certified copies of all required insurance policies, including endorsements required by these specifications, at any time.

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

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

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11.62 City Council

AGENDA REPORT
DATE: 05/08/2025
AGENDA OF: 05/27/2025
DEPARTMENT: Human Resources
SUBJECT: Authorization to Exceed $100,000 for Legal Services (HR) LOCATION: Citywide
RECOMMENDATION: Motion authorizing the City Manager, or their designee, to execute agreements with Burke, Williams & Sorensen LLP, in forms approved by the City Attorney, and approve payments exceeding $100,000 legal services for Fiscal Years 2025 and 2026.

BACKGROUND: The City of Santa Cruz contracts with specialized labor counsel to provide legal support and negotiation assistance during labor relations activities. These services are essential to ensuring that the City maintains compliance with state and federal labor laws, negotiates in good faith as required under the Meyers-Milias-Brown Act (MMBA), and achieves labor agreements that are fiscally responsible and operationally sound.

As required under Santa Cruz Municipal Code Section 3.08, expenditures exceeding $100,000 in a fiscal year must be approved by City Council.

DISCUSSION: The City is entering a significant period of labor negotiations at the close of FY 2025 and continuing throughout FY 2026, with eight of the City's bargaining unit contracts scheduled for expiration. These negotiations will require considerable staff time and legal support to ensure that contract terms reflect both the City’s operational needs and its commitment to equity, fiscal sustainability, and workforce wellbeing.

Labor attorney services include:
 Strategic planning and consultation
 Proposal development and review
 Direct negotiation and mediation support
 Interpretation of complex labor laws and legal trends  Representation in any potential disputes, grievances, or impasse processes Historical spending on labor attorney services has ranged from:
2023 252,966.91
2024 102,269.73
2025 89,928.43

12.1 Given the scope and volume of labor negotiations in FY 2025 and FY 2026, the Human Resources Department anticipates that labor attorney service needs will increase significantly.

Staff estimates a total need of up to $260,000 in labor legal services in FY 2026 which is similar the amounts spent during the last negotiation cycle and a planned expense in the operating budget of the department. Staff expects FY 2025 costs will exceed $100,000.

As provided per the City’s procurement procedures for professional services, staff selected the use of a sole source vendor which forgoes the request for proposal process. The selection of our current labor counsel is based on their deep familiarity with the City’s labor history, established working relationships with staff and bargaining units, and demonstrated ability to provide timely and strategic legal support during critical labor negotiations. Compatibility with existing processes and the urgency of upcoming contract expirations make it impractical to transition to a new provider without risking delays or disruption in service delivery. Continuing with this vendor ensures continuity, efficiency, and legal consistency as we enter a high-volume negotiation period affecting multiple bargaining groups.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: Not applicable.

HEALTH IN ALL POLICIES (HiAP): The City of Santa Cruz has adopted a Health in All Policies framework that calls for policy decisions to be made with an understanding of how they impact community and employee health outcomes. Labor agreements are a critical component of this approach. Thoughtful and collaborative negotiations can:
 Improve workforce stability and morale, reducing turnover and absenteeism  Promote safe and healthy working conditions
 Advance equity by addressing compensation gaps and career access for underserved groups
 Ensure continued delivery of essential services that contribute to public health, such as emergency response, sanitation, and infrastructure maintenance  Retaining legal expertise to support these goals directly aligns with the City’s commitment to centering equity, sustainability, and public health in all decision-making.

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: Funds are available in the department operating budget through the City’s cost allocation plan and funded by the general and enterprise funds FY 2025 and FY 2026 budget for Services. As required under Santa Cruz Municipal Code Section 3.08, expenditures exceeding $100,000 in a fiscal year must be approved by City Council.

Prepared and Submitted By:

Sara De Leon
HR Director
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

None.

12.2 City Council

AGENDA REPORT
DATE: 05/08/2025
AGENDA OF: 05/27/2025
DEPARTMENT: Human Resources
SUBJECT: Authorization to Exceed $100,000 for Investigation Services with Oppenheimer Investigations Group, LLP, Related to Respectful Workplace, Harassment, and Discrimination Complaints (HR) LOCATION: Citywide
RECOMMENDATION: Motion authorizing the City Manager, or their designee, to execute agreements with Oppenheimer Investigations Group, LLP, in forms approved by the City Attorney, and approve payments exceeding $100,000 in the aggregate for third-party investigation services related to workplace harassment, discrimination, and respectful workplace complaints for Fiscal Years 2025 and 2026.

BACKGROUND: The City of Santa Cruz is committed to providing a safe, inclusive, and respectful workplace for all employees as outlined in City Administrative Procedure Order II-1a and II-1B. To fulfill this commitment, the City must respond promptly and thoroughly to complaints involving alleged violations of anti-harassment, anti-discrimination, and respectful workplace policies.

The Human Resources Department routinely engages third-party investigators to conduct impartial investigations, particularly when internal review may present actual or perceived conflicts of interest or when the scope and complexity of allegations require external expertise.

DISCUSSION: To comply with legal obligations, third-party investigations must be conducted independently, thoroughly, and often on expedited timelines. The Human Resources Department is seeking Council authorization to exceed the $100,000 spending threshold for these critical services during the current fiscal year with Oppenheimer Investigations Group, LLP. Future year requests have been included to ensure that investigations in progress may continue without funding delay. The HR Department will make this request annually whether it is expected to exceed expenses over $100,000 or not to ensure timely progress toward investigation completion.

As provided per the City’s procurement procedures for professional services, staff selected the use of a sole source vendor which forgoes the request for proposal process, as transitioning to a new provider mid-investigation or during periods of high case volume could delay resolution and undermine trust in the process.

13.1 To support long-term planning and vendor diversification, the HR Department intends to conduct a competitive RFP process in calendar year 2026 to establish a panel of qualified investigation firms. This will ensure continued access to experienced, responsive investigators while aligning with the City’s procurement standards and commitment to transparent vendor selection.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: Not applicable.

HEALTH IN ALL POLICIES (HiAP): The City of Santa Cruz is guided by its Health in All Policies (HiAP) approach, which prioritizes the integration of health, equity, and sustainability into decision-making processes across all departments. Ensuring a workplace free from harassment and discrimination is central to this approach.

Workplace harassment, discrimination, and unresolved interpersonal conflict negatively impact employee mental health, productivity, retention, and sense of safety—especially for individuals from historically marginalized communities. By proactively addressing such issues through professional investigation services, the City:
 Advances equity and inclusion as a determinant of workforce well-being.  Prevents harm to employee mental and emotional health.  Upholds a systems-level commitment to eliminating disparities.  Fosters a culture of accountability, respect, and trust, consistent with HiAP.

This investment in responsive and impartial investigations directly supports the City’s goal to embed equity and health into organizational practices and reinforces the workplace as a key site for health promotion.

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: Funds are available in the budget through the City’s cost allocation plan and funded by the general and enterprise funds FY 2025 and FY 2026 budget for Services and exists in the departments operational budget.

Prepared and Submitted By:

Sara De Leon
HR Director
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

None.

13.2 City Council

AGENDA REPORT
DATE: 05/22/2025
AGENDA OF: 05/27/2025
DEPARTMENT: Planning
SUBJECT: Proposed Amendment to the Planning Commission Bylaws Regarding Meeting Start Time (PL)
LOCATION: Citywide
RECOMMENDATION: Motion to amend Article VIII – Meetings, Section 1 – Time and Location of Meetings – of the Planning Commission Bylaws to add the provision that the Chair of the Planning Commission may have the option to begin the meeting no earlier than 6:00 pm upon recommendation of the Planning and Community Development Department staff.

BACKGROUND: The Planning Commission serves as an advisory body to the City Council on matters pertaining to land use, following due consideration of public input. Furthermore, the Planning Commission holds final decision-making authority for specific land use actions, except in cases where an appeal is submitted to the City Council. It is within the purview of the City Council to approve the Planning Commission's Bylaws, as well as any subsequent revisions or amendments.

DISCUSSION: At the regular meeting on May 1, 2025, the Planning Commission agendized the discussion of a proposed amendment to its Bylaws regarding meeting start time. During this meeting, the Planning Commission approved adding a provision that allows the Chair of the Planning Commission the option to begin the meeting no earlier than 6:00 p.m., upon recommendation of the Planning and Community Development Department staff. The proposed amendment to the Planning Commission Bylaws is included in tracked changes. This amendment for a potentially earlier meeting start time is intended to provide greater flexibility in accommodating agenda items that may need more extensive discussion and to allow for flexibility in scheduling to accommodate other potential community meetings or events.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION:

This action is not considered a project under CEQA.

HEALTH IN ALL POLICIES (HiAP): In 2019, the City adopted a Health in All Policies (HiAP) strategy to eliminate inequities in health and well-being and attain equity for all

14.1 residents. The proposed amendment to the Planning Commission Bylaws, regarding the start time of meetings, directly aligns with the City's Health in All Policies (HiAP) strategy by making participation more accessible and ensuring that meetings with considerable public input can be conducted without extending to late hours. This enhanced community engagement is recognized as vital for fostering the social, economic, and environmental well-being of Santa Cruz.

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:

Viviane Pearson
Principal Management
Analyst
Samantha Haschert
Principal Planner
Submitted By:

Lee Butler
Director, Planning and
Community Development
Approved By:

Matt Huffaker
City Manager
ATTACHMENT:

1. BYLAWS OF THE PLANNING COMMISSION – TRACKED CHANGES.DOCX

14.2 BYLAWS
of the Planning Commission
City of Santa Cruz, California
Under authority of applicable statutes of the State of California, and the City Charter of the City of Santa Cruz, California, for the purpose of establishing rules and regulations governing the organization and procedures of the
Planning Commission of the City of Santa Cruz, CA
Adopted (June 18, 2009)
Approved by City Council (July 28, 2009)
Amended by Commission, Approved by City Council (December 14, 2021) Amended by Commission, Approved by City Council (May 27, 2025)

14.3 Planning Commission Bylaws of the City of Santa Cruz Page 2 Planning Commission Bylaws
Table of Contents
ARTICLE I – NAME AND/OR AUTHORITY ........................................................................................4 ARTICLE II – PURPOSE...........................................................................................................................4 ARTICLE III – DUTIES AND RESPONSIBILITIES.............................................................................4 ARTICLE IV – MEMBERSHIP ................................................................................................................5 Section 1. Membership .................................................................................................................................5 Section 2. Qualifications...............................................................................................................................5 Section 3. Application for Membership........................................................................................................5 Section 4. Direct Appointments/Method of Appointment............................................................................5 Section 5. Good Standing and Reporting of Absences .................................................................................5 Section 6. Termination..................................................................................................................................5 Section 7. Ex-Officio Membership “Optional”.............................................................................................5 ARTICLE V – TERM OF OFFICE...........................................................................................................6 Section 1. Term.............................................................................................................................................6 Section 2. Membership Year.........................................................................................................................6 Section 3. Length of Term ............................................................................................................................6 Section 4. Dual Service.................................................................................................................................6 ARTICLE VI – OFFICERS AND ELECTIONS......................................................................................6 Section 1. Officers ........................................................................................................................................6 Section 2. Election of Officers......................................................................................................................6 Section 3. Term of Office .............................................................................................................................6 Section 4. Nominations.................................................................................................................................6 Section 5. Voting ..........................................................................................................................................6 Section 6. Vacancy of an Officer ..................................................................................................................7 Section 7. Removal of Elected Officers........................................................................................................7 Section 8. Duties of the Chair.......................................................................................................................7 Section 9. Duties of the Vice Chair ..............................................................................................................7 Section 10. Duties of the Acting Chair .........................................................................................................7 ARTICLE VII – STAFF SUPPORT..........................................................................................................7 Section 1. Staff..............................................................................................................................................7 Section 2. Staff Relationship to the Advisory Body .....................................................................................8 ARTICLE VIII – MEETINGS ...................................................................................................................8 Section 1. Time and Location of Meetings...................................................................................................8 Section 2. Cancellation .................................................................................................................................8 Section 3. Special Meetings..........................................................................................................................9 Section 4. Communications..........................................................................................................................9

14.4 Planning Commission Bylaws of the City of Santa Cruz Page 3 ARTICLE IX – CONDUCT OF MEETINGS...........................................................................................9 Section 1. Compliance with the Brown Act and Council Policies ...............................................................9 Section 2. General Conduct of Meetings ......................................................................................................9 Section 3. How Items Are Placed on the Agenda.........................................................................................9 Section 4. Quorum ........................................................................................................................................9 Section 5. Absence of a Quorum ................................................................................................................10 Section 6. Agenda .......................................................................................................................................10 Section 7. Order of Business.......................................................................................................................11 ARTICLE X – MOTIONS ........................................................................................................................11 Section 1. Call for Motion ..........................................................................................................................11 Section 2. Seconding a Motion ...................................................................................................................11 Section 3. Lack of a Second........................................................................................................................11 Section 4. Discussion/Debate......................................................................................................................11 Section 5. Time Limits on Discussion/Debate............................................................................................11 Section 6. Amending a Motion ...................................................................................................................11 Section 7. Withdrawing a Motion...............................................................................................................12 Section 8. Motion to Table..........................................................................................................................12 Section 9. Results of Voting .......................................................................................................................12 ARTICLE XI – VOTING..........................................................................................................................12 Section 1. Statements of Disqualification...................................................................................................12 Section 2. Voice Vote .................................................................................................................................13 Section 3. Roll Call Vote ............................................................................................................................13 Section 4. Sealed Ballot Votes....................................................................................................................13 Section 5. Adoption of ................................................................................................................................13 Section 6. Tie Votes....................................................................................................................................13 ARTICLE XII – REPORTS .....................................................................................................................13 Section 1. Agenda Reports to Advisory Body ............................................................................................13 Section 2. Committee Reports ....................................................................................................................14 Section 3. Preparation of Advisory Body-Generated City Council Agenda Reports .................................14 ARTICLE XIII – RECORD KEEPING..................................................................................................14 Section 1. Maintenance of Records ............................................................................................................14 Section 2. Action Agenda ...........................................................................................................................14 Section 3. Minutes ......................................................................................................................................14 Section 4. Audio and Video Recording of Meetings ..................................................................................14 ARTICLE XIV – COMMITTEES...........................................................................................................15 Section 1. Ad Hoc Committees...................................................................................................................15 Section 2. Standing Committees .................................................................................................................15 Section 3. Staff Support to Committees......................................................................................................15 Section 4. Appointments.............................................................................................................................15 Section 5. Committee Meetings..................................................................................................................15 Section 6. Outside Communications...........................................................................................................15 ARTICLE XV – AMENDMENTS ...........................................................................................................16 ARTICLE XVI – ADOPTION OF BYLAWS.........................................................................................16

14.5 Planning Commission Bylaws of the City of Santa Cruz Page 4 Planning Commission Bylaws
ARTICLE I – NAME AND/OR AUTHORITY
The Name of this organization shall be the Planning Commission of the City of Santa Cruz, California; hereinafter referred to as the Planning Commission, or the Commission.

ARTICLE II – PURPOSE
The Planning Commission will advise City Council on matters pertaining to land use after receiving public input. The Planning Commission will be final decision maker for certain land use actions unless appealed to the City Council.

ARTICLE III – DUTIES AND RESPONSIBILITIES
The Planning Commission shall have the ability, as vested by the City Council, and be required to:
 Recommend to the City Council, after public input, the adoption, amendment or repeal of the general plan or any part thereof; specific, master or area plans; or the local coastal land use plan, for the physical development of the City;
 Make recommendations concerning the consistency of public works with the General Plan and the clearance and rebuilding of blighted or substandard areas within the City;  Undertake studies in the area of planning and zoning and make recommendations to the City Council and other city organizations;
 Act in an advisory capacity to the City Council in all matters pertaining to future planning matters in the City of Santa Cruz and its Sphere of Influence;  Make recommendations to the City Council on any matter relating to proposed changes to the City’s Zoning and Subdivision Ordinances and zoning map;  Hear and decide matters relating to the application of the Zoning Ordinance, as assigned or appealed to the Commission;
 Hear and decide matters relating to the application of the Subdivision Ordinance, as assigned or appealed to the Commission;
 Annually review the City’s capital improvement program for consistency with the General Plan;  Perform other duties as may from time to time be prescribed by the City Council.

14.6 Planning Commission Bylaws of the City of Santa Cruz Page 5 ARTICLE IV – MEMBERSHIP
Section 1. Membership
The Planning Commission shall consist of seven Planning Commission members, hereinafter referred to as members.

Membership, term of office, and procedures for removal of members and the filling of vacancies shall be as established by City Ordinance or by the City Council.

Section 2. Qualifications
The seven members of the Planning Commission shall be qualified electors of the City of Santa Cruz pursuant to 2.40.011 of the Municipal Code and City Council Policy, Section 5.

Section 3. Application for Membership
Prospective members shall file an application in the office of the City Clerk.

Section 4. Method of Appointment
The City Council will appoint members to the Planning Commission by an at-large vote.

Section 5. Good Standing and Reporting of Absences
Councilmembers and the chairperson of each permanent city advisory body shall receive annual attendance reports prepared in the City Clerk's Department. Absences will be identified as "with notification" or "without notification." An absence is considered as "with notification" if the member notifies the chairperson or the staff prior to the meeting. If there has been no prior notification, the absence is considered "without notification." It is important to notify staff of any absences for the purposes of determining a quorum. Planning Commission members are expected to attend meetings regularly.

Planning Commission members are allowed six absences per year.

It is the responsibility of staff of an advisory body to bring serious attendance issues to the attention of the Mayor or City Clerk prior to reaching the limit, if possible. If either through study of the annual attendance report or through other channels, the Mayor learns that a member has more than the allowable number of absences, the Mayor may notify the member or chairperson, that action may be initiated by Council to remove the member from the advisory body. The Mayor may choose to postpone or withhold notification to Council in unusual circumstances: for example, if the member is actively performing work for the advisory body outside of the regular meetings or is involved in subcommittee work.

Section 6. Termination
After three meetings following appointment to the Planning Commission, each member shall be subject to removal by motion of any Councilmember, adopted by at least four affirmative votes.

Section 7. Ex-Officio Membership “Optional”
The Planning Commission may find that, because of the complexity of its work, it is desirable to add member(s) at-large to the Planning Commission to serve as non-voting ex-officio members to lend other opinions or expertise to the work of the Planning Commission. The City Council

14.7 Planning Commission Bylaws of the City of Santa Cruz Page 6 will authorize the Chair of the Planning Commission to nominate member(s)-at-large for Council approval to be non-voting ex-officio members for a determined period of time.

ARTICLE V – TERM OF OFFICE
Section 1. Term
Term of office for each member shall be four years. A member may be appointed to complete an unexpired term. A Member may continue to serve until their successor has been appointed.

Section 2. Membership Year
A membership year shall be from February 1st to January 31st of each year.

Section 3. Length of Term
A member shall not serve more than two consecutive full four-year terms. Upon completion of a member's eighth consecutive year of service, that member will be ineligible for reappointment for a period of two years. Members who have six years or less at the time their term expires are eligible for reappointment.

Section 4. Dual Service
No member shall be eligible to serve on two Advisory Bodies unless one is established for less than 13 months.

ARTICLE VI – OFFICERS AND ELECTIONS
Section 1. Officers
Officers of the Planning Commission shall consist of a Chair and Vice Chair.

Section 2. Election of Officers
As soon as is practicable following the first day of January of every year, there shall be elected from among the membership of the Planning Commission a Chair and Vice Chair.

Section 3. Term of Office
The term of office for the Chair and Vice Chair is one calendar year. Officers may not serve in the same position for more than two consecutive years.

Section 4. Nominations
The Chair will open the floor to nominations. Any member may nominate a candidate from the membership for the position of Chair or Vice Chair; nominations need not be seconded.

A member may withdraw their name if placed in nomination, announcing that, if elected, they would not be able to serve; but they shall not withdraw in favor of another member.

Once the nominations are complete, the Chair will ask for a motion to close the nominations; a second of, and vote on, the motion is required.

The Chair then declares that it has been moved and seconded that the nominations be closed, and the members proceed to the election.

Section 5. Voting
Voting may be by voice vote or by roll call vote.

14.8 Planning Commission Bylaws of the City of Santa Cruz Page 7 The candidate who receives a majority of the votes is then declared to be legally elected to fill the office of Chair.

The same procedure is followed for the election of Vice Chair.

New officers shall assume office at the next meeting.

Section 6. Vacancy of an Officer
Should a vacancy occur, for any reason, in the office of Chair or Vice Chair prior to the next annual election, a special election shall be held to fill the vacant office from among the membership. That member shall serve until a new appointment has been made.

Section 7. Removal of Elected Officers
The Chair or Vice Chair may be removed by a majority vote of the full Planning Commission at a regularly scheduled meeting of the Planning Commission, when all appointed members are present, or at a special meeting convened for that purpose at which a quorum is present. Any officer removed ceases to hold the office once the vote has been tallied and announced. If the Chair is removed, the Vice Chair shall become the new Chair. An election for the Vice Chair shall then be agendized for the next meeting.

Section 8. Duties of the Chair
The Chair shall preside at all regular meetings and may call special meetings.

The Chair shall decide upon all points of order and procedure during the meeting; their decision shall be final unless overruled by a vote of the Planning Commission, in compliance with Article IX, Section 2, “General Conduct of Meetings.”
The Chair may not make motions, but may second motions on the floor.

The Chair acts as primary contact for staff and shall represent the Planning Commission before City Council whenever the Commission or Council considers it necessary unless the Chair designates an alternative.

The Chair and staff shall jointly set the meeting agendas.

Section 9. Duties of the Vice Chair
The Vice Chair shall assume all duties of the Chair in the absence or disability of the Chair.

Section 10. Duties of the Acting Chair
In case of absence of both the Chair and the Vice Chair from any meeting, an Acting Chair shall be elected from among the members present, to serve only during the absence of the Chair and Vice Chair.

ARTICLE VII – STAFF SUPPORT
Section 1. Staff
Staff support and assistance is provided, but advisory bodies do not have supervisory authority over City employees. While they may work closely with advisory bodies, staff members remain responsible to their immediate supervisors and ultimately to the City Manager and Council.

14.9 Planning Commission Bylaws of the City of Santa Cruz Page 8 The Director of Planning and Community Development shall designate appropriate staff to act as staff person(s) to assist and support the Planning Commission. Staff shall attend all regular and special Planning Commission meetings. Staff shall be responsible for coordination of such reports, studies, and recommendations as are necessary to assist the Planning Commission in the conduct of its business according to City Council policy and the Brown Act. Staff may enlist the assistance of other departments as required. Staff shall be responsible for all public notification regarding all regular and special Planning Commission meetings.

Staff shall record the minutes of the meetings in accordance with the guidelines established in the “Preparation of Minutes” section of the City Councilmembers' Handbook, shall supervise volunteers and interns, shall work closely with the Chair between meetings, shall make recommendations, prepare reports and proposals to the Planning Commission, may represent the Planning Commission at other meetings, presentations, and other public functions as requested, and shall perform administrative tasks.

Staff shall be responsible for the maintenance of proper records and files pertaining to Planning Commission business. Staff shall receive and record all exhibits, petitions, documents, or other materials presented to the Planning Commission in support of, or in opposition to, any question before the Planning Commission. Staff shall sign all notices prepared in connection with Planning Commission business, shall attest to all records of actions, transmittals, and referrals as may be necessary or required by law, and shall be responsible for compliance with all Brown Act postings and noticing requirements.

Section 2. Staff Relationship to the Planning Commission Given limited staff resources, the Chair or individual members shall not make separate requests of staff without approval of the Planning Commission. If a member has a research or report request, it shall be brought to the Planning Commission for discussion, consideration, and recommendation prior to making the request of staff. If not approved by the Planning Commission, the individual member shall be responsible for their own research or report.

Staff and the Chair shall jointly set meeting agendas.

ARTICLE VIII – MEETINGS
Section 1. Time and Location of Meetings
The Planning Commission will hold its regular meetings on the first and third Thursdays of each month at the City Council Chambers. If the Council Chambers are not available another City facility that is accessible to persons with disabilities will be used. The meetings shall be in the evening beginning at 7:00 pm, and the Chair of the Planning Commission may have the option to begin the meeting no earlier than 6:00 pm upon recommendation of the Planning and Community Development Department staff and will adjourn no later than 11:00 pm, unless the Chair, with concurrence of the Planning Commission, extends the time of adjournment.

If the scheduled date for a regular meeting falls on a holiday, such meeting shall be rescheduled in accordance with Council policy.

14.10 Planning Commission Bylaws of the City of Santa Cruz Page 9 Section 2. Cancellation
If a majority of the membership or staff deems it necessary or desirable, a scheduled regular meeting may be cancelled or rescheduled upon giving notice, unless a public hearing has previously been noticed.

Section 3. Special Meetings
The Chair of the Planning Commission, staff, or a majority of the membership of the Planning Commission may call a special meeting. Notice of such meeting shall state the purpose or the business to be transacted during such special meeting. No other business may be transacted at such special meeting other than as stated in the notice. Oral Communications are not required at special meetings as long as a statement appears on the agenda identifying that there will be no Oral Communications, but that members of the public will have the opportunity to address the Planning Commission on item(s) on the agenda.

Section 4. Communications
All oral communications between Planning Commissioners and applicants and the public regarding any application pending before the Commission shall take place at public meetings of the Commission. Written communications from the applicants and the public on an application must be submitted to the Planning and Community Development Department by 5:00 pm seven calendar days before Commission consideration, to allow for inclusion in the agenda packet. The late submittal of written communications will need to be summarized at the public hearing before the Planning Commission because there may be insufficient time for the Planning Commission to review such submittals the night of the hearing.

ARTICLE IX – CONDUCT OF MEETINGS
Section 1. Compliance with the Brown Act and Council Policies All regular, special, and adjourned meetings of the Planning Commission shall be open meetings to which the public and the press shall be admitted in compliance with the Brown Act. Meetings will be held at City facilities which are accessible to persons with disabilities.

Section 2. General Conduct of Meetings
Points of order and conduct, including those not addressed by these Bylaws, shall be settled by the Chair, unless overruled by a majority vote of the Planning Commission. Points of order and conduct shall comply with the Brown Act, these Bylaws, and the City Councilmembers’ Handbook. The Chair will consult with staff as necessary. Unresolved issues shall be referred to the City Attorney and continued to a future meeting.

Section 3. How Items Are Placed on the Agenda
A request to have an item placed for consideration on a future agenda may be made by staff, any Planning Commission member or a member of the public. The Chair and staff will consider the validity (within the approved scope of work) and urgency of the request and determine when and if that item should be placed on a Planning Commission agenda. Issues may be referred to an advisory body by the City Council and may have time sensitive deadlines. The items must comply with the procedures in Article XII, Section 1, “Agenda Reports to Advisory Body.” Section 4. Quorum
A quorum of the Planning Commission shall consist of four members, whether or not there are vacancies on the Planning Commission.

14.11 Planning Commission Bylaws of the City of Santa Cruz Page 10 Section 5. Absence of a Quorum
In the absence of a quorum at any meeting, such meeting shall be adjourned to the next regular meeting date by the Chair, Vice Chair, or staff.

A meeting may be declared adjourned for lack of a quorum after a 15-minute period has elapsed from the scheduled time of the start of the meeting. A meeting may also be declared adjourned in advance, if absence notifications received by staff provided for lack of a quorum. Adjournment may be declared by any member or staff.

Section 6. Agenda
The Chair and staff shall jointly set the meeting agenda and its format shall conform to the template set by Council Policy.

The normal order of the agenda shall be as follows:

A. Call to Order.

B. Roll Call
C. Statement of Disqualification.

D. Oral Communications
E. Announcements
F. Approval of Minutes
G. Consent Calendar
H. Public Hearings
I. General Business
J. Informational Items
K. Subcommittee/Advisory Body Oral Reports
L. Items Referred to Future Agendas
M. Adjournment
The order of presentation of applications and petitions shall be as follows:

A. Presentation of application by staff, staff report, and preliminary recommendations.

B. Questions by members of the Commissioners.

C. Presentation by applicant, if any.

14.12 Planning Commission Bylaws of the City of Santa Cruz Page 11 D. Public hearing opened by Chair.

E. Statements by members of the public, if any.

F. Rebuttal by applicant.

G. Public hearing closed by Chair.

H. Questions and comments by members of the Commission.

I. Motions and voting.

The public shall have an opportunity to speak to any agenda item. Therefore, at the beginning of the General Business section of the agenda, the Chair will announce that persons in the audience will have an opportunity to speak to any item in that section. At the beginning of each item, the Chair will ask the audience if there is a desire to speak on that item. The Chair may set parameters for the nature and length of any comments.

Section 7. Order of Business
The Chair or a majority vote of the Planning Commission may change the order of business.

ARTICLE X – MOTIONS
Section 1. Call for Motion
Upon conclusion of preliminary discussion, any member other than the Chair may place a motion on the floor. The motion shall contain the proposed action.

Section 2. Seconding a Motion
The Chair shall receive all motions and shall call for a second to each motion. The Chair may second a motion.

Section 3. Lack of a Second
If, after a reasonable time, no second has been made, the motion shall be declared dead for lack of a second, and the Chair shall state this. This shall not be considered an action of the Planning Commission and shall not be included in the minutes.

Section 4. Discussion/Debate
After a motion has been made and seconded, the Chair shall call for a discussion of the question.

All discussion shall be limited to the motion on the floor. At the close of the discussion, the Chair shall put the matter to a vote.

Section 5. Time Limits on Discussion/Debate
The Chair may, at their discretion, limit debate of any motion; except that each member shall have the opportunity to speak.

Section 6. Amending a Motion
A motion to amend may be made by any member to revise a motion on the floor; but it cannot be a freestanding motion on its own, nor can it substitute for a main motion. The motion to amend

14.13 Planning Commission Bylaws of the City of Santa Cruz Page 12 must be voted upon, unless the maker and the second accept it as a friendly amendment, and, if it passes, it then becomes part of the main motion.

Section 7. Withdrawing a Motion
Any motion may be withdrawn by the maker and the second and shall not be included in the meeting minutes.

Section 8. Motion to Table
A motion to table may be made to suspend consideration of an item that appears on a meeting agenda for reasons of urgency or to end an unproductive discussion. A motion to table is not in order when another member has the floor. A motion to table requires a second, is not debatable, is not amendable, requires a majority vote for passage, and, if adopted, cannot be reconsidered at the meeting at which it is adopted. Members will refrain from using a motion to table as a means of capriciously limiting debate among members, to suppress a minority of the Planning Commission, or to avoid public input on an agenda item under consideration by the Planning Commission. A tabled item may be placed back on the agenda per the procedures in Article IX, Section 3, “How Items are Placed on the Agenda.”
Section 9. Results of Voting
The Chair shall state the results of each vote, e.g., “The motion passes by a vote of five to two.” ARTICLE XI – VOTING
Section 1. Statements of Disqualification
Section 607 of the City Charter states that “...All members present at any meeting must vote unless disqualified, in which case the disqualification shall be publicly declared and a record thereof made.” No member may abstain from voting on any item, except on the approval of the minutes, when that member was absent.

The City of Santa Cruz has adopted a Conflict of Interest Code, and Section 8 of that Code states that “no person shall make or participate in a governmental decision which they knows or has reason to know will have a reasonably foreseeable material financial effect distinguishable from its effect on the public generally.”
Any member who has a disqualifying interest on a particular matter shall do all of the following:
1) Publicly identify the financial interest that gives rise to the conflict of interest or potential conflict of interest in detail sufficient to be understood by the public, except that disclosure of the exact street address of a residence is not required; 2) Recuse themselves from discussing and voting on the matter, or otherwise acting in violation of government code Section 87100;
3) Leave the room until after the discussion, vote, and any other disposition of the matter is concluded unless the matter has been placed on the portion of the agenda reserved for uncontested matters;
4) Notwithstanding paragraph 3, a public official may speak on the issue during the time that the general public speaks on the issue.

Any question regarding conflicts of interest shall be referred to the City Attorney.

14.14 Planning Commission Bylaws of the City of Santa Cruz Page 13 Section 2. Voice Vote
All questions shall be resolved by voice vote. Each member shall vote “Aye” or “No” and the vote shall be so entered into the minutes, noting the vote of each member. A member may state the reasons for his or her vote, which reasons shall also be entered into the minutes of the meeting. All members including the Chair shall vote on all matters, except where they have a disqualifying interest.

Section 3. Roll Call Vote
Any member may request a roll call vote, either before or immediately after a voice vote. A roll call vote shall be taken without further discussion. The Planning Commission staff shall call the roll and each member shall state their vote for the record.

Section 4. Sealed Ballot Votes
The Planning Commission shall not take a sealed ballot vote in open session.

Section 5. Adoption of a Motion
Adoption of a motion shall be made by a simple majority of the members present, except as provided below.

Adoption of a motion recommending adoption or amendment of the General Plan or elements thereof, Zoning Ordinance text and map amendments or the Local Coastal Land Use Program shall be by a majority vote of the entire Planning Commission, four affirmative votes.

The Chair shall restate the vote for the record, e.g., “The motion is approved by a vote of five to two.”
Section 6. Tie Votes
Tie votes will be resolved as follows:

Statement of Disqualification: A tie vote resulting from a Statement of Disqualification of one or more members, with no members absent and no vacancies on the Planning Commission, shall constitute a defeat of the motion.

Absence: A tie vote during the absence of one or more members, or when there is a vacancy on the Planning Commission, shall cause the item to be automatically continued to the next meeting; except that, as to matters on which action must be taken on a date prior to the next meeting, a tie vote shall constitute a denial of the requested action.

Successive Tie Vote: A tie vote at the next meeting on a matter that has been continued as a result of a tie vote shall constitute a denial of the appeal or defeat of the motion.

ARTICLE XII – REPORTS
Section 1. Agenda Reports to Planning Commission
All agenda items require a written report. Written reports serve as the analysis, detail, history, and justification for each agenda item. Reports shall include recommendation(s) and background.

If a report is initiated by a Planning Commission member, an electronic draft of that report shall be provided to staff for formatting at least eight business days prior to the meeting. Staff shall then format reports to be consistent with content, style, and formatting of City Council agenda

14.15 Planning Commission Bylaws of the City of Santa Cruz Page 14 reports. Items initiated by a committee shall be processed in the same manner. Draft reports not submitted in a timely manner shall be placed on a future agenda.

Section 2. Committee Reports
Committee reports may be verbal or written and may be accompanied by written documentation.

Section 3. Preparation of Planning Commission-Generated City Council Agenda Reports All resolutions and recommendations adopted by the Planning Commission and addressed to the City Council shall be delivered to the Mayor as soon as possible. If the action requests City Council action, the item shall be placed on a future City Council agenda. Agenda reports to the City Council from the Planning Commission shall be written reports consistent with content, style, and formatting of City Council agenda reports.

Additionally, the agenda report shall include a section called analysis, which includes the pros, cons, and foreseeable consequences of the recommendation(s). In the event that staff and the Planning Commission disagree, an analysis of both recommendations shall be included.

ARTICLE XIII – RECORD KEEPING
Section 1. Maintenance of Records
All records shall be maintained according to the City of Santa Cruz Records Retention Schedule.

Section 2. Action Agenda
Action agendas are required for the Planning Commission. An action agenda is an unofficial record of the meeting and shall consist of attendance; motion maker and seconder of the motion; and an actual tally of the votes for all actions taken. The action agenda shall be made available to the Planning Commission, the public and Staff within four working days of the meeting.

Section 3. Minutes
Action-only minutes will be produced for all Planning Commission meetings in the same format as that used for City Council meetings. Planning Commission members who want a particular comment included in the minutes must state “for the record” before making such comment.

Minutes shall be reviewed, corrected as appropriate, and or amended and approved by the Planning Commission at a subsequent meeting.

Subcommittee reports presented orally in a meeting shall be summarized in the minutes.

Section 4. Audio and Video Recording of Meetings
Proceedings for all Planning Commission meetings shall be recorded on audiotapes whenever possible. The audiotapes shall be retained for one year pursuant to the City of Santa Cruz Records Retention Schedule unless a greater length of time is necessary, a determined by the Director of Planning and Community Development.

As appropriate and/or when requested by the Planning Commission or City Council, a meeting of the Planning Commission may be video recorded or televised.

Members of the public have the right to make recordings of a meeting without disrupting the proceedings under any circumstances.

14.16 Planning Commission Bylaws of the City of Santa Cruz Page 15 ARTICLE XIV – COMMITTEES
Section 1. Ad Hoc Committees
Ad hoc committees are established by the Planning Commission to gather information or deliberate on issues deemed necessary to carrying out the functions and purpose of the Planning Commission. Ad hoc committees generally serve only a limited or single purpose, are not perpetual, and are dissolved once their specific task is completed. An ad hoc committee shall be less than six months in term and shall have fewer members than a simple majority of the membership of the appointing Planning Commission. Ad hoc committees shall bring back information to the Planning Commission in either oral or written form.

Following ad hoc committee input, the Planning Commission shall then discuss, deliberate, and make recommendations on the designated issue, thereby providing the public with the opportunity to participate in the decision-making process. This shall take place in the presence of a quorum of the Planning Commission at a properly noticed public meeting.

Ad hoc committees shall not be subject to the Brown Act. City staff shall not be required to be present at ad hoc committee meetings. All ad hoc committees shall provide a final report to the Planning Commission in lieu of minutes.

Section 2. Standing Committees
Standing committees are bodies established to gather information or deliberate on issues deemed necessary to carry out the functions and purpose of the Planning Commission. Standing committees are ongoing in nature and are created to deal with issues and make decisions on behalf of the Planning Commission. The public has a right to participate in this process.

Standing committees are subject to the Brown Act and staff will provide only such support as to ensure such compliance.

Section 3. Staff Support to Committees
City staff shall normally not be required to attend or provide support for standing or ad hoc committee meetings, unless directed by the department head. All ad hoc committees shall provide a final report to the Planning Commission in lieu of minutes. All standing committees shall provide reports, no less than quarterly, to the Planning Commission.

Section 4. Appointments
The Chair of the Planning Commission may designate or solicit participation for standing and ad hoc committees.

Section 5. Committee Meetings
All standing or ad hoc committee meetings shall be held upon call of the Committee Chair.

Section 6. Outside Communications
On matters relating to planning policy, Planning Commissioners must necessarily communicate with interested citizens, including at times other than at meetings. However, no Planning Commissioner may represent the Commission except by direction of the Chair or the Commission.

14.17 Planning Commission Bylaws of the City of Santa Cruz Page 16 ARTICLE XV – AMENDMENTS
A majority of the full membership of the Planning Commission may amend these bylaws, four affirmative votes, subject to the approval of the City Council.

ARTICLE XVI – ADOPTION OF BYLAWS
Immediately upon favorable vote of not less than four affirmative votes of the full membership of the Planning Commission of the City of Santa Cruz, and approval of the City Council, these Bylaws shall be in full force and effect. Any and all previously adopted bylaws are thereby superseded.

These Bylaws shall not be considered or construed as superseding any ordinance or directive of the City Council of the City of Santa Cruz, nor shall they preclude the preparation and adoption of further procedural manuals and policies by which the Planning Commission may direct its activities.

14.18 City Council

AGENDA REPORT
DATE: 05/08/2025
AGENDA OF: 05/27/2025
DEPARTMENT: Parks and Recreation
SUBJECT: Contract for Septic System Replacement Services at Lower DeLaveaga Community Park. Environmental Determination: Categorical Exemption 15301(d), Existing Facilities (PR)
LOCATION: District 1
RECOMMENDATION: Motion to:
1) Adopt a resolution to amend the FY 2025 budget to appropriate funds in the amount of $163,080 from existing Parks and Recreation Capital Improvement Program project balances to resource the repair of the Lower DeLaveaga Park septic system; 2) Award a contract for services to procure and install a new septic system at Lower DeLaveaga Park to Tom’s Septic Construction, a subsidiary of The Don Chapin Company, Inc. in an amount not to exceed $132,750; and
3) Approve the CEQA determination contained in this agenda report, including the application of the following categorical exemption: CEQA Guidelines Section 15301 (Existing Facilities).

BACKGROUND: In June 2024, the Lower DeLaveaga Community Park septic system experienced a catastrophic failure, resulting in the immediate closure of the park's restrooms.

This failure presents a significant risk to the health and safety of park patrons, as the lack of functioning restrooms creates a potential public health hazard. While temporary portable restrooms are currently in use, they are not a sustainable solution for this heavily used community park.

Parks and Recreation staff, in coordination with the County of Santa Cruz Environmental Health, initiated a process to determine the most appropriate and expedient solution to replace the antiquated system. Due to their expertise, County Environmental Health recommended Myers Engineering, Inc., an Onsite Wastewater Treatment System (OWTS) consultant, to assess feasible solutions and obtain the necessary permits for the septic replacement project.

The City made good faith efforts to secure competitive bids for this project, consistent with SCMC Chapter 3.08.

15.1 1. Initial Bidding: Staff initially solicited bids for the septic system replacement based on an initial design. Vendors submitted bids.

2. Revised Design Proposal: During this process, one bidder, Tom's Septic, proposed an alternative design solution. Upon review, the City's OWTS consultant found this alternative design to be preferable to the original specifications.

3. Second Bidding Attempt (Revised Design): Recognizing the superiority of the revised design, staff conducted a second bid solicitation specifically for this new scope of work, contacting three qualified vendors. Tom's Septic was the only vendor that submitted a bid for the revised design.

4. Material Sourcing and Vendor Relationship: Concurrently, staff planned to procure necessary project materials separately from The Don Chapin Company, Inc. Subsequently, it was determined that Tom's Septic is a subsidiary of The Don Chapin Company, Inc.

5. Combined Project Value: The combined value for the services (bid by Tom's Septic) and the materials (sourced from Don Chapin) totals $132,750.

DISCUSSION: Pursuant to SCMC Section 3.08.150, a good faith review concludes that The Don Chapin Company, Inc. (inclusive of its subsidiary Tom's Septic Construction) represents the sole source for the required, preferred septic system replacement design and materials for the following reasons:
• Unique Capability for Preferred Design: Despite efforts to obtain multiple bids for the superior, revised design identified by the City's consultant, only Tom's Septic submitted a responsive bid.

The other solicited vendors declined to bid on the new design. • Efficient Project Delivery: Utilizing Tom’s Septic Construction streamlines the project by coordinating both services and materials through a single entity, potentially expediting the project timeline and ensuring seamless integration of all components. • Project Urgency: The septic system failure necessitates prompt action to eliminate the ongoing public health risk associated with closed restrooms, especially with the busy summer season approaching. Delaying further to re-design or re-bid yet again would prolong the period without adequate facilities.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: The City Council's action on this item is exempt under CEQA Guidelines Section 15301, Existing Facilities, in that it involves the repair and replacement of existing public structures, involving negligible or no expansion of use.

HEALTH IN ALL POLICIES (HiAP): The project implements Health in All Policies related to environmental health and health and wellness because it restores essential sanitation services at a public park.

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 total project cost is $163,080. This budget encompasses all necessary project components, including onsite wastewater treatment system (OWTS) engineering and design work, required soil testing, procurement and installation labor for the new septic system, and essential site preparation. Funding for this project will be reappropriated from existing Parks and Recreation Capital Improvement Program project balances, resulting in no net impact to the General Fund.

15.2 Prepared By:

Lindsay Bass
Principal Management
Analyst
Submitted By:

Tony Elliot
Director of Parks and
Recreation
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. LOWER DELA SEPTIC DRAFT PSA.PDF

2. BUDGET ADJUSTMENT.PDF

3. FY2025 PR CIP SEPTIC PROJECT BUDGET ADJUSTMENT DETAIL.PDF

15.3 City of Santa Cruz Professional Services Agreement for Lower DeLaveaga Park Septic System Replacement
May 2025 (Form Rev.01/24 ) Page 1
Professional Services Agreement With
TOM’S SEPTIC CONSTRUCTION, A SUBSIDIARY OF THE DON CHAPIN COMPANY, INC.

For LOWER DELAVEAGA PARK SEPTIC SYSTEM REPLACEMENT
THIS AGREEMENT for professional services is made by and between the City of Santa Cruz (“City”) and Tom’s Septic Construction, a subsidiary of The Don Chapin Company, Inc. (“Vendor”) (each is referred to individually as a “Party” and collectively, as the “Parties”) as of ____________, 2025 (the “Effective Date”).

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

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

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

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

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

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

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

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

15.4 City of Santa Cruz Professional Services Agreement for Lower DeLaveaga Park Septic System Replacement
May 2025 (Form Rev.01/24 ) Page 2
SECTION 4: FEES AND PAYMENT
For services actually performed, the City will compensate Vendor at the rates set forth in the Fee Schedule detailed in Exhibit B and in accordance with the terms set forth therein. Payment for Vendor's services in carrying out the entire Scope of Work shall be made within the budget limit, or limits shown, upon Exhibit B. Markups shall not be charged for any approved sub-Vendors or subcontractors.

Vendor agrees that the payments to Vendor specified in this Section 4 will constitute full and complete compensation for all obligations assumed by Vendor under this Agreement. Such payments shall be considered the full compensation for all personnel, materials, supplies, and equipment used by Vendor in the Scope of Work Where conflicts regarding compensation may occur, the provisions of this section apply.

Variations from the budget for each task which are justified by statements indicating personnel time expended and submittal of a revised budget are only allowed with prior City approval; however, in no event shall the total fee charged for the Scope of Work set forth in Exhibit A exceed the budget of $132,750 without advance written City authorization in the form of an amendment or change order.

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

All invoices shall contain the following affidavit signed by Vendor (if individual) or by an authorized representative of Vendor (if Vendor is an entity):
"I hereby certify [or as an authorized representative of Vendor] that the charge of (Insert invoice amount) as summarized above and shown in detail on the attachments is in accordance with the terms of Agreement dated (Insert Agreement Date), and has not been previously paid." This Agreement is contingent upon the appropriation of sufficient funding by the City for the services covered by this Agreement. If funding is reduced or deleted by the City for the services covered by this Agreement, the City has the option without penalty or liability to either terminate this Agreement or to offer an amendment to this Agreement indicating the reduced amount.

SECTION 5: TRAVEL REIMBURSEMENT POLICY
The City shall not be responsible for any travel, meal, or lodging reimbursements to Vendor and/or Vendor’s employees unless otherwise specified in the Scope of Work.

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

SECTION 7: TERM AND SCHEDULE
The term of this Agreement shall be for 6 months beginning on the effective date of this Agreement and terminating upon completion of the Scope of Work.

15.5 City of Santa Cruz Professional Services Agreement for Lower DeLaveaga Park Septic System Replacement
May 2025 (Form Rev.01/24 ) Page 3
Vendor shall begin work as specified in a written authorization (e.g., Notice to Proceed) to perform services. The written authorization to perform work shall not be issued until after this Agreement has been approved and authorized by the City.

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

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

The City reserves the right to obtain the item(s) and/or services covered by this Agreement from another source during any on-going suspension of service due to the circumstances outlined above.

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

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

The City may, at its option, allow Vendor to cure its failure to perform within 10 business days (or longer period authorized in writing by the City) from the date of the City’s termination notice. The termination shall be become effective if Vendor has not cured within the specified time period to the City’s satisfaction.

Vendor may terminate this Agreement for cause if the City fails to cure a material default in performance within a period of 30 calendar days (or such longer period agreed to by the Vendor), from the date of the Vendor’s written termination notice specifying the default in performance. Vendor must provide a written notice of termination to the City not less than 30 calendar days of the effective termination date.

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

SECTION 9: INSURANCE

15.6 City of Santa Cruz Professional Services Agreement for Lower DeLaveaga Park Septic System Replacement
May 2025 (Form Rev.01/24 ) Page 4
Prior to the beginning of and throughout the duration of the Agreement, Vendor will maintain and comply with the Insurance Requirements as set forth in Exhibit D. Vendor will insure the City against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder.

The insurance coverages required shall not in any way limit the liability of the Vendor.

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

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

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

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

SECTION 13: AMENDMENTS
This Agreement may not be amended in any respect except by way of a written instrument which expressly references and identifies this particular Agreement, which expressly states that its purpose is to amend this particular Agreement, and which is duly executed by the City and Vendor. Vendor acknowledges that no such amendment shall be effective until approved and authorized by the City’s authorized representative. No representative of the City is authorized to obligate the City to pay the cost or value of services beyond the scope of services set forth in Exhibit A. Such authority

15.7 City of Santa Cruz Professional Services Agreement for Lower DeLaveaga Park Septic System Replacement
May 2025 (Form Rev.01/24 ) Page 5
is retained solely by the City Manager, Director, or their designee. Unless expressly authorized by the City Manager or Director, Vendor’s compensation shall be limited to that set forth in Exhibit B, Fee Schedule.

SECTION 14: MISCELLANEOUS PROVISIONS

1. Project Manager/Key Staff. Director reserves the right to evaluate and confer with Vendor regarding the project manager or other key staff assigned by Vendor to perform the work under this Agreement. Vendorshall replace the project manager or key staff upon Director’srequest due to Director’s concern about their performance. Otherwise, no change in assignment by the Vendor may occur without prior written approval of the City.

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

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

In the event that Vendor or any employee, agent, or subcontractor of Vendor providing services under this Agreement is determined by a court of competent jurisdiction or the California Public Employees Retirement System (PERS) to be eligible for enrollment in PERS as an employee of City, Vendor shall indemnify, defend, and hold harmless City for the payment of any employee and/or employer contributions for PERS benefits on behalf of Vendor or its employees, agents, or subcontractors, as well as for the payment of any penalties and interest on such contributions, which would otherwise be the responsibility of City.

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

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

Vendor shall be as fully responsible to the City for the negligent acts and omissions of its contractors and subcontractors or subVendors, and of persons either directly or indirectly employed by them, or acting on Vendor’s behalf pursuant to this Agreement, as it is for the acts and omissions of persons directly employed by Vendor.

Vendor’s obligation to pay its subVendors is an independent obligation from the City’s obligation to make payments to the Vendor.

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

15.8 City of Santa Cruz Professional Services Agreement for Lower DeLaveaga Park Septic System Replacement
May 2025 (Form Rev.01/24 ) Page 6

7. Conflicts of Interest. Vendor agrees to comply with conflict of interest laws in performing the work and services under this Agreement. Vendor covenants (on behalf of Vendor and Vendor’s employees, agents, representatives, and subcontractors) that there is no direct or indirect interest, financial or otherwise, which would conflict in any manner or degree with the performance of services required under this Agreement. Vendor acknowledges and agrees to comply with applicable provisions of conflict of interest law and regulations, including the CA Political Reform Act, Sections 1090 and 87100 of the Government Code, and the City’s conflict of interest code. Vendor will immediately advise City if Vendor learns of a conflicting financial interest of Vendor during the term of this Agreement.

8. City Property. The work, or any portion, of Vendor in performing this Agreement shall become the property of City. The Vendor may be permitted to retain copies of such work for information and reference in connection only with the provision of services for the City. All materials and work product, whether finished or unfinished, shall be delivered to City upon completion of contract services or termination of this Agreement for any reason. Vendor acknowledges and agrees that the work product shall be considered a work made for hire within the meaning of the patent and copyright laws of the United States; and Vendor agrees that all copyrights which arise from creation of project-related documents and materials pursuant to this Agreement shall be vested in the City and Vendor waives and relinquishes all claims to copyright or other intellectual property rights in favor of City. Any work product related to this Agreement shall be confidential, not to be used by the Vendor on other projects or disclosed to any third party, except by agreement in writing by the City, or except as otherwise provided herein. Vendor’s final deliverables shall comply with Section 508 (29 U.S.C. Section 794d) accessibility requirements, as applicable.

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

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

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

10. Confidentiality.
a. Vendor shall not acquire any ownership interest in data and information (“City Data”) received by Vendor from City, which shall remain the property of the City. Certain information may be considered confidential (“Confidential Information”). Confidential Information shall mean all information or proprietary materials

15.9 City of Santa Cruz Professional Services Agreement for Lower DeLaveaga Park Septic System Replacement
May 2025 (Form Rev.01/24 ) Page 7
(in every form and media) not generally known to the public and which has been or is hereafter disclosed or made available directly or indirectly to Vendor through any means of communication, either verbally or in writing even if it has not been designated in writing as “Confidential” to Vendor in connection with this Agreement. Unless otherwise required by law, Vendor shall not, without City’s written permission, use or disclose City Data and/or Confidential Information other than in the performance of the obligations under this Agreement. As between Vendor and City, all City Confidential Information shall remain the property of the City. Vendor shall not acquire ownership interest in the City’s Confidential Information. b. Vendor shall be responsible for ensuring and maintaining the security and confidentiality of City Data and Confidential Information, protect against any anticipated threats or hazards to the security or integrity of City Data and Confidential Information, protect against unauthorized access to or use of City Data and Confidential Information that could result in substantial harm or inconvenience to City or any end users; and ensure the proper return and/or disposal of City Data and Confidential Information upon termination of this Agreement with notice to the City.
c. Vendor shall take appropriate action to address any incident of unauthorized access to City Data and Confidential Information, including addressing and/or remedying the issue that resulted in such unauthorized access, notifying City as soon as possible of any incident of unauthorized access to City Data and Confidential Information, or any other breach in Vendor’s security that materially affects City or end users; and be responsible for ensuring compliance by its officers, employees, agents, and subcontractors with the confidentiality provisions hereof. Should confidential and/or legally protected City Data be divulged to unauthorized third parties, Vendor shall comply with all applicable federal and state laws and regulations, including but not limited to California Civil Code sections 1798.29 and 1798.82 at Vendor’s sole expense. Vendor shall not charge City for any expenses associated with Vendor’s compliance with these obligations.
d. Vendor shall defend, indemnify and hold harmless City, its officials, officers, employees and agents against any claim, liability, loss, injury or damage (including attorneys’ fee and costs) arising out of, or in connection with, the unauthorized use, access, and/or disclosure of City Data and/or Confidential Information by Vendor and/or its agents, employees or subcontractors, excepting only loss, injury or damage caused by the sole negligence or willful misconduct of the City. This provision shall survive the termination or expiration of this Agreement.

11. Vendor's Records/Audits. Vendor shall maintain accurate accounting records and other written documentation pertaining to the costs incurred relating to this Agreement for examination and audit by the City, State, or federal government, as applicable, in compliance with Gov. Code §8546.7 for a contract in excess of $10,000, or in compliance with other applicable federal laws (e.g. 48 CFR 31) or regulations for a period of three (3) years from:
the date of the final City payment for Vendor's services, or from the date of final disposition of real property or equipment acquired with federal funds, or date of the termination of this Agreement, whichever is later. If Vendor engages a subcontractor to perform work related to this Agreement with a cost of $10,000 or more over a 12-month period, such subcontract shall contain these same requirements. This provision shall survive the termination of this Agreement.

12. California Public Records Act. City is a public agency subject to the disclosure requirements of the California Public Records Act (“CPRA”). If Vendor’s proprietary information is contained in documents or information submitted to City, and Vendor claims that such information falls within one or more CPRA exemptions, Vendor must clearly mark such information “Confidential and Proprietary,” and identify the specific lines containing the information. In the event of a request for such information, City will make best efforts to provide notice to Vendor prior to such disclosure. If Vendor contends that any documents are exempt from the CPRA and wishes

15.10 City of Santa Cruz Professional Services Agreement for Lower DeLaveaga Park Septic System Replacement
May 2025 (Form Rev.01/24 ) Page 8
to prevent disclosure, it is required to obtain a protective order, injunctive relief, or other appropriate remedy from a court of law in Santa Cruz County before the City is required to respond to the CPRA request. If Vendor fails to obtain such remedy within the time the City is required to respond to the CPRA request, City may disclose the requested information without any liability. Vendor further agrees that it shall defend, indemnify and hold City harmless against any claim, action or litigation (including but not limited to all judgments, costs, and attorney’s fees) that may result from denial by City of a CPRA request for information arising from any representation, or any action (or inaction), by the Vendor.

13. Compliance with Laws. All activities of Vendor, its employees, subcontractors and/or agents will be carried out in compliance with all applicable federal, state, and local laws and regulations. Vendor further agrees to comply with the covenant of good faith and fair dealing and other provisions of Santa Cruz Municipal Ordinance chapter 3.09, or otherwise Vendor may be subject to penalties including being declared an irresponsible contractor.

14. Licensure. Vendor agrees that Vendor, its subcontractors and/or agents (if any) has/have complied 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:
• Vendor, 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.

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

16. Prevailing Wages for Public Work. To the extent that the work or services to be performed under this Agreement may be considered a “public work” (construction, alteration, demolition, or repair work) pursuant and subject to Labor Code section 1720 et seq., Vendor (and any subVendor performing the work or services) shall conform to any and all prevailing wage requirements applicable to such work/and or services under this Agreement.

Vendor (and any subVendor) shall adhere to the prevailing wage determinations made by the Director of Industrial Relations (DIR) pursuant to California Labor Code Part 7, Chapter 1, Article 2, applicable to the work, if any. All workers employed in the execution of a public works contract (as such term is defined California Labor Code section 1720 et seq. and section 1782(d)(1)) must be paid not less than the specified prevailing wage rates for the type of work performed. (CA Labor Code sections 1720, 1774 and 1782.) To the extent applicable to the scope of work and services under this Agreement, Vendor agrees to be bound by the state prevailing wage requirements, including, but not limited to, the following:
a. If a worker is paid less than the applicable prevailing wage rate owed for a calendar day (or any portion thereof), Vendor shall pay the worker the difference between the prevailing wage rate and the amount actually paid for each calendar day (or portion thereof) for which the worker(s) was paid less than the prevailing wage rate, as specified in Labor Code section 1775; b. Vendor shall maintain and make available payroll and worker records in accordance with Labor Code sections 1776 and 1812;
c. If Vendor employs (and/or is legally required to employ) apprentices in performing the work and/or services under this Agreement, Vendor shall ensure compliance with Labor Code section 1777.5;

15.11 City of Santa Cruz Professional Services Agreement for Lower DeLaveaga Park Septic System Replacement
May 2025 (Form Rev.01/24 ) Page 9
d. Vendor is aware of the limitations imposed on overtime work by Labor Code sections 1810 et seq. and shall be responsible for any penalties levied in accordance with Labor Code section 1813 for failing to pay required overtime wages;
e. Vendor shall post a copy of the applicable wage rates at each jobsite at a location readily available to its workers.
f. Any failure of Vendor and/or its subVendor to comply with the above requirements relating to a public work project shall constitute a breach of this Agreement that excuses the City’s performance of this Agreement at the City’s sole and absolute option and shall be at the sole risk of Vendor. Vendor on behalf of itself and any subVendor, 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 Vendor and any subVendor to pay prevailing wages or to otherwise comply with the requirements of prevailing wage law relating to a public work. g. Vendor acknowledges that it and/or any subVendor may not engage in the performance of any contract for public work unless currently registered with the DIR and qualified to perform public work pursuant to Labor Code section 1725.5 [with limited exceptions from this requirement for bid purposes only under Labor Code section 1771.1(a)].

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

18. Dispute Resolution. The Parties agree to attempt in good faith to resolve through negotiation any dispute, claim or controversy arising out of or relating to this Agreement. Either party may initiate negotiations by providing written notice in letter form to the other party, setting forth the subject of the dispute and the relief requested.

Promptly upon such notification, the Parties shall meet at a mutually agreeable time and place in order to exchange relevant information and perspective, and to attempt to resolve the dispute. In the event that no resolution is achieved, and if, but only if, the parties mutually agree, then prior to pursuing formal legal action, the parties shall make a good faith effort to resolve the dispute by non-binding mediation or negotiations between representatives with decision-making power, who, to the extent possible, shall not have had substantive involvement in the matters of the dispute. To the extent that the dispute involves or relates to a public works project, the Parties agree to attempt to resolve the dispute by complying with the claims process as set forth in Public Contract Code sections 9204(e), 20104-20104.6, but without waiving the requirements of the California Tort Claims Act, Gov’t Code section 800 et seq. unless otherwise agreed to by the Parties.

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

15.12 City of Santa Cruz Professional Services Agreement for Lower DeLaveaga Park Septic System Replacement
May 2025 (Form Rev.01/24 ) Page 10
performance of its respective obligation by reason of such Force Majeure, the only remedy is that there may be an equitable adjustment of the schedule based on City’s sole discretion.

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

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

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

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

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

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

26. Notices. If either party shall desire or is required to give notice to the other such notice shall be given in writing, via email, and concurrently delivered by: (a) personal delivery, in which case notice is effective upon delivery; (b) overnight courier (i.e., Federal Express) with charges prepaid or charged to the sender’s account, in which case notice is effective when delivered; (c) priority U.S. Mail, in which case notice shall be deemed delivered on the second business day after the deposit thereof with the U.S. Postal Service. Notices shall be addressed to recipient as follows:

To CITY:

Parks and Recreation
Tony Elliot, Director
323 Church St., Santa Cruz, CA 95060
[email protected]
831-420-5270
To VENDOR:

Tom’s Septic Construction, a subsidiary of
The Don Chapin Company, Inc.

Ralph Sahagun
P.O. Box 4610, Salinas, CA 93912
[email protected]
831.633.2321
Changes to the above information shall be given to the other party in writing ten (10) business days before the change is effective.

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

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

15.13 City of Santa Cruz Professional Services Agreement for Lower DeLaveaga Park Septic System Replacement
May 2025 (Form Rev.01/24 ) Page 11
[SIGNATURES ON FOLLOWING PAGE]

15.14 City of Santa Cruz Professional Services Agreement for Lower DeLaveaga Park Septic System Replacement
May 2025 (Form Rev.01/24 ) Page 12
Approved As To Form:

By: _____________________________ Date: __________________ Office of the City Attorney

CITY OF SANTA CRUZ
By: _____________________________ Date: __________________ Matt Huffaker
City Manager
VENDOR
By: _____________________________ Date: __________________ Printed: ___________________________ Title: __________________ By: _____________________________ Date: __________________ Printed: ___________________________ Title: __________________

15.15 City of Santa Cruz Professional Services Agreement for Lower DeLaveaga Park Septic System Replacement
May 2025 (Form Rev.01/24 ) Page 13
EXHIBIT A: SCOPE OF WORK
See following page for Exhibit A.

15.16 Post Office Box 4610, Salinas, California 93912
Phone: 831.633.2321 • Fax: 831.633.6451
April 24, 2025
City of Santa Cruz
300 Evergreen St
Santa Cruz CA 95060
Attn: Steve Gomez
RE: Delaveaga Park OWTS Repair
855 Branciforte Dr
Santa Cruz CA
Mr. Gomez
As per your request, Tom's Septic Construction Inc. is pleased to provide a cost proposal for the abovementioned project. The proposal is based on site inspection and plans as drawn up by Myer Engineering.

Our proposal is to provide materials, labor, and equipment to install the system and provide misc. materials and fittings required to install the system upgrade as per the plans provided.

Our proposal includes the following:
1) Pump and demo existing 1500-gallon concrete septic tank 2) Install new 1500-gallon concrete septic tank with 2 each Oren co fiberglass risers to grade 3)
Install a new 1000-gallon concrete holding tank with 1 each Orenco riser to grade Note: Plan shows Roth poly tanks but to avoid anti flotation collar concrete tanks have been substituted.
4) Install Orenco duplex pump system as per plan
5)
Install 1" pvc sch 80 or HOPE piping from the pump tank to the proposed leach field location Note: Piping will run behind restrooms through dirt area as shown in plans 6) Install a 1 ½" ADV as per plans 2 ft above outlet of pump chamber 7) Install 4 each 18" x 5' effective x 100' leach fields with 1 ½" pvc with 1/8" orifices at 24" centers as per plan
8) Install 4 each 1 ½" high pressure gate valves with access risers to grade at the beginning of each leach field
9) Install flushing ports at the ends of each leach field 10) Backfill with native spoils (no import fill figured) and haul excess spoils to within 1 ½ miles to site on Dimea Lane (NC for dumping)
11) The project is estimated to take 25 to 30 days to complete, the start time is estimated to be by June 1, 2025, subject to delivery of materials required to complete the project

15.17 15.18
City of Santa Cruz Professional Services Agreement for
Lower DeLaveaga Park Septic System Replacement
May 2025 (Form Rev.01/24 ) Page 14
EXHIBIT B: FEE SCHEDULE
See budget as set forth in Exhibit A. on page 2.

15.19 City of Santa Cruz Professional Services Agreement for Lower DeLaveaga Park Septic System Replacement
May 2025 (Form Rev.01/24 ) Page 15
EXHIBIT C: WORK SCHEDULE
The project is estimated to take 25 to 30 days to complete. The start time is estimated to early June 2025, subject to delivery of materials required to complete the project.

15.20 City of Santa Cruz Professional Services Agreement for Lower DeLaveaga Park Septic System Replacement
May 2025 (Form Rev.01/24 ) Page 16
EXHIBIT D: INSURANCE REQUIREMENTS
Vendor shall procure and maintain insurance against claims for injuries to persons or damages to property and otherwise which may arise from or in connection with the performance of the work under this Agreement and the results of that work by Vendor, its agents, representatives, employees, or subcontractors.

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

B. MINIMUM SCOPE AND LIMITS OF INSURANCE
Vendor acknowledges that the insurance coverage and policy limits set forth in this section constitute the minimum amount of coverage required. If Vendor 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 Vendor. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City of Santa Cruz.

Coverage will be at least as broad as:
• COMMERCIAL GENERAL LIABILITY (CGL): $1,000,000 PER OCCURRENCE; $2,000,000 AGGREGATE Proof of coverage for $1 Million per occurrence and $2 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. • PROFESSIONAL LIABILITY (ERRORS AND OMISSIONS): $2,000,000 PER OCCURRENCE OR CLAIM, $2,000,000 AGGREGATE.

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

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

15.21 City of Santa Cruz Professional Services Agreement for Lower DeLaveaga Park Septic System Replacement
May 2025 (Form Rev.01/24 ) Page 17
The Worker’s Compensation policy must be endorsed with a waiver of subrogation in favor of the City for all work performed by the Vendor and its employees.
(Not required if Vendor provides written verification it has no employees) - If Vendor has no employees, Vendor shall complete and sign a Workers’ Compensation Exemption Declaration and Release of Liability.
• 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 $2,000,000 policy aggregate.

1. 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.

2. The Automobile Liability policy shall be endorsed to include Transportation Pollution Liability insurance, covering hazardous materials to be transported by Vendor pursuant to the Agreement. This coverage may also be provided on the Vendor’s Pollution Liability policy.

C. OTHER INSURANCE PROVISIONS
The insurance policies are to comply with the following provisions:
• ADDITIONAL INSURED STATUS
The City, its officers, officials, employees, agents, and volunteers are to be covered as additional insureds on the CGL policy with respect to liability arising out of work or operations performed by or on behalf of Vendor including materials, parts, or equipment furnished in connection with such work or operations, products and completed operations. General liability coverage will be provided in the form of an endorsement to Vendor’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).
o PRIMARY COVERAGE
For any claims related to this Agreement, Vendor’s and all subcontractor’s insurance coverage will be primary and non-contributory as respects the City, its officers, officials, employees, agents, and volunteers. Any insurance or self-insurance maintained by the City, its officers, officials, employees, agents, or volunteers will be excess of Vendor’s and all subcontractor’s insurance and will not contribute with it.
• NOTICE OF CANCELLATION
Each insurance policy required above shall state that the coverage shall not be canceled, except with notice to the City.
• WAIVER OF SUBROGATION
Vendor hereby grants to the City a waiver of any right to subrogation, except as otherwise not applicable, which any insurer of said Vendor may acquire against the City by virtue of the payment of any loss, including attorney’s fees under such insurance. Vendor agrees to obtain any endorsement that may be necessary to effectuate this waiver of subrogation, but this provision applies regardless of whether or not the City has received a waiver of subrogation endorsement from the insurer. • EXCESS LIABILITY/UMBRELLA INSURANCE POLICIES
Vendor 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

15.22 City of Santa Cruz Professional Services Agreement for Lower DeLaveaga Park Septic System Replacement
May 2025 (Form Rev.01/24 ) Page 18
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 Vendor’s primary and excess liability policies are exhausted. • DURATION OF COVERAGE
CGL & Excess Liability/Umbrella policies for any construction related work, including, but not limited to, maintenance, service, or repair work, shall continue coverage for a minimum of 5 years for Completed Operations liability coverage. Such Insurance must be maintained, and evidence of insurance must be provided, for at least five (5) years after completion of the contract of work. • SELF-INSURED RETENTIONS (SIR)
Self-insured retentions must be declared to and approved by the City. City may require Vendor to purchase coverage with a lower retention or provide proof of ability to pay losses and related expenses. The policy language shall provide, or be endorsed to provide, that the self-insured retention may be satisfied by either the named insured or City.
• ACCEPTABILITY OF INSURERS
Insurance is to be placed with insurers with a current A.M. Best’s rating of no less than A: VII, unless otherwise acceptable to the City.
• CLAIMS MADE POLICIES
If any of the required policies provide coverage on a claims-made basis:

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

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

3. If coverage is canceled or non-renewed, and not replaced with another claims-made policy form with a Retroactive Date prior to the contract effective date, the Vendor must purchase “extended reporting” coverage for a minimum of five (5) years after completion of contract work. • VERIFICATION OF COVERAGE
Vendor will furnish the City with original Certificates of Insurance including all required amendatory endorsements (or copies of the applicable policy language effecting coverage required by this clause) and a copy of the Declarations and Endorsement Page of the CGL policy (and CPL, automobile and any Excess Liability/Umbrella policies, as applicable) listing all policy endorsements to be approved by the City before work commences. However, failure to obtain the required documents prior to the work beginning will not waive the Vendor’s obligation to provide them. The City reserves the right to require complete, certified copies of all required insurance policies, including endorsements required by these specifications, at any time.

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

15.23 City of Santa Cruz Professional Services Agreement for Lower DeLaveaga Park Septic System Replacement
May 2025 (Form Rev.01/24 ) Page 19
E. SPECIAL RISKS/CIRCUMSTANCES
City reserves the right to modify these requirements, including limits, based on the nature of the risk, prior experience, insurer, coverage, or other special circumstances and provide notice to Vendor.

15.24 City of Santa Cruz

BUDGET ADJUSTMENT REQUEST
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TOTAL EXPENDITURE

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 Clear Form
2025
05/08/2025
Adjusting existing project revenue budget to resource a critical FY25 project See attached detailed pdf.
0 0
0 Lindsay
Bass
Digitally signed
by Lindsay Bass
Date: 2025.05.08
11:22:18 -07'00'
Anthony Elliot
Digitally signed
by Anthony Elliot
Date: 2025.05.08
12:04:26 -07'00'
Emily
Burton
Digitally signed
by Emily Burton
Date: 2025.05.09
10:38:24 -07'00'
Elizabet
h Cabell
Digitally signed by
Elizabeth Cabell
Date: 2025.05.09
10:41:57 -07'00' 15.25
Fund
Add/
Reduce
/New Project # Project Name GL Account String Account Description Amount Onetime Annual Justification
311 ADD c302516-963-0-0 Lower DeLaveaga Septic System Replac. 311-00-00-0000-49180 From General Fund CIP Reserve 85,104 X 311 REDUCE c302515-963-0-0 Replace Surf Museum Cupola 311-00-00-0000-49180 From General Fund CIP Reserve (85,104) X 311 ADD c302516-908-0-0 Lower DeLaveaga Septic System Replac. 311-00-00-0000-49109 From Parks & Rec Tax Fund 20,000 X 311 REDUCE c302408-908-0-0 West Cliff Design & Improvement Standards 311-00-00-0000-49109 From Parks & Rec Tax Fund (20,000) X 311 ADD c302516-912-0-0 Lower DeLaveaga Septic System Replac. 311-00-00-0000-49101 From General Fund 9,120 X 311 REDUCE c302511-912-0-0 Civic Water Main Replacement 311-00-00-0000-49101 From General Fund (9,120) X 311 ADD c302516-908-0-0 Lower DeLaveaga Septic System Replac. 311-00-00-0000-49109 From Parks & Rec Tax Fund 48,856 X 311 REDUCE c302419-908-0-0 DeLaveaga Park - Culvert Repair 311-00-00-0000-49109 From Parks & Rec Tax Fund (48,856) X

TOTAL -
Fund
Add/
Reduce
/New Project # Project Name GL Account String Account Description Amount Onetime Annual Justification
311 ADD c302516-100-2020-0 Lower DeLaveaga Septic System Replac. 311-30-41-9110-57312 Park Improvements 85,104 X 311 REDUCE c302515-100-2020-0 Replace Surf Museum Cupola 311-30-41-9110-57312 Park Improvements (85,104) X 311 ADD c302516-100-2020-0 Lower DeLaveaga Septic System Replac. 311-30-41-9110-57312 Park Improvements 20,000 X 311 REDUCE c302408-100-2020-0 West Cliff Design & Improvement Standards 311-30-41-9110-57312 Park Improvements (20,000) X 311 ADD c302516-100-2020-0 Lower DeLaveaga Septic System Replac. 311-30-41-9110-57312 Park Improvements 9,120 X 311 REDUCE c302511-100-2020-0 Civic Water Main Replacement 311-30-42-9210-57203 Building remodeling (9,120) X 311 ADD c302516-100-2020-0 Lower DeLaveaga Septic System Replac. 311-30-41-9110-57312 Park Improvements 48,856 X 311 REDUCE c302419-100-2020-0 DeLaveaga Park - Culvert Repair 311-30-41-9120-57203 Building remodeling (48,856) X

TOTAL -
Adjusting existing project expense budget to resource a critical FY25 project
Adjusting existing project expense budget to resource a critical FY25 project
Adjusting existing project expense budget to resource a critical FY25 project
Adjusting existing project expense budget to resource a critical FY25 project
Adjusting existing project revenue budget to resource a critical FY25 project
Adjusting existing project revenue budget to resource a critical FY25 project
FY 2025 Budget Adjustment Request - Lower DeLaveaga Park Septic System Replacement Revenue
Expenditures
Adjusting existing project revenue budget to resource a critical FY25 project
Adjusting existing project revenue budget to resource a critical FY25 project

15.26 City Council

AGENDA REPORT
DATE: 05/08/2025
AGENDA OF: 05/27/2025
DEPARTMENT: Public Works/Finance
SUBJECT: Resolution for Grant Anticipation Notes to Fund Repairs to West Cliff Drive (PW/FN)
LOCATION: Districts 3 and 6
RECOMMENDATION: Motion to approve a resolution authorizing the issuance and sale of up to $22,000,000 in grant anticipation notes to provide financing for the West Cliff Drive emergency repairs, and authorizing execution and delivery of a note purchase agreement and related documents and actions.

BACKGROUND: West Cliff Drive between Columbia Road and David Way was severely damaged by large swells during the January 2023 and 2024 storms, causing portions of the roadway and path to fail, along with impacts to public access points, utility infrastructure, and the surrounding neighborhood. Due to the nature of the damages, two forms of federal disaster funding were pursued. The Federal Highway Administration (FHWA) and Federal Emergency Management Agency (FEMA) both fund immediate response efforts and long-term repairs to coastal armoring and transportation infrastructure. Based on feedback from federal and state inspectors, in 2023 the City applied for FHWA recovery funds to make repairs to affected sections of the road and pathway along West Cliff. The City also applied for FEMA funding to repair damaged coastal armoring, in areas where significant volumes of rock revetment were lost.

To date, the City has successfully secured approvals from FHWA to undertake major repair projects including multiple infill walls along the 900 block and 1000 block of West Cliff, as well as replacement of the Bethany Curve Culvert. Those projects were initiated in late summer 2023, achieved a major milestone by reopening the 900 to block in December 2024 to two-way traffic, and are expected to be substantially complete in late spring 2025. The estimated cost of this work exceeds $25 million dollars and is funded at 88.5% federal cost share with the local share covered by a combination of emergency reserves, general fund and gas tax dollars.

FEMA funding has proved to be significantly harder to secure. Multiple coastal armoring funding requests were submitted to FEMA in spring 2023, and after several years of waiting, FEMA formally rejected those funding requests in March 2025. The primary reason for the FEMA denial was because FHWA had approved funding in other coastal locations along West Cliff, therefore FEMA concluded it should not also take responsibility for similar or adjacent

16.1 sites. The California Office of Emergency Services, who is a necessary partner to support any City appeal process has indicated they would not side with the City in this circumstance therefore the City is intending to take the outstanding FEMA claims and repackage them for FHWA consideration as soon as possible.

DISCUSSION: As noted above construction of FHWA funded projects are nearing completion.

While funding approvals and construction have both moved rapidly, reimbursement for City incurred costs has not. The federal program that funds FHWA emergency projects is oversubscribed and requires congressional action to appropriate additional funds to meet the national emergency funding commitments. So, while the City has been authorized for over $25 million in funding, less than $4 million has been reimbursed by FHWA to date. The City is not in a unique position, several other agencies regionally are experiencing similar delays in their ability to reimburse for accrued costs which then creates a negative cash flow situation.

In order to address this cash flow issue, Public Works and Finance Department staff worked with NHA Advisors (financial advisors) and Jones Hall (legal counsel) financial advisors to explore various interim financing options. The team ultimately recommended issuance of grant anticipation notes as the best available bridge financing. FHWA funding runs through Caltrans local assistance program and Caltrans staff have indicated there is an uncertain timeline as to when additional funds will be made available for reimbursement and could be anywhere from 8- 12 months until the City can resume reimbursements. The current federal funding review and pullback happening per federal administration direction is not expected to affect emergency funds already obligated to recipients such as the City.

The Grant Anticipation Notes (GANs) will be purchased by Wells Fargo, the City’s depository bank. The GANs are structured so that the City can draw down funds as required and then prepay the funds when the City receives the reimbursement from FHWA. The GANs will mature June 30, 2027 and carry a floating interest rate calculated using the daily secured overnight financing rate. As an example, the May 6, 2025 rate was calculated as 4.038%. Interest payments are due the first of each month. Assuming the City draws the initial amount of $15.92 million based on FHWA authorized funding, it is estimated that the monthly interest will be approximately $65,000. The City will also pay a fee of 0.20% per annum on the unused available funding.

Initially the unused funding is $4.13 million, resulting in a fee of $689 per month.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION:

Notice of Exemptions have been filed for all emergency projects completed or in construction.

HEALTH IN ALL POLICIES (HiAP): This action supports the public health and sustainability pillars of of HiAP. Interim funding will enable the City to complete recovery efforts along West Cliff Drive. Recovery efforts in this area will ensure continued emergency access, reduce risks to life safety from coastal hazards, and ensure accessible and safe biking and pedestrian access for future public use and enjoyment.

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: Yes

16.2 FISCAL IMPACT DESCRIPTION: The West Cliff Drive Bethany Curve Culvert (c402407) has received Federal Highway Administration approved funding for this project at a cost share of

88.75%. The General Fund has contributed $300,000. With the attached budget adjustment, matching funds from State RSTPX ($871,000) and LPP ($629,000) are available to cover the remaining City’s local match. No additional General Funds are required.

The West Cliff Drive Stabilization Project (c401501) has received Federal Highway Administration approved funding for this project at a cost share of 88.75%. Matching funds of $1.7 million Gas-Tax, $1 million from General Fund CIP, and $1 million from the California Natural Resources Agency cover the City’s local match requirement. No additional General Funds are required.

Assuming the City draws the initial amount of $15.92 million, it is estimated that the monthly interest will be approximately $65,000. The City will also pay a fee of 0.20% per annum on the unused available funding. Initially the unused funding is $4.13 million, resulting in a fee of $689 per month. If the City draws the full available funding, monthly interest is estimated to be approximately $80,000.

NHA Advisors, the City’s municipal advisor, has provided good faith estimates of the cost of the GANs, as required by California Government Code Section 5852.1. These estimates are based on historical secured overnight financing rates used in the calculation of the GANs daily rate and are included in Appendix A of the City Resolution. The estimates assume the City draws the remaining authorization 6 months after loan closing.

Prepared By:

Kevin Crossley
Assistant Director of Public
Works
Submitted By:

Nathan Nguyen, P.E.

Director of Public Works
Elizabeth Cabell
Director of Finance
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. RESOLUTION FOR WEST CLIFF GAN.DOCX

2. NOTE PURCHASE AGREEMENT (CITY OF SANTA CRUZ) - GRANT ANTICIPATION NOTE 2025.DOCX

16.3 RESOLUTION NO. NS-30,XXX

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA CRUZ

AUTHORIZING THE ISSUANCE AND SALE OF GRANT ANTICIPATION NOTES TO

PROVIDE FINANCING FOR THE WEST CLIFF DRIVE PROJECT, AND AUTHORIZING

EXECUTION AND DELIVERY OF A NOTE PURCHASE AGREEMENT AND RELATED

DOCUMENTS AND ACTIONS
WHEREAS, the City of Santa Cruz (the “City”) is undertaking various projects relating to the repair and stabilization of West Cliff Drive, including coastal bluffs. coastal armoring and other roadway repairs (the “West Cliff Drive Project”); and
WHEREAS, the West Cliff Drive Project has been approved for funding by the U.S.

Department of Transportation Federal Highway Administration (“FHWA”); and WHEREAS, pending the receipt of funding from FHWA, the City wishes to provide for interim financing for the West Cliff Drive Project, and pursuant to Article 7, Chapter 4, Part 1, Division 2, Title 5 of the California Government Code, commencing at Section 53859 of said Code (the “Grant Anticipation Note Law”), the City is authorized to provide interim financing for the West Cliff Drive Project by issuing its Grant Anticipation Notes which are payable from amounts received from FHWA; and
WHEREAS, pursuant to Section 53859.08 of the Grant Anticipation Note Law, the City is authorized to borrow up to 95% of the amount which is stated in writing by the granting authority to be committed and appropriated for the West Cliff Drive Project, and the City has received written confirmation from the California Department of Transportation, being the agency which administers the grant from FHWA, that $16,760,268.10 of funds has been committed and appropriated with an additional $4,352,603.54 authorization which is pending; and WHEREAS, in order to provide interim financing for the West Cliff Drive Project, the City proposes to enter into a Note Purchase Agreement (the “Note Purchase Agreement”) with Wells Fargo Bank, National Association, or its wholly owned subsidiary Wells Fargo Municipal Capital Strategies, LLC (the “Bank”), under which the City will issue one or more Grant Anticipation Notes under the Grant Anticipation Note Law in the aggregate principal amount of not to exceed $22,000,000 (the “Notes”) which is purchased by the Bank; and WHEREAS, payment of amounts owed by the City on the Notes shall be secured by a pledge of and lien on the revenues received from the grant made by FHWA with respect to the West Cliff Drive Project; and
WHEREAS, as required by Government Code Section 5852.1, attached hereto as Appendix A is certain financial information relating to the Notes that has been obtained by the City and is hereby disclosed and made public; and

16.4 WHEREAS, the City Council has previously approved a debt policy which complies with Government Code Section 8855, and the execution, delivery and issuance of the Notes will be in compliance with said policy; and
WHEREAS, the City Council of the City has duly considered such transactions and wishes at this time to approve said transactions in the public interest of the City; NOW, THEREFORE, the City Council of the City of Santa Cruz does hereby resolve, find, determine and order as follows:

Section 1. Approval of Note Purchase Agreement. The City Council hereby approves the Note Purchase Agreement between the City and the Bank in substantially the form on file with the City Clerk Administrator together with any changes therein or additions thereto deemed advisable by the City Manager, the Finance Director or the Assistant Director/City Engineer (each, an “Authorized Officer”). An Authorized Officer is hereby authorized and directed for and in the name and on behalf of the City to execute the final form of the Note Purchase Agreement, and the City Clerk Administrator is hereby authorized and directed to attest the final form of the Note Purchase Agreement on behalf of the City. Execution of the Note Purchase Agreement by an Authorized Officer shall be conclusive evidence of the approval of any changes therein or additions thereto by such Authorized Officer.

Section 2. Issuance of the Grant Anticipation Notes. The City Council hereby approves the Notes in substantially the form attached hereto as Appendix B, together with such changes thereto as an Authorized Officer shall approve. The Notes shall be issued in the maximum principal amount of $22,000,000, for the purpose of providing funds to finance the West Cliff Drive Project. The initial principal amount of the Notes shall not exceed 95% of the amount of the grant which has been committed and appropriated as of the date the Notes are originally issued, provided that the principal amount of the Notes may be increased if and as additional grant proceeds are committed and appropriated for the West Cliff Drive Project.

The Notes shall be payable from and secured by a pledge of and lien on the revenues received from the grant made by FHWA with respect to the West Cliff Drive Project. As set forth in the Grant Anticipation Note Law, in the event the Notes are not paid from revenues received from the grant made by FHWA, the Notes shall be payable from any taxes, income, revenue, cash receipts, or other monies of the City lawfully available therefor. The Notes shall be issued under and pursuant to the terms and provisions of the Grant Anticipation Note Law and the Note Purchase Agreement. An Authorized Officer is hereby authorized and directed to execute, and the City Clerk Administrator is hereby authorized and directed to attest to, the final form of the Notes in the name and on behalf of the City. The executed Notes shall be delivered to the Bank concurrently with the execution and delivery of the Note Purchase Agreement.

Section 3. Professional Services. The City Council hereby affirms the engagement of Jones Hall, A Professional Law Corporation, for bond counsel services in connection with the issuance and sale of the Notes, pursuant to an agreement between the City and such firm in the form on file with the City Clerk Administrator, which an Authorized Officer is hereby authorized and directed to execute on behalf of the City. The City Council further affirms the engagement of

16.5 NHA Advisors for municipal advisory services in connection with the issuance and sale of the Notes, pursuant to the existing agreement between the City and such firm. The estimated costs of issuing the Notes are set forth in Appendix A, which is hereby approved.

Section 4. Official Actions. The Mayor, the City Manager, the Finance Director, the Assistant Director/City Engineer, the City Clerk Administrator and any and all other officers of the City are hereby authorized and directed, for and in the name and on behalf of the City, to do any and all things and take any and all actions, including execution and delivery of any and all assignments, certificates, requisitions, agreements, requests for loans, notices, consents, instruments of conveyance and other documents, which they, or any of them, may deem necessary or advisable in order to consummate the transactions described herein and under the Note Purchase Agreement. Any such actions previously taken by such officers are hereby ratified and confirmed.

Whenever in this Resolution any officer of the City is authorized to execute or countersign any document or take any action, such execution, countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such officer is absent or unavailable.

Section 5. Effective Date. This Resolution shall take effect immediately upon its passage and adoption.

PASSED AND ADOPTED by the City Council of the City of Santa Cruz at a regular meeting held on May 27, 2025, by the following vote:

AYES:

NOES:

ABSENT:

DISQUALIFIED:

APPROVED: ______________________________
Fred Keeley, Mayor
ATTEST: _________________________________
Bonnie Bush, City Clerk Administrator

16.6 A-1

APPENDIX A

REQUIRED DISCLOSURES PURSUANT TO
GOVERNMENT CODE SECTION 5852.1

1. True Interest Cost of the Notes: The Notes will bear interest at a variable rate based on the Secured Overnight Financing Rate (SOFR) index.

2. Finance charge of the Notes, being the sum of all fees and charges paid to third parties, in the amount of approximately $88,500.

3. Proceeds of the Notes expected to be received by the City, net of proceeds for Costs of Issuance in (2) above to paid, capitalized interest and reserves (if any) from the principal amount of the Notes (Estimated): $19,966,500.

4. Total Payment Amount for the Notes, being the sum of all debt service to be paid on the Notes to final maturity (Estimated): $21,993,247. *All amounts and percentages are estimates, and are made in good faith by the City based on information available as of the date of adoption of this Resolution.

Estimates of debt service on the Notes are based on assumed an assumed rate of interest which is necessarily uncertain since the Notes bear interest at a variable rate. The amount of the Note proceeds and the total payment amount for the Notes assume the Notes are issued in the principal amount of $20,055,000.

16.7 B-1

APPENDIX B

FORM OF NOTE

THIS NOTE IS SUBJECT TO CERTAIN TRANSFER RESTRICTIONS AS PROVIDED IN SECTION 10.9 OF THE HEREIN DEFINED AGREEMENT.

CUSIP No. ______
[$22,000,000] Dated: ________, 2025
Santa Cruz, California
For value received, the CITY OF SANTA CRUZ (the “Borrower”) promises to pay to the order of WELLS FARGO MUNICIPAL CAPITAL STRATEGIES, LLC, and its successors and assigns (the “Bank”), the amount of $____________, the aggregate unpaid principal amount of this Note purchased by the Bank pursuant to the Note Purchase Agreement dated ________, 2025 (together with any amendments or supplements thereto, the “Agreement”), between the Borrower and the Bank, on the dates and in the amounts provided for in the Agreement.

The Borrower promises to pay interest on the unpaid principal amount of the Note on the dates and at the rates provided for in the Agreement. All payments of principal and interest shall be made to the Bank in lawful money of the United States of America in immediately available funds. All capitalized terms used herein and not otherwise defined herein shall have the meanings specified in the Agreement.

This Note is the Note referred to in the Agreement and is entitled to the benefits thereof and of the Note Documents referred to therein. As provided in the Agreement, this Note is subject to prepayment, in whole or in part. In case an Event of Default (as defined in the Agreement) shall occur and be continuing the principal of and accrued interest on this Note may be declared due and payable in the manner and with the effect provided in the Agreement.

This Note is secured by a first lien on the Grant Proceeds in accordance with the Grant Anticipation Note Law and the Resolution, and this Note does not constitute a legal or equitable pledge, charge, lien or encumbrance upon any other property of the Borrower. The Grant Anticipation Note Law further provides that in the event the principal and interest on the note is not paid from Grant Proceeds, such principal and interest shall be paid from any taxes, income, revenue cash receipts, or other monies of the Borrower lawfully available. [The remainder of this page intentionally left blank]

16.8 B-2

THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA.

CITY OF SANTA CRUZ
By:

Name:

Title:

ATTEST:

By:

Name:

Title:

16.9 4908-3426-8195.8

NOTE PURCHASE AGREEMENT
by and between

CITY OF SANTA CRUZ
and

WELLS FARGO MUNICIPAL CAPITAL STRATEGIES, LLC
Relating to

CITY OF SANTA CRUZ

VARIABLE RATE GRANT ANTICIPATION NOTE,
SERIES 2025
Dated [May __, 2025]

16.10 TABLE OF CONTENTS
PAGE
i
ARTICLE I DEFINITIONS .................................................................................................1 Section 1.1. Definitions ......................................................................................1 Section 1.2. Accounting Terms and Determinations........................................14 Section 1.3. Interpretation.................................................................................15 Section 1.4. Rates .............................................................................................15 ARTICLE II PURCHASE OF THE NOTE AND ADVANCES ........................................16 Section 2.1. Commitment .................................................................................16 Section 2.2. Closing..........................................................................................16 Section 2.3. Advances.......................................................................................16 Section 2.4. Conditions Precedent....................................................................17 Section 2.5. Amendment, Consent or Waiver Fee............................................19 Section 2.6. Utilization .....................................................................................19 ARTICLE III THE BORROWER’S OBLIGATIONS .........................................................20 Section 3.1. Interest on the Note.......................................................................20 Section 3.2. Repayment of the Note .................................................................20 Section 3.3. Prepayment of the Note ................................................................20 Section 3.4. Determination of Taxability .........................................................20 Section 3.5. Daily Simple SOFR Confirming Changes....................................21 Section 3.6. Changed Circumstances................................................................21 ARTICLE IV SECURITY.....................................................................................................23 Section 4.1. Security.........................................................................................23 ARTICLE V LIABILITY, INDEMNITY AND PAYMENT..............................................23 Section 5.1. Liability of the Borrower..............................................................23 Section 5.2. Indemnification by the Borrower..................................................24 Section 5.3. Increased Costs .............................................................................25 Section 5.4. Calculation of Interest and Fees; Maximum Interest Rate; Default Rate..................................................................................26 Section 5.5. Form and Method of Payments; Late Payment; Net Payments.......................................................................................27 Section 5.6. Liability of the Bank.....................................................................28 Section 5.7. Obligations Unconditional............................................................28 ARTICLE VI REPRESENTATIONS AND WARRANTIES ..............................................29 Section 6.1. Representations and Warranties of the Borrower.........................29 ARTICLE VII AFFIRMATIVE COVENANTS OF THE BORROWER..............................34 Section 7.1. Maintenance of Existence.............................................................34

16.11 ii
Section 7.2. Reports, Certificates and Other Information ................................34 Section 7.3. Maintenance of Books and Records .............................................35 Section 7.4. Access to Books and Records.......................................................35 Section 7.5. Compliance with Documents........................................................36 Section 7.6. Environmental Compliance ..........................................................36 Section 7.7. Further Assurances .......................................................................36 Section 7.8. Application of Proceeds of the Note.............................................36 Section 7.9. Payment of Obligations; Removal of Liens..................................36 Section 7.10. Compliance with Law; Employee Benefit Plan Compliance .......37 Section 7.11. Payment from Grant Proceeds......................................................37 Section 7.12. Investment Policy .........................................................................37 Section 7.13. Other Agreements.........................................................................37 Section 7.14. Sovereign Immunity .....................................................................38 Section 7.15. Rating............................................................................................38 ARTICLE VIII NEGATIVE COVENANTS OF THE BORROWER ....................................38 Section 8.1. Changes in Obligations.................................................................38 Section 8.2. Additional Debt ............................................................................38 Section 8.3. Swap Termination Payments ........................................................38 Section 8.4. No Impairment..............................................................................38 Section 8.5. Only Authorized Uses of Revenues by the Borrower ..................38 Section 8.6. References to the Bank .................................................................39 Section 8.7. Accounting Methods and Fiscal Year...........................................39 Section 8.8. No Priority Claim .........................................................................39 Section 8.9. Anti-Money Laundering Laws and Anti-Corruption Laws; Sanctions.......................................................................................39 Section 8.10. Source of Repayment and Collateral ............................................39 Section 8.11. Exempt Status ...............................................................................39 ARTICLE IX DEFAULTS AND REMEDIES .....................................................................39 Section 9.1. Events of Default ..........................................................................39 Section 9.2. Rights and Remedies Upon Default .............................................42 Section 9.3. No Waiver of Remedies................................................................42 Section 9.4. Remedies Not Exclusive...............................................................42 ARTICLE X MISCELLANEOUS.......................................................................................43 Section 10.1. Evidence of Debt ..........................................................................43 Section 10.2. Amendments, Etc..........................................................................43 Section 10.3. Addresses for Notices; Bank’s Office ..........................................43 Section 10.4. Survival of this Agreement...........................................................44 Section 10.5. Costs, Expenses and Taxes...........................................................44 Section 10.6. Right of Setoff; Other Collateral ..................................................45 Section 10.7. Severability...................................................................................45 Section 10.8. Governing Law; Waiver of Jury Trial; Jurisdiction and Venue............................................................................................45 Section 10.9. Successors and Assigns; Participations; Certain Pledges.............46

16.12 iii
Section 10.10. Headings .......................................................................................48 Section 10.11. Counterparts..................................................................................48 Section 10.12. Patriot Act Notice .........................................................................48 Section 10.13. No Advisory or Fiduciary Responsibility.....................................48 Section 10.14. Integration.....................................................................................48 Section 10.15. EMMA Postings ...........................................................................48 Section 10.16. Tax Identification Number ...........................................................49 EXHIBIT A – FORM OF NOTE
EXHIBIT B – FORM OF NOTICE OF TERMINATION UPON EVENT OF DEFAULT EXHIBIT C – FORM OF NOTICE OF PREPAYMENT
EXHIBIT D – FORM OF COMPLIANCE CERTIFICATE
EXHIBIT E – FORM OF INVESTOR LETTER
EXHIBIT F – FORM OF REQUEST FOR ADVANCE

16.13 -1-

NOTE PURCHASE AGREEMENT
This NOTE PURCHASE AGREEMENT, dated [May __, 2025] (as amended, modified, supplemented or restated, this “Agreement”), is entered into by and between the CITY OF SANTA CRUZ, a charter city and municipal corporation duly organized and existing under and pursuant to the Constitution and laws of the State of California (the “Borrower” or the “City”) and WELLS FARGO MUNICIPAL CAPITAL STRATEGIES, LLC, a Delaware limited liability company (together with its successors and assigns, the “Bank”).

RECITALS
A. Pursuant to Article 7, Chapter 4, Part 1, Division 2, Title 5 of the California Government Code, commencing at Section 53859 of said Code (the “Grant Anticipation Note Law”), local agencies of the State of California may borrower money and evidence such indebtedness by the issuance of grant anticipation notes.

B. The Borrower has issued its City of Santa Cruz, California Grant Anticipation Note, Series 2025 (the “Note”) pursuant to the Resolution (as defined herein) to pay the costs of the West Cliff Drive Project within the City and costs of issuance.

C. The Bank hereby agrees to purchase the Note, and as a condition to such purchase, the Bank has required the Borrower to enter into this Agreement.

D. All obligations of the Borrower to repay the Note and to pay all other amounts payable to the Bank arising under or pursuant to this Agreement or the Note (all such obligations are hereinafter collectively referred to as the “Payment Obligations”) are created under and will be evidenced by this Agreement and the Note and will be secured by a first lien on the Grant Proceeds (as defined herein) all in accordance with the terms and conditions hereof.

NOW, THEREFORE, in consideration of the foregoing Recitals and other consideration, the receipt and sufficiency of which is hereby acknowledged, and to induce the Bank to extend to the Borrower the Line of Credit, the Borrower and the Bank hereby agree as follows:

ARTICLE I

DEFINITIONS
Section 1.1. Definitions. The following terms shall have the following meanings as used herein:
“Additional Agreement” has the meaning set forth in Section 7.13 hereof. “Additional Rights” has the meaning set forth in Section 7.13 hereof. “Advances” means, collectively, the Initial Advance and each subsequent advance made by the Bank pursuant to Section 2.3(b) hereof.

16.14 -2-
“Affiliate” means, with respect to any Person, any Person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such first Person. A Person shall be deemed to control another Person for the purposes of this definition if such first Person possesses, directly or indirectly, the power to direct, or cause the direction of, the management and policies of the second Person, whether through the ownership of voting securities, common directors, trustees or officers, by contract or otherwise. “Agreement” has the meaning set forth in the introductory paragraph hereof. “Anti-Corruption Laws” means: (a) the U.S. Foreign Corrupt Practices Act of 1977, as amended; (b) the U.K. Bribery Act 2010, as amended; and (c) any other anti-bribery or anticorruption laws, regulations or ordinances in any jurisdiction in which the Borrower is located or doing business.
“Anti-Money Laundering Laws” means applicable Laws or regulations in any jurisdiction in which the Borrower is located or doing business that relates to money laundering, any predicate crime to money laundering, or any financial record keeping and reporting requirements related thereto.
“Applicable Factor” means 80%.
“Applicable Spread” means a rate per annum of 0.55%; provided, however, that the per annum rate set forth above shall be (a) increased 0.15% per annum from and after the date of each Rating Downgrade and (b) decreased 0.15% per annum from and after the date of each Rating Upgrade, but only to the extent of any increase(s) in the rate resulting from a Rating Downgrade; provided, further that in no event shall the Applicable Spread at any time be less than 0.55% per annum. Any change in the Applicable Spread resulting from a Rating Downgrade or a Rating Upgrade shall be and become effective upon a change by the applicable Rating Agency and as of and on the date of the last announcement of such downgrade or upgrade. References to ratings in the definitions of Rating Downgrade and Rating Upgrade are to rating categories as presently determined by the Rating Agencies, and in the event of the adoption of any new or changed rating system or a “global” rating scale by any such Rating Agency, the rating categories shall be adjusted accordingly to a new rating which most closely approximates the requirements as set forth herein. “Authorized Denominations” means $250,000 and integral multiples of $1,000 in excess thereof.
“Authorized Representative” means the Borrower’s City Manager, the Finance Director, the Assistant Director/City Engineer or any other person designated by the Borrower as an Authorized Representative pursuant to a resolution of the governing board of the Borrower; provided, that a copy of such resolution shall have been provided to the Bank. “Available Tenor” means, as of any date of determination and with respect to the thencurrent Benchmark, as applicable, (a) if such Benchmark is a term rate, any tenor for such Benchmark (or component thereof) that is or may be used for determining the length of an interest period pursuant to this Agreement or (b) otherwise, any payment period for interest calculated with reference to such Benchmark (or component thereof) that is or may be used for determining any frequency of making payments of interest calculated with reference to such Benchmark, in each

16.15 -3-
case, as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to Section 3.6(c)(iv). “Bank” means Wells Fargo Municipal Capital Strategies, LLC, a Delaware limited liability company, and its successors and assigns.
“Bank Agreement” means any credit agreement, liquidity agreement, standby bond purchase agreement, reimbursement agreement, direct purchase agreement, bond purchase agreement, or other agreement or instrument (or any amendment, supplement or other modification thereof) under which, directly or indirectly, any Person or Persons undertake(s) to make or provide funds to make payment of, or to purchase or provide credit enhancement for bonds or notes of the Borrower.
“Bank’s Office” means, the office or offices of the Bank described as such in Section 10.3, or such other office or offices as the Bank may from time to time notify the Borrower. “Bank Transferee” has the meaning set forth in Section 10.9(b) hereof. “Benchmark” means, initially, Daily Simple SOFR; provided, that if a Benchmark Transition Event has occurred with respect to Daily Simple SOFR or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 3.6(c)(i). “Benchmark Replacement” means, with respect to any Benchmark Transition Event, the sum of: (a) the alternate benchmark rate that has been selected by the Bank and the Borrower giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement to the then-current Benchmark for Dollar-denominated syndicated credit facilities and (b) the related Benchmark Replacement Adjustment; provided, that, if such Benchmark Replacement as so determined would be less than the Floor, such Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Note Documents. “Benchmark Replacement Adjustment” means, with respect to any replacement of the thencurrent Benchmark with an Unadjusted Benchmark Replacement for any applicable Available Tenor, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Bank giving due consideration to (a) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (b) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for Dollar-denominated syndicated credit facilities.
“Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark:

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(a) in the case of clause (a) or (b) of the definition of “Benchmark Transition Event,” the later of (i) the date of the public statement or publication of information referenced therein and (ii) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or (b) in the case of clause (c) of the definition of “Benchmark Transition Event,” the first date on which such Benchmark (or the published component used in the calculation thereof) has been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be non-representative; provided, that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (c) and even if any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date.

For the avoidance of doubt, the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (a) or (b) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof). “Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark:
(a) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely; provided, that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);
(b) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the FRB, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely; provided, that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or
(c) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in

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the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are not, or as of a specified future date will not be, representative.

For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof). “Benchmark Transition Start Date” means, in the case of a Benchmark Transition Event, the earlier of (a) the applicable Benchmark Replacement Date and (b) if such Benchmark Transition Event is a public statement or publication of information of a prospective event, the 90th day prior to the expected date of such event as of such public statement or publication of information (or if the expected date of such prospective event is fewer than 90 days after such statement or publication, the date of such statement or publication). “Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Note Document in accordance with Section 3.6(c) and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Note Document in accordance with Section 3.6(c).
“Bond Counsel” means Jones Hall, A Professional Law Corporation, as bond counsel to the City in connection with the transactions described herein. “Borrower” or “City” means the City of Santa Cruz, and its successors and assigns permitted hereunder.
“Business Day” means (a) a day which is not (i) a Saturday, Sunday or legal holiday on which banking institutions in New York, New York or the state where the principal corporate office of the Borrower is located are authorized by law to close, (ii) a day on which the New York Stock Exchange or the Federal Reserve Bank of New York is closed or (iii) a day on which the principal office of the Bank is closed and (b) with respect to all notices and determinations in connection with, and payments of principal and interest on, the Note, any day that is a Business Day described in clause (a) and that is also a U.S. Government Securities Business Day. “Change in Law” means the occurrence, after the Effective Date, of any of the following:
(a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided, that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be

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deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued (other than any rule thereunder that has been adopted and fully implemented prior to the Effective Date). “Code” means the Internal Revenue Code of 1986, as in effect on the Effective Date or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the Effective Date, together with applicable proposed, temporary and final regulations promulgated, and applicable official public guidance published, under said Code. “Commitment Amount” has the meaning set forth in Section 2.1 hereof. “Compliance Certificate” means a certificate in the form attached to this Agreement as Exhibit D.
“Confidential Information” means any sensitive or confidential information regarding the Borrower, the Bank or any Affiliate of the Bank including, without limitation, address and account information, e-mail addresses, telephone numbers, facsimile numbers, names and signatures of officers, employees and signatories.
“Conforming Changes” means, with respect to either the use or administration of Daily Simple SOFR or the use, administration, adoption or implementation of any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Business Day,” the definition of “U.S. Government Securities Business Day,” or any similar or analogous definition (or the addition of a concept of “interest period”), timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of Section 3.6 and other technical, administrative or operational matters) that the Bank decides may be appropriate to reflect the adoption and implementation of any such rate or to permit the use and administration thereof by the Bank in a manner substantially consistent with market practice (or, if the Bank decides that adoption of any portion of such market practice is not administratively feasible or if the Bank determines that no market practice for the administration of any such rate exists, in such other manner of administration as the Bank decides is reasonably necessary in connection with the administration of this Agreement and the other Note Documents). “Daily Simple SOFR” means, for any day (a “SOFR Rate Day”), a rate per annum equal to the greater of (a) SOFR for the day (such day, a “SOFR Determination Day”) that is five (5) U.S. Government Securities Business Days prior to (i) if such SOFR Rate Day is a U.S. Government Securities Business Day, such SOFR Rate Day or (ii) if such SOFR Rate Day is not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such SOFR Rate Day, in each case, as such SOFR is published by the SOFR Administrator on the SOFR Administrator’s Website, and (b) the Floor. If by 5:00 p.m. on the second (2nd) U.S. Government Securities Business Day immediately following any SOFR Determination Day, SOFR in respect of such SOFR Determination Day has not been published on the SOFR Administrator’s Website and a Benchmark Replacement Date with respect to the Daily Simple SOFR has not occurred, then SOFR for such SOFR Determination Day will be SOFR as published in respect of the first preceding U.S. Government Securities Business Day for which such SOFR was published on the SOFR Administrator’s Website; provided, that any SOFR determined pursuant to this sentence shall be utilized for purposes of calculation of Daily Simple

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SOFR for no more than three (3) consecutive SOFR Rate Days. Any change in Daily Simple SOFR due to a change in SOFR shall be effective from and including the effective date of such change in SOFR without notice to the Borrower.
“Date of Advance” has the meaning set forth in Section 2.3(b) hereof. “Debt” means all items that would be classified as a liability in accordance with GAAP, including, without limitation, (a) indebtedness or liability for borrowed money, or for the deferred purchase price of property or services (including trade obligations); (b) obligations as lessee under leases which should have been, or should be, recorded as capital leases in accordance with GAAP; (c) current liabilities in respect of unfunded benefits under employee benefit, retirement or pension plans; (d) obligations issued for the account of any other Person; (e) all obligations arising under acceptance facilities; (f) all guarantees, endorsements (other than for collection or deposit in the ordinary course of business) and other contingent obligations to purchase, to provide funds for payment, to supply funds to invest in any other Person or otherwise to assure a creditor against loss; (g) obligations secured by any mortgage, lien, pledge, security interest or other charge or encumbrance on property, whether or not the obligations have been assumed; (h) all unfunded amounts under a loan agreement, letter of credit, or other credit facility for which the Borrower would be liable, if such amounts were advanced under the credit facility; and (i) obligations of the Borrower under any Swap Contract.
“Default” means any condition or event which, with the giving of notice or lapse of time or both would unless cured or waived become an Event of Default. “Default Rate” means, for any day, a fluctuating rate of interest per annum equal to the greatest of (i) the Prime Rate in effect at such time plus four percent (4.0%), (ii) the Fed Funds Rate in effect at such time plus five percent (5.0%), and (iii) ten percent (10.0%); provided, however, that in no event shall the Default Rate exceed the applicable Maximum Interest Rate then in effect.
“Determination of Taxability” means and shall be deemed to have occurred on the first to occur of the following:
(a) on the date when the Borrower files any statement, supplemental statement or other tax schedule, return or document which discloses that an Event of Taxability shall have in fact occurred;
(b) on the date when the Noteholder or any former Noteholder notifies the Borrower that it has received a written opinion by a nationally recognized firm of attorneys of substantial expertise on the subject of tax exempt municipal finance to the effect that an Event of Taxability shall have occurred; provided that a Determination of Taxability shall be deemed not to have occurred if, within one hundred eighty (180) days after receipt by the Borrower of such notification from the Noteholder or any former Noteholder, the Borrower shall deliver to the Noteholder and any former Noteholder a ruling or determination letter issued to or on behalf of the Borrower by the Commissioner of the Internal Revenue Service or the Director of Tax Exempt Bonds of the Tax Exempt and Government Entities Division of the Internal Revenue Service (or any other government

16.20 -8-
official exercising the same or a substantially similar function from time to time) to the effect that, after taking into consideration such facts as form the basis for the opinion that an Event of Taxability has occurred, an Event of Taxability shall not have occurred; (c) on the date when Borrower shall be advised in writing by the Commissioner of the Internal Revenue Service or the Director of Tax Exempt Bonds of the Tax Exempt and Government Entities Division of the Internal Revenue Service (or any other government official exercising the same or a substantially similar function from time to time, including an employee subordinate to one of these officers who has been authorized to provide such advice) that, based upon filings of the Borrower, or upon any review or audit of the Borrower or upon any other ground whatsoever, an Event of Taxability shall have occurred; or
(d) on the date when the Borrower shall receive notice from the Noteholder or any former Noteholder that the Internal Revenue Service (or any other government official or agency exercising the same or a substantially similar function from time to time) has assessed as includable in the gross income of such Noteholder or such former Noteholder the interest on the Note due to the occurrence of an Event of Taxability; provided, however, no Determination of Taxability shall occur under subparagraph (c) or (d) hereunder unless the Borrower has been afforded the opportunity, at its expense, to contest any such assessment, and, further, no Determination of Taxability shall occur until such contest, if made, has been finally determined; provided, further, however, that upon demand from the Noteholder or former Noteholder, the Borrower shall promptly reimburse, such Noteholder or former Noteholder for any payments, including any taxes, interest, penalties or other charges, such Noteholder or former Noteholder shall be obligated to make as a result of the Determination of Taxability.
“Dollar” and “$” mean lawful money of the United States. “Effective Date” means [May __, 2025], subject to the satisfaction or waiver of the conditions to closing set forth in Section 2.4(a) hereof. “EMMA” means Electronic Municipal Market Access system as provided by the Municipal Securities Rulemaking Board.
“Environmental Laws” means any and all federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions relating to the environment or to emissions, discharges or releases of pollutants, contaminants, petroleum or petroleum products, chemicals or industrial, toxic or hazardous substances or wastes into the environment, including, without limitation, ambient air, surface water, ground water, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, petroleum or petroleum products, chemicals or industrial, toxic or hazardous substances or wastes or the clean up or other remediation thereof. “Event of Default” means any event or circumstance specified in Section 9.1 hereof.

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“Event of Insolvency” means, with respect to any Person, the occurrence of one or more of the following events:
(a) the issuance, under the laws of any state or under the laws of the United States of America, of an order of rehabilitation, liquidation or dissolution of such Person; (b) the commencement by or against such Person of a case or other proceeding seeking liquidation, reorganization or other relief with respect to such Person or its debts under any bankruptcy, insolvency or other similar state or federal law now or hereafter in effect, including, without limitation, the appointment of a trustee, receiver, liquidator, custodian or other similar official for such Person or any substantial part of its property or there shall be appointed or designated with respect to it, an entity such as an organization, board, commission, authority, agency or body to monitor, review, oversee, recommend or declare a financial emergency or similar state of financial distress with respect to it or there shall be declared or introduced or proposed for consideration by it or by any legislative or regulatory body with competent jurisdiction over it, the existence of a state of financial emergency or similar state of financial distress in respect of it; (c) the making of an assignment for the benefit of creditors by such Person; (d) the failure of such Person to generally pay its debts as they become due; (e) a debt moratorium, debt adjustment, debt restructuring or comparable restriction with respect to the payment of any indebtedness of such Person is declared or imposed by such Person or by any governmental authority having jurisdiction over such Person;
(f) such Person shall admit in writing its inability to pay its debts when due; or (g) the initiation of any actions to authorize any of the foregoing by or on behalf of such Person.
“Event of Taxability” means (i) a change in Laws or fact or the interpretation thereof, or the occurrence or existence of any fact, event or circumstance (including, without limitation, the taking of any action by the Borrower, or the failure to take any action by the Borrower, or the making by the Borrower of any misrepresentation herein or in any certificate required to be given in connection with this Agreement) which has the effect of causing interest paid or payable on the Note to become includable, in whole or in part, in the gross income of a Noteholder for federal income tax purposes or (ii) the entry of any decree or judgment by a court of competent jurisdiction, or the taking of any official action by the Internal Revenue Service or the Department of the Treasury, which decree, judgment or action shall be final under applicable procedural law, in either case, which has the effect of causing interest paid or payable on the Note to become includable, in whole or in part, in the gross income of a Noteholder for federal income tax purposes.

An Event of Taxability does not include any event, condition or circumstance which results in interest on the Note being an item of tax preference subject to the federal alternative minimum tax, or any other tax consequences which depend upon a Noteholder’s particular tax status.

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“Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided, that if such rate is not so published for any day which is a Business Day, the Federal Funds Rate for such day shall be the average of the quotation for such day on such transactions received by Wells Fargo Bank, National Association from three federal funds brokers of recognized standing selected by Wells Fargo Bank, National Association. Notwithstanding the foregoing, if the Federal Funds Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.
“FHWA” means the U.S. Department of Transportation Federal Highway Administration. “Fiscal Year” means the period commencing on July 1 of each year and terminating on the next succeeding June 30.
“Fitch” means Fitch Ratings, or its successors.
“Floating Rate” means a per annum rate of interest equal to the sum of (a) the product of (i) Daily Simple SOFR multiplied by (ii) the Applicable Factor plus (b) the Applicable Spread; provided, however, that immediately and upon the occurrence of an Event of Default (and without any notice given with respect thereto) and during the continuation of such Event of Default, “Floating Rate” shall mean the Default Rate.
“Floor” means a rate of interest equal to 0.00%.
“FRB” means the Board of Governors of the Federal Reserve System of the United States. “General Obligation Credit Rating” means the long-term unenhanced credit rating assigned by a Rating Agency to general obligation debt of the City. The Borrower acknowledges that as of the Effective Date the General Obligation Credit Rating is “AA+” by S&P. “Generally Accepted Accounting Principles” or “GAAP” means generally accepted accounting principles in effect from time to time in the United States and applicable to entities such as the Borrower, including, without limitation, those principles set forth in the statements and pronouncement of the Government Accounting Standards Board. “Governmental Approval” means an authorization, consent, approval, license, or exemption of, registration or filing with, or report to any Governmental Authority. “Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).
“Grant Anticipation Note Law” has the meaning set forth in the recitals hereof.

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“Grant Proceeds” means the grant proceeds for the West Cliff Drive Project received by the Borrower from the FHWA.
“Indemnified Party” has the meaning set forth in Section 5.2 hereof. “Initial Advance” means the initial Advance made by the Bank on the Effective Date pursuant to 2.3(a) hereof.
“Interest Payment Date” means the first Business Day of each calendar month, commencing July 1, 2025, and continuing to and including the Maturity Date. “Investor Letter” has the meaning set forth in Section 10.9(c) hereof. “Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.
“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).
“Material Adverse Effect” means an event or occurrence which adversely affects in a material manner (a) the assets, liabilities, condition (financial or otherwise), business or operations of the Borrower, (b) the ability of the Borrower to carry out its business as of the date of this Agreement or as proposed herein to be conducted or to meet or perform its obligations under this Agreement or any of the other Note Documents on a timely basis, (c) the validity or enforceability of this Agreement or any other Note Document or (d) the rights or remedies of the Bank under this Agreement, the Note or any other Note Document.
“Maturity Date” means June 30, 2027.
“Maximum Federal Corporate Tax Rate” means, on any given day, the maximum rate of income taxation imposed on corporations pursuant to Section 11(b) of the Internal Revenue Code, as in effect from time to time (or, if as a result of a change in the Internal Revenue Code, the rate of income taxation imposed on corporations generally shall not be applicable to the Bank, the maximum statutory rate of federal income taxation which could apply to the Bank). “Maximum Interest Rate” means the maximum rate of interest on the relevant obligation permitted by applicable law.
“Moody’s” means Moody’s Investors Service, Inc., or its successors.

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“Non-Bank Transferee” has the meaning set forth in Section 10.9(c) hereof. “Note” has the meaning set forth in the recitals hereof. “Noteholder” means the holder or owner of the Note or any portion thereof. “Note Documents” means this Agreement, the Note, the Resolution and any documents related thereto.
“Participant” means any entity to which the Bank has granted a participation in the obligations of the Bank hereunder and of the Borrower hereunder and under the Note. “Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Title III of Pub. L. 107 56 (signed into law October 26, 2001).
“Payment Obligations” has the meaning provided in the Recitals hereto. “Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity. “Prepayment Date” means any Business Day on which the Borrower prepays the Note in whole or in part pursuant to Section 3.3 hereof.
“Prime Rate” means, at any time, the rate of interest per annum publicly announced from time to time by Wells Fargo Bank, National Association as its prime rate. Each change in the Prime Rate shall be effective as of the opening of business on the day such change in such prime rate occurs. The parties hereto acknowledge that the rate announced publicly by Wells Fargo Bank, National Association as its prime rate is an index or base rate and shall not necessarily be its lowest or best rate charged to its customers or other banks. “Property” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, whether now owned or hereafter acquired. “Rating Agency” means Fitch, Moody’s or S&P or any other nationally recognized rating agency with a General Obligation Credit Rating then in effect. “Rating Downgrade” means each rating category reduction of the General Obligation Debt Rating assigned by a Rating Agency. For example, a reduction by S&P from “AA+” to “AA” is one Rating Downgrade, and a reduction by S&P from “AA+” to “AA-” is two Rating Downgrades. “Rating Upgrade” means each rating category increase of the General Obligation Credit Rating assigned by a Rating Agency. For example, an increase by S&P from “AA” to “AA+” is one Rating Upgrade, and an increase by S&P from “AA” to “AAA” is two Rating Upgrades. “Relevant Governmental Body” means the FRB or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the FRB or the Federal Reserve Bank of New York, or any successor thereto.

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“Request for Advance” mean a certificate substantially in the form attached hereto as Exhibit F, properly completed and signed by an Authorized Representative, as such form may be amended, modified or updated from time to time by the Bank. “Resolution” means the resolution of the City adopted by the City Council of the City on [May 27, 2025], together with any other resolutions or proceedings taken by the City in connection with the execution and delivery of this Agreement, the Note and the other Note Documents. “S&P” means S&P Global Ratings, and any successor rating agency. “Sanction” or “Sanctions” means any and all economic or financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes and restrictions and anti-terrorism laws imposed, administered or enforced from time to time by: (a) the United States of America, including those administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), the U.S. Department of State, the U.S. Department of Commerce, or through any existing or future statute or Executive Order, (b) the United Nations Security Council, (c) the European Union, (d) the United Kingdom, or (e) any other Governmental Authority with jurisdiction over the Borrower.
“Sanctioned Target” means any target of Sanctions, including: (a) Persons on any list of targets identified or designated pursuant to any Sanctions, (b) Persons, countries, or territories that are the target of any territorial or country-based Sanctions program, (c) Persons that are a target of Sanctions due to their ownership or control by any Sanctioned Target(s), or (d) otherwise a target of Sanctions, including vessels and aircraft, that are designated under any Sanctions program. “SOFR” means a rate equal to the secured overnight financing rate as administered by the SOFR Administrator.
“SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate). “SOFR Administrator’s Website” means the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time. “SOFR Determination Day” has the meaning specified in the definition of “Daily Simple SOFR”.
“SOFR Rate Day” has the meaning specified in the definition of “Daily Simple SOFR”. “State” means the State of California.
“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency

16.26 -14-
options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.
“Taxable Date” means the date, if any, on which interest on the Note is first includable in gross income of any holder thereof (including the Bank) as a result of an Event of Taxability as such a date is established pursuant to a Determination of Taxability. “Taxable Period” has the meaning set forth in Section 3.5 hereof. “Taxable Rate” means, with respect to a Taxable Period, the product of (a) the interest rate on the Note during such period, and (b) the quotient of (i) one divided by (ii) one minus the Maximum Federal Corporate Tax Rate.
“Taxes” has the meaning provided in Section 5.5 hereof. “Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment. “United States” means the United States of America.
“Unutilized Amount” means, as of any date, an amount equal to the difference between (i) the Commitment Amount and (ii) the aggregate amount of Advances made by the Bank pursuant to the terms hereof.
“U.S. Government Securities Business Day” means any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities. “West Cliff Drive Project” has the mean set forth in the Resolution.

Section 1.2. Accounting Terms and Determinations. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made and all financial statements required to be delivered hereunder shall be prepared in accordance with Generally Accepted Accounting Principles as in effect from time to time, applied on a consistent basis.

Section 1.3. Interpretation. The following rules shall apply to the construction of this Agreement unless the context requires otherwise: (i) the singular includes the plural, and the plural the singular; (ii) words importing any gender include the other gender; (iii) references to statutes are to be construed as including all statutory provisions consolidating and amending, and all regulations promulgated pursuant to, such statutes; (iv) references to “writing” include printing,

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photocopy, typing, lithography and other means of reproducing words in a tangible visible font; (v) the words “including,” “includes” and “include” shall be deemed to be followed by the words “without limitation”; (vi) references to the introductory paragraph, recitals, articles, sections (or clauses or subdivisions of sections), exhibits, appendices, annexes or schedules are to those of this Agreement unless otherwise indicated; (vii) references to agreements and other contractual instruments shall be deemed to include all subsequent amendments and other modifications to such instruments, but only to the extent that such amendments and other modifications are permitted or not prohibited by the terms of this Agreement; (viii) section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose; (ix) references to Persons include their respective permitted successors and assigns; and (x) in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding.” All references to “funds” herein shall include all accounts and subaccounts therein unless the context clearly requires otherwise.

Section 1.4. Rates. The Bank does not warrant or accept any responsibility for, and shall not have any liability with respect to, (a) the continuation of, administration of, submission of, calculation of or any other matter related to the Benchmark, any component definition thereof or rates referred to in the definition thereof, or with respect to any alternative, successor or replacement rate thereto (including any Benchmark Replacement), including whether the composition or characteristics of any such alternative, successor or replacement rate (including any Benchmark Replacement), as it may or may not be adjusted pursuant to Section 3.6(c), will be similar to, or produce the same value or economic equivalence of, or have the same volume or liquidity as, the Benchmark or any other Benchmark prior to its discontinuance or unavailability, or (b) the effect, implementation or composition of any Conforming Changes. The Bank and its Affiliates or other related entities may engage in transactions that affect the calculation of the Benchmark, any alternative, successor or replacement rate (including any Benchmark Replacement) or any relevant adjustments thereto and such transactions may be adverse to the Borrower. The Bank may select information sources or services in its reasonable discretion to ascertain the Benchmark, any component definition thereof or rates referred to in the definition thereof, in each case pursuant to the terms of this Agreement, and shall have no liability to the Borrower or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service.

ARTICLE II

PURCHASE OF THE NOTE AND ADVANCES
Section 2.1. Commitment. Upon the conditions set forth in Section 2.4(a) hereof and based on the representations, warranties and covenants of the Borrower set forth herein, the Bank agrees to purchase from the Borrower and the Borrower hereby agrees to sell to the Bank the Note in an aggregate principal amount not to exceed Twenty Million Fifty-Five Thousand and NO/100 Dollars ($20,055,000) (the “Commitment Amount”), and in substantially the form set forth in Exhibit A hereto.

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Section 2.2. Closing. On the Effective Date, the Borrower shall deliver to the Bank the documents described in Section 2.4(a) hereof. Upon delivery of such documents and the satisfaction or waiver by the Bank of the conditions precedent set forth in Section 2.4(a) hereof, the Bank will make the Initial Advance in immediately available federal funds payable to the Borrower. One fully registered Note, in the aggregate principal amount not to exceed the Commitment Amount, shall be issued to and registered in the name of the Bank, or as otherwise directed by the Bank.

Section 2.3. Advances.
(a) Initial Advance. Upon satisfaction of the conditions precedent set forth in Section 2.4(a) hereof, the Bank shall make the Initial Advance in the principal amount of [$______] to the Borrower to be used by the Borrower to pay or reimburse the Borrower for the payment of costs of the West Cliff Drive Project. (b) Additional Advances. Prior to the Maturity Date and upon the satisfaction of the conditions precedent set forth in Section 2.4(b) of this Agreement, the Bank shall make one or more Advances to the Borrower to be used by the Borrower to pay or reimburse the Borrower for the payment of costs of the West Cliff Drive Project; provided that the aggregate principal amount of Advances shall not exceed the Commitment Amount. The Borrower shall not use any Advance for any payment which is not permitted by the Code, the Grant Anticipation Note Law, or this Agreement. (c) Requests for Advance. The Borrower shall give written notice to the Bank in the form of a Request for Advance no later 8:00 a.m. California time on a Business Day which is not less than three (3) Business Days prior to the Business Day the related Advance is to be made (a “Date of Advance”); provided that the Borrower shall not deliver more than one Request for Advance in any thirty (30) calendar day period. If the Bank receives a Request for Advance at or after 8:00 a.m. California time on any Business Day, such Request for Advance shall be deemed to have been received on the following Business Day. Requests for Advances shall be delivered to the Bank via e-mail or facsimile at the e-mail addresses or the facsimile numbers set forth in Section 10.3 for receipt of Requests for Advances.
(d) Minimum Amounts. Each Advance, other than the Initial Advance, shall be in the principal amount requested by the Borrower pursuant to each Request for Advance but in any event in a minimum principal amount of $100,000 or such greater amount which is in an integral multiple of $1,000; provided that no Advance shall be greater than the Unutilized Amount.

Section 2.4. Conditions Precedent.
(a) Conditions Precedent to Effective Date and Initial Advance. The obligations of the Bank to purchase the Note and make the Initial Advance hereunder shall be subject to the fulfillment of each of the following conditions precedent on or before the Effective Date in a manner satisfactory to the Bank in its sole discretion:

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(i) The Bank shall have received a fully executed original of this Agreement and the original Note, duly issued by the Borrower, and confirmation that the Note is not (A) assigned a specific rating by any Rating Agency, (B) registered with The Depository Trust Company or any other securities depository, (C) issued pursuant to any type of official statement, private placement memorandum or other offering document or (D) placed or offered by a broker dealer in the capacity of an underwriter or a placement agent, and fully executed originals of the other Note Documents or acknowledged copies of such other Note Documents certified by an Authorized Representative as true, correct and complete copies thereof, and certifying that such documents were duly issued, adopted or executed and delivered, have not been modified, amended or rescinded and are in full force and effect on and as of the Effective Date.
(ii) The Bank shall have received a copy of the Resolution of the Borrower authorizing the execution and delivery of this Agreement, the Note and the other Note Documents, certified as of the Effective Date by an Authorized Representative.
(iii) The Bank shall have received certified copies of all approvals, authorizations and consents of any trustee, or holder of any indebtedness or obligation of the Borrower or any governmental agency or public authority, if any, which are necessary for the Borrower to enter into each of the Note Documents and the transactions contemplated herein and therein.
(iv) The Bank shall have received an opinion addressed to the Bank and dated the Effective Date of counsel to the Borrower as to (a) the due authorization, execution and delivery, validity and enforceability with respect to the Borrower of this Agreement and the Note and the other Note Documents, (b) the validity of the pledge of the Grant Proceeds to secure the Payment Obligations as described in Section 4.1 hereof, (c) the exclusion of interest on the Note from gross income for federal income tax purposes and (d) such other matters as the Bank may reasonably request, in form and substance satisfactory to the Bank. (v) The following statements shall be true and correct on the Effective Date, and the Bank shall have received a certificate incorporating by reference the definitions of the capitalized terms defined in this Agreement, signed by an Authorized Representative, dated the Effective Date, certifying the name, incumbency and specimen signature of each individual authorized to sign this Agreement, the Note and the other Note Documents and the other documents or certificates to be delivered by the Borrower pursuant hereto or thereto, on behalf of the Borrower, and of each individual authorized to act on behalf of the Borrower for purposes of this Agreement, on which the Bank may conclusively rely until a revised certificate is similarly delivered and as to the matters set forth in Sections 2.3(a)(viii),(ix), (x) and (xi) hereof.
(vi) The Bank shall have received such authorization documents, certifications, incumbency certificates and opinions with respect to the other parties

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to the transactions as the Bank may reasonably request, in form and substance satisfactory to the Bank.
(vii) The Bank shall have received from the Borrower evidence satisfactory to the Bank of the commitment of the FHWA to make the grant to the Borrower.
(viii) The representations and warranties of the Borrower contained in each of the Note Documents and each certificate, letter, other writing or instrument delivered by the Borrower to the Bank pursuant hereto or thereto are true and correct on and as of the Effective Date as though made on and as of such date. (ix) No Default or Event of Default has occurred and is continuing or would result from the execution and delivery of this Agreement or the issuance of the Note.
(x) Since the most current date of the information, financial or otherwise, supplied by the Borrower to the Bank, there has been no change in the assets, liabilities, financial position or results of operations of the Borrower which might reasonably be anticipated to cause a Material Adverse Effect and the Borrower has not incurred any obligations or liabilities which might reasonably be anticipated to cause a Material Adverse Effect.
(xi) The Bank shall be reasonably satisfied that, in connection with the preparation, issuance, execution, delivery and filing of this Agreement, the Note and the other Note Documents, payment will be made to the Bank promptly after demand therefor after the Effective Date of fees and disbursements of the Bank’s counsel (for disbursement by the Bank to its counsel).
(xii) All other legal matters pertaining to the execution and delivery of each of the Note Documents and the adoption and implementation of the Resolution shall be reasonably satisfactory to the Bank and its counsel. (xiii) The Bank shall have received evidence that all required filings, if any, with the California Debt and Investment Advisory Commission have been or will be made and the fee of the California Debt and Investment Advisory Commission, if any, shall have been paid by the Borrower. (xiv) The Bank shall have received such other documents, certificates, opinions (including reliance letters), approvals (and if requested by the Bank, certified duplicates of executed copies of such approvals) and filings with respect to this Agreement, the Note and the other Note Documents as the Bank may reasonably request, in form and substance satisfactory to the Bank. (xv) The Bank shall have received a copy of the most recent unaudited financial statements for the City and the audited financial statements for the City for the Fiscal Years ending June 30, 2024, 2023 and 2022, a copy of the Borrower’s

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investment policy in effect as of the Effective Date and a copy of the most recent annual operating budget of the City.
(xvi) Evidence that a CUSIP number has been obtained and reserved from Standard & Poor’s CUSIP Service for the Note which shall be obtained and paid for by the Bank.
(b) Conditions Precedent to Additional Advances. The obligation of the Bank to make an Advance (other than the Initial Advance) is subject to the satisfaction of the following conditions precedent on the Date of Advance:
(i) the representations and warranties of the Borrower set forth in Article VI of this Agreement shall be true and correct in all material respects on such Date of Advance (except to the extent any such representation or warranty expressly relates to an earlier date);
(ii) no Default of Event of Default shall have occurred and be continuing on such Date of Advance;
(iii) the Bank shall have received a Request for Advance as required under, and in strict conformity with, Section 2.3(c) hereof; and (iv) the principal amount of the Advance, together with the principal amount of each Advance made hereunder prior to such Date of Advance, shall not exceed 95% of the amount which is stated in writing by the granting authority as committed and appropriated.

Section 2.5. Amendment, Consent or Waiver Fee. Upon each amendment hereof, consent or waiver hereunder or under any Note Document, the Borrower agrees to pay to the Bank an amendment fee of $2,500 and shall pay or cause to be paid attorneys’ fees and expenses, if any, incurred by the Bank in processing such amendment, consent or waiver.

Section 2.6. Utilization. The Borrower shall pay or cause to be paid to the Bank on July 1, 2025, for the period commencing on the Effective Date to and including June 30, 2025, and in arrears on the first Business Day of each January, April, July and October occurring thereafter to the Maturity Date, and on the Maturity Date, a non-refundable fee in an amount equal to the product of the daily average Unutilized Amount and one fifth of one percent (0.20%) per annum during each related quarterly period.

ARTICLE III
THE BORROWER’S OBLIGATIONS
Section 3.1. Interest on the Note. Subject to Section 3.6 hereof, (a) the Note shall bear interest on the outstanding principal amount thereof from the Effective Date to the date the Note is repaid in full at a rate per annum equal to the Floating Rate, (b) upon a Determination of Taxability, the Note shall bear interest on the outstanding principal amount thereof at a rate per annum equal to the Taxable Rate in accordance with the provisions of Section 3.4 hereof, and

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(c) upon the occurrence and during the continuance of an Event of Default, the Note shall bear interest on the outstanding principal amount thereof at a rate per annum equal to the Default Rate.

Interest on the Note shall be paid to the Bank monthly in arrears on each Interest Payment Date applicable thereto, and at such other times as may be specified herein. Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.

Section 3.2. Repayment of the Note. The principal of the Note shall be repaid in full on the Maturity Date; provided that, within thirty (30) days of receiving Grant Proceeds, the Borrower shall use such Grant Proceeds to repay the principal of and interest on the Note as required by Section 7.11 hereof.

Section 3.3. Prepayment of the Note. The Borrower may prepay the Note, in whole or in part, on any Business Day, without cost, penalty or premium, provided written notice is provided by the Borrower to the Bank in the form of Exhibit C hereto not later than 8:00 a.m., California time, on the date which is at least ten (10) Business Days prior to the Prepayment Date. Each such notice of optional prepayment shall be irrevocable and shall bind the Borrower to make such prepayment in accordance with such notice. Accrued interest on all prepayments of principal to the Prepayment Date shall be payable on the Prepayment Date.

Section 3.4. Determination of Taxability.
(a) In the event a Taxable Date occurs, the Borrower hereby agrees to pay to the Bank or the Noteholder on demand therefor (i) an amount equal to the difference between (A) the amount of interest that would have been paid to the Bank or the Noteholder, as applicable, on the Note during the period for which interest on the Note is includable in the gross income of the Bank or the Noteholder, as applicable, if the Note had borne interest at the Taxable Rate, beginning on the Taxable Date (the “Taxable Period”), and (B) the amount of interest actually paid to the Bank or the Noteholder, as applicable, during the Taxable Period, and (ii) an amount equal to any interest, penalties or charges owed by the Bank or a Noteholder, as applicable, as a result of interest on the Note becoming includable in the gross income of the Bank or such Noteholder, as applicable, together with any and all reasonable attorneys’ fees, court costs, or other out of pocket costs incurred by the Bank or such Noteholder, as applicable, in connection therewith; (b) Subject to the provisions of clauses (c) and (d) below, the Bank shall afford the Borrower the opportunity, at the Borrower’s sole cost and expense, to contest (i) the validity of any amendment to the Code which causes the interest on the Note to be includable in the gross income of the Bank or the Noteholder or (ii) any challenge to the validity of the tax exemption with respect to the interest on the Note, including the right to direct the necessary litigation contesting such challenge (including administrative audit appeals);
(c) As a condition precedent to the exercise by the Borrower of its right to contest set forth in clause (b) above, the Borrower shall, on demand, immediately reimburse the Bank or the Noteholder, as applicable, for any and all expenses (including reasonable attorneys’ fees for services that may be required or desirable) that may be

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incurred by the Bank or the Noteholder, as applicable, in connection with any such contest, and shall, on demand, immediately reimburse the Bank or the Noteholder, as applicable, for any and all penalties or other charges payable by the Bank or the Noteholder, as applicable, for failure to include such interest in its gross income; and (d) The obligations of the Borrower under this Section 3.4 shall survive the termination of the Note and this Agreement.

Section 3.5. Daily Simple SOFR Confirming Changes. In connection with the use or administration of Daily Simple SOFR, the Bank will have the right to make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Note Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Note Document. The Bank will promptly notify the Borrower of the effectiveness of any Conforming Changes in connection with the use or administration of Daily Simple SOFR.

Section 3.6. Changed Circumstances.
(a) Circumstances Affecting Benchmark Availability. Subject to clause (c) below, if for any reason (i) the Bank shall determine (which determination shall be conclusive and binding absent manifest error) that reasonable and adequate means do not exist for ascertaining Daily Simple SOFR pursuant to the definition thereof or (ii) the Bank shall determine (which determination shall be conclusive and binding absent manifest error) that Daily Simple SOFR does not adequately and fairly reflect the cost to the Bank of purchasing the Note, then, in each case, the Bank shall promptly give notice thereof to the Borrower. Upon notice thereof by the Bank to the Borrower, the Note will be deemed to have been converted to bear interest at the Prime Rate immediately. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted.
(b) Laws Affecting SOFR Availability. If, after the date hereof, the introduction of, or any change in, any applicable Law or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by the Bank (or its respective lending offices) with any request or directive (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, shall make it unlawful or impossible for the Bank (or its respective lending offices) to honor its obligations hereunder, or to determine or charge interest based upon SOFR or Daily Simple SOFR, the Bank shall promptly give notice thereof to the Borrower (an “Illegality Notice”).

Thereafter, until the Bank notifies the Borrower that the circumstances giving rise to such determination no longer exist, the Note shall bear interest at the Prime Rate. (c) Benchmark Replacement Setting.
(i) Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Note Document, upon the occurrence of a Benchmark Transition Event, the Bank and the Borrower may amend this Agreement to replace

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the then-current Benchmark with a Benchmark Replacement. Any such amendment with respect to a Benchmark Transition Event will become effective at 5:00 p.m. on the fifth (5th) Business Day after the Bank has posted such proposed amendment to the Borrower. No replacement of a Benchmark with a Benchmark Replacement pursuant to this Section 3.6(c)(i) will occur prior to the applicable Benchmark Transition Start Date.
(ii) Benchmark Replacement Conforming Changes. In connection with the use, administration, adoption or implementation of a Benchmark Replacement, the Bank will have the right to make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Note Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Note Document.
(iii) Notices; Standards for Decisions and Determinations. The Bank will promptly notify the Borrower of (A) the implementation of any Benchmark Replacement and (B) the effectiveness of any Conforming Changes in connection with the use, administration, adoption or implementation of a Benchmark Replacement. The Bank will promptly notify the Borrower of the removal or reinstatement of any tenor of a Benchmark pursuant to Section 3.6(c)(iv). Any determination, decision or election that may be made by the Bank pursuant to this Section 3.6(c), including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its sole discretion and without consent from any other party to this Agreement or any other Note Document, except, in each case, as expressly required pursuant to this Section 3.6(c).
(iv) Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary herein or in any other Note Document, at any time (including in connection with the implementation of a Benchmark Replacement), (A) if the thencurrent Benchmark is a term rate and either (1) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Bank in its reasonable discretion or (2) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is not or will not be representative, then the Bank may modify the definition of “Interest Period” (or any similar or analogous definition) for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (B) if a tenor that was removed pursuant to clause (A) above either (1) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (2) is not, or is no longer, subject to an announcement that it is not or will not be representative for a Benchmark (including a Benchmark Replacement), then the Bank may modify the definition of “Interest Period” (or any

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similar or analogous definition) for all Benchmark settings at or after such time to reinstate such previously removed tenor.
(v) Benchmark Unavailability Period. Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, any outstanding principal on the Note will be deemed to have been converted to bear interest at the Prime Rate immediately.

ARTICLE IV

SECURITY
Section 4.1. Security. Pursuant to the Grant Anticipation Note Law and the Resolution, the principal of and interest on the Note is secured by a first lien upon and charge against the Grant Proceeds. No filing, registering, recording or publication of this Agreement or any other Note Document is required to establish the lien and charge on the Grant Proceeds or to perfect, protect or maintain the lien created thereby. Furthermore, as set forth in Section 53859.07 of the Grant Anticipation Note Law, in the event the principal of and interest on the Note is not paid from Grant Proceeds, such principal and interest shall be paid to the extent permitted by law from any taxes, income, revenue, cash receipts, or other monies of the Borrower lawfully available therefore.

ARTICLE V

LIABILITY, INDEMNITY AND PAYMENT
Section 5.1. Liability of the Borrower. The Borrower and the Bank agree that the obligation of the Borrower to pay the Payment Obligations is a contractual obligation of the Borrower secured by Grant Proceeds, shall not constitute a full faith and credit general obligation of the Borrower and shall not be affected by, and the Bank shall not be responsible for, among other things, (i) the validity, genuineness or enforceability of this Agreement, the Note or documents, notices or endorsements relating thereto (even if this Agreement or any documents, notices endorsements relating thereto should in fact prove to be in any and all respects invalid, fraudulent or forged), (ii) the use to which the amounts disbursed by the Bank may be put, or (iii) any other circumstances or happenings whatsoever, whether or not similar to any of the foregoing.

Section 5.2. Indemnification by the Borrower.
(a) (a) To the fullest extent permitted by law, the Borrower agrees to indemnify, defend and hold harmless the Bank, the Participants and their respective officers, directors, employees, representatives and agents (collectively, the “Indemnified Parties” and, individually, an “Indemnified Party”), from and against any and all claims, damages, penalties, actions, judgments, suits, disbursements, losses, liabilities, costs or expenses whatsoever (including reasonable attorneys’ fees) which any of them may incur (or which may be claimed against any of them by any Person) as a result of, or arising out of, or in any way related to, or by reason of or in connection with (i) the execution and delivery or transfer of, or payment or failure to pay under this Agreement or the Note, (ii) the

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application of the proceeds the Note, (iii) any breach by the Borrower of any warranty, covenant, term or condition in, or the occurrence of any default under any of the Note Documents, together with all reasonable expenses resulting from the compromise or defense of any claims or liabilities arising as a result of any such breach or default, (iv) any action or proceeding relating to a court order, injunction or other process or decree restraining or seeking to restrain the Bank from paying any amount under this Agreement (other than actions or proceedings instituted by or on behalf of the Bank) or (v) any investigation, litigation or other proceeding (whether or not the Bank or any Participant is a party thereto) related to the entering into and/or each performance of any of the Note Documents or the use of the proceeds of the Note under this Agreement; provided, that the Borrower shall not be required to indemnify the Bank for any claims, damages, penalties, actions, judgments, suits, disbursements, losses, liabilities, costs or expenses to the extent, but only to the extent, caused by the willful misconduct or gross negligence of the Bank (as determined by a final order of a court of competent jurisdiction) in determining whether the purchase of the Note hereunder complied with the terms hereof. (b) The obligations of the Borrower hereunder shall include, but not be limited to (i) the burden and expense of defending all claims, suits and administrative proceedings (with counsel chosen by the Borrower and reasonably approved by the Indemnified Parties), even if such claims, suits or proceedings are groundless, false or fraudulent, (ii) conducting all negotiations of any description, and (iii) paying and discharging, when and as the same become due, any and all claims, damages, penalties, actions, judgments, suits, disbursements, losses, liabilities, costs or expenses due from or rendered against the Indemnified Parties.
(c) Nothing in this Section 5.2 is intended to limit the obligations of the Borrower contained in Section 5.7 hereof.
(d) The obligations of the Borrower under this Section 5.2 shall survive the termination of the Note and the payment in full of all Payment Obligations.

Section 5.3. Increased Costs.
(a) Increased Costs Generally. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, liquidity ratio, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, the Bank (except any reserve requirement contemplated by Section 5.3(d) below);
(ii) subject the Bank to any taxes on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or
(iii) impose on the Bank any other condition, cost or expense affecting this Agreement or the Note purchased by the Bank;

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and the result of any of the foregoing shall be to increase the cost to the Bank of purchasing the Note, or to reduce the amount of any sum received or receivable by the Bank hereunder (whether of principal, interest or any other amount) then, upon request of the Bank, the Borrower will pay to the Bank, such additional amount or amounts as will compensate the Bank, for such additional costs incurred or reduction suffered. (b) Capital Requirements. If the Bank determines that any Change in Law affecting the Bank or the Bank’s Office or the Bank’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on the Bank’s capital or on the capital of the Bank’s holding company, if any, as a consequence of this Agreement or the Bank’s purchase of the Note, to a level below that which the Bank or the Bank’s holding company could have achieved but for such Change in Law (taking into consideration the Bank’s policies and the policies of the Bank’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to the Bank, as the case may be, such additional amount or amounts as will compensate Bank or the Bank’s holding company for any such reduction suffered. (c) A certificate of the Bank setting forth the amount or amounts necessary to compensate the Bank or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay the Bank the amount shown as due on any such certificate within thirty (30) days after receipt thereof.
(d) Delay in Requests. Failure or delay on the part of the Bank to demand compensation pursuant to the foregoing provisions of this Section 5.3 shall not constitute a waiver of the Bank’s right to demand such compensation, provided, that the Borrower shall not be required to compensate the Bank pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than nine (9) months prior to the date that the Bank notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of the Bank’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine (9) month period referred to above shall be extended to include the period of retroactive effect thereof).

Section 5.4. Calculation of Interest and Fees; Maximum Interest Rate; Default Rate. (a) Interest payable hereunder or under the Note or any other Note Document shall be calculated on the basis of a year of three hundred sixty (360) days based on the actual number of days elapsed. Any change in the Floating Rate or the Default Rate resulting from a change in Daily Simple SOFR, the Federal Funds Rate or the Prime Rate shall become effective as of the opening of business on the day on which such change in Daily Simple SOFR, the Federal Funds Rate or the Prime Rate shall become effective.

Each determination by the Bank of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error. All fees hereunder shall be fully earned on the date when due and, once paid, shall be non-refundable. If the Floating Rate becomes equal to the Default Rate pursuant to their definitions hereunder, the Borrower shall also pay all amounts due hereunder due to such change in the interest rate.

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(b) Any and all amounts remaining unpaid when due under this Agreement, the Note or any other Note Document shall bear interest at the Default Rate until repaid and shall be payable upon demand. Any such amounts which constitute interest remaining unpaid when due shall be added to principal, and such interest shall, in turn, bear interest at the Default Rate until repaid and shall be payable upon demand. Any sum payable by the Borrower to the Bank hereunder or under the Note or any other Note Document upon the occurrence or during the continuance of any Event of Default hereunder shall bear interest at the Default Rate.
(c) To the extent permitted by law, in the event that a rate of interest required to be paid by the Borrower under this Agreement, the Note or any other Note Document shall exceed a maximum rate established by law or by the Resolution, any subsequent reduction in the rate of interest required to be paid by the Borrower hereunder or under the Note or any other Note Document will not reduce the rate of interest below the maximum rate established by law until the total amount of interest accrued equals the amount of interest which would have accrued if the rate of interest required hereunder or under the Note or any other Note Document (without giving effect to this paragraph) had at all times been in effect. Upon the date on which all amounts payable on the Note or other Payment Obligations are due and payable, and otherwise immediately on the Maturity Date, in consideration for the limitation of the rate of interest otherwise payable under this Agreement, the Note or any other Note Document, the Borrower shall pay to the Bank a fee equal to the amount of all such unpaid interest which would have accrued if the rate of interest required hereunder or under the Note or any other Note Document (without giving effect to this paragraph) had at all times been in effect. (d) All amounts paid by the Borrower pursuant to this Agreement, the Note or any other Note Document shall be non-refundable and shall be paid in lawful money of the United States of America in immediately available funds.

Section 5.5. Form and Method of Payments; Late Payment; Net Payments. (a) Form and Method of Payments. All payments made to the Bank under this Agreement, the Note or any other Note Document shall be made not later than 4:00 p.m. (California time) without setoff, counterclaim or other defense by wire transfer in lawful currency of the United States and in immediately available funds to the Bank by the wire instructions set forth in Section 10.3 (or at such other bank, address or account as the Bank may designate in writing from time to time to the Borrower). Any payment received by the Bank later than 4:00 p.m. (California time) shall be deemed to be made on the next succeeding Business Day. If any payment required to be made by the Borrower hereunder or under the Note or any other Note Document becomes due and payable on a day other than a Business Day, the due date thereof shall be extended to the next succeeding Business Day and interest thereon shall be payable at the applicable rate during such extension. (b) Late Payment. In addition to any other rights the Bank may have hereunder or under the Note or any other Note Document, if any payment of principal or interest or portion thereof, under this Agreement, the Note or any other Note Document is not paid

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within fifteen (15) days of when due, a late payment charge equal to five percent (5%) of such past due payment may be assessed and shall be immediately payable. (c) Net Payments. All such payments will be made free and clear of, and without deduction or withholding for, any present or future taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or hereafter imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein (but excluding any tax imposed on the overall net income of the Bank or a Participant pursuant to the laws of the jurisdiction (or any political subdivision or taxing authority thereof or therein) in which the principal office of the Bank or such Participant is located) and all interest, penalties or similar liabilities with respect thereto (collectively, “Taxes”); provided, however, that the Borrower shall have no liability with respect to any Taxes which are imposed on the Bank or any Participant that is a foreign banking institution pursuant to the laws of the jurisdiction (or any political subdivision or taxing authority thereof or therein) in which the principal office of the Bank or such Participant, as the case may be, is located, unless (i) the Bank or such Participant, as the case may be, is entitled to benefits of an income tax treaty with the United States that provides for an exemption from United States withholding tax on interest and other amounts payable to the Bank or such Participant, as the case may be, pursuant to the terms of this Agreement, the Note or any other Note Document, or (ii) all interest and other amounts payable to the Bank or such Participant, as the case may be, pursuant to the terms of this Agreement, the Note or any other Note Document will be effectively connected with the conduct by the Bank or such Participant, as the case may be, of a trade or business within the United States. If any Taxes are so levied or imposed, the Borrower agrees to pay the full amount of such Taxes and such additional amounts as may be necessary so that every payment of all amounts due hereunder or under the Note or the other Note Documents, after withholding or deduction for or on account of any Taxes, will not be less than the amount provided for herein or in the Note or the other Note Documents. The Borrower will deliver to the Bank within fortyfive (45) days after the date the payment of any Taxes is due pursuant to applicable law certified copies of tax receipts evidencing such payment by the Borrower. To the extent permitted by law, the Borrower will indemnify and hold harmless the Bank and each Participant, and reimburse the Bank and each Participant upon written request, for the amount of any Taxes so levied or imposed and paid by the Bank or such Participant.

Section 5.6. Liability of the Bank. Neither the Bank nor any of its officers, directors, employees, representatives or agents shall be liable or responsible for (i) the use which may be made of the Note or this Agreement or for any acts, omissions, errors, interruptions, delays in transmission, dispatch or delivery of any message or advice, however transmitted, of the Bank in connection with this Agreement or the Note, (ii) any action, inaction or omission which may be taken by the Bank in connection with this Agreement or the Note, (iii) the validity, sufficiency or genuineness of documents, or of any endorsements thereon, even if such documents should in fact prove to be in any or all respects invalid, insufficient, fraudulent or forged, (iv) payment by the Bank against presentation of documents which do not comply with the terms of this Agreement, including failure of any documents to bear any reference or adequate reference to this Agreement, or (v) any other circumstances whatsoever in making or failing to make payment under this Agreement, except for acts or events described in the immediately preceding clauses (i) through (v), to the extent, but only to the extent, of any direct, as opposed to special, indirect, consequential

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or punitive, damages (the right to receive special, indirect, consequential or punitive damages being hereby waived) suffered by it which the Borrower proves were caused by or (y) the Bank’s willful misconduct or gross negligence in determining whether documents presented under this Agreement comply with the terms of this Agreement. The Borrower further agrees that any action taken or omitted by the Bank under or in connection with this Agreement or the related draft or documents, if done without gross negligence, shall be effective against the Borrower as to the rights, duties and obligations of the Bank and shall not place the Bank under any liability to the Borrower. In furtherance and not in limitation of the foregoing, the Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary.

Section 5.7. Obligations Unconditional. The Borrower’s obligation to pay the Payment Obligations and to perform and observe all of its other obligations under this Agreement, the Note or any other Note Document shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment which the Borrower may have against the Bank, any Participant, or any other Person, including, without limitation, any defense based on the failure of any nonapplication or misapplication of the proceeds of the Note hereunder, and irrespective of the legality, validity, regularity or enforceability of this Agreement, the Note or any or all other Note Documents, and notwithstanding any amendment or waiver of (other than an amendment or waiver signed by the Bank explicitly reciting the release or discharge of any such obligation), or any consent to, or departure from, this Agreement, the Note or any or all other Note Documents or any exchange, release, or nonperfection of any collateral securing the obligations of the Borrower hereunder and any other circumstances or happening whatsoever, whether or not similar to any of the foregoing; provided, however, that nothing contained in this Section 5.7 shall abrogate or otherwise affect the rights of the Borrower pursuant to Section 5.2 hereof.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES
Section 6.1. Representations and Warranties of the Borrower. To induce the Bank to enter into this Agreement, the Borrower hereby represents and warrants to the Bank as of the Effective Date as follows:
(a) Organization Existence. The Borrower is a charter city and municipal corporation duly organized, validly existing and in good standing under and pursuant to the Constitution and laws of the State.
(b) Power and Authority. The Borrower has and had at the time of adoption, execution, delivery, issuance, sale or performance full power, right and authority to (i) execute, deliver and perform its obligations hereunder and under the Note and each of the other Note Documents, and any and all instruments and documents required to be executed, adopted or delivered pursuant to or in connection herewith or therewith, (ii) pay the Payment Obligations at the times and in the manner set forth herein and (iii) perform each and all of the matters and things herein and therein provided for and the Borrower has complied with the laws of the State in, all matters relating to such execution, delivery and performance.

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(c) Due Authorization. This Agreement, the Note and each of the other Note Documents have been duly authorized, executed, issued and delivered and constitute the legal, valid and binding obligations of the Borrower enforceable in accordance with their terms.
(d) Necessary Actions Taken. The Borrower has taken all actions necessary to be taken by it (i) for the adoption, execution, adoption and delivery by the Borrower of any and all such other instruments and the taking of all such other actions on the part of the Borrower as may be necessary or appropriate for the effectuation and consummation of the transactions on the part of the Borrower contemplated by the Note Documents or in connection herewith or therewith and (ii) to authorize or approve, as appropriate, the execution or adoption, issuance and delivery of, and the performance of its obligations under and the transactions contemplated by, each of the Note Documents and the payment of the Payment Obligations at the times and in the manner set forth herein. (e) Binding Effect. The Resolution has been duly adopted and is in full force and effect. This Agreement, the Note and each of the other Note Documents have been duly authorized, executed and delivered by the Borrower and each constitutes a legal, valid and legally binding obligation of the Borrower, which obligation is enforceable in accordance with its terms, and the payment of the Payment Obligations is and shall continue to be a contractual obligation of the Borrower for which the Grant Proceeds are and shall continue to be pledged as provided in Grant Anticipation Note Law and in the Note Documents, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, debt adjustment, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally or as to the availability of any particular remedy. No other Governmental Approval or other action by, and notice to or filing with, any Governmental Authority, and no election or referendum of or by any Person, organization or public body whatsoever required in connection with any of the foregoing actions or the performance by the Borrower of its obligations under the Note Documents that has not been obtained. There are no provisions of State law which would allow, as of the date hereof or any date subsequent hereto, any public vote or referendum, the results of which could invalidate this Agreement, the Note or any other Note Document or invalidate, limit or condition the obligation of the Borrower to pay the Payment Obligations to the Bank or any other obligation or pledge undertaken hereunder or in connection with the transactions contemplated by the Note Documents. (f) No Contravention. The adoption of the Resolution and the execution, delivery and performance of this Agreement, the Note and each of the other Note Documents, and compliance with the provisions hereof and thereof, do not and will not (i) conflict with or result in a violation of any Laws, including any debt limitations or other restrictions or conditions on the debt-issuing power of the Borrower, (ii) contravene the Borrower’s authorizing legislation, (iii) require any consent or approval of any creditor of the Borrower, (iv) conflict with or result in a violation of, or breach of, or constitute a default under, any law, judgment, order, decree or administrative regulation or any of the terms, conditions or provisions of any ordinance, judgment, decree, contract, loan agreement, note, bond, resolution, indenture, mortgage, deed of trust or other agreement or instrument to which the Borrower is a party or by which it or any property of the Borrower

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is bound and (v) do not and will not result in the imposition or creation of any Lien upon or invalidate or adversely affect in any way the Grant Proceeds. The Borrower has not received any notice, not subsequently withdrawn, given in accordance with the remedy provisions of any bond resolution or ordinance, trust indenture, guarantee or agreement or state law pertaining to bonds or notes, of any default or event of default of the Borrower which has not been cured.
(g) Compliance with Law; Employee Benefit Plan Compliance. The Borrower is in compliance with all Laws (including, without limitation, Regulations T, U or X of the FRB, or any successor regulations), except for such noncompliance that singly or in the aggregate, has not caused or is not reasonably expected to cause a Material Adverse Effect.

The current collection of the Grant Proceeds and the management of the Borrower and the accounting and recordkeeping therefor are in material compliance with all applicable state and federal laws and all applicable resolutions, ordinances and rules of the Borrower. The Borrower is in material compliance with the terms of the employee benefit plans in which the Borrower or any of its employees participate. Neither the Borrower nor any employee benefit plan maintained by the Borrower, or to which the Borrower contributes (or has contributed or is required to contribute) is subject to the Employee Retirement Income Security Act of 1974, as amended.
(h) Compliance; No Breach. The Borrower is in compliance with the terms and conditions of each of the Note Documents, and no breach of the terms hereof or thereof has occurred and is continuing, and no Default or Event of Default has occurred and is continuing.
(i) No Default. No default by the Borrower has occurred and is continuing in the payment of the principal of or premium, if any, or interest on any bond, note or other evidence of indebtedness issued by the Borrower with a lien on any portion of the Grant Proceeds. No bankruptcy, insolvency or other similar proceedings pertaining to the Borrower or any agency or instrumentality of the Borrower are pending or contemplated.

The Borrower is not in default under any other contract, loan agreement, note, bond, resolution, indenture, mortgage, deed of trust or other agreement or instrument to which the Borrower is a party or by which it or any property of the Borrower is bound, which default could have a Material Adverse Effect. The Borrower is in compliance with the terms and conditions of all Debt, and no breach of the terms hereof or thereof has occurred and is continuing, and no default or event of default under any Debt has occurred and is continuing.
(j) No Public Vote or Referendum; Pending Legislation and Decisions. To the best knowledge of the Borrower, there is no public vote or referendum pending, proposed or concluded, the results of which could in any way adversely affect the transactions contemplated by the Note Documents, or the validity or enforceability of the Note Documents. To the knowledge of the Borrower, there is no amendment, or proposed amendment to the Constitution or any law of the State or any administrative interpretation of the Constitution or any law of the State, or any legislation that has passed either house of the legislature of the State, or any judicial decision interpreting any of the foregoing, the effect of which could in any way adversely affect the transactions contemplated by the

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Note Documents, or the validity or enforceability of the Note Documents, or could otherwise reasonably be expected to result in a Material Adverse Effect. (k) No Immunity. The Borrower is not entitled to raise the defense of sovereign or governmental immunity in connection with any legal proceedings to enforce or collect upon this Agreement, the other Note Documents or the transactions contemplated hereby or thereby, including the payment of the principal of and interest on the Note or the payment of the other Payment Obligations.
(l) Litigation. There is no action, suit, inquiry, investigation or proceeding at law or in equity pending, or to the best knowledge of the Borrower, threatened, against or affecting the Borrower before any court, governmental agency, authority, arbitrator or administrative or governmental body which (i) could result in any Material Adverse Effect, (ii) which in any manner draws into question the validity or enforceability of this Agreement, the Note or any other Note Document, the pledge of the Grant Proceeds or the priority of any lien in favor of the Bank, (iii) which in any way affects the existence, organization or powers of the Borrower or any elected official thereof to execute and deliver any of this Agreement, the Note or the other Note Documents or perform the obligations thereunder or contemplated thereby, (iv) affects the title of any official of the Borrower to such Person’s office, (v) seeks to restrain or enjoin the collection or the pledge of the Grant Proceeds to pay the Payment Obligations at the times and in the manner set forth in the Note Documents, (vi) in any way contests or affects the validity or enforceability of any of this Agreement, the Note or the other Note Documents, (vii) contests in any way the powers or authority of the Borrower with respect to any of this Agreement, the Note or the other Note Documents, or (viii) which could materially adversely affect the ability of the Borrower to timely comply with its obligations under or in respect of any of this Agreement, the Note or the other Note Documents or in connection with the transactions contemplated hereby or thereby.
(m) Disclosure. Neither the Note Documents nor any other document, certificate or statements (including the unaudited financial statements, budgets, projections and cash flows) of the Borrower furnished to the Bank by or on behalf of the Borrower in connection with the transactions contemplated hereby, or thereby contains any untrue statement of any material fact or omits to state any material fact necessary so as to make the statements contained herein or therein, in light of the circumstances under which they were made, not misleading.
(n) Financial Information. The Borrower has delivered to the Bank a copy of the audited financial statements for the Borrower for the most recently completed Fiscal Year. These together with related notes, fairly present the condition (financial or otherwise), results of operations or projections of revenues of the Borrower as of the date and for the periods therein set forth. All such financial statements have been prepared in accordance with Generally Accepted Accounting Principles for government entities consistently applied. There has been no change which would have a Material Adverse Effect since the last day of the Fiscal Year set forth in such financial statements. The Borrower has no material contingent liabilities or other material contracts or commitments which are not reflected in such financial statements or in the notes thereto. The annual

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operating budget of the Borrower and any supplements thereto for the current Fiscal Year, a true and complete copy of which has been delivered to the Bank, fairly presents the anticipated income and expenses of the Borrower for such Fiscal Year. (o) Official Signatures. An Authorized Representative, on behalf of the Borrower, has full power and authority to execute, deliver and perform under each of the Note Documents. Any agreement, certificate or request signed by or on behalf of any Authorized Representative and delivered to the Bank shall be deemed a representation and warranty by the Borrower to the Bank as to the truth, accuracy and completeness of the statements made by the Borrower therein.
(p) Incorporation of Representations and Warranties by Reference. The Borrower hereby makes to the Bank the same representations and warranties made by the Borrower in each Note Document, which representations and warranties, as well as the related defined terms contained therein, are hereby incorporated by reference for the benefit of the Bank with the same effect as if each and every such representation and warranty and defined term were set forth herein in its entirety. No amendment to or waiver of such representations and warranties or defined terms made pursuant to any Note Document shall be effective to amend such representations and warranties and defined terms as incorporated by reference herein without the prior written consent of the Bank. (q) Swap Contracts. The Borrower has not entered into any Swap Contract under which a termination payment would be required to be paid from any portion of the Grant Proceeds on basis senior to or on a parity with the lien on the Grant Proceeds securing the Payment Obligations.
(r) Usury. The terms of this Agreement, the Note and the other Note Documents regarding the calculation and payment of interest and fees do not violate any applicable usury laws.
(s) Security. The Note constitutes a first lien upon and charge against the Grant Proceeds. As provided in Section 53859.07 of the Grant Anticipation Note Law, in the event the principal of and interest on the Note is not paid from Grant Proceeds, such principal and interest shall be paid to the extent permitted by law from any taxes, income, revenue cash receipts, or other monies of the Borrower lawfully available therefore. (t) Investment Policy. The Borrower has delivered to the Bank a true and complete copy of its investment policy. All investments of the Borrower have been and will be made substantially in accordance with such investment policy. Only the Borrower may amend, rescind or otherwise modify the Borrower’s investment policy. (u) Environmental Matters. In the ordinary course of its business, the Borrower conducts an ongoing review of Environmental Laws on the business, operations and properties of the Borrower, in the course of which it identifies and evaluates associated liabilities and costs (including, without limitation, any capital or operating expenditures required for cleanup or closure of properties presently or previously owned or operated, any capital or operating expenditures required to achieve or maintain compliance with

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environmental protection standards imposed by law or as a condition of any license, permit or contract, any related constraints on operating activities, including any periodic or permanent shutdown of any facility or reduction in the level of or change in the nature of operations conducted thereat and any actual or potential liabilities to third parties, including employees, and any related costs and expenses). On the basis of such review the Borrower has reasonably concluded that Environmental Laws are unlikely to have a Material Adverse Effect.
(v) Anti-Money Laundering and Anti-Corruption Laws; Sanctions. (i) The Borrower has instituted, maintains and complies with policies, procedures and controls reasonably designed to assure compliance with AntiMoney Laundering Laws and Anti-Corruption Laws. To the best of the Borrower’s knowledge, after due care and inquiry, the Borrower is not under investigation for an alleged violation of Anti-Money Laundering Laws or Anti-Corruption Laws by a Governmental Authority that enforces such laws.
(ii) The Borrower is not a Sanctioned Target. The Borrower is not owned or controlled by, or is acting or purporting to act for or on behalf of, directly or indirectly, a Sanctioned Target. The Borrower has instituted, maintain and comply with policies, procedures and controls reasonably designed to assure compliance with Sanctions. To the best of the Borrower’s knowledge, after due care and inquiry, the Borrower is not under investigation for an alleged violation of Sanction(s) by a Governmental Authority that enforces Sanctions. The Borrower shall notify the Bank in writing not more than one Business Day after first becoming aware of any breach of this Section.
(w) Tax-Exempt Status. The Borrower has not taken any action or omitted to take any action, and knows of no action taken by any Governmental Authority, which action, if taken or omitted, would adversely affect the exclusion of interest on the Note from gross income for purposes of federal income taxation.

ARTICLE VII

AFFIRMATIVE COVENANTS OF THE BORROWER
So long as the Note is outstanding and until all Payment Obligations shall have been paid in full, the Borrower hereby covenants and agrees that, unless the Bank shall otherwise consent in writing:

Section 7.1. Maintenance of Existence. The Borrower (a) shall maintain its existence as a charter city and municipal corporation duly organized and existing under and pursuant to the Constitution and laws of the State and (b) shall not liquidate or dissolve, or sell or lease or otherwise transfer or dispose of all or any substantial part of its property, assets or business, or combine, merge or consolidate with or into any other entity.

Section 7.2. Reports, Certificates and Other Information. The Borrower shall furnish or cause to be furnished to the Bank copies of:

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(a) (i) As soon as available, and in any event within two hundred seventy (270) days after the close of each Fiscal Year of the Borrower, the complete audited financial statements of the Borrower including the balance sheet as of the end of such Fiscal Year and the related statements of revenues, expenses and cash flows and changes in fund balance for such Fiscal Year, setting forth in each case in comparative form the corresponding figures for the preceding Fiscal Year all in reasonable detail, certified and prepared by an independent certified public accountant (acceptable to the Bank) in accordance with GAAP, consistently applied, an opinion of an independent certified public accountant (acceptable to the Bank), which opinion shall not contain a “going concern” or other material qualification, to the effect that such financial statements fairly present the financial, changes in financial position and results of operations of the Borrower for such the last day of such Fiscal Year and for such Fiscal Year, and were prepared in accordance with generally accepted accounting principles, consistently applied; (ii) in connection with the financial statements required to be delivered by the Borrower pursuant to Section 7.2(a)(i) above, a Compliance Certificate signed by an Authorized Representative stating that no Event of Default or Default has occurred, or if such Event of Default or Default has occurred, specifying the nature of such Event of Default or Default, the period of its existence, the nature and status thereof and any remedial steps taken or proposed to correct such Event of Default or Default;
(b) As soon as available for each Fiscal Year, and in any event no later than sixty (60) days following the commencement of each Fiscal Year, a copy of a balanced annual operating budget for the Borrower for such Fiscal Year and a certificate of an Authorized Representative to the effect that such annual operating budget includes all amounts reasonably anticipated to be necessary to make all payments in respect of the Payment Obligations due in such Fiscal Year;
(c) As soon as available, any disclosure documents distributed in connection with the original issuance or incurrence of any Debt;
(d) Promptly upon obtaining knowledge of any Default or Event of Default, or notice thereof, and within five (5) days thereafter, a certificate signed by an Authorized Representative specifying in reasonable detail the nature and period of existence thereof and what action the Borrower has taken or proposes to take with respect thereto; (e) As soon as practicable, written notice to the Bank of all litigation served against the Borrower and all proceedings before any court or governmental authority which, in each case, directly or indirectly relates to the enforceability of this Agreement, the Note or any of the other Note Documents or could have a Material Adverse Effect and promptly upon obtaining knowledge thereof, written notice to the Bank of the occurrence of any other event which could have a Material Adverse Effect; (f) Copies of any filings (including annual reports and notice of events described in the United States Securities and Exchange Commission Rule 15c2- 12(b)(5)(i)(C), if any) the Borrower files in the normal course of affairs with any nationally

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recognized municipal securities repository with respect to any Debt pursuant to any continuing disclosure agreement;
(g) Promptly after the adoption thereof and to the extent the Bank is not required to receive and make notice of the same, copies of any amendments to the Note Documents or a waiver to any provisions of the same.
(h) The Borrower shall provide the Bank written notice within fifteen (15) days of the receipt of Grant Proceeds, and the Borrower shall provide written notice promptly if the Borrower does not receive Grant Proceeds on a scheduled or expected date. (i) Such other information regarding the affairs and condition of the Borrower as the Bank may from time to time reasonably request in writing delivered to an Authorized Representative.

Section 7.3. Maintenance of Books and Records. The Borrower shall keep proper books of record and account in which full, true and correct entries in accordance with the Borrower’s budget basis accounting principles and reporting practices shall be made of all dealings or transactions in relation to its activities.

Section 7.4. Access to Books and Records. To the extent permitted by law, the Borrower shall permit any Person designated by the Bank to visit any of the offices of the Borrower to examine the books and financial records, including minutes of meetings of any relevant governmental committees or agencies, and make copies thereof or extracts therefrom, and to discuss the affairs, finances and accounts of the Borrower with its principal officials, all at such reasonable times and as often as the Bank may reasonably request.

Section 7.5. Compliance with Documents. The Borrower shall perform and comply with each and every covenant and agreement required to be performed or observed by it herein and in the Note and in each of the other Note Documents, which provisions, as well as related defined terms contained therein, are hereby incorporated by reference herein with the same effect as if each and every such provision were set forth herein in its entirety all of which shall be deemed to be made for the benefit of the Bank and shall be enforceable against the Borrower. To the extent that any such incorporated provision permits the Borrower or any other party to waive compliance with such provision or requires that a document, opinion or other instrument or any event or condition be acceptable or satisfactory to the Borrower or any other party, for purposes of this Agreement, such provision shall be complied with only if it is specifically waived by the Bank in writing and such document, opinion or other instrument and such event or condition shall be acceptable or satisfactory only if it is acceptable or satisfactory to the Bank which shall only be evidenced by the Bank’s written approval of the same. No termination or amendment to such covenants and agreements or defined terms or release of the Borrower with respect thereto made pursuant to the Note Documents shall be effective to terminate or amend such covenants and agreements and defined terms or release of the Borrower with respect thereto as incorporated by reference herein without the prior written consent of the Bank. Notwithstanding any termination or expiration of any such Note Document, the Borrower shall continue to observe the covenants therein contained for the benefit of the Bank until the termination of this Agreement. All such incorporated covenants shall be in addition to the express covenants contained herein and shall not be limited

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by the express covenants contained herein nor shall such incorporated covenants be a limitation on the express covenants contained herein.

Section 7.6. Environmental Compliance. The Borrower shall comply with all Environmental Laws, except to the extent non-compliance could not reasonably be expected to result in a Material Adverse Effect.

Section 7.7. Further Assurances. From time to time hereafter, the Borrower shall execute and deliver such additional instruments, certificates or documents, and shall take all such actions as the Bank may reasonably request for the purposes of implementing or effectuating the provisions of the Note Documents or for the purpose of more fully perfecting or renewing the Bank’s rights with respect to the rights, properties or assets subject to such documents (or with respect to any additions thereto or replacements or proceeds thereof or with respect to any other property or assets hereafter acquired by the Borrower which may be deemed to be a part thereof).

Upon the exercise by the Bank of any power, right, privilege or remedy pursuant to the Note Documents which requires any consent, approval, registration, qualification or authorization of any governmental authority or instrumentality, the Borrower shall, to the extent permitted by law, execute and deliver all necessary applications, certifications, instruments and other documents and papers that the Bank may be required to obtain for such governmental consent, approval, registration, qualification or authorization.

Section 7.8. Application of Proceeds of the Note. The Borrower shall cause the proceeds from the Note hereunder to be applied only to pay or reimburse the Borrower for payment of the costs of the West Cliff Drive Project.

Section 7.9. Payment of Obligations; Removal of Liens. The Borrower shall duly and punctually pay or cause to be paid the Payment Obligations and the other amounts due hereunder and under the Note and the other Note Documents, on the dates, at the places and in the manner provided in or determined in accordance with this Agreement and the Note according to the true intent and meaning hereof. The Borrower will at all times faithfully perform and observe any and all covenants, undertakings and provisions contained in this Agreement. The Borrower shall pay (a) all indebtedness and obligations of the Borrower in accordance with the terms thereof and (b) all assessments or other governmental charges as the same respectively become due, all taxes, assessments (general or special) and governmental charges of any kind whatsoever that may be at any time lawfully assessed or levied against or with respect to any portion of the Grant Proceeds or any interest thereon and promptly discharge or cause to be discharged all liens, encumbrances and charges on such property and assets. The Borrower shall include in its annual operating budgets all amounts reasonably anticipated to be necessary to make payments due to the Bank hereunder or `under the Note or the other Note Documents.

Section 7.10. Compliance with Law; Employee Benefit Plan Compliance. The Borrower shall comply with and observe the obligations and requirements set forth in all Laws applicable to it and its Property, except where non-compliance could not reasonably be expected to result in a Material Adverse Effect, such compliance to include, without limitation, paying all taxes, assessments and governmental charges imposed upon it or its Property before the same become delinquent, unless and to the extent that the same are being contested in good faith and by appropriate proceedings and reserves are provided therefor that in the opinion of the Borrower are

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adequate. The Borrower shall in a timely fashion, comply, in all material respects with all requirements under any employee benefit plan in which the Borrower or any of its employees participate. Notwithstanding the foregoing, the Borrower shall comply with Sanctions, AntiMoney Laundering Laws and Anti-Corruption Laws.

Section 7.11. Payment from Grant Proceeds. Within thirty (30) days of receipt of any Grant Proceeds, the Borrower will use such Grant Proceeds to (a) pay interest then due and payable on the Notes, (b) prepay the principal amount of the Note outstanding hereunder pursuant to Section 3.3, and (c) pay the principal amount of the Note at the maturity thereof. The Borrower may not use Grant Proceeds for any purpose other than the repayment of the Note and other amounts owed hereunder and the Borrower may not issue or incur any other indebtedness or obligation secured by or payable from Grant Proceeds, in each case, without prior written consent of the Bank. The Borrower will comply with all Federal, State and FHWA guidelines required as a condition of receipt of the Grant Proceeds and will diligently pursue and all steps necessary to secure payment of such Grant Proceeds to the Borrower.

Section 7.12. Investment Policy. The Borrower shall comply with its investment policy in effect from time to time.

Section 7.13. Other Agreements. While this Agreement remains in effect, if the Borrower executes and delivers a Bank Agreement with a financial institution substantially similar to the financial arrangements provided for in this Agreement (“Additional Agreement”) relating to Debt of the Borrower and such Additional Agreement provides different or more restrictive covenants, different or additional events of default and/or greater rights and remedies than are provided to the Bank in this Agreement (collectively, the “Additional Rights”), then the Borrower shall provide the Bank with a copy of such Additional Agreement and the Additional Rights shall be automatically deemed incorporated into this Agreement and the Bank shall have the benefit of the Additional Rights. The Borrower shall promptly cooperate with the Bank to enter into an amendment of this Agreement to include such Additional Rights; provided that the Bank shall have and maintain the benefit of such different or more restrictive covenants, different or additional events of default and/or greater rights and remedies even if the Borrower fails to provide such amendment.

Section 7.14. Sovereign Immunity. The Borrower agrees not to assert any defense of sovereign immunity, if available, in any proceeding initiated by the Bank to enforce any of the obligations of the Borrower hereunder or under the Note or the other Note Documents. To the extent that the Borrower has or hereafter may acquire under any applicable law any right to immunity from set off or legal proceedings, including but not limited to a writ of mandamus ordering a levy of taxes by the Borrower, on the grounds of sovereignty or otherwise, the Borrower, to the extent permitted by law, hereby irrevocably waives such rights to immunity for itself and agrees not to invoke any defense of immunity in respect of its obligations arising under or related to this Agreement, the Note or the other Note Documents.

Section 7.15. Rating. The Borrower shall maintain at all times at least one (1) General Obligation Credit Rating.

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ARTICLE VIII

NEGATIVE COVENANTS OF THE BORROWER
While the Line of Credit is outstanding and until all of the Payment Obligations shall have been paid in full, the Borrower shall not do any of the following, without the prior written consent of the Bank:

Section 8.1. Changes in Obligations. The Borrower shall not repeal, modify, amend or supplement any provision of the Resolution.

Section 8.2. Additional Debt. The Borrower shall not issue or incur any Debt payable from or secured by Grant Revenues.

Section 8.3. Swap Termination Payments. The Borrower shall not enter into any Swap Contract which requires the Borrower to post cash collateral to secure its obligations thereunder.

Section 8.4. No Impairment. The Borrower will neither take any action, nor cause or permit any other Person to take any action, under the Note Documents inconsistent with the rights of the Bank under this Agreement including, without limitation, the Payment Obligations and pledge of the Grant Proceeds. The Borrower will neither agree to any amendment, modification or supplement to any Note Document to which it is a party without the prior written consent of the Bank, nor shall the Borrower waive or consent to any waiver of any condition under any Note Document.

Section 8.5. Only Authorized Uses of Revenues by the Borrower. The Borrower shall not transfer, or permit the transfer, of any Grant Proceeds, for any purpose other than to pay the principal of and interest on the Note and other Payment Obligations.

Section 8.6. References to the Bank. The Borrower shall not refer to the Bank in any official statement, offering memorandum, or private placement memorandum (other than a factual description of this Agreement without a specific reference to the Bank) without the Bank’s prior written consent thereto.

Section 8.7. Accounting Methods and Fiscal Year. The Borrower shall not adopt, permit or consent to any change in accounting practices other than as required by GAAP and will not adopt, permit or consent to any change in its Fiscal Year, except as may be permitted by the Bank in writing.

Section 8.8. No Priority Claim. The Borrower shall not, directly or indirectly, incur, create, assume or permit any Lien on any portion of the Gross Revenues other than the Lien in favor of the Note.

Section 8.9. Anti-Money Laundering Laws and Anti-Corruption Laws; Sanctions. (a) The Borrower shall not use any of the proceeds of the Note to fund, finance or facilitate any activities, business or transactions that would be prohibited by Anti-Money Laundering Laws or Anti-Corruption Laws.

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(b) The Borrower shall not use any of the proceeds of the Note to fund, finance or facilitate any activities, business or transactions: (i) that are prohibited by Sanctions, (ii) that would be prohibited by U.S. Sanctions if conducted by a U.S. Person, or (iii) that would be prohibited by Sanctions if conducted by the Bank, or any other party to this Agreement. The Borrower shall notify the Bank in writing not more than one Business Day after first becoming aware of any breach of this Section.

Section 8.10. Source of Repayment and Collateral. The Borrower shall not fund any repayment of the Note with proceeds, or provide as collateral any Property, that is directly or indirectly derived from any transaction or activity that is prohibited by Sanctions, Anti-Money Laundering Laws or Anti-Corruption Laws, or that could otherwise cause the Bank or any other party to this Agreement to be in violation of Sanctions, Anti-Money Laundering Laws or AntiCorruption Laws.

Section 8.11. Exempt Status. The Borrower shall not take any action or omit to take any action that, if taken or omitted, would adversely affect the excludability of interest on the Note from the gross income of the holders thereof for purposes of federal income taxation.

ARTICLE IX

DEFAULTS AND REMEDIES
Section 9.1. Events of Default. The occurrence of any of the following events (including the expiration of any specified time) shall constitute an “Event of Default,” unless waived by the Bank in writing:
(a) The Borrower fails to pay, or cause to be paid, when due (i) any principal and interest due hereunder or under the Note, or (ii) any other amounts due hereunder or under the Note or any other amounts due to the Bank under any other Note Document; or (b) (i) The Borrower fails to perform or observe any term, covenant or agreement contained in Section 7.1, 7.6, 7.8, 7.11, 7.13, 7.14, 7.15 or Article VIII hereof or (ii) the Borrower fails to perform or observe any term, covenant or agreement contained in this Agreement (other than those referred to in Section 9.1(a) and (b)(i)) and any such failure is irremediable or, if remediable, remains unremedied for thirty (30) days after notice thereof to the Borrower or thirty (30) days after the Borrower obtains actual knowledge thereof, whichever comes first;
(c) (i) A default occurs with respect to the payment of any Debt or any interest or premium thereon as and when the same shall become due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) (including any amount due in respect of any other obligation owed to the Bank as and when the same shall become due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise)); or (ii) a default occurs under any mortgage, agreement or other instrument relating to any Debt or other obligation owed to the Bank, and continuance of such default beyond the period of grace, if any, allowed with respect thereto, or the occurrence of any act or omission by the Borrower under any such mortgage, agreement or other instrument

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which results in such Debt or other obligation owed to the Bank becoming, or being capable of becoming, immediately due and payable or any such Debt or other obligation owed to the Bank is otherwise required to be prepaid (other than by a regularly scheduled required prepayment or an optional prepayment) prior to the stated maturity thereof; or (d) The Borrower has taken or permitted to be taken any action which would materially adversely affect the enforceability of this Agreement, the Note, any other Note Document or the legal ability of the Borrower to pay Payment Obligations; or (e) Any representation or warranty on the part of the Borrower contained in any Note Document or in any certificate, letter or other writing or instrument furnished or delivered by the Borrower to the Bank pursuant hereto or thereto or in connection herewith or therewith, shall at any time prove to have been incorrect in any material respect when made or deemed made or when effective or when reaffirmed, as the case may be, whether by misstatement or omission; or
(f) Any material provision of this Agreement, the Note or the other Note Documents shall at any time for any reason cease to be valid and binding on the Borrower or shall be declared to be null and void by any court or governmental authority or agency having jurisdiction over the Borrower, or the validity or the enforceability of any material provision of this Agreement, the Note or the other Note Documents shall at any time be contested by the Borrower in a judicial or administrative proceeding or the Borrower shall deny that it has any or further liability or obligation under any material provision of this Agreement, the Note or the other Note Documents, or the validity or enforceability of any material provision of this Agreement, the Note or the other Note Documents shall be contested by any governmental agency or authority having jurisdiction over the Borrower; or
(g) The Borrower fails to pay when due a final, nonappealable judgment or order for the payment of money in excess of $3,000,000 and for which insurance proceeds shall not be available shall be rendered against the Borrower and such judgment or order shall continue unstayed, undischarged, unbonded or unsatisfied for a period of sixty (60) days; or
(h) An Event of Insolvency shall occur with respect to the Borrower; or (i) The Bank fails to have an enforceable lien on and security interest in the Grant Proceeds with the priority as contemplated by Section 4.1 hereof; or (j) Any funds or investments on deposit in, or otherwise to the credit of, any of the funds or accounts established hereunder or under the Resolution shall become subject to any writ, judgment, warrant or attachment, execution or similar process; or (k) The occurrence and continuation of an Event of Default or event of nonperformance under, or the occurrence of an event which results in or permits the early termination of, any of the Note Documents after the expiration of any applicable grace period (other than as specified in another Event of Default under this Section 9.1); or

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(l) The Borrower’s accountant delivers a qualified opinion with respect to the Borrower’s status as an on-going concern; or
(m) Any Rating Agency shall downgrade the Borrower’s General Obligation Credit Rating to a level below “Baa1” in the case of Moody’s, “BBB+” in the case of S&P and “BBB+” in the case of Fitch;
(n) The occurrence of any event (other than as specified in another Event of Default under this Section 9.1) which has had, or may result in, any Material Adverse Effect;
(o) (i) The Borrower imposes a debt moratorium, debt restructuring, debt adjustment or comparable restriction on repayment when due and payable of the principal of or interest on any Debt of the Borrower, or (ii) under any existing or future law of any jurisdiction relating to bankruptcy, insolvency, reorganization or relief of debtors, the Borrower seeks to have an order for relief entered or seeking to adjudicate the Borrower insolvent or bankrupt or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to the Debts of the Borrower, or (iii) the Borrower seeks appointment of a receiver, trustee, custodian or other similar official or for any substantial part of the property of the Borrower, or the Borrower shall make a general assignment of its properties and assets for the benefit of its creditors, or (iv) there shall be commenced against the Borrower any case, proceeding or other action of a nature referred to in clause (ii) and the same shall remain undismissed, or (v) there shall be commenced against the Borrower any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its property which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal, within sixty (60) days from the entry thereof, or (vi) the Borrower takes action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), (iii), (iv), (v) above, or (vii) the Borrower shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its Debts as they become due.

Section 9.2. Rights and Remedies Upon Default.
(a) Automatic Termination. In the case of any Event of Default specified in Section 9.1(h) or 9.1(o) that has occurred, all amounts due hereunder and under the Note and the other Note Documents (including the Note and interest thereon) shall immediately become due and payable. Upon such termination, the Bank shall send a notice thereof in the form of Exhibit B hereto to the Borrower; provided, that failure to send or receive such notice shall not affect the termination of the Note as provided hereunder. (b) All Events of Default. In the case of any Event of Default, including any Event of Default specified in Section 9.1(h) or 9.1(o), that has occurred and is continuing, the Bank may, in its sole discretion, but shall not be obligated to, exercise all, or any of, the following rights and remedies:

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(i) By notice to the Borrower, declare all amounts due hereunder and under the Note and the other Note Documents (including without limitation, the Note and interest thereon) immediately due and payable; and/or (ii) By notice to the Borrower in the form of Exhibit B hereto, terminate the Note; and/or
(iii) Petition a court of competent jurisdiction to issue a mandamus order to the Borrower to compel specific performance of the covenants of the Borrower contained in any of the Note Documents; and/or
(iv) Provide written notice of the occurrence of an Event of Default to the Borrower and exercise any rights and remedies available to the Bank at law, equity or hereunder or under any Note Document.

Except as expressly provided in this Section 9.2, procurement, demand, protest and all other notices of every kind are hereby expressly waived.

Section 9.3. No Waiver of Remedies. No waiver of any breach of or default under any provision of this Agreement, the Note or any of the other Note Documents shall constitute or be construed as a waiver by the Bank of any subsequent breach of or default under that or any other provision of any of the Note Documents.

Section 9.4. Remedies Not Exclusive. No remedy herein conferred upon the Bank is intended to be exclusive of any other remedy herein or in any other agreement between the parties hereto or by law provided or permitted, but each shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law, in equity or by statute.

ARTICLE X

MISCELLANEOUS
Section 10.1. Evidence of Debt. The Bank shall maintain in accordance with its usual practices an account or accounts evidencing the indebtedness resulting from each Note made from time to time hereunder and the amounts of principal and interest payable and paid from time to time hereunder. In any legal action or proceeding in respect of this Agreement, the entries made in such account or accounts shall be conclusive evidence (absent manifest error) of the existence and amounts of the obligations therein recorded.

Section 10.2. Amendments, Etc. No amendment or waiver of any provision of this Agreement nor consent to any departure by the parties hereto shall in any event be effective unless the same shall be in writing and signed by such parties, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

Section 10.3. Addresses for Notices; Bank’s Office. Any notice required or permitted to be given under or in connection with this Agreement shall be in writing and shall be mailed by first-class mail, registered or certified, return receipt requested, or express mail, postage prepaid, or sent by email, telex, telegram, telecopy or other similar form of rapid transmission confirmed

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by mailing (by first-class mail, registered or certified, return receipt requested, or express mail, postage prepaid) written confirmation at substantially the same time as such rapid transmission, or personally delivered to an officer of the receiving party; provided that each Request for Advance shall be sent via e-mail or by facsimile. All such communications shall be mailed, sent or delivered to the address or numbers set forth below, or as to each party at such other address or numbers as shall be designated by such party in a written notice to the other parties.

If to the Borrower: City of Santa Cruz
809 Center Street
Santa Cruz, California 95060
Attention: Elizabeth Cabell, Finance Director
Telephone: (831) 420-5055
Email: [email protected]
If to the Bank: Payment Instructions:

ABA: 121000248
Name: Wells Fargo Bank
Account number: 00698314050720
Account name: Wires in Process
Address: Roanoke, Virginia
Originator to beneficiary info:

Customer name: City of Santa Cruz
Notices:

Wells Fargo Municipal Capital Strategies, LLC
c/o Wells Fargo Bank, National Association
1655 Grant Street 3rd Floor
Concord, California 94520
Attention: Zina Monroe
Telephone: (925) 852-1061
Email: [email protected]
Requests for Advance:

Wells Fargo Municipal Capital Strategies, LLC
c/o Wells Fargo Bank, National Association
Attention: [____________]
Facsimile: [(___) ___-____]
E-mail: [____________]
Telephone: [(___) ___-____]
Section 10.4. Survival of this Agreement. All covenants, agreements, representations and warranties made in this Agreement shall survive the purchase by the Bank of the Note and shall continue in full force and effect so long as the Note shall be unexpired or any sums drawn or due thereunder or any other obligations shall be outstanding and unpaid, regardless of any investigation

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made by any Person and so long as any amount payable hereunder remains unpaid. The agreement of the Borrower to indemnify the Bank under Section 5.2 hereof shall continue in full force and effect notwithstanding a termination of the Note or the payment in full of all Payment Obligations.

The obligations of the Borrower under Sections 5.2, 5.3 and 10.5 shall also continue in full force and effect notwithstanding a termination of the Note or the payment in full of all Payment Obligations.

Section 10.5. Costs, Expenses and Taxes. The Borrower agrees (i) to pay on demand all costs and expenses (including fees and disbursements of the Bank’s counsel) in connection with the preparation, issuance, execution, delivery, filing, enforcement and administration of any of the Note Documents and any other instruments or agreements which may be delivered pursuant to or in connection therewith, or pursuant to or in connection with any waiver or amendment of, or the giving of any consent under, this Agreement or any of the Note Documents and such other instruments or agreements and (ii) to pay on demand any and all stamp and other taxes and fees payable or determined to be payable in connection with the execution, delivery, filing and recording of this Agreement or any of the Note Documents and such other instruments and agrees to indemnify and hold the Bank harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such taxes and fees. The obligations of the Borrower under this Section 10.5 shall survive the termination of the Note and the payment in full of all Payment Obligations.

Section 10.6. Right of Setoff; Other Collateral.
(a) Upon the occurrence and during the continuation of an Event of Default, the Bank is hereby authorized at any time and from time to time without notice to the Borrower (any such notice being expressly waived by the Borrower), and to the fullest extent permitted by law, to setoff, to exercise any banker’s lien or any right of attachment and to apply any and all balances, credits, deposits (general or special, time or demand, provisional or final), accounts or monies at any time held and other indebtedness at any time owing by the Bank to or for the account of the Borrower (irrespective of the currency in which such accounts, monies or indebtedness may be denominated and the Bank is authorized to convert such accounts, monies and indebtedness into dollars) against any and all of the obligations and liabilities of the Borrower arising under or connected with this Agreement, the Note and the other Note Documents, whether or not the Bank shall have made any demand hereunder or thereunder.
(b) The rights of the Bank under this Section are in addition to, in augmentation of, and do not derogate from or impair, other rights and remedies (including, without limitation, other rights of set-off) which the Bank may have. The Bank agrees to promptly notify the Borrower after any such set-off and application referred to in subsection (a) above, provided, that failure to give such notice shall not affect the validity of such set-off and application.
(c) For such purpose, the Bank shall have, and the Borrower hereby grants to the Bank, a first lien on and security interest in such deposits, property, funds and accounts held or maintained by the Bank and the proceeds thereof, other than funds (if any) which are subject to the lien in favor of the Note.

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Section 10.7. Severability. Any provision of this Agreement which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or nonauthorization without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction.

Section 10.8. Governing Law; Waiver of Jury Trial; Jurisdiction and Venue. (a) This Agreement and the Note shall be deemed to be a contract under, and together with any disputes or controversies arising out of or relating to this Agreement and the Note shall be governed by, and construed and interpreted in accordance with the laws of the State and applicable federal law, without regard to choice of law rules. (b) Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in any legal proceeding directly or indirectly arising out of or relating to this Agreement or the Note or the transactions contemplated hereby or thereby (whether based on contract, tort or any other theory). If and to the extent the foregoing waiver of the right to a jury trial is unenforceable for any reason, the parties hereto hereby consent to the adjudication of any and all claims pursuant to judicial reference as provided in California Code of Civil Procedure Section 638, and the judicial referee shall be empowered to determine any and all issues in such reference whether fact or law. Each party hereto acknowledges and represents that it and the other parties hereto have been induced to enter into this Agreement and the Note by, among other things, the mutual waivers and certifications in this Section, and that it has reviewed this waiver and consent, and knowingly and intentionally waives its jury trial rights and consents to judicial references following the opportunity to consult with legal counsel of its choice on such matters. In the event of litigation, a copy of this Agreement may be filed as a written consent to a trial by the court or to judicial reference under California Code of Civil Procedures Section 678 as provided herein.
(c) Each of the parties hereto hereby submits to the exclusive jurisdiction of any federal or state court of competent jurisdiction in the State for the purpose of any suit, action or other proceeding arising out of or relating to this Agreement and the Note and hereby waives any objection which it may have to the laying of venue of any such suit, action or proceeding in any of such courts and any claim that any such suit, action or proceeding has been brought in an inconvenient forum; service of process may be accomplished by registered mail, return receipt requested to each of the parties at the address listed for notice in Section 10.3 hereof.

Nothing in this Section shall affect the right of the Bank to serve legal process in any other manner permitted by law or affect the right of the Bank to bring any suit, action or proceeding against the Borrower or its property in the courts of any other jurisdiction.

Section 10.9. Successors and Assigns; Participations; Certain Pledges. (a) Successors and Assigns Generally. This Agreement is a continuing obligation and shall be binding upon the Borrower, its successors, transferees and assigns

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and shall inure to the benefit of the Noteholders and their respective permitted successors, transferees and assigns as set forth herein. The Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Bank. Each Noteholder may, in its sole discretion and in accordance with applicable Law, from time to time assign, sell or transfer in whole or in part, this Agreement, its interest in the Note and the other Note Documents in accordance with the provisions of paragraph (b) or (c) of this Section. Each Noteholder may at any time and from time to time enter into participation agreements in accordance with the provisions of paragraph (c) of this Section.

Each Noteholder may at any time pledge or assign a security interest subject to the restrictions of paragraph (d) of this Section.
(b) Sales and Transfers by Noteholder to Bank Transferee. Without limitation of the foregoing generality, a Noteholder may at any time sell or otherwise transfer to one or more transferees all or a portion of the Note in Authorized Denominations to a Person that is (i) a Bank Affiliate or (ii) a trust or other custodial arrangement established by the Bank or a Bank Affiliate, the owners of any beneficial interest in which are limited to “qualified institutional buyers” as defined in Rule 144A promulgated under the 1933 Act (each, a “Bank Transferee”). From and after the date of such sale or transfer, Wells Fargo Municipal Capital Strategies, LLC (and its successors) shall continue to have all of the rights of the Bank hereunder and under the other Note Documents as if no such transfer or sale had occurred; provided, however, that (A) no such sale or transfer referred to in clause (b)(i) or (b)(ii) hereof shall in any way affect the obligations of the Bank hereunder, (B) the Borrower shall be required to deal only with the Bank with respect to any matters under this Agreement and (C) in the case of a sale or transfer referred to in clause (b)(i) or (b)(ii) hereof, only the Bank shall be entitled to enforce the provisions of this Agreement against the Borrower.
(c) Sales and Transfers by Noteholder to a Non-Bank Transferee. Without limitation of the foregoing generality, a Noteholder may at any time sell or otherwise transfer all or any portion of the Note in Authorized Denominations to one or more transferees which are not Bank transferees but each of which constitutes (i) a “qualified institutional buyer” as defined in Rule 144A promulgated under the Securities Act of 1933, as amended, and (ii) a commercial bank organized under the laws of the United States, or any state thereof, or any other country which is a member of the Organization for Economic Cooperation and Development, or a political subdivision of any such country, and, in any such case, having a combined capital and surplus, determined as of the date of any transfer pursuant to this clause (b), of not less than $5,000,000,000 (each a “Non-Bank Transferee”) if (A) written notice of such sale or transfer, including that such sale or transfer is to a NonBank Transferee, together with addresses and related information with respect to the NonBank Transferee, shall have been given to the Borrower and the Bank, and (B) the NonBank Transferee shall have delivered to the Borrower and the Bank, an investor letter in substantially the form attached as Exhibit E to this Agreement (the “Investor Letter”).

From and after the date the Borrower and the selling Noteholder have received written notice and an executed Investor Letter (A) the Non-Bank Transferee thereunder shall be a party hereto and shall have the rights and obligations of a Noteholder hereunder and under the other Note Documents, and this Agreement shall be deemed to be amended

16.59 -47-
to the extent, but only to the extent, necessary to effect the addition of the Non-Bank Transferee, and any reference to the assigning Noteholder hereunder and under the other Note Documents shall thereafter refer to such transferring Noteholder and to the Non-Bank Transferee to the extent of their respective interests; and (B) if the transferring Noteholder no longer owns the Note, then it shall relinquish its rights and be released from its obligations hereunder and under the Note Documents.
(d) Participations. The Bank shall have the right to grant participations in all or a portion of the Bank’s interest in the Note, this Agreement and the other Note Documents to one or more other Participants; provided, that (i) no such participation by any such Participant shall in any way affect the obligations of the Bank hereunder and (ii) the Borrower shall be required to deal only with the Bank, with respect to any matters under this Agreement, the Notes and the other Note Documents and no such Participant shall be entitled to enforce any provisions hereunder against the Borrower. (e) Certain Pledges. In addition to the rights of the Bank set forth above, the Bank may at any time pledge or assign a security interest in all or any portion of its rights or interests under this Agreement (including under the Note, if any) to secure obligations of the Bank or an Affiliate of the Bank, including any pledge or assignment to secure obligations to a Federal Reserve Bank or to any state or local governmental entity or with respect to public deposits; provided, that no such pledge or assignment shall release the Bank from any of its obligations hereunder or substitute any such pledgee or assignee for the Bank as a party hereto.

Section 10.10. Headings. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

Section 10.11. Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which counterparts, taken together; shall constitute but one and the same Agreement.

Section 10.12. Patriot Act Notice. The Bank hereby notifies the Borrower that pursuant to the requirements of the Patriot Act it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow the Bank to identify the Borrower in accordance with the Patriot Act. The Borrower hereby agrees that it shall promptly provide such information upon request by the Bank.

Section 10.13. No Advisory or Fiduciary Responsibility. In connection with all aspects of the transactions contemplated by this Agreement and the Note Documents (including in connection with any amendment, waiver or other modification of this Agreement or of any Note Document), the Borrower acknowledges and agrees that: (a)(i) any arranging, structuring and other services regarding this Agreement and the Note Documents provided by the Bank or any Affiliate of the Bank are arm’s length commercial transactions between the Borrower on the one hand, and the Bank and any Affiliate of the Bank on the other hand, (ii) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (iii) the

16.60 -48-
Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated by this Agreement and the Note Documents; (b)(i) the Bank and each Affiliate of the Bank is and has been acting solely as a principal and has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower or any other Person and (ii) neither the Bank nor any Affiliate of the Bank has any obligation to the Borrower with respect to the transactions contemplated by this Agreement and the Note Documents, except those obligations expressly set forth herein; and (c) the Bank and each Affiliate of the Bank may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower, and neither the Bank nor any Affiliate of the Bank has any obligation to disclose any of such interests to the Borrower.

Section 10.14. Integration. This Agreement constitutes the entire agreement between the Bank and the Borrower regarding the Line of Credit, and all prior oral or written communications between the Borrower and the Bank shall be of no further effect or evidentiary value.

Section 10.15. EMMA Postings. In the event the Borrower files with EMMA this Agreement or any other Note Document, or any description of the material terms thereof or notice of any agreement to covenants, events of default, remedies, priority rights or other similar terms, either voluntarily or as required pursuant to a continuing disclosure agreement or Rule 15c2-12 promulgated pursuant to the Securities and Exchange Act of 1934, as amended (the “Rule”) (each such posting, an “EMMA Posting”), the Borrower shall use its best efforts to notify the Bank prior to submitting or posting on EMMA any notice containing a copy of this Agreement or any other Note Document to permit the Bank an opportunity to prepare and provide redacted copies of such documents redacting Confidential Information, if any, for use in connection with such posting.

The Borrower acknowledges and agrees that although the Bank may request review, edits or redactions of such materials prior to filing, the Bank is not responsible for the Borrower’s or any other entity’s (including, but not limited to, any broker-dealer’s) compliance or noncompliance (or any claims, losses or liabilities arising therefrom) with any continuing disclosure agreement or any applicable securities or other laws, including, but not limited to, those relating to the Rule.

Section 10.16. Tax Identification Number. The Borrower’s tax identification number is 946000427.
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16.61 Signature Page to Note Purchase Agreement
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written.

CITY OF SANTA CRUZ
By:

Name: _________________________________
Title: __________________________________
ATTEST:

By:

Name: ______________________________
Title: _______________________________

WELLS FARGO MUNICIPAL CAPITAL

STRATEGIES, LLC
By:

Name: Brian Goins
Title: Vice President

16.62 -A-1-

EXHIBIT A

FORM OF NOTE

GRANT ANTICIPATION NOTE

THIS NOTE IS SUBJECT TO CERTAIN TRANSFER RESTRICTIONS AS PROVIDED IN SECTION 10.9 OF THE HEREIN DEFINED AGREEMENT.

CUSIP No. [______]
$20,055,000 Dated [May __, 2025]
Santa Cruz, California
For value received, the CITY OF SANTA CRUZ (the “Borrower”) promises to pay to the order of WELLS FARGO MUNICIPAL CAPITAL STRATEGIES, LLC, and its successors and assigns (the “Bank”), the amount not to exceed TWENTY MILLION FIFTY-FIVE THOUSAND DOLLARS AND NO CENTS ($20,055,000), the aggregate unpaid principal amount of this Note purchased by the Bank pursuant to the Note Purchase Agreement, dated [May __, 2025] (together with any amendments or supplements thereto, the “Agreement”), by and between the Borrower and the Bank, on the dates and in the amounts provided for in the Agreement.

The Borrower promises to pay interest on the unpaid principal amount of the Note on the dates and at the rates provided for in the Agreement. All payments of principal and interest shall be made to the Bank in lawful money of the United States of America in immediately available funds. All capitalized terms used herein and not otherwise defined herein shall have the meanings specified in the Agreement.

This Note is the Note referred to in the Agreement and is entitled to the benefits thereof and of the Note Documents referred to therein. As provided in the Agreement, this Note is subject to prepayment, in whole or in part. In case an Event of Default (as defined in the Agreement) shall occur and be continuing the principal of and accrued interest on this Note may be declared due and payable in the manner and with the effect provided in the Agreement.

This Note is secured by a first lien on the Grant Proceeds in accordance with the Grant Anticipation Note Law and the Resolution, and this Note does not constitute a legal or equitable pledge, charge, lien or encumbrance upon any other property of the Borrower. The Grant Anticipation Note Law further provides that in the event the principal and interest on the note is not paid from Grant Proceeds, such principal and interest shall be paid from any taxes, income, revenue cash receipts, or other monies of the Borrower lawfully available. [The remainder of this page intentionally left blank]