Agenda packet — Santa Cruz City Council, June 24, 2025 (part 2 of 9)

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.

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

13.65 City of Santa CruzProfessional Services Agreement for ON-CALL ENVIRONMENTAL CONSULTING

SERVICES FOR CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) AND NATIONAL

ENVIRONMENTAL POLICY ACT (NEPA) COMPLIANCE AND PERMITTING June 2025 (Form Rev.03/25 ) Page 8
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. 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.

13.66 City of Santa CruzProfessional Services Agreement for ON-CALL ENVIRONMENTAL CONSULTING

SERVICES FOR CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) AND NATIONAL

ENVIRONMENTAL POLICY ACT (NEPA) COMPLIANCE AND PERMITTING June 2025 (Form Rev.03/25 ) Page 9
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 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.

13.67 City of Santa CruzProfessional Services Agreement for ON-CALL ENVIRONMENTAL CONSULTING

SERVICES FOR CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) AND NATIONAL

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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 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 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, 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.

13.68 City of Santa CruzProfessional Services Agreement for ON-CALL ENVIRONMENTAL CONSULTING

SERVICES FOR CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) AND NATIONAL

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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

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 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

13.69 City of Santa CruzProfessional Services Agreement for ON-CALL ENVIRONMENTAL CONSULTING

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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:

City Manager’s Office
Tiffany Wise-West
809 Center St. Rm 9/10
Santa Cruz, CA 96060
[email protected]/
831/420-5433
To CONSULTANT:

WSP USA, Inc.

Erika Leachman
104 West Anapamu Street, Suite 204A
Santa Barbara, CA 93101
[email protected]
805-962-0992
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]

13.70 City of Santa CruzProfessional Services Agreement for ON-CALL ENVIRONMENTAL CONSULTING

SERVICES FOR CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) AND NATIONAL

ENVIRONMENTAL POLICY ACT (NEPA) COMPLIANCE AND PERMITTING June 2025 (Form Rev.03/25 ) Page 13
Note:

Signature Requirements for Business Entity:
a. Corporation – 2 officer signatures required (one from each group, unless person signing holds officer positions in both Group 1 and 2):

Group 1: Chief Executive Officer, Chairman of the Board, President, or Vice President Group 2: Secretary, Assistant Secretary, Chief Financial Officer, Treasurer, Assistant Treasurer b. Partnership - Signature of General Partner, or signature of partner who is authorized to execute documents per the Certificate of Partnership. If authorized partner is a corporation, follow Corporation signature requirement. c. LLC- For a member-managed LLC, signature of any member. For a manager-managed LLC, signature of the manager. If the LLC has corporate officer designations, follow Corporation signature requirement.

See, City’s Signature Requirements for Business Entities for more information.

Approved As To Form:

By: _____________________________ Date: __________________ Office of the City Attorney, Ashley Wheelock

CITY OF SANTA CRUZ
By: ______________________________ Date: _________________ Matt Huffaker
City Manager

CONSULTANT
By: _____________________________ Date: June 4, 2025
Printed: Aaron Goldschmidt
By: _____________________________
Title: Senior Vice President
Date: __________________
Printed: ___________________________ Title: __________________ June 3, 2025

13.71 City of Santa CruzProfessional Services Agreement for ON-CALL ENVIRONMENTAL CONSULTING

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EXHIBIT A: SCOPE OF WORK
For each on-call project, City and Consultant agree that the written Scope of Work will be defined as part of any future City executed purchase order. No work is to begin without the City executed purchase order that will include the requirements for the project, an estimate of the total fee for the project, project schedule, and any additional project information. Each on-call project’s executed purchase order that sets forth the Scope of Work will refer to this Agreement and when signed by the City, will be incorporated into this Agreement as Exhibit A1, Exhibit A2, etc. Scope of Work as part of any future executed purchase order but may include any of the following:

The Consultant may be asked to provide staff and environmental consulting services for City projects on an as-needed basis. The Consultant may be asked to provide a variety of professional services and prepare appropriate environmental documents to comply with CEQA and/or NEPA.  The Consultant may assist in performing environmental review on City projects, such as, but not limited to, policies, ordinances, zoning updates, long-range plans, and capital improvement projects, as well as private development projects undergoing review through the City's planning and permitting processes. Typical environmental factors that will need to be assessed for impacts include but are not limited to:
• Aesthetics
• Air Quality
• Climate Change/Global Warming
• Geology and Soils
• Hydrology and Water Quality
• Noise
• Mineral Resources
• Population and Housing
• Recreation
• Utilities and Service Systems
• Agricultural and Forestry Resources
• Biological Resources
• Cultural Resources
• Hazards and Hazardous Materials
• Land Use and Planning
• Energy
• Wildfire
• Tribal Cultural Resources
• Public Services
• Transportation
• Cumulative Impacts
• Environmental Justice
• Waters of the State, Waters of the US, Riparian Habitat, and Wetlands • State and Federal Endangered and Special Status Species and Their Habitats • Coastal Zone

13.72 City of Santa CruzProfessional Services Agreement for ON-CALL ENVIRONMENTAL CONSULTING

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Services may also involve environmental permitting and compliance for certain projects. The Consultant may evaluate the feasibility, schedule, and requirements of environmental permitting for a specific project. The strategy will critically analyze a project to identify potential issues that may be encountered during environmental permitting. Jurisdictional delineations may be required, and project alternatives may be developed, analyzed, and documented as needed to assist in the permitting feasibility determination. Potential required permits, such as Section 404 Clean Water Act Permitting, Section 401 Clean Water Act Water Quality Certification, California Endangered Species Act Consistency Determination or Incidental Take Permit, Lake and Streambed Alteration Agreement, and Coastal Development Permitting. Compliance with National Environmental Policy Act (NEPA), Section 7 ESA Consultation/Biological Opinions from the USFWS and NMFS, and Section 106 may also be required for issuance of federal permits. It is expected that environmental permitting will be completed at the conclusion of the CEQA process; however, support during early consultation with permitting agencies may be necessary. The services may also include the timely development of environmental permitting submittals and approvals necessary for project implementation based upon the developed Environmental Permitting Strategy. Technical resource support during agency consultations may be required.

The Consultant will have the capacity, expertise, and experience to execute the following tasks:

A.  Assist City staff in managing the environmental processes for City planning and infrastructure projects, including preparation of environmental documents, attendance at public meetings, regular interface with City of Santa Cruz staff and other City consultants, and attendance at regularly scheduled coordination meetings as necessary when work is in progress.

B. Establish sub-consulting teams to conduct the requisite studies for each project as needed.

C. Oversee work deliverables to ensure all studies, documents and record keeping conform to best management practices and regulatory standards.

D.  Communicate and coordinate with specialized environmental consultants and City staff and other City consultants as necessary.

E. Demonstrate the depth and breadth of the firm to provide a full range of environmental consulting services capable of meeting the needs of any City-initiated project.

F. Provide strong emphasis on the management of multiple projects and competing priorities while maintaining quality, meeting schedules, and staying within budget.

G. Provide project noticing lists, notices, and noticing directions to streamline noticing.

H. Sub-consultants may be utilized for various technical reports. The City reserves the right to require the use of approved sub-consultants.

I. Attend public meetings to provide expert testimony on CEQA or related technical questions.

J. Accompany City staff at pre-application or other coordination meetings with regulators is support of environmental permitting applications.

K. Provide CEQA trainings to staff or public bodies.

L.  Comply with State and Federal grant requirements such as invoicing, records-keeping, audits, and other requirements specific to any grant funding sources.

13.73 City of Santa CruzProfessional Services Agreement for ON-CALL ENVIRONMENTAL CONSULTING

SERVICES FOR CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) AND NATIONAL

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EXHIBIT B: FEE SCHEDULE
The fee shall not exceed $620,000 each year and consultant’s hourly service rates are as follows. For each on-call project, City and Consultant agree that there will be a separate not to exceed amount specified and a budget set for that on-call project which will be defined as part of any future executed purchase order.

Proposed Personnel Area of Expertise Position Title
Fully Burdened
Hourly Rate
Leachman, Erika CEQA/NEPA Environmental
Planning
P7 - Principal Environmental
Planner
$245
Meisinger, Nicholas CEQA/NEPA Environmental
Planning
P7 - Senior Environmental
Planner
$245
Lane, Taylor CEQA/NEPA Environmental
Planning
P5 - Associate Environmental
Planner
$168
Klemann, Daniel CEQA/NEPA Environmental
Planning
P6 - Senior Environmental
Planner
$201
Frohning, Rebecca Air Quality & GHGs P6 - Air Quality Specialist $201 Crawford, Scott Biological Resources P7 - Biologist $245 Erlich, Jason Biological Resources P4 - Biologist $142
Fjerstad, Branden Cultural Resources P5 - Cultural Resource Specialist
$168
Huddleston, Jesica Cultural Resources P4 - Cultural Resource Specialist
$142
Amorelli, Michael Cultural Resources P3 - Cultural Resource Specialist
$119
Sauter, Matthew Paleontology P5 - Paleontologist $168
Conlan, Linda Hazards & Hazardous Materials P7 - Hazardous Materials Specialist
$245
Smith, Ellen Hazards & Hazardous Materials P3 - Hazardous Materials Specialist
$119
Munro, Rosalind Geology & Soils P7 - Geologist $245
Romo, Pierre Geology & Soils P5 - Geologist $168
Spongberg, Martin Hydrology & Water Resources P7 - Hydrologist $245 Holst, Keegan Hydrology & Water Resources P2 - Hydrologist $103 Keller, Kevin Noise P6 - Noise Specialist $201
Anderson, Sarah CEQA/NEPA Environmental
Planning
P6 - Environmental Planner $201
Sawaya, Gina CEQA/NEPA Environmental
Planning
P5 - Environmental Analyst &
Outreach Specialist
$168
Nishimura, Kelly CEQA/NEPA Environmental
Planning
P3 - Environmental Analyst $119
Halpin, Kaitlyn CEQA/NEPA Environmental
Planning
P3 - Environmental Analyst $119
Senaldi, Samantha CEQA/NEPA Environmental
Planning
P3 - Environmental Analyst $119

13.74 City of Santa CruzProfessional Services Agreement for ON-CALL ENVIRONMENTAL CONSULTING

SERVICES FOR CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) AND NATIONAL

ENVIRONMENTAL POLICY ACT (NEPA) COMPLIANCE AND PERMITTING June 2025 (Form Rev.03/25 ) Page 17
Proposed Personnel Area of Expertise Position Title
Fully Burdened
Hourly Rate
Hadly, Isabel CEQA/NEPA Environmental
Planning
P2 - Environmental Analyst $103
Johnson, Aaron GIS P4 - GIS Analyst $142
Samaniego, Rita Administration S3 - Project Coordinator $87 Ramsden, Jerald Coastal Resources P7 - Coastal Resources Specialist
$245
Akkinepally, Vamshi Transportation P6 - Transportation Engineer $201 Schumacher, David Transportation P5 - Transportation Planner $168 Notes:

Rates are in US Dollars ($US)
1 Rates for specialist services, including but not limited to litigation support; expert witness, including time spent in depositions and the preparation and presentations of testimony; and/or senior level consultation, and priority emergency level services are available upon request.
2 Rates for laboratory services and use of company owned equipment will be provided upon request. 3 The rates and charges listed above exclude applicable local and federal taxes. Taxes will appear as a separate line item on each invoice.
.

13.75 City of Santa CruzProfessional Services Agreement for ON-CALL ENVIRONMENTAL CONSULTING

SERVICES FOR CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) AND NATIONAL

ENVIRONMENTAL POLICY ACT (NEPA) COMPLIANCE AND PERMITTING June 2025 (Form Rev.03/25 ) Page 18
EXHIBIT C: WORK SCHEDULE
For each on-call project, City and Consultant agree that the Work Schedule will be defined as part of any future executed purchase order.

13.76 City of Santa CruzProfessional Services Agreement for ON-CALL ENVIRONMENTAL CONSULTING

SERVICES FOR CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) AND NATIONAL

ENVIRONMENTAL POLICY ACT (NEPA) COMPLIANCE AND PERMITTING June 2025 (Form Rev.03/25 ) Page 19
EXHIBIT D: 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, and
• Coverages must be maintained during the term of the Agreement with the City, unless a longer duration is required as specified below.

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

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 $2 Million per occurrence including products and completed operations, property damage, bodily injury, personal and advertising injury will be provided on Insurance Services Office (ISO) Form CG 00 01 covering CGL. If a general aggregate limit applies, either the general aggregate limit will apply separately to this project/location (ISO CG 25 03 or 25 04) or the general aggregate limit will be at least twice the required occurrence limit.
• PROFESSIONAL LIABILITY (ERRORS AND OMISSIONS): $2,000,000 PER OCCURRENCE OR CLAIM, $2,000,000 AGGREGATE.

Consultant will maintain insurance appropriate to Consultant’s profession; with limit no less than $2,000,000 per occurrence or claim, $2,000,000 aggregate. Insurance must be maintained, and evidence of insurance must be provided for at least five (5) years after date of completion of the services under this Agreement. If coverage is canceled or 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 five (5) years after completion of contract work.

13.77 City of Santa CruzProfessional Services Agreement for ON-CALL ENVIRONMENTAL CONSULTING

SERVICES FOR CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) AND NATIONAL

ENVIRONMENTAL POLICY ACT (NEPA) COMPLIANCE AND PERMITTING June 2025 (Form Rev.03/25 ) Page 20
• AUTOMOBILE LIABILITY:

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

The Worker’s Compensation policy must be endorsed with a waiver of subrogation in favor of the City for all work performed by the Contractor and its employees. (Not required if Contractor provides written verification it has no employees) - If Contractor has no employees, Contractor 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.

C. OTHER INSURANCE PROVISIONS
The insurance policies are to comply with the following provisions:
• ADDITIONAL INSURED STATUS
The City, its officers, officials, employees, and volunteers are to be covered as additional insureds on the CGL, CPL, and automobile insurance (if transporting hazardous materials) policies with respect to liability arising out of work or operations performed by or on behalf of Contractor including materials, parts, or equipment furnished in connection with such work or operations. General liability coverage will be provided in the form of an endorsement to Contractor’s insurance at least as broad as ISO Form CG 20 10 11 85, or if not available, through the addition of both CG 20 10 CG 20 26, CG 20 33, or CG 20 38; and CG 20 37 (if a later edition is used).
o PRIMARY COVERAGE
For any claims related to this Agreement, Contractor’s insurance coverage will be primary insurance as respects the City, its officers, officials, employees, agents, and volunteers. Any insurance or self-insurance maintained by the City, its officers, officials, employees, agents, or volunteers will be excess of Contractor’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.

13.78 City of Santa CruzProfessional Services Agreement for ON-CALL ENVIRONMENTAL CONSULTING

SERVICES FOR CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) AND NATIONAL

ENVIRONMENTAL POLICY ACT (NEPA) COMPLIANCE AND PERMITTING June 2025 (Form Rev.03/25 ) Page 21
• WAIVER OF SUBROGATION
Contractor hereby grants to the City a waiver of any right to subrogation, except as otherwise not applicable, which any insurer of said Contractor may acquire against the City by virtue of the payment of any loss, including attorney’s fees under such insurance. Contractor agrees to obtain any endorsement that may be necessary to effectuate this waiver of subrogation, but this provision applies regardless of whether or not the City has received a waiver of subrogation endorsement from the insurer. • EXCESS LIABILITY/UMBRELLA INSURANCE POLICIES
The excess/liability policies will provide similar coverage as the primary CGL policy with no new exclusions - Excess liability insurance must follow form the terms, conditions, definitions, and exclusions of the underlying CGL insurance. The excess/umbrella policy must also be written on a primary and noncontributory basis for an additional insured, and that it will apply before any other insurance that is available to such additional insured which covers that person or organization as a named insured, and we will not share with that other insurance.

The policy regarding Limits of Insurance regarding Aggregates must provide that the aggregate limits if applicable shall apply in the same manner as the aggregate limits shown in the Schedule of the Underlying Insurance.
• SELF-INSURED RETENTIONS
Self-insured retentions must be declared to and approved by the City. City may require Contractor 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 Contractor must purchase “extended reporting” coverage for a minimum of five (5) years after completion of contract work. • VERIFICATION OF COVERAGE
Contractor will furnish the City with original Certificates of Insurance including all required amendatory endorsements (or copies of the applicable policy language effecting coverage required by this clause) and a copy of the Declarations and Endorsement Page of the CGL, CPL, and Automobile Policies listing all policy endorsements to be approved by the City before work commences. However, failure to obtain the required documents prior to the work beginning will not waive the Contractor’s obligation to provide them.

The City reserves the right to require complete, certified copies of all required insurance policies, including endorsements required by these specifications, at any time.

13.79 City of Santa CruzProfessional Services Agreement for ON-CALL ENVIRONMENTAL CONSULTING

SERVICES FOR CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) AND NATIONAL

ENVIRONMENTAL POLICY ACT (NEPA) COMPLIANCE AND PERMITTING June 2025 (Form Rev.03/25 ) Page 22
D. SUBCONTRACTORS
The Contractor shall include all Subcontractors as additional insured under the policies or shall furnish separate certificates and endorsements for each Subcontractor. Contractor shall require and verify that all Subcontractors maintain insurance meeting all the requirements stated herein, and Contractor shall ensure that City is an additional insured on insurance required from Subcontractors.

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 Contractor.

13.80 City Council

AGENDA REPORT
DATE: 06/09/2025
AGENDA OF: 06/24/2025
DEPARTMENT: City Manager
SUBJECT: Appropriate Funds and Award Contract for Resilient Coast 2.0: Shoreline Adaptation Management Plans Funded by Ocean Protection Council Senate Bill 1 Grant Award – Budget Adjustment (CM)
LOCATION: Districts 2, 3, 4, and 6
RECOMMENDATION: Motion to:
1) Adopt a resolution amending the Fiscal Year 2025 budget in the amount of $509,970.00 to carry out the Ocean Protection Council grant funded project Resilient Coast Santa Cruz 2.0; and 2) Award a contract for coastal climate adaptation and environmental planning services to complete the Resilient Santa Cruz 2.0: Shoreline Adaptation Management Plans Project (Project) to AECOM Technical Services, Inc. (AECOM) in the amount of $395,999.35, reject all other proposals, and authorize the City Manager, or designee, to execute a contract in a form approved by the City Attorney with AECOM. The Purchasing Manager is authorized to execute change orders within the approved budget.

BACKGROUND: In January 2025, the City of Santa Cruz (City) was awarded grant funds from the Ocean Protection Council (OPC) Senate Bill (SB) 1 Grant Program in the amount of $509,970.00 to develop accessible, community-supported Shoreline Adaptation Management Plans (SAMPs) and accompanying accessible Blueprints for three coastal subareas representing the entire public shoreline: East Cliff, Main/Cowell Beaches, and West Cliff. Under the Resilient Coast Santa Cruz 2.0 moniker, the Project will accelerate investment in implementing coastal resilience visions and projects. While the City has undertaken significant coastal climate adaptation efforts in recent years to address episodic storm events and slower impacts from sea level rise, coastal storm damage in winter 2023 created a renewed community imperative to address coastal change. The proposed project builds upon this work, creating SAMPs and accompanying implementation “blueprints” for each coastal subarea. The Project integrates the City’s prior work in developing its working adaptation pathways approach with new information, policy, planning guidance and diverse engagement to produce community-supported, fundable implementation deliverables: the East Cliff, Main/Cowell Beaches, and West Cliff Shoreline Adaptation Blueprints.

14.1 SAMPs will reference extensive prior work on existing conditions, future vulnerabilities, feasibility of adaptation alternatives, visioning, and equitable engagement. The work will be informed by technical, youth, and equity advisors and builds upon deep and innovative engagement that is accessible and includes compelling visualizations of strategies and projects.

The three Blueprints will be accompanied by a set of four Technical Briefs which will include level setting of information and data, financial and resourcing moves, adaptation pathways and coastal change monitoring refinements, and community engagement summaries. The Blueprints will include prioritized projects as well as Local Coastal Plan Implementation Plan policy recommendations and explicit change management requirements that the City can immediately act upon. Leveraging considerable momentum, existing partnerships and new knowledge, this project aims to level set planning across the City’s coast, align local and regional plans, further develop Local Coastal Program policies, and catalyze the City into implementation of its coastal community vision.

DISCUSSION: On March 4, 2025, staff issued a Request for Proposals (RFP) for coastal climate adaptation and environmental planning services to complete the Resilient Santa Cruz 2.0:

Shoreline Adaptation Management Plans Project. The RFP Scope of Services included compiling and reviewing prior work, identifying and filling gaps for satisfying both the OPC SB 1 Grant Program Sea Level Rise Adaptation Criteria and Senate Bill 272, conducting equitable engagement, community outreach, and stakeholder coordination, refining adaptation pathways, developing a financial analysis and funding plan, and developing SAMPs and accessible Blueprints for West Cliff, Main/Cowell Beaches, and East Cliff. In addition, the consultant team will prepare Technical Briefs for each of the following project areas:
 Data Summary
 Engagement Summary
 Adaptation Pathways
 Financial Planning
Staff will provide updates to, and will seek direction from, the City Council four times throughout the project. The RFP was posted on the City’s website to ensure an open and competitive process and the City issued a solicitation notification to a bid list of 11,175 vendors the same day.

City staff held a non-mandatory Pre-Proposal Meeting on March 18, 2025 and received four proposals by the April 9, 2025 deadline. After being checked for responsiveness, all four firms’ proposals were evaluated by an evaluation committee consisting of subject matter experts in climate adaptation, coastal engineering, environmental planning, parks management, and resilience project construction. Staff recommends awarding the contract to the top firm from the competitive ranking process, AECOM. The coastal climate adaptation and environmental planning services are needed as soon as possible given the limited time frame to complete the deliverables specified in the grant award. The proposed contract has an initial contract period of 18 months.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: Not applicable. The proposed contract for coastal climate adaptation and environmental planning services is not a “project” under CEQA because no direct or indirect physical change to the environment is anticipated, nor does the grant administration services represent the type of activity described in Public Resources Code section 21065.

14.2 HEALTH IN ALL POLICIES (HiAP): Completion of the SAMPs for the three subareas are mitigation actions specified in the recently adopted 2025-2030 Local Hazard Mitigation and Climate Adaptation Plan. Completion of the SAMPs will increase equitable access to the coastline and improve public and life safety. The project will ensure equitable engagement with indigenous people and historically under-served and under-represented people and will employ best practices to facilitate their participation (e.g., stipends, food and childcare for focus groups and events).

FISCAL IMPACT:

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

2. This recommendation requires a budget adjustment: Yes

3. The recommendation creates an on-going expenditure commitment: No FISCAL IMPACT DESCRIPTION: The attached budget adjustment will appropriate funds into project number g102502. The fee for consulting services from AECOM, Technical Services, Inc. is $395,999.35, which covers the scope of work outlined in Exhibit A of Attachment:

AECOM Professional Services Agreement. Grant funds awarded from the Ocean Protection Council SB 1 grant will be appropriated to project number g102502 to fulfill the overall scope of the grant and will partially fund a limited term project manager to oversee the completion of the project. There will be no impact on the General Fund.

Prepared By:

Tiffany Wise-West, P.E.

Sustainability and Resiliency
Officer
Submitted By:

Michelle Templeton
Assistant City Manager
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. BUDGET ADJUSTMENT.PDF

2. AECOM PROFESSIONAL SERVICES AGREEMENT.PDF

3. EVALUATION TABULATION.DOCX

14.3 City of Santa Cruz

BUDGET ADJUSTMENT REQUEST
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2025
06/09/2025
Appropriate $509,970.00 to the Ocean Protection Council grant-funded project Resilient Coast Santa Cruz 2.0 Shoreline Adaptation and Management Plans, g102502.
101-10-03-1217-43210 g102502-126-1058-0 State Operating Grants and Contributions 509,970 Resilient Coast SC 2 Shoreline Blueprint
509,970
101-10-03-1217-52199 g102502-100-2020-0 Other professional and Tecnicnal Services 509,970 Resilient Coast SC 2 Shoreline Blueprint
509,970
0 Tiffany
Wise-West
Digitally signed by
Tiffany Wise-West
Date: 2025.06.09
22:34:47 -07'00'
Michelle
Templeton
Digitally signed by
Michelle Templeton
Date: 2025.06.10
16:01:08 -07'00'
Digitally signed
by Emily Burton
Date: 2025.06.10
'16:46:58 -07'00
Jessie
Gooch
Digitally signed by
Jessie Gooch
Date: 2025.06.11
08:37:07 -07'00' 14.4
City of Santa Cruz Professional Services Agreement for Shoreline Adaptation Management Plans Professional Services Agreement With
AECOM
For RESILIENT COAST SANTA CRUZ 2.0: SHORELINE ADAPTATION MANAGEMENT PLANS
THIS PROFESSIONAL SERVICES AGREEMENT (“Agreement”) for professional services is made by and between the City of Santa Cruz (“City”) and AECOM Technical Services, Inc. (“Consultant”) (each is referred to individually as a “Party” and collectively, as the “Parties”) as of June 25, 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, 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 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 Michelle Templeton, of the City Manager 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

14.5 City of Santa Cruz Professional Services Agreement for Shoreline Adaptation Management Plans 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 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 Exhibit B 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 B.

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 $395,999.35 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 and/or state government 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.

14.6 City of Santa Cruz Professional Services Agreement for Shoreline Adaptation Management Plans SECTION 7: TERM AND SCHEDULE
The term of this Agreement shall be for 18 months and commence on the effective date of this Agreement and terminate on December 31, 2026.

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 C. In the event there are major changes to the Scope of Work, the schedule for completion as stated in Exhibit C 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 C in order to allow the City to achieve its objectives for entering into this Agreement.

The Parties therefore agree that time is a material element 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

14.7 City of Santa Cruz Professional Services Agreement for Shoreline Adaptation Management Plans to failure of the Consultant to perform pursuant to the Agreement. City may withhold any payments to 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 D. 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
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 or active negligence or willful misconduct of Indemnitees. Consultant’s obligation to defend shall arise regardless of any claim or assertion that Indemnitees caused or contributed to the Losses.

In the event this Agreement involves the performance of design professional services by Consultant, Consultant’s officers, employees, agents, or subcontractors, Consultant’s costs to defend Indemnitees shall not exceed the Consultant’s proportionate percentage of fault per Civil Code §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 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, harassment, and retaliation exist in Consultant’s business organization. The City’s current Equal Employment Opportunity and NonDiscrimination 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

14.8 City of Santa Cruz Professional Services Agreement for Shoreline Adaptation Management Plans 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 Exhibit B, Fee Schedule.

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’s request 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. Consultant shall have no authority, express or implied, pursuant to this Agreement to bind City to any obligation whatsoever.

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.

14.9 City of Santa Cruz Professional Services Agreement for Shoreline Adaptation Management Plans 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 its subconsultants is 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.

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.

14.10 City of Santa Cruz Professional Services Agreement for Shoreline Adaptation Management Plans 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 noninfringing; 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, Consultant 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 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 Consultant and/or its agents, employees or subcontractors, excepting only loss, injury

14.11 City of Santa Cruz Professional Services Agreement for Shoreline Adaptation Management Plans 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.

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.

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.

14.12 City of Santa Cruz Professional Services Agreement for Shoreline Adaptation Management Plans pursuant and subject 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 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, 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/citydepartments/public-works/stormwater/best-management-practices

14.13 City of Santa Cruz Professional Services Agreement for Shoreline Adaptation Management Plans

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.

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.

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.

14.14 City of Santa Cruz Professional Services Agreement for Shoreline Adaptation Management Plans 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:

City Manager’s Office
Tiffany Wise-West
809 Center Street
Santa Cruz, CA 95060
Email: [email protected]
Phone: (831) 420-5433
To CONSULTANT:

AECOM Technical Services, Inc.

Peter Torrey
300 Lakeside Drive
Oakland, CA 94612
Email: [email protected]
Phone: 714-721-5993
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.

14.15 City of Santa Cruz Professional Services Agreement for Shoreline Adaptation Management Plans Approved As To Form:

By: _____________________________ Date: __06-05-2025_______________ Office of the City Attorney

CITY OF SANTA CRUZ
By: _____________________________ Date: _________________ Matt Huffaker
City Manager

CONSULTANT
By: _____________________________ Date: _________________ Printed: ___________________________ Title: __________________ By: _____________________________ Date: _________________ Printed: ___________________________ Title: __________________ Corporation – 2 officer signatures required (one from each group, unless person signing holds officer positions in both Group 1 and 2):

14.16 City of Santa Cruz Professional Services Agreement for Shoreline Adaptation Management Plans EXHIBIT A: SCOPE OF WORK
Task 1: Project Management
The AECOM Project Manager and Project Director will hold a one-hour virtual kick-off meeting with the City’s Project Team at the beginning of the project to confirm expectations, align processes, refine proposed tasks and workflow activities discussed herein, and validate/revise the project schedule as needed.

AECOM’s Project Manager and members of the AECOM Team (as needed) will conduct 30-minute virtual meetings via Microsoft Teams every two weeks for 18 months with the City’s Project Team to address issues, questions or concerns, and discuss upcoming milestones and deliverables. AECOM will prepare and send meeting agendas in advance of each meeting and provide meeting minutes with associated action items no more than five business days after each meeting.

AECOM will maintain a Gantt chart project schedule including tasks, meetings, and deliverables therein.

Monthly narrative and financial progress reports (for both AECOM and Circlepoint) will be prepared for the City’s Project Manager on a monthly basis. AECOM will coordinate with the City on the OPC grant reporting requirements. AECOM will prepare the Ocean Protection Council (OPC) grant quarterly invoice and will coordinate with the City to prepare the OPC grant quarterly progress report.

Deliverables
• Coordination meetings (Teams)
• Meeting agendas and notes (emailed)
• Input to quarterly grant reporting (to be prepared in coordination with the City; emailed) • Monthly invoices and progress reports (Word / Excel /emailed) • Gantt Chart project schedule (Microsoft Project)
• Shared file repository (AECOM SharePoint)
Task 2: Information Compilation and Level Setting
As a precursor to drafting the three Shoreline Adaptation Management Plans (SAMPs), AECOM will review and inventory work to-date in the shared file repository (including all prior work and corresponding geospatial information such as the completed OPC Criteria Gap Analysis, local and regional plans, studies, data, analyses, as well as relevant materials produced by adjacent jurisdictions and property owners within the coastal subareas) and assess knowledge gaps so there is consistency with science, planning guidance (OPC), state/federal policies (Senate Bill [SB] 272), and local and regional plans.

AECOM will compile existing available science and literature previously collated by the City to fill remaining knowledge gaps, as applicable, and level set each of the three subareas in accordance with OPC and SB 272 criteria. The AECOM Team will participate in up to two meetings with OPC for the duration of the project to verify necessary information for the SAMPs and fill remaining gaps. The resulting information will comprise the draft and final ‘Analysis of Existing and Future Area Conditions’ Technical Brief section of each SAMP. More specifically, this technical brief would include an assessment of

14.17 City of Santa Cruz Professional Services Agreement for Shoreline Adaptation Management Plans existing and projected shoreline conditions under medium and high sea level rise scenarios with and without “hold the line” protective interventions such as, but not limited to, for example:
• Existing and reasonably foreseeable public and private development, including shoreline protection structures and other infrastructure,
• Upland, shoreline, bluff, sandy beach, and offshore public access and recreational areas, including accessways and parking areas,
• Natural shoreline, aesthetic, and cultural resources, such as sensitive habitat areas, rocky intertidal zones, dunes, important public views and scenic resources, and significant tribal cultural areas, and
• Existing and projected average sandy beach area widths throughout tidal and seasonal ranges.

In order to understand existing conditions, consider prior adaptation solutions identified as feasible and ideate other adaptation solutions for each of the three coastal subareas, a one-day site visit is included and will be attended by AECOM’s Project Manager, the Adaptation Planning Lead, and Project Director.

Between the preparation of the draft and final Technical Brief, the AECOM Team will prepare for and participate in the first Community Conversation as further detailed in Task 3. AECOM will prepare a slide deck for the first of four City Council meetings to update the City Council on Task 2 deliverables.

Deliverables
• Shared repository/inventory of data sources (AECOM SharePoint / Excel) • Work products needed to fill gaps identified (TBD, likely ArcGIS, Excel, Word, PDF) • Draft and Final Data Summary Technical Brief (Word / PDF) • City Council Presentation Slide Deck (PowerPoint)
Assumptions
• The City will provide access to necessary plans, studies, and data for review/integration in this task and for the project duration via the AECOM SharePoint. • AECOM assumes up to 2 meetings with OPC to verify requirements for the SAMPs. • AECOM assumes one round of revisions on the Draft and Final Technical Brief. • All technical briefs will include an accompanying plain language summary, free of jargon and accessible to general audiences, one page in length or less in both English and Spanish. Spanish translation will be provided by AECOM.
• City staff will be responsible for preparation of City Council agenda report.

Task 3: Community Engagement
Subtask 3.1: Equitable Engagement Strategy. The AECOM Team will work closely with the City Project Team to develop an Equitable Engagement Strategy that further defines stakeholder and public engagement goals and objectives and the most effective communication channels and forums for reaching them. The Strategy will identify the timing and desired inputs for two online surveys, to be developed collaboratively with the City Project Team. The AECOM Team will work with affected property owners, residents, visitors, the Coastal Commission, tribal interests, non-governmental organizations (NGOs), and other interested parties to develop each SAMP.

14.18 City of Santa Cruz Professional Services Agreement for Shoreline Adaptation Management Plans Subtask 3.2: Community Conversations and Focus Groups. In coordination with City staff and community partners, the AECOM Team will prepare for, and facilitate, two rounds of Community Conversations in each coastal subarea for a total of six meetings (one of which being in-person and one virtual, per subarea). In addition, the AECOM Team will facilitate six virtual Small Focus Groups (two for each subarea), coordinate meeting logistics, develop tailored messaging for each audience, support the development of detailed facilitation guidelines/annotated agendas, and document stakeholder and community input.

Subtask 3.3: Public Opinion Polling.

The AECOM Team will work closely with the City’s Public Opinion Consultant to assess community members’ perceptions of local sea level rise challenges and potential solutions.

Subtask 3.4 Technical Brief. The findings from the community meetings, implementation of the Equitable Engagement Strategy, public opinion polling, and community surveys will be assimilated into the draft and final Engagement Summary Technical Brief, including how community-received feedback was integrated at each step.

Deliverables
• Draft and Final Equitable Engagement Strategy (Word)
• Online Surveys and Accompanying Results Analysis
• Agendas, additional meeting materials (e.g., posters, slide decks), meeting notes, and summary from community engagement meetings (Word / PowerPoint /Canva / PDF) • Polling Summary Slide Deck (with input from the City’s Public Opinion Consultant; PowerPoint) • Draft and Final Engagement Summary Technical Briefs (Word / PDF) Assumptions
• We assume that the Equitable Engagement Strategy will undergo up to two rounds of consolidated revisions.
• We assume that the City will host and promote stakeholder and community meetings at City/government-owned facilities and the AECOM Team will not incur room, equipment, refreshments or insurance fees.
• We assume that up to one Circlepoint staff person, one Apex Strategies staff person, and up to 3 AECOM staff members will attend both the in-person and virtual community and stakeholder meetings.
• We assume that printed materials will be kept to a minimum to conserve natural resources. • The AECOM Team assumes that the City will support language translation for meeting materials and interpretation needs for relevant focus groups.

Task 4: Refinement of Adaptation Pathways Approach
AECOM will refine and update the existing adaptation pathways approach for each of the three coastal subareas for community comment and buy-in, City council meetings, and to inform the SAMP/Blueprint development.

14.19 City of Santa Cruz Professional Services Agreement for Shoreline Adaptation Management Plans Subtask 4.1: Assess Available Adaptation Pathways. AECOM will assess the existing working set of Resilient Coast Santa Cruz 1.0 adaptation pathways, triggers, and thresholds, including additional work to-date, incorporating the findings from Task 2 therein.

Subtask 4.2: Refine Adaptation Pathways. AECOM will refine and define the adaptation pathways by coastal subarea, feature, and asset, along with sequencing triggers, and thresholds with new data gleaned from Task 2, recent projects, cost benefit analyses, and engagement outcomes from Task 3.

AECOM will also assess cross jurisdictional impacts and tradeoffs of each pathway and project.

Subtask 4.3: Develop Adaptation Pathways Visualizations and StoryMap. The AECOM Team will work collaboratively with the City Project Team to revise adaptation pathway visualizations, by coastal subarea. This would be accomplished through the Community Conversations and Focus Groups and work completed in Subtasks 4.1 and 4.2 to develop an online StoryMap dashboard to present/visualize the results.

Subtask 4.4 Develop a Draft and Final Adaptation Pathways Technical Brief. AECOM will document project recommendations based on revised adaptation pathways for near- and medium-term time horizons (up to 30 years) and refine the longer-term pathways at a high-level (50 years) for the three subareas to meet community visions and values verified during the community engagement conversations.

AECOM will also refine the preliminary design of the coastal change monitoring network to track adaptation pathways as part of this subtask.

Subtask 4.5 Council Presentation. The AECOM Team will prepare a slide deck for the second of four City Council meetings. These materials are meant to update the City Council on Task 3 and 4 deliverables and for direction to proceed with preparation of the Blueprints.

Deliverables
• Draft and Final Adaptation Pathways Technical Brief (Word / PDF) • Adaptation Pathway Visualizations and StoryMaps (PDF / ArcGIS, ESRI StoryMap) • City Council Presentation Slide Deck (PowerPoint)
Assumptions
• AECOM assumes one round of revisions per deliverable. • Technical brief will include an accompanying plain language summary accessible to general audiences that is one page in length or less in both English and Spanish. • City staff will be responsible for preparation of City Council agenda report. • Up to 3 AECOM staff will virtually attend the City Council meeting for this task.

Task 5: Costing and Funding Analysis
Adaptation investments are resource and capital intensive, requiring local jurisdictions to understand their costs and to identify multiple funding streams. The Team will begin by reviewing the adaptation strategies and pathways refined and developed in Task 4, conceptual designs, funding/financing strategies, and recent project costs. Through this iterative process, AECOM will work collaboratively with the City Project Team to identify unit cost estimates for individual adaptation strategies outlined in

14.20 City of Santa Cruz Professional Services Agreement for Shoreline Adaptation Management Plans Task 4 for the three coastal subareas (across the grey/green spectrum—such as seawalls, living shorelines, and floodproofing—and for the near-term planning horizon). We assume various shoreline adaptation project components may be included within a single project concept. The Team will then meet with the City for a one-hour virtual task kickoff meeting to align on goals, priorities, and available data related to adaptation project costs and considerations, review the initial and proposed adaptation project component costs, and discuss current funding and financing sources and associated challenges.

Costing Library
AECOM will then develop a high-level cost estimate library for a portfolio of shoreline adaptation project components resulting from the work in Task 4. The primary objectives of the library are to provide cost estimates that inform early-stage planning and project prioritization, support funding strategy development, and identify key cost drivers and uncertainties that can help future design refinement. The library, which will be developed using AECOM’s internal specialists, tools, RSMeans, and other industry benchmarks, will include rough-order-of-magnitude (ROM) capital costs, rule of thumb for percentage of capital costs to estimate operations and maintenance expenditures, and contingency estimates. It will also incorporate regional cost modifiers and cost escalation suggestions for medium- and long-term shoreline adaptation projects. The information on costs will be formatted as ranges of unit cost estimates (e.g., per linear foot or per acre) for each of the identified adaptation strategies and associated project components.

Since costs can vary widely depending on project-specific contexts, cost driver considerations, such as permitting, land acquisition costs, and presence of existing infrastructure needs will be included as notes.

AECOM will work with the City Project Team to refine the cost workbook library and associated inputs.

The findings of the costing exercise will be documented in a PowerPoint presentation that outlines the methodology, assumptions, and results. Using the cost workbook library, AECOM will estimate total project costs for the near to mid-term adaptation pathway alternatives and will explain how these costs have been derived and the assumptions in the technical brief. Visualizations to convey information, such as project components, will be developed to support community and stakeholder understanding and decisions to be made by the City.

Funding and Financing
Leveraging our funding and financing work with other agencies across California, the desktop review, and the one-hour discussion with the City, AECOM will identify and evaluate up to three new or innovative funding and financing mechanisms that may support implementation of the adaptation pathways. These could include parametric insurance, green or catastrophe bonds, and/or the role of climate resilience districts in facilitating funding/financing mechanisms. The AECOM Team will incorporate all work that the City has completed to date in this evaluation. Mechanisms will be considered against an array of criteria, like revenue potential, long-term sustainability, administrative complexity, and political feasibility.

AECOM will develop a Costing and Funding Analysis Technical Brief that outlines the applicability of these mechanisms to the City’s adaptation pathways and key considerations to inform decision-making.

Finally, AECOM will prepare a slide deck to highlight the findings from this task (both the costing exercise and funding/financing work) for the third of four City Council Meetings.

14.21 City of Santa Cruz Professional Services Agreement for Shoreline Adaptation Management Plans Deliverables
• One-hour task kickoff meeting (PowerPoint)
• Agenda and key takeaways from task kickoff meeting (emailed) • Cost estimation methodology and assumptions (PowerPoint) • Cost estimation framework and matrix comparing high-level project costs (Excel) • Draft and Final Costing and Financing Technical Brief (Word / PDF) • City Council Presentation Slide Deck (PowerPoint)
Assumptions
• The draft technical brief will be reviewed by community partners and City staff with feedback integrated into the final technical brief. AECOM assumes that the City will lead solicitation, compilation, and adjudication of the comments.
• The technical brief will include an accompanying plain language summary accessible to general audiences that is 1 page in length or less in both English and Spanish. • City staff will be responsible for preparation of City Council agenda report. • The cost estimates will be provided as rough-order-of-magnitude and used for planning purposes only.
• The scope for this task excludes further development of the adaptation project concepts. • Any opinions of probable construction costs provided by AECOM represent AECOM's good faith professional judgment in light of its experience, knowledge and the information reasonably available to AECOM at the time of preparation of the opinion. However, since AECOM has no control over the market, economic conditions or the bidding procedures, AECOM, its directors, officers and employees and subconsultants do not make any guarantees or warranties whatsoever, whether express or implied, with respect to such opinions and accept no responsibility for any loss or damage arising therefrom or in any way related thereto. Third parties relying on such opinions do so at their own sole risk.
• AECOM is providing professional services, and is not a municipal advisor, acting in an agent or fiduciary capacity or in the capacity of broker, dealer, municipal securities underwriter, or municipal advisor, or providing any legal, financial, tax, accounting, or investment advice of any kind. No deliverables or services provided by AECOM shall be construed as legal, financial, tax, accounting, or investment advice or be a substitute for such advice. AECOM has not provided, and will not provide, any financial, legal, tax, accounting, investment, or other advice to Client. Client shall seek legal, financial, tax, accounting, and investment advice from its legal, financial, tax, accounting, investment, or other advisors, including any municipal advisor of Client, to the extent Client desires to obtain such advice. • In the performance of its services on behalf of the City, AECOM (a) is not recommending that the City take or refrain from taking any action regarding municipal financial products or the issuance of municipal securities; and (b) is not acting as a municipal advisor to the City and does not owe a fiduciary duty to the City pursuant to Section 15B of the Securities Exchange Act of 1934, as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act, with respect to the information and material contained in this document..

14.22 City of Santa Cruz Professional Services Agreement for Shoreline Adaptation Management Plans Task 6: Develop Shoreline Adaptation Management Plans and Blueprints The AECOM Team will develop three SAMPs with accessible, implementation-focused Blueprints for West Cliff, Main/Cowell Beaches, and East Cliff. Information and technical briefs that will be incorporated into the SAMPs will be developed and compiled throughout the course of the project from each of the prior tasks (Tasks 2-5). The three SAMPs will include consideration of the following requirements:
• Maintain consistency with the City’s current Local Coastal Program (LCP) and its new (soon to be adopted) Beaches and Bluffs chapter’s policies/objectives. • Ensure consistency with OPC requirements and criteria to satisfy SB 272. • Community engagement (discussed in more detail in Task 3). • Near-, mid-, and long-term visions for the three coastal subarea shoreline adaptation strategies and project implementation.
• Analysis of existing and future area conditions (described in Task 2 in more depth) • Adaptation strategies, programs, and actions that are consistent with local planning efforts, phased to accommodate funding constraints and City priorities, utilize current and available science/literature, contain implementation programs and design guidelines for specific projects, monitoring programs, and financing mechanisms (described in Task 4 and 5 in more detail). • Sandy beach adaptation strategies (e.g., sand replenishment/retention and removal of development/armoring) to help maintain beach width for habitat/species use and public/recreational access.
• Bluff stabilization strategies, locations for potential managed retreat, and criteria for near-term maintenance of shoreline protection features (e.g., riprap). • Potential alternatives for public/recreational access and mitigation for loss of sandy beaches. • Incorporation of environmental justice including the potential distribution of coastal resource benefits and impacts to disadvantaged and other members of the community and strategies to address disparate or inequitable impacts.
• Monitoring, evaluation, and adaptive management for developed adaptation strategies.

In addition to the SAMPs, each coastal subarea Blueprint will include the following components:
• Five pages or less so that it can be more approachable by the general public. • Graphically rich for ease of comprehension and to convey key messages. • Document key findings from technical briefs (Tasks 2-5), adaptation pathways decisions, prioritized implementation projects, and next steps for financing sustainable strategies to implement identified capital projects.
• High-level recommendations for LCP policies for future amendments.

The AECOM Team will prepare the slide deck to highlight the findings from this task for the final City Council Meeting.

14.23 City of Santa Cruz Professional Services Agreement for Shoreline Adaptation Management Plans Deliverables
• Administrative Draft (Word)
• Public Review Draft (Word)
• Final West Cliff, Beaches, and East Cliff Shoreline Adaptation Management Plans (Word / PDF) • Blueprints and Technical Brief Appendices (Word / PDF) • Updated Adaptation Pathways StoryMaps, if applicable (PDF / ArcGIS) • City Council Presentation Slide Deck (PowerPoint)
Assumptions
• The SAMPs will include the Blueprints and final technical briefs as appendices. • The AECOM Team will be responsible for Spanish translation, accessibility, and design of the Blueprints.
• Adaptation Pathways StoryMaps may be updated in this task to align with the Final Blueprint recommendations, if applicable.
• The cost estimate for this task does not include the development of technical briefs that were drafted and finalized in previous tasks.
• The Administrative Draft review period will be 30 days in duration. • The Public Review Draft review period will be 60 days in duration. • City staff will be responsible for preparation of City Council agenda report. • Up to 3 AECOM staff will virtually attend the City Council meeting for this task.

14.24 City of Santa Cruz Professional Services Agreement for Shoreline Adaptation Management Plans EXHIBIT B: FEE SCHEDULE

14.25 City of Santa Cruz Professional Services Agreement for Shoreline Adaptation Management Plans EXHIBIT C: WORK SCHEDULE

14.26 City of Santa Cruz Professional Services Agreement for Shoreline Adaptation Management Plans June 2025 (Form Rev.03/25 ) Page 23
EXHIBIT D: 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.

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.

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.

14.27 City of Santa Cruz Professional Services Agreement for Shoreline Adaptation Management Plans June 2025 (Form Rev.03/25 ) Page 24
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 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 Consultant’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
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.

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.

14.28 City of Santa Cruz Professional Services Agreement for Shoreline Adaptation Management Plans June 2025 (Form Rev.03/25 ) Page 25
• ACCEPTABILITY OF INSURERS
Insurance is to be placed with insurers with a current A.M. Best’s rating of no less than A: VII, unless otherwise acceptable to the City.
• CLAIMS MADE POLICIES
If any of the required policies provide coverage on a claims-made basis:

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

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

3. If coverage is canceled or non-renewed, and not replaced with another claims-made policy form with a Retroactive Date prior to the contract effective date, the Consultant must purchase “extended reporting” coverage for a minimum of five (5) years after completion of contract work. • VERIFICATION OF COVERAGE
Consultant will furnish the City with original Certificates of Insurance including all required amendatory endorsements (or copies of the applicable policy language effecting coverage required by this clause) and a copy of the Declarations and Endorsement Page of the CGL 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. Consultant will provide a copy of its insurance policy for review, in redacted form, on Consultant’s premises with sufficient advance notice. Moreover, Consultant will also furnish for review Policies, in redacted form, in the instance where they are asked to indemnify the City and the insurer has denied the claim tender. They will also agree to provide a copy of the denial letter containing and explanation of the coverage denial.

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).

14.29 City of Santa Cruz
City Manager
Matt Huffaker, City Manager
809 Center st, Santa Cruz, CA 95060

ATTACHMENT - EVALUATION TABULATION
RFP No. RFP No. CM-0195
Resilient Coast Santa Cruz 2.0: Shoreline Adaptation Management Plans RESPONSE DEADLINE: April 9, 2025 at 4:00 pm
Report Generated: Friday, May 30, 2025
PHASE 1
Vendor Total Score
(Max Score 100)
AECOM Technical Services, Inc. 89.05
Haley & Aldrich 87.7
Wallace Roberts & Todd (WRT) 81.89
Dudek 80.81
PHASE 2
Vendor Total Score
(Max Score 100)
AECOM Technical Services, Inc. 88.17
Haley & Aldrich 79.34
Dudek
Excluded
0 Wallace Roberts & Todd (WRT)
Excluded
0 14.30
City Council

AGENDA REPORT
DATE: 06/03/2025
AGENDA OF: 06/24/2025
DEPARTMENT: City Council
SUBJECT: Designation of Voting Delegate to Attend the League of California Cities (LOCC) Annual Conference (CN)
LOCATION: Citywide
RECOMMENDATION: Motion to designate Councilmember Brunner as the voting delegate to attend the League of California Cities Annual Conference in Long Beach on October 8-10, 2025.

BACKGROUND: This year’s League of California Cities (LOCC) Annual Conference is scheduled for Wednesday, October 8, 2025 through Friday, October 10, 2025 in Long Beach, California.

DISCUSSION: One very important aspect of the conference is the session to consider and take action on conference resolutions. This session is scheduled for Friday, October 10. Annual conference resolutions guide cities and the LOCC in their efforts to improve the quality, responsiveness, and vitality of local government in California. It is therefore important that all cities be represented. Although each member city has a right to cast one vote, at this time, the LOCC has asked that each city council designate a voting delegate and up to two alternates in the event that the voting delegate is unavailable so that proper records may be established.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: This is not a project.

HEALTH IN ALL POLICIES (HiAP): By participating along with other cities in their efforts to improve the quality, responsiveness and vitality of local governments in California, this action supports and advances the HiAP pillars of equity, public health and sustainability.

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: Funds have been budgeted to pay for City Council meeting/travel expenses.

15.1 Prepared By:

Bonnie Bush
City Clerk
Submitted By:

Fred Keeley
Mayor
ATTACHMENTS:

None.

15.2 City Council

AGENDA REPORT
DATE: 06/13/2025
AGENDA OF: 06/24/2025
DEPARTMENT: City Council
SUBJECT: A Resolution Condemning the Use of Military Force in Civilian Communities, Recognizing the Contributions of Immigrants Locally and Nationally, and Affirming Santa Cruz’s Commitment to the Constitutional Rights of All People (CN)
LOCATION: Citywide
RECOMMENDATION: Motion to adopt a resolution condemning the use of military force in civilian communities, recognizing the contributions of immigrants locally and nationally, and affirming the City of Santa Cruz’s commitment to the Constitutional rights of all people.

BACKGROUND: In June 2025, Los Angeles became the epicenter of a Constitutional crisis when the federal government, without the consent of the California state government, deployed approximately 700 U.S. Marines and 4,000 National Guard troops to Los Angeles to police civilian communities. This was the first time since 1965 that a President has deployed military forces inside a state without that state’s approval. The federal government’s deployment is a blatant attempt to use intimidation to erode democratic values, undermine Constitutional rights, and disrupt community trust, particularly among immigrant populations.

In light of these exigent circumstances and the City of Santa Cruz’s (City) historical role in promoting social justice and human rights, it is important for the City to unequivocally condemn the use of military force in civilian communities and all actions that target immigrant communities and peaceful protesters.

DISCUSSION: Adopting the proposed resolution is a critical step in reinforcing the City’s commitment to the human rights of all people and the well-being of our diverse community members, regardless of immigration status. This action denounces the dangerous use of military forces in civilian communities, which erodes the democratic foundations of our country. Through this resolution, the City sends a clear message that it will champion the rights and dignity of every person, so all can thrive without fear or oppression.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: The proposed Council action is not a “project” under CEQA.

16.1 HEALTH IN ALL POLICIES (HiAP): The goal of Health in All Policies (HiAP) is to ensure that decision-makers are informed about the impacts on the three HiAP pillars of health, equity, and sustainability when reviewing projects and policy options. This resolution reiterates the City’s commitment to human rights and Constitutional protections for all people, regardless of their immigration status or background. This promotes health and equity in our community.

FISCAL IMPACT:

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

2. This recommendation requires a budget adjustment: No

3. The recommendation creates an on-going expenditure commitment: No FISCAL IMPACT DESCRIPTION: No impact.

Submitted By:

Gabriela Trigueiro
Councilmember, District 1
Submitted By:

Fred Keeley
Mayor
Submitted By:

Sonja Brunner
Councilmember, District 2
ATTACHMENTS:

1. RESOLUTION.DOCX

16.2 RESOLUTION NO. NS-30,XXX

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA CRUZ CONDEMNING

THE USE OF MILITARY FORCE IN CIVILIAN COMMUNITIES, RECOGNIZING THE

CONTRIBUTIONS OF IMMIGRANTS LOCALLY AND NATIONALLY, AND AFFIRMING SANTA CRUZ’S COMMITMENT TO THE CONSTITUTIONAL RIGHTS OF ALL PEOPLE WHEREAS, the City of Santa Cruz thrives as a vibrant, inclusive community, enriched by the contributions of immigrants who help drive economic growth, cultural diversity, and civic engagement; and
WHEREAS, the City of Santa Cruz is committed to safeguarding the rights and dignity of all residents, regardless of immigration status; and
WHEREAS, the recent federal deployment of National Guard troops and U.S. Marines for policing or intimidation in immigrant communities in California represents an alarming escalation of military presence; and
WHEREAS, the recent use of military force in civilian settings sets a dangerous precedent that must be condemned, as it threatens constitutional protections, erodes democratic values, and threatens public safety and trust; and
WHEREAS, this deployment, enacted without the consent of California’s state government, marks a rare and troubling use of federal military force against civilians; and WHEREAS, such actions have instilled fear, disrupted community stability, and caused emotional distress, particularly among marginalized populations; and WHEREAS, the right to peaceful protest is a cornerstone of democracy, protected by the First Amendment, and its suppression undermines the principles of free expression and inalienable rights enshrined in the United States and California Constitutions; and WHEREAS, the City of Santa Cruz and its broader region have historically played a critical role in California’s social movements, showing courage, unity, and a commitment to nonviolence; and
WHEREAS, in times of adversity, the City of Santa Cruz is called to respond with unity, nonviolence, and a steadfast commitment to protecting all human dignity and democratic ideals; and
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Santa Cruz as follows:

1. The City of Santa Cruz strongly condemns the use of military force against civilian communities and the targeting of immigrant populations and peaceful protestors within California.

16.3 RESOLUTION NO. NS-30,XXX

2. The City of Santa Cruz affirms its unwavering support for the constitutional rights of all people, regardless of immigration status or background.

3. The City of Santa Cruz celebrates the immigrant community and the vital contributions they provide to Santa Cruz and the nation as a whole.

4. The City of Santa Cruz urges both state and federal officials to immediately stop the deployment and use of military forces in civilian communities, as well as all actions that target immigrant communities or peaceful protesters.

5. The City Clerk shall transmit copies of this resolution to Governor Gavin Newsom, Assemblymember Gail Pellerin, and the City’s State and federal legislative representatives, urging them conduct oversight and take all appropriate actions to prevent the misuse of military power against civilians.

6. The City Council urges all neighboring cities and counties to adopt similar resolutions.

PASSED AND ADOPTED this 24th day of June, 2025 by the following vote:

AYES:

NOES:

ABSENT:

DISQUALIFIED:

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

16.4 City Council

AGENDA REPORT
DATE: 06/05/2025
AGENDA OF: 06/24/2025
DEPARTMENT: City Council
SUBJECT: A Resolution Affirming the City of Santa Cruz’s Commitment to Abide by the California Trans State of Refuge Act and Support for the Transgender, Gender Queer, Non-binary, Gender Fluid, Gender Non-conforming, and Intersex Community (CN)
LOCATION: Citywide
RECOMMENDATION: Motion to adopt a resolution affirming the City of Santa Cruz’s (City) commitment to abide by the California Trans State of Refuge Act and support for the transgender, gender queer, non-binary, gender fluid, gender non-conforming, and intersex community.

BACKGROUND: California has been at the forefront of protecting LGBTQ+ rights, including the passage of SB107 in 2022 (California Trans State of Refuge Act), which safeguards individuals seeking gender-affirming health care from out-of-state legal repercussions. Despite these protections, increasing legislative attacks on gender-affirming health care in other states pose significant risks to the well-being and safety of transgender and gender-diverse individuals who may seek refuge in more supportive environments like the City. Gender-affirming health care is recognized by major medical organizations as essential and lifesaving. Research indicates that access to these services significantly improves mental health outcomes, reduces suicide risks, and enhances overall well-being for transgender, gender queer, non-binary, gender fluid, and intersex individuals. In preparation of future legislation that may criminalize those providing or seeking gender-affirming care and given the Council’s stated values of equity and inclusion, it is important for the City to be proactive in reiterating our commitment to transgender rights and equal protections for transgender people.

DISCUSSION: Adopting the proposed resolution is a critical step in reinforcing the City’s commitment to equality, human rights, and the well-being of its diverse community members. It sends a strong message of solidarity and protection to transgender, gender queer, non-binary, gender fluid, and intersex individuals, affirming that the City stands with the State of California as a safe haven where their rights and well-being are prioritized. This resolution would resolve to ensure the rights of transgender individuals in the City are upheld, and that no City resources - including staff time - would be used to detain individuals seeking care, or otherwise to cooperate with jurisdictions seeking to enforce laws criminalizing gender affirming care in other jurisdictions. It provides necessary protections, aligns with State laws, and ensures that the City

17.1 remains a beacon of support for the transgender, gender queer, non-binary, gender fluid, and intersex community.

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 goal of Health in All Policies (HiAP) is to ensure that decision-makers are informed about the impacts on the three HiAP pillars of public health, equity, and sustainability when reviewing projects and policy options. This resolution reiterates the City’s commitment to transgender rights and equal protections for transgender, gender queer, non-binary, gender fluid, gender non-conforming, and intersex people, promoting public health and equity in our community.

FISCAL IMPACT:

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

2. This recommendation requires a budget adjustment: No

3. The recommendation creates an on-going expenditure commitment: No FISCAL IMPACT DESCRIPTION: No impact.

Submitted By:

Shebreh Kalantari-Johnson
Vice Mayor, District 3
Submitted By:

Gabriela Trigueiro
Councilmember, District 1
Submitted By:

Sonja Brunner
Councilmember, District 2
ATTACHMENTS:

1. RESOLUTION.DOCX

17.2 RESOLUTION NO. NS-30,XXX

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA CRUZ AFFIRMING SANTA CRUZ’S COMMITMENT TO ABIDE BY THE CALIFORNIA TRANS STATE OF REFUGE ACT AND SUPPORT FOR THE TRANSGENDER, GENDER QUEER, NONBINARY, GENDER FLUID, GENDER NON-CONFORMING, AND INTERSEX

COMMUNITY
WHEREAS, as of the date of this resolution, California law does not restrict access to gender-affirming healthcare and bans insurance exclusions for gender-affirming healthcare; and WHEREAS, other states may adopt or expand laws that impose criminal punishment, civil liability, administrative penalties, or professional sanctions on health care professionals who provide gender-affirming health care and on persons who seek, receive, or assist another in receiving gender-affirming health care in states or jurisdictions that provide such care; and WHEREAS, the State of California passed SB 107 in 2022 (California Trans State of Refuge Act) protecting individuals seeking safety from out of state prosecution and explicitly prohibits law enforcement agencies from knowingly making or participating in the arrest or extradition of an individual pursuant to an out-of-state arrest warrant based on another state’s law against receiving gender affirming healthcare in California; and WHEREAS, for the purpose of this resolution, “gender-affirming health care” and “genderaffirming mental health care” have the same meanings as provided in section 16010.2 of the California Welfare and Institutions Code; and
WHEREAS, gender-affirming health care has been proven to be evidence-based, medically necessary, and lifesaving by the American Medical Association, the American Academy of Child and Adolescent Psychiatry, the American Academy of Pediatrics, the Endocrine Society, the American Psychiatric Association, and the World Professional Association for Transgender Health, amongst other institutions; and
WHEREAS, studies have shown that gender transition, including access to genderaffirming health care, improves the overall wellbeing of transgender, gender queer, non-binary, gender fluid, gender non-conforming, and intersex people and access to gender-affirming health care for youth is associated with better mental health outcomes and lower risks of suicide; and WHEREAS, multiple health care institutions across the country have scaled back or have considered scaling back gender-affirming health care services in response to legal challenges, perception of legal risk, harassment, or threats of violence; and WHEREAS, health care professionals, as well as persons seeking, receiving, or assisting another individual who is seeking or receiving gender-affirming health care in the City of Santa Cruz, should be protected from attempts to impose criminal punishment, civil liability, administrative penalties, or professional sanctions based on the laws of other states when gender17.3 RESOLUTION NO. NS-XX,XXX
2 affirming health care is lawful in the State of California and meets standards of good professional practice; and
WHEREAS, it is necessary and appropriate to exercise the authority vested in the City Council to protect health care professionals and persons lawfully seeking, receiving, and assisting another individual in seeking or receiving gender-affirming health care in the City of Santa Cruz; and
WHEREAS, the City of Santa Cruz endeavors to cultivate a supportive and inclusive environment that recognizes the contributions of everyone, including transgender, gender queer, non-binary, gender fluid, gender non-conforming, and intersex people and that using lived names and pronouns shows respect and acceptance and affirms individual agency; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Santa Cruz as follows: the Santa Cruz City Council does hereby make a commitment to transgender, gender queer, non-binary, gender fluid, gender non-conforming, and intersex rights and equal protections for transgender, gender queer, non-binary, gender fluid, gender non-conforming, and intersex community members and affirms its intention to abide by the California Trans State of Refuge Act.

BE IT FURTHER RESOLVED, that the City of Santa Cruz recognizes the importance of gender-affirming health care as a matter of health, privacy, and equality and shall ensure, to the greatest extent permitted by law, that those rights are upheld for all people living, working, or seeking services within the City.

BE IT FURTHER RESOLVED that no City resources, including but not limited to time spent by employees, officers, contractors, or subcontractors while on duty, or the use of City property, shall be utilized to persecute or detain, or to assist another jurisdiction wishing to persecute or detain persons for seeking or providing gender-affirming health care, including such activities as gender affirming mental health care, gender affirming hormone therapy, or genderaffirming surgery.

BE IT FURTHER RESOLVED that no City resources shall be utilized for cooperating with or providing information to any individual or out-of-state agency regarding the provision of lawful gender-affirming health care or gender-affirming mental health care performed in the State of California.

BE IT FURTHER RESOLVED that the City of Santa Cruz shall not allocate funds, resources, or staff to assist in any investigation, detention, or punitive action against any individual for using identification or documentation—government-issued or otherwise—that aligns with their gender identity, regardless of legal sex marker or gender assigned at birth. City staff, including law enforcement and administrative personnel, are directed to uphold this policy in all interactions, and no City facility or service shall be used to support agencies or efforts that seek to criminalize or penalize such expression of identity.

17.4 RESOLUTION NO. NS-XX,XXX
3 BE IT FURTHER RESOLVED that all City of Santa Cruz-owned facilities, including, but not limited to, restrooms, locker rooms, shelters, and recreational spaces, shall be accessible to individuals in alignment with their self-identified gender. No person shall be denied access, excluded, or harassed in any facility based on gender identity or expression. The City shall ensure staff are trained in affirming practices, and visible signage (e.g. “unisex” or “all-gender” restrooms) and/or communication shall affirm this policy to residents and visitors.

BE IT FURTHER RESOLVED that the City shall recognize all individuals with their accurate gender identity and lived name in all settings and situations that do not require their legal name.

BE IT FURTHER RESOLVED that nothing in this resolution prohibits the investigation or enforcement of any criminal activity, provided that no prescription or medical information relating to gender-affirming health care for any specific individual may be shared with an out-ofstate agency or any other individual.

PASSED AND ADOPTED this 24th day of June 2025 by the following vote:

AYES:

NOES:

ABSENT:

DISQUALIFIED:

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

17.5 City Council

AGENDA REPORT
DATE: 06/05/2025
AGENDA OF: 06/24/2025
DEPARTMENT: Economic Development and Housing
SUBJECT: Award Contract for Bethany Curve Bridge Culvert Community Mosaic Public Art – Budget Adjustment (EDH)
LOCATION: District 6
RECOMMENDATION: Motion to:
1) Award a contract to Community Arts & Empowerment for the Bethany Curve Bridge Culvert Community Mosaic Public Art in the amount of $188,204;
2) Authorize the City Manager to execute an agreement, amendments, and any related documents, in a form approved by the City Attorney, with Community Arts & Empowerment for the Bethany Curve Bridge Culvert Community Mosaic Public Art; and 3) Adopt a resolution amending the FY 2026 budget to transfer funding from the Water Department Percent for Public Art (Fund 714) to the CIP Public Art Fund (Fund 313) for the Bethany Curve Bridge Culvert Community Mosaic Public Art project.

BACKGROUND: The Bethany Curve Park bridge on West Cliff Drive was damaged significantly during the 2023 atmospheric river storms. Construction of the new replacement bridge was completed and the road repair section of West Cliff reopened to pedestrian and bike traffic in March 2025. Bethany Curve Park is a narrow linear neighborhood park comprised of

2.6 acres running from Delaware Street to West Cliff Drive and Woodrow Avenue. At the terminus of the park where it meets the ocean, several memorial benches along with the “Astronomy & Tides” sculpture offer a respite to sit and reflect while looking out on the Pacific Ocean. Running through the linear park is a stream which serves as a pillar of the ecosystem for flora and fauna. The Bethany Curve bridge culvert allows water to run under the Bethany Curve bridge and flow into the ocean via a cross drain. With West Cliff Drive being a precious and iconic landmark for Santa Cruz, both locals and visitors alike travel this 2.5 mile stretch of coastline every day.

The mosaic mural installation at Bethany Curve bridge will act as a beautiful statement of community and as an educational opportunity focusing on the natural water resource flowing into the ocean. By utilizing a community-based art design and fabrication process, residents and students will develop a tangible connection to the location and knowledge of the importance of

18.1 ensuring the watershed is clean and well-maintained. The design will incorporate the relationship between the river and the ocean and the role that the City and community play in keeping this ecosystem thriving. On May 1, 2025, the Water Department Director approved the Percent for Public Art Fund (Fund 714-water) as the funding source for the community mosaic as it aligns with the following art themes in the adopted Water Education Goals:
 2023 Watershed Sanitary Survey - Support of local Non-Governmental Organizations (NGO) in public education.
 Water Department Strategic Goal - Public behavior changes to improve water quality of our source waters.
 Water Department Saving Our Water Future (SOWF) policy - Water is essential to life.  City’s General Plan Goal CC3.5.2 - Promote public education and awareness about the City's water resources and importance of water conservation.

At the May 14, 2025 Arts Commission meeting, the Arts Commission voted unanimously to fund the Bethany Curve Bridge Culvert Community Mosaic. The City issued a Request for Proposal (RFP) seeking a non-profit vendor or artist team, working in collaboration with a nonprofit organization to execute a community designed and fabricated set of mosaic murals to be installed on the Bethany Curve bridge.

DISCUSSION: By the close of the RFP period, one proposal was submitted to the City by Community Arts & Empowerment. The proposal was evaluated by an evaluation committee consisting of City staff from Water, Public Works and Economic Development and Housing.

Based on the criteria listed in the solicitation, the Evaluation Committee recommends awarding the contract to Community Arts & Empowerment to design, fabricate and install a community mosaic at the Bethany Curve bridge. The mosaic will enhance a highly visible public space along West Cliff Drive, promote community involvement and engagement with public art, and educate and highlight the importance of water resources and the connection of actions on the watershed and ocean.

The community designed and fabricated set of mosaic murals will be installed on the interior south face, interior north face, and the exterior north face of the Bethany Curve Bridge, totaling 260 feet. The three-sided mosaic will be impactful and accessible for all visitors. A series of community workshops will be held with an anticipated attendance of 200-300 community members who will be directly involved in the design and fabrication of the mural.

Announcement materials for community workshops will be advertised in both English and Spanish. The tile mosaic design is expected to take place in Summer 2025 with a final design returning to the Arts Commission in September/October 2025 for feedback and approval.

Installation is earmarked to take place in January 2026.

Project funding will be used for artist fees, extensive community outreach, space to be used to create and store the mosaics, supplies and materials needed to create the mosaics, rental fees for installation equipment, including a lift for the non-street side portion, and an administration fee to cover the insurance and liability. The City Manager's office, Public Works Department, and the Parks & Recreation Department support the proposed art installation to beautify and protect this highly visible, newly repaired City asset with a community-based art project.

18.2 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): This project addresses the HiAP pillars of Sustainability and Equity. As a community designed public art piece, this project will involve hundreds of residents in the design process and hands on contribution to the fabrication. The project will provide an ongoing message, through the art tiles, of the importance of water and the impact humans have on preserving the City’s local watershed. By directly involving the community and local community groups, the messaging that water is essential to life can be shared with a broad range of residents and visitors to this highly trafficked bridge along the treasured stretch of coastline along West Cliff Drive.

FISCAL IMPACT:

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

2. This recommendation requires a budget adjustment: Yes

3. The recommendation creates an on-going expenditure commitment: No FISCAL IMPACT DESCRIPTION: The proposed action has no impact on the General Fund.

The appropriation of $201,500 is from the Water Department’s Percent for Public Art Fund (Fund 714) to the CIP Public Art Fund (Fund 313). A new project has been created to track these funds and they will be carried forward to the next fiscal year (a512601, Bethany Curve Bridge Community Mosaic). Project costs will include the Community Arts & Empowerment contract and potential extra permitting and installation expenses.

Prepared By:

Ali Robinson
Principal Management
Analyst
Submitted By:

Bonnie Lipscomb
Deputy City Manager
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. BUDGET ADJUSTMENT.PDF

2. PROJECT PROPOSAL_COMMUNITY ARTS AND EMPOWERMENT.PDF

18.3 City of Santa Cruz

BUDGET ADJUSTMENT REQUEST
Administrative Approval
Fiscal Year:

ACCOUNT PROJECT NAME (if applicable) OR REVENUE ACCOUNT TITLE ACCOUNT PROJECT NAME (if applicable) OR EXPENDITURE ACCOUNTTITLE NET: $

REQUESTEDBY DEPARTMENTHEAD

APPROVAL

BUDGET/ACCOUNTING

REVIEWED

FINANCE DIRECTOR

APPROVAL

CITYMANAGER

APPROVAL
Reso #:

PROJECT

PROJECT
AMOUNT
AMOUNT
Council Approval

TOTALEXPENDITURE

TOTALREVENUE
Date:

Purpose:

Revised November 3, 2022

18.4 Letter of Interest & Qualifications:

Non-Profit or Artist & Non-Profit Team Experience
Community Arts & Empowerment, Established in 2020
240 Maple Ave.

Watsonville, CA 95076
(831) 498-6048
EIN 83-4528109
Kathleen Crocetti, Executive Director of Community Arts & Empowerment, is applying for the Bethany Curve Bridge Culvert Community Mosaic. We are a non-profit organization based in Watsonville specializing in community-generated mosaics.

We believe that for a public artwork to be successful, it must be relevant to the community, and for it to have a long-lasting relevance, it must also have the ability to transform. This belief system informs all of the work of Community Arts and Empowerment (CA&E).

Relevance is established through the communal creation of public art. Working side by side, we invest in the community, ourselves, our youth, our creativity, and our desire to be connected to each other and our place.

The potential to transform is realized at the onset of the project when a group of people engage with each other around common goals. The successful process provides forums for communication that deepen ties, encourage the establishment of community identity, and civic pride. The transformational power of relevant public work does not end with all the benefits of the collaborative processes of creating the works as a community; transformation continues when the work is engaging to viewers who experience a sense of awe or learn something about the community or themselves. In this way, the viewer is changed, and the power of transformation is carried forward.

We are excited about the Bethany Curve Project because the art themes as put forth in the RFP will have the power to transform by educating the public about the importance of the San Lorenzo River and its watershed to the vitality of our community.

CA&E Executive Director and Lead Artist, Kathleen Crocetti’s long-term vision is to turn Santa Cruz County into the Barcelona of the West Coast. This ambitious goal cannot be accomplished by one person making mosaics no matter how prolific they are. Using her skills and experience as a teacher for 27 years, she mentors both youth and adults in

18.5 the art of mosaic making while producing iconic artworks that instill community pride and ownership not only among those who participate in the creation of them but also among the residents who live with and love them. Of the 20 public artworks Kathleen has produced in SC County, only 4 of them are of her own design. She believes that diversity makes us stronger and that by mentoring and uplifting other artists, she actively demonstrates solidarity and compassion. Kathleen brings 22 years of experience executing community-based mosaics to the project. Eight of her community-generated public works are on the San Lorenzo River and focus on water education. Professionally and artistically, she is happy to be adding to this collection of work that is helping revitalize the SLR corridor.

CA&E’s largest project, “Watsvonille Brillante,” is the 12,500 square feet of mosaics that cover the Civic Parking Garage in Watsonville. This project took 5 years to complete, 120 artists were paid stipends for their designs, and 700 community volunteers assisted with the mosaic fabrication.

To facilitate community engagement, with the community that will live with the final artwork CA&E has opened satellite studios. In 2024, we operated a satellite studio in an empty storefront in Capitola Mall for the creation of mosaics for the Capitola Wharf, and in 2023 we occupied a Santa Cruz City-owned property for community participation in the fabrication of “Dancing Waters”, a mosaic hung on the Front Street Garage.

18.6 Community members assisting with mosaic fabrication in a storefront in Capitola Mall.

Panel in progress for Capitola Wharf.

Finished mosaic installed at Capitola Wharf
“Dancing Waters” is installed on the Front St. Garage in Santa Cruz.

Youth volunteers working on “Dancing Waters” in the NIAC building.

Middle School youth working on “Dancing Waters” at Mission Hill Middle School.

Please follow this Link to see the locations and photos of the 20+ community-generated public art mosaics completed by Kathleen Crocetti & Community Arts & Empowerment in Santa Cruz County.

Project Approach and Community Design Experience
Work Plan:

Phase 1 Community Outreach and Design

18.7 Consulting with City staff, CA&E will produce and publish an RFQ to solicit a local Santa Cruz Artist for the design work.

Three finalists will be selected by CA&E and City Representatives (City Arts Commissioners, Redevelopment Staff, City Water Agency, and others). These finalists will be paid a stipend to attend design forums.

By design, our process grows communities. This begins with our design forums. Design forums are highly publicized events intended to bring in all stakeholders (Print, radio, and social media). CA&E staff will facilitate forums in a pubic location such as the community room at the downtown branch of the Public Library. The forums will begin with an acknowledgment of the first people to inhabit the land we are using, and a moment of silence to reflect on those people. Once all persons present have been introduced and welcomed to the space the Project Objectives and Art Themes will be presented. A conversation will ensue about the themes, and participating members of the community will be invited to suggest images that resonate with them based on the presented themes. The three finalists will be in attendance to receive the community input.

A second community forum will be held 2 weeks later. At the Second forum, the three artists present their draft ideas. Each Draft will be projected, and each artist will explain their concept. Afterwards, the community will be given survey forms and invited to have a closer look at each design (enlarged and hung on the walls) and to talk with the artists.

CA&E Staff and City Representative will choose the Finalist Artist. The winning artist will be paid a larger stipend to finalize their design using feedback from the community, CA&E, and City Staff.

A third forum will be held to gather feedback on the design that the Finalist Artist developed as a result of the aforementioned directions.

Once input has been gathered, the Finalist Artist will make adjustments in consultation with CA&E and City Representatives. Designs approved by CA&E and City Representatives will be made available to the general public for comments and input.

Once input has been gathered, adjustments may be made in consultation with CA&E and City Representatives. CA&E will work with City staff to ensure proper documentation is submitted for the final design approval with the City Arts. CA&E staff and the Finalist Artist will attend the Arts Commission meeting to receive any design feedback and respond accordingly.

18.8 Phase 2 Fabrication
We have not located a venue for the community fabrication of the Bethany Cruve mosaics and would appreciate assistance from the City in securing a suitable space.

A suitable space would be wheelchair accessible, have access to bathrooms, preferably a non-carpeted floor, and a minimum of 800 square feet. We would lease the space for six months, with the option of extending for one additional month.

CA&E staff will enlarge the images to scale on paper and prepare workboards for community mosaic fabrication.

CA&E has a large network of artists and friends who will be excited to participate in this adventure. Both CA&E and the City have electronic newsletters and active social media platforms that they will use to generate community participation. Mission Hill Middle School will participate in fabrication through their art classes, and Santa Cruz High School students will be invited to participate in the project to earn their community service graduation requirement. Kathleen is a 21-year veteran art teacher with SCCSD and has the connections to encourage public school student participation. “Growing Up Sanat Cruz” is a publication that will reach the private school communities. In keeping with their shared vision of uplifting young artists, CA&E will seek out 1-2 young artists who reside near the work site to work as paid assistants.

CA&E will closely supervise the cohesive application of the tesserae (mosaic pieces).

All tesserae cutting will be done with hand tools. Safety guidelines and studio rules will be reviewed with every participant, and a safety waiver, both for CA&E and for the City, will be signed before volunteers are permitted to assist. Safety equipment will be provided, a first aid kit will be on hand. Community members who do not follow safety protocols after repeated instructions or those who are disruptive will be asked to leave Community fabrication of the mosaics will take approximately 3,300 hours of labor.

Depending on the amount of community engagement, this could take 22-26 weeks.

Phase 3 Installation
CA&E will coordinate with the City on scheduling, permits, and safety measures to ensure the safety of the installers, pedestrians, and vehicles during installation. Two CA&E staff members will supervise and assist three union tile setters who will install and grout the mosaics over a period of 5 days.

18.9 Materials to be used in the installation:

Laticrete Water Barrier
Laticrete Thin-Set
Laticrete Grout
Laticrete Sealer
Timeline
Leadership meeting CA&E Staff and City Representatives meet to discuss communication protocols,
confirm calendar dates, sign contracts, and
discuss lease options.

July 1
Design RFQ Collaboration with City Arts Commission to
design and publish an RFQ
July 10
Leadership meeting Revenw RFQ Submissions, choose three artist finalists
July 28
Design Forum #1 Community Forum: Project, themes, and 3 Artists introduced. Solicit community input
for images to narrate the themes.

July 31
Design Forum #2 Three artists present their concepts to the public. Pubic input collected.

August 14
Leadership meeting Review Concepts and community input, choose the Finalist Artist. Discuss any
calendar changes and logistics around the
fabrication location.

August 18
Design Forum #3 Public reveal and feedback session for the design by the Finalist Artist.

August 28
Leadership meeting City Representatives provide CA&E Staff with City feedback for the artist. Discuss
any calendar changes and logistics around
the fabrication location.

September 2
Design Forum #4 Final Artwork presented ot the public, last opportunity for suggested changes
September 11
Leadership meeting CA&E consults with City Representatives about the Arts Commission application.

September 12

18.10 Arts Commission
Meeting
CA&E and Lead Artist make a presentation
to the Arts Commission.

September 17
City Council
Meeting
CA&E and Lead Artist make a presentation
to the City Council. (If needed)
Studio Set-up September 2nd
Fabrication All approvals are final, fabrication begins September 20th Leadership meeting CA&E presents fabrication progress. Social Media progress reviewed.

November 13
Leadership meeting CA&E presents fabrication progress.

Calendars are consulted for installation
planning.

January 15
Installation
Scheduling
CA&E, City Representative, Scaffolding and
Installation Team
Late January
Installation Weather dependant Mid February
Budget Estimate
$188,204
Please see the Excel spreadsheet with this Link
References
In this section, provide the following:

1. City of Watsonville: “Watsonville Brillante” and “COVID Memorial” “Watsonville Brillante” 12,500 square feet of mosaics covering the Civic Parking Garage. 2.2 Million June 2019- October 2024, Project Owner was Community Arts & Empowerment, finished mosaic property of the City of Watsonville. Kathleen Crocetti, then and current Executive Director of Community Arts & Empowerment, Studio managers Susanne Brubeck and Alicia Flores-Rocha.

Subcontractors: Rinaldi Tile and Marble: Installers, and Elite Scaffold. “COVID Memorial” Free-standing mosaic butterfly. $40K May 2023-Septemmber 2022, Project Owner was Community Arts & Empowerment, finished mosaic property of the City of Watsonville. Kathleen Crocetti, then and current Executive Director of Community Arts & Empowerment, Studio managers Susanne Brubeck and Alicia Flores-Rocha. Subcontractors: Rinaldi Tile and Marble: Installers.

18.11 City Council

AGENDA REPORT
DATE: 06/05/2025
AGENDA OF: 06/24/2025
DEPARTMENT: Economic Development and Housing
SUBJECT: Downtown Play and Paseos Project – Conceptual Design (EDH) LOCATION: District 4
RECOMMENDATION: Motion to:
1) Accept the staff recommendation for landscape and paseo improvements, and authorize and direct staff to proceed with Phase 2 of the Downtown Play and Paseos Project, including contracting with SWA Landscape Architects to prepare construction plans and specifications within the approved budget (ED IIG Parks and Paseos - c512402); together with execution of any necessary actions and documents; and
2) Approve the CEQA determination contained in this agenda report. The Council’s action is exempt from CEQA under Section 15262 – Feasibility and Planning Studies, Sections 15301 – Existing Facilities, and 15304 – Minor Alterations to Land.

BACKGROUND: The Downtown Play and Paseos Project (ED IIG Parks and Paseos - c512402) aims to revitalize Downtown by transforming several Downtown service lanes and alleys into a network of pedestrian friendly public spaces with multiple amenities. The Project also proposes enhanced wayfinding, installing playful features, and artistic elements to help connect Pacific Avenue foot traffic with emerging commercial areas along Cedar Street and other major side streets. The Project builds off the recent Downtown recovery and revitalization work completed by Parks and Recreation during implementation of the Downtown Site Furnishings Standards (“Downtown Standards”).

The Downtown Standards were prepared by RRM Design Group in collaboration with City staff and with public outreach through pop-ups, online engagement, and stakeholder meetings with the Downtown Association (DTA) and local businesses. The Downtown Standards aim to create a more cohesive and attractive Downtown, while standardizing maintenance for efficiency. In addition to replacing and refinishing Downtown furnishings, public outreach identified a community desire for more car-free public spaces, shaded areas and landscaping, interactive art, events, performance space, and outdoor dining. To support these, the Downtown Standards proposed that additional furnishings like interactive art and musical features, games, and playful elements be added as resources become available.

19.1 Initial Downtown revitalization work was completed in 2024 and replaced major furnishings like benches, trash receptacles, and refinished light poles, bollards, kiosks, and other Downtown fixtures. Most notably, work transitioned many features from the classical forest green to the now familiar Las Palmas Blue color; however, more playful elements of the Downtown Standards could not be delivered within the City’s available budget.

The opportunity to bring the Downtown Play and Paseos vision with these enhancements to reality is the result of a successful partnership with For the Future Housing and Echelcon (collectively, “Developer”) on the Pacific Station Project. In 2021, the City was awarded roughly $21 million from the state Infrastructure and Infill Grant (IIG) Program for public infrastructure throughout Downtown supporting affordable housing development at and around Pacific Station.

Much of this funding supports the new Santa Cruz METRO transit center at Pacific Station, as well as transportation improvements along Front Street and Downtown stormwater improvements. Due to efficiencies achieved by the Developer, budget savings have allowed the City to increase the amount of grant funds available for Downtown public spaces. It is now anticipated that between $3-4 million can be allocated to upgrade many Downtown Paseos, streetscape, and the farmers market plaza area, while additional funding is earmarked to support connectivity improvements at the Riverwalk and near Pacific Station.

The Downtown Play and Paseos Project is now moving forward for implementation to stay within the IIG performance timeline. In November 2024, Economic Development and Housing (EDH) hired SWA Landscape Architects (SWA) through the City’s on-call contract to lead in reimagining Downtown through targeted interventions. SWA is a globally renowned and sustainably focused design firm based in San Francisco with a track record of creating dynamic and well-loved destinations like the Chase Center entertainment district, Santana Row, the San Diego Embarcadero, and more.

Adding to outreach conducted for the Downtown Standards, EDH and SWA have continued the City’s collaboration with Downtown businesses and the DTA. Three collaborative review sessions from February through May 2025 have helped refine conceptual plans for Downtown alleys to transform them into people-first paseos. Meanwhile, opportunity sites and ideas have been identified in and around Pacific Avenue and adjoining streets to create a more dynamic and family-friendly environment with enhanced wayfinding to promote commerce.

More information about the Downtown Play and Paseos Project can be found online at:
https://www.cityofsantacruz.com/government/city-departments/downtown-play-and-paseosproject DISCUSSION: Downtown Santa Cruz is changing, and more than 1,600 housing units are either being permitted, under construction, or have been completed within the last three years; roughly 35% of these are deed-restricted affordable housing.. More than 90% of residents in these new affordable units also benefit from the City’s local preference, meaning new, permanent, and affordable homes for long-time Santa Cruzans. Many of these new homes are larger two and three-bedroom family units; bringing a whole new generation who will grow up Downtown and will redefine its culture and sense of place with local roots.

While we are often focused primarily on buildings themselves, it is the spaces inside that are useful to people and the outdoor places between them where community happens. The Downtown Play and Paseos project leans into this concept and builds upon other public spaces

19.2 being developed along the Riverwalk, at Pacific Station, and the recently completed Cathcart Paseo, to deliver a more connected and human-centered Downtown.

The Downtown Recovery Plan, as amended, developed in the wake of the Loma Prieta earthquake, has long envisioned service lanes and alleys as dynamic multi-use spaces that prioritize pedestrian activity while preserving their functional use. Core goals of this Project are to activate long forgotten alleys into these inviting places of common experience, to address existing infrastructure issues, attract and support local businesses, and to promote a healthy and enriching environment for residents and visitors of all ages.

The Project focus areas include several existing alleys, Pacific Avenue and major streets downtown, and phase 1 improvements supporting the Farmers’ Market at their new location in Lot 16. Themes and specifications captured in this project are applicable throughout the broader downtown as new pedestrian connections and existing alleys are upgraded alongside development.

Specifically, the Project engages the following Downtown locations with clear themes, updated lighting, and improvements, as described below:
• Plaza Lane – Children’s Lane - Art inspired, playable sculpture feature, synthetic turf area, and movable block seating.
• Commerce Lane – Fitness Lane – Outdoor parcourse or fitness equipment, sprint track markings, urban basketball court, and sports target wall (i.e. soccer and/or racket sports). • Pearl Alley – Outdoor dining – Tree planting, greening, outdoor seating areas w/ movable furniture.
• Frazier Lewis Lane – Event space – Utility access, dynamic lighting, decorative pavement treatment.
• Pacific Avenue & major side streets – Wayfinding and play – Decorative and interactive play features and art inspired sculptures, pavement marking, wayfinding features to promote commerce and downtown activities.
• Pet exercise circuit – Designation of a pet friendly path of travel including a mini dog run at Scope Park, distributed self-cleaning pet relief areas, and wayfinding. • Market Plaza – Phase 1 improvements to support the Farmers’ Market relocation to Lot 16, Church and Cedar Streets.

A formal presentation of the above concepts and approach will be presented to Council during the June 24 meeting. Staff selected these concepts and approaches in collaboration with the DTA and engaged businesses and in consultation with the landscape architect team. Final details and improvements will be refined throughout the design development phase of the Project and opportunities will be sought to gather additional feedback on wayfinding motifs and iconic imagery for artistic play sculptures and fixtures. Some ideas suggested to date include distinctive local wildlife like the banana slug, Otter 841, and monarch butterflies, as well as cultural themes including surfing, skating, and biking, and even historical figures like the Rainbow Dancer who once frequented the old Cooper House. A portal for submitting and commenting on ideas will be included on the project webpage.

Staff recommends continuing to contract with SWA through the City’s on-call contract for the next phase of the project, including further development of designs and preparation of construction documents and specifications and within the existing approved project budget.

19.3 Once complete, staff will return to City Council for approval of plans and authorization to bid the Project.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: The staff recommendation would not result in any immediate changes to the physical environment and is exempt from CEQA under Section 15262 – Feasibility and Planning Studies. Future work anticipated after discretionary approval of the work recommended under the proposed actions would similarly be exempt from CEQA under sections 15301 – Existing Facilities and 15304 – Minor Alterations to Land. Specifically, the Project would restore degraded public spaces and landscaping, to include more resilient landscaping and infrastructure. Recommended actions and the anticipated implementation work is also consistent with the Final Environmental Impact Report (EIR) adopted for Amendments to the Downtown Recovery Plan (certified Nov. 15, 2017), including enhancement of Downtown service alleys and streetscapes.

HEALTH IN ALL POLICIES (HiAP): The proposed project is intended to improve public safety by reducing illegal and illicit activity within the project areas, as well as promoting public health and social connection. Improvements proposed will provide enhanced public space for children and residents of all ages to spend time outdoors downtown and participate in active pursuits, fitness, and play.

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: Proposed improvements are funded in the c512402, IIG Parks and Paseos project and are planned to include drought tolerant plant and tree species, as well as durable materials that require limited maintenance. Downtown maintenance is currently provided by Parks and Recreation, the Public Works Parking Division, and limited contractor services supporting waste removal, tree work, and power washing. Maintenance is partially funded through proceeds of the Downtown Parking District.

Prepared By:

David McCormic
Asset and Development
Manager
Submitted By:

Bonnie Lipscomb
Deputy City Manager
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

None.

19.4 City Council

AGENDA REPORT
DATE: 06/05/2025
AGENDA OF: 06/24/2025
DEPARTMENT: Economic Development and Housing
SUBJECT: Resolution to Authorize the City Manager to Finalize and Execute Agreements, in a Form Approved by the City Attorney, to Facilitate the Financial Closing Necessary for the Construction of the Downtown Library and Affordable Housing/Downtown Library Mixed-Use Project (DLAHP or DTLMU) Developed by Eden Housing, Inc. and For the Future Housing Inc (Affordable Housing Developers) (EDH)
LOCATION: District 4
RECOMMENDATION: Motion to adopt a resolution authorizing the City Manager, or their designee, to:
1) Execute and record a final Parcel Map for 119 Lincoln Street dividing the City of Santa Cruz's (City) existing property into two separate legal parcels (Affordable Housing/ Residential Components parcel and City Components parcel) and execute and record in the official records a Reciprocal Easements/Covenants, Conditions and Restrictions (CC&Rs) Agreement governing the joint use and operation of the parcels and the separate projects constructed on each parcel in a form approved by the City Attorney.
2) Execute two ground leases to facilitate development of the Downtown Library Affordable Housing Project (DLAHP or DTMLU): Lease 1, a short-term lease, for Parcel 1 to develop and construct a Parking Garage, Library, and Commercial Retail Space (collectively, City Components) to be conveyed by the lessee and, thereafter, owned by the City, following completion of construction of the City Components; and Lease 2, a long-term lease, for Parcel 2 to develop, construct, own, and operate 123 affordable housing units (plus 1 manager's unit), and a daycare center (collectively, Residential Components) in a form approved by the City Attorney.
3) Finalize and execute an Improvements Agreement and any other additional required documents with the affordable housing developers Eden Housing, Inc. and For the Future Housing, Inc. (and/or their affiliates) to identify terms and commitments and conditions necessary to develop, construct and fund the City Components of the DLAHP in a form approved by the City Attorney.

20.1 4) Execute loan documents and regulatory agreements as required for the City's affordable housing funding sources in an amount not to exceed $7,255,621 for the Residential Components based on previous funding commitments, in forms approved by the City Attorney. 5) Execute and negotiate any additional requested documents as required by the lender(s) and investor for the Residential Components, consistent with approved project terms, in a form approved by the City Attorney, to facilitate the financial closing for the DTLMU project, and the subsequent construction of the DTLMU project.

BACKGROUND: Efforts leading to the proposed development of the subject site began over a decade ago, with the Santa Cruz Public libraries initiating a comprehensive facilities master planning process, culminating in a Library Master Plan in 2014. Between 2014 and 2021, numerous City Council advisory and subcommittees reviewed and provided guidance for the future mixed-use project. Ultimately, based on exhaustive public outreach and input, the City Council selected the option of building a new library on the downtown lot between Lincoln and Cathcart streets, commonly known as Lot 4, over rehabilitating the existing downtown library located on Church Street. After multiple public meetings and hearings the City Council approved the Downtown Library Affordable Housing Project (“DLAHP" or "Project”), a mixed-use project including 123 units of affordable housing with a mix of affordability for households with an average median income that does not exceed 60% of area median income for our area and one manager’s unit.

In 2021, the City released a request for proposal (“RFP”) to solicit an affordable housing developer partner and selected a joint proposal from For The Future Housing, Inc. and Eden Housing, Inc. (collectively “Developer”) to build the Project. For the Future Housing and Eden Housing partnered to form DTLMU Investors L.P., a California limited partnership, as a joint venture to serve as the legal entity responsible for executing loan agreements and leases.

On March 14, 2023, City Council approved several entitlements related to the DLAHP, located at 113 & 119 Lincoln Street to develop 123 units of affordable housing and one manager’s unit, a new downtown branch library, parking garage, childcare center, and commercial/retail space uses. The permits approved included a nonresidential demolition authorization permit, special use permit, heritage tree removal permit, design permit, density bonus request, and lot line adjustment. The City owns both the parcels at 119 Lincoln Street (APN 005-141-21) and 113 Lincoln Street (APN 005-141-11).

The City and/or the Project have received funding from a variety of state and local sources, including the State Housing & Community Development’s Local Housing Trust Fund (LHTF) ($3.805 million),the City’s Affordable Housing Trust Fund ($1.75 million), Central Coast Community Energy (3CE) Grant ($240,000.00), an Affordable Housing Sustainable Communities (“AHSC”) award ($33.5 million), a Regional Early Action Planning Grant (REAP

2.0) award ($169,380.00), a US Department of Housing and Urban Development (HUD) Community Housing Development Organization (CHDO) HOME Investment Partnerships Program (HOME) award ($1,644,119.00), a Public Housing Local Allocation (PLHA) ($56,502.00) and a Fiscal Year 2023 federal grant of ($2 million). Per State funding requirements, the City needs to enter into a lease(s) with the Developer to use the awarded funds and to apply for any future funds.

20.2 On March 28, 2023, City Council Resolution No. NS- 30,125 was adopted authorizing the City Manager to enter into lease(s) and authorizing the Economic Development and Housing Director to execute any amendments or documents needed thereto of a non-substantive nature, in forms approved by the City Attorney, for real property located at 119 Lincoln Street (APN 005-141-21) between the City of Santa Cruz and DTLMU Investors, L.P. (a California Limited Partnership), and/or or its affiliate(s), for the previously approved DLAHP on the site. The City then entered into an Option to Lease Agreement for the purposes of applying for the California Strategic Growth Council (SGC), Round 7 State Affordable Housing and Sustainable Communities Grant Program (AHSC) grant as a co-applicant with the Developer and the Santa Cruz Metropolitan Transit District (METRO) along with any future grant opportunities. The Project received an AHSC award for $33,502,820 million on September 1, 2023.

Following acquisition of 113 Lincoln Street, and to maintain compliance with funding awards inclusive of the AHSC award, on May 14, 2024, City Council Resolution No. NS-30,331 was adopted ratifying the Amended and Restated Option to Lease Agreement, authorizing the City Manager to enter into lease(s) once terms of the Option Agreement have been satisfied by the parties; and authorizing the Economic Development and Housing Director to execute any amendments or documents needed thereto of a non-substantive nature, in forms approved by the City Attorney, for real property located at 119 Lincoln Street (APN 005-141-21) and 113 Lincoln Street (APN 005-141-11) between the City of Santa Cruz and DTLMU Investors, L.P. (a California Limited Partnership), and/or or its affiliate(s), for the previously approved DLAHP.

On December 11, 2024, the Affordable Housing Developers further secured tax credits and bonds through the California Tax Credit Allocation Committee as their final funding source to move forward with construction. The financial closing is targeted for the end of June to allow for funds to be released to start construction.

DISCUSSION: In order to satisfy the various requirements for the different funding sources, the approach to the legal structure to support construction required new authority to move forward on additional agreements not originally contemplated. In particular, the following actions will need to be taken:

1. Record and execute a final Parcel Map (Attachment 4 “Draft Parcel Map”) for 119 Lincoln Street dividing the City's existing property into two separate legal parcels (Residential Components parcel and City Components parcel) and execute and record in the official records a Reciprocal Easement Agreement governing the joint use and operation of the parcels and the separate projects constructed on each parcel.

2. Execute two ground leases to facilitate development of the Downtown Library Affordable Housing Project (DLAHP or DTLMU):
a. Lease 1, a short-term lease for Parcel 1, to develop and construct a Parking Garage, Library, and Commercial Retail Space (collectively, City Components) to be conveyed by the lessee, and, thereafter, owned by the City, following completion of construction of the City Components. This lease will follow the final form of the Housing parcel lease with a shorter term.
b. Lease 2, a long-term lease for Parcel 2, to develop, construct, own, and operate 123 affordable housing units (plus 1 manager's unit), and a daycare center (collectively, Residential Components) (Attachment 2 “Draft Ground Lease Housing Parcel”)

20.3 3. Execute an Improvements Agreement (Attachment 3 “Draft Improvements Agreement”) outlining the terms and commitments for Parcel 1 of the City Components. Particularly for use of Measure S Bonds and Parking Revenue Bonds as these sources are unable to be bundled as part of the housing loan agreements and must remain in City’s control to be spent as costs are incurred for their specific uses.

4. Execute loan documents and regulatory agreements as required for the City's affordable housing funding sources for the Residential Components based on previous funding commitments as described above for AHSC, HOME, LHTF, AHTF, PLHA sources.

In summery, staff recommend that the City Council adopt a resolution authorizing the City Manager, or their designee, to finalize, execute and record the necessary agreements in a final form approved by the City Attorney allowing the project housing financing to close and release funds. This will be the final action needed to mobilize and commence construction of the first Phase of the DLAHP.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: On June 26, 2012, City Council certified the CEQA Environmental Impact Report for the City’s General Plan 2030 (“General Plan EIR”). On November 14, 2017, the City Council certified a supplemental CEQA Environmental Impact Report for amendments to the Downtown Plan (“Downtown Specific Plan EIR”) to address additional environmental impacts specific to downtown development. Following these certifications, on March 16, 2023, the City of Santa Cruz filed a CEQA Notice of Exemption (“NOE”) for the Downtown Library and Affordable Housing Project with both the Clerk of the Board for Santa Cruz County and the Office of Planning and Research. This NOE affirmed that the Project is exempt from further environmental review under CEQA. The approval of this Resolution is consistent with the approvals for the Project, including the bases for determining the entirety of the Project activities are categorically exempt from CEQA.

HEALTH IN ALL POLICIES (HiAP): HiAP is a collaborative approach to improving the health of all people by incorporating health considerations into decision-making across sectors and policy areas. HiAP is based on 3 pillars: equity, public health, and sustainability. The goal of HiAP is to ensure that all decision-makers are informed about the health, equity, and sustainability impacts of various policy options during the policy development process. The DLAHP supports the pillar of equity by providing a destination public facility, childcare, commercial facility, and affordable residential rental units on a site in the City’s downtown urban core, in an area that is improved with sidewalks and street trees near public transportation, commercial goods and services, and recreational areas.

With the Project located downtown, it encourages a sustainable and healthy lifestyle by allowing residents to walk, cycle, and ride to the job center and commercial uses in the downtown vicinity. By providing 100% affordable rental apartments, this will not only help the City with a more sustainable supply of rental housing but will also help create a more inclusive equitable community.

FISCAL IMPACT:

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

2. This recommendation requires a budget adjustment: No

3. The recommendation creates an on-going expenditure commitment: No

20.4 FISCAL IMPACT DESCRIPTION: There is no impact to the General Fund with the approval of the recommended actions. Once the development is complete, significant enhancement to the downtown urban core will be achieved including improved sidewalks and bikeways adjacent to the project, a childcare facility, new commercial spaces, replacement parking supply, a new modernized accessible Downtown Library, and much-needed affordable housing; achieving many policy goals of the City Council to enhance the vitality and economy of downtown. The City will receive increased revenue from future commercial tenants in the Project and the Downtown Parking District will receive a revenue stream from the managed parking supply.

Prepared By:

Brian W. Borguno
Development Manager
Submitted By:

Bonnie Lipscomb
Deputy City Manager
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. RESOLUTION.DOCX

2. DRAFT GROUND LEASE HOUSING PARCEL.PDF

3. DRAFT IMPROVEMENTS AGREEMENT.PDF

4. DRAFT PARCEL MAP.PDF

20.5 RESOLUTION NO. NS-30,XXX

RESOLUTION FOR THE CITY COUNCIL OF THE CITY OF SANTA CRUZ

AUTHORIZING THE CITY MANAGER TO NEGOTIATE AND EXECUTE FINAL

AGREEMENTS, IN A FORM APPROVED BY THE CITY ATTORNEY, AND TO TAKE

CERTAIN ACTIONS TO FACILITATE THE FINANCIAL CLOSING NECESSARY FOR

CONSTRUCTION OF THE DOWNTOWN LIBRARY AFFORDABLE HOUSING/

DOWNTOWN LIBRARY MIXED-USE PROJECT
The City Council of the City of Santa Cruz, a California Municipal Corporation hereby consents to, adopts and ratifies the following resolution:

WHEREAS, the City of Santa Cruz (the “Agency” or the “City”) recognizes the critical need for affordable housing within the City to address the housing needs of persons and families of low or moderate income; and
WHEREAS, on July 20, 2020, the City issued a Request for Proposals to redevelop certain Cityowned parcels located on the north side of Cathcart Street along Cedar Street and south of Lincoln Street previously used as City Public Parking Lot #4 (the “Property”), as more particularly described in the “Library Mixed Use Project – Request for Proposals for Owner’s Representative;” and
WHEREAS, on or about June 8, 2021, the City selected Eden Housing, Inc. and For the Future Housing (“Proposers”) after a competitive bidding process to develop the Downtown Library Affordable Housing Project (“DLAHP”) also referred to as the Downtown Library Mixed Use project(“DTLMU”) a proposed new public library facility and affordable housing residential development, including a parking garage, a childcare facility, and commercial spaces (the “Project”) at the Property. The Proposers formed Eden Cedar Street Development, LLC and DTLMU Limited Partnership, (“Tenants”) to manage and oversee the development; and WHEREAS, on March 14, 2023, the City approved Resolution No. NS-30,120, granting entitlements for the Project, including findings that the Project is exempt from environmental review under the California Environmental Quality Act, and approving a nonresidential demolition authorization permit, special use permit, design permit, lot-line adjustment, and density bonus request, and upholding approval of a heritage tree removal permit; and WHEREAS, pursuant to City Resolution No. NS-30,120, the City approved the Project, including the demolition of the existing parking lot at the Property and construction of the following improvements on the Property: (i) one hundred twenty three (123) units of affordable housing and one (1) unrestricted manager’s unit (“Affordable Housing Component”); (ii) a childcare facility comprising one thousand three hundred thirty-three square feet (1,333 sq. ft.) of indoor space and five hundred eighty-six square feet (586 sq. ft.) of outdoor space (the “Community Service Component”) (the Community Service Component and the Affordable Housing Component are collectively referred to as the “Residential Components”); (iii) a library facility of approximately thirty-eight thousand sixty-nine square feet (38,069 sq. ft.) on the ground

20.6 RESOLUTION NO. NS-30,XXX
2 floor of the Project (the “Library Component”); (iv) a parking garage for approximately two hundred forty-three (243) spaces (the “Parking Component”); and (v) a commercial component comprised of approximately nine thousand seven hundred thirty-two square feet (9,732 sq. ft.) (the “Commercial Component”) (the Commercial Component, the Library Component and the Parking Component are, collectively referred to as the “City Components”); and WHEREAS, the City intends to record a parcel map subdividing the Property into two air parcels (“Parcel 1” for the City Components, and “Parcel 2” for the Residential Components) necessary for the separate ownership of the City Components and Residential Components along with an executed and recorded Reciprocal Easements/Covenants, Conditions and Restrictions (CC&Rs) Agreement; and
WHEREAS, the Zoning Administrator has determined that pursuant to Santa Cruz Municipal Code Section 23.04.060, that a tentative parcel map is not required for conformance with the Subdivision Map Act and impracticable for the Project given its public serving use; t he timing of Project funding requires approval of the subdivision by July 21, 2025; the need for a condominium map was identified only recently; and the scheduling of a public hearing on a tentative parcel map could preclude the Project from meeting the funding deadline; and WHEREAS, the subdivision can be processed through a parcel map without a tentative parcel map, consistent with the Subdivision Map Act, which does not independently require a tentative map for this type of conveyance, and which exempts parcel maps for transfers involving a governmental agency under Government Code § 66428(a)(2); and WHEREAS, the City intends to enter into two ground leases, one lease for the purposes of developing and constructing the City Components and a separate lease for the Residential Components; and
WHEREAS, the Ground Lease for Parcel 1 relating to the City Components and the duration of such lease will be sufficient for a period of time to allow the construction of the City Components by the Tenant, and will terminate upon the transfer of the completed City Components to the City for the City’s long term ownership and operation, on the terms and conditions set forth in the City Components Ground Lease, along with an Improvements Agreement to identify terms, and commitments to develop, construct and satisfy the conditions necessary for the City to fund the City Components of the DLAHP; and
WHEREAS, the Ground Lease for Parcel 2 for Residential Components provides that the Tenant will retain ownership and control of the Residential Components for a total lease term of sixty five (65) years; and imposes use restrictions to provide affordable housing under terms and conditions the City deems best suited to the provision of such housing in compliance with Government Code section 37364; and
WHEREAS, the Tenants are near completion of final construction documents and plans for the Project, readying for Building Permit issuance.

20.7 RESOLUTION NO. NS-30,XXX
3 WHEREAS, the City obtained the Project funding through Measure S Library funds ($20 million), issued Parking Revenue Bonds ($21.6 million), the City’s Economic Development Trust Fund ($1 million), and a Congressional Grant ($2 million) total of $44.6 million to fund the construction of the City Components by the Tenant under the City Components Ground Lease, on the condition that the City Components are to be owned and operated by the City after completion of the Project; and
WHEREAS, the affordable housing developer secured funding sources for the Residential Components, and such funding requires the closing to occur no later than July 2025; and WHEREAS, the City intends to support the affordable housing developer in their financial closing by executing final agreements as required; and

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA CRUZ DOES HEREBY FIND, DETERMINE, RESOLVE AND DIRECT AS FOLLOWS:

Section 1. Authorize the City Manager, or their designee, to:

1. Execute and record a final Parcel Map for 119 Lincoln Street and a Reciprocal Easements/CC&Rs Agreement governing the joint use and operation of the parcels and the separate projects constructed on each parcel in a form approved by the City Attorney.

2. Execute two ground leases to facilitate development of the DLAHP or DTMLU: Lease 1, a short-term lease, for Parcel 1 to develop and construct, City Components and Lease 2, a long-term lease, for Parcel 2 to develop, construct, own, and operate, Residential Components in a form approved by the City Attorney.

3. Finalize and execute an Improvements Agreement and any other additional required documents with the affordable housing developers Eden Housing, Inc and For the Future Housing, Inc. (and/or their affiliates) to identify terms and commitments and conditions necessary to develop, construct and fund the City Components of the Project in a form approved by the City Attorney.

4. Execute loan documents and regulatory agreements as required for the City's affordable housing funding sources in an amount not to exceed $7,255,621 for the Residential Components based on previous funding commitments, all in a form approved by the City Attorney.

5. Execute and negotiate any additional requested documents as required by the lender(s) and investor for the Residential Components, consistent with approved project terms, in a form approved by the City Attorney, to facilitate the financial closing for the DTLMU project, and the subsequent construction of the DTLMU project.

20.8 RESOLUTION NO. NS-30,XXX
4 PASSED AND ADOPTED this 24th day of June, 2025 by the following vote:

AYES:

NOES:

ABSENT:

DISQUALIFIED:

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

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GROUND LEASE
(Downtown Affordable Housing Development Project)
This Ground Lease (Downtown Affordable Housing Development Project) ("Lease") is made and entered into as of June ____ 2025, by and between the City of Santa Cruz, a California municipal corporation and charter city ("Landlord"), and DTLMU Investors, L.P., a California limited partnership ("Tenant"), who agree as follows:

ARTICLE 1. PROPERTY AND BACKGROUND

1.1 Purpose. The purpose of this Lease is to develop an affordable housing project on the Property (defined in Section 1.3) pursuant to the conditions of this Lease. Pursuant to Resolution No. NS-30,120, the Landlord is entering into this Lease with Tenant for the construction of the improvements on the Property, including: (i) one hundred twenty four (123) units of affordable housing as set forth in this Lease, plus one (1) manager's unit ("Affordable Housing Component"); and (ii) a childcare facility consisting of approximately one thousand three hundred thirty-three square feet (1,333 sq. ft.) of indoor space and five hundred eighty-six square feet (586 sq. ft.) of outdoor space (the "Community Service Component", each a "Component", and together with the Affordable Housing Component, the "Project"). Pursuant to a separate ground lease (the "Library Lease") between Landlord and Eden Cedar Street Development, LLC, a California limited liability company (the "Library Tenant"), the City has leased adjacent parcels to the Library Tenant, and the Library Tenant shall cause the construction of: (1) a library component of approximately thirty-eight thousand sixty-nine square feet (38,069 sq. ft.) on the ground floor of the building (the "Library Component"); (2) a parking garage for approximately two hundred forty-three (243) spaces (the "Parking Component"); and (v) a commercial component comprised of approximately nine thousand seven hundred thirty-two square feet (9,732 sq. ft.) (the "Commercial Component", together with the Library Component, Parking Component, the "City Components"). Following the completion of construction of the City Components, the City Components shall be conveyed by the Library Tenant to the City, pursuant to the Library Lease, and, thereafter, the Library Lease shall terminate, and the City shall be the owner of the City Components.

1.2 Parties.

A. Landlord. Landlord is a municipal corporation and owns the Property defined herein. This Lease shall not be construed as a regulatory approval or a waiver of Landlord's right to act in a regulatory capacity and therefore at times refers to the "City" acting in a regulatory capacity.

B. Tenant. Tenant is a California limited partnership. Eden DTLMU, LLC, a California limited liability company, is the managing general partner of the Tenant. Tenant will develop and operate the Project in accordance with this Lease, subject to the assignment and subletting provisions set forth in Article 15 herein. Notwithstanding any other provision of this Lease, Tenant and, its general partner(s), shall remain jointly and severally responsible for the duties and responsibilities of the Tenant under this Lease.

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1.3 Property. Landlord owns the real property commonly known as 113 Lincoln Street and 119 Lincoln Street in Santa Cruz, California (the "Site"). Prior to the Effective Date, the City caused the subdivision of the Site pursuant to that certain map entitled "Parcel Map Santa Cruz Library" and filed in the official records of the County of Santa Cruz (the "Official Records") on ______________, 2025, as map ___________ (the "Map"). The portion of the Site leased to the Tenant is referred to as the "Property", and the legal description of the Property is attached hereto as Exhibit A ("Property"). The Property is currently comprised of assessor's parcel numbers (APN) 005-141-011 and 005-141-021.

1.4 Easements. In conjunction with the filing of the Map, the City, as declarant, recorded that certain [reciprocal easement agreement] dated as of ___________, 2025, and recorded in the Official Records on ______________, 2025, as document ______________ (the "REA") providing for the establishment of mutual and reciprocal rights and rights of ingress and egress, parking, security and other like matters for the purpose of the ongoing operation of the City Components and the Project, on the Site, in accordance with this Lease.

1.5 Improvements. Pursuant to the Project's conditions of approval accepted by Tenant, the Tenant is responsible for the improvements which shall be designed, developed and constructed by Tenant: (i) in accordance with the Scope of Development attached hereto as Exhibit C and incorporated herein by this reference; and (ii) in substantial compliance with the plans, drawings and documents submitted by Tenant to Landlord for development of the Project, as reasonably approved by Landlord ("Construction Documents"), which are listed on Exhibit G.

1.6 Lease of the Property. For and in consideration of the payment of rentals and the performance of all of the covenants and conditions of this Lease, Landlord hereby leases and demises to Tenant, and Tenant hereby leases and hires from Landlord, the Property, for the term and upon the covenants and conditions set forth herein. The Tenant acknowledges and understands that the Property will be leased to the Tenant for purposes of development pursuant to this Lease and not for speculation in undeveloped land.

ARTICLE 2. CONDITIONS TO EFFECTIVENESS OF LEASE

2.1 Conditions Precedent. This Lease shall become effective upon the satisfaction or waiver by the benefited party of each of the conditions set forth below within the time stated therefor in the Schedule of Performance, attached hereto as Exhibit D and incorporated herein by reference. Landlord and Tenant mutually acknowledge and represent that the conditions set forth in Sections 2.2 and 2.3 have been or will be satisfied at the time of the execution of this Lease.

2.2 Conditions for the Benefit of the Landlord. The effectiveness of this Lease and the Tenant's right to possession of the Property is subject to the following conditions, which are for the Landlord's benefit and which shall be fulfilled or waived prior to the term of this Lease commencing or possession of the Property being delivered to Tenant:

A. The Tenant (and/or the Library Tenant) has obtained from the City and any other governmental agencies having jurisdiction the required land use approvals, entitlements and permits (other than building permits) necessary for the development of the Property.

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B. The Tenant has, or in conjunction with the Library Tenant have, submitted a complete application to the City for a building permit for the development of the Property.

C. The Tenant has submitted to the Landlord evidence reasonably satisfactory to the Landlord that the Tenant has obtained firm and binding commitments for the equity and construction loan financing necessary for all aspects of the development of the Property, including, without limitation, allocations for any mortgage revenue bonds and/or tax credits, commitments for any private mortgage financing and final approvals for any other state or local funding sources.

D. The Tenant has delivered to the Landlord a copy of the fully executed Property Management Agreement for the Project required by Section 7.8. The Property Management Agreement shall be with a property management agent or agents which possess sufficient financial resources and operating history that the Tenant can obtain the necessary financing and equity for the development of the Improvements, and otherwise be approved by the Landlord in its reasonable discretion.

E. The Tenant has delivered to the Landlord a copy of the fully executed construction contract for the construction of the Project.

F. The Tenant has completed the relocation of any tenants or occupants on the Property, if any, in accordance with the requirements of law.

G. The City is duly authorized to execute this Lease under all applicable laws, including but not limited to compliance with the Surplus Land Act (Cal. Gov. Code Section 54220 et seq.) (the "SLA"), and the approval of the Lease is not subject to any written claim or litigation regarding compliance with the SLA.

H. The Library Lease has been executed by the City and the Library Tenant and the Library Lease is in full force and effect.

2.3 Conditions for the Benefit of the Tenant. This Lease shall become effective and the obligation of the Tenant to take possession of the Property is subject to the following conditions which are for the Tenant's benefit and which shall be fulfilled or waived prior to the term of this Lease commencing or Tenant being required to take possession of the Property:

A. The Tenant has obtained from the Landlord and any other governmental agencies having jurisdiction the required land use approvals, entitlements and permits (other than building permits) necessary for the development of the Property.

B. The Tenant has obtained firm commitments for the equity and construction loan financing necessary for all aspects of the development of the Property, including, without limitation, allocations for any mortgage revenue bonds and/or tax credits, as set forth in Article 19, commitments for any private mortgage financing and final approval for any other state or local funding sources.

C. A title insurance company acceptable to the Tenant is prepared to issue a leasehold policy of title insurance insuring that leasehold title to the Property is vested in the Tenant in the condition required by Section 4.1 of this Lease.

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2.4 Termination for Failure of Condition. In the event that there is a failure of one or more conditions described in Sections 2.2 or 2.3 that is not waived by the benefited party, the party for whose benefit the condition is established may terminate this Lease by written notice to the other party. In the event of such termination, neither party shall have any further rights or liability to the other under this Lease, except Tenant's obligations to pay costs to the City.

If the Commencement Date (as defined in Section 3.2) has not occurred and/or the Tenant has not taken possession of the Property on or before July 1, 2026, for any reason, this Lease may be terminated by either party upon written notice to the other party, provided the terminating party is not then in default of this Lease. In the event of such termination, neither party shall have any further rights or liability to the other under this Lease.

ARTICLE 3. TERM

3.1 Term. Unless terminated earlier in accordance with the provisions of this Lease, the initial term of this Lease shall be for a period of sixty-five (65) years. The term shall expire at 11:59 p.m. on the date which is the sixty-fifth (65th) anniversary of the Commencement Date (as defined in Section 3.2, below).

3.2 Commencement. The term of this Lease shall commence upon the fulfillment or waiver of the conditions set forth in Sections 2.2 and 2.3 and delivery of possession to Tenant ("Commencement Date"). Upon, or immediately following, the Commencement Date, Landlord and Tenant shall execute and record the Memorandum, as defined in Section 18.11 hereof, setting forth the Commencement Date of this Lease.

ARTICLE 4. CONVEYANCE OF LEASEHOLD TITLE TO THE PROPERTY

4.1 Conveyance of Leasehold Title to the Property.

A. Escrow; Title Insurance. The Landlord and Tenant shall open an escrow with First American Title Insurance Company, as escrow agent (the "Escrow Agent"), for the purpose of Tenant obtaining a leasehold policy of title insurance. The Tenant shall pay the premium for the title insurance policy and endorsements, including an owner's title insurance policy, in favor of the Landlord. The Landlord and the Tenant agree to execute and acknowledge for recording, the Memorandum as defined in Section 18.11 hereof, with the Tenant being responsible for the payment of the documentary transfer tax, if any, that may be due in connection with the recording thereof.

B. Condition of Title. At the time that the Landlord delivers possession of the Property to the Tenant, title shall be free and clear of all recorded liens, encumbrances, assessments, leases and taxes except easements of record and encumbrances that are consistent with this Lease and reasonably approved by the Tenant.

C. Delivery of Possession. Subject to Section 4.1.B. above, at the time that the Landlord delivers possession of the Property to the Tenant, the Property shall be conveyed free of any possession or right of possession by any person.

ARTICLE 5. RENT

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5.1 Base Rent. Commencing on the Commencement Date and during the term of the Lease, Tenant shall pay annual rent of ONE DOLLAR ($1) per year which may be paid in full for the term of the Lease in advance on the Commencement Date (the "Base Rent"). Base Rent shall be payable in arrears on each anniversary of the Commencement Date. Tenant may prepay all or any portion of the Base Rent at any time.

5.2 Intentionally Deleted.

5.3 Additional Rent. In addition to and not by way of limitation of Landlord's rights under specific provisions of this Lease, Landlord shall at all times have the right (at its sole election and without any obligation to do so) to advance on behalf of Tenant any amount payable under the terms hereof by Tenant, or to otherwise satisfy any of Tenant's obligations hereunder, provided that (except in case of an emergency calling for immediate payment) Landlord shall first have given Tenant no less than ten (10) business days' advance written notice of Landlord's intent to advance such amounts on behalf of Tenant, and Tenant fails to perform the act/make the expenditure prior to the expiration of such ten (10) business day period. No advance by Landlord shall operate as a waiver of any of Landlord's rights under this Lease and Tenant shall remain fully responsible for the performance of its obligations under this Lease. All amounts advanced by Landlord shall constitute "Additional Rent" under this Lease, shall be due and payable by Tenant to Landlord within five (5) business days of Tenant's receipt of an invoice from Landlord therefor, together with supporting documentation, and shall bear interest at the rate specified in Section 5.5, below from the date of advance until paid in full.

5.4 Net Lease. This Lease is a net lease and rent and other payments due and payable hereunder to or on behalf of Landlord shall be paid without notice or demand and, except as specifically provided for in this Lease, without offset, counterclaim, abatement, suspension, deferment, deduction or defense.

5.5 Late Payment of Rent. Any rent required under the terms of this Lease not paid when due shall bear interest at the lesser of twelve percent (12%) per annum, simple interest or the maximum rate allowed by law, from the date due.

ARTICLE 6. TAXES AND ASSESSMENTS

6.1 Personal Property Taxes. Tenant shall pay before delinquency all taxes, assessments, license fees and other charges ("taxes") that are levied and assessed against Tenant's personal property installed or located in or on the Property which become payable during the term of this Lease. On demand by Landlord, Tenant shall furnish Landlord with satisfactory evidence of these payments.

6.2 Real Property Taxes. Tenant shall pay all real property taxes, assessments and general and special taxes including, without limitation, possessory interest taxes ("real property taxes"), levied and assessed against the Property and all real property taxes and assessments levied against Tenant's interests in the Property during the term of this Lease. In the event Landlord receives a tax bill for the Property, Landlord shall notify Tenant of the real property taxes, and immediately on receipt of the tax bill, shall furnish Tenant with a copy of the tax bill. Tenant shall, semiannually, pay the real property taxes not later than the taxing authority's delinquency date. If

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at any time during the term of this Lease any authority having the power to tax, including, without limitation, any federal, state, county, city government or any political subdivision thereof (collectively, "taxing authority"), shall alter the methods and/or standards of taxation and assessment against the legal or equitable interests of Landlord in the Property or the Improvements located or constructed thereon, in whole or in part, so as to impose a monetary obligation on Landlord in lieu of or in addition to the taxes and assessments in existence as of the date of this Lease, such taxes or assessments based thereon, including, without limitation, (a) a tax, assessment, excise, surcharge, fee, levy, penalty, bond or similar imposition (collectively, "impositions"), on Landlord's right to rental or other income from the Property or as against Landlord's leasing of the Property, (b) any impositions in substitution or in lieu, partially or totally, of any impositions assessed upon real property prior to any such alteration, (c) any impositions allocable to or measured by the area of the Property or the rental payable hereunder, including, without limitation, any impositions levied by any taxing authority with respect to the receipt of such rental or with respect to the possession, leasing, operation, management, maintenance, alteration, repair, use or occupancy by Tenant or any subtenant of the Property or any portion thereof, (d) any impositions upon this lease transaction or any document to which Tenant is a party which creates or transfers any interest or estate in or to the Property (other than any transfer tax which may be due upon recordation of the Memorandum, as defined in Section 18.11), or (e) any special, unforeseen or extraordinary impositions which, although not specifically described above, can fairly be characterized as a real property tax or a substitute for real property tax, shall be considered as "real property taxes" for the purposes of this Lease. "Real property taxes" shall exclude, however, all general income taxes, gift taxes, inheritance taxes and estate taxes owed by Landlord.

6.3 Reserved.

6.4 New Assessments. If any general or special assessment or other governmental charge is levied on any business conducted on the Property, Tenant shall pay any such charge and shall have the right to vote or instruct the Landlord to vote in any election held in connection with the approval of such a charge. If any general or special assessment or other governmental charge is levied on the Property, Landlord shall not vote to approve the imposition of the general or special assessment or other governmental charge without the prior written consent of Tenant and its Investor Limited Partner and each Leasehold Mortgagee. If, despite Landlord's vote against such general or special assessment or other governmental charge, such charge, tax or assessment is imposed, then Landlord may elect to pay the assessment in full or allow it to go to bond. If Landlord pays the assessment in full, Tenant shall pay to Landlord each time a payment of real property taxes is made a sum equal to that which would have been payable (as both principal and interest) had Landlord allowed the assessment to go to bond. If Tenant instructs Landlord to vote against the general or special assessment or other governmental charge but the Landlord votes in favor of the general or special assessment or other governmental charge, and the general or special assessment or other governmental charge is imposed on the Property, then the Landlord shall be solely responsible to pay for any new general or special assessment or other governmental charge on the Property.

6.5 Tenant's Tax Liability Prorated. To the extent Tenant is liable to pay a new assessment pursuant to Section 6.4 above, Tenant's liability to pay new assessments shall be prorated on the basis of a three hundred sixty-five (365) day year to account for any fractional

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portion of a fiscal tax year included in the lease term at its inception and expiration or earlier termination in accordance with this Lease.

6.6 Revenue & Taxation Code Section 107.6. Tenant recognizes and understands that this Lease may create a possessory interest subject to property taxes and that, in the event that a possessory interest is created, Tenant shall be responsible for payment of any taxes levied against such possessory interest.

6.7 Section 33673. In the event the Property or any Improvements thereon, or any possessive interest therein, should at any time be subject to ad valorem taxes or privilege taxes levied, assessed or imposed on such property, Tenant shall pay taxes upon the assessed value of the entire Property and any Improvements thereon and not merely upon the assessed value of its leasehold interest, as provided in Section 33673 of the California Health and Safety Code.

6.8 Tax Contest. Tenant may seek a reduction in the assessed valuation of the Property or contest any real property taxes that are to be paid by Tenant, in its discretion. If Tenant seeks a reduction or contests the real property taxes, the failure on Tenant's part to pay the real property taxes shall not constitute default as long as Tenant complies with the provisions of this Section

6.8. Landlord shall not be required to join in any proceeding or contest brought by Tenant except to the extent requested by Tenant, or to the extent Landlord is required to join in such proceeding, in either case it shall be at no cost to Landlord and Landlord shall be provided with an indemnity from Tenant in connection with the same approved by Landlord in its reasonable discretion. Tenant, on final determination of the proceeding or contest, shall immediately pay or discharge any decision or judgment rendered, together with all costs, charges, interest and penalties incidental to the decision or judgment. If Tenant does not pay the real property taxes when due and Tenant seeks a reduction or contests them as provided in this Section 6.8, before the commencement of the proceeding or contest Tenant shall furnish to Landlord a surety bond issued by an insurance company qualified to do business in California. The amount of the bond shall equal one hundred ten percent (110%) of the total amount of real property taxes in dispute. The bond shall hold Landlord and the premises harmless from any damage arising out of the proceeding or contest and shall insure the payment of any judgment that may be rendered.

ARTICLE 7. USE, CHARACTER,

OPERATION AND MAINTENANCE OF

IMPROVEMENTS

7.1 General. Tenant may use the Property and the Improvements only for the uses specified in Section 1.1 and this Article ("primary uses") and uses ancillary to such primary uses as herein specified. Tenant shall use the Property and the Improvements thereon for no other purpose without the prior written consent of Landlord which Landlord may grant or withhold in its sole discretion.

7.2 Use Obligations.

A. Nondiscrimination. There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, sexual orientation,

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gender, gender identity, gender expression height, weight, physical appearance, marital status, ancestry or national origin, source of income, disability, veteran or military status, or genetic information in the sublease, transfer, use, occupancy, tenure or enjoyment of the Property or the Improvements thereon, or any part thereof, and the Tenant itself, or any person claiming under or through it, shall not establish or permit any such practice of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Property or the Improvements thereon, or any part thereof.

Tenant shall refrain from restricting the rental, sale or lease of the Property or the Improvements thereon, or any portion thereof, on the basis of race, color, creed, religion, sex, sexual orientation, gender, gender identity, gender expression height, weight, physical appearance, marital status, familial status, ancestry or national origin, source of income, disability, veteran or military status, or genetic information of any person. All such leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses:

1. In leases: "The lessee herein covenants for itself, its heirs, executors, administrators and assigns, and all persons claiming under or through it, and this Lease is made and accepted upon and subject to the following conditions: 'That there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, sexual orientation, gender, gender identity, gender expression, height, weight, physical appearance, marital status, ancestry or national origin, source of income, disability, veteran or military status, or genetic information in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein leased, nor shall the lessee itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the premises herein leased."

2. In contracts: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, sexual orientation, gender, gender identity, gender expression, height, weight, physical appearance, marital status, ancestry or national origin, source of income, disability, veteran or military status, or genetic information in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the premises."
The foregoing clauses shall comply with any other requirements imposed as a condition of funding, or imposed by federal, state, or local law.

B. Housing Affordability.

1. Definitions.
a. "Affordable Rent" shall be determined in accordance with California Health and Safety Code Section 50053(b)(2) or any successor legislation thereto, and, shall be determined in accordance with the California Tax Credit Allocation Committee ("TCAC")

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regulatory agreement to be recorded against the Property (the "TCAC Regulatory Agreement").

If the foregoing statutes are no longer in effect and no successor statutes are enacted, and following the expiration of the term of the TCAC Regulatory Agreement, Landlord shall establish the Affordable Rent for purposes of this Section 7.2.B. Affordable Rent for Lower Income Households shall be determined by TCAC, or its successor agency. b. "Extremely Low Income Households" means persons or
families whose gross income do not exceed the qualifying limits for extremely low income families, as established and amended from time to time by HUD, pursuant to Section 8 of the United States Housing Act of 1937 or as otherwise determined by the California Department of Housing and Community Development ("HCD"), pursuant to California Health and Safety Code Section 50106. These limits are equivalent to thirty percent (30%) of the area median income, adjusted by family size as promulgated by HUD. If the foregoing statutes are no longer in effect and no successor statutes are enacted, Landlord shall establish income levels for purposes of this Section 7.2.B.
c. "Lower Income Households" means persons or families
whose gross income do not exceed the qualifying limits for lower income families, as established and amended from time to time by HUD, pursuant to Section 8 of the United States Housing Act of 1937 or as otherwise determined by HCD, pursuant to California Health and Safety Code Section 50079.5. These limits are equivalent to eighty percent (80%) of the area median income, adjusted by family size as promulgated by HUD. If the foregoing statutes are no longer in effect and no successor statutes are enacted, Landlord shall establish income levels for purposes of this Section 7.2.B.
d. "Very Low Income Households" means persons or families whose gross incomes do not exceed the qualifying limits for very low income families established and amended from time to time by HUD, pursuant to Section 8 of the United States Housing Act of 1937, but in no event exceeding the limit set forth in Section 50105 of the California Health and Safety Code or any successor statute thereto. These limits are equivalent to fifty percent (50%) of the area median income, adjusted by family size as promulgated by the HUD. If the foregoing statutes are no longer in effect and no successor statutes are enacted, Landlord shall establish income levels for purposes of this Section 7.2.B.
e. "Eligible Households" means households meeting the
definitions of Extremely Low Income, Very Low Income, or Lower Income Households as set forth above (at initial occupancy).

2. Affordability Requirements.
a. Rent and Income Restrictions. Upon recordation of the Memorandum, and thereafter for the remaining term of this Lease, Tenant by and for itself and any successors in interest, hereby covenants and agrees that all dwelling units within the Project (except one (1) designated on-site manager's units) shall be rented to Eligible Households at an Affordable Rent ("Restricted Units") as follows:

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Affordable Rent
Level
Total
Number
of Units
3-BR 2-BR 1-BR Studio
Extremely Low
Income
(30% AMI or less)
19 5 5 8 1
Very Low Income
(30-50% AMI)
59 14 14 26 5
Low Income
(50-80% AMI)
45 12 12 16 1
Total 123 31 31 50 11
Nothing in this Section 7.2.B shall be deemed to waive, limit, or impair the Tenant's right to agree to more restrictive population, income and rent limitations that may be imposed on the Restricted Units by any funding source utilized by the Tenant to construct or operate the Project, including, but not limited to any other agreement in favor of the City. The affordability requirements set forth in this Section are in satisfaction of the Tenant's obligations to develop and operate affordable housing units pursuant to Santa Cruz Municipal Code Chapter 24.16 Part 1: Inclusionary Housing Requirements, and any implementing guidelines (collectively the "City Inclusionary Housing Program"), as required by the conditions of approval previously imposed by the City. To comply with the City Inclusionary Housing Program, the affordability requirements set forth in the Section shall be, and shall remain, in senior lien priority to any subsequent lien or encumbrance recorded against the Tenant's leasehold interest in the Property. b. Reporting Requirements. An annual report and annual
income recertifications must be submitted to Landlord. The reports, at a minimum, shall include:
(1) The number of persons per unit;
(2) Tenant name;
(3) Initial occupancy date;
(4) Rent paid per month;
(5) Adjusted gross income per year as certified by
Tenant; and
(6) Percent of rent paid in relation to income.

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If required by Landlord, annual income recertifications shall also contain those documents used to certify eligibility. Landlord may from time to time during the term of this Lease request additional or different information and Tenant shall promptly supply such information in the reports required hereunder. Tenant shall maintain all necessary books and records, including property, personal and financial records, in accordance with requirements prescribed by Landlord with respect to all matters covered by this Section 7.2.B. Tenant, at such time and in such forms as Landlord may require, shall furnish to Landlord statements, records, reports, data and information pertaining to matters covered by this Section 7.2.B. Upon request for examination by Landlord and reasonable notice, Tenant, at any time during normal business hours, shall make available all of its records with respect to all matters covered by this Section 7.2.B.

Tenant shall permit Landlord to audit, examine and make excerpts or transcripts from those records.
c. Memorandum. The Memorandum, as defined in Section

18.11, shall include a reference to the affordability requirements in this Section 7.2.B. d. Subordination to Federal or State Programs. To the extent permitted by the City Inclusionary Housing Program, the affordability requirements in this Section

7.2.B. may be subordinated to a lien or encumbrance of a first mortgage lender or a regulatory agreement under a federal or state program where the federal or state agency is providing financing, refinancing or other assistance to the Project if the lender, federal or state agency refuses to consent to the seniority of the affordability requirements in this Section 7.2.B. on the basis that the lender, federal or state agency is required to maintain its lien, encumbrance or regulatory agreement or restrictions due to statutory or regulatory requirements, adopted or approved policies or other guidelines pertaining to the financing, refinancing or other assistance of the Project. Upon written request, Landlord shall execute an instrument evidencing its agreement to subordinate; provided such lien, encumbrance or regulatory agreement includes the following: (i) Landlord shall receive any notices of default under such lien, encumbrance or regulatory agreement; (ii) Landlord shall have the right to cure any default by Tenant within a reasonable time of notice of default; (iii) Landlord shall have the right to exercise its rights hereunder without such lender, federal or state agency accelerating its debt provided Landlord has cured or is attempting to cure any defaults; and (iv) Landlord shall have the right to transfer the Project to a nonprofit corporation who shall own and operate the Project as a low income rental housing project, in accordance with this Lease, with the consent of such federal or state agency which consent shall not be unreasonably withheld. Notwithstanding the foregoing, the parties agree that the affordability requirements in this Section 7.2.B shall not be subordinated to the Leasehold Mortgage in favor of the California Municipal Finance Authority ("CMFA"), which has been or will be assigned to U.S. Bank Trust Company, National Association, as fiscal agent, as the same may be amended, restated and/or supplemented from time to time.

3. Compliance with Government Code Section 37364. This Lease is authorized under the SLA based upon the representation and warranty that the Affordable Housing Component and the Affordable Units will satisfy the requirements for a project authorized by Government Code Section 37364. Accordingly, the Project shall comply with the following: (1) not less than eighty percent (80%) of the area of any parcel of the Property is used for the development of housing, (2) not less than forty percent (40%) of the total number of the housing units are affordable to households whose incomes are equal to, or less than, 75 percent of the

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maximum income of Lower Income Households, and at least half of which shall be affordable to Very Low Income Households; and, (3) the affordability restrictions are imposed by a regulatory agreement for a term of the longest feasible time, but not less than thirty (30) years, that binds successors in interest and is duly recorded in the Official Records.

7.3 City Inclusionary Housing Program Requirements. In accordance with the City Inclusionary Housing Program, the Tenant is subject to the following requirements:

A. Eligibility. An immediate family member or employee of any person having any equity interest in the Project, including but not limited to a developer, partner, or investor, and their immediate family members or employees, is ineligible to rent a Restricted Unit, and shall not be considered an Eligible Household.

B. Principal Residence. All tenants of a Restricted Unit must occupy the Restricted Unit as their principal place of residence.

C. No Short Term Rental. Any renting or leasing of any portion of a Restricted Unit as a short-term rental (a period of 30 consecutive calendar days or less) is prohibited pursuant to Santa Cruz Municipal Code Section 24.12.1710 (or any successor code section).

D. Increased Income of Extremely Low Income Household. If, upon the annual certification of the income of an Extremely Low-Income Household, Tenant determines that the income of such household has increased above the qualifying limit for an Extremely LowIncome Household, but not above the qualifying income for a Very Low Income Household or Lower Income Household, such household may continue to occupy the Restricted Unit and such household's rent may be increased to an Affordable Rent for a Very Low Income Household or Lower Income Household, as applicable. Tenant shall then rent the next available Restricted Unit to an Extremely Low-Income Household to comply with the requirements of Section 7.2.B above, at a rent not exceeding the Affordable Rent for an Extremely Low-Income Household as specified in Section 7.2.B, above, or re-designate another comparable Restricted Unit in the Project with an Extremely Low-Income Household as an Extremely Low-Income Unit, to comply with the requirements of Section 7.2.B above. Upon renting the next available Restricted Unit in accordance with Section 7.2.B, above, or re-designating another Restricted Unit in the Project as an Extremely Low-Income Unit, the Tenant shall be deemed to be in compliance with this Section.

E. Increased Income of Very Low Income Household. If, upon the annual certification of the income of an Very Low Income Household, Tenant determines that the income of such household has increased above the qualifying limit for an Very Low Income Household, but not above the qualifying income for a Lower Income Household, such household may continue to occupy the Restricted Unit and such household's rent may be increased to an Affordable Rent for a Lower Income Household. Tenant shall then rent the next available Restricted Unit to a Very Low Income Household to comply with the requirements of Section 7.2.B above, at a rent not exceeding the Affordable Rent for a Very Low Income Household as specified in Section 7.2.B, above, or re-designate another comparable Restricted Unit in the Project with an Very Low Income Household as an Very Low Income Unit, to comply with the requirements of Section 7.2.B above.

Upon renting the next available Restricted Unit in accordance with Section 7.2.B, above, or re20.21 13 1247\13\3924879.5
designating another Restricted Unit in the Project as a Very Low Income Unit, the Tenant shall be deemed to be in compliance with this Section.

F. Increased Income of Lower Income Household. If, upon the annual certification of the income of a Lower Income Household, Tenant determines that the income of such household has increased above the qualifying limit for a Lower Income Household, such household may continue to occupy the Restricted Unit and such household's rent may be increased to a rent that is permitted under the City Inclusionary Housing Program, or any applicable law (subject to any other rent restriction governing the Project). Tenant shall then rent the next available Restricted Unit to a Lower Income Household to comply with the requirements of Section 7.2.B, above, at a rent not exceeding the Affordable Rent for Lower Income Households specified in Section 7.2.B, above, or re-designate another comparable Restricted Unit in the Project with a Lower Income Household as a Lower Income Unit, to comply with the requirements of Section 7.2.B, above. Upon renting the next available Restricted Unit in accordance with Section

7.2.B, or re-designating another Restricted Unit in the Project as a Lower-Income Unit, the Tenant shall be deemed to be in compliance with this Section.

G. Certification of Compliance. As a condition to obtaining a temporary, or final, certificate of occupancy, the Tenant shall complete and submit to the City a "certification of compliance", substantially in the form attached as Exhibit E, regarding the Tenant's obligations to use the Project for affordable housing purposes.

H. Rental Agreements. The form of rental agreement to be entered into by Tenant with each Eligible Household shall be subject to the Landlord's prior written approval (which shall not be unreasonably delayed, withheld, or conditioned) and shall be consistent with all of the applicable requirements set forth in this Article, including, but not limited to the City Inclusionary Housing Program.

7.4 Use Prohibitions. Tenant agrees that in connection with the use and operation of the Property it will not:

A. Permit undue accumulations of garbage, trash, rubbish or any other refuse; or
B. Create, cause, maintain or permit any nuisance (as the same may be defined by applicable law) in, on or about the Property; or C. Commit or suffer to be committed any waste in, on or about the Property; or
D. Use or allow the Property to be used for any unlawful purpose, or for any purpose which violates the terms of any recorded instrument affecting the Property; or E. Do or permit to be done anything which in any way unreasonably disturbs the occupants of neighboring property; or

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F. Cause or permit any insurance coverage on the Property or the Improvements to become void or voidable or make it impossible to obtain any required insurance at commercially feasible rates; or
G. Intentionally cause or knowingly permit any material structural damage to the Property or the Improvements or to any adjacent public or private property; or H. Violate any law, ordinance or regulation applicable to the Property and the Improvements thereon.

7.5 General Standards of Maintenance.

A. Landlord shall have no obligation to make any repairs, improvements or alterations whatsoever related to the Property or its fixtures or contents, except as may be required pursuant to the REA. Tenant shall be solely responsible for all repairs to and maintenance of the Property, including any and all Improvements made by Tenant to the Property. Tenant shall be solely responsible for all repairs to, and maintenance of, the Project and as otherwise set forth herein during the term of this Lease. Tenant shall, at Tenant's sole cost and expense, promptly repair any damage to the Property caused by Tenant, its agents, employees, customers, invitees, subtenants, or assignees.

B. Tenant shall be fully responsible for the operation and maintenance of the Improvements and any open space and common areas within or about the Property (if any), and shall operate and maintain, or cause to be operated and maintained, including the duty to repair and replace in accordance with this Lease, such Improvements and open space and common areas in good order, condition and repair consistent with the purpose set forth in Section 1.1, subject only to normal wear and tear customary in accordance with applicable codes and ordinances and the practices prevailing in the operation of similar developments in the San Francisco Bay Area.

Tenant shall also operate and maintain, including the duty to repair and replace in accordance with this Lease, the Improvements in accordance with all applicable laws, and all mitigation measures imposed on the Property or the Project. Without limiting the generality of the foregoing, Tenant shall, in accordance with the practices prevailing in the operation of similar developments, observe the following standards (each to the extent applicable to the Property):

1. Maintain the surface of all pedestrian areas level, smooth and evenly covered with the type of surfacing material originally installed thereon or such substitute therefor as shall be in all respects equal thereto or better in quality, appearance and durability;

2. Maintain all common areas and open space within the Property in accordance with Santa Cruz Municipal Code Section 24.14.400 et seq. relating to floodplain management, as applicable.

3. Remove all papers, debris, filth and refuse, and sweep, wash down and/or clean all hard surfaces, including brick, metal, concrete, glass, wood and other permanent poles, walls or structural members as required;

4. Maintain such appropriate entrance, exit and directional signs, markers and lights as shall be reasonably required;

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5. Clean lighting fixtures and relamp and/or reballast as needed;

6. Repaint striping, markers, directional signs, etc., as necessary to maintain in first class condition;

7. Maintain landscaping as necessary to maintain in first class condition;

8. Maintain signs, including relamping and/or reballasting and/or repairing as required;

9. Maintain and keep in a sanitary condition public restrooms within the Project, if any;

10. Clean, repair and maintain all common utility systems to the extent that the same are not cleaned, repaired and maintained by public utilities;

11. Maintain all fountains, water courses and associated structures, drinking fountains, pumps and associated plumbing;

12. Provide adequate security lighting in all areas during periods of unrestricted public access, and maintain all security and decorative light fixtures and associated wiring systems;

13. Maintain all surface and storm lateral drainage systems;

14. Maintain all sanitary sewer lateral connections;

15. Promptly remove any graffiti on or about the Property; and

16. Comply with any operations and maintenance plan mutually developed by the parties for all areas of the Property, as such plan may be amended from time to time.

For the avoidance of doubt, the Tenant agrees that the duty to main all components of the Improvements, whether set forth above, or otherwise, shall expressly include the duty to repair and replace such components in accordance with this Lease. Provided that the Tenant complies with the similar or equivalent covenant, condition, and obligation, applicable to the Property, as set forth in the REA, the Tenant shall be deemed to be in compliance with such obligation set forth above.

7.6 Governmental Requirements.

A. Except with respect to Landlord's obligations under Article 7 of this Lease, Tenant shall at all times comply with, and shall pay all costs and expenses which may be incurred or required to be paid in order to comply with, any and all laws, statutes, ordinances, rules and regulations ("laws") which apply to the development, operation and use of the Property, including those requiring alterations or additions to be made to, or safety appliances and devices to be

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maintained or installed in, on or about the Property under any laws now or hereafter adopted, enacted or made and applicable to the Property, and payment of any fees, charges or assessments arising out of or in any way related to the Property as a source of adverse environmental impacts or effects.

B. Tenant acknowledges and expressly accepts full responsibility and shall incur all costs and expenses for compliance with the requirements of the Americans with Disabilities Act (ADA) and any other local, state, or federal law or regulation regarding the accessibility of the Property by disabled individuals. Tenant's obligation to indemnify the Landlord shall expressly include any claim, loss, expense, or liability arising from Tenant's failure to fully comply with all such laws or regulations.

7.7 Reciprocal Easement Agreement. Tenant shall comply with all applicable covenants, conditions, and obligations governing the Property as set forth in the REA.

7.8 Property Management Agreement. Tenant, at its expense, shall maintain in full force and effect during the entire term of this Lease an agreement with a professional property management company ("Manager") for the maintenance and operation of the Project (the "Property Management Agreement"). Landlord shall approve the identity of the Manager in its reasonable discretion. The initial term of the Property Management Agreement shall not exceed five (5) years without the written consent of the Landlord, which Landlord may grant or withhold in its sole discretion. Landlord hereby approves Eden Housing Management, Inc., as the initial Manager.

7.9 Prevailing Wages. To the extent required by applicable law, in connection with the Project Tenant shall:

A. pay, and shall cause any consultants or contractors to pay, prevailing wages in the construction of the Project as those wages are determined pursuant to California Labor Code Section 1720 et seq.;
B. cause any consultants or contractors to employ apprentices as required by California Labor Code Section 1777.5 et seq., and the implementing regulations of the Department of Industrial Relations (the "DIR"), and to comply with the other applicable provisions of California Labor Code Sections 1720 et seq., 1777.5 et seq., and implementing regulations of the DIR;
C. keep and retain, and shall cause any consultants and contractors to keep and retain, such records as are necessary to determine if such prevailing wages have been paid as required pursuant to California Labor Code Section 1720 et seq., and apprentices have been employed are required by California Labor Code Section 1777.5 et seq.; D. post at the Property, or shall cause the contractor to post at the Property, the applicable prevailing rates of per diem wages. Copies of the currently applicable current per diem prevailing wages are available from DIR;
E. cause contractors and subcontractors constructing the Project to be registered as set forth in California Labor Code Section 1725.5;

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F. cause its contractors and subcontractors, in all calls for bids, bidding materials and the construction contract documents for the construction of the Project to specify that:

1. no contractor or subcontractor may be listed on a bid proposal nor be awarded a contract for the construction of the Project unless registered with the DIR pursuant to California Labor Code Section 1725.5; and

2. the construction of the Project is subject to compliance monitoring and enforcement by the DIR.

G. provide the City all information required by California Labor Code Section 1773.3 as set forth in the DIR's online form PWC-100 within 2 days of the award of any contract (https://www.dir.ca.gov/pwc100ext/);
H. cause its contractors to post job site notices, as prescribed by regulation by the DIR; and
I. cause its contractors to furnish payroll records required by California Labor Code Section 1776 directly to the Labor Commissioner, at least monthly in the electronic format prescribed by the Labor Commissioner.

Tenant shall indemnify, hold harmless and defend (with counsel reasonably acceptable to the Landlord) the Landlord and all of its current and future councilmembers, commissioners, directors, officers, employees, agents, successors and assigns (the "Landlord Indemnified Parties") against any claim for damages, compensation, fines, penalties or other amounts arising out of the failure or alleged failure of any person or entity (including Tenant, its contractor and subcontractors) to pay prevailing wages as determined pursuant to Labor Code Sections 1720 et seq., to employ apprentices pursuant to Labor Code Sections 1777.5 et seq., and implementing regulations of the DIR or to comply with the other applicable provisions of Labor Code Sections 1720 et seq., 1777.5 et seq., and the implementing regulations of the DIR in connection with the construction of the Project or any other work undertaken or in connection with the Property.

Such obligation to indemnify shall survive termination or expiration of this Lease.

ARTICLE 8. CONDITION OF PROPERTY

8.1 Condition of Property; Remediation and Indemnity.

A. Reserved.

B. Landlord makes no representations or warranties express or implied concerning the condition of the Property including, without limitation, its environmental condition, other than that Landlord has no actual knowledge of the existence on the Property of any Hazardous Materials (as defined below). Except as specifically set forth in this Section 8.1, Tenant acknowledges and agrees that it shall take possession of the Property from Landlord pursuant to this Lease "as is," in its current physical condition, with no warranties, express or implied, as to the physical condition thereof, the presence or absence of any latent or patent condition thereon or

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therein, including, without limitation, any Hazardous Materials thereon or therein, and any other matters affecting the Property.

C. Tenant acknowledges that the rent required under this Lease reflects the "as is" nature of this transaction and any faults, liabilities, defects or other adverse matters that may be associated with the Property. Tenant has fully reviewed the disclaimers and waivers set forth in this Lease with Tenant's counsel and understands the significance and effect thereof. Tenant further acknowledges and agrees that: (i) to the extent required to be operative, the disclaimers of warranties contained in this Section hereof are "conspicuous" disclaimers for purposes of all applicable laws, statutes, codes, ordinances, orders, rules, regulations and requirements of all governmental authorities and the appropriate agencies, officers, departments, boards and commissions thereof, whether now or hereafter in force, applicable to Landlord, Tenant, or the Property, or any portion thereof; and (ii) the disclaimers and other agreements set forth in such sections are an integral part of this Lease, that this Lease has been adjusted to reflect the same and that Landlord would not have agreed to lease the Property to Tenant pursuant to this Lease without the disclaimers and other agreements set forth in this Section.

D. Except with respect to any Landlord Released Party's (as defined below) gross negligence, fraud, illegal acts, misrepresentation, breach of any representation or warranty or other requirement or obligation set forth herein, or otherwise except as expressly set forth in this Lease, Tenant, on behalf of itself and anyone claiming by, through or under Tenant hereby waives its right to recover from and fully and irrevocably releases Landlord, its councilmembers, officers, employees, and agents (collectively, "Landlord Released Parties") from any and all claims that Tenant may have or hereafter acquire, on or after the Commencement Date, against any of the Landlord Released Parties for any costs, loss, liability, damage, expenses, demand, action or cause of action arising from or related to: (i) the condition (including any construction defects, errors, omissions or other conditions, latent or otherwise), valuation, salability or utility of the Property, or its suitability for any purpose whatsoever; and (ii) any presence of Hazardous Materials at the Property.

E. Tenant agrees that, with respect to the general release contained in this Section, the general release extends to all matters regarding the Property, whether or not claimed or suspected, as of and including the Commencement Date, and constitutes a waiver of each and all of the provisions of the California Civil Code Section 1542, which reads as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR

OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR

HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF

KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY."
F. Tenant herein acknowledges that the effect and import of the provisions of California Civil Code § 1542 have been explained to it by its own counsel. Tenant understands and acknowledges the significance and the consequence of such specific waiver of unknown claims and hereby assumes full responsibility for any injuries, damages, losses or liabilities that it may hereinafter incur from the waiver of these unknown claims.

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Tenant Initials: ___________
G. Landlord makes no representations or warranties concerning the condition of any of the existing buildings or other improvements (collectively "Buildings") located on the Property and Landlord disclaims all such representations and warranties. Tenant acknowledges and agrees that it will comply all applicable laws, environmental or otherwise, in the demolition, construction, development, and operation of the Property or Buildings.

H. Pursuant to Health and Safety Code Section 25359.7, Tenant is hereby notified that Hazardous Materials are located on or beneath the Property. Tenant shall be responsible for any applicable remediation of all Hazardous Materials to the extent necessary for the development, use, and operation of the Property as set forth in this Lease. Tenant agrees to accept the Property in its present condition, including all findings from any environmental assessment including all findings from the Phase I and Phase II Environmental Site Assessments performed by Weber, Hayes & Associates, and referenced in the CEQA Exemption Review Memorandum, dated March 6, 2023, by DUDEK. Tenant, at its sole cost and expense, must comply with remediation agreement, dated as of August 11, 2022, between Landlord and County, and incorporated herein by reference.

Tenant shall indemnify, defend, protect and hold harmless Landlord and Landlord Indemnified Parties from and against any claim, liability, injury, damage, fees, fines, penalties, actual out of pocket costs or expenses (including without limitation, attorneys' fees, court costs, and the cost of any clean-up testing, remediation or removal of Hazardous Materials) relating to or arising out of any Hazardous Materials on, about or within the Property during the term of this Lease, except to the extent the condition was caused, arose or resulted from Landlord's own negligence or willful misconduct or that of its officials, employees, contractors, agents, successors or assigns.

I. As used in this Lease, the term "Hazardous Materials" shall mean any flammable substance, explosive, radioactive material, asbestos, asbestos-containing material, polychlorinated biphenyl, chemical known to cause cancer or reproductive toxicity, pollutant, contaminant, hazardous waste, medical wastes, toxic substance or related material, explosive, petroleum, petroleum product or any "hazardous" or "toxic" material, substance or waste that is defined by those or similar terms or is regulated as such under any law, including any material, substance or waste that is: (a) defined as a "hazardous substance" under Section 311 of the Water Pollution Control Act (33 U.S.C. § 1317), as amended; (b) designated as "hazardous substances" pursuant to 33 U.S.C. § 1321; (c) defined as a "hazardous waste" under Section 1004 of the Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901, et seq., as amended; (d) defined as a "hazardous substance" or "hazardous waste" under Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Reauthorization Act of 1986, 42 U.S.C. § 9601, et seq., or any so-called "superfund" or "superlien" law; (e) defined as a "pollutant" or "contaminant" under 42 U.S.C. § 9601(33); (f) defined as "hazardous waste" under 40 C.F.R. Part 260; (g) defined as a "hazardous chemical" under 29 C.F.R. Part 1910; (h) any matter within the definition of "hazardous substance" set forth in 15 U.S.C. § 1262; (i) any matter, waste or substance regulated under the Toxic Substances Control Act [15 U.S.C. Sections 2601, et seq.]; (j) any matter, waste or substance regulated under the Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801, et seq.; (k) those substances

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listed in the United States Department of Transportation (DOT) Table [49 C.F.R. 172.101]; (l) any matter, waste or substances designated by the EPA, or any successor authority, as a hazardous substance [40 C.F.R. Part 302]; (m) defined as "hazardous waste" in Section 25117 of the California Health and Safety Code; (n) defined as a "hazardous substance" in Section 25316 of the California Health and Safety Code; (o) that is subject to any other Law regulating, relating to or imposing obligations, liability or standards of conduct concerning protection of human health, plant life, animal life, natural resources, property or the enjoyment of life or property free from the presence in the environment of any solid, liquid, gas, odor or any form of energy from whatever source; or (p) that is or becomes regulated or classified as hazardous or toxic under Law or in the regulations adopted pursuant to Law.

8.2 Bona Fide Prospective Purchaser. Landlord and Tenant agree to cooperate and comply with all applicable laws and regulations that may permit either to assert defenses available under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended ("CERCLA") or qualify as a bona fide prospective purchaser, including but not limited to the following:

A. Providing all legally required notices with respect to the discovery or release of any hazardous substance at the Property.

B. Exercising appropriate care with respect to hazardous substances found at the Property by taking reasonable steps to:

1. Stop any continuing release;

2. Prevent any threatened future release; and

3. Prevent or limit human, environmental, or natural resource exposure to any previously released hazardous substance.

C. Providing full cooperation, assistance and access to persons that are authorized to conduct response actions or natural resource restoration at the Property (including the cooperation and access necessary for the installation, integrity and maintenance of any complete or partial response action or natural resource restoration at the Property).

D. Maintaining compliance with any land use restrictions established or relied on in connection with a response action at the Property.

E. Not impeding the effectiveness or integrity of any institutional control employed at the Property or in connection with a response action.

F. Complying with any request for information or administrative subpoena issued by the President of the United States of America under CERCLA.

ARTICLE 9. CONSTRUCTION AND LIENS

9.1 Scope of Development. The Property shall be developed as provided in the Scope of Development attached as Exhibit C, and consistent with the City Council Resolution No. NS20.29 21 1247\13\3924879.5
30,120, and the Project's Condition of Approval stated therein (CP22-0128), and as such design concept and/or conditions may be amended at the request of the Tenant and with the approval of the Landlord and the City.

9.2 Conditions of Approval for the Development of the Property. In accordance with the conditions of approval for the development of the Property imposed by the City, all construction and development on the Property shall adhere to the following conditions:

A. Project buildings shall be designed and constructed in accordance with City of Santa Cruz Green Building Regulations, Municipal Code Chapter 24.15.

B. Prior to occupancy of any buildings Tenant shall submit a management plan which includes, but is not limited to, the following: tenant screening process, and the availability of all advertisements and rental documents in Spanish.

C. The development of the Property shall be in substantial accordance with the Construction Documents.

9.3 Initial Construction of Improvements.

A. Construction Plans. Within the time and in the manner set forth in this Lease, Tenant shall submit to the Landlord for Landlord's approval all construction plans, drawings and related documents required by the City for the development of the Improvements. As a key contributor to the Project funding, land and entitlements approval process, the City expects that it is a Project development team member with the same access to all Project-related information and resources provided by Project consultants that the Project lenders may have, including but not limited to design, environmental information, construction, and financing even if the consultant is contracted by Tenant; provided, however that certain information may be available for the City's review at the Project site rather than delivered to the City.

B. Construction. Within the time and in the manner set forth in this Lease, Tenant shall construct or cause to be constructed the Improvements as required herein (the "Construction") and in full conformity with the construction plans, drawings and related documents approved by the City. In accordance with the REA, Tenant shall not materially interfere with, or otherwise delay, any construction of the City Components pursuant to the Library Lease.

C. Timely Completion. Tenant shall take all steps necessary to enable it to commence, and (except as prevented by causes enumerated in Section 18.4 of this Lease) Tenant will commence the Construction, and will diligently prosecute and complete such Construction within the times set forth in the Schedule of Performance (Exhibit D). In the event Tenant fails to meet any deadline for the Construction set forth in the Schedule of Performance, after first taking into account any extensions of time required in accordance with the provisions of Section 18.4 of this Lease, and does not cure such failure within sixty (60) days of receipt of written notice from Landlord of such failure, such failure shall constitute a default under Article 16; provided, however, that in the event that the nature of such cure is such that more than sixty (60) days are reasonably required, Tenant shall have such additional period of time as is reasonably required

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provided that Tenant commences, the cure within such sixty (60) days and thereafter diligently and continuously prosecutes the cure to completion. Such failure or default by Tenant under any of the Construction Documents is a default under all Construction Documents.

9.4 Construction Standards.

A. General Construction Standards. All construction, alteration or repair work permitted herein shall be accomplished expeditiously and diligently in compliance with the Construction Documents. Tenant shall take all reasonably necessary measures to minimize any damage, disruption or inconvenience caused by such work and make adequate provision for the safety and convenience of all persons affected thereby. Tenant shall repair, at its own cost and expense, any and all damage caused by such work, and shall restore the area upon which such work is performed to a condition which is equal to or better than the condition which existed prior to the beginning of such work. In addition, Tenant shall indemnify and hold Landlord harmless from all damages, losses or claims attributable to the performance of such work. Dust, noise and other effects of such work shall be controlled using the best-accepted methods customarily utilized in order to control such deleterious effects associated with construction projects in a populated or developed area.

B. Utility Work. Any work performed by or on behalf of Tenant or any occupant or sublessee to connect to, repair, relocate, maintain or install any storm drain, sanitary sewer, water line, gas line, telephone conduit or any other public utility service shall be performed so as to minimize interference with the provision of such services to occupants and other persons and shall be performed in accordance with all applicable laws and regulations.

C. Use of Plans. The contracts with any architect, other design professional or any general contractor shall provide, in form and substance reasonably satisfactory to Landlord, for the assignment thereof to Landlord, subject to the rights of Senior Leasehold Mortgagee, as security to Landlord for Tenant's performance hereunder, and Landlord shall be furnished with any such agreement, together with the further agreement of the parties thereto, that if this Lease is terminated due to Tenant's default, Landlord may use any plans and specifications to which Tenant is then entitled pursuant to any such contract without payment of any further sums to any party thereto.

D. Compliance with Construction Documents and Laws; Issuance of Permits.

All Improvements on the Property shall be constructed in compliance with any construction documents approved by Landlord and also in compliance with all applicable local, state and federal laws and regulations. Tenant shall have the sole responsibility for obtaining all necessary permits required for the construction of the Improvements and shall make application for such permits directly to the person or governmental agency having jurisdiction.

E. Construction Safeguards. Tenant shall erect and properly maintain at all times, as required by the conditions and the progress of work performed by Tenant, all necessary safeguards for the protection of workers and the public.

F. Conditions to Commencement of Construction. In addition to and not by way of limitation of any conditions contained in this Lease, in no event shall Tenant commence

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any construction on the Property until the following conditions have been satisfied or waived by Landlord, in addition to other conditions and requirements imposed by this Lease:

1. Landlord has approved Tenant's final plans and specifications for the Improvements;

2. Landlord, in the exercise of its reasonable discretion, has approved evidence that Tenant has obtained firm commitments for the equity and construction loan financing necessary for the full payment of construction of the Improvements, together with any required operating capital;

3. Tenant has obtained building permits and all other governmental approvals necessary for the construction of the Improvements;

4. Tenant has entered into complete and binding contracts with its contractor or contractors for the construction of the Improvements; and

5. Tenant has provided Landlord with certificates of insurance for the Improvements as required by Section 12.2.

G. Landlord's Cooperation. Landlord shall cooperate (at no additional cost) with and assist Tenant in every reasonable way in Tenant's efforts to obtain all governmental consents, approvals, permits or variances which may be required for the performance of any construction permitted under the terms of this Lease, including Landlord's joinder in any application for any such consent, approval, permit or variance where joinder therein by the owner of the Property is required by law.

Tenant and Landlord each recognize that in order to provide for the more orderly development of the Property and the overall management and operation of the Improvements thereon, it may be necessary, desirable or required that street, water, sewer, drainage, gas, power line, and other easements and dedications, and similar rights be granted or dedicated over or within portions of the Property. Landlord agrees that it will, upon written request of Tenant, join with Tenant in executing and delivering such documents, from time to time, and throughout the term of this Lease as may be appropriate, necessary, or required by the several governmental agencies and public utility companies for the purpose of granting such easements and dedications. All costs and expenses incurred by Landlord in connection therewith shall be reimbursed to Landlord by Tenant promptly upon written demand therefor by Landlord. Under no circumstances shall Landlord be required or obligated to grant any such easements or make any such dedications on property, which is not the subject of this Lease, except to the extent reasonably required to provide for the Property to be serviced by any necessary utility.

H. Rights of Access. Representatives of Landlord shall have the right of reasonable access to the Property and the Improvements thereon without charges or fees, and at normal construction hours during the period of construction for the purposes of ascertaining compliance with the terms of this Lease, including, but not limited to, the inspection of the construction work being performed. Landlord's access shall be reasonably calculated to minimize interference with Tenant's construction and/or operations.

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I. Notice of Completion. Upon Completion of Construction of the Improvements, Tenant shall file or cause to be filed in the Official Records a Notice of Completion (the "Notice of Completion") with respect to the Improvements, and Tenant shall deliver to Landlord, at no cost to Landlord, two (2) sets of final as-built plans signed and certified by the project architect.

J. Development Costs. Except as otherwise expressly provided in this Lease, Tenant shall be solely responsible for all of the costs and expenses related to the development and construction of the Improvements, including but not limited to all taxes, fees, developer fees, assessments, and charges for:

1. On- or off-site infrastructure improvements such as drainage, curbs, gutters, sidewalks, storm or sanitary sewerage improvements;

2. Sewer, water, and other utility connection and capacity charges and rates;

3. Planning, building, engineering, environmental, and other public agency actions, including costs associated with the filing of subdivision maps, lot line adjustments, use, demolition or building permits, and easements, rights of way; inspection costs; and any and all other on- or off-site dedication or improvement requirements of the City of Santa Cruz;

4. All costs of above and below grade demolition; and

5. Any costs associated with asbestos mitigation or other environmental costs not expressly assumed by Landlord in this Lease.

9.5 Additional Construction on Property.

A. Construction Standards. Any additional building erected on any portion of the Property as permitted under this Lease, any remodeling or reconstruction work undertaken on or within any existing building on any portion of the Property, and any alteration of or addition to open spaces or common area, shall at all times be of first class construction and architecturaldesign and shall be in accordance with plans therefor submitted to and approved by Landlord in accordance with subsection B of this Section 9.5. Any such development or construction of additional buildings, remodeling or reconstruction of any building on any portion of the Property, or alteration of or addition to open spaces or common area, shall at all times meet the requirements of the Lease and shall conform to the approved design concepts, so that the exterior of all such buildings, including, without limitation, exterior elevations and color thereof, and all such other improvements, will be architecturally and aesthetically compatible and harmonious with the other buildings and improvements on the Property to create a uniform general plan for the Property. All construction shall be diligently prosecuted and accomplished without cost or expense to Landlord, and in a good and workmanlike manner.

B. Landlord's Approval of Plans. Landlord's rights of approval with respect to the initial construction, reconstruction or remodeling work undertaken prior to filing a Notice of Completion for the Property shall be governed by the provisions of Section 9.4 of the Lease.

Following completion of the initial construction and filing of said Notice of Completion, any

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construction, reconstruction or remodeling undertaken by Tenant on the Property shall be governed by the following:

1. Tenant shall have the right, without Landlord's consent (but subject to all other provisions of this Lease), to undertake any interior, nonstructural remodeling of the Tenant's Improvements not visible from the outside or affecting exterior appearance and not altering the preexisting location of the Improvements thereon on the Property;

2. If Tenant at any time following the filing of said Notice of Completion desires to undertake any construction, reconstruction, demolition or remodeling on the Property which is not exempt from Landlord's approval as provided in subsection 9.5.B.(1), above, Tenant shall, prior to the commencement of such work, prepare or cause to be prepared, at its sole expense, and shall submit to Landlord for its review and written approval, plans and specifications for such work, showing, without limitation, scaled elevations, scaled floor plans, design concepts, dimensions, material selection, colors, signing (if any) and such additional information as is reasonably necessary for Landlord to make an informed decision on such submission. Landlord shall approve or disapprove such submitted plans within thirty (30) days of receipt of complete plans and specifications meeting the requirements of this subsection. Failure of the Landlord to specify any objection to such plans and specifications or make a proposal that would add to or change the plans and specifications within such thirty (30) day period shall be deemed to be an approval. The plans and specifications shall comply with this Lease and shall be in compliance with applicable building codes and other laws, regulations and ordinances; and

3. No material changes to the approved plans and specifications shall be made without the prior written approval of Landlord, which approval shall not be unreasonably withheld, conditioned or delayed.

C. Indemnity from Tenant Contractor. Any contract between Tenant and any contractor, and any contractor relating to any construction and improvement work is subject to Landlord's prior approval (which shall not be unreasonably withheld, delayed, or conditioned), and shall contain release, defense, and indemnity provisions in Landlord's favor to the fullest extent permitted by law in a form to be approved by Landlord, substantially similar to:
"Contractor agrees to defend, indemnify, and hold harmless the Landlord, its officials, officers, employees ('Landlord Indemnitees') from and against any damage, claim, liability, expense (including attorney fees and costs) in any way related to the acts or omissions of Contractor, its employees, agents, or others acting on Contractor's behalf or under Contractor's authority or control on the Property, except where caused by the sole negligence or willful misconduct of Landlord. Contractor's obligation to defend shall arise regardless of any claim or assertion that Landlord Indemnitees caused or contributed to the losses. This indemnification clause shall survive termination of this Agreement."

9.6 Protection of Landlord. Nothing in this Lease shall be construed as constituting the consent of Landlord, expressed or implied, to the performance of any labor or the furnishing of any materials or any specific improvements, alterations of or repairs to the Property or any part thereof by any contractor, subcontractor, laborer or materialman, nor as giving Tenant or any other person any right, power or authority to act as agent of or to contract for, or permit the rendering

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of, any services, or the furnishing of any materials, in such manner as would give rise to the filing of mechanics' liens or other claims against the fee of the Property or the Improvements thereon.

Landlord shall have the right at all reasonable times to post, and keep posted, on the Property any notices which Landlord may reasonably deem necessary for the protection of Landlord and of the Property and the Improvements thereon from mechanics' liens or other claims. Tenant shall give Landlord ten (10) days' prior written notice of the commencement of any work to be done on the Property to enable Landlord to post such notices. In addition, Tenant shall make, or cause to be made, prompt payment of all monies due and legally owing to all persons doing any work or furnishing any materials or supplies to Tenant or any of its contractors or subcontractors in connection with the Property and the Improvements thereon.

A. Tenant shall keep the Property and the Improvements thereon free and clear of all mechanics' liens and other liens on account of work done for Tenant or persons claiming under it. Tenant agrees to and shall indemnify and save Landlord harmless against liability, loss, damages, costs, attorneys' fees, and all other expenses on account of claims of lien of laborers or materialmen or others for work performed or materials or supplies furnished to Tenant or persons claiming under it. Tenant shall be permitted to contest any mechanics' liens filed on the Property so long as Tenant has recorded a release bond for such mechanic's lien sufficient to clear such lien as an encumbrance from title to the Property.

B. In the event any lien is recorded and not expunged within sixty (60) days of recording, Tenant shall, upon demand, furnish the bond described in California Civil Code Section 8424, or successor statute, which results in the removal of such lien from the Property.

9.7 Notice. Should any claims of lien be filed against the Property or the Improvements thereon, or any action affecting the title to such property, be commenced, the party receiving notice of such lien or action shall forthwith give the other party written notice thereof.

ARTICLE 10. OWNERSHIP OF IMPROVEMENTS AND PERSONAL PROPERTY

10.1 Ownership of Improvements During Term. The Improvements existing or constructed on the Property by Tenant as permitted or required by this Lease shall during this Lease term, be and remain the property of Tenant and Tenant alone shall be entitled to all of the tax attributes of ownership of the Improvements and the furnishings, fixtures, and equipment, including, without limitation, the right to claim expenses, depreciation or cost recovery deductions, amortization, and the right to claim the federal low-income housing tax credit described in Section 42 of the Internal Revenue Code and claim any other federal or state tax benefits attributable to the Improvements; provided, however, that Tenant's rights and powers with respect to such Improvements are subject to the terms and limitations of this Lease and Tenant's interest in such Improvements shall terminate upon the expiration or sooner termination of this Lease. As owner of the Improvements, as between Landlord and Tenant, Tenant shall be solely obligated for all costs and expenses incurred in connection with the Improvements during the term of this Lease.

Landlord and Tenant covenant for themselves and all persons claiming under or through them that the Improvements are real property. It is the intent of the parties that this Lease shall create a constructive notice of severance of the Improvements from the Property without the necessity of a deed from the Landlord after the Improvements have been constructed.

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10.2 Landlord's Right on Default by Tenant. In the event of any default, after the expiration of all applicable cure periods, on the part of Tenant in performing the terms and provisions of this Lease entitling Landlord to possession of the Property, Landlord shall have the immediate right of possession of all personal property permanently affixed to the Property and the right to assume any ownership or leasehold interest of Tenant in any financed or leased personal property, subject to the rights of third party lenders and equipment lessors.

10.3 Removal and Ownership at Termination. At the expiration or sooner termination of this Lease term, Landlord may, at Landlord's election, require the removal from the Property, at Tenant's sole cost and expense, of all personal property (other than fixtures), as specified in the notice provided for below. A request to take effect at the normal expiration of the term shall be effected by notice given at least one hundred twenty (120) days before the expiration date. A demand to take effect on any other termination of this Lease term shall be effectuated by notice given concurrently with notice of such termination or within ten (10) days after such termination.

Tenant shall be liable to Landlord for costs incurred by Landlord in effecting the removal of personal property, which Tenant has failed to remove after demand pursuant to this section.

A. Tenant may remove any personal property during the term of this Lease, and within forty-five (45) days after the expiration of the term of this Lease, that may be removed without damage to the structural integrity of the Property and the Improvements thereon. Tenant shall repair all damage caused by any such removal. Such obligation to repair shall survive the expiration of this Lease.

B. Any personal property owned by Tenant and not removed by Tenant within forty-five (45) days following expiration of the term shall be deemed to be abandoned by Tenant and shall, without compensation to Tenant, then become the Landlord's property, free and clear of all claims to or against them by Tenant or any other person, but subject to the rights of third party lenders and equipment lessors as to which Landlord has notice.

ARTICLE 11. UTILITIES

11.1 Tenant shall pay when due and shall hold Landlord harmless from any liability for all charges for water, gas, sewage, electricity, telephone and other utility service supplied to the Property. Landlord shall not be liable in damages or otherwise for any failure or interruption of any utility service, and no such failure or interruption shall entitle Tenant to terminate this Lease or abate the rent due hereunder.

ARTICLE 12. INSURANCE AND INDEMNITY

12.1 Indemnity. Tenant shall indemnify, defend (with counsel reasonably selected by the City) and hold harmless Landlord, and Landlord Indemnified Parties, against and from any and all claims arising from the Tenant's use, possession, occupancy, or enjoyment of the Property, including any claims related to any approval by City for the Project, any breach of or default under this Lease, or from the conduct of its business or from any activity, work, or other things done, permitted or suffered by Tenant in or about the Property, or is based on claims in which liability without fault or strict liability is imposed or sought to be imposed upon Landlord, and shall further indemnify and hold harmless Landlord against and from any act, error, omission, or negligence,

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whether passive or active, direct or indirect, of Tenant, or any officer, agent, representative, employee, contractor or subcontractor of any tier, guest, licensee, invitee, or other party engaged on behalf of Tenant, and from all costs, damages, expenses, fees, investigation costs, court costs, attorney's fees, and liabilities incurred in connection with or relating to the defense of any such claim or any action or proceeding brought thereon and in the case of any action or proceeding be brought against the Landlord by reason of such claim, Tenant upon notice from Landlord shall defend the same at the Tenant's expense by counsel reasonably satisfactory to the Landlord.

Tenant, as a material part of the consideration to Landlord, hereby assumes all risk of damage to property or injury to or death of persons in, upon or about the Property, from any cause other than the willful act or negligence of Landlord, or of its agents, representatives, officers, managers, directors, servants, employees, contractor's, or others for whom Landlord is responsible in law, and Tenant hereby waives all claims in respect thereof against Landlord. Tenant shall give prompt notice to Landlord in case of casualty or accidents occurring in or upon the Property. Such obligations shall survive the termination or expiration of this Lease.

12.2 Insurance.

A. General. Without limiting Tenant's indemnification of Landlord and City, the Tenant shall provide and maintain at its own expense during the term of this Lease the following programs of insurance covering its operations hereunder. Such insurance shall be provided by insurer(s) reasonably satisfactory to the Landlord and evidence of such programs reasonably satisfactory to the Landlord shall be delivered to the Landlord on or before the Commencement Date of this Lease. Such evidence shall specifically identify this Lease and shall contain express conditions that the Landlord is to be given written notice at least thirty (30) days in advance of any modification or termination of any program of insurance.

B. During Construction. During the period of construction, including any demolition, excavation or other preconstruction activities, Tenant shall provide or cause its contractors or subcontractors to furnish the following forms and amounts of insurance. Such insurance shall be primary to and not contributing with any other insurance maintained by the Landlord, shall name the Landlord, its officials, officers, employees, and agents as additional insureds, and shall include, but not be limited to:

1. Builders All-Risk Insurance, including earthquake (if commercially reasonable to obtain), flood coverage (if commercially reasonable to obtain), covering the entire work against loss or damage until completion and acceptance by the Landlord as evidenced by the issuance of a Certificate of Completion pursuant to the Lease. Such insurance shall be in an amount equal to the replacement value of all Improvements on the Property and endorsed for broad form property damage, breach of warranty, and explosions, collapse and underground hazards.

Reasonable deductibles will be allowed.

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3. Comprehensive Auto Liability Insurance endorsed for all owned and non-owned vehicles with a combined single limit of at least ONE MILLION DOLLARS ($1,000,000) per occurrence. Such policy shall be endorsed to include Transportation Pollution Liability insurance, covering materials to be transported by Tenant's general contractor (or its subcontractor) for the development of the Improvements; provided, however, this coverage may also be provided by such contractor's Pollution Liability policy.

4. Worker's Compensation Insurance in an amount and form to meet all applicable requirements of the Labor Code of the State of California and Employer's Liability Insurance with limit of no less than $1,000,000 per accident for bodily injury or disease which specifically covers all persons providing services on behalf of Tenant and all risks to such persons under this Lease.

5. Contractors Pollution Liability and/or Asbestos Pollution Liability and/or Errors & Omissions applicable to the work being performed, with a limit no less than $2,000,000 per claim or occurrence and $2,000,000 aggregate per policy period of one year.

C. Following Completion of Construction. During the term of this Lease, following the completion of construction, Tenant shall provide the following forms and amounts of insurance with respect to the Property. Such insurance shall be primary to and not contributing with any other insurance maintained by the Landlord, shall name the Landlord, its officials, officers, employees, and agents as additional insureds, and shall include, but not be limited to:

1. Fire Insurance\Legal Liability Coverage and "All Risk" Property Insurance Coverage. Tenant, at its sole cost, shall procure and maintain in full force and effect at all times during the Term of this Lease, fire and extended coverage insurance satisfactory to Landlord covering the Property to keep all buildings, improvements, and other structures therein in an amount not less than one hundred percent (100%) of the full replacement cost against loss or destruction by fire and all perils, including vandalism, malicious mischief, special extended perils ("special form"). Landlord shall be named as an additional insured and loss payee on the policy.

Subject to the rights of Leasehold Mortgagees, any loss payable under any policy described in this section shall be paid by the insurance company to Landlord or as otherwise agreed by the Parties to be used to fund the repair or replacement of the damaged Premises or improvement. Landlord, its officials, officers, employees, and agents shall be made additional insureds on any policy of insurance required by any permanent or construction lender.

2. Comprehensive General Liability Insurance on an "occurrence" basis, including products and completed operations, property damage, bodily injury and personal & advertising injury with a combined single limit of not less than TWO MILLION DOLLARS ($2,000,000) per occurrence, with an annual aggregate of FOUR MILLION DOLLARS ($4,000,000). The liability insurance policy required herein shall insure Tenant's performance of the indemnity provisions of this Lease; and Landlord, and its officials, officers, employees, and agents shall be named as additional insureds with cross-liability endorsements. The Landlord shall not incur liability for payment of any premium for any policy of insurance required herein. If available, any policy of insurance required herein shall contain a provision requiring the insurer to give the Landlord thirty (30) days' prior written notice before canceling or changing any such coverage.

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3. Worker's Compensation Insurance in an amount and form to meet all applicable requirements of the Labor Code of the State of California and Employer's Liability Insurance with limit of no less than $1,000,000 per accident for bodily injury or disease which specifically covers all persons providing services on behalf of Tenant and all risks to such persons under this Lease.

4. If the Tenant maintains broader coverage and/or higher limits than the policy limits shown above, then the Landlord automatically requires and shall be entitled to the broader coverage and/or the higher limits maintained by the Tenant without any amendment to this Lease. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the Landlord, subject to the rights of Leasehold Mortgagees.

12.3 Review. The liability insurance requirements may be reviewed by Landlord and Tenant every five (5) years, for the purpose of mutually increasing (in consultation with their respective insurance advisors) the minimum limits of such insurance from time to time to limits which shall be reasonable and customary for similar facilities of like size and operation in accordance with generally accepted insurance industry standards, but in no event will Tenant be required to increase the amount of cumulative or single occurrence coverage by more than twentyfive percent (25%) for any five (5) year period. If the parties are unable to mutually agree upon such new limits within thirty (30) days of a written demand by one party upon the other, the determination of an independent insurance advisor selected by the parties' insurance advisors shall be binding upon the parties.

12.4 Proof of Coverage. All policies required hereunder shall be with companies having a Best's A-VII rating. Copies of all policies of insurance or certificates thereof shall be delivered to Landlord. All insurance policies required by this Article 12 shall name Landlord and its officials, employees, contractors, invitees, and agents as additional insureds. As often as any such policies shall expire or terminate, renewal or additional policies shall be procured and maintained in like manner and to like extent. All policies of insurance must contain a provision that the company writing such policy will give both parties thirty (30) days' advance written notice of any cancellation or lapse of the effective date or any reduction in the amounts of insurance. If Tenant fails to purchase, renew or maintain any insurance policies required herein, Landlord shall have the right to so purchase any such insurance and the amount of any such advance by Landlord shall constitute Additional Rent as defined in Section 5.3.

12.5 Other Insurance. Nothing in this Article 12 shall prevent Tenant from carrying insurance of the kind required of Tenant under a blanket insurance policy or policies, which cover other properties owned or operated by Tenant. Tenant shall furnish Landlord with copies of a schedule or makeup of all property affected by any such policy of blanket insurance within thirty (30) days after the filing of such schedule or makeup with the appropriate filing body.

Umbrella or Excess Policies will be acceptable provided that all of the Primary and Umbrella or Excess Policies shall provide all of the insurance coverages herein required, including, but not limited to, primary and non-contributory, additional insured, Self-Insured Retentions (SIRs), indemnity, and defense requirements. The Umbrella or Excess policies shall be provided on a true "following form" or broader coverage basis, with coverage at least as broad as provided

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on the underlying Commercial General Liability 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 Tenant's or any of its contractor's primary and excess liability policies are exhausted.

12.6 Pollution Insurance. Prior to conducting and/or causing any work to be conducted upon the Property, Tenant shall require its general contractor to use its best efforts to obtain a Contractor's Pollution Liability insurance policy, with an insurer(s) having a rating, as circulated by Best's Insurance reports, of "A" or better, with policy coverage and limits as required herein naming Landlord, its officials, employees, , and agents as additional insureds. Tenant shall require the general contractor to obtain, secure, and maintain in full force and effect such policy throughout the duration of work on the Property. Tenant shall pay any additional premium attributable to such coverage.

ARTICLE 13. DAMAGE OR DESTRUCTION

13.1 Restoration.

A. Insured Damage. No loss or damage by fire or any other cause resulting in either partial or total destruction of the Improvements now or hereafter located on the Property, or any fixtures, equipment or machinery used or intended to be used in connection with the Property or the Improvements thereon, shall (except as otherwise provided in Sections 13.1.B, or

13.2, below) operate to terminate this Lease or to relieve or discharge Tenant from the payment of any rent, or other amounts payable hereunder, as and when they become due and payable, or from the performance and observance of any of the agreements, covenants and conditions herein contained to be performed and observed by Tenant. Tenant covenants to repair or cause to be repaired and/or reconstruct or cause to be reconstructed any Improvements so damaged or destroyed to the extent, condition and value of such Improvements immediately prior (or if Tenant was in default of its maintenance and repair obligations at the time of such damage or destruction, to the condition and value which would have existed if Tenant had not been in default) to such damage or destruction, assuming full compliance with this Lease. Subject to the rights of any Leasehold Mortgagee (as defined in Section 17.3. below) Tenant also covenants that all insurance proceeds will be applied to the repair and/or reconstruction of such Improvements. Tenant's failure to make such full repair and restoration under any conditions in which it was elected or required so to do shall constitute default hereunder.

B. Uninsured Damage. Notwithstanding the provisions of Section 13.1.A, if, during the term, (i) the Improvements are totally or partially destroyed from a risk not covered one hundred percent (100%) by the sum of the applicable deductible and the insurance required to be carried by Tenant under this Lease, rendering the premises totally or partially inaccessible or unusable, and (ii) the cost of restoration exceeds ten percent (10%) of the then replacement value of the Improvements, Tenant can elect, with the prior written consent of each Leasehold Mortgagee and Investor Limited Partner, to terminate this Lease by giving notice to Landlord within thirty (30) days after determining the restoration cost and replacement value. If Tenant elects to terminate this Lease, Landlord, within ninety (90) days after receiving Tenant's notice to terminate, can elect to pay to Tenant, at the time Landlord notifies Tenant of its election, the difference between one hundred percent (100%) of the replacement value of the Improvements and the actual cost of

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restoration, in which case Tenant shall restore the Improvements. On Landlord's making its election to contribute, Landlord shall deposit immediately the amount of its contribution with the insurance trustee provided for in the following provisions. If Tenant elects to terminate this Lease and Landlord does not elect to contribute toward the cost of restoration as provided in this paragraph, this Lease shall terminate as of the ninety-first (91st) day following Tenant's notice.

C. Establishment of Insurance Trust and Disbursement Procedures. Assuming that Landlord has made the foregoing election to contribute, and there is available to Tenant insurance proceeds (subject to rights of any Leasehold Mortgagee as noted in A, above) for a portion of the cost of the restoration, Tenant shall make the loss adjustment with the insurance company insuring the loss and on receipt of the proceeds shall immediately pay them to a builder's control company, title company, or bank selected by the mutual agreement of the parties (the "insurance trustee"). Landlord shall also immediately deposit with the insurance trustee its required contribution toward the cost of restoration. All sums deposited with the insurance trustee shall be held for the following purposes and the insurance trustee shall have the following powers and duties:

1. The sums shall be paid in installments by the insurance trustee to the contractor retained by Tenant as construction progresses, for payment of the cost of restoration.

Any final retention provided for in the contract with such contractor will be paid to the contractor on completion of restoration, payment of all costs, expiration of all applicable lien periods, and proof that the Improvements and the Property are free of all mechanics' liens and lienable claims.

Any draw of the proceeds being held by the insurance trustee shall not be released until the Senior Leasehold Mortgagee has approved that draw and the back up documentation delivered in connection therewith, which consent shall be governed by the terms of Senior Leasehold Mortgagee's loan documents relating to draws for such improvements.

2. Payments shall be made on presentation of certificates or vouchers from the architect or engineer retained by Tenant showing the amount due. If the insurance trustee, in its reasonable discretion, determines that the certificates or vouchers are being improperly approved by the architect or engineer retained by Tenant, the insurance trustee shall have the right to appoint an architect or an engineer to supervise construction and to make payments on certificates or vouchers approved by the architect or engineer retained by the insurance trustee.

The reasonable expenses and charges of the architect or engineer retained by the insurance trustee shall be paid by the insurance trustee out of the trust fund.

3. If the sums held by the insurance trustee are not sufficient to pay the actual cost of restoration Landlord and Tenant shall each deposit one-half (1/2) the amount of the deficiency with the insurance trustee within ten (10) business days after request by the insurance trustee indicating the amount of the deficiency.

4. Any undisbursed funds after compliance with the provisions of this paragraph shall be delivered to Landlord to the extent of Landlord's contribution to the fund, and the balance, if any, shall be paid to Tenant.

5. All actual costs and charges of the insurance trustee shall be paid by Tenant.

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6. If the insurance trustee resigns or for any reason is unwilling to act or continue to act, the parties shall substitute a new trustee in the place of the designated insurance trustee.

7. Both parties shall promptly execute all documents and perform all acts reasonably required by the insurance trustee to perform its obligations under this paragraph.

13.2 Right to Terminate Upon Destruction Near the End of the Term. If, during the last five (5) years of the term, the Improvements on the Property are totally or partially destroyed, and if the cost of restoration exceeds ten percent (10%) of the replacement cost of Improvements on the Property immediately before the damage or destruction, Tenant may elect to terminate this Lease, with the consent of all Leasehold Mortgagees, provided that Tenant complies with all of the following conditions:

A. Tenant gives Landlord written notice of the damage or destruction within thirty (30) days after the event causing such damage or destruction; B. Tenant is not in material default under this Lease;
C. Tenant transfers to Landlord all insurance proceeds resulting from the casualty, net of any cost incurred by Tenant in collecting such insurance proceeds and/or in complying with the provisions of Paragraph E. below;
D. Tenant delivers possession of the Property and Improvements thereon to Landlord and quitclaims to Landlord all right, title and interest in the Property and the Improvements thereon; and
E. If Tenant so elects to terminate this Lease under this section, then Tenant shall, at its expense, promptly remove all debris and put the Property in a safe condition.

Thereupon, this Lease shall terminate and the parties shall have no further obligations to each other excepting those previously accrued but not satisfied at the time of termination.

13.3 Waiver. The provisions of this Article 13 shall govern the rights of the parties in the event of any full or partial destruction of the Property. Tenant hereby waives the provisions of Civil Code Section 1932(2) and Civil Code Section 1933(4) and any similar successor statute or law with respect to any destruction of the Property or the Improvements thereon.

13.4 Determination of Extent of Destruction, Interference with Use. For the purposes of Section 13.2, the extent of destruction of the Improvements shall be determined by dividing the estimated cost of replacement or restoration as evidenced by estimates prepared by licensed general contractors acceptable to Landlord by the full replacement cost of the Improvements, applying thereto the percentage change in construction cost for the applicable period based upon the Engineering News Record (ENR) average construction cost index for such period, applicable to the San Francisco Bay Metropolitan Area, or in the absence of such index, a similar index prepared for such area.

13.5 Procedures for Repair and Restoration. In the event of any damage or destruction, Tenant shall promptly give Landlord written notice of such damage or destruction and the date on

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which such damage or destruction occurred. Tenant shall promptly make proof of loss and shall proceed promptly to collect, or cause to be collected, all valid claims which Tenant may have against insurers or others based upon any such damage or destruction. Except as otherwise provided below, subject to the rights of Leasehold Mortgagees, amounts received on account of any losses pursuant to insurance policies shall be used and expended for the purpose of fully repairing or reconstructing the portions of the Improvements on the Property which have been destroyed or damaged. Tenant shall commence and complete or cause to be corrected and completed, in a good and workmanlike manner and in accordance with this Lease, the reconstruction or repair of any part of the Improvements on the Property damaged or destroyed, after Landlord has approved Tenant's plans, drawings, specifications and construction schedule for such reconstruction or repair.

ARTICLE 14. CONDEMNATION

14.1 Definitions.

A. "Condemnation" means (1) the exercise of any governmental power in eminent domain, whether by legal proceedings or otherwise, by a condemnor, and (2) a voluntary sale or transfer to any condemnor, either under threat of condemnation or while legal proceedings for condemnation are pending.

B. "Date of taking" means the date the condemnor has the right to possession of the property being condemned.

C. "Award" means all compensation, sums or anything of value awarded, paid or received on a total or partial condemnation.

D. "Condemnor" means any public or quasi-public authority, or private corporation or individual, having the power of condemnation.

14.2 Parties' Rights and Obligations to be Governed by Lease. If during the term there is any taking of all or any part of the Property, any Improvements on the Property or any interest in this Lease by condemnation, the rights and obligations of the parties shall be determined pursuant to the provisions of this Article 14, subject to the rights of any Leasehold Mortgagee as provided in Article 17 of this Lease.

14.3 Total Taking. If the Property is totally taken by condemnation, this Lease shall terminate on the date of taking.

14.4 Effect of Partial Taking. If any portion of the Property or the Improvements thereon is taken by condemnation, this Lease shall remain in effect, except that Tenant may elect to terminate this Lease, with the consent of all Leasehold Mortgagees and the Investor Limited Partner, if the remaining portion of the Property is rendered unsuitable (as defined herein) for Tenant's continued use. The remaining portion of the Property shall be deemed unsuitable for Tenant's continued use if, following a reasonable amount of reconstruction, Tenant's business on the Property could not be operated at an economically feasible level. Tenant must exercise its right to terminate by giving Landlord written notice of its election within ninety (90) days after the nature and extent of the taking have been finally determined. Such notice shall also specify the

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date of termination, which shall not be prior to the date of taking. Failure to properly exercise the election provided for in this Section will result in this Lease continuing in full force and effect.

14.5 Restoration of the Premises. If, in Tenant's judgment it is reasonably possible and economically feasible to do so, Tenant shall be entitled to use so much of the award as is necessary to restore or to add on to the Property so that the area and approximate layout of the Property will be substantially the same after the date of taking as they were before the date of taking. If it is not reasonably possible and economically feasible to so restore the area and layout of the Property, the remaining provisions of this Article 14 shall govern the rights of the parties. If, after receipt of the award, Tenant fails to promptly commence any reasonably required repair, restoration or reconstruction of the Property and diligently prosecute such repair, restoration or reconstruction to completion, and such failure is not remedied within sixty (60) days of written notice from the Landlord to Tenant, this Lease may be terminated by the Landlord; provided, however, that in the event that the nature of the cure is such that more than sixty (60) days are reasonably required, Tenant shall have such additional period of time as is reasonably required provided that Tenant commences the required repair, restoration or reconstruction within such sixty (60) days and thereafter diligently and continuously prosecutes it to completion.

14.6 Waiver of CCP Section 1265.130. Each party waives the provisions of the Code of Civil Procedure Section 1265.130 allowing either party to petition the Superior Court to terminate this Lease in the event of a partial taking of the Property.

14.7 Award. Subject to the provisions of Section 14.5, and subject to the rights of any Leasehold Mortgagee and subject to Tenant's right to use the award as is necessary for restoration in accordance with Section 14.5, the award for the Property and for the Improvements shall be allocated as follows:

A. Landlord and Tenant shall be entitled to receive and retain such separate awards and portions of lump sum awards as may be allocated to their respective interests in any condemnation proceedings, or as may be otherwise agreed, taking into consideration the fact that Landlord's interest in the Property is limited to the land (exclusive of the Improvements), as encumbered by this Lease, and, upon the expiration of the Term, a reversionary interest in the Leased Premises and the Improvements. If the Property shall be restored as is contemplated in Section 14.5 above, Tenant shall be entitled to recover the costs and expenses incurred in such restoration out of any award. Thereafter, if the condemning authority does not make separate awards, the Parties agree that any award will be allocated on a proportionate basis.

B. If the parties are unable to agree as to amounts that are to be allocated to the respective interests of each party, then each party shall select an independent M.A.I. real estate appraiser (an "Appraiser"). Each Appraiser shall separately determine the amount of the balance of the award that is to be allocated to the interests of each Party. If the percentage of the balance of the award each Appraiser allocates to Landlord (a) are within ten percent (10%) of each other, the two (2) allocations shall be averaged, and such average shall be the final allocation of the award, or (b) are not within ten percent (10%) of each other, the two (2) Appraisers shall then select a third Appraiser, who shall independently allocate the award between Landlord and Tenant, and the middle of such three allocations shall be the final allocation of the award. Notwithstanding the foregoing, if required by the Senior Leasehold Mortgagee, the Net Condemnation Award shall

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be distributed to the Senior Leasehold Mortgagee in accordance with the Senior Leasehold Mortgage if such Taking occurs while the Senior Leasehold Mortgage encumbers the Property.

Tenant shall have the right to negotiate directly with the condemnor for the recovery of the portion of the award that Tenant is entitled to under this Section 14.7. Nothing in this Section 14.7 shall be deemed a waiver or surrender by Tenant or any subtenant of any right to receive relocation assistance under Government Code Section 7260, et seq., or compensation for moving of personal property under Code of Civil Procedure Section 1263.260.

ARTICLE 15. ASSIGNMENT AND SUBLETTING

15.1 General. Prior to the Completion of the Improvements, defined as issuance of certificates of occupancy for all Improvements to be constructed on the Property, Tenant shall not have the right, except pursuant to Leasehold Mortgages, to assign its rights or obligations under this Lease unless such assignment has been approved in writing by Landlord. Landlord may grant or withhold such approval at its sole discretion. Any permitted assignment shall specifically provide that Developer's assignee agrees to be bound by the provisions of this Lease.

Following the Completion of the Improvements, Tenant may not assign its interest in this Lease or sublet all or any portion of the Property or Improvements without Landlord's written consent, except as otherwise hereinafter provided in this Article 15. When such consent is required, it shall not unreasonably be withheld, conditioned or delayed. It shall not be unreasonable for Landlord to condition its approval, among other things, upon the proposed assignee having a financial net worth, according to a current financial statement prepared by a certified public accountant, which is reasonably acceptable to Landlord, upon the proposed assignee having a reputation for and experience and qualifications in operating and maintaining similar affordable housing properties reasonably comparable to that of the Tenant, and upon the proposed assignee having a first-class business reputation. In evaluating the acceptability of the net worth of a proposed assignee, Landlord may require that the assignee's net worth be sufficient to carry out the performance of Tenant's obligation under this Lease, including, but not limited to the affordability restrictions set forth in Article 7. Notwithstanding the foregoing, Landlord agrees that it will not withhold its consent to Tenant's assignment of its interest in this Lease if Tenant demonstrates to the reasonable satisfaction of Landlord that such assignee has a net worth equal to or exceeding that of Tenant as of the Commencement Date, has a reputation for and experience and qualifications in operating and maintaining at least three (3) similar properties, and has a first class business reputation in the real estate industry. Landlord's consent to any one assignment or sublease shall not constitute consent to any other assignment or sublease, and shall not constitute a waiver of the right to give or withhold consent in accordance with this Article 15.

15.2 Transfer of Tenant. Prior to the Completion of the Improvements (as defined in Section 15.1), there shall be no change in control of Tenant (other than such changes occasioned solely by the death or incapacity of an individual, or the dilution or transfer of a partner's, shareholder's or member's interest pursuant to the provisions of the governing documents for the Tenant's entity) without the prior written approval of Landlord. Landlord may grant or withhold such approval at its sole discretion. For purposes of this section, a "change in control" shall be defined as any transfers of more than 49 percent (49%) in the aggregate of the partnership or membership interests or stock of Tenant. Tenant shall promptly notify Landlord of any and all such changes in control of Tenant. This Lease may be terminated by Landlord if there is any change

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(voluntary or involuntary) in the control of Tenant in violation of this Lease (other than such changes occasioned solely by the death or incapacity of an individual, or the dilution of a partner's, shareholder's or member's interest pursuant to the provisions of the governing documents for the Tenant's entity) that has not been approved by Landlord prior to the time of such change. Following Completion of the Improvements, there shall be no change in control of Tenant (other than such changes occasioned solely by the death or incapacity of an individual, or the dilution of a partner's or shareholder's or member's interest pursuant to the provisions of the governing documents for Tenant's entity) without the prior written approval of Landlord, which approval shall not be unreasonably withheld, conditioned or delayed. Further, following Completion of the Improvements and despite any other provision of this Lease, Landlord's consent is not required for any assignment to an Affiliate (as defined below), as long as the following conditions are met: (a) Landlord receives written notice of the assignment (as well as any documents or information reasonably requested by Landlord regarding the assignment or assignee); and (b) the assignee assumes in writing all of Tenant's obligations under this Lease. An "Affiliate" means any entity that controls, is controlled by, or is under common control with Tenant. For the purposes of this Section 15.3, "control" as it relates to an Affiliate means the direct or indirect ownership of more than fifty percent (50%) of the voting securities of an entity or possession of the right to direct the entity's day-to-day affairs.

Notwithstanding anything to the contrary contained herein, Landlord hereby consents to the following transactions: (i) transfer of the limited partner's interest in Tenant to the Investor Limited Partner; (ii) transfer by the Investor Limited Partner of its limited partner interest in Tenant to an entity in which the Investor Limited Partner, or its affiliate, manages and controls, directly or indirectly, the management decisions of said entity; and (iii) the withdrawal, removal and/or replacement of Tenant's general partner(s) by the Investor Limited Partner, its successors or assigns for a default under the Tenant's partnership agreement provided that Landlord has approved the replacement general partner, which approval shall not be unreasonably withheld so long as such replacement general partner satisfies the requirements of 24 CFR 92.300(a)(4) during any period in which the Project is funded by the HOME Investment Partnerships Program set forth in 24 CFR Part 92; and (iv) the transfer of the limited partner's interest in Tenant to the Tenant's managing general partner.

15.3 Subleases.

A. Tenant may sublease all or any portion of the Property upon Landlord's written consent, which shall not be unreasonably withheld, conditioned or delayed.

1. Subleases of Residential Units. Landlord hereby consents to all subleases of individual residential rental units constructed on the Property (including one (1) designated on-site manager's units), subject to the following qualifications:
a. The subtenant is an "Eligible Household" as defined in Section 7.2 of this Lease and the sublease is consistent with the rent and income restrictions set forth therein (and, to the extent applicable, any other regulatory agreement governing the Tenant).

Tenant shall provide Landlord with copies of all reports and certifications given to state or federal regulatory agencies concerning the rental and income qualifications of subtenants.

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b. Tenant has provided Landlord with an annual written
certification that Tenant has obtained from all subtenants the written waiver described in Subsection 15.4.D of this Lease. Tenant shall make available to Landlord copies of such written waivers upon request.

2. Other Subleases. For any sublease other than those described in Section 15.4.A.1. above, it shall not be unreasonable for Landlord to withhold its consent of any proposed sublease if the proposed sublessee intends to use the Property for a use other than those authorized by this Lease or that is prohibited under Article 7 of this Lease. At least thirty (30) days prior to the effective date of any sublease of the Property or of any amendment or assignment of an existing sublease, Tenant shall submit a copy of the sublease, amendment or assignment to the Landlord, together with a certification of Tenant that the sublease or amendment does not grant to the proposed subtenant any option or other right to purchase the Tenant's leasehold interest in the portion of the Property which is the subject of such sublease.

B. In the event that Tenant is unable to make the certifications set forth in subsection A of this Section 15.4, no such sublease, amendment or assignment shall be approved by Landlord. Landlord shall approve or disapprove each such proposed sublease within thirty (30) calendar days of receipt of a copy of the sublease and if not approved or disapproved within such time, the sublease, amendment or assignment shall be deemed approved, but only if the written transmittal of the sublease contains a prominent notice in bold face type that failure to approve or disapprove the sublease within thirty (30) calendar days will result in the sublease being deemed approved. Tenant agrees to promptly provide Landlord with any information reasonably requested by Landlord relating to the identity of any proposed subtenant, the nature of such subtenant's business and the proposed subtenant's financial responsibility.

C. Each sublease entered into on the Property shall comply with the applicable provisions of the Lease. No sublease shall have a term, which extends beyond the term of this Lease.

D. Tenant shall include in all subleases and assignments: (1) a disclosure by Tenant and acknowledgement by the proposed assignee or sublessee of: (a) the presence of the Hazardous Materials on the Property as required by California Health and Safety Code Section 25359.7; and (2) a waiver by the assignee or subtenant of any claims, damages or causes of action against Landlord arising from the presence of Hazardous Materials on the Property. Landlord shall approve in advance the form and content of such disclosure, acknowledgment and waiver. All subleases shall also include provisions requiring Tenant (as landlord) to notify any subtenants of any threatened flooding of the Property and sensitive equipment and materials above flood elevations.

15.4 Nondisturbance Agreement. If Landlord has consented to a sublease, other than subleases described in Section 15.4.A.1, then Landlord shall, at Tenant's request, execute and deliver to any subtenant a recognition and nondisturbance agreement which shall assure such subtenant, so long as it is not in default under its sublease, the quiet possession of its subleasehold during the term thereof, notwithstanding Tenant's default or any termination of this Lease, provided that, except to the extent expressly agreed upon by Landlord in writing in such nondisturbance agreement: (a) no sublease shall be for a term which exceeds the term of this Lease;

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(b) no sublease shall provide for prepaid rent (excepting an advance payment of the first month's rent and no more than an additional two month's rent as a security deposit); (c) all rental terms shall be reasonable and at prevailing market rates for comparable properties; and (d) no greater burdens are placed upon the Landlord in the sublease than are undertaken by the Landlord under this Lease. To obtain the recognition and nondisturbance agreement, Tenant shall provide Landlord with a fully executed copy of any sublease along with a written request for such agreement.

ARTICLE 16. TENANT DEFAULTS AND LANDLORD'S REMEDIES

16.1 Defaults by Tenant. Tenant shall be in default under the Lease if:

A. Tenant is at any time in default in the payment of rent or any other monetary sum called for by this Lease for more than thirty (30) days following written notice from Landlord to Tenant; or
B. Tenant is at any time in default in the keeping and performing of any of its other covenants or agreements herein contained, and should such other default continue for sixty (60) days after written notice thereof from Landlord to Tenant specifying the particulars of such default, or if such other default is of a nature that curing such default will take more than sixty (60) days and Tenant has failed to commence such cure within such sixty (60) days and to thereafter diligently pursue completion of such cure; or
C. Tenant fails to commence Construction by the date set forth in Section 3.3 and such default is not cured within sixty (60) days of written notice from Landlord to Tenant; or D. Tenant abandons or substantially suspends the Construction, as required by this Lease, prior to the Completion of Improvements, and such default is not cured within sixty (60) days of written notice from Landlord to Tenant; or E. Subject to the provisions of Section 17.4 and 17.9 of this Lease, Tenant fails to obtain Completion of Improvements within the time set forth in the Schedule of Performance and such default is not be cured within sixty (60) days of written notice from Landlord to Tenant; provided, however, that in the event that the nature of the cure is such that more than sixty (60) days are reasonably required, Tenant shall have such additional period of time as is reasonably required provided that Tenant commences the cure within such sixty (60) days and thereafter diligently and continuously prosecutes the cure to completion; or F. Tenant assigns, sells, transfers, conveys, encumbers, hypothecates or leases the whole or any part of the Property or any improvement constructed thereon in violation of this Lease; or
G. There occurs, in violation of this Lease, any change in control of Tenant or of a part thereof, or any other act or transaction involving or resulting in a change in the identity of the parties in control of Tenant or the degree of such control; or H. A receiver is appointed to take possession of either the Property, the Improvements, Tenant's interest in the leasehold estate, or of Tenant's operation on the Property

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for any reason; provided that the appointment by a receiver for the benefit of a Leasehold Mortgagee with a Leasehold Mortgage permitted by this Lease shall not be construed as a default within the meaning of this Section.

16.2 Remedies. Subject to the rights of any Leasehold Mortgagees and the Investor Limited Partner permitted under Article 17 of this Lease, upon the occurrence of any default, in addition to any and all other rights or remedies of Landlord hereunder, or by law or in equity provided, Landlord shall have the sole option to exercise the following rights and remedies:

A. Terminate this Lease by giving Tenant notice of termination. On the giving of the notice, all Tenant's rights in the Property and in all Improvements shall terminate. Promptly after notice of termination, Tenant shall surrender and vacate the Property and all Improvements in broom-clean condition; and, following the expiration without exercise by Senior Leasehold Mortgagee of its new lease right under Section 17.12, below, subject to the provisions in Section

16.2.B, below, respecting the right of certain subtenants to remain, Landlord may reenter and take possession of the Property and all Improvements and eject all parties in possession or eject some and not others, or eject none. Termination under this paragraph shall not relieve Tenant from the payment of any sum then due to Landlord or from any claim for damages previously accrued or then accruing against Tenant.

B. Without terminating this Lease, Landlord may at any time and from time to time relet the Property and Improvements thereon or any part or parts of them for the account and in the name of Tenant or otherwise. Landlord may at Landlord's election eject all persons or eject some and not others, or eject none; provided, however, that Landlord shall not have the right to eject any subtenant who is not in default under a sublease whose lease has been duly submitted and approved (if required) in writing by Landlord pursuant to Section 15.3 of this Lease and is not then in default. Any reletting may be for the remainder of the term or for a longer or shorter period.

Landlord may execute any leases made under this provision either in Landlord's name or in Tenant's name, and shall be entitled to all rents from the use, operation, or occupancy of the Property or Improvements thereon, or both. Tenant hereby appoints Landlord its attorney-in-fact for purpose of such leasing. Tenant shall nevertheless pay to Landlord on the due dates specified in this Lease the equivalent of all sums required of Tenant under this Lease, less the revenue received by Landlord from any reletting or attornment, plus Landlord's expenses, including (by way of example), but not limited to, remodeling expenses, commissions and advertising costs. No act by or on behalf of Landlord under this provision shall constitute a termination of this Lease unless Landlord gives Tenant notice of termination.

C. Reletting by Landlord pursuant to Paragraph B, above, does not waive Landlord's right to thereafter terminate this Lease and all of Tenant's rights in or to the leased Property.

16.3 Damages. Should Landlord elect to terminate this Lease, Landlord shall be entitled to recover from Tenant, as damages:

A. The worth at the time of the award of the unpaid rent that had been earned at the time of termination of this Lease;

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B. The worth at the time of the award of the amount by which the unpaid rent that would have been earned after the date of termination of this Lease until the time of award exceeds the amount of the loss of rent that Tenant proves could have been reasonably avoided; C. The worth at the time of the award of the amount by which the unpaid rent for the balance of the lease term after the time of award exceeds the amount of the loss of rent that Tenant proves could have been reasonably avoided; and
D. Any other amount (and court costs) necessary to compensate Landlord for all detriment proximately caused by Tenant's default, including, without limitation, costs of alterations and commissions in connection with reletting.

16.4 "Worth at the Time of the Award." The "worth at the time of the award," as used in subsections A and B of Section 16.3, is to be computed by allowing interest at the maximum rate permitted by Section 1(2) of Article XV of the California Constitution. The "worth at the time of the award," as referred to in subsection C of Section 16.3, is to be computed by discounting the amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of the award, plus one percent (1%).

16.5 Landlord's Right to Cure Tenant's Default. Landlord, at any time after Tenant commits a default which Tenant has failed to cure within the time established therefor, but subject to the rights to notice and cure of any Leasehold Mortgagee and the Investor Limited Partner, may cure the default at Tenant's cost. If Landlord at any time, by reason of Tenant's default, pays any sum, the sum paid by Landlord, plus the Landlord's administrative fee, in an amount equal to twelve percent (12%) of such sum, shall be considered Additional Rent, and shall be due in accordance with Section 5.3.

ARTICLE 17. MORTGAGEE PROTECTION PROVISIONS

17.1 Definitions. As used in this Article 17:

A. The term "Institutional Lender" shall refer to a savings bank, savings and loan association, commercial bank, trust company, credit union, insurance company, college, university, real estate investment trust, private equity provider, or pension fund. The term "Institutional Lender" shall also include governmental entities, other lenders of substance, including Fannie Mae and the Federal Home Loan Mortgage Corporation (and their constituent lenders) which perform functions similar to any of the foregoing, and which have assets in excess of FIFTY MILLION DOLLARS ($50,000,000) at the time the leasehold mortgage or similar loan is made.

B. The term "Investor Limited Partner" shall refer to Tenant's limited partner together with its successors and assigns. As of the date hereof, the Investor Limited Partner is U.S.

Bancorp Community Development Corporation, a Minnesota corporation.

C. The term "Leasehold Mortgage" shall include a mortgage, a deed of trust or other security instrument by which Tenant's leasehold estate is mortgaged, conveyed, assigned or otherwise transferred to secure a debt or other obligation.

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D. The term "Leasehold Mortgagee" or "mortgagee" shall refer to a holder of a leasehold mortgage with respect to which the notice provided for by Section 17.4, below, has been given and received and as to which the provisions of this Article 17 are applicable.

E. The term "Senior Leasehold Mortgagee" shall refer to the Leasehold Mortgagee holding the senior most (in terms of lien priority) Leasehold Mortgage on Tenant's leasehold estate created under this Lease.

17.2 Leasehold Mortgages. Tenant shall have the right to grant one or more Leasehold Mortgages encumbering Tenant's interest in the Improvements and/or Tenant's leasehold interest under this Lease to any Institutional Lender only with Landlord's prior written consent which shall not be unreasonably withheld, conditioned or delayed.

A. The Leasehold Mortgage shall cover no interest in any real property other than Tenant's interest in the Improvements or some portion thereof, and the leasehold estate of Tenant under this Lease.

B. Prior to the filing of a Notice of Completion with respect to the Improvements, Leasehold Mortgages may be made only for the purposes of financing necessary and appropriate to pay Development Costs (or, as to the First Transfer (defined below), any acquisition costs). "Development Costs" as used herein means the following actual costs and expenses of the development work to be performed by or on behalf of Tenant for or in connection with the development of the Property and Improvements required under this Lease, to the extent that such costs and expenses are incurred and paid for by Tenant and/or a Leasehold Mortgagee in connection with the initial construction:

1. Land development work.

2. Construction of the Improvements and installation of the required fixtures, furniture, machinery and equipment.

3. Building permits and entitlement fees not paid for or reimbursed by landlord.

4. Premiums for fire, public liability and property damage insurance during construction and on bonds securing work against liens for labor and materials.

5. Real estate taxes and assessments upon the Property and Improvements or the Improvements during the period of construction.

6. Fees for architects, engineers, accountants and attorneys.

7. Development fees paid to government agencies.

8. Out-of-pocket costs incurred by Tenant in connection with construction financing, including, without limitation, commitment fees, interest reserve and points, lender's legal fees charged to Tenant, mortgage broker fees, standby fees and fees of a like nature,

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printing and duplicating expenses, documentary transfer tax stamps, mortgage taxes, recording charges.

9. Expenditures by Tenant required to satisfy any other obligation of Tenant under the Lease.

C. The amount of any loan secured by a Leasehold Mortgage prior to the filing of a Notice of Completion shall not, when added to the amounts secured by other Leasehold Mortgages, exceed the total amount estimated by Tenant sufficient to pay all Development Costs.

17.3 No Subordination. Landlord's reversionary fee interest in the Property and rights and interests in the Property and this Lease, including without limitation the affordability restrictions and Landlord's right to receive any sums from Tenant, shall not be subordinated to the rights of any lien, mortgage or security interest (including without limitation, the rights of any Leasehold Mortgagees) granted in Tenant's interest under this Lease or granted by Tenant.

Notwithstanding the foregoing, a Leasehold Mortgagee shall have all of the rights set forth in the Leasehold Mortgage, as approved by Landlord in accordance with Section 17.2 herein, to the extent that such rights are not inconsistent with the terms of this Lease, including the right to commence an action against Tenant for the appointment of a receiver and to obtain possession of the Property under and in accordance with the terms of said Leasehold Mortgage; provided, that subject to Leasehold Mortgagee's rights and obligations under Section 17.9 below, all obligations of Tenant hereunder shall be kept current, including but not limited to the payment of sums owing under this Lease and curing of all defaults hereunder. In addition, the City Manager of Landlord or the City Manager's designee, in his or her discretion, may agree to subordinate the affordability restrictions as set forth in Section 7.2.B.2.c.

17.4 Notice to Landlord. At any time the Landlord is not a secured lender to the Tenant, Tenant shall cause each Leasehold Mortgagee to give Landlord the right to receive notices of any event of default by Tenant under the applicable Leasehold Mortgage and the right to cure any such default in the same period of time as is given to Tenant thereunder plus an additional ten (10) business days with respect to those defaults that are curable. Landlord may exercise such cure right no more than three (3) times in any thirty-six (36) consecutive month period of the term of this Lease. If and to the extent Tenant fails to cure any such default, and Landlord exercises its right to cure the same, Tenant shall reimburse Landlord for all of Landlord's reasonable costs and expenses, including without limitation reasonable attorneys' fees which shall be considered Additional Rent. At any time the Landlord is not a secured lender to the Tenant, Landlord may record in the Official Records a request for notice of default.

In the event a Leasehold Mortgagee intends to negotiate a deed in lieu of foreclosure as a result of Tenant's default, Leasehold Mortgagee shall notify the Landlord, and Landlord shall have the right to assume Tenant's leasehold mortgage, curing all defaults, and Tenant shall convey its interests in Improvements to Landlord. After conveyance, Tenant shall have no further obligation under the Lease except for those obligations that expressly survive this Lease.

17.5 Notice to Leasehold Mortgagee and Investor Limited Partner. Landlord shall mail to Leasehold Mortgagee and Investor Limited Partner a duplicate copy of any and all notices Landlord may from time to time give to or serve on Tenant pursuant to or relating to this Lease.

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Leasehold Mortgagee and the Investor Limited Partner shall, to the extent it would like to receive such notices, deliver to Landlord in writing of the name and mailing address of such Leasehold Mortgagee and may, from time to time, make changes in its mailing address by delivering notice thereof to Landlord. Any notices or other communications permitted by this or any other Section of this Lease or by law to be served on or given to Leasehold Mortgagee or the Investor Limited Partner by Landlord shall be deemed duly served on or given to Leasehold Mortgagee or the Investor Limited Partner, upon Leasehold Mortgagee's or the Investor Limited Partner's receipt or refusal to accept, as applicable, and shall be delivered by United States mail, certified, return receipt requested or by overnight courier, return receipt, addressed to Leasehold Mortgagee at the last mailing address for Leasehold Mortgagee furnished in writing to Landlord by Tenant, Leasehold Mortgagee, or the Investor Limited Partner, it being acknowledged by Landlord that the Investor Limited Partner's notice address is set forth in Section 18.5 of this Lease. The date of notice shall be the date marked on the return receipt.

17.6 Leasehold Mortgagee's Rights. Notwithstanding anything to the contrary set forth in this Lease, Leasehold Mortgagee (or its nominee) shall have the right, without further consent of Landlord, at any time during the Term of this Lease to:

A. Do any act or thing required of Tenant under this Lease, and any such act or thing done and performed by Leasehold Mortgagee shall be as effective to prevent a forfeiture or loss of Tenant's rights under this Lease as if done by Tenant itself; B. Do any act or thing required of Tenant, and enforce the obligations of Tenant, under any regulatory agreement recorded against Tenant's leasehold estate in connection with the Leasehold Mortgage;
C. Transfer, convey or assign the right, title and interest of Tenant in and to the leasehold estate created by this Lease to any purchaser at any foreclosure sale, whether the foreclosure is conducted pursuant to court order or pursuant to a power of sale contained in a Leasehold Mortgage; and
D. Acquire and succeed to the right, title and interest of Tenant under this Lease by virtue of any foreclosure proceeding, whether the foreclosure is conducted pursuant to a court order or pursuant to a power of sale contained in a Leasehold Mortgage, or by virtue of a transfer in lieu of foreclosure ("Foreclosure") and, following such Foreclosure, transfer, convey or assign the right, title and interest of Tenant in and to the leasehold estate granted by this Lease to any third party (the "First Transfer"), and such third party may place acquisition and construction financing on the Property in connection with such First Transfer.

17.7 Obligations of Leasehold Mortgagee Upon Acquisition of Leasehold Estate. If the holder of a Leasehold Mortgage acquires the leasehold estate created hereunder or otherwise acquires possession of the Property and Improvements pursuant to available legal remedies, Landlord will look to such holder to perform the obligations of Tenant hereunder accruing only from and after the date of foreclosure or possession and will not hold such holder responsible for the past actions or inactions of the prior Tenant. Notwithstanding the foregoing, (i) on and after the date of such Foreclosure or possession, such holder shall be required to perform and abide by each and all of the obligations of Tenant under this Lease (except for the payment any Additional

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Rent accruing prior to the date of foreclosure or possession, which shall remain personal obligations of the prior Tenant) and (ii) on and after the date of such Foreclosure or possession, Landlord shall have the right to enforce each and all of the provisions of this Lease against such holder. Nothing herein is intended or shall be construed to limit or restrict Landlord's rights and remedies against any prior Tenant, provided that Landlord's pursuit of such remedies shall not affect the rights of the holder of any Leasehold Mortgage to the use, enjoyment or operation of the Property and Improvements, and provided further that Landlord agrees that each Leasehold Mortgagee or its designee or affiliate (i) shall be automatically released from any liability that arises following the date of the transfer of the Leased Premises to a third-party purchaser and (ii) shall have no liability hereunder in excess of such party's interest in the Leased Premises.

17.8 No Modification of Lease Without Leasehold Mortgagee's and Investor Limited Partner's Consent. Tenant and Landlord hereby expressly stipulate and agree that they will not modify this Lease in any way nor will Tenant surrender its interest in this Lease without the prior written consent of each Leasehold Mortgagee and the Investor Limited Partner. Any modification to this Lease without the prior written consent of each Leasehold Mortgage and the Investor Limited Partner shall be null, void and without effect. Tenant and Landlord further agree that each will not take advantage of any provisions of the United States Bankruptcy Code that would result in a termination of this Lease or make it unenforceable.

17.9 Right of Leasehold Mortgagee and Investor Limited Partner to Cure Default.

Before Landlord may terminate this Lease because of any default under or breach of this Lease by Tenant, Landlord must (i) give written notice of the default or breach (the "Initial Default Notice") and (ii) give written notice of the failure of the Tenant to cure the default or breach (the "Second Default Notice") to each Leasehold Mortgagee and the Investor Limited Partner concurrently with the transmittal of such notices to Tenant and afford each of the Leasehold Mortgagee and the Investor Limited Partner the opportunity to:

A. Cure the breach or default (including the payment of all accrued and delinquent rent other than any Additional Rent due hereunder) at any time prior to the sixtieth (60th) day after service on Leasehold Mortgagee or the Investor Limited Partner, as applicable, of the Second Default Notice where the default can be cured by the payment of money to Landlord or some other person;
B. Cure the breach or default within ninety (90) days after service on Leasehold Mortgagee or the Investor Limited Partner, as applicable, of the Second Default Notice where the breach or default must be cured by something other than the payment of money and can reasonably be cured within that time; or
C. Cure the breach or default in such reasonable time as may be required where something other than the payment of money is required to cure the breach or default and cannot be reasonably cured within ninety (90) days after service on Leasehold Mortgagee or the Investor Limited Partner, as applicable, of the Second Default Notice, provided that acts to cure the breach or default are commenced within that time period after service of the Second Default Notice on Leasehold Mortgagee or the Investor Limited Partner by Landlord and are thereafter diligently and continuously pursued by Leasehold Mortgagee or the Investor Limited Partner, as applicable, to completion.

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If in order to complete the cure of the default or breach Leasehold Mortgagee requires access to the Property the foregoing cure period shall not commence until Leasehold Mortgagee obtains possession of the Property, provided that the Leasehold Mortgagee diligently seeks to obtain such possession by a foreclosure action or otherwise and diligently pursues such action all within the time periods set forth in Section 17.10 below. If Leasehold Mortgagee or the Investor Limited Partner completes the cure of the default or breach in a timely and proper manner, Landlord shall accept the cure as fulfilling the terms of this Lease. For the avoidance of any doubt, in no event shall any Leasehold Mortgagee be obligated to cure any default triggered by any failure to pay any debt of Tenant to such Leasehold Mortgagee, be obligated to cure any default under any default under any Leasehold Mortgage of subordinate priority (in terms of lien position), including, if applicable any subordinate loan in favor of Landlord, in order to avoid the termination of this Lease, nor shall any successor owner following any foreclosure of deed in lieu of foreclosure by such Leasehold Mortgagee, or its nominee (a "Successor Owner") be obligated to cure any such default thereafter.

Notwithstanding anything to the contrary in this Lease, in the event of a default due to the failure of Tenant to meet any date in the Schedule of Performance, so long Leasehold Mortgagee or the Investor Limited Partner has cured any other default that it is obligated to cure hereunder, the dates in the Schedule of Performance shall be extended for any period prior to the First Transfer and upon the First Transfer, the transferee in such First Transfer and Landlord shall agree upon a new reasonable Schedule of Performance based on the state of completion of construction at such time.

17.10 Foreclosure in Lieu of Curing Default. Notwithstanding any other provision of this Lease, a Leasehold Mortgagee may forestall termination of this Lease by Landlord for a default under or breach of this Lease by Tenant by commencing proceedings to foreclose its Leasehold Mortgage, whether the Foreclosure is conducted pursuant to a court order or pursuant to a power of sale contained in a Leasehold Mortgage, or by virtue of a transfer in lieu of foreclosure.

Commencement of the Foreclosure shall not, however, forestall termination of this Lease by Landlord for the default or breach by Tenant unless:

A. It occurs within ninety (90) days after service on Leasehold Mortgagee of the Second Default Notice (and the expiration of all cure periods by Tenant hereunder); B. It is diligently and continuously pursued to completion; and C. Leasehold Mortgagee keeps and performs all of the terms, covenants and conditions of this Lease (including the payment of rent, including past due rent, under this Lease except for the payment of Additional Rent) requiring the payment or expenditure of money by Tenant accruing after commencement of the Foreclosure until the Foreclosure is complete or is discharged by redemption, satisfaction, payment or conveyance of the leasehold estate to Leasehold Mortgagee.

If any Leasehold Mortgagee is prohibited, stayed or enjoined by any law or by any bankruptcy, insolvency, action, process, injunction or other judicial proceedings of any court including without limitation a court having jurisdiction over the Tenant, from commencing or prosecuting foreclosure or other appropriate proceedings, the times specified for curing a default under this

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Lease or commencing or prosecuting such foreclosure or other proceedings shall be extended for the period of such prohibition.

17.11 Assignment of Lease Upon Foreclosure. Provided that a Leasehold Mortgagee gives written notice of transfer to Landlord setting forth the name and address of the transferee as well as the effective date of the transfer, the written consent of Landlord shall not be required for transfer of Tenant's right, title and interest under this Lease to:

A. Any purchaser, which includes the Leasehold Mortgagee (or its nominee), at a foreclosure sale of a Leasehold Mortgage, whether the foreclosure is conducted pursuant to court order or pursuant to a power of sale in the instrument creating the Leasehold Mortgage; or B. A purchaser from Leasehold Mortgagee (or its nominee) after foreclosure where Leasehold Mortgagee was the purchaser of Tenant's interest at the foreclosure sale of the Leasehold Mortgage, or acquired Tenant's interest by transfer in lieu of foreclosure. The purchase from the Leasehold Mortgagee shall be subject to all the terms and conditions of this Lease, but not the consent of Landlord. The Leasehold Mortgagee (or its nominee, if applicable), the purchaser at a foreclosure sale, or the purchaser from the Leasehold Mortgagee shall be subject to all the terms and conditions of this Lease except that (i) the time for performance of any unperformed acts required by Article 16 of this Lease shall be extended for that period equal to the delay in performance of the act caused by Tenant's inability or failure to perform the act and the time required to transfer the Lease to the purchaser at a foreclosure sale and/or to the purchaser from Leasehold Mortgagee, (ii) the performance of any acts required by this Lease that have already been performed shall be excused, (iii) Leasehold Mortgagee (and Leasehold Mortgagee only) shall be able to absolutely assign or transfer this Lease regardless of the date of assignment without the approval or consent of Landlord, (iv) Landlord and the Successor Owner shall agree upon a new reasonable Schedule of Performance in accordance with Section 17.9, above, (v) neither Leasehold Mortgagee (or its nominee, if applicable) nor any Successor Owner shall be obligated for any Additional Rent, or to cure any default hereunder that is not reasonably capable of cure by Leasehold Mortgagee (or its nominee, if applicable) or Successor Owner.

17.12 New Lease to Leasehold Mortgagee. Notwithstanding any other provision of this Lease, if this Lease terminates for any reason whatsoever or if Tenant as debtor in possession, or any trustee for Tenant's bankruptcy estate in any bankruptcy proceeding, shall reject this Lease prior to the end of the Term, then Landlord shall, within thirty (30) days after the request pursuant to Subsection A, below, is received, execute and deliver a new lease for the Property and Project to the most senior Leasehold Mortgagee (in terms of lien position prior to the termination) (or with its affiliate- or contractor-nominee, routinely utilized by such Leasehold Mortgage for purposes of taking title to properties in the event of a foreclosure or deed-in-lieu thereof by such Leasehold Mortgagee) requesting a new lease hereunder, provided:

A. A written request for the new lease is served on Landlord by Leasehold Mortgagee within ninety (90) days after service on Leasehold Mortgagee of notice that the Lease has terminated and Landlord agrees to give Leasehold Mortgagee notice of such termination.

B. The new lease (i) is for a term ending on the same date the term of this Lease would have ended had not this Lease been terminated, and (ii) contains the same covenants,

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conditions and provisions as are contained in this Lease, except that Leasehold Mortgagee, or its nominee (and Leasehold Mortgagee, or its nominee only) shall be able to absolutely assign or transfer the new lease to a third party regardless of the date of assignment without the approval or consent of Landlord.

C. After termination of this Lease but prior to the expiration of the period within which Leasehold Mortgagee has to request and receive a new lease, Landlord shall not terminate any existing subleases or enter into any new subleases for the Property or Project and Landlord shall account to Leasehold Mortgagee for all subtenant rents during such period. Unless and until Landlord has received notice from each Leasehold Mortgagee that the Leasehold Mortgagee elects not to demand a new lease as provided above, or until the period therefor has expired, Landlord shall not cancel or agree to the termination or surrender of any existing subleases nor enter into any new subleases hereunder without the prior written consent of the Leasehold Mortgagee(s).

D. The new lease shall be subject to all existing subleases under which each such sublessee is not in default and shall be assignable by Leasehold Mortgagee without further approval or consent by Landlord provided the conditions of this Section are satisfied.

E. The new lease shall:

1. Extend the time for performance of any unperformed acts required by Article 16 of this Lease for such period as is equal to the delay in performance of the act caused by Tenant's inability or failure to perform the act and the time required to terminate this Lease, execute a new lease to Leasehold Mortgagee and Leasehold Mortgagee's timely assignment of such new lease and the Schedule of Performance shall be extended in accordance with Section

17.9 above; and

2. Excuse the performance of any act required by Article 16 of this Lease that has already been performed; provided, however, in no event shall Leasehold Mortgagee (or its nominee, if applicable) (or any successor to Leasehold Mortgagee of the rights under the new lease) be obligated for payment of any Rent, Additional Rent or any other costs and/or expenses incurred by Landlord in the performance of any act required by Article 16 of this Lease or elsewhere in this Lease or to cure any default hereunder that is not reasonably capable of cure by Leasehold Mortgagee (or its nominee, if applicable) or such successor (if applicable).

F. The new lease and the Leasehold Mortgage shall have the same priority as the original Lease and the Leasehold Mortgage on the original Lease, and any intervening liens shall not have any priority over the new lease or Leasehold Mortgage, and the rights hereunder of any Leasehold Mortgagee whose Leasehold Mortgage is subordinate in lien shall be null and void and of no further force or effect.

Nothing herein contained shall require any Leasehold Mortgagee to enter into a new lease pursuant to Section 17.12, above, nor to cure any default of Tenant referred to above unless such election to enter into the new lease is made as set forth above.

17.13 No Merger of Estates. During the existence of any Leasehold Mortgage, if the same person or entity holds the leasehold estate created by this Lease and Landlord's reversionary

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interest or fee interest in the Property, such estates shall remain separate and there shall be no merger without the consent of each Leasehold Mortgagee.

17.14 Amendments for Benefit of Leasehold Mortgagee. Landlord and Tenant shall consider reasonably and in good faith including in this Lease by suitable amendment from time to time any provision which may reasonably be requested by a Leasehold Mortgagee or proposed Leasehold Mortgagee for the purpose of implementing the mortgagee-protection provisions contained in this Article and allowing such Leasehold Mortgagee reasonable means to protect or preserve its Leasehold Mortgage on the occurrence of a default under the terms of this Lease; provided, however, that such amendment shall not have a material adverse effect on Landlord's rights or obligations under this Lease.

17.15 Restriction on Landlord's Right to Encumber its Interest. Landlord shall not mortgage, hypothecate, pledge or encumber its interest in the Property or any part thereof without the prior written consent of the holder of a Leasehold Mortgage, unless there is an express subordination of the new lender's lien on Landlord's interest in the Property to this Lease (and all Leasehold Mortgages made in compliance with this Lease), which subordination shall be in a form acceptable to the holder of such Leasehold Mortgage, in its sole and absolute discretion. Landlord further irrevocably and unconditionally agrees that any mortgage, deed of trust or other security instrument now or hereafter encumbering all or any part of the Landlord's interest in the Property shall automatically be subject and subordinate in all respects to the lien of the Lease (and all amendments, modifications, extensions and renewals hereof) and all existing and future Leasehold Mortgages (and all amendments, modifications, extensions and renewals thereof). Landlord shall, at the request of any Leasehold Mortgagee, cause the holder of each such mortgage, deed of trust and other security instrument to execute and deliver to the requesting Leasehold Mortgagee a written and recordable subordination agreement in form and substance as required by such Leasehold Mortgagee in its sole and absolute discretion.

17.16 Restriction on Subordination of Tenant's Interest. Any subordination or attempted subordination of this Lease by Tenant to any mortgage, deed of trust, encumbrance or other security interest in Landlord's interest in the Property or any part thereof shall be void ab initio and shall have no force or effect unless first agreed to in writing by the holder of any Leasehold Mortgage.

17.17 Multiple Leasehold Mortgages. Where there is a right herein to be exercised by a Leasehold Mortgagee and there exists more than one Leasehold Mortgage, the right may be exercised in the order of priority of each Leasehold Mortgage.

17.18 Consent of Leasehold Mortgagee and Investor Limited Partner Required. There shall be no cancellation, surrender or modification of the Lease by joint action of Landlord and Tenant without the prior consent in writing of each Leasehold Mortgagee and the Investor Limited Partner, nor shall any election, determination or waiver by Tenant (whether through action or inaction) that materially impairs the value of the Leasehold be effective without such prior written consent. Without limitation upon the foregoing, no election by Tenant to terminate the Lease shall be effective unless the same is contained in a written instrument signed by Tenant and each Leasehold Mortgagee and the Investor Limited Partner.

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17.19 Rights of Leasehold Mortgagee and the Investor Limited Partner. Any Leasehold Mortgagee and the Investor Limited Partner shall have the right, but not the obligation, at any time prior to termination of the Lease and without payment of any penalty, to pay all of the rents due hereunder, to effect any insurance, to pay any taxes or assessments, to make any repairs or improvements, to do any other act or thing required of Tenant under the Lease, and to do any act or thing which may be necessary and proper to be done in the performance and observance of the agreements, covenants and conditions to prevent termination of the Lease. Any Leasehold Mortgagee and Investor Limited Partner and its respective agents and contractors shall have full access to the Property for purposes of accomplishing any of the foregoing. Any of the foregoing done by any Leasehold Mortgagee or the Investor Limited Partner shall be as effective to prevent a termination of the Lease as the same would have been if done by Tenant.

17.20 Lender Loss Payable Endorsement. Landlord agrees that the name(s) of the Leasehold Mortgagee(s) may be added to the "Loss Payable Endorsement" of any and all insurance policies required to be carried by Tenant under the Lease.

17.21 Insurance and Condemnation Proceeds. Notwithstanding anything herein to the contrary, for so long as a Leasehold Mortgage is in effect the Senior Leasehold Mortgagee shall have the right to participate any proposed settlement of any insurance claim and any condemnation proceeding as more particularly described the provisions of its Leasehold Mortgage documents and all proceeds from any insurance policies and the proceeds arising from any condemnation shall be paid to and held by the Senior Leasehold Mortgagee and applied by such Leasehold Mortgagee pursuant to the provisions of its Leasehold Mortgage documents (and such Senior Leasehold Mortgagee may reserve the right to apply to the mortgage debt all, or any part, of such proceeds pursuant to the terms of its Leasehold Mortgage documents). For the avoidance of doubt, Landlord shall have no right to receive any insurance or condemnation proceeds until the Property has been fully restored or such time as each Leasehold Mortgage has been paid in full, and this Lease may not be terminated in the event of any damage or destruction or condemnation unless and until each Leasehold Mortgage has been paid in full.

17.22 Notice of Arbitration or Insurance/Condemnation Proceedings. The parties hereto shall give all Leasehold Mortgagee(s) notice of any arbitration or condemnation proceedings, or of any pending adjustment of insurance claims, and any Leasehold Mortgagee shall have the right to intervene therein and shall be made a party to such proceedings. The parties hereto do hereby consent to such intervention. In the event that any Leasehold Mortgagee shall not elect to intervene or become a party to the proceedings, that Leasehold Mortgagee shall receive notice and a copy of any award or decision made in connection therewith.

ARTICLE 18. MISCELLANEOUS

18.1 Holding Over. If Tenant shall hold over the leased Property after the expiration of the term hereof with the consent of Landlord, either express or implied, such holding over shall be construed to be only a tenancy from month to month, subject to all the covenants, conditions and obligations contained in this Lease. Tenant hereby agrees to pay to Landlord as monthly rental one-twelfth (1/12) of the amount which is one hundred twenty-five percent (125%) of the total amounts (inclusive) paid from Tenant to Landlord in the year prior to the expiration of the term.

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18.2 Attorneys' Fees. In the event that any action or arbitration is brought by either party hereto as against the other party hereto for the enforcement or declaration of any right or remedies in or under this Lease or for the breach of any covenant or condition of this Lease, then and in that event the prevailing party shall be entitled to recover, and the other party agrees to pay all fees and costs to be fixed by the court or arbitrator therein including, but not limited to, attorneys' fees.

18.3 Quiet Possession. Landlord agrees that Tenant, so long as Tenant is not in default under this Lease and is paying the rent and performing the covenants and conditions of this Lease, shall quietly have, hold and enjoy the leased Property throughout the term hereof without interruption or disturbance from Landlord or any other persons claiming by, through or under Landlord; and Landlord warrants to Tenant that as of the Commencement Date of this Lease term, there were no existing tenancies on the leased Property.

18.4 Force Majeure. Except as to the payment of rent, in addition to the specific provisions of this Lease, neither of the parties hereto shall be chargeable with, liable for, or responsible to, the other for anything or in any amount for any delays due to war; act of terrorism; insurrection; strikes; lock-outs; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; pandemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor, subcontractor or supplier; acts of another party; acts or the failure to act of any public or governmental agency or entity (except that acts or the failure to act of the Landlord shall not excuse performance by the Landlord); or any other causes whether similar or dissimilar to the foregoing which is beyond the reasonable control or without the fault of the party claiming an extension of time to perform, and any delay due to said causes or any of them shall not be deemed a breach of or default in the performance of this Lease. An extension of time for any such cause shall only be for the period of the enforced delay, which period shall commence to run from the time of the commencement of the cause. If, however, notice by the party claiming such extension is sent to the other party more than thirty (30) days after the commencement of the cause, the period shall commence to run only thirty (30) days prior to the giving of such notice.

18.5 Notices. Any notice to be given or other document to be delivered by either party to the other hereunder shall be in writing and shall be deemed to have been duly given and received (i) upon personal delivery, (ii) as of the third business day after mailing by United States registered or certified mail, return receipt requested, postage prepaid, addressed as set forth below, (iii) the immediately succeeding business day after deposit with Federal Express or other equivalent overnight delivery system or (iv) upon electronic transmission to the principal offices of Landlord and Tenant, and addressed to the party for whom intended, as follows:

Landlord: City of Santa Cruz
337 Locust Street
Santa Cruz, CA 95060
Attention: Bonnie Lipscomb, Economic Development Director Email: [email protected]
Copy to: City Attorney
Atchison Barisone & Condotti

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333 Church Street
Santa Cruz, CA 95060
Attention: Anthony Condotti
Email:[email protected]
Tenant: DTLMU Investors, L.P.
c/o Eden DTMLU, LLC
22645 Grand Street
Hayward, CA 94541
Attention: Andrea Osgood
Email: [email protected]
With Copy To: Cox Castle & Nicholson LLP
50 California St. Suite 3200
San Francisco, CA 94111
Attention: Ofer Elitzur
Email: [email protected]
With Copy To
Investor Limited
Partner: U.S. Bancorp Community Development Corporation 1307 Washington Avenue, Suite 300
Mail Code: SL MO RMCD
St. Louis, MO 63103
USB Project No: 31345
Attn: Director of LIHTC Asset Management
With Copy To: Kutak Rock LLP
1650 Farnam Street
Omaha, NE 68102
Attn: Jill Goldstein
Any party hereto may from time to time, by written notice to the other, designate a different address which shall be substituted for the one above specified.

18.6 Waiver. No waiver of any breach of any of the terms, covenants, agreements, restrictions or conditions of this Lease shall be construed to be a waiver of any succeeding breach of the same or other terms, covenants, agreements, restrictions and conditions hereof.

18.7 Surrender. Upon the expiration or sooner termination of the term of this Lease, and notwithstanding anything herein contained to the contrary, Tenant shall surrender to Landlord all and singular the leased Property, together with the Improvements then situated thereon, in good condition and repair, except for reasonable wear and tear.

18.8 Binding. Subject to the restrictions set forth herein regarding assignment of the leasehold estate, each of the terms, covenants and conditions of this Lease shall extend to and be binding on and shall inure to the benefit of not only Landlord and Tenant, but to each of their

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respective heirs, administrators, executors, successors and assigns. Whenever in this Lease reference is made to either Landlord or Tenant, the reference shall be deemed to include, wherever applicable, the heirs, administrators, executors, successors and assigns of such parties, the same as if in every case expressed.

18.9 Landlord's Right to Enter Property. Landlord and its authorized representatives shall have the right to enter the Property at all reasonable times and subject to the rights of any subtenants under their respective subleases with Tenant, after giving Tenant three (3) business days' prior written notice, for any of the following purposes: to determine whether the Property is in good condition and whether Tenant is complying with its obligations under this Lease; to do any necessary maintenance and to make any restoration to the Property that Landlord has the right or obligation to perform; to serve, post or keep posted any notices required or allowed under the provisions of this Lease; to do any necessary maintenance and to make any restoration to the Property that Landlord has the right or obligation to perform; to serve, post or keep posted any notices required or allowed under the provisions of this Lease; to post "for sale" signs at any time during the term, so long as such signs make it clear at first impression it is Landlord's interest alone that is for sale; to post "for rent" or "for lease" signs during the last one (1) year of the term, or during any period while Tenant is in default; to show the Property to prospective brokers, agents, buyers, tenants or persons interested in an exchange, at any time during the term; and to do any act or thing necessary for the safety or preservation of the Property if any excavation or other construction is undertaken or is about to be undertaken on any adjacent property or nearby street.

A. Landlord shall not be liable in any manner for any inconvenience, disturbance, loss of business, nuisance, or other damage arising out of Landlord's entry on the Property as provided in this section other than those caused by the negligence or willful misconduct of Landlord, its agents, employees or contractors.

B. Tenant shall not be entitled to an abatement or reduction of rent if Landlord exercises any rights reserved in this section.

18.10 Disclaimer of Partnership. The relationship of the parties hereto is that of Landlord and Tenant, and it is expressly understood and agreed that Landlord does not in any way nor for any purpose become a partner of Tenant or a joint venturer with Tenant in the conduct of Tenant's business or otherwise.

18.11 Memorandum. A short form Memorandum of this Lease ("Memorandum"), in the form attached hereto as Exhibit F, shall be recorded within five (5) business days after the date this Lease is executed. The Parties agree to make any amendment or modification of the Memorandum in such form as shall be reasonably required (i) for Tenant to be able to obtain a leasehold title policy insuring Tenant's leasehold interest in the Property, or (ii) by any Leasehold Mortgagee.

18.12 Quitclaim. At the expiration or earlier termination of this Lease, Tenant shall execute, acknowledge and deliver to Landlord within thirty (30) days after written demand from Landlord to Tenant, any quitclaim deed or other document required by any reputable title company to remove the cloud of this Lease from the real property subject to this Lease.

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18.13 Interpretation. The titles to the paragraphs of this Lease are not a part of this Lease and shall have no effect upon the construction or interpretation of any part of this Lease.

18.14 Covenants and Conditions. Each term and each provision, including, without limitation, the obligation for the payment of rent, to be performed by Tenant or Landlord, as the case may be, shall be construed to be both a covenant and a condition of this Lease.

18.15 Integration. This Lease and the exhibits and documents of both incorporated by reference, constitutes the entire agreement between the parties and there are no conditions, representations or agreements regarding the matters covered by this Lease which are not expressed herein.

18.16 Estoppel Certificate. Landlord agrees to deliver, within ten (10) business days after written request therefor by Tenant, a statement in recordable form addressed to any such proposed investor, lender, or Tenant, in a form requested by Tenant's mortgagee or purchaser, certifying that this Lease is unmodified and is in full force and effect (if such be the case), certifying the commencement and termination dates of the lease term, certifying that there has been no assignment or subletting of this Lease (or providing detail regarding any such assignment or subletting), and that there are no defenses or offsets hereto (or stating those claimed by Landlord) and containing such other information as may reasonably be requested by the party to whom such certificate is addressed. In the event Landlord fails to deliver such estoppel certificate to Tenant within the ten (10) day period provided above, it shall be deemed that this Lease is in full force and effect and that Landlord has no defenses or offsets against Tenant. In addition, the Landlord agrees that at any time and form time to time upon not less than twenty (20) days prior written notice by the Tenant, the Investor Limited Partner, or any Leasehold Mortgagee, the Landlord shall execute, acknowledge and deliver to Tenant, the Investor Limited Partner and/or Leasehold Mortgagee, as applicable, an estoppel certificate in writing certifying the following: (a) that the Lease is unmodified and in full force and effect (except as expressly set forth in the certificate), (b) the date through which the rent and Additional Rent (if applicable) has been paid; and (c) that, to the knowledge of the certified (if such be the case), there is no default, set-off, defense or other claim against Tenant other than those, if any, so specified under the provisions of this Lease. It is intended that any estoppel certificate delivered pursuant to this Section 18.16 may be relied upon by an persons proposing to acquire the interest of the Landlord, the Tenant, the Investor Limited Partner, or any Leasehold Mortgagee , as the case may be, in this Lease or by any assignee of any Leasehold Mortgagee or Investor Limited Partner.

18.17 Landlord's Right to Sell. Landlord shall have the right to sell its fee estate in the Property and assign its interest in this Lease with the consent of the Tenant and the Senior Leasehold Mortgagee; provided, however, no consent shall be required for the transfer of the Property to another governmental entity; and provided, further, that any such sale shall be subject to this Lease and shall comply with Section 17.15 of this Lease. Upon any such conveyance, Landlord shall automatically be relieved of any obligations under this Lease other than those obligations, which accrued prior to the date of such conveyance.

18.18 Amendments to This Lease. Landlord and Tenant agree to mutually consider reasonable requests for amendments to this Lease that may be made by either of them, subtenants of Tenant, lending institutions or bond counsel or financial consultants to Landlord or Tenant,

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provided such requests are consistent with this Lease and would not materially alter the basic business terms included herein. No amendment hereto shall be effective unless in writing and signed by the parties hereto and consented to in writing by the Investor Limited Partner.

18.19 Time is of the Essence. Time is of the essence in the performance of the terms and conditions of this Lease.

18.20 Landlord Acting in Regulatory Capacity. Except where clearly and expressly provided otherwise in this Lease, the capacity of City in this Lease shall be as a landlord only, and any obligation or restriction, if any, imposed by this Lease on City shall be limited to that capacity and shall not relate to, or otherwise affect, any activity of City in its capacity as a governmental authority, including but not limited to enacting laws, inspecting structures, reviewing and issuing permits, or all other legislative, administrative, or enforcement functions of City pursuant to federal, state, or local law, including, but not limited to the City Inclusionary Housing Program.

Nothing in this Lease shall be construed as abrogating or limiting any immunity or exemption to which City is entitled under law.

ARTICLE 19. METHOD OF FINANCING AND

DEDICATION OF TAX INCREMENT TO RENT SUBSIDY

19.1 Mortgage Revenue Bonds. The Tenant intends to finance the development of the Project in part through a Leasehold Mortgage funded by tax-exempt financing issued by the CMFA. All costs of obtaining such financing from CMFA shall be borne by the Tenant, and the Tenant shall comply with all requirements of the regulatory agreement in favor of CMFA (so long as such regulatory agreement encumbers Tenant's leasehold interest in the Property).

19.2 Tax Credits. The Tenant intends to finance the development of the Property in part through the sale of federal low income housing tax credits ("Tax Credits"). The Tenant has received a reservation of Tax Credits for the Project TCAC. All costs of obtaining the Tax Credit allocation shall be borne by the Tenant, and the Tenant shall comply with all requirements of the regulatory agreement in favor of TCAC (so long as such regulatory agreement encumbers Tenant's leasehold interest in the Property).

19.3 Lease Riders. Landlord agrees to execute and deliver to Tenant, TCAC, and HCD, one or more lease riders and/or estoppel certificates in form and substance required by TCAC and HCD as and when required by such agencies.

ARTICLE 20. BOOKS AND RECORDS

20.1 Records. Tenant shall be solely responsible to implement internal controls and record keeping procedures in order to comply with this Lease and all applicable laws.

A. Tenant shall maintain any and all ledgers, books of account, invoices, vouchers, bids, cancelled checks; and other records or documents evidencing or relating to the activities performed by Tenant under this Lease, including without limitation those relating to the construction of the Improvements, for a minimum period of five (5) years, or for any longer period

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required by law, from the date of termination of this Agreement or the date of the City's acceptance of the Improvements, whichever is longer. Notwithstanding this previous sentence, Tenant shall retain such records beyond five (5) years so long as any litigation, audit, dispute, or claim is pending. Real estate documents related to any vested or licensed rights in the Property shall be retained in perpetuity.

B. Any records or documents required to be maintained pursuant to this Lease shall be made available for inspection or audit at no cost to City, at any time during regular business hours, upon written request by the City Attorney, City Auditor, City Manager, or a designated representative of any of these officers. Copies of such documents shall be provided to City for inspection at City Hall when it is practical to do so. Otherwise, unless an alternative is mutually agreed upon, the records shall be available at Tenant's address indicated for receipt of notices in this Lease.

C. Where City has reason to believe that such records or documents may be lost or discarded due to dissolution, disbandment or termination of Tenant's business, City may, by written request by any of the above-named officers, require that custody of the records be given to City and that the records and documents be maintained in City Hall. Access to such records and documents shall be granted to any party authorized by Tenant, Tenant's representatives, or Tenant's successor-in-interest.
[Signatures to appear on the following page.]

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IN WITNESS WHEREOF, the parties hereto have caused this Lease to be executed by their lawfully authorized representatives.

LANDLORD:

CITY OF SANTA CRUZ, a California municipal
corporation and charter city
By:______________________
Name: Matt Huffaker
Title: City Manager
ATTEST:

By:

City Clerk
APPROVED AS TO FORM:

By:

City Counsel

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TENANT:

DTLMU INVESTORS, L.P., a California limited
partnership
By: Eden DTLMU, LLC, a California limited liability
company, its managing general partner
By: Eden South Bay, Inc., a California nonprofit
public benefit corporation, its sole member
By: ___________________________
Andrea Osgood
Chief of Real Estate Development
and Executive Vice President
Note: Tenant must initial Section 8.1.E

20.67 EXHIBIT A-1
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EXHIBIT A
Property Legal Description
Real property in the City of Santa Cruz, County of Santa Cruz, State of California, described as follows:

20.68 EXHIBIT B-1
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EXHIBIT B

PROPERTY MAP
[Attached behind]

20.69 EXHIBIT C-1
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EXHIBIT C

SCOPE OF DEVELOPMENT
The Tenant and the Landlord agree that the Property shall be developed and improved in accordance with the provisions of this Lease, and the plans, drawings and related documents approved by the Landlord, together with conditions of approval imposed thereon by the City. The Tenant and its supervising architect, engineer and contractor shall work with City and Landlord staff to coordinate the overall design, architecture and color of the Property.

The Project's construction plans are described in Exhibit G.

20.70 EXHIBIT D-1
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EXHIBIT D

SCHEDULE OF PERFORMANCE

20.71 EXHIBIT E-1
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EXHIBIT E

FORM OF CERTIFICATION OF COMPLIANCE

AFFORDABLE HOUSING PROJECT REQUIREMENT

CERTIFICATION OF COMPLIANCE

1. Prior to Temporary Certificate of Occupancy, Owner/ Developer hereby acknowledges and certifies that the Downtown Affordable Housing Development Project is in compliance with the requirements set forth in that certain Ground Lease and Affordable Housing Regulatory Agreement (AHRA) finalized on ________, 2025 concerning that certain real property located in the City of Santa Cruz as more particularly described in Exhibit A of the referenced agreements (the "Project"), including but not limited to:
a. The Project is required to:
i. Comply with the following requirements:

Affordable Rent
Level
Total
Number
of Units
3-BR 2-BR 1-BR Studio
Extremely Low
Income
(30% AMI or less)
19 5 5 8 1
Very Low Income
(30-50% AMI)
59 14 14 26 5
Low Income
(50-80% AMI)
45 12 12 16 1
Total 123 31 31 50 11
ii. Provide seven (7) HOME Units and must comply with all applicable regulations.
iii. Comply with the tenant preference (live/ work) in Resolution NS-29,463.

When multiple rental applications exist, preference shall be given in the following order:
o Residents of the City of Santa Cruz for at least one year. o Those employed in the City of Santa Cruz.
o Residents of the County of Santa Cruz for at least one year. o Those employed in the County of Santa Cruz.

2. Owner/ Developer acknowledges that per Resolution NS-29,463 they are required to submit Annual Compliance Monitoring for the Inclusionary units to the City and comply with HUD HOME Program Compliance Monitoring and shall, at the City's request and in its sole discretion, provide annual compliance reporting for the remaining __ affordable units to the City.

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3. Accordingly, Owner/ Developer is aware and understands that if any time it is determined that the declaration as made in this Certification of Compliance is no longer accurate, Owner/Developer shall immediately report discrepancies to the Director of Economic Development, or shall be subject to civil and/or criminal prosecution for misrepresentation/fraud under applicable local and state law.

4. If any provision and/or requirements contained in this Certificate of Compliance is in conflict with, or inconsistent with, any provision or requirement in the subject AHRA and Ground Lease provisions, the provision contained in the AHRA and Ground Lease shall govern and control.

Owner/ Developer acknowledges the above statements and declares under penalty of perjury, in the State of California, that the foregoing declaration is true and correct. __________________________________ ___________________________________ Owner Signature Date
__________________________________
Owner Printed Name

20.73 EXHIBIT F-1
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EXHIBIT F

RECORDING REQUESTED BY )
AND WHEN RECORDED MAIL TO: )
)
City of Santa Cruz )
337 Locust Street )
Santa Cruz, California 95060 )
Attn: Economic Development Director )
)
Exempt from Recording Fees Pursuant to Government Code Section 27383

MEMORANDUM OF GROUND LEASE
(Downtown Affordable Housing Development Project)
This Memorandum of Ground Lease ("Memorandum") is hereby entered into as of ____________, 2025, by and between the City of Santa Cruz, a California municipal corporation and charter city, ("Landlord"), and DTLMU Investors, L.P., a California limited partnership ("Tenant").

RECITALS
A. Landlord and Tenant have entered into that certain Ground Lease (Downtown Affordable Housing Development Project) (the "Ground Lease") dated concurrently herewith for that certain parcel of real property which is legally described in Exhibit A attached hereto and incorporated herein by reference (the "Property"). A copy of the Ground Lease is available for public inspection at Landlord's office at 337 Locust Street, Santa Cruz, California. The term of the Ground Lease is sixty-five (65) years, commencing as of the date this Memorandum is recorded in the Official Records of Santa Cruz County, California (the "Official Records").

B. The Ground Lease provides that a short form memorandum of the Ground Lease shall be executed and recorded in the Official Records.

NOW, THEREFORE, the parties hereto certify as follows:

Landlord, pursuant to the Ground Lease, hereby leases the Property to the Tenant upon the terms and conditions provided for therein. The Ground Lease imposes certain obligations, requirements on the Tenant, and limitations on the use of the Property, including, but not limited to, the obligation to lease residential units at the Property to households at specific income levels, as set forth in Section 7.2.B of the Ground Lease in order to comply with the City Inclusionary Housing Program (as defined in the Ground Lease) and the Surplus Land Act (Cal. Gov. Code Section 54220 et seq.) . This Memorandum is not a complete summary of the Ground Lease, and shall not be used to interpret the provisions of the Ground Lease. [Signatures to appear on the following page.]

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IN WITNESS WHEREOF, the parties hereto have caused this Memorandum to be executed by their lawfully authorized representatives.

LANDLORD:

CITY OF SANTA CRUZ, a California municipal
corporation and charter city
By: ____________________________________
Matt Huffaker
City Manager
ATTEST:

By:

City Clerk
APPROVED AS TO FORM:

By:

City Counsel
TENANT:

DTLMU INVESTORS, L.P., a California limited
partnership
By: Eden DTLMU, LLC, a California limited liability
company, its managing general partner
By: Eden Housing, Inc., a California nonprofit
public benefit corporation, its manager
By: ___________________________
Andrea Osgood
Chief of Real Estate Development
and Executive Vice President

20.75 EXHIBIT F-3
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EXHIBIT A TO MEMORANDUM OF LEASE

LEGAL DESCRIPTION

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EXHIBIT G

LIST OF CONSTRUCTION DOCUMENTS
[Attached behind]

20.77 Downtown Library & Affordable Housing Development Project City Components Funding and Development Agreement 1

DOWNTOWN LIBRARY & AFFORDABLE HOUSING DEVELOPMENT PROJECT

CITY COMPONENTS FUNDING AND DEVELOPMENT AGREEMENT
This Downtown Library & Affordable Housing Development Project City Components Funding and Development Agreement (“Agreement”) is entered into as of ______________, 2025 (“Effective Date”) by and among Lincoln Street Development, LLC, a California limited liability company (“Developer”), Eden Cedar Street Development, LLC, a California limited liability company (“Ground Lessee”), and the City of Santa Cruz, a municipal corporation (“City”).

Developer. Ground Lessee and the City are individually referred to herein as a “Party” and collectively as the “Parties”.

RECITALS:

A. On July 20, 2020, the City issued a Request for Proposals to redevelop certain Cityowned parcels located on the north side of Cathcart Street along Cedar Street and south of Lincoln Street previously used as City Public Parking Lot #4 (the “Property”), as more particularly described in the “Library Mixed Use Project – Request for Proposals for Owner’s Representative.” B. On or about June 8, 2021, the City selected Eden Housing, Inc. and For the Future Housing (“Proposers”) after a competitive bidding process to develop the “Downtown Library Mixed Use Project,” a proposed new public library facility and affordable housing residential development, including a parking garage, a childcare facility, and commercial spaces (as further described in Recital D, below, the “Project”) at the Property. The Proposers formed Developer to manage and oversee the development of the City Components of the Project (as described herein).

C. On March 14, 2023, the City approved Resolution No. NS-30,120, granting entitlements for the Project, including findings that the Project is exempt from environmental review under the California Environmental Quality Act, and approving a nonresidential demolition authorization permit, special use permit, design permit, lot-line adjustment, and density bonus request, and upholding approval of a heritage tree removal permit.

D. Pursuant to City Resolution No. NS-30,120, the City approved the Project, including the demolition of the existing parking lot at the Property and construction of the following improvements on the Property: (i) one hundred twenty three (123) units of affordable housing and one (1) unrestricted manager’s unit (“Affordable Housing Component”); (ii) a childcare facility comprising one thousand three hundred thirty-three square feet (1,333 sq. ft.) of indoor space and five hundred eighty-six square feet (586 sq. ft.) of outdoor space (the “Community Service Component”) (the Community Service Component and the Affordable Housing Component and, collectively, the “Residential Components”); (iii) a library facility of approximately thirty-eight thousand sixty-nine square feet (38,069 sq. ft.) on the ground floor of the Project (the “Library Component”); (iv) a parking garage for approximately two hundred fortythree (243) spaces (the “Parking Component”); and (v) a commercial component comprised of nine thousand seven hundred thirty-two square feet (9,732 sq. ft.) (the “Commercial Component”) (the Commercial Component, the Library Component and the Parking Component are, collectively, the “City Components”).

20.78 Downtown Library & Affordable Housing Development Project City Components Funding and Development Agreement 2
E. On _____________, 2025, the City recorded a parcel map for the Project (recorded in the official records of Santa Cruz County in Volume ___ of Parcel Maps, Page ___), subdividing the Property into two air parcels (“Parcel 1” for the City Components, and “Parcel 2” for the Residential Components).

F. On _____________, 2025, the Santa Cruz City Council approved the final plans (“Plans”) for the City Components attached hereto as [Exhibit __], and incorporated herein by reference.

G. On _____________, 2025, the City entered into that certain Agreement Regarding Reciprocal Easements, Covenants, Conditions and Restrictions for the Downtown Library Affordable Housing Development Project (the “REA”) (recorded in the official records of Santa Cruz County as Document No. _____________), to establish a general scheme of ownership for the Project and to impose certain easements upon the Property and establish certain covenants, conditions and restrictions with respect to the Property, for the mutual and reciprocal benefit and complement of the Property and the present and future owners and occupants thereof.

H. The City has obtained the “City Funds” (as defined below) to fund the construction of the City Components, on the condition that the City Components are to be owned and operated by the City after completion of the Project.

I. Concurrently herewith, the City and Ground Lessee are entering into a ground lease relating to the City Components (the “City Components Ground Lease”), and the City and DTLMU Investors, L.P., a California limited partnership (“Affordable Housing Owner”), are entering into a ground lease relating to the Residential Components (the “Residential Components Ground Lease”), it being the mutual agreement of the City, the Ground Lessee and the Affordable Housing Owner that (i) the duration of the City Components Ground Lease will be for a period of time sufficient to allow the construction of the City Components, and will terminate upon the transfer of the completed City Components to the City for the City’s long term ownership and operation, on the terms and conditions set forth in the City Components Ground Lease, and (ii) the duration of the Residential Components Ground Lease will be for the long-term ownership and operation of the Residential Components by the Affordable Housing Owner and/or its successor(s) in interest as ground lessees under the Residential Components Ground Lease.

J. The City Components will be constructed pursuant to that certain AIA Document A102-2017 by and between the Ground Lessee and Echelcon, Inc. (the “City Components Construction Contract”) and the Residential Components will be constructed pursuant to that certain AIA Document A102-2017 by and between the Affordable Housing Owner and Echelcon, Inc. (the “Residential Components Construction Contract”), it being the mutual agreement of the City, the Ground Lessee, the Developer (serving as the “Owner’s Representative” on behalf of the Ground Lessee under the City Components Construction Contract), and the Affordable Housing Owner that construction of the City Components and Residential Components pursuant to the City Components Construction Contract and the Residential Components Construction Contract shall be coordinated in a manner to allow for the completed City Components and Residential Components Project to operate as a mixed-use project consistent with the City’s approvals.

20.79 Downtown Library & Affordable Housing Development Project City Components Funding and Development Agreement 3
K. Ground Lessee will enter into a Development Agreement with Developer such that Developer has the legal responsibility to manage the construction of the City Components as the “Owner’s Representative” on behalf of the Ground Lessee under the City Components Construction Contract, and the City will be named as a beneficiary of such Development Agreement.

L. The Parties now desire to enter into this Agreement to set forth their respective duties and obligations relating specifically to the construction of the City Components as stated herein, it being agreed that the City, in its capacity as ground lessor of the City Components and as the funding source for the proceeds to be used by Ground Lessee to pay for the “Work” (as described herein) is entitled to the rights and privileges set forth herein with respect to the Work, and the Developer’s obligations hereunder.

NOW THEREFORE, the Parties agree to incorporate the Recitals and further agree as follows:

1. Term of Agreement. This Agreement commences on the Effective Date and, unless earlier terminated pursuant to the terms of this Agreement, terminates upon the satisfaction of both (i) completion of the Work related to the City Components consistent with the Plans and acceptance by the City in accordance with this Agreement, and (ii) payment of the City Funds by City validly due to Ground Lessee under this Agreement. The term of this Agreement is expected to end on or before the latest date set forth in Section 3.1 below.

2. Funding of City Components Improvements.

2.1. Project Costs and Payment of Funds. The construction of the City Components is to be funded by proceeds of the City’s Parking District Bonds, Measure S Library Bonds, Congressional Appropriation funds, and other City funds, as more particularly set forth in [Exhibit __] attached hereto, and incorporated herein by reference (the “City Funds”). The City Funds amounts are to be granted from the City to the Ground Lessee, subject to the satisfaction of the conditions set forth in Section 2.3 and Section 2.4, below, solely for Ground Lessee’s payment of eligible construction costs incurred under the City Components Construction Contract, consistent with the City Components construction budget approved by the City and the Ground Lessee, attached hereto as [Exhibit __], and incorporated herein by reference (as the same may be updated from time to time in accordance with this Agreement, the “Budget”).

2.2. Payment of Funds. City agrees to grant to Ground Lessee the City Funds, and Ground Lessee agrees to pay the City Funds towards the actual costs for the construction of the City Components to be performed by Echelcon. Inc. (or any successor general contractor for the City Components) (as applicable, “Contractor”), or its subcontractors, under the City Components Construction Contract, and towards the approved developer fee under the Development Agreement by and between Ground Lessee and Developer, all as provided in the Budget. City and Ground Lessee shall have thirty (30) days from receipt of draw request to approve or disapprove such request and thereafter to provide or cause to be provided payment of any undisputed amount, consistent with the Budget, to the Developer or the Contractor, as applicable, which draw request will be deemed complete so long as it includes the Contractor’s payment application, along with (i) a conditional general contractor’s lien release for all of the Work covered under such payment application, (ii) an unconditional general contractor’s lien

20.80 Downtown Library & Affordable Housing Development Project City Components Funding and Development Agreement 4
release for all of the Work covered under the immediately previous payment application, and (iii) conditional lien releases from all subcontractors with contract prices at or above $100,000 for all of the Work covered under the payment application filed two months prior to the current payment application. Developer (in its capacity as Owner’s Representative under the City Components Construction Contract) will submit draw requests on a monthly basis to the Ground Lessee, with a copy to the City, to ensure timely payment of invoices, and such invoices shall be paid, or caused to be paid, by Ground Lessee, solely from proceeds disbursed by the City to or for the benefit of Ground Lessee pursuant to the terms of this Agreement and/or from such additional funds as may be obtained by Ground Lessee. In no event shall the City Funds be used to fund, or otherwise pay for, any cost paid or to be paid for any work covered under the Residential Components Construction Contract.

2.3. Conditions to Initial Grant of Funds. On or before the date of the first disbursement of funds to the Ground Lessee pursuant to this Section 2, the following conditions shall have been satisfied:
(a) The City Components Ground Lease, the Residential Components Ground Lease, the City Components Construction Contract and the Residential Components Construction Contract shall have been fully executed;
(b) The Parcel Map and the REA shall have been recorded, or shall be recorded concurrently with such first disbursement;
(c) Ground Lessee and Developer have delivered evidence of insurance in accordance with this Agreement; and
(d) The City shall have received a signed completion guaranty with respect to the City Components, executed by the same guarantors as are delivering a completion guarantor to the mortgage lender for the Residential Components, which completion guaranty shall be on substantially similar terms and conditions as the completion guaranty in favor of the mortgage lender for the Residential Components (the “City Components Completion Guaranty”).

2.4. Conditions to Each Disbursement of Grant of Funds. Each disbursement of funds to the Ground Lessee pursuant to this Section 2 is conditioned on the following:
(a) No event of default shall have occurred and be continuing hereunder or under the City Components Ground Lease, the Residential Components Ground Lease, the REA, the City Components Construction Contract, the Residential Components Construction Contract, or the City Components Completion Guaranty, and each remains in full force and effect.
(b) Developer shall have provided to Ground Lessee and the City, and the Ground Lessee and the City shall have approved, the draw request materials required under Section 2.2 above.

3. Implementation of City Components Improvements.

20.81 Downtown Library & Affordable Housing Development Project City Components Funding and Development Agreement 5

3.1. Scope of Work and Work Schedule. Developer agrees to furnish, construct, and install in a good and workmanlike manner and through its qualified and properly licensed contractors (including Contractor), subcontractors, consultants, and agents (collectively, “the Contractor Parties”), perform the scope of work consistent with the plans and specifications for the City Components (the “Work”) attached hereto in Exhibit A. Contractor shall commence work within ten (10) days of a written Notice to Proceed from the Ground Lessee (and Ground Lessee agrees to issue a written Notice to Proceed as soon as possible after the Effective Date), or as otherwise agreed upon by the Parties, and complete the Work on or before September 30, 2030 (the “Developer Completion Date”) based on an agreed upon work schedule. All time limits stated herein are of the essence. Notwithstanding the foregoing and notwithstanding the Developer Completion Date, in the event that Developer has not completed the Work prior to _____________ [NOTE: Insert date by which the funding parties are anticipating the City Components to be complete so that it does not hold up the anticipated timing for the work on the Affordable Housing Component], the parties hereto agree that Affordable Housing Owner, the Affordable Housing Investor (hereinafter defined) or any of Affordable Housing Owner’s mortgagees shall have the right, in their sole election and without any obligation to do so, but with prior notice to the other parties hereto, to step in and complete the Work for the City Components at its sole election (“StepIn Right”). In the event Affordable Housing Owner or the Affordable Housing Investor elects to exercise this Step-In Right, the parties hereto agree that Affordable Housing Owner or the Affordable Housing Investor, as applicable, shall have the right to receive City Funds in payment for any such completed Work performed which has been performed to City’s reasonable satisfaction (which shall not be unreasonably withheld) in exercise of this Step-In Right for only the City Components, so long as (a) Affordable Housing Owner, the Affordable Housing Investor, or the Affordable Housing Investor’s designee (provided such designee is approved by the City, such approval not to be unreasonably withheld, conditioned or delayed) (an “Investor Designee”), as applicable, steps in as a replacement ground lessee under the City Components Ground Lease, (b) such Work is performed in accordance with this Agreement, and (c) Affordable Housing Owner or the Affordable Housing Investor, as applicable, follows the same reimbursement procedure set forth in Section 2.2 as if the Work was performed by Developer.

3.2. Construction Contract. Ground Lessee has executed and the City has approved of the City Components Construction Contract. The City Components Construction Contract identifies the Developer as the Owner’s Representative on behalf of the Ground Lessee.

In its capacity as Owner’s representative, the Developer shall have the following responsibilities:
(a) Contractor Insurance Requirements. Developer shall require that Contractor maintain the type and amount of insurance coverage provided in Exhibit B and to name the Ground Lessee, the City, their respective officials, officers, directors, and employees as additional insureds on such policies. Developer shall review the certificates of insurance of its Contractor prior to commencing Work to verify such coverage is in place. In the event that Developer fails to require Contractor to maintain the insurance coverage specified in Exhibit B, then Developer shall be liable to the Ground Lessee and the City for any coverage shortfalls. Any additional insurance or indemnity benefits that the City Components Construction Contract grants to the Developer will likewise be given to the Ground Lessee and City. (b) Contractor Indemnity Requirement. Developer shall require Contractor performing Work related to the Project to defend, indemnify, and hold harmless the

20.82 Downtown Library & Affordable Housing Development Project City Components Funding and Development Agreement 6
Ground Lessee and the City and their related parties. The City Components Construction Contract shall include the following indemnity provision:
“Contractor agrees, to the fullest extent permitted by law, to indemnify, defend, and hold harmless the Ground Lessee, the City, their respective 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 Contractor, Contractor’s officers, employees, agents, or subcontractors in any way related to this Agreement. Contractor’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. Contractor’s obligation to defend shall arise regardless of any claim or assertion that Indemnitees caused or contributed to the Losses. This indemnification clause shall survive termination of this Agreement.”
(c) Contractor Verification. Developer must require Contractor to execute the Contractor Indemnification & Insurance Agreement, attached hereto as Exhibit C, to verify Contractor’s compliance with these indemnification and insurance requirements. Developer shall provide notice to Ground Lessee and the City listing the names of the Contractor Parties a minimum of 10 days prior to Contractor Parties’ work under the City Components Construction Contract.
(d) Subcontractor Insurance and Indemnity. The City Components Construction Contract will require that all subcontractors of the Contractor shall be subject to the same insurance and indemnity requirements as that required of the Contractor. (e) Warranty. The City Components Construction Contract shall require the Contractor performing the Work to warranty the Work for materials and workmanship at no additional cost for a period of at least one (1) year after final written acceptance of the Work, as provided in Section 3.11 below, or the Work’s completion, whichever is later. A longer warranty period may apply where the supplier or manufacturer of the equipment or material provides a longer guaranty period. During the one-year warranty or other applicable time period, Contractor shall be required at its sole cost and expense to agree to promptly make all needed repairs or replacements arising out of defective materials, equipment, or workmanship. This warranty coverage will extend to all Work in the Construction Contract. (f) Bonds/Security. It is agreed that Developer shall require its Contractor to furnish, concurrently with the execution of the City Components Construction Contract, cash, bond or other security, naming the Ground Lessee and the City as the beneficiaries or loss payees, as set forth below:
(1) Labor and Materials (Payment) Bond and Faithful
Performance Bond. A labor and material bond in the amount of 100% of the estimated cost of the Work to ensure payment to all contractors, subcontractors, laborers, suppliers, and materialmen

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performing work or supplying materials (attached hereto as Exhibit D), and 2) a performance bond in the amount of 100% of the estimated cost of the work to ensure faithful performance of the Work (attached hereto as Exhibit E). If the Faithful Performance Bond provides for a one-year warranty to assure responsibility for the repair, replacement or reconstruction of the work or facilities during the year following completion and acceptance of the Work, a separate Maintenance Bond is not necessary. If the estimated costs of construction and/or installation increase, as demonstrated by estimates based on detailed plans submitted as part of a building permit application (which estimates Developer shall prepare at Ground Lessee’s and/or City’s reasonable request), Developer shall increase the amount of the Labor and Materials Bond and Faithful Performance Bond to cover such increased costs. If the estimated costs of construction and/or installation decrease by 10% or more, as demonstrated by estimates based on detailed plans submitted as part of a building permit application, Developer shall decrease the amount of the Labor and Materials Bond and Faithful Performance Bond due to such decreased costs. (2) Form of Security. The surety on each of said above bonds or other form of security (collectively, “Security”), and the form thereof shall be satisfactory to the Ground Lessee and the City. If Developer seeks to replace any Security instrument with another Security instrument, the replacement shall: (1) comply with all the requirements for Security in this Agreement; (2) be provided by the Developer to the Ground Lessee and the City; and (3) upon its written acceptance by the Ground Lessee and the City, be deemed a part of this Agreement.

Upon the Ground Lessee’s and the City’s acceptance of a replacement Security, the former Security may be released by the Developer.
(3) Release of Security. Developer may withhold from any security to be released pursuant to this Section 3.2(f), amounts sufficient to cover the Ground Lessee’s and/or City’s costs and reasonable expenses and fees, including reasonable attorney’s fees, incurred as a result of an event of default with respect to the Work. Developer shall release the Labor and Materials Bond and Performance Bond amounts remaining after withholding, if any, as follows, which releases shall be in addition to any releases required to account for decreases in costs as set forth in subparagraph (1) above:
a. At six (6) months from the anticipated date of
acceptance of the completed Work, and after all deficiencies have been corrected and in the absence of any claim against such Security, whichever is later, Developer shall release 100% of the Labor and Materials Bond attributable to the accepted Work. If claims against the Labor and Material Bond have been filed, such Security shall be reduced to an amount equal to the total amount claimed by all claimants for whom liens have been filed and of which notice has been given to the Ground Lessee and the City. The balance of the Security shall be released upon settlement or release of all claims and obligations for which the Security was given. b. Upon acceptance by the Ground Lessee and the City
of the completed Work, the Developer shall release the Performance Bond in an amount equal to 90% of the value of the accepted Work. The remaining 10% of the Performance Bond shall remain in effect to guarantee the repair and replacement of defective equipment, materials and work, discovered within one (1) year after final payment has been accepted by the Developer and/or Contractor has cured or paid for all damages sustained by the Ground Lessee or the City by it on account of any such defects. After one (1) year from the date of acceptance of the completed work

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or after satisfaction of the one (1) year warranty period, whichever is later, and after any deficiencies have been corrected and in the absence of any claim against such Security, the Developer shall release the remaining 10% of the Performance Bond.

3.3. No Lien. Developer agrees to furnish any and all required supervision, labor, equipment, material, and services, and will bear any and all other expense necessary or incidental to the performance of the Work under this Agreement. Developer shall not permit or suffer any mechanic’s or materialman’s lien of any kind or nature to be enforced against the Ground Lessee or the City property for any work done or materials furnished thereon related to this Agreement, and any uncured default with respect to this provision shall constitute a default hereunder. Developer may dispute or contest, and will not be required to pay, any liens as required by this Section 3.3, so long as (i) Developer provides prompt written notice of such dispute or contest to Ground Lessee and the City, (ii) Developer diligently prosecutes such dispute or contest to a prompt determination in a manner not prejudicial to Ground Lessee or the City and promptly pays all amounts ultimately determined to be owing, and (iii) Developer provides security or other forms of assurances for the payment of such lien in a form reasonably acceptable to the City.

3.4. Change Orders.
(a) By virtue of the fact that the City is providing the sources of funds used to pay City Components Construction Contract amounts, the City has the right to review and decide whether to approve change orders for the Work, as provided herein. Any substantive design changes during construction, including design changes that result in increased material costs or extension of anticipated completion dates are subject to review by both the Ground Lessee and the City, with the City having the right to make the final decision in its reasonable discretion. Any non-substantive or time-sensitive design changes necessitated due to emergency during construction are subject to approval by the Ground Lessee and the Developer with notification to the City as soon as reasonably practicable. Except only in limited circumstances as provided in this Section 3.4(a), and except for an emergency or non-substantive changes to the Plans, the Ground Lessee and/or Developer shall not approve any change order request under the City Components Construction Contract without the City’s prior consent. For the avoidance of doubt, written approval of any change order must be requested and obtained from the City, unless it is not reasonable under the limited circumstances set forth herein. The City Components Construction Contract must state that, except for the limited circumstances set forth in this Section

3.4(a), no change orders will be approved without the City’s prior written consent. Developer shall timely notify the Ground Lessee and the City regarding any change order requests, consistent with this section. The Ground Lessee and the City shall respond to the Developer’s or Contractor’s change order request within 48 hours of Developer’s notification. (b) Any change in the scope of work to be done, method of performance, nature of materials or price thereof, work schedule changing the number of working days, or to any other matter materially affecting the performance or nature of the Work will not be paid for or accepted unless such change, addition or deletion is approved in advance by the Ground Lessee and, subject to the City’s prior review and approval, in a written change order. (c) The changes will be set forth in written change orders which specify the scope of work to be done in connection with the changes, the basis of compensation for

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proposed change order, and any adjustments to the Work schedule or Work completion date. Such change orders shall be reviewed by the Ground Lessee and provided to the City to notify the City and to seek City’s approval, unless the City’s approval is not required or is not practically feasible due to an emergency as set forth in Section 3.4(a). Upon receipt of an approved change order, or of a written authorization from the City setting forth a description of the change and agreed upon changes in contract price, the Contractor shall proceed with the work so ordered. (d) In the absence of an approved change order or written authorization by the City and the Ground Lessee as provided in this Section 3.4, the Developer and Contractor shall not be entitled to payment for any changed or extra work or any adjustment to the Work schedule or Work completion date.
(e) When the authorized changes increase or decrease the cost of the Work, an adjustment of the Contract price will be made as set forth in the change order. (f) Developer’s Contractor shall not be entitled to an adjustment in the compensation or work schedule for delay, disruption, or interference caused by or within the control of Contractor. Delay, disruption, and interference attributable to and within the control of a subcontractor or supplier shall be deemed to be within the control of the Contractor. (g) If the provisions of any bond requires notice to be given to a surety of any change affecting the general scope of work or the provisions of the City Components Construction Contract (including, but not limited to, compensation or work schedule), the giving of any such notice will be Developer’s and its Contractor’s responsibility. The amount of each applicable bond will be adjusted to reflect the effect of any such change. (h) If the City requires material changes to the Project that result in an increase to the cost of the Work, Developer will not be required to make any such changes until the City commits or causes to be committed additional sources of funding to be provided to Ground Lessee to fund the cost of such changes. Except as set forth above, the Ground Lessee and/or Developer shall be solely obligated to fund all costs necessary to complete the City Components in excess of the City Funds,
(i) Nothing in this Agreement is intended to alter the approvals required to be obtained from the City pursuant to its ordinary governmental functions. For the avoidance of doubt, the Parties acknowledge that the Developer shall be solely liable for all cost increases for the completion of the Work, caused by such party’s negligence, willful misconduct, failure to enforce or oversee any contract for the design and construction of such improvements, or any default or failure to perform by any Contractor or Contractor Parties retained by, or on behalf of, Ground Lessee or Developer.

3.5. Preservation of Public Property/Monuments/Repairs and Replacements.

During the course of the Work, Developer and its Contractor shall exercise due care and install suitable safeguards to protect and avoid damage to infrastructure and other features of City property and the public right-of-way which are unrelated to the Work. Developer shall replace, or have replaced, or repair, or have repaired any damage to the infrastructure and other features of City property and the public right-of-way, and as the case may be, all pipes and monuments shown

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on the map which have been destroyed or damaged by reason of or during the course of performing the Work, and Developer shall replace or have replaced, repair or have repaired, as the case may be, or pay to the owner, the entire cost of replacement or repairs, of any and all property damaged or destroyed by reason of or in the course of performing any Work done hereunder, whether such property be owned by the United States or any agency thereof, or the State of California, or any agency or political subdivision thereof, or by the City or by any public or private corporation, or by any person whomsoever, or by any combination of such owners. Any such repair or replacement shall be to the satisfaction, and subject to the reasonable approval, of the City Engineer.

3.6. Environmental Remediation/Compliance.
(a) The parties hereto acknowledge that they are aware that the Property is subject to a Remedial Excavation and Soil Management Plan, dated [__________] (“RESMP”), approved by the County of Santa Cruz Health Services Agency - Environmental Health, and that the RESMP subjects the Property to a Land Use Covenant (“LUC”) and Site Environmental Management Plan (“SEMP”). Ground Lessee and Developer agree to be responsible for complying with the RESMP, the LUC and the SEMP, and any amendments thereto, in connection with the Work.
(b) The parties hereto acknowledge that other than the disclosure set forth in Section 3.6(a), neither the Ground Lessee nor the City makes any representations or warranties, express or implied, concerning the condition of the Property including, without limitation, its environmental condition, the physical condition, the presence or absence of any latent or patent condition thereon or therein, including, without limitation, any Hazardous Materials (as defined below) thereon or therein, and any other matters affecting the Property.

3.7. Environmental Covenants.
(a) Ground Lessee, Developer and their respective employees, representatives, Contractor, Contractor Parties, and invitees, shall not engage in any activity on, under, or about the Property or public right-of-way that violates any Federal, State or local laws, rules or regulations pertaining to hazardous, toxic or infectious substances or materials (“Hazardous Substances” or “Hazardous Materials”), and shall promptly, at Developer’s expense, take all investigatory and/or remedial action required or ordered for clean-up of any contamination of the Property and public right-of-way of the elements surrounding the same created, released, or exacerbated by Developer or its Contractor. For the purposes of this Agreement, the term “Hazardous Substances” or “Hazardous Materials” shall mean any substance or material which is capable of posing a risk of injury to health, safety or property, including all those materials and substances designated as hazardous or toxic by any federal, state or local law, ordinance, rule, regulation or policy, including but not limited to, all of those materials and substances defined as “Toxic Materials” in Sections 66680 through 66685 of Title 22 of the California Code of Regulations, Division 4, Chapter 30, as the same shall be amended from time to time, or any other materials requiring remediation under federal, state or local laws, ordinances, rules, regulations or policies.
(b) Except as caused by the gross negligence or willful misconduct of Ground Lessee, City or their respective officials, officers, directors, employees, and agents,

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Developer shall defend, indemnify, and hold harmless the Ground Lessee, the City, their respective officials, officers, directors, employees, and agents from any and all costs, claims, expenses, penalties and attorneys’ fees and costs arising out of a breach by Developer, its Contractor, Contractor Parties, employees, invitees, or agents of the covenant included above, including, but not limited to, the investigation, remediation and abatement of any contamination therein involved where the contamination was caused, released, or exacerbated by the acts or omissions of Developer, Contractor, Contractor Parties or their respective employees, agents, and invitees.

3.8. Permits; Compliance with Laws.
(a) Developer shall obtain and conform to all necessary permits, including encroachment permits, and licenses for the construction of the Work, give all necessary notices, pay all applicable fees and taxes as set forth in the City Components construction budget approved by the City and the Ground Lessee (and any amendments thereto), and comply with all applicable laws, rules, and regulations, environmental or otherwise, in the demolition, construction, development of the City Components. Developer also agrees that the Work shall comply with the applicable provisions of the Americans with Disabilities Act (ADA) and other applicable accessibility laws, and shall provide certification of compliance thereof. (b) Developer agrees that its Contractor Parties working in the City shall comply with any and all applicable federal, state, and local licensing requirements and agrees to provide proof of the Contractor’s current City of Santa Cruz Business license tax certificates. (c) Developer agrees that its Contractor Parties shall comply with the applicable terms of the REA and the City Components Ground Lease, as applicable.

3.9. Site Access/Right of Entry and Site Conditions.
(a) If reasonably necessary for the Work, the City agrees to grant Ground Lessee and/or Developer, as applicable, a right of entry to access to certain City property, public right-of-way, and other facilities (with City reserving the right to charge for access to power sources, if applicable) solely to perform the Work (including staging activities) under this Agreement, subject to an encroachment permit issued by the City, as applicable. The City acknowledges and agrees that the City parking lot adjacent from the Property across Lincoln Street is anticipated to be used as a staging area in accordance with this provision and to be formalized by a license agreement.
(b) Intentionally Omitted.
(c) Developer shall not hold any ownership or vested property interest in the Work area during the construction of the Project. (d) During the course of performing the Work, the security and safety of the Work area/site, and construction materials and equipment will be the Developer’s sole responsibility. Developer shall ensure that the Work site is properly maintained in accordance with applicable legal and safety requirements, that all necessary barriers or signage to deter unauthorized entry and to protect the public are in place, such as notifying, warning, and protecting

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the public of any dangerous conditions on the property related to the Work, installing a secure construction fence, security surveillance and patrol, and other reasonable measures as further may be requested by City to protect public health and safety during the course of the Work, all in a manner to allow reasonably normal operations of adjacent properties. (e) No material or equipment shall be stored where it will interfere with or cause a nuisance to private property owner’s use of their property, interfere with the safe passage of public traffic or use of City property or right-of ways, except as allowed under Paragraph 3.9(a).

At the end of each day’s Work and at other times when construction operations are suspended for any reason, Developer shall require its Contractor to remove all equipment and other obstructions from that portion of the roadway open for use by public traffic, or from property owned by the City unless otherwise pre-approved or authorized in writing by the City. Spillage resulting from hauling operations along or across any public traveled way shall be removed promptly. (f) Developer and its Contractor and Contractor Parties shall not unreasonably interfere with the public’s use of any applicable public right-of-way to the extent such public right-of-way is usable and accessible during the course of performing the Work. When Contractor’s operations require one-way traffic or creates a condition hazardous to public traffic, Developer shall require its Contractor and/or Contractor Parties to provide and station competent flaggers whose sole duties shall consist of directing the movement of public traffic through or around the work.
(g) Developer agrees to require its Contractor and Contractor Parties to keep the construction site related to the Work in a neat and sanitary condition as reasonably possible at all times. All trash and excess excavated material shall be removed from the Work sites.

If dust problems should occur, dust control will be provided by the Developer or its Contractor or Contractor Parties in a manner approved by the City Engineer at no additional expense to the City.

At the start of the Project, Developer will place filter fabric in all storm drain inlets in the project area so as to prevent soil particles from entering. Trench dewatering must be conducted so as to minimize sediment from entering storm drains in compliance with state laws. (h) Developer shall require its Contractor and Contractor Parties to exercise due care to avoid damage to existing improvements, utility facilities, and adjacent property. The fact that any pipe or underground facility is not shown on the plans and specifications shall not relieve the Developer or its Contractor or Contractor Parties of responsibility or ascertaining the existence of any underground improvements or facilities which may be subject to damage by reason of the Work.
(i) In carrying out its work, Developer shall require its Contractor and Contractor Parties at all times, exercise all necessary precautions for the safety of employees appropriate to the nature of the work and the conditions under which the work is to be performed, and be in compliance with all federal, state and local statutory and regulatory requirements including State of California, Division of Industrial Safety (Cal/OSHA) regulations, and the U.S.

Department of Transportation Omnibus Transportation Employee Testing Act (as applicable).

Safety precautions as applicable shall include instructions in accident prevention for all employees and the public, such as safe walkways, scaffolds, fall protection, ladders, bridges, gang planks, confined space procedures, trenching & shoring, equipment and wearing apparel as are necessary

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or lawfully required to prevent accidents or injuries or damage to public or private property or to the general public.
(j) Any loss or damage to Developer’s or Contractor’s or Contractor Parties’ materials and equipment in the Work area is Developer’s sole responsibility, and Ground Lessee and City shall not have any liability for any such loss or damage. Developer is also solely responsible for any personal injury or property damage related to Developer’s or its Contractor’s or Contractor Parties’ activities on City property and in the public right-of way under this Agreement, except to the extent caused by the City’s gross negligence or willful misconduct. (k) Upon completion of the Work, Developer and its Contractor and Contractor Parties shall leave the Property and public right-of-way in a clean and orderly condition and shall restore or replace in-kind any improvements or landscaping damaged by Developer or its Contractor or Contractor Parties, including any public property impacted by the Work, but not otherwise contemplated in this Agreement. In the event Developer is in default of it obligations pursuant to this Agreement, beyond any applicable notice and cure period, Ground Lessee and City shall have the right to make any corrections or repair any damages caused by Developer and/or its Contractor or Contractor Parties on their respective property shall be responsible to pay Ground Lessee or City all costs, including 20% overhead administrative fee, arising therefrom within thirty (30) days of the date of an invoice therefor.

3.10. Access for Inspection by Ground Lessee and City. Developer and/or its Contractor or Contractor Parties shall at all times maintain proper, safe, and secure facilities and provide safe access for inspection by Ground Lessee and/or City, their respective employees, or agents, to all parts of the Work. Nothing in this Agreement is intended or shall be construed to limit in any way access by the Ground Lessee or the City to the Work area at all reasonable times during the duration of this Agreement, or the right of entry or inspection that the Ground Lessee, the City, their respective employees, contractors, and consultants or any other agency may have by operation of law.

3.11. Acceptance of Public Improvements. Upon completion of any severable improvement or improvements that are to be public improvements, as reasonably determined by the City Engineer, that are part of the Work, if such improvement or improvements are found to be in substantial compliance with the Plans and Specifications, then the City Engineer, if required, will certify that the improvement(s) is/are complete and, no more than 30 days following such certification, the City will accept the improvement(s) on its property, as applicable. Developer shall bear all costs of inspection and certification for acceptance. Acceptance by the City Engineer shall not constitute a waiver by the City of any defects in the improvement(s), the Work, or City Components, nor shall such acceptance constitute a waiver by the City of any claims it may have under the City Components Ground Lease.

3.12. Warranty Period. Developer guarantees and warrants the Work, and any severable improvement or improvements thereof, and agrees to remedy any defects, damages, or imperfections in the improvement(s) arising from faulty or defective materials or construction for a period of one (1) year after Ground Lessee’s and/or City’s acceptance of the subject improvement(s). Ground Lessee or City is hereby authorized to make such repairs if, within 10 business days after delivery of a notice in writing to the Developer, the Developer neglects to

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commence or undertake with due diligence the aforesaid repairs, replacements, or reconstruction affecting the Ground Lessee’s or City’s respective property; provided, however, that in case of an emergency where, in Ground Lessee’s or City’s reasonable discretion, as applicable, delay would cause serious loss or damage, repairs may be made without notice being sent to the Developer. In the event that the Ground Lessee or City is required to perform the repair work during the warranty period, Developer shall pay all costs, losses, and damages arising out of or relating to such repair, removal, replacement, or reconstruction plus the overhead fee of an additional 20% of all costs incurred by the Ground Lessee or City. Such costs shall not be reimbursable to Developer by the Ground Lessee or City. This warranty does not affect or limit Ground Lessee’s or City’s other remedies under California law, including but not limited to, applicable statutes of limitations relating to defective construction or any other remedies in law or in equity. This warranty also does not affect or limit the City’s rights or remedies under the City Components Ground Lease.

3.13. State Prevailing Wage & Federal Labor Standard Wage Provisions. (a) Developer and Contractor performing the Work shall conform to the prevailing wage requirements and federal labor standard wage provisions applicable to the Work under this Agreement. Developer (and its Contractors) shall adhere to the prevailing wage determinations made by the Director of Industrial Relations pursuant to California Labor Code Part 7, Chapter 1, Article 2, applicable to the Work, if any. The Parties acknowledge that all workers employed in the execution of a public works contract (as such term is defined California Labor Code Section 1720 et seq. and Section 1782(d)(1)) must be paid not less than the specified prevailing wage rates for the type of work performed. Reference: California Labor Code Sections 1720, 1774 and 1782.
(b) Developer agrees to indemnify, defend and hold harmless the Ground Lessee, the City, and their respective officials, officers, directors, employees, and agents from and against any and all claims, liabilities, losses, costs, expenses, attorney’s fees, damages, expenses, fines, financial consequences, interest, and penalties, of any kind or nature, arising from or relating to any failure (or alleged failure) of the Developer and its Contractor to pay prevailing wages or to otherwise comply with the requirements of prevailing wage law relating to a public work, to the extent those requirements apply to the Work, regardless of the termination of this Agreement.

3.14. Storm Water Requirements. To the extent applicable to the Work under this Agreement, Developer, its employees, contractors, 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.

3.15. Nondiscrimination. In connection with the performance of this Agreement, Developer and its Contractor shall not discriminate, harass, or retaliate against any person or class of persons 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),

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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.

4. General Provisions.

4.1. Public Entity Authorization. Notwithstanding any provision of this Agreement to the contrary, each of the Parties acknowledge that: (i) all of the actions summarized above, including, but not limited to any allocation of public funding contemplated by this Agreement, require authorization by the applicable public entity’s respective governing body in accordance with all applicable laws. The public entity’s governing body, such as the Santa Cruz City Council, in their respective sole discretion, may grant, deny, or grant with certain conditions, such approval as may be necessary for the respective public entity to engage in any action contemplated in this Agreement; (ii) while the respective public entity’s staff will engage in good faith, commercially reasonable, efforts to recommend to the respective governing body to authorize each approval necessary for the respective public entity to engage in any action contemplated in this Agreement, such efforts are not a guaranty of any particular approval by the applicable governing body at any particular time; and (iii) nothing in this Agreement shall be deemed to waive, limit, or otherwise impair the discretion of the respective governing body in connection with each approval necessary for the Project. In the event of any conflict between the terms of this Section, and any other provision of this Agreement, the terms of this Section shall control.

4.2. Indemnification by Developer.
(a) It is the Parties’ intent that the Developer shall be responsible for all liability for the construction of the Work, and that the Ground Lessee and the City shall not be liable to Developer for any negligence, nonfeasance, misfeasance or malfeasance in the Ground Lessee’s or City’s respective inspection, review, or approval of any construction work, unless the particular improvement or design was specifically required by the Ground Lessee or City after Developer’s written objection, which objection: (i) was reviewed by the Ground Lessee and/or City before its approval of the improvement or design, and (ii) demonstrated that the improvement or design proposed by the Ground Lessee and/or City was dangerous or defective, and (iii) suggested an alternative safe and feasible design.
(b) The Ground Lessee, City, and their respective officials, officers, directors, employees, and agents (collectively, “Indemnitees”) shall not be liable for any injury to persons or property arising out of, pertaining to or relating to the acts or omissions of the Developer or its agents, officers, employees, contractors and subcontractors, or others under Developer’s control or authority in the performance of the Work or Agreement, unless such damages are caused by the gross negligence or willful misconduct of Indemnitees. (c) To the fullest extent permitted by law, Developer hereby agrees to, and shall indemnify, defend, and hold harmless the Indemnitees, from any liability or damage or claims for damage for personal injury, including death, as well as from claims for property damage or any other type of claims, liabilities, actions, losses, damages, fines, penalties, judgments, costs, and expenses, including attorneys’ fees and costs (“Losses”) which may arise directly or indirectly

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from: (i) the acts or omissions of Developer, Contractor, Contractor Parties, or Developer’s agents, employees, or others acting under Developer’s authority or control in connection with the Work under this Agreement, (ii) the condition of the Property, or its suitability for any purpose whatsoever; and (iii) any presence of Hazardous Materials at the Property. Developer’s duty to indemnify, defend, and hold harmless the Indemnitees shall not apply to the extent such Losses are caused by the gross negligence or willful misconduct of the Indemnitees. (d) The aforesaid hold harmless/indemnification obligation of Developer shall apply to all damages and claims for damages of every kind suffered, or alleged to have been suffered related to the Work or Agreement, regardless of whether or not the Ground Lessee or the City has prepared, supplied or approved of, plans and/or specifications for the Project, or accepted the Work, or regardless of whether or not such insurance policies shall have been determined to be applicable to any of such damages or claims for damages. (e) The obligation to defend by Developer shall arise regardless of any claim or assertion that Indemnitees caused or contributed to the Losses. (f) The obligations under this Section 4.2 of the Agreement shall survive expiration or termination of this Agreement to the fullest extent permitted by law. (g) Nothing in this Section 4.2 shall be deemed to waive, limit or otherwise impair the Ground Lessee’s obligation to indemnify the City under the City Components Ground Lease.

4.3. Indemnification between Ground Lessee and City. The Ground Lessee and the City shall comply with the indemnity obligations as set forth in the Ground Lease. The obligations under this Section 4.3 of the Agreement shall survive expiration or termination of this Agreement to the fullest extent permitted by law.

4.4. Developer’s Insurance. Developer shall not commence the Work under this Agreement until Developer shall have obtained all insurance required as set forth in Exhibit B to insure the Developer and the Ground Lessee and City against claims for injuries to persons or damages to property which may arise from or in connection with this Agreement, with the Ground Lessee and the City named as additional insureds on the Commercial General Liability policy carried by the Developer and its Contractor.

4.5. 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 Project involves or qualifies as a public works project, the Parties agree to comply with Public

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Contract Code sections 9204(e) and 20104-20104.6, but without waiving the requirements of the California Tort Claims Act, Gov’t Code section 800 et seq. unless otherwise agreed to by the Parties. Nothing in this Section 4.5 shall serve as a limitation of the City’s rights and remedies under the City Components Ground Lease or the City Components Completion Guaranty.

4.6. Default.
(a) Event of Default and Notice. If Developer or its Contractor (i) refuses or fails to proceed with the Work, or any severable improvement thereof, with such diligence as will insure its completion within the time specified, including any extensions, (ii) fails to obtain completion of said Work or improvement within such time, (iii) if the Developer or Guarantor should be adjudicated as bankrupt, (iv) if Developer or Guarantor should make a general assignment for the benefit of Developer’s creditors, (v) if a receiver should be appointed in the event of Developer’s or Guarantor’s insolvency, or (vi) if Developer, or any of Developer’s contractors, subcontractors, agents, or employees should violate any of the provisions of this Agreement; such occurrence or action shall constitute a “Default” under the Agreement. City Engineer or City Council may serve written notice upon Developer and Developer’s surety of the event of Default under this Agreement. An uncured default hereunder (past any applicable notice and cure period) shall also constitute a default under the Ground Lease. (b) Performance by Developer or Surety. In the event Developer or its Contractor fails to cure a Default, or fails to commence and diligently pursue efforts to cure any Default under this Agreement within thirty (30) calendar days after the Developer receives written notice of such Default to Developer, Developer or its Contractor’s surety shall have the duty to take over and complete the Work, or the severable improvement thereof that is the subject of the Default. Developershall act within a reasonable time to enforce the surety’s obligation to complete performance of the Work. If the surety, within five (5) business days of receipt of notice from of Developer’s failure to cure, does not give the Ground Lessee and/or the City written notice of its intention to take over the performance of the Work or the severable improvement at issue, and does not commence performance thereof within five (5) business days after notice to the Ground Lessee and/or the City of such election, Developer agrees that the Ground Lessee and/or the City may assert a claim against the surety so as to give a right of action to the Ground Lessee and/or the City in any action or suit to enforce liability on the bonds issued to Developer related to this Work. The Ground Lessee and/or the City may take over the Work, or the severable improvement thereof, and prosecute the same to completion, by contract or by any other method the Ground Lessee and/or the City may deem advisable, including a 20% overhead administration fee, for the account and at the expense of Developer and/ Developer’s surety; and, in such event, without liability for so doing, the Ground Lessee and/or the City may take possession of, and utilize in completing the Work, or severable improvement thereof, such materials, appliances, and other property belonging to the Contractor or Developer as may be on the site of the Work necessary thereof.
(c) Remedies. The Ground Lessee and/or the City reserve all remedies available to either or both of them at law or in equity for breach of Developer’s obligations under this Agreement, or failure to pay the Ground Lessee and/or the City any damages due or penalties assessed within the time prescribed. In addition to the right to compel specific performance of this Agreement and to seek recovery of damages, the Ground Lessee and/or the City shall have the

20.94 Downtown Library & Affordable Housing Development Project City Components Funding and Development Agreement 18
right, subject to this Section 4.6, to draw upon or use the appropriate Security to do or cause to be done acts required of Developer that Developer has failed to perform or to otherwise mitigate the Ground Lessee’s and/or the City’s damages in the event of Default by Developer. The Ground Lessee and/or the City shall have the right to draw upon or use the Security in addition to any other remedy available to the Ground Lessee and/or the City. The Ground Lessee and the City agree to draw upon or attempt to draw upon such Security prior to initiating legal or equitable action to recover damages or obtain specific performance. The Parties acknowledge that the estimated costs and Security amounts may not reflect the actual cost of construction of the Work and, therefore, the Ground Lessee’s and/or the City’s damages reimbursable by Developer for Developer’s Default shall be all of the actual costs of completing the required Work, or severable improvement thereof, regardless of whether the Ground Lessee’s and/or City’s costs of completion exceeds the amount of the Security amounts. Ground Lessee and City also are entitled to recover all associated costs of enforcing the terms of this Agreement including their respective administrative costs for staff time, Consultant fees, court fees, and attorneys’ fees and costs.

4.7. Termination.
(a) Ground Lessee’s Right to Terminate. In the event that Ground Lessee is not in default, Ground Lessee, solely with the written consent of the City and of U.S.

Bank National Association (“USB”) and the Affordable Housing Investor, may terminate this Agreement only if Developer is in default hereunder and has not cured any such default by expiration of all applicable cure periods, by providing written notice of intent to terminate to the other Parties not less than thirty (30) calendar days prior to an effective termination date. Nothing in this Section 4.7 shall allow Ground Lessee any termination rights which conflict with the City Components Ground Lease.
(b) City’s Right to Terminate. Subject to Section 4.18 below, In the event that City is not in default, City may terminate this Agreement only if Developer is in default hereunder and has not cured any such default by expiration of all applicable cure periods, by providing written notice of intent to terminate to the other Parties not less than thirty (30) calendar days prior to an effective termination date. Nothing in this Section 4.7 shall allow Ground Lessee any termination rights which conflict with the City Components Ground Lease. (c) Developer’s Right to Terminate. In the event that Developer is not in default, Developer, solely with the written consent of the City and of USB and the Affordable Housing Investor, may terminate this Agreement for cause by providing written notice of intent to terminate to the other Parties not less than thirty (30) calendar days prior to an effective termination date. Developer may terminate for cause if the Ground Lessee or the City fails to cure a material default in performance within a period of thirty (30) calendar days (or such longer period agreed to by Developer), from the date of the Developer’s written termination notice specifying the default in performance.
(d) Notice to Terminate. Upon notice of termination by either Ground Lessee or City to Developer, Developer will immediately act to not incur any additional obligations, costs or expenses, except as may be reasonably necessary to terminate its activities.

Ground Lessee’s and/or the City only obligation to Developer will be payment for work authorized by and received to the satisfaction of the Ground Lessee and City up to and including the effective

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date of termination less any amounts withheld by the Ground Lessee and/or the City for any expenses or damages sustained by Ground Lessee or City related to Developer’s acts or omissions under the Agreement.

4.8. Force Majeure. No 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 written 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.

4.9. Developer's Records. To the extent required by law, Developer 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, during the period of this Agreement, and for a period of at least five years from the date of Ground Lessee’s or City’s acceptance of the Work.

4.10. Assignment. This Agreement may not be assigned without the express written consent of the non-assigning Party, which consent shall not be unreasonably withheld.

Notwithstanding the foregoing, the parties hereby consent to the collateral assignment of Ground Lessee’s and Developer’s interests in this Agreement to USB pursuant to loan documentation by and among those parties.

4.11. 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.

4.12. Severability. The provisions of this Agreement are severable. If any portion of this Agreement is held invalid by a court of competent jurisdiction, the remainder of the agreement shall remain in full force and effect.

4.13. Relationship of Parties. This Agreement does not create any joint venture, partnership, or agent relationship between any of the Parties hereto.

4.14. Conflicts of Interest. No member, official, officer, employee, agent, representative, or consultant of the Parties shall have any personal interest, direct or indirect, in this Agreement nor shall any such member, official, officer, agent, representative, or employee participate in any decision relating to this Agreement which affects his or her personal interests or the interests of any corporation, partnership, or association in which he or she has a direct or indirect interest. Each Party warrants that it has not paid or given, and will not pay or give, any such member, official, officer, employee, agent, representative, or consultant of the other Party any money or other consideration for obtaining this Agreement.

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4.15. Governing Law. This Agreement shall be governed by the laws of the State of California.

4.16. Additional Documents. The agreements set forth herein are binding and enforceable obligations of the Parties subject to the limitations set forth above. However, it is anticipated that some or all of the Parties hereto or their affiliates may be entering additional documents or agreement in furtherance of the agreements expressed herein.

4.17. Cooperation. The Parties hereto acknowledge that this Agreement does not describe all of the actions, documents and approvals necessary for the Project; and each Party agrees to cooperate with the other Parties as may be necessary to achieve the purposes of this Agreement.

4.18. 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:

If to Ground Lessee: Eden Cedar Street Development, LLC c/o Eden Housing, Inc.
22645 Grand Street
Hayward, CA 94541
Attn: Andrea Osgood, Chief of Real Estate Development
Email: [email protected]
If to City:

with a copy to:

City of Santa Cruz
Economic Development and Housing Dept.
337 Locust Street
Santa Cruz, CA 95060
Attn: Brian Borguno
Email: [email protected]
City of Santa Cruz
Attn: City Attorney
333 Church Street
Santa Cruz, CA 95060
Email: [email protected]
If to Developer: Lincoln Street Development, LLC
c/o Eden Housing, Inc.
22645 Grand Street
Hayward, CA 94541
Attn: Andrea Osgood, Chief of Real Estate Development

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Email: [email protected]
and
c/o For the Future Housing, Inc.
433 Marsh Street
San Luis Obispo, CA 93401
Attn: Jim Rendler, Principal
Email: [email protected]
With a copy to: Cox, Castle & Nicholson LLP
50 California Street, Suite 3200
San Francisco, CA 94111
Attn: Ofer Elitzur and Lisa Weil
Email: [email protected] and [email protected]
Changes to the above information shall be given to the other party in writing ten (10) business days before the change is effective.

The parties hereto agree to give concurrent notice of any default hereunder to the following parties:

Affordable Housing
Owner: DTLMU Investors, L.P.
c/o Eden Housing, Inc.
22645 Grand Street
Hayward, CA 94541
Attn: Andrea Osgood, Chief of Real Estate Development
Email: [email protected]
With a copy to: U.S. Bancorp Community Development Corporation (“Affordable Housing Investor”)
c/o U.S. Bancorp Impact Finance
505 North Seventh Street, 10th Floor
SL-MO-10F
St. Louis, Missouri 63101
Attention: Director of LIHTC Asset Management
And to: Kutak Rock LLP
1650 Farnam Street
Omaha, NE 68102
Attn: Jill Goldstein

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And to: U.S. Bank National Association (“Affordable Housing Lender”)
c/o U.S. Bancorp Community Development Corporation
505 North Seventh Street, 10th Floor
SL-MO-10F
St. Louis, Missouri 63101
Attention: Director of LIHTC Asset Management
The City shall not exercise any right to terminate this Agreement, unless it has provided Affordable Housing Owner, Affordable Housing Investor and Affordable Housing Lender with written notice of the Event default or breach (the “Initial Default Notice”) and a second notice of the failure by Developer and/or Ground Lessee, as applicable, to cure the default or breach within any cure period specified herein (the “Second Default Notice”) to Affordable Housing Owner, Affordable Housing Investor and Affordable Housing Lender concurrently with the transmittal of such notices to Ground Lessee and/or Developer, as applicable, and afford each of the Affordable Housing Owner, Affordable Housing Investor and Affordable Housing Lender the opportunity to:

A. Cure the breach or default at any time prior to the sixtieth (60th) day after service on the Affordable Housing Owner, Affordable Housing Investor and Affordable Housing Lender, as applicable, of the Second Default Notice where the default can be cured by the payment of money to City or some other person;
B. Cure the breach or default within ninety (90) days after service on the Affordable Housing Owner, Affordable Housing Investor or Affordable Housing Lender, as applicable, of the Second Default Notice where the breach or default must be cured by something other than the payment of money and can reasonably be cured within that time; or C. Cure the breach or default in such reasonable time as may be required where something other than the payment of money is required to cure the breach or default and cannot be reasonably cured within ninety (90) days after service on the Affordable Housing Owner, Affordable Housing Investor and Affordable Housing Lender, as applicable, of the Second Default Notice, provided that acts to cure the breach or default are commenced within that time period after service of the Second Default Notice on Affordable Housing Owner, Affordable Housing Investor and Affordable Housing Lender by City and are thereafter diligently and continuously pursued by Affordable Housing Owner, Affordable Housing Investor and Affordable Housing Lender, as applicable, to completion.

If in order to complete the cure of the default or breach Affordable Housing Owner, Affordable Housing Investor or Affordable Housing Lender requires access to the Property the foregoing cure period shall not commence until Affordable Housing Owner, Affordable Housing Investor or Affordable Housing Lender, as applicable, obtains possession of the Property, provided that the Affordable Housing Owner, Affordable Housing Investor (on its own behalf or through an Investor Designee) or Affordable Housing Lender diligently seeks to obtain such possession as a replacement ground lessee under the City Ground Lease (with respect to the Affordable Housing Owner, Affordable Housing Investor, and Investor Designee) or by a foreclosure action or otherwise (with respect to the Affordable Housing Lender) and diligently pursues such action all within the time periods set forth above. If Affordable Housing Owner, Affordable Housing

20.99 Downtown Library & Affordable Housing Development Project City Components Funding and Development Agreement 23
Investor or Affordable Housing Lender completes the cure of the default or breach in a timely and proper manner, City shall accept the cure as fulfilling the terms of this Agreement and shall pay them for any work completed from City Funds in accordance herewith.

4.19. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which, taken together, shall constitute one and the same instrument. A .pdf/electronic of a duly executed copy of this Agreement or of any document signed pursuant to this Agreement shall be deemed for all purposes as receipt of an originally signed document, and any such copy bearing a .pdf/electronic signature shall be binding upon, and enforceable against, the Party to be charged thereby.

4.20. Warranty of Authority. The signatories to this Agreement warrant and represent that each is authorized to execute this Agreement and that their respective signatures serve to legally obligate their respective corporate entity, representatives, agents, successors, and assigns to comply with the provisions of this Agreement. [SIGNATURES ON FOLLOWING PAGE]

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Downtown Library & Affordable Housing Development Project City Components Funding and Development Agreement 24
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date written above.

GROUND LESSEE:

EDEN CEDAR STREET DEVELOPMENT, LLC
By:______________________________
Name: ___________________________
Its: ______________________________
CITY:

CITY OF SANTA CRUZ
By:______________________________
Matt Huffaker
Its: City Manager
Approved as to form:
_______________________________
Tony Condotti, City Attorney
DEVELOPER:

LINCOLN STREET DEVELOPMENT, LLC,
a California limited liability company
By: Eden Housing, Inc. a California nonprofit public benefit corporation, its Manager
By:__________________________________
Andrea Osgood, Chief of Real Estate Development
By: For the Future Housing, Inc., a California corporation, its Manager
By: _____________________________
Jim Rendler, Principal

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Downtown Library & Affordable Housing Development Project City Components Funding and Development Agreement 25

EXHIBIT A
SECTION A.1 –PROJECT PLANS AND SPECIFICATIONS

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Downtown Library & Affordable Housing Development Project City Components Funding and Development Agreement 26
SECTION A.2 –, PROJECT PLANS AND SPECIFICATIONS

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Downtown Library & Affordable Housing Development Project City Components Funding and Development Agreement 27

EXHIBIT A
SECTION B.1 –PROJECT PLANS AND SPECIFICATIONS

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Downtown Library & Affordable Housing Development Project City Components Funding and Development Agreement 28

EXHIBIT A
SECTION B.2 –, PROJECT PLANS AND SPECIFICATIONS

EXHIBIT B

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Downtown Library & Affordable Housing Development Project City Components Funding and Development Agreement 29

INSURANCE REQUIREMENTS
Developer/Contractor/Subcontractor shall procure and maintain insurance against claims for injuries to persons or damages to property and otherwise which may arise from or in connection with the performance of the work under this Agreement and the results of that work by Developer, its agents, representatives, employees, contractors, or subcontractors.

A. CERTIFICATE REQUIREMENTS
The Ground Lessee and 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 for:
 the City of Santa Cruz will be City of Santa Cruz, Risk Management, 1200 Pacific Avenue, Suite 290, Santa Cruz, CA 95060
 Ground Lessee will be as provided separately by Ground Lessee • Certificate will be signed by an authorized representative, • An endorsement, if required below, will be provided to show the Ground Lessee, City and their respective officers, officials, employees, and volunteers as additional insureds, and • Coverages must be maintained during the term of the Agreement with the Ground Lessee and the City, unless a longer duration is required as specified below.

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

Coverage will be at least as broad as:
• COMMERCIAL GENERAL LIABILITY (CGL): $5,000,000 PER OCCURRENCE; $10,000,000

AGGREGATE
Proof of coverage for $5 Million per occurrence including products and completed operations, property damage, bodily injury, personal and advertising injury will be provided on Insurance Services Office (ISO) Form CG 00 01 covering CGL. d • PROFESSIONAL LIABILITY (ERRORS AND OMISSIONS): $2,000,000 PER OCCURRENCE OR CLAIM, $2,000,000 AGGREGATE.

Developer will maintain insurance appropriate to Developer’s profession; with limit no less than $2,000,000 per occurrence or claim, $2,000,000 aggregate. Insurance must be

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Downtown Library & Affordable Housing Development Project City Components Funding and Development Agreement 30
maintained, and evidence of insurance must be provided for at least five (5) years after date of completion of the services under this Agreement. If coverage is canceled or nonrenewed and not replaced with another claims-made policy form with a Retroactive Date prior to the contract effective date or start of work date, Developer must purchase “extended reporting” coverage for a minimum of five (5) years after completion of contract 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 Developer has no owned autos, hired, (Code 8) and non-owned autos (Code 9), per accident for bodily injury and property damage. • WORKERS’ COMPENSATION AS REQUIRED BY THE STATE OF CALIFORNIA, WITH STATUTORY LIMITS, AND EMPLOYER’S LIABILITY INSURANCE: $1,000,000 per accident for bodily injury or disease.

The Worker’s Compensation policy must be endorsed with a waiver of subrogation in favor of the City for all work performed by the Developer and its employees. (Not required if Developer provides written verification it has no employees) - If Contractor has no employees, Contractor 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 $4,000,000 policy aggregate.

2. The Automobile Liability policy shall be endorsed to include Transportation Pollution Liability insurance, covering hazardous materials to be transported by Contractor pursuant to the Agreement. This coverage may also be provided on the Contractors Pollution Liability policy.
• BUILDER’S RISK (Course of Construction) insurance utilizing an “All Risk” (Special Perils) coverage form, with limits equal to the completed value of the project and no coinsurance penalty provisions.

Builder’s Risk (Course of Construction) Insurance
Developer’s Contractor may submit evidence of Builder’s Risk insurance in the form of Course of Construction coverage. Such coverage shall name the City as a loss payee as their interest may appear.

C. OTHER INSURANCE PROVISIONS
The insurance policies are to comply with the following provisions:
• ADDITIONAL INSURED STATUS

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Downtown Library & Affordable Housing Development Project City Components Funding and Development Agreement 31
The Ground Lessee, the and their respective officers, officials, employees, and volunteers are to be covered as additional insureds on the CGL, CPL, and automobile insurance (if transporting hazardous materials] policies with respect to liability arising out of work or operations performed by or on behalf of Developer including materials, parts, or equipment furnished in connection with such work or operations. General liability coverage will be provided in the form of an endorsement to Developer’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, Developer’s insurance coverage will be primary insurance as respects the Ground Lessee, the City and their respective officers, officials, employees, agents, and volunteers. Any insurance or self-insurance maintained by the Ground Lessee, the City and their respective officers, officials, employees, agents, or volunteers will be excess of Developer’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 Ground Lessee and the City.
• WAIVER OF SUBROGATION
Developer hereby grants to the Ground Lessee and the City a waiver of any right to subrogation, except as otherwise not applicable, which any insurer of said Developer may acquire against the Ground Lessee and the City by virtue of the payment of any loss, including attorney’s fees under such insurance. Developer 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 Ground Lessee or the City has received a waiver of subrogation endorsement from the insurer.
• EXCESS LIABILITY/UMBRELLA INSURANCE POLICIES
Developer 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, SelfInsured Retentions (SIRs), indemnity, and defense requirements. The excess liability/umbrella insurance policies shall be provided on a true “following form” or broader coverage basis, with coverage at least as broad as provided on the underlying CGL insurance. No insurance policies maintained by the additional insureds, whether primary or excess, and which also apply to a loss covered hereunder, shall be called upon to contribute to a loss until the Developer’s primary and excess liability policies are exhausted.
• SELF-INSURED RETENTIONS
Self-insured retentions must be declared to and approved by the Ground Lessee and the City. The Ground Lessee and the City may require Developer 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

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Downtown Library & Affordable Housing Development Project City Components Funding and Development Agreement 32
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 Developer must purchase “extended reporting” coverage for a minimum of five (5) years after completion of contract work.
• VERIFICATION OF COVERAGE
Developer will furnish the Ground Lessee and the City with original Certificates of Insurance including all required amendatory endorsements (or copies of the applicable policy language effecting coverage required by this clause) and a copy of the Declarations and Endorsement Page of the CGL, CPL, and automobile Policies listing all policy endorsements to be approved by the City before work commences. However, failure to obtain the required documents prior to the work beginning will not waive the Developer’s obligation to provide them. The Ground Lessee and the City reserve the right to require complete, certified copies of all required insurance policies, including endorsements required by these specifications, at any time.

D. CONTRACTORS/SUBCONTRACTORS
Developer shall require and verify that all contractors and subcontractors maintain insurance meeting all the requirements stated herein, and Contractor shall ensure that the Ground Lessee and the City are additional insureds on insurance required from subcontractors.

E. SPECIAL RISKS/CIRCUMSTANCES
The Ground Lessee and the City reserve 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 Developer.

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Downtown Library & Affordable Housing Development Project City Components Funding and Development Agreement 33

EXHIBIT C

CONTRACTOR INDEMNIFICATION & INSURANCE AGREEMENT
This Contractor Indemnification & Insurance Agreement (“Contractor Indemnification Agreement”) is entered into this day of , 20__, by ________________ (“Contractor”), Eden Cedar Street Development, LLC, a California limited liability company (“Ground Lessee”), and the City of Santa Cruz, a municipal corporation (“City”). Each are individually referred to as a “Party” or collectively as the “Parties”.

RECITALS
WHEREAS, Lincoln Street Development, LLC (“Developer”) entered into the Downtown Library & Affordable Housing Development Project City Components Funding and Development Agreement (“Agreement”) with the Ground Lessee and the City related to developing certain civic and commercial improvements (“Project”) at the proposed Downtown Library & Affordable Housing Development Project described in the Agreement, and for Developer to implement the Project (“Work”) in the attached Agreement, which is incorporated as Exhibit A hereto;
WHEREAS, Contractor has entered into a separate agreement with Ground Lessee to perform the Work necessary for the Project, and Developer serves as “Owner’s Representative” on behalf of Ground Lessee with respect to the Work; and WHEREAS, as required by the Agreement, Contractor is required to agree to indemnify, defend, and hold harmless the Ground Lessee and the City in the same manner as Developer, and also provide insurance for claims arising from the Contractor’s work in performing any portion of the Project described in the Agreement;
NOW, THEREFORE, the Parties agree to incorporate the above Recitals and further agree as follows:

1. Indemnification. Contractor agrees to indemnify, defend, and hold harmless the Ground Lessee, the City and their respective its officials, officers, employees, and agents in the same manner as the Developer, as described in Section 4.2 of the Agreement as follows:
a. The Ground Lessee, the City, and their respective officials, officers, directors, employees, and agents (collectively, “Indemnitees”) shall not be liable for any injury to persons or property arising out of, pertaining to or relating to the acts or omissions of the Developer or its agents, officers, employees, contractors and subcontractors, or others under Developer’s control or authority in the performance of the Work or Agreement, unless such damages are caused by the gross negligence or willful misconduct of Indemnitees.
b. To the fullest extent permitted by law, Contractor hereby agrees to, and shall indemnify, defend, and hold harmless the Ground Lessee, the City, and their

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Downtown Library & Affordable Housing Development Project City Components Funding and Development Agreement 34
respective officials, officers, directors, employees, and agents (collectively, “Indemnitees”), from any liability or damage or claims for damage for personal injury, including death, as well as from claims for property damage or any other type of claims, liabilities, actions, losses, damages, fines, penalties, judgments, costs, and expenses, including attorneys’ fees and costs (“Losses”) which may arise directly or indirectly from: (i) the acts or omissions of Contractor or its subcontractors, agents, employees, or others acting under Contractor’s authority or control in connection with the Work under this Agreement; (ii) the condition of the Project, or its suitability for any purpose whatsoever; and (iii) any presence of Hazardous Materials at the Property. Contractor’s duty to indemnify, defend, and hold harmless the Indemnitees shall not apply to the extent such Losses are caused by the gross negligence or willful misconduct of the Indemnitees.
c. The aforesaid hold harmless/indemnification obligation of Contractor shall apply to all damages and claims for damages of every kind suffered, or alleged to have been suffered related to the Work or Agreement, regardless of whether or not the Ground Lessee or the City has prepared, supplied or approved of, plans and/or specifications for the Project, accepted the Work, or regardless of whether or not such insurance policies shall have been determined to be applicable to any of such damages or claims for damages.
d. The obligation to defend by Contractor shall arise regardless of any claim or assertion that Indemnitees caused or contributed to the Losses. e. The obligations under this section shall survive expiration or termination of this Contractor Indemnification Agreement to the fullest extent permitted by law.

2. Insurance. Contractor agrees to provide the insurance as required in Section 4.4 and Exhibit B of the underlying Agreement.

3. Miscellaneous.
a. Each party acknowledges that it has reviewed this Contractor Indemnification Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Contractor Indemnification Agreement. b. The unenforceability, invalidity or illegality of any provision(s) of this Contractor Indemnification Agreement shall not render the other provisions unenforceable, invalid or illegal.
c. The Parties may execute this Contractor Indemnification Agreement in two or more counterparts, which shall, in the aggregate, be deemed an original but all of which, together, shall constitute one and the same instrument. A scanned, electronic, facsimile or other copy of a party’s signature shall be accepted and valid as an original.

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Downtown Library & Affordable Housing Development Project City Components Funding and Development Agreement 35
d. The signatories to this Contractor Indemnification Agreement warrant and represent that each is authorized to execute this Contractor Indemnification Agreement and that their respective signatures serve to legally obligate their respective representatives, agents, successors and assigns to comply with the provisions of this Agreement.

IN WITNESS WHEREOF, the Parties have executed this Contractor Indemnification Agreement the date and year first above written.

CITY OF SANTA CRUZ CONTRACTOR

By:___________________________ By:______________________________ Name:_________________________ Name:___________________________ Its:____________________________ Its:______________________________

GROUND LESSEE
By:___________________________
Name:_________________________
Its:____________________________

Signature Requirements for Business Entity:
a. Corporation – 2 officer signatures required (one from each group, unless person signing holds officer positions in both Group 1 and 2):

20.112
Downtown Library & Affordable Housing Development Project City Components Funding and Development Agreement 36

EXHIBIT D

LABOR AND MATERIALS (PAYMENT) BOND
WHEREAS, the _____________ and __________________, hereinafter designated as the "Principal," entered into a contract identified as Construction Contract dated ___________ for work on the ____________________ project described in the contract document hereby referenced and made a part hereof;
WHEREAS, said Principal is required under the terms of said contract to furnish a Labor and Material Bond, the surety of this bond will pay the same to the extent hereinafter set forth; and NOW, THEREFORE, we the Principal, and a corporation
organized and existing under and by virtue of the laws of the State of California, as surety, are held and firmly bound unto the _____________ in the sum of ___________________________________________________dollars ($________) such sum being not less than one hundred percent (100%) of the estimated contract cost of the work, lawful money of the United States of America, to be paid to the _____________, for the payment of which sum, well and truly to be made, we hereby bind ourselves, our heirs, administrators, executors, successors and assign jointly and severally.

THE CONDITION OF THIS OBLIGATION IS SUCH, that if said Principal or its heirs, executors, administrators, successors or assigns, shall fail to pay for any materials, provisions, vendor supplies, or equipment as provided in the contract documents, upon, for, or about the performance of the work contracted to be done, or for any work or waiver thereon of any kind, or for amounts due under the Unemployment Insurance Code with respect to work or labor performed by any such claimant, or fails to pay any of the persons authorized under Civil Code Section 9100 to assert a claim against a payment bond, or fails to pay for any amounts required to be deducted, withheld, and paid over to the Franchise Tax Board for the wages of employees of the Principal or his/her subcontractor pursuant to Section 18806 of the Revenue and Taxation Code, or fails to pay for any amounts required to be deducted, withheld, and paid over to the Employment Development Department from the wages of employees of the principal and all subcontractors with respect to such work and labor that the surety or sureties will pay for the same, in an amount not exceeding the sum specified in this bond, and also, in case suit is brought upon the bond, will pay, in addition to the face amount hereof, a reasonable attorney's fee, to be fixed by the Court.

The condition of this obligation is such that its terms inure to the benefit of any of the persons and entities authorized in Civil Code Section 9100 to assert a claim against a payment bond so as to give a right of action to such persons or entities or their assigns in any suit brought upon or action to enforce liability on the bond.

The surety, for value received, hereby stipulates and agrees that no change, extension of time, alteration, or addition to the terms of the contract or to the work to be performed thereunder shall in any manner affect its obligation upon this bond, and it does hereby explicitly waive notice of any such change, extension of time, alteration or addition to the terms of the contract or to the

20.113
Downtown Library & Affordable Housing Development Project City Components Funding and Development Agreement 37
work to be performed thereunder, and further explicitly hereby waives its rights under Civil Code Section 2819.

IN WITNESS WHEREOF, the above parties have executed this instrument under their seals this_____ day of____________________, 20__, and duly signed by its undersigned representation, pursuant to authority of its governing body.

PRINCIPAL:

Firm name:

Printed name:

Signature: Date:

Title:

SURETY:

Firm name:

Printed name:

Signature: Date:

Title:

Notice to Surety:

Address:______________________________________________________________________ Contact Person: ________________________________________________________________ Email: _________________________ Phone No.:_________________________________ I hereby approve the form of the within bond.

Legal Counsel Date
(Note: Signatures of those executing for the Principal and Surety must include a Notary Acknowledgement.)

20.114
Downtown Library & Affordable Housing Development Project City Components Funding and Development Agreement 38

ACKNOWLEDGMENT
State of California )
County of _____________________ )
On before me, ,
(insert name and title of the officer)
personally appeared ____________________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

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

WITNESS my hand and official seal.

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

20.115
Downtown Library & Affordable Housing Development Project City Components Funding and Development Agreement 39

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

WITNESS my hand and official seal.

20.116
Downtown Library & Affordable Housing Development Project City Components Funding and Development Agreement 40

EXHIBIT E

FAITHFUL PERFORMANCE BOND
WHEREAS, _________________, and ________________ hereinafter designated as “Principal” have entered into a contract identified as Contractor Agreement, dated _____________, whereby Principal agrees to install and complete the work on the _______________ project described in the contract document hereby referenced and made a part hereof:

WHEREAS, said Principal is required under the terms of said contract with the ________________ to furnish security for the faithful performance of said contract; and NOW, THEREFORE, we, the Principal, and a corporation
organized and existing under and by virtue of the laws of the State of , as surety, are held and firmly bound unto the ____________, in the sum of ($ ), such sum being not less than one hundred percent (100%) of the estimated contract cost of the work, lawful money of the United States of America, to be paid to the_______________, for payment of which sum, well and truly to be paid, we hereby jointly and severally bind ourselves, our heirs, administrators, executors, successors and assigns, by these presents;
NOW, THEREFORE, THE CONDITION OF THIS OBLIGATION IS SUCH, that if the above bound Principal, its heirs, executors, administrators, successors, or assigns will in all things abide by and well and truly keep and perform the covenants, conditions and provisions in the said agreement and any alteration thereof made as therein provided, on his or her part, to be kept and performed at the time and in the manner therein specified, and in all respects according to the true intent and meaning, and will indemnify and save harmless the _____________, its officers and agents, and employees, as therein stipulated, then this obligation will become null and void, otherwise it will be and remain in full force and effect.

As a part of the obligation secured hereby and in addition to the face amount specified therefore, there will be included costs and reasonable expenses and fees, including reasonable attorneys’ fees, incurred by the___________________.

As a condition precedent to the satisfactory completion of the said contract, an obligation in the amount of ($ ), being not less than ten percent (10%) of the estimated contract cost, will remain in force for a period of one (1) year after the official acceptance of said work, during which time if the Principal, its heirs, executors, administrators, successors or assigns will fail to make full, complete and satisfactory repairs and replacements or totally protect the _____________ from loss or damage made evident during said period of one (1) year from the date of official acceptance of said work and resulting from or caused by defective materials or faulty workmanship in the prosecution of the work done, the above obligation in the sum of ($ ) shall remain in full force and effect, otherwise the obligation shall be discharged. However, notwithstanding any other provisions of this paragraph, the obligation for the surety hereunder will continue so long as any obligation of the Principal remains.

20.117
Downtown Library & Affordable Housing Development Project City Components Funding and Development Agreement 41
The surety, for value received, hereby stipulates and agrees that no change, extension of time, alteration, or addition to the terms of the contract or to the work to be performed thereunder or the specifications shall in any manner affect this obligation upon this bond, and it does hereby explicitly waive notice of any such changes, extensions of time, alterations, or additions to the terms of the contract or to the work to be performed thereunder, or to the specifications, and it further explicitly hereby waives its rights under California Civil Code §2819.

IN WITNESS WHEREOF, the parties have executed this instrument under their seals this day of , 20__, and duly signed by its undersigned representative, pursuant to the authority of its governing body.

PRINCIPAL:

Firm name:

Printed name:

Signature: Date:

Title:

SURETY:

Firm name:

Printed name:

Signature: Date:

Title:

Notice to Surety:

Address: _________________________________________________________________________ Contact Person: ____________________________________________________________________ Email: _________________________ Phone No.:__________________________________ I hereby approve the form of the within bond.

Legal Counsel Date
(Note: Signatures of those executing for the Principal and Surety must include a Notary Acknowledgement.)

20.118
Downtown Library & Affordable Housing Development Project City Components Funding and Development Agreement 42

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

WITNESS my hand and official seal.

20.119
Downtown Library & Affordable Housing Development Project City Components Funding and Development Agreement 43

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

WITNESS my hand and official seal.

20.120

PRELIMINARY

ENGINEERS-SURVEYORS-PLANNERS
1730 N. FIRST STREET, SUITE 600
SAN JOSE, CALIFORNIA 95112
DRAFT

20.121

CATHCART STREET CEDAR STREET
LINCOLN STREET PACIFIC AVENUE 40scale 1" = 40' 0 40 feet 80 10' ALLEYWAY CEDAR STREET CATHCART STREET CATHCART STREET PACIFIC AVE. DETAIL "A" DETAIL "B" DETAIL "C" ENGINEERS-SURVEYORS-PLANNERS 1730 N. FIRST STREET, SUITE 600 SAN JOSE, CALIFORNIA 95112 DRAFT
scale 1" = 20'
20 0 20
feet
40 ENGINEERS-SURVEYORS-PLANNERS
1730 N. FIRST STREET, SUITE 600
SAN JOSE, CALIFORNIA 95112
DRAFT

LEVEL ONE

20.123

CATHCART STREET LINCOLN STREET

CEDAR STREET
scale 1" = 20'
20 0 20
feet
40 LEVEL TWO

ENGINEERS-SURVEYORS-PLANNERS
1730 N. FIRST STREET, SUITE 600
SAN JOSE, CALIFORNIA 95112
DRAFT

20.124

CATHCART STREET LINCOLN STREET

CEDAR STREET
scale 1" = 20'
20 0 20
feet
40 LEVEL THREE

ENGINEERS-SURVEYORS-PLANNERS
1730 N. FIRST STREET, SUITE 600
SAN JOSE, CALIFORNIA 95112
DRAFT

20.125

CATHCART STREET LINCOLN STREET

CEDAR STREET
scale 1" = 20'
20 0 20
feet
40 LEVEL FOUR

ENGINEERS-SURVEYORS-PLANNERS
1730 N. FIRST STREET, SUITE 600
SAN JOSE, CALIFORNIA 95112
DRAFT

20.126

CATHCART STREET LINCOLN STREET

CEDAR STREET
scale 1" = 20'
20 0 20
feet
40 LEVEL FIVE & SIX

ENGINEERS-SURVEYORS-PLANNERS
1730 N. FIRST STREET, SUITE 600
SAN JOSE, CALIFORNIA 95112
DRAFT

20.127

CATHCART STREET LINCOLN STREET

CEDAR STREET
scale 1" = 20'
20 0 20
feet
40 LEVEL SEVEN & EIGHT

ENGINEERS-SURVEYORS-PLANNERS
1730 N. FIRST STREET, SUITE 600
SAN JOSE, CALIFORNIA 95112
DRAFT

20.128
VERTICAL SECTION A.1
NTS
VERTICAL SECTION A.2
NTS

VERTICAL SECTIONS
A.1 & A.2

ENGINEERS-SURVEYORS-PLANNERS
1730 N. FIRST STREET, SUITE 600
SAN JOSE, CALIFORNIA 95112
DRAFT

20.129
VERTICAL SECTION A.3
NTS

VERTICAL SECTION
A.3

ENGINEERS-SURVEYORS-PLANNERS
1730 N. FIRST STREET, SUITE 600
SAN JOSE, CALIFORNIA 95112
DRAFT

20.130

VERTICAL SECTION
B.1 - B.4
VERTICAL SECTION B.1
NTS
VERTICAL SECTION B.1
NTS
VERTICAL SECTION B.3
NTS
VERTICAL SECTION B.4
NTS

ENGINEERS-SURVEYORS-PLANNERS
1730 N. FIRST STREET, SUITE 600
SAN JOSE, CALIFORNIA 95112
DRAFT

20.131
Brittany Inclan
From: Deborah Peronto <[email protected]>
Sent: Monday, June 23, 2025 2:25 PM
To: City Council; Bonnie Bush
Subject: Comments RE: June 24th meeting agenda
Dear City Council Members,
My comments are in regard to the June 24, 2025 meeting agenda items:

Item 20 in the Consent Agenda
Resolution to Authorize the City Manager to Finalize and Execute Agreements, in a Form Approved by the City Attorney, to Facilitate the Financial Closing Necessary for the Construction of the Downtown Library and Affordable Housing/Downtown Library Mixed-Use Project (DLAHP or DTLMU) Developed by Eden Housing, Inc. and For the Future Housing Inc. (Affordable Housing Developers) (EDH) I am writing to express my support for the Downtown Library and Affordable Housing Development Project.

This initiative is a positive and significant step for our community, and we appreciate the continued efforts of the city staff and partners who have contributed to its progress.

We would appreciate the swift adoption of this resolution.

Thank you for your ongoing commitment to this essential development. Debby Peronto, Board of Friends of Santa Cruz Public Libraries
__________________
Board Member, Friends of the Santa Cruz Public Libraries

20.132
Brittany Inclan
From: Janis O'Driscoll <[email protected]>
Sent: Monday, June 23, 2025 2:36 PM
To: City Council
Cc: Bonnie Bush
Subject: Support for Consent Agenda Item #20 on Tuesday (6/24)) City Council Agenda City Council Members:

Thank you for your support for the Library Affordable Housing Project and thank you, especially, for the conversations that the Friends and Council Members continue to have about this important community facility.

Agenda Item #20 represents the careful and detailed work that City staff has engaged in to coordinate the efforts of the many project partners and the many financial resources required to make this dream real.

The Friends of the Santa Cruz Public Libraries especially appreciate the documentation and tracking that assures that Measure S money is spent exclusively on the Downtown Branch Library. We are in strong support of authorizing the City Manager to complete the essential agreements cited in the resolution.

Authorization of Agenda Item #20 brings us one step closer to the day when we open the doors to a beautiful community gathering space that serves everyone in our community.

Thank you for standing up for public libraries and for strengthening our own public library system. --
Janis O'Driscoll
President, Friends of the Santa Cruz Public Libraries
To help protect your privacy, Microsoft Office prevented automatic download of this picture from the Internet.

20.133
Brittany Inclan
From: Robin Holland <[email protected]>
Sent: Monday, June 23, 2025 2:52 PM
To: City Council
Cc: Bonnie Bush
Subject: Support for Item 20 in the Consent Agenda
Dear City Council Members,
This regards June 24, 2025 meeting consent agenda Item 20:

I am writing to express enthusiastic support for the Downtown Library and Affordable Housing Development Project.

This initiative represents a significant and positive step for our community, and we appreciate the diligent efforts of the city staff and the many partners who have contributed to its progress.

We support the swift adoption of this resolution.

Thank you for your ongoing commitment to this essential development.

Sincerely,
Robin Holland
Board Member, Friends of the Santa Cruz Public Libraries [email protected]@gmail.com
415-342-5546
New Downtown Library Capital Campaign

20.134
Sent from my iPhone - format may be ‘interesting’

20.135
Brittany Inclan
From: cindy jackson <[email protected]>
Sent: Monday, June 23, 2025 3:54 PM
To: City Council
Cc: Bonnie Bush
Subject: 6.24.25 Council meeting agenda
Dear City Council Members,
Please accept my enthusiastic support for item 20 in the Consent Agenda which reads:

Resolution to Authorize the City Manager to Finalize and Execute Agreements, in a Form Approved by the City Attorney, to Facilitate the Financial Closing Necessary for the Construction of the Downtown Library and Affordable Housing/Downtown Library MixedUse Project (DLAHP or DTLMU) Developed by Eden Housing, Inc. and For the Future Housing Inc. (Affordable Housing Developers) (EDH)
Thank you for your continued support for the Downtown Library and Affordable Housing Development Project which will be a wonderful addition to Santa Cruz. I appreciate your swift adoption of this resolution so that this project can continue to move forward. It will be a great day when that construction fence goes up!
Thank you for your support.

Sincerely,
Cindy Jackson
Board Member, Friends of the Santa Cruz Public Libraries

20.136
Brittany Inclan
From: Cynthia Mathews <[email protected]>
Sent: Monday, June 23, 2025 4:57 PM
To: City Council
Cc: Bonnie Bush
Subject: Support Agenda Item 20: The Library/Housing project!! Dear Councilmembers,
I'm writing to say thank you for your sustained support of the exciting Downtown Library/Affordable Housing project that the community has been looking forward to for so long — and to urge your support once again for the actions on your upcoming agenda that specify the complex details that will allow this project to actually move forward.

We knew from the beginning, years ago, that this multi-use project was both visionary and complex.

Fortunately we have superb partners to work with, and City staff has quietly done the detailed legal and financial work to bring the needs of all partners into alignment.

This is an exciting moment! I hope you do not get sidetracked with irrelevant time-worn comments of opposition, or objections based on incomplete understanding of the process. Please give your enthusiastic support to the actions required to move forward. We will all be so proud as a community to realize this goal!
Grateful for your service,
Cynthia Mathews.

20.137
City Council

AGENDA REPORT
DATE: 06/05/2025
AGENDA OF: 06/24/2025
DEPARTMENT: Fire
SUBJECT: Second Amendment to the Agreement for Fire Protection and Emergency Response Services and First Amendment of Lease of the UCSC Fire Station (FD)
LOCATION: Citywide
RECOMMENDATION: Motion to authorize the City Manager to execute the Second Amendment to the Agreement for Fire Protection and Emergency Response Services (Service Agreement) and the Second Amendment of Lease of the UCSC Fire Station (Lease Agreement) between the City of Santa Cruz (City) and the Regents of the University of California, on behalf of its Santa Cruz Campus (UCSC), extending the term for one (1) year with minor modifications.

BACKGROUND: In 2014, the City entered into a 10-year agreement with UCSC to provide Fire Protection and Emergency Response Services to the campus. At that time a Lease Agreement was also executed for the UCSC Fire Station located at 701 Chinquapin Rd. The City of Santa Cruz Fire Department occupies the UCSC Fire Station with a fire crew and apparatus in order to provide fire protection and emergency response service to the campus. In 2024, the City executed a first amendment to both the Service Agreement and Lease Agreement extending the term for one (1) year with minor modifications.

DISCUSSION: The Fire Department conducted a Community Risk Assessment, Standards of Cover and Deployment Analysis study with consultants AP Triton, which the City received as a final report in May of 2025. The results of the Community Risk Assessment, Standards of Cover and Deployment Analysis report will play a pivotal role in the Santa Cruz Fire Department’s development of strategic planning and deployment of resources. This report will guide the Fire Department in enhancing public safety within the community, which will impact a long-term service agreement and lease agreement with UCSC.

With the first amendment to the Service Agreement and Lease Agreement expiring on June 30th, 2025, City and UCSC staff concluded it would be prudent to not enter into a long-term agreement until the Standards of Cover and Community Risk Assessment report is carefully reviewed and recommendations relating to the City and UCSC have been processed and discussed. A second amendment to the Service Agreement and Lease Agreement extending the term for one (1) year with minor modifications was mutually agreed upon between the Fire Department and UCSC. Necessary updates to the original 2014 Service Agreement and Lease

21.1 Agreement and 2024 first amendments were included in the second amendments under the advice of the City Attorney.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: The proposed City Council action is not a “Project” under CEQA. CEQA applies to activities that may result in direct or reasonably foreseeable indirect physical changes to the environment.

Since the second amendment to the Service Agreement and Lease Agreement recommendation authorizes executing amendments to service and lease agreements without directly proposing or approving any land use or construction projects, this action falls outside CEQA’s scope.

However, if it were considered a project, it would be exempt from review under the CEQA Guidelines Section 15061(b)(3) (known as the “Common Sense” exemption) in that it would not reasonably be seen to create a significant impact on the environment. It would also be exempt under Section 15306 (Information Collection) of the CEQA Guidelines in that it relates to analysis and provision of information to the Council.

HEALTH IN ALL POLICIES (HiAP): The Service Agreement and Lease Agreement second amendments directly support the City’s HiAP pillar of public health through sustained fire protection and emergency response services provided to the UCSC campus by the City.

FISCAL IMPACT:

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

2. This recommendation requires a budget adjustment: No

3. The recommendation creates an on-going expenditure commitment: No FISCAL IMPACT DESCRIPTION: The proposed recommendation will retain General Fund revenue from UCSC. UCSC pays 17% of the Fire Department’s Fire Administration operating expenses, Fire/EMS Operations operating expenses, and an amortization schedule for Capital Improvement Project expenses, with an additional 2.5% administrative fee. The revenue received in FY25 from the Service Agreement to the General Fund was $3,990,235. The lease payment is an operating expense in the Fire/EMS Operations budget. The lease expenses from the FY25 budget were $63,624. There will be a 3% annual increase in the lease payment per the original Lease Agreement, effective July 1st.

Prepared By:

Megan Nutt
Principal Management
Analyst
Submitted By:

Rob Oatey
Fire Chief
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. LEASE FIRST AMENDMENT.PDF

2. LEASE SECOND AMENDMENT.DOCX

3. SERVICE FIRST AMENDMENT.PDF

4. SERVICE SECOND AMENDMENT.DOCX

5. SERVICE AGREEMENT.PDF

6. LEASE AGREEMENT.PDF

21.2 FIRST AMENDMENT OF LEASE BETWEEN THE CITY

OF SANTA CRUZ AND THE REGENTS OF THE

UNIVERSITY OF CALIFORNIA, ON BEHALF OF ITS

SANTA CRUZ CAMPUS
THIS FIRST AMENDMENT OF the LEASE BETWEEN THE CITY OF SANTA CRUZ (“City” or “Tenant”) AND THE REGENTS OF THE UNIVERSITY OF CALIFORNIA, ON BEHALF OF ITS SANTA CRUZ CAMPUS (“University” or “Landlord”), (the “Lease Amendment”), is effective as of July 1, 2024 (“Amendment Effective Date”).

RECITALS
A. University and City entered into that certain Lease (“Lease”) effective September 23, 2014 for lease of the UCSC Fire Station (CAAN 7404), as more particularly described in the Lease, including the Lease’s Exhibit A;
B. Landlord and Tenant (collectively “Parties”) now wish to extend the Lease for one year and amend the Lease as agreed below;
NOW, THEREFORE, in consideration of the mutual covenants and promises set forth in this Lease Amendment and other valuable consideration, receipt of which is hereby acknowledged, Landlord and Tenant, hereby agree that the Lease is amended as follows:

1. Definitions and Recitals. Except as expressly modified herein, terms defined in the Lease shall have the same meanings when used in the Amendment. The Parties agree to incorporate the above recitals.

2. Term. The existing language in the Lease’s Article 3.1 titled, “Term,” is deleted in its entirety and replaced with the following:
“The term of this Lease (the “Lease Term”) shall commence on the Operative Date as set forth in the Fire Services Agreement (“Lease Commencement Date”) and end as of the earlier of June 30, 2025 or the termination of the Fire Services Agreement (“Lease Termination Date”), unless sooner terminated pursuant to any provision hereof. The Lease Termination Date may be extended by mutual written agreement of the Parties.”

3. Tenant Request for Maintenance, Repair, or Service. The existing language in the Lease’s Article 9.4(b) and 9.4(c) is deleted in its entirety and replaced with the following:
“9.4 (b) - Service Requests received from the Tenant for maintenance, repair or services, will be addressed in the following manner:
i. Emergency (Priority 1): University shall confirm receipt and respond in a timeframe appropriate for the emergency, and in no event later than 12 hours after receiving the emergency service request. Off-hours emergencies should be reported to UCSC Police Department Dispatch for immediate attention. Emergencies shall be remedied in a timeframe appropriate to the emergency, and always initially addressed within 24 hours after receiving the service request, with any non-emergency follow-on actions to be addressed via one of the lower priority timelines discussed later in this Docusign Envelope ID: 9CA7E6C5-4F36-4243-91CD-05F4C25B0D05

21.3 paragraph. Emergencies are those for which immediate action is needed to prevent harm or significant damage; examples of emergencies include: Flooding, fire hazards, biological hazards, gas leaks, electrical failures to critical areas, and structural damage. Life safety emergencies should be directed to emergency services by calling 911.
ii. Urgent / High (Priority 2): University shall confirm receipt and respond within two business days and shall create a work plan that is shared with SCFD within three days after receiving the Urgent / High Priority Service request. Off-hours urgent / high priorities should be reported to UCSC Police Department Dispatch for prompt attention. Urgent / high priority requests shall be remedied within seven days after receiving the Urgent / High Priority Service request, with any follow-on non-urgent / non-high priority actions to be addressed via 9.4 (b)(iii). below. Urgent / high priorities are those for which prompt resolution is needed to maintain habitability and/or avoid disruptions to operations; examples of urgent / high priority work include: HVAC failures affecting critical areas, plumbing issues, malfunctioning security systems, electrical failures in non-critical areas, carbon monoxide monitor replacement, and health hazards not deemed to be an emergency.
iii. Medium (Priority 3): University to confirm receipt within five business days, respond within fourteen days, and shall create a work plan that is shared with SCFD within thirty days. Medium priority requests should be remedied within thirty days; however, completion of medium priority requests may be delayed no longer than 60 days after receiving the Priority 3 Service request due to higher priority tasks or scheduling constraints.
iv. The Parties acknowledge and agree that the living quarters on the Premises must be fit for human habitation, and the implied warranty of habitability applies as to those areas.
v. Regular Reporting Related to Service Requests: For Priority 1 Service Requests, University shall provide daily written status update reports to SCFD until the Priority 1 issue is resolved. For Priority 2 Service Requests, University shall provide weekly written status update reports to SCFD until the Priority 2 issue is resolved. For Priority 3 Service Requests, University shall provide monthly written status update reports to SCFD until the Priority 3 issue is resolved.
vi. As provided in Paragraph 9.4(a), University shall designate a single point of contact to communicate with SCFD about Service Requests.
(c) If the Parties disagree as to the best course of action for a Service Request, the Parties agree to promptly communicate with each other and attempt to negotiate a resolution in good faith. If Landlord decides that a Service Request requires immediate attention to preserve Landlord’s property, Landlord may elect to repair the issue pending the resolution of the dispute by providing notice to Tenant that Landlord will complete the repair.”

4. Rent. To Article 4, the following new subsection is added:
a) For the Period commencing July 1, 2024 through June 30, 2025, the rental amounts paid by the City shall be 3% more than what the City paid July 1, 2023 through June 30, 2024.

5. Except as expressly amended above, the Lease remains in full force and effect. [Signatures on following page]
Docusign Envelope ID: 9CA7E6C5-4F36-4243-91CD-05F4C25B0D05

21.4 IN WITNESS WHEREOF, the Parties have executed this Lease Amendment on the dates specified adjacent to their respective signatures.

LANDLORD TENANT

THE REGENTS OF THE UNIVERSITY THE CITY OF

CALIFORNIA SANTA CRUZ
By: By:

Name:____________________________ Matthew Huffaker
Director Real Estate and Contracts City Manager
Date: Date:

APPROVED AS TO FORM:

Office of the City Attorney Date
Docusign Envelope ID: 9CA7E6C5-4F36-4243-91CD-05F4C25B0D05 9/18/2024
9/18/2024 9/18/2024
Nikki Vamosi

21.5 Second Amendment to Lease
June 2025 Page 1

SECOND AMENDMENT TO THE LEASE AGREEMENT BETWEEN THE CITY OF SANTA CRUZ AND THE REGENTS

OF THE UNIVERSITY OF CALIFORNIA
THIS SECOND AMENDMENT of the Lease (the “Second Lease Amendment”), is made by and between THE CITY OF SANTA CRUZ (“City or Tenant”) AND THE REGENTS OF THE UNIVERSITY OF CALIFORNIA, ON BEHALF OF ITS SANTA CRUZ CAMPUS (“University” or “Landlord”), effective as of _______, 2025 (the “Effective Date”). City and University may be referred to individually as a “Party” and collectively, as the “Parties.”

RECITALS
WHEREAS, the University and the City entered into that certain lease effective September 23, 2014 for the lease of the UCSC Fire Station (CAAN 7404) (the “Lease”) as more particularly described in the Lease, including the Lease’s Exhibit A;
WHEREAS, the University and the City further entered into a First Amendment of the Lease on July 1, 2024 to extend the term of the Lease for one year and to amend Article 9.4(b) and Article 9.4 (c) regarding “Tenant Request for Maintenance, Repair, or Service”; WHEREAS, the University and the City desire to enter into this Second Amendment to the Lease to extend the term of the Lease for an additional one year and to amend Article 4 “Rent” of the Lease, as specified herein.

AGREEMENT
NOW, THEREFORE, it is agreed between the Parties to incorporate the above Recitals hereto, and that the Parties agree to the following:

1. Article 3.1 “Term” of the Lease is hereby amended to replace the prior Article 3.1 of the Lease with the following:

The term of this Lease (the “Lease Term”) shall commence on the Operative Date as set forth in the Fire Services Agreement (“Lease Commencement Date”) and end as of the earlier of June 30, 2026 or the termination of the Fire Services Agreement (“Lease Termination Date”), unless sooner terminated pursuant to any provision hereof. The Lease Termination Date may be extended by mutual written agreement of the Parties.

2. Article 4 “Rent” of the Lease is hereby amended to replace the prior Article 4 of the Lease with the following:
a. For the Period commencing July 1, 2025 through June 30, 2026, the Bi-Annual Rent (“Base Rent”) paid by the City shall be $66,500.92 ( 3% more than $64, 564— (the amount paid by the City for July 1, 2024 through June 30, 2025).
b. Tenant shall pay to Landlord the Base Rent for the Premises, consistent with subdivision 4(a) above. After Tenant has exhausted Tenant’s Capital Reserve Fund in association with Section 9

21.6 Second Amendment to Lease
June 2025 Page 2
of the Work Agreement between Landlord and Tenant dated ____________________ 2025 (the “Work Agreement”), Landlord agrees to provide Tenant with a credit against the Base Rent for Excess Costs, as defined in the Work Agreement, whereby the Tenant shall not be responsible for the payment of any Base Rent. This credit against the Base Rent shall continue until all costs and expenses for the kitchen and living room alterations project as further described and defined in the Work Agreement (the “Alterations”) have been credited to Tenant. After all costs and expenses for the Alterations have been credited to Tenant, the Parties agree to resume the Base Rent. Rent shall be payable to Landlord at the address stated herein or at such other address as Landlord may from time to time designate in writing.

3. Except as amended by this Second Lease Amendment, all other applicable terms and conditions of the Lease, and other prior amendment(s), shall remain in full force and effect. The terms of this Second Lease Amendment shall control if any conflict exists.

4. Each party acknowledges that it has reviewed this Second Lease Amendment 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 Second Lease Amendment.

5. The unenforceability, invalidity or illegality of any provision(s) of this Second Lease Amendment shall not render the other provisions unenforceable, invalid or illegal.

6. The Parties may execute this Second Lease Amendment 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.

7. The signatories to this Second Lease Amendment warrant and represent that each is authorized to execute this Second Lease Amendment and that their respective signatures serve to legally obligate their respective representatives, agents, successors and assigns to comply with the provisions of this Second Lease Amendment.
[SIGNATURES ON FOLLOWING PAGE]

21.7 Second Amendment to Lease
June 2025 Page 3
IN WITNESS WHEREOF, the University and the City have executed this Second Lease Amendment effective as of the Effective Date.

Approved As To Form:

By: ______________________________ Date: ___________
Office of the City Attorney

UNIVERSITY
By: ______________________________ Date: __________________ Printed: __________________________ Title: _________________________

CITY OF SANTA CRUZ
By: ______________________________ Date: __________________ Matt Huffaker, City Manager

21.8 FIRST AMENDMENT OF THE AGREEMENT FOR FIRE

PROTECTION AND EMERGENCY RESPONSE

SERVICES BETWEEN THE CITY OF SANTA CRUZ

AND THE REGENTS OF THE UNIVERSITY OF

CALIFORNIA, ON BEHALF OF ITS SANTA CRUZ
CAMPUS

THIS FIRST AMENDMENT OF THE AGREEMENT FOR FIRE PROTECTION AND EMERGENCY RESPONSE SERVICES BETWEEN THE CITY OF SANTA CRUZ (“City”) and the

REGENTS OF THE UNIVERSITY OF CALIFORNIA, ON BEHALF OF ITS SANTA CRUZ CAMPUS (“University”), (the “Amendment”), is effective as of July 1, 2024 (“Amendment Effective Date”)).

RECITALS
A. City and University entered into the Agreement for Fire Protection and Emergency Services effective July 1, 2014, (the “Services Agreement”) for certain services at the “University Fire Service Area” or “Campus Area”, as more particularly described in the Services Agreement, including Exhibit B to the Services Agreement;
B. City and University now wish to extend the Services Agreement for one year and amend the Service Agreement as set forth below;
NOW, THEREFORE, in consideration of mutual covenants and promises set forth in this Amendment and other valuable consideration, receipt of which is hereby acknowledged, City and University hereby agree that the Services Agreement is amended as follows:

1. The Parties agree to incorporate the above recitals. Except as expressly modified herein, terms defined in the Services Agreement shall have the same meanings when used in this Amendment.

2. Term. The existing language in the Services Agreement’s Article 1.2 titled, “Term,” is deleted in its entirety and replaced with the following:
“The term of this Agreement shall commence on the Operative Date and shall end on June 30, 2025 (the “Term End Date”, unless sooner terminated pursuant to the terms of this Agreement. The Term End Date may be extended by mutual written agreement of the Parties.”

3. Response Services. The following new subsections are added to Article 4.2.2 (B):
(viii) City crews to attend training walkthroughs with University related to field training and newly constructed/renovated or newly occupied campus buildings at timely and mutually agreeable times to ensure knowledge of familiarity with the following:
● Site security, access, fire protection, location of fire hydrants, additional operational needs (pre-Construction at a construction site). Requirements covered in NFPA 241.
● The building during the construction phase, once fire sprinklers and alarms are online and in operating condition.
● Pre-Occupancy certification of the building.

Docusign Envelope ID: 9CA7E6C5-4F36-4243-91CD-05F4C25B0D05

21.9 (ix) Add-on EMS deployment. If mutually agreed upon by the Parties and if staffing and equipment allows, City will provide additional EMS deployment for stand-by for planned campus events at a mutually pre-agreed upon service fee per each scheduled planned event.

4. Designated Campus Fire Marshall Program. The following new subsection is added to 4.2:

4.2 (E) Designated Campus Fire Marshal Program. UCSC to include the following in its Campus Fire Marshall Program:
● Plan review and construction inspections for Title 24; ● Fire and life safety inspections in existing state-regulated occupancies and compulsory annual inspections in existing state mandated occupancies for Title 19; ● Special events as defined by the MOU between the UC Regents and California Office of the State Fire Marshal;
● Fires, explosions, and other emergency notifications to UCSC Lead Designated Campus Fire Marshal; and
● Post Incident Re-Occupancy Plans.

5. Except as expressly amended above, the Services Agreement remains in full force and effect.

IN WITNESS WHEREOF, the parties have executed this First Amendment of the Services Agreement on the dates specified adjacent to their respective signatures.

RECIPIENT SERVICER

THE REGENTS OF THE UNIVERSITY THE CITY OF

CALIFORNIA SANTA CRUZ
By: By:

Name:____________________________ Matthew Huffaker
Director Real Estate and Contracts City Manager
Date: Date:

APPROVED AS TO FORM:

Office of the City Attorney Date
Docusign Envelope ID: 9CA7E6C5-4F36-4243-91CD-05F4C25B0D05 9/18/2024
9/18/2024
Nikki Vamosi
9/18/2024

21.10 SECOND AMENDMENT TO THE AGREEMENT FOR FIRE PROTECTION AND EMERGENCY RESPONSE

SERVICES BETWEEN THE CITY OF SANTA CRUZ AND THE REGENTS OF THE UNIVERSITY OF

CALIFORNIA
THIS SECOND AMENDMENT of the Agreement for Fire Protection and Emergency Response Services (the “Second Services Amendment”), is made by and between THE CITY OF SANTA CRUZ (“City”) AND THE REGENTS OF THE UNIVERSITY OF CALIFORNIA, ON BEHALF OF ITS SANTA CRUZ CAMPUS (“University” or “Landlord”), effective as of _______, 2025 (the “Effective Date”). City and University may be referred to individually as a “Party” and collectively, as the “Parties.”

RECITALS
WHEREAS, the University and the City entered into that certain Agreement for Fire Protection and Emergency Response Services, effective July 1, 2014 (the “Services Agreement”), incorporated herein by this reference;
WHEREAS, the University and the City further entered into a First Amendment to the Services Agreement on July 1, 2024 to extend the term of the Services Agreement for one year and to add subsections to Article 4.2.2 (B) regarding “Response Services”; WHEREAS, the University and the City desire to enter into this Second Services Amendment to extend the term of the Services Agreement for one year and to amend Section 5.2.4 “Use of University Facilities”.

AGREEMENT
NOW, THEREFORE, it is agreed between the Parties to incorporate the above Recitals hereto, and that the Parties agree to the following:

1. Article 1.2 “Term” of the Services Agreement is hereby amended to replace the prior Article 1.2 with the following:

This term of this Agreement shall commence on the Operative Date and shall end on June 30, 2026 (the “Term End Date”), unless sooner terminated pursuant to the terms of this Agreement. The Term End Date may be extended by mutual written agreement of the parties.

2. Section 5.2.4 “Use of University Facilities” of the Services Agreement is hereby amended to replace the prior Section 5.2.4 with the following:

Use of University Facilities. In addition to use of the UCSC Fire Station (the use of which is governed by the Lease), University will allow City fire personnel to use the University facilities specified in (A) and (B) below, as set forth below. All such facility use shall be subject to University policies and procedures applicable to internal University users of such facilities, except for the payment terms specified below:

21.11 A. University Wellness Center. University will provide three (3) passes for access to the University Wellness/Fitness Center (the “Center”), for use by on-duty firefighters only, at no cost to the City or employee (other than as included in rent due under the Lease), B. Parking. University will provide three (3) designated parking spaces with appropriate signage and striping, as provided in the Lease, for the exclusive use of the City for onduty firefighters assigned to the UCSC Fire Station at no charge to the City or employee (other than as included in rent due under the Lease). Additional spaces requested by the City will be paid for by the City at the University's parking rates prevailing at the time of the request and may be adjusted in accordance with University policy.

University designates Blanca Cassidy, Project Support Specialist to Associate Vice Chancellor Clement O. Stokes (“University Representative”), as the contact person for City to contact for any issues that may arise with the City’s use of the three passes to access the Center or if any issues arise with use of the designated parking spaces. The Parties agree that the University Representative will have ten (10) days after receiving notice from the City of any issues, to ensure City’s access to the Center and exclusive use of the three (3) designated parking spaces as required by this Section.

3. Except as amended by this Second Services Amendment, all other applicable terms and conditions of the Services Agreement, and other prior amendment(s), shall remain in full force and effect. The terms of this Second Services Amendment shall control if any conflict exists.

4. Each party acknowledges that it has reviewed this Second Services Amendment 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 Second Services Amendment.

5. The unenforceability, invalidity or illegality of any provision(s) of this Second Services Amendment shall not render the other provisions unenforceable, invalid or illegal.

6. The Parties may execute this Second Services Amendment 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.

7. The signatories to this Second Services Amendment warrant and represent that each is authorized to execute this Second Services Amendment and that their respective signatures serve to legally obligate their respective representatives, agents, successors and assigns to comply with the provisions of this Second Services Amendment.
[SIGNATURES ON FOLLOWING PAGE]

21.12 IN WITNESS WHEREOF, the University and the City have executed this Second Services Amendment effective as of the Effective Date.

Approved As To Form:

By: ______________________________ Date: ___________
Office of the City Attorney

UNIVERSITY
By: ______________________________ Date: __________________ Printed: __________________________ Title: _________________________

CITY OF SANTA CRUZ
By: ______________________________ Date: __________________ Matt Huffaker, City Manager

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City Council

AGENDA REPORT
DATE: 06/05/2025
AGENDA OF: 06/24/2025
DEPARTMENT: Finance
SUBJECT: Liability Claims Filed Against the City of Santa Cruz (FN) RECOMMENDATION: Motion to reject the liability claims of 1) Miah Murray, 2) Christina Olsen 3) Armando Tellez, 4) Michael Bradley Alerich, and to return as late the claim of 5) Installed Building Products, based on staff recommendation.

BACKGROUND: N/A
DISCUSSION: I. Claims to be rejected:

1. Claimant: Miah Murray
Date of occurrence: 4/4/2025
Date of claim: 5/19/2025
Amount of claim: $35,000+
Claimant seeks damages and reimbursement for medical expenses related to injuries allegedly sustained from an incident at Harbor High School.

Represented by Legal Counsel

2. Claimant: Christina Olsen
Date of occurrence: 12/09/2024
Date of claim: 6/2/2025
Amount of claim: $25,000+
Claimant seeks reimbursement for damages resulting from an alleged trip and fall on a sidewalk.

Represented by Legal Counsel

3. Claimant: Armando Tellez
Date of occurrence: 12/26/2024
Date of claim: 6/5/2025
Amount of claim: $1,000,000

22.1 Claimant seeks damages and reimbursement for injuries sustained while riding a Santa Cruz Metro bus.

Represented by Legal Counsel

4. Claimant: Michael Bradley Alerich
Date of occurrence: 4/27/2025
Date of claim: 6/6/2025
Amount of claim: $35,000+
Claimant seeks damages after allegedly stepping in a hole located in a City parking structure.

Represented by Legal Counsel
II. Claim to be returned as late:

5. Claimant: Installed Building Products
Date of occurrence: 10/3/2024
Date of claim: 5/22/2025
Amount of claim: $31,430.08
Claimant seeks reimbursement for damages to their vehicle.

Self-Represented
CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: N/A HEALTH IN ALL POLICIES (HiAP): N/A
FISCAL IMPACT:

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

2. This recommendation requires a budget adjustment: No

3. The recommendation creates an on-going expenditure commitment: No FISCAL IMPACT DESCRIPTION: No fiscal impact.

Prepared By:

Ross Brandon
Risk & Safety Manager
Submitted By:

Elizabeth Cabell
Finance Director
Approved By:

Matt Huffaker
City Manage
ATTACHMENTS:

None.

22.2 City Council

AGENDA REPORT
DATE: 06/05/2025
AGENDA OF: 06/24/2025
DEPARTMENT: Finance
SUBJECT: Pass-Through Agreement with Volunteer Center of Santa Cruz County - TDA Claimant (FN)
LOCATION: Citywide
RECOMMENDATION: Motion to authorize and direct the City Manager to execute an agreement with Volunteer Center of Santa Cruz County, allowing the City of Santa Cruz (City) to act as claimant for funds obtained from the Santa Cruz County Regional Transportation Commission (SCCRTC) for FY 2026.

BACKGROUND: The Volunteer Center of Santa Cruz County relies on funding from the SCCRTC to support its programs. The City of Santa Cruz (City) annually serves as a passthrough agent between the Volunteer Center and the Santa Cruz County Regional Transportation Commission (SCCRTC). Accordingly, the Volunteer Center is again requesting that the City act as claimant for funds for the coming Fiscal Year (FY) 2026. Since the Volunteer Center is unable to act as claimant for itself, it must request that an outside entity perform this service.

DISCUSSION: The SCCRTC has budgeted $109,132 for fiscal year 2026, which is typically disbursed in one lump-sum payment. See Exhibits A, Program Description/Scope of Work; B, TDA FY 2026 Budget; C, Volunteer Center Letter of Request; D, SCCRTC Volunteer Center Resolution; and E, SCCRTC Apportionment Schedule.

As noted in the SCCRTC Apportionment Schedule, the SCCRTC has granted funding to Volunteer Center for $109,132 for FY 2026.

The City contract stipulates in Item 3 that the City will make the payment to the Volunteer Center based on the amount received from the SCCRTC in each fiscal year. In addition, SCCRTC bylaws stipulate that changes may occur in funding amounts, as needed, during the course of a fiscal year.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: This is not a project under CEQA.

HEALTH IN ALL POLICIES (HiAP): This action promotes Health in All Policies areas of Health and Wellness, and Community Connectedness. By acting as a pass-through agent, the

23.1 City supports the Volunteer Center’s continued outreach within the community. This specific program prioritizes providing rides for medical requests, ensuring access to care to those who may not have easily accessible transportation.

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 City will serve as a pass-through agent. The only impact to the City is staff time to act as the pass-through agent.

Prepared By:

Joseph Balasabas
Accounting Technician
Submitted By:

Elizabeth Cabell
Director of Finance
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. PROGRAM DESCRIPTION AND SOW_EXHIBITS A-E.PDF

2. AGREEMENT.PDF

23.2 Exhibit A

VOLUNTEER CENTER OF SANTA CRUZ COUNTY
1740 17th Avenue Santa Cruz, CA 95062 427-5070

PROGRAM DESCRIPTION/SCOPE OF WORK

VOLUNTEER CENTER SENIOR TRANSPORTATION PROGRAM
Fiscal Year 2025-26
A. TARGET POPULATION
Older adults age 60+ and persons 50+ with disabilities who do not drive, may not be able to take METRO or LiftLine and who do not have the support of family or friends to drive them. In addition, those individuals who may be in need of a free transportation service.

B. SERVICE GOALS
Our goal is to provide 5,800 one-way trips to eligible clients. Participants will belimited to a maximum of two rides per week. Our priority for filling requests is as follows:
1st Priority
2nd Priority
3rd Priority
Medical requests for target population.

Shopping requests for target population.

Other essential destinations that
contribute to the overall health and wellbeing of the individual (for example: fall prevention classes)
These trips will be targeted for geographic distribution as follows:

Rides % of Rides #Participants
Santa Cruz/Mid-County/Aptos/Capitola 2400 41% 120
San Lorenzo/Scotts Valley 1700 29% 80
Watsonville/ Freedom 1700 29% 80
In considering geographic distribution of services, our goal is to provide extra support in those areas which are outside the boundaries of Liftline and ParaCruz services, and/or have limited service times.

C. PROGRAM ACTIVITIES

1. The Volunteer Center will maintain volunteers Monday- Friday 9:00 a.m. to 5:00 p.m.

2. When possible, the Volunteer Center will refer those callers whose requests cannot be accommodated through our program to other programs such as Liftline and Metro.

3. The Volunteer Center will continue its intensive campaign to recruit new drivers

4. Volunteer Center staff will attend meetings of the ED TAC of the RTC.

23.3 .

D. QUARTERLY REPORTS
Volunteer Center of Santa Cruz Transportation Program TDA Funding Quarterly Reports and Final Activities Report are due to the Transportation Commission and the City of Santa Cruz according to this schedule:

Quarterly Activities Report 1: October 25, 2025
Quarterly Activities Report 2: February 8, 2026
Quarterly Activities Report 3: April 26, 2026
Quarterly Activities Report 4: July 26, 2026
The reports will contain the following information for each center and total:

1. Number of rides/deliveries provided

2. Trip destinations

3. Mileage claimed

4. Estimated total mileage

5. Average length of trip

6. Number of unduplicated passengers

7. Number of requests for service

8. Number of turndowns

9. Reason for turndowns

10. Number of active volunteers

11. Geographic distribution of clients
E. INSURANCE
Comprehensive auto and general liability insurance over and above that held by the driver will be maintained by the Volunteer Center in the amount of $1,000,000 per occurrence.

F. CLAIMS
One claim will be submitted for advance
payment for the year: Annual
Advance - July, 2025 109,132

23.4 PROGRAM: FY:

Transportation
05 2,800
101,767
104,567

TOTAL CURRENT

EXPENSES
$111,932.00 $104,567.00
6150 Volunteer Recognition 600 300
6160 Admin Fees 16,777 14,232
6100 Telecommunication 2,500 2,500
6125 Utilities 600 600
6081 Computer Software &
Fees
375 375
6098 Mileage, Volunteers 3,500 3,500
6061 Rent 2,000 2,000
6078 Office Supplies 900 525
6050 Postage 200 200
6009 Recruitment/Marketing 2,003 1,450
6040 Insurance, General 700 615
6042 Insurance, Volunteer 2,000 1,900
6151 Background Checks 425 425
6039 Facility Maintenance 300 200
6018 Copies 165 165
6032 Equipment 400 380

HOURLY WAGES AND

BENEFITS
80,587 77,500
6012 Auditing Expense 400 200
4000 PUBLIC

SUPPORT
2,800
4008 Unallocated Funds
4295 Transportation

CURRENT YEAR CLAIM

TOTAL CURRENT YEAR

REVENUES
109,132
111,932
Exhibit B
Volunteer Center Transportation Budget
Budget
Unit Name
Transportation
Budget
Unit
05 2025_26 2024_25

23.5 May 5, 2025
Elizabeth Cabell
Finance Department
1200 Pacific Ave.

Santa Cruz CA 95060
Dear Ms. Cabell,
This letter serves as our request that the City of Santa Cruz act as the Transportation Development Act (TDA) claimant for the Volunteer Center of Santa Cruz Transportation Program through the Santa Cruz County Regional Transportation Commission.

We are requesting a one time payment in the amount of $109,132 in July, 2025.

Our agency remains committed to serving the senior and disabled population of Santa Cruz County.

Please see Exhibit A to review Program Responsibilities and Exhibit B to review our proposed Budget for fiscal year 2025-26.

Thank you for your continued support of the Volunteer Center Transportation Program.

Warm Regards,
Tara Ireland
Empowered Aging Division Director
Volunteer Center of Santa Cruz County
Exhibit C

23.6 Exhibit D

23.7 23.8
6 Apportionment Schedule FY 2024/25 FY 2025/26
Proposed Proposed
4/3/25 4/3/25
Note
Transportation Development Act (TDA):
1 TDA Reserve Fund 561,390 24,418 (536,972) -95.65% To meet 8% Reserve Target* 2 RTC Reserve Fund - - -
3 4 SCCRTC:
5 Administration 734,548 785,966 51,418 7.00%
6 Planning 631,735 675,956 44,221 7.00%
7 1,366,283 1,461,923 95,640 7.00%
8 9 Bike to Work/School/Encouragement 72,000 72,000 - 0.00% 10 HSA Vision Zero Bike & Ped Safety 156,000 156,000 - 0.00% 11 228,000 228,000 - 0.00%
12 -
13 Santa Cruz Metro 8,701,057 9,330,817 629,760 7.24%
14 Spec Transit (CB/CTSA) 854,841 916,712 61,871 7.24%
15 Volunteer Center 101,767 109,132 7,366 7.24%
16 City of Capitola 19,063 20,130 1,067 5.60%
17 City of SC-Non Transit 125,220 133,058 7,839 6.26%
18 City of Scotts Valley 23,488 25,045 1,557 6.63%
19 City of Watsonville 98,783 108,166 9,383 9.50%
20 County of Santa Cruz 252,457 270,176 17,719 7.02%
21 Subtotal 10,176,675 10,913,236 736,561 7.24%
22 Total TDA Apportioned 12,332,348 12,627,577 295,229 2.39% Difference $ Difference
%
*FY 2022/23 TDA revenues were lower than estimated and $561,390 was needed to meet the FY 2024/25 8% reserve fund target. In FY 2025/26 the amount needed to meet the reserve target is due to the increase in TDA revenue estimates. 29-17
Exhibit E

23.9 23.10

23.11 23.12

23.13 City Council

AGENDA REPORT
DATE: 06/05/2025
AGENDA OF: 06/24/2025
DEPARTMENT: Finance
SUBJECT: Pass-Through Agreement with Community Bridges - TDA Claimant (FN) LOCATION: Citywide
RECOMMENDATION: Motion to authorize and direct the City Manager to execute an agreement with Community Bridges, allowing the City of Santa Cruz (City) to act as claimant for funds obtained from the Santa Cruz County Regional Transportation Commission (SCCRTC) for FY 2026.

BACKGROUND: Community Bridges relies on funding from the SCCRTC to support its programs. The City annually serves as a pass-through agent between Community Bridges and the SCCRTC. Accordingly, Community Bridges is again requesting that the City act as claimant for funds for the coming FY 2026. Since Community Bridges is unable to act as a claimant for itself, it must request that an outside entity perform this service.

DISCUSSION: The SCCRTC has budgeted $916,712 for Consolidated Transportation Services Agency (CTSA) operations which will each be disbursed in four installments during the fiscal year. See Community Bridges’ Letter of Request and Exhibits A, Operating and Capital Budget; B, CTSA Five Year Capital Improvement Plan; C, Operating Plan; D, Schedule of Payments; E, Statement of Role and Responsibility; F, Reporting Period; G, Operating Statistics; H, Community Bridges Agency Board Resolution; and I, SCCRTC Apportionment Schedule.

The City contract stipulates in Item 3 that the City will make payments to Community Bridges for the amount received from the SCCRTC in each fiscal year. In addition, SCCRTC bylaws stipulate that changes may occur in funding amounts, as needed, during the course of a fiscal year.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: This is not a project under CEQA.

HEALTH IN ALL POLICIES (HiAP): This action promotes Health in All Policies areas of Health and Wellness, and Community Connectedness. By acting as a pass-through agent, the City supports Community Bridges’ continued outreach within the community. This specific program provides rides for non-emergency health and medical transportation for low-income

24.1 seniors and disabled residents, ensuring access to care to those who may not have easily accessible transportation.

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 City will serve as a pass-through agent. The only impact on the City is staff time to serve as the pass-through agent and to submit an Annual State Controllers Transit Report in regards to acting as the pass-through agent.

Prepared By:

Joseph Balasabas
Accounting Technician
Submitted By:

Elizabeth Cabell
Director of Finance
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. LETTER OF REQUEST.PDF

2. AGREEMENT.PDF

3. EXHIBITS A-I.PDF

24.2 May 16, 2025
Ms. Elizabeth Cabell
Finance Director
City of Santa Cruz
1200 Pacific Avenue, Suite 290
Santa Cruz, CA 95060
RE: CTSA/City of Santa Cruz Claim for FY 2025/2026 TDA Revenues Dear Ms. Cabell:

This letter serves as Community Bridges request for the City of Santa Cruz to continue act as the claimant for the Consolidated Transportation Services Agency (CTSA) for Transportation Development Act (TDA) funding through the Santa Cruz County Regional Transportation Commission (SCCRTC) in the Year 2025/2026.

We understand the SCCRTC will allocate $916,712 for CTSA operations. These funds will be used to operate a variety of specialized transportation services throughout Santa Cruz County serving lowincome seniors and residents with disabilities who are unable to utilize traditional public transit. TDA funds will be used for the Taxi Scrip programs operating in South and North County, non-emergency medical transportation, transportation to Meals on Wheels Senior Dining Centers and Elderday Adult Day Health Center.

Enclosed are the following:

1.2025/2026 TDA Claim Form, Written Report of Activities, and CHP Inspection Report

2.2025/2026 Operating & Capital Budget (Exhibit A, pages 1-2)

3.CTSA Five Year Capital Improvement Plan (Exhibit B)

4.Operating Plan (Exhibit C-1, pages 1-2 & C-2, page 1)

5.Schedule of Payments Requested (Exhibit D)

6.Statement of Role and Responsibility (Exhibit E)

7.CTSA Reporting Period & Performance Measures (Exhibit F)

8.3-year Operating Statistics and Budget to Actuals (Exhibit G1- G2)

9.Community Bridges Agency Board Resolution 2025-04-01

10. RTC resolution number 52-25

11. FY 25-26 TDA Apportionment Schedule

24.3 Community Bridges’ Lift Line attests to the accuracy of the claim and all its accompanying documentation. I hope this claim can be submitted to the Santa Cruz City Council for approval at its upcoming meeting. If you require any additional information, please contact me at 831-688-8840 or [email protected]
On behalf of Lift Line clients and Community Bridges, I thank the City Council and its staff for its continued support of these vital transportation service programs.

Thank you,
Raymon Cancino, CEO
Cc: J.Balasabas
D. Underhill
M. Miller

24.4 1

AGREEMENT
The CITY OF SANTA CRUZ, hereinafter referred to as "CITY," and COMMUNITY BRIDGES, a California non-profit corporation, hereinafter referred to as "CONTRACTOR," hereby agree as follows:

1. CITY and CONTRACTOR agree that, for purposes of this Agreement, the CITY will act as the Transportation Development Act (TDA) claimant for administering a specialized transportation services program to CONTRACTOR through the Santa Cruz County Regional Transportation Commission (“SCCRTC”) for the period of July 1, 2025 through June 30, 2026, pursuant to SCCRTC Resolution No. 52-25, attached as Exhibit H.

2. CONTRACTOR shall provide during the term of this Agreement the services described in the Operating Plan, attached as Exhibit C.

The CONTRACTOR will maintain an Equipment Replacement Reserve Fund in an amount as specified in the approved Five Year Capital Improvement Plan, attached as Exhibit B, or as approved by other Santa Cruz County Regional Transportation Commission action. The Reserve Fund shall be maintained in a separate bank account with interest and the CONTRACTOR shall create a separate balance sheet account for the Fund. The interest earned will become an addition to the Equipment Replacement Reserve Fund, except that interest in an amount not to exceed $10,000 may be used by CONTRACTOR to provide for operating expenses. Said Fund is to be used exclusively for the replacement of rolling equipment or major maintenance thereof, and any disbursements from this Fund shall be reported to the Santa Cruz County Regional Transportation Commission ("SCCRTC").

Disbursements in excess of $10,000 shall be reflected in the adopted budget, and any revisions thereto, and shall be subsequently approved by the SCCRTC. All major expenditures ($10,000 or more) from this account shall also be subject to the approved Five Year Capital Improvement Plan.

3. In consideration of such services, CITY shall pay CONTRACTOR on the basis of appropriate claims submitted to the City Director of Finance in accordance with Exhibit D (Schedule of Payments). In no event shall the maximum payment made by CITY to CONTRACTOR under this Agreement exceed the amount received from the SCCRTC for the period of July 1, 2025 through June 30, 2026.

CONTRACTOR agrees that this Agreement is contingent upon the appropriation of sufficient funding by SCCRTC for the Operating Plan covered by this Agreement. If SCCRTC funding is reduced or deleted for the Operating Plan covered by this Agreement, the CITY has the option without penalty or

24.5 2
liability to either terminate this Agreement or to offer an amendment to this Agreement indicating any reduced amount.

4. In accordance with Exhibit A (Operating and Capital Budget), CONTRACTOR shall be permitted to make transfers within the categories of "Services and Supplies" and "Fixed Assets" of the TDA Budget unless they exceed 10% of the category total. Transfers within the "Salaries and Benefits" category may also be made by the CONTRACTOR unless they involve changes in the number and salary of positions or exceed 10% of the category total. Transfers between the categories of "Salaries and Benefits," "Services and Supplies," and "Fixed Assets" may be made by CONTRACTOR unless they exceed 10% of either category total involved. Any changes in the above-noted budget categories of more than ten percent (10%) of the entire category shall require a budget amendment and approval of the SCCRTC Executive Director.

5. CONTRACTOR may receive pursuant to the Schedule of Payments, Exhibit D, quarterly advance payments subject to the following conditions: Second, Third and Fourth Quarter advances shall be conditioned upon timely receipt by both the City Director of Finance and SCCRTC Executive Director, of the annual or quarterly reports described in Exhibit F. The prior fiscal year’s annual report is to be received by November 15, 2025 and the current fiscal year’s quarterly reports by January 15, 2026, April 15, 2026, July 15, 2026 and November 15, 2026.

6. CONTRACTOR shall submit evidence of incorporation by the State of California to the City Director of Finance no later than July 1, 2025. Payments to CONTRACTOR after that date will not be made if Evidence of Incorporation has not been submitted. If Evidence of Incorporation is already on file with the Finance Department, there is no need to resubmit evidence each year.

7. CONTRACTOR shall submit quarterly reports to CITY & SCCRTC as specified in Exhibit F, and such additional reports as may be requested by CITY & SCCRTC, describing work progress in carrying out the approved program under this Agreement, expenditures of funds, and any difficulties in meeting program objectives.

8. CONTRACTOR shall keep and maintain accurate records pertaining to its conduct of the program approved under this Agreement. Fiscal records shall be designated by the City Director of Finance. These records will be made available to CITY & SCCRTC or any authorized representatives thereof, and CONTRACTOR shall retain records for four years after the expiration of this agreement unless permission to destroy them is granted by CITY & SCCRTC. CONTRACTOR agrees to make all fiscal and necessary records available to the City Director of Finance upon his or her request, for the purpose of an audit and for verifying CONTRACTOR'S compliance with the terms of this Agreement.

24.6 3

9. The Board of Directors of CONTRACTOR shall be vested with responsibility for administration of the program to be conducted under this Agreement, and it is agreed that CONTRACTOR is an independent contractor under this Agreement.

10. CONTRACTOR agrees to indemnify, defend and hold harmless the CITY & SCCRTC, their officers, employees and agents from and against any and all claims, demands, costs, liability and actions arising out of the activities or premises of CONTRACTOR. CONTRACTOR shall maintain, during the entire term of the Agreement, comprehensive general liability and comprehensive automobile liability insurance. Such insurance shall be in an amount not less than one million dollars per occurrence combined single limit. The comprehensive automobile liability insurance shall include coverage of nonowned automobiles. The comprehensive general liability insurance shall include full personal injury coverage and shall include contractual liability coverage sufficient to meet liability arising out of this contract and the hold harmless clause herein. All such insurance shall have the CITY & SCCRTC as additional insured and shall not be subject to cancellation, reduction in coverage or refusal to renew with less than thirty (30) days advance written notice to the CITY & SCCRTC. CONTRACTOR shall submit to the City Director of Finance a certificate of such insurance.

11. CONTRACTOR shall maintain worker's compensation insurance in conformance with the worker's compensation laws of the State of California during the term of this contract. CONTRACTOR shall submit to the City Director of Finance a certificate of such insurance.

12. CONTRACTOR will not discriminate against any employee employed in the performance of this Agreement or against any applicant for employment in the performance of this Agreement because of color, religion, age, handicap, national origin, sex, sexual orientation, marital status, ancestry, medical condition, or any other non-merit factor unrelated to job performance. CONTRACTOR shall take affirmative action to ensure that applicants are employed and that employees are treated fairly during employment without regard to their color, religion, age, handicap, national origin, sex, sexual orientation, marital status, ancestry, medical condition, or any other non-merit factor unrelated to job performance.

This requirement shall apply to, but not be limited to, the following: employment, upgrading, demotion, or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship.

13. No person shall, on the grounds of color, religion, age, handicap, national origin, sex, sexual orientation, marital status, ancestry or medical condition, be excluded from participation in, be denied the benefits of, or be subjected to discrimination in any program conducted under this Agreement.

14. None of the funds, materials, property or services contributed by CITY or CONTRACTOR under this agreement shall be used in the performance of any functions other than those described in Exhibit A, as proper Program Functions.

24.7 4

15. There shall be no religious worship, instruction or proselytization as part of or in connection with the performance of this Agreement.

16. CONTRACTOR shall comply with all applicable laws, ordinances and codes of the federal, state and local government.

17. CONTRACTOR shall not assign this Agreement without prior written consent of CITY & SCCRTC.

18. This instrument contains all of the agreements, understandings, representations, warranties and covenants made between the parties hereto. Unless set forth herein, neither party shall be liable for any representations made, and all modifications and amendments made hereto must be made in writing.

19. This Agreement shall become effective as of July 1, 2025 and shall continue in effect through June 30, 2026, unless sooner terminated as provided in Paragraph 20. This Agreement may be similarly renewed in subsequent years.

20. This Agreement may be terminated by either party upon thirty (30) days prior written notice to the other party.

CITY OF SANTA CRUZ Community Bridges/CTSA
Matt Huffaker, City Manager Raymon Cancino, Executive Director Dated: Dated: ________________________
APPROVED AS TO FORM:

Office of the City Attorney
Dated:

AGR Community Bridges TDA FY 2026
6/3/2025
6/3/25

24.8 24.9

24.10 24.11

24.12 24.13

24.14 24.15

24.16 24.17

24.18 24.19

24.20 24.21

24.22 FILENAME: TDA 25-26 Budget Exhibit A Internal
COMMUNITY BRIDGES - LIFT LINE / CTSA EXHIBIT A, Page 1 of 2 TDA 2025-2026 BUDGET
1,183,605 300-71.0
TDA/STA Non-TDA CTSA TDA/STA Non-TDA CTSA
2025-26 2025-26 2025-26 2024-25 2024-25 2024-25

ACCOUNT TITLE BUDGET BUDGET BUDGET BUDGET BUDGET BUDGET PERSONNEL:

Salaries & Wages 534,283 1,059,006 1,593,289 505,847 1,027,407 1,533,254 Fringe Benefits: Unemployment 4,195 7,761 11,956 3,794 10,200 13,994 Workers Comp 40,570 86,006 126,576 39,507 80,242 119,749 Health Insurance 84,981 220,125 305,106 82,247 167,061 249,308 FICA 41,077 80,810 121,887 38,697 76,145 114,842
401K Plan 6,621 11,852 18,473 5,825 11,831 17,656
TOTAL PERSONNEL COSTS: 711,727 1,465,560 2,177,287 675,917 1,372,886 2,048,803 SERVICES & SUPPLIES:

OPERATING:

Vehicle Operations-Fuel 45,735 73,383 119,118 39,029 69,571 108,600 Vehicle Licenses 8,247 8,768 17,015 5,397 10,963 16,360 Vehicle Repair & Maintenance 50,334 52,952 103,286 37,921 63,684 101,605 Vehicle Insurance 44,475 47,284 91,759 36,570 53,969 90,539 Communications-Radio 42,086 63,313 105,399 42,463 53,570 96,033 TOTAL VEH. OPERATING COSTS: 190,876 245,701 436,577 161,381 251,756 413,137 OTHER OPERATING & ADMINISTRATION COSTS:

Professional Services 0 106,455 106,455 54,031 50,866 104,897 Janitorial Services & Supplies 4,370 4,646 9,016 2,860 5,809 8,669 Legal services & Audit 0 7,256 7,256 0 7,093 7,093
Publicity/Media 0 56,888 56,888 0 43,500 43,500
Special Events 0 438 438 0 421 421
Staff travel 2,951 3,137 6,088 0 1,288 1,288
Minor Equipment 5,316 5,651 10,967 3,479 7,066 10,545
Equip Maintenance/Repair 1,826 1,941 3,767 1,195 2,427 3,622 Office Supplies 3,898 4,144 8,042 2,108 4,282 6,390
Program Supples 11,327 12,043 23,370 7,414 15,057 22,471 Vehicle Maintenance Supplies 3,731 3,967 7,698 2,937 5,965 8,902 Computer Supplies/Related 2,391 2,543 4,934 1,565 3,180 4,745 Postage 1,704 1,811 3,515 1,115 2,265 3,380
Utilities 12,562 13,355 25,917 8,722 16,198 24,920
Space Maintenance 4,171 4,434 8,605 2,730 5,544 8,274
Telephone 1,884 2,003 3,886 2,133 1,603 3,736
Misc Fees 3,837 4,080 7,917 2,842 5,772 8,614
Staff Training 2,031 2,160 4,191 1,659 3,371 5,030
Insurance-General Liability & Fidelity 2,910 0 2,910 2,910 0 2,910 Memberships/Subscriptions 5,453 5,797 11,250 3,569 7,249 10,818 Printing & Copying 5,412 5,753 11,165 3,542 7,193 10,735 Advertising (Recruitment) 3,440 3,658 7,098 1,459 2,963 4,422 Interest Expense 0 70,861 70,861 0 65,309 65,309
Subsidized Taxi - Elderday Rides 0 4,500 4,500 0 1,000 1,000 Subsidized Taxi - MOW Rides 0 0 0 0 0 0
Subsidized Taxi - LL Rides 21,811 23,189 45,000 9,073 18,427 27,500 Subsidized Taxi - Scrip 7,500 0 7,500 2,500 0 2,500
Nonsubsidized Taxi-Measure D Svcs 0 64,117 64,117 0 61,651 61,651 Trxfer to/from Equip Reserve 0 0 0 0 0 0
Deprec-Groupwise Upgrade 0 0 0 0 39,722 39,722
Major Equipment - Non 5310 0 0 0 0 453,867 453,867
300 Property Fixed Asset 0 137,518 137,518 0 497,865 497,865 Leasehold Improvements 0 0 0 0 0 0
Debt Repayment 0 0 0 0 20,000 20,000
Agency Overhead 172,478 297,523 470,001 162,928 280,723 443,651 TOTAL ADMINISTRATION COSTS: 281,002 849,868 1,130,870 280,769 1,637,678 1,918,447 TOTAL EXPENDITURES 1,183,605 2,561,129 3,744,734 1,118,067 3,262,320 4,380,387 TOTAL REVENUES 1,183,605 2,561,129 3,744,734 1,118,067 3,262,320 4,380,387 NET GAIN (LOSS) 0 0 0 0 0 0

24.23 COMMUNITY BRIDGES - LIFT LINE / CTSA EXHIBIT A, Page 2 of 2 TDA 2025-2026 BUDGET
TDA/STA Non-TDA CTSA TDA Non-TDA CTSA
2025-26 2025-26 2025-26 2024-25 2024-25 2024-25

ACCOUNT TITLE BUDGET BUDGET BUDGET BUDGET BUDGET BUDGET REVENUE:

TDA 916,712 0 916,712 854,841 0 854,841
STA - Pending Approval 25/26 266,893 0 266,893 263,226 0 263,226 State of Good Repair - SGR 0 0 315,718 315,718
City of Capitola 44,000 44,000 44,000 44,000
City of Watsonville 0 0 1,250 1,250
County of SC-Measure D Sales Tax 1,107,000 1,107,000 1,110,111 1,110,111 CARB 30,000 30,000 30,000 30,000
LCTOP 0 0 147,000 147,000
Transfer From Measure D Reserve 121,477 121,477 430,436 430,436 Area Agency on Aging-Title IIIB 20,000 20,000 20,000 20,000 FTA Section 5310-Expanded 131,000 131,000 152,317 152,317 Monterey Peninsula Foundation 125,000 125,000 125,000 125,000 CPUC TNC 65,000 65,000 63,051 63,051
Outside Contracts-Other 489,685 489,685 441,000 441,000 Scrip - Client Payments 15,000 15,000 12,000 12,000
MOW Intra-Program Charges 22,500 22,500 22,500 22,500
Elderday Intra-Program Charges 346,667 346,667 289,944 289,944 Donations 21,800 21,800 36,918 36,918
Program Income-Other 5,000 5,000 3,075 3,075
Vehicle Maintenance Intra-Program Charges 12,000 12,000 12,000 12,000 Vehicle Sales 5,000 5,000 6,000 6,000
TOTAL REVENUES 1,183,605 2,561,129 3,744,734 1,118,067 3,262,320 4,380,387

CTSA CTSA CTSA

FINAL BUDGET BUDGET
OPERATING FUND SOURCES FY 23-24 FY 24-25 FY 25-26
TDA 975,664 854,841 916,712
STA - Pending Approval 25/26 257,045 263,226 266,893
State of Good Repair - SGR 0 315,718 0
City of Capitola 31,417 44,000 44,000
City of Watsonville 1,250 1,250 0
County of SC-Measure D Sales Tax 1,076,000 1,110,111 1,107,000 Transfer From Measure D Reserve 408,844 430,436 121,477 CARB 22,716 30,000 30,000
LCTOP 0 147,000 0
Area Agency on Aging-Title IIIB 20,000 20,000 20,000
FTA Section 5310-Expanded 93,603 152,317 131,000
Monterey Peninsula Foundation 75,000 125,000 125,000
CPUC TNC 12,693 63,051 65,000
Outside Contracts-Other 362,991 441,000 489,685
Scrip - Client Payments 17,992 12,000 15,000
MOW Intra-Program Charges 22,500 22,500 22,500
Elderday Intra-Program Charges 245,313 289,944 346,667
Donations 5,400 36,918 21,800
Program Income-Other 0 3,075 5,000
PPP Loan Forgiveness 0 0 0
Vehicle Maintenance Intra-Program Charges 8,174 12,000 12,000 Vehicle Sales 4,000 6,000 5,000
TOTAL REVENUES 3,640,601 4,380,387 3,744,734

24.24 EXHIBIT B

CAPITAL REVENUE
Projected Projected Projected Projected Projected
2025-2026 2026-2027 2027-2028 2028-2029 2029-2030
Fund Balance $29,943 $30,018 $30,093 $30,168 $30,243
FTA Section 5310 $601,000 $0 $210,000 $0 $510,000
Addition to Fund $0 $0 $0 $0 $0
Fund Interest $75 $75 $75 $75 $76
Total $631,018 $30,093 $240,168 $30,243 $540,319

CAPITAL EXPENDITURES
2025-2026 2026-2027 2027-2028 2028-2029 2029-2030
Equipment Purchase $601,000 $0 $210,000 $0 $510,000
Major Maintenance $0 $0 $0 $0 $0
Total $601,000 $0 $210,000 $0 $510,000
Year-End Balance $30,018 $30,093 $30,168 $30,243 $30,319 Notes:
1 As capital grants are indefinite, and as capital equipment arrival dates vary, projected figures may require adjustment.
2 Lift Line is going to be receiving 5 Ford Transit minivans ans 1 Ford E-450 Bus in FY 2025-2026
3 Lift Line is going to apply $210,000 equipment funding for vehicle and computer purchase in FY 2027-2028.
4 Lift Line is going to apply $510,000 equipment funding for vehicle and computer purchase in FY 2029-2030.

FISCAL YEARS: 25/26 THROUGH 29/30
CTSA FIVE YEAR CAPITAL IMPROVEMENT PLAN 25/26
T:\GRANT MGMT\LIFT LINE\25-26\Grants & Contracts\TDA STA Claim\Updated Claim\Exhibit B-1 TDA Capital Plan 25-26 Complete

24.25 EXHIBIT C-1
Lift Line / CTSA
FY25/26 OPERATING PLAN
The Lift Line program provides demand-responsive, specialized non-emergency health and medical transportation for low-income seniors and disabled residents of Santa Cruz County.

Riders are not charged a fare for the service. Service is generally provided from 8:00 AM to 4:00 PM, seven days a week (with the exception of published holidays), while Lift Line also coordinates additional services on behalf of its clients outside these hours.

Service is focused on individuals that live outside the METRO ParaCruz service area, those who are unable to afford the METRO ParaCruz fare, those that do not meet the ADA complementary paratransit eligibility requirements, those needing same day service, and those that need a higher level of service than can be provided by METRO ParaCruz. Lift Line operates a fleet of 26 wheelchair accessible vans. Transportation is provided to destinations such as doctors’ offices, pharmacies, Elderday Adult Day Health Care, Senior Dining Centers, out of county medical destinations, dialysis sites, and various medical therapy appointments. Clients are generally asked to book their medical rides between 8:30am and 3:30pm.

Lift Line is seeking to continue TDA Medical Rides service and ensure this service reaches those with the most need. Lift Line projecting 5,894 TDA Medical Rides for FY 25/26.

The TDA Medical Rides program serves as a safety net service for medical rides outside the ADAmandated METRO paratransit service areas. Eligible individuals may schedule rides to medical destinations as late as one day in advance, with no fares collected. Currently all of the residents that receive medical rides are low income and below the federal 200% poverty level. Lift Line staff continue to update participant applications to reflect the new Federal Government poverty level guidelines to ensure income and disability eligibility is maintained by participants.

Lift Line also coordinates with the local taxi companies to offer the Taxi Scrip (TS) program.

Lift Line is projecting 4,000 Taxi Scrip rides in FY 25/26.

The Taxi Scrip program serves as a safety net service for medical rides and non-medical rides needed outside the ADA-mandated METRO paratransit service areas. Individuals may purchase subsidized taxi scrip so that they can directly schedule taxi rides. Taxi companies own and operate vehicles that are fully accessible for mobility devices such as wheelchairs. Currently all residents that receive Taxi Scrip at a discount are low income and below the federal 200% poverty level. Currently clients can purchase three $10.00 books, for a total of $30.00 worth of scrip, for $8.00 which would give them approximately one (1) or two (2) rides per book. There is currently a limit to purchase six books per person per quarter.

Lift Line is projecting 12,079 Meals on Wheels rides for FY 25/26, 6,724 of which will be funded with TDA funds.

We are on track to meet our projected goal for the current fiscal year. Lift Line will continue to coordinate with the Meals on Wheels program to help them meet any increase attendance demands at all of the senior dining centers. Lift Line continues to meet with the Meals on Wheels Program Director and site managers to review unmet transportation service needs.

24.26 Exhibit C – 1
Lift Line / CTSA 25/26 Operating Plan
Lift Line is projecting 25,912 Elderday rides in FY 25/26, of which 15,512 are funded by TDA.

The Elderday program provides outpatient adult day health care to seniors and community residents who need constant care, and/or are diagnosed with dementia or Alzheimer’s disease. Almost all of these participants use wheelchairs or walkers, and require vans with lifts. Generally, these clients are very frail and need personal, door-to-door assistance. Elderday rides are reflective of the level of client service that Lift Line drivers provide to patients with critical needs.

Lift Line is seeking to continue STA Same Day and Out of County service and ensure this service reaches those with the most need. Lift Line projecting 1,923 STA Same Day and Out of County Rides for FY 25/26.

The STA Same Day and Out of County Rides program serves as a safety net service same dy and out of County rides. Eligible individuals may schedule same day rides, with no fares collected.

Currently all of the residents that receive medical rides are low income and below the federal 200% poverty level. Lift Line staff continue to update participant applications to reflect the new Federal Government poverty level guidelines to ensure income and disability eligibility is maintained by participants.

Lift Line will continue to provide expanded hours service rides funded by Measure D. Lift Line is projecting 5,900 Measure D funded rides in FY 25/26.

Measure D provides funding for three additional drivers, extending our medical ride program service for four additional hours. These two hours in the morning and two hours in the evening extend operating hours of service. The Measure D funded program provides rides to essential services such as Medical appointments, social services, banking, pharmacy, dental, and mental health programs representing around 10% of our total rides.

Santa Cruz City CouncilJune 24, 2025

Santa Cruz City Council
June 24, 2025