May 6, 2025
2025 by submitting the attached Bond BHCIP Round 1: Launch Ready Conditional Award Attestation letter to DHCS via email at [email protected]. This acceptance will ensure that the conditional awardee acknowledges they will meet all the requirements in order to receive grant funding. Failure to respond to DHCS by the due date above will result in voluntary relinquishment of the conditional grant award.
2. Program Funding Agreement (PFA)
Information from your application is deemed final and will serve as the foundation of the project data, payment schedule, and Statement of Work (SOW). All this information will be included in your Program Funding Agreement (PFA), or contract, with Advocates for Human Potential, Inc. (AHP), the BHCIP administrative entity. See the attached sample PFA.
As per the Request for Applications (RFA), the PFA must be digitally executed by the conditional awardee and executed with AHP within 90 days of its receipt, a condition of disbursement. DHCS will not accept any modifications, negotiations, or redlines to the PFA. Furthermore, conditional awardees are obligated to clear title to the subject property to be improved with Bond BHCIP Round 1: Launch Ready funds prior to recordation of the security instruments. DHCS retains the authority to rescind conditional award funding and redirect it to alternate applicants in instances where extended delays in the execution of the PFA occur.
3. Match Requirements
The match source specified in your submitted application is considered final, and you may not make any modifications to it. All conditional awardees must provide the necessary documentation to support their match source no later than 5:00pm (PT) on May 16, 2025. For more information about match, see the attached Match information sheet.
Conditional awardees who identified use of cash for their match source will have 90 days from the date of the PFA execution to deposit those funds into a designated match account.
Conditional awardees who identified use of sunk costs for their match source may now submit invoices and proof of payment for costs incurred prior to the date of this letter (“sunk costs”) and receive credit on their required match.
Conditional awardees must adhere to strict guidelines and submit all documentation for DHCS approval of allowable sunk costs by 5:00pm (PT) on May 13, 2025. Costs incurred up to one year prior to the date of the award letter can be submitted as sunk costs; costs incurred more than one year ago will not be considered sunk costs.
Docusign Envelope ID: 3E26CE3E-3E86-4E88-9507-EABAD9456B66
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May 6, 2025
4. AHP Account Success Manager (ASM)
Your designated ASM has scheduled an onboarding call for May 13, 2025 at 2:30pm (PT). This is a mandatory initial step in the contracting process and an opportunity to meet your ASM, who will serve as your point of contact throughout the contracting and funding processes.
5. Bond BHCIP Round 1 Conditional Awardee Kickoff Webinar A mandatory kickoff webinar will be held on May 8, 2025, from 12:00 to 1:00 pm (PT). Please register here. Your project lead and all development team members are invited. A link to the recording will be sent to all conditional awardees for their reference following the webinar.
6. Incurred Cost and Projected Funding Needs
As a conditional awardee, you will be able to incur allowable project-specific expenses beginning the date of this conditional award letter. However, the ability to invoice will be contingent upon meeting all bond funding and program requirements.
Please note conditional awardees must submit an initial cost projection by 5:00pm (PT) on May 16, 2025 to align with the general obligation bond process. The specificity of these requirements will be covered in your scheduled onboarding call and mandatory webinars.
7. Monitoring and Reporting
Conditional awardees are required to complete the SOW and budget to finalize the PFA. Upon execution of the PFA, conditional awardees will be identified as awardees and at a minimum commit to providing: monthly funding projections, updates to project construction timelines, quarterly progress reports, and attending monthly ASM calls.
Reporting requirements and regular compliance on-site inspections will be required by DHCS for up to 30 years after completion of project construction.
8. Communications and Media Publications
As a condition of this award, conditional awardees are required to respond to DHCS requests regarding the promotion of this award. Requests may include, but are not limited to, media interviews; submission of related letters to the editor; providing quotes for media activities; or submitting informational videos to discuss the organization, funded behavioral health facilities, and impacts on communities as a result of this award.
You will receive an email from [email protected] with instructions on how to whitelist safe email addresses. All future communications from AHP will be sent from [email protected]. Please whitelist this email address to ensure you receive communications related to this award.
Docusign Envelope ID: 3E26CE3E-3E86-4E88-9507-EABAD9456B66
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Notice of Conditional Bond BHCIP Round 1 Award
May 6, 2025
For questions, please contact DHCS or AHP at [email protected]. If you have not already done so, you are encouraged to register for the BHCIP listserv to receive updates about current and future funding opportunities. In addition, please review the frequently asked questions (FAQ) on the BHCIP website regularly for program guidance.
Should you no longer be interested in receiving Bond BHCIP Round 1: Launch Ready grant funding or wish to withdraw your grant application, please contact DHCS immediately at [email protected].
DHCS is excited to embark on this partnership with you to expand California’s continuum of behavioral health facilities. We are doing lasting work that will benefit many of our state’s most vulnerable individuals.
Sincerely,
Marlies Perez
Division Chief, Community Services Division
Project Executive, Behavioral Health Transformation
Department of Health Care Services
Attachment: Award Attestation
Docusign Envelope ID: 3E26CE3E-3E86-4E88-9507-EABAD9456B66
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Department of Health Care Services
Grantee: City of Santa Cruz
Agreement # BR1-25-4401
ATTACHMENT L
FACILITY ACCESS AGREEMENT
BEHAVIORAL HEALTH CONTINUUM INFRASTRUCTURE PROGRAM (BHCIP) ROUND 1: LAUNCH READY
1. STATEMENT OF INTENT
The purpose of this Facility Access Agreement (this “Agreement”) is to provide the State of California (the “State”) Department of Health Care Services (“DHCS”) with access to a property and facility owned and operated by CITY OF SANTA CRUZ, a California municipal corporation (the “Sponsor”), which received grant funding through the Behavioral Health Continuum Infrastructure Program (“BHCIP”). The Sponsor further agrees to provide information and documents to DHCS as outlined in this Agreement. The Sponsor agrees to provide this facility access and to provide the information outlined in this Agreement to enable DHCS to confirm the Sponsor’s compliance with BHCIP requirements and restrictions and applicable federal regulations. The Sponsor enters into this Agreement as a condition of receipt of Bond BHCIP Funds and will comply with this Agreement for the term specified.
2. BACKGROUND
DHCS oversees BHCIP pursuant to the requirements of California Welfare and Institutions Code sections 5960-5960.4, as amended by sections 5965-5967.01 that provided, in part, for the: (a) addition of section 5965.04 to the California Welfare and Institutions Code allocating additional funding to the Program; and (b) repealed section 5960.45 from the California Welfare and Institutions Code.
DHCS oversees BHCIP to award State Behavioral Health Infrastructure Bond Act of 2024 funds (“Bond BHCIP Funds”) to qualified entities, through competitive grants, to construct, acquire, and rehabilitate real estate assets to address significant crisis care gaps in California’s behavioral health (mental health and substance use disorder) infrastructure.
DHCS awarded the Sponsor Bond BHCIP Funds to acquire, expand, or construct certain improvements (the “Sponsor’s Project”) on that certain real property commonly known as 125 Coral Street, located in the City of Santa Cruz, County of Santa Cruz, State of California, and the improvements thereon (the “Property”); and, to operate the specific type of behavioral health facility (the “Facility”) identified in the Sponsor’s application on the Property following the completion of the Sponsor’s Project.
As part of DHCS’s grant award to the Sponsor, the Sponsor entered into a contract with Advocates for Human Potential, Inc., a Massachusetts corporation (“AHP”), which is
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assisting in the management of the Bond BHCIP Funds and administering BHCIP in partnership with DHCS.
This Agreement between DHCS and the Sponsor provides additional obligations the Sponsor has to DHCS as a condition of receiving all funds under the Sponsor’s contract with AHP and in order to comply with the requirements of the statutes governing BHCIP.
3. APPLICABILITY OF BHCIP STATUTES
It is the intent of the parties that the Sponsor, and any subsequent owners of the Property continue to be bound by the requirements of the BHCIP statutes (California Welfare and Institutions Code sections 5960-5960.4) and this Agreement for a minimum of thirty (30) years from the date of the Sponsor’s contract with AHP, and shall continue in full force and effect for a period of at least thirty (30) years after the date of either of the following:
(i) the date of issuance of a Certificate of Occupancy, if the Sponsor’s Project is for construction of a new facility, or (ii) the date of recordation of a Notice of Completion in the official records of the county in the jurisdiction where the Property is located, if the Sponsor’s Project is for the rehabilitation or expansion of an existing facility on the Property, notwithstanding the repeal of the BHCIP statutes. The BHCIP statutes, as written on the date of this Agreement, are hereby incorporated by reference into this Agreement.
4. SPONSOR OBLIGATIONS TO DHCS
For a minimum of thirty (30) years, the Sponsor shall:
A. Ensure that the Facility operates in compliance with the requirements set forth in California Welfare and Institutions Code sections 5960-5960.4 and Section 8.A. of this Agreement;
B. Comply with the change of Facility use requirements contained in Section 8.B. of this Agreement, if applicable;
C. Maintain all books, accounting records, client records, and documents in accordance with the requirements set forth in Section 8.C. of this Agreement; D. Provide DHCS access to the Property, the Facility, books, accounting records, client records, and documents in accordance with the requirements set forth in Section 8.D. of this Agreement;
E. Provide DHCS with reports in the manner and frequency set forth in California Welfare and Institutions Code sections 5960-5960.4 and Section 8.E. of this Agreement;
F. Require, as a condition of sale, that any subsequent owners of the Property comply with the terms of this Agreement, if the Sponsor transfers ownership of Facility at any time during the thirty (30) years;
G. Obtain DHCS’s written consent prior to incurring any debt secured by the Property, as applicable;
H. Provide written notice to DHCS within thirty (30) days of payment in full of any debt secured by the Property, as applicable; and
I. Provide written notice to DHCS of any litigation or governmental proceeding pending against the Sponsor, or any other event, that may materially adversely affect the Sponsor’s Property, business, operations, assets, condition (financial or
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otherwise), or prospects, in accordance with the requirements set forth in Section
8.H. of this Agreement.
5. SERVICE LOCATION
The services shall be performed at the Property.
6. SERVICE HOURS
The services shall be provided during normal Sponsor working hours and days.
7. PROJECT REPRESENTATIVES
A. The project representatives during the term of this Agreement will be:
Department of Health Care Services
Contract/Grant Manager:
Laurice Artap, Section Chief
Community Services Division /
Behavioral Health Continuum
Infrastructure Program Section
Telephone: +1 (916) 345-8512
Email: [email protected]
City of Santa Cruz
Contract/Grant Manager:
Matt Huffaker, City Manager
Telephone: (831) 420-5150
Email: [email protected]
B. Direct all inquiries to:
Department of Health Care Services
State of California
Department of Health Care Services
Attention: Behavioral Health Expansion
Branch, Community Services Division
1501 Capitol Avenue, MS 2633
Sacramento, CA 95814
Telephone: +1 (916) 345-8512
Email: [email protected]
City of Santa Cruz
Attention: Matt Huffaker, City
Manager
809 Center Street
Santa Cruz, CA 95060
Telephone: (831) 420-5150
Email: [email protected]
C. Either party may make changes to the information above by giving written notice to the other party. Said changes shall not require an amendment to this Agreement.
8. SERVICES TO BE PERFORMED
A. Operation of the Facility:
For a minimum of thirty (30) years, the Sponsor shall comply with the following requirements:
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1. Operate the Facility in accordance with all applicable requirements in California Welfare and Institutions Code sections 5960-5960.4;
2. Operate the Facility as the type of behavioral health services facility identified in the Sponsor’s DHCS-approved BHCIP grant application for Bond BHCIP Funds, and serve the populations identified in the Sponsor’s DHCS-approved BHCIP grant application for Bond BHCIP Funds, unless otherwise approved by DHCS in the manner described in Section 8.B. below; and
3. Accept Medi-Cal beneficiaries and serve at least the same percentage, or more, of Medi-Cal beneficiaries, as identified in the Sponsor’s DHCSapproved BHCIP grant application for Bond BHCIP Funds.
Any change to the Sponsor’s Project, including the Sponsor’s Project expansion scope requirements, as set forth in Table 1 below, shall require the Sponsor to submit a written request to DHCS in accordance with the requirements of Section 8B. No changes may be made without prior written approval from DHCS.
TABLE 1
A. SPONSOR’S PROJECT AND SPONSOR INFORMATION
Sponsor Name: City of Santa Cruz, a California municipal corporation Entity Type: City
Project UUID: BOND_1021_SantaCruzCoralS
Project Name: Santa Cruz Coral Street SUD Campus
Project Address: 125 Coral Street, Santa Cruz, CA 95060 B. SPONSOR’S PROJECT NARRATIVE
The City of Santa Cruz is requesting $30 Million for its Coral Street SUD Campus, a new construction facility that will contain 50 beds of adult residential SUD treatment at ASAM levels 3.1, 3.2-WM, and 3.5. This project is in the design development phase, with expected completion by mid-2027. The project will attach to the Coral Street Campus, an existing facility that contains transitional housing, permanent supportive housing, and homeless services that include medical/dental clinic and workforce training. This colocation of different levels of care along the behavioral health continuum in one campus is a unique opportunity to provide a step up or down in treatment in a single location. The target population for the facility is the large unhoused population in the City, as well as individuals with SUD that are exiting the judicial system. According to recent Santa Cruz County research, 55% of the Santa Cruz County homeless population has a SUD diagnosis. In the most recent Point in Time (PIT) survey, 22% of respondents listed SUD as their primary condition that led to their homelessness. 46% of homeless respondents self-reported SUD, while 37% self-reported having a psychiatric or emotional condition. This facility will treat co-occurring SUD and mental illness, allowing the City to continue its progress in reducing the impact of homelessness on the downtown area.
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% of Medi-Cal Beneficiaries Served: 100%
C. SPONSOR’S PROJECT EXPANSION SCOPE REQUIREMENTS
Facility Type 1: Adult
Residential SUD Treatment
Facility
# New Beds: 50 # New Slots:
Facility Type 2: # New Beds: # New Slots:
Facility Type 3: # New Beds: # New Slots:
Facility Type 4: # New Beds: # New Slots:
Facility Type 5: # New Beds: # New Slots:
Facility Type 6: # New Beds: # New Slots:
Facility Type 7: # New Beds: # New Slots:
Facility Type 8: # New Beds: # New Slots:
Facility Type 9: # New Beds: # New Slots:
Facility Type 10: # New Beds: # New Slots:
Total # New Beds: 50 Total # New Slots: 0
B. Change in Facility Use
For a minimum of thirty (30) years, if the Sponsor wants to change the type of behavioral health facility that it operates on the Property to something other than what was approved in the Sponsor’s BHCIP grant application for Bond BHCIP Funds, or to change or expand populations to be served by the facility, the Sponsor shall submit a written request to DHCS prior to making such a change.
The Sponsor’s written request shall:
1. Identify the desired type of behavioral health facility;
2. Identify the populations to be served by the facility;
3. Explain the need for the proposed change; and
4. Identify any licenses, certifications, building modifications, staff, or any other requirement that the Sponsor must obtain before being able to make the proposed change.
As a part of its review of the Sponsor’s request, DHCS shall ensure that the change in use or population is tailored to provide behavioral health treatment that will meet community needs identified by local stakeholders, including the county board of supervisors, the county behavioral health director, providers of behavioral health
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services, and individuals who have or have had a mental health disorder or a substance use disorder. DHCS has absolute discretion to permit or deny the request and may require the Sponsor to provide additional information to evaluate the Sponsor’s request.
C. Record Retention
1. The Sponsor shall maintain books, accounting records, client records, and other documents in a manner sufficient to properly reflect all direct and indirect costs of operating the Property during the term of this Agreement, including any matching costs and expenses. The foregoing constitutes “records” for the purpose of this provision.
2. The Sponsor’s records and the Property’s and Facility’s records shall be subject at all reasonable times to inspection, audit, and reproduction by authorized representatives of the State, including DHCS or its authorized representatives.
3. The Sponsor agrees that departments authorized to represent the State (including DHCS, the Department of Finance or its authorized representatives, and the Bureau of State Audits or their designated representatives) and authorized representatives of the United States (including the Comptroller General and the Internal Revenue Service) shall have the right to review and to copy any records and supporting documentation pertaining to the performance of this Agreement. The Sponsor agrees to allow these state and/or federal representatives access to such records during normal business hours and to allow interviews of any employees who might reasonably have information related to such records.
Further, the Sponsor agrees to include a similar right of the State to audit records and interview staff in any subcontract related to performance of this Agreement. (Cal. Gov. Code § 8546.7, 2 CCR §1896.77.)
3.1 The Sponsor shall maintain records in a data storage medium that is accessible to DHCS. DHCS, at its sole discretion, shall determine whether the Sponsor’s type of data storage medium meets this accessibility requirement.
4. The Sponsor shall retain all financial records, supporting documents, statistical records, and all other records pertinent to the Sponsor’s Project and the Bond BHCIP Funds for a minimum of thirty-five (35) years from the date of final disbursement to the Sponsor of its award of Bond BHCIP Funds, in compliance with the July 2, 2008 General Obligation Bond Record Retention Memorandum from the California State Treasury Office, 26 C.F.R. §1.148-5(d)(6)(iii)(E), Section 7 of Attachment A of the Sponsor’s contract with AHP, and all applicable Internal Revenue Service statutes, regulations, and guidance. If any litigation, claim, negotiation, audit, or other action involving the records has been started before the expiration of the thirty-five (35) year period, the records shall be retained until completion of the action and resolution of all issues which arise from it, or until the end of the regular thirty-five (35) year period, whichever is later.
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5. The Sponsor may, at DHCS's discretion, following the expiration of this Agreement, reduce its accounts, books, and records related to this Agreement to microfilm, computer disk, CD ROM, DVD, or other data storage medium. Upon request by DHCS or an authorized DHCS representative to inspect, audit, or obtain copies of said records, the Sponsor shall supply or make available applicable devices, hardware, and/or software necessary to view, copy, and/or print said records. Applicable devices may include, but are not limited to, microfilm readers and microfilm printers, etc.
D. DHCS Monitoring
DHCS, or its authorized representatives, has, the right at all reasonable times to inspect the Property and the Facility. If DHCS exercises this right to inspect, the Sponsor shall provide access to the Property and the Facility and shall provide reasonable assistance for the safety and convenience of DHCS or its authorized representatives in the performance of their duties. All inspections and evaluations shall be performed in such a manner as will not unduly delay the work.
E. Proof of Insurance
Beginning five (5) years after the Sponsor’s contract with AHP, the Sponsor shall provide DHCS with proof of insurance for the Property annually or whenever there is a change in coverage. DHCS shall accept evidence of self-insurance, in the amounts and types sufficient to provide adequate coverage, subject to DHCS approval, in its sole discretion.
F. Assignment of this Agreement Following the Transfer of Ownership of the Facility If at any time during the thirty (30) year period of this Agreement, the Sponsor sells, gifts, or otherwise transfers ownership of the Property, in whole or in part, the Sponsor shall ensure that, as a condition of the ownership transfer, the subsequent owner of the Property complies with the terms of this Agreement.
Prior to finalizing any transfer of ownership of the Property, the Sponsor shall request that DHCS formally amend this Agreement to assign the Sponsor’s obligations under this Agreement to the subsequent owner of the Property.
This Agreement is not assignable by the Sponsor, either in whole or in part, without the prior written consent of DHCS.
G. Debt Secured by the Property
1. The Sponsor shall obtain DHCS’s written consent prior to incurring any debt secured by the Property, as applicable.
2. The Sponsor shall notify DHCS in writing within thirty (30) days of payment in full of any debt secured by the Property, as applicable.
H. Notice of Litigation and Other Events
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Within five (5) business days after an officer or other authorized representative of the Sponsor obtains knowledge thereof, the Sponsor shall provide written notice to DHCS of (i) any litigation or governmental proceeding pending against the Sponsor which could materially adversely affect the Sponsor’s Property, business, operations, assets, condition (financial or otherwise), or prospects and (ii) any other event which is likely to materially adversely affect the Sponsor’s Property, business, operations, assets, condition (financial or otherwise), or prospects.
I. Remedies
If the Sponsor violates the terms of this Agreement, DHCS or another department authorized to represent the State may impose a corrective action plan and/or take any of the following enforcement actions:
1. Direct AHP to temporarily withhold any grant payments of Bond BHCIP Funds pending correction of the deficiency;
2. Disallow all or part of the cost of the activity or action not in compliance;
3. Direct AHP to wholly or partly suspend or terminate the grant award of Bond BHCIP Funds;
4. Withhold or deny further award of Bond BHCIP Funds to the Sponsor;
5. Require the Sponsor to forfeit and return all or part of the grant award of Bond BHCIP Funds, including any interest; and/or
6. Require the Sponsor to forfeit and return all unused grant Bond BHCIP Funds, including any interest.
7. Specific Performance
DHCS (or another department authorized to represent the State) may specify the timeframes and deadlines for the Sponsor’s compliance with the above remedies.
All remedies required by DHCS shall be final and are not subject to administrative review.
DHCS (or another department authorized to represent the State) may take any other permissible remedies available in law or equity to enforce the terms of this Agreement.
9. AMERICANS WITH DISABILITIES ACT
Sponsor agrees to ensure that deliverables developed and produced pursuant to this Agreement shall comply with the accessibility requirements of sections 7405 and 11135 of the California Government Code, section 508 of the Rehabilitation Act of 1973 as amended (29 U.S.C. § 794d), regulations implementing the Rehabilitation Act of 1973 as set forth in Part 1194 of Title 36 of the Code of Federal Regulations, and the Americans with Disabilities Act of 1990 (42 U.S.C. § 12101 et seq.). In 1998, Congress amended the Rehabilitation Act of 1973 to require Federal agencies to make their electronic and information technology (EIT) accessible to people with disabilities. California Government Code sections 7405 and 11135 codifies section 508 of the Rehabilitation Act of 1973 requiring accessibility of EIT.
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10. AGREEMENT EXECUTION
This Agreement shall be signed by DHCS and by a representative of the Sponsor, who by signing warrants that they have the requisite authority to enter into this Agreement on behalf of the Sponsor. This Agreement shall be effective as of the date that the complete document is signed or the date that the contract between the Sponsor and AHP goes into effect, whichever date is later.
[counterpartySignerSignature_4c4OuJH]
Sponsor’s Authorized Representative’s Signature
Matt Huffaker, City Manager
Sponsor Representative’s Name in Print and Title
[counterpartySignerDateField_qTlI77F]
Date
DHCS Representative Signature
Laurice Artap, Section Chief
Community Services Division / Behavioral Health
Continuum Infrastructure Program Section
DHCS Representative Name in Print and Title
Date
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City of Santa Cruz
BUDGET ADJUSTMENT REQUEST
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REQUESTED BY DEPARTMENT HEAD
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Clear Form
2026
01/13/2026
To amend the FY2026 budget to appropriate California Department of Health Care Services (DHCS) Behavioral Health Continuum Infrastructure Program (BHCIP) funding and the required local match to fund a 50 bed residential substance use disorder facility (Navigation Center) at 125 Coral Street. The project will begin in Fiscal Year 2026 and by completed in Fiscal Year 2030. The General Fund support (derived from temporary license revenues generated by the property) already budgeted in the Navigation Center Predevelopment Phase project c512504 will be shifted to this new grant funded project. 311-51-80-9990-43290 c512602-216-2007-0 State Grants Other: Navigation Center BHCIP 30,000,000 311-51-80-9990-46990 c512602-107-0-0 From General Fund: Navigation Center BHCIP 100,000 311-00-00-0000-49101 c512504-912-0-0 From General Fund: Navigation Center Predevelopment Phase -100,000 30,000,000
311-51-80-9990-57390 c512602-100-2020-0 Other Infrastructure: Navigation Center BHCIP 30,100,000 30,100,000
0 Kathryn
L. Mintz
Digitally signed by
Kathryn L. Mintz
Date: 2025.12.19
14:28:45 -08'00'
Kathryn
L. Mintz
Digitally signed by
Kathryn L. Mintz
Date: 2025.12.19
15:46:54 -08'00'
Digitally signed
by Emily Burton
Date: 2025.12.24
'10:35:36 -08'00
Elizabet
h Cabell
Digitally signed by
Elizabeth Cabell
Date: 2025.12.24
10:43:35 -08'00' 16.176
City Council
AGENDA REPORT
DATE: 12/19/2025
AGENDA OF: 01/13/2026
DEPARTMENT: Economic Development and Housing
SUBJECT: Palomar Inn Affordable Housing Preservation – Budget Adjustment (EDH) LOCATION: District 4
RECOMMENDATION: Motion to:
1) Authorize the City Manager, or designee, to execute an affordable housing preservation loan agreement, and any related documents, amendments or extensions, in a form to be approved by the City Attorney;
2) Adopt a resolution amending the Fiscal Year 2026 budget to appropriate $1,000,000 in the Affordable Housing Trust Fund (AHTF), transferred from the Housing Successor Agency, as a loan to the Palomar Inn Project; and
3) Adopt a finding of Categorical Exemption pursuant to CEQA Guideline Section 15301 (Existing Facilities).
BACKGROUND: Affordability rental restrictions are set to expire at the Palomar Inn located at 1344 Pacific Avenue on January 3, 2026. The Palomar Inn (Project) consists of 97 residential rental apartments, including 94 single room occupancy apartments and 3 one-bedroom apartments. Currently, 65 of the apartments have affordability deed restrictions that are set to expire in January. The Project has a private bank loan due later this month. Palomar Associates (Owner) is working on refinancing the existing loan. The Owner requested the City’s help to preserve affordability at the property.
DISCUSSION: Per various State and City loan requirements, the Project has had rental affordability deed restrictions in place since the 1980s. The affordability restrictions are expiring this month and the Owner would like to continue providing affordable rents at the Palomar Inn.
The Owner requested a short-term loan from the City while they work on a long-term plan to preserve affordability and make much needed rehab improvements at the property.
Below are the proposed substantive loan terms:
Loan Amount: $1,000,000
Interest Rate: 3% simple interest
Payment Schedule: Balloon payment due at the end of the loan term
17.1 Term Expiration: 3 years from loan closing
Restrictions: 3-year use agreement restricting the property to tenants up to 80% of area median income (AMI).
Other restrictions: Private bank lender is the senior lien holder During the 3-year loan term, City staff will work with the Owner on a long-term financing plan to fund rehab improvements and preserve affordability for a longer term. City staff will return to City Council before the end of the loan term to provide an update and potentially another funding request to preserve affordability as the Project moves forward with the long-term plan. Staff recommend that any request to extend the term of the loan should also be accompanied by an extension of the affordability period.
This loan, if approved by City Council, will not only preserve affordability for the 65 deed restricted apartments set to expire, but will also increase affordability at the property for the remaining 22 units, thereby restricting 100% of the rental apartments in the Project.
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. The Project is located in the Downtown Plan Area. As the Project aligns with existing plans and will not include a fundamental change to their use or environmental footprint, the Project qualifies for a Class 1 Categorical Exemption (14 CCR 15301) for existing facilities.
HEALTH IN ALL POLICIES (HiAP): HiAP is a collaborative approach to improving the health of all people by incorporating health considerations into decision-making across sectors and policy areas. HiAP is based on 3 pillars: equity, public health, and sustainability. The goal of HiAP is to ensure that all decision-makers are informed about the health, equity, and sustainability impacts of various policy options during the policy development process. The Project supports the pillar of equity by preserving 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 an additional 3 years of 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: Yes
3. The recommendation creates an on-going expenditure commitment: No FISCAL IMPACT DESCRIPTION: There is no impact to the General Fund with the approval of the recommended action. The Affordable Housing Trust Fund loan, through a transfer from the Housing Successor Agency, is preserving much-needed affordable housing; achieving many
17.2 policy goals of the City to enhance the vitality and economy of downtown. The loan has a 3% interest rate and will be repaid at the end of the 3-year term.
Prepared By:
Jessica de Wit
Housing and Community
Development Manager
Submitted By:
Bonnie Lipscomb
Deputy City Manager
Approved By:
Matt Huffaker
City Manager
ATTACHMENTS:
1. BUDGET ADJUSTMENT.PDF
17.3 City of Santa Cruz
BUDGET ADJUSTMENT REQUEST
$GPLQLVWUDWLYH$SSURYDO
)LVFDO<HDU
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25EXPENDITURE ACCOUNT TITLE
NET: $
REQUESTED BY DEPARTMENT HEAD
APPROVAL
BUDGET/ACCOUNTING
5(9,(:('
FINANCE DIRECTOR
APPROVAL
CITYMANAGER
APPROVAL
5HVR
352-(&7
352-(&7
$02817
$02817
&RXQFLO$SSURYDO
TOTAL EXPENDITURE
TOTALREVENUE
'DWH
1VSQPTF
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Clear Form
2026
1/13/26
Preservation of housing affordability at the Palomar Inn through a short term Affordable Housing Trust Fund (AHTF) loan, funded by a transfer from the Housing Successor Agency.
279-00-00-0000-49118 N/A From L&M Income Housing Fund (Housing Successor) 1,000,000 1,000,000
281-00-00-0000-59136 N/A To Affordable Housing Trust Fund 1,000,000 279-51-81-5201-56960 N/A Loans and Grants 1,000,000
2,000,000
-1,000,000
Tiffany
Lake
Digitally signed
by Tiffany Lake
Date: 2025.12.18
13:44:05 -08'00'
Kathryn
L. Mintz
Digitally signed by
Kathryn L. Mintz
Date: 2025.12.19
15:44:47 -08'00'
Digitally signed
by Emily Burton
Date: 2025.12.24
'10:34:13 -08'00
Elizabet
h Cabell
Digitally signed by
Elizabeth Cabell
Date: 2025.12.24
10:42:45 -08'00' 17.4
City Council
AGENDA REPORT
DATE: 12/23/2025
AGENDA OF: 01/13/2026
DEPARTMENT: Finance
SUBJECT: Living Wage Rate Annual Prescription for Fiscal Year 2027 (FN) LOCATION: Citywide
RECOMMENDATION: Motion to adopt a resolution upwardly indexing the prescribed minimum living wage rate by 2.7%, the amount which corresponds to San Francisco-OaklandHayward Area Consumer Price Index (CPI) for Urban Wage Earners and Clerical Workers, for the period ending August 31, 2025, to become effective July 1, 2026; and rescinding Resolution No. NS-30,433.
BACKGROUND: On February 28, 2023, the City Council adopted Ordinance No. 2023-03 pertaining to the payment of a living wage. Section 5.10.040 of the ordinance requires that the City Council adopt adjustments to minimum living wage rates and benefits annually, to be effective on July 1st. This section of the ordinance further requires that, at a minimum, the living wage rates shall be upwardly indexed each year by an amount that corresponds with the San Francisco-Oakland-Hayward area CPI for Urban Wage Earners and Clerical workers for the twelve-month period ending on October 31st, of the previous year.
DISCUSSION: This CPI data for the period ending August 31, 20251 reflects an increase of
2.7%. The Bureau of Labor Statistics (BLS) could not collect October 2025 reference period survey data due to a lapse in appropriations. BLS is unable to retroactively collect these data.
Staff recommends that this percentage be used to upwardly index the current living wage rate, effective July 1, 2026. Using this percentage to calculate the new minimum living wage rates will result in the following:
1. The minimum living wage to be paid to employees that receive the minimum leave and health insurance benefits prescribed in this resolution shall be increased by $.58 to $21.78 per hour.
2. The minimum living wage to be provided to employees who do not receive the minimum leave and health insurance benefits prescribed in this resolution shall be increased by $.63 to $23.76 per hour.
1 Note: The Bureau of Labor Statistics (BLS) could not collect October 2025 reference period survey data due to a lapse in appropriations. BLS is unable to retroactively collect these data.
18.1 3. The minimum sick leave, vacation leave and health insurance benefits which must be provided to employees in order to qualify for the $21.78 per hour wage rate shall be as follows:
a. Compensated sick leave/vacation leave: a combined twelve (12) days annually for full-time employees and prorated for employees working less than full time.
b. Uncompensated sick leave/vacation leave: a combined ten (10) days annually for full-time employees and prorated for employees working less than full time.
c. Health insurance benefits: the payment of at least $1.98 per hour towards the payment for a health insurance policy for each employee.
CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: This has no impact on the natural environment, because it does not create any physical change to the environment. Therefore, it is not considered a project under CEQA.
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. The proposed new living wage increase will ensure the health and welfare of all Santa Cruz citizens is benefited and advanced when Santa Cruz workers are paid a wage which enables them to live above the poverty line. City regulations requiring the payment of a living wage are consistent with other city regulations such as the city’s prevailing wage regulations designed to address the economic needs of low wage workers in the city.
FISCAL IMPACT:
1. The recommendation in this report impacts the General Fund: No
2. This recommendation requires a budget adjustment: No
3. The recommendation creates an on-going expenditure commitment: No FISCAL IMPACT DESCRIPTION: This rise in the minimum living wage may increase contract pricing for some service contracts; however it is not possible to determine any fiscal impact at this time.
Prepared By:
Rachel Rodriguez
Buyer I
Submitted By:
Elizabeth Cabell
Finance Director
Approved By:
Matt Huffaker
City Manager
ATTACHMENTS:
1. RESOLUTION FOR FY2027 PRESCRIPTIVE ANNUAL INCREASE TO LIVING WAGE.DOC
18.2 RESOLUTION NO. NSRESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA CRUZ ESTABLISHING MINIMUM LIVING WAGE RATES EFFECTIVE JULY 1, 2026 AND RESCINDING RESOLUTION NO. NS-30,276
WHEREAS, the City Council adopted Ordinance No. 2023-03 on February 28, 2023; and WHEREAS, the living wage ordinance, at Municipal Code Section 5.10.030 requires the payment of a living wage to all “employees” as that term is defined in the ordinance; and WHEREAS, Section 5.10.040 requires the City Council annually to prescribe by resolution the minimum living wage rates to be paid to employees pursuant to the requirements of the ordinance to become effective no later than July 1st of each year.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Santa Cruz as follows:
1. The minimum living wage to be paid to employees when said employees receive the minimum vacation leave, sick leave, and health insurance benefits prescribed in this resolution shall be $21.78 per hour.
2. The minimum living wage to be provided to employees who do not receive the minimum vacation leave, sick leave, and health insurance benefits prescribed in this resolution shall be $23.76 per hour.
3. The minimum vacation leave, sick leave, and health insurance benefits that must be provided to employees in order to qualify for the $21.78 per hour minimum living wage prescribed in this resolution shall be as follows:
a. Compensated sick leave/vacation leave: a combined twelve (12) days annually for fulltime employees and prorated for employees working less than full time. b. Uncompensated sick leave/vacation leave: a combined ten (10) days annually for fulltime employees and prorated for employees working less than full time. c. Health insurance benefits: the payment of at least $1.98 per hour towards the payment for a health insurance policy for the employee.
18.3 PASSED AND ADOPTED this 13th day of January 2026, by the following vote:
AYES:
NOES:
ABSENT:
DISQUALIFIED:
APPROVED: _____________________________
Fred Keeley, Mayor
ATTEST: _________________________________
Bonnie Bush, City Clerk Administrator
18.4 City Council
AGENDA REPORT
DATE: 12/16/2025
AGENDA OF: 01/13/2026
DEPARTMENT: Finance
SUBJECT: Liability Claims Filed Against the City of Santa Cruz (FN) RECOMMENDATION: Motion to reject the liability claims of 1) Jeffrey Marshall Paine, 2) Ann Sisco, and 3) Curron Michael-Edward Clark, and to return as late, the claims of 4) Curron Michael-Edward Clark, 5) Curron Michael-Edward Clark, and 6) Curron Michael-Edward Clark; based on staff recommendation.
BACKGROUND: N/A
DISCUSSION: I. Claims to be rejected:
1. Claimant: Jeffrey Marshall Paine
Date of occurrence: 06/20/2025
Date of claim: 11/21/2025
Amount of claim: $15,000.00
Claimant seeks reimbursement for damages to his vehicle and personal injuries allegedly resulting from a vehicle accident involving a third party vehicle.
Self-Represented
2. Claimant: Ann Sisco
Date of occurrence: 9/7/2025
Date of claim: 12/5/2025
Amount of claim: Unspecified
Claimant seeks reimbursement for damages resulting from an alleged trip and fall on a PG&E owned utility cover.
Represented by Legal Counsel
3. Claimant: Curron Michael-Edward Clark
Date of occurrence: 11/28/2025
Date of claim: 12/8/2025
19.1 Amount of claim: Unspecified
Claimant seeks damages related to alleged violations of his civil rights by SCPD.
Self-Represented
II. Claims to be returned as late:
4. Claimant: Curron Michael-Edward Clark
Date of occurrence: Unspecified
Date of claim: 12/8/2025
Amount of claim: $50,000
Claimant seeks damages related to alleged violations of his civil rights by SCPD.
Self-Represented
5. Claimant: Curron Michael-Edward Clark
Date of occurrence: 4/28/2024
Date of claim: 12/8/2025
Amount of claim: $50,000
Claimant seeks damages related to alleged violations of his civil rights by SCPD.
Self-Represented
6. Claimant: Curron Michael-Edward Clark
Date of occurrence: 4/28/2024
Date of claim: 12/8/2025
Amount of claim: Unspecified
Claimant seeks damages related to alleged violations of his civil rights by SCPD.
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 Manager
19.2 ATTACHMENTS:
None.
19.3 City Council
AGENDA REPORT
DATE: 12/23/2025
AGENDA OF: 01/13/2026
DEPARTMENT: Human Resources
SUBJECT: Outside Legal Services – Budget Adjustment (HR) LOCATION: Citywide
RECOMMENDATION: Motion to adopt a resolution to amend the Fiscal Year (FY) 2026 budget to appropriate funds in the amount of $363,394 to the Human Resources Department for outside legal services.
BACKGROUND: The Human Resources Department is responsible for managing the City’s labor relations program and administering workplace investigations involving alleged misconduct, discrimination, harassment, retaliation, and other sensitive employment matters.
These responsibilities regularly require access to specialized external legal labor counsel and qualified, independent investigators. Legal labor services support collective bargaining, grievance administration, unfair labor practice matters, disciplinary actions, policy development, and compliance with state and federal employment laws. Investigation services are necessary to ensure allegations of workplace misconduct are reviewed promptly, thoroughly, and impartially, consistent with legal requirements and best practices. In recent years, the City has experienced increased labor relations activity and a higher volume and complexity of workplace complaints requiring investigation. These trends, combined with evolving legal standards and heightened expectations for neutrality and documentation, have resulted in greater reliance on external labor counsel and investigation professionals.
DISCUSSION: The existing budget was established based on historical usage and no longer reflects current operational needs. Several factors have contributed to increased demand for these services, including but not limited to:
Negotiations of seven successor labor contracts
Expanded and more complex meet-and-confer obligations Increased grievance, disciplinary, and unfair labor practice activity A higher volume of sensitive workplace complaints requiring impartial investigation Evolving state labor and employment laws, regulatory guidance, and case law The use of external investigation services, particularly in complex or sensitive cases, supports neutrality, credibility, and legal defensibility, and helps maintain employee trust in the process.
20.1 CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: Not applicable.
HEALTH IN ALL POLICIES (HiAP): Approval of this action supports organizational health, stability, and equity by ensuring legally sound and well-informed labor relations practices that reduce workplace conflict. Access to specialized legal labor guidance promotes fairness, transparency, and due process, contributing to a more equitable, resilient, and sustainable workplace for the City workforce.
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: Approval of this action will increase the expenditure budget for outside legal labor services within the Human Resources Department. Costs will eventually be distributed to the General Fund and the City’s Enterprise Funds in accordance with the Central Service Allocation Plan.
Prepared and Submitted By:
Sara De Leon
HR Director
Approved By:
Matt Huffaker
City Manager
ATTACHMENTS:
1. BUDGET ADJUSTMENT.PDF
20.2 City of Santa Cruz
BUDGET ADJUSTMENT REQUEST
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25EXPENDITURE ACCOUNT TITLE
NET: $
REQUESTED BY DEPARTMENT HEAD
APPROVAL
BUDGET/ACCOUNTING
5(9,(:('
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APPROVAL
CITYMANAGER
APPROVAL
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$02817
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12/23/2025
Budget adjustment to appropriate funds for legal services for the Human Resources Department of the City of Santa Cruz for the remainder of FY 2026.
0 101-12-00-1230-52132 Legal Services 363,394
363,394
-363,394
Alexandra
Schmidt
Digitally signed by
Alexandra Schmidt
Date: 2025.12.23
16:42:10 -08'00'
Sara De
Leon
Digitally signed
by Sara De Leon
Date: 2025.12.23
16:44:19 -08'00'
Digitally signed
by Emily Burton
Date: 2025.12.24
'10:34:33 -08'00
Elizabet
h Cabell
Digitally signed by
Elizabeth Cabell
Date: 2025.12.24
10:43:06 -08'00' 20.3
City Council
AGENDA REPORT
DATE: 12/23/2025
AGENDA OF: 01/13/2026
DEPARTMENT: Human Resources
SUBJECT: 2025-2028 City of Santa Cruz Fire Management Association Agreement for Successor Memorandum of Understanding (HR)
LOCATION: Citywide
RECOMMENDATION: Motion to adopt a resolution approving a Total Tentative Agreement between the City of Santa Cruz and the Fire Management Association effective October 11, 2025 through July 3, 2028.
BACKGROUND: The Memorandum of Understanding (MOU) with the Fire Management Association (FMA) expired on October 10, 2025. FMA and the City have met and conferred in good faith according to the Meyers-Milias-Brown Act (MMBA) regarding wages, hours, and other terms and conditions of employment since July 24, 2025.
FMA represents classifications assigned to both 56-hour and 40-hour schedules that provide management oversight and strategy for emergency fire suppression, fire prevention, medical response services, and training across four fire stations, the lifeguard headquarters, an administrative office, and the City’s emergency operations center. The unit includes approximately 6 full-time equivalent positions, including Fire Division Chief and Battalion Chief. Approval of the successor MOU supports workforce stability in these critical roles and ensures the continuity of essential public safety services for the community.
Based on the 2025 Compensation study, the median average of total compensation for fire management classifications is 0.50% above market. The City considers classifications within 5% of the market as competitive. The 2025 compensation study includes the benchmark classification for Fire Battalion Chief.
When it comes to wages, the City considers the median market standing of the benchmarked classification and average overall standing of the group, consumer price index of the Bay Area (CPI-U), and financial resiliency in providing services long-term.
DISCUSSION: Having met and conferred in good faith in accordance with the MMBA, the City and FMA have reached a Total Tentative Agreement on a successor MOU for a term of just under two years and nine months. The typical full three-year contract term changed this cycle in order to shift contract negotiation timelines, reducing the number of MOUs being negotiated at
21.1 once. During the contract term, cost-of-living adjustments are 2.5%, 2.5%, and 2.5%. Other changes such as accruals related to holiday time are outlined in Exhibit A.
CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: Not applicable.
HEALTH IN ALL POLICIES (HiAP): Approval of the successor MOU aligns with the Public Health pillar of HiAP in that it supports workforce stability in critical public safety roles, ensuring continuity of emergency medical, fire suppression, and prevention services that protect community health and safety.
FISCAL IMPACT:
1. The recommendation in this report impacts the General Fund: Yes
2. This recommendation requires a budget adjustment: Yes
3. The recommendation creates an on-going expenditure commitment: Yes FISCAL IMPACT DESCRIPTION: Additional appropriations to account for the cost of these compensation and benefit changes will be brought comprehensively to City Council in the FY 2026 midyear budget adjustment in February 2026 and as part of FY 2027 budget.
Prepared and Submitted By:
Sara De Leon
HR Director
Approved By:
Matt Huffaker
City Manager
ATTACHMENTS:
1. RESOLUTION.DOCX
2. EXHIBIT A – TOTAL TENTATIVE AGREEMENT.PDF
21.2 RESOLUTION NO. NS-XX,XXX
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA CRUZ APPROVING A
TOTAL TENTATIVE AGREEMENT WITH THE FIRE MANAGEMENT ASSOCIATION WHEREAS, representatives of the City of Santa Cruz and Fire Management Association (FMA) have met and conferred in good faith to bargain for a successor agreements; and WHEREAS, the Total Tentative Agreement with FMA has been entered into by the respective parties and duly ratified by FMA members; and WHEREAS, the Total Tentative Agreement with FMA includes a contract term effective October 11, 2025 through June 30, 2028; and
WHEREAS, the remaining terms of the Total Tentative Agreement are attached as Exhibit A.
NOW, THEREFORE, BE IT RESOLVED that by the City Council hereby approves the Total Tentative Agreement dated December 30, 2025 and directs the preparation of the Memorandum of Understanding to include the Total Tentative Agreement to be brought before the City Council for adoption at a later City Council meeting.
PASSED AND ADOPTED this 13th day of January, 2026 by the following vote:
AYES:
NOES:
ABSENT:
DISQUALIFIED:
APPROVED: ______________________________
Fred Keeley, Mayor
ATTEST: _________________________________
Bonnie Bush, City Clerk Administrator
21.3 4934-2011-3281 v1
December 15, 2025
SUCCESSOR MOU NEGOTIATIONS
Between
CITY OF SANTA CRUZ
And
FIRE MANAGEMENT ASSOCIATION OF THE CITY OF SANTA CRUZ
CITY’S TOTAL PACKAGE TENTATIVE AGREEMENT PROPOSAL #1
The City submits this Total Package Tentative Agreement Proposal #1 pursuant to ground rule 14.
A rejection of any one of the proposals set forth below will be deemed a rejection of the Total Package Proposal in its entirety. The City reserves the right to modify any of the below proposals based on any subsequent individual proposal or any additional subsequent Total Package Proposal.
1. TERM PROPOSAL
SECTION 1.00 TERM
The term of this Memorandum of Understanding shall commence the pay period beginning October 11, 2025 and shall expire the pay period ending June 30, 2028.
2. SALARY PROPOSAL
SECTION 12.03 SALARY
Effective October 1, 2022, the salaries for represented classifications will be increased by three and one quarter percent (3.25%).
Effective September 30, 2023, the salary for represented classifications will be increased by three percent (3.00%).
Effective September 28, 2024, the salary for represented classifications will be increased by five percent (5.0%).
Effective October 1, 2022, the salary for the Division Chief classification will be increased by two percent (2.0%).
Effective the pay period that begins on October 11, 2025, or the pay period when Council approves the successor MOU in open session, whichever is later, the salary for all bargaining unit members shall be increased by an additional two and one-quarter percent (2.25%).
Effective the pay period that begins on July 4, 2026, the salary for all bargaining unit members shall be increased by an additional two and one-quarter percent (2.25%).
Docusign Envelope ID: 489B7B80-D298-4B21-B8A1-BA9D2F77DFA3
21.4 4934-2011-3281 v1
Effective the pay period that begins on July 3, 2027, the salary for all bargaining unit members shall be increased by an additional two and one-quarter percent (2.25%).
3. OPERATIONAL COMPENSATION/EMERGENCY CALLBACK PROPOSAL SECTION 12.05 OPERATIONAL COMPENSATION/EMERGENCY CALLBACK Operational Compensation – Battalion Chiefs Absence
Effective the pay period that begins July 4, 2026, if a Battalion Chief’s absence creates or contributes to overtime as a result of minimum staffing requirements, a Battalion Chief may be offered to work the absence or vacancy and be paid at one and one-half (1 ½) times the employee's current base rate of pay for actual hours worked outside the employee’sregular schedule. Battalion Chiefs and Division Chiefs may choose, in lieu of operational compensation payment, to have operational compensation hours worked converted to a compensatory time bank at the rate of one and one-half (1 ½) times the actual hours worked outside the employee's regular schedule. This provision is administered in accordance with Policy and Procedures Manual Article 5-26.
Emergency Call Back
In addition, Battalion Chief’s or Division Chiefs required to return to work for emergency call duty as determined by the Fire Chief, will be paid time and one-half of the employee’s current base rate of pay for actual hours worked outside the employee's regular schedule. Battalion Chiefs and Division Chiefs may choose, in lieu of operational compensation payment, to have operational compensation hours worked converted to a compensatory time bank at an equal rate of time and one-half.
Declared Emergencies
Battalion Chiefs and Division Chiefs will also be paid time and one-half of their current base rate of pay for actual hours worked outside the employee's regular schedule. If assigned to work for a declared disaster team or to provide coverage for Battalion Chiefs required to perform such duty.
Payment of time and one-half will be for those incidents which the City receives reimbursement from OES, FEMA, or other appropriate State or Federal agencies. Battalion Chiefs and Division Chiefs may choose, in lieu of operational compensation payment, to have operational compensation hours worked converted to a compensatory time bank at an equal rate of time and one-half.
Battalion Chiefs and Division Chiefs are designated as FLSA exempt and this compensation will not be considered PERS income, as it is considered additional duties.
Employees total compensatory time bank shall not exceed 120 hours. The use of compensatory time off shall be in accordance with Fire department policy 4-13 Vacation Selection Process For Shift Personnel. Employees must receive payment for all accrued and unused compensatory time at the time of employment separation or at the end of each calendar year.
4. SICK LEAVE PROPOSAL
Docusign Envelope ID: 489B7B80-D298-4B21-B8A1-BA9D2F77DFA3
21.5 4934-2011-3281 v1
SECTION 14.00 - SICK LEAVE
14.01 Definition
The purpose of this section is to provide paid leave time to be used by employees in the event of a non-work related illness, injury, preventative healthcare, care of an existing health condition, as victims of domestic violence, sexual assault or stalking, or the medical necessity of others as specified below. Sick leave shall not be construed to be a privilege which an employee may use at their discretion but shall be allowed only in case of necessity herein set forth.
14.02 Accrual
14.02.01 2 24-Hour Shift Personnel
All 24-hour shift personnel shall accrue sick leave at the rate of 16 hours for each full month of continuous regular service in which the employee has worked or has been in authorized leave of absence with pay.
4.02.02 40-Hours per Week Personnel
All 40-hour week shall accrue such leave at the rate of 8 hours for each full month of continuous regular service in which the employee has worked or has been in authorized leave of absence with pay.
14.02.03 Eligibility
Employees must be on paid status at least 50% of the working hours of a pay period to earn sick leave for that period.
5. SICK LEAVE INCENTIVE PROGRAM PROPOSAL
SECTION 14.04 SICK LEAVE INCENTIVE PROGRAM
City and Union agree to meet at a future date during the contract to address the Constructive Receipt issue in a separate proposal.
14.04.01 40 Hour and 56 Hour Per Week Employees
Earned sick leave hours may not be converted to cash and may be converted to CalPERS service credit upon retirement with the City of Santa Cruz.
In addition, employees may be allowed to ''bank" all hours in excess of 1,860.
Banked hours may not later be converted to cash and will be used as sick leave Docusign Envelope ID: 489B7B80-D298-4B21-B8A1-BA9D2F77DFA3
21.6 4934-2011-3281 v1
only when all other sick leave is exhausted or be converted to CalPERS service credit upon retirement.
B. Vacation Conversion
Employees with 15 or more years of regular service and a minimum sick leave balance of 150 hours for 56-hour/week schedules may elect to convert sick leave to vacation time according to the following table:
Years of Service Maximum No. of Extra Vacation Hours
15-19 24/year
20-24 36/year
25+ 48/year
Department head approval is required prior to taking vacation, and converted hours are not allowed to accumulate from one calendar year to the next.
6. BEREAVEMENT LEAVE PROPOSAL
SECTION 16.00 BEREAVEMENT LEAVE
The purpose of this section is to provide paid leave for employees when they are bereaved at the death of a family member and this loss has had a temporary effect on the employee's ability to continue daily work performance.
In accordance with the California Family Rights Act (CFRA), employees who have been employed for at least thirty (30) days, are entitled to bereavement leave. Employees shall be granted up to five (5) working days (not necessarily consecutive days) of paid bereavement leave in a calendar year to attend to necessary obligations and commitments related to the death of a family member (i.e., the employee’s spouse, registered domestic partner, child, stepchild, parent, stepparent, sibling, grandparent, parent-in-law, or sibling-in-law). In accordance with the California Family Rights Act (CFRA), employees will also be granted up to five (5) working days (not necessarily consecutive days) of unpaid bereavement leave for any additional obligations or commitments related to the death of a family member. An employee may use vacation, sick leave, and/or compensatory time off in addition to the five (5) days of paid bereavement leave, subject to approval from the Fire Chief. Employees may elect to use available sick leave, vacation leave, or other types of paid leave in order to receive pay during unpaid bereavement leave.
7. PREGNANCY DISABILITY LEAVE PROPOSAL
SECTION 17.02.02 PREGNANCY DISABILITY LEAVE
An employee may take a leave of absence up to four (4) months in length for the purpose of pregnancy disability leave. The City may request a license medical practitioner's opinion regarding any work restrictions that may exist prior to or after delivery.
Requests for pregnancy disability leave must be made in writing to the Fire Chief at least thirty (30) days in advance of the anticipated starting date. Such request must include specific begin and Docusign Envelope ID: 489B7B80-D298-4B21-B8A1-BA9D2F77DFA3
21.7 4934-2011-3281 v1
end dates for the leave. Starting dates should be as accurate as possible barring any unforeseen medical issues related to the pregnancy or earlier or later birth than expected. Any requests for extension of pregnancy disability leave must be made in writing to the Fire Chief at least ten (10) calendar days prior to the scheduled end of the existing leave.
The employee may elect to use any appropriate paid leave either before or after an approved pregnancy disability leave, within the use limitations of those leave provisions.
Any additional post-partum leave may be approved by the City Manager or his designee after consideration of the nature of the request and the operational needs of the department.
8. LONG-TERM DISABILITY PROPOSAL
18.08 Long Term Disability Insurance
The City shall contribute full cost of the City-sponsored long-term disability program. The maximum monthly benefit shall be at least $10,000.
9. DISCIPLINARY APPEALS PROCEDURE PROPOSAL
SECTION 24.00 DISCIPLINARY APPEALS PROCEDURE
24.01 Definition
Disciplinary action shall mean written reprimand, suspension (as authorized by FLSA), demotion, disciplinary reduction in salary, or discharge. The appeal procedure described herein shall apply to cases of disciplinary action affecting regular employees. It shall not be applicable to probationary employees. Employees have the right to representation at any or all stages of the appeal process.
24.02 Pre-Action Procedure
24.02.01 Step I
Prior to imposing disciplinary action which would result in a loss of salary, the supervisor shall first provide the employee a preliminary written notice of the proposed action stating the effective date, the specific grounds and particular facts upon which the action will be taken. The employee shall have access to any known written materials, reports or documents upon which the action is based. The employee shall have the right to respond to the charges within five ( 5) workdays from receipt of the notice either orally, in writing, or both to the Fire Chief.
The employee may request an extension of the time to respond for justifiable reasons.
Failure to respond within the time specified will result in the employee's waiver of their procedural rights and final action will be taken.
24.02.02 Step II
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21.8 4934-2011-3281 v1
Following a review of a proposed disciplinary action the Fire Chief, within ten (10) workdays of receiving employee's response, shall render a written decision and send it by registered mail or personal delivery to the employee. A copy shall also be mailed to the employee's representative. The written decision will include the effective date of the disciplinary action.
The employee has the right, within ten (10) workdays after receiving the decision, to file a request for appeal with the City Manager. The appeal shall be a written statement, signed by the applicant, explaining the matter appealed from, stating the action desired by the appellant, with their reasons therefore, and stating that the pre-action procedures have been exhausted.
24.03 Post-Action Appeal
24.03.01 Step III
If the employee files a timely appeal, the City Manager shall, within ten (10) workdays after receiving the appeal, designate a hearing officer who shall schedule a hearing not less than ten (10) workdays from the date the appeal is received. The hearing date itself is not required within this timeframe.
The hearing officer may conduct such independent investigation of the matter as they deem necessary to evaluate claims raised by the employee during the hearing. However, the hearing officer shall not initiate an investigation or introduce new factual findings that were not previously disclosed to the employee as part of the basis for their discipline, unless those facts were introduced by the employee during the hearing. In such cases, the hearing officer may include those facts solely to supplement the findings related to the employee’s claims. The appellant shall be given the opportunity to answer or present evidence in opposition to the findings of this independent investigation.
The appellant shall appear personally at the scheduled hearing unless physically unable to do so. The appellant or their representative may produce relevant oral or documentary evidence at the hearing.
Within fifteen (15) workdays following the hearing, the hearing officer shall render a written decision to all parties involved. The hearing officer has the authority to affirm, repeal or modify the disciplinary action.
For discipline equivalent to the severity of suspension (as authorized by FLSA) of one (1) week or less, or leave balance reduction of one (1) week or less, there shall be no appeal beyond Step III and the City Manager's decision shall be final.
24.03.02 Step IV
If the appeal (except as exempted above) is not resolved to the satisfaction of the appellant at the conclusion of Step III, the employee may appeal the decision of the City Manager to Docusign Envelope ID: 489B7B80-D298-4B21-B8A1-BA9D2F77DFA3
21.9 4934-2011-3281 v1
a neutral arbitrator, provided it so informs the City Manager in writing within ten (10) working days following receipt of the City Manager's decision.
Within ten (10) working days from the date of receipt of the appeal, the parties may mutually agree on a neutral party from an independent source to serve as an arbitrator. In the event the parties fail to agree on the neutral party, they shall immediately, thereafter jointly request the California State Mediation and Conciliation Service to submit to them a list of five (5) persons qualified and available to act as arbitrator.
If such a list is requested from the State Mediation and Conciliation Service, the parties within five (5) working days of receipt of the list, shall mutually agree upon the person on the list who shall be the arbitrator. If one person is not mutually agreed upon the parties shall within five ( 5) days after receipt of the list of names, alternately strike two (2) names from such list with the last remaining name to be the person serving as arbitrator. The party having first choice to strike a name from the list shall be determined by lot.
The arbitrator shall have no authority to add to, detract from, alter, amend, or modify any provision of this agreement, or impose on any party hereto a limitation or obligation not explicitly provided for in this agreement, or to alter any wage rate or wage structure. The decision of the arbitrator shall be rendered after the evidence and arguments are presented to them by the parties in the presence of each other and in post hearing briefs, if necessary.
The decision of the arbitrator shall be final and binding upon the parties.
The arbitrator is requested to expedite the decision as the parties normally expect a decision to be issued within fifteen (15) days after the conclusion of the hearing. The arbitrator's expenses shall be borne equally by the parties. Each party shall bear the cost of its own representation.
24.04 Firefighter Procedural Bill of Rights Act
During the period of this Memorandum of Understanding, the City and Association agree to adopt and comply with the Firefighter Procedural Bill of Rights, codified at California Government Code§§ 3250-3262, effective January 1, 2008.
10. TENTATIVE AGREEMENTS
Individual Tentative Agreements: The Parties also mutually agree to incorporate the individual tentative agreements signed by their respective bargaining teams during these negotiations for a successor MOU. All proposals exchanged by the Parties that are not included in a signed tentative agreement are hereby withdrawn.
For the City of Santa Cruz For the Fire Management Association of the City of Santa Cruz
________________________________
Sara De Leon, Lead Negotiator
____________________________________
Joshua Coleman, Lead Negotiator
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Date: Date:
________________________________
Timothy L. Davis, Co- Lead Negotiator
Date:
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1/13/2026
21.11 City Council
AGENDA REPORT
DATE: 12/23/2025
AGENDA OF: 01/13/2026
DEPARTMENT: Human Resources
SUBJECT: 2025-2028 City of Santa Cruz Supervisors Operating Engineers, Local 3 Agreement for Successor Memorandum of Understanding (HR) LOCATION: Citywide
RECOMMENDATION: Motion to adopt a resolution approving the Total Tentative Agreement between the City of Santa Cruz and the Supervisors Operating Engineers, Local 3, dated December 6, 2025 through December 8, 2028.
BACKGROUND: The Memorandum of Understanding (MOU) with the Supervisors Operating Engineers, Local 3 (OE3) expired on December 5, 2025. Supervisors OE3 and the City of Santa Cruz (City) have met and conferred in good faith according to the Meyers-Milias-Brown Act (MMBA) regarding wages, hours, and other terms and conditions of employment since September 12, 2025.
Supervisors OE3 represents a broad and diverse set of supervisory classifications assigned across multiple operating divisions within the City. Members oversee day-to-day field operations, technical services, regulatory compliance, mechanical and electrical systems, water and wastewater treatment processes, collections and distribution systems, facilities maintenance, parks and wharf operations, and various public service functions. These supervisors provide frontline leadership, staff scheduling, training, safety oversight, and operational decision-making that support essential municipal infrastructure and resident-facing services across Public Works, Water, Wastewater, Resource Recovery, Parks and Recreation, Library, and Police administrative units.
The unit includes approximately 86 active positions across forty-four unique job classifications ranging from crew leaders and field supervisors to technical supervisors for treatment plants, laboratory quality control, code compliance, fleet, mechanical/electrical shops, wharf operations, and service field teams.
Based on the 2025 Compensation study, the median average of total compensation for Supervisors OE3 classifications is 4.36% below market. The City considers classifications within 5% of the market as competitive. The 2025 compensation study includes the following benchmark classifications:
22.1 1. Chief Ranger
2. Facilities Maintenance Supervisor
3. Field Supervisor
4. Garage Services Supervisor
5. Library Assistant III
6. Parking Office Supervisor
7. Parks Field Crew Leader
8. Police Property and Evidence Supervisor
9. Police Records Supervisor
10. QA/QC Laboratory Chemist
11. Recreation Supervisor
12. Resource Recovery Supervisor
13. Senior Environmental Compliance Inspector
14. Senior Wastewater Plant Operator IV
15. Utility Supervisor
16. Wastewater Collection Field Crew Leader
17. Wastewater Facilities Electrical/Instrumentation Supervisor
18. Wastewater Facilities Mechanical Supervisor
19. Wastewater Treatment Operations Supervisor
20. Water Distribution Crew Leader IV
21. Water Distribution Supervisor IV
22. Water Facilities Field Supervisor
23. Water Facilities Mechanical Supervisor
24. Water Resources Supervisor
25. Water Treatment Supervisor IV
When it comes to wages, the City considers the median market standing of the benchmarked classification and average overall standing of the group, consumer price index of the Bay Area (CPI-U), and financial resiliency in providing services long-term.
DISCUSSION: Having met and conferred in good faith in accordance with the MMBA, the City and Supervisors OE3 have reached a Total Tentative Agreement on a successor MOU for a term of three years. During the contract term, cost-of-living adjustments are 3%, 3%, and 4% and reallocation of the 1% of the Employer Contribution for CalPERS pension costs back to the City.
Other changes such as accruals related to holiday and vacation time are outlined in Exhibit A.
CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: Not applicable.
HEALTH IN ALL POLICIES (HiAP): Approval of the successor agreements for supervisors OE3 addresses the public health pillar of HiAP by supporting operational continuity, ensuring stable leadership in managing essential City services and programs that directly affect community well-being.
FISCAL IMPACT:
1. The recommendation in this report impacts the General Fund: Yes
2. This recommendation requires a budget adjustment: Yes
3. The recommendation creates an on-going expenditure commitment: Yes
22.2 FISCAL IMPACT DESCRIPTION: Additional appropriations to account for the cost of these compensation and benefit changes will be brought comprehensively to the City Council in the FY 2026 midyear budget adjustment in February 2026 and as part of FY 2027 budget.
Prepared and Submitted By:
Sara De Leon
HR Director
Approved By:
Matt Huffaker
City Manager
ATTACHMENTS:
1. RESOLUTION.DOCX
2. EXHIBIT A – TOTAL TENTATIVE AGREEMENT.PDF
22.3 RESOLUTION NO. NS-XX,XXX
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA CRUZ APPROVING A
TOTAL TENTATIVE AGREEMENT WITH THE SUPERVISORS OPERATING ENGINEERS, LOCAL 3
WHEREAS, representatives of the City of Santa Cruz and Supervisors OE3 Association have met and conferred in good faith to bargain for a successor agreements; and WHEREAS, the Total Tentative Agreement with Supervisors OE3 has been entered into by the respective parties and duly ratified by Supervisor OE3 members; and WHEREAS, the terms of the Total Tentative Agreement are attached as Exhibit A.
NOW, THEREFORE, BE IT RESOLVED that by the City Council hereby approves the Total Tentative Agreement dated December 6, 2025 through December 8, 2028 and directs the preparation of the Memorandum of Understanding to include the Total Tentative Agreement to be brought before the City Council for adoption at a later City Council meeting.
PASSED AND ADOPTED this 13th day of January, 2026 by the following vote:
AYES:
NOES:
ABSENT:
DISQUALIFIED:
APPROVED: ______________________________
Fred Keeley, Mayor
ATTEST: _________________________________
Bonnie Bush, City Clerk Administrator
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SUCCESSOR MOU NEGOTIATIONS
Between
CITY OF SANTA CRUZ
And
SUPERVISORY EMPLOYEES OF THE CITY OF SANTA CRUZ
OPERATING ENGINEERS, LOCAL #3
CITY’S TOTAL PACKAGE TENTATIVE AGREEMENT PROPOSAL #4
JANUARY 7, 2026
The City submits this Total Package Tentative Agreement Proposal #3 pursuant to ground rule 15.
A rejection of any one of the proposals set forth below will be deemed a rejection of the Total Package Proposal in its entirety. The City reserves the right to modify any of the below proposals based on any subsequent individual proposal or any additional subsequent Total Package Proposal.
1. TERM PROPOSAL
2.00 TERM
This Memorandum of Understanding shall be effective on December 6, 2025, or when Council approves the successor MOU in open session, whichever is later, and shall expire on December 8, 2028.
Unless otherwise stated herein, all payroll related changes identified in this agreement will commence with the pay period beginning December 6, 2025, or the pay period when Council approves the successor MOU in open session, whichever is later.
2. SALARY PROPOSAL
13.00 PAY RATES AND PRACTICES
Effective the pay period that begins on December 6, 2025, or when Council approves the successor MOU in open session, whichever is later, the salary for all bargaining unit members shall be increased by three percent (3.0%).
Effective the pay period that begins on November 21, 2026, the salary for all bargaining unit members shall be increased by three percent (3.0%).
Effective the pay period that begins on December 4, 2027, the salary for all bargaining unit members shall be increased by four percent (4.0%).
3. LONGEVITY PROPOSAL
13.05 LONGEVITY
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Upon completion of ten (10) years of continuous regular service employees shall receive a two and one-half percent (2.5%) longevity pay increase. Upon completion of fifteen (15) years of continuous regular service employees shall receive an additional two percent (2%) longevity pay increase.
Effective November 21, 2026, upon completion of twenty (20) years of continuous regular service employees shall receive an additional two percent (2%) longevity pay increase. Longevity is calculated from the date of hire into a regular status position or a fully benefited special status position. It is understood that longevity pay is considered "additional compensation" for purposes of PERS and tax computations.
4. STATE DISABILITY INSURANCE PROPOSAL
NEW SECTION
Effective the pay period inclusive of December 6, 2025, or when Council approves the successor MOU in open session, whichever is later, the City will provide to represented employees CA SDI and STD Plan Option #9 (30 day EP to dovetail with LTD 90 day EP, 24-hour coverage). To cover the cost of SDI benefits, employees shall contribute 1% of their base salary through payroll deductions.
5. FIXED HOLIDAYS PROPOSAL
14.01 FIXED HOLIDAYS
Employees within the unit shall have the following specific holidays with pay:
Twelve (12) 8 Hour Holidays
New Year's Day
Martin Luther King's Birthday
Presidents' Day
César Chavez Day
Memorial Day
Independence Day
Juneteenth
Labor Day
Veterans' Day
Thanksgiving Day
Friday after Thanksgiving
Christmas Day
Four (4) Hour Holidays
The last four (4) hours of the work shift are Holiday hours for Christmas Eve.
The last four (4) hours of the work shift are Holiday hours for New Year's Eve.
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Except as provided for on Christmas Eve and New Year's Eve, when a holiday falls on Sunday, the following Monday shall be observed. When a holiday falls on Saturday, the proceeding Friday shall be observed.
6. WORKING OUT OF CLASS PROPOSAL
13. 06 WORKING OUT OF CLASSIFICATION PAY DIFFERENTIAL
The term "working out of classification" is defined as a management authorized full-time assignment on a temporary basis of an employee in a lower classification to a budgeted higher classification. Assignments will be made by the Department Head or City Manager to qualified employees assuming a significant number of duties of the higher classified position. Employees must work a minimum of one (1 ), eight (8) hour day to qualify for out-of-classification pay.
The employee so assigned shall be entitled to receive a minimum of five percent (5.0%) above the employee's current base rate of pay for another supervisory or management position.
Best efforts will be made to equally offer working out of classification opportunities to all qualified staff on a rotating basis. When a particular employee has worked out of classification for more than 90 consecutive workdays in a position that is vacant, including vacancies resulting from an employee’s long-term leave; and the assignment exceeds 90 consecutive workdays, an additional five percent (5.0%) will be added to the above pay for the duration of the assignment.
All initial working out of class assignments will be submitted as determined by the HR Director or their designee.
In accordance with the Public Employees Pension Reform Act (PEPRA), working out of classification pay is not pensionable compensation for employees who are "New Members" of CalPERS, as defined by California Government Code Section 7522.04(±).
7. HAZARDOUS MATERIAL PAY PROPOSAL
13.19 HAZARDOUS MATERIAL PAY
The City will provide a fifty ($50.00) per month premium pay for all employees who may be exposed to dangerous chemicals and/or biohazardous materials as indicated in the job classification description. The list of qualifying classifications will be confirmed at a subsequent meeting.
8. LIFE INSURANCE PROPOSAL
18.07 LIFE INSURANCE
The City shall provide a twenty-five thousand dollar ($25,000) term life insurance policy for employees.
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9. VACATION PROPOSAL
15.01 ACCRUAL
Vacation accrual will be on a monthly basis beginning at date of hire. Employees within the probationary period may use accrued paid vacation upon approval of the department head; such time will not be counted as qualifying service toward completion of the probationary period.
An employee must be in paid status for at least fifty percent (50%) of a pay period to earn their vacation accrual. Annual vacation accrual shall be based on continuous regular service, as follows:
Up to five (5) years: 80 hours
Six (6) to ten (10) years: 120 hours
Eleven (11) or more years: 160 hours plus 8 hours for each year of service after 10 years to a maximum of 200 hours
10. OVERTIME PROPOSAL
13.08 OVERTIME
The Union understands that from time to time employees may be directed to work overtime hours. To the extent possible, employees will be given advance notification. An employee may be excused from overtime work for legitimate reasons.
Overtime shall be defined as all management authorized hours in a paid status in excess of forty (40) hours per week, which are contiguous with the employee's regular work schedule, excluding voluntary training. Overtime shall be computed at the rate of one and one-half (1- 1/2) times the base hourly rate or may be converted to compensatory time off at the rate of one and one-half (1-1/2) times the hours worked.
Compensatory time off shall not be allowed to accumulate beyond one hundred sixty (160) hours at any given time. Any accrued and unused compensatory time earned during the calendar year will be paid out on the last pay date in December each year and employees will not be permitted to carry over unused compensatory hours at the conclusion of the calendar year.
Employees with accrued compensatory time off may choose from the following options:
• To use such time within a reasonable period in the same calendar year as it was earned after making the request, unless such time off will unduly disrupt the operations of the department.
• To roll over any accrued and unused compensatory time earned during the calendar year into a City-sponsored deferred compensation plan anytime during the calendar year. • To cash out all or part of the accrued and unused compensatory time anytime during the calendar year.
• Any remaining balance will be either rolled over to deferred comp or paid out as described
22.8 4925-7149-4790 v1
above on the last payday in December.
11. SHIFT DIFFERENTIAL PROPOSAL
13.07 SHIFT DIFFERENTIAL
Any employee who is required and authorized by management to work, and actually works, a regularly scheduled shift at least one hour or more of which fall between the hours of 6:00 p.m. and 6:00 a.m. shall be paid a shift differential of ninety cents ($.90) per hour or five percent (5%), whichever is greater, for each hour worked within the shift differential period of 6:00 p.m. and 6:00 a.m.
Evening differential shall not apply to:
a. Paid leave hours, including vacation, sick leave, holidays, and other paid leaves provided in Section 17.01.
b. Hours that are worked between 6:00pm and 6:00am as a result of call-back, duty assignment, or overtime.
c. Hours that are worked which weekend differential is paid.
13.07.01 Weekends
Part-time and Regular employees assigned to 24-hour operations and required and authorized by management to work a regularly scheduled shift with at least one hour or more that falls between 6:00 p.m. Friday and 6:00 a.m. Monday shall be paid a shift differential of ten percent (10%) the employee’s regular rate of pay for each hour worked within the shift differential period of 6:00 p.m. Friday and 6:00 a.m. Monday. Work on a Fixed Holiday, as outlined in Section 14.01, results in hours being banked. This provision applies to the following classifications: Senior Wastewater Plant Operator III/IV, Water Treatment Supervisor IV/V, and Wastewater Treatment Operations Supervisor.
Weekend differential shall not apply to:
A. Paid leave hours, including vacation, sick leave, holidays and other paid leaves, provided in Section 17.00-Leaves of Absence.
B. Hours that are worked between 6:00 p.m. and 6:00 a.m. as a result of call-back, duty assignment, or overtime.
13.07.02 Water Plant Lone Operator
The Water Treatment Supervisor IV/Water Treatment Supervisor V - Chief Plant Operator assigned to the Water Treatment Facility will receive fourdollars ($4.00) per hour additional shift differential subject to meeting all the conditions listed below:
22.9 4925-7149-4790 v1
A. Fully qualified to operate the Graham Hill Treatment plant without direct supervision as determined by the Superintendent of Water Treatment and Production.
B. Works at least six hours without any other qualified Treatment Operators present.
If the above conditions are met, then the shift differential will be paid for all hours actually performing the duties as the "stand-alone" Treatment Operator.
13.07.03 Wastewater Plant Lone Operator
A Senior Plant Operator assigned to the Wastewater Treatment Facility will receive four dollars ($4.00) per hour additional shift differential subject to meeting all the conditions listed below:
A. State Water Resources Control Board Grade 3 Wastewater Plant Operator Certification.
B. Fully qualified to work at the City of Santa Cruz Wastewater Treatment Plant as the Lone Operator.
C. Works at least four (4) hours alone as the only operator (except for callback responses).
If the above conditions are met, then the shift differential will be paid for all hours worked on assigned "lone operator" shift.
12. RETIREMENT PROPOSAL
13.04 RETIREMENT
13.04.01 Employees Hired on or Before May 11, 2012 (Tier I) This section 13.04.01 shall apply to employees hired on or before May 11, 2012 who are contributing members of CalPERS.
A. Final Compensation Based on the Single Highest Year
For purposes of determining a retirement benefit, final compensation for employees covered by this section 13.04.01 shall be based on the single highest year.
B. 2.0% @ 55 Pension Formula
The 2.0% @ 55 pension formula shall be available to all employees covered by this section 13.04.01 who are contributing members of CalPERS.
Additionally, the City provides the Pre-Retirement Optional Settlement 2W Death Benefit to employees covered by this section 13.04.01.
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C. Required Employee Contribution
Members covered by this section 13.04.01 will contribute the employee contribution amount established by CalPERS for the 2.0% @ 55 pension formula. The required contribution amount was seven (7.0%) as of the date of this MOU.
D. Additional Required Employee Contribution
In addition to the required employee contribution, starting with the pay period containing August 17, 2013 members covered by this section 13.04.01 will contribute an additional four percent (4.0%) (total of eleven percent (11.0%) as of the date of this MOU).
Effective the pay period that begins on November 21, 2026, employees covered by this section shall have their payment of the employer’s retirement share reduced by
1.0% (total 10.0%) on a pre-tax basis.
13.04.02 Employees Hired On or After May 12, 2012 (Tier II) This section 13.04.02 shall apply to employees hired after May 12, 2012 but on or before January 1, 2013 who are contributing members of CalPERS.
A. Final Compensation Based on Three Year Average
For purposes of determining a retirement benefit, final compensation for employees covered by this section 13.04.02 shall be based on the employee's highest three-year average.
B. 2.0% @ 60 Pension Formula
The 2.0% @ 60 pension formula shall be available to all employees covered by this section 13.04.02 who are contributing members of CalPERS.
Additionally, the City provides the Pre-Retirement Optional Settlement 2W Death Benefit to employees covered by this section 13.04.02.
C. Required Employee Contribution
Members covered by this section 13.04.02 will contribute the employee contribution amount established by CalPERS for the 2.0% @ 60 pension formula. The required contribution amount was seven percent (7.0%) as of the date of this MOU.
D. Additional Required Employee Contribution
22.11 4925-7149-4790 v1
In addition to the required employee contribution, starting with the pay period containing August 17, 2013 members covered by this section 13.04.02 will contribute an additional four percent ( 4.0%) (total of eleven percent (11.0%) as of the date of this MOU).
Effective the pay period that begins on November 21, 2026, employees covered by this section shall have their payment of the employer’s retirement share reduced by
1.0% (total 10.0%) on a pre-tax basis.
13.04.03 Employees Hired On or After January 1, 2013 (Tier III) This section 13.04.03 shall apply to employees hired on or after January 1, 2013 who are contributing members of CalPERS.
A. Final Compensation Based on Three Year Average
For purposes of determining a retirement benefit, final compensation for employees covered by this section 13.04.03 shall be based on the employee's highest three year average.
B. 2.0% @ 62 Pension Formula
The 2.0% @ 62 pension formula shall be available to all employees covered by this section 13.04.03 who are contributing new members of CalPERS.
Additionally, the City provides the Pre-Retirement Optional Settlement 2W Death Benefit to employees covered by this section 13.04.03. Employees covered by this section 13.04.03 who are classic members as defined by CalPERS may be eligible for a different pension formula.
C. Required Employee Contribution
Members covered by this section 13.04.03 will contribute the employee contribution amount established by CalPERS for their pension formula. The required contribution amount for the 2.0%@ 62 was seven and one quarter percent 7.25% as of the date of this MOU. In the event employee contribution rates are adjusted by CalPERS during the term of this MOU, the employee contribution will be recalculated based upon the updated required employee contribution rate established by CalPERS.
D. Additional Required Employee Contribution
In addition to the required employee contribution, starting with the pay period containing August 17, 2013 members covered by this section 13.04.03 will contribute an additional 4.0% (total of eleven and one quarter percent 11.25% as of the date of this MOU).
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Effective the pay period that begins on November 21, 2026, employees covered by this section shall have their payment of the employer’s retirement share reduced by 1.0% (total
10.25%) on a pre-tax basis.
13. PERFORMANCE EVALUATIONS PROPOSAL
11.02 PERFORMANCE EVALUATIONS
It is compulsory that all regular employees receive an annual written performance evaluation from their supervisors. Employees will be evaluated at the completion of their third and sixth month of service. For original and re-hire appointments, employees will receive an informal evaluation at their third month of service and a formal written evaluation at six and twelve months of service. Thereafter, all regular employees will be evaluated annually on their merit review date.
Evaluations are intended to be a summary of the employee's performance over the course of the evaluation period. Evaluations are also to be used as a tool to motivate the employee to work at their highest capacity and to communicate and document the employee's level of performance. To this end, the supervisor and the employee will meet and discuss work responsibilities, job standards and objectives, review progress and plan for the employee's future development prior to the evaluation being placed in the employee's personnel file. Supervisors will make every effort to address performance issues in a timely manner throughout the evaluation period and provide appropriate feedback to employees on an ongoing basis.
Any additions, corrections, deletions or changes on the original evaluation form require initialing by both the maker of the amendment and the employee to indicate that the changes have been discussed and understood. No evaluation shall be made on hearsay statements. Employees may also choose to discuss performance evaluations with their department heads and/or the Chief People Officer (Human Resources Director) and formally enter a response to the evaluation in their personnel file. Disputes regarding performance reviews shall not be subject to the grievance process.
14. PROBATION PROPOSAL
11.03 PROBATION
11.03.01 Probationary Period
All original and re-hire appointments shall be subject to a probationary period of twelve (12) months. Successful completion of the six-month evaluation of an original and rehire appointment qualify for a merit increase. Promotional appointments shall be subject to a probationary period of six (6) months at which they qualify for a merit increase.
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Any time spent by an employee on paid or unpaid leave exceeding five (5) consecutive workdays shall not be counted as qualifying service toward completion of the probationary period.
11.03.02 Objective of Probationary Period
The probationary period shall be regarded as part of the selection process and shall be utilized for training the new employee on work assignments and standards and observing and evaluating the employee's performance.
11.03.03 Rejection of Probationary Employee
During the probationary period, an employee may be rejected at any time by the appointing authority without the right of appeal. Notification of rejection shall be served to the probationary employee in writing.
Any promoted employee who is rejected during the probationary period shall be reinstated to the position from which promotion occurred; unless the rejection is due to discharge in which case no reinstatement shall occur.
11.03.04 Extension of Probation
All efforts will be made to sufficiently evaluate the probationary employee during the assigned period. An extension of the probationary period may, however, be recommended by the appointing authority and approved by the Chief People Officer (Human Resources Director) when good cause exists. Such extensions shall be for a specific period of time not to exceed six (6) months for original hire and re-hire appointments, and not to exceed three (3) months for promotional appointments. The employee shall be informed in writing of the reasons for the period of the extension at least seven (7) calendar days prior to the scheduled end of the probationary period.
15. LIGHT DUTY ASSIGNMENTS PROPOSAL
12.07 LIGHT DUTY ASSIGNMENTS
If an employee's medical condition temporarily precludes the performance of their normal duties and management determines modified work is available and necessary to be performed, they may, with medical authorization from the employee's personal physician, be temporarily assigned to such work for a period not to exceed six months unless an extension is approved by the Human Resources Director or their designee. No change in base pay will result from this temporary assignment.
16. SALARY RATES UPON APPOINTMENT PROPOSAL
13.02 SALARY RATES UPON APPOINTMENT
22.14 4925-7149-4790 v1
New employees shall be hired at the first step of the classification's salary range; unless a higher starting step is recommended by the appointing authority based on the employee's advance qualifications for the position and such recommendation is approved by the Human Resources Director or their designee.
Promoted employees shall be appointed to the first step in the salary range for the new classification. However, if such employee is already being paid at a rate equal to or higher than the first step of the higher range, they shall be placed at the next higher step in the new range to provide the employee an increase of at least two and one-half percent (2.5% ).
17. COMPACTION PROPOSAL
13.21 COMPACTION
The City agrees to meet and confer with the union quarterly with a pledge of preventing and addressing compaction between a supervisor and the position they supervise. The Parties will meet at least quarterly to resolve compaction and implement all applicable changes by the second full pay period of July annually. All changes, including implementation timing, must be made upon mutual agreement of the Parties.
Salary compaction is defined as any percentage less than ten percent (10%) between top step salary of the supervisory and the top step salary of the classification it primarily supervises. A list of supervisor positions and the associated positions they supervise will be discussed at the meeting.
18. ADVANCEMENT WITHIN THE RANGE PROPOSAL
13.03 ADVANCEMENT WITHIN THE RANGE
A. Advancement within a classification's salary range shall normally be granted on the employee's scheduled merit review date. Such advancements shall be based solely on meritorious job performance as documented by a satisfactory performance evaluation submitted by the department head and approved by the Chief People Officer (Human Resources Director).
B. All new and promoted employees shall be granted their first merit increase upon successful completion of the probationary period (see "Probation").
The employee shall then be eligible for subsequent merit increases after each full-year on paid status, continuing until the top of the salary range is attained.
C. Merit increases shall be from one pay step to the next higher pay step.
Increases of greater than one step may, however, be recommended by the department head when exceptional performance has been demonstrated by the employee. Increases of greater than one step must be approved by the Chief People Officer (Human Resources Director).
D. A merit increase may be denied by the department head when an employee's job performance falls below the acceptable work standards for the duties
22.15 4925-7149-4790 v1
assigned. The department head may, in such a case, recommend that the employee's work performance be reviewed again at a specific time before the next review date. If a merit increase is granted at that time, the employee's original review date shall change and they shall be eligible for the next merit increase after one year on paid status from the new review date.
E. An employee's scheduled merit review date shall be adjusted for any time spent by the employee on paid or unpaid status.
F. When an employee's position is reclassified to a classification with a higher salary range, the employee's pay shall be set at the beginning salary of the range or be placed at a salary in the new range that provides the employee a salary increase of at least five percent (5%). This increase shall have no effect on the employee's original merit review date.
19. MEDICAL BENEFITS PROPOSAL
18.01 MEDICAL BENEFITS
A. City Cafeteria Plan Contributions
The City will provide medical insurance through the California Public Employees' Retirement System (CalPERS). The City will contribute a monthly amount to CalPERS pursuant to Government Code Section 22892 of the Public Employees Medical and Hospital Care Act (PEMHCA).
In accordance with IRS Code Section 125, the City will provide a Flexible Benefits Plan ("Cafeteria Plan") to all eligible employees. If an employee elects to participate in a CalPERS medical plan, the maximum monthly City contribution*, including the PERS required minimum, shall equal 90% of the cost of the highest medical premium between the Blue Shield Access+ HMO and PERS Choice PPO plans and employees will contribute the remaining premium balance, based upon the plan level in which they are enrolled (i.e., employee only, employee plus one, or employee plus family). Employees shall pay their contribution on a pre-tax basis. In no event will the maximum monthly City contribution exceed the premium for the plan in which the employee is enrolled.
Each employee participating in a medical plan will make an additional $35.00 contribution per pay period towards the cost of health care benefits. This pre-tax contribution is made during pay periods where employee deductions for health care benefits are taken (24 pay periods).
*Note: The monthly contribution is based on the CalPERS regional pricing for the Bay Area/Sacramento area, Region 1 ). In the event an active employee relocates to another regional area, or a newly hired employee resides in another regional area, it is the City's intent to provide a contribution based on the Bay Area/Sacramento area CalPERS regional pricing (Region 1 Area regional pricing) with the understanding that in no event
22.16 4925-7149-4790 v1
will the maximum monthly City contribution exceed the premium for the plan in which the employee is enrolled.
20. TENTATIVE AGREEMENTS
Individual Tentative Agreements: The Parties also mutually agree to incorporate the individual tentative agreements signed by their respective bargaining teams during these negotiations for a successor MOU, pursuant to ground rule 15.
For the City of Santa Cruz Supervisory Employees of the City of Santa Cruz Operating Engineers, Local #3
________________________________
Sara De Leon , Lead Negotiator
Date:
____________________________________
Michael Moore, OE3 Lead Negotiator
Date:
________________________________
Timothy L. Davis, Co-Lead Negotiator
Date:
____________________________________
DC Lawson-Thomas, OE3 Vice President
Date:
22.17 City Council
AGENDA REPORT
DATE: 12/11/2025
AGENDA OF: 01/13/2026
DEPARTMENT: Public Works
SUBJECT: Neary Lagoon Tule & Sediment Removal Project 2025 (m409668) – Notice of Completion (PW)
LOCATION: District 3
RECOMMENDATION: Motion to accept the work of McNabb Construction, Inc. (Lafayette, CA) as completed per plans and specifications and authorize the filing of the Notice of Completion for the Neary Lagoon Tule & Sediment Removal Project 2025 (m409668) and authorizing the Public Works Director to sign the Notice of Completion as the Owner’s Authorized Agent.
BACKGROUND: At its June 10, 2025, meeting, City Council approved the authorization to advertise and award a contract for the Neary Lagoon Tule & Sediment Removal Project 2025.
On July 8, 2025, bid proposals were opened and reviewed by Public Works staff. On July 15, 2025, the project was awarded to lowest responsive and responsible bidder, McNabb Construction, Inc. Construction began on August 18, 2025, and included the removal of vegetation along Neary Lagoon (primarily tule) and sediment dredging.
DISCUSSION: Various areas were prioritized for dredging to support and maintain high quality habitat, stormwater flow, and access. The engineer’s estimated tule vegetation removal and sediment dredging is based on the square footage of priority areas and an assumed sediment depth to be removed. Actual sediment depths can vary from those assumed and affect the final amount of material dredged in a given year. Actual sediment tonnage removed from the lagoon cannot be precisely determined by the contractor until it is dried and hauled to the City landfill where it is weighed. A variance from the estimated tonnage to the actual tonnage dredged resulted in a net project cost increase of $90,655.02. Sediment removal is a key management activity at the lagoon to support hydraulic function of the area and provide important habitat.
The work for this project is now complete. The project has been inspected by staff and found to be completed in accordance with the specifications.
CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: The environmental review process and (Mitigated) Negative Declaration was completed in accordance with the State CEQA guidelines and the local City of Santa Cruz CEQA guidelines and procedures. The CEQA Notice of Intent (NOI) was posted on 2/8/2021 with a review period
23.1 ending on 3/9/2021. The City received minor comments from one agency that were subsequently addressed. The Notice of Determination (NOD) was filed on April 22, 2021.
HEALTH IN ALL POLICIES (HiAP): This project promotes the following Health in All Policies Conditions:
Health - Promotes access to recreational spaces with exercise opportunities (i.e. walking, running, etc.).
Sustainability - Maintains a healthy natural lagoon environment that in turn supports overall habitat and wildlife health and maintains flood control areas. The project also promotes environmental stewardship by maintaining an environment which provides the community opportunity to learn about local wildlife, birds, and fish.
Equity - Provides connectedness of urban areas to open spaces accessible to the entire 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: The total cost of the project along with the change order was $585,149.02 and was funded by the Wastewater Capital Improvement Program Fund FY 2026 budget in project m409668. There is no impact to the General Fund.
Prepared By:
Dale Cabreros
Engineering Technician
Submitted By:
Nathan Nguyen, P.E.
Director of Public Works
Approved By:
Matt Huffaker
City Manager
ATTACHMENTS:
1. NOTICE OF COMPLETION.DOCX
23.2 Notice of Completion (Revised Oct 2021)
(Space above for Recorder’s use only)
This instrument is being recorded for the benefit of the City of Santa Cruz.
No recording fee is required pursuant to Government Code § 27383.
NOTICE OF COMPLETION
(CA Civil Code Sections 8102 and 9204)
NOTICE IS HEREBY GIVEN THAT:
The undersigned is an authorized representative of the owner of the interest or estate stated below.
1. The Owner’s Name and Address. The Project owner is the City of Santa Cruz, a municipal corporation (the “City”). The City’s mailing address is 809 Center Street, Santa Cruz, California 95060. The City of Santa Cruz has the following interest in the subject Property described below: Fee Ownership.
2. Project Title and Number. The full name of the work of improvement/public works project (the “Project”) which is the subject of this Notice of Completion is: Neary Lagoon Tule & Sediment Removal Project 2025 (m409668)
3. Nature of Work Performed on the Property or Materials Furnished for the City. The Project consisted of work described as: Vegetation removal (primarily tules) and sediment dredging in Neary Lagoon
4. The general site location description or address (the “Property”) of the public improvement is located at: Neary Lagoon Park
5. Name and Address of Contractor. The Contractor on the Project is: McNabb Construction, Inc. 3527 Mt Diablo Blvd #307, Lafayette, CA 94549
6. Construction Lender. The name and address of the construction lender, if any, is: N/A
7. Date of Completion. The Project on the Property was completed on: October 3, 2025
8. The filing of this Notice of Completion was authorized by the Santa Cruz City Council Minute Order on Tuesday, January 13, 2026
DATE: ___________________
Nathan Nguyen
Director of Public Works, City of Santa Cruz
RECORDED AT THE REQUEST OF:
City of Santa Cruz, Public Works
Attn: Dale Cabreros
WHEN RECORDED MAIL TO:
City Clerk’s Department
809 Center Street, Room 9
Santa Cruz, CA 95060
23.3 Notice of Completion (Revised Oct 2021)
VERIFICATION FOR THE CITY OF SANTA CRUZ
I have read the foregoing Notice of Completion and know the contents thereof, and I certify that the same is true of my own knowledge, except as to those matters which are therein stated upon my information or belief, and as to those matters I believe it to be true. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.
Executed on ____________________at Santa Cruz, CA
Nathan Nguyen
Director of Public Works, City of Santa Cruz
23.4 Notice of Completion (Revised Oct 2021)
PROOF OF SERVICE DECLARATION
(California Civil Code § 8118)
I, Dale Cabreros, declare that I served copies of the above NOTICE OF COMPLETION on the interested parties, in the manner and at the date and place set forth below (Check One):
Direct Contractor: McNabb Construction, Inc.
3527 Mt Diablo Blvd #307, Lafayette, CA 94549
☒ REGISTERED, CERTIFIED, OR EXPRESS MAIL: by placing the Notice in a sealed envelope with postage fully prepaid and depositing the envelope in the United States mail by registered, certified, or express mail. Documentation of such service is attached herein. ☐ OVERNIGHT DELIVERY: by causing the Notice to be picked up for overnight delivery by an express service carrier. Documentation of such service is attached herein. ☐ PERSONAL DELIVERY: by causing the Notice to be personally delivered to each of the addresses above stated on the date below.
☐ CODE OF CIV. PROC. § 415.20: by leaving the Notice and mailing a copy of the Notice in the manner provided under California Code of Civil Procedure § 415.20 for service of a summons and complaint in a civil action.
I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.
Executed on January 13, 2026, at Santa Cruz, California.
Dale Cabreros
23.5 City Council
AGENDA REPORT
DATE: 12/11/2025
AGENDA OF: 01/13/2026
DEPARTMENT: Public Works
SUBJECT: Soquel Avenue Minor Striping Improvements 2025 (PW) LOCATION: Districts 1 and 2
RECOMMENDATION: Motion to:
1) Approve the Soquel Avenue Minor Striping Improvements 2025 Plan; 2) Adopt a resolution to approve the Soquel Avenue Minor Striping Improvements 2025 Plan pursuant to Government Code Section 830.6; and
3) Adopt a finding of Categorical Exemption under CEQA Guidelines 14 CCR section 15301(c) (existing facilities).
BACKGROUND: Soquel Avenue is one of the primary east-west routes through Santa Cruz, carrying approximately 22,000 vehicles per day. Over the past few years, Pure Water Soquel (PWS) has been working on the installation of a recycled water pipeline along the corridor which connects the Wastewater Treatment Plant owned by the City of Santa Cruz (City) to the Soquel Water District-owned facility on Chanticleer Avenue in the unincorporated County. The pipeline work is now complete, and PWS will be restriping the roadways where patching occurred over the new pipeline. The City has developed two minor striping enhancements at Frederick Street and Trevethan Avenue (the “Project”) to improve safety traffic flow caused by the diversions from the Murray Street Bridge closure.
DISCUSSION: The Murray Street Bridge closure has re-routed traffic to Soquel Avenue and increased the demand for westbound left turns into the Seabright neighborhood, particularly at the Soquel Avenue and Frederick Street intersection. At the same time, the eastbound through traffic along Soquel Avenue has also increased as an alternative route during construction.
Unfortunately, those two movements compete against each other for green time at the signal because they conflict with each other. As the City has worked to optimize throughput along Soquel Avenue, longer queues have been observed (people waiting for a green light) in the westbound left turn lane.
The proposed striping plan increases the length of the westbound left turn lane east of San Juan Ave by reducing the space of the shared bus stop and bike lane on the south side of the roadway.
24.1 The change to the bus stop will not impact Metro service, in-fact it may improve it, as buses will not have to wait to re-enter traffic. This condition is similar to other stops along Soquel Avenue where the bus stops partially in the bike lane and outside travel lane. Additionally, the left turn lane is set back further from the intersection to improve the lane-shift that occurs for eastbound traffic through the intersection.
The second modification is between Trevethan Avenue and Mentel Avenue, adjacent to Barrios Unidos and Community Printers. At this location there are two pinch points, one created by the two parking spaces on the northern side of the roadway and the sidewalk/property line at the northwest corner of Forest Avenue and Soquel Avenue. The proposed plan removes the two-hour parking spaces on the north side to straighten the alignment through this segment of roadway.
To compensate for the parking change, the parking regulations on Trevethan Avenue will be modified. Currently there are approximately eight unregulated parking stalls just north of Soquel Avenue before a neighborhood parking district begins at approximately 114 and 125 Trevethan Avenue. To accommodate for the two lost parking stalls on the north side of Soquel Avenue, the unregulated parking area on the east and west side of Trevethan Avenue will be modified to “2- hour Parking Monday through Saturday except Sundays and Holidays.” The parking at the frontage of 114 Trevethan Avenue will be modified to “2-hour Parking Monday through Saturday except by permit Sunday and Holidays.” In addition, the Oversized Vehicle Ordinance sign will be posted to reinforce that citywide regulation. City staff worked with Barrios Unidos and Community Printers about the parking modification and they concurred with the change.
As a result of the proposed alignment, the constraints of parked vehicles next to a narrow bike lane will be eliminated through the straightening of the bike lane on the north side of Soquel Avenue. On the south side of Soquel Avenue, a new bike buffer is proposed. The proposed bike buffer offers extra space in between the vehicles in the travel lane and cyclists in the bike lane. In addition, the proposed bike buffer offers a lane shift setback further from the intersection of Soquel Avenue and Forest Avenue for vehicles traveling eastbound. The proposed travel lane alignment is straight as vehicles travel eastbound through the Soquel Avenue and Forest Avenue intersection. The striped median on Soquel Avenue between Trevethan Avenue and Forest Avenue will be reduced in size as a result of the proposed realignment. With the reduction of the size of the median, extra space is created which results in a longer westbound left turn lane at the intersection of Soquel Avenue and Trevethan Avenue. This left turn lane will help alleviate some of the queuing that happens on Soquel Avenue traveling eastbound due to the Murray Street Bridge closure.
All improvements are designed to meet the California Manual on Uniform Traffic Control Devices (CAMUTCD), National Association of City Transportation Officials (NACTO) Urban Street Design Guide, and Caltrans Highway Design Manual (HDM).
Design Immunity
Government Code section 830.6 provides design immunity for public entities and public employees.
24.2 To establish the design immunity defense to shield the public agency from liability, the public agency must show:
A causal relationship between the plan or design and the accident; Discretionary approval of the plan or design before the construction or improvement; and Substantial evidence supporting the reasonableness of the plan or design.
Staff recommends the adoption of the attached resolution to give the City the best chance of being able to take advantage of design immunity for this Project, if there were to be an accident at the subject location.
Plans can be found on the city webpage: https://www.santacruzca.gov/Government/CityDepartments/Public-Works/Projects CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: This project is exempt from CEQA under Section 15301(c) Existing Facilities. Class 1 exemption consists of the operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities, mechanical equipment, or topographical features, involving negligible or no expansion of existing or former use. Maintenance of existing streets and other alterations, such as transit improvements and pedestrian crossings that do not create additional automobile lanes, qualify within this exemption.
HEALTH IN ALL POLICIES (HiAP): This Project promotes the Healthy Environments Health in All Policies Condition by improving roadway safety. The improvements improve the bicycling experience by removing pinch points at Trevethan Avenue and improve the roadway taper at Frederick Avenue.
FISCAL IMPACT:
1. The recommendation in this report impacts the General Fund: No
2. This recommendation requires a budget adjustment: No
3. The recommendation creates an on-going expenditure commitment: No FISCAL IMPACT DESCRIPTION: There is no general fund impact. The work will be completed by PWS.
Prepared By:
Matt Starkey, P.E.
Transportation Manager
Submitted By:
Nathan Nguyen, P.E.
Director of Public Works
Approved By:
Matt Huffaker
City Manager
ATTACHMENTS:
1. RESOLUTION.DOCX
24.3 RESOLUTION NO. NS-XX,XXX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA CRUZ APPROVING
THE DESIGN AND PLANS FOR THE CONSTRUCTION OF THE SOQUEL AVENUE MINOR STRIPING IMPROVEMENTS 2025, PURSUANT TO GOVERNMENT CODE SECTION 830.6
BE IT RESOLVED, by the City Council of the City of Santa Cruz as follows:
SECTION 1: The City Council finds and declares as follows:
A. City staff has designed and prepared the plans for the Soquel Avenue Minor Striping Improvements 2025 (Project);
B. The City Engineer has approved the completed design and plans for the Project and that construction of the Project may begin;
C. The City Council wishes to obtain the immunities set forth in Government Code §830.6 with regard to the plans and construction of the Project.
SECTION 2: Design Immunity; Authorization.
A. The City Council approves the design and plans for the Project.
B. The design approval set forth in this Resolution occurred before actual work on the Project construction commenced.
C. The approval granted by this Resolution conforms with the City's General Plan.
D. The City Engineer, or designee, is authorized to act on the City's behalf in approving any alterations or modifications of the design and plans approved by this Resolution.
E. The approval and authorization granted by this Resolution is intended to avail the City of the immunities set forth in Government Code §830.6.
SECTION 3: The City Clerk is directed to certify the adoption of this Resolution.
SECTION 4: This Resolution will become effective immediately upon adoption.
24.4 RESOLUTION NO. NS-XX,XXX
PASSED AND ADOPTED this 13th day of January, 2026, by the following vote:
AYES:
NOES:
ABSENT:
DISQUALIFIED:
APPROVED: __________________________
Fred Keeley, Mayor
ATTEST: ___________________________
Bonnie Bush, City Clerk Administrator
24.5 1
Jenna Shaffer
From: [email protected]
Sent: Monday, January 12, 2026 2:49 PM
To: Nathan Nguyen; City Council
Subject: Council meeting of 1/13/26 Item #24 Soquel Avenue Striping Dear Director and Councilmembers:
Please enhance the Soquel Avenue striping project plans by adding bike lanes across all of the intersecƟons. For example, this has been accomplished with green lanes at Ocean/Water Streets (pictured below) and with dashed lines at Soquel and Forest Aves. Doing so would alert both motorists and bicyclists to where they should be travelling through the intersecƟons in order to help avoid collisions or near misses.
This is especially important across the three most problemaƟc intersecƟons where veering is required (pictured below):
Soquel Ave. westbound across Trevathan Ave. – drivers have to veer to the leŌ to remain in their travel lanes, but not all do sufficiently to remain outside the pathway of cyclists. Soquel Ave. eastbound across Hagemann Ave. -- a similar, although less pronounced, situaƟon. Soquel Ave. eastbound across Frederick St. -- an opposite situaƟon where drivers have to veer to the right to remain in their travel lanes, but many do so prematurely into the area cyclists would be riding in.
In addiƟon to marking the pavement, warning signs (such as pictured below) could be installed as a further reminder to motorists and bicyclists to veer.
24.6 2
Westbound Soquel across Trevathan. Eastbound Soquel across Hagemann. Eastbound Soquel across Frederick. Warning sign example.
Regarding other aspects of the project: Bicyclists will welcome the removal of the two parking spaces in front of Barrios United. The bike lane adjacent to these spaces is too narrow to safely ride in without potenƟally geƫng doored. Also welcome is the buffering along a short segment of the Soquel Ave bike lane eastbound between Hagemann and Forest on the opposite side of the street.
However, it is unfortunate that space for cyclists will be narrowed on Soquel Ave. eastbound for a porƟon east of Frederick Street. Although the project plans show a standard 5 foot bike lane, about two feet are taken up by the guƩer pan, constraining the width cyclists can be comfortable riding in. When the street is next repaved, the City should extend the asphalt over the guƩer pan. This would provide cyclists with extra smooth surface to ride on. This would parallel the condiƟon on the opposite side of the street where the exposed guƩer pan is only about one foot wide.
Thanks for adding these suggested enhancements to the project plans.
Rick Hyman
24.7 City Council
AGENDA REPORT
DATE: 12/22/2025
AGENDA OF: 01/13/2026
DEPARTMENT: Water
SUBJECT: Purchase of Vac-con Vactor Truck (WT)
LOCATION: None
RECOMMENDATION: Motion to purchase a hydro-excavator truck from Vac-con (Green Cove Springs, FL) in the amount of $742,564.02 under the existing cooperative contract with Sourcewell.
BACKGROUND: The Water Department’s water distribution system is a complex network of pipes and fittings of varying materials, sizes, and ages. Water Distribution staff are available year-round to respond to system issues—including water main breaks, service line failures, and fire hydrant damage—often completing critical repairs at night, on weekends, and during holidays.
A hydro-excavator, or vactor truck, plays a key role in these emergency responses. During this type of activity, the vactor truck uses high-powered vacuum and water-jetting systems to quickly remove soil, debris, and standing water from the excavation area. This allows crews to safely expose damaged pipes, access valves, and create a clean work zone without delays. The vactor truck also helps clear clogged valve boxes, remove sediment from repair pits, and control water flow during active leaks—significantly reducing repair time and minimizing service disruptions for customers, and creating safe workspaces for employees.
Currently, staff rely on a 12-year old hydro-excavator truck that has become increasingly unreliable, labor-intensive, and costly to maintain, resulting in delays to routine maintenance and emergency response activities.
DISCUSSION: Staff recommend the purchase of a new Vac-Con vactor truck. Use of vactor trucks have become an industry standard, particularly in areas where multiple utilities are colocated below ground. The newer truck models also offer improved safety features, lower noise levels, enhanced hose controls, and better operator ergonomics.
Section 3.08.170 of the Municipal Ordinance authorizes the City to procure equipment through cooperative purchasing agreements when it is in the City’s best interest. Staff propose purchasing the Vac-Con vactor truck through a competitively awarded Sourcewell cooperative purchasing contract, which is available to more than 50,000 public agencies nationwide. Utilizing this
25.1 contract allows the City to benefit from nationally negotiated pricing, favorable terms, and significant time savings by avoiding a separate competitive bid, making it the most cost-effective and efficient method for acquiring needed equipment.
CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: The proposed Council action is not a “project” under the California Environmental Quality Act (CEQA). An activity undertaken, supported, or authorized by a public agency is a “project” subject to CEQA only if it “may cause either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.” (Pub. Resources Code, § 21065.) The purchase of equipment for routine operations and maintenance activities does not have the potential to cause physical change in the environment directly or indirectly and is therefore not a “project” under CEQA.
HEALTH IN ALL POLICIES (HiAP): This project advances the City’s HiAP goal of Healthy Environments: Natural and Built Infrastructure by maintaining stormwater inlets, sewer lines, and catch basins, ensuring proper drainage and reducing infrastructure strain.
FISCAL IMPACT:
1. The recommendation in this report impacts the General Fund: No
2. This recommendation requires a budget adjustment: No
3. The recommendation creates an on-going expenditure commitment: No FISCAL IMPACT DESCRIPTION: There is no impact to the General Fund as a result of this action. Funds for the purchase of this Hydro-Excavator Truck were included in the FY 2026 Adopted Budget and are available in the Water Operations Fund (Fund 711).
Prepared By:
Evanda Goad
Management Analyst
Submitted By:
Heidi Luckenbach
Water Director
Approved By:
Matt Huffaker
City Manager
ATTACHMENTS:
1. COOPERATIVE PURCHASING AGREEMENT.PDF
2. QUOTE.PDF
25.2 101221-VAC
Rev. 3/2021 1
Solicitation Number: RFP #101221
CONTRACT
This Contract is between Sourcewell, 202 12th Street Northeast, P.O. Box 219, Staples, MN 56479 (Sourcewell) and Vac-Con, Inc., 969 Hall Park Road, Green Cove Springs, FL 32043 (Supplier).
Sourcewell is a State of Minnesota local government unit and service cooperative created under the laws of the State of Minnesota (Minnesota Statutes Section 123A.21) that offers cooperative procurement solutions to government entities. Participation is open to eligible federal, state/province, and municipal governmental entities, higher education, K-12 education, nonprofit, tribal government, and other public entities located in the United States and Canada.
Sourcewell issued a public solicitation for Sewer Vacuum, Hydro-Excavation, and Municipal Pumping Equipment with Related Accessories and Supplies from which Supplier was awarded a contract.
Supplier desires to contract with Sourcewell to provide equipment, products, or services to Sourcewell and the entities that access Sourcewell’s cooperative purchasing contracts (Participating Entities).
1. TERM OF CONTRACT
A. EFFECTIVE DATE. This Contract is effective upon the date of the final signature below.
B. EXPIRATION DATE AND EXTENSION. This Contract expires November 29, 2025, unless it is cancelled sooner pursuant to Article 22. This Contract may be extended one additional year upon the request of Sourcewell and written agreement by Supplier.
C. SURVIVAL OF TERMS. Notwithstanding any expiration or termination of this Contract, all payment obligations incurred prior to expiration or termination will survive, as will the following: Articles 11 through 14 survive the expiration or cancellation of this Contract. All rights will cease upon expiration or termination of this Contract.
2. EQUIPMENT, PRODUCTS, OR SERVICES
A. EQUIPMENT, PRODUCTS, OR SERVICES. Supplier will provide the Equipment, Products, or Services as stated in its Proposal submitted under the Solicitation Number listed above.
25.3 101221-VAC
Rev. 3/2021 2
Supplier’s Equipment, Products, or Services Proposal (Proposal) is attached and incorporated into this Contract.
All Equipment and Products provided under this Contract must be new and the current model.
Supplier may offer close-out or refurbished Equipment or Products if they are clearly indicated in Supplier’s product and pricing list. Unless agreed to by the Participating Entities in advance, Equipment or Products must be delivered as operational to the Participating Entity’s site.
This Contract offers an indefinite quantity of sales, and while substantial volume is anticipated, sales and sales volume are not guaranteed.
B. WARRANTY. Supplier warrants that all Equipment, Products, and Services furnished are free from liens and encumbrances, and are free from defects in design, materials, and workmanship.
In addition, Supplier warrants the Equipment, Products, and Services are suitable for and will perform in accordance with the ordinary use for which they are intended. Supplier’s dealers and distributors must agree to assist the Participating Entity in reaching a resolution in any dispute over warranty terms with the manufacturer. Any manufacturer’s warranty that extends beyond the expiration of the Supplier’s warranty will be passed on to the Participating Entity.
C. DEALERS, DISTRIBUTORS, AND/OR RESELLERS. Upon Contract execution and throughout the Contract term, Supplier must provide to Sourcewell a current means to validate or authenticate Supplier’s authorized dealers, distributors, or resellers relative to the Equipment, Products, and Services offered under this Contract, which will be incorporated into this Contract by reference. It is the Supplier’s responsibility to ensure Sourcewell receives the most current information.
3. PRICING
All Equipment, Products, or Services under this Contract will be priced at or below the price stated in Supplier’s Proposal.
When providing pricing quotes to Participating Entities, all pricing quoted must reflect a Participating Entity’s total cost of acquisition. This means that the quoted cost is for delivered Equipment, Products, and Services that are operational for their intended purpose, and includes all costs to the Participating Entity’s requested delivery location.
Regardless of the payment method chosen by the Participating Entity, the total cost associated with any purchase option of the Equipment, Products, or Services must always be disclosed in the pricing quote to the applicable Participating Entity at the time of purchase.
A. SHIPPING AND SHIPPING COSTS. All delivered Equipment and Products must be properly packaged. Damaged Equipment and Products may be rejected. If the damage is not readily apparent at the time of delivery, Supplier must permit the Equipment and Products to be
25.4 101221-VAC
Rev. 3/2021 3
returned within a reasonable time at no cost to Sourcewell or its Participating Entities.
Participating Entities reserve the right to inspect the Equipment and Products at a reasonable time after delivery where circumstances or conditions prevent effective inspection of the Equipment and Products at the time of delivery. In the event of the delivery of nonconforming Equipment and Products, the Participating Entity will notify the Supplier as soon as possible and the Supplier will replace nonconforming Equipment and Products with conforming Equipment and Products that are acceptable to the Participating Entity.
Supplier must arrange for and pay for the return shipment on Equipment and Products that arrive in a defective or inoperable condition.
Sourcewell may declare the Supplier in breach of this Contract if the Supplier intentionally delivers substandard or inferior Equipment or Products.
B. SALES TAX. Each Participating Entity is responsible for supplying the Supplier with valid taxexemption certification(s). When ordering, a Participating Entity must indicate if it is a taxexempt entity.
C. HOT LIST PRICING. At any time during this Contract, Supplier may offer a specific selection of Equipment, Products, or Services at discounts greater than those listed in the Contract.
When Supplier determines it will offer Hot List Pricing, it must be submitted electronically to Sourcewell in a line-item format. Equipment, Products, or Services may be added or removed from the Hot List at any time through a Sourcewell Price and Product Change Form as defined in Article 4 below.
Hot List program and pricing may also be used to discount and liquidate close-out and discontinued Equipment and Products as long as those close-out and discontinued items are clearly identified as such. Current ordering process and administrative fees apply. Hot List Pricing must be published and made available to all Participating Entities.
4. PRODUCT AND PRICING CHANGE REQUESTS
Supplier may request Equipment, Product, or Service changes, additions, or deletions at any time. All requests must be made in writing by submitting a signed Sourcewell Price and Product Change Request Form to the assigned Sourcewell Supplier Development Administrator. This approved form is available from the assigned Sourcewell Supplier Development Administrator.
At a minimum, the request must:
x Identify the applicable Sourcewell contract number;
x Clearly specify the requested change;
x Provide sufficient detail to justify the requested change;
25.5 101221-VAC
Rev. 3/2021 4
x Individually list all Equipment, Products, or Services affected by the requested change, along with the requested change (e.g., addition, deletion, price change); and x Include a complete restatement of pricing documentation in Microsoft Excel with the effective date of the modified pricing, or product addition or deletion. The new pricing restatement must include all Equipment, Products, and Services offered, even for those items where pricing remains unchanged.
A fully executed Sourcewell Price and Product Change Request Form will become an amendment to this Contract and will be incorporated by reference.
5. PARTICIPATION, CONTRACT ACCESS, AND PARTICIPATING ENTITY REQUIREMENTS
A. PARTICIPATION. Sourcewell’s cooperative contracts are available and open to public and nonprofit entities across the United States and Canada; such as federal, state/province, municipal, K-12 and higher education, tribal government, and other public entities.
The benefits of this Contract should be available to all Participating Entities that can legally access the Equipment, Products, or Services under this Contract. A Participating Entity’s authority to access this Contract is determined through its cooperative purchasing, interlocal, or joint powers laws. Any entity accessing benefits of this Contract will be considered a Service Member of Sourcewell during such time of access. Supplier understands that a Participating Entity’s use of this Contract is at the Participating Entity’s sole convenience and Participating Entities reserve the right to obtain like Equipment, Products, or Services from any other source.
Supplier is responsible for familiarizing its sales and service forces with Sourcewell contract use eligibility requirements and documentation and will encourage potential participating entities to join Sourcewell. Sourcewell reserves the right to add and remove Participating Entities to its roster during the term of this Contract.
B. PUBLIC FACILITIES. Supplier’s employees may be required to perform work at governmentowned facilities, including schools. Supplier’s employees and agents must conduct themselves in a professional manner while on the premises, and in accordance with Participating Entity policies and procedures, and all applicable laws.
6. PARTICIPATING ENTITY USE AND PURCHASING
A. ORDERS AND PAYMENT. To access the contracted Equipment, Products, or Services under this Contract, a Participating Entity must clearly indicate to Supplier that it intends to access this Contract; however, order flow and procedure will be developed jointly between Sourcewell and Supplier. Typically, a Participating Entity will issue an order directly to Supplier or its authorized subsidiary, distributor, dealer, or reseller. If a Participating Entity issues a purchase order, it may use its own forms, but the purchase order should clearly note the applicable Sourcewell
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contract number. All Participating Entity orders under this Contract must be issued prior to expiration or cancellation of this Contract; however, Supplier performance, Participating Entity payment obligations, and any applicable warranty periods or other Supplier or Participating Entity obligations may extend beyond the term of this Contract.
Supplier’s acceptable forms of payment are included in its attached Proposal. Participating Entities will be solely responsible for payment and Sourcewell will have no liability for any unpaid invoice of any Participating Entity.
B. ADDITIONAL TERMS AND CONDITIONS/PARTICIPATING ADDENDUM. Additional terms and conditions to a purchase order, or other required transaction documentation, may be negotiated between a Participating Entity and Supplier, such as job or industry-specific requirements, legal requirements (e.g., affirmative action or immigration status requirements), or specific local policy requirements. Some Participating Entities may require the use of a Participating Addendum; the terms of which will be negotiated directly between the Participating Entity and the Supplier. Any negotiated additional terms and conditions must never be less favorable to the Participating Entity than what is contained in this Contract.
C. SPECIALIZED SERVICE REQUIREMENTS. In the event that the Participating Entity requires service or specialized performance requirements not addressed in this Contract (such as ecommerce specifications, specialized delivery requirements, or other specifications and requirements), the Participating Entity and the Supplier may enter into a separate, standalone agreement, apart from this Contract. Sourcewell, including its agents and employees, will not be made a party to a claim for breach of such agreement.
D. TERMINATION OF ORDERS. Participating Entities may terminate an order, in whole or in part, immediately upon notice to Supplier in the event of any of the following events:
1. The Participating Entity fails to receive funding or appropriation from its governing body at levels sufficient to pay for the equipment, products, or services to be purchased; or
2. Federal, state, or provincial laws or regulations prohibit the purchase or change the Participating Entity’s requirements.
E. GOVERNING LAW AND VENUE. The governing law and venue for any action related to a Participating Entity’s order will be determined by the Participating Entity making the purchase.
7. CUSTOMER SERVICE
A. PRIMARY ACCOUNT REPRESENTATIVE. Supplier will assign an Account Representative to Sourcewell for this Contract and must provide prompt notice to Sourcewell if that person is changed. The Account Representative will be responsible for:
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x Maintenance and management of this Contract;
x Timely response to all Sourcewell and Participating Entity inquiries; and x Business reviews to Sourcewell and Participating Entities, if applicable.
B. BUSINESS REVIEWS. Supplier must perform a minimum of one business review with Sourcewell per contract year. The business review will cover sales to Participating Entities, pricing and contract terms, administrative fees, sales data reports, supply issues, customer issues, and any other necessary information.
8. REPORT ON CONTRACT SALES ACTIVITY AND ADMINISTRATIVE FEE PAYMENT A. CONTRACT SALES ACTIVITY REPORT. Each calendar quarter, Supplier must provide a contract sales activity report (Report) to the Sourcewell Supplier Development Administrator assigned to this Contract. Reports are due no later than 45 days after the end of each calendar quarter. A Report must be provided regardless of the number or amount of sales during that quarter (i.e., if there are no sales, Supplier must submit a report indicating no sales were made).
The Report must contain the following fields:
x Participating Entity Name (e.g., City of Staples Highway Department); x Participating Entity Physical Street Address;
x Participating Entity City;
x Participating Entity State/Province;
x Participating Entity Zip/Postal Code;
x Participating Entity Contact Name;
x Participating Entity Contact Email Address;
x Participating Entity Contact Telephone Number;
x Sourcewell Assigned Entity/Participating Entity Number; x Item Purchased Description;
x Item Purchased Price;
x Sourcewell Administrative Fee Applied; and
x Date Purchase was invoiced/sale was recognized as revenue by Supplier.
B. ADMINISTRATIVE FEE. In consideration for the support and services provided by Sourcewell, the Supplier will pay an administrative fee to Sourcewell on all Equipment, Products, and Services provided to Participating Entities. The Administrative Fee must be included in, and not added to, the pricing. Supplier may not charge Participating Entities more than the contracted price to offset the Administrative Fee.
The Supplier will submit payment to Sourcewell for the percentage of administrative fee stated in the Proposal multiplied by the total sales of all Equipment, Products, and Services purchased
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by Participating Entities under this Contract during each calendar quarter. Payments should note the Supplier’s name and Sourcewell-assigned contract number in the memo; and must be mailed to the address above “Attn: Accounts Receivable” or remitted electronically to Sourcewell’s banking institution per Sourcewell’s Finance department instructions. Payments must be received no later than 45 calendar days after the end of each calendar quarter.
Supplier agrees to cooperate with Sourcewell in auditing transactions under this Contract to ensure that the administrative fee is paid on all items purchased under this Contract.
In the event the Supplier is delinquent in any undisputed administrative fees, Sourcewell reserves the right to cancel this Contract and reject any proposal submitted by the Supplier in any subsequent solicitation. In the event this Contract is cancelled by either party prior to the Contract’s expiration date, the administrative fee payment will be due no more than 30 days from the cancellation date.
9. AUTHORIZED REPRESENTATIVE
Sourcewell's Authorized Representative is its Chief Procurement Officer.
Supplier’s Authorized Representative is the person named in the Supplier’s Proposal. If Supplier’s Authorized Representative changes at any time during this Contract, Supplier must promptly notify Sourcewell in writing.
10. AUDIT, ASSIGNMENT, AMENDMENTS, WAIVER, AND CONTRACT COMPLETE A. AUDIT. Pursuant to Minnesota Statutes Section 16C.05, subdivision 5, the books, records, documents, and accounting procedures and practices relevant to this Agreement are subject to examination by Sourcewell or the Minnesota State Auditor for a minimum of six years from the end of this Contract. This clause extends to Participating Entities as it relates to business conducted by that Participating Entity under this Contract.
B. ASSIGNMENT. Neither party may assign or otherwise transfer its rights or obligations under this Contract without the prior written consent of the other party and a fully executed assignment agreement. Such consent will not be unreasonably withheld. Any prohibited assignment will be invalid.
C. AMENDMENTS. Any amendment to this Contract must be in writing and will not be effective until it has been duly executed by the parties.
D. WAIVER. Failure by either party to take action or assert any right under this Contract will not be deemed a waiver of such right in the event of the continuation or repetition of the circumstances giving rise to such right. Any such waiver must be in writing and signed by the parties.
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E. CONTRACT COMPLETE. This Contract represents the complete agreement between the parties. No other understanding regarding this Contract, whether written or oral, may be used to bind either party.For any conflict between the attached Proposal and the terms set out in Articles 1-22 of this Contract, the terms of Articles 1-22 will govern.
F. RELATIONSHIP OF THE PARTIES. The relationship of the parties is one of independent contractors, each free to exercise judgment and discretion with regard to the conduct of their respective businesses. This Contract does not create a partnership, joint venture, or any other relationship such as master-servant, or principal-agent.
11. INDEMNITY AND HOLD HARMLESS
Supplier must indemnify, defend, save, and hold Sourcewell and its Participating Entities, including their agents and employees, harmless from any claims or causes of action, including attorneys’ fees incurred by Sourcewell or its Participating Entities, arising out of any act or omission in the performance of this Contract by the Supplier or its agents or employees; this indemnification includes injury or death to person(s) or property alleged to have been caused by some defect in the Equipment, Products, or Services under this Contract to the extent the Equipment, Product, or Service has been used according to its specifications. Sourcewell’s responsibility will be governed by the State of Minnesota’s Tort Liability Act (Minnesota Statutes Chapter 466) and other applicable law.
12. GOVERNMENT DATA PRACTICES
Supplier and Sourcewell must comply with the Minnesota Government Data Practices Act, Minnesota Statutes Chapter 13, as it applies to all data provided by or provided to Sourcewell under this Contract and as it applies to all data created, collected, received, stored, used, maintained, or disseminated by the Supplier under this Contract.
13. INTELLECTUAL PROPERTY, PUBLICITY, MARKETING, AND ENDORSEMENT A. INTELLECTUAL PROPERTY
1. Grant of License. During the term of this Contract:
a. Sourcewell grants to Supplier a royalty-free, worldwide, non-exclusive right and license to use thetrademark(s) provided to Supplier by Sourcewell in advertising and promotional materials for the purpose of marketing Sourcewell’s relationship with Supplier.
b. Supplier grants to Sourcewell a royalty-free, worldwide, non-exclusive right and license to use Supplier’s trademarks in advertising and promotional materials for the purpose of marketing Supplier’s relationship with Sourcewell.
2. Limited Right of Sublicense. The right and license granted herein includes a limited right of each party to grant sublicenses to their respective subsidiaries, distributors, dealers,
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resellers, marketing representatives, and agents (collectively “Permitted Sublicensees”) in advertising and promotional materials for the purpose of marketing the Parties’ relationship to Participating Entities. Any sublicense granted will be subject to the terms and conditions of this Article. Each party will be responsible for any breach of this Article by any of their respective sublicensees.
3. Use; Quality Control.
a. Neither party may alter the other party’s trademarks from the form provided and must comply with removal requests as to specific uses of its trademarks or logos.
b. Each party agrees to use, and to cause its Permitted Sublicensees to use, the other party’s trademarks only in good faith and in a dignified manner consistent with such party’s use of the trademarks. Upon written notice to the breaching party, the breaching party has 30 days of the date of the written notice to cure the breach or the license will be terminated.
4. As applicable, Supplier agrees to indemnify and hold harmless Sourcewell and its Participating Entities against any and all suits, claims, judgments, and costs instituted or recovered against Sourcewell or Participating Entities by any person on account of the use of any Equipment or Products by Sourcewell or its Participating Entities supplied by Supplier in violation of applicable patent or copyright laws.
5. Termination. Upon the termination of this Contract for any reason, each party, including Permitted Sublicensees, will have 30 days to remove all Trademarks from signage, websites, and the like bearing the other party’s name or logo (excepting Sourcewell’s pre-printed catalog of suppliers which may be used until the next printing). Supplier must return all marketing and promotional materials, including signage, provided by Sourcewell, or dispose of it according to Sourcewell’s written directions.
B. PUBLICITY. Any publicity regarding the subject matter of this Contract must not be released without prior written approval from the Authorized Representatives. Publicity includes notices, informational pamphlets, press releases, research, reports, signs, and similar public notices prepared by or for the Supplier individually or jointly with others, or any subcontractors, with respect to the program, publications, or services provided resulting from this Contract.
C. MARKETING. Any direct advertising, marketing, or offers with Participating Entities must be approved by Sourcewell. Send all approval requests to the Sourcewell Supplier Development Administrator assigned to this Contract.
D. ENDORSEMENT. The Supplier must not claim that Sourcewell endorses its Equipment, Products, or Services.
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14. GOVERNING LAW, JURISDICTION, AND VENUE
The substantive and procedural laws of the State of Minnesota will govern this Contract. Venue for all legal proceedings arising out of this Contract, or its breach, must be in the appropriate state court in Todd County, Minnesota or federal court in Fergus Falls, Minnesota.
15. FORCE MAJEURE
Neither party to this Contract will be held responsible for delay or default caused by acts of God or other conditions that are beyond that party’s reasonable control. A party defaulting under this provision must provide the other party prompt written notice of the default.
16. SEVERABILITY
If any provision of this Contract is found by a court of competent jurisdiction to be illegal, unenforceable, or void then both parties will be relieved from all obligations arising from that provision. If the remainder of this Contract is capable of being performed, it will not be affected by such determination or finding and must be fully performed.
17. PERFORMANCE, DEFAULT, AND REMEDIES
A. PERFORMANCE. During the term of this Contract, the parties will monitor performance and address unresolved contract issues as follows:
1. Notification. The parties must promptly notify each other of any known dispute and work in good faith to resolve such dispute within a reasonable period of time. If necessary, Sourcewell and the Supplier will jointly develop a short briefing document that describes the issue(s), relevant impact, and positions of both parties.
2. Escalation. If parties are unable to resolve the issue in a timely manner, as specified above, either Sourcewell or Supplier may escalate the resolution of the issue to a higher level of management. The Supplier will have 30 calendar days to cure an outstanding issue.
3. Performance while Dispute is Pending. Notwithstanding the existence of a dispute, the Supplier must continue without delay to carry out all of its responsibilities under the Contract that are not affected by the dispute. If the Supplier fails to continue without delay to perform its responsibilities under the Contract, in the accomplishment of all undisputed work, the Supplier will bear any additional costs incurred by Sourcewell and/or its Participating Entities as a result of such failure to proceed.
B. DEFAULT AND REMEDIES. Either of the following constitutes cause to declare this Contract, or any Participating Entity order under this Contract, in default:
1. Nonperformance of contractual requirements, or
2. A material breach of any term or condition of this Contract.
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The party claiming default must provide written notice of the default, with 30 calendar days to cure the default. Time allowed for cure will not diminish or eliminate any liability for liquidated or other damages. If the default remains after the opportunity for cure, the non-defaulting party may:
x Exercise any remedy provided by law or equity, or
x Terminate the Contract or any portion thereof, including any orders issued against the Contract.
18. INSURANCE
A. REQUIREMENTS. At its own expense, Supplier must maintain insurance policy(ies) in effect at all times during the performance of this Contract with insurance company(ies) licensed or authorized to do business in the State of Minnesota having an “AM BEST” rating of A- or better, with coverage and limits of insurance not less than the following:
1. Workers’ Compensation and Employer’s Liability.
Workers’ Compensation: As required by any applicable law or regulation.
Employer's Liability Insurance: must be provided in amounts not less than listed below:
Minimum limits:
$500,000 each accident for bodily injury by accident
$500,000 policy limit for bodily injury by disease
$500,000 each employee for bodily injury by disease
2. Commercial General Liability Insurance. Supplier will maintain insurance covering its operations, with coverage on an occurrence basis, and must be subject to terms no less broad than the Insurance Services Office (“ISO”) Commercial General Liability Form CG0001 (2001 or newer edition), or equivalent. At a minimum, coverage must include liability arising from premises, operations, bodily injury and property damage, independent contractors, products-completed operations including construction defect, contractual liability, blanket contractual liability, and personal injury and advertising injury. All required limits, terms and conditions of coverage must be maintained during the term of this Contract.
Minimum Limits:
$1,000,000 each occurrence Bodily Injury and Property Damage $1,000,000 Personal and Advertising Injury
$2,000,000 aggregate for Products-Completed operations
$2,000,000 general aggregate
3. Commercial Automobile Liability Insurance. During the term of this Contract, Supplier will maintain insurance covering all owned, hired, and non-owned automobiles in limits of liability not less than indicated below. The coverage must be subject to terms
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no less broad than ISO Business Auto Coverage Form CA 0001 (2010 edition or newer), or equivalent.
Minimum Limits:
$1,000,000 each accident, combined single limit
4. Umbrella Insurance. During the term of this Contract, Supplier will maintain umbrella coverage over Employer’s Liability, Commercial General Liability, and Commercial Automobile.
Minimum Limits:
$2,000,000
5. Network Security and Privacy Liability Insurance. During the term of this Contract, Supplier will maintain coverage for network security and privacy liability. The coverage may be endorsed on another form of liability coverage or written on a standalone policy. The insurance must cover claims which may arise from failure of Supplier’s security resulting in, but not limited to, computer attacks, unauthorized access, disclosure of not public data – including but not limited to, confidential or private information, transmission of a computer virus, or denial of service.
Minimum limits:
$2,000,000 per occurrence
$2,000,000 annual aggregate
Failure of Supplier to maintain the required insurance will constitute a material breach entitling Sourcewell to immediately terminate this Contract for default.
B. CERTIFICATES OF INSURANCE. Prior to commencing under this Contract, Supplier must furnish to Sourcewell a certificate of insurance, as evidence of the insurance required under this Contract. Prior to expiration of the policy(ies), renewal certificates must be mailed to Sourcewell, 202 12th Street Northeast, P.O. Box 219, Staples, MN 56479 or sent to the Sourcewell Supplier Development Administrator assigned to this Contract. The certificates must be signed by a person authorized by the insurer(s) to bind coverage on their behalf.
Failure to request certificates of insurance by Sourcewell, or failure of Supplier to provide certificates of insurance, in no way limits or relieves Supplier of its duties and responsibilities in this Contract.
C. ADDITIONAL INSURED ENDORSEMENT AND PRIMARY AND NON-CONTRIBUTORY INSURANCE CLAUSE. Supplier agrees to list Sourcewell and its Participating Entities, including their officers, agents, and employees, as an additional insured under the Supplier’s commercial general liability insurance policy with respect to liability arising out of activities, “operations,” or “work” performed by or on behalf of Supplier, and products and completed operations of Supplier. The policy provision(s) or endorsement(s) must further provide that coverage is
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primary and not excess over or contributory with any other valid, applicable, and collectible insurance or self-insurance in force for the additional insureds.
D. WAIVER OF SUBROGATION. Supplier waives and must require (by endorsement or otherwise) all its insurers to waive subrogation rights against Sourcewell and other additional insureds for losses paid under the insurance policies required by this Contract or other insurance applicable to the Supplier or its subcontractors. The waiver must apply to all deductibles and/or self-insured retentions applicable to the required or any other insurance maintained by the Supplier or its subcontractors. Where permitted by law, Supplier must require similar written express waivers of subrogation and insurance clauses from each of its subcontractors.
E. UMBRELLA/EXCESS LIABILITY/SELF-INSURED RETENTION. The limits required by this Contract can be met by either providing a primary policy or in combination with umbrella/excess liability policy(ies), or self-insured retention.
19. COMPLIANCE
A. LAWS AND REGULATIONS. All Equipment, Products, or Services provided under this Contract must comply fully with applicable federal laws and regulations, and with the laws in the states and provinces in which the Equipment, Products, or Services are sold.
B. LICENSES. Supplier must maintain a valid and current status on all required federal, state/provincial, and local licenses, bonds, and permits required for the operation of the business that the Supplier conducts with Sourcewell and Participating Entities.
20. BANKRUPTCY, DEBARMENT, OR SUSPENSION CERTIFICATION
Supplier certifies and warrants that it is not in bankruptcy or that it has previously disclosed in writing certain information to Sourcewell related to bankruptcy actions. If at any time during this Contract Supplier declares bankruptcy, Supplier must immediately notify Sourcewell in writing.
Supplier certifies and warrants that neither it nor its principals are presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from programs operated by the State of Minnesota; the United States federal government or the Canadian government, as applicable; or any Participating Entity. Supplier certifies and warrants that neither it nor its principals have been convicted of a criminal offense related to the subject matter of this Contract. Supplier further warrants that it will provide immediate written notice to Sourcewell if this certification changes at any time.
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21. PROVISIONS FOR NON-UNITED STATES FEDERAL ENTITY PROCUREMENTS UNDER
UNITED STATES FEDERAL AWARDS OR OTHER AWARDS
Participating Entities that use United States federal grant or FEMA funds to purchase goods or services from this Contract may be subject to additional requirements including the procurement standards of the Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, 2 C.F.R. § 200. Participating Entities may have additional requirements based on specific funding source terms or conditions. Within this Article, all references to “federal” should be interpreted to mean the United States federal government.
The following list only applies when a Participating Entity accesses Supplier’s Equipment, Products, or Services with United States federal funds.
A. EQUAL EMPLOYMENT OPPORTUNITY. Except as otherwise provided under 41 C.F.R. § 60, all contracts that meet the definition of “federally assisted construction contract” in 41 C.F.R. § 60-
1.3 must include the equal opportunity clause provided under 41 C.F.R. §60-1.4(b), in accordance with Executive Order 11246, “Equal Employment Opportunity” (30 FR 12319, 12935, 3 C.F.R. §, 1964-1965 Comp., p. 339), as amended by Executive Order 11375, “Amending Executive Order 11246 Relating to Equal Employment Opportunity,” and implementing regulations at 41 C.F.R. § 60, “Office of Federal Contract Compliance Programs, Equal Employment Opportunity, Department of Labor.” The equal opportunity clause is incorporated herein by reference.
B. DAVIS-BACON ACT, AS AMENDED (40 U.S.C. § 3141-3148). When required by federal program legislation, all prime construction contracts in excess of $2,000 awarded by nonfederal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. § 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 C.F.R. § 5, “Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction”). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. The non-federal entity must place a copy of the current prevailing wage determination issued by the Department of Labor in each solicitation. The decision to award a contract or subcontract must be conditioned upon the acceptance of the wage determination. The non-federal entity must report all suspected or reported violations to the federal awarding agency. The contracts must also include a provision for compliance with the Copeland “Anti-Kickback” Act (40 U.S.C. § 3145), as supplemented by Department of Labor regulations (29 C.F.R. § 3, “Contractors and Subcontractors on Public Building or Public Work Financed in Whole or in Part by Loans or Grants from the United States”). The Act provides that each contractor or subrecipient must be prohibited from inducing, by any means, any person employed in the construction, completion, or repair of public work, to give up any part of the compensation to which he or she is otherwise entitled. The non-federal entity must report all suspected or reported violations to the federal awarding agency. Supplier must be in compliance with all applicable Davis-Bacon Act provisions.
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C. CONTRACT WORK HOURS AND SAFETY STANDARDS ACT (40 U.S.C. § 3701-3708). Where applicable, all contracts awarded by the non-federal entity in excess of $100,000 that involve the employment of mechanics or laborers must include a provision for compliance with 40 U.S.C. §§ 3702 and 3704, as supplemented by Department of Labor regulations (29 C.F.R. § 5).
Under 40 U.S.C. § 3702 of the Act, each contractor must be required to compute the wages of every mechanic and laborer on the basis of a standard work week of 40 hours. Work in excess of the standard work week is permissible provided that the worker is compensated at a rate of not less than one and a half times the basic rate of pay for all hours worked in excess of 40 hours in the work week. The requirements of 40 U.S.C. § 3704 are applicable to construction work and provide that no laborer or mechanic must be required to work in surroundings or under working conditions which are unsanitary, hazardous or dangerous. These requirements do not apply to the purchases of supplies or materials or articles ordinarily available on the open market, or contracts for transportation or transmission of intelligence. This provision is hereby incorporated by reference into this Contract. Supplier certifies that during the term of an award for all contracts by Sourcewell resulting from this procurement process, Supplier must comply with applicable requirements as referenced above.
D. RIGHTS TO INVENTIONS MADE UNDER A CONTRACT OR AGREEMENT. If the federal award meets the definition of “funding agreement” under 37 C.F.R. § 401.2(a) and the recipient or subrecipient wishes to enter into a contract with a small business firm or nonprofit organization regarding the substitution of parties, assignment or performance of experimental, developmental, or research work under that “funding agreement,” the recipient or subrecipient must comply with the requirements of 37 C.F.R. § 401, “Rights to Inventions Made by Nonprofit Organizations and Small Business Firms Under Government Grants, Contracts and Cooperative Agreements,” and any implementing regulations issued by the awarding agency. Supplier certifies that during the term of an award for all contracts by Sourcewell resulting from this procurement process, Supplier must comply with applicable requirements as referenced above.
E. CLEAN AIR ACT (42 U.S.C. § 7401-7671Q.) AND THE FEDERAL WATER POLLUTION CONTROL ACT (33 U.S.C. § 1251-1387). Contracts and subgrants of amounts in excess of $150,000 require the non-federal award to agree to comply with all applicable standards, orders or regulations issued pursuant to the Clean Air Act (42 U.S.C. § 7401- 7671q) and the Federal Water Pollution Control Act as amended (33 U.S.C. § 1251- 1387). Violations must be reported to the Federal awarding agency and the Regional Office of the Environmental Protection Agency (EPA).
Supplier certifies that during the term of this Contract will comply with applicable requirements as referenced above.
F. DEBARMENT AND SUSPENSION (EXECUTIVE ORDERS 12549 AND 12689). A contract award (see 2 C.F.R. § 180.220) must not be made to parties listed on the government wide exclusions in the System for Award Management (SAM), in accordance with the OMB guidelines at 2 C.F.R. §180 that implement Executive Orders 12549 (3 C.F.R. § 1986 Comp., p. 189) and 12689 (3 C.F.R. § 1989 Comp., p. 235), “Debarment and Suspension.” SAM Exclusions contains the names
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of parties debarred, suspended, or otherwise excluded by agencies, as well as parties declared ineligible under statutory or regulatory authority other than Executive Order 12549. Supplier certifies that neither it nor its principals are presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from participation by any federal department or agency.
G. BYRD ANTI-LOBBYING AMENDMENT, AS AMENDED (31 U.S.C. § 1352). Suppliers must file any required certifications. Suppliers must not have used federal appropriated funds to pay any person or organization for influencing or attempting to influence an officer or employee of any agency, a member of Congress, officer or employee of Congress, or an employee of a member of Congress in connection with obtaining any federal contract, grant, or any other award covered by 31 U.S.C. § 1352. Suppliers must disclose any lobbying with non-federal funds that takes place in connection with obtaining any federal award. Such disclosures are forwarded from tier to tier up to the non-federal award. Suppliers must file all certifications and disclosures required by, and otherwise comply with, the Byrd Anti-Lobbying Amendment (31 U.S.C. § 1352).
H. RECORD RETENTION REQUIREMENTS. To the extent applicable, Supplier must comply with the record retention requirements detailed in 2 C.F.R. § 200.333. The Supplier further certifies that it will retain all records as required by 2 C.F.R. § 200.333 for a period of 3 years after grantees or subgrantees submit final expenditure reports or quarterly or annual financial reports, as applicable, and all other pending matters are closed.
I. ENERGY POLICY AND CONSERVATION ACT COMPLIANCE. To the extent applicable, Supplier must comply with the mandatory standards and policies relating to energy efficiency which are contained in the state energy conservation plan issued in compliance with the Energy Policy and Conservation Act.
J. BUY AMERICAN PROVISIONS COMPLIANCE. To the extent applicable, Supplier must comply with all applicable provisions of the Buy American Act. Purchases made in accordance with the Buy American Act must follow the applicable procurement rules calling for free and open competition.
K. ACCESS TO RECORDS (2 C.F.R. § 200.336). Supplier agrees that duly authorized representatives of a federal agency must have access to any books, documents, papers and records of Supplier that are directly pertinent to Supplier’s discharge of its obligations under this Contract for the purpose of making audits, examinations, excerpts, and transcriptions. The right also includes timely and reasonable access to Supplier’s personnel for the purpose of interview and discussion relating to such documents.
L. PROCUREMENT OF RECOVERED MATERIALS (2 C.F.R. § 200.322). A non-federal entity that is a state agency or agency of a political subdivision of a state and its contractors must comply with Section 6002 of the Solid Waste Disposal Act, as amended by the Resource Conservation
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and Recovery Act. The requirements of Section 6002 include procuring only items designated in guidelines of the Environmental Protection Agency (EPA) at 40 C.F.R. § 247 that contain the highest percentage of recovered materials practicable, consistent with maintaining a satisfactory level of competition, where the purchase price of the item exceeds $10,000 or the value of the quantity acquired during the preceding fiscal year exceeded $10,000; procuring solid waste management services in a manner that maximizes energy and resource recovery; and establishing an affirmative procurement program for procurement of recovered materials identified in the EPA guidelines.
M. FEDERAL SEAL(S), LOGOS, AND FLAGS. The Supplier not use the seal(s), logos, crests, or reproductions of flags or likenesses of Federal agency officials without specific pre-approval.
N. NO OBLIGATION BY FEDERAL GOVERNMENT. The U.S. federal government is not a party to this Contract or any purchase by an Participating Entity and is not subject to any obligations or liabilities to the Participating Entity, Supplier, or any other party pertaining to any matter resulting from the Contract or any purchase by an authorized user.
O. PROGRAM FRAUD AND FALSE OR FRAUDULENT STATEMENTS OR RELATED ACTS. The Contractor acknowledges that 31 U.S.C. 38 (Administrative Remedies for False Claims and Statements) applies to the Supplier’s actions pertaining to this Contract or any purchase by a Participating Entity.
P. FEDERAL DEBT. The Supplier certifies that it is non-delinquent in its repayment of any federal debt. Examples of relevant debt include delinquent payroll and other taxes, audit disallowance, and benefit overpayments.
Q. CONFLICTS OF INTEREST. The Supplier must notify the U.S. Office of General Services, Sourcewell, and Participating Entity as soon as possible if this Contract or any aspect related to the anticipated work under this Contract raises an actual or potential conflict of interest (as described in 2 C.F.R. Part 200). The Supplier must explain the actual or potential conflict in writing in sufficient detail so that the U.S. Office of General Services, Sourcewell, and Participating Entity are able to assess the actual or potential conflict; and provide any additional information as necessary or requested.
R. U.S. EXECUTIVE ORDER 13224. The Supplier, and its subcontractors, must comply with U.S.
Executive Order 13224 and U.S. Laws that prohibit transactions with and provision of resources and support to individuals and organizations associated with terrorism.
S. PROHIBITION ON CERTAIN TELECOMMUNICATIONS AND VIDEO SURVEILLANCE SERVICES OR EQUIPMENT. To the extent applicable, Supplier certifies that during the term of this Contract it will comply with applicable requirements of 2 C.F.R. § 200.216.
25.19 101221-VAC
Rev. 3/2021 18
T. DOMESTIC PREFERENCES FOR PROCUREMENTS. To the extent applicable, Supplier certifies that during the term of this Contract will comply with applicable requirements of 2 C.F.R. § 200.322.
22. CANCELLATION
Sourcewell or Supplier may cancel this Contract at any time, with or without cause, upon 60 days’ written notice to the other party. However, Sourcewell may cancel this Contract immediately upon discovery of a material defect in any certification made in Supplier’s Proposal. Cancellation of this Contract does not relieve either party of financial, product, or service obligations incurred or accrued prior to cancellation.
Sourcewell Vac-Con, Inc.
By: __________________________ By: __________________________ Jeremy Schwartz M.J. DuBois, President, DuCo, LLC
Title: Chief Procurement Officer Title: Authorized Contract Administrator Date: ________________________ Date: ________________________ Approved:
By: __________________________
Chad Coauette
Title: Executive Director/CEO
Date: ________________________
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Bid Number: RFP 101221 Vendor Name: DuCo, LLC
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City Council
AGENDA REPORT
DATE: 12/22/2025
AGENDA OF: 01/13/2026
DEPARTMENT: Water
SUBJECT: Introduce for Publication an Ordinance Amending Chapter 16.02 of the Santa Cruz Municipal Code Restricting the Irrigation of Nonfunctional Turf (WT)
LOCATION: County (Water Service Area)
RECOMMENDATION: Motion to:
1) Introduce for publication an ordinance amending Chapter 16.02 of the Santa Cruz Municipal Code restricting the irrigation of nonfunctional turf; and 2) Adopt a finding of categorical exemption pursuant to California Environmental Quality Act (CEQA) Guidelines Section 15307 (Actions by Regulatory Agencies for Protection of Natural Resources) and Section 15308 (Actions by Regulatory Agencies for Protection of the Environment).
BACKGROUND: On October 23, 2023, Governor Newsom signed into law Assembly Bill (AB) 1572, which restricts the irrigation of nonfunctional turf (ornamental lawn) statewide. AB 1572 prohibits using potable water to irrigate nonfunctional turf on commercial, industrial, institutional (CII) properties and homeowners’ association (HOA) common areas. The legislation will be phased in beginning in 2027, with compliance deadlines for various property types as follows:
January 1, 2027: Properties owned by local governments, local or regional public agencies, and public water systems.
January 1, 2028: All other institutional properties and all commercial and industrial properties.
January 1, 2029: All common areas of properties of HOAs, common interest developments, and community service organizations or similar entities. January 1, 2031: Properties owned by local governments that are within state-designated disadvantaged communities. (Deadline is January 1, 2031, or when state funding becomes available to support conversion of turf to climate-appropriate landscapes, whichever is later).
26.1 AB 1572 also requires public water suppliers, including the City of Santa Cruz Water Department, to update their regulations, ordinances, or policies to include the requirements of AB 1572—updates must be completed on or before January 1, 2027.
The city has already demonstrated a strong history of successful water conservation and efficiency practices and continues to meet and exceed water use thresholds set by the State, such as SB X7-7 and Urban Water Use Objective reporting. AB 1572 applies to water suppliers statewide regardless of their existing water use patterns.
DISCUSSION: In compliance with the requirements of AB 1572, the Water Department is proposing revisions to Chapter 16.02 of the Municipal Code (Water Waste Prohibition and Other Water Use Regulations) to incorporate required irrigation restrictions, compliance timelines, and definitions. The Water Department has also developed a policy to address AB 1572 requirements, which mirrors the existing water waste enforcement policy. The Municipal Code updates and policy were developed by staff from the Customer Assistance, Customer Service, and Engineering sections (Utility Services Manager, Principal Planner, Associate Planner, Management Analyst, and Program Analyst).
Staff initiated outreach to inform customers of the coming irrigation restrictions. To date, outreach has targeted key government and CII customers, including City departments, County of Santa Cruz, City of Capitola, UCSC, and large commercial customers such as Santa Cruz Seaside Company and Capitola Mall. The City’s Community Relations Specialist for the Water Department has been engaged to support current and future outreach. The outreach effort will expand to additional CII customers and HOAs as future compliance deadlines approach.
CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: Staff has performed a preliminary environmental assessment of this project and has determined that it falls within the Categorical Exemption set forth in 14 CCR 15307 which exempts actions by regulatory agencies for protection of natural resources, because the project is intended to assure the maintenance, restoration, or enhancement of a natural resource (i.e., water resources). The project also falls within the Categorical Exemption set forth in 14 CCR 15308, which exempts actions by regulatory agencies for protection of the environment, because the project is intended to assure the maintenance, restoration, enhancement or protection of the environment.
Furthermore, Staff has determined that none of the exceptions to Categorical Exemptions set forth in the CEQA Guidelines, section 15300.2 apply to this project.
HEALTH IN ALL POLICIES (HiAP): The proposed Municipal Code changes advance water use efficiency, consistent with the Health in All Policies pillar of sustainability. The Municipal Code changes also support Measure M-8 of the City’s 2030 Climate Action Plan, which is to promote efficient municipal water consumption.
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: Water use and associated revenue may decrease as customers comply with non-functional turf irrigation restrictions. Non-functional turf currently served by the City is relatively limited and impacts, while not fully know yet, are likely to.
26.2 Enforcement of non-functional turf requirements would be conducted alongside existing water waste enforcement activities and would be absorbed by existing staff. Additionally, the regulation may spur projects by other City departments if their properties contain non-functional turf.
Prepared By:
Jennifer Kidson
Associate Planner II
Submitted By:
Heidi Luckenbach
Water Director
Approved By:
Matt Huffaker
City Manager
ATTACHMENTS:
1. DRAFT ORDINANCE.DOC
2. CHAPTER 16.02-TRACK CHANGES.PDF
26.3 ORDINANCE NO. 2026-XX
AN ORDINANCE OF THE CITY OF SANTA CRUZ AMENDING MUNICIPAL CODE CHAPTER 16.02 – WATER WASTE PROHIBITION AND OTHER WATER USE
REGULATIONS, ADOPTING AMENDMENTS TO RESTRICT THE IRRIGATION OF
NONFUNCTIONAL TURF
WHEREAS, Assembly Bill (AB) 1572 was passed in 2023 and amended the California Water Code to prohibit the use of potable water for irrigation of nonfunctional turf on commercial, institutional, and industrial properties, as well as on common areas of homeowners’ associations and similar entities; and
WHEREAS, AB 1572 established phased compliance deadlines based on property type, with the first compliance deadline being January 1, 2027 for properties owned by local governments, local or regional public agencies, and public water systems; and WHEREAS, AB 1572 also requires public water systems, including the City of Santa Cruz, to revise their regulations, ordinances, or policies governing water service to include the requirements of AB 1572 no later than January 1, 2027.
BE IT ORDAINED by the City Council of the City of Santa Cruz as follows:
Section 1. Incorporation of Recitals. The foregoing recitals are found to be true and correct, and are incorporated by this reference into this action.
Section 2. Chapter 16.02 of the Santa Cruz Municipal Code is hereby amended to read as follows:
16.02.010 PURPOSE.
The purpose of this chapter is to ensure that the water supply of the city of Santa Cruz is put to maximum beneficial use and that waste or unreasonable use or unreasonable method of use of water be prevented and to support implementation of state required urban water use restrictions when local supply conditions do not support implementation of the water shortage contingency plan described in Chapter 16.01.
16.02.020 APPLICATION OF REGULATIONS.
The provisions of this chapter shall apply to all persons using water, both in and outside the city and within city water service areas, regardless of whether any person using water shall have a contract for water service with the city. Notwithstanding other code provisions inconsistent with this chapter, the provisions of this chapter shall supersede and prevail until termination of this chapter.
26.4 ORDINANCE NO. 2026-XX
16.02.030 DEFINITIONS.
For the purpose of this chapter, the following words shall have the meanings set forth below:
(a) “Commercial water user” means a water user that provides or distributes a product or service. (b) “Common area” means that portion of a common interest development or of a property owned or managed by a homeowners’ association or a community service organization or similar entity that is not assigned or allocated to the exclusive use of the occupants of an individual dwelling unit within the property.
(c) “Common interest development” means any of the following:
1. A community apartment project.
2. A condominium project.
3. A planned development.
4. A stock cooperative.
(d) “Community service organization or similar entity” means a nonprofit entity, other than an association, that is organized to provide services to residents of the common interest development or to the public in addition to the residents, to the extent community common area or facilities are available to the public. “Community service organization or similar entity” does not include an entity that has been organized solely to raise moneys and contribute to other nonprofit organizations that are qualified as tax exempt under Section 501(c)(3) of the Internal Revenue Code and that provide housing or housing assistance.
(e) “Community space” means an area designated by a property owner or a governmental agency to accommodate human foot traffic for civic, ceremonial, or other community events or social gatherings.
(f) “Director” means the director of the water department of the city of Santa Cruz, or his or her designated representative.
(g) “Disadvantaged community” means a community with an annual median household income that is less than 80 percent of the statewide annual median household income. (h) “Drip irrigation” means low-flow point specific irrigation systems that apply water directly to plant root zones through emitters, low volume microspray devices that are components of a drip irrigation system, and soaker hoses.
(i) “Homeowners’ association” means a nonprofit corporation or unincorporated association created for the purpose of managing a common interest development. (j) “Industrial water user” means a water user that is primarily a manufacturer or processor of materials as defined by the North American Industry Classification System code sectors 31 to 33, inclusive, or an entity that is a water user primarily engaged in research and development.
26.5 ORDINANCE NO. 2026-XX
(k) “Institutional water user” means a water user dedicated to public service. This type of user includes, among other users, higher education institutions, schools, courts, churches, hospitals, government facilities, and nonprofit research institutions. (l) “Nonfunctional turf” includes, but is not limited to:
1. Turf that is solely ornamental and not regularly used for human recreational purposes or to accommodate civic, ceremonial, or other community events or social gatherings.
2. Turf located within street rights-of-way and parking lots.
3. Turf enclosed by fencing or other barriers to permanently preclude human access for recreation or assembly.
(m) “Person” means any individual, firm, partnership, association, corporation, or political entity. (n) “Potable water” means water that is suitable for human consumption. (o) “Recycled water” means water which, as a result of treatment of waste, is suitable for a direct beneficial use or a controlled use that would not otherwise occur and is therefore considered a valuable resource.
(p) “Turf” means a living ground cover surface of mowed grass. (q) “Water” means any water obtained from the water department of the city of Santa Cruz.
16.02.040 REGULATIONS.
(a) Water Waste Prohibitions. It is unlawful for any person to use water for any of the following:
1. Fire Hydrants. Use of water from any fire hydrant unless specifically authorized by permit from the city, except by regularly constituted fire protection agencies for fire suppression purposes, or for other authorized uses, including distribution system flushing, fire flow testing, and filling of approved vehicles for sewer system flushing, storm drain maintenance, and street sweeping purposes.
2. Watering/Irrigation. The watering of grass, lawn, groundcover, shrubbery, open ground, crops and trees, including agricultural irrigation, in a manner or to an extent which allows excess water to run to waste.
3. Plumbing Leaks. The escape of water through leaks, breaks, or malfunction within the water user’s plumbing or distribution system for any period of time within which such break or leak should reasonably have been discovered and corrected. It shall be presumed that a period of twenty-four hours after the water user discovers such break, leak or malfunction, or receives notice from the city of such condition, whichever occurs first, is a reasonable time within which to correct such condition or to make arrangements for correction.
26.6 ORDINANCE NO. 2026-XX
4. Washing of Exterior Surfaces. The washing of sidewalks, walkways, driveways, parking lots, patios, or other exterior surfaces unless the hose is equipped with an automatic shutoff nozzle.
5. Cleaning of Structures and Vehicles. The cleaning of building exteriors, mobile homes, cars, boats, and recreational vehicles unless the hose is equipped with an automatic shutoff nozzle.
6. Fountains. The operation of an ornamental fountain, unless such water is recycled in the fountain.
7. Cooling. The use of water in new ice-making machines and any other new mechanical equipment that utilizes a single pass cooling system to remove and discharge heat to the sanitary sewer. Water used for all cooling purposes shall be recycled.
8. Commercial Car Washes. The washing of vehicles at a commercial car wash unless the facility utilizes water recycling equipment, or operates on a timer for a limited time period and shuts off automatically at the expiration of the time period.
9. Construction. The use of potable water for dust control or soil compaction purposes in construction activities where there is a reasonably available source of reclaimed water appropriate for such use.
10. The indiscriminate running of water or washing with water not otherwise prohibited in this section, which is wasteful, and without reasonable purpose.
11. Use of potable water to irrigate turf, lawns, gardens, or ornamental landscaping between 10:00 a.m. and 6:00 p.m. unless by drip irrigation, or by hand watering with a quick acting positive shut off nozzle. (Exceptions may be made by the director for professional gardeners where there is no ability to not water between 10:00 a.m. and 6:00 p.m.).
12. (a) The use of potable water for the irrigation of nonfunctional turf located on commercial, industrial, and institutional properties (other than a cemetery), and on properties of homeowners’ associations, common interest developments, and community service organizations or similar entities is prohibited as of the following dates:
(1) All properties owned by the Department of General Services, beginning January 1, 2027.
(2) All properties owned by local governments, local or regional public agencies, and public water systems, beginning January 1, 2027.
(3) All other institutional properties and all commercial and industrial properties, other than cemeteries, beginning January 1, 2028.
26.7 ORDINANCE NO. 2026-XX
(4) All common areas of properties of homeowners’ associations, common interest developments, and community service organizations or similar entities, beginning January 1, 2029.
(5) All properties owned by local governments, local public agencies, and public water systems in a disadvantaged community, beginning January 1, 2031, or the date upon which a state funding source is made available to fund conversion of nonfunctional turf on these properties to climate-appropriate landscapes, whichever is later. (b) Notwithstanding subdivision (a), the use of potable water is not prohibited by this section to the extent necessary to ensure the health of trees and other perennial nonturf plantings, or to the extent necessary to address an immediate health and safety need. (b) Imposition of State Mandated Restrictions. From time to time the city may require additional water use restrictions in order to comply with state mandated restrictions on water use to address state-wide drought conditions when local supply conditions do not warrant implementation of the Water Shortage Contingency Plan. The water director shall provide notification to city council and the public before any such restrictions are put into effect. Such restrictions may include, but are not limited to:
1. Landscape Irrigation. To prevent unreasonable use of water and to promote water conservation, the number of days per week on which landscape irrigation is allowed may be limited and/or specific watering days may be assigned on which landscape irrigation is allowed.
2. Nonfunctional Turf. To prevent the unreasonable use of water and to promote water conservation, the use of potable water for nonfunctional turf by commercial, industrial, or institutional users (as defined at 23 CCR 996) may be restricted or prohibited. The use of water necessary to ensure the health of trees and other perennial nonturf landscaping is not prohibited.
3. A prohibition on serving drinking water to any customer, unless expressly requested, by a restaurant, hotel, cafe, cafeteria, or other public place where food is sold, served, or offered for sale.
4. The use of potable water for washing sidewalks, driveways, buildings, structures, patios, parking lots, or other hard surfaced areas, except in cases where health and safety are at risk.
5. The use of potable water for street cleaning or construction site preparation purposes, unless no other method can be used or as needed to protect the health and safety of the public.
6. The application of water to irrigate turf and ornamental landscapes during and within forty-eight hours after measurable rainfall of at least one-fourth of one inch of rain. In determining whether measurable rainfall of at least one-fourth of one inch of rain occurred in a given area, enforcement may be based on records of the National Weather Service, the
26.8 ORDINANCE NO. 2026-XX
closest CIMIS station to the parcel, or any other reliable source of rainfall data available to the entity undertaking enforcement of this subsection.
7. The use of potable water for irrigation of ornamental turf on public street medians.
16.02.050 REMEDIES FOR VIOLATIONS.
(a) Administrative Enforcement. Any person, firm, partnership, association, corporation, political entity or other water department customer violating any provision of this chapter may be subject to the administrative enforcement provisions, and assessed administrative penalties, in accordance with the enforcement provisions of Section 16.01.110 and 16.01.120. An administrative penalty imposed pursuant to this subsection may be appealed in accordance with Section 16.01.100(b). (b) Disconnection.
1. Any person in violation of the provisions of this chapter who fails to take corrective action within fifteen days of receiving written notification of the violation may be subject to disconnection of water service or installation of a water flow restrictor as deemed appropriate by the director or designee. Prior to disconnection or installation of water flow restrictor, reasonable notice and an opportunity to cure shall be given. Upon disconnection of water service a written notice shall be served upon the violator, or conspicuously posted at the entrance of the violator’s premises, and shall state the time, place and general description of the violation and the method by which reconnection can be accomplished.
2. Where water service is disconnected, as authorized above, it shall be immediately reconnected upon correction of the condition or activity and the payment of the reconnection charge in an amount specified by resolution of the city council. (c) Infraction Citation. Consistent with applicable law (including 23 CCR 995(e)), any person violating this chapter shall be deemed guilty of an infraction punishable by a fine of up to five hundred dollars for each day in which the violation occurs. Any fine imposed pursuant to this subsection is in addition to, and does not supersede or limit, any other remedies, civil or criminal, including those provided for in Title 4 of the Santa Cruz Municipal Code. Each and every day a violation of this chapter exists constitutes a separate and distinct offense for which enforcement action may be taken.
16.02.060 CITATION AUTHORITY.
All peace officers and persons authorized by law to issue citations within the water service area shall, in conjunction with duties imposed by the law, diligently enforce the provisions of this chapter. Pursuant to the provisions of Section 836.5 of the State Penal Code, the water department director and water department employees designated by the director are hereby designated and authorized to issue citations for enforcement of this chapter.
26.9 ORDINANCE NO. 2026-XX
Section 3. This ordinance shall take effect and be added to the City’s Municipal Code thirty (30) days after final adoption. The nonfunctional turf irrigation restrictions shall commence January 1, 2027, as provided in Section 16.02.040.
PASSED FOR PUBLICATION this 13th day of January, 2026, by the following vote:
AYES:
NOES:
ABSENT:
DISQUALIFIED:
APPROVED: ______________________________
Fred Keeley, Mayor
ATTEST: _________________________________
Bonnie Bush, City Clerk Administrator
PASSED FOR FINAL ADOPTION this 27th day of January, 2026, by the following vote:
AYES:
NOES:
ABSENT:
DISQUALIFIED:
APPROVED: ______________________________
Fred Keeley, Mayor
ATTEST: _________________________________
Bonnie Bush, City Clerk Administrator
This is to certify that the above and
foregoing document is the original
of Ordinance No. 2026-xx and that
it has been published or posted in
accordance with the Charter of the
City of Santa Cruz.
________________________________
Bonnie Bush, City Clerk Administrator
26.10 Santa Cruz Municipal Code
Chapter 16.02 WATER WASTE PROHIBITION AND
OTHER WATER USE REGULATIONS
Chapter 16.02
WATER WASTE PROHIBITION AND OTHER WATER USE REGULATIONS Sections:
16.02.010 Purpose.
16.02.020 Application of regulations.
16.02.030 Definitions.
16.02.040 Regulations.
16.02.050 Remedies for violations.
16.02.060 Citation authority.
16.02.010 PURPOSE.
The purpose of this chapter is to ensure that the water supply of the city of Santa Cruz is put to maximum beneficial use and that waste or unreasonable use or unreasonable method of use of water be prevented and to support implementation of state required urban water use restrictions when local supply conditions do not support implementation of the water shortage contingency plan described in Chapter 16.01.
16.02.020 APPLICATION OF REGULATIONS.
The provisions of this chapter shall apply to all persons using water, both in and outside the city and within city water service areas, regardless of whether any person using water shall have a contract for water service with the city. Notwithstanding other code provisions inconsistent with this chapter, the provisions of this chapter shall supersede and prevail until termination of this chapter.
16.02.030 DEFINITIONS.
For the purpose of this chapter, the following words shall have the meanings set forth below:
(a) “Commercial water user” means a water user that provides or distributes a product or service. (b) “Common area” means that portion of a common interest development or of a property owned or managed by a homeowners’ association or a community service organization or similar entity that is not assigned or allocated to the exclusive use of the occupants of an individual dwelling unit within the property. (c) “Common interest development” means any of the following:
1. A community apartment project.
2. A condominium project.
3. A planned development.
4. A stock cooperative.
(d) “Community service organization or similar entity” means a nonprofit entity, other than an association, that is organized to provide services to residents of the common interest development or to the public in addition to the residents, to the extent community common area or facilities are available to the public. “Community service organization or similar entity” does not include an entity that has been organized solely to raise moneys and contribute to other nonprofit organizations that are qualified as tax exempt under Section 501(c)(3) of the Internal Revenue Code and that provide housing or housing assistance. (e) “Community space” means an area designated by a property owner or a governmental agency to accommodate human foot traffic for civic, ceremonial, or other community events or social gatherings. (f)(a) “Director” means the director of the water department of the city of Santa Cruz, or his or her designated representative.
26.11 Santa Cruz Municipal Code
Chapter 16.02 WATER WASTE PROHIBITION AND
OTHER WATER USE REGULATIONS
(g) “Disadvantaged community” means a community with an annual median household income that is less than 80 percent of the statewide annual median household income. (bh) “Drip irrigation” means low-flow point specific irrigation systems that apply water directly to plant root zones through emitters, low volume microspray devices that are components of a drip irrigation system, and soaker hoses. (ci) “Homeowners’ association” means a nonprofit corporation or unincorporated association created for the purpose of managing a common interest development.
(j) “Industrial water user” means a water user that is primarily a manufacturer or processor of materials as defined by the North American Industry Classification System code sectors 31 to 33, inclusive, or an entity that is a water user primarily engaged in research and development.
(k) “Institutional water user” means a water user dedicated to public service. This type of user includes, among other users, higher education institutions, schools, courts, churches, hospitals, government facilities, and nonprofit research institutions.
(l) “Nonfunctional turf” means turfincludes, but is not limited to:
1. Turf that is solely ornamental and not regularly used for human recreational purposes or to accommodate for civic, ceremonial, or other community events. “Nonfunctional turf” does not include sports fields and turf that is regularly used for or social gatherings.
2. Turf located within street rights-of-way and parking lots.
3. Turf enclosed by fencing or other barriers to permanently preclude human recreational purposes or access for civicrecreation or community eventsassembly.
(dm) “Person” means any individual, firm, partnership, association, corporation, or political entity. (e)(n) “Potable water” means water that is suitable for human consumption. (o) “Recycled water” means water which, as a result of treatment of waste, is suitable for a direct beneficial use or a controlled use that would not otherwise occur and is therefore considered a valuable resource. (p) “Turf” means a living ground cover surface of mowed grass. (q) “Water” means any water obtained from the water department of the city of Santa Cruz.
16.02.040 REGULATIONS.
(a) Water Waste Prohibitions. It is unlawful for any person to use water for any of the following:
1. Fire Hydrants. Use of water from any fire hydrant unless specifically authorized by permit from the city, except by regularly constituted fire protection agencies for fire suppression purposes, or for other authorized uses, including distribution system flushing, fire flow testing, and filling of approved vehicles for sewer system flushing, storm drain maintenance, and street sweeping purposes.
2. Watering/Irrigation. The watering of grass, lawn, groundcover, shrubbery, open ground, crops and trees, including agricultural irrigation, in a manner or to an extent which allows excess water to run to waste.
3. Plumbing Leaks. The escape of water through leaks, breaks, or malfunction within the water user’s plumbing or distribution system for any period of time within which such break or leak should reasonably have been discovered and corrected. It shall be presumed that a period of twenty-four hours after the water user discovers such break, leak or malfunction, or receives notice from the city of such condition, whichever occurs first, is a reasonable time within which to correct such condition or to make arrangements for correction.
4. Washing of Exterior Surfaces. The washing of sidewalks, walkways, driveways, parking lots, patios, or other exterior surfaces unless the hose is equipped with an automatic shutoff nozzle.
26.12 Santa Cruz Municipal Code
Chapter 16.02 WATER WASTE PROHIBITION AND
OTHER WATER USE REGULATIONS