CITY COUNCIL AGENDA
Regular Meeting - June 9, 2026
Council Chambers
809 Center Street
Santa Cruz
12:30 P.M. CLOSED SESSION
1:15 P.M. ORAL COMMUNICATIONS, CONSENT, CONSENT PUBLIC HEARINGS,
GENERAL BUSINESS AND PUBLIC HEARINGS
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Press *9 on your phone to “raise your hand” when the Mayor calls for public comment. It will be your turn to speak when the Mayor calls on you. Press *6 to unmute yourself. The timer will then be set.
Correspondence to be included in the agenda packet must be received by 5:00 pm on Monday, June 8, 2026
PLEASE NOTE:
Council may take a break(s) as needed.
Requests for extra speaking time on items other than Oral Communications must be made by 5:00 p.m. on Sunday, June 7th by emailing the Mayor and the City Clerk.
Approval will be confirmed via email.
[email protected] [email protected]
June 9, 2026 City Council 2
The City of Santa Cruz does not discriminate against persons with disabilities. Out of consideration for people with chemical sensitivities we ask that you attend fragrance free. Upon request, the agenda can be provided in a format to accommodate special needs. Additionally, if you wish to attend this public meeting and will require assistance such as an interpreter for American Sign Language, Spanish, or other special equipment, please call the City Clerk’s Department at 420-5030 at least five days in advance so that we can arrange for such special assistance, or email [email protected]. The Cal-Relay system number: 1-800-735-2922.
Si desea asistir a esta reunión pública y necesita ayuda - como un intérprete de lenguaje de señas americano, español u otro equipo especial - favor de llamar al Departamento de la Secretaría de la Ciudad al 420-5030 al menos cinco días antes para que podamos coordinar dicha asistencia especial o envié un correo electrónico a [email protected]. El número del sistema Cal-Relay es: 1-800-735-2922.
Agenda and Agenda Packet Materials: The City Council agenda and the complete agenda packet containing public records, which are not exempt from disclosure pursuant to the California Public Records Act, are available for review on the City’s website: www.santacruzca.gov/councilmeetings and at the Office of the City Clerk located at 809 Center Street, Room 8, Santa Cruz, California, during normal business hours.
Agenda Materials Submitted after Publication of the Agenda Packet: Pursuant to Government Code §54957.5, public records related to an open session agenda item submitted after distribution of the agenda packet are available at the same time they are distributed or made available to the legislative body on the City’s website at: www.santacruzca.gov/councilmeetings and are also available for public inspection at the Office of the City Clerk, 809 Center Street Room 8, Santa Cruz, California, during normal business hours, and at the Council meeting.
Need more information? Contact the City Clerk’s office at 831-420-5030. 12:30 PM
Statements of Disqualification
Public Comment on Closed Session Items
Closed Session
1. Conference With Legal Counsel – Liability Claims (Government Code §54956.95)
1) Claimant: David Allen Hill
2) Claimant: Rudolf Wories
3) Claimant: Sanders Yixuan Tan
4) Claimant: Bailey James Manoff
Claims against the City of Santa Cruz
June 9, 2026 City Council 3
Closed Session (continued)
2. Real Property Negotiations (Government Code §54956.8) Property: 17-E Municipal Wharf
APN: 007-331-09
Owner: City of Santa Cruz
City Negotiator: Bonnie Lipscomb
Negotiating Parties: City of Santa Cruz and Socksmith Design, Inc.
Under Negotiation: Price, terms of payment, or both
3. Conference With Legal Counsel – Anticipated Litigation (Government Code §54956.9(d)(2))
Significant exposure to litigation (one potential case to be discussed)
4. Conference With Legal Counsel – Anticipated Litigation (Government Code §54956.9(d)(4))
Initiation of litigation (one potential case to be discussed) June 9, 2026 City Council 4
City Council
1:15 PM
Call to Order
Roll Call
Oral Communications - Members of the public may address Council on matters not on the agenda, but within the jurisdiction of the Council. 30 minutes is allocated for Oral Communications. No extra time for groups will be granted.
Presentations
5. Mayoral Proclamation Declaring June 13, 2026 as Juneteenth Jubilation Day
6. Shingu Delegation Report Back
The below presentation will be heard at or around 4:00 p.m.
7. CityServe Volunteer Awards
Presiding Officer's Announcements
Statements of Disqualification
Additions and Deletions
City Attorney Report on Closed Session
Council Meeting Calendar
8. The City Council will review the meeting calendar attached to the agenda and revise it as necessary.
June 9, 2026 City Council 5
Consent Agenda
9. Minutes of the May 26, 2026 City Council Meeting (CC) LOCATION: None
Motion to approve as submitted.
10. Resolution Directing Staff to Submit Ordinance No. 2025-18 Related to Extending the Active Life of Permits to the Coastal Commission (CD/ED)
LOCATION: 2, 3, 4, and 6
Motion to adopt a resolution directing staff to submit Ordinance No. 2025-18 to the California Coastal Commission for their certification.
11. First Amendment to the Professional Services Agreement for Emergency Shelter Transportation Program Operations and Management (CM)
LOCATION: District 1
Motion to authorize the City Manager to execute the First Amendment to the Professional Services Agreement, in a form approved by the City Attorney and pending adoption of the FY 2027 budget with Community Bridges/Lift Line, for transportation operations with the Emergency Shelter Program in the amount of $465,125. The Director of Homelessness Response and Community Programs is authorized to approve and execute change orders.
12. Children’s Fund Oversight Committee Funding Recommendations for the Allocation of the FY 2027 and FY 2028 Funds (CM)
LOCATION: Citywide
Motion to approve the Children’s Fund Oversight Committee funding recommendations for the allocation of the FY 2027 and FY 2028 Funds.
June 9, 2026 City Council 6
Consent Agenda (continued)
13. Cooperative Retail Management Business Real Property Improvement District Assessments for FY 2027 (ED)
LOCATION: District 4
Motion to:
1) Approve the FY 2026/27 Annual Report/Plan prepared by the Downtown Management Corporation; and
2) Adopt the Resolution of Intention to levy a Cooperative Retail Management Business Real Property Improvement District Assessment for FY 2027 and schedule a public hearing for June 23, 2026 on the levy of the assessments for FY 2027.
14. Ocean Street Beautification Project – Authorization to Bid and Award an Installation of Landscape Design Contract and Authorization to Execute a Public Art Contract Amendment with Idea Fabrication Labs Santa Cruz, LLC (ED)
LOCATION: District 1
Motion to:
1) Authorize the solicitation of bids and award a landscaping contract, in a form to be approved by the City Attorney, in an amount within Ocean Street Beautification Project budget (c512001) (an amount not to exceed $525,000);
2) Approve the Ocean Street Beautification Project Concept Plans, and authorize the City Manager, or designee, to approve final landscaping improvement plans and specifications and execute a contract, in a form to be approved by the City Attorney, for landscaping improvements;
3) Authorize the City Manager, or designee, to execute an amendment with Idea Fabrication Labs Santa Cruz, LLC, in a form to be approved by the City Attorney, to produce the public art, in an amount of $32,405, for a total public art contract not to exceed $126,635; and 4) Adopt a finding of Categorical Exemption pursuant to CEQA Guidelines Sections 15301 (Existing Facilities); 15302 (Replacement or Reconstruction), 15303 (New Construction or Conversation of Small Structures), and 15304 (Minor Alterations to Land).
June 9, 2026 City Council 7
Consent Agenda (continued)
15. Amended and Restated Municipal Wharf Lease Agreement with Socksmith Design, Inc. for City-Owned Commercial Space at 17-E Municipal Wharf (ED)
LOCATION: District 4
Motion to:
1) Approve and authorize the City Manager to execute an Assignment and Assumption of Lease Agreement whereby Sockshop & Shoe Company, Inc. (Assignor) agrees to assign all of Assignor’s rights, title, obligations and interest in the Wharf Lease Agreement dated February 1, 2017 to Socksmith Design, Inc. (Assignee), in a form approved by the City Attorney, for the commercial retail space located at 17-E Municipal Wharf;
2) Approve and authorize the City Manager to execute the Amended and Restated Municipal Wharf Lease Agreement with Socksmith Design, Inc., and any documents, amendments or extensions of a nonsubstantive nature, in a form approved by the City Attorney, for the commercial retail space located at 17-E Municipal Wharf; 3) Approve and authorize the City Manager to execute a Memorandum of Lease, in a form approved by the City Attorney, to be recorded in the Santa Cruz County Recorder’s Office; and
4) Adopt a finding of categorical exemption pursuant to the following CEQA guidelines: 14 CCR 15301 (Existing Facilities) and 14 CCR 15061(b)(3) (Common Sense Exemption).
16. Owners Representative Contract for the Coral Street Substance Use Disorder Navigation Center (ED)
LOCATION: District 5
Motion to:
1) Authorize the City Manager, or designee, to execute a contract with Ausonio Incorporated for Owners Representative services, in an amount not to exceed $405,593, and any related documents in a form to be approved by the City Attorney; and
2) Authorize the Deputy City Manager, or designee, to execute amendments or change orders with Ausonio Incorporated within the approved budget of the Navigation Center BHCIP Project (c512602).
June 9, 2026 City Council 8
Consent Agenda (continued)
17. Harvey West Studios (119 Coral Street) and Future Residential Substance Use Disorder Navigation Center Site (125 Coral Street) – Easements Modifications and Removals (ED)
LOCATION: District 5
Motion to:
1) Adopt a resolution to: (a) Authorize the City Manager to approve proposed new utility, emergency access, and ingress egress easements and property rights modifications necessary for the development and operation of Harvey West Studios (119 Coral Street) and the City’s future Residential Substance Use Disorder Navigation Center (125 Coral Street), in a form to be approved by City Attorney, including the execution of separate instruments, agreements, a reciprocal easement agreement, and any other such documents related to easements needed to facilitate development and operation of the above project sites, and (b) Authorize the City Manager to approve and execute the reconveyance of existing parking, utility, emergency access and ingress egress easement agreements that are in conflict with the proposed new easements and execution of new easement agreements needed to facilitate development and operation on the above project sites, in a form to be approved by City Attorney; and
2) Find that the actions are exempt under CEQA Guidelines Section 15305 - Minor Alterations in Land Use Limitations.
18. Liability Claims Filed Against the City of Santa Cruz (FN) Motion to reject the liability claims of 1) David Allen Hill, 2) Rudolf Wories, and 3) Sanders Yixuan Tan; and to return as late claim of 4) Bailey James Manoff based on staff recommendation.
June 9, 2026 City Council 9
Consent Agenda (continued)
19. General Obligation Refunding Bonds - Tax Rate Authorization (FN) LOCATION: Citywide
Motion to adopt a resolution setting the tax rate for FY 2027 with respect to the City's General Obligation Refunding Bonds.
20. Proposition 4 GANN Appropriations Limit Adjustment Factors (FN) LOCATION: Citywide
Motion to:
1) Adopt a resolution amending the calculation of the City’s Proposition 4 Appropriations Limit (GANN Limit) based on the adopted budget for FY 2026 and rescinding Resolution No. NS-30,524; and
2) Adopt a resolution approving the selection of the annual adjustment factors to be utilized in the calculation of the City’s Proposition 4 Appropriations Limit (GANN Limit) based on the adopted budget for FY 2027, with amendments thereto, if any.
21. Santa Cruz Firefighters, I.A.F.F. Local 1716 of the City of Santa Cruz Memorandum of Understanding (HR) LOCATION: Citywide
Motion to adopt the successor Memorandum of Understanding (MOU) for the International Association of Firefighters Local 1716 (Local 1716) of the City of Santa Cruz effective September 27, 2025 through June 30, 2028.
22. Fire Management Association of the City of Santa Cruz Memorandum of Understanding (HR) LOCATION: Citywide
Motion to adopt the successor Memorandum of Understanding (MOU) for the Fire Management Association (FMA) of the City of Santa Cruz effective October 11, 2025 through June 30, 2028.
June 9, 2026 City Council 10
Consent Agenda (continued)
23. Santa Cruz Police Officers’ Association of the City of Santa Cruz Memorandum of Understanding (HR)
LOCATION: Citywide
Motion to adopt the successor Memorandum of Understanding for Santa Cruz Police Officers’ Association (POA) of the City of Santa Cruz effective March 14, 2026 through March 23, 2029.
24. 2025 Santa Cruz Wharf End Interim Repair Project (c302612) - Notice of Completion (PR)
LOCATION: District 4
Motion to:
1) Accept the work of Jilk Heavy Construction (Brea, CA) as completed per plans and specifications;
2) Authorize the filing of the Notice of Completion for the 2025 Santa Cruz Wharf End Interim Repair Project (c302612); and
3) Authorize the Parks and Recreation Director to sign the Notice of Completion as the Owner’s Authorized Agent.
25. Depot Bike Park – Phase II of Bike Park Renovation (c302237) (PR) LOCATION: District 4
Motion to:
1) Approve the design, plans, and specifications for the Depot Bike Park – Phase II of Bike Park Renovation Project (c302237). Authorize the Parks & Recreation Director, or designee, to act on the City’s behalf in approving modifications of the Council approved design; 2) Award a contract to procure and install bike ramps at Depot Bike Park to the American Ramp Company in the amount of $261,000. The Director of Parks and Recreation is authorized to execute change orders within the approved project budget; and
3) Approve of the California Environmental Quality Act (CEQA) determination contained in this agenda report. The Council’s action is exempt from CEQA review under (1) Common Sense Exemption (14 CCR 15061), (2) Class 1 Categorical Exemption (14 CCR 15301) for existing facilities, (3) Class 2 Categorical Exemption (14 CCR 15302) for Replacement or Reconstruction, and (4) Class 3 Categorical Exemption for New Construction or Conversion of Small Structures (14 CCR 15303).
June 9, 2026 City Council 11
Consent Agenda (continued)
26. Park Host Program License Agreement – Harvey West Park (PR) LOCATION: District 5
Motion to:
1) Approve and authorize the City Manager to execute the Park Host Program License Agreement with Kenneth Castro for a one-year term at Harvey West Park; and
2) Adopt a finding of categorical exemption pursuant to CEQA Guidelines Section 15301 (Existing Facilities).
27. Metro Rapid Corridors Project (c402615) – Agreement and Budget Adjustment (PW)
LOCATION: District 4
Motion to:
1) Authorize the City Manager to enter into a reimbursement agreement, in a form acceptable to the City Attorney, with Santa Cruz Metropolitan Transit District, detailing the parties’ responsibilities with respect to the design, construction, and maintenance of the Metro Rapid Corridors Project. The Public Works Director is authorized to enter into amendments within the approved budget;
2) Adopt a resolution to amend the FY 2026 budget and appropriate funds in the amount of $1,875,000 for revenue and expenditures of the Metro Rapid Corridors Project (c402615); and
3) Authorize the City Manager to acquire necessary right-of-way at the southern corners of the Soquel Avenue and Front Street intersection in accordance with APO I28.
June 9, 2026 City Council 12
Consent Agenda (continued)
28. Second Amendment to the Professional Services Agreement with Miller Maxfield, Inc. for Communications and Planning in Support of the Water Department and its Capital Investment Program (WT) LOCATION: Water Service Area
Motion to:
1) Authorize the City Manager to execute the Second Amendment to the Professional Services Agreement, in the form accepted by the City Attorney, with Miller Maxfield, Inc. of Santa Cruz, CA for Communications and Planning in support of the Water Department and its Capital Investment Program; and
2) Authorize the Water Director to revise the Second Amendment Scope of Work and execute resulting future Amendments that are within the approved budget.
End Consent Agenda
Consent Public Hearings
29. 2nd Reading and Final Adoption of Ordinance No. 2026-11 Amending Santa Cruz Municipal Code Section 24.16.045 and Adding Part 5 to Chapter 24.16 Related to the City’s Local Preference Policy (ED/CD) LOCATION: Citywide
Adopt Ordinance No. 2026-11 amending Santa Cruz Municipal Code Section 24.16.045 and adding a new Part 5 to Chapter 24.16 “Local Preference Policy.”
30. Downtown Association: Parking and Business Improvement Area Assessments for FY 2027 (ED)
LOCATION: District 4
Motion to adopt a resolution confirming the Parking and Business Improvement Area FY 2027 Plan prepared by the Downtown Association and levying the Parking and Business Improvement Area Assessments for FY 2027.
June 9, 2026 City Council 13
Consent Public Hearings (continued)
31. Acceptance of Proposed Modifications to Local Coastal Program Beaches and Bluffs Hazards Adaptation Chapter as Requested by the California Coastal Commission (CD)
LOCATION: Districts 2, 3, 4, and 6
Motion to:
1) Adopt a resolution acknowledging receipt of Coastal Commission action letter from the California Coastal Commission including the suggested modifications, approving the suggested modifications, and directing staff to submit the approval to the California Coastal Commission Executive Director, and
2) Acknowledge the determination that the suggested modifications are exempt from environmental review under California Environmental Quality Act (CEQA) Guidelines Section 15265 and Public Resources Code Section 21080.9.
Public Hearing
32. Public Hearing on 2025 Urban Water Management Plan (WT) LOCATION: Water Service Area
Receive input and discuss the 2025 Urban Water Management Plan and Water Shortage Contingency Plan.
June 9, 2026 City Council 14
General Business
33. Amendments to Municipal Code Title 24, Zoning, Related to Protections Against On-Shore Facilities Supporting Off-Shore Oil and Gas Drilling and Deep-Sea Mining and Exploration, and Corresponding Changes to the City’s Local Coastal Program Implementation Plan (CM/CD/CN) LOCATION: Citywide
Motion to:
1) Introduce for publication an ordinance adding Section 24.06.093 to Chapter 24.06 – Zoning Map and Text Amendments and amending Sections 24.06.090 and 24.10.1620 of the Santa Cruz Municipal Code (SCMC) related to adding protections against on-shore facilities supporting off-shore oil & gas drilling and deep-sea mining and exploration;
2) Introduce for publication an ordinance amending the Local Coastal Program Implementation Plan (LCP IP) and amending Section
24.10.1525 of the SCMC to add protections against on-shore facilities supporting deep-sea mining and exploration; and
3) Find that the proposed amendments are categorically exempt from California Environmental Quality Act (CEQA) review, pursuant to: Class 7 Exemption (14 CCR § 15307); Class 8 Exemption (14 CCR § 15308); and the Common Sense Exemption (14 CCR § 15061(b)(3)).
34. Adoption of 2025 Urban Water Management Plan and Water Shortage Contingency Plan (WT)
LOCATION: Water Service Area
Motion to:
1) Adopt a resolution adopting the 2025 Urban Water Management Plan and authorizing the Water Director to file a copy of the plan with the California Department of Water Resources; and
2) Adopt a resolution adopting the Water Shortage Contingency Plan and authorizing the Water Director to file a copy of the Water Shortage Contingency Plan, as a component of the 2025 Urban Water Management Plan, with the California Department of Water Resources.
June 9, 2026 City Council 15
General Business
35. Budget Adoption
35.1. Fiscal Year 2027 Proposed Budget Adoption (FN)
LOCATION: Citywide
Motion to:
1) Adopt the Fiscal Year (FY) 2027 Budget, including the Capital Investment Program (CIP), effective July 1, 2026; authorize the City Manager to allocate within the applicable funds the FY 2027 changes to the Proposed Budget to the appropriate accounting classification; and approve related and applicable transfers in/out between funds; and authorize the Finance Director to create additional appropriations to provide for commitments carried over from the prior fiscal year, including contract and purchase order encumbrances and unexpended project balances, so long as there is a sufficient fund balance to finance these commitments;
2) Approve the CIP project exclusions from the Public Art transfer calculation for FY 2027; and
3) Accept the Water Commission’s recommendations regarding the Water Department’s FY 2027 Operating and Capital Investment Program.
35.2. Resolution Amending the City of Santa Cruz Personnel Complement and Classification and Compensation Plans for Various Departments (HR) LOCATION: Citywide
Motion to adopt a resolution amending the City of Santa Cruz Personnel Complement and Classification and Compensation Plans for - City Manager’s Office, Finance, Human Resources, Information Technology, Economic Development, Parks and Recreation, Police, Public Works, and Water.
Any funding approved by the Council will not be implemented until the required meet and confer process is completed in accordance with City obligations under the Meyer-Milias Brown Act and before any contract returns to City Council in open session.
Adjournment
June 9, 2026 City Council 16
INFORMATION ITEMS PREVIOUSLY DISTRIBUTED TO CITY COUNCILMEMBERS ADDENDUM TO CITY COUNCIL AGENDA – JUNE 9, 2026
36. Community Development Department: Response to May 26, 2026 City Council Direction on Homeless Garden Project Fee Estimates for Waiver Consideration 6/4/26 (CDFYI 0056)
MAYOR'S PROCLAMATIONS
ADDENDUM TO CITY COUNCIL AGENDA – JUNE 9, 2026
37. Proclaiming May 29, 2026 as “Frankie Moreno Day” and encouraging all residents to honor him not only as an artist of extraordinary achievement, but a lifelong Santa Cruz native whose early years, values, and creative identity were shaped by this community—and who continues to carry its spirit proudly onto the world stage.
Advisory Body Appointments
The following positions are either currently vacant or the terms are due to expire.
Council will make appointments at a future meeting.
Board of Building and Fire Appeals Two openings – at-large nominations County Library Advisory
Commission
One opening – at-large nomination
Downtown Commission Two openings – to be appointed by
Councilmembers Golder and O’Hara
Sister Cities Committee One opening – at-large nomination June 9, 2026 City Council 17
Public Hearing
If, in the future, you wish to challenge in court any of the matters on this agenda for which a public hearing is to be conducted, you may be limited to raising only those issues which you (or someone else) raised orally at the public hearing or in written correspondence received by the City at or before the hearing.
Any person seeking to challenge a City Council decision made as a result of a proceeding in which, by law, a hearing is required to be given, evidence is required to be taken, and the discretion in the determination of facts is vested in the City Council, shall be required to commence that action either 60 days or 90 days following the date on which the decision becomes final as provided in Code of Civil Procedure Section 1094.6 Please refer to code of Civil Procedure 1094.6 to determine how to calculate when a decision becomes “final.” The 60-day rule applies to all public hearings conducted pursuant to the City’s Zoning Ordinance, Title 24, Santa Cruz Municipal Code. The 90-day rule applies to all other public hearings.
2026 City Council Meeting Calendar
June 19 - City Hall Closure - Juneteenth
June 23 - Regular Meeting
July 3 - City Hall Closure - Independence Day
July 14 and 28 Meetings Cancelled
August 11 - Regular Meeting
August 25 - Regular Meeting
September 7 - City Hall Closure - Labor Day
September 8 - Regular Meeting
September 11/12 - Rosh Hashanah (City observed - sundown to sundown) October 20/21 - Yom Kippur (City observed - sundown to sundown) September 22 - Regular Meeting
October 13 - Regular Meeting
October 27 - Regular Meeting
November 11 - City Hall Closure - Veteran's Day (observed) November 17 - Regular Meeting
November 26 - City Hall Closure - Thanksgiving Day
November 27 - City Hall Closure - Day After Thanksgiving Day December 4/5 - Hanukkah (City observed - sundown to sundown) December 8 - Regular Meeting
December 22 Meeting Cancelled
December 25
8.1 MINUTES ARE UNOFFICIAL UNTIL APPROVED BY COUNCIL
City of Santa Cruz
809 Center Street
Santa Cruz, California 95060
MINUTES OF A CITY COUNCIL MEETING
May 26, 2026
11:30 AM
Call to Order – Mayor Keeley called the meeting to order at 11:32 a.m. in Council Chambers.
Roll Call
Present: Councilmembers Trigueiro, Brunner, Newsome, Golder, O’Hara (via Zoom); Vice Mayor Kalantari-Johnson; Mayor Keeley.
Absent: None.
Staff: City Manager M. Huffaker, Assistant City Manager M. Templeton, City Attorney C. Bronson, Deputy City Manager/Director of Economic Development B. Lipscomb, Director of Community Development L.
Butler, Director of Finance E. Cabell, Chief of Fire R. Oatey, Chief People Officer S. De Leon, Director of Information Technology K.
Morgan, Director of Parks and Recreation T. Elliot, Chief of Police B.
Escalante, Director of Public Works N. Nguyen, Director of Water H.
Luckenbach, Senior Professional Engineer H. Yu, Finance Manager E.
Burton, Principal Management Analyst V. Pearson, Principal Management Analyst L. Bass, Deputy City Clerk Administrator J. Wood, City Clerk Administrator B. Bush.
Oral Communications
At 11:33 a.m. Mayor Keeley opened Oral Communications for members of the public who wished to speak regarding items not listed on the City Council agenda.
Michael Spadafora spoke regarding the Murray Street Bridge and communication from the City regarding its construction.
Seth Heitzenrater spoke regarding the Murray Street Bridge and asked when they can expect communication for the anticipated bridge closure in June.
9.1 May 26, 2026 CITY COUNCIL MINUTES 8267
Oral Communications (continued)
Bradley Snyder spoke regarding the Murray Street Bridge construction and local businesses that have closed downtown.
Unidentified person spoke regarding the City’s requirement for a permit prior to building demolition, and sewer lateral cleanouts.
At 11:43 a.m. Mayor Keeley closed Oral Communications.
At this time, Mayor Keeley reordered the agenda and item 1 was moved to the end of the meeting. It was later announced that this item is continued to the June 9th meeting.
Presentations
1. Shingu Delegation Report Back
This item was continued to the meeting of June 9, 2026.
Presiding Officer's Announcements – Mayor Keeley spoke regarding Memorial Day.
Statements of Disqualification – Councilmember Brunner announced she will be recusing herself from item 7 as it relates to her employment.
Additions and Deletions – None.
City Attorney Report on Closed Session – None.
Council Meeting Calendar
2. The City Council reviewed and did not revise the meeting calendar attached to the agenda.
9.2 May 26, 2026 CITY COUNCIL MINUTES 8268
Consent Agenda
Councilmember Brunner made a comment on items 9 and 12.
Councilmember Trigueiro made a comment on items 9, 12, and 13.
Senior Professional Engineer H. Yu responded to Council questions regarding item 13.
Mayor Keeley opened the public comment period. The following people spoke:
Unidentified person made a comment on item 12.
Unidentified person made a comment on item 6.
Unidentified person spoke regarding item 5.
Mayor Keeley closed the public comment period.
MOTION: Councilmember Golder moved, seconded by Vice Mayor KalantariJohnson, to approve the Consent Agenda.
ACTION: The motion carried with the following vote.
AYES: Councilmembers Trigueiro, Brunner (with the exception of item 7), Newsome, Golder, O’Hara; Vice Mayor Kalantari-Johnson; Mayor Keeley.
NOES: None.
ABSENT: None.
DISQUALIFIED: Councilmember Brunner (item 7).
3. Minutes of the May 12, 2026 City Council Meeting (CC) LOCATION: None
Motion carried to approve as submitted.
9.3 May 26, 2026 CITY COUNCIL MINUTES 8269
Consent Agenda (continued)
4. Environmental Impact Report for 307 Chestnut Street (p502601) – Budget Adjustment (CD)
LOCATION: District 4
Motion carried to:
Approve a contract with Dudek (Encinatas, CA) to prepare the Environmental Impact Report for 307 Chestnut Street in the amount of $55,200 and authorize the Director of Community Development to execute change orders within the approved project budget; and
Adopt Resolution No. NS-30,655 to amend the FY 2026 budget and appropriate funds in the amount of $55,200 from the applicant for the Environmental Impact Report for 307 Chestnut Street (p502601).
5. Update on the Implementation of the Downtown Plan Expansion (CD/PW/CM) LOCATION: District 4
Motion carried to accept the update on the one-year implementation of the Downtown Plan Expansion.
6. Approval of Monterey Bay Area Regional Climate Project Working Group (RCPWG) Memorandum of Understanding (MOU) (CM)
LOCATION: Citywide
Motion carried to:
Adopt Resolution No. NS-30,656 affirming the City Council’s intention to commit to funding the City of Santa Cruz’s contribution to the RCPWG for two additional years (through FY 2028), for an annual contribution of $20,000 and a total contribution of $40,000; and
Authorize the City Manager, or designee, to enter into the MOU as a voting member of the RCPWG.
9.4 May 26, 2026 CITY COUNCIL MINUTES 8270
Consent Agenda (continued)
7. Downtown Association: Parking and Business Improvement Area Assessments for FY 2027 (ED)
LOCATION: District 4
Motion carried to:
Approve the annual report and work plan prepared by the Downtown Association for FY 2027; and
Adopt Resolution No. NS-30,657 as a Resolution of Intention to levy a Downtown Association Parking and Business Improvement Assessment for FY 2027 and schedule a public hearing for June 9, 2026 on the levy of the assessments for FY 2027.
8. Approve the Single Source Vendor Selection and Allocation of Funding in the Amount of $101,586 for Shower Repairs in Fire Station 61 from the FY 2026 Approved Fire Department Budget (FD)
LOCATION: District 4
Motion carried to:
Approve the single source vendor selection for Central Coast Construction Company (Cen-Con) and approve the expenditure of $101,586 for shower repairs in Fire Station 61; and
Adopt a CEQA finding of categorical exemption pursuant to: (1) 14 CCR § 15301 (Class 1/existing facilities), (2) 14 CCR § 15302 (Class 2/replacement or reconstruction), and (3) 14 CCR § 15061(b)(3) (common sense exemption).
9. Update to the City Emergency Operations Plan (FD)
LOCATION: Citywide
Motion carried to approve the updated 2025-2030 City Emergency Operations Plan.
9.5 May 26, 2026 CITY COUNCIL MINUTES 8271
Consent Agenda (continued)
10. Award a Citywide Contract for On-call Plumbing Services (FN) LOCATION: Citywide
Motion carried to award a citywide contract for on-call plumbing services to Silicon Valley Mechanical, Incorporated, San Jose, California, for 5 years, with 2 (1) year optional extensions, and to authorize the City Manager, or designee, to execute an agreement in a form approved by the City Attorney with Silicon Valley Mechanical. The Purchasing Manager is authorized to execute change orders within the approved budget.
11. Authorize the Purchase of Police Patrol Vehicle Equipment and Associated Labor to Upfit Three (3) Police Patrol Vehicles Using General Capital Improvement 350 Funds - Budget Adjustment (PD/PW)
LOCATION: Citywide
Resolution No. NS-30,658 was adopted authorizing the City Manager to transfer funds in the amount of $65,021 from the General Capital Improvement 350 Fund to the FY 2026 General Fund to purchase patrol vehicle equipment, with associated labor costs, to upfit three (3) patrol vehicles.
12. Active Transportation Program Cycle 8 Grant Proposal (PW) LOCATION: Districts 1 and 2
Motion carried to apply for, accept, and appropriate funds from the California Transportation Commission Active Transportation Program Cycle 8 for the Eastside Neighborhood Connector and Sidewalk project.
13. Award Contract - Pump Station 1 and Soquel Pump Station Design Consulting Services (c401707)
LOCATION: District 4
Motion carried to award the Engineering, Design, and Consulting services contract for Pump Station 1 and Soquel Pump Station (c401707) with Carollo Engineers (Walnut Creek, CA) and direct the City Manager to execute a Professional Service Agreement in a form approved by the City Attorney. The Public Works Director is authorized to execute future amendments within the approved project budget.
End Consent Agenda
9.6 May 26, 2026 CITY COUNCIL MINUTES 8272
Public Hearings
14. 2nd Reading and Final Adoption of Ordinance No. 2026-11 Amending Santa Cruz Municipal Code Section 24.16.045 and Adding Part 5 to Chapter 24.16 Related to the City’s Local Preference Policy (ED/CD)
LOCATION: Citywide
This item was continued to the meeting of June 9, 2026 and was not discussed.
15. Proposed City Charter Amendments (CC)
LOCATION: Citywide
City Clerk Administrator B. Bush gave a presentation and responded to Council questions.
City Manager M. Huffaker, City Attorney C. Bronson, and Director of Finance E. Cabell responded to Council questions.
Mayor Keeley opened the public comment period. The following people spoke.
James Ewing-Whitman
Unidentified person
Mayor Keeley closed the public comment period.
MOTION: Vice Mayor Kalantari-Johnson moved, seconded by Councilmember Brunner, to:
Direct staff to return to Council at the June 23, 2026 meeting with a resolution calling an election to place a measure on the November ballot with the proposed edits presented by staff;
Direct staff to develop an anti-nepotism policy by the end of December 2026; and
Direct staff to develop a policy recommending but not requiring the City Manager live within the county and/or within 30 miles of the City of Santa Cruz.
9.7 May 26, 2026 CITY COUNCIL MINUTES 8273
Public Hearings (continued)
15. Proposed City Charter Amendments (CC) LOCATION: Citywide (continued) After discussion, the motion was restated as follows:
Direct staff to return to Council at the June 23, 2026 meeting with a resolution calling an election to place a measure on the November ballot with the proposed edits presented by staff;
Direct staff to develop an anti-nepotism policy by the end of December 2026; and
Direct staff to develop a policy recommending but not requiring the City Manager live within the county and/or recommended mileage from the City.
ACTION: The motion carried unanimously with the following vote.
AYES: Councilmembers Trigueiro, Brunner, Newsome, Golder, O’Hara; Vice Mayor Kalantari-Johnson; Mayor Keeley.
NOES: None.
ABSENT: None.
DISQUALIFIED: None.
16. Public Posting of Vacant Funded Positions and Recruitment and Retention Efforts in Compliance with Assembly Bill 2561 (AB 2561) (HR) LOCATION: Citywide
Chief People Officer S. De Leon gave a presentation and responded to Council questions.
Mayor Keeley opened the public comment period. There were no speakers.
Mayor Keeley closed the public comment period.
MOTION: Vice Mayor Kalantari-Johnson moved, seconded by Councilmember Golder, to receive the information report on the City of Santa Cruz Vacancies and Recruitment and Retention Efforts Pursuant to Government Code Section 3502.3.
9.8 May 26, 2026 CITY COUNCIL MINUTES 8274
Public Hearings (continued)
16. Public Posting of Vacant Funded Positions and Recruitment and Retention Efforts in Compliance with AB 2561 (HR) LOCATION: Citywide (continued) ACTION: The motion carried unanimously with the following vote.
AYES: Councilmembers Trigueiro, Brunner, Newsome, Golder, O’Hara; Vice Mayor Kalantari-Johnson; Mayor Keeley.
NOES: None.
ABSENT: None.
DISQUALIFIED: None.
General Business
17. Fiscal Year 2027 Proposed Budget (CM/FN)
LOCATION: Citywide
Director of Finance E. Cabell, Finance Manager E. Burton, Director of Public Works N. Nguyen, and Director of Water H. Luckenbach gave a presentation.
At 1:41 p.m. Council took a break and returned at 2:06 p.m.
Director of Public Works N. Nguyen, City Manager M. Huffaker, Finance Manager E. Burton, Director of Finance E. Cabell, Principal Management Analyst V. Pearson, Director of Parks and Recreation T. Elliot, and Principal Management Analyst L. Bass responded to Council questions.
Mayor Keeley opened the public comment period. The following people spoke.
Unidentified person
Ariel Zucker
Dana Bagshaw
Nancy Pyzel
Unidentified person
Judi Grunstra
Mayor Keeley closed the public comment period.
9.9 May 26, 2026 CITY COUNCIL MINUTES 8275
General Business (continued)
17. Fiscal Year 2027 Proposed Budget (CM/FN) LOCATION: Citywide (continued) MOTION: Vice Mayor Kalantari-Johnson moved, seconded by Councilmember Newsome, to:
1) Receive the FY 2027 Budget information;
2) Direct staff to return to Council in September 2026 with a staffing plan and funding options for the establishment of the Office of Well-Being, including any recommended budget adjustments for FY 2027;
3) Direct staff to ensure departmental performance measures align with the Strategic Plan, Council directive, and soon-to-be developed Community Indicators Dashboard to be reflected in each department's budget section beginning with the FY 2028 Budget packet; and
4) Direct staff to amend the Parks and Recreation FY 2027 Goal to remove the word "secure" in reference to Children's Fund and Sugar-Sweetened Beverage Tax funds and replace it with, “Work with the Children's Fund Oversight Committee and the Sugar-Sweetened Beverage Tax Oversight Committee to explore the allocation of funds towards relevant Parks and Recreation programs.”
FRIENDLY AMENDMENT: Councilmember Newsome requested to add:
5) Direct the City Manager and the Director of Public Works to return to Council in August 2026 with options to address safety issues at the crosswalk of Mission Street and Green Street, including a flashing light crosswalk beacon, and engage with the neighbors near the intersection of Myrtle Street and Taylor Street to assess the want for speed bumps; and 6) Explore prioritizing the reinstated transfer from the General Fund to the Paving Fund for transportation safety projects.
Vice Mayor Kalantari-Johnson accepted.
FRIENDLY AMENDMENT: Councilmember Trigueiro requested to add:
7) Direct the City Manager’s Office and Community Development Department to provide Council with an analysis on any fee reductions or waivers available (without creating direct expenses) for the Homeless Garden Project before budget adoption.
Vice Mayor Kalantari-Johnson and Councilmember Newsome accepted.
9.10 May 26, 2026 CITY COUNCIL MINUTES 8276
General Business (continued)
17. Fiscal Year 2027 Proposed Budget (CM/FN) LOCATION: Citywide (continued) ACTION: The motion carried unanimously with the following vote.
AYES: Councilmembers Trigueiro, Brunner, Newsome, Golder, O’Hara; Vice Mayor Kalantari-Johnson; Mayor Keeley.
NOES: None.
ABSENT: None.
DISQUALIFIED: None.
Adjournment – Councilmember Golder moved, seconded by Councilmember Trigueiro, to adjourn. By consensus City Council adjourned at 3:27 p.m.
Respectfully Submitted:
Julia Wood, Deputy City Clerk Administrator
Attest:
Bonnie Bush, City Clerk Administrator
Approved:
Fred Keeley, Mayor
9.11 City Council
AGENDA REPORT
DATE: 06/04/2026
AGENDA OF: 06/09/2026
DEPARTMENT: Community Development/Economic Development
SUBJECT: Resolution Directing Staff to Submit Ordinance No. 2025-18 Related to Extending the Active Life of Permits to the Coastal Commission (CD/ED) LOCATION: 2, 3, 4, 6
RECOMMENDATION: Motion to adopt a resolution directing staff to submit Ordinance No. 2025-18 to the California Coastal Commission for their certification.
BACKGROUND: Ordinance No. 2025-18, to extend the active life of commercial use permits from calendar year 2019 through January 1, 2030, was introduced for publication at the August 26, 2025 Council meeting and passed for final adoption at the September 9, 2025 City Council meeting.
DISCUSSION: Since the adopted ordinance amends a section of the Municipal Code that is part of the Local Coastal Program Implementation Plan, staff request that the City Council adopt the resolution directing staff to submit Ordinance No. 2025-18 to the California Coastal Commission for their Certification.
CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION:
The adoption of a resolution to submit an ordinance to the California Coastal Commission is not a project under CEQA.
HEALTH IN ALL POLICIES (HiAP): By extending the life of commercial use permits, the City will continue to advance the goals of its Economic Development Strategy. It will also create inviting communal spaces and promote the establishment of businesses, thereby enhancing the quality of life for residents and aligning with the City’s commitment to HiAP. This approach also supports the City’s HiAP goals by integrating health considerations into land use and economic development decisions. Encouraging active, vibrant commercial corridors contributes to improved mental well-being, social connectedness, and access to essential goods and services.
Employment uses within the City support active transportation from nearby residents, which support the health and sustainability HiAP pillars, and reducing startup costs for new businesses supports the equity HiAP pillar.
10.1 FISCAL IMPACT:
1. The recommendation in this report impacts the General Fund: No
2. This recommendation requires a budget adjustment: No
3. The recommendation creates an on-going expenditure commitment: No FISCAL IMPACT DESCRIPTION: No impact.
Prepared by:
Clara Stanger
Senior Planner
Submitted by:
Lee Butler, AICP, LEED AP
Director of Community
Development
Approved by:
Matt Huffaker
City Manager
ATTACHMENTS:
1. RESOLUTION TO SUBMIT ORDINANCE 2025-18 TO THE COASTAL COMMISSION.DOCX
2. ORDINANCE 2025-18.PDF
10.2 RESOLUTION NO. NS-30,XXX
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA CRUZ
AUTHORIZING AND DIRECTING THE CITY MANAGER TO SUBMIT THE PROPOSED AMENDMENTS TO TITLE 24, THE ZONING ORDINANCE OF THE CITY
OF SANTA CRUZ MUNICIPAL CODE, AS LOCAL COASTAL PROGRAM
IMPLEMENTATION PLAN AMENDMENTS TO THE CALIFORNIA COASTAL
COMMISSION FOR FINAL CERTIFICATION
WHEREAS, the City of Santa Cruz continues to advance the goals of its Economic Development Strategy, including revitalizing and reoccupying vacant commercial spaces throughout the City; and
WHEREAS, the COVID-19 pandemic, subsequent economic disruptions, and shifting commercial market conditions have contributed to prolonged vacancies and economic uncertainty for small businesses seeking to activate existing commercial spaces; and WHEREAS, Municipal Code section 24.04.160 currently limits the life of most use permits to thirty-six (36) months from approval, and further provides for expiration if a permitted use ceases for six (6) consecutive months, regardless of intent to abandon; and WHEREAS, in both 2009 and 2022, the City Council previously adopted time-limited extensions of permit validity in response to economic hardship and public emergency conditions; and
WHEREAS, the City Council now desires to further facilitate business retention and reactivation of vacant commercial tenant spaces by extending the life of all commercial use permits that were valid at any time from January 1, 2019 through December 31, 2026, through January 1, 2030, unless otherwise extended; and
WHEREAS, at its July 17, 2025 meeting, the Santa Cruz Planning Commission reviewed the modifications to the Santa Cruz Municipal Code and found that the public necessity, and the general community welfare, and good zoning practice shall be served and furthered; and that the proposed amendments are in general conformance with the principles, policies and land use designations set forth in the General Plan, Local Coastal Plan and any adopted area or specific plan; and
WHEREAS, at its July 17, 2025 meeting, the Santa Cruz Planning Commission considered the modifications to the Santa Cruz Municipal Code as modifications to the Local Coastal Program and found that (1) the proposed amendment is deemed to be in the public interest; (2) the proposed General Plan and/or Local Coastal Program amendment is consistent and compatible with the rest of the General Plan and LCP and any implementation programs that may be affected; (3) the potential impacts of the proposed amendment have been assessed and have been determined not to be detrimental to the public health, safety, or welfare; and (4) the proposed amendment has been processed in accordance with the applicable provisions of the California Government Code and the California Environmental Quality Act (CEQA); and WHEREAS, the Planning Commission reviewed this ordinance at a duly noticed public hearing on July 17, 2025 and recommended approval; and
10.3 RESOLUTION NO. NS-30,XXX
WHEREAS, on August 26, 2025, the City Council held a public hearing where the proposed amendments to the Municipal Code were introduced for publication; and WHEREAS, on September 9, 2025, the City Council held a public hearing where the proposed amendments to the Municipal Code were approved; and WHEREAS, in making their decisions, including this direction, the Council considered the full public record for said items, including but not limited to the staff reports and associated materials in the packet; and
WHEREAS, the City Council now finds:
1. The proposed amendments to Title 24 are in the public interest as they support business retention and reactivation of vacant commercial tenant spaces.
2. The proposed amendments to Title 24 are consistent and compatible with the General Plan and any implementation programs that may be affected.
3. The proposed amendments to Title 24 are intended to be carried out in a manner fully in conformity with the Coastal Act (CA Section 30510).
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Santa Cruz that it hereby directs the City Manager to submit the Local Coastal Program Implementation Plan changes, as shown in in Ordinance No. 2025-18 that makes modifications to Title 24 of the City of Santa Cruz Municipal Code, to the Coastal Commission for certification.
BE IT FURTHER RESOLVED by the City Council of the City of Santa Cruz that it hereby further authorizes the City Manager, with approval by the City Attorney, to make nonsubstantive text revisions to the Local Coastal Implementation Plan amendments, as may be requested by California Coastal Commission to achieve certification, that are consistent with Council action and direction.
BE IT FURTHER RESOLVED that the amendments to the Local Coastal Implementation Plan will become effective inside the Coastal Zone upon final certification by the California Coastal Commission.
PASSED AND ADOPTED this 9th day of June, 2026, by the following vote:
AYES:
NOES:
ABSENT:
DISQUALIFIED:
APPROVED: ______________________________
Fred Keeley, Mayor
ATTEST: _________________________________
10.4 RESOLUTION NO. NS-30,XXX
Bonnie Bush, City Clerk Administrator
10.5 10.6
10.7 10.8
City Council
AGENDA REPORT
DATE: 05/20/2026
AGENDA OF: 06/09/2026
DEPARTMENT: City Manager
SUBJECT: First Amendment to the Professional Services Agreement for Emergency Shelter Transportation Program Operations and Management (CM) LOCATION: District 1
RECOMMENDATION: Motion to authorize the City Manager to execute the First Amendment to the Professional Services Agreement, in a form approved by the City Attorney and pending adoption of the FY 2027 budget with Community Bridges/Lift Line, for transportation operations with the Emergency Shelter Program in the amount of $465,125. The Director of Homelessness Response and Community Programs is authorized to approve and execute change orders.
BACKGROUND: On June 27, 2023, the City Council (Council) approved a contract with The Salvation Army (TSA) to operate the City Overlook Emergency Shelter located at the Santa Cruz Armory (Armory) from July 1, 2023 through June 30, 2024. In the report to Council, staff indicated that the shuttle program, which provides transportation to and from the Armory for shelter program participants, had been removed from the TSA contract, and that the City would initiate a Request for Proposal (RFP) process to identify a new vendor to provide the transportation service.
The RFP was released on May 26, 2023, and three organizations submitted proposals that met the minimum qualifications. In accordance with the City’s procurement protocols and the evaluation criteria outlined in the RFP, the City reviewed the submissions and Community Bridges/Lift Line received the highest score. In addition, Community Bridges/Lift Line submitted the lowest cost proposal. Community Bridges/Lift Line is able to leverage their existing fleet of vehicles and drivers to operate the Armory transportation program, keeping costs down. They have extensive experience and a proven history working with vulnerable populations throughout Santa Cruz County. On September 12, 2023, June 25, 2024, and June 24, 2025, Council has approved contracts with Community Bridges to provide the transportation services at the City Overlook Emergency Shelter.
DISCUSSION: Community Bridges/Lift Line first began providing the shuttle services for the City Overlook Emergency Shelter and the Long-Term Safe Parking program at the Armory site on September 15, 2023. They provide hourly service to approximately 150 program participants, shuttling them from the Armory to stops in Santa Cruz, including Coral Street, and County
11.1 Health and Humans Services at Emeline. The transportation program operates 14 hours a day (6:00 a.m. to 9:00 p.m.), 365 days a year. Community Bridges/Lift Line has developed productive working relationships with the Emergency Shelter and Long-Term Parking Program staff and participants and they performed a reliable and high quality level of service throughout the three years of operating this program. Staff recommends approving the first amendment to the professional services agreement with Community Bridges/Lift Line to operate the Emergency Shelter Transportation Program for FY 2027. The proposed first amendment to the professional services agreement with Community Bridges amount for the 12-month period is $465,125, which represents a 6.2% increase from FY 2026.
CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: The proposed Council action is not a “project” under CEQA because it does not have the potential to cause a physical change in the environment directly or indirectly.
HEALTH IN ALL POLICIES (HiAP): HiAP is a collaborative framework designed to improve population health by integrating health considerations into decision-making processes across sectors and policy areas. HiAP is built on three core pillars: equity, public health, and sustainability. Its primary goal is to ensure that policymakers fully consider the health, equity, and sustainability impacts of various policy options during development. The proposed program aligns with HiAP principles by promoting public health and equity, ensuring that lower-income individuals have access to services accessed via this transportation program. By prioritizing the welfare of vulnerable populations, this initiative reinforces commitment to a healthier, more resilient community.
FISCAL IMPACT:
1. The recommendation in this report impacts the General Fund: Yes
2. This recommendation requires a budget adjustment: No
3. The recommendation creates an on-going expenditure commitment: No FISCAL IMPACT DESCRIPTION: For FY 2027, funding to support the operations and management of the Emergency Shelter Transportation program will come from the General Fund, Safe Sleeping and Shelter – Armory (p102202) project, in the amount of $465,125. The funding request to support this first amendment to the professional services agreement with Community Bridges was included in the FY 2027 budget for consideration by the City Council.
Prepared By:
Larry Imwalle
Director of Homelessness
Response and Community
Programs
Submitted By:
Michelle Templeton
Assistant City Manager
Approved By:
Matt Huffaker
City Manager
ATTACHMENTS:
1. FIRST AMENDMENT TO PSA WITH COMMUNITY BRIDGES.PDF
11.2 First Amendment to Professional Services Agreement with Community Bridges May 2026 Page 1
FIRST AMENDMENT TO PROFESSIONAL SERVICES AGREEMENT WITH COMMUNITY BRIDGES THIS FIRST AMENDMENT (“First Amendment”), effective as of _________, (the “Effective Date”) to the PROFESSIONAL SERVICES AGREEMENT dated July 1, 2025, is made by and between the CITY OF SANTA CRUZ (“City”) and Community Bridges (“Consultant”). City and Consultant may be referred to individually as a “Party” and collectively, as the “Parties.”
RECITALS
WHEREAS, City and Consultant have previously entered into that certain Professional Services Agreement for Operation of Emergency Shelter Transportation Services dated July 1, 2025 (the “Agreement”), incorporated herein by this reference; and WHEREAS, City and Consultant desire to enter into this First Amendment to the Agreement to extend the term and to amend Section 4: Fees and Payment, as well as the Fee Schedule in Exhibit B, as specified herein.
AGREEMENT
NOW, THEREFORE, it is agreed between the Parties to incorporate the above Recitals hereto, and that the Parties agree to the following:
1. Section 4 of the Agreement is hereby amended as follows:
The following sentence is removed from Section 4: “Invoices shall detail the time worked by each class of employee on each task and the expenses incurred for which billing is made.” The sentence shall be replaced with the following: “Invoices shall specify the actual costs and shall specify the direct and indirect costs Consultant is billing for using a form substantially similar to the sample attached as Exhibit E, the sample Statement of Revenues and Expenditures. Indirect costs shall not exceed those authorized by the Fee Schedule in Exhibit B. Should the City request, Consultant will provide the underlying documentation to support the charges. Such documentation, if requested, shall detail the time worked by each class of employee on each task and the expenses incurred for which billing is made.”
2. Section 4 of the Agreement is further amended to revise the not to exceed budget amount from $437,994 and increase it to $465,125.
3. Section 7 of the Agreement is hereby amended to extend the term of the Agreement by one (1) year with the term of the Agreement now terminating on June 30, 2027 instead of June 30, 2026.
11.3 First Amendment to Professional Services Agreement with Community Bridges May 2026 Page 2
4. Exhibit B: Fee Schedule of the Agreement is hereby amended to change the total amount payable under the Agreement from a not to exceed amount of $437,994 to $465,125 and to replace the Diagram of Anticipated Costs with the new and updated Diagram of Anticipated Costs as specified in Exhibit A-1, attached hereto and incorporated herein.
5. Except as amended by this First Amendment, all other applicable terms and conditions of the Agreement and attachments shall remain in full force and effect. The terms of this First Amendment shall control if any conflict exists.
6. Each party acknowledges that it has reviewed this First Amendment and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this First Amendment.
7. The unenforceability, invalidity or illegality of any provision(s) of this First Amendment shall not render the other provisions unenforceable, invalid or illegal.
8. The Parties may execute this First Amendment in two or more counterparts, which shall, in the aggregate, be deemed an original but all of which, together, shall constitute one and the same instrument. A scanned, electronic, facsimile or other copy of a party’s signature shall be accepted and valid as an original.
9. The signatories to this First Amendment warrant and represent that each is authorized to execute this First Amendment and that their respective signatures serve to legally obligate their respective representatives, agents, successors and assigns to comply with the provisions of this First Amendment.
[SIGNATURES ON FOLLOWING PAGE]
11.4 First Amendment to Professional Services Agreement with Community Bridges May 2026 Page 3
IN WITNESS WHEREOF, the City and the Consultant have executed this First Amendment effective as of the Effective Date first written above.
Approved As To Form:
By: _____________________________ Date: _________________ Office of the City Attorney
CONSULTANT
By: _____________________________ Date: __________________ Printed: _________________________ Title: _________________________ By: _____________________________ Date: __________________ Printed: _________________________ Title: __________________________ a. Corporation – 2 officer signatures required (one from each group, unless person signing holds officer positions in both Group 1 and 2):
Group 1: Chief Executive Officer, Chairman of the Board, President, or Vice President Group 2: Secretary, Assistant Secretary, Chief Financial Officer, Treasurer, Assistant Treasurer b. Partnership - Signature of General Partner, or signature of partner who is authorized to execute documents per the Certificate of Partnership. If authorized partner is a corporation, follow Corporation signature requirement. c. LLC- For a member-managed LLC, signature of any member. For a manager-managed LLC, signature of the manager. If the LLC has corporate officer designations, follow Corporation signature requirement.
CITY OF SANTA CRUZ
By: _____________________________ Date: _________________ Matt Huffaker, City Manager
5/20/2026
11.5 First Amendment to Professional Services Agreement with Community Bridges May 2026 Page 4
EXHIBIT A-1
Organization Name: COMMUNITY BRIDGES
PROGRAM NAME: LIFT LINE
Program Date: July 1, 2026 - June 30, 2027
Request to: CITY OF SANTA CRUZ
11.6 City Council
AGENDA REPORT
DATE: 05/14/2026
AGENDA OF: 06/09/2026
DEPARTMENT: City Manager
SUBJECT: Children’s Fund Oversight Committee Funding Recommendations for the Allocation of the FY 2027 and FY 2028 Funds (CM)
LOCATION: Citywide
RECOMMENDATION: Motion to approve the Children’s Fund Oversight Committee funding recommendations for the allocation of the FY 2027 and FY 2028 Funds.
BACKGROUND: The purpose of the Children’s Fund is to support the enhancement and expansion of evidenced-based programs that prioritize access to early childhood development, prevention, and service for vulnerable youth, without supplanting existing City of Santa Cruz (City) services or investments, as outlined in the City Charter. Santa Cruz was the first city in the state to dedicate cannabis tax revenues to children’s programs through a Charter amendment.
Funds are designated to serve children and youth under the age of 25 in the City, guided by asset-based youth development principles and prioritizing those most impacted by poverty, trauma, and violence.
In 2014, voters approved Measure L, establishing a tax on cannabis businesses operating in the City (Cannabis Tax). In 2017, the City Council (Council) adopted a policy allocating General Fund revenue equivalent to 12.5% of Cannabis Tax revenues to a dedicated Children’s Fund. In 2021, voters approved Measure A, codifying the Children’s Fund in the City Charter and increasing the allocation to 20% of audited Cannabis Tax revenues to support evidence-based programs focused on early childhood development, prevention, and vulnerable youth. In 2023, the Children’s Fund Oversight Committee (CFOC) was established to provide recommendations on the use of these funds.
At its May 28, 2024 meeting, Council approved funding recommendations from CFOC for FY 2020, FY 2022, FY 2023 and FY 2024 in the amount of $751,409. These funds were distributed to 18 applicants during FY 2025 and FY 2026, with $10,000 allocated for a consultant to prepare a biennial State of the Youth Report in FY 2025.
The application period opened on February 13, 2026, and closed on March 13, 2026. The City received 29 applications, of which 2 were incomplete. The remaining 27 applications were evaluated and scored based on the following criteria:
12.1 Target population income (priority given to low-income populations) Primary population served (City of Santa Cruz residents) Alignment with the Children and Youth Bill of Rights
Alignment with needs outlined in the 2025 State of the Youth Well-being report Support for physical, mental, and/or emotional health Demonstrated community need
Organizational expertise
Reasonableness of budget and ability to leverage additional resources The total amount requested across the 27 eligible applications was $1,718,742 over two years, significantly exceeding the $530,276 in available funding.
At its April 30, 2026 meeting, the CFOC approved funding recommendations for FY 2027 and FY 2028. These recommendations were developed by a CFOC appointed applicant review and selection ad hoc committee consisting of CFOC Members Cunningham, Kalantari-Johnson, and Velazquez. The committee administered the application process, reviewed submissions, and presented funding recommendations totaling $518,276 over two years ($259,138 annually).
Additional allocations include $2,000 for the Youth Liaison Program and $10,000 for a consultant to prepare the biennial State of the Youth Report in FY 2027, bringing the total recommended funding to the full $530,276 Cannabis Tax available through this funding cycle.
The CFOC also asked staff to explore alternative funding options for the well-being report in the next funding cycle (FY 2029 and FY 2030).
DISCUSSION: The CFOC application review and selection ad hoc committee used a scoring matrix to ensure a fair and objective evaluation of all applications. All other applications were independently scored by each committee member, after which the committee convened to review and finalize scores. If a Committee members have a conflict of interest with, or are part of an applicant organization, they do not evaluate their own organization’s applications or participate in related discussions.
Given that funding requests significantly exceeded the $530,276 in available funds, and in an effort to support multiple programs, the committee prioritized the highest-scoring applications for the two-year grant cycle. This process resulted in 15 programs being recommended for funding and 12 programs not recommended.
Award amounts were reduced from requested levels as needed to remain within available funding limits. These reductions were made on a case-by-case basis, taking into account the proposed scope and impact of each program, the ability to leverage additional funding, and overall budget considerations to determine appropriate award levels.
CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: The proposed action is not a “project” under CEQA because it does not have the potential to cause a physical change in the environment directly or indirectly.
HEALTH IN ALL POLICIES (HiAP): The CFOC activities align with the Health in All Policies principles by addressing youth health and equity issues in our community. The CFOC also aligns with community values and ensures that programs will be funded that address and promote long-term health and well-being of our youth which is consistent with HiAP’s goal of embedding health and equity into considerations into policy-making.
12.2 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: None.
Prepared By:
Gina Liebig
Principal Management
Analyst
Submitted By:
Michelle Templeton
Assistant City Manager
Approved By:
Matt Huffaker
City Manager
ATTACHMENTS:
1. FY 2027 AND FY 2028 CHILDREN'S FUND OVERSIGHT COMMITTEE FUNDING RECOMMENDATIONS.DOCX
12.3 FY 2027 & FY 2028 CITY OF SANTA CRUZ CHILDREN’S FUND OVERSIGHT
COMMITTEE FUNDING RECOMMENDATIONS
Centering Children and Youth in Policy and Funding
The City of Santa Cruz Children and Youth Bill of Rights ensures that leaders keep the needs of young people at the forefront of decisions about budgets and government policies. Children and youth are vulnerable members of our community that require prioritization and protection. There are groups of children and youth who are even further marginalized and must be prioritized, this includes: People of Color (including Black, Indigenous, Latinx, Asian American Pacific Islander), differently abled, LGBTQIA+, undocumented, or from low-income households.
The Ten City of Santa Cruz Children and Youth Bill of Rights The City’s Children and Youth Bill of Rights provides the foundation to help the City of Santa Cruz and community make children and youth a top priority so that:
1. They have a healthy mind, body and spirit that enables them to maximize their potential.
2. They develop a healthy attachment to a parent, guardian, or caregiver and an ongoing relationship with a caring and supporting adult.
3. They have a safe and healthy environment, including homes, schools, neighborhoods and communities.
4. They have access to quality education that promotes future success in school, career and life.
5. They have training in life skills that will prepare them to live independently, be self-sufficient and positively contribute to their community.
6. They have employment opportunities with protections from unfair labor practices.
7. They have freedom from mistreatment, abuse and neglect.
8. They voice opinions in matters of interest to them, develop their leadership capacity and engage in their community.
9. They feel supported by the larger community and maintain a sense of hope for the future.
10. They are encouraged to explore and express their innate curiosity and creativity.
With the City Council policy directing 20% of Cannabis Tax Revenue dedicated to the Children’s Fund, the City is able to support programs that meet the goals of the Children and Youth Bill of Rights. In total, the City received $1,718,742 in funding requests. The City had a total of $530,276 available for funding children and youth serving organizations and programs for the two-year FY 2027-2028 funding cycle. The Children’s Fund Oversight Committee recommended allocating $2,000 to the Youth Liaison Program and $10,000 for preparation of the FY 2027 State of the Youth Report, leaving $518,276 available for program
12.4 FY 2027 & FY 2028 CITY OF SANTA CRUZ CHILDREN’S FUND OVERSIGHT
COMMITTEE FUNDING RECOMMENDATIONS
awards during this funding cycle.
Total FY 2027-2028 Requested and Available Funds
Total Available Funds $ 530,276
Youth Liaison Program $ 2,000
State of the Youth FY 2027 Report $ 10,000
Funds Remaining for Awards $ 518,276
Partial Funding Awarded to Organizations Recommended * $ 518,276 Funding Requested from Organizations Not Recommended $ 570,400 Total Requested from All Organizations $ 1,718,742
*Organizations
recommended for
funding do not
necessarily receive the
full requested funding
amount. Full request
amounts equaling
$1,718,742 are detailed
in the following
tables.Organization Name
Award
Amount
Requested
Funding
Target
Age
Group
Served
0-5
Target
Age
Group
Served
6-17
Target
Age
Group
Served
18-24
City of Santa Cruz
Children & Youth Bill
of Rights
(1-10) Addressed in
Application
Boys & Girls Clubs of Santa
Cruz County
$ 90,000 $ 200,000 Y Y Y
2, 3, 4
Friends of Parks and
Recreation (FOPAR)
$ 90,000 $ 200,000 Y Y Y
1, 2, 3
Walnut Avenue Family &
Women's Center
$ 85,000 $ 150,000 Y Y Y
1, 2, 3, 4, 5, 7, 8, 9,
10 Coastal Watershed Council $ 33,276 $ 48,773 N Y N
1, 3, 4, 8, 9, 10
Shared Adventures $ 25,000 $ 45,000 N Y Y
1, 2, 9
Monarch Services -
Servicios Monarca
$ 20,000 $ 54,569 N Y N
1, 3, 7
Ventures $ 15,000 $ 100,000 Y N N
1, 2, 4
12.5 FY 2027 & FY 2028 CITY OF SANTA CRUZ CHILDREN’S FUND OVERSIGHT
COMMITTEE FUNDING RECOMMENDATIONS
Cradle to Career Santa
Cruz County / Jóvenes
Sanos
$ 20,000 $ 30,000 N Y N
1, 8, 9
FoodWhat?! $ 25,000 $ 50,000 N Y Y
All (1-10)
Santa Cruz Toddler Care
Center
$ 20,000 $ 50,000 Y N N
1, 2, 3
Jacob’s Heart Children’s
Cancer Support Services
$ 25,000 $ 50,000 Y Y Y
1, 2, 3
Community Bridges Early
Education Centers
$ 25,000 $ 80,000 Y N N
1, 2, 3, 4
Senderos $ 15,000 $ 50,000 Y Y Y
1, 2, 3, 9, 10
The Diversity Center $ 20,000 $ 30,000 N Y Y
3, 8, 9, 10
Hospice of Santa Cruz
County
$ 10,000 $ 10,000 N Y N
1, 2, 9, 10
TOTAL $ 518,276 $ 1,148,342
12.6 FY 2027 & FY 2028 CITY OF SANTA CRUZ CHILDREN’S FUND OVERSIGHT
COMMITTEE FUNDING RECOMMENDATIONS
Organizations Not Recommended for Funding
Requested
Funding
Scotts Valley Multicultural Fair through SVEF $ 10,000
Santa Cruz Museum of Art & History $ 40,000
California Dreamin' $ 50,000
Girls on the Run of Silicon Valley $ 15,000
Santa Cruz County Junior Golf Association $ 25,000
Camp Opportunity $ 70,000
Siena House $ 80,000
Community Bridges Family Resource Center $ 75,000
Santa Cruz City Schools $ 45,000
Teen Kitchen Project $ 50,000
Big Brothers Big Sisters of Santa Cruz County $ 70,400
Tannery World Dance & Cultural Center $ 40,000
Requested Funding Not Recommended $ 570,400
12.7 City Council
AGENDA REPORT
DATE: 05/20/2026
AGENDA OF: 06/09/2026
DEPARTMENT: Economic Development
SUBJECT: Cooperative Retail Management Business Real Property Improvement District Assessments for FY 2027 (ED)
LOCATION: District 4
RECOMMENDATION: Motion to:
1) Approve the FY 2026/27 Annual Report/Plan prepared by the Downtown Management Corporation; and
2) Adopt the Resolution of Intention to levy a Cooperative Retail Management Business Real Property Improvement District Assessment for FY 2027 and schedule a public hearing for June 23, 2026 on the levy of the assessments for FY 2027.
BACKGROUND: On February 8, 1994 the City Council adopted Ordinance No. 94-06 adding Chapter 5.06 to the Santa Cruz Municipal Code establishing the Cooperative Retail Management (CRM) Business Real Property Improvement District (District) and levying assessments on the properties along Pacific Avenue pursuant to the Parking and Business Improvement Area Law of 1989 for the purpose of establishing a Downtown Hospitality Program. In 1996, the area was expanded to include side streets between Cedar and Front Streets and some downtown alleyways including Plaza, Locust, Commerce, Elm Lane, Birch Lanes, Pearl Alley, Lincoln-Cathcart and Pacific-Front alleyways. In 2023, the area was expanded to include all real property used for commercial or business purposes on parcels with street frontage on Cedar Street, Front Street, the south side of Mission Street and Water Street, and the north side of Laurel Street.
The CRM District is managed by the Downtown Management Corporation (DMC) Board of Directors which includes three property owner representatives, three business owner representatives, two City Councilmembers, and the Deputy City Manager as Chief Financial Officer.
In accordance with State law, the DMC is required to submit an Annual Report/Plan for each year in which assessments are to be levied in the District. The attached Fiscal Year (FY) 2026 Annual Report and FY 2027 Plan prepared by the DMC is provided for City Council consideration.
13.1 DISCUSSION: The FY 2026 Annual Report and FY 2027 Plan do not propose any changes to the CRM District area. The District includes properties used for commercial or business purposes with frontage on Pacific Avenue between Water Street and Laurel Street and those with frontage on the side streets and alleyways between Cedar and Front Street and properties with frontage on Cedar Street, Front Street, the south side of Mission Street and Water Street, and the north side of Laurel Street. The assessments are based upon the linear foot frontage and lot size and building size of the real property used for commercial or business purposes, including rental residential, within the CRM District.
Each parcel’s assessment is calculated as follows:
Linear Feet Frontage x Linear Feet Frontage Rate = Linear Footage Assessment Lot Area Square Footage x Lot Area Square Footage Rate = Lot Assessment Building Square Footage x Building Square Footage Rate = Building Assessment Linear Footage Assessment + Lot Assessment + Building Assessment = Annual Assessment
The CRM assessment formula allows the Board to recommend an annual adjustment in the rate based on the Consumer Price Index (CPI). The annual CPI adjustment as of February 2026 is
2.5%, therefore the rates per square foot will increase as follows:
FY 2026 Rates
SERVICE
ZONE
Comm Bldg
SF Assmt
Res Bldg SF
Assmt
Parcel SF
Assmt
Pacific Ave
Frontage
Assmt
All Other
Frontage
Assmt
Pacific Ave
Parcels $0.0755 $0.0755 $0.0853 $7.4028 $5.5521
All Other
Parcels $0.0566 $0.0566 $0.0640 $0.0000 $5.5521
FY 2027 Rates
SERVICE
ZONE
Comm Bldg
SF Assmt
Res Bldg SF
Assmt
Parcel SF
Assmt
Pacific Ave
Frontage
Assmt
All Other
Frontage
Assmt
Pacific Ave
Parcels
$0.0773 $0.0773 $0.0874 $7.5879 $5.6909
All Other
Parcels
$0.0580 $0.0580 $0.0656 $0.0000 $5.6909
FY 2027 Planned Activities:
The Annual Report/Plan (Plan) outlines the DMC’s FY 2027 planned activities, budgeted expenses and revenues and contributions from sources other than the assessments levied.
The DMC Board of Directors recommends continuing the Downtown Ambassador Program contract with the Downtown Association with the goals of encouraging a positive experience on the street; providing proactive assistance to visitors; providing eyes on the street to report disruptive or criminal behavior; and reporting and resolving vandalism, graffiti, waste, and cleanliness issues. The program will provide one Operations Director and sufficient Ambassador
13.2 hours to walk the CRM district 10am - 6pm, 7 days per week and staff the Information Kiosk during peak hours. The Plan also includes funding for maintenance and beautification which includes quarterly pressure washing services above and beyond city baseline services and grants for storefront window coverings to enhance the visual appeal of vacant storefronts.
The DMC’s Plan has been approved by the DMC Board for FY 2027. Following City Council approval of the DMC Annual Report/Plan, a resolution declaring the intention of the City to levy and collect assessments within the District must be adopted. The resolution will also set a public hearing to be held on June 23, 2026. Notice of the public hearing will be given by publishing the Resolution of Intention in a newspaper of general circulation in the City once, at least seven days prior to the public hearing. The law also requires that no sooner than 10 days after adoption of the Resolution of Intention, the City Council must hold a public hearing at which time it is required to take public testimony and receive protests pertaining to the proposed assessment.
Written and oral protests, if any, may be made in accordance with Sections 36524 and 36525 of the Law. City Council may then adopt a resolution levying the assessment only if there is not a majority of the property owners opposed to the levy.
CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: The proposed City Council action is not a “project” under CEQA because it does not have the potential to cause a physical change in the environment directly or indirectly.
HEALTH IN ALL POLICIES (HiAP): The proposed City Council action and services provided by the DMC through the annual workplan align with the HiAP goals of equity, community connectedness, and increased economic vitality in the CRM District.
FISCAL IMPACT:
1. The recommendation in this report impacts the General Fund: Yes
2. This recommendation requires a budget adjustment: No
3. The recommendation creates an on-going expenditure commitment: Yes FISCAL IMPACT DESCRIPTION: The City owns property within the boundaries of the District. The assessment for City properties in FY 2027 is $89,191.91. The General Fund (Fund 101), Parking Fund (Fund 741) and Housing Successor (Fund 281) contribute to the assessments and have been included in the FY 2027 budget request.
Prepared By:
Rebecca Unitt
Economic Development
Manager
Submitted By:
Bonnie Lipscomb
Deputy City Manager
Approved By:
Matt Huffaker
City Manager
ATTACHMENTS:
1. RESOLUTION.DOCX
2. ANNUAL REPORT AND WORKPLAN.DOCX
13.3 RESOLUTION NO. NSRESOLUTION OF INTENTION OF THE CITY COUNCIL OF THE CITY OF SANTA CRUZ
TO LEVY COOPERATIVE RETAIL MANAGEMENT BUSINESS REAL PROPERTY IMPROVEMENT DISTRICT ASSESSMENTS FOR FISCAL YEAR 2027
WHEREAS, in accordance with California Streets & Highways Code §36533, the Downtown Management Corporation has prepared an Annual Report/Plan to the City of Santa Cruz for the Fiscal Year (FY) 2026/27 pertaining to the Cooperative Retail Management (“CRM”) Business Real Property Improvement District (“District”); and WHEREAS, pursuant to California Streets & Highways Code §36533, the City Council has heretofore considered that Annual Report/Plan and by motion approved the Annual Report/Plan; and
WHEREAS, Santa Cruz Municipal Code §5.06.030 provides for the levy of semiannual assessments within the CRM District pursuant to the formula set forth in this resolution.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Santa Cruz as follows:
1. The City Council hereby declares its intention to levy and collect, on a semiannual basis, assessments within the CRM District for the FY 2027.
2. The City Council hereby declares and finds that the proposed assessment is based upon a proportionate degree of special benefit derived by each owner and tenant of business real property in the CRM District.
3. The FY 2026/27 Annual Report/Plan filed with the City Clerk by the Downtown Management Corporation of Santa Cruz contains a full and detailed description of the improvements and activities provided to the CRM District in the FY 2026. In addition, the report specifically identifies the boundaries of the CRM District and the proposed assessments to be levied upon the businesses within the CRM District for the FY 2027.
4. The assessments for FY 2027 are based upon the linear foot frontage, lot size and building size of the real property used for commercial or business purposes within the CRM District.
Rental residential property is assessed at the same rate per building square foot. The annual Consumer Price Index adjustment is 2.5% (February 2025 to February 2026), resulting in an increase of the per square foot rate as follows. For property fronting Pacific Avenue, the rates will increase from $7.4028 per linear foot on Pacific Avenue, $5.5521 per linear foot for all other frontage, $.0853 per lot square foot and $.0755 per building square foot to $7.5879 per linear foot on Pacific Avenue, $5.6909 per linear foot for all other frontage, $.0874 per lot square foot, and $.0773 per building square foot.
13.4 RESOLUTION NO. NS-XX,XXX
2 For property fronting side streets and alleys, the rates will increase from $5.5521 per linear foot, $.0640 per lot square foot, and $.0566 per building square foot to $5.6909 per linear foot, $.0656 per lot square foot, and $.0580 per building square foot. Frontage on side streets and alleys include properties located: on Cedar and Front Streets and located on Soquel Avenue; on Center Street between Cedar and Mission, Mission, Locust, Cooper, Church, Walnut, Lincoln, Cathcart, Elm and Maple Streets; Plaza, Locust, Commerce, Elm and Birch Lanes; in Pearl Alley; in Lincoln-Cathcart and Pacific-Front alley ways.
5. The Santa Cruz City Council will hold a public hearing in the City Council Chambers, located at City Hall, 809 Center Street, Santa Cruz, on Tuesday, June 23, 2026, to receive any oral or written protests or endorsements pertaining to the proposed levy of assessments, the amount of the proposed assessments, the proposed improvements and activities to be funded with the revenues derived from the proposed levy of assessments, and/or the proposed boundaries of the CRM District. The form and manner of protest shall conform to the requirements set forth therefore in California Streets & Highways Code §36524 and §36525 and legislation enacted pursuant to Proposition 218.
6. The City Clerk is hereby directed to give notice of the public hearing referenced in paragraph 5 by publishing this Resolution of Intention once in a newspaper of general circulation in the City of Santa Cruz once, at least seven days prior to the public hearing.
PASSED AND ADOPTED this 26th day of May, 2026 by the following vote:
AYES:
NOES:
ABSENT:
DISQUALIFIED:
APPROVED: ______________________________
Fred Keeley, Mayor
ATTEST: _________________________________
Bonnie Bush, City Clerk Administrator
13.5 Downtown Management Corporation
FY 2026 Annual Report
FY 2027 Plan
13.6 2
Introduction
The Downtown Management Corporation (DMC) oversees the Cooperative Retail Management District (CRM), covering Pacific Avenue from Water Street to Laurel Street, and the side streets off of Pacific Avenue. The CRM District is an improvement district funded by an assessment levied on property owners in this geographic boundary to fund enhanced programs and services focused on a clean, safe and welcoming Downtown.
The objectives of the DMC, as stated in the bylaws, are:
To improve public perception of downtown Santa Cruz by enhancing safety and security; To provide information and direction to shoppers and visitors in downtown Santa Cruz; To provide a visible presence in downtown Santa Cruz to observe and report street disorder.
The DMC is governed by a volunteer board of directors that includes two City of Santa Cruz Councilmembers, the City’s Deputy City Manager, three business owner representatives, and three property owner representatives. This work plan has been developed by the Board and staff to serve as a roadmap to guide the activities and resource allocations of the Downtown Management Corporation for fiscal year 2027.
13.7 3
Downtown Management Corporation
FY 2026 Annual Report and FY 2027 Plan
1. Are there any proposed changes to the Cooperative Retail Management Business Real Property Improvement District (CRM)?
The CRM assessment formula allows the Board to recommend an annual adjustment in the rate based on the Consumer Price Index. The annual CPI adjustment as of February 2026 is 2.5%, therefore the rates per square foot will increase as follows:
FY 2026 Rates
SERVICE ZONE
Comm Bldg SF
Assmt
Res Bldg SF
Assmt
Parcel SF
Assmt
Pacific Ave
Frontage
Assmt
All Other
Frontage
Assmt
Pacific Ave
Parcels $0.0755 $0.0755 $0.0853 $7.4028 $5.5521
All Other Parcels $0.0566 $0.0566 $0.0640 $0.0000 $5.5521 FY 2027 Rates
SERVICE ZONE
Comm Bldg SF
Assmt
Res Bldg SF
Assmt
Parcel SF
Assmt
Pacific Ave
Frontage
Assmt
All Other
Frontage
Assmt
Pacific Ave
Parcels $0.0773 $0.0773 $0.0874 $7.5879 $5.6909
All Other Parcels $0.0580 $0.0580 $0.0656 $0.0000 $5.6909
2. Describe the improvement activities that were provided for the year.
Please see Attachment No. 1.
3. Describe the budget for the improvements and activities.
Please see Attachment No. 2.
4. Describe the method used to levy assessments for FY 26.
The assessments for FY 26 were based upon the linear foot frontage, lot size and building size of the real property used for commercial or business purposes within the CRM District. The individuals or entities subject to the proposed assessment shall be those persons or entities who own commercial or business real property within the assessment district which have frontage on Pacific Avenue, downtown side streets and downtown alleyways and properties with frontage on Cedar Street, Front Street, the south side of Mission Street and Water Street, and the north side of Laurel Street. The proposed assessment shall be payable in two equal installments due on or before July 1st and January 1st. New property owners shall not be exempt from levy of the assessment.
Rental residential property is assessed at the same rate as building square footage.
Owner-occupied residential properties in the district are exempt from the assessment.
13.8 4
Each parcel’s assessment is calculated as follows:
Linear Feet Frontage x Linear Feet Frontage Rate = Linear Footage Assessment Lot Area Square Footage x Lot Area Square Footage Rate = Lot Assessment Building Square Footage x Building Square Footage Rate = Building Assessment.
Linear Footage Assessment + Lot Assessment + Building Assessment = the annual assessment
Assessment Rate Linear Feet Frontage Lot Area Square
Footage
Building Area Square
Footage
Pacific Avenue $7.4028 $0.0853 $0.0755
Side Street and
Alley
$5.5521 $0.0640 $0.0566
Rental residential square footage is assessed at the same building square feet rate
5. Show the amount or any surplus or deficit revenues carried over from the prior year.
The FY 2026 Operating Budget is estimated to have a fund balance of six thousand three hundred fifty-four dollars and seventy-nine cents ($6,354.79).
6. The amount of contributions from other sources, if any.
The Economic Development Department provided administrative support in the form of membership mailings and the coordination of regular meetings of the DMC Board of Directors.
7. The proposed work plan for the next fiscal year.
The following proposed activities were approved by the Board of Directors at the May 21, 2026 Board Meeting for Fiscal Year 2027. The Board voted to allow the activities and reserve funding to be revisited throughout the year for reallocation as needed as conditions change and based on actual costs for services. See Attachment 2 for the proposed work plan budget.
Downtown Ambassador Program
The DMC Board of Directors recommends continuing to contract with Block By Block Inc., through the Downtown Association of Santa Cruz (DTA) to provide Downtown Ambassador Services within the CRM district for FY 2027. DMC will allocate three hundred sixty-seven thousand three hundred eighty-three dollars and fifty-eight cents ($367,383.58) for the 12-month contract.
13.9 5
The Ambassador Program provides one Operations Director and sufficient Ambassador hours to walk the DMC district 10am - 6pm, 7 days per week and staff the Information Kiosk during peak hours.
The Ambassadors will provide the following services:
a. Offer and provide assistance, information and directions to visitors of the downtown.
b. Provide a uniformed ambassador presence by walking the service area. c. Inform persons as to Santa Cruz Municipal Codes on standards of conduct with the goal of achieving compliance.
d. Promptly report disruptive or criminal behavior to the appropriate public agency and cooperate as necessary for enforcement.
e. Notify appropriate authorities to respond to medical or mental health emergencies.
f. Pick up trash such as newspapers and small debris.
g. Address light litter and graffiti and report large graffiti, spills on sidewalk, and other conditions that may impact public safety to the appropriate department if unable to remediate.
Downtown-Beach Shuttle
The Beach-Downtown shuttle replaces the Santa Cruz Trolley program and will provide transportation for thousands of visitors between the beach and downtown during the summer months. The program restarted in 2023 after pausing following the 2019 season due to the pandemic. Shuttle operations are funded through a combination of sponsorships, advertising revenue, fares and grants. DMC Board of Directors believes that the number of visitors that the shuttle brings to the CRM district is beneficial and warrants a contribution of $10,000 to shuttle operation costs.
Maintenance and Beautification Services
The work plan includes budget for seventy thousand dollars ($70,000) to provide maintenance and beautification services for public and private property in the CRM District. The maintenance services are planned to include quarterly sidewalk pressure washing services for a total of fifty-five thousand dollars ($55,000). The quarterly cleanings will include two cleanings of all sidewalks in the district area in May and November and two cleanings of Pacific Avenue in August and February.
Beautification services will include a proposed window covering grant to provide a 50% reimbursement grant up to $2,000 per storefront for the installation of window coverings on vacant storefronts. These windows coverings are required to be installed on all empty storefronts by the City’s Vibrancy Ordinance and this DMC funding will help offset the costs to install the coverings and enhance beautification in the District.
Pet Waste Bag Dispensers
The work plan includes continuation of maintenance for the five pet waste bag dispensers in the district and purchase of refill bags for an estimated cost of one thousand five hundred dollars ($1,500). With the increase in downtown residents and their pets, these bags are placed in strategic locations to reduce pet waste on the sidewalks in the District.
13.10 6
Attachment No. 1
DMC FY 2026 Work Program
The objectives of the DMC, as stated in the bylaws, are:
To improve public perception of downtown Santa Cruz by enhancing safety and security; To provide information and direction to shoppers and visitors in downtown Santa Cruz; To provide a visible presence in downtown Santa Cruz to observe and report street disorder.
The DMC Board of Directors, pursuant to its bylaws, consists of nine members, including:
Three representatives of the City: Mayor and Vice Mayor (or their designees) and Deputy City Manager as CFO.
Three downtown property owners or designated agents.
Three downtown business owners or designated agents selected by the DMC Board of Directors.
Downtown Management Corporation Board of Directors FY 2026 Chris Murphy, Business Representative
Elfin Saffer, Business Representative
Ian McRae, Business Representative
Kris Reyes, Property Owner Representative
Ryan Coonerty, Property Owner Representative
Sabrina Michaelis, Property Owner Representative
Bonnie Lipscomb, Deputy City Manager
Scott Newsome, Councilmember
Shebreh Kalantari-Johnson, Councilmember
Downtown Ambassador Program
In the FY 2026 workplan the DMC Board of Directors
continued the contract with the Downtown Association
of Santa Cruz to provide hospitality services in the
district for a sixth year of service.
The Ambassador program has been designed based on
best practices of Downtown Management
Organizations, with the specific and unique needs of
Downtown Santa Cruz in mind. The primary objective
of the program is to foster a welcoming and friendly
environment in the Downtown and to provide support
to the business community. The program provides one Operations Director and sufficient Ambassador hours to walk the DMC district 10am - 6pm, 7 days per week and staff the Information Kiosk during peak hours. The Ambassadors are tasked with offering assistance and directions to visitors, providing eyes on the street to report disruptive or criminal behavior, picking up trash and debris to promote cleanliness downtown, and reporting graffiti, sidewalk spills, and other conditions to the proper departments or agencies. The Ambassadors also maintain close relationships with the merchants in the district to provide information and address concerns to support their success downtown.
13.11 7
Maintenance Services
Daily biohazard removal services in the CRM District transitioned to the City’s Parking District for daily cleaning and on-call services. The DMC Board approved use of the maintenance fund for additional pressure washing services on Pacific Avenue a one-time contribution of forty thousand dollars ($40,000) to the Parking District to purchase replacement equipment for daily sidewalk scrubbing services.
Related Services That Enhance the Downtown Ambassador Program City Services
The Downtown Police Patrol enhances the efforts of the ambassadors. The Downtown Police Officers are in communication with the Ambassadors daily to monitor issues impacting the downtown and maintain communication between the businesses.
Homeward Bound Program
The City’s Homeward Bound Program provides funding for bus tickets to people in need after verifying that they are returning to family, medical services or employment.
Downtown Outreach Worker
The Downtown Outreach Workers (DOW), mental health outreach workers funded by the City of Santa Cruz, has been extremely effective in identifying and assisting people with social and mental health problems and in referring them to needed services. The DOW program works closely with the ambassadors, police and downtown businesses to increase the awareness of the program and to provide assistance to the business owners with social problems occurring in their premises and in the downtown generally. The DOWs work five days a week and serve as case managers to provide ongoing support to individuals to assist them with medical services, transportation and housing.
Downtown Association
The DMC continues to collaborate with the Downtown Association of Santa Cruz (DTA) on creating a clean, safe and welcoming downtown. The DTA sponsors safety workshops for new downtown employees and invites the police and the downtown outreach workers to attend and to provide information on services.
The DTA also operates the Downtown Information Kiosk which is located at 1130 K2 Pacific Avenue. The professional, friendly staff provides information to thousands of visitors and locals on area services, events, downtown opportunities and directions. They answer numerous questions including information about the public property ordinances in the downtown. Staff keeps a watchful eye on the area surrounding the kiosk and works cooperatively with police and downtown outreach workers.
13.12 8
Attachment No. 2
Downtown Management Corporation
Estimated Operating Budget FY 2026 and Proposed Budget for FY 2027 FY 26
Estimated Actual
FY 27
Proposed
Revenue
Assessment 426,838.39 465,451.17
Interest 25.57 30.00
Beginning Reserve 1,286.40 6,354.79
Total Revenue 428,150.36 471,835.96
Expenses
Ambassador Program 358,422.96 367,383.58
Insurance 1,645.00 1,700.00
Tax Preparation 1,765.00 1,810.00
Taxes 100.00 100.00
Downtown-Beach Shuttle 10,000.00 10,000.00
Pet Waste Bag Dispensers 962.61 1,500.00
Maintenance 48,900.00 55,000.00
Beautification - 16,000.00
Total Expenses 421,795.57 453,493.58
Net Income (Loss) 5,068.39 11,987.59
Accumulated Reserve 6,354.79 18,342.38
13.13 City Council
AGENDA REPORT
DATE: 05/20/2026
AGENDA OF: 06/09/2026
DEPARTMENT: Economic Development
SUBJECT: Ocean Street Beautification Project – Authorization to Bid and Award an Installation of Landscape Design Contract and Authorization to Execute a Public Art Contract Amendment with Idea Fabrication Labs Santa Cruz
LLC (ED)
LOCATION: District 1
RECOMMENDATION: Motion to:
1) Authorize the solicitation of bids and award a landscaping contract, in a form to be approved by the City Attorney, in an amount within Ocean Street Beautification Project budget (c512001) (an amount not to exceed $525,000);
2) Approve the Ocean Street Beautification Project Concept Plans, and authorize the City Manager, or designee, to approve final landscaping improvement plans and specifications and execute a contract, in a form to be approved by the City Attorney, for landscaping improvements;
3) Authorize the City Manager, or designee, to execute an amendment with Idea Fabrication Labs Santa Cruz LLC, in a form to be approved by the City Attorney, to produce the public art, in an amount of $32,405, for a total public art contract not to exceed $126,635; and 4) Adopt a finding of Categorical Exemption pursuant to CEQA Guidelines Sections 15301 (Existing Facilities); 15302 (Replacement or Reconstruction), 15303 (New Construction or Conversation of Small Structures), and 15304 (Minor Alterations to Land).
BACKGROUND: The Ocean Street Gateway is one the busiest entry points to Santa Cruz and is described in the Ocean Street Area Plan (OSAP) as the “front door to Santa Cruz.” An average of over 41,200 vehicles per day were counted in 2020 traveling to or from state highways through the Ocean Street Gateway (Gateway), excluding local traffic traveling toward Graham Hill or the Grant Park and Oceans 11 neighborhoods. The volume of traffic shows that the Gateway holds tremendous opportunity to reframe perceptions of Santa Cruz and promote community pride. Yet, aging signage, limited landscaping with narrow medians and refuse have long been the first impression for many. The Ocean Street Beautification Project aims to improve the appearance, function, and safety at the Gateway.
14.1 Public Works recently made improvements to address many safety issues. Restriping, installation of buffered bike lanes, and widening of the median are expected to reduce vehicle speeds entering the City, while clearly designating safer paths of travel for cyclists and vehicles. The limited landscaping and pedestrian experience remain to be improved through the Ocean Street Beautification Project.
The vision for the Ocean Street Gateway is included in the OSAP, adopted in 2014. The OSAP was informed through the work of two community workshops. The OSAP Committee comprised of community stakeholders and leaders also provided ongoing input throughout the OSAP planning process. In all, over 150 community members actively participated in drafting the OSAP. To deliver the Gateway features, OSAP recommended that the City conduct a “design contest” for ideas to enhance the Gateway through public art and iconic signage. The OSAP also proposed that the artwork be durable, reflect important community values like nature or history, integrate landscape, public art, and signage, and other recommendations to create a gateway that is clearly distinctive.
On June 24, 2025, the City Council authorized the City Manager to take actions necessary to prepare landscaping plans and specifications for the Ocean Street Beautification Project and execute contracts with artists Melissa Marzan and Idea Fabrication Labs Santa Cruz LLC (Idea Fab Labs) for art signage. On October 28, 2025, City Council directed staff to proceed with development of final plans for the Ocean Street Beautification Project with additional hardscaping and landscape design elements.
DISCUSSION: Staff have been working with SWA Group to finalize plans and specification documents for the landscaping implementation and the coordination with the artists for the art installations. Final documents are expected to be ready in mid-June, 2026. In order for the project to progress over the summer, staff requests authorization at this time to solicit bids and award a landscaping contract within the approved project budget.
Additionally, SWA Group is supporting the artist Melissa Marzan to ensure the artwork installations are integrated into the landscaping plans and specifications. It is anticipated that additional services may be required to ensure the artwork is safe and sustainable when installed.
Staff recommend authorizing a contract amendment with Idea Fab Labs, who is working with the artist to adhere to City requirements, in an amount of $32,405, for a total not to exceed amount of $126,635. City Council approval is required to adhere to City Purchasing requirements for contracts over $100,000.
Based on the trajectory of design and artists schedules, staff anticipate construction work over the summer and final art installations by Fall 2026.
CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: The landscaping improvements that are authorized by this Council action are exempt from CEQA under CEQA Guidelines sections 15301 (Existing Facilities); 15302 (Replacement or Reconstruction), 15303 (New Construction or Conversation of Small Structures), and 15304 (Minor Alterations to Land).
Specifically, the project will update and restore existing facilities with landscape improvements that are more resilient and “gardening” of existing improved landscape and potential grading of areas with slopes less than 10%. It is also worth noting that the recommended are also consistent
14.2 with the Mitigated Negative Declaration (MND) adopted for the OSAP, including beautification of the corridor and inclusion of public art.
HEALTH IN ALL POLICIES (HiAP): Together with street improvements completed by Public Works, the Ocean Street Beautification Project aims to create a clear transition from Highway 17 to Ocean Street, slow traffic by providing artful elements and widening median upgrades, improve public safety by reducing illegal and illicit activity within the project area, and increase awareness of pedestrian and bicycle activity. Additionally, the sign team was selected as a partnership to support the professional growth experience of a local Queer/Bisexual Filipino American artist through the opportunity to expand their public art portfolio through this project.
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 current Fiscal Year (FY) 2026 budget and proposed FY 2027 Ocean Street Beautification Project (c512001) budget are sufficient to complete implementation of the landscaped work and artwork installations. Proposed improvements are planned to be drought tolerant, while requiring limited maintenance. Potential maintenance costs to the General Fund should be offset by some reduction in the regular cleanups and removal of debris. Additionally, proposed art pieces were designed with maintenance in mind and include countermeasures to address vandalism and graffiti. Intermittent repairs of public art will be funded through the public art program, as needed. Funding for maintenance of City medians is included in the FY 2026 and FY 2027 Proposed Operating Budget for Parks and Recreation.
Prepared By:
Brian W. Borguno
Development Manager
Submitted By:
Bonnie Lipscomb
Deputy City Manager
Approved By:
Matt Huffaker
City Manager
ATTACHMENTS:
1. OCEAN STREET GATEWAY LANDSCAPE CONCEPT.PDF
14.3 / 1
RENDERINGS OF LANDSCAPE
ARCHITECTURE OPTIONS AND
SELECTED ARTWORK
LANDSCAP E ARCHITECTURE 14.4
/
PLYMOUTH STREET
N
14.5 CHRIS MOSLEY
14.6 MELISSA MARZAN + IDEA FAB LABS
14.7 /
5 SITE LOCATION
LANDSCAP E ARCHITECTURE
• Be visible to vehicles
and pedestrians
• Do not impact the roots
of the redwood trees
with construction – stay
out of the driplines
• Discourage pedestrian
and vehicle conflicts
• Maintain cone of vision
for Pryce Street and
Ocean Street
intersections
CONSIDERATIONS
14.8 /
• Cone of vision visibility triangle
• Site line must be maintained
between oncoming traffic
and Pryce St
• Tree trunk offset root protection
zone
– 3x trunk diameter
• Signal + Utility poles
• Vaults – Caltrans boxes
• Freeway sign
LANDSCAP E ARCHITECTURE 6
CONSTRAINTS
14.9 /
Stone as groundcover
Sculptural approach
No fence needed
Ground Plane Stone - Hardscape
Limits access
Low maintenance
14.10 /
Cuts and mounding create uneven terrain
Can improve stormwater management
Adds visual interest and defines space
Limits access
Low maintenance
Varied Surfacing - Landscape
14.11 /
Forest, and wetlands inspired
Inspired by redwood understory, adapted to dryer and sunnier setting Native or adapted plants
May limit planting at base of redwoods due to heavy duff Low plants to allow visibility across the site for security Planting Concepts - Landscape
14.12 /
Demonstrated success
Embedded Stones
Boulders
Uneven grades
Santa Cruz Precedents
Limits access
Low maintenance
No fence needed
14.13 / 16
SELECTIVE BOULDER
HARDSCAPE AND
LANDSCAPING OPTION
LANDSCAP E ARCHITECTURE 14.14
14.15 14.16
14.17 14.18
Brittany Inclan
From: Kate Oates <[email protected]>
Sent: Monday, June 8, 2026 4:08 PM
To: City Council
Subject: Support for Ocean Street Beautification Project Dear Mayor Keeley and Councilmembers,
My name is Kate Oates, and I live on Pryce Street, right next to the Ocean Street Gateway Project. I’m writing in strong support.
I was part of the early community input for the Ocean Street Area Plan, and this past year I’ve taken on the entrance to Santa Cruz as my own small stewardship project. I pick up trash there weekly and partnered with nearby businesses to get everything disposed of properly. Doing this work has shown me how much neighbors care about this stretch — and how ready people are to feel proud of our neighborhood again.
Once the proposed project is in place, I’m excited to keep doing my part and to team up with other neighbors to help keep the area clean, cared for, and reflective of the pride we all feel for Santa Cruz.
I respectfully urge you to approve the recommended actions so this project can move forward.
Warmly,
Kate Oates
14.19 Brittany Inclan
From: Kevin Norton <[email protected]>
Sent: Monday, June 8, 2026 4:30 PM
To: Shebreh Kalantari-Johnson; Scott Newsome; Fred Keeley; Gabriela Trigueiro; Renee Golder; Sonja Brunner; Susie O'Hara; City Council
Subject: Ocean Street Beautification Project
Dear City Council,
Ocean Street saw 25 reported traffic injuries in 2024-25, including three pedestrians and five people riding bicycles, according to SWITRS. That context is important as you consider the Ocean Street Beautification contract.
I support the goal of keeping medians clear of encampments and maintaining safe public spaces.
However, the project's estimated lifetime cost of $1.16 million raises important questions about how we prioritize limited city resources.
While beautification has value, the city also faces urgent transportation safety needs. A simpler, lowercost hardscaping approach could potentially achieve the project's primary safety objectives while freeing up substantial funding for other community priorities.
The opportunity cost is significant. The difference between a lower-cost alternative and the proposed project could help fund protected bike lanes, pedestrian safety improvements, or other interventions on corridors where people are being injured today.
Visitors form impressions of Santa Cruz through word-of-mouth and lived experience, much more than landscaping. The evidence from public health is clear: walkable, bikeable streets improve population health outcomes, reduce injuries, and make places more attractive to residents and visitors alike. A city where people feel safe getting around without a car is more appealing — and healthier — than one with prettier medians. Public health research is clear: safer streets reduce injuries and deaths, encourage physical activity, support local businesses, and strengthen community connections.
Before awarding this contract, I ask the Council to direct staff to evaluate a lower-cost alternative that achieves the project's primary safety objectives and to identify how any resulting savings could be invested in pedestrian and bicycle safety improvements, which would make streets safer for ALL road users — including visitors in cars.
With 25 reported traffic injuries on Ocean Street between the years 2024-2025, I believe our street investments should prioritize preventing future injuries whenever possible.
Best,
Kevin
14.20 City Council
AGENDA REPORT
DATE: 05/20/2026
AGENDA OF: 06/09/2026
DEPARTMENT: Economic Development
SUBJECT: Amended and Restated Municipal Wharf Lease Agreement with Socksmith Design, Inc. for City-Owned Commercial Space at 17-E Municipal Wharf (ED)
LOCATION: District 4
RECOMMENDATION: Motion to:
1) Approve and authorize the City Manager to execute an Assignment and Assumption of Lease Agreement whereby Sockshop & Shoe Company, Inc. (Assignor) agrees to assign all of Assignor’s rights, title, obligations and interest in the Wharf Lease Agreement dated February 1, 2017 to Socksmith Design, Inc. (Assignee), in a form approved by the City Attorney, for the commercial retail space located at 17-E Municipal Wharf; 2) Approve and authorize the City Manager to execute the Amended and Restated Municipal Wharf Lease Agreement with Socksmith Design, Inc., and any documents, amendments or extensions of a non-substantive nature, in a form approved by the City Attorney, for the commercial retail space located at 17-E Municipal Wharf; 3) Approve and authorize the City Manager to execute a Memorandum of Lease, in a form approved by the City Attorney, to be recorded in the Santa Cruz County Recorder’s Office; and 4) Adopt a finding of categorical exemption pursuant to the following CEQA guidelines: 14 CCR 15301 (Existing Facilities) and 14 CCR 15061(b)(3) (Common Sense Exemption).
BACKGROUND: In October 2016, Sockshop & Shoe Company, Inc. (“Sockshop”) was selected through a Request for Proposal process as the preferred tenant for the City-owned premises located at 17-E Municipal Wharf. Sockshop is a successful locally-owned business with locations in Aptos and downtown Santa Cruz. It has an iconic status and is known for its expansive mix of hosiery and footwear. The business contributes positively to the overall Wharf experience, and the owners are responsible tenants. The owners are now requesting a transfer in ownership.
DISCUSSION: The owners currently own the business under Sockshop as fifty-fifty partners.
They would like to transfer ownership to their wholesale company, Socksmith Design, Inc.,
15.1 where they are two-thirds of the owners, with a retired partner holding the remaining third. Staff recommends approving the Assignment and Assumption of Lease Agreement to transfer the ownership. Additionally, staff recommends approving the Amended and Restated Municipal Wharf Lease Agreement to extend the term to June 30, 2031 and update applicable terms and conditions to meet current City practices. The current rent is the greater of the minimum base rent or 8% of adjusted gross sales and 1% of adjusted gross sales towards the capital improvement fund. The minimum base rent is subject to an annual adjustment of five percent (5%). The minimum base rent of $1,675.12 per month is expected to yield minimum annual revenues in the amount of $20,101.44. The Amended and Restated Municipal Wharf Lease Agreement does not modify the rent terms.
CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: The proposed City Council action does not meet the definition of “project” under CEQA, as codified in Public Resources Code Section 21065.
To the extent any of the proposed City Council actions are deemed a project, they are exempt from CEQA under: (1) 14 CCR 15301 – Class 1 Categorical Exemption because the City Council action relates to the lease of an existing facility involving negligible or no expansion of existing or former use; and (2) 14 CCR 15061(b)(3) as an activity that, with certainty, does not have an effect on the environment.
HEALTH IN ALL POLICIES (HiAP): Promoting locally owned businesses helps support social and community bonds, improves community economic resilience, reduces commute times and pollution from owner operators, and generally aligns business activities with local culture and initiatives. While these factors may not in themselves influence public health, they have been shown to have a positive impact on the social determinants of health and support the overall well-being in the community.
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: Lease revenue from the commercial space is maintained in Municipal Wharf Fund (Fund 104) and helps support ongoing maintenance operations of the Wharf. Should sales exceed the minimum base rent, the percentage rent would increase the revenue. Capital Improvement Fund (Fund 319) contributions are collected in the capital investment project, 17-E Municipal Wharf (w511701), dedicated to support ongoing property improvement and capital needs related to the premises and/or to be expended on repairs or replacement of Wharf decking, substructure and pilings related to or supporting the premises if 50% of any tenant contributions remain unspent in any calendar year.
Prepared By:
Jennifer Shelton
Principal Management
Analyst
Submitted By:
Bonnie Lipscomb
Deputy City Manager
Approved By:
Matt Huffaker
City Manager
15.2 ATTACHMENTS:
1. ASSIGNMENT AND ASSUMPTION OF LEASE AGREEMENT FROM SOCKSHOP AND SHOE COMPANY, INC.PDF
2. AMENDED AND RESTATED MUNICIPAL WHARF LEASE AGREEMENT WITH SOCKSMITH DESIGN, INC..DOCX
3. MEMORANDUM OF LEASE WITH SOCKSMITH DESIGN, INC..PDF
15.3 1
ASSIGNMENT AND ASSUMPTION OF LEASE AGREEMENT
This Assignment and Assumption of Lease (the “Assignment”), is made as of_______________, (the “Effective Date”), by and between the City of Santa Cruz, a municipal corporation (the “Landlord”) and Sockshop & Shoe Company, Inc. (the “Assignor”) and Socksmith Design, Inc. (the “Assignee”). Landlord, Assignor, and Assignee are hereinafter collectively referred to as the “Parties” and individually as the “Party”.
RECITALS
WHEREAS, the Landlord and Assignor entered into the Wharf Lease Agreement dated February 1, 2017 (the “Lease”) whereby Landlord agreed to lease to Assignor, and Assignor agreed to lease from Landlord the real property in the City of Santa Cruz, California, commonly known as 17-E Municipal Wharf, APN 007-331-09 (the “Premises”);
WHEREAS, Assignor desires to assign its right, title, and interest in, to, and under the Lease and the Premises to Assignee, and Assignee desires to accept that assignment on, and subject to all of the terms and conditions of this Assignment.
NOW, THEREFORE, in consideration of the mutual covenants contained in this Assignment, and for valuable consideration, the Parties agree as follows:
1. Assignment and Assumption of Lease. Assignor hereby assigns, transfers, and conveys to Assignee all of Assignor’s rights, title, claim, privileges, obligations, and interest in, to and under the Lease (including, but not limited to, any right, title, claim, privilege, obligation, and interest in and to the Premises and the building and improvements constructed thereon), and Assignee accepts this Assignment of the Lease and assumes all of Assignor’s obligations, responsibilities, duties, and liabilities under the Lease and agrees to be bound by and comply with all terms, conditions, and provisions of the Lease and to timely perform and discharge all the obligations of the tenant under the Lease as a direct obligation to the Landlord from and after the Effective Date of this Assignment. This assignment and assumption is made on, and is subject to, all of the terms, conditions, and covenants of this Assignment.
2. Rent. Without limiting the foregoing, Assignee shall be responsible for all rent, fees, costs, expenses, proportionate share of taxes, and any other charges which are incurred or payable under the Lease, as of the Effective Date of this Assignment and thereafter, in accordance with the terms of the Lease.
3. Condition of Premises. The Premises will be delivered by Assignor to Assignee in “as is” condition with all those items of furniture, fixtures, and equipment as presently contained therein. Assignor represents and warrants that the furniture, fixtures, and equipment are not
15.4 2
subject to any liens, conditional sales contracts, or other encumbrances, except for any rights the Landlord may have in the furniture, fixtures, and equipment provided in the Lease.
4. Security Deposit. Assignor transfers and assigns all of its right, title, and interest in the security deposit held by Landlord to the Assignee.
5. Indemnification.
a. Assignor shall defend, indemnify, and hold harmless the Landlord, its officials, officers, employees, and agents from and against any and all liability, claim, action, loss, injury, dagame, judgment, costs, or expenses, caused by or resulting from the Assignor’s occupancy or use of the Premises, or duties or obligations related to the Premises under the Lease, prior to the Effective Date of this Assignment, or any breach or default under the Lease by Assignor occurring prior to the Effective Date of this Assignment. b. Assignee shall defend, indemnify, and hold harmless the Landlord, its officials, officers, employees, and agents from and against any and all liability, claim, action, loss, injury, dagame, judgment, costs, or expenses, caused by or resulting from the Assignee’s occupancy or use of the Premises, or duties or obligations related to the Premises under the Lease, from or after the Effective Date of this Assignment, or any breach or default under the Lease by Assignee, occurring from or after the Effective Date of this Assignment.
c. Assignee will defend, indemnify and hold harmless the Assignor from all costs, expenses, claims, causes of action and damages (including, without limitation, reasonable attorney fees and costs), which arise in connection with the Lease (as the same may be amended from time to time after the date of this Assignment) and the Premises, from and after the Effective Date of this Assignment.
6. Landlord Consent. Pursuant to the requirements in Article 14 of the Lease, Landlord hereby expressly consents to this Assignment as conditioned herein. Landlord’s consent to this Assignment is limited solely to the assignment to Assignee and shall not constitute (i) a waiver of any restrictions contained in the Lease regarding assignments or transfers, (ii) a consent to any future transfer or assignment, (iii) a waiver of any existing or future defaults under the Lease, whether known or unknown by Landlord, or (iv) a waiver of Landlord’s right to enforce any term or condition of the Lease.
7. Further Assurances and Documents. Assignor and/or Assignee agree, at each entity’s respective own cost and expense, to take any other actions or to execute and deliver any further documents, forms, and/or instruments which any other Party may reasonably request, or which may be reasonably required or appropriate to evidence or carry out the intent and purposes of this Assignment.
15.5 3
8. Estoppel Certificate. Prior to the execution of this Assignment, Assignor agrees to execute and deliver to Landlord an estoppel certificate certifying that there are no breaches by Landlord and Assignor has no claims or offsets against Landlord under the Lease, in a form provided by or reasonably acceptable to the Landlord.
9. Governing Law; Legal Action. This Assignment will be governed by, and construed in accordance with California law, with jurisdiction in the Santa Cruz County Superior Court.
10. Entire Assignment. This Assignment constitutes the final and complete statement between the Parties pertaining to the terms of Assignor’s assignment of the Lease and the Premises to Assignee, supersedes all prior and contemporaneous understandings or agreements of the Parties, and is binding on and inures to the benefit of their respective heirs, representatives, successors and assigns. Neither party has been induced to enter into this Assignment by, nor is either party relying on any representation or warranty outside those expressly set forth in this Assignment. Any agreement made after the date of this Assignment is ineffective to modify, waive, or terminate this Assignment, in whole or in part, unless that agreement is in writing, is signed by the Parties, and specifically states that agreement modifies this Assignment.
11. Contract Interpretation. Each Party acknowledges that it has reviewed this Assignment and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Assignment.
12. Counterparts. The Parties may execute this Assignment in two or more counterparts, which shall, in the aggregate, be deemed an original but all of which, together, shall constitute one and the same instrument. A scanned, electronic, facsimile or other copy of a party’s signature shall be accepted and valid as an original.
13. Severability. The unenforceability, invalidity or illegality of any provision(s) of this Assignment shall not render the other provisions unenforceable, invalid or illegal.
14. Warranty of Authority. The signatories of this Assignment warrant and represent that each is authorized to execute this Assignment and that their respective signatures serve to legally obligate their respective representatives, agents, successors, and assigns to comply with the provisions of this Assignment.
[SIGNATURES ON FOLLOWING PAGE]
15.6 4
IN WITNESS WHEREOF, the Parties have executed this Assignment as of the Effective Date as of the date indicated above.
CITY OF SANTA CRUZ
BY: _____________________ Date: ________________
Matt Huffaker
City Manager
ASSIGNOR: Sockshop & Shoe Company, Inc.
BY: _____________________ Date: ________________
Eric Gil, President
BY: _____________________ Date: ________________
Ellen Gil, Secretary
ASSIGNEE: Socksmith Design, Inc.
BY: _____________________ Date: ________________
Eric Gil, President
BY: _____________________ Date: ________________
Ellen Gil, Secretary
APPROVED AS TO FORM
________________________ Date: _______________
Office of the City Attorney
5/1/2026
15.7
AMENDED AND RESTATED MUNICIPAL WHARF LEASE AGREEMENT
This Amended and Restated Municipal Wharf Lease Agreement (“Lease”) is made and entered into as of __________, (the “Effective Date”), by and between the City of Santa Cruz, a municipal corporation (“Landlord”) and Socksmith Design, Inc. (“Tenant”). Landlord and Tenant are hereinafter collectively referred to as the “Parties” and individually as the “Party”.
RECITALS
A. Landlord is the owner of certain real property in the City of Santa Cruz, California, commonly known as 17-E Municipal Wharf, APN 007-331-09 (the “Premises”) located on the Santa Cruz Municipal Wharf (the “Wharf”), as more particularly described in Exhibit A, attached hereto and incorporated herein by reference; B. Landlord previously entered into the Wharf Lease Agreement dated February 1, 2017 (the “Original Lease”) whereby Landlord agreed to lease the Premises to Sockshop & Shoe Company, Inc.;
C. Concurrently with this Lease, Landlord, the Tenant, and Sockshop & Shoe Company, Inc. entered into an Assignment and Assumption of Lease Agreement whereby Sockshop & Shoe Company assigned to Tenant all of Sockshop & Shoe Company’s rights, title, obligations, and interest to the Original Lease; D. Landlord and Tenant now desire to enter into this Lease to amend and restate the Original Lease as set forth herein, such that this Lease shall upon its commencement supersede the Original Lease, and become the operative Lease between the Parties and govern all rights, covenants, commitments, and obligations relating to Tenant’s tenancy of the Premises as of the Effective Date of this Lease.
E. The Parties acknowledge and agree that the Original Lease is superseded as of the Effective Date of this Lease, and the Parties agree that neither Party has any rights or claims under the Original Lease, which is superseded.
F. Landlord desires to lease to Tenant and Tenant desires to lease from Landlord, on the terms and subject to the conditions of this Lease, the Premises in exchange for Tenant’s performance of its obligations pursuant to this Lease and for the rent and other consideration described herein.
NOW, THEREFORE, in furtherance of the foregoing Recitals, which are incorporated herein, and in consideration of the mutual covenants contained herein, Landlord and Tenant hereby agree as follows:
ARTICLE 1. BASIC LEASE PROVISIONS
The following are basic terms applicable to this Lease. The Sections and Exhibits referenced below in parenthesis explain and define the basic terms specified below and are to be read in conjunction with basic terms herein:
1.01 Tenant Trade Name. “Socksmith” (Section 8.01).
1.02 Commencement Date. July 1, 2026 (“Commencement Date”) (Section 3.01).
15.8
1.03 Term. Five (5) years, as of the Commencement Date and terminating no later than 11:59 p.m. on June 30, 2031(“Expiration Date”), unless sooner terminated or otherwise extended as permitted under this Lease (Article 3).
1.04 Premises Location and Leased Area. That certain designated area, located on the Wharf at 17-E Municipal Wharf, Santa Cruz, California 95060 (APN 007-331-09) in the City of Santa Cruz, County of Santa Cruz, State of California and further depicted on Exhibit A and consisting of approximately ±416 square feet of space (“Premises”).
The Premises is further described in Section 2.02 (Premises) of this Lease and depicted in Exhibit A (Premises) and Exhibit B (Floor Plan of Premises), both of which are attached hereto and incorporated herein.
1.05 Rent.
(a) Minimum Base Rent - $1,675.12 per month, subject to annual increase. (Article 4)
(b) Percentage Rent Rate - Eight percent (8%) of Gross Sales (Section 4.04), subject to increase (Article 4).
1.06 Use of Premises. Tenant shall use the Premises for operating and maintaining the sale of socks, tights, leggings, knit beanies, and scarves (the “Permitted Use”) and for no other purposes without Landlord’s prior written consent. (Article 8).
1.07 Hours of Operation. Tenant’s hours of operation, unless otherwise agreed in writing by Landlord, shall be at least the following:
Summer (Memorial Day through Labor Day): 10:00 AM - 8:00 PM (daily) Winter: 11:00 AM – 5:00 PM (daily) (Section 8.04) (Operation of Business; Hours of Operation).
1.08 Security Deposit. $3,350 (Article 7).
1.09 Tenant’s Deadline to Complete Tenant’s Work. INTENTIONALLY OMITTED.
1.10 Guarantor of Lease. Ellen Gil.
1.11 Tenant’s Address for Notices.
Socksmith Design, Inc.
1515 Pacific Avenue
Santa Cruz, CA 95060
Phone: 831-234-2208
Email: [email protected]
1.12 Landlord’s Address for Notices.
City of Santa Cruz
Attn: Jennifer Shelton
337 Locust Street
Santa Cruz, CA 95060
15.9
Phone: (831) 420-5154
Email: [email protected]
1.13 Landlord’s Address for Payment of Rent.
City of Santa Cruz
Finance Department
Attn - Revenue
1200 Pacific Ave, Suite 290
Santa Cruz, CA 95060
ARTICLE 2. LEASE OF PREMISES
2.01 City of Santa Cruz as Landlord. Tenant acknowledges and understands that Landlord is a municipality consisting of numerous offices and departments. Whenever a provision contained in this Lease, or any extension, modification or amendment, requires the “written consent” of Landlord, such consent must be obtained from the then acting City Manager or authorized designee for the City of Santa Cruz (“City”). Tenant may not rely on any statement or representation by any other employee, agent or representative of Landlord in obtaining such consent and any such statement or representation other than the express written consent of the then acting City Manager or authorized designee shall be null and void and have no effect.
Nothing contained in this Section shall limit in any way the authority of any office, or department of the City of Santa Cruz from approving or withholding consent to any event or activity regulated by local law.
2.02 Premises. For and in consideration of the rents to be paid and promises and covenants to be performed by Tenant under this Lease, Landlord leases to Tenant, and Tenant leases from Landlord, in accordance with the terms and conditions set forth in this Lease, that certain designated area, (together with certain appurtenant rights and easements), described in Section 1.04 (Premises), as more particularly described and depicted in Exhibit A (collectively the “Premises”). A floor plan of the Premises is attached to this Lease as Exhibit B.
2.03 License Area of Adjacent Public Right of Way. INTENTIONALLY OMITTED.
2.04 Reservations of Leasehold Rights. This Lease is subject to any and all exceptions, easements, rights, rights-of-way, and other matters of record affecting the Premises, structures or other improvements on the Premises, and land of which the Premises are a part, and such other matters as are apparent from an inspection of the Premises (including, but not limited to, existing easements, servitudes and right-of-ways for roads, telephone, and electric power lines and facilities, pipelines, and other purposes whether recorded or not). This Lease confers no rights either with regard to the subsurface of the water or land below the ground level of the Premises or with regard to airspace above the roof of the Premises. Easements for light and air are not granted in this Lease. Tenant shall have no rights in, the Municipal Wharf of Santa Cruz (the “Wharf”), or the Wharf decking, pilings, substructure, and support elements underlying or surrounding the Premises.
Landlord reserves and shall at all times have the right to make inspections, alterations, repairs, improvements, and/or additions to the Premises and the Wharf and all associated structures, including, but not limited to, areas and structures under and/or affecting the Premises; and, to conduct or perform any obligations or duties assigned or assumed to be the responsibility under this Lease or applicable law. Landlord also reserves the right to construct other buildings or improvements on the Wharf and to make alterations or additions thereto. Landlord further reserves the right to enter and access the roof of any buildings and/or structures on and/or comprising the Premises, or to repair and maintain the roof, and to use any space within the walls,
15.10
above the ceiling finish, beneath the floor surface, and under the Premises for purposes including, but not limited to, inspections, utility lines and conduits, and/or Wharf operation and maintenance.
Tenant hereby waives any claims for damage against Landlord (including, but not limited to, those arising from loss of business) by reason of Landlord’s entry onto the Wharf and/or removal of all of any portion of any structure or building on the Wharf for the purposes of making repairs, alterations, improvements and/or additions. Except as otherwise expressly provided herein, when exercising the rights reserved under this Section, Landlord shall not unreasonably disturb or interfere with Tenant’s quiet enjoyment of the Premises.
2.05 Condition of Premises. Tenant agrees to lease the Premises in their “AS IS, WHERE IS, IN ITS CURRENT CONDITION, WITH ALL FAULTS” condition, subject to all applicable city, county, state or federal laws, ordinances, and/or regulations affecting the use of the Premises.
Tenant acknowledges that Tenant has determined by Tenant’s own independent investigation that the Premises are suitable for Tenant’s intended use.
Tenant is responsible for determining whether or not the building codes, zoning, applicable laws, permits, certifications, permissions, approvals, authorizations, and covenants and/or restrictions of record ("Applicable Requirements") are appropriate for Tenant's intended use, and acknowledges that past uses of the Premises may no longer be allowed. Correction of any item of non-compliance with any Applicable Requirements shall be the obligation of Tenant at Tenant's sole cost and expense. Any work required by Tenant to prepare the Premises for Tenant’s occupancy shall be paid for by Tenant and shall be subject to all of the terms and conditions set forth in this Lease.
Tenant acknowledges that: (a) Tenant has been advised by Landlord to satisfy itself with respect to the condition of the Premises (including, but not limited to, the electrical, security, environmental aspects, and compliance with Applicable Requirements, including, but not limited to, the Americans with Disabilities Act), and their suitability for Tenant’s intended use; (b) Tenant has made (and will make) such investigation as Tenant deems necessary and Tenant assumes all responsibility for the investigation related to Tenant’s occupancy and use of the Premises; (c) Tenant acknowledges that Tenant has determined by Tenant’s own independent investigation that the Premises are suitable for Tenant’s intended use; and (d) neither Landlord, nor Landlord’s employees, officers, officials, representatives, or agents have made any oral or written representations or warranties (express or implied) as to the condition of the Wharf or Premises or as to the present or future suitability of the Wharf or Premises for the conduct of Tenant's business or any purposes whatsoever.
2.06 Wharf Closure. Tenant acknowledges and understands that the Wharf may be subject to closure (either full or partial) due to conditions, events, or other public health, welfare, and safety reasons in Landlord’s sole discretion, including, but not limited to, ocean conditions (including, but not limited to, high surf), waterfront and/or weather related conditions, as well as Force Majeure events (as defined in Section 20.06 (Force Majeure)) (collectively “Closure Conditions”). Tenant enters into this Lease with full knowledge of the existing conditions of the Wharf and Closure Conditions, and with the understanding that at any point during the Lease Term (as defined in Article 3), Landlord may close the Wharf and/or Premises to public and Tenant access and use (including, but not limited to Tenant’s access and/or use) due to Closure Conditions, without any liability to Tenant by virtue of such closure and/or related actions.
Notwithstanding the forgoing, Landlord reserves the right to establish policies for Tenant relief and compensation but in no event shall Landlord be obligated to do so. During any such period of Wharf closure where Tenant is completely unable to access and use the Premises, Tenant shall not be liable to Landlord for damages for failure to operate pursuant to Section 4.09 (Damages For Failure To Operate).
15.11
2.07 Relocation of Premises. Landlord shall have the right, at Landlord’s sole discretion, during the term of this Lease and any extensions thereof, to relocate Tenant to other premises (“New Premises”) on the Wharf comparable to the Premises in accordance with the following:
(a) For the purposes of this Section “comparable” shall mean New Premises of reasonably similar size to the Premises to the extent that such alternate property is available or made available within the timeline described in Section 2.07(b).
In the event that the New Premises varies in square footage, Rent shall be adjusted by the same square footage rate.
(b) Except in a case of an emergency, such as the destruction of the Premises, Landlord shall give Tenant at least one hundred eighty (180) days’ notice of Landlord’s intention to relocate the Premises (“Notice of Intent to Relocate”) and at least ninety (90) days’ notice (“Relocation Notice”) of the estimated date of relocation (“Relocation Date”), and the location of the New Premises. Tenant shall have ten (10) days following the date of the Relocation Notice to accept in writing regarding the relocation to the New Premises. In the event that Tenant fails to so accept the New Premises within such ten-day period, this Lease shall be terminated ninety (90) days following the date of the Relocation Notice to Tenant and Tenant shall have ninety (90) days following the date of the Relocation Notice to vacate and surrender the current Premises. Should Tenant accept the New Premises within such ten-day period, Tenant shall have ninety (90) days following the date of the Relocation Notice to complete the move to the New Premises. Landlord shall provide Tenant access to the New Premises for the purpose of planning and constructing any Tenant Improvements (as defined below in Article 9) effective as of the date of the Relocation Notice, and Tenant shall not be required to pay Minimum Base Rent or Percentage Rent for the New Premises prior to the earlier of (a) the Relocation Date or (b) the date Tenant has relocated to the New Premises.
(c) Landlord shall not require Tenant to relocate during the period between May 15 through September 15 of each calendar year, except in a case of an emergency.
(d) Tenant shall be responsible for vacating the current Premises and relocating all of Tenant’s trade fixtures, furniture, equipment, inventory, and other personal property (collectively “Personal Property”) to the New Premises no later than the Relocation Date. Tenant shall submit to Landlord within sixty (60) days of Landlord’s issuance of the Notice of Intent to Relocate a schedule itemizing Tenant’s anticipated costs to relocate Tenant’s Personal Property. Landlord shall review said schedule and provide to Tenant a moving allowance (“Moving Allowance”), the amount of which shall be determined by Landlord at Landlord’s sole discretion. Such Moving Allowance shall cover the reasonable cost of relocating Tenant’s Personal Property to the New Premises, said payment to be made to Tenant following Landlord’s receipt of correct invoices for the expenses actually incurred by Tenant (in form satisfactory to Landlord), provided Tenant submits such invoices within sixty (60) days after completion of Tenant’s move to the New Premises. Landlord shall reimburse Tenant the lesser of (a) the approved Moving Allowance or (b) Tenant’s actual relocation costs within thirty (30) days of Landlord’s receipt of Tenant’s correct and substantiated invoices, not to exceed the specified Moving Allowance.
(e) Tenant shall be responsible for installing Tenant Improvements at the New Premises equal in quality and function to those at the Premises, subject to the terms, conditions, and requirements of Article 9 (Tenant Improvements, Alterations, and Additions). Tenant shall obtain Landlord’s prior written approval, which shall not be
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unreasonably withheld, for any proposed Tenant Improvements, subject to the terms and conditions of Article 9 (Tenant Improvements, Alterations, and Additions). Tenant shall submit to Landlord within sixty (60) days of Landlord’s issuance of the Notice of Intent to Relocate a schedule itemizing Tenant’s anticipated costs to install the Tenant Improvements. Landlord shall review said schedule and provide Tenant an improvement allowance (“New Premises Improvement Allowance”), the amount of which shall be determined by Landlord in Landlord’s sole discretion. Such New Premises Improvement Allowance shall cover the reasonable cost of the approved Tenant Improvements, including costs to demolish, remove, or alter existing Tenant Improvements at the New Premises, and any required permits, said payment to be made to Tenant upon receipt of correct invoices (in form satisfactory to Landlord) for expenses actually incurred by Tenant, provided Tenant submits such invoices within sixty (60) days after completion of the move. Landlord shall reimburse Tenant the lesser of (a) the approved New Premises Allowance or (b) Tenant’s actual costs to install the subject improvements within thirty (30) days of Landlord’s receipt of Tenant’s correct and substantiated invoices, not to exceed the specified New Premises Allowance. (f) If Tenant does not accept Landlord’s determination of the Moving Allowance and/or the New Premises Improvement Allowance, Tenant shall rescind Tenant’s acceptance of the New Premises and shall vacate and surrender the Premises no later than ninety (90) days following the date of the Relocation Notice to Tenant. (g) Tenant shall be solely responsible for applying for and obtaining all building, planning, development, zoning and other permits, licenses, authorizations, permissions, certifications, dispensations and approvals required by local, regional, state, and/or federal regulatory authorities related to the work and/or Tenant Improvements.
(h) Tenant shall be responsible for the transfer of all Utilities and Services (as defined in Article 11 below) to the New Premises. (i) Tenant shall be solely responsible for all other costs of remodeling, outfitting and furnishing the New Premises. At no time shall Landlord be obligated for other out-of-pocket expenses over and above the Moving Allowance and the New Premises Improvement Allowance or for downtime incurred by the Tenant or Tenant’s employees, representatives, and agents in the event of a relocation. Except as set forth in this Section 2.07 (Relocation of Premises), Tenant hereby releases, indemnifies, and holds harmless Landlord (and its officials, officers, directors, employees, agents, attorneys, volunteers, representatives, successors and assigns) from any and all losses, claims, injuries, damages, costs, expenses, fines, penalties, or other liability, of every kind and nature, including, but not limited to, consequential damages, whether to persons or property, no matter how caused, resulting from or in any manner related to or incidental to the relocation of the Premises pursuant to this Section 2.07 (Relocation of Premises), and Tenant expressly waives any right to claim that such relocation constitutes grounds for a claim of abatement of rent, constructive eviction, or for termination of the Lease.
(j) Landlord shall transfer Tenant’s contributions to the Premises’ Capital Improvement Fund to the New Premises’ Capital Improvement Fund. (k) Effective as of the Relocation Date, and notwithstanding any adjustments allowed under the Lease, Tenant’s Minimum Base Rent at the New Premises shall be determined by multiplying the Premise’s annual square foot rent in
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effect on the Relocation Date by the square footage of the New Premises. Minimum Base Rent for the New Premises shall be calculated in accordance with Article 4 (Rent). (l) Pursuant to Section 20.32 (Amendments to Lease), Landlord and Tenant shall execute an amendment to this Lease acknowledging the relocation of the Premises to the New Premises and the terms and conditions thereof. Upon the effective date of the amendment, the term “Premises” in this Lease shall refer to the New Premises.
(m) Landlord may only relocate Tenant to other premises once during the Initial Term and once during the Extended Term (both as defined in Article 3 [Term] below), if any, of this Lease. Landlord may exercise its right to substitute the Premises pursuant to this Section 2.07 (Relocation of Premises) during any subsequent extension or renewal of the Term.
ARTICLE 3. TERM
3.01 Commencement of Term. The initial term of this Lease (the “Initial Term”) shall commence on the date specified in Section 1.02 (Commencement Date) and shall continue until the date of termination specified in Section 1.03 (Term), unless terminated sooner in accordance with the terms and provisions of this Lease.
3.02 Extension of Term.
(a) If Tenant fully and faithfully performs all of the terms and conditions of this Lease and is not in default at any time during the Term of this Lease, Tenant may request an extension to the Initial Term by giving written notice (“Extension Request”) to Landlord at least one hundred twenty (120) days but not more than one hundred eighty (180) days before the expiration of the Initial Term. Landlord shall have the sole option to extend the Initial Term of this Lease for two (2) additional five (5) year periods (the “Extended Term”) immediately following the expiration of the Initial Term, upon the same terms and provisions contained in this Lease except for the amount of the Minimum Base Rent, and/or Percentage Rent, which shall be adjusted as provided in Article 4 (Rent). The Initial Term and Extended Term are collectively referred to herein as the “Term.”
(b) If Tenant has failed to cure a default in accordance with Article 15 (Default) of this Lease, at any time during the Initial Term of this Lease, Tenant’s request to extend the Term of this Lease shall be totally ineffective and this Lease shall expire at the end of the Initial Term, unless otherwise terminated earlier in accordance with this Lease.
(c) Landlord may (in its sole and absolute discretion and without any obligation to do so) elect to accept the Extension Request notwithstanding the default of Tenant (which acceptance shall not waive or otherwise relieve Tenant of its obligations to promptly correct such default(s) and fully comply with all terms and conditions of this Lease).
(d) Tenant’s failure to timely give the Extension Request to Landlord shall constitute an election by Tenant not to request an extension. In that event, Tenant’s right to request an extension of the Term shall automatically and immediately terminate without notice and this Lease shall expire at the end of the Initial Term. Tenant shall have no other rights to extend the Term.
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(e) Any extension granted to Tenant in this Lease is personal to the original Tenant and cannot be assigned or exercised by anyone other than said original Tenant without Landlord’s prior written consent, which may be given or withheld in Landlord’s sole and absolute discretion, and only while the original Tenant is in full possession of the Premises and, if requested by Landlord, with Tenant certifying that Tenant has no intention of thereafter assigning or subletting.
3.03 Expiration; Holding Over.
(a) The Term will expire at 11:59 p.m. (PST) on the Expiration Date specified in Section 1.03 (Term), unless sooner terminated or otherwise extended as permitted under this Lease.
(b) If Tenant should remain in possession of the Premises after the expiration or earlier termination of the Term of this Lease in the absence of a new lease agreement, or after Landlord has declared a forfeiture of this Lease as a result of Tenant’s default, then such holding over shall be construed as a tenancy from monthto-month, subject to all of the terms, conditions, provisions and obligations of this Lease at the time this Lease expires or upon Tenant’s default, as the case may be, except the Minimum Base Rent, and/or the Percentage Rent shall be one and one half (1 ½ ) times the amount of such rent in effect immediately prior to Tenant’s holdover. Unless Tenant obtains the express written consent of Landlord to holding over, Landlord does not waive its right to pursue any legal or equitable remedy against Tenant with regard to Tenant’s continued possession of the Premises after the expiration of the Term of this Lease.
Under a month-to-month tenancy, Tenant may terminate this Lease by providing Landlord with written notice at least thirty (30) days prior to the intended termination date. Tenant shall be responsible for paying Rent through the termination date even if moving out early. Landlord may terminate the tenancy by giving notice to Tenant as required by law.
3.04 Surrender of Premises.
(a). Surrender. On the expiration or earlier termination of this Lease, Tenant shall, at Tenant’s sole expense:
(i).surrender and vacate the Premises (including, but not limited to all Tenant Improvements) to Landlord in a clean, safe, sanitized, and in good order and condition, except for ordinary wear and tear; and,
(ii).abate and remove all of Tenant’s Personal Property in compliance with Applicable Requirements; and repair all damage caused by such removal subject to the provisions of Section 9.05 (Trade Fixtures), Section 9.06 (Design
Standards), Section 9.08 (Restoration), Section 9.09
(Ownership of Improvements), and this Section; and,
(iii).restore the Premises to the condition existing as of the first day of the Term or better, without removing approved
Tenant Improvements, alterations or additions, reasonable wear and tear excepted, unless Landlord expressly
requested their removal at Tenant’s sole cost and expense; and,
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(iv).render the Premises safe and free from debris and hazards, and without any reduction in value resulting from any
conduct in violation of this Lease; and
(v).surrender all keys to the Premises to Landlord.
Tenant’s abatement and removal of its Personal Property on the Premises pursuant to this section shall be in compliance with all applicable Laws, permits, certifications, approvals, permissions, and authorizations.
(b) Landlord’s Property. Landlord may remove, store, and dispose of any items Tenant does not remove from the Premises as permitted or required under this Lease.
(c) No Implied Acceptance of Surrender. Landlord's acceptance of Tenant's surrender of the Premises will be valid and binding only if it is in a writing signed by Landlord, and no act by Landlord will be deemed to be Landlord's acceptance of Tenant's surrender.
(d) Indemnity. Tenant shall reimburse Landlord and indemnify and hold harmless Landlord, and Landlord’s officers, officials, employees, and agents against any and all damages that Landlord incurs from Tenant’s delay in vacating and/or surrendering the Premises, removing and abating Tenant’s Personal Property, and/or restoring the Premises. This indemnification and hold harmless provision extends to any and all damages, costs, and expenses incurred by Landlord as a result of Tenant’s breach of the covenants contained herein with respect to the condition of the Premises at the expiration or earlier termination of this Lease as provided in this Lease. (e) Survival of Surrender Obligations. Tenant's obligations under this Section will survive the expiration or termination of this Lease.
3.05 Quit Claim Deed. At any time after the expiration or earlier termination of this Lease, Tenant shall execute, acknowledge and deliver to Landlord, within fifteen (15) days after receipt of written demand therefore, a good and sufficient deed whereby all right, title and interest of Tenant in and to the Premises, Tenant Improvements and other improvements are quitclaimed to Landlord. Should Tenant fail or refuse to deliver the required deed to Landlord, Landlord shall have the right to prepare and record a notice reciting the failure of Tenant to execute, acknowledge, and deliver such deed. Said notice shall be conclusive evidence of the termination of this Lease and of all right of Tenant in and to the Premises, any Tenant Improvements and other improvements.
ARTICLE 4. RENT
4.01 Rent. Beginning with the Commencement Date, Tenant shall pay to Landlord the greater of: a minimum base rent (“Minimum Base Rent”) as described in Section 1.05 (Rent) per month; or a percentage rent (“Percentage Rent”) in a sum equal to eight percent (8%) of Gross Sales (as defined in Section 4.07 [Gross Sales] below) calculated monthly.
The foregoing Minimum Base Rent shall be subject to increase during the Term as provided in Section 4.05 (Adjustments to Minimum Base Rent).
In addition to the Minimum Base Rent and Percentage Rent specified above, Tenant shall pay to Landlord any additional rent (“Additional Rent”) as defined in Section 4.10 below.
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“Rent” as used in this Agreement shall mean the applicable Minimum Base Rent, Percentage Rent, and Additional Rent.
4.02 Commencement of Rent. Tenant’s obligation to pay the Minimum Base Rent or Percentage Rent under this Lease shall start on the Commencement Date of the Term as set forth in Section 1.02 (Commencement Date). The greater of the Minimum Base Rent or Percentage Rent specified in Section 4.01 (Rent), subject to adjustment as set forth in Section
4.05 (Adjustments to Minimum Base Rent). Rent shall be remitted to Landlord at the address set forth in Section 1.13 (Landlord’s Address for Payment of Rent) or at such other location as Landlord may notify Tenant in writing.
In the event that Tenant’s obligation to pay rent does not commence on the first (1st) day of a calendar month, Tenant shall pay Rent for the fractional month on a per-diem basis (calculated on the basis of a thirty (30) day month) for the first month.
4.03 Rent Payment Procedure. Rent shall be paid in lawful money of the United States and remitted to Landlord at the address listed in Section 1.13 (Landlord’s Address for Payment of Rent) or at such other location as Landlord may notify Tenant in writing. Rent for the preceding month shall be due and payable in full by Tenant fifteen (15) days after the month ending. Rent paid after fifteen (15) days after the month ending will be considered late and subject to a late charge and interest as set forth below. Each rent payment shall be paid without deduction, offset, prior notice or demand.
4.04 Percentage Rent/Monthly Statements of Gross Sales. In accordance with the rent payment schedule set forth in Section 4.03 (Rent Payment Procedure), Tenant shall furnish to Landlord a written Statement of Gross Income and Percentage Rent (the “Monthly Statement”) (Exhibit D), certified by Tenant under penalty of perjury to be true and correct, showing the total Gross Income and Percentage Rent and other rent due based upon the preceding month. Said statement shall be in a form substantially similar to that as set forth in Exhibit D (Statement of Gross Income and Percentage Rent) (attached hereto and made part hereof), which is subject to modification by Landlord. In addition, Tenant shall provide Landlord with copies of all state sales tax reports at the same time as they are provided to the State Board of Equalization and upon request by Landlord. Tenant acknowledges that Rent paid without being accompanied by the Monthly Statement will be considered late payment of Rent.
4.05 Adjustments to Minimum Base Rent.
(a) Commencing on each anniversary of the Commencement Date of the Lease, the Minimum Base Rent shall increase by five percent (5%). In no event shall the Minimum Base Rent for any given year be less than the Minimum Base Rent established for the immediately preceding year.
(b) Upon adjustment of the Minimum Base Rent, as provided for above, Landlord shall notify Tenant in writing. Failure of Landlord to so notice Tenant shall not relieve Tenant of responsibility to pay any increase in Minimum Base Rent and/or Percentage Rent.
4.06 Late Charges and Interest on Unpaid Rent; Maximum Legal Interest; NonSufficient Funds.
Tenant acknowledges that late payment by Tenant to Landlord of Rent, and/or failure to submit when due Monthly Statements, California state, local and district sales and use returns, and/or other reports, records or documentation set forth herein, will cause Landlord to incur costs not contemplated by this Lease, the exact amount of such costs being extremely difficult and impracticable to fix. Such costs include, without limitation, processing and accounting charges,
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and late charges that may be imposed on Landlord by the terms of any encumbrance and/or note secured by any encumbrance covering the Premises.
Therefore, if any installment of Rent due from Tenant, Monthly Statement, sales and use return, and/or report, record, or documentation referenced herein which is due from Tenant is not received by Landlord when due, Tenant shall pay to Landlord an additional sum of ten percent (10%) of the overdue Rent as a late charge, and interest at the rate of one and one half percent (1½%) per month, or the maximum rate of interest allowed by law (whichever is less), on the unpaid balance of said Rent or sum until paid (or until such outstanding Monthly Statement, report or record is received by Landlord). The Parties agree that said late charges and interest represents a fair and reasonable estimate of the costs that Landlord will incur by reason of late payment (and/or late submittal of required documentation) by Tenant. The acceptance by Landlord of any late charge shall not constitute a waiver of Tenant's default with respect to the overdue amount, nor prevent Landlord from exercising any of the other rights and remedies available to Landlord under this Lease or as provided by law.
Additionally, if a check is returned for non-sufficient funds (“NSF”), Tenant shall pay to Landlord a $25 NSF fee. If any payment is returned for NSF or because Tenant stops payment, then Landlord may, in writing, require Tenant to pay future Rent in cash.
4.07 Gross Sales. The term "Gross Sales" as used in this Lease means all gross receipts of every kind and nature from sales and services from all business conducted by Tenant on, in, at, about, or from the Premises, whether upon credit or for cash, in every department operating on, in, at, about, or from the Premises, whether operated by Tenant or by any subtenant, representative, agent, or concessionaire, excepting therefrom any rebates or refunds to customers and clients and the amount of all sales or excise tax receipts collected from customers and clients and paid by Tenant to any government agency. Sales upon credit shall be included in the Gross Sales for the period in which the merchandise is delivered or service rendered to the customer or client, regardless of when payment is made.
4.08 Books and Records.
(a) Tenant shall keep full, complete and proper books, records, and accounts of its operations and daily Gross Sales for a period of four (4) years. Landlord and its employees, representatives and agents shall have the right, with twenty-four (24) hours prior notice, and anytime during the regular business hours, to examine and copy all of the books, records, and accounts of Tenant, including, but not limited to, any sales tax reports pertaining to the business of Tenant conducted on, in, at, about, or from the Premises, for the purpose of investigating and verifying the accuracy of any Monthly Statement and/or of Gross Sales.
(b) If Tenant fails to furnish any Monthly Statement or annual balance sheet and profit and loss statement when due, Landlord shall have the right, after giving Tenant five (5) days' written notice, to engage an auditor to examine Tenant's books, records, and accounts and verify the amount of Tenant's Gross Sales. Such auditor’s verification will be binding on Tenant, and Tenant shall promptly pay the cost of the examination, plus any Rent shown to be due. (c) In addition to engaging an auditor as provided in subsection (b), Landlord may also, once in any calendar year, cause an audit of Tenant's business to be made by an accountant of Landlord's selection. Tenant shall furnish any requested information necessary for the audit within thirty (30) days, unless otherwise approved by Landlord in writing. If the audit discloses an understatement by Tenant of three percent (3%) or more in Gross Sales for the period of any report, then Tenant shall immediately pay to Landlord the cost of such audit, as well as the additional Rent payable by Tenant to Landlord, plus interest and late charges; otherwise, the cost of such audit shall be paid by Landlord.
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(d) Tenant shall provide Landlord, annually within ninety (90) days after the close of the business fiscal year for income tax purposes, Tenant's current annual balance sheet and profit and loss statement for Tenant's business on, in, at, about, or from the Premises, either certified under penalty of perjury by Tenant to be true and correct or accompanied by a report of Tenant's certified public accountant (“CPA”). Any Guarantor of this Lease shall, upon request but not more frequently than annually, provide Landlord its current balance sheet, either certified under penalty of perjury by Guarantor to be true and correct or accompanied by a report of Guarantor's CPA. Any annual balance sheet or profit and loss statement submitted by Tenant or Guarantor shall be used by Landlord only to verify and audit compliance with this Lease, including, but not limited to, verifying and auditing Gross Sales records. (e) Landlord agrees to maintain all business information obtained through Monthly Statements and/or audits as confidential, to the extent legally permitted and allowed under the California Public Records Act, with the exception of information required to bring or defend legal actions.
(f) Tenant agrees to use a cash collection system acceptable to Landlord to record sales. Landlord may, at its option, require Tenant to institute changes in said cash collection system.
4.09 Damages For Failure To Operate. LANDLORD DESIRES TO HAVE TENANT KEEP THE PREMISES FULLY OPERATIONAL. TENANT ACKNOWLEDGES AND
UNDERSTANDS THAT ITS FAILURE TO KEEP ITS BUSINESS OPEN AND OPERATIONAL
DURING THE TIMES SET FORTH ELSEWHERE IN THIS LEASE WITHOUT THE PRIOR
WRITTEN CONSENT OF LANDLORD WILL CAUSE LANDLORD TO INCUR LOSSES NOT
CONTEMPLATED BY THIS LEASE, THE EXACT AMOUNT OF SUCH LOSSES BEING EXTREMELY DIFFICULT AND IMPRACTICABLE TO FIX. THEREFORE, (A) IF TENANT FAILS
TO OPEN AND CONTINUOUSLY OPERATE ITS BUSINESS TO THE PUBLIC ON THE
COMMENCEMENT DATE, OR (B) THEREAFTER, IF TENANT FAILS TO CONTINUOUSLY
OPERATE ITS BUSINESS IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS
LEASE OR VACATES OR ABANDONS THE PREMISES PRIOR TO THE EXPIRATION OF THE
INITIAL TERM, OR ANY EXTENDED TERM, LANDLORD SHALL HAVE THE RIGHT, AT ITS OPTION, TO COLLECT AS LIQUIDATED DAMAGES AN AMOUNT EQUAL TO $55.84 FOR
EACH DAY WHICH TENANT FAILS TO SO OPERATE IN ORDER TO COMPENSATE
LANDLORD FOR THE LOSS OF PERCENTAGE RENT AND CUSTOMER TRAFFIC, AND ANY OTHER LOSSES. LANDLORD AND TENANT AGREE THAT SAID CHARGE REPRESENTS A
FAIR AND REASONABLE ESTIMATE OF THE COSTS THAT LANDLORD WILL INCUR BY
REASON OF SUCH ACTION BY TENANT AND THAT LANDLORD MAY (AT ITS OPTION AND
WITHOUT ANY OBLIGATION TO DO SO) DEDUCT SAID CHARGE FROM THE SECURITY DEPOSIT. THIS LIQUIDATED DAMAGES PROVISION SHALL NOT IN ANY WAY AFFECT OR LIMIT LANDLORD’S RIGHTS OR REMEDIES RESULTING FROM TENANT’S BREACH OF ANY OBLIGATION UNDER THIS LEASE. BY EXECUTING THIS LEASE, TENANT
ACKNOWLEDGES THAT IT HAS READ AND UNDERSTOOD THE ABOVE PROVISION
COVERING LIQUIDATED DAMAGES, AND THAT TENANT HAD THE OPPORTUNITY TO
CONSULT WITH LEGAL COUNSEL WHO EXPLAINED THE CONSEQUENCES OF THIS LIQUIDATED DAMAGES PROVISION AT THE TIME THIS LEASE WAS EXECUTED.
TENANT’S PAYMENT OF THE AMOUNTS NOTED ABOVE AS LIQUIDATED DAMAGES
HEREUNDER IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO LANDLORD PURSUANT TO CIVIL CODE SECTION 1671.
Tenant Initials: ___________________
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4.10 Additional Rent. All amounts which Tenant is required to pay pursuant to this Lease (other than Minimum Base Rent or Percentage Rent), together with any fine, penalty, interest and costs which may be added for nonpayment or late payment thereof, shall constitute additional rent (hereinafter referred to as “Additional Rent”). Additional Rent shall include but not be limited to payment for Operating Expenses, as defined in Section 6.01 (Operating Expenses), and utility charges as provided in for in Section 11.02 (Jointly Metered Utilities). Unless this Lease provides otherwise, Tenant shall pay all Additional Rent as described in Section 4.03 (Rent Payment Procedure) or by the due date noted in the notice to submit payment (whichever is sooner). If Tenant fails to pay when due any Additional Rent due under this Lease, then Landlord shall have the right, but not the obligation, to pay the same and shall have all of the rights, powers and remedies with respect thereto as are provided in this Lease or by law in the case of nonpayment of Minimum Base Rent or Percentage Rent.
4.11 Capital Improvement Contributions.
(a) Commencing with the Commencement Date and continuing throughout the Term of this Lease (including, but not limited to any Extended Term), Tenant shall fund a capital improvement reserve fund (the “Capital Improvement Fund”) in accordance with the provisions of this Section for the cost of Permitted Capital Improvements (as defined below). (b) Tenant and Landlord agree and acknowledge that the purpose of the Capital Improvement Fund shall be to provide funds for the costs and expenses of additions, replacements, renovations, and/or significant upgrades of or to the improvements on the Premises, including, but not limited to, building exteriors and major building systems (such as HVAC, mechanical, electrical, plumbing, vertical transportation, security, communications, Wharf substructure and pilings, structural elements, roof, etc.) that significantly increase the capacity, efficiency, useful life and/or or economy of operation of the improvements or their major systems, as determined by Landlord (the “Permitted Capital Improvements”). Landlord’s determination as to whether an addition, replacement, renovation or upgrade is necessary and constitutes a Permitted Capital Improvement shall be binding upon Tenant and shall conclusively establish whether amounts may be disbursed from the Capital Improvement Fund. (c) Commencing with the Minimum Base Rent first due after the Commencement Date, Tenant shall make monthly deposits to the Capital Improvement Fund in an amount equal to one percent (1%) of Tenant’s total Gross Sales (as defined above) for the previous month. All interest and earnings on the Capital Improvement Fund shall be added to the Capital Improvement Fund, but shall not be treated as a credit against the Capital Improvement Fund deposits required to be made by Tenant pursuant to this Section 4.11 (Capital Improvement Contributions).
(d) In the event, Tenant separately funds Permitted Capital Improvements that may be reimbursed by the Capital Improvement Fund, Landlord at its sole discretion may reimburse Tenant for the real cost of improvements or authorize a credit towards the Capital Improvement Fund payments. Reimbursements shall not exceed available Capital Improvement Funds; credits towards payment to the Capital Improvement Fund shall be established in writing signed by both Parties and shall not reduce the payment amount to less than one-half percent (0.5%) of Tenant’s total Gross Sales for any month nor exceed a cumulative total amount of $99,999 without prior City Council approval. Except in the event of an emergency or other sole source procurement eligible case, Tenant shall comply with City procurement rules and regulations, including, but not limited to, seeking a minimum of three (3) bids or proposals, for any work above $10,000 seeking reimbursement.
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(e) The Capital Improvement Fund shall be held in an account established and administered by Landlord into which deposits shall be made by Tenant pursuant to this Section
4.11 (Capital Improvement Contributions).
(f) Disbursements shall be made from the Capital Improvement Fund only for costs which have been approved by Landlord in writing and which satisfy the requirements of this Section 4.11 (Capital Improvement Contributions). For the purpose of obtaining Landlord’s prior written approval of any Capital Improvement Fund disbursements, Tenant shall submit to Landlord on an annual calendar year basis a capital expenditure plan (the “Capital Expenditure Plan”) for the upcoming year which details the amount and purpose of anticipated Capital Improvement Fund expenditures for which Tenant requests Landlord’s approval (which approval shall not be unreasonably withheld). Any anticipated expenditure set forth in such Capital Expenditure Plan that is approved in writing by Landlord as an acceptable Capital Improvement Fund disbursement shall be considered pre-approved by Landlord (but only up to the amount of such expenditure approved by Landlord and set forth in the annual Capital Expenditure Plan) for the duration of the upcoming year. Tenant shall have the right during the course of each year to submit to Landlord for Landlord’s approval revisions to the then current Capital Expenditure Plan in effect for such year, or individual expenditures not noted on the previously submitted Capital Expenditure Plan. Prior to the disbursement of any amounts from the Capital Improvement Fund, Tenant shall furnish to Landlord applicable invoices, evidence of payment and other back-up materials reasonably acceptable to Landlord, documenting and substantiating costs incurred and the use of amounts from the Capital Improvement Fund.
(g) Notwithstanding any provision contained in this Lease that may be construed to the contrary, the Capital Improvement Fund shall not be used to fund any portion of the cost of periodic, recurring or ordinary expenditures, repairs or replacements (excepting repairs or replacement of Wharf substructure and/or pilings) that keep the Premises or its major systems in an ordinarily efficient operating condition, but that do not significantly add to their value or appreciably prolong their useful life. Permitted Capital Improvements must constitute capital replacements, improvements or equipment under generally accepted accounting principles consistently applied. Permitted Capital Improvements shall not include costs for any necessary repairs to remedy any broken or damaged improvements (including, but not limited to, Tenant Improvements), all of which costs and expenses shall be borne solely by Tenant. All specific purposes and costs for which Tenant desires to utilize amounts from the Capital Improvement Fund shall be subject to Landlord’s prior written approval, which approval shall not be unreasonably withheld.
(h) Notwithstanding any provision contained in this Lease that may be construed to the contrary, Landlord may in its discretion utilize and expend fifty percent (50%) of any Capital Improvement Fund contributions of Tenant that remain unspent in any calendar year for repairs or replacement of Wharf decking, substructure and pilings related to or supporting the Premises.
ARTICLE 5. TAXES; ASSESSMENTS; AND LICENSES
5.01 Tenant to Pay Personal Property and Possessory Interest Taxes. (a) Tenant shall be solely responsible for and promptly pay before delinquency during the Term of this Lease, without abatement, deduction, or offset, any and all real property, possessory interest, and personal property taxes, general and special assessments, and other charges and fees of any description (including, without limitation, any increase caused by a change in the tax rate or by a change in assessed valuation) attributable, levied or assessed by any governmental agency or entity on or against the Premises, the improvements located (or to be located) on the Premises (including, but not limited to any Tenant Improvements), personal property located on, at, about or in the Premises or improvements located or to be located thereon (including,
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but not limited to any Tenant Improvements), and the leasehold estate created by this Lease. Tenant shall also be responsible for all other operating costs associated with the Premises and/or Tenant’s use of and/or operations at the Premises (as further described in Article 6 below).
(b) Landlord hereby gives notice to Tenant, pursuant to California Revenue and Tax Code Section 107.6 that this Lease may create a possessory interest that is the subject of property taxes levied on such interest, the payment of which taxes shall be the sole obligation of Tenant. Tenant shall advise (in writing) any sublessee or third party using the Premises of the requirements of Section 107.6. (c) Any payments under this Section shall not reduce or offset Rent payments. Landlord has no liability for such payments. On demand by Landlord, Tenant shall furnish Landlord with satisfactory evidence of these payments by delivering to Landlord the official and original receipt evidencing the payment of any taxes, fees, assessments, and other charges required under this Article 5; or Tenant shall retain at its sole cost and expense for the Term of this Lease, a tax service to notify Landlord whether the taxes, assessments, and other charges have been paid by Tenant as required under this Article 5. If Tenant fails to timely pay any taxes, fees, charges, or assessments, as provided herein, Landlord shall have the right (without notice to Tenant), but not the obligation, to pay such taxes, fees, charges, and/or assessments on behalf of Tenant. In that event, Tenant shall promptly on written demand of Landlord reimburse Landlord for the full amount paid by Landlord in paying or discharging that tax, assessment, fee or other charge, together with a twenty percent (20%) overhead administrative fee and interest thereon at the then-maximum legal rate from the date of payment by Landlord until the date of repayment by Tenant.
5.02 Tenant Indemnification of Landlord for Taxes. Tenant shall indemnify, defend and hold Landlord (and Landlord’s officers, officials, employees, representatives, and agents) and Landlord's property, including, but not limited to, the Wharf, the Premises and any improvements (including, but not limited to, any Tenant Improvements) now or subsequently located on the Premises, harmless from any liability, loss, cost, or damage resulting from any taxes, fees, assessments, or other charges required by this Article 5 to be paid by Tenant and from all interest, penalties, and other sums imposed thereon and from any sales or other proceedings to enforce collection of any such taxes, assessments, or other charges.
5.03 Parking and Business Improvement Area Zone and Charges. Tenant shall pay before delinquency all taxes, assessments, fees, and other charges that are attributable, levied, assessed, charged or imposed upon businesses within any Parking and Business Improvement Area Zones that include the Santa Cruz Municipal Wharf, which may be established by the City of Santa Cruz. On demand by Landlord, Tenant shall furnish Landlord with satisfactory evidence of these payments.
5.04 Title 12 Santa Cruz Municipal Code - Local Improvements. Tenant shall pay before delinquency its proportionate share of all taxes, assessments, fees, and other charges that are attributable, levied, and/or assessed against the building(s), other improvements, and land of which the Premises are part by any improvement and/or maintenance district that includes the Santa Cruz Municipal Wharf, which may be created under Title 12 Santa Cruz Municipal Code - Local Improvements as amended (Chapter 12:32.420, Resolutions NS-2233, 20190, and 20424) or any revised or successor ordinances or resolutions applicable thereto. On demand by Landlord, Tenant shall furnish Landlord with satisfactory evidence of these payments.
5.05 .City of Santa Cruz Business License. A city business license is required concurrent or prior to execution of this Lease. Tenant agrees to provide proof of a current City of
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Santa Cruz Business Tax Certificate. Tenant may contact the City’s Finance Department at 831- 420-5050 for more information.
ARTICLE 6. OPERATING EXPENSES
6.01 Operating Expenses. In addition to the Minimum Base Rent and Percentage Rent specified above, Tenant shall pay as Additional Rent, a pro rata amount of certain expenses (the “Operating Expenses”) incurred by Landlord in the operation and maintenance of the Premises. These common Operating Expenses include, without limitation, general maintenance and repair of the fabric portion of the awnings, general maintenance and repair of exterior siding, exterior painting, periodic cleaning of the roof, and certain maintenance, repairs and replacement of the heating, ventilation and air conditioning systems. Upon request, on or before September 30th of each year, Landlord shall provide Tenant with an annual statement or recapitulation of all charges allocated to Tenant as Operating Expenses and Landlord reserves the right to seek payment thereof with prior notice to Tenant, of not less than thirty (30) days, for Tenant’s payment of such expenses.
6.02 Tenant’s Pro Rata Share. Tenant’s pro rata share of Operating Expenses shall be determined as follows:
(a) Exterior Siding: Tenant shall be responsible for a pro rata share of the cost of maintenance and repair of all exterior siding based on the ratio of the square footage of the Premises to the total square footage of the building in which the Premises are located.
(b) Awnings: Tenant shall be responsible for a pro rata share of the cost of maintenance (including, but not limited to, cleaning) and repair of the fabric portion of all exterior awnings based on the ratio of the linear feet of the awnings benefiting the Premises to the total linear feet of all awnings. (c) Roof: Tenant shall be responsible for a pro rata share of the cost of the cleaning of the roof based on the ratio of the square footage of the Premises to the total square footage of the building in which the Premises are located. Said periodic cleaning shall include, without limitation, the removal of bird debris and excrement at such times as the Landlord deems necessary.
(d) HVAC: In the event that Landlord contracts with a service company pursuant to Section 10.01 (Landlord’s Maintenance Obligations), Tenant shall be responsible for the cost of the maintenance, repairs and replacement of the heating, ventilation and air conditioning systems (“HVAC”) of the Premises.
ARTICLE 7. SECURITY DEPOSIT
7.01 Amount of Deposit. Landlord has a current security deposit on file from Tenant in the amount of $2,500 (the “Security Deposit”). Commencing with the Effective Date of this Lease or within a timeline approved by Landlord, Tenant shall deposit with Landlord an additional $850 such that the sum of the Security Deposit equals $3,350. This Security Deposit shall be held by Landlord, as partial security for the full and faithful performance by Tenant of all the terms, covenants and conditions of this Lease to be performed by Tenant. Landlord may commingle the Security Deposit and shall not be required to keep it separate from its general funds. Tenant shall not be entitled to any interest on such deposit.
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Landlord may adjust the Security Deposit amount annually to account for increases in Minimum Base Rent. Such additional Security Deposit amounts shall be due within a timeline approved by Landlord. The Security Deposit shall not exceed the equivalent of two (2) months of the Minimum Base Rent.
7.02 Use of Security Deposit. If Tenant fails to abide by any of the terms, covenants and/or conditions of this Lease, or otherwise defaults with respect to the provisions of this Lease, then Landlord, at its option (and without any obligation to do so), may use any amount of the Security Deposit to compensate Landlord for any loss or damage sustained or suffered due to such failure by Tenant. The entire Security Deposit, or any portion thereof, may be applied by Landlord for the payment of overdue Rent or other sums due and payable to Landlord by Tenant hereunder. Tenant shall, upon the written demand of Landlord, immediately remit to Landlord a sufficient amount to restore the Security Deposit to the original sum deposited or two (2) months of the Minimum Base Rent, whichever is greater. Failure to do so within five (5) days after such demand, or a timeline approved by Landlord, shall constitute a material breach of this Lease.
7.03 Return of Security Deposit. If Tenant fully performs all of its duties and obligations under this Lease, complies with all of the terms, covenants and conditions of this Lease, and promptly pays when due all of the Rent herein provided and all other sums payable by Tenant under this Lease, Landlord will return to Tenant the remaining portion of the Security Deposit within thirty (30) days after the expiration or earlier termination of this Lease, Tenant’s vacation of the Premises, and Landlord’s receipt of possession of the Premises in accordance with the provisions of this Lease.
7.04 Increase of Security Deposit. If Tenant shall default under this Lease more than two (2) times in any twelve (12) month period, irrespective of whether or not such default is cured, then the Security Deposit shall, within ten (10) days after demand by Landlord, be increased by Tenant to an amount equal to the greater of: (i) two (2) times the amount specified in Section 7.01 (Amount of Deposit) above; or (iii) as may be otherwise reasonably required by Landlord.
7.05 Transfer of Security Deposit. Landlord may deliver the Security Deposit to Landlord’s assignee or successor in interest in the Premises, in the event that Landlord’s interest is sold, conveyed, transferred or assigned, and upon delivery. Landlord shall be discharged from any further liability with respect to repayment of the Security Deposit to Tenant.
7.06 Waiver. Tenant waives the provisions of California Civil Code section 1950.7 and any Laws, or any successor statute, or any other law, which is contrary to the terms of this Article
7. ARTICLE 8. USE
8.01 Use of Premises.
(a) Tenant shall use the Premises under the trade name, and solely for the use specified in Section 1.01 (Tenant Trade Name), Section 1.06 (Use of Premises) and Section 1.07 (Hours of Operation) herein, subject to the terms and conditions contained in this Article 8 and in compliance with all Applicable Requirements, and governing permits, approvals, authorizations, and Laws (which shall include all applicable city, county, state, or federal laws, ordinances, and/or regulations) now existing or which shall exist.
(b) Tenant shall use the Premises solely for the purposes of operating, maintaining and managing for profit as described in Section 1.06 (Use of Premises).
Tenant’s business shall be established and conducted throughout the Term in a clean,
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safe, and lawful manner. Tenant shall not change the use of the Premises without first obtaining the written consent of Landlord (which consent may be delayed or withheld in Landlord’s sole and absolute discretion). Tenant shall use its best efforts to operate its business on the Wharf and use the Premises for purposes permitted by this Article 8 in a manner that will maximize Gross Sales.
(c) Tenant’s branding and business concepts shall be distinct from other businesses on the Wharf and approved by the City of Santa Cruz’s Economic Development Deputy Director, or City’s designee.
(d) At City’s request, Tenant shall provide an anticipated annual percentage increase in growth of Gross Sales goal during the Term (including, without limitation, any Extended Term) to Landlord, and at a minimum, shall consider the following recommendations to attain the annual goals:
(i). Clearly identify a target market
(ii). Mixed media advertising campaign
(iii). Develop online presence and/or virtual sales
(iv). Consider pricing changes
(v). Consult with Small Business Development Center
(vi). Explore options to enhance curb appeal and
customer experience
(e) In the event Tenant sales decrease more than twenty-five percent (25%) over the prior three (3) year average, Tenant and Landlord shall, within forty-five (45) days of Landlord’s request, develop an action plan incorporating the recommendations outlined in Section 8.01(d) to increase growth of Gross Sales. Such plan shall be subject to Landlord approval. Tenant shall implement this pre-approved action plan within one hundred eighty (180) days or within a timeline approved in writing by Landlord.
(f) Tenant shall at no time allow slot machines or any other gaming machines or arcade amusement machines (including, without limitation pinball, video, and other games of amusement), to be used, operated or kept within the Premises without the prior written consent of Landlord. Tenant shall not commit or suffer to be committed any waste upon the Premises or any nuisance or other act or thing which may disturb the quiet enjoyment of any other tenants or their customers on the Wharf.
8.02 Compliance with Laws; Permits. From and after the Effective Date of this Lease and throughout the entire Term of this Lease and operation of Tenant’s business, Tenant shall, at Tenant's sole cost and expense, observe, comply with and conform to all Laws, permits, approvals, certifications, permissions, authorizations and requirements (including, without limitation, those requiring capital improvements to the Premises and/or improvements thereon) of all Governmental Bodies (which for purposes of this Lease shall include, without limitation, federal, state, county, and/or municipal) and any board of fire underwriters (or other similar body now or hereafter constituted), relating to the Premises and/or the improvements located (or to be located) thereon, any activities on, at or in connection with the Premises and/or the improvements located (or to be located) thereon, and any use and/or occupancy of the Premises and/or the improvements located (or to be located) thereon (and including, but not limit to, any particular use or occupancy by Tenant).
Any use permitted by this Lease, as well as any construction, improvement, addition, alteration, or modification of the Premises or improvements located (or to be located) thereon, must be independently consistent with, and not in violation of, the provisions of the City of Santa
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Cruz Charter and Municipal Code, Applicable Requirements and Laws. Tenant is advised and understands that in addition to this Lease, Tenant may need to obtain permits, licenses, authorizations, certifications, permissions, approvals, and/or other dispensations from the City of Santa Cruz and/or other Governmental Bodies prior to engaging in the permitted uses, performing any work, performing any Tenant Improvement, and/or engaging in any other construction, improvement or modification of the Premises or improvements located (or to be located) thereon.
From and after the Effective Date and throughout the Term of this Lease, Tenant shall be responsible for obtaining and maintaining, at its own cost and expense, any and all licenses, permits, certifications, permissions, approvals, and/or other governmental authorizations required for Tenant’s occupancy and use of the Premises, any portion of the Premises, and any improvements located (or to be located) thereon, in the manner contemplated under this Lease, including, without limitation, those necessary for the construction and operation of any Tenant Improvements, and all related uses. Tenant shall promptly take all actions necessary to comply with all Laws, licenses, permits, certifications, permissions, approvals, and authorizations regulating the occupancy and/or use by Tenant of the Premises and improvements located (or to be located) thereon.
8.03 Prohibited Uses; No Illegal Purposes or Nuisance. Tenant shall not use, or permit the Premises (or any part thereof or any improvement located or to be located thereon) to be used, for any purpose other than the purpose for which the Premises are hereby leased. No use shall be made or permitted to be made of the Premises or any improvement located (or to be located) thereon, nor acts done, which will increase the existing rate of insurance upon the Premises, or cause a cancellation of any insurance policy covering the Premises or any part thereof. Tenant shall not sell or permit to be kept, used, stored or sold in, on, at or about the Premises (or any improvement located or to be located thereon) any article which may be prohibited by any policy of fire, casualty or liability insurance obtained by Landlord. Tenant shall, at its sole cost and expense, comply with any and all requirements regarding the use of the Premises (and any improvement located or to be located thereon) by any company that issues a policy of fire, casualty or public liability insurance to Landlord. If Tenant's use of the Premises results in any rate increase for the Premises, Tenant shall pay as Additional Rent within ten (10) days written notice, a sum equal to the additional premium caused by such rate increase.
Tenant shall not use or permit the Premises (or any improvement located or to be located thereon) or any portion of the Premises to be improved, altered, constructed, developed, used, or occupied in any manner or for any purpose that is in any way prohibited or in violation of any applicable Law or permit. Furthermore, Tenant shall not cause, maintain, commit, or permit the Premises (or any improvement located or to be located thereon) or any adjoining or underlying portion of the Wharf to be used in any way that constitutes waste or a nuisance (as now or hereafter defined by any statutory or decisional law applicable to the Premises or any part of the Premises), or that unreasonably annoys, disturbs or interferes with owners and/or occupants of, or causes damage to the balance of the Wharf or neighboring premises, properties, or improvements.
Tenant shall not conduct any auctions, liquidation or bankruptcy sales, “fire” sales or sidewalk sales on, about or near the Premises without Landlord’s prior written consent.
8.04 Operation of Business; Hours of Operation. During the Term of this Lease, including, but not limited to, any and all extensions thereto, Tenant shall utilize all of its usable space within the Premises in the ordinary course of business. Tenant shall conduct its business in the Premises during the usual and customary days and hours for such type of business, as set forth in Section 1.06 (Use of Premises) and Section 1.07 (Hours of Operation). Unless otherwise agreed by Landlord in writing, Tenant’s hours of operation shall be as specified in Section 1.07 (Hours of Operation) and shall in no event be less than such hours of operation, except in an emergency or Force Majeure event, or otherwise approved in writing by Landlord.
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Tenant shall notify Landlord prior to any temporary closure of the business exceeding two (2) days, or any modification of ongoing operating hours. In the event Tenant desires to close the business for five (5) consecutive days, Tenant shall make a written request to Landlord at least fourteen (14) days prior to the start of the business closure, or immediately in the event of an emergency. In no event, shall Tenant close the business for five (5) consecutive days or more without Landlord’s prior written approval. Notwithstanding any other terms of this Lease, Tenant’s closure of the business shall not constitute a waiver or modification of any Rent due.
In the event that Tenant intends to terminate this Lease for any reason, or abandon the Premises, prior to the expiration of the Term of this Lease without the prior written consent of Landlord, Tenant shall immediately notify Landlord in writing of its intention to terminate or abandon. Except for the expiration of the Term of this Lease, Tenant agrees to keep the Premises open for business during regular business hours for a period of ninety (90) days following notice of termination or abandonment. During this ninety (90) day period, Tenant shall keep the Premises adequately stocked with merchandise and maintain sufficient personnel in order to conduct its business in accordance with sound business practices.
8.05 Storage; Office Space. Tenant may warehouse, store and stock within the Premises only such goods, wares and merchandise as Tenant intends to offer for retail sale on or about the Premises. This shall not preclude occasional emergency transfers of merchandise to any other store belonging to Tenant, if any, which is not located on the Wharf. Tenant shall use for office, clerical or other non-selling purposes only such limited space in the Premises as is, from time to time, reasonably required for Tenant’s business operation on the Premises.
Tenant shall not conduct any auctions, liquidation or bankruptcy sales, “fire” sales or sidewalk sales on, about or near the Premises without Landlord’s prior written consent.
8.06 Cooperative Retail Management. INTENTIONALLY OMITTED.
8.07 Hazardous or Toxic Materials/Indemnification of Landlord. (a) Tenant shall, at its sole cost and expense, comply with all Laws concerning environmental conditions, emissions, pollutants and controls. Tenant warrants and agrees that it will not introduce, disturb, release, discharge, use, maintain, generate, store, treat or dispose of any Hazardous Material (as defined below) on, in, at, about, from, or under the Premises (or any improvements located or to be located thereon) in violation of any applicable environmental Laws (including, but not limited to, those laws described below). Tenant further warrants and agrees that Tenant shall not cause, store, use or permit any Hazardous Material, including without limitation, asbestos or polychlorinated biphenyls, to be brought upon, kept or used on, in, at, about, from, or under the Premises (or the improvements located or to be located thereon) by Tenant, its officers, directors, employees, representatives, agents, volunteers, contractors, subcontractors, suppliers, invitees, customers, or others acting on Tenant’s behalf or under Tenant’s authority or control, without the prior written consent of Landlord (which consent may be withheld or delayed in Landlord’s sole discretion). (b) Tenant shall indemnify, defend (with counsel reasonably satisfactory to Landlord) and hold harmless Landlord (and its officials, officers, directors, employees, volunteers, agents, representatives, independent contractors, successors, and assigns) from and against (a) any costs, actions, lawsuits, judgments, penalties, fines, liability, loss, damages, or claims as related to a Hazardous Materials contamination of the Premises (or the improvements located or to be located thereon) caused by Tenant, its officers, directors, employees, representatives, agents, volunteers, contractors, subcontractors, suppliers, invitees, customers, or others acting
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on Tenant’s behalf or under Tenant’s authority or control; and (b) any and all claims, actions, lawsuits, judgments, damages, penalties, fines, costs, expenses (including, but not limited to, reasonable attorneys’ fees), liabilities and/or losses, including, without limitation, diminution in value of the Premises (or the improvements located or to be located thereon), damages for the loss or restriction on use of rentable or usable space or of any amenity of the Premises (or the improvements located or to be located thereon), damages arising from any adverse impact on marketing of space on the Wharf, and sums paid in settlement of claims, attorneys’ fees, consultant fees and expert fees which arise during or after the Term as a result of or as related to (i) the presence in, on, under, at or about the Premises (or the improvements located or to be located thereon), or discharge in, on, at, under or from the Premises (or the improvements located or to be located thereon), of any Hazardous Materials generated and/or brought on or about the Premises (or the improvements located or to be located thereon) by Tenant (or its officers, directors, employees, agents, or anyone acting within Tenant’s authority or control); and/or (ii) Tenant’s failure to comply with any applicable environmental Laws (including, without limitation, those laws described below) applicable to the Premises (and/or the improvements located or to be located thereon). Without limiting the foregoing, if the presence of any Hazardous Material on the Premises (or the improvements located or to be located thereon) caused or permitted by Tenant results in any contamination of the Premises (or the improvements located or to be located thereon), Tenant shall promptly take all actions at its sole cost and expense as are necessary to return the Premises (and the improvements located or to be located thereon) to the condition existing prior to the introduction of any such Hazardous Material to the Premises; provided that Landlord’s approval of such action(s) shall first be obtained, which approval shall not be unreasonably withheld so long as such action(s) would not potentially have any material adverse long-term or short-term effect on the Premises (or the improvements located or to be located thereon). (c) As used herein, the term “Hazardous Material” means any hazardous or toxic substance, material or waste which is or becomes regulated by any local governmental authority, the State of California or the United States Government.
The term “Hazardous Material” shall include without limitation, any material or substance which is: (i) defined as a “hazardous waste,” “extremely hazardous waste” or “restricted hazardous waste” under Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140, of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control); (ii) defined as a “hazardous material” under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory); (iii) defined as a “hazardous substance” under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances); (iv) petroleum; (v) asbestos; (vi) listed under Article 9 or defined as hazardous or extremely hazardous pursuant to Article 11 of Title 22 of the California Administrative Code, Division 4, Chapter 20; (vii) designated as a “hazardous substance” pursuant to Section 311 of the Federal Water Pollution Control Act (33 U.S.C. § 1317); (viii) defined as a “hazardous waste” pursuant to Section 1004 of the Federal Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq. (42 U.S.C. § 6903); or (ix) defined as a “hazardous substance” pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq. (42 U.S.C. § 9601), and any amendments or successor statutes thereto.
8.08 Compliance with Governmental Regulations. Tenant shall, at its sole cost and expense, comply with all of the requirements of all local, state, and federal authorities now in force, or which may hereafter be in force, pertaining to the Premises and the Wharf. With regard
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to the use of the Premises, Tenant shall faithfully observe all local ordinances and state and federal statutes now in force or which may hereafter be in force.
8.09 Americans with Disabilities Act. Throughout the Term of the Lease, Tenant acknowledges and expressly accepts full responsibility and shall incur all costs and expenses (whether structural or non-structural in nature) for compliance with the requirements of the Americans with Disabilities Act (ADA) and any other Law regarding the accessibility of the Premises (and the improvements located or to be located thereon) by disabled individuals. Tenant agrees to release, indemnify, defend and hold harmless Landlord (and its officials, officers, directors, employees, agents, representatives, volunteers, contractors, successors and assigns) from and against any claim, loss, expense or liability arising from or related to Tenant’s failure to fully comply with all such Laws and/or this Section 8.09 (Americans with Disabilities Act).
If the Premises requires modifications to comply with the ADA or any other local, state or federal law or regulation regarding the accessibility of the Premises by disabled individuals, Tenant shall be fully responsible for the cost thereof, provided however, that if expenditures are required during the last six (6) months of this Lease, or Extended Term, and the cost thereof exceeds six (6) months the Minimum Base Rent, Tenant may instead terminate this Lease unless Landlord notifies Tenant, in writing, within ten (10) days after receipt of Tenant’s termination notice that Landlord has elected to pay the difference between the actual cost thereof and the amount equal to six (6) months the Minimum Base Rent. If Tenant elects termination, Tenant shall immediately cease the use of the Premises and deliver to Landlord written notice specifying a termination date at least ninety (90) days thereafter. Such termination date shall, however, in no event be earlier than the last day that Tenant could legally utilize the Premises without commencing such modifications. Termination of this Lease does not relieve Tenant of any duty to assume legal responsibility as stated below for any third-party claims related to compliance with the ADA.
8.10 CASp Inspection. Landlord states that the Premises has not been inspected by a Certified Access Specialist (CASp). Accordingly, this notice is provided by Landlord pursuant to California Civil Code Section 1938:
“A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of the construction-related accessibility standards within the premises.” Unless otherwise expressly stated in this Lease and subject to the terms of this Lease, Tenant may elect at any time to perform a CASp inspection of the Premises at Tenant’s expense;
Tenant agrees that: (a) any repairs or modifications necessary to correct violations of applicable construction-related accessibility standards within or about Premises are the responsibility of Tenant; (b) any construction-related accessibility improvements by Tenant or alterations of or improvements to the Premises are the responsibility of the Tenant; (c) any repairs or modifications to correct violations of applicable construction-related accessibility standards are the responsibility of Tenant.
8.11 Green Business Program.
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(a) Landlord requires that all Wharf tenants become a certified Green Business through the City of Santa Cruz Green Business Program. Green Businesses reduce carbon dioxide generation, conserve energy by using fluorescent lighting and Energy Star rated equipment, conserve water through the use of low-flow toilets and water flow restrictors, conserve natural resources by promoting public transit, biking and walking, reduce waste by recycling and composting and using materials with recycled content, and use less toxic products, all of which provide a safer and healthier environment for employees and visitors to the Wharf.
(b) Tenant shall contact the City of Santa Cruz Green Business Program and schedule and complete a free Green Business Program Audit within six (6) months of the Commencement Date.
(c) Upon receiving the results of the Green Business Program Audit, and at Tenant’s sole discretion, Tenant may proceed to become a certified Green Business.
(d) As an incentive to Tenant to become a certified Green Business, and only after receiving Landlord’s express written approval, Tenant may utilize up to twenty-five (25%) percent of Tenant’s contributions to the Capital Improvement Fund for improvements to the Premises specifically listed on the Certified Green Business Program Checklist.
(e) Upon receipt from Tenant of documented proof of Tenant’s payment of costs for eligible Green Business improvements, and Tenant’s certification as a Green Business Program, Landlord, at Landlord’s sole and absolute discretion, will reimbursement Tenant or defer collection of Tenant’s required monthly Capital Improvement Fund contributions until the total amount deferred equals the amount of Tenant’s Green Business improvement costs, at which time Tenant shall resume making monthly Capital Improvement Fund contributions.
8.12 Use of Sidewalk Area. Tenant shall not in any way encumber, obstruct or impede the sidewalks and any ramps that may be present in front of the Premises. Tenant shall at all times keep and maintain said sidewalks in good condition and repair, free and clear of all obstacles, stands (including, but not limited to, any hostess or sales stands), dirt, mud, water, debris, rubbish, filth, and other encumbrances or obstructions, and safe and convenient for the use of the public, unless otherwise approved by the Landlord in writing.
ARTICLE 9. IMPROVEMENTS, ALTERATIONS, AND ADDITIONS
For the purpose of this Lease, “Tenant Improvements” shall mean any fixtures, furnishings, equipment, or modifications to the Premises installed or caused to be installed by Tenant or otherwise not present on the Premises prior to Tenant’s occupancy.
9.01 Tenant Improvements
No Tenant Improvements, as defined above, are contemplated by Tenant or required by Landlord during the Term of this Agreement; however, in the event Landlord exercises Landlord’s option to extend the Term of this Agreement, Tenant may be required to construct Tenant Improvements at the Premises in accordance with the following:
(a) No later than thirty (30) days following the expiration of the Tenant Improvement Period, Tenant shall submit to Landlord an accounting of all expenses paid by Tenant for any Tenant Improvements at the Premises. Such accounting shall include
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copies of paid receipts, paid invoices, and other documentation as determined by Landlord to be sufficient to validate Tenant’s aggregate costs for the Tenant Improvements.
(b) In the event that Tenant cannot document its expenditures for the Extended Term Tenant Improvements in the amount required herein, Tenant shall, immediately upon demand from Landlord, pay to Landlord any underage as determined by Landlord.
(c) If Tenant desires to construct Tenant Improvements during the Initial Term of this Agreement, Tenant may do so provided that Tenant obtain Landlord’s prior written consent pursuant to Section 9.02 (Consent) of this Agreement. (d) Tenant shall be solely responsible for applying for and obtaining all building, zoning or other permits required by local or state regulatory authorities related to any Tenant Improvements.
9.02 Consent. Tenant shall not make any improvements, alterations, additions, or repairs to the exterior of the Premises without Landlord’s prior written consent (which consent may be withheld or delayed in Landlord’s sole and absolute discretion). Tenant shall not make any improvements, alterations or additions to the interior of the Premises which cost in excess of fifteen thousand dollars ($15,000), or the equivalent current dollar value at Landlord’s sole discretion, at the time work is proposed, without Landlord’s prior written consent (which consent may be withheld or delayed in Landlord’s sole and absolute discretion). All improvements, alterations, additions, or repairs shall be in conformity with the laws, directives, rules, permits, or regulations of all applicable public and governmental agencies, as well as the terms and conditions of this Lease, including, but not limited to, the provisions of this Article 9. Any improvements, alterations, additions, or repairs shall be made at Tenant’s sole costs and expense. Landlord shall also own any improvements constructed by Tenant or Landlord on the Premises.
9.03 Notices; Liens. At least fifteen (15) days prior to commencing any work relating to any improvements, alterations, additions, or repairs approved by Landlord, Tenant shall notify Landlord and Wharf Supervisor in writing of the expected commencement date and completion date for the work. Landlord shall have the right thereafter to post and maintain on the Premises such notices (including, but not limited to, notices of Landlord’s non-responsibility) as Landlord deems necessary to protect Landlord and the Premises from mechanics’ liens, materialmen’s liens and/or any other liens or encumbrances. Tenant shall pay, when due, all claims for labor and materials furnished to or for Tenant for use in repairing or improving the Premises. Tenant shall not permit any mechanics’ or materialmen’s liens to be levied against the Premises arising out of work performed, materials furnished or obligations to have been performed on the Premises by or at the request of Tenant. Tenant hereby indemnifies and holds Landlord harmless against loss, damage, attorneys’ fees and all other expenses on account of claims of lien of laborers or materialmen or others for work performed or materials or supplies furnished to Tenant or persons claiming under it.
In the event of an emergency, Tenant may promptly commence repairs to the Premises, but shall provide written notice to Landlord as soon as practical.
At all times during the Term of this Lease, Tenant shall keep the Premises and all improvements now or hereafter located on the Premises (including, but not limited to, any Tenant Improvements) free and clear of all liens and claims of liens for labor, services, materials, supplies, and/or equipment performed on or furnished to the Premises. Tenant shall not suffer or permit any mechanics’ or materialmen’s lien, attachment, execution or similar liens or stop notices to
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attach to, or to be filed or levied against the Premises (including, but not limited to, the equipment or improvements located thereon) or against Landlord’s interest therein. Subject to the provisions of Section 9.04 (Contesting Liens) below, if any such liens, stop notices, or similar proceedings are filed or commenced, Tenant shall, within twenty (20) days after notice of the filing, cause the same to be discharged of record by payment, deposit, order of court or by bonding. Subject to the provisions of Section 9.04 (Contesting Liens) below, should Tenant fail to pay and discharge or cause the Premises (and improvements now or hereafter located on the Premises) to be released from any such lien or claim of lien within twenty (20) days after notice of the filing of such lien or claim, Landlord shall have, in addition to all other remedies provided under this Lease and/or applicable Law, the right (but not the obligation) to cause the same to be released by such means as Landlord shall deem proper (including, but not limited to, paying, adjusting, compromising, and/or discharging any such lien or claim on any terms and in any manner that Landlord may deem appropriate on behalf of the Tenant) and charge Tenant the costs incurred by Landlord as Additional Rent. In that event, Tenant shall, on or before the first day of the next calendar month following any such payment by Landlord, reimburse Landlord for the full amount paid by Landlord in paying, adjusting, compromising, and/or discharging that lien or claim of lien, including, but not limited to, any attorneys' fees or other costs expended by Landlord, together with interest at the then-maximum legal rate from the date of payment by Landlord to the date of repayment by Tenant.
Tenant shall indemnify, hold harmless, and defend (with counsel reasonably satisfactory to Landlord) Landlord (and Landlord’s officers, employees, representatives, and agents) from and against any and all liens and encumbrances arising out of any work performed or materials furnished by or at the direction of Tenant, as well as any loss, damage, attorneys’ fees and all other costs and expenses on account of claims of lien of laborers or materialmen or others for work performed or materials or supplies furnished to Tenant or persons claiming under Tenant.
Nothing in this Lease shall be deemed or construed in any way as giving Tenant any right, power or authority to contract for or permit, on Landlord’s behalf or as to Landlord’s interest, the rendering of any services or the furnishing of any materials.
9.04 Contesting Liens. If Tenant desires to contest any lien of the nature set forth above, it shall notify Landlord of its intention to do so within ten (10) days after the filing of such lien, and Tenant shall furnish the bond required in California Civil Code § 8424 (or any comparable statute hereafter enacted) or otherwise cause such lien to be removed within twenty (20) days after it has been recorded against the Premises. Within five (5) days after the final determination of the validity thereof, Tenant shall satisfy and discharge such lien and the amount owed to the extent held valid, and all penalties, interest and cost in connection therewith, as the case may be.
In the event of any such contest, Tenant shall indemnify, defend, and protect Landlord (and Landlord’s officers, employees, representatives, and agents) and the Premises (and improvements located or to be located thereon) against all loss, cost, expense and damage (including, but not limited to, attorney’s fees and costs) resulting therefrom. If Tenant fails to comply with foregoing provisions, Landlord may (but is not obligated to) do so on behalf of Tenant and charge the Tenant the costs incurred by Landlord as Additional Rent.
9.05 Trade Fixtures. Tenant may install trade fixtures, display items, machinery or other trade equipment in conformance with this Article 9 and all laws, ordinances, directives, rules, permits, or regulations of all applicable public and governmental agencies. With the exception of furniture, equipment and trade fixtures that may be removed by Tenant without causing damage to the Premises, all improvements, alterations, repairs, or additions shall become part of the realty and belong to Landlord at expiration or earlier termination of this Lease. Tenant shall not remove any trade fixtures, display items, machinery or other trade equipment from the Premises, without Landlord’s prior written consent, if the removal of any such item would cause damage to the Premises and, in the absence of Landlord’s written consent to removal, any such item shall be
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deemed a part of the realty and belong to Landlord at expiration or earlier termination of the Lease.
9.06 Design Standards.
(a) No structure or other improvement of any kind (including, but not limited to, any Tenant Improvements) shall be constructed on the Premises unless and until the construction documents (including, but not limited to, the plans, specifications, drawings, and related documents [collectively “Construction Documents”]) and proposed location of that structure and/or improvement have been approved in writing by Landlord. The Construction Documents prepared for the Tenant Improvements by Tenant shall comply with all applicable goals, policies, and guidelines contained in the 2024 Santa Cruz Wharf Master Plan and Engineering Report (as such may be amended), particularly the 2024 Santa Cruz Wharf Master Plan and Engineering Report Design Standards (the “Design Standards”), all of which are incorporated herein and made part hereof by reference. No structure or other improvement of any kind (including, but not limited to, the any Tenant Improvements) shall be constructed on the Premises that does not comply with the Construction Documents (including, but not limited to, the plans and specifications) approved in writing by Landlord. (b) After approval by Landlord of the Construction Documents pertaining to any Tenant Improvements, any substantial change in the Construction Documents must be approved in writing by Landlord. For purposes of this Section, "substantial change" means a change that (i) materially alters the exterior appearance of the subject Tenant Improvements, (ii) substantially alters the approved design intent, or a (iii) results in a decrease or increase in construction costs of $15,000 or more. Minor changes in work or materials not constituting a substantial change need not be approved by Landlord, but a copy of the altered plans and specifications reflecting those changes must be promptly given to Landlord.
(c) Tenant shall accomplish any and all repair, construction, addition, improvement, and/or alteration in, on, at, about, from, or under the Premises expeditiously, diligently, and with due care.
(d) Contractor Requirements.
(i). All work required in the construction of any Tenant Improvements, including, but not limited to, any site
preparation work, landscaping work, and/or utility
installation work, as well as actual construction work on the Tenant Improvements, shall be performed only by
competent contractors licensed and registered under the laws of the State of California and shall be performed in accordance with written contracts with those contractors.
Each such contract shall comply with California prompt
payment laws (including, but not limited to California Public Contract Code section 7201) and provide that the final
payment under the contract due to the contractor shall be in an amount equaling at least five percent (5%) of the full amount payable under the contract and shall not be paid to contractor until whichever of the following last occurs: (a) The expiration of thirty-five (35) days from the date of recording by Tenant of a Notice of Completion of the Tenant Improvements, Tenant agreeing to record that Notice of
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Completion promptly within the time specified by law for the recording of that notice; or (b) The settlement and discharge of all liens of record claimed by persons who supplied any labor and/or materials for the construction of the Tenant Improvements.
(ii). If Tenant engages or uses an independent
contractor for the subject work, Tenant shall furnish to Landlord for Landlord’s approval, a true and correct copy of Tenant’s proposed contract with the general contractor for the Tenant Improvements, along with evidence of the
general contractor’s financial condition. The contract shall grant Tenant the right to assign and Landlord the right (but not the obligation) to assume Tenant’s obligations and rights under that contract if Tenant defaults (with such assignment becoming effective only upon and to the extent of Landlord’s acceptance of such assignment(s) in writing). Landlord may disapprove such contract by notice given within thirty (30) days following Landlord’s receipt of the copy of the
proposed contract and evidence specified above. The
notice shall specify the grounds for disapproval. Landlord shall not unreasonably disapprove and shall be considered to have approved in the absence of notice of disapproval given within thirty (30) days after Landlord receives the contract and evidence specified above.
(iii). Prior to entering into a contract with Tenant for such work and/or services, each contractor engaged by Tenant to perform any work or services for construction of the authorized and approved Tenant Improvements that costs
over $25,000, including, but not limited to, any construction, site preparation, utility installation, or landscaping services, shall furnish to Tenant, who shall promptly deliver copies of both of the following to Landlord:
(iv). A faithful performance bond issued by a corporate surety authorized to issue surety insurance in California, in an amount equal to one hundred percent (100%) of the
contract price payable under the contract securing the
faithful performance by the contractor of its contract with Tenant, and in form and content acceptable to Landlord; and (v). A labor and materials payment bond issued by a
corporate surety authorized to issue surety insurance in California, in an amount equal to one hundred percent
(100%) of the contract price payable under the contract securing the payment of all claims for the performance of labor or services on, or the furnishing of materials for, the performance of the contract and in form and content
acceptable to Landlord.
The labor and materials payment bond and faithful performance bond referenced above shall be issued by an insurance organization or surety (1) currently authorized by the Insurance Commissioner to transact business of insurance
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in the State of California; (2) listed as an acceptable surety in the latest revision of the Federal Register Circular 570; and (3) assigned a Policyholders’ Rating A- (or higher) and Financial Size Category Class VII (or larger) in accordance with the latest edition of Best’s Key Rating Guide: Property-Casualty.
(e) Tenant shall take all reasonably necessary measures to minimize any damage, disruption or inconvenience caused by such work and make adequate provision for the safety and convenience of all persons affected thereby. Dust, noise and other effects of such work shall be controlled by Tenant using methods customarily utilized in order to control deleterious effects associated with construction. (f) All improvements, alterations, additions, or repairs (including, but not limited to, any Tenant Improvements) shall be constructed and maintained in a good and workmanlike manner, in accordance with the generally accepted practices, and to the standards of, any engaged contractor’s profession, using only new materials of good quality and which are equal to or exceeding that of the original equipment or improvement, and in compliance with all Applicable Requirements, Laws, and permits, licenses, certifications, variances, authorizations, permissions, and other regulatory approvals, including but not limited to the City’s Coastal Development Permit conditions for the Wharf Maintenance Program (Th16a – Application Number: 3-18-1081).
(g) Tenant shall have the sole responsibility for obtaining all necessary permits, licenses, certifications, authorizations, and other approvals for the Tenant Improvements and shall make application for such permits, licenses, certifications, variances, authorizations, and other approvals directly to the person or governmental agency having jurisdiction. Tenant shall notify Landlord in writing at least thirty (30) days prior to submitting application(s) to any governmental regulatory agency for any development, construction or building permit or license pertaining to the Premises or the Tenant Improvements. Tenant shall provide Landlord with a copy of all application(s) within five (5) days of making said application(s), along with copies of all documentation (including, but not limited to, plans and specifications) submitted as part of the application(s). Tenant shall also provide Landlord, within ten (10) days of Tenant’s receipt, a copy of all permits, licenses, variances, certifications, authorizations, or other approvals subsequently issued.
(h) Tenant shall pay all Landlord’s costs incurred in connection with review and approval of any Tenant Improvement. Landlord shall bear no cost for their review or processing of any Tenant Improvement.
(i) All construction work shall comply with and conform to the City’s Construction Work Best Management Practices and Regulations, a copy of which is attached hereto as Exhibit E and incorporated herein.
(j) It shall be the obligation of Tenant (and any contractor and/or subcontractor under Tenant) to comply with and conform to all applicable State of California labor laws, rules and regulations (including, but not limited, prevailing wage laws and requirements as further detailed below), and the Parties agree that Tenant shall be liable for any violation thereof.
(k) With respect to Tenant Improvements involving structural changes or expenditures in excess of $15,000, or equivalent current dollar value at Landlord’s sole discretion, at the time work is proposed, Tenant shall submit to Landlord evidence that Tenant has sufficient cash on-hand to build Tenant Improvements in accordance with the approved Construction Documents (defined above) and working drawings.
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(l) Tenant shall make, at its sole cost and expense, improvements, alterations, repairs, or additions in and to Tenant Improvements and structures on the Premises that may be required by any Applicable Requirement and/or Laws (including, but not limited to, the ADA) from time to time.
(m) The construction of any Tenant Improvements involving structural changes (if any are proposed by Tenant and allowed by Landlord) shall strictly conform to the requirements and terms of this provision.
(i). Tenant shall submit an executed construction
contract or contracts, in a form and content reasonably acceptable to Landlord, with competent and financiallyresponsible contractors for construction in accordance with the Construction Documents and working drawings
approved by Landlord.
(ii). Tenant will commence construction within sixty (60) days of approval by Landlord of the construction contract(s) and Tenant shall continuously and diligently pursue
construction to completion by a date approved by the
Landlord. Provided, however, the commencement and
completion dates may be extended pursuant to subsection (m)(3) below. All construction will be substantially in accordance with the plans and specifications, including but not limited to the Construction Documents and working
drawings, previously approved in writing by Landlord,
subject to changes thereto as may be approved in writing by Landlord, in Landlord’s sole discretion. Said plans and specifications, and any approved changes thereto, are by this reference made a part of this Lease. In the event of any inconsistency between the Construction Documents
(including, but not limited to, the plans and specifications) and the terms and conditions of this Lease, the terms and conditions of this Lease shall prevail.
(iii). The time(s) during which Tenant’s construction is delayed by Force Majeure Events (as defined in Section
20.06 [Force Majeure] below), shall be added to the times for the commencement and completion of the construction established above on a day-for-day basis. Any extension due to excused delay shall not commence until such time as Tenant notifies Landlord in writing of such delay.
(n) If requested by Landlord, Tenant shall furnish Landlord a completion bond as described below promptly following Landlord’s demand therefor.
The bond shall be issued by a corporate surety authorized to issue surety insurance in California, in an amount equal to one hundred percent (100%) of the estimated costs of construction of the Tenant Improvements, securing completion of the proposed construction of the Tenant Improvements and in form and content acceptable to Landlord. Landlord may, but shall not unreasonably, disapprove the completion bond.
The completion bond shall be deemed approved unless notice of disapproval is given within fifteen (15) working days after receipt of the proposed bond.
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(o) Tenant shall indemnify, defend (with counsel reasonably satisfactory to Landlord), and hold harmless Landlord its officials, officers, directors, employees, agents, representatives, contractors, volunteers, successors and assigns from and against any damage, claims, cost, expense or liability as a result of or as related to the Tenant Improvements, including, without limitation, any and all expenses such as consultant, architect, contractor fees and attorney’s fees related to reviewing and approving the Construction Documents (including, but not limited to, the plans) or removing any Tenant Improvements upon termination or expiration of this Lease. This Article 9 shall not expand or restrict the indemnity obligations of the Parties under Article 12 (Indemnification, Insurance) below.
(p) With the exception of furniture, equipment and trade fixtures that may be removed by Tenant as provided in Section 9.05 (Trade Fixtures) above, the Tenant Improvements shall be surrendered with and remain on the Premises upon expiration or earlier termination of this Lease, subject to Landlord’s right to require their removal by Tenant within sixty (60) days after the termination or expiration of this Lease. (q) Tenant shall, at the expiration or earlier termination of this Lease, remove the Tenant’s Personal Property and the trade fixtures that are removable as provided in Section 9.05 (Trade Fixtures), whether or not bolted or otherwise attached to the Premises, and shall repair all resultant damage or injury to the Premises.
(r) Notwithstanding any other provision of this Lease that may be construed to the contrary, the Parties agree that upon expiration or earlier termination of this Lease, Landlord shall have no liability or obligation to pay compensation for any improvements made to the Premises.
9.07 Signs and Advertising Matter.
(a) Tenant will not place, install, maintain or construct or allow any third party to place, install, maintain or construct any sign, banner, flag, awning or canopy, covering, or advertising matter on the roof, or on any exterior door, wall or windows of the Premises without Landlord’s prior written consent, which shall not be unreasonably withheld. Tenant further agrees to maintain such sign, awning, canopy, decoration, lettering, advertising matter or window coverings in good condition and repair at all times. Tenant shall not display or sell any merchandise or allow carts, portable signs, devices, vending machines or other objects to be stored or remain on the sidewalk or elsewhere outside of the defined exterior of the Premises without the prior written consent of Landlord.
(b) No advertising medium shall be used or allowed to be used by Tenant which can be heard or experienced outside the Premises, including without limitation, flashing lights, searchlights, loudspeakers, phonographs, radios or television.
Except with Landlord’s prior written consent, Tenant shall not display, paint or place, or cause to be displayed, painted or placed, any handbills, bumper stickers or other advertising devices on any vehicle parked in the parking area of the Wharf, including, but not limited to, those belonging to Tenant, or to Tenant’s agent or any other person; nor shall Tenant distribute or cause to be distributed on the Wharf any handbills or other advertising devices.
(c) Tenant agrees, at Tenant’s sole cost and expense, to construct and install signs as may be required or allowed by Landlord in strict conformance with the Municipal Wharf Sign Guidelines (“Sign Guidelines”) attached hereto as Exhibit F and
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the Design Standards made part hereof by reference. Tenant’s signs shall not be installed without the written consent of Landlord. Tenant, at its sole cost and expense, shall obtain all necessary permits, licenses, variances, certifications, authorizations, and other approvals before installing, erecting or constructing any such sign. Signs shall be installed prior to the commencement of Tenant’s business and thereafter shall be maintained by Tenant at Tenant’s sole cost and expense. If Tenant fails to maintain any such sign(s), Landlord shall have the right (but not the obligation) to maintain any such sign(s) and Tenant shall reimburse Landlord for such cost, plus a twenty percent (20%) administrative overhead fee. If Tenant installs a sign without Landlord’s prior written consent, or said sign does not conform to Landlord’s Sign Guidelines, Landlord shall have the right, at its sole and absolute discretion, to remove and store Tenant’s sign at Tenant’s sole cost and expense. The removal and storage costs and expenses shall bear interest at the rate of one and one half percent (1 1/2%) per month until paid, or at the maximum rate allowed by law, whichever is less.
(d) Landlord reserves the right to revise the Sign Guidelines and the Design Standards for any reason, at any time, including without limitation changes in any governmental requirement or Landlord’s renovation of the Wharf. Within sixty (60) days of Landlord’s request, Tenant shall remove Tenant’s existing sign, patch and repair the underlying attachment surface, and install a new sign, at Tenant’s sole cost and expense, in accordance with Landlord’s then existing Sign Guidelines and Design Standards.
9.08 Restoration. Except as otherwise provided herein, upon expiration or earlier termination of this Lease, Tenant shall return the Premises to the same condition as existed at the date of execution of the Lease, except as the Premises were repaired, rebuilt, restored, altered, and/or added to as permitted or required by the provisions of this Lease, reasonable wear and tear excepted. Landlord, at Landlord’s sole discretion and authority, and upon receipt of written request from Tenant, may consider allowing any Tenant Improvements approved by Landlord under this Lease to remain. In addition, Landlord, at its election, may also require Tenant to remove, at Tenant’s sole cost and expense, any improvements, alterations or additions approved by Landlord in accordance with this Lease. Tenant shall repair, at its sole cost and expense, any damage resulting from the removal of any improvements, alterations, additions, equipment, machinery or trade fixtures.
9.09 Ownership of Improvements.
(a) Any improvements existing on the Premises at the Effective Date of this Lease and/or the Commencement Date shall remain Landlord’s property. Landlord shall also own any improvements constructed on the Premises by Tenant or Landlord. (b) Landlord owns the Wharf and the pilings, substructure, and decking under the Premises, as well as the Premises.
(c) Upon expiration or earlier termination of this Lease from any cause, all improvements on the Premises, including but not limited to any Tenant Improvements, Landlord elects to retain, shall automatically and without any act of Landlord, Tenant, or any third party, become Landlord’s property and Tenant, upon Landlord’s demand, shall execute a quit claim deed whereby all right, title and interest of Tenant in and to the Premises (including, but not limited to, the Tenant Improvements) is quitclaimed to Landlord. Said improvements on the Premises shall be free and clear of all liens and encumbrances upon expiration or earlier termination of this Lease.
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(d) Subject to Landlord’s right to require removal of fixtures and improvements as provided in this Article 9, all permanent improvements and fixtures on the Premises at the expiration or earlier termination of this Lease shall, without compensation to Tenant, automatically and without any act of Tenant or any third party become Landlord's property. Tenant shall surrender the Premises and all improvements constructed thereon to Landlord at the expiration or earlier termination of this Lease, free and clear of all liens, encumbrances, and third party claims. Tenant shall indemnify, defend and hold harmless Landlord against all liability and loss arising from such liens, encumbrances, or claims and/or from Landlord’s exercise of the rights conferred by this Section. Tenant agrees to execute, acknowledge, and deliver to Landlord any instrument requested by Landlord as necessary in Landlord's opinion to perfect Landlord's right, title, and interest in and to the Premises and the permanent improvements and fixtures located thereon. Tenant may remove any movable personal property and equipment, provided such removal is consistent with Section 9.05 (Trade Fixtures) and Tenant shall repair any damage caused by such removal. Tenant shall not remove trade fixtures, display items, machinery or other trade equipment except as allowed pursuant to Section 9.05 (Trade Fixtures) above. Notwithstanding anything contained in this Lease that may be construed to the contrary, to the full extent permitted by law (including, but not limited to, California Public Resources Code Section 6312, or any successor statute), the Parties agree that upon expiration or earlier termination of this Lease, Landlord shall have no liability or obligation to pay compensation for any improvements made to the Premises.
ARTICLE 10. MAINTENANCE AND REPAIRS
10.01 Landlord’s Maintenance Obligations.
(a) Landlord shall maintain in good condition and repair the foundations, roofs, the Wharf substructure and pilings, and exterior surfaces of exterior walls of the Premises (exclusive of doors, door frames, door checks, windows, window frames and store fronts); provided, however, if any repairs or replacements are necessitated by the acts, omissions, negligence, gross negligence or willful acts of Tenant (or its officers, directors, employees, representatives, agents, volunteers, contractors, subcontractors, suppliers, customers, invitees, or others acting on Tenant’s behalf or under Tenant’s authority or control), or trespassers, or by reason of Tenant’s failure to observe or perform its obligations and/or any provisions contained in this Lease or caused by alterations, additions or improvements made by Tenant or its directors, officers, employees, representatives, agents, contractors, subcontractors, laborers or materialmen, the cost and expense of such repairs and replacements shall be the sole obligation of Tenant.
(b) Landlord shall be responsible for the required five (5) year inspection of all fire sprinkler systems on the Premises in accordance with the California Fire Code and Santa Cruz Municipal Code Chapter 19.05, and any other applicable state or local rules and regulations. Landlord shall comply with all requirements of the Landlord’s insurance underwriters and any other governmental authority having jurisdiction thereof, regarding the installation and periodic maintenance of fire suppression systems or apparatus on the Premises. Tenant shall be responsible for all other required inspections, testing, maintenance, and serving of the fire sprinkler systems serving the Premises, including compliance with the California Fire Code and Santa Cruz Municipal Code Chapter 19.05, and any other applicable state or local rules and regulations and the requirements of Tenant’s insurance carriers, if any. All costs
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related to the maintenance and inspection of fire sprinkler systems on the Premises shall be considered Additional Rent and billed to Tenant.
(c) Tenant shall be solely responsible for all repairs to and maintenance of the Premises and improvements constructed by Tenant (including, but not limited to, any Tenant Improvements) which are not expressly allocated to the Landlord under this Lease or by separate written Lease between the Landlord and Tenant.
(d) Tenant acknowledges and agrees that it shall be responsible for paying Landlord a pro rata share of Landlord’s Operating Expenses in maintaining the surfaces of the exterior walls and for periodic cleaning of awnings and of the roof of the building in which the Premises are located as set forth elsewhere in this Lease. Landlord agrees to exercise reasonable effort to obtain cleaning and maintenance services at a reasonable and market rate.
(e) In its sole discretion, or in the event Tenant fails to maintain, repair, or replace any mechanical or electrical system (including, but not limited to, the HVAC systems) in accordance with Section 10.03 (Tenant’s Maintenance Obligations), Landlord may contract with a service company licensed and experienced in servicing the applicable systems and/or equipment and approved by Landlord for regular maintenance, repairs and replacement, if required, of the applicable systems and/or equipment serving the Premises. Tenant shall be responsible for the costs and expenses of such maintenance, repairs or replacement as set forth in this Lease. (f) Unless Tenant notifies Landlord in writing of the need for repairs under this provision, Landlord shall not be liable to Tenant or others for its failure to make such repairs. Landlord shall be entitled to a reasonable period of time to effect such repairs upon receipt of said written notice from Tenant. Tenant expressly waives and agrees not to assert as an affirmative defense in any judicial proceeding or arbitration brought by Landlord against Tenant (1) the right to require Landlord to make repairs; (2) any right to make repairs at the expense of Landlord; (3) the right to reduce or offset rent as a consequence of the condition of the Premises or the improvements located thereon; (4) the benefits of California Civil Code Section 1932, 1941, and 1942, as amended from time to time, or any superseding statute, and of any other Law permitting Tenant to make repairs at Landlord's expense; and (5) any Law, judicial pronouncement, or common law principal similar thereto, which is now or hereinafter in effect or is otherwise inconsistent with the provisions of this Lease.
10.02 Landlord’s Right of Entry. Landlord, its agents, contractors, employees, representatives, contractors, and assigns may enter the Premises at all reasonable times to:
(a) Examine the Premises and improvements thereon;
(b) Perform any obligation of, or exercise any right or remedy of, Landlord under this Lease;
(c) Make improvements, alterations, additions, or repairs to the Premises, or to other portions of the Wharf as Landlord deems necessary; (d) Perform work necessary to comply with laws, ordinances, rules or regulations of any public authority or any insurance underwriter;
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(e) To post “for rent” or “for lease” signs or to show prospective tenants the Premises during the last six (6) months of the Term; and (f) Perform work that Landlord deems necessary to prevent waste or deterioration in connection with the Premises and/or the Wharf should Tenant fail to commence to make, and diligently pursue to completion, in a reasonable time, as defined by Landlord, Tenant’s required repairs after written demand therefore by Landlord. Landlord will give Tenant a minimum of twenty-four (24) hours advance notice of such entry when practical, except in the case of an emergency and/or in situations involving an immediate peril and/or hazard to the Wharf, when such entry shall be made summarily by Landlord. Landlord shall be the sole and exclusive judge as to what constitutes immediate peril and hazard to the Wharf.
Tenant hereby waives any claims for damage against Landlord arising from loss of business by reason of Landlord’s entry onto, use of, modification to, and/or removal of all or any portion of the Premises or any structure or building on the Wharf for the purpose of making improvements, alteration, additions and/or repairs to the Premises or to any other area.
Tenant shall furnish key(s) to Premises within ten (10) days of Landlord’s written request.
10.03 Tenant’s Maintenance Obligations.
(a) Except as provided elsewhere in this Lease or as expressly assigned to Landlord, Tenant, at its sole cost and expense, shall clean and maintain the Premises and any Improvements in good order, condition and repair and shall make all replacements necessary to keep all portions of the Premises and any Improvements (including inside and outside) in a safe, clean, neat, and sanitary condition, including, but not limited to, maintenance, repair, and replacement of interior plumbing and fixtures and HVAC systems. For the purposes of this Section, the term “Improvements” shall be inclusive of any such improvements on, in, at, about, from, or under the Premises, that are not otherwise the responsibility of the Landlord and those specified in Section
10.01(b). Without limiting the foregoing, Tenant’s maintenance obligations shall include, without limitation, the following:
(i). Cleaning the building sewer main and the sewer
distribution system related to the Premises and
Improvements located (or to be located) thereon with a rotorooter system as needed. (ii). Maintaining, without limitation, all plumbing fixtures and the plumbing system in the Premises and
Improvements located (or to be located) thereon.
(iii). Steam-cleaning or pressure washing the pedestrian sidewalk fronting the Premises on a quarterly basis or upon Landlord’s request.
(iv). Keeping and maintaining the sidewalk, ramp, and
railings fronting the Premises in good condition and repair, free and clear of all obstacles, stands, dirt, mud, water, debris, rubbish, filth, and other encumbrances or
obstructions, and safe and convenient for the use of the public.
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(v). Washing windows inside and out on a regular basis; maintaining flags, awnings and signs in a good condition; keeping lights operable; washing any fabric awnings
regularly and repairing immediately if ripped or torn;
removing graffiti immediately; cleaning and polishing
regularly any brass or metallic hardware.
(vi). Handling, recycling and/or disposing of all waste on, in, at, about, from, or under the Premises consistent with City’s applicable rules and regulations.
(vii). In the event, Tenant chooses to paint the exterior of the Premises, Tenant shall endeavor to conduct all exterior painting activities during typically rain free months (April through September); and, Tenant shall thereafter be
responsible for maintenance of any such painted surfaces, except if reverting to City specified color and motif, at Landlord’s sole discretion. Tenant shall address any paint issues, and repaint surfaces as needed, within ninety (90) days of any request by Landlord. Any painting of the building exterior shall require Landlord’s approval of color, material, and motif.
(b) All replacement equipment shall be of a quality, value and use equal to or exceeding that of the original equipment or Improvements. Should Tenant fail to promptly and diligently make these repairs and replacements or otherwise maintain and/or repair the Premises and Improvements located (or to be located) thereon for a period of three (3) days after delivery of a written demand by Landlord, Landlord shall have the right (but not the obligation) to make such repairs or replacements without liability to Tenant for any loss or damage that may occur to Tenant’s stock or business, and Tenant shall pay for all costs and expenses incurred by Landlord in making such repairs and/or replacements, together with interest thereon at the maximum rate permitted by law from the date of commencement of the work through the date of payment. Tenant shall, at its sole cost and expense, promptly and diligently repair any damage to the Premises, building(s) and/or Improvements located (or to be located) on the Premises, and/or the Wharf caused by Tenant, its officers, directors, employees, representatives, agents, volunteers, contractors, subcontractors, suppliers, customers, invitees, subtenants, assignees, concessionaires, or others acting on Tenant’s behalf or under Tenant’s authority or control, or caused by the installation or removal of Tenant’s personal property.
10.04 Windows. Tenant shall replace, at its expense, any and all damaged or broken glass and plate glass components on or about the Premises resulting from any cause whatsoever other than that proximately caused by the sole negligence or willful misconduct of Landlord.
Tenant shall have full responsibility, at its sole discretion, to either self-insure or obtain insurance policies covering damage or replacement of said glass and plate glass components. If Tenant elects not to obtain such insurance coverage, it does so at its sole risk.
10.05 Requirements of Governmental Bodies. At all times during the Term of this Lease, Tenant, at Tenant's sole cost and expense, shall do all of the following:
(a) Make all improvements, alterations, additions, and/or repairs to, on, in, at, about from, or under the Premises required by any Laws (including, but not limited to, ADA) now or hereafter in effect and applicable;
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(b) Indemnify, defend and hold Landlord (and Landlord’s officers, officials, employees, representatives, and agents) and the property of Landlord, including, but not limited to the Premises, free and harmless from any and all liability, loss, cost, damages, fines, penalties, claims, and actions resulting from or related to the Tenant's failure to comply with and perform the requirements of this Section.
ARTICLE 11. UTILITIES AND SERVICES
11.01 Separate Charges. Tenant shall make all arrangements and be solely responsible for obtaining all gas, water, electricity, heat, fuel, communication service, refuse disposal, sewer, grease interceptor, maintenance, security services, and other utilities and services (collectively “Utilities and Services”) for the Premises and/or improvements located or to be located thereon (including, but not limited to any Tenant Improvements). Tenant shall promptly pay or cause to be paid before delinquency, and hold Landlord and Landlord's property, including, but not limited to, the Premises and improvements located or to be located thereon (including, but not limited to, any Tenant Improvements) free and harmless from, all charges, costs and expenses for the furnishing of all Utilities and Services to the Premises and/or improvements located or to be located thereon and for the removal of garbage, tallow, and rubbish from the Premises and/or improvements located or to be located thereon.
Tenant shall pay for all water, gas, heat, light, power, communication service and any other utilities metered or otherwise separately charged to the Premises.
11.02 Jointly Metered Utilities. Tenant shall pay, as Additional Rent, a pro rata share of any Utilities and Services which are jointly metered or charged. Tenant’s pro rata share of these charges and fees shall be based upon the ratio of the square footage of the Premises to the total square footage of the building or buildings serviced by such meter, plus any extraordinary uses by Tenant which may be reasonably ascertained by Landlord. Such charges will be paid as Rent to Landlord at the time of regular Rent payments.
In the event that any other premises shall be submetered or otherwise utilize utilities for which the Tenant is the primary account holder and responsible for payment, Tenant shall be entitled to recoup a pro rata share of such charges and fees as can be reasonably assigned to the secondary user.
11.03 Interruption. Landlord shall not be liable for any failure or interruption of any Utilities and Services being furnished to the Premises, and no such failure or interruption shall entitle Tenant to terminate this Lease.
11.04 Electricity Use Included. INTENTIONALLY OMITTED.
11.05 No Offset. Any payments under this Section shall not reduce or offset Rent payments. Landlord has no liability for such payments.
ARTICLE 12. INDEMNIFICATION AND INSURANCE
12.01 Indemnification. In addition to any other indemnity provided for in this Lease, and to the fullest extent permitted by law, Tenant agrees to indemnify, defend (with counsel reasonably satisfactory to Landlord), and hold harmless Landlord, its officials, officers, directors, employees, agents, attorneys, volunteers, representatives, successors and assigns (“Indemnified Parties”) from and against any and all claims, demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including, without limitation, attorney’s fees, disbursements and court costs) for any injury or
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damage to person or property, or of any other kind or nature, that may arise from or in any manner relate to (directly or indirectly): (i) the rights and/or obligations of Tenant, its employees, and agents under this Lease, (ii) the acts or omissions or negligence or willful misconduct of Tenant or its officers, directors, employees, agents, representatives, invitees, customers, contractors, sublessees, suppliers, trespassers, or others acting on Tenant’s behalf or under Tenant’s authority or control as related to this Lease, (iii) the occupancy and/or use of the Premises, or improvements to the Premises (including, but not limited to any Tenant Improvements or personal property located therein) by Tenant, or its officers, directors, employees, agents, servants, representatives, volunteers, guests, invitees, customers, contractors, subcontractors, suppliers, laborers, materialmen, sublessees, or others acting on Tenant’s behalf or under Tenant’s authority or control (collectively “Tenant Agents” and individually “Tenant Agent”), (iv) any breach or default under this Lease by Tenant; and/or (v) any construction or other work undertaken by Tenant on the Premises (including any Tenant Improvements)(individually, each a “Claim” and, collectively, “Claims”).
Tenant’s obligations in this Section shall not extend to any Claim that is caused by the sole negligence or willful misconduct of Landlord or an Indemnified Party, subject to any immunities which may apply to Landlord with respect to such Claims. Tenant’s obligation to defend shall arise regardless of any claim or assertion that Landlord caused or contributed to the Claims. This Section and any other indemnification provided elsewhere in this Lease shall survive the termination of this Lease and shall survive for the entire time that any third party can make a Claim.
Tenant shall ensure that its contractors and subcontractors (e.g. those constructing any Tenant Improvements or performing any work on the Premises) also fully indemnify, defend and hold harmless the Indemnified Parties to the same extent that Tenant is required to indemnify, defend and hold harmless such Indemnified Parties.
12.02 Insurance Requirements. Upon execution of this Lease, and, in any event, before Tenant enters the Premises (or any portion thereof) or commences any work on or at the Premises, Tenant shall, at its sole cost and expense, procure and maintain in full force and effect for the duration of this Lease, insurance as required by Exhibit G (Insurance Requirements) to protect against claims for injuries to persons or damages to the Premises and to loss or damage to Tenant’s trade fixtures, personal property, and improvements, which may arise from or in connection with the Tenant’s operation and use of the Premises. The cost of such insurance shall be borne by the Tenant.
12.03 Review of Coverage. Landlord may increase or decrease the amount of commercial general liability insurance required herein, based upon a general review by Landlord of the standard insurance requirements. Changes in insurance amounts shall occur not more frequently than once a year. Landlord will notify Tenant of any changes under this provision of this Lease. Landlord may also require Tenant’s contractor or subcontractor to obtain insurance sufficient in coverage, form, and amount to provide adequate protection for Landlord, Tenant, and/or those using the Premises.
12.04 Tenant’s Failure to Maintain Insurance.
(a) Tenant agrees that if Tenant does not procure, maintain and show evidence of any insurance policy required under this Lease or fails to pay any premiums when due, Landlord may, at its election (but without any obligation to do so), either terminate this Lease, require that the Premises be immediately closed for business pending reinstatement of insurance by Tenant, or obtain the necessary insurance and pay the premium, and the repayment thereof shall be deemed to be Additional Rent due by the Tenant and payable on the next date upon which a payment of rent is due.
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(b) Landlord has the right at any time to demand a copy of a Certificate of Insurance from Tenant for the policies of insurance required herein and any other reasonable evidence proving compliance with these provisions. (including, but not limited to, complete, certified copies of all required insurance policies, including, but not limited to, endorsements). The failure to provide the Landlord with such evidence within five (5) calendar days of such demand shall constitute a material breach of this Lease. (c) In the event that Tenant fails to maintain insurance coverages, as required in this Lease, and a loss or damage occurs that results in Landlord’s liability for copayments, deductibles, or other such charges to replace the loss under Landlord’s applicable insurance policy, Tenant agrees to reimburse the City for all such charges within ninety (90) days of the City’s notification to Tenant.
12.05 Waiver of Subrogation. Tenant for itself and on behalf of its insurers, hereby waives and releases the Landlord, and its officers, officials, directors, employees, agents, representatives, and volunteers (i.e. the additional insureds) from liability for injury to any person or damage to property that is caused by or results from any risk covered under any insurance policy required by this Agreement or any other valid and collectible insurance policy otherwise carried by Tenant. Tenant agrees to defend, indemnify and hold Landlord and its officers, officials, directors, employees, agents, representatives, and volunteers harmless from any and all such liability. Tenant shall obtain a waiver of any subrogation right that its insurers may acquire against any of the additional insureds by virtue of payment of any such loss covered by such insurance.
12.06 Waiver of Loss and Damage. Landlord shall not be liable for any damage to inventory or other property of Tenant, or others, located in, on, at, or about the Premises, nor for the loss of or damage to any property of Tenant or of others by theft or otherwise, which is not proximately caused by Landlord’s sole negligence or willful misconduct, and Tenant waives any claim against Landlord with respect to such property. Landlord shall not be liable to Tenant or Tenant’s officers, directors, employees, agents, representatives, volunteers, contractors, subcontractors, guests, invitees, or customers for any injury or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, water, rain or leaks from any part of the Premises or from the pipes, appliance or plumbing works or from the roof, street or subsurface or from any other places or by any other cause of whatsoever nature. Landlord shall not be liable to Tenant or Tenant’s officers, directors, employees, agents, representatives, volunteers, contractors, subcontractors, guests, invitees, or customers for any such damage caused by other tenants or persons in the Premises, occupants of adjacent property of the Wharf, or the public, or caused by operations in construction of any private, public or quasi-public work.
All property of Tenant kept or stored on the Premises shall be so kept or stored at the sole risk of Tenant, and Tenant shall hold Landlord harmless from any claims arising out of damage to the same, including, but not limited to, subrogation claims by Tenant’s insurance carriers, unless such damage shall be proximately caused by the willful act or sole negligence of Landlord.
12.07 Notice by Tenant. Tenant shall give prompt notice to Landlord in case of fire or accidents in or around the Premises or of any damage or defects in the Premises (or any improvements located thereon), or any fixtures or equipment therein.
ARTICLE 13. PARKING
13.01 Employee Parking. Tenant understands and agrees that it will use good faith efforts to discourage Tenant’s employees from parking on the Wharf except by permit which may be issued by Landlord. Tenant and its employees shall park their vehicles only in those areas as may be designated for such purpose by Landlord. Tenant and its employees agree not to occupy parking places directly in front of Wharf businesses.
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13.02 Customer Parking. Landlord shall have the right to adopt and implement such parking programs as may be necessary to alleviate parking problems during peak traffic periods, including, without limitation, requiring the use of off-site parking. Landlord reserves the right to change the entrances, exits, traffic lanes, and the boundaries and locations of the parking area.
Tenant shall be responsible for compliance with all parking rules and regulations as may be adopted and implemented by Landlord from time to time, including, without limitation, systems of validation, shuttle transportation or any other programs which may be deemed necessary or appropriate by Landlord to control, regulate or assist parking by customers of the Wharf.
ARTICLE 14. TRANSFER, ASSIGNMENT AND SUBLETTING
14.01 Transfers Prohibited. Tenant and its permitted successors and assigns shall not either voluntarily, or by operation of law, Transfer (as defined below) its interest in this Lease or in the Premises, or any portion thereof, without first providing written request to Landlord and obtaining Landlord’s prior written consent pursuant to Section 14.02(b) below (which consent may be withheld or delayed in Landlord’s sole discretion). As used in this Lease, the term “Transfer” means any attempt to sell, convey, assign, sublease, transfer, mortgage, pledge, grant, hypothecate or encumber this Lease or any interest in this Lease, or the Premises or any portion thereof or the buildings and improvements thereon, and any attempt to sublet, license or grant any concession to the Premises, in whole or in part, or allow any person other than Tenant’s employees, agents, customers, and invitees to occupy or use all or any portion of the Premises.
14.02 Landlord Consent; Tenant’s Request to Landlord.
(a) Any Transfer made in violation of this Article 14 is voidable, at Landlord’s election, and shall constitute a default subject to the cure right in Article 15 (Default).
(b) For purposes of this Article 14, the consent to any Transfer must be obtained from the City Council, or any agent or representative authorized by said City Council to give said consent. Unless otherwise provided in writing by Landlord, approved transferees and assignees may not extend the Initial Term of this Lease (and any applicable Extended Term) by exercising any option(s) to extend or renew the Initial Term (or Extended Term, as applicable) of this Lease granted herein that have not already commenced at the time of said assignment, sublease or other Transfer. (i). Notwithstanding anything to the contrary herein,
Landlord reserves, at Landlord’s sole discretion, all authority to withhold, deny, approve, or otherwise require the
modification of any proposed Transfer.
(c) Tenant shall comply with the following requirements for any Transfer. Tenant agrees that failure to satisfy these requirements are reasonable bases for Landlord to deny consent but is not exhaustive of the bases to deny consent:
(i). Tenant shall give Landlord at least thirty (30) days’ written notice of its proposed Transfer and provide
appropriate documentation demonstrating, to Landlord’s
satisfaction, the financial and operational responsibility and appropriateness of the proposed transferee. Tenant shall provide Landlord within five (5) days such other or additional information and/or documentation as may be reasonably
requested by Landlord; and
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(ii). Tenant shall provide the terms and provisions of the proposed Transfer; and
(iii). The proposed assignee or transferee shall expressly assume all the terms, covenants, obligations,
responsibilities, liabilities, duties, and conditions of this Lease.
14.03 Involuntary Assignment. No interest of Tenant (or Tenant’s shareholders as of the Effective Date) in this Lease, shall be assignable by operation of law including, without limitation, the Transfer of this Lease by testate or intestate succession, except to Tenant’s heirs at law in the first degree. Each of the following acts shall be considered an involuntary assignment:
(a) If Tenant is or becomes bankrupt or insolvent, makes an assignment for the benefit of creditors, or institutes a proceeding under the Bankruptcy Act in which Tenant is the bankrupt; or, if Tenant is a partnership or consists of more than one person or entity, if any partner of the partnership or other person or entity is or becomes bankrupt or insolvent, or makes an assignment for the benefit of creditors; (b) If a writ of attachment or execution is levied on this Lease; (c) If, in any proceeding or action to which Tenant is a party, a receiver is appointed with authority to take possession of the Premises; An involuntary Transfer shall constitute a default by Tenant and Landlord shall have the right to elect to terminate this Lease, in which case this Lease shall not be treated as an asset of Tenant.
If a writ of attachment or execution is levied on this Lease, Tenant shall have fifteen (15) days in which to cause the attachment or execution to be removed. If any involuntary proceeding in bankruptcy is brought against Tenant, or if a receiver is appointed, Tenant shall have thirty (30) days in which to have the involuntary proceeding dismissed or the receiver removed.
14.04 Consent Required. Tenant shall not, without Landlord’s prior written consent, Transfer any interest in this Lease or any right or privilege appurtenant hereto or permit use of the Premises by any person or persons other than Tenant, its employees, agents, invitees, and customers. It is agreed that Landlord will not be acting unreasonably in refusing to consent to a Transfer if, in Landlord’s opinion, (A) the quality of the operation of the proposed assignee or transferee is not equal to or better than that of the Tenant, (B) such assignee or transferee may adversely affect the business of the other tenants or the tenant mix in the Wharf or Landlord’s ability to obtain Rent, (C) such assignee or transferee does not have a positive net worth on the date of assignment, or (D) such assignee or transferee does not have a net worth on the date of assignment that is equal to or greater than Tenant and Guarantor’s combined net worth as of the Effective Date of this Lease. The term “net worth” shall mean the amount by which the total of all assets shall exceed the total of all liabilities as determined by an independent certified public accountant in accordance with generally accepted accounting principles.
14.05 Deemed Assignment. Any Transfer of this Lease from Tenant by merger, consolidation, liquidation or sale of a controlling interest of corporate stock shall constitute an assignment. All Transfers shall require Landlord’s prior written approval pursuant to this Article
14. 14.06 Unauthorized Assignment or Sublease. Any attempted Transfer without Landlord’s required consent shall be void. Any assignee, subtenant, transferee or other recipient
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of Tenant’s interest in this Lease is hereby notified that such Transfer is of no force or effect without Landlord’s prior written consent.
14.07 Expenses and Attorneys’ Fees. Tenant shall pay to Landlord, all of Landlord’s costs and expenses (including reasonable attorneys’ fees) incurred by Landlord in connection with reviewing, considering, or consenting to any proposed Transfer, regardless of whether such transfer is approved or consummated, or in connection with any other actions taken by Landlord pursuant to this Article 14.
14.08 Effect of Consent. Consent by Landlord to a Transfer shall not release Tenant from its primary liability under this Lease. Landlord’s consent to one Transfer or occupation by other parties shall not be deemed a consent to other or future assignments or use by other parties, or constitute a waiver of the requirements of this Article 14.
14.09 Surrender of Lease. The voluntary or other surrender or a cancellation of this Lease by Tenant shall not work a merger, and shall, at the election of Landlord, either terminate all or any existing subleases or sub-tenancies or may operate as an assignment to Landlord of any or all of such subleases or sub-tenancies. Landlord shall exercise its election within thirty (30) days of the event so requiring.
ARTICLE 15. DEFAULT
15.01 Events of Default. The occurrence of any of the following shall constitute a material breach and an Event of Default of this Lease by Tenant:
(a) The failure of Tenant to pay or cause to be paid any Rent, monies or other charges due Landlord as set forth in this Lease on or before the due date for payment of any such amounts;
(b) The failure of Tenant to maintain all insurance coverage as set forth in Article 12 (Indemnification and Insurance);
(c) The abandonment of the Premises by Tenant, which shall mean failure to operate as set forth in this Lease for five (5) consecutive days, except by prior written notice by Tenant to Landlord at least fourteen (14) days in advance and with the written consent of Landlord;
(d) Except as otherwise provided in this Lease, the failure of Tenant to do or cause to be done any act as set forth in this Lease, if the failure continues for fifteen days (15) consecutive days after notice has been given to Tenant. However, Tenant shall not be in default of this Lease if Tenant commences to cure the default within said fifteen (15) day period and diligently and in good faith continues to cure the default to the satisfaction of the Landlord;
(e) Tenant causing, permitting or suffering, without the prior written consent of Landlord, any act when this Lease requires Landlord’s prior written consent or prohibits such act; or
(f) Any act of bankruptcy caused, suffered or permitted by Tenant. For the purposes of this Lease, “act of bankruptcy” shall include any of the following:
(i) Any general assignment or general arrangement for
the benefit of creditors;
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(ii) The filing of any petition by or against Tenant to have Tenant adjudged a bankrupt or a petition for reorganization or arrangement under any law relating to bankruptcy, unless such petition is filed against Tenant and the same is
dismissed within sixty (60) days;
(iii) The appointment of a trustee or receiver to take
possession of substantially all of Tenant’s assets located in the Premises or of Tenant’s interest in this Lease.
(iv) The attachment, execution, or other judicial seizure of substantially all of Tenant’s assets located at the
Premises or of Tenant’s interest in this Lease.
(g) Failure to abide by any Laws; or
(h) Failure to maintain the Premises in a clean, safe, and attractive condition, as described above; and, failure to promptly remedy any maintenance issues within sixty (60) days of notice from Landlord.
15.02 Remedies. In the event of any breach or default by Tenant, Landlord may, at Landlord's option and in Landlord’s sole discretion, exercise any and all rights available to a landlord under the laws of the State of California (including, but not limited to, those rights and remedies set forth in California Civil Code Sections 1951.2, 1951.4, and 1951.8), including, without limitation, the right to do any of the following:
(a) Landlord may elect to continue this Lease in effect by not terminating Tenant’s right to possession of the Premises, in which case Landlord shall be entitled to enforce all Landlord’s rights and remedies under this Lease, including the right to cure the breach underlying the Event of Default for the account and at the expense of Tenant and Landlord shall recover all costs, including costs of settlements, court costs and attorney’s fees, administrative overhead fees of twenty percent (20%) together with interest thereon at the rate of the prime rate of interest per annum as quoted by the Bank of America from the date of such payment or performance by Landlord, that Landlord may incur in the course of curing Tenant’s breach; and Landlord may also recover all Rent specified in this Lease as it becomes due under this Lease, and seek any other damages proximately caused by Tenant’s failure to perform the obligations under this Lease;
(b) Landlord shall have the right to terminate this Lease and recover against Tenant:
(i) The worth at the time of award of the unpaid Rent
which had been earned at the time of termination (plus
applicable late charges and interest);
(ii) The worth at the time of award of the amount by
which the unpaid Rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided (plus interest on the award at the
maximum rate allowed by law);
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(iii) The worth at the time of award of the amount by
which the unpaid Rent for the balance of the Term after the time of award exceeds the amount of such rental loss for the same period that Tenant proves could be reasonably
avoided, including, without limitation, interest on the excess at the rate set forth in Section 4.06 (Late Charge and
Interest on Unpaid Rent); and
(iv) Any other amount necessary to compensate
Landlord for all the detriment proximately caused by
Tenant’s failure to perform Tenant’s obligations under this Lease or which in the ordinary course of things would be likely to result therefrom.
(c) The “worth at the time of award” of the amounts referred to in the previous subparagraphs 15.02(b)(i), and (b)(ii) shall be computed by allowing interest at ten percent (10%) per annum. The worth at the time of award of the amount referred to in subparagraph 15.02(b)(iii) shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%).
(d) Efforts Landlord may make to mitigate the damages caused by Tenant’s breach of this Lease shall not constitute a waiver of Landlord’s right to recover damages against Tenant, nor shall anything contained in this Lease affect Landlord’s right to indemnification against Tenant for any liability arising prior to the termination of this Lease (including, but not limited to, for personal injuries and/or property damage), and Tenant agrees to indemnify and hold Landlord (and Landlord’s officers, employees, representatives, and agents) harmless from any injuries and damages, including, but not limited to, all reasonable attorney fees and costs incurred by Landlord in defending any action brought against Landlord for any recovery, and in enforcing the terms and provisions of this indemnification against Tenant.
(e) In addition to all other rights and/or remedies of Landlord at law, in equity, and/or under this Lease, the Landlord has the remedy described in California Civil Code Section 1951.4, as such may be amended (Landlord may continue Lease in effect after Tenant’s breach and abandonment and recover Rent as it becomes due, if Tenant has right to sublet or assign, subject only to reasonable limitations). Accordingly, the breach of this Lease by Tenant, or an abandonment of the Premises by Tenant, shall not constitute a termination of this Lease, nor of Tenant’s right of possession under this Lease, unless and until Landlord elects to so terminate this Lease, and until that time Landlord may (at Landlord’s option) continue this Lease in full force and effect and shall have the right to recover Rent and all other payments to be made by Tenant under this Lease as they become due; provided, that until Landlord elects to terminate this Lease and Tenant’s right of possession under this Lease, Tenant shall have the right to sublet the Premises or to assign interests in this Lease, or both, subject only to the written consent of Landlord, which consent shall not be unreasonably withheld or delayed. The Parties intend that this Section 15.02(e) satisfies the requirements of California Civil Code §1951.4 and that the Landlord has the remedy set forth in California Civil Code Civil Code §1951.4.
(f) In the event Landlord terminates this Lease pursuant to this Section
15.02, and Tenant has made an advance payment of Rent as defined in California Civil Code §1951.7, and Tenant has requested in writing that Landlord notify it of any initial
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reletting of the Premises, then and only then must Landlord notify Tenant pursuant to California Civil Code §1951.7(c) that the Premises have been relet. (g) As security for the performance by Tenant of all duties and obligations under the Lease, Tenant assigns to Landlord the right, power, and authority, during the continuance of this Lease, to collect the Rents, issues, and profits of the Premises, reserving to Tenant the right, prior to any breach or default by Tenant under this Lease, to collect and retain the rents, (solely in the case of a sublease previously approved by Landlord) issues, and profits, from the operation of Tenant’s approved business use, as they become due and payable, and so long as payments to Landlord are also kept current. Upon any breach or default, Landlord shall have the right at any time afterward, without notice except as provided for previously, either in person, by agent, or by a receiver to be appointed by a court, enter and take possession of the Premises and collect Rents, issues, and profits, including, but not limited to, those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including, but not limited to, reasonable attorney fees, upon any secured indebtedness, and in an order as Landlord may determine. (h) In the event that Landlord should take any act to maintain or preserve the Premises on Tenant’s behalf, or seek the appointment of a receiver to protect Landlord’s interests under this Lease, such acts shall not constitute a termination of Tenant’s right of possession unless Tenant receives written notice from Landlord regarding Landlord’s election to terminate.
(i) Tenant acknowledges that Landlord has executed this Lease in reliance on the financial information furnished by Tenant to Landlord as to Tenant’s financial condition. If it is determined at any time subsequent to the date of this Lease that any of the financial information furnished by Tenant and relied upon by Landlord in executing this Lease is substantially untrue or inaccurate, Tenant shall be deemed to be in default under this Lease, which default shall not be subject to cure, and which shall entitle Landlord to exercise all rights and remedies reserved to Landlord under this Lease or otherwise available to Landlord at law.
(j) Landlord may remove all Tenant’s property from the Premises, and such property may be stored by Landlord in a public warehouse or elsewhere at the sole cost and expense for the account of Tenant. If Landlord does not elect to store any or all of Tenant’s property left in the Premises, Landlord may consider such property to be abandoned by Tenant, and Landlord may thereupon dispose of such property in any manner deemed appropriate by Landlord. Any proceeds realized by Landlord on the disposal of any such property shall be applied first to offset all expenses of storage and sale, then credited against Tenant’s outstanding obligations to Landlord under this Lease, and any balance remaining after satisfaction of all obligations of Tenant under this Lease shall be delivered to Tenant.
15.03 Covenants and Conditions. All covenants made by Tenant hereby are conditions of this Lease; therefore, in the event of any default by Tenant in fulfilling any of the same, Landlord may at any time thereafter at its option declare a forfeiture of this Lease. Landlord shall not be obligated to perform any covenant made by Landlord under this Lease which accrues after the date of any default by Tenant hereunder.
15.04 Landlord’s Right to Perform. All terms, covenants and conditions of this Lease to be performed or observed by Tenant shall be performed or observed by Tenant at Tenant’s sole cost and expense, and without any reduction of Rent. If Tenant shall fail to pay any sum of money, or other Rent, required to be paid by it hereunder, or shall fail to perform any other term,
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covenant, or condition hereunder on its part to be performed, and such failure shall continue for ten (10) days after written notice thereof by Landlord, Landlord, without waiving or releasing Tenant from any obligation of Tenant hereunder, may, but shall not be obligated to, make any such payment or perform any such other term, covenant or condition on Tenant’s part to be performed. All sums so paid by Landlord and all necessary costs of such performance by Landlord plus an administrative overhead fee of twenty percent (20%), together with interest thereon at the rate of the prime rate of interest per annum as quoted by the Bank of America from the date of such payment or performance by Landlord, shall be paid (and Tenant covenants to make such payment) to Landlord on Landlord’s demand, and Landlord shall have (in addition to any other right or remedy of Landlord) the same rights and remedies in the event of nonpayment by Tenant as in the case of failure by Tenant in the payment of any Rent hereunder.
ARTICLE 16. DAMAGE OR DESTRUCTION
16.01 Repair of Damage by Landlord. Tenant agrees to notify Landlord in writing promptly of any damage to the Premises resulting from fire, earthquake, or any other identifiable event of a sudden, unexpected, or unusual nature (“Casualty”). If the Premises are damaged by a Casualty or any adjacent or surrounding common areas providing access to the Premises are damaged by a Casualty, such as but not limited to a Wharf closure as provided in Section 2.06 (Wharf Closure), and such that the Premises are untenantable, or Tenant does not have reasonable access to the Premises, provided that the Casualty was not caused by the negligence, gross negligence or willful misconduct of any Tenant’s employee, contractor, invitee, guest, licensee, contractor or subtenant (“Tenant Party”), and if neither Landlord nor Tenant has elected to terminate this Lease under Section 16.03 (Landlord’s Option to Terminate or Repair) or Section
16.04 (Tenant’s Option to Terminate), Landlord will promptly and diligently restore such common areas, the Premises, and the Tenant Improvements originally constructed by Landlord to substantially the same condition as existed before the Casualty, or to a condition that satisfies required buildings codes and other laws, or to a condition that is desirable by Landlord in its sole discretion. In making these modifications, Landlord will not materially impair Tenant’s access to the Premises. Landlord’s obligation to restore is subject to reasonable delays for insurance adjustment and other matters beyond Landlord’s reasonable control and subject to the other clauses of this Article 16. If Tenant requests that Landlord modify the Tenant Improvements in connection with the rebuilding, Landlord may condition its consent to those modifications on:
(a) Tenant’s payment to Landlord before construction is begun of any sums in excess of the amount of insurance proceeds received by Landlord that are needed to complete the Tenant Improvements; and
(b) Confirmation by Landlord’s architect or contractor that the modifications will not increase the scope of work or the time necessary to complete the Tenant Improvements.
16.02 Repair Period Notice. Landlord will provide written notice to Tenant indicating the anticipated period for repairing the Casualty (“Repair Period Notice”), within the later of: (a) sixty (60) days after the date on which Landlord determines the full extent of the damage caused by the Casualty, or (b) thirty (30) days after Landlord has determined the extent of the insurance proceeds available to effectuate repairs. The Repair Period Notice will also state, if applicable, Landlord’s election either to repair or to terminate the Lease under Section 16.03 (Landlord’s Option to Terminate or Repair).
16.03 Landlord’s Option to Terminate or Repair. Landlord may elect either to terminate this Lease or to effectuate repairs if:
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(a) The Repair Period Notice estimates that the period for repairing the Casualty exceeds one (1) year from the date of the commencement of the repair; (b) The estimated repair cost exceeds the available insurance proceeds, if any, for such repair (not including the deductible), plus any amount that Tenant is obligated to pay for, or elects to pay for such repair; (c) The estimated repair cost of the Premises, even though covered by insurance, exceeds fifty percent (50%) of the full replacement cost of the Premises; or (d) The Premises cannot be restored except in a substantially different structural or architectural form than existed before the Casualty.
Landlord’s election will be stated in the Repair Period Notice.
16.04 Tenant’s Option to Terminate. If all or a substantial part of the Premises are rendered untenantable or inaccessible by damage to all or any part of the Premises from a Casualty, and Landlord does not elect to terminate as provided above, then Tenant may elect to terminate this Lease if the Repair Period Notice provided by Landlord indicates that the anticipated period for repairing the Casualty exceeds one (1) year from the date of commencement of the repairs. Tenant may elect to terminate this Lease by providing written notice (“Tenant’s Termination Notice”) to Landlord within thirty (30) days after receiving the Repair Period Notice from Landlord. If Tenant does not elect to terminate within this thirty-day (30-day) period, Tenant will be considered to have waived the option to terminate. Tenant will not have an option to terminate if Tenant is in default under this Lease and the Casualty was caused in part or in whole by the fault of any Tenant Party, including negligence, gross negligence or willful misconduct of any Tenant Party.
16.05 Rent Abatement Due to Casualty. Landlord and Tenant agree that, if the Casualty was not the result of the negligence, gross negligence, or willful misconduct of any Tenant Party, and provided that Tenant is not then in default under this Lease, Tenant will be provided with a proportionate abatement of Rent based on the Rentable Square Footage of the Premises rendered unusable (due to physical damage to the Premises or the unavailability of access to the Premises) and not used by Tenant. That proportional abatement, if any, will be provided during the period beginning on the later of: (a) the date of the Casualty, or (b) the date on which Tenant ceases to occupy the Premises and ending on the date of substantial completion of Landlord’s restoration obligations as provided in this Article 16. Subject to Section 16.04 (Tenant’s Option to Terminate), the Rent abatement provided in this Section16.05 is Tenant’s sole remedy due to the occurrence of the Casualty. Landlord will not be liable to Tenant or any other person or entity for any direct, indirect, or consequential damage (including but not limited to lost profits of Tenant or loss of or interference with Tenant’s business), whether or not caused by the negligence of Landlord or Landlord’s employees, contractors, licensees, or invitees, due to, arising out of, or as a result of the Casualty (including but not limited to the termination of the Lease in connection with the Casualty). Tenant agrees to maintain business interruption insurance in amounts and with coverage no less than that required by Exhibit G (Insurance Requirements) to provide coverage regarding such matters.
16.06 Damage Near End of Term. Notwithstanding any other provision of this Article 16, if the Premises is destroyed or damaged by a Casualty during the last eighteen (18) months of the Lease Term, Landlord has the option to terminate this Lease by giving written notice to Tenant consistent with the Repair Period Notice.
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16.07 Effective Date of Termination and Rent Apportionment. If Landlord or Tenant elects to terminate this Lease under this Article 16 in connection with a Casualty, the termination will be effective thirty (30) days after delivery of notice of such election. Tenant must pay Rent, properly apportioned up to the date of the Casualty or Tenant’s cessation of revenue generating business activities from the Premises, whichever is later. After the effective date of the termination, Landlord and Tenant will be discharged of all future obligations under this Lease, except for those provisions that, by their terms, survive the expiration or earlier termination of this Lease.
16.08 Waiver of Statutory Provisions. The provisions of this Lease, including those in this Article 16, constitute an express agreement between Landlord and Tenant that applies in the event of any Casualty to the Premises. Landlord and Tenant, therefore, each fully waives the provisions of any statute or regulation, including California Civil Code §§1932(2) and 1933(4), or any successor statute, relating to any rights or obligations concerning a Casualty.
ARTICLE 17. ESTOPPEL CERTIFICATES; ATTORNMENT
17.01 Tenant to Furnish Certificate. Tenant shall, within ten (10) business days of written notice from Landlord, execute and deliver to Landlord a written statement certifying that this Lease is unmodified and in full force and effect or, if modified, stating the nature of such modification. Tenant’s statement shall include other details requested by Landlord, such as the date to which Rent and other charges are paid and Tenant’s acknowledgement concerning any uncured defaults in Landlord’s obligations under this Lease and the nature of such defaults if they are claimed. Any such statement may be relied upon conclusively by any prospective purchaser or encumbrancer of the Premises. Tenant’s failure to deliver such statements within such time shall be conclusive upon Tenant that this Lease is in full force and effect, except as and to the extent any modification has been represented by Landlord, and that there are no uncured defaults in Landlord’s performance and that not more than one (1) month’s Minimum Base Rent has been paid in advance.
17.02 Attornment. If any proceedings are brought for foreclosure, or if the power of sale is exercised under any mortgage or deed of trust made by Landlord covering the Premises, Tenant shall attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as Landlord under this Lease.
17.03 Additional Documents. Tenant, upon request of any party in interest, shall execute promptly such instruments and certificates necessary to carry out the intent of the foregoing Sections as shall be requested by Landlord.
ARTICLE 18. OTHER MUNICIPAL RULES AND REGULATIONS
18.01 Rules and Regulations. Tenant acknowledges and understands that the Premises are located on property of Landlord, primarily devoted to commerce and navigation, namely the Municipal Wharf, which is under exclusive control of Landlord. By executing this Lease, Tenant agrees to abide by all Laws promulgated by the City Council of the City of Santa Cruz now existing or hereafter made for the government, management, maintenance, operation and/or improvement of the Wharf, including, without limitation, such directives as to the usage of the Wharf as may be determined or promulgated by the officials, officers or representatives of Landlord in their official or departmental capacity. Tenant further agrees that such Laws or conditions as may be imposed by Landlord through its City Council, administrative officers, department heads and/or duly authorized representatives, shall be subject to immediate compliance by Tenant without question or qualification as to the validity or reasonableness thereof.
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