Agenda packet — Santa Cruz City Council, October 13, 2026 (part 1 of 4)

CITY COUNCIL AGENDA
Regular Meeting - October 13, 2026
Council Chambers
809 Center Street
Santa Cruz
12:00 P.M. CLOSED SESSION
12:15 P.M. ANNUAL MEETING OF THE BOARD OF DIRECTORS OF THE INDUSTRIAL

DEVELOPMENT AUTHORITY (IDA)
AROUND 12:20 P.M. ANNUAL MEETING OF THE BOARD OF DIRECTORS OF THE SANTA CRUZ

PUBLIC IMPROVEMENT FINANCING CORPORATION (SCPIFC)
AROUND 12:25 P.M. ORAL COMMUNICATIONS, CONSENT, PUBLIC HEARINGS, AND

GENERAL BUSINESS
Council meetings are hybrid, and may be viewed remotely, using any of the following sources:
 Click on Zoom link (no time delay): https://zoom.us/j/94684401344  Online at http://www.cityofsantacruz.com/government/city-council/council-meetings  Online at Watch – Community Television of Santa Cruz County  Comcast Channel 25
Or: Call any of the numbers below. If one is busy, try the next one.  1-833-548-0276 (Toll Free)
 1-833-548-0282 (Toll Free)
 1-877-853-5247 (Toll Free)
 1-669-900-9128
 Enter the meeting ID number: 946 8440 1344
 When prompted for a Participant ID, press #.
 Press *9 on your phone to “raise your hand” when the Mayor calls for public comment.  It will be your turn to speak when the Mayor calls on you. Press *6 to unmute yourself. The timer will then be set.

Correspondence to be included in the agenda packet must be received by 5:00 pm on Monday, October 12th.

October 13, 2026 City Council 2
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, October 11th by emailing the Mayor and the City Clerk.

Approval will be confirmed via email.
[email protected] [email protected]
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. 12:00 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: Lori Ann Rivera
2) Claimant: Kristen L. Hsieh
3) Claimant: David W. Turner
4) Claimant: Kelli Jelovic
Claims against the City of Santa Cruz
October 13, 2026 City Council 3
PLEASE NOTE: City Councilmembers serve as Boardmembers for the City’s Industrial Development Authority (IDA) and Santa Cruz Public Improvement Financing Corporation (SCPIFC). The boards were created for the purpose of providing the City an instrument to issue bonds. Annually, while the bonds are in existence, the Boardmembers are legally required to hold a meeting of the IDA and SCPIFC. The meetings are procedural and for the purpose of approving Minutes and electing new Boardmembers.
12:15 PM
Annual Meeting of the Board of Directors of the Industrial Development Authority (IDA)
Call to Order
Roll Call
General Business

2. Election of Officers
Motion to elect new officers as set forth in Section 3.02 of the Industrial Development Authority bylaws as follows:

Executive Director: City Manager M. Huffaker
Treasurer: Director of Finance E. Cabell
Chair: Mayor Keeley
Vice Chair: Vice Mayor Kalantari-Johnson
Secretary: City Clerk Administrator B. Bush

3. Minutes of the October 28, 2025 Industrial Development Authority (IDA) Motion to approve as submitted.

Adjournment
October 13, 2026 City Council 4
At or around 12:20 PM
Annual Meeting of the Board of Directors of the Santa Cruz Public Improvement Financing Corporation (SCPIFC)
Call to Order
Roll Call
General Business

4. Election of Officers
Motion to elect new officers as set forth in Section 3.02 of the Santa Cruz Public Improvement Financing Corporation bylaws as follows:

Chief Executive Officer: City Manager M. Huffaker
Chief Financial Officer: Director of Finance E. Cabell
President: Mayor Keeley
Vice President: Vice Mayor Kalantari-Johnson
Secretary/Treasurer: City Clerk Administrator B. Bush

5. Minutes of the October 28, 2025 Santa Cruz Public Improvement Finance Corporation (SCPIFC)
Motion to approve as submitted.

Adjournment
October 13, 2026 City Council 5
City Council
At or around 12:25 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.

Presentation

6. Mayoral Proclamation Declaring the Week of October 1 - 8, 2026, as Week Without Driving
Presiding Officer's Announcements
Statements of Disqualification
Additions and Deletions
City Attorney Report on Closed Session
Council Meeting Calendar

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

October 13, 2026 City Council 6
Consent Agenda

8. Minutes of the September 22, 2026 City Council Meeting (CC) LOCATION: None
Motion to approve as submitted.

9. Downtown Commission Appointment (CC)
LOCATION: Citywide
Motion to approve Councilmember Golder's nomination of Ryan Dong to serve on the Downtown Commission.

10. State Route 9 (SR 9) Caltrans Quitclaim Deed and ROW Contract (ED) LOCATION: District 5
Motion to adopt a resolution authorizing the City Manager to execute a Quitclaim Deed within APNs 008-163-06 and 008-172-08 and a Right of Way Contract with the California Department of Transportation for State Route 9.

11. Kiosk Lease and License Agreement with Rockin’ Rolls – Cinnamon Rolls

LLC (ED)
LOCATION: District 4
Motion to:
1) Approve and authorize the City Manager to execute the Kiosk Lease and License Agreement with Rockin’ Rolls – Cinnamon Rolls LLC, along with any related documents, amendments, or extensions with substantially the same terms as the original agreement, all in a form approved by the City Attorney, for the kiosk located at 1130 K-1 Pacific Avenue;
2) Authorize the City Manager, or his designee, 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 3) Adopt a CEQA finding of exemption pursuant to 14 CCR 15301 (existing facilities exemption) and 14 CCR 15061(b)(3) (common sense exemption).

October 13, 2026 City Council 7
Consent Agenda (continued)

12. Enhanced Infrastructure Financing District (EIFD) Application to Santa Cruz County to Participate in the Newly Formed Santa Cruz EIFD (ED) LOCATION: Citywide
Motion to:
1) Authorize the City Manager to execute a contract amendment with Kosmont & Associates, Inc. dba Kosmont Companies, in amount not to exceed $47,500, with a total contract amount not to exceed $197,500, to support the proposal for County of Santa Cruz participation and implementation of the associated amendments to the Enhanced Infrastructure Financing District (EIFD) and Infrastructure Financing Plan (IFP); and
2) Direct staff to submit a proposal to the County of Santa Cruz to participate in the Santa Cruz EIFD based on the County’s EIFD Policy.

13. Liability Claims Filed Against the City of Santa Cruz (FN) Motion to reject the liability claims of 1) Lori Ann Rivera, 2) Kristen L.

Hsieh, 3) David W. Turner, and 4) Kelli Jelovic, based on staff recommendation.

14. Application and Project Management Support for Information Technology Systems (IT)
LOCATION: Citywide
Motion to authorize the Information Technology Director to approve a contract change order or amendment, in a form to be approved by the City Attorney, increasing the expenditure limits set by the City Council at the April 28, 2026 City Council meeting with respect to the Vantagepoint Business Solutions, LLC (Vantagepoint) Professional Services Agreement, for application and project management support of critical information technology systems. The total contract value, inclusive of this amendment, shall not exceed $1,508,300.

October 13, 2026 City Council 8
Consent Agenda (continued)

15. Resource Recovery Facility - Hope Services, Inc. Contract Approval (PW)
LOCATION: District 6
Motion to authorize and direct the City Manager to approve a new contract with Hope Services, Inc. (Santa Cruz, CA) for recycling and litter control services at the City’s Resource Recovery Facility on Dimeo Lane.

16. Annual Permit Compliance Services at the Santa Cruz Resource Recovery Facility – Contract Amendment No. 1 (PW)
LOCATION: District 6
Motion to authorize the City Manager to execute Contract Amendment No.1 with GeoLogic Associates (Ontario, CA) for permit compliance services for the Resource Recovery Facility in the amount of $227,618 in a form approved by City Attorney. The Public Works Director is authorized to execute future amendments within the approved project budget.

17. 212 Locust Street/117 Union Street Sewer Repair Project – Notice of Completion (m402502) (PW)
LOCATION: District 4
Motion to accept the work of Montano Plumbing (Santa Cruz, CA) as completed per plans and specifications and authorize the filing of the Notice of Completion for the 212 Locust Street/117 Union Street – Sewer Repair Project (m402502) and authorize the Public Works Director to sign the Notice of Completion as the Owner’s Authorized Agent.

October 13, 2026 City Council 9
Consent Agenda (continued)

18. Beltz Well 10 Rehabilitation and Set Up for the Aquifer Storage and Recovery Pilot Testing Program (c701609) (WT)
LOCATION: County
Motion to:
1) Approve plans and specifications for the Beltz Well 10 Aquifer Storage and Recovery Pilot Testing Program (Project), and authorize the City to enter into a contract with Subsurface Technologies, Inc.

The City Manager, or designee, is hereby authorized and directed to execute the contract, in a form to be approved by the City Attorney, as authorized by Resolution No. NS-27,563; and
2) Authorize the Water Director, or their designee, to approve future construction change orders for the Project that are within the approved project budget.

End Consent Agenda
Public Hearings

19. 2nd Reading and Final Adoption of Ordinance No. 2026-16 Amendment to Santa Cruz Municipal Code Chapter 10.41 Pertaining to Eligibility for Citywide Permit Parking (PW)
LOCATION: Citywide
Motion to adopt Ordinance No. 2026-16 to amend Santa Cruz Municipal Code (SCMC) Chapter 10.41 – Citywide Permit Parking to restrict preferential permit parking program participation for certain residential development projects that use state law to provide fewer off-street parking spaces than would otherwise be required by the City.

October 13, 2026 City Council 10
Public Hearings (continued)

20. Ordinance Amending Section 10.46.040 of the City of Santa Cruz Municipal Code to Provide an Alternative Transportation Demand Management Compliance Option for School District Residential Projects (PW)
LOCATION: Citywide
Motion to introduce for publication an ordinance amending Section

10.46.040 of the City of Santa Cruz Municipal Code to provide an alternative Transportation Demand Management compliance option for residential projects where a public school district is the applicant.

21. Amendment to Santa Cruz Municipal Code Chapter 16.12 Pertaining to Sewer Rates and Charges (PW)
LOCATION: Citywide
Motion to:
1) Introduce for publication an ordinance amending Santa Cruz Municipal Code (SCMC) Chapter 16.12 “Sewer Rates and Charges” by amending Section 16.12.010 Definitions and Section 16.12.130 Sewer Main Extensions Constructed and Paid for by Property Owners, and adding section 16.12.140 Reimbursement Agreement; and
2) Find that the changes are exempt from California Environmental Quality Act (CEQA) review pursuant to Public Resources Code Section 21080(b)(8) and CEQA Guidelines Section 15273, both of which exempt for rates, tolls, fares, and other charges from CEQA, along with CEQA Guidelines Section 15308, as an action by a regulatory agency for the protection of the environment.

October 13, 2026 City Council 11
General Business

22. County Library Advisory Commission Appointment (CC) Appoint one at-large County Library Advisory Commissioner with a term ending April 19, 2028.

23. Road Safety Action Plan (PW)
LOCATION: Citywide
Motion to:
1) Adopt the City of Santa Cruz Road Safety Action Plan (SAP); 2) Direct staff to conduct an Engineering and Traffic Survey to reduce speed limits where feasible on streets with 30mph speed limits and in school zones;
3) Direct staff to apply for grant funds for road safety projects through Highway Safety Improvement Program (HSIP) Cycle 13 and the Caltrans Sustainable Communities Transportation Planning Program; 4) Direct staff to utilize existing Safe Streets for All (SS4A) funding to pilot rest-in-red & leading pedestrian interval (LPI) signal timing on High Injury Network (HIN) and High Risk Network (HRN) streets; 5) Approve of the City Manager’s establishment of a City staff working group to review fatal and severe injury (FSI) crash locations and meet regularly to discuss SAP implementation;
6) Direct staff to write a letter to Caltrans requesting additional safety measures on Caltrans owned facilities, including SR1/Mission Street and the intersection of SR1/SR9; and
7) Direct staff to return with a project scope and budget for a pilot project to select and test traffic calming devices for emergency response routes that do not increase emergency response times or damage fire apparatus.

Adjournment
October 13, 2026 City Council 12

INFORMATION ITEMS PREVIOUSLY DISTRIBUTED TO CITY COUNCILMEMBERS ADDENDUM TO CITY COUNCIL AGENDA - OCTOBER 13, 2026

24. Library: Incident Report – Santa Cruz Public Library 4th Quarter 2025– 2026 9/18/26 (LBFYI 025)

25. Economic Development Department: Waiver of Late Charges and Interest 9/21/26 (EDFYI 004)

MAYOR'S PROCLAMATIONS
ADDENDUM TO CITY COUNCIL AGENDA - OCTOBER 13, 2026

26. Proclaiming September 26, 2026 as “Santa Cruz Surfing Museum Day” and encouraging all citizens to join in celebrating the Santa Cruz Surfing Museum’s 40th Anniversary.

27. Proclaiming September 26, 2026 as “Janus 50th Anniversary Day” and encouraging all residents to join in celebrating this important milestone and in recognizing the many contributions that Janus has made over the past fifty years to the well-being and success of our community.

28. Proclaiming September 30, 2026 as “Becca King Reed Day” and encouraging all citizens to join in expressing heartfelt appreciation for her remarkable contributions and in wishing her all the best in her retirement.

October 13, 2026 City Council 13
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
Downtown Commission One opening – to be appointed by
Councilmember O’Hara
Sister Cities Committee One opening – at-large nomination Transportation and Public Works
Commission
One opening – to be appointed by
Councilmember Trigueiro
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.

City of Santa Cruz
809 Center Street
Santa Cruz, California 95060

MINUTES OF THE ANNUAL MEETING OF THE

BOARD OF DIRECTORS OF THE INDUSTRIAL DEVELOPMENT AUTHORITY October 28, 2025
2:00 PM
Call to Order – Chair Keeley called the meeting to order at 2:01 p.m.

Roll Call

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

Absent: None.

General Business

1. Election of Officers
Chair Keeley opened the public comment period. There were no speakers.

Chair Keeley closed the public comment period.

MOTION: Vice Chair Golder moved, seconded by Director Newsome, to elect new officers as set forth in Section 3.02 of the Industrial Development Authority bylaws as follows:

Executive Director: City Manager M. Huffaker
Treasurer: Director of Finance E. Cabell
Chair: Mayor Keeley
Vice Chair: Vice Mayor Kalantari-Johnson
Secretary: City Clerk Administrator B. Bush
ACTION: The motion carried unanimously with the following vote.

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

NOES: None.

ABSENT: None.

DISQUALIFIED: None.

3.1 INDUSTRIAL DEVELOPMENT AUTHORITY 2
OCTOBER 28, 2025 ANNUAL BOARD OF DIRECTORS MEETING MINUTES General Business (continued)

2. Minutes of the October 8, 2024 Industrial Development Authority (IDA) Chair Keeley opened the public comment period. There were no speakers.

Chair Keeley closed the public comment period.

MOTION: Director Trigueiro moved, seconded by Director Brunner, to approve as submitted.

ACTION: The motion carried unanimously with the following vote.

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

NOES: None.

ABSENT: None.

DISQUALIFIED: None.

Adjournment - The Industrial Development Authority adjourned at 2:03 p.m.

Respectfully Submitted,
Bonnie Bush, Secretary

3.2 City of Santa Cruz
809 Center Street
Santa Cruz, California 95060

MINUTES OF THE ANNUAL MEETING OF THE BOARD OF DIRECTORS OF

THE SANTA CRUZ PUBLIC IMPROVEMENT FINANCING CORPORATION October 28, 2025
At or around 2:05 PM
Call to Order – President Keeley called the meeting to order at 2:03 p.m.

Roll Call

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

Absent: None.

General Business

1. Election of Officers
President Keeley opened the public comment period. There were no speakers.

President Keeley closed the public comment period.

MOTION: Director Newsome moved, seconded by Vice President Golder, to elect new officers as set forth in Section 3.02 of the Santa Cruz Public Improvement Financing Corporation bylaws as follows:

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

NOES: None.

ABSENT: None.

DISQUALIFIED: None.

5.1 SANTA CRUZ PUBLIC IMPROVEMENT FINANCING CORPORATION 2 OCTOBER 28, 2025 ANNUAL BOARD OF DIRECTORS MEETING MINUTES General Business (continued)

2. Minutes of the October 8, 2024 Santa Cruz Public Improvement Finance Corporation (SCPIFC)
President Keeley opened the public comment period. There were no speakers.

President Keeley closed the public comment period.

MOTION: Vice President Kalantari-Johnson moved, seconded by Director O’Hara, to approve as submitted.

ACTION: The motion carried unanimously with the following vote.

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

NOES: None.

ABSENT: None.

DISQUALIFIED: None.

Adjournment - The Santa Cruz Public Improvement Financing Corporation adjourned at 2:06 p.m.

Respectfully Submitted,
Bonnie Bush, Secretary/Treasurer

5.2 2026 City Council Meeting Calendar
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

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

MINUTES OF A CITY COUNCIL MEETING
September 22, 2026
Closed Session
1:00 PM
Mayor Keeley opened the City Council Closed Session at 1:02 p.m. in a public meeting via Zoom and in Council Chambers, for the purpose of announcing the agenda, and receiving public testimony.

Roll Call

Present: Councilmembers Trigueiro, Brunner, Newsome, Golder (arrived at 1:05 p.m.), O’Hara; Vice Mayor Kalantari-Johnson; Mayor Keeley.

Absent: None.

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

Statements of Disqualification – None.

Public Comment on Closed Session Items
Mayor Keeley opened the public comment period at 1:03 p.m. The following person spoke:

Matthew Staker made a comment on item 1.3.

Mayor Keeley closed the public comment period at 1:06 p.m., at which time the meeting was closed to the public and Council adjourned to the Courtyard Conference Room.

8.1 September 22, 2026 CITY COUNCIL MINUTES 8357
Closed Session

1. Conference With Legal Counsel – Liability Claims (Government Code §54956.95) 1) Claimant: Larrel Wayne Thompson
2) Claimant: Doug Miller
3) Claimant: Matthew A Staker
4) Claimant: Neda Amjadi
5) Claimant: Neda Amjadi
Claims against the City of Santa Cruz
Council received a status report, took up under agenda item 8, and no reportable action was taken.

2. Conference With Legal Counsel – Anticipated Litigation (Government Code §54956.9(d)(2))
Significant exposure to litigation (one potential case to be discussed) Council received a status report and took no reportable action.

8.2 September 22, 2026 CITY COUNCIL MINUTES 8358
City of Santa Cruz
809 Center Street
Santa Cruz, California 95060

MINUTES OF A CITY COUNCIL MEETING
September 22, 2026
2:00 PM
Call to Order – Mayor Keeley called the meeting to order at 2:04 p.m. in Council Chambers.

Roll Call

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

Absent: None.

Staff: City Manager M. Huffaker, Assistant City Manager M. Templeton, City Attorney C. Bronson, Director of Community Development L. Butler, Director of Finance E. Cabell (via Zoom), Chief of Fire R. Oatey, Chief People Officer S. De Leon, Director of Parks and Recreation T. Elliot (via Zoom), Director of Public Works N. Nguyen, Fire Division Chief T.

Shields, Principal Management Analyst/OES Manager M. Albert, Sustainability and Resiliency Officer T. Wise-West, Principal Transportation Planner C. Gallogly, Deputy City Clerk Administrator J.

Wood, City Clerk Administrator B. Bush.

At this time, Council heard item 3.

Oral Communications
At 2:11 p.m. Mayor Keeley opened Oral Communications for members of the public who wished to speak regarding items not listed on the City Council agenda.

Bruce Van Allen spoke in opposition to the proposed development at Seabright Plaza.

Jennie Evans spoke in opposition to the proposed development at Seabright Plaza.

Gabrielle Wilder spoke in opposition to the proposed development at Seabright Plaza.

8.3 September 22, 2026 CITY COUNCIL MINUTES 8359
Oral Communications (continued)
Rachel Kaplan spoke in opposition to the proposed development at Seabright Plaza.

Unidentified person spoke regarding the Water Department’s Long-Range Financial Plan.

Selesa Webster spoke in opposition to the proposed development at Seabright Plaza.

James Ewing-Whitman spoke regarding the battery plant in Moss Landing, CA catching fire.

Bradley Snyder spoke regarding over development and stated the long-term financial health of people who live near institutions such as UCSC and UCSB suffer.

Theresa Mogavero spoke in opposition to the proposed development at Seabright Plaza.

Unidentified person spoke in opposition to the proposed development at Seabright Plaza.

Linda Kimball spoke in opposition to the proposed development at Seabright Plaza.

Unidentified person spoke in opposition to the proposed development at Seabright Plaza.

Robert Thorton spoke in opposition to the proposed development at Seabright Plaza.

Lee Brokaw spoke in opposition to the proposed development at Seabright Plaza.

Karen McGovern spoke in opposition to the proposed development at Seabright Plaza.
[Unintelligible name] spoke in opposition to the proposed development at Seabright Plaza.

At 2:55 p.m. Mayor Keeley closed Oral Communications.

8.4 September 22, 2026 CITY COUNCIL MINUTES 8360
At this time, Council heard item 4 and proceeded through the remaining agenda in order.

Presentations

3. Mayoral Proclamation Declaring October 2026 as Domestic Violence Awareness Month
Vice Mayor Kalantari-Johnson read from and presented a proclamation declaring October 2026 as Domestic Violence Awareness Month. Commission for the Prevention of Violence Against Women Chair Karen Madura and Commissioner Danielle Long spoke.

At this time, Council heard Oral Communications.

4. Fire Prevention Week and National Emergency Preparedness Month Fire Division Chief T. Shields gave a presentation on Fire Prevention Week.

Principal Management Analyst/OES Manager M. Albert gave a presentation on National Emergency Preparedness Month and responded to Council questions.

Chief of Fire R. Oatey responded to Council questions.

Presiding Officer's Announcements – Mayor Keeley extended a “thank you” to Senator John Laird on behalf of the City Council for his work in the acquisition of two acres of Caltrans-owned land near the intersection of Highway 1 and Highway 9 for the development of affordable housing.

Statements of Disqualification – None.

Additions and Deletions – City Attorney C. Bronson informed Council an attachment for item 10 had been uploaded late, however all Brown Act requirements had been met.

City Attorney Report on Closed Session – See page 8357 for the report.

Council Meeting Calendar

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

8.5 September 22, 2026 CITY COUNCIL MINUTES 8361
Consent Agenda
Sustainability and Resiliency Officer T. Wise-West responded to Council questions on item 7.

Councilmember Brunner made a comment on item 7.

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

Unidentified person made a comment on item 8.

Bradley Snyder made a comment on item 7.

Mayor Keeley closed the public comment period.

MOTION: Councilmember Golder moved, seconded by Councilmember Brunner, to approve the Consent Agenda.

ACTION: The motion carried unanimously with the following vote.

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

NOES: None.

ABSENT: None.

DISQUALIFIED: None.

6. Minutes of the September 8, 2026 City Council Meeting (CC) LOCATION: None
Motion carried to approve as submitted.

8.6 September 22, 2026 CITY COUNCIL MINUTES 8362
Consent Agenda (continued)

7. Approval of an Option Agreement for EV Charging Services Site License to Support Direct Current Fast Charging Infrastructure (CM) LOCATION: District 2
Motion carried to:
 Authorize the City Manager to execute an Option Agreement for EV Charging Services Site License for space at the parking lot located at 1111 Soquel Avenue for the purpose of installing and operating Direct Current Fast Charging infrastructure; and
 Adopt a CEQA finding of categorical exemption pursuant to: 14 CCR 15301 (Existing Facilities); 14 CCR 15304 (Minor Alterations to Land); and 14 CCR 15061(b)(3) (Common Sense Exemption).

8. Liability Claims Filed Against the City of Santa Cruz (FN) Motion carried to reject the liability claims of 1) Larrel Wayne Thompson, 2) Doug Miller, and 3) Matthew A Staker; and to return as late the claims of 4) Neda Amjadi, and 5) Neda Amjadi, based on staff recommendation.

9. Wastewater Treatment Facility (WWTF) Energy and Electrical Resiliency (Project WEER) - Award of Progressive Design for Phase 1 Services (c401405) – Budget Adjustment (PW)
LOCATION: District 3
Motion carried to:
 Authorize the City Manager to execute the Project WEER Progressive Design Build Agreement for Phase 1 Services in a form approved by the City Attorney with Royal Electric (Sacramento, CA) in the amount of $5,015,000, and authorize the Public Works Director to execute future contract amendments within the approved budget; and
 Adopt Resolution No. NS-30,698 amending the FY 2027 budget to appropriate funds to the WWTF-Electrical System Project (c401405) in the amount of $1,500,000 from Fund 721.

End Consent Agenda

8.7 September 22, 2026 CITY COUNCIL MINUTES 8363
Consent Public Hearings
City Attorney C. Bronson responded to Council questions on item 10.

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

Unidentified person made a comment on item 10.

Mayor Keeley closed the public comment period.

MOTION: Councilmember O’Hara moved, seconded by Councilmember Trigueiro, to approve the Consent Public Hearing Agenda.

ACTION: The motion carried unanimously with the following vote.

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

NOES: None.

ABSENT: None.

DISQUALIFIED: None.

10. 2nd Reading and Final Adoption of Ordinance No. 2026-15 CalPERS Contract Amendment (HR)
LOCATION: Citywide
Motion carried to adopt Ordinance No. 2026-15 implementing the CalPERS contract amendment.

8.8 September 22, 2026 CITY COUNCIL MINUTES 8364
Consent Public Hearings (continued)

11. 2023 Program Year Annual Action Plan Amendment – Budget Adjustment (CD) LOCATION: Districts 1 and 4
Motion carried to:
 Adopt Resolution No. NS-30,699 amending the 2023 U.S. Department of Housing and Urban Development (HUD) Annual Action Plan for Community Development Block Grant (CDBG) to reduce funding to the “2023 PY Civic Auditorium ADA Improvements” project in an amount up to $100,000 and reallocate the funding to the project “2023 PY Market St. Senior Center Renovations”;
 Adopt Resolution No. NS-30,700 reallocating 2023-2024 Community Development Block Grant (CDBG) funding from the “2023 PY Civic Auditorium ADA Improvements” project in an amount up to $100,000 and reallocate the funding to the project “2023 PY Market St. Senior Center Renovations” and appropriating the funds in the FY27 budget; and  Direct staff to submit the Annual Action Plan (AAP) amendment to HUD for approval.

12. Georgiana Bruce Kirby Preparatory School – Tax and Equity Fiscal Responsibility Act (TEFRA) Public Hearing and Resolution (ED)
LOCATION: District 5
Motion carried to:
 Conduct a public hearing under the requirements of TEFRA and Section 147(f) of the Internal Revenue Code of 1986, as amended (the “Code”); and,  Adopt Resolution No. NS-30,701 providing for the issuance by the California Municipal Public Financing Authority (“CalMuni PFA” or the “Authority”) of revenue bonds in an aggregate principal amount not to exceed $12,025,000 (the “Bonds”) for the benefit of Georgiana Bruce Kirby Preparatory School.

8.9 September 22, 2026 CITY COUNCIL MINUTES 8365
General Business

13. Resilient Coast Santa Cruz 2.0 Update (CM)
LOCATION: Districts 2, 3, 4, and 6
Sustainability and Resiliency Officer T. Wise-West gave a presentation and responded to Council questions.

Director of Public Works N. Nguyen responded to Council questions.

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

Mayor Keeley closed the public comment period.

MOTION: Councilmember Brunner moved, seconded by Councilmember Newsome, to receive and accept the project update including medium term coastal adaptation strategy development status, community engagement to date, and timeline to project completion.

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.

14. Amendment to Santa Cruz Municipal Code Chapter 10.41 Pertaining to Eligibility for Citywide Permit Parking (PW)
LOCATION: Citywide
Principal Transportation Planner C. Gallogly gave a presentation and responded to Council questions.

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

Rafa Sonnenfeld
Don Landes
Unidentified person
Bradley Snyder
James Ewing-Whitman
Mayor Keeley closed the public comment period.

8.10 September 22, 2026 CITY COUNCIL MINUTES 8366
General Business (continued)

14. Amendment to Santa Cruz Municipal Code Chapter 10.41 Pertaining to Eligibility for Citywide Permit Parking (PW)LOCATION: Citywide (continued) Director of Public Works N. Nguyen, City Attorney C. Bronson, and City Manager M. Huffaker responded to Council questions.

MOTION: Vice Mayor Kalantari-Johnson moved, seconded by Councilmember Newsome, to:
 Introduce for publication Ordinance No. 2026-16 to amend Santa Cruz Municipal Code (SCMC) Chapter 10.41 – Citywide Permit Parking to restrict preferential permit parking program participation for certain residential development projects that use state law to provide fewer off-street parking spaces than would otherwise be required by the City; and  Adopt a CEQA finding of exemption pursuant to CEQA Guidelines section 15061(b)(3) (the “common sense” exemption) and section 15301(c) (existing facilities categorical exemption).

FRIENDLY AMENDMENT: Councilmember O’Hara requested to amend the motion to include:
1) Direct staff and the City Attorney’s Office to evaluate the ordinance prior to the final adoption a potential exception preserving residential parking permit eligibility for occupants of deed-restricted affordable housing units, including affordable units within mixed-income developments.

The evaluation should consider:
 The legal feasibility of an exception comparable to the provisions established in AB 2712 for the City of Los Angeles;
 Whether the exception should apply to extremely low, very low, or lower-income households;
 Whether reasonable limitations on the number or type of permits could address concerns about neighborhood parking availability;  How guest permits, caregiver access, and other essential needs visitors can be accommodated, and
 The implications of such an exception for the ordinance’s legal structure implementation.

Determine whether Council can preserve appropriate access to residential parking for residents of deed-restricted affordable housing while maintaining the City’s ability to manage neighborhood parking demand.

8.11 September 22, 2026 CITY COUNCIL MINUTES 8367
General Business (continued)

14. Amendment to Santa Cruz Municipal Code Chapter 10.41 Pertaining to Eligibility for Citywide Permit Parking (PW)LOCATION: Citywide (continued) FRIENDLY AMENDMENT (continued):
2) Direct staff and the City Attorney’s Office to return to Council with an evaluation of the following considerations and policy options:

Equity and Housing Accessibility
 Evaluate the potential unintended consequences of residential parking permit restrictions for lower-income residents, affordable housing occupants, transportation-dependent households, and those who rely on caregivers or essential visitors.
 Consider whether the restrictions could create practical barriers to housing accessibility for certain populations and identify potential accommodations.

Effectiveness
 Evaluate whether the proposed restrictions are likely to improve neighborhood parking availability or primarily redistribute parking demand to surrounding unrestricted streets.
 Identify the data necessary to evaluate the effectiveness of these restrictions, including parking utilization, permit demand, and available curb capacity.

Location-Specific Parking Management
 Evaluate whether the City could establish objective criteria based on actual curb supply, parking demand, permit utilization, and neighborhood conditions to inform location-specific parking management decisions.
 Include consideration of whether such a framework could preserve Council discretion to establish appropriate parking restrictions based on the circumstances of individual developments or parking districts.

Comprehensive and Equitable Parking Management
 Evaluate opportunities to modernize the residential parking permit program to consider parking demand and access across all housing types, both existing and new.
 This should include consideration of permit allocations per household, availability and utilization of off-street parking, guest and caregiver access, and the cumulative parking impacts of neighborhood development.

8.12 September 22, 2026 CITY COUNCIL MINUTES 8368
General Business (continued)

14. Amendment to Santa Cruz Municipal Code Chapter 10.41 Pertaining to Eligibility for Citywide Permit Parking (PW)LOCATION: Citywide (continued) FRIENDLY AMENDMENT (continued):

Legal Feasibility
 Request that the City Attorney's Office evaluate the legal implications of these potential approaches, including whether affordable housing exceptions, location-specific determinations, or other modifications could be structured consistently with Vehicle Code Section 22507 and applicable state housing law.

Vice Mayor Kalantari-Johnson and Councilmember Newsome accepted #1 of the friendly amendment, with the following deletion:

After further discussion, it was determined that #2 of the friendly amendment was not accepted.

FRIENDLY AMENDMENT: Councilmember Newsome requested to amend the friendly amendment by removing “the ordinance prior to the final adoption” from #1.

Councilmember O’Hara called a point of order to state the friendly amendment had already been accepted.

Councilmember Newsome withdrew his acceptance of the friendly amendment.

Councilmember O’Hara accepted the friendly amendment.

Councilmember Newsome accepted the friendly amendment, as amended.

8.13 September 22, 2026 CITY COUNCIL MINUTES 8369
General Business (continued)

14. Amendment to Santa Cruz Municipal Code Chapter 10.41 Pertaining to Eligibility for Citywide Permit Parking (PW)LOCATION: Citywide (continued) MOTION TO AMEND: Councilmember O’Hara moved, seconded by Councilmember Brunner, to amend the motion, as amended by the friendly amendments, to add the following:

Direct staff and the City Attorney’s Office to return to Council in 2027 with an evaluation of the following considerations and policy options:

8.14 September 22, 2026 CITY COUNCIL MINUTES 8370
General Business (continued)

14. Amendment to Santa Cruz Municipal Code Chapter 10.41 Pertaining to Eligibility for Citywide Permit Parking (PW)LOCATION: Citywide (continued) MOTION TO AMEND (continued):

FRIENDLY AMENDMENT: Councilmember Trigueiro requested to amend the motion to amend by removing language regarding “guest and caregiver access” from the direction. Councilmembers O’Hara and Brunner accepted the friendly amendment.

ACTION: The motion to amend, inclusive of Councilmember Trigueiro’s friendly amendment, failed to be accepted with the following vote.

AYES: Councilmembers Trigueiro, Brunner, O’Hara.

NOES: Councilmembers Newsome, Golder; Vice Mayor KalantariJohnson; Mayor Keeley.

ABSENT: None.

DISQUALIFIED: None.

ACTION: The original motion as amended 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.

8.15 September 22, 2026 CITY COUNCIL MINUTES 8371
Adjournment – Councilmember Golder moved, seconded by Councilmember Brunner, to adjourn. By consensus City Council adjourned at 5:48 p.m.

Respectfully Submitted:

Julia Wood, Deputy City Clerk Administrator
Attest:

Bonnie Bush, City Clerk Administrator
Approved:

Fred Keeley, Mayor

8.16 City Council

AGENDA REPORT
DATE: 09/21/2026
AGENDA OF: 10/13/2026
DEPARTMENT: City Clerk
SUBJECT: Downtown Commission Appointment (CC)
LOCATION: Citywide
RECOMMENDATION: Motion to approve Councilmember Golder's nomination of Ryan Dong to serve on the Downtown Commission.

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

DISCUSSION: Due to the resignation of Commissioner Peggy Dolgenos, there is a vacancy on the Downtown Commission. Councilmember Golder has nominated Ryan Dong to fill the vacancy, which requires approval by the City Council.

If approved, Mr. Dong would be appointed to serve the remainder of Commissioner Dolgenos’ term, ending January, 31, 2027. Following the completion of this term, Mr. Dong will be eligible to serve two additional full terms.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: Does not require CEQA review as it does not meet the definition of a “Project” under CEQA. The proposed Council action will not result in “a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment[.]” (Public Resources Code § 21065.)
HEALTH IN ALL POLICIES (HiAP): This is an administrative process and is not directly related to Health in All Policies.

FISCAL IMPACT:

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

2. This recommendation requires a budget adjustment: No

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

9.1 Prepared By:

Bonnie Bush
City Clerk
Submitted By:

Michelle Templeton
Assistant City Manager
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. APPLICATION.PDF

9.2 Please note: This application is considered a public document and will be available for release upon request.

CITY OF SANTA CRUZ APPLICATION FOR APPOINTMENT TO

ADVISORY BODIES
Applications will be considered active for two years from date of submission. If vacancies occur, your application may be reconsidered by the Council.

NAME* DATE
RESIDENCE ADDRESS* CITY ZIP
EMAIL* HOME # CELL #

EMPLOYER OCCUPATION
REGISTERED CITY VOTER? Yes No YEARS LIVED IN CITY LIMITS OF SANTA CRUZ EMPLOYED BY CITY OF SANTA CRUZ? Yes No PRESENTLY SERVING ON ADVISORY BODY? Yes No PERSONAL REFERENCE or
ENDORSING COUNCILMEMBER (optional) PHONE
*required fields.

ADVISORY BODIES
If you are applying for more than one advisory body, please rank your preferences numerically with #1 as your first choice.

Arts Commission* Equal Employment Opportunity Committee Board of Building Appeals* Historic Preservation Commission* Children’s Fund Oversight Committee Parks and Recreation Commission* Commission for the Prevention of Violence Against Women* Planning Commission* Downtown Commission* Sister Cities Committee
Enhanced Infrastructure Financing District Public Financing Authority
Transportation and Public Works Commission*
Water Commission*
Other Advisory Body, or if you are applying for a specialized category, please indicate:

Advisory Body Category
* A Statement of Economic Interest must be filed after appointment by those appointed to the advisory bodies marked with an asterisk (*). The statement includes, but is not limited to, disclosure of financial, business and real property interests held by the appointee (and spouse) in the City of Santa Cruz or within 2 miles of the jurisdiction of the City of Santa Cruz.

SIGN AND RETURN TO CITY CLERK’S DEPARTMENT
By Email [email protected]
By Mail/In Person: 809 Center Street, Room 8
Santa Cruz, CA 95060
Signature of Applicant Fax: 831-420-5031
How did you hear about the advisory body opening?
City Website Word of mouth Display ad City Staff, Commissioner, or Councilmember Other (explain)
ɿ PLEASE USE THE REVERSE SIDE FOR ADDITIONAL INFORMATION ɿ Ryan Dong 12/31/2025
Santa Cruz 95060
Karon Properties Realtor/Property Manager
Yes
X
Renee Golder
2 1
%#
&
!

9.3 9.4
Downtown Commission:
1) I would be a valuable member of the Santa Cruz Downtown Advisory Commission because I offer a fresh, youthful perspective alongside deep ties to the community. As a younger resident, I can represent voices and ideas that are often underrepresented in local decision-making. Since I manage multiple properties in the downtown district, I see many of the ongoing changes on a regular basis. As a fourth-generation Santa Cruz local, I also have a strong personal commitment to the long-term success of the downtown area. I care deeply about preserving what makes downtown unique while supporting thoughtful new projects and policies that will strengthen it for the future. 2) While in college at University of the Pacific, I was in a business centric fraternity, Delta Sigma Pi, which taught me a lot about business, but also how to lead a group of people. I held multiple executive positions which gave me the opportunity to grow as a leader. These roles gave me the chance to be in charge of making decisions on behalf of the fraternity based on the wants of the members. Growing up, my parents owned a local photography studio that my grandparents started over 50 years ago. From a young age, I saw the sacrifices and hard work that it took to run a small business. As a current property manager, I have an insider view of many different types of businesses that lease space in various parts of town. I can relate to the challenges that come with running a small business, and will aim to assist in making it easier for them to thrive in our city. I grew up gaining first hand exposure to real estate through family members who invested in property in Santa Cruz. I began my professional career in property management and commercial real estate, working for two firms in Stockton and Sacramento, California. I now focus on residential sales and property management here in Santa Cruz. 3) I am a regular attendee of the “Brokers Breakfasts” hosted by the Santa Cruz Economic Development Department. I am a member of the Modern Real Estate Professional Committee, and Local Government Relations Committee at the Santa Cruz Association of Realtors. I regularly play softball through the Santa Cruz City Parks and Recreation program. My wife teaches at Bay View Elementary School, and I routinely support the school community by helping with events, attending community gatherings, and rebuilding their “Little Free Library.”
Parks and Rec:
1) I would be a strong fit for the Santa Cruz Parks and Recreation Advisory Commission because I bring both a youthful perspective and firsthand experience with the city’s parks and facilities. Growing up in Santa Cruz, I benefited greatly from playing multiple sports at a variety of local parks and recreational spaces, which gave me an early appreciation for the value these spaces provide to the community. As a younger member of the commission, I can help represent the needs and perspectives of youth and active residents, while also advocating for continued investment in accessible, well-maintained parks and sports facilities. I remain actively engaged in the community by using these spaces today, and I am motivated to be a voice that supports the ongoing public benefit of parks, recreation, and shared outdoor complexes for all residents.
2) I would bring a strong real estate background that would be valuable in guiding decisions related to reinvestment in buildings and facilities. My experience allows me to identify necessary repairs, assess long-term maintenance needs, and help prioritize expenditures for improvements in a cost-effective and strategic manner. Having worked in both commercial and residential real estate, I offer a broad understanding of different property types and the unique considerations each requires. As a fourth-generation Santa Cruz local with deep roots in the community and no plans to leave, I am highly

9.5 invested in supporting thoughtful growth that meets the city’s needs while preserving the small-town character that residents value and cherish.
3) I am a regular attendee of the “Brokers Breakfasts” hosted by the Santa Cruz Economic Development Department. I am a member of the Modern Real Estate Professional Committee, and Local Government Relations Committee at the Santa Cruz Association of Realtors. I also regularly play softball through the Santa Cruz City Parks and Recreation program. My wife teaches at Bay View Elementary School, and I routinely support the school community by helping with events, attending community gatherings, and rebuilding their “Little Free Library.”

9.6 City Council

AGENDA REPORT
DATE: 09/24/2026
AGENDA OF: 10/13/2026
DEPARTMENT: Economic Development
SUBJECT: State Route 9 (SR 9) Caltrans Quitclaim Deed and ROW Contract (ED) LOCATION: District 5
RECOMMENDATION: Motion to adopt a resolution authorizing the City Manager to execute a Quitclaim Deed within APNs 008-163-06 and 008-172-08 and a Right of Way Contract with the California Department of Transportation for State Route 9.

BACKGROUND: In April 2026, the California Department of Transportation (Caltrans) informed the City of project number 0522000188 to improve motorist and pedestrian safety at the junction of State Route 1 (SR 1) and State Route 9 (SR 9), between the San Lorenzo River Bridge and West of State Route 9. The safety improvements include providing continuous lighting along SR 1 on both sides of the SR 1 and SR 9 intersection and improving illuminance beyond the minimum standards at the SR 1 and SR 9 intersection. Additional improvements include providing Connected and Automated Vehicle (CAV) support and changing the signal phasing at the intersection to reduce motorists delay and further improve pedestrian safety. This project is funded entirely by Caltrans.

The Caltrans project also included a notice to the City of the State’s intent to acquire a portion of property owned by the City to be added to the State’s highway right-of-way. Caltrans intends to acquire this right-of-way pursuant to Section 83 of California Streets and Highways Code, which, under some circumstances, permits the State to obtain the right-of-way at no cost from counties and cities when required for a state highway project. The land to be conveyed via a quitclaim deed is shown most clearly in Attachment No. 5. Most of the property to be conveyed is where existing State highway infrastructure already is present.

DISCUSSION: Public Works and the Police Department reviewed the requested Quitclaim Deed and the lighting project scope. Section 83 of the Streets and Highway Code requires the State to assume all liability and responsibility for the maintenance of the conveyed property. In order to memorialize that responsibility along with the Quitclaim Deed action, the City requested that Caltrans execute a Right of Way Contract, which has been reviewed by City staff and the City Attorney’s Office.

As described above, the property conveyed to Caltrans through this action consolidates ownership and maintenance responsibility for this section of SR 1 and SR 9, and it will facilitate

10.1 future improvements. As the overall changes are minor, this grant of property will not affect ongoing City redevelopment and housing project planning.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: The proposed Council action is not a “project” under CEQA because the City lacks discretionary authority and will not be the party that is actually constructing any improvements on the State highway. (Public Resources Code section 21080(b)(1).) Caltrans, as the government agency undertaking any physical improvements to the area, will need to ensure compliance with CEQA prior to constructing any “project”, as that term is defined by CEQA.

HEALTH IN ALL POLICIES (HiAP): The Caltrans lighting project will promote public health by improving safety at the intersection of SR 1 and SR 9 for everyone travelling through it.

FISCAL IMPACT:

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

2. This recommendation requires a budget adjustment: No

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

Prepared By:

Kathryn Mintz
Development Manager
Submitted By:

Bonnie Lipscomb
Deputy City Manager
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. RESOLUTION.DOCX

2. 1Q250-13952 TRANSMITTAL LETTER TO CITY OF SANTA CRUZ.PDF

3. 1Q250-13952 QUITCLAIM DEED.PDF

4. 1Q250-13952 RIGHT OF WAY CONTRACT.PDF

5. PROPERTY TO BE CONVEYED VIA QUITCLAIM.PDF

10.2 RESOLUTION NO. NS-XX,XXX

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA CRUZ AUTHORIZING

THE CITY MANAGER TO EXECUTE A QUITCLAIM DEED FOR REAL PROPERTY WITHIN APNS 008-163-06 AND 008-172-08 AND A RIGHT OF WAY CONTRACT WITH

THE CALIFORNIA DEPARTMENT OF TRANPORTATION
WHEREAS, the California Department of Transportation (Caltrans) Project 0522000188 will improve lighting at the junction of State Route 1 and State Route 9 and in the process will improve a portion of the City Right of Way on River Street; and WHEREAS, Caltrans is designating the portion of River Street to be improved (portions of APN 008-163-06 and APN 008-172-08) as State highway; and WHEREAS, Caltrans notified the City that it intends to acquire the right-of-way for its project pursuant to California Streets and Highways Code Section 83, which, under some circumstances, permits the State to obtain right-of-way at no cost from counties and cities when required for a State highway project. Most of the property to be conveyed is where existing State highway infrastructure is already present.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Santa Cruz as follows: the City Manager is authorized to execute a Quitclaim Deed for real property in APNs 008-163-06 and 008-172-08 and a Right of Way Contract with the California Department of Transportation under the terms and conditions presented herein, and to execute any related documents or other actions necessary to complete the transfer.

PASSED AND ADOPTED this 13th day of October, 2026 by the following vote:

AYES:

NOES:

ABSENT:

DISQUALIFIED:

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

10.3 “Improving lives and communities through transportation.” CALTRANS DISTRICT 5
50 HIGUERA STREET
SAN LUIS OBISPO, CA 93401-5415
(805) 549-3101 | FAX (805) 549-3329 TTY 711
www.dot.ca.gov
District County Route Postmile Project ID
5 SCR 9/1 0.18/17.5 0522000188
April 6, 2026
Kathryn Mintz
Development Manager
City of Santa Cruz
337 Locust Street
Santa Cruz, CA 95060
STATE HIGHWAY 1/9 JUNCTION – LIGHTING PROJECT
Dear Kathy:

The California Department of Transportation (Caltrans) is currently in the process of improving lighting at the junction of State Route 1 and State Route 9. A portion of River Street has been improved. This portion of River Street is described in the grant deeds to the City of Santa Cruz, recorded as 2022-0007413 O.R., 2022-03-07 for APN 008-163-06 and 2022-0007414 O.R., 2022-03-07 for APN 008-172-08.

Caltrans is planning on designating as state highway that portion shown and identified as State Parcel 13952-1 on the attached Quitclaim Deed and map.

For recordkeeping and to leave a clear chain of title, we ask that you place a request on the agenda for the City Council to approve the attached map and execute the Quitclaim Deed. Please sign and notarize the top portion of the second page of the deed. The signature blocks have been left blank for you to fill in the name(s) and title(s) of those needing to sign the deed for the City. After signing and notarization, return the deed to me so Caltrans can sign the certificate of acceptance and record it.

This is pursuant to Section 83 of California Streets and Highways Code.

Any and all existing City utilities located within roadways included in said State Highway 1/9 right of way shall remain the property of the City. Improvements, maintenance and repairs to said City utilities are the responsibility of the City but are subject to the authority of Caltrans and the City shall obtain an encroachment

10.4 City of Santa Cruz
April 6, 2026

Page 2 ends

“Improving lives and communities through transportation.” permit from Caltrans to perform said improvements, maintenance and repairs unless prior agreements or statutes dictate otherwise.

If you have any questions, please call me at 805-458-9481, or email at me [email protected].

Sincerely,

JILLIAN ASHBY
Associate Right of Way Agent
Enclosures:

Parcel 13952 Quitclaim Deed with legal description and map exhibits California Streets and Highways Code, Section 83
Grant Deed 2022-0007413
Grant Deed 2022-0007414

10.5 Recording Requested by and
after Recording Return To:

Department of Transportation – R/W
50 Higuera Street
San Luis Obispo, CA 93401-5415
Mail Tax Statements to: Same as above
STATE BUSINESS – FREE:

This document presented for recording
pursuant to Govt. Code Section 27383.

Documentary Transfer Tax:

No Tax Due (Gov. Code 27383)

CALIFORNIA DEPARTMENT OF

TRANSPORTATION
BY: _____________________________
Signature of Declarant, Kelly Codorniz
Transfer to a Public Entity
Right of Way APN 008-163-06 & 008-
172-08
Space above this line for Recorder’s Use
Quitclaim_Deed_Corp_FullAcq.docx 01/2023
QUITCLAIM DEED District County Route Postmile Number
5 SCr 9/1 0.18/17.5 13952-1
The City of Santa Cruz, a body politic, organized, and existing under and by virtue of the laws of the State of California.
hereinafter called GRANTOR, hereby releases and quitclaims to the State of California, Department of Transportation, hereinafter called STATE, all right, title and interest in and to all that real property in the City of Santa Cruz, County of Santa Cruz, State of California, described as follows:

See Exhibits A and B, attached.

10.6 Number
13952-1
Quitclaim_Deed_Corp_FullAcq.docx 01/2023
Dated: City of Santa Cruz,
a municipal corporation
Name:

Title:

Name:

Title:

This is to certify that the State of California, acting by and through the Department of Transportation (according to Section 27281 of the Government Code), accepts for public purposes the real property described in this deed and consents to its recordation.

Dated Dina A. El-Tawansy
Director of Transportation
By
Attorney in Fact
Patrick W. Mason, Chief
San Luis Obispo Acquisitions Branch
Right of Way

10.7 Exhibit A
Parcel 13952-1
Those portions of the real property described in the grant deeds to the City of Santa Cruz, recorded March 7, 2022, as document 2022-0007414, and recorded March 7,2022 as document 2022-0007413, both of Official Records of Santa Cruz County, State of California lying within the following described area:

Beginning at a 2 inch iron pipe tagged “LS 7367” per the map recorded in Volume 112 of Maps, at page 2, Records of Santa Cruz County, said point being the northerly point of cusp of the area labeled “State of California 1522 O.R. 034” per said map, and from whence a 2 inch iron pipe tagged “LS 7367”, said pipe bears South 39°32'53" East, 714.13 feet (South 39°34'04" East, 714.11 feet calculated from said map); Thence (1), South 39°32'53" East, 59.49 feet;
Thence (2), perpendicular from said last course, South 50°27'07" West, 19.09 feet to a point on a curve, concave southwesterly with a radius of 6.80 feet, to which a radial line bears North 1°42'05" West;
Thence (3), westerly along said curve, through a central angle of 27°02'17", an arc distance of 3.21 feet;
Thence (4), South 3°15'47" East, 163.80 feet;
Thence (5), South 4°48'06" East, 219.15 feet;
Thence (6), South 9°33'36" East, 100.49 feet;
Thence (7), South 13°44'47" East, 30. 67 feet;
Thence (8), South 11°15'49" East, 20.45 feet;
Thence (9), South 35°10'10" East, 4.34 feet;
Thence (10), South 37°59'11" West, 4.57 feet;
Thence (11), South 11°12'48" East, 104.37 feet to the line described as “South 86°18'50" West, 201.80 feet” in State parcel “No. 14659” per the grant deed to the State of California recorded May 27, 1955 in Volume 1019 at page 75; Thence (12), along said line, South 87°10'57" West, 43.76 feet to the southerly terminus of the line described as “North 11°36'31" West, 132.02 feet” in said grant deed;

10.8 Number
13952-1

Page 2 of 2 ends

Thence (13), along said line, North 10°43'42" West, 132.02 feet to the northerly terminus of said line, said terminus also being the southerly terminus of the line described as “North 8°52'00" West, 5.90 Chains” in said State parcel “No. 14657” per the grant deed to the State of California recorded September 30, 1955, in Volume 1039 at page 121 Official Records of Santa Cruz County, State of California; Thence (14), along said line, North 2°54'01" West, 391.23 feet to the northerly terminus of said line, said terminus also being the southerly terminus of the line described as “North 3°27'57" West, 180 feet” in said State parcel “No. 14656” per the grant deed recorded November 5, 1956, in Volume 1101 at page 408, Official Records of Santa Cruz County, State of California;
Thence (15), along said line North 2°24'58" West, 181.12 feet to the Point of Beginning.

END OF DESCRIPTION
This real property description has been prepared by me, or under my direction, in conformance
with the Professional Land Surveyors Act.

Signature
Date Augusth 24th, 2026
Name
9918 Number
2026-09-30
Exp. Date
Adrian Foster

10.9 Exhibit B - Parcel 13592

STATE OF CALIFORNIA

CALIFORNIA STATE TRANSPORTATION AGENCY

DEPARTMENT OF TRANSPORTATION

RIGHT OF WAY

DEED MAP
∆

10.10 Exhibit B - Parcel 13952

STATE OF CALIFORNIA

CALIFORNIA STATE TRANSPORTATION AGENCY

DEPARTMENT OF TRANSPORTATION

RIGHT OF WAY

DEED MAP

10.11 STATE OF CALIFORNIA * DEPARTMENT OF TRANSPORTATION RIGHT OF WAY CONTRACT - STATE HIGHWAY Page 1 of 3
Part of Document No. 13952-1

__________________________, California

_________________________, 20________
____________________________________
____________________________________
Grantor PROJECT: 0522000188
THIS DOCUMENT NO. 13952-1, in the form of a QUITCLAIM DEED, covering the property particularly described in the above instrument, has been executed and delivered to JILLIAN ASHBY, Right of Way Agent for the State of California.

In consideration of which, and the other considerations hereinafter set forth, it is mutually agreed as follows:

1. The parties have herein set forth the whole of their agreement. The performance of this agreement constitutes the entire consideration for said document and shall relieve the State of all further obligation or claims on this account, or on account of the location, grade, or construction of the proposed public improvement. (A) Grantee requires said property described in DOCUMENT NO. 13952-1 for State highway purposes.
(B) The parties to this contract shall, pursuant Section 21.7(a) of Title 49, Code of Federal Regulations, comply with all elements of Title VI of the Civil Rights Act of 1964. This requirement under Title VI and the Code of Federal Regulations is to complete the USDOT- Non-Discrimination Assurance requiring compliance with Title VI of the Civil Rights Act of 1964, 49 C.F.R. Part 21 and 28 C.F.R. Section 50.3. (C) No person in the United States shall, on the grounds of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be otherwise subjected to discrimination under any program or activity that is the subject of this contract.

2. The State shall:
(A) Accept delivery of the property or interest conveyed by above referenced document at no cost when title to said property vests in the State subject to all liens, encumbrances, assessments, easements, and leases (recorded and/or unrecorded) and taxes.

District County Route Post Mile Exp Auth
05 SCr 9/1 0.18/17.5 1Q250

10.12 STATE OF CALIFORNIA * DEPARTMENT OF TRANSPORTATION RIGHT OF WAY CONTRACT - STATE HIGHWAY Page 2 of 3
Part of Document No. 13952-1

3. It is agreed that the property conveyed by DOCUMENT NO. 13952-1 is being acquired by the State without compensation being paid, under Sections 81-83 of the Streets and Highways Code.

4. The undersigned Grantor warrants that, to the best of their knowledge, they are the owner of the property described as Parcel 13952-1 and they have the right to grant the property rights described.

5. Grantor warrants that, to the best of their knowledge, they do not hold any oral or written leases on all or any portion of Parcel 13952-1 exceeding a period of one month.

6. It is understood and agreed that Parcel 13952-1 is required for the maintenance of the State Highway System. The Quitclaim Deed releases the Grantor from their responsibility for maintenance.

7. The State agrees to indemnify and hold harmless the Grantor from any liability arising out of the State’s operations under this agreement. The State further agrees to assume responsibility for any damages proximately caused by reason of the State’s operation under this agreement and the State will, at its option, either repair or pay for such damage.

8. It is agreed and confirmed by the parties hereto that notwithstanding other provisions in this contract, that the right of possession and use of the subject property by the State, including the right to remove and dispose of improvements, shall commence upon receipt of the executed Right of Way Contract.

9. If the property being acquired is found to be contaminated by the presence of hazardous waste which requires mitigation under Federal or State law, the State may elect to recover its clean-up costs from those who caused or contributed to contamination.

10. This Right of Way Contract shall be binding upon and inure to the benefit of the heirs, devisees, executors, administrators, legal representatives, successors and assigns of the grantor.

11. This contract may be delivered by way of scanning and a scanned signature shall be treated as an original signature.

10.13 STATE OF CALIFORNIA * DEPARTMENT OF TRANSPORTATION RIGHT OF WAY CONTRACT - STATE HIGHWAY Page 3 of 3
Part of Document No. 13952-1
IN WITNESS WHEREOF, the parties have executed this agreement the day and year first above written.

GRANTOR: CITY OF SANTA CRUZ, A MUNICIPAL CORPORATION
__________________________________
NAME:

TITLE:

DATE:
__________________________________
NAME:

TITLE:

DATE:

RECOMMENDED FOR APPROVAL:

By_______________________________

JILLIAN ASHBY
Associate Right of Way Agent
ACCEPTED:

STATE OF CALIFORNIA

DEPARTMENT OF TRANSPORTATION
By_______________________________
PATRICK W. MASON, Chief
San Luis Obispo Acquisition Branch
Right of Way

NO OBLIGATION OTHER THAN THOSE SET FORTH HEREIN WILL BE RECOGNIZED ADA NOTICE: For individuals with sensory disabilities, this document is available in alternate formats. For information call (916) 654-6410 or TDD (916) 654- 3880 or write Records and Forms Management, 1120 N Street, MS-89, Sacramento, CA 95814.

10.14 Exhibit- Quitclaim Deed within APNs 008-163-06 and 008-172-08 and a Right of Way Contract with the California Department of Transportation for State Route 9 Limits of quit claim shown in red.

10.15 City Council

AGENDA REPORT
DATE: 09/18/2026
AGENDA OF: 10/13/2026
DEPARTMENT: Economic Development
SUBJECT: Kiosk Lease and License Agreement with Rockin’ Rolls – Cinnamon Rolls

LLC (ED)
LOCATION: District 4
RECOMMENDATION: Motion to:
1) Approve and authorize the City Manager to execute the Kiosk Lease and License Agreement with Rockin’ Rolls – Cinnamon Rolls LLC, along with any related documents, amendments, or extensions with substantially the same terms as the original agreement, all in a form approved by the City Attorney, for the kiosk located at 1130 K-1 Pacific Avenue; 2) Authorize the City Manager, or his designee, 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 3) Adopt a CEQA finding of exemption pursuant to 14 CCR 15301 (existing facilities exemption) and 14 CCR 15061(b)(3) (common sense exemption).

BACKGROUND: The City accepts proposals for available kiosks on Pacific Avenue on a rolling basis. In 2026, the City received seven proposals, two of which withdrew during the review process. The remaining proposals were evaluated on adherence to proposal requirements, experience, qualifications, financials, operations and management plan, and community compatibility.

DISCUSSION: Based on the evaluation process, City staff recommends the City enter into a Kiosk Lease and License Agreement with Rockin’ Rolls – Cinnamon Rolls LLC for the kiosk located at 1130 K1 Pacific Avenue. The business is owned and managed by Rachele Chenowith.

She will serve Country Fair Cinnamon Rolls that have been a popular favorite at state fairs for over 50 years. These cinnamon rolls are widely recognized throughout California for their quality and flavor. Ms. Chenowith is licensed by Country Fair Cinnamon Rolls to prepare and sell their cinnamon rolls under her brand name using approved proprietary ingredients and recipes. Her menu will consist of a variety of flavors, including but not limited to, original and original with frosting and nuts, sold as singles or 4-packs, and beverages.

11.1 Ms. Chenowith has extensive management experience and a strong background in restaurant operations, including serving as Manager and General Manager for Kianti’s Pizza & Pasta Bar in downtown Santa Cruz. This will be her first business venture. She consulted with the Small Business Development Center to review her business plan and financial planning.

The initial term of the lease is one (1) year, from November 1, 2026 to October 31, 2027, with up to two (2) additional one (1) year periods to extend, if the tenant is in good standing.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: The proposed Council action is exempt from CEQA under: (1) 14 CCR 15301 – Class 1 Categorical Exemption because the Council action relates to the lease of an existing facility involving negligible or no expansion of existing or former use; and (2) 14 CCR 15061(b)(3) as an activity that, with certainty, does not have an effect on the environment.

HEALTH IN ALL POLICIES (HiAP): Promoting locally owned businesses helps support social and community bonds, improves community economic resilience, and generally aligns business activities with local culture and initiatives. While these factors may not have direct impact on public health, they have been shown to have a positive impact on the social determinants of health and support overall well-being in the community. Locally owned businesses may also reduce commute times and pollution from owner operators, which supports reduction in greenhouse gas emissions.

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 proposed action will not impact the City’s General Fund. Lease revenues from kiosks are maintained in the Kiosk Maintenance Fund (Fund 123), where they help fund repairs, maintenance, and contributions to Downtown Programs managed by the Downtown Management Corporation. The proposed lease includes a minimum annual rent of $3,600 per year or six percent (6%) of sales, whichever is greater.

Prepared By:

Jennifer Shelton
Development Manager
Submitted By:

Bonnie Lipscomb
Deputy City Manager
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. KIOSK LEASE AND LICENSE AGREEMENT WITH ROCKIN’ ROLLS – CINNAMON ROLLS LLC.PDF

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KIOSK LEASE AND LICENSE AGREEMENT
This Kiosk Lease and License Agreement (“Agreement”) is entered into by and between the City of Santa Cruz, a municipal corporation (hereinafter, “Landlord”) and Rockin’ Rolls – Cinnamon Rolls LLC, a limited liability company (hereinafter “Tenant”). The effective date of this Agreement shall be ______________ (“Effective Date”). Landlord and Tenant are sometimes hereinafter referred to individually as “Party” and collectively as “Parties". Landlord and Tenant agree to all terms and conditions of this Agreement as set forth herein.

ARTICLE 1. BASIC AGREEMENT PROVISIONS
The following are basic terms applicable to this Agreement. 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. “Rockin’ Rolls – Cinnamon Rolls” (Section 8.01).

1.02 Commencement Date. November 1, 2026 (“Commencement Date”) (Section

3.01).

1.03 Term. One (1) year, as of the Commencement Date and terminating no later than 11:59 p.m. on October 31, 2027 (“Expiration Date”), unless sooner terminated or otherwise extended as permitted under this Agreement (Article 3).

1.04 Premises and License Area. Kiosk located at 1130 K1 Pacific Avenue, Santa Cruz, CA 95060 and adjacent License Area. (Section 2.02, Exhibit A); consisting of approximately sixty (60) square feet (Section 2.02).

1.05 Rent.
(a) “Minimum Base Rent.” $300/month or equal to $3,600.00/year, subject to annual increase (Section 4.05).
(b) “Percentage Rent.” Six Percent (6%) of Gross Sales (Section 4.01).

1.06 Use of Premises and License Area. Tenant shall use the Kiosk and License Area for food service sales of those items listed in Exhibit B (Limitations on Use) and for no other purposes without Landlord’s prior written consent. (Section 8.01).

1.07 Hours of Operation. Tenant’s hours of operation unless otherwise agreed in writing by Landlord, shall be at least seven (7) hours per day between the hours of 6:00 AM and 12:00 AM, five (5) days a week. Days of operation shall include the weekend year-round. (Section 8.02).

1.08 Security Deposit. $600.00. (Article 7).

1.09 Tenant’s Deadline to Complete Tenant’s Work. INTENTIONALLY OMITTED.

1.10 Guaranty of Agreement. Rachele Chenowith.

1.11 Tenant’s Address for Notices.

Rachele Chenowith
711 Seabright Avenue, 7

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Santa Cruz, CA 95062
Phone: (559) 760-2244
Email: [email protected]

1.12 Landlord’s Address for Notices.

City of Santa Cruz
Attn: Jennifer Shelton
337 Locust Street
Santa Cruz, CA 95060
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/LICENSE OF PREMISES AND LICENSE AREA

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 Agreement, 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. Landlord leases to Tenant and Tenant leases from Landlord in accordance with the terms and conditions set forth in this Agreement, the Premises described in Section 1.04 (Premises and License Area), as more particularly described and depicted in Exhibit A (Premises and License Area) (the “Premises”).

2.03 License Area of Adjacent Public Right of Way. Landlord is the owner of the public right of way surrounding and adjacent to the Premises described herein. Tenant desires to obtain the permission of Landlord to perform certain acts upon and within the public right of way.

Landlord, as Licensor, grants to Tenant, as Licensee, a license for the use during business hours of a portion of the public right of way surrounding the kiosk (“License Area”) for the purpose of walk-up business, pick-ups and deliveries, and outdoor seating consisting of tables and chairs in connection with Tenant’s operation of its business at the Premises. The License Area is marked and described on the attached Exhibit B (Limitations of Use). The license is non-exclusive, nonassignable, and terminable and revocable at the will of Landlord.

The areas governed by the license are not a part of the leased Premises. Tenant, as Licensee, does not hold any estate or interest in the property of the City in the public right of way by virtue of this license. The City may formulate rules, conditions of license, regulations and a permit process for the use of the public property and right of way area surrounding and in close proximity to Pacific Avenue kiosks and Premises, and the uses of other areas in the public right

11.4 3
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way of the City. The areas surrounding the Premises may be governed thereby and Tenant agrees to be bound by these rules and regulations and obtain such permits or licenses as may be required. These areas may be governed by this Agreement to the extent it is not in conflict with City rules, regulations, and permit requirements as they now or hereafter exist.

Landlord shall at all times retain exclusive final authority over the public right of way, including the License Area. Landlord shall have the right to perform any and all acts of construction and maintenance in the public right of way, including the License Area, as fully and completely as if the license for the use of the License Area did not exist. Landlord will not be liable to Tenant by reason of any injury to or interference with Tenant’s business or property for any inconvenience or damages caused thereby.

Landlord retains the right at its sole discretion to terminate or revoke said license at any time. Termination or revocation of the Licensee’s use of the License Area is not grounds for termination of the Agreement. Termination or restriction of use the use of the License Area does not reduce rental payments due under the Agreement.

The License Area will be managed similar to the management of the City’s Café/Retail Extension Areas. The Café Extension Area Policies and Procedures are attached as a frame of reference for the management of the License Area as Exhibit D (“Café Extension Areas Policies and Procedures”). Exhibit D (Café Extension Area Policies and Procedures) notwithstanding, Landlord shall have final determination as to all policies and procedures with respect to the License Area.

2.04 Reservations of Leasehold Rights. This Agreement 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 Agreement confers no rights either with regard to the subsurface of the 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 Agreement.

2.05 Condition of Premises. Tenant accepts the Premises and the License Area 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 and License Area. 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 and License Area may no longer be allowed.

Tenant acknowledges that:
(a) Tenant has determined by Tenant’s own independent investigation, that the Premises and the License Area are suitable for Tenant’s intended use, and Tenant assumes all responsibility for the investigation related to Tenant’s occupancy and use of the Premises and the License Area; and
(b) neither Landlord nor its employees, officers, officials, agents or representatives have made any representations or warranties (express or implied) as to the condition of the Premises and License Area or as to the present or future suitability of the Premises and License Area for the conduct of Tenant's business or for any purposes whatsoever. Any work required by Tenant to prepare the Premises for

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Tenant’s occupancy shall be paid for by Tenant and shall be subject to all of the terms and conditions set forth in this Agreement.

2.06 Reserved.

2.07 Relocation of Premises. Landlord shall have the right, at Landlord’s sole discretion, during the term of this Agreement and any extensions thereof, to relocate Tenant to other premises (“New Premises”) 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 2.08(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 sixty (60) days’ notice of Landlord’s intention to relocate the Premises (“Notice of Intent to Relocate”) and at least sixty (60) 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 tenday period, this Agreement 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 and License Area.

Should Tenant accept the New Premises within such ten-day period, Tenant shall have sixty (60) days, or extended at Landlord’s discretion, 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 5) 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) Tenant shall be responsible for vacating the current Premises and the License Area 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. (d) 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.

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(e) 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.
(f) Tenant shall be responsible for the transfer of all Utilities and Services (as defined in Article 11 below) to the New Premises.
(g) 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 and/or License Area 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 this Agreement.
(h) Effective as of the Relocation Date, and notwithstanding any adjustments allowed under this Agreement, Tenant’s Minimum Base Rent at the New Premises shall be determined by multiplying the Premise’s annual square foot rent in 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). (i) Pursuant to Section 20.32 (Amendments to Agreement), Landlord and Tenant shall execute an amendment to this Agreement 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 Agreement shall refer to the New Premises.
(j) 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 Agreement. 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 Agreement (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 Agreement.

3.02 Extension of Term. If Tenant fully and faithfully performs all of the terms and conditions of this Agreement and is not in default under this Agreement, Tenant may, at Landlord’s sole option, request to extend the Initial Term of this Agreement for up to two (2) additional one (1) year periods (the “Extended Term”) immediately following the expiration of the Initial Term (or Extended Term, if applicable) on the following terms and conditions:

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(a) 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 or Extended Term (if applicable). 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 Agreement shall expire at the end of the applicable Term. Tenant shall have no other rights to extend the Term. (b) All terms and provisions contained in this Agreement shall apply during any Extended Term, except that the amount of the Minimum Base Rent will be adjusted as provided in Section 4.05 (Adjustments to Minimum Base Rent). (c) If Tenant has failed to cure a default in accordance with Article 15 (Default) of this Agreement, at any time during the Initial Term or Extended Term (if applicable) of this Agreement, Tenant’s Extension Request shall be ineffective and this Agreement shall expire at the end of the applicable Term, unless otherwise terminated earlier in accordance with this Agreement. However, 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 Agreement). (d) Any extension granted to Tenant in this Agreement 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 and 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 PM (PST) on the Expiration Date specified in Section 1.03 (Term), unless sooner terminated or otherwise extended as permitted under this Agreement.
(b) If Tenant should remain in possession of the Premises or the License Area after the expiration or earlier termination of the Term of this Agreement in the absence of a new agreement, or after Landlord has declared a forfeiture of this Agreement as a result of Tenant’s default, then such holding over shall be construed as a tenancy from month-to-month, subject to all of the terms, conditions, provisions and obligations of this Agreement at the time this Agreement expires or upon Tenant’s default, as the case may be, except the Minimum Base Rent shall be one and one-half (1.5) 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 or License Area after the expiration of the Term of this Agreement. Under a month-to-month tenancy, Tenant may terminate this Agreement 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 and Leasehold Interest.

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(a) Surrender. On the expiration or earlier termination of this Agreement, Tenant shall, at Tenant’s sole expense:
(i) surrender and vacate the Premises and License
Area and all improvements in, on or about the Premises, to Landlord in a clean, safe, sanitized, and in good order and condition, except for ordinary wear and tear; and,
(ii) remove all of Tenant’s personal property and
equipment; and repair all damage resulting from such
removal; and
(iii) restore the Premises and License Area to the
condition existing as of the first day of the Term or better, except as the Premises were repaired, rebuilt, restored, altered, and/or added to as permitted or required by the provisions of this Agreement, and reasonable wear and tear expected; and,
(iv) render the Premises and License Area safe and free from debris and hazards, and without any reduction in value resulting from any conduct in violation of this Agreement; and
(v) surrender in writing or by legal instrument any
leasehold interest or claim to the Premises and License Area, improvements, equipment, fixtures, and use thereof; and
(vi) surrender all keys to the Premises to Landlord.

Tenant’s abatement and removal of its personal property and equipment 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 and License Area as permitted or required under this Agreement at Tenant’s sole cost and in a manner deemed appropriate by Landlord.
(c) No Implied Acceptance of Surrender. Landlord's acceptance of Tenant's surrender of the Premises and License Area 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 or the License Area, removing and abating Tenant’s personal property and equipment, and/or restoring the Premises and License Area. This indemnification and hold harmless provision extend 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 and the License Area at the expiration or earlier termination of this Agreement as provided in this Agreement.

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(e) Survival of Surrender Obligations. Tenant's obligations under this section will survive the expiration or termination of this Agreement.

3.05 Quit Claim Deed. At any time after the expiration or earlier termination of this Agreement, upon Landlord’s written request, Tenant shall execute, acknowledge and deliver to Landlord a good and sufficient deed whereby all right, title and interest of Tenant in and to the Premises, and other improvements are quitclaimed to Landlord. Should Tenant fail or refuse to deliver the required deed to Landlord within fifteen (15) days after Landlord’s written demand therefore, 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 Agreement and of all right of Tenant in and to the Premises and other improvements.

ARTICLE 4. RENT

4.01 Rent. Beginning with the Commencement Date, Tenant agrees to and shall pay Landlord the greater of the Minimum Base Rent as described in Section 1.05 (Rent) or Percentage Rent as described in Section 1.05 (Rent). The Minimum Base Rent shall be adjusted annually (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 (as defined in Section 4.10 (Additional Rent). “Rent” as used in this Agreement shall mean the applicable Minimum Base Rent, Percentage Rent, and Additional Rent.

4.02 Commencement of Rent.
(a) Tenant’s obligation to pay the Rent under this Agreement shall start on the date of Commencement of the Term as set forth in Section 1.02 (Commencement Date).
(b) 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 the fifteenth (15th) day of the month 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. 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 Sales and Percentage Rent (the “Monthly Statement”) (Exhibit E) (Statement of Gross Income and Percentage Rent), 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 calendar month. Said statement shall be in a form substantially similar to that as set forth in Exhibit E (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.

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4.05 Adjustments To Minimum Base Rent. The Minimum Base Rent specified herein shall each be subject to adjustment at each anniversary of the Commencement Date including all extensions thereto (the “Adjustment Date”) as follows:
(a) The base for computing the adjustment is the Consumer Price Index, All Urban Consumers, San Francisco-Oakland-Hayward, All Items (1982-1984 = 100), as published by the United States Department of Labor, Bureau of Labor Statistics (“Index”), which is in effect on the date of the commencement of the term (“Beginning Index”). The Index published most immediately preceding the Adjustment Date in question (“Extension Index”) is to be used in determining the amount of the adjustment.

If the Extension Index is increased over the Beginning Index, the Minimum Base Rent for the following year (until the next rent adjustment) shall be set by multiplying the preceding year’s Minimum Base Rent set forth above by a fraction, the numerator of which is the Extension Index and the denominator of which is the Beginning Index. (b) In no case shall the Minimum Base Rent be less than the amount set forth in Section 1.05 (Rent), nor shall the Minimum Base Rent be less than the Minimum Base Rent in effect immediately prior to the adjustment date then occurring. On adjustment of the Minimum Base Rent as provided in this Agreement, Landlord shall notify Tenant in writing of the new Minimum Base Rent. If the Index has changed so that the base differs from that in effect on the Commencement Date, the Index shall be converted in accordance with the conversion factor published by the United States Department of Labor, Bureau of Labor Statistics. If the Index is discontinued or revised during the term of this Agreement, such other government index or computation with which it is replaced shall be used in order to obtain substantially the same result as would be obtained if the index had not been discontinued or revised. (c) 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 any of the rents owed by Tenant.

4.06 Late Charges and Interest on Unpaid Rent; Maximum Legal Interest; Non- Sufficient Funds.
(a) 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 Agreement, the exact amount of such costs being extremely difficult and impracticable to fix. Such costs include, without limitation, processing and accounting charges, and late charges that may be imposed on Landlord by the terms of any encumbrance and/or note secured by any encumbrance covering the Premises.
(b) Therefore, if any installment of Rent 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

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to the overdue amount, nor prevent Landlord from exercising any of the other rights and remedies available to Landlord under this Agreement or as provided by law. (c) 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 Agreement 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 and License Area, 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.
(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 Agreement 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

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shall be used by Landlord only to verify and audit compliance with this Agreement, 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 Agreement without the prior written consent of Landlord will cause Landlord to incur losses not contemplated by this Agreement, 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 of this Agreement or vacates or abandons the Premises prior to the expiration of the term, Landlord shall have the right, at its option, to collect as liquidated damages an amount equal to one-thirtieth (1/30) of the monthly installment of Minimum Base Rent 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 other obligation under this Agreement. By executing this Agreement, 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 Agreement 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 Section 3275 or 3369, but is intended to constitute liquidated damages to Landlord pursuant to Civil Code Section 1671.

4.10 Additional Rent. All amounts which Tenant is required to pay pursuant to this Agreement (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 (Joint Metered Utilities). Unless this Agreement 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. If Tenant fails to pay when due any Additional Rent due under this Agreement, 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 Agreement or by law in the case of nonpayment of Minimum Base Rent or Percentage Rent.

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 Agreement, without abatement, deduction, or offset,

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all federal, state or local taxes, assessments, license fees, and other charges that are levied and assessed against Tenant’s personal property installed or located in or on the Premises, and that become payable during the term.
(b) Landlord hereby gives notice to Tenant, pursuant to California Revenue and Tax Code Section 107.6, that this Agreement 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 Agreement, 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 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.

For the purpose of this Agreement, “Tenant Improvements” shall mean any fixtures, furnishings, equipment, or modifications to the Premises or the License Area installed or caused to be installed by Tenant or otherwise not present on the Premises or the License Area prior to Tenant’s occupancy.

5.03 Parking and Business Improvement Area Zone and Charges. Tenant shall pay, as applicable, 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 established by the City of Santa Cruz or other such applicable local agency. 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, as applicable, 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 City of Santa Cruz or other such applicable local agency, including 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

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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 of Santa Cruz business license is required concurrent or prior to execution of this Agreement. Tenant agrees to provide proof of a current City of 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 kiosk building systems (plumbing, electrical system, etc.). 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.

ARTICLE 7. SECURITY DEPOSIT

7.01 Amount of Deposit. Concurrently with the Effective Date of this Agreement or within a timeline approved by Landlord, Tenant shall deposit with Landlord the sum set forth in Section

1.08 (Security Deposit) herein (the “Security Deposit”). 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 Agreement 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.

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 Agreement, or otherwise defaults with respect to the provisions of this Agreement, 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 breach of this Agreement.

7.03 Return of Security Deposit. If Tenant fully performs all of its duties and obligations under this Agreement, complies with all of the terms, covenants and conditions of this Agreement, and promptly pays when due all of the Rent herein provided and all other sums payable by Tenant under this Agreement, Landlord will return to Tenant the remaining portion of the Security Deposit within thirty (30) days after the expiration or earlier termination of this Agreement, Tenant’s vacation of the Premises and the License Area, and Landlord’s receipt of possession of the Premises in accordance with the provisions of this Agreement.

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7.04 Increase of Security Deposit. If Tenant defaults under this Agreement more than two (2) times in any twelve (12) month period, irrespective of whether or not such default is cured, then Landlord may with ten (10) days after written demand increase the Security Deposit by an amount up to two (2) times the amount specified in Section 7.01 (Amount of Deposit).

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, 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 and the License Area under the trade name, and solely for the use specified, in Section 1.01 (Tenant Trade Name), Section

1.06 (Use of Premises and License Area) 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 now existing or which shall exist.
(b) Tenant shall use the Premises and the License Area solely for the purposes of operating, maintaining and managing for profit as described in Section 1.06 (Use of Premises and License Area). Tenant’s business shall be established and conducted throughout the Term in a clean, 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 and use the Premises and the License Area 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 in downtown Santa Cruz and approved by the City of Santa Cruz’s Economic Development and Housing 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

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(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 surrounding tenants or their customers.

8.02 Compliance with Laws; Permits. From and after the Effective Date of this Agreement and throughout the entire Term of this Agreement and operation of Tenant’s business, Tenant shall, at Tenant's sole cost and expense, observe, comply with and conform to all laws, rules, regulations, 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 Agreement 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).

Tenant further agrees to comply with all rules and regulations imposed by the City's Fire, Police, Planning, Water, Public Works, Finance, and Economic Development departments and divisions, and any other departments and divisions in existence now or at any time in the future.

Any use permitted by this Agreement, as well as any construction, improvement, addition, alteration, or modification of the Premises or the License Area 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 Cruz Charter and Municipal Code, Applicable Requirements and Laws. Tenant is advised and understands that in addition to this Agreement, 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 Agreement, Tenant shall be responsible for obtaining, maintaining, and complying with, 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 Agreement, including, without limitation, those necessary for the construction and operation of any Tenant Improvements, and all related uses.

8.03 Prohibited Uses; No Illegal Purposes or Nuisance. Tenant shall not use, or permit the Premises, the License Area, (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, the License Area, or any improvement located (or to be located thereon), nor acts done, which will increase the existing

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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 the License Area (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 the License Area (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 or the License Area 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.

8.04 Operation of Business/Hours of Operation. During the Term of this Agreement, 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 forth in Section 1.06 (Use of Premises and License Area), 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.

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 Agreement, 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 Agreement for any reason, or abandon the Premises, prior to the expiration of the Term of this Agreement 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 Agreement, 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. 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.

8.06 Cooperative Retail Management. As a condition of this Agreement, Tenant shall be a member of any existing or future Cooperative Retail Management entity (“CRM”) organized for Tenants, property owners, retailers and City government in downtown Santa Cruz and of which Landlord is or will be a member. Tenant shall abide by the rules and regulations of the CRM entity. The objective of CRM shall be for retailers to cooperate in such areas as business hours, promotion, participation in special marketing events, maintenance of appearance of storefront windows and signs, and such other activities which relate to the overall economic retail environment of the downtown.

8.07 Hazardous or Toxic Materials/Indemnification of Landlord.

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(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 the License Area (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 License Area (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 License Area (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 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 License Area (or the improvements located or to be located thereon), damages arising from any adverse impact on marketing of space in downtown Santa Cruz, 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

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local governmental authority, the State of California or the United States Government.

The term “Hazardous Material includes but is not limited to:
(i) Any “hazardous substance,” as that term is defined
in the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (CERCLA) (42
USC §§9601–9675);
(ii) “Hazardous waste,” as that term is defined in the
Resource Conservation and Recovery Act of 1976 (RCRA)
(42 USC §§6901–6992k);
(iii) Any pollutant, contaminant, or hazardous,
dangerous, or toxic chemical, material, or substance, within the meaning of any other applicable federal, state, or local law, regulation, ordinance, or requirement (including
consent decrees and administrative orders imposing liability or standards of conduct concerning any hazardous,
dangerous, or toxic waste, substance, or material, now or hereafter in effect);
(iv) Petroleum products;
(v) Radioactive material, including any source, special nuclear, or by‑product material as defined in 42 USC
§§2011–2297h–13;
(vi) Asbestos in any form or condition; and
(vii) Polychlorinated biphenyls (PCBs) and substances
or compounds containing PCBs.

8.08 Americans With Disabilities Act. Tenant acknowledges and expressly accepts full responsibility and shall incur all costs and expenses (non-structural in nature) for compliance with the requirements of the Americans with Disabilities Act (“ADA”) and any other applicable federal, state, or local laws regarding the accessibility of the Premises (and any improvements located thereon). Tenant agrees to release, indemnify, defend and hold Landlord (and its officers, employees, representatives and agents) harmless for any claim, loss, expense or liability arising from or related to Tenant’s failure to fully comply with applicable accessibility laws and/or this Section 8.09.

8.09 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 landlord may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the 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.”

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Unless otherwise expressly stated in this Agreement and subject to the terms of this Agreement, 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.

ARTICLE 9. IMPROVEMENTS, ALTERATIONS AND ADDITIONS

9.01 Consent. Tenant shall not make any improvements, alterations, additions, or repairs to the Premises without Landlord’s prior written consent (which consent may be withheld or delayed in Landlord’s sole and absolute discretion). 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. 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 Agreement, including but not limited to, the provisions of this Article 9.

9.02 Notices. 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 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.

9.03 Trade Fixtures. Tenant may install trade fixtures, display items, machinery or other trade equipment in conformance with this Article 9 and all laws. With the exception of furniture, equipment and trade fixtures that may be removed by Tenant without causing damage to the Premises, all improvements, alterations, or additions shall become part of the realty and belong to Landlord at expiration or earlier termination of this Agreement. 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 deemed a part of the realty and belong to Landlord at expiration or earlier termination of the Agreement. Tenant shall repair any damage caused by such removal.

9.04 Design Standards. INTENTIONALLY OMITTED.

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9.05 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. (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 all applicable laws and regulations, including but not limited to Santa Cruz Municipal Code Chapter 24.12, Part 4. 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 applicable laws and regulations, 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 or amend any laws or regulations relating to signage for any reason, at any time, including without limitation changes in any governmental requirement. 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 laws or regulations relating to signage.

9.06 Restoration. Except as otherwise provided herein, upon expiration or earlier termination of this Agreement, Tenant shall return the Premises and the License Area to the same condition as existed at the date of execution of the Agreement, except as the Premises were repaired, rebuilt, restored, altered, and/or added to as permitted or required by the provisions of this Agreement, reasonable wear and tear excepted. In addition, Landlord, at its election, may require Tenant to remove, at Tenant’s sole cost and expense, any improvements, alterations or additions approved by Landlord in accordance with this Agreement. 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.

9.07 Kiosk Windows. Tenant is prohibited from painting any and all windows of the kiosk Premises without the prior written consent of Landlord. At Landlord’s discretion, Tenant shall cause to be removed any coverings, coatings, stickers or signage affixed to the windows, that

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may obstruct visibility, or otherwise be of detriment to the Pacific Avenue streetscape and community enjoyment thereof.

9.08 Ownership of Improvements.
(a) Any improvements existing on the Premises and License Area at the Effective Date of this Agreement shall remain Landlord’s property. Landlord shall also own any improvements constructed on the Premises by Tenant or Landlord. (b) Landlord owns the Premises and License Area.
(c) Upon expiration or earlier termination of this Agreement from any cause, all improvements on the Premises and License Area that 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 and License Area 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 Agreement.
(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 and License Area at the expiration or earlier termination of this Agreement 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 License Area and all improvements constructed thereon to Landlord at the expiration of the Term or earlier termination of this Agreement, 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 License Area and the permanent improvements and fixtures located thereon. Tenant may remove any movable personal property and equipment, provided such removal is consistent with Section 9.03 (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 9.03 (Trade Fixtures) above. Notwithstanding anything contained in this Agreement 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 Agreement, Landlord shall have no liability or obligation to pay compensation for any improvements made to the Premises and License Area.

ARTICLE 10. MAINTENANCE AND REPAIRS

10.01 Landlord’s Maintenance Obligations.
(a) Landlord shall maintain in good condition and repair the foundations, roofs, 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, 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

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Rev. 09.01.2026
of Tenant’s failure to observe or perform its obligations and/or any provisions contained in this Agreement 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) Tenant shall be solely responsible for all repairs to and maintenance of the Premises and improvements constructed by Tenant which are not expressly allocated to the Landlord under this Agreement or by separate written Agreement between the Landlord and Tenant.
(c) 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 the periodic cleaning of awnings and of the roof of the building in which the Premises are located as set forth elsewhere in this Agreement.

Landlord agrees to exercise reasonable effort to obtain cleaning and maintenance services at a reasonable and market rate.
(d) 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 Agreement.

10.02 Landlord’s Right of Entry. Landlord, its agents, contractors, employees, representatives, contractors, and assigns may enter the Premises and/or License Area at all reasonable times to:
(a) Examine the Premises or the License Area and improvements thereon;
(b) Perform any obligation of, or exercise any right or remedy of, Landlord under this Agreement;
(c) Make improvements, alterations, additions, or repairs to the Premises or the License Area as Landlord deems necessary;
(d) Perform work necessary to comply with laws, ordinances, rules or regulations of any public authority or any insurance underwriter; (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 or the License Area 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

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Rev. 09.01.2026
of such entry when practical, except in the case of an emergency, when such entry shall be made summarily by Landlord.

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 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. Except as provided elsewhere in this Agreement or assigned to Landlord, Tenant, at its sole cost and expense, shall clean and maintain the Premises and License Area, and the sidewalks appurtenant to the Premises (free and clear of all obstacles), in good order, condition and repair and shall make all replacements necessary to keep all portions of the Premises and License area in a safe, clean, neat and sanitary condition, including, but not limited to sweeping and trash pickup on a minimum daily basis and steam cleaning or pressure washing at Landlord’s request. Without limiting the foregoing, Tenant’s maintenance obligations shall include, without limitation, the following:
(a) 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. (b) Maintaining, without limitation, all plumbing fixtures and the plumbing system in the Premises and improvements located (or to be located) thereon. (c) Steam-cleaning or pressure washing the License Area on a quarterly basis or upon Landlord’s request.
(d) Keeping and maintaining the sidewalk, 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.
(e) 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. (f) Handling, recycling and/or disposing of all waste on, in, at, about, or from or within the Premises consistent with City’s applicable rules and regulations and in accordance with Section 10.05 (Trash and Recycling). (g) 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. (h) 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

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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, 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.
(i) Tenant shall, at its own cost and expense, comply with all requirements of the Landlord’s insurance underwriters and any other governmental authority having jurisdiction thereof, regarding the installation and periodic maintenance of fire suppression systems or apparatus.

Tenant shall promptly, at its expense, repair (and make replacements as needed) any damage to the Premises caused by Tenant, its agents, employees, customers, invitees, subtenants, assignees or concessionaires or caused by the installation or removal of Tenant’s personal property. All replacement equipment shall be of a quality equal to or exceeding that of the original equipment or improvements. To the greatest extent feasible, Tenant shall endeavor to replace all equipment or improvements with models that improve water, resource, and energy efficiency, or such features as will reduce the overall environmental impact of the business and kiosk space. Should Tenant fail to make these repairs and replacements for a period of three (3) days after delivery of a written demand by Landlord, or should Tenant commence, but fail to complete, any repairs or replacements within a reasonable time after written demand by Landlord, Landlord shall have the right 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 incurred by Landlord in making such repairs or replacements, including an administrative overhead fee of twenty percent (20%), 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 own expense, comply with all requirements of Landlord’s insurance underwriters and any other governmental authority having jurisdiction thereof, regarding the installation and periodic maintenance of fire suppression systems or apparatus.

10.04 Windows. Tenant agrees to maintain the windows properly and in good repair, free of leaks, defects, cracks, shattering, or any other defect at Tenant’s sole cost and obligation.

Tenant will immediately notify Landlord of any window damages and will immediately cause the windows to be repaired. Tenant will clean the windows using an appropriate cleaning medium that will not etch, scratch, or cloud or fog the 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 selfinsure 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 Trash and Recycling. Tenant is solely responsible for removing its waste and recycling generated as a result of its business operations. Tenant shall obtain refuse service from Santa Cruz Municipal Utilities. Tenant agrees to participate, to the greatest extent possible, in

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all existing or future recycling activities initiated or arranged by Landlord or by other City of Santa Cruz department or entity.

Tenant may not dispose of its business waste and recycling in the Pacific Avenue waste and recycling receptacles, however, Tenant’s customers may do so. In the event, that excessive dumping of business waste requires Landlord’s removal of said waste, over and above standard waste and recycling of City waste disposal bins, Landlord may charge the actual cost of additional cleanup to Tenant. Tenant shall pay such charges with the next monthly rent.

ARTICLE 11. UTILITIES AND SERVICES

11.01 Separate Charges. Tenant shall make all arrangements and be solely responsible for obtaining and paying water, communication service, refuse disposal, sewer, internet, and other utilities and services (collectively “Utilities and Services”) for the Premises and/or improvements located or to be located thereon, except for the services described in Section 11.04 (Electricity Use Included). 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 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, 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 utility and services charges which are jointly metered or charged, excluding electricity.

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 shared 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 utility and services being furnished to the Premises, and no such failure or interruption shall entitle Tenant to terminate this Agreement.

11.04 Electricity Use Included. The amount of the Minimum Base Rent specified in this Agreement includes use of electricity based upon historical average usage by former kiosk Tenants. Tenant agrees that Landlord may review Tenant’s consumption of electricity, and the Minimum Base Rent shall be adjusted annually by an amount equal to the estimated increase or decrease in Landlord’s costs for electricity. Landlord shall have the exclusive right to determine the amount of this adjustment and Tenant, upon reasonable request, shall be provided a computation as setting forth the adjustment.

In the event Landlord utilizes (sub)meter readings to measure actual electrical use by Tenant, Landlord reserves the right to charge Tenant the cost for electrical usage in excess of ten percent (10%) greater than the average monthly usage among all active kiosk Tenants.

Tenant shall endeavor to manage electrical costs through the use of energy efficient equipment, light bulbs, appliances, or other such point of use fixtures, as available; and, shall

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turn-off all non-essential, non-security or food safety related lighting or equipment when not in use.

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 Agreement, and to the fullest extent permitted by law, Tenant agrees to indemnify, release, defend (with counsel reasonably satisfactory to Landlord) and hold harmless Landlord, its officials, officers, employees, volunteers, successors, assigns, and agents (“Indemnified Parties”) from any loss, claim, liability, penalty, demand, action, damage, judgment, fine, cost, expense, including attorney’s fees and court costs for any injury or 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 obligations or rights of Tenant, its employees, and agents under this Agreement; (ii) the acts or omissions or negligence or willful misconduct of Tenant or its officers, directors, employees, agents, representatives, invitees, customers, contractors, subcontractors, suppliers, trespassers, or others acting on Tenant’s behalf or under Tenant’s authority or control as related to this Agreement; (iii) the occupancy and/or use of the Premises and/or License Area (including, but not limited to any improvements or personal property located therein) by Tenant, or its officers, directors, employees, agents, representatives, invitees, customers, contractors, subcontractors, suppliers, trespassers, 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 Agreement by Tenant; and/or (v) any construction or other work undertaken by Tenant on the Premises or the License Area (including any Tenant Improvements) (individually, each a “Claim” and, collectively “Claims”). Tenant’s obligations in this Section, however, shall not extend to any Claims that are caused by the sole negligence or willful misconduct of Landlord, its officials, officers, employees, volunteers or agents, 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 Agreement shall survive the termination of this Agreement 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 or the License Area) 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 Survival. The indemnification provisions herein and any other indemnification provided elsewhere in this Agreement shall survive the termination of this Agreement.

12.03 Insurance Requirements. Prior to the beginning of and throughout the duration of the Agreement, Tenant will maintain and comply with the Insurance Requirements as set forth in Exhibit F (Insurance Requirements).

12.04 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 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 the direct result of Landlord’s negligence, and Tenant waives any claim against Landlord with respect to such property. Landlord shall not be liable to Tenant, Tenant’s employees or representatives for any injury or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, water, rain or leaks from any part of the Premises or from the pipes, appliance or plumbing works or from the roof, street or subsurface or from any other places or by dampness or by any other cause of whatsoever nature. Landlord shall not be liable to Tenant,

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Tenant’s employees or representatives for any such damage caused by other Tenants or persons in the Premises, occupants of adjacent property, 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 subrogation claims by Tenant’s insurance carriers, unless such damage shall be caused by the willful act or gross neglect of Landlord.

12.05 Notice by Tenant. Tenant shall give immediate 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 fixtures or equipment therein.

ARTICLE 13. PARKING

13.01 No Parking Provided. No provisions for parking are contemplated with this Agreement. Tenant, and its agents, representatives, and assigns, are responsible for all transportation of food, materials, and personnel to and from the premises, together with conformance to all City of Santa Cruz parking regulations and any charges, fees, or fines, as may apply for failure to comply with said regulations. In no event shall, Landlord be responsible for any loss, damage to, or impoundment of any vehicles employed by Tenant, and its agents, representatives, and assigns.

Information on parking regulations and public parking facilities are provided on the City’s webpage and can be reached at the following URL:
http://www.cityofsantacruz.com/government/city-departments/public-works/parking-services 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 Agreement or in the Premises or the License Area, 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 Agreement, the term “Transfer” means any attempt to sell, convey, assign, sublease, sublicense, transfer, mortgage, pledge, grant, hypothecate or encumber this Agreement or any interest in this Agreement, or the Premises or the License Area or any portion thereof or the buildings and improvements thereon, and any attempt to sublet, license or grant any concession to the Premises or the License Area, 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 Agreement (and any applicable Extended Term) by exercising any option(s) to extend or renew the Initial Term (or Extended Term, as applicable) of this Agreement granted herein that have not already commenced at the time of said assignment, sublease or other Transfer.

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(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 sixty (60) 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
(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 Agreement.

Involuntary Assignment. No interest of Tenant (or Tenant’s shareholders as of the Effective Date) in this Agreement shall be assignable by operation of law including, without limitation, the Transfer of this Agreement by testate or intestate succession, except to Tenant’s heirs at law in the first degree. 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 Agreement shall not be treated as an asset of Tenant.

If a writ of attachment or execution is levied on this Agreement, 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.

14.03 Consent Required. Tenant shall not, without Landlord’s prior written consent, Transfer any interest in this Agreement 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 on Pacific Avenue 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 Agreement. 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.

14.04 Deemed Assignment. Any Transfer of this Agreement from Tenant by merger, consolidation, liquidation or sale of a controlling interest of corporate stock shall constitute an

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assignment. All Transfers shall require Landlord’s prior written approval pursuant to this Article

14. 14.05 Unauthorized Assignment or Sublease. Any attempted Transfer without Landlord’s required consent shall be void. Any assignee, subtenant, transferee or other recipient of Tenant’s interest in this Agreement is hereby notified that such Transfer is of no force or effect without Landlord’s prior written consent.

14.06 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.

14.07 Effect of Consent. Consent by Landlord to a Transfer shall not release Tenant from its primary liability under this Agreement. 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.

14.08 Surrender of Agreement. The voluntary or other surrender or a cancellation of this Agreement 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 default (“Event of Default”) of this Agreement 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 Agreement 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 Agreement 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 Agreement, the failure of Tenant to do or cause to be done any act as set forth in this Agreement, if the failure continues for fifteen (15) consecutive days after notice has been given to Tenant. However, Tenant shall not be in default of this Agreement 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 Landlord;
(e) Tenant causing, permitting or suffering, without the prior written consent of Landlord, any act when this Agreement requires Landlord’s prior written consent or prohibits such act;
(f) Any act of bankruptcy caused, suffered or permitted by Tenant. For the purposes of this Agreement, “act of bankruptcy” shall include any of the following:

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(i) Any general assignment or general arrangement for
the benefit of creditors;
(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 Agreement; or (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 Agreement.
(g) Failure to abide by any local, state, or Federal governmental laws or regulations; or
(h) Failure to maintain the Premises and/or License Area in a clean, safe, and attractive condition, as required by this Agreement; or (i) Failure to promptly remedy any maintenance issues within sixty (60) days of notice from Landlord.

15.02 Tenant Opportunity to Cure. Landlord shall by prior written notice first allow Tenant a reasonable opportunity to cure an Event of Default, except in cases of emergency, where Landlord may proceed without prior notice to Tenant.

15.03 Remedies. In the event of any breach or default by Tenant, Landlord may, at Landlord’s option, 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 Agreement 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 Agreement, 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 Agreement as it becomes due under this Agreement, and seek any other damages proximately caused by Tenant’s failure to perform the obligations under this Agreement;
(b) Landlord shall have the right to terminate this Agreement 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);

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(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);
(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 Agreement 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 Agreement shall not constitute a waiver of Landlord’s right to recover damages against Tenant, nor shall anything contained in this Agreement affect Landlord’s right to indemnification against Tenant for any liability arising prior to the termination of this Agreement (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 Agreement, 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 Agreement by Tenant, or an abandonment of the Premises by Tenant, shall not constitute a termination of this Agreement, nor of Tenant’s right of possession under this Agreement, unless and until Landlord elects to so terminate this Agreement, and until that time Landlord may (at Landlord’s option) continue this Agreement in full force and effect and shall have the right to recover Rent and all other payments to be made by Tenant under this Agreement as they become due; provided, that until Landlord elects to terminate this Agreement and Tenant’s right of possession under this Agreement, Tenant shall have the right to sublet the Premises or to assign interests in this Agreement, 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

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§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 Agreement pursuant to this Section 15.03 (Remedies), and Tenant has made an advance payment of Rent as defined in California Civil Code §1951.7, and Tenant has requested in writing that Landlord notify it of any initial reletting of the Premises, then and only then must Landlord notify Tenant pursuant to California Civil Code §1951.7(c) that the Premises have been relet.
(g) As security for the performance by Tenant of all duties and obligations under the Agreement, Tenant assigns to Landlord the right, power, and authority, during the continuance of this Agreement, to collect the Rent, issues, and profits of the Premises, reserving to Tenant the right, prior to any breach or default by Tenant under this Agreement, to collect and retain the Rent, (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 Rent, 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 Agreement, 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 Agreement 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 Agreement that any of the financial information furnished by Tenant and relied upon by Landlord in executing this Agreement is substantially untrue or inaccurate, Tenant shall be deemed to be in default under this Agreement, which default shall not be subject to cure, and which shall entitle Landlord to exercise all rights and remedies reserved to Landlord under this Agreement or otherwise available to Landlord at law. (j) Landlord may remove all Tenant’s property from the Premises or the License Area, 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 or the License Area, 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 Agreement, and any balance remaining after satisfaction of all obligations of Tenant under this Agreement shall be delivered to Tenant.

15.04 Covenants and Conditions. All covenants made by Tenant hereby are conditions of this Agreement; 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 Agreement. Landlord

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shall not be obligated to perform any covenant made by Landlord under this Agreement which accrues after the date of any default by Tenant hereunder.

15.05 Landlord’s Right to Perform. All terms, covenants and conditions of this Agreement 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, covenant or condition hereunder on its part to be performed, and such failure shall continue for fifteen (15) 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 or the License Area 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 common areas providing access to the Premises are damaged by a Casualty 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 Tenant or any of Tenant’s employees, contractors, invitees, guests, licensees, contractors or subtenants (“Tenant Party”), and if neither Landlord nor Tenant has elected to terminate this Agreement under Section 16.03 (Landlord’s Option to Terminate or Repair) or Section 16.04 (Tenant’s Option to Terminate), Landlord will, subject to available financial resources, promptly and diligently restore the Premises or such common areas providing access to the Premises, to substantially the same condition as existed before the Casualty, or to a condition that satisfies required building 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,

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Landlord’s election either to repair or to terminate the Agreement 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 Agreement or to effectuate repairs if:
(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 this Agreement as provided above, then Tenant may elect to terminate this Agreement 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 Agreement 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 this Agreement.

Tenant will not have an option to terminate if Tenant is in default under this Agreement 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 Agreement, 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 Section 16.05 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 this Agreement in connection with the Casualty). Tenant agrees to maintain business interruption insurance in amounts and with coverage no less than that required by Exhibit F (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

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the Agreement Term, Landlord has the option to terminate this Agreement by giving written notice to Tenant consistent with the Repair Period Notice.

16.07 Effective Date of Termination and Rent Apportionment. If Landlord or Tenant elects to terminate this Agreement 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 the date of 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 Agreement, except for those provisions that, by their terms, survive the expiration or earlier termination of this Agreement.

16.08 Waiver of Statutory Provisions. The provisions of this Agreement, 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 Agreement 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 Agreement 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 Agreement 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 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 Agreement.

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
This section intentionally omitted.

ARTICLE 19. CONDEMNATION

19.01 Condemnation. If the Premises or any portion thereof are taken under the power of eminent domain or sold under the threat of the exercise of said power (collectively “Condemnation”), this Agreement shall terminate as to the part taken as of the date the condemning authority takes title or possession, whichever first occurs. If more than twenty-five percent (25%) of that portion of the Premises is taken by Condemnation, Tenant may, at Tenant’s option, to be exercised in writing within ten (10) days after Landlord shall have given Tenant written notice of such taking (or in the absence of such notice, within ten (10) days after the

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condemning authority shall have taken possession) terminate this Agreement as of the date the condemning authority takes such possession. If Tenant does not terminate this Agreement in accordance with the foregoing, this Agreement shall remain in full force and effect as to the portion of the Premises remaining, except that the Minimum Base Rent shall be reduced in proportion to the reduction in utility of the Premises caused by such Condemnation. Except as provided herein, Landlord shall be entitled to receive all compensation and anything of value awarded, paid, or received in settlement or otherwise related to any Condemnation (“Award”) and Tenant irrevocably assigns and transfers to Landlord all rights to and interests in the Award, including, without limitation, any amount attributable to any excess of the market value of the Premises for the remainder of the Term over the present value as of the termination date of the Rent payable for the remainder of the Term (commonly referred to as the “bonus value” of the Agreement).

Notwithstanding the foregoing, Tenant shall have the right to make a separate claim in the Condemnation proceeding, as long as the Award payable to Landlord is not reduced thereby, for:
(a) the taking of the unamortized or undepreciated value of any leasehold improvements owned by Tenant that Landlord has the right to remove at the end of the Term and that Tenant elects not to remove; (b) reasonable removal and relocation costs for any leasehold improvements that Tenant has the right to remove and elects to remove (if condemner approves of the removal); and (c) relocation costs under California Government Code section 7262, the claim for which Tenant may pursue by separate action independent of this Agreement.

ARTICLE 20. MISCELLANEOUS

20.01 Attorneys’ Fees. In the event of any legal action, arbitration or proceeding between the Parties, the prevailing Party shall be entitled to reasonable attorneys’ fees and expenses as awarded by the court, arbitrator or other person deciding the legal action, arbitration or proceeding as a part of the judgment or award resulting therefrom.

20.02 Sale or Lease of the Premises by Landlord. Notwithstanding any provisions of this Agreement, Landlord may assign in whole or in part Landlord’s interest in this Agreement and may sell all or part of Landlord’s leasehold interest in the real estate of which the Premises are a part. In the event of any sale or exchange of the Premises by Landlord and assignment by Landlord of this Agreement, Landlord shall be entirely freed and relieved of all liability under all covenants and obligations contained in or derived from this Agreement or arising out of any act, occurrence or omission relating to the Premises which occurs after the consummation of such sale, exchange or assignment.

20.03 Liability to Successors. The covenants and conditions herein contained shall, subject to the provisions as to assignment, apply to and bind the heirs, successors, executors, administrators and assigns of the Parties hereto who shall be jointly and severally liable for the covenants contained herein. This Agreement shall be binding on and shall inure to the benefit of the heirs, executors, administrators, successors, and assigns of the Parties hereto, but nothing in this Section shall be construed as a consent by Landlord to any assignment of this Agreement or any interest in this Agreement by Tenant except as provided in Article 14 (Transfers, Assignment and Subletting) of this Agreement.

20.04 Interpretation. Whenever the singular number is used in this Agreement, the same shall include the plural. Reference to any gender shall include the masculine, feminine and neuter genders, and the word “person” shall include corporation, firm or association, when required by the content.

The headings or titles to the paragraphs of this Agreement are for convenience only and do not in any way define, limit or construe the contents of such paragraphs.

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This instrument contains all of the agreements and conditions made between the Parties with respect to the hiring of the Premises and may not be modified orally or in any manner except by a written instrument signed by all the Parties to this Agreement.

The laws of the State of California shall govern the validity, performance and enforcement of this Agreement. Any action or proceeding arising out of or relating to the Agreement shall be brought in a state or federal court situated in the County of Santa Cruz, State of California. If any provision of this Agreement is determined to be void by any court of competent jurisdiction, such determination shall not affect any other provision of this Agreement and such other provisions shall remain in full force and effect. If any provision of this Agreement is capable of two constructions, one which would render the provision void and one which would render the provision valid, the provision shall be interpreted in the manner which would render it valid.

Except as may otherwise be expressly stated, each payment required to be made by Tenant shall be in addition to and not in substitution for other payments to be made by Tenant.

20.05 Time. Time is of the essence in this Agreement.

20.06 Force Majeure. Any prevention, delay or stoppage due to strikes, lockouts, labor disputes, abnormal adverse weather conditions, acts of God, inability to obtain labor or materials or reasonable substitutes therefore, governmental restrictions, regulations or controls, enemy or hostile government action, civil commotion, fire or other casualty, and other causes beyond the reasonable control of and not caused by the fault or negligence of the Party obligated to perform, shall excuse the performance by such Party for a period equal to that resulting from such prevention, delay or stoppage. However, nothing contained in this Section shall excuse the prompt payment of Rent by Tenant as required by this Agreement. Tenant’s obligations to make payment for Rent and other charges pursuant to the terms of this Agreement shall be excused or reduced only as elsewhere expressly and specifically provided in this Agreement.

20.07 Notices. Any notice to be given by one Party to the other under this Agreement or any options to be exercised under this Agreement, shall be in writing. To the extent permitted by law, such notices shall be delivered via email to the addresses listed in Section 1.11 (Tenant’s Address for Notices) and Section 1.12 (Landlord’s Address for Notices).

If email is not permitted as a sufficient written notice pursuant to California law, the notice shall be delivered by 1) personal delivery in writing to the address set forth in Section 1.11 (Tenant’s Address for Notices) and Section 1.12 (Landlord’s Address for Notices), in which case notice is effective upon delivery; 2) overnight courier (i.e. Federal Express) to the address set forth in Section 1.11 (Tenant’s Address for Notices) and Section 1.12 (Landlord’s Address for Notices) with postage and charges prepaid and return receipt requested, in which case notice is effective when delivered; 3) priority U.S. Mail to the address set forth in Section 1.11 (Tenant’s Address for Notices) and Section 1.12 (Landlord’s Address for Notices), in which case notice shall be deemed delivered on the second business day after the deposit thereof with the United States Postal Service; or 4) as otherwise required by law. Either Party may change its notification contact information set forth in Section 1.11 (Tenant’s Address for Notices), Section 1.12 (Landlord’s Address for Notices) and Section 1.13 (Landlord’s Address for Payment of Rent) by providing written notice of any such change in accordance with this paragraph.

Mailed notices shall be sent by United States Postal Service, certified or registered mail, postage prepaid, and shall be deemed to have been given on the date of posting in the United States Postal Service.

Either Party may, by proper written notice pursuant to this Agreement, at any time designate a different address to which notices shall be sent.

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20.08 Relationship of Parties. The relationship of the Parties hereto is that of Landlord and Tenant. Nothing in this Agreement shall be construed to render Landlord in any way or for any purpose a partner, joint venturer, or associate in any relationship with Tenant other than that of Landlord and Tenant, nor shall this Agreement be construed to authorize either to act as agent for the other.

20.09 Advertising and Promotion Fund. INTENTIONALLY OMITTED.

20.10 Waiver. The waiver by Landlord of any breach of any provision, term, covenant or condition of this Agreement shall not constitute a continuing waiver or a waiver of any subsequent breach by Tenant of either the same or a different provision, term, covenant or condition of this Agreement. The subsequent acceptance of Rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any provision, term, covenant or condition of this Agreement, other than the failure of Tenant to pay the particular rental so accepted, regardless of Landlord’s knowledge of such preceding breach at the time of acceptance of such rent. No provision, covenant, term or condition of this Agreement shall be deemed to have been waived by Landlord, unless such waiver is in writing by Landlord.

20.11 Accord and Satisfaction. No payment by Tenant or receipt by Landlord of a lesser amount than the rent herein stipulated shall be deemed to be other than on account of the earliest stipulated rent, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such rent or pursue any other remedy in this Agreement provided.

20.12 Authority. If Tenant is a corporation or partnership, each individual executing this Agreement on behalf of such entity represents or warrants that he or she is duly authorized to execute and deliver this Agreement on behalf of such entity and that such entity shall be bound by all the terms and provisions hereof.

20.13 Joint and Several Liability. If more than one individual or entity comprises Tenant, the obligations and liabilities imposed on each individual or entity that comprises Tenant under this Agreement will be joint and several.

20.14 Broker’s Commission. Each Party represents and warrants that there are no claims for brokerage commissions or finder’s fees arising from that Party’s activities in connection with this Agreement, and each Party agrees to indemnify and hold the other Party harmless from all liability arising from any such claim.

20.15 Guaranty of Agreement. This Agreement shall not be effective until the Guarantor(s) named in Section 1.10 (Guaranty of Agreement) has executed a written Guaranty in the form attached hereto as Exhibit C (Guaranty of Agreement). If Section 1.10 (Guaranty of Agreement) is blank or marked “Intentionally Omitted” then Tenant shall be solely responsible for all payments and performance required by this Agreement.

20.16 Assessment District Establishment. INTENTIONALLY OMITTED.

20.17 MacBride Principles and the Peace Charter. The City Council of the City of Santa Cruz approved Resolution No. NS-19,378 on the 24th day of July 1990, endorsing the MacBride Principles and Peace Charter and encourages all companies doing business in Northern Ireland to abide by the MacBride Principles and Peace Charter.

20.18 Partial Invalidity; Severability. If any provision of this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, such determination shall not affect any other provision of this Agreement and such remaining provisions of this Agreement shall remain in full force and effect unimpaired by the holding.

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20.19 Approval by City Council/City Attorney. This Agreement, and any amendment of its terms, except as under such authority delegated to the City Manager, or designee, is subject to the approval of the City Council of the City of Santa Cruz and the City Attorney, and shall not bind Landlord until such time as their approval and consent has been received in writing.

20.20 Subordination. This Agreement is and shall be subordinate to any encumbrance now of record or recorded after the date of this Agreement affecting the Premises, other improvements, and land of which the Premises are a part.

Such subordination is effective without any further act of Tenant. Tenant shall from time to time, on request from Landlord, execute and deliver any documents or instruments that may be required by a lender to effectuate any subordination. If Tenant fails to execute and deliver any such documents or instruments, Tenant irrevocably constitutes and appoints Landlord as Tenant’s special attorney in fact to execute and deliver any such documents or instruments.

20.21 Permits and Approvals. Tenant is responsible for obtaining all applicable and required government permits or approvals. Approval by Landlord of any action requiring approval does not constitute approval by the City of Santa Cruz of any required permits or applications, and in no way limits the discretion of the City of Santa Cruz in the permit, regulatory, and approval process. Landlord and Tenant will render to each other reasonable assistance in obtaining necessary City of Santa Cruz and other governmental permits or approvals. Any consent or approval of the City of Santa Cruz for any permit, application, or regulatory matter does not constitute consent or approval by Landlord under the terms of this Agreement.

20.22 Prevailing Wage. It shall be the obligation of Tenant and/or any contractor or subcontractor under Tenant to comply with and conform to all State of California labor laws, rules and regulations and the Parties agree that the Landlord shall not be liable for any violation thereof.

To the extent that the construction of any Tenant Improvements or any other work performed pursuant to this Agreement may be considered a “public work” (construction, alteration, demolition, or repair work) under and pursuant to the California Labor Code (see California Labor Code Sections 1720 et seq. and Title 8, California Code of Regulations, Chapter 8, Subchapter 3, commencing with Section 16000) and subject to labor compliance monitoring and enforcement by the Department of Industrial Relations, Tenant (and its contractor(s) and subcontractor(s) performing the work) shall conform to any and all prevailing wage requirements applicable to the work on the Premises under this Agreement. Tenant (and its contractors and subcontractors) shall adhere to the prevailing wage determinations made by the Director of Industrial Relations pursuant to California Labor Code Part 7, Chapter 1, Article 2, applicable to the Tenant Improvements and associated work. All workers employed in the execution of a public works contract (as such term is defined California Labor Code Section 1720 et seq. and Section 1782(d)(1)) must be paid not less than the specified prevailing wage rates for the type of work performed. (Reference: California Labor Code Sections 1720, 1774 and 1782). Tenant shall ensure that its contractors and subcontractors also comply with and adhere to this prevailing wage provision. Tenant shall be responsible for any failure of Tenant’s contractors and/or subcontractors to comply with applicable prevailing wage and public works laws. If the Tenant is unsure whether the subject work is a “public work” as defined in the California Labor Code, it may wish to seek a timely determination from the California Department of Industrial Relations (“DIR”) or an appropriate court. Only the DIR and courts of competent jurisdiction have jurisdiction to issue legally binding determinations that a particular project is or is not a public work.

Any failure of Tenant and/or its subconsultant to comply with prevailing wage requirements relating to a public work project shall constitute a breach of this Agreement that excuses the Landlord’s performance of this Agreement at the Landlord’s sole and absolute option and shall be at the sole risk of Tenant. Tenant on behalf of itself and any subconsultant, agree to indemnify, defend and hold harmless the Landlord and its officials, officers, employees, and agents from and

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against any and all claims, liabilities, losses, costs, expenses, attorney’s fees, damages, expenses, fines, financial consequences, interest, and penalties, of any kind or nature, arising from or relating to any failure (or alleged failure) of Tenant and any subconsultant to pay prevailing wages or to otherwise comply with the requirements of prevailing wage law relating to a public work.

20.23 Limitation of Liability; Waiver of Consequential Damages; No Liability for Damages.
(a) The obligations of Landlord under this Agreement shall not constitute personal obligations of Landlord or its City Council members, officials, directors, officers, employees, representatives, agents, or volunteers, and Tenant shall not seek recourse against Landlord’s City Council members, officials, directors, officers, employees, representatives, agents, or volunteers, or any of their personal assets for such satisfaction.
(b) In no event shall Landlord (or its City Council members, officials, officers, directors, employees, agents, representatives, or volunteers) be liable to Tenant for penalties or liquidated damages, or for special, indirect, consequential, or incidental losses or damages including, but not limited to, lost profits, loss or interruption of business, lost or damaged data, loss of use of facility or equipment, or the failure or increased expense of operations, regardless of whether any such losses or damages are characterized as arising from breach of contract, breach of warranty, tort, strict liability, or otherwise, even if Landlord is advised of the possibility of such losses or damages, or if such losses or damages are foreseeable.
(c) Tenant acknowledges that Landlord would not enter into this Agreement if it were to be liable for damages (including, but not limited to, actual damages, economic damages, consequential damages, lost profits, loss of rents or other revenues, loss of business opportunity, loss of goodwill or loss of use) under, or relating to, this Agreement or any of the matters referred to in this Agreement.

Accordingly, Tenant covenants and agrees on behalf of itself and its successors and assigns, not to sue Landlord (either in its capacity as landlord in this Agreement or in its capacity as the City of Santa Cruz) or Landlord’s City Council members, officials, officers, directors, employees, agents, representatives, or volunteers for damages (including, but not limited to, actual damages, economic damages, consequential damages, lost profits, loss of rents or other revenues, loss of business opportunity, loss of goodwill or loss of use) or monetary relief for any breach of this Agreement by Landlord or for any dispute, controversy, or issue between Landlord and Tenant arising out of or connected with this Agreement or any of the matters referred to in this Agreement (including, without limitation, any and all Landlord obligations, and/or any and all plans, permits, licenses, regulatory approvals, California Environmental Quality Act (“CEQA”) documents, Transfers and/or any future amendments or enactments thereto), the Parties agreeing that declaratory relief, injunctive relief, mandate and specific performance shall be Tenant’s sole and exclusive judicial remedies.

20.24 Offer. Preparation of this Agreement by either Party or their agent and submission of same to the other Party shall not be deemed an offer to lease to the other Party. This Agreement is not intended to be binding until executed and delivered by all Parties hereto.

20.25 Retention of Discretion. By its execution of this Agreement, Landlord is not committing itself or agreeing to undertake any activity requiring the subsequent exercise of discretion by the City of Santa Cruz, or any department thereof, including but not limited to the approval of any Tenant Improvements, any CEQA documents, any development proposal or land

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use regulation governing the Premises, or any other approval. Tenant understands and agrees that Landlord in its capacity as the City of Santa Cruz reserves the right to exercise its discretion as to all matters which it is, by law, entitled or required to exercise its discretion, including, but not limited to, the consideration of Tenant Improvements, any CEQA documents, a final development or project, any and all plans, permits, licenses or regulatory approvals, and/or any other acts or activities requiring the subsequent independent exercise of discretion by the City of Santa Cruz or any agency or department thereof. Nothing in this Agreement shall obligate the Landlord in its capacity as the City of Santa Cruz to exercise its discretion in any particular manner, and notwithstanding any provision of this Agreement to the contrary any exercise of discretion required by law or permitted by this Agreement shall not be deemed to constitute a breach of Landlord’s duties under this Agreement.

20.25 Memorandum of Lease. The Parties agree to execute and record a short form Memorandum of this Lease in the form attached hereto as Exhibit G within ten (10) days after the date this Agreement is executed.

20.26 Cumulative Remedies. The various rights, options, elections, powers and remedies contained in this Agreement shall be construed as cumulative, and no one of them shall be exclusive of any of the others or of any other legal or equitable remedy which either party might otherwise have in the event of a breach or default in the terms of this Agreement. The exercise of one right or remedy by such Party shall not impair its right to any other right or remedy until all obligations imposed on the other party have been fully performed.

20.27 Counterparts. This Agreement may be executed in several counterparts and all such executed counterparts together shall constitute one agreement binding on all of the Parties.

A scanned, electronic, facsimile or other copy of a Party’s signature shall be accepted and valid as an original.

20.28 Entire Agreement. This Agreement and the attached Exhibits contain all of the agreements and conditions made between the Parties with respect to the hiring and leasing of the Premises, the License Area, and the subject matter of this Agreement and supersede all prior agreements or understandings between the Parties related thereto. Any agreements or representations respecting the Premises or the License Area, their leasing to Tenant by Landlord, or any other matter discussed in this Agreement not expressly set forth in this instrument are null and void. This Agreement may not be modified or amended orally or in any manner except as provided in Section 20.32 (Amendments to Agreement) below.

20.29 Construction of Agreement. Each Party acknowledges that it has reviewed this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting Party shall not apply in the interpretation or construction of this Agreement.

20.30 Amendments to Agreement. This Agreement may not be amended in any respect except by way of a written instrument which expressly references and identifies this particular Agreement, which expressly states that its purpose is to amend this particular Agreement, and which is duly executed by the Parties.

20.31 Warranty of Authority. The signatories to this Agreement warrant and represent that each is authorized to execute this Agreement and that their respective signatures serve to legally obligate their respective representatives, agents, successors and assigns to comply with the provisions of this Agreement.
[Signatures on Following Page]

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LANDLORD
City of Santa Cruz
A California municipal corporation

By: Matt Huffaker Date
Its: City Manager
TENANT
By: Rachele Chenowith Date
APPROVED AS TO FORM:

Stephanie Duck
Deputy City Attorney
Date
Septebmer 14, 2026

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EXHIBIT A

PREMISES AND LICENSE AREA
Approximately located at 1130-K1 Pacific Avenue, Santa Cruz, CA 95060.

Approx. License Area
(non-exclusive)

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EXHIBIT B

LIMITATIONS ON USE
Tenant shall use the Premises for the sale of cinnamon rolls and beverages.

Except as expressly permitted above, Tenant shall not sell menu items, except beverages, which are available from or directly compete with other tenants in the Downtown Kiosk Program.

Tenant’s menu and any significant menu changes must be approved by Landlord in writing and in Landlord’s sole discretion. Landlord may withhold approval of Tenant’s menu in cases where Landlord determines that such menu may result in unfair competition, or in cases where Tenant proposes to sell items currently sold by other tenants of Landlord participating in the Downtown Kiosk Program.

Tenant shall endeavor to serve food and beverages that are distinct from nearby businesses and the menu as a whole shall not substantially replicate dishes that have otherwise been available nearby prior to inclusion on Tenant’s menu.

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EXHIBIT C

INTENTIONALLY OMITTED

GUARANTY OF AGREEMENT

1. In consideration of the execution of the attached lease agreement dated _____________, by and between City of Santa Cruz, a municipal corporation (“Landlord”) and Rachele Chenowith, an individual, doing business as Rockin’ Rolls – Cinnamon Rolls (“Tenant”) for the premises known as 1130 K1 Pacific Avenue, in Santa Cruz, California (hereinafter referred to as the “Agreement”), the undersigned Guarantor(s) hereby unconditionally and irrevocably guarantee(s) to Landlord, its successors and assigns, the prompt payment by Tenant of the rent and all other sums required under the Agreement, and the faithful performance by Tenant of all the terms, covenants, and conditions contained in the Agreement.

The Agreement is incorporated herein by reference.

2. This Guaranty of Agreement (hereinafter the “Guaranty”) shall not be affected by any deviation from or alteration of the terms, covenants, or conditions of the Agreement or by any permitted assignment or subletting of all or any part of the interest of Tenant in the Agreement. This Guaranty shall not be released, extinguished, modified, or in any way affected by failure on the part of Landlord to enforce any or all of its rights or remedies whether pursuant to the terms of the Agreement or at law or in equity.

3. This Guaranty is a continuing one and shall terminate only on payment by Tenant of all the rent and other sums required under the Agreement and on performance by Tenant of all duties and obligations contained in the Agreement.

4. The undersigned waives notice: (a) of any default by Tenant (i) in payment by Tenant of any of the rent or other sums hereby guaranteed and (ii) in performance by Tenant of the terms, covenants, and conditions of the Agreement, and (b) of acceptance by Landlord of this Guaranty. Landlord agrees to give written notice to the undersigned prior to commencing legal action against the Tenant or against the undersigned.

5. The undersigned consents that Landlord may from time to time extend the time for performance or otherwise modify, alter, or change the Agreement and any or all of its provisions and may extend the time for payment of the rent and all other sums hereby guaranteed and may receive and accept notes, checks, and other instruments for the payment of money made by Tenant and extensions and renewals thereon without in any way releasing or discharging the undersigned from its obligations under this Guaranty. Notice of presentment of any such note or notes and/or notice of default in the payment thereof at maturity and/or protest or notice of protest thereof is expressly waived.

6. The undersigned further consents and agrees that Landlord shall not be required, in order to enforce this Guaranty, to first institute suit or exhaust its legal remedies against Tenant. This Guaranty of Agreement shall not be extinguished as a result of any bankruptcy proceeding.

7. This Guaranty may be immediately enforced against the undersigned (jointly and/or severally if more than one guarantor) on any default by Tenant, and the insolvency of Tenant shall be deemed a default.

8. In the event any action should be commenced by Landlord against the undersigned to enforce any of the terms or conditions of this Guaranty, Landlord shall be entitled to recover from the undersigned hereunder in any action in which it shall prevail, reasonable attorneys’ fees and expenses.

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9. If there is more than one Guarantor, the obligations and liabilities imposed on each individual that serves as a Guarantor under this Guaranty will be joint and several.

10. This Guaranty shall inure to the benefit of Landlord, its successors and assigns, and shall bind the successors and assigns of the undersigned.

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

12. The undersigned Guarantor(s) acknowledge(s) that he/she has/have reviewed this Guaranty 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 Guaranty.

13. The undersigned Guarantor(s) acknowledge(s) giving mature and careful thought to this Guaranty and has the legal capacity and standing to enter into this Guaranty. The undersigned Guarantor(s) acknowledges understanding the meaning and legal consequences of this Guaranty.

14. This Guaranty may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the undersigned has executed this Guaranty this ______ day of _____________, 2026.

Guarantor:
______________________
Rachele Chenowith, individually and
as owner of Rockin’ Rolls – Cinnamon Rolls LLC

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EXHIBIT D
CAFÉ EXTENSION AREA POLICIES AND PROCEDURES
Purpose
The purpose of extension areas is to enhance the pedestrian ambiance of Downtown Santa Cruz by introducing uses attractive to pedestrians onto the pedestrian environment.

Designated extension areas shall be confined to uses that add activity and color to the street; permitted uses shall be limited to outdoor cafes or the selling of flowers, produce and newspaper/magazines, unless otherwise approved by the City Council or its designated agent.

Outdoor Cafes
• Cafes shall project no more than 12 feet from the property line into the public right-ofway, and in no case shall a café extension area result in a public promenade less than 12 feet, unless the café is located along Pacific Avenue in which case the public promenade can be 8 feet;
• The elevation of the extension area shall be the same as the public sidewalk, and shall meet accessibility standards;
• No permanent structures will be allowed within the public right-of-way. • If a separation between the café and the promenade is desired, this shall be achieved through low planters that could contain colorful flowers or a low hedge not permanently affixed to the sidewalk;
 The maximum height of such planters (including the planting) shall be no more than four feet; and
 Planters shall consist of high quality durable materials of a weight and mass that will discourage theft, vandalism or easy movement.
 Should applicant propose other means to achieve separation such as fencing, this shall be self-supporting and decorative.
• A canvas awning will be permitted to extend over the depth of the café extension area; no columns or supporting poles will be permitted within the public right-of-way. Awnings shall comply with the design and height guidelines prescribed below; • The use of removable umbrellas within sidewalk extension areas is also encouraged, provided that seven (7) feet of clearance is provided from the sidewalk. • Removable wind screens that are of a transparent material and that are an integral part of the planter will be permitted to extend the seasonal use of the café area. Such screens shall not exceed a height of six (6) feet and shall be separated from the awnings to provide for air movement.

Retailing Uses

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• Retailing uses within extension zones shall be limited to the sale of newspapers and magazines, flowers and produce, unless otherwise approved by the City Council or its designated agent;
• Such extension areas shall not exceed 6 feet in depth, unless it is determined that such depth is necessary to achieve the desired pedestrian objectives for the street, and in no case shall an extension area result in a public promenade that is less than 12 feet in depth or 8 feet along Pacific Avenue.
• Merchandise shall be displayed against the shop front and be oriented toward the street on tables or stands that do not exceed four feet in height; • No separation (e.g., planters or low walls) between the merchandise and the street shall be permitted.

Design Requirements
Furniture: All furniture (e.g. tables, chairs, retailing stands) shall be durable, well maintained, and of a high quality, suitable for outdoor use; such furniture should be light, not heavy or massive in nature, to ensure that it does not visually dominate the street. All furniture shall be approved by City Council or its designated agent at the time of permit hearing.

Design Materials: The design materials and colors used for chairs, tables display stands, lighting, and other fixtures (including umbrellas and awnings) shall be generally consistent with or complementary to both the architectural style and colors used on the building façades and the quality of fixtures along Pacific Avenue.

Lighting: Lighting of the café extension area shall be incorporated into the façade of the building and shall compliment the style of the building. Lights on buildings shall not be glaring to pedestrians and should illuminate only the extension area and the activities within. General illumination should be at 5 foot-candles, with a maximum of 10 foot-candles. Table lamps or candles are encouraged in café areas. Wired electrical fixtures will be allowed outside the face of the building, if contained within the semi-permanent barrier allowed for café extension areas and if installed by a licensed electrician. A lighting plan must be approved by the City Council or its designated agent.

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EXHIBIT E

STATEMENT OF GROSS INCOME AND RENT
Gross Income and Rent Computation

IN ACCOUNT WITH

CITY OF SANTA CRUZ
FINANCE DEPARTMENT – REVENUE
1200 PACIFIC AVENUE, SUITE 290
SANTA CRUZ, CALIFORNIA 95060

MONTHLY STATEMENT OF GROSS INCOME AND RENT
FOR MONTH ENDING _________________ 20___

1. Gross monthly income (all sales and business transactions): ............................... $ ___________

2. Cash or credit refunds made upon sales from premises: ........................................ $ ___________

3. The amount of any city, county, state or federal sales, luxury or excise taxes on sales from the premises where such taxes are both added to the selling price and paid to the taxing authorities by Tenant: .......................................................... $ ___________

4. Total adjustments (Line 2 plus Line 3): ................................................................... $ ___________

5. Adjusted gross income (Line 1 minus Line 4): ........................................................ $ ___________

6. Percentage Rent (Line 5 x 6%): ............................................................................... $ ___________

7. Minimum Base Rent: ............................................................................................... $ __300.00____

8. RENT DUE (the greater of Line 6 or Line 7): .......................................................... $ ___________

9. LATE FEE (10% of Line 8 if paid after the due date): ............................................. $ ___________

10. INTEREST ON UNPAID RENT (1.5% monthly interest of Line 8 if paid after the due date): .................................................................................................. $___________

11. CREDIT/TRUE UP (amount of any prior rent over/underpayments)*: .................... $ ___________

12. TOTAL REMITTANCE (Sum of Line 8-11): ........................................................... $ _____________

Description of Credit/True-Up
I hereby certify that “Gross Monthly Income” reported herein is equal to total gross sales which have been or will be reported on the State, Local, and District Sales and Use Tax Return submitted to the State Board of Equalization for the period ending _________________. ______________________________________________________
Signature of Tenant or Tenant’s Principal Agent
Executed at Santa Cruz, California on ______________________, 20_____ This completed and signed form, together with the accompanying payment, must be received by the City no later than close of business on the fifteenth day of the month following the month for which you are reporting sales.

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EXHIBIT F

INSURANCE REQUIREMENTS
Tenant shall procure and maintain for the duration of the Agreement, insurance against claims for injuries to persons or damages to property which may arise from or in connection with Tenant’s operation on, access to, and/or use of the leased Premises and License Area. The cost of such insurance shall be borne by Tenant.

A. Insurance Certificate Requirements.

Landlord will be issued a Certificate of Insurance (a Memorandum of Understanding will not be accepted) with the following minimum requirements:
• Certificate(s) will show current policy number(s) and effective dates, • Coverage and policy limits will meet, or exceed, requirements below, • The Certificate Holder will be City of Santa Cruz, Risk Management, 1200 Pacific Ave., Suite 290, Santa Cruz, CA 95060,
• Certificate will be signed by an authorized representative, • An endorsement, if required below, will be provided to show Landlord, its officers, officials, employees, and volunteers as additional insureds, and • Coverages must be maintained during the term of the Agreement with Landlord, unless a longer duration is required.

B. Minimum Scope and Limit of Insurance.

Tenant acknowledges that the insurance coverage and policy limits set forth in this section constitute the minimum amount of coverage required. If Tenant maintains broader insurance coverage and/or higher limits than the minimums shown below, Landlord shall be entitled to the broader insurance coverage and/or higher limits maintained by Tenant. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to Landlord.

Tenant shall maintain limits no less than the following:

1. Commercial General Liability (CGL): $2,000,000.00 per occurrence; $2,000,000 in the aggregate, including products and completed operations, property damage, bodily injury and personal & advertising injury insuring against all liability of Tenant and its employees, agents, representatives, subtenants, assignees and concessionaires arising out of and in connection with Tenant's use or occupancy of the Premises and the License Area; and, if applicable, liability for the sale and distribution of liquor and alcoholic beverages.

2. “All Risk” Property Insurance Coverage. Tenant shall, at Tenant's sole expense, obtain and keep in full force and effect an insurance policy covering all of Tenant's personal property, trade fixtures, equipment and merchandise located in or upon the Premises and the License Area in an amount sufficient to cover not less than one hundred percent (100%) of the replacement value thereof, providing protection against any peril included within including sprinkler damage, vandalism and malicious mischief endorsements ordinarily included in extended coverage casualty insurance policies. Tenant shall be solely responsible for any uninsured loss or damage caused to Tenant's personal property, trade fixtures, equipment and merchandise located in or upon the Premises or the License Area for any reason.

3. Fire Insurance\Legal Liability Coverage. Tenant, at its sole cost, shall procure and maintain in full force and effect at all times during the Term of this Agreement, fire and extended coverage insurance satisfactory to Landlord covering the Premises and the License

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Area to keep all leased property or rented space, Tenant Improvements therein in an amount not less than one hundred percent (100%) of the full replacement cost against loss or destruction by fire and all perils, including vandalism, malicious mischief, special extended perils (“special form”). The property insurance is to be endorsed to include Legal Liability Coverage (ISO Form CP 00 40 04 02 or equivalent) with a limit equal to the replacement cost of the leased property. Landlord shall be named as an additional insured and loss payee on the policies. Any loss payable under any policy described in this section shall be paid by the insurance company to Landlord or as otherwise agreed by the Parties to be used to fund the repair or replacement of the damaged Premises or License Area or improvement pursuant to this Agreement. “Full replacement cost,” as used in this section, shall mean the actual cost of replacement for any building, structure, or other improvements on the Premises or License Area, as determined from time to time.

4. Business Interruption Insurance. Policy with adequate limits to cover the term of this Agreement and shall contain an inflation endorsement if the Premises, License Area, or Tenant Improvements are destroyed or rendered inaccessible by a risk insured against by a policy of standard fire and extended coverage insurance, with vandalism and malicious mischief endorsements. Insurance proceeds thereunder shall be payable to Landlord for loss of rents.

5. Workers’ Compensation and Employer’s Liability Insurance. Tenant shall obtain policies as required by applicable law against liability arising on account of injuries or death to workers or employees on the Premises, License Area, or any improvement of Tenant.

Such workers’ compensation insurance shall be in amounts at least equal to the maximum liability of Tenant, its agents, and contractors under the Workers’ Compensation Insurance and Safety Act of the State of California and the Federal Longshore and Harbor Workers’ Compensation Act, as applicable. Tenant shall also maintain Employer’s Liability insurance with limits no less than One Million Dollars ($1,000,000) per accident for bodily injury or disease, $1,000,000 disease – policy limit, $1,000,000 disease – each employee. Such insurance shall include a waiver of subrogation in favor of Landlord.

C. Other Insurance Provisions.

ADDITIONAL INSURED STATUS
Landlord, its officers, officials, employees, agents, and volunteers are to be covered as additional insureds on the CGL policy with respect to liability arising out of work or operations performed by or on behalf of Tenant, including materials, parts, or equipment furnished in connection with such work or operations, products and completed operations.

General liability coverage will be provided in the form of an endorsement to Tenant’s insurance at least as broad as ISO Form CG 20 10 11 85, or if not available, through the addition of both CG 20 10, CG 20 26, CG 20 33, or CG 20 38; and CG 20 37 (if a later edition is used).

PRIMARY COVERAGE
For any claims related to this Agreement, Tenant’s insurance coverage will be primary and non-contributory as respects Landlord, its officers, officials, and employees. Any insurance or self-insurance maintained by Landlord, its officers, officials, and employees will be excess of Tenant’s insurance and will not contribute with it.

NOTICE OF CANCELLATION
Each insurance policy required above shall state that the coverage shall not be canceled, except with notice to Landlord.

WAIVER OF SUBROGATION

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Tenant hereby grants to Landlord a waiver of any right to subrogation, except as otherwise not applicable, which any insurer of said Tenant may acquire against Landlord by virtue of the payment of any loss, including attorney’s fees under such insurance. Tenant agrees to obtain any endorsement that may be necessary to effectuate this waiver of subrogation, but this provision applies regardless of whether or not Landlord has received a waiver of subrogation endorsement from the insurer.

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

SELF-INSURED RETENTIONS (SIR)
Self-insured retentions must be declared to and approved by Landlord. Landlord may require Tenant to purchase coverage with a lower retention or provide proof of ability to pay losses and related expenses. The policy language shall provide, or be endorsed to provide, that the self-insured retention may be satisfied by either the named insured or Landlord.

ACCEPTABILITY OF INSURERS
Insurance is to be placed with insurers with a current A.M. Best’s rating of no less than A:

VII, unless otherwise acceptable to Landlord.

VERIFICATION OF COVERAGE
Tenant will furnish Landlord with original Certificates of Insurance including all required amendatory endorsements (or copies of the applicable policy language effecting coverage required by this clause) and a copy of the Declarations and Endorsement Page of the CGL, and any Excess Liability/Umbrella policies, as applicable, listing all policy endorsements to be approved by Landlord before the Commencement Date of the Agreement. However, failure to obtain the required documents prior to the work beginning will not waive Tenant’s obligation to provide them. Landlord reserves the right to require complete, certified copies of all required insurance policies, including endorsements required by these specifications, at any time.

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

TENANT'S FAILURE TO MAINTAIN INSURANCE
Tenant agrees that if Tenant does not maintain any insurance policy required under this Agreement or fails to pay any premiums when due, Landlord may, at its election, either terminate this Agreement, require that the Premises be immediately closed for business pending reinstatement of insurance by Tenant, or obtain the necessary insurance and pay

11.55 54
Rev. 09.01.2026
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.

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

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EXHIBIT G

MEMORANDUM OF LEASE

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

MEMORANDUM OF LEASE
This Memorandum of Lease (“Memorandum”) is hereby entered into as of ____________, 2026, by and between the City of Santa Cruz, a California municipal corporation and charter city, (“Landlord”), and Rachele Chenowith, an individual, doing business as Rockin’ Rolls – Cinnamon Rolls (“Tenant”).

RECITALS
A. Landlord and Tenant have entered into that certain Lease (the “Lease”) dated concurrently herewith for that certain parcel of real property located at 1130 K1 Pacific Avenue, Santa Cruz, CA 95060 (the “Property”). A copy of the Lease is available for public inspection upon request at Landlord's office at 337 Locust Street, Santa Cruz, California. The Lease is for a term of one (1) year and includes the option to extend for up to two (2) additional one (1) year periods.

B. The Lease provides that a short form memorandum of the Lease shall be executed and recorded in the Official Records of Santa Cruz County, California.

NOW, THEREFORE, the parties hereto certify as follows:

Landlord, pursuant to the Lease, hereby leases the Property to the Tenant upon the terms and conditions provided for therein. The Lease imposes certain obligations, requirements on the Tenant, and limitations on the use of the Property. This Memorandum is not a complete summary of the Lease and shall not be used to interpret the provisions of the Lease.
[SIGNATURES ON FOLLOWING PAGE]

11.57 56
Rev. 09.01.2026
IN WITNESS WHEREOF, the parties hereto have caused this Memorandum to be executed by their lawfully authorized representatives.

LANDLORD:

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

By:____________________________________
Rachele Chenowith
Owner
APPROVED AS TO FORM:

By: ___________________
Office of the City Attorney

11.58 57
Rev. 09.01.2026

CERTIFICATE OF ACKNOWLEDGMENT OF NOTARY PUBLIC
State of California)
County of Santa Cruz)
On ______________________ before me,
, Notary Public, personally
appeared __________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature ______________________________ (Seal)
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

11.59 58
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I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

11.60 City Council

AGENDA REPORT
DATE: 09/23/2026
AGENDA OF: 10/13/2026
DEPARTMENT: Economic Development
SUBJECT: Enhanced Infrastructure Financing District (EIFD) Application to Santa Cruz County to Participate in the Newly Formed Santa Cruz EIFD (ED) LOCATION: Citywide
RECOMMENDATION: Motion to:
1) Authorize the City Manager to execute a contract amendment with Kosmont & Associates, Inc. dba Kosmont Companies, in amount not to exceed $47,500, with a total contract amount not to exceed $197,500, to support the proposal for County of Santa Cruz participation and implementation of the associated amendments to the Enhanced Infrastructure Financing District (EIFD) and Infrastructure Financing Plan (IFP); and
2) Direct staff to submit a proposal to the County of Santa Cruz to participate in the Santa Cruz EIFD based on the County’s EIFD Policy.

BACKGROUND: As a result of the elimination of redevelopment agencies in California, the City of Santa Cruz (City) lost a tax increment financing (TIF) tool to invest in public facilities supporting the sustainable development of communities. In 2014, Senate Bill (SB) 628 created a new TIF tool called the Enhanced Infrastructure Financing District (EIFD). The original legislation has been amended to modify the requirements to form an EIFD and to issue bonds to finance infrastructure.

In May 2023, the Office of Economic Development (ED) issued a Request for Proposals (RFP) to conduct financial feasibility studies that included TIF analysis to determine how the City may finance related public infrastructure, affordable housing, and other community goals in the Downtown Plan Expansion area, adjacent Riverwalk and the broader downtown area. In September 2023, the City selected Kosmont & Associates, Inc. dba Kosmont Companies (Kosmont) as the consultant to prepare the analysis and determine next steps for implementation of the financial tools that would be most beneficial.

On March 25, 2025, the City Council adopted Resolution of Intention No. NS-30,457 to initiate the establishment of the City of Santa Cruz Enhanced Infrastructure Financing District (Santa Cruz EIFD) and establish the Santa Cruz EIFD Public Financing Authority (PFA) as its governing body.

12.1 Subsequently, on August 28, 2025, the PFA approved the preparation of the Infrastructure Financing Plan (IFP) as required by the EIFD Law (California Government Code Section 53398.50 through 53398.88). The IFP is the legal document describing the EIFD, and it is to be adopted by the City Council and PFA to guide the use of incremental tax revenues over the life of the EIFD. Public notices were mailed, information was posted on a dedicated website (https://www.santacruzca.gov/Business-Development/Active-Project-List/DevelopmentProjects/Enhanced-Infrastructure-Financing-District-EIFD), and notices were also published in the newspaper, as required by law, to inform property owners and residents.

On December 9, 2025, the City Council adopted a resolution approving the IFP (attached Adopted IFP) and the allocation of property tax increment within the Santa Cruz EIFD.

Following the City Council’s approval of the IFP in January and February of 2026, the PFA held two required public hearings and adopted the IFP, forming the Santa Cruz EIFD. Staff then filed the required EIFD documents with the State Board of Equalization (BOE). The State BOE should finalize processing the EIFD packet at the end of the 2026 calendar year/early 2027.

DISCUSSION: EIFDs aid cities in funding public facilities and other public investments to foster future development and increase property values. By capturing tax increment revenue generated within the district as new development occurs and property values increase over time, like a redevelopment project area, a portion of tax increment revenue growth over the established baseline is redirected from the taxing entity to the EIFD. Importantly, the establishment of EIFDs does not increase property taxes or any other taxes for landowners within or outside the EIFD boundaries.

As the final actions of formation and filing occurred at the City Council and PFA for the Santa Cruz EIFD; the County of Santa Cruz Board of Supervisors at its February 10, 2026 meeting approved a formal EIFD participation policy, establishing county wide standards for consideration of participation in EIFDs and guidelines for submitting a formal proposal to Santa Cruz County Board of Supervisors (County) (attached SC County EIFD Policy and EIFD Staff Report dated 2.10.26). The County participation in the EIFD will add additional tax allocation to the EIFD fund and allow for an increase in future bonding capacity available to the EIFD.

Next Steps
Following the City Council action, staff will coordinate with County staff to initiate a process of amending the IFP, PFA membership & Bylaws, and the associated analysis and submit a proposal to the County to participate in the Santa Cruz EIFD. The PFA will be required to hold two public hearings before final approval of the amended IFP, following City Council and County actions. The PFA may adopt the amended IFP at the second public hearing to amend the EIFD. A summary of the key actions, as well as estimated dates of completion, is as follows:

Task Target Date Notes
City Council direction to pursue
County participation
October 13, 2026 Per County Policy, submit a proposal for participation with County tax allocation to the
EIFD
Work with County Staff on
analysis, revisions to IFP, PFA
membership and Bylaws
October -
December 2026
PFA membership to include a Santa Cruz
County representative replacing one of the
City Council appointments
County Board of Supervisors
Resolution of Intention to join
the Santa Cruz EIFD
January 2027 Adoption of a Resolution

12.2 In the event of a majority protest by property owners or residents within the boundaries, the amendment proceedings would discontinue.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: City Council action, directing staff to submit a proposal to Santa Cruz County to participate in the newly formed Santa Cruz EIFD, is solely related to the creation of a government funding mechanism and the administrative or organizational activities of the City. Therefore, this action does not constitute a “project” pursuant to CEQA Guidelines Sections 15378(b)(4) and 15378(b)(5). This action could not result in a physical change in the environment because the City has not committed itself to any specific project(s) that could be funded by the EIFD.

Additionally, this action is exempt from the requirements of CEQA pursuant to Section 15061(b)(3) of the CEQA Guidelines, because it can be seen with certainty that there is no possibility that they will have a significant effect on the environment. Future actions (such as the approval of infrastructure improvements using funding from the EIFD) will be analyzed for CEQA compliance at the time of project approval.

HEALTH IN ALL POLICIES (HiAP): HiAP is a collaborative approach to improving the health of all people by incorporating health considerations into decision-making across sectors and policy areas. HiAP is based on 3 pillars: equity, public health, and sustainability. The goal of HiAP is to ensure that all decision-makers are informed about the health, equity, and sustainability impacts of various policy options during the policy development process.

In general, the formation and implementation of the EIFD provides the City with a tax increment financing tool to invest in public facilities supporting the sustainable development of communities and covers multiple HiAP goals. The formation of the EIFD supports the pillar of equity by having an inclusive and robust public hearing process, including significant public noticing (via mail, newspaper, and website) to ensure voices of the community are heard. It also leverages a financial tool that derives from utilizing tax increment to benefit the community at large by funding public projects. Furthermore, the public infrastructure improvements depending on the projects serve the greater needs of the community by improving pedestrian and bike connections in key areas of the City, and potentially other recreation improvements, increasing the vibrancy and health of residents. The last pillar of sustainability is also key when forming a district. The EIFD aids in providing long term financial support for necessary City projects that also will allow the City to leverage grant funding opportunities to improve upon sustainable infrastructure that benefits the residents and visitors alike. These improvements can provide upgrades to existing infrastructure that take into consideration the health of the community, climate resiliency goals, and future growth of the Downtown.

PFA Public Meeting to present
revised draft IFP and revised
Bylaws
March 2027 Initial review and comments on revised IFP
and revised Bylaws
County Board of Supervisors
considerations of revised IFP
April 2027 Adoption of resolution accepting the IFP
City Council consideration of
revised IFP and PFA
membership
April 2027 Adoption of resolution accepting the IFP and adjusting PFA Membership
PFA public hearing #1 on
revised IFP
May 2027 Required
PFA public hearing #2 on
revised IFP
June 2027 Required hearing and formal adoption of
amended IFP

12.3 FISCAL IMPACT:

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

2. This recommendation requires a budget adjustment: No

3. The recommendation creates an on-going expenditure commitment: No FISCAL IMPACT DESCRIPTION: There is no immediate fiscal impact. ED will use existing budget to fund the amendment process; these costs can later be reimbursed by the Santa Cruz EIFD. If amended, the EIFD will create the opportunity to use tax increment financing from both the City and County tax allocation(s) to fund targeted infrastructure investments in the City.

Prepared By:

Brian W. Borguno
Deputy Director of Economic
Development
Submitted By:

Bonnie Lipscomb
Deputy City Manager
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. SANTA CRUZ COUNTY EIFD POLICY.PDF

2. SANTA CRUZ COUNTY EIFD STAFF REPORT 2.10.2026.PDF

3. ADOPTED INFRASTRUCTURE FINANCING PLAN.PDF

12.4 COUNTY OF SANTA CRUZ

ENHANCED INFRASTRUCTURE FINANCING DISTRICT

PARTICIPATION POLICY
On September 24, 2014, the governor approved Senate Bill 628, which authorized the formation of an Enhanced Infrastructure Financing District (EIFD). EIFDs were proposed as an alternative development tool following the dissolution of Redevelopment Agencies in 2012.

An EIFD is a tax increment financing district that allows one or more taxing entities to secure a portion of property tax increment revenues from a specifically defined area, to finance a broad range of public infrastructure and economic development projects of community-wide significance. An EIFD does not impose new taxes or any fees on property owners.

The County of Santa Cruz (County) supports economic development projects benefiting the residents of the county. As such, the County will consider proposals from cities seeking financial partnership through a joint city-county EIFD. The County is particularly interested in supporting projects that foster sustainable development that provide for housing, hospitality, and commercial and industrial developments that promote creation of above minimum wage jobs within the region, the development of critical infrastructure to support county residents, as well as supporting one or more of the County’s strategic priorities supporting affordable housing, climate adaptation and resilience, or advancing racial and social equity. Pursuant to this EIFD Policy, projects that offer private investment to leverage invested public funds will be viewed favorably by the County.

Proposals shall be submitted for review to the County Executive Office and the County’s Auditor-Controller-Treasurer-Tax Collector and include the following components:

1. CONTRIBUTION OF TAX INCREMENT
a. Minimum City Contribution
The city shall contribute at least the same percentage share of tax increment that the County contributes, excluding Affected Taxing Entities as defined by Government Code section 53398.51(a) governed by the Santa Cruz County Board of Supervisors.

12.5 b. Maximum County Contribution
The County will contribute no more than twenty-five percent (25%) of the County’s share of future ad valorem property tax increment generated in the proposed geographic area of the EIFD, as defined further in Section 1(d).
c. Correlation of Contributions
If the contributions from Sections 1(a) and 1(b) result in a lower city contribution than the County, then the city must increase its contribution to be at least equal to the County’s contribution.
d. Limitations on Tax Increment
The County’s tax increment contribution will only be composed of future ad valorem property tax increment growth within the proposed geographic area of the EIFD (the “Future Increment”), excluding the base tax increment of the area (the “Base Increment”).

The Base Increment is equal to the ad valorem property tax increment of the EIFD area for the Fiscal Year property tax assessment roll in which the EIFD was created.

2. TERM OF COUNTY PARTICIPATION
a. Maximum Term
The County will participate in a joint city-county EIFD for a period not to exceed thirty (30) years, allowing consistency when evaluating requests by multiple jurisdictions and intergenerational equity as indicated in County fiscal policies. b. Procedures for Extension
i. The County plans to enter joint city-county partnerships for projects requiring a regional funding approach best suited for an EIFD model with a duration consistent with Section 2(a), with the assumption that future extensions will be unnecessary. ii. The County will review options for extending its participation in an existing EIFD, at the discretion of the Santa Cruz County Board of Supervisors, upon receipt of an amended proposal from a city as outlined in Section 3, and may decide to extend its participation in the EIFD for a period longer than the term in Section 2(a) on a caseby-case basis. Amended proposals must be received by the County Executive Office no later than six months (180 days) prior to the end of the term. c. Governance
i. The County will receive a minimum of one seat on the governing body of the EIFD. ii. The composition of the EIFD governing board will include a member from the County who will be a sitting member of the Board of Supervisors representing the

12.6 supervisorial district within which the project is situated. This will ensure the County’s representation aligns closely with the specific geographical area of the project’s location.

3. REQUIRED SECTIONS FOR THE PROPOSAL
a. Executive Summary
This section must provide an overview of the city’s proposal in summary form, written in plain language that is easy to read and understand by members of the public. The city may submit a report completed by a third party. The overview or report prepared by the city or a third party must outline the proposed district, including its financial impacts and the social benefits to the city and the County. This information shall be provided to the County prior to the Resolution of Intention so the County may evaluate its participation. b. Project Description
This section must provide details related to the proposed district, including the following aspects:
i. Proposed District Details

1. Map(s) including: • Assessor’s Parcel number(s) • Name and address of legal owner for each property • General locations of lots and structures (if available) • Access points to public transit • Vicinity map showing sufficient detail to locate the proposed parcel(s) location and relation to the community, current surrounding land uses, city limits, existing spheres of influence, and approved urban growth boundaries or edges

2. Narrative of the commercial, industrial, and/or residential uses proposed, including: • General description of the use • Square footage of lots and structures (if available) • Estimated number of employees (temporary and permanent) • Expected pay range and job types to be generated • Access points to public transit or other traffic demand management strategies • Estimated number of residential units to be constructed or residential lots to be created for future construction • Type of residential units and number of employee housing units, if any • Estimated number of total residential units and unit count by affordability level with anticipated Area Median Income (AMI) • Description of how the proposed district is consistent with any existing County-city land use agreements

3. Stage of current planning efforts for development within the district, including entitlement status and City Council actions

12.7 ii. Demonstration of Social Benefits

1. Qualitative analysis of why a joint city-county EIFD model is the best approach to implement the proposed district

2. Consistency with stated goals of the Santa Cruz County Board of Supervisors, including workforce development, infrastructure improvements, sustainability, equity, climate adaption and resiliency, and affordable housing

3. Workforce development and job creation benefits, emphasizing career-track jobs that pay above minimum wage

4. Residential projects planned on parcels included within the EIFD shall include 100% of units affordable to lower income households when funded with EIFD revenues
c. Financial Analysis
This section must provide a comprehensive analysis of district economics, including financial impacts to the County and city over the project life and beyond, including:
i. Financial Details Related to Project

1. Summary of assumptions

2. Anticipated net growth in ad valorem property tax with and without the district

3. Proposed tax increment contributions by jurisdiction

4. Plan of finance for any municipal securities

5. Other one-time revenue sources

6. Related Transient Occupancy Tax, Sales Tax, or other revenues

7. Estimated new ongoing service costs

8. Sensitivity analysis
ii. Ongoing Administrative Responsibilities

1. Proposed budget for EIFD administration

2. Continuing disclosure responsibilities

3. Ongoing grant reporting
iii. Positive Net Impact to the County
The proposal must demonstrate a positive net financial impact to County finances. iv. Tax Rate Area Consistency
As a condition of County participation, EIFD boundaries administered by the County shall consist of whole Tax Rate Areas (TRAs). EIFD proposals that include partial TRAs will not be considered unless the Board of Supervisors determines that the benefits clearly outweigh the administrative and system impacts. The city may engage a third party to complete the analysis on behalf of the County at the expense of the city or EIFD. Additionally, as outlined in Section 5, the city shall be required to reimburse the County, at the expense of the city or

12.8 EIFD, for all reasonable and actual costs incurred in evaluating, implementing, administering, and, if applicable, modifying the County’s property tax systems to support the EIFD.

4. COUNTY ANALYSIS OF CITY PROPOSAL
The County may retain consultants to assist in evaluating proposals. The city shall compensate the County for reasonable consultant costs.

5. ADMINISTRATION
a. County Participation in Cost Recovery
County participation in an EIFD is discretionary and subject to approval by the Board of Supervisors. Any city requesting County participation in an EIFD shall be required to reimburse the County, at the expense of the city or EIFD, for all reasonable and actual costs incurred in evaluating, implementing, administering, and, if applicable, modifying the County’s property tax systems to support the EIFD.

Recoverable costs may include, but are not limited to:
• Staff time across County departments
• Legal, financial, and technical consulting services
• Property tax system analysis, development, testing, and ongoing administration • Bond issuance, disclosure, and compliance activities
• Any other costs reasonably related to County participation Cost reimbursement terms shall be documented in a participation agreement, memorandum of understanding, or other agreement approved by the Board of Supervisors.

The County may require advance deposits or full reimbursement prior to initiating work.

The County reserves the right to outsource property tax increment allocation calculations associated with an EIFD to a third party, at the expense of the city or EIFD, for the County’s share of contribution. The city may also, at its own cost outsource its property tax increment allocation calculations associated with an EIFD to a third party and be reimbursed by the EIFD.

12.9 6. MISCELLANEOUS PROVISIONS
a. Eminent Domain
The County shall not participate in any EIFD that uses eminent domain on inhabited residential properties.
b. Affordable Housing and Regional Housing Needs Allocation For projects with an affordable housing component, the County will explore options for crediting new housing units toward the County’s Regional Housing Needs Allocation. c. County Participation
Nothing in this policy shall be construed to create an expectation or entitlement for a city to receive any portion of the County’s property tax increment. Any sharing of County tax increment, if considered, shall be subject to separate Board approval and negotiated on a case-by-case basis.
d. Property Tax System Impacts
EIFD proposals that require changes to the County’s property tax system, including the development or administration of shared tax increment, shall be subject to heightened review. The County may decline participation in EIFDs that impose disproportionate administrative burden, fiscal risk, or system impacts, regardless of reimbursement.

EFFECTIVE DATE
This policy shall take effect upon approval by the Santa Cruz County Board of Supervisors.

12.10 County of Santa Cruz Board of Supervisors
Agenda Item Submittal
From: County Executive Office
Subject: Enhanced Infrastructure Financing District Participation Policy Meeting Date: February 10, 2026
Formal Title: Approve the Enhanced Infrastructure Financing District Participation Policy
Recommended Actions
Approve the Enhanced Infrastructure Financing District Participation Policy.

Executive Summary
Approval of an Enhanced Infrastructure Financing District (EIFD) Participation Policy establishes fiscal, administrative, and governance standards for County participation in EIFDs. This action does not approve any specific EIFD, commit County tax increment, or obligate the County to participate in any future district. Rather, the policy provides a consistent framework to guide evaluation of future proposals, should they be brought forward. Key policy provisions include limiting the County’s tax increment contribution to no more than twenty-five percent (25%) of future incremental growth, capping County participation at a maximum of thirty (30) years and requiring full reimbursement of County administrative and property tax system costs associated with EIFD participation.

Discussion
Enhanced Infrastructure Financing Districts (EIFDs) are authorized under California Government Code section 53398.50 et seq. as a post-redevelopment financing tool following the dissolution of redevelopment agencies in 2012. EIFDs allow participating taxing entities to dedicate a portion of future property tax increment, above a defined base year, to finance eligible public infrastructure and economic development projects without imposing new taxes or assessments on property owners. County participation in EIFDs is voluntary and discretionary.

In recent years, cities within Santa Cruz County have expressed interest in EIFDs as a mechanism to fund infrastructure, affordable housing, and economic development projects. The proposed policy establishes countywide standards to ensure that any future consideration of EIFD participation is fiscally responsible, transparent, and aligned with Board priorities. The policy is modeled upon the EIFD Participation Policy for the County of Monterey and revised to reflect conditions for the County of Santa Cruz.

The proposed EIFD Participation Policy is modeled on policies adopted by peer counties and tailored to Santa Cruz County’s fiscal structure, service responsibilities, and property tax administration framework. The policy emphasizes fiscal safeguards, proportional participation, and recovery of County costs, while preserving full Board discretion.

County Tax Increment Contribution
The policy limits the County’s contribution to no more than twenty-five percent (25%) of the County’s share of future ad valorem property tax increment generated within an

12.11 EIFD. The County does not contribute any portion of base year property tax revenues.

This limitation ensures that the majority of future County property tax growth remains available to support core County services, including public safety, health, and social services. To ensure proportional participation, the policy requires that the initiating city contribute a tax increment share that is equal to or greater than the County’s contribution. This requirement ensures that the County is not the primary funding source for city-initiated projects.

Duration of County Participation
The policy caps County participation in any EIFD at a maximum of thirty (30) years. This limitation balances the long-term financing needs of major infrastructure projects with principles of fiscal sustainability and intergenerational equity. While the policy allows the Board to consider extensions on a case-by-case basis, extensions are not anticipated and would require an amended proposal, updated fiscal analysis, and explicit Board approval.

Administrative and Property Tax System Costs
EIFDs can impose significant administrative and technical demands on County departments, particularly the Auditor-Controller-Treasurer-Tax Collector related to property tax system configuration, tax increment allocation, reporting, and ongoing administration. The policy requires full reimbursement to the County for all reasonable and actual costs incurred in evaluating, implementing, administering, and, if applicable, modifying County systems to support an EIFD. Recoverable costs include staff time, legal and financial consulting services, property tax system development and maintenance, and bond issuance, disclosure, and compliance activities. Cost recovery requirements must be documented in a participation agreement or similar instrument approved by the Board of Supervisors, and advance deposits may be required prior to initiating County work.

Financial Impact
Board approval of the EIFD Participation Policy does not result in a direct fiscal impact and does not commit County resources. Any future EIFD proposal requesting County participation would be subject to separate Board consideration and would include a detailed fiscal analysis identifying potential impacts to the County General Fund, service levels, and administrative capacity.

Strategic Initiatives
Equity Framework - Plans, Policies & Budgets
Operational Plan - Attainable Housing, Reliable Transportation Submitted By:

Nicole D. Coburn, County Executive Officer
Recommended By:

Nicole D. Coburn, County Executive Officer
Artificial Intelligence Acknowledgment:

ChatGPT, an Artificial Intelligence (AI) large language model tool, significantly contributed to the development of this agenda item, including Staff Report and Attachments, in compliance with the County of Santa Cruz AI Appropriate Use Policy.

12.12 CITY OF SANTA CRUZ ENHANCED

INFRASTRUCTURE FINANCING DISTRICT

INFRASTRUCTURE FINANCING PLAN
FEBRUARY 19, 2026
Prepared By:

Prepared For:

12.13 Santa Cruz EIFD
Infrastructure Financing Plan
February 19, 2026

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Table of Contents
Section Page

1.0 Introduction .............................................................................................................................3

2.0 Description of the Proposed District .......................................................................................6

3.0 Description of Proposed Facilities and Development ............................................................7

4.0 Finding of Communitywide Significance.............................................................................. 12

5.0 Financing Section ................................................................................................................ 13

6.0 Removal of Dwelling Units and Replacement Housing Plan .............................................. 17

7.0 Goals of the District.............................................................................................................. 18

8.0 Appendices .......................................................................................................................... 19 Index of Appendices
Appendix A: Map of Boundaries of the Santa Cruz EIFD
Appendix B: Legal Description of the Santa Cruz EIFD
Appendix C: Projected Tax Increment Revenue Analysis
Appendix D: Fiscal Impact Analysis

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Infrastructure Financing Plan
February 19, 2026

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1.0 Introduction

1.1 Background & Purpose
The proposed Santa Cruz Enhanced Infrastructure Financing District (“Santa Cruz EIFD” or “District”) will serve as a catalyst for private development and critical regional infrastructure with transformative potential for the City of Santa Cruz (“City”) and larger Santa Cruz County (“County”) region. The Santa Cruz EIFD encompasses approximately 543 acres of land, representing approximately 5% of the total land area within the City. The Santa Cruz EIFD includes the Santa Cruz Downtown Plan Expansion Area, several mixed-use corridors, and various other housing and blended-use development opportunity sites within the City that stand to benefit from catalytic infrastructure improvements with communitywide and regional benefit.

1.2 Contents and Overview of this Infrastructure Financing Plan (“IFP”) Pursuant to Government Code Sections 53398.59 through 53398.74, this IFP comprises the following information:
a) A map and legal description of the District, included herein as Appendix A and Appendix B, respectively.
b) A description of the public facilities and other forms of development or financial assistance that is proposed in the area of the district, including those to be provided by the private sector, those to be provided by governmental entities without assistance under this chapter, those public improvements and facilities to be financed with assistance from the proposed district, and those to be provided jointly. The description shall include the proposed location, timing, and costs of the development and financial assistance. This information is included in Section 3 of this IFP.
c) If funding from affected taxing entities is incorporated into the financing plan, a finding that the development and financial assistance are of communitywide significance and provide significant benefits to an area larger than the area of the district. This information is included in Section 4 of this IFP.
d) A financing section (included in Section 5 of this IFP), which shall contain all of the following information:
a. A specification of the maximum portion of the incremental tax revenue of the city or county and of each affected taxing entity proposed to be committed to the district for each year during which the district will receive incremental tax revenue.

The portion need not be the same for all affected taxing entities. The portion may

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Infrastructure Financing Plan
February 19, 2026

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change over time. The maximum portion of the City’s property tax increment to be committed to the District will be 50% throughout the duration of the District lifetime. b. A projection of the amount of tax revenues expected to be received by the district in each year during which the district will receive tax revenues, including an estimate of the amount of tax revenues attributable to each affected taxing entity for each year. Section 5.3 of this IFP includes a projection of tax revenues to be received by the District from each participating taxing entity by year over the course of the projected District lifetime. These projections are based on research and analysis of available data at the time of IFP preparation for purposes of illustration. Actual results may differ from those expressed in this document.

Appendix C provides additional detail for the projected revenue analysis. c. A plan for financing the public facilities to be assisted by the district, including a detailed description of any intention to incur debt. Section 5.4 of this IFP includes a plan for financing the public facilities to be assisted by the District. The Public Financing Authority (“PFA”) governing the District intends to incur debt only when it is financially prudent to do so. It is estimated at this time that the Santa Cruz EIFD will contribute approximately $89 million in present-value dollars to public improvements and affordable housing projects from a combination of bond or loan proceeds (multiple issuances may be necessary) and pay-as-you-go funding over the District lifetime. This is equivalent to approximately $217 million in nominal dollars (i.e., not adjusting for inflation).
d. A limit on the total number of dollars of taxes that may be allocated to the district pursuant to the plan. The total number of dollars or taxes that may be allocated to the District shall not exceed $400,000,000 (nominal dollars). e. A date on which the district will cease to exist, by which time all tax allocation to the district will end. The date shall not be more than 45 years from the date on which the issuance of bonds is approved pursuant to subdivision (a) of Section 53398.81, or the issuance of a loan is approved by the governing board of a local agency pursuant to Section 53398.87. The District will cease to exist the earlier of: (i) forty five (45) years from the date on which the first issuance of bonds or acquisition of a loan is approved by the PFA, or (ii) June 30, 2076. This IFP assumes that the base year for the District will be Fiscal Year 2025-2026 and that the District will begin receiving tax revenues in Fiscal Year 2026-2027. f. An analysis of the costs to the city or county of providing facilities and services to the area of the district while the area is being developed and after the area is developed. The plan shall also include an analysis of the tax, fee, charge, and other revenues expected to be received by the city or county as a result of expected development in the area of the district. Appendix D to this IFP includes,

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Infrastructure Financing Plan
February 19, 2026

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Santa Cruz City CouncilOctober 13, 2026

Santa Cruz City Council
October 13, 2026