Given this factor, staff recommends that the City Council authorize staff to prioritize an additional $300,000 in annual General Fund support for the Human Services Grants Program, dedicated to food assistance and childcare subsidies, in the Proposed FY 2027-29 Biennial Operating Budget, as described in the Financial Impacts & Budget Actions section of this report.
Public Grocery Store
As part of the policy around addressing food costs, the City Council also directed staff to evaluate public grocery store models. New York City is currently piloting a City-led model in which the City delivers grocery-ready sites, covers rent and property taxes, and sets operating requirements. $70 million in capital funding has been allocated to launch five public groceries under the pilot in New York City, and because the program is in its early stages, staff recommends that the City continue to observe its evolution and learn from that pilot before considering local implementation.
In the meantime, staff will continue to explore the feasibility of siting affordable grocers at City-owned sites, and specifically within the City’s affordable housing developments,
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so that residents can afford the grocery stores in their own buildings. Of note, the affordable housing development on City-owned land at 1318 4th Street will include an affordable grocery store, the terms of which are still under negotiation.
2. Early-Childhood and Childcare Costs
The City supports families with children through two main channels, including subsidized childcare for income-qualifying families (delivered through Connections for Children), and out-of-school time programming for youth from elementary through high school (delivered through the CREST program on local school campuses, the Police Activities League (PAL), and Virginia Avenue Park).
Childcare Costs
Childcare subsidies are distributed by the City through Connections for Children (CFC), the local childcare resource and referral agency, which centralizes State and local funding for eligible families. The City currently funds $1.2 million annually in childcare subsidies for income-qualifying Santa Monica families through this initiative, and of note, the current program does not meet all of the known need. For instance, the City last increased its reimbursement rate in FY 2023-24, and although the City’s rate is higher than the State rate, it is still not high enough for some Santa Monica families in need.
CFC maintains a waitlist of children who are eligible for Santa Monica childcare subsidies but for whom funding is not available.
Subsidy amounts are calculated based on each family’s income and average $18,000 to $20,000 per child per year. Additional funding would allow staff to increase the reimbursement rate, serve more qualifying families, or both. As part of this program, for each additional $100,000 per year invested, we would be able to serve approximately five more children.
As noted above in the food costs overview, staff recommends that the City Council authorize staff to prioritize an additional $300,000 in annual General Fund support for the Human Services Grants Program, dedicated to food assistance and childcare
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subsidies, in the Proposed FY 2027-29 Biennial Operating Budget, as described in the Financial Impacts & Budget Actions section of this report.
Out-of-School Time Programs
The City Council’s direction also asked staff to prioritize programs such as CREST.
CREST provides after-school childcare, school-break camps, and enrichment classes on local school campuses. While CREST charges a fee, the City offers a financial assistance program for qualifying families.
CREST is so popular that it has far exceeded its targets for full-fee families this school year, which allows the program to provide an even deeper level of financial assistance to those in need. For instance, in the current fiscal year alone, the City has forgiven $700,000 in fee revenue for families, and 320 youth currently receive financial assistance for CREST programs. PAL and Virginia Avenue Park also offer free programming for participating families.
To further support families with out-of-school time needs for their children, the City also recently executed an agreement with the Santa Monica-Malibu Unified School District (SMMUSD) to make after-school care more affordable. Through the District’s Expanded Learning Opportunities Program (ELOP), more students have access to free or low-cost after-school care and CREST camps during summer, spring, and winter breaks and on pupil-free days. Eligible students include those in foster care, students experiencing homelessness, low-income students, and English learners.
Newborn Supply Kits
Staff has also spent time evaluating the possible establishment of a local baby basket program. A comparable program, the Newborn Supply Kit, was piloted by the U.S.
Department of Health and Human Services during the Biden-Harris administration.
While well intentioned, the pilot identified several challenges. First, many households opted out because they already had the kit’s contents through their own families and networks. Also, the kits contained roughly $100 in goods, and the pilot found that the timing of when families learned about and received the kit was critical, which means a
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program limited to families in need would require targeted outreach during pregnancy.
As we assessed existing City staffing resources, it was identified that an operation of that scale is unlikely to be cost-effective.
As an alternative to deploying newborn supply kits, staff identified that investing dollars into an expansion of our existing childcare subsidy programs (for which there is a known and unmet need in Santa Monica) could serve as a viable expansion of support for families. Moving ahead, staff would also recommend assessing the viability of establishing a new program which provides the value of the newborn supply kit (~$100) directly to income-qualifying Santa Monican families with newborns to use as they see fit. Finally, staff has had preliminary discussions with the nonprofit firm Baby2Baby, which is moving its headquarters into Santa Monica. Baby2Baby provides children in need with diapers, clothing, and basic necessities, and with the nonprofit’s relocation into Santa Monica, staff has had discussions with the firm about partnering on a local newborn supply kits effort for Satna Monica in the future.
3. Worker Wages and Labor Protections
Santa Monica has several ordinances that guarantee wage and labor protections that exceed what State law requires, including a higher minimum wage, more paid sick leave, and other protections for workers. These regulations are contained in our Minimum Wage Ordinance, the Hotel Worker Minimum Wage Ordinance, and the Hotel Worker Protection Ordinance. The City Attorney’s Office (CAO) Consumer Protection Division is responsible for enforcing these laws.
Local Wage Enforcement
For the first ten years after the City adopted its minimum wage ordinance, the City contracted with the Los Angeles County Department of Consumer and Business Affairs (DCBA) to investigate and administratively enforce violations. The CAO worked with DCBA investigators to ensure consistent application of the City’s laws and represented the City in administrative appeals of DCBA citations, but it did not oversee the program on a day-to-day basis.
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As part of the City’s Realignment Plan efforts, the Consumer Protection Division was able to add an in-house Senior Legal Analyst with extensive experience in minimum wage investigations to lead investigations of worker protection violations and improve efficiency. That staff member joined the CAO in October 2026, and with that new staffing resource, workers who believe they have been undercompensated can now file a complaint directly with the CAO, much as tenants do. Complaints are then assigned to the Senior Legal Analyst and an attorney, who investigate jointly and, where violations are found, develop an enforcement plan.
The added staffing will also allow the CAO to conduct outreach and education for local businesses and workers about their rights and obligations, beginning in the first quarter of 2027. Most businesses want to comply but may not know how, and proactive education improves compliance on the front end, which is better for workers and frees enforcement resources for the most serious cases.
Final Paycheck Designee Ordinance
The City Council also directed staff to return with an ordinance to support wage recovery for residents who are unable to collect final wages because they have been detained by ICE. To that end, staff has developed such an ordinance, which if adopted would allow a worker to designate a person to receive the worker’s final paycheck when the worker cannot collect it personally.
Under State law, Labor Code section 202(a) generally requires an employer to pay final wages within 72 hours after an employee quits, unless the employee gave at least 72 hours’ notice, in which case wages are due at the time of quitting. Employees who give notice may direct that final wages be mailed to a designated address. Also, Labor Code section 1555 requires employers to give employees the opportunity to name an emergency contact and to indicate whether that contact should be notified if the employee is arrested or detained while working. However, neither provision addresses what happens to a final paycheck when an employee is unexpectedly separated from employment and has not directed where it should be sent.
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Against this backdrop, the City can adopt an ordinance requiring employers to allow employees to designate a person authorized to receive a final paycheck. The ordinance would apply whenever a final paycheck is available, but it is likely to be most useful when an employee unexpectedly fails to report to work because of an arrest, detention, illness, or other emergency during which they cannot communicate with their employer.
The core components of the draft ordinance (included as Attachment C) include the following provisions:
• Employers must provide all employees who perform work in Santa Monica a form to designate a person who may receive a final paycheck on the employee’s behalf;
• The form must be provided at hire and at least once each calendar year, and employees must be allowed to update it on request;
• The form must be provided in the language in which the employer provides other documents and information to the employee, unless the City has not provided a template in that language, in which case it may be provided in English; • Once prepared, the final paycheck must be provided to the employee or designee on request;
• If the final paycheck is not retrieved within 15 days after it is prepared, notice must be sent to the employee at the last known address and to the designee; • Enforcement is by the City Attorney’s Office; and
• The requirements may be waived by an express and unambiguous waiver in a collective bargaining agreement.
Staff sought feedback on these components from representatives of the Business Improvement Districts, Santa Monica Travel & Tourism, and the Santa Monica Chamber of Commerce, as well as from Familias Latinas Unidas and the CLEAN Carwash Worker Center. Community and worker representatives were strongly supportive and described at least one instance in which families wanted to get a paycheck to an employee or the employee’s representative after an immigration raid, but had difficulty determining how to do so.
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Chamber of Commerce representatives expressed some opposition on the grounds that the ordinance would increase administrative and compliance burdens for employers and could expose them to new liability for minor violations. In response, staff proposes that the ordinance take effect July 1, 2027, to allow ample time for outreach and support to businesses. In addition, the draft ordinance may be enforced only by the City and does not create a private right of action, and the Consumer Protection Division would lead outreach, education, and compliance with an education-first approach.
Tips for App-Based Delivery Drivers
The City Council directed staff to evaluate options to prohibit third-party delivery platforms from using customer tips to offset or substitute for base wages. In 2020, California voters passed Proposition 22, which classified app-based delivery drivers as independent contractors and set rules for minimum earnings and tips. Proposition 22 requires delivery platforms to pay drivers 120% of the applicable minimum wage for all “engaged time” and prohibits platforms from deducting tips from a driver’s earnings for engaged time. It also expressly preempts local legislation regarding app-based driver compensation and gratuities.
Given Proposition 22, the City is preempted from adopting its own regulations in this area. However, the CAO can and will accept complaints related to underpayment or diversion of tips under Proposition 22 as part of its expanded wage enforcement program and will collaborate with other prosecutors’ offices, as appropriate, to pursue investigations and enforcement.
4. Consumer Pricing Fairness
As part of the Affordability Agenda, the City Council directed staff to analyze the City’s authority to prohibit surveillance pricing, including a review of Federal Trade Commission (FTC) findings and pending State legislation, and to explore an ordinance requiring retailers to offer non-digital coupons.
Surveillance Pricing
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Surveillance pricing is the practice of using personal data about a consumer, combined with algorithms, to set individualized prices for goods, services, and even wages.
Particularly when shopping online, consumers may have very different experiences depending on their demographics, location, shopping history, and other factors.
In July 2024, the FTC issued orders to eight companies offering surveillance pricing products and services, seeking information about the potential effects of these practices on privacy, competition, and consumer protection. In January 2025, the FTC issued a research summary of early impressions from the responses, although these were not final findings. The preliminary information confirmed that surveillance pricing tools in use today can generate targeted prices and segment consumers based on defined attributes or behaviors, and that a broad range of businesses use them (including online and brick-and-mortar retailers, financial services, travel, credit card, and car rental companies). The FTC has not issued further information or final findings since January 2025.
Three states have passed laws addressing surveillance pricing directly. The California Legislature recently considered AB 2564, which would have prohibited surveillance pricing and furthered the purpose of the California Privacy Rights Act of 2020, but the bill did not advance to the Governor. The CAO will monitor whether similar legislation is reintroduced in the next legislative session.
While the City’s authority to broadly regulate surveillance pricing is limited, the City does prosecute businesses that charge more than the advertised price for a product under Business and Professions Code section 12024.2, based on investigations and referrals from the Los Angeles County Department of Weights and Measures. In some cases, these violations result from businesses changing an advertised price through surveillance pricing tactics without updating their point-of-sale systems.
Given these factors, staff is not recommending further local regulations at this time.
However, staff will continue to monitor federal and State action and to enforce existing price-accuracy laws.
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Digital-Only Coupons
In 2025, San Diego adopted an ordinance requiring retailers to make a non-digital coupon available for any deal offered through a digital coupon, so that seniors and people without cell phones can access the same discounts. After the ordinance was adopted, Albertsons, which also owns Vons and Pavilions, announced that its San Diego stores would significantly reduce the number of promotions and digital deals available, stating that many of its vendors and manufacturers do not provide alternative formats for their digital offers.
Given the experience in San Diego, staff is not recommending a local ordinance at this time. The potential that a new regulation related to digital-only coupons could reduce the availability of coupons for at least some segment of the populations suggests that the City should continue to monitor San Diego’s ordinance and experience, and return with further recommendations as appropriate.
5. Housing Stability and Tenant Protections
Housing stability is the area in which the City has the most existing tools and programs.
The Housing and Human Services Department operates several programs that support housing stability for at-risk households, including:
• The Preserving Our Diversity (POD) program provides cash assistance to low-income, long-term Santa Monica residents living in rent-controlled apartments. • The Measure GS-funded expansion of the Right to Counsel program provides free eviction prevention legal services to low-income renters through the Legal Aid Foundation of Los Angeles.
• Santa Monica Renter Aid (SMRA), a Measure GS-funded homelessness prevention program, helps eligible renters resolve immediate housing stability
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crises through one-time or short-term financial assistance and housing stabilization services.
• The Homelessness Prevention and Intervention Division is partnering with Los Angeles County’s Homelessness Prevention Unit to launch the Santa Monica Predictive Prevention Pilot, which will proactively identify households at highest risk of homelessness.
The CAO Consumer Protection Division also enforces the City’s tenant protection laws, including the Tenant Harassment Ordinance, the Housing Anti-Discrimination Ordinance, and the Tenant Relocation Assistance Ordinance, to prevent displacement of the City’s most vulnerable renters.
Adding to the City’s affordable housing stock remains one of the primary long-term solutions for households struggling to afford rent or to stay in the city. In addition to the Housing Trust Fund and Measure GS, the City is participating in a regional study of social housing models. On May 18, 2026, ACT-LA, on behalf of the LA Housing Training Hub (The Hub), was awarded $499,567 through the Los Angeles County Affordable Housing Solutions Agency (LACAHSA) to work with the City of Santa Monica, LA Metro, and the City of Long Beach on innovative housing solutions. The work in Santa Monica begins with community outreach on social housing goals, which will inform housing models that give residents a meaningful voice in how rental housing is operated, share responsibility for managing a property, collectively govern and own housing through a cooperative, or allow ownership of a home that remains affordable for future residents. The Hub will then conduct a feasibility study of the financial viability of appropriate models, assess publicly owned land that may be suitable for future development, recommend best-fit models for Santa Monica, and provide education and technical support to developers through a workshop series.
Measure GS Housing Production Funds and the Housing Trust Fund Guidelines On June 1, 2026, the Measure GS Resident Oversight Committee voted to recommend that up to $23.5 million in Measure GS funds from the Housing Production category be
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incorporated into the Housing Trust Fund (HTF) Guidelines process. The proposed exhibit to the HTF Guidelines (Attachment D) would create a new housing trust fund for Measure GS housing production funds, with guidelines governing eligible uses and affordability levels. Incorporating these funds into the HTF process will expedite affordable housing development in the City. With Council approval, staff would conduct outreach to affordable housing developers and reopen the “over-the-counter” process for affordable housing development funding in January 2027.
Preserving Our Diversity (POD) Program Expansion
Staff proposes updates to the POD program that would allow it to serve more very low-income senior renters, adjust benefits to better reflect current living costs, and study future expansion. The proposed eligibility changes would include the following components:
• Include participants living in deed-restricted affordable housing; • Lower the minimum age from 65 to 62;
• Lower the minimum tenure in a rent-controlled apartment to 10 years; and • Establish an annual cost-of-living adjustment to benefit payments, tracking annual changes in the Consumer Price Index for Los Angeles County as compiled by the U.S. Bureau of Labor Statistics.
Expanding eligibility would supports the POD program’s long-term goal of serving at least 300 very low-income senior households.
To make these changes without reducing the number of households served, staff requests City Council authorization to allocate $360,000 in currently available funding from Special Revenue Sources. That funding would include an additional $250,000 to fund the cost-of-living adjustments through FY 2027-28; an annual allocation of $10,000 for marketing and outreach; and up to $100,000 to commission a study of the feasibility of further expanding the program to serve low-income Santa Monica families and households that include persons with disabilities. These budgetary amendments are further described in the Financial Impacts & Budget Actions section of this report.
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Tenant Organizing and Collective Tenant Rights
Council directed staff to evaluate and return with options to support tenant unionization and collective tenant rights, including best practices from similarly situated jurisdictions.
State law already protects tenants’ right to organize. Civil Code sections 1942.5 and 1942.6 prohibit retaliation for a tenant’s participation in organizing activity or advocacy for tenants’ rights, and expressly protects the right of any invited person to enter a building to share information about tenants’ rights or participate in organizing.
Prohibited retaliation includes raising rent, decreasing services, forcing a tenant to move out, or bringing an eviction action because of a tenant’s organizing activity.
Several California cities go further than State law. They generally fall into two groups, as follows:
• Cities that treat retaliation for, or bad-faith interference with, tenant organizing as a form of prohibited tenant harassment, subject to penalties and a defense to eviction. These include West Hollywood, Long Beach, Oxnard, Santa Ana, Los Angeles, Pasadena, and Mountain View. East Palo Alto expressly recognizes a right to organize but does not expressly prohibit landlord interference with that right or provide penalties for it.
• Cities that grant additional rights to tenant associations. San Francisco and Berkeley give associations supported by a petition signed by at least 50% of tenants the right to require the landlord to confer with the association on matters affecting all tenants and to attend quarterly association meetings.
Santa Monica falls within the first group. The City’s Rent Control Law (Charter Section 1806(d)) prohibits evictions brought in retaliation for a tenant organizing other tenants, and the Tenant Harassment Ordinance (SMMC section 4.56.020(n)) prohibits retaliation against a tenant for exercising any tenant right, which includes the right to engage in organizing activity. Violations of the Tenant Harassment Ordinance are subject to civil
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penalties of up to $20,000 per violation or actual damages, criminal prosecution, and injunctive relief. Unlike many of the other cities in this group, however, Santa Monica’s Tenant Harassment Ordinance does not expressly prohibit landlord interference with organizing activity.
The CAO Consumer Protection Division has received few complaints of retaliation for organizing activity and is not aware of any complaint involving a landlord’s refusal to recognize or engage with a tenant association. It has, however, recently received a complaint alleging landlord interference with organizing activity. That investigation is not complete, and the CAO has not yet determined whether the tools available under the Tenant Harassment Ordinance are sufficient to address the conduct alleged or similar conduct in future cases.
With that being said, consistent with the City Council’s direction, the City can adopt an ordinance that expressly prohibits bad-faith interference with, obstruction of, or discouragement of tenants’ right to organize as a form of tenant harassment.
Accordingly, staff is seeking City Council authorization to begin both development and outreach regarding amendments to the City’s Tenant Harassment Ordinance related to tenant organizing activities.
Based on our assessment, staff does not believe an ordinance along the lines of Berkeley’s or San Francisco’s, which grants additional rights to tenant associations that demonstrate support from 50% of tenants, is necessary at this time. However, staff will report back if additional information warrants it.
Tenant Habitability
Separately, staff expects to return to Council in 2027 with recommendations to improve the processes for addressing tenant habitability complaints, which are under development. As part of that work, staff is evaluating what additional resources may be needed to support both individual tenants and groups of tenants in buildings with habitability concerns.
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Next Steps
If Council approves the recommended actions, the Final Paycheck Designee Ordinance would return for second reading and adoption and would take effect July 1, 2027, preceded by business outreach led by the CAO Consumer Protection Division, which also begins broader wage-enforcement outreach and education in the first quarter of 2027.
Staff would conduct developer outreach and reopen the over-the-counter affordable housing funding process in January 2027, implement the POD program updates, and incorporate Council’s direction on HSGP funding into the Proposed FY 2027-29 Biennial Operating Budget. Staff will continue to monitor the public grocery, surveillance pricing, and digital coupon developments described above, and will return to Council in 2027 on both a Tenant Harassment Ordinance and tenant habitability operations.
Environmental Review
The adoption of the ordinance, the revisions to the Housing Trust Fund Guidelines, the POD program updates, and the budget changes are exempt from CEQA pursuant to Section 15061(b)(3) (Common Sense Exemption) of the CEQA Guidelines, which provides that CEQA does not apply "where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment." The recommended actions are administrative and programmatic in nature and continue the City’s existing affordability and tenant protection programs. Therefore, it can be seen with certainty that these actions would not result in adverse physical impacts on the environment, and they are exempt from CEQA.
Financial Impacts and Budget Actions
FY 2026-27 budget amendment (POD program)
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Staff seeks authority to appropriate available funding from the Special Revenue Source Fund to implement the POD program updates described in this report. If approved, the following budget amendment is required:
FY 2026-27 Budget Amendment
Appropriate Funds
Account # Amount
10420002.555710 $250,000
01420010.521000 $10,000
01420010.552010 $100,000
TOTAL $360,000
FY 2027-29 budget direction (HSGP)
Staff seeks Council direction regarding the allocation of an additional $300,000 in General Funds annually to the Human Services Grants Program beginning in FY 2027- 28, dedicated to food assistance programs and childcare subsidies. The proposed split would be determined based on the responses received from through the HSGP funding process. If approved, staff will incorporate this direction into development of the FY 2027-29 Biennial Operating Budget.
Prepared By: Sergio Ramirez, Chief of Staff
Approved Forwarded to Council
Attachments:
A. Attachment A - Exploring Affordability and Tenant Protection Initiatives - Torosis, Hall, Raskin
B. Attachment B - Approval of Funding Guidelines and Authorization to Release Request for Proposals for Human Services Grants Program FY 2027-31 C. Attachment C - Ord - Employee Designation of Individual to Receive Last Paycheck 10.27.26
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D. Attachment D - MSGS Attachment to HTF Guidelines
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Meeting: January 27, 2026
16 ITEM BY MAYOR CAROLINE TOROSIS, COUNCILMEMBER DAN HALL, AND
COUNCILMEMBER ELLIS RASKIN
Request of Mayor Torosis and Councilmembers Hall and Raskin to direct the City Manager and City Attorney to evaluate and advance targeted affordability strategies addressing food costs, early-childhood expenses, worker wage protection, consumer pricing fairness, and tenant displacement, using proven local and national models.
Over the past several years, the cost of everyday life in Santa Monica has risen sharply. Even as headline inflation has cooled, residents continue to feel real pressure at the grocery store, when welcoming a new child, in their housing costs, and in the prices they pay as consumers and workers. Affordability is no longer a challenge facing only the lowest-income households; it affects renters and homeowners, families with young children, seniors on fixed incomes, working professionals, small business employees, and longtime residents alike.
While the federal government abandons many Obama- and Biden-era affordability policies, cities across the country are increasingly focusing on affordability strategies that reduce costs directly at the source. These approaches lower prices, improve transparency, protect earned wages, and prevent displacement caused by consolidation, speculation, and opaque pricing practices. They are designed to benefit middle- and working-class households while providing the greatest relief to those with the least financial margin.
Santa Monica is well positioned to lead locally by piloting and scaling policies that are legally viable at the municipal level, supported by resident sentiment, and grounded in documented outcomes elsewhere. A city cannot claim economic recovery and renaissance if residents and workers cannot afford to live, raise families, or remain housed here. If Realignment is about restoring confidence in City Hall and revitalizing our Downtown, this affordability agenda is about ensuring that Santa Monica remains livable for the people who power its economy and civic life.
Food and Household Essentials
From 2020-2024, grocery prices nationally increased by 23%,1 outpacing wage growth for many households. Research by the U.S. Department of Agriculture and the Federal Reserve shows that food costs take up a disproportionate share of income for lower-income households, and that grocery consolidation has reduced competition in many regions. In response, several cities and states have explored public or municipally supported grocery models to stabilize prices and ensure access. Examples include:
1 https://www.ers.usda.gov/data-products/chart-gallery/chart-detail?chartId=58350
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Packet Pg. 919 Attachment: Attachment A - Exploring Affordability and Tenant Protection Initiatives - Torosis, Hall, Raskin (7980 : Affordability Agenda) 16 ITEM BY MAYOR TOROSIS AND COUNCILMEMBERS HALL AND RASKIN Exploring Affordability and Tenant Protection Initiatives ● Leon, Kansas and St. Paul, Kansas, where a school district and municipal government stepped in to operate grocery stores after private operators exited.2 ● The Illinois Grocery Initiative, which provides public support to sustain grocery access in underserved areas.3
● Policy research from the Economic Security Project documents that public grocery stores can use publicly owned land, pooled purchasing, and mission-driven pricing to reduce consumer costs and stabilize local food access.4 Santa Monica is not immune to food desertification. When the 99 Cents Only Store on Pico Blvd. and Stewart St. closed in 2024, many low-income families in the Pico neighborhood and across all of Santa Monica were deeply concerned that our city lost its only low cost grocer. Dollar Tree eventually leased the store and continues operations today, but it no longer offers refrigerated foods, and it now offers far fewer low-cost food products. Furthermore, if the company were to cease operations at the site, the neighborhood would be without a low cost grocer. A public grocery would ensure continuity of low cost nutrition for all Santa Monica families.
Early-Childhood Costs and Baby Basket Programs
The birth of a child is one of the most financially vulnerable moments for families.
Diapers, wipes, and postpartum supplies can cost more than $1,000 annually, and many of these items are not covered by federal assistance programs such as SNAP or WIC. Finland has offered a Baby Box program to new families since the 1930s, and New York City piloted a Baby Box program under Mayor Adams, set to be expanded under Mayor Mamdani, which provides no-cost ‘starter kits’ for new parents. A federal pilot program under the Biden Administration found that:
● Two-thirds of parents reported reduced stress with the receipt of baby supplies. ● Over three-quarters of low-income recipients reported meaningful financial relief.5 These programs are typically distributed through hospitals or clinics at birth and paired with information on public benefits and maternal health resources.
Wages and Labor Protections
App-based delivery workers depend heavily on customer tips, yet persistent concerns remain about how third-party delivery platforms calculate pay. Under California law, gratuities are the sole property of the worker and may not be counted toward an employer’s wage obligations. However, opaque pay formulas used by delivery apps 5 https://www.hhs.gov/blog/2024/10/28/supporting-families-moments-that-matter.html 4 https://economicsecurityproject.org/resource/opening-the-door-to-public-grocery-stores/ 3 https://dceo.illinois.gov/illinois-grocery-initiative.html 2 https://www.ruralgrocery.org/learn/publications/case-studies/
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Packet Pg. 920 Attachment: Attachment A - Exploring Affordability and Tenant Protection Initiatives - Torosis, Hall, Raskin (7980 : Affordability Agenda) 16 ITEM BY MAYOR TOROSIS AND COUNCILMEMBERS HALL AND RASKIN Exploring Affordability and Tenant Protection Initiatives often make it difficult for workers and customers to determine whether tips truly supplement earnings or are used to offset base pay.
Prior enforcement actions and public settlements involving major platforms highlight the need for clearer rules and transparency. When tips fail to increase total compensation, workers lose income and consumers are misled. Ensuring that tips are paid fully on top of guaranteed wages aligns delivery platforms with established labor standards and protects both workers and customers.
Consumer Pricing Transparency
Advances in data analytics have enabled companies to experiment with personalized or surveillance-based pricing, in which prices are adjusted based on consumer data such as location, browsing history, or purchasing behavior. The Federal Trade Commission has documented6 active development of these tools in retail, grocery, and airline industries.
Academic and journalistic investigations7 have shown that such practices can result in different consumers paying different prices for identical goods, often correlating with income, geography, or demographic proxies. In response:
● California and Massachusetts legislators have introduced bills to restrict or ban surveillance pricing, particularly in groceries.
● Consumer advocacy groups have called for “one person, one price” rules to preserve transparency and fairness.
● San Diego banned digital-only coupons to ensure seniors and persons without cell phones could access deals.
Municipal action in this space focuses on access to non-digital coupons, consumer protection, and deceptive practices, areas where cities traditionally exercise authority.
Wage Recovery and Family Protections for Residents and Workers Detained by Immigration and Customs Enforcement (ICE)
Santa Monica is home to many immigrant residents and workers whose labor contributes directly to the local economy. Under California and federal law, workers are entitled to be paid for all wages earned regardless of immigration status. This includes final paychecks, accrued wages, and other compensation owed at the time of job separation, detention, or deportation.
7 https://www.consumerreports.org/money/questionable-business-practices/instacart-ai-pricing- experiment-inflating-grocery-bills-a1142182490/
6 https://www.ftc.gov/system/files/ftc_gov/pdf/sp6b-issue-spotlight.pdf
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Packet Pg. 921 Attachment: Attachment A - Exploring Affordability and Tenant Protection Initiatives - Torosis, Hall, Raskin (7980 : Affordability Agenda) 16 ITEM BY MAYOR TOROSIS AND COUNCILMEMBERS HALL AND RASKIN Exploring Affordability and Tenant Protection Initiatives When a worker is detained by Immigration and Customs Enforcement (ICE), families and dependents often face immediate financial crisis. In many cases, earned wages go unpaid or unclaimed because:
● the worker is unable to retrieve their final paycheck, ● employers do not proactively release wages to authorized family members, ● or dependents lack information or documentation to assert wage claims on the worker’s behalf.
California law permits authorized representatives, including family members with proper documentation (such as power of attorney), to recover unpaid wages through the Labor Commissioner’s Office. Worker advocacy organizations, including the Asian Law Caucus and the California Labor Commissioner, have documented that wage recovery is legally possible but procedurally difficult without legal assistance.8 Local governments cannot regulate immigration enforcement, but they can ensure access to wage recovery, provide information, and coordinate with legal service providers so that families are not unlawfully deprived of earned income at moments of crisis.
Ensuring that detained workers’ final, prorated wages reach their dependents is both a worker-protection measure and an anti-poverty intervention, preventing sudden income loss from cascading into eviction, food insecurity, or homelessness.
Housing Stability and Anti-Displacement
Santa Monica’s housing stock is predominantly renter-occupied, and displacement often occurs through eviction caused by building sales, followed by rent increases or redevelopment.
The Tenant Opportunity to Purchase Act (TOPA) model, first adopted in Washington, D.C.,9 provides tenants the right of first refusal when their building is offered for sale. Under TOPA:
● Property owners still receive fair market value.
● Tenants may assign their purchase right to a nonprofit affordable housing provider.
● Cities preserve naturally affordable housing without new construction. 9 https://ota.dc.gov/page/tenant-opportunity-purchase-act-topa 8 https://www.asianlawcaucus.org/news-resources/guides-reports/how-to-receive-your-paycheck-if-youve- been-detained-or-deported
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Packet Pg. 922 Attachment: Attachment A - Exploring Affordability and Tenant Protection Initiatives - Torosis, Hall, Raskin (7980 : Affordability Agenda) 16 ITEM BY MAYOR TOROSIS AND COUNCILMEMBERS HALL AND RASKIN Exploring Affordability and Tenant Protection Initiatives TOPA-style policies have been studied by housing researchers and are currently under consideration or pilot in some California jurisdictions as an anti-displacement strategy consistent with state housing law. Santa Monica can learn from other jurisdictions’ opportunities and challenges to craft a local program meeting our needs.
Additionally, other jurisdictions have enacted strict protections to ensure that existing tenants are not pushed out or priced out when family members, such as aging parents or other relatives, are forced to move in. Last month, the City of Los Angeles banned rent increases when family members join the household.10 Enacting similar renter protections in Santa Monica will help promote neighborhood stability and keep long-term renters in their homes.
Tenant Unionization and Collective Tenant Rights
Across California, tenants increasingly rely on collective organization to address habitability issues, unlawful rent practices, harassment, and displacement pressure.
Tenant unions provide a structured way for renters to communicate with property owners, assert existing legal rights, and prevent retaliation when raising concerns.
California law already protects tenants’ right to organize (California Civil Code § 1942.5). Under state anti-retaliation statutes, landlords may not threaten eviction, raise rent, reduce services, or otherwise retaliate against tenants for organizing, participating in tenant associations, or exercising rights under housing law. Courts and enforcement agencies have recognized tenant organizing as a protected activity when tenants act collectively to improve housing conditions or enforce lease terms.
Despite these protections, tenant unions often face practical barriers, including:
● inability to communicate with or meet other tenants easily, ● lack of clear recognition by landlords,
● uncertainty around meeting access in common areas,
● fear of retaliation,
● and fragmented complaint processes that require tenants to act individually rather than collectively.
Several cities, such as San Francisco, have responded by clarifying, facilitating, and reinforcing tenant organizing rights at the local level.11 These measures do not create new rent regulations; instead, they strengthen enforcement of existing rights, provide clear standards for landlords, and create structured communication channels between tenant associations and city departments.
11 https://www.sf.gov/news--new-legislation-tenant-organizing-and-tenant-associations 10 https://mayor.lacity.gov/news/making-la-more-affordable-mayor-bass-enacts-new-tenant-protections- caps-rent-apartment-units
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Packet Pg. 923 Attachment: Attachment A - Exploring Affordability and Tenant Protection Initiatives - Torosis, Hall, Raskin (7980 : Affordability Agenda) 16 ITEM BY MAYOR TOROSIS AND COUNCILMEMBERS HALL AND RASKIN Exploring Affordability and Tenant Protection Initiatives Santa Monica, with its long-standing rent control and tenant protection framework, is well positioned to formalize and strengthen support for tenant unions as a cost-containment and displacement-prevention tool, particularly in large multifamily buildings where collective action can prevent minor issues from escalating into housing loss.
In order to further advance a Renaissance Agenda for the City of Santa Monica and build upon the City’s Realignment Plan passed in October 2025, WE THEREFORE MOVE THAT THE COUNCIL:
1. Direct the City Manager to return to Council within 180 days with an evaluation of public grocery store models, including:
1.1. Legal authority and operational structures available to Santa Monica,
1.2. Potential use of publicly owned land or partnerships,
1.3. Case studies from other municipalities,
1.4. Estimated startup and operating costs and governance options.
2. Direct the City Manager, in coordination with local community based organizations and municipal partners, to explore and return to council within 180 days with an evaluation and recommendations for a Santa Monica Baby Basket program, including:
2.1. Possibility for coordination with local hospitals, birthing centers, and/or libraries,
2.2. Cost estimates per newborn and potential funding sources,
2.3. Potential non-profit partners,
2.4. Alignment with existing childcare and family support programs,
2.5. Any proposed limitations or eligibility criteria.
3. Direct the City Manager, in coordination with the City Attorney, to evaluate options to prohibit third-party delivery platforms from using customer tips to offset or substitute for base wages, and return to council within 90 days with a recommendation, including:
3.1. Assessing the City’s authority to require clear pay transparency from delivery platforms, including disclosure of:
3.1.1. guaranteed base pay,
3.1.2. customer tips paid to workers,
3.1.3. and confirmation that tips are paid entirely in addition to, and not in lieu of, wages.
3.2. Evaluating enforcement models adopted or under consideration by other California jurisdictions, including consumer-protection and labor-standards approaches addressing app-based delivery services.
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3.3. Exploring ordinance or administrative options that would ensure tips function solely as gratuities, consistent with long-standing labor standards applicable to restaurant and hospitality workers.
4. Direct the City Attorney to analyze municipal authority to prohibit surveillance pricing, and return to Council within 90 days with recommendations, including:
4.1. Review of FTC findings and pending state legislation,
4.2. Options for defining surveillance pricing as a deceptive practice,
4.3. Exploring an ordinance to require non-digital coupons,
4.4. Enforcement mechanisms and penalties.
5. Direct the City Manager, in coordination with the City Attorney, to report back in 90 days with an ordinance to support wage recovery for residents and workers detained by ICE, including claims through the California Labor Commissioner, for workers who are detained, deported, or otherwise unable to retrieve final paychecks, that would require employers to provide a form to new and existing employees with which an employee can designate a bank account or individual to receive an employee’s paycheck in the event of the employee’s unavailability due to detention by federal immigration authorities.
6. Direct the City Manager to evaluate and return within 180 days with recommendations for community land trust and tenant opportunity to purchase policies, including:
6.1. Compatibility with Santa Monica City Charter Articles XVIII and XX and just cause ordinances,
6.2. Administrative models from other municipalities,
6.3. Financing and nonprofit partnership options,
6.4. Anti-speculation and anti-abuse guardrails.
7. Direct the City Manager and City Attorney to evaluate and return within 180 days with options to support tenant unionization and collective tenant rights, including:
7.1. Clarifying local recognition of tenant associations, including defining when a tenant organization is considered a representative body for purposes of communication with landlords and the City.
7.2. Reviewing best practices from other California cities that have adopted tenant-organizing support measures, such as:
7.2.1. anti-retaliation ordinance enhancements,
7.2.2. required landlord notice of tenant organizing rights,
7.2.3. and protocols for landlord–tenant association communication.
7.3. Evaluating access to common areas in multifamily properties for lawful tenant meetings, consistent with fire, safety, and building codes.
7.4. Assessing need for additional enforcement mechanisms to address retaliation against tenants for organizing, including:
7.4.1. civil penalties,
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7.4.2. administrative remedies,
7.4.3. and referral pathways to the City Attorney or appropriate enforcement agencies.
7.5. Exploring creation of a tenant-union liaison or ombudsperson function, either within an existing department or via contracted legal services, to:
7.5.1. assist tenant associations in understanding their rights and facilitating organization,
7.5.2. coordinate habitability or code-enforcement complaints raised collectively,
7.5.3. and reduce duplicative, individual filings.
7.6. Ensure alignment with existing Santa Monica Rent Control, Just Cause, tenant-harassment protections, and State and Federal fair housing laws.
7.7. Return to City Council with options for ensuring that existing tenancies will not be terminated, and residents will not be subject to rent increases, when partners, parents, grandparents, children, aunts, uncles, nieces, nephews, or other close family members move into existing tenancies.
7.8. Return to Council with findings and recommendations, including legal constraints, staffing implications, and potential ordinances or administrative actions.
7.9. The City Manager and City Attorney shall carry out this direction in consultation with the Rent Control Agency, with the understanding that the Charter respects the separation of powers between the City Council and Rent Control Agency.
8. Direct the City Manager and City Attorney to evaluate additional tenant-stability and anti-displacement tools used in similarly situated jurisdictions, including but not limited to; anti-harassment standards, ownership-change protections including requirements to notify all tenants when buildings are put up for sale, additional relocation assistance triggers, data transparency, and procedural eviction safeguards, and report back in 180 days with legally viable options for Santa Monica.
9. Direct staff to engage stakeholders, including renters’ rights organizations, consumer advocates, grocers, healthcare providers, and affordable housing nonprofits, and report back with recommendations, funding opportunities, and potential implementation timelines.
###
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Packet Pg. 926 Attachment: Attachment A - Exploring Affordability and Tenant Protection Initiatives - Torosis, Hall, Raskin (7980 : Affordability Agenda) City Council
Report
City Council Meeting: August 11, 2026
Agenda Item: 11.A
1 of 18
To: Mayor and City Council
From: Aileen Reynolds, Director, Housing and Human Services Department Subject: Approval of Funding Guidelines and Authorization to Release Request for Proposals for Human Services Grants Program FY 2027-31
Recommended Action
Staff recommends that the City Council:
1. Adopt a finding that the proposed actions are not a “project” subject to the California Environmental Quality Act;
2. Approve the proposed FY 2027-31 Human Services Grants Program (HSGP) Funding Guidelines (Attachment I); and
1. Authorize staff to release a Request for Proposals (RFP) for the next four-year HSGP funding cycle (FY 2027-31).
Executive Summary
The City of Santa Monica (City) Human Services Grants Program (HSGP) provides funding to a wide range of local programs, providing a social safety net of services to respond to the evolving needs of the City’s underserved populations. The next funding cycle is scheduled to begin in July 2027, and staff requests City Council feedback and approval on key components of the HSGP Request for Proposals (RFP) along with authorization to issue the RFP to solicit applications for the FY 2027-31 HSGP funding cycle.
This report outlines a brief history and overview of the HSGP, including the program’s priorities and guiding principles, engagement efforts to solicit community input, and proposed funding guidelines for the FY 2027-31 RFP, including eligible services, eligibility criteria for participants and prospective agencies, living wage and cash match waiver, and program evaluation and scoring criteria.
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As the largest single source of City funds to non-profit social service agencies, the HSGP is a critical community resource to address wide-ranging socio-economic policy issues, including youth violence, homelessness, a growing aging population, and behavioral health issues. In the face of regional and federal funding cuts and a growing demand for services, the role of the HSGP has become even more critical in helping ensure the most vulnerable Santa Monicans are supported.
Background
The City has funded Santa Monica non-profits to provide high quality social services to target populations for over 50 years. Since its inception in 1974, the grants program was designed to address critical community needs, fill gaps in the existing service system, and offer funding stability to local social service agencies. Over the decades, the HSGP has grown from funding four non-profits to a portfolio of 18 agencies and 21 programs, administered by the Housing and Human Services Department (HHS). Although it has not kept pace with local community needs, funding has expanded to a current annual budget of $11 million.
To ensure that HSGP services focus on local needs, agencies must design programs specific to Santa Monica and demonstrate a history of effective services to target populations, including older adults, youth and families, people with disabilities, and other vulnerable Santa Monicans. As the cost of delivering services has increased over time and the needs of low income households have grown more complex, the grants program has intentionally focused funding on holistic programs that provide robust and comprehensive support to a smaller number of highly vulnerable individuals and families as opposed to broader, light-touch interventions to more people, ensuring HSGP-funded services more effective and meaningful for program participants. Current HSGP-funded services include, but are not limited to: child care subsidies, school-based mental health, job training and placement, food assistance, legal services, housing retention services, programs for older adults, and services for people experiencing homelessness.
The HSGP recently completed the third year of a four-year funding cycle, which runs from FY 2023-27. The four-year funding cycle intentionally offers stability for both
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grantee agencies and program participants. City staff work closely with HSGP agencies throughout the grant cycle to ensure that services continue to be responsive to local needs, and Council approves agency funding levels annually during the budget process.
Guiding Principles
• Provide Effective Services to All Target Populations: The HSGP remains committed to preserving the diversity of Santa Monica residents by supporting historically marginalized and underserved community members. Over the decades, the City has prioritized funding for programs whose proposals document strong evidence of meeting critical local needs. While the needs of various populations continue to fluctuate over time, it is critical that HSGP maintains a core and stable safety net for all populations. • Utilize Best Practices and Evidence-based Models to Provide Data-driven, High-impact Programs: To ensure that community members are served effectively and efficiently, HSGP services must be informed by best or promising practices and utilize evidence-based models whenever possible. Programs must also use data, including quantitative outputs and outcomes and qualitative participant and staff experiences, to inform adjustments and enhancements to the service model and maximize program impact.
• Maintain Strong Interagency Coordination: A key factor to maintaining a stable social service safety net is the providers’ demonstrated ability to collaborate effectively across agencies and programs and avoid duplication of efforts. HSGP-funded program staff are expected to stay current on other local programs and services, work closely on shared cases, and participate in warm hand-offs as appropriate.
• Prioritize People: Programs must balance high-quality client care and staff wellness. Research shows that workforce resilience and client care are deeply interconnected. Agencies that value and compensate their employees competitively demonstrate improved staff retention and participant outcomes, particularly for non-profit social service jobs that are often demanding and lower paid.
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Citywide Strategies and Initiatives that Inform HSGP Funding Priorities Over the past several years, HHS’s Human Services (HSD) and Homelessness Prevention and Intervention (HPI) Divisions, in partnership with a variety of community-based organizations, have facilitated several studies and authored plans to help direct Citywide strategic priorities and investments. The following community engagement initiatives inform the services, target populations, and guiding principles of the HSGP.
Behavioral Health Study
On February 25, 2025, City Council approved a behavioral health report, which included a comprehensive study and community engagement process (Attachment D) to understand key local and regional behavioral health needs including mental health and substance use disorder (SUD), and to assess the feasibility of developing a behavioral health crisis facility. The City engaged just under 600 adult and youth stakeholders through interviews, community meetings, focus groups, and a survey. They identified significant gaps in adult crisis services and children and youth behavioral health care.
Services have not kept up with increased need, resulting in untreated behavioral health challenges, particularly for vulnerable populations, including people who are uninsured or under-insured, people experiencing homelessness, older adults, people with disabilities, and youth. Additional research identified gaps in mental health and SUD programs for adults at multiple levels and in behavioral health services for children and youth across the continuum of care, including prevention and early intervention, crisis, and treatment and recovery services.
Renters’ Protection Report
Per Council direction, the City conducted a situational analysis and formulated recommendations to protect the 70 percent of Santa Monicans who are renters amidst record evictions. The Renters’ Protection Report (Attachment C) was approved by Council on March 11, 2025. Twenty-five in-depth interviews were conducted with 50+ participants across government agencies; legal, housing, and social services providers; tenant advocate groups; and resident groups. Many of these stakeholders noted equitable access to services as a priority. They expressed concerns related to heavy documentation burdens and overly complex and restrictive eligibility requirements,
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which can unintentionally exclude the most vulnerable Santa Monicans. Stakeholders also expressed the importance of preserving households of varying income levels and diverse backgrounds in Santa Monica, with emphasis on families with minor children, older adults, people with disabilities, and households with low- or fixed-income.
Homelessness Strategic Plan
Between 2022 and 2025, the City of Santa Monica conducted extensive community outreach to understand strengths and challenges in the City's homelessness response and outline the community's priorities related to homelessness. Stakeholder feedback was collected via 17 group and individual interviews, eight inter-departmental small group meetings, and six presentations to community groups and City Commissions/Boards. Stakeholder feedback identified key themes including helping to prevent housed Santa Monicans from becoming homeless through responsive service provision and minimizing the length and severity of homelessness and its impacts on the community by providing effective supportive services. The City developed a Homelessness Strategic Plan (Attachment B) which responds to these themes and provides a shared vision, goals, and investment of resources for addressing homelessness. City Council approved the Plan on March 11, 2025.
Aging and Disability Action Plan
City Council approved a citywide Aging and Disability Action Plan (Attachment A) on September 9, 2025. The Action Plan was driven by a community-based Advisory Committee which centered the lived experience of Santa Monica’s older adults, people with disabilities and caregivers. The needs-assessment to collect the public’s feedback on age- and disability-friendliness in Santa Monica was promoted widely over three months and captured almost 500 community survey responses, the voices of 50 open house attendees, and over 20 focus group participants. A cross-cutting theme from the needs assessment was a deeply felt sense of vulnerability. This vulnerability presented in people’s stories about feeling isolated and disconnected from community life and their concerns about housing affordability and aging in the community as their needs change.
Santa Monica Cradle to Career
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Santa Monica Cradle to Career (SMC2C) is a longstanding collective impact initiative of nonprofit providers and public institutions committed to supporting the holistic wellbeing and stability of children, youth and families by addressing the root causes of events and circumstances that create struggle and crisis. In FY 2025-26, parents, advocates, social services providers, elected officials, Santa Monica High School students, and staff from the City, SMMUSD, and SMC gathered over a series of three meetings to discuss the most pressing needs facing children, youth, and families in Santa Monica. Themes that emerged included a lack of safe, accessible spaces for youth to seek mental health support and peer connection; the need for earlier access to resources to prevent challenges from escalating into crises; financial stressors affecting household stability and homelessness; and growing concerns around youth mental distress and isolation, including the role of technology and social media.
HSGP Funding and Social Service System Needs
The current grants cycle began in FY 2023-24 with a budget of $10,145,594 and will end in FY 2026-27 at $11,168,123. Over the last three years, staff identified new funding sources to expand services in response to community needs and gaps in care, including one-time General Fund dollars for emergency immigration services, County Measure A funds to support housing retention, and Opioid Settlement and Providence Saint John’s (PSJ) Development Agreement funds for youth behavioral health services.
While these additional funds allowed a few programs to expand in a limited capacity, overall funding has not kept pace with demand.
Concurrently, the HSGP funds a wide array of social services that have been impacted by increased need and simultaneous funding cuts, including the following examples:
• The California Budget & Policy Center reports that thousands of families across California have been on a waiting list for years for subsidized child care slots, while Governor Newsom’s proposed budget for FY 2026-27 does not include any new funding for child care subsidies. In Los Angeles County alone, only 18% of eligible children were enrolled in subsidized child care as of 2024. 1 1 https://www.latimes.com/california/story/2026-02-02/subsidized-child-care-california-newsom
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• A 2026 report from the Federal Reserve Bank of New York found a sharp increase in food insecurity across the nation2 at a time when COVID-era food assistance grants are expiring and recent federal legislation enacted over $180 billion in reductions to Supplemental Nutrition Assistance Program (SNAP).3 • By 2030, a quarter of California’s population will be 60 years or older, a trend Santa Monica is experiencing locally4, and the National Council on Aging reports that the proposed federal budget for the Older Americans Act (OAA), which funds an incredible range of community-based services for older adults, includes elimination or drastic reduction of funding for the OAA's programs5. • The LA County Department of Homeless Services and Housing was forced to cut programming for FY 2026-27, including homelessness prevention and housing navigation, due to a $303 million budget deficit.6
• According to RAND, diagnosed mental health conditions among US children increased 35% from 2016 to 2023, and almost 40% of children aged 12 to 17 years with a major depressive episode did not receive treatment in the past year.
Barriers to treatment included financial costs, limited clinician availability, and logistical challenges, which are consistent with the findings of Santa Monica’s local behavioral health study7.
In this time when many mainstream programs are being scaled back or eliminated, centering the HSGP as a critical local resource helps ensure that the most vulnerable Santa Monicans are supported. Nearly half of current HSGP programs regularly maintain a waitlist, thus limiting the impact of these programs without additional funding.
Employee Wages
Social service agencies regionally and nationally have long struggled to meet operating costs as well as recruit and retain staff. This is particularly true in Santa Monica where 2 https://www.npr.org/2026/05/27/nx-s1-5836441/food-insecurity-economy-new-york-fed 3 https://www.pbs.org/newshour/show/millions-lose-snap-benefits-as-one-big-beautiful-bills-stricter-requirements-kick-in 4 santamonica.gov - Aging and Disability Action Plan
5 https://www.ncoa.org/article/current-federal-budget-and-appropriations-for-aging-services-programs/ 6 LA County Homeless Services & Housing Department; 2/3/26 Adopted Board of Supervisors Letter, p.4. 7 Burnett, A. L., Breslau, J., Cantor, J. H., McBain, R. K., & Yu, H. (2026). US child mental health care need, unmet needs, and difficulty accessing services. JAMA Pediatrics, 180(4), 451–453. doi.org
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agencies face high rent and many staff endure long commutes due to prohibitively high local housing costs. Provider wages and quality of life are inextricably intertwined with their ability to provide high quality services and overall program outcomes. Agencies struggling to secure adequate funding for staffing, benefits, administration, and operations also struggle to recruit and retain staff. The Center for Effective Philanthropy has documented that burnout and staffing issues are serious concerns for nonprofits, with leaders reporting that burnout affects their organizations’ ability to achieve their missions. To foster high-quality programs that maximize services to vulnerable community members and support living wages for the direct services workforce, HSGP funding levels must keep pace with living wage standards.
Past Council Actions
Meeting Date Description
08/24/2022
(Attachment E)
Council approved FY 2023-27 HSGP funding guidelines
05/09/2023
(Attachment F)
Council approved FY2023-27 HSGP funding
recommendations
02/25/2025
(Attachment G)
Council received the Adult Crisis & Children and Youth
Behavioral Health Care Study and authorized contract
modifications for Social Emotional Wellness
Initiative, St. Joseph Center, and Family Service of Santa Monica to expand behavioral health support for children and youth
12/16/2025
(Attachment H)
Council authorized a contract modification for Haven
Neighborhood Services to provide emergency financial
assistance to households impacted by federal immigration enforcement efforts
Discussion
HSD staff began updating the HSGP funding priorities in late 2025 to prepare for the release of the RFP in fall 2026.
Community Input
Over the last twelve months, City staff held a series of meetings with community members, current HSGP program participants, institutional partners, and key stakeholders to gather input on the current HSGP portfolio and understand service gaps and the growing needs of Santa Monica’s most vulnerable community members. City
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staff held a series of public community input sessions in May and June 2026, including a special meeting of the Human Services Commission, a SMC2C meeting, and a meeting at Virginia Avenue Park, which were collectively attended by 51 community stakeholders. Staff advertised these meetings to residents via a combination of City-wide email distribution lists, the City’s social media channels, and a media alert.
Accommodations were offered as appropriate. Child care and Spanish language interpretation were provided at Virginia Avenue Park. There was also a written public comment period open from May through June 2026 during which staff received four responses from the community.
At each meeting, staff presented: (1) an overview of the HSGP; (2) proposed RFP components, including program expectations, funding, agency eligibility criteria, and participant eligibility criteria; (3) HSGP goals; and (4) project timeline and continued opportunities to provide feedback. During the meetings, community members asked questions and shared thoughts and ideas. They also participated in a gallery walk, where they provided input on the HSGP priorities: housing and homelessness prevention, health and wellness, and financial stability. They responded to a series of questions related to each of the three areas, including:
• What does a healthy neighborhood look and feel like to you? • What services do you wish existed to help people avoid losing their home? • What types of jobs or training would help people in your community get ahead? Through these engagements, City staff learned that key gaps in services include formal support for the immigrant community, post-secondary workforce development services and programming for transition age youth (TAY) and non-traditional students, and positive programming for TAY. Residents and community members emphasized that access to health and wellness services is a major unmet need especially amid federal funding changes, with significant gaps in mental health services (particularly for school-age children and TAY), dental care for adults and seniors, women’s health, pediatric care, and specialty services for those with Medi-Cal. Participants also strongly advocated for providers who reflect the racial and cultural diversity of the community.
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Participants also emphasized that true wellness extends beyond services and includes communities where all people feel connected and have opportunities to engage across generations. Homelessness was also raised as a significant concern, with participants calling for more holistic and comprehensive approaches that address the full range of needs of people experiencing homelessness rather than treating it as solely a public safety issue. Additionally, the Pico Neighborhood was a point of emphasis where several populations were identified as not being adequately reached by current programs, including older adults and families with children ages 0-5.
Rent, housing affordability, food, transportation, and child care costs were named as the greatest day-to-day financial pressures facing community members. Participants cited rising rent and a lack of affordable units as key housing and financial concerns. This was particularly true for older adults, as rising costs make it increasingly difficult for those on fixed incomes to afford basic necessities while remaining in their homes.
Stakeholders also voiced concerns about physical accessibility for people with disabilities, many of whom are older adults, calling for more comprehensive and inclusive programming and greater support for residents who need to relocate due to mobility changes. To address child care costs, community members suggested larger subsidies that reflect the true cost of care and a pathway to universal care for children under five. Participants also encouraged greater investment in workforce programs and pathways that create true economic mobility in fields like healthcare, technology, trades, and green jobs, moving beyond basic survival to long-term economic empowerment.
Proposed 2027-31 RFP
The HSGP RFP recommendations described in this section are designed to provide accountability for public funds, foster a healthy and sustainable social service safety net, and support a balanced array of services to maintain a diverse and inclusive community.
Eligible Services
To determine local service priorities, staff reviewed stakeholder feedback, recent reports and initiatives, and the City’s strategic priorities. Services eligible for HSGP funding are organized under three key areas:
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While some of the above services are funded in the current HSGP grant cycle, several new areas emerged, such as: intergenerational programming, domestic violence services, enhanced immigration services, and expanded case management for housing retention. The RFP is an opportunity for both new and returning agencies to propose new programs or propose continuing or modifying existing programs that meet specific community needs. Agencies applying for HSGP funds must demonstrate that their program provides one or more of the eligible services listed above (see Attachment I, Section I for a detailed list of eligible services).
It should be noted that while the HSGP is a critical component of the City’s social services safety net, Santa Monica offers additional services funded outside of the HSGP including, but not limited to: out of school time programs, homeless outreach, interim housing, and standalone homelessness prevention financial assistance (e.g., Santa Monica Renter Aid program).
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Santa Monica Program Participant (SMPP) Eligibility
The HSGP relies on Council-adopted criteria for SMPP to ensure that local resources serve local needs. Applicants have flexibility in determining the population(s) they propose to serve, so long as program participants comply with the following SMPP eligibility criteria:
• An individual or household with a permanent address in Santa Monica; or • A student currently enrolled in a Santa Monica public school (for school-based services).
Council adopted more specific criteria for programs proposing to serve people experiencing homelessness (individuals or families), which ensure HSGP-funded programs prioritize people with the strongest ties to Santa Monica and with the most complex needs in a limited resource environment. This criteria was modified in January 2025, bringing the number of years a person needs to be homeless in Santa Monica from five years down to three years for single adults and one year for families. Staff do not propose any further changes. A person experiencing homelessness who does not meet SMPP criteria can instead be served by County or other regional resources, and providers are encouraged to have a referral process to connect these individuals with appropriate care. A list of all proposed SMPP eligibility criteria can be found in Attachment I, Section 2.
Agency Eligibility
To apply for HSGP funding, an agency must be a non-profit registered 501(c)(3) organization with a board of directors or a hospital, educational, or health care institution with a governing board and maintain an accounting system in accordance with Generally Accepted Accounting Principles (GAAP). An agency must also certify they are and will remain in compliance with city and federal regulations as well as laws that prohibit discrimination in hiring or provision of services and are in Good Standing with the State of California Office of the Secretary of State.
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If awarded funding, an agency must possess a current and valid Santa Monica business license for each Santa Monica location where services will be provided, have an established Grievance Procedure/Policy for participants, and submit a Good Neighbor Agreement. A list of all proposed agency eligibility criteria can be found in Attachment I, Section 3.
Program Evaluation
HSGP programs are intended to be data-driven and have lasting positive impacts on the lives of participants. Quantitative data, contextualized with qualitative program descriptions, help assess a program’s performance and can identify what is working and where adjustments are needed. HSGP-funded programs are required to report on program performance twice during the fiscal year, at mid-year and at year-end, and must submit a program report with a qualitative performance description and report on performance indicators including outputs and outcomes.
Programs must define a minimum of two and a maximum of five indicators to assess their impact. An indicator is a pair of one output and one outcome. Outputs describe the result of an activity and can include number of people served or number of services performed, while outcomes assess measurable impacts to participants’ lives and improvements resulting from the program. Indicators should be specific, measurable, achievable, relevant, and time-bound (SMART) and assess progress during the program year. The following is an example of a performance indicator, which includes one output and one outcome:
Example Performance Indicator
Metric
Type Description
Annual
Target
Documentation
Method
Indicator
1 Output # of vulnerably housed participants
who receive case management
100
SMPP
Case management
database
Outcome # of participants who remain housed 95
SMPP
Case management
database
Applying programs should adhere to the requirements above. The City may grant exceptions to how indicators are designed for HSGP-funded programs on a case-by-case basis.
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Packet Pg. 939 Attachment: Attachment B - Approval of Funding Guidelines and Authorization to Release Request for Proposals for Human Services Grants 14 of 18
Cash Match or Living Wage Options
In recognition of the fact that staff retention is a significant challenge among nonprofits in Santa Monica and across the region, the HSGP seeks to fund agencies at a level that allows them to pay program staff a living wage. Historically, HSGP grantees have been required to provide a 30% cash match, meaning City funds could be used to cover up to 70% of the cost of services to SMPP and agencies had to secure non-City funding for the balance of those costs. For the FY 2027-31 funding cycle, applying agencies will have the following options:
1. Provide a minimum 30% cash match and pay staff at a rate set by the agency; or
2. Agree to meet the City’s Minimum Wage ($25.00 per hour for FY 2026-27 and adjusted annually) (see Attachment J, Living Wage Certification) for all staff billed 90% or more to the HSGP program and waive the cash match requirement (i.e., programs that pay all HSGP-funded staff a minimum of $25 per hour will not be required to provide cash match).
Programs that are unable to pay staff the City’s minimum wage, due to organizational limitations or other reasons, can maintain current salaries and provide cash match.
Programs that agree to meet the City’s minimum wage will not be required to provide cash match. The intention is to free up funding that would otherwise be used for match to help make it more feasible for programs to meet minimum wage. The Living Wage Cash Match Waiver guidelines are in Attachment I, Section 4.
Scoring
Complete proposals will be scored under program and fiscal categories and will include a program plan; program budget, evaluation, and demographics workbook; and supporting documentation. The RFP will include a detailed scoring chart that aligns each application component with an evaluation criteria and corresponding maximum point value. Proposals will be scored by a review panel made up of City staff and external subject matter experts.
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Packet Pg. 940 Attachment: Attachment B - Approval of Funding Guidelines and Authorization to Release Request for Proposals for Human Services Grants 15 of 18
Program Scoring
The review panel will score the program category based on the description of the proposed program; past monitoring reports; organizational capacity; policies, and procedures; and proposed participant outcomes. Below is a description of each area along with its point allocation:
• Program Summary (25 points): Proposals must demonstrate how the program provides an eligible service, serves a relevant target population, and leverages best practices. They must describe how services are culturally appropriate, accessible, and sensitive to economically, ethnically, and socially diverse populations.
• Past Program Performance, Policies and Procedures, and Organizational Capacity (25 points): Proposals must include reports from the agency’s largest funder for the last two fiscal years, to indicate their history of providing high impact, fiscally sound services. They must include a program plan and staffing structure that indicates sufficient infrastructure to operate the proposed program and demonstrate strong partnerships and integration into City and regional systems of care. Organizational policies and practices should also be included that address diversity, equity, and inclusion (DEI) for participants and staff. • Program Evaluation (10 points): Proposals must describe the intended impact of the program. They should include indicators that align with the guidelines described above under Performance Evaluation and specify a plan to collect data and measure progress.
• Employee Retention (10 points): Proposals must describe organizational initiatives designed to encourage staff retention by promoting the physical, mental, and financial health of their workforce.
Fiscal Scoring
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Packet Pg. 941 Attachment: Attachment B - Approval of Funding Guidelines and Authorization to Release Request for Proposals for Human Services Grants 16 of 18
The review panel will score the fiscal category based on the program budget, audited financial statements, and recent monitoring reports. Below is a description of each area along with its point allocation:
• Program Budget (15 Points): Program budgets should outline all anticipated expenses associated with the program to determine if overall costs are reasonable, salaries are adequate, and non-city funds are sufficiently leveraged and/or eligible staff salaries meet the City’s Living Wage requirement. • Audited Financial Statements and Past Financial Performance (15 points):
Proposals must include the agency’s three most recently completed audited financial statements to determine if there are any outstanding findings or concerns. They must also include the most recent monitoring reports from the agency’s largest funder to assess concerns around spend-down issues, returned funds, ability to meet cash match requirements (as applicable), and/or any other fiscal-related findings.
Additional reference materials that will be available to the review panel are (1) fiscal and programmatic monitoring reports from the City’s internal auditor, Baker Tilly, LP, and (2) City-issued performance review letters for agencies currently funded by the HSGP.
Next Steps
Dependent on Council input and approval, staff will release the FY2027-31 HSGP RFP in September 2026. The RFP will remain open for several months, during which time staff will hold a bidders’ conference. In Spring of 2027, staff will return to Council with funding recommendations. Staff will include funding awards in the budget study session in May 2027, and final HSGP funding awards will be made as part of biennial budget adoption in June 2027. The FY2027-31 HSGP funding cycle will begin July 1, 2027.
Environmental Review
Approval of the funding guidelines is not a “project” subject to CEQA. This approval will allow staff to release an RFP to solicit proposals for social service programs. Pursuant to CEQA Section 21065, the form does not meet the definition of a “project” subject to CEQA as it will not “cause either a direct physical change in the environment, or a
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Packet Pg. 942 Attachment: Attachment B - Approval of Funding Guidelines and Authorization to Release Request for Proposals for Human Services Grants 17 of 18
reasonably foreseeable indirect physical change in the environment.” Additionally, per Section 15378(b) of the CEQA Guidelines, a “project” does not include continuing administrative or maintenance activities, such as general policy and procedure making.
Therefore, it can be seen with certainty that approval of the guidelines will not result in adverse physical impacts on the environment, and as such, is exempt from CEQA.
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action resulting from the recommendations in this report.
For FY 2027-28, the first year of the new grants cycle, the total projected amount allocated to the HSGP is $9,198,587. Staff will return to Council with proposed HSGP funding recommendations in the Spring of 2027 in preparation for the FY 2027-29 biennial budget process. At that time, in order to meet the growing need for services, enhance grant amounts to allow HSGP-funded programs to pay their staff living wages, and incorporate COLA adjustments through FY2027-28 – staff anticipate recommending an increase to the HSGP budget for the FY 2027-31 cycle. Staff will consider all available funding sources, including City Measure GS dollars and County Measure A funds, to minimize the potential impact on the City’s General Fund.
Prepared By: Nicole Liner-Jigamian, Human Services Administrator – Fiscal Approved Forwarded to Council
Attachments:
A. Attachment A. Santa Monica Aging and Disability Action Plan B. Attachment B. Homelessness Strategic Plan 2025-2030
C. Attachment C. Renter Protections Program Situational Analysis D. Attachment D. Behavioral Health Reports
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Packet Pg. 943 Attachment: Attachment B - Approval of Funding Guidelines and Authorization to Release Request for Proposals for Human Services Grants 18 of 18
E. Attachment E. Approval of FY 2023-27 HSGP Funding Guidelines (Web Link) F. Attachment F. Approval of FY 2023-27 HSGP Funding Recommendations (Web Link)
G. Attachment G. Authorize Contract Modifications for Social Emotional Wellness Initiative, St. Joseph Center, and Family Service of Santa Monica to Expand Youth Behavioral Health Support (Web Link)
H. Attachment H. Authorize Contract Modification for Haven Neighborhood Services for Emergency Financial Assistance (Web Link)
I. Attachment I. Proposed HSGP 2027-31 Funding Guidelines J. Attachment J. FY26-27 Living Wage Certification
K. Written Comments
L. PowerPoint Presentation
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Packet Pg. 944 Attachment: Attachment B - Approval of Funding Guidelines and Authorization to Release Request for Proposals for Human Services Grants City Council Meeting: October 27, 2026 Santa Monica, California ORDINANCE NUMBER ___ (CCS)
(City Council Series)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA ADDING SANTA MONICA MUNICIPAL CODE CHAPTER 4.70 TO ALLOW EMPLOYEES WHO
PERFORM WORK IN THE CITY TO DESIGNATE A REPRESENTATIVE TO RECEIVE
A FINAL PAYCHECK
WHEREAS, Santa Monica is home to many residents and workers whose labor contributes directly to the local economy and whose wages support the workers and their families; and
WHEREAS, under California law, an employee’s final paycheck must be provided to an employee within 72 hours after separation by the employee, and an employee who quits with advance notice can direct that the final paycheck be sent by mail; and WHEREAS, under California law, an employee who quits or otherwise becomes unavailable to work without providing advance notice, including by unintentionally abandoning their employment because they have become unavailable due to arrest, detention, or other unanticipated emergency, often cannot communicate with their employer to receive their final paycheck themselves, designate a person to receive the final paycheck, or direct a final paycheck to be mailed; and WHEREAS, families of Santa Monica workers detained during an immigration enforcement action have reported difficulty in receiving the employee’s final paycheck when the employee was unable to receive the final paycheck personally; and WHEREAS, allowing workers to designate, in advance, a person to receive their final paycheck and be notified if a final paycheck is available makes it easier for employers to get final paychecks to employees who may not be able to retrieve them personally; and
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Packet Pg. 945 Attachment: Attachment C - Ord - Employee Designation of Individual to Receive Last Paycheck 10.27.26 [Revision 1] (7980 : Affordability WHEREAS, ensuring that Santa Monica workers promptly receive all wages due when they are unexpectedly separated from employment supports employees’ ability to obtain vital services the employee and their family may need while the family member remains unable to work, such as food, housing, transportation, legal services, and dependent care services; and
WHEREAS, it is the intent of the City Council in adopting this ordinance to provide employees the opportunity to designate a person to receive their final paycheck in advance of the employee becoming unavailable to work, in addition to any other right of employees may have to direct release of a final paycheck to any person;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES HEREBY ORDAIN AS FOLLOWS:
SECTION 1. Chapter 4.70 of the Santa Monica Municipal Code is hereby added to read as follows:
4.70.010 Definitions.
(a) “City” means the City of Santa Monica.
(b) “Designated person” means a person designated by an employee on a designation form to receive the employee’s final paycheck. Where an employee has provided multiple completed designation forms to an employer, “designated person” means the person designated in the most recent designation form provided by the employee.
(c) “Employee” means any person who in a particular week performs at least two hours of work within the geographic boundaries of the City for an employer; and qualifies as an employee entitled to payment of a minimum wage from any employer under the
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Packet Pg. 946 Attachment: Attachment C - Ord - Employee Designation of Individual to Receive Last Paycheck 10.27.26 [Revision 1] (7980 : Affordability California Labor Code and wage orders published by the California Industrial Welfare Commission.
(d) “Employer” means any person, including a corporate officer or executive, association, organization, partnership, business trust, and limited liability company or corporation, who directly or indirectly, or through an agent or any other person, including through the services of a temporary service or staffing agency or similar entity, employs or exercises control over the wages, hours or working conditions of any employee. (e) “Final paycheck” means an instrument of payment of an employee’s wages due at the time of quitting or within 72 hours of quitting pursuant to Section 202(a) of the California Labor Code.
(f) “Final paycheck designation form” means a written form by which an employee designates a person to receive the employee’s final paycheck from an employer.
4.70.030 Release of final paycheck.
(a) An employer shall provide the employee’s final paycheck to the employee’s designated person upon request of the designated person or the employee. (b) If neither an employee nor the employee’s designated person has received the employee’s final paycheck within 15 days after the final paycheck is due, the employer shall send written notice to both the employee and the designated person stating that the employee’s final paycheck is available for receipt, that the employee has authorized the designated person, who shall be named in the notice, to receive the employee’s final paycheck, that the employee or designated person may receive the final paycheck from the employer unless the employer first receives notice from the employee that the employee wishes to rescind the employee’s final paycheck designation form, the address
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Packet Pg. 947 Attachment: Attachment C - Ord - Employee Designation of Individual to Receive Last Paycheck 10.27.26 [Revision 1] (7980 : Affordability where the final paycheck may be received in person, and a phone number where the employer may be reached.
(c) The notice required by subsection (b) shall be sent to the employee by mail to the employee’s last known address and to the employee’s email address stated on the final paycheck designation form, if any. The notice required by subsection (b) shall simultaneously be sent to the employee’s designated person to the designated person’s mailing address and email address, if any, stated on the final paycheck designation form. (d) The notice required by subsection (b) shall be mailed, and if required, emailed, to the employee and employee’s designated person no less than 15 days and no more than 30 days after the employee’s final paycheck is due. (e) If an employer provides an employee’s final paycheck to the employee’s designated person, the employer shall make reasonable efforts to notify the employee that the employer has done so.
(f) Nothing in this Chapter prohibits an employer from providing an employee’s final paycheck to the employee or any other person to whom the employer is permitted to provide the final paycheck..
4.70.020 Final paycheck designation form requirements.
(a) An employer shall provide an employee the opportunity to designate a person authorized to receive the employee’s final paycheck by providing the employee a final paycheck designation form no later than July 1, 2027 for an existing employee, and at the time of hire for an employee hired on or after July 1, 2027. An employer shall provide an employee the opportunity to update any previously completed final paycheck designation form or to complete a final paycheck designation form if the employee has not previously
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Packet Pg. 948 Attachment: Attachment C - Ord - Employee Designation of Individual to Receive Last Paycheck 10.27.26 [Revision 1] (7980 : Affordability done so, at any time upon request by the employee, and by providing the employee a blank copy of a final paycheck designation form at least once per calendar year. (b) The final paycheck designation form referred to in subsection (a) shall include fields for the employee’s name, employee’s address, employee’s phone number, employee’s email address (optional), designated person’s name, designated person’s address, designated person’s phone number, designated person’s email address (optional), employee signature indicating authorization to the employer to release the final paycheck to the designated person, and date of signature. The final paycheck designation form referred to in subsection (a) shall also disclose that an employee’s designated person shall be authorized to receive the employee’s final paycheck upon request, that an employee may modify or revoke the designation at any time, and that an employer may not retaliate against an employee for completing or declining to complete the designation form.
(c) The City shall make available on the City’s website a template final paycheck designation form.
(d) The final paycheck designation form referred to in subsection (a) shall be provided in the language the employer normally uses to communicate employment-related information to the employee and which the employee understands if the template form is available in that language on the City’s website. If the template form is not available in that language, then the final paycheck designation form may be provided in English.
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Packet Pg. 949 Attachment: Attachment C - Ord - Employee Designation of Individual to Receive Last Paycheck 10.27.26 [Revision 1] (7980 : Affordability (e) An employer may combine a designation form with any other form the employer provides to the employee, including a form to designate an emergency contact, so long as the form provided contains the fields and information required by subsection (b). (f) No employee shall be required to complete a final paycheck designation form.
4.70.040 Exemption for government agencies.
The requirements of this Chapter shall not apply to employers that are government agencies, including federal agencies, state agencies, cities, counties, school districts, and all other public entities.
4.70.050 Supersession by collective bargaining agreement.
The provisions of this Chapter, or any part thereof, may be waived in a bona fide collective bargaining agreement, but only if the waiver is explicitly set forth in such agreement in clear and unambiguous terms. Unilateral implementation of terms and conditions of employment by either party to a collective bargaining relationship shall not constitute or be permitted as a waiver of all or any part of the provisions of this Chapter.
4.70.060 Retaliatory action prohibited.
(a) It shall be unlawful for an Employer to reduce the hours, wages or benefits of; demote; suspend; discharge; or otherwise discriminate or take adverse action against any person for exercising rights protected under this Chapter. (b) Taking adverse action against a person within 90 days of the person's exercising rights protected under this Chapter shall raise a rebuttable presumption that the adverse action was taken in retaliation for the exercise of such rights.
4.70.070 Administrative Regulations.
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Packet Pg. 950 Attachment: Attachment C - Ord - Employee Designation of Individual to Receive Last Paycheck 10.27.26 [Revision 1] (7980 : Affordability The City Manager or designee may adopt administrative regulations that are consistent with the provisions of this Chapter. Violations of the administrative regulations adopted pursuant to this section shall constitute violations of this Chapter, and shall subject the violator to the penalties set forth in this Chapter.
4.70.080 Enforcement.
(a) To monitor and investigate compliance with the requirements of this Chapter, every employer shall cooperate with City-authorized investigators, including, but not limited to: accessing records, and allowing investigators to interview persons, including employees, during normal business hours.
(b) The City may issue and serve administrative subpoenas as necessary to obtain specific information regarding compliance with this Chapter. Any subpoena issued pursuant to this Section shall not require the production of information sooner than thirty days from the date of service. A person that has been served with an administrative subpoena may seek judicial review during that thirty-day period. (c) Unless otherwise specifically provided, any person violating any provision of this Chapter shall be guilty of a misdemeanor, which shall be punishable by a fine not exceeding five hundred dollars but not less than one hundred fifty dollars per violation, or imprisonment in the County Jail for a period not exceeding six months, or by both fine and imprisonment, or shall be guilty of an infraction, which shall be punishable by a fine not exceeding two hundred fifty dollars but not less than one hundred dollars per violation.
Each such person shall be guilty of a separate offense for each and every day during any portion of which any violation of any provision of this Chapter is committed, continued, or permitted by such person and shall be punishable accordingly.
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Packet Pg. 951 Attachment: Attachment C - Ord - Employee Designation of Individual to Receive Last Paycheck 10.27.26 [Revision 1] (7980 : Affordability (d) Any person violating any provision of this Chapter or any rule or regulation may be subject to administrative citation pursuant to Chapter 1.09 of this Code. (e) The City may enforce the provisions of this Chapter by means of a civil action, and upon prevailing, shall be entitled to injunctive relief, a penalty in the amount of five hundred dollars per violation, and reasonable attorneys’ fees and costs. (f) Any person convicted of violating any provision of this Chapter shall be required to reimburse the law enforcement agency that investigated the violation its full investigative costs.
(g) Violation of any provision of this Chapter, with the exception of Sections
4.70.060, shall be considered a strict liability offense; accordingly, the prosecution shall not be required to prove any intent or other mental state. (h) Prosecution for any violation of this Chapter, including the issuance of any administrative citation or order, shall be commenced within one year after discovery of the commission of the offense by law enforcement authorities or by the victims of the offense.
SECTION 2. Any provision of the Santa Monica Municipal Code or appendices thereto inconsistent with the provisions of this Ordinance, to the extent of such inconsistencies and no further, is hereby repealed or modified to that extent necessary to effect the provisions of this Ordinance.
SECTION 3. If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be invalid or unconstitutional by a decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have passed
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Packet Pg. 952 Attachment: Attachment C - Ord - Employee Designation of Individual to Receive Last Paycheck 10.27.26 [Revision 1] (7980 : Affordability this Ordinance and each and every section, subsection, sentence, clause, or phrase not declared invalid or unconstitutional without regard to whether any portion of the ordinance would be subsequently declared invalid or unconstitutional.
SECTION 4. The Mayor shall sign and the City Clerk shall attest to the passage of this Ordinance. The City Clerk shall cause the same to be published once in the official newspaper within 15 days after its adoption. This Ordinance shall become effective 30 days from its adoption.
APPROVED AS TO FORM:
_________________________
HEIDI VON TONGELN
City Attorney
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Packet Pg. 953 Attachment: Attachment C - Ord - Employee Designation of Individual to Receive Last Paycheck 10.27.26 [Revision 1] (7980 : Affordability Homelessness Prevention and Affordable Housing
Fund (Measure GS) Housing Trust Fund
Source of Funds
Funding for this program is provided using revenues generated through (i) the voter-approved Measure GS tax revenues, known as the Homelessness Prevention and Affordable Housing Fund and (ii) any other funds dedicated by the City Council.
No less than fifty percent of all funds deposited into the Homelessness Prevention and Affordable Housing Fund annually that are not used pursuant to 4. 90.030(a), shall be used to acquire and rehabilitate existing rental properties as deed-restricted affordable housing or to create new deed-restricted affordable housing for Extremely Low-Income Households, Very Low-Income Households, Low Income Households or Moderate-Income Households.
The description below pertains to any portion of Measure GS funds that City Council, consistent with the terms of Measure GS, directs to be spent subject to these guidelines.
Eligible Borrowers
Eligible borrowers are qualified affordable housing developers with proven capacity to develop, own, and operate affordable housing and whose Articles of Incorporation and Bylaws irrevocably dedicate residential property owned by the corporation to the charitable purpose of providing affordable housing to low- and moderate-income households. Limited partnerships with such a nonprofit housing development corporation as the general partner are also eligible borrowers if the nonprofit partner is the managing general partner throughout the term of the loan and will receive at least 51% of the developer fee. Nonprofit corporations must have a valid 501(c)(3) or (4) designation from the Internal Revenue Service.
Eligible Projects
Funds can be used to make deferred loans to eligible borrowers to provide affordable housing, for very low, low- and moderate-income households through acquisition and/or rehabilitation or new construction.
Eligible rehabilitation projects will:
(1) be in need of rehabilitation as defined herein;
(2) be located in the City of Santa Monica;
(3) be free from significant adverse environmental impacts except those that can be mitigated through rehabilitation; and
(4) avoid permanent involuntary tenant displacement to the greatest degree feasible in order to carry out the program.
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Packet Pg. 954 Attachment: Attachment D - MSGS Attachment to HTF Guidelines (7980 : Affordability Agenda) Eligible projects which involve new construction or conversion of an existing non-residential use will conform to items (2), (3), and (4) above.
Affordability Requirements
All assisted units shall be affordable to households whose incomes do not exceed 120% of median income, and (except for households in occupancy at the time of acquisition) shall be occupied by households whose incomes do not exceed 120% of median income. The City may require the Borrower to pay to the City residual receipts resulting from rents associated with tenant(s) existing prior to the acquisition which exceed the rent limits pursuant to the Regulatory Agreement.
For new construction projects, any unit assisted under this program shall be affordable to and occupied by households whose incomes do not exceed 120% of median income as adjusted for household size.
Eligible projects assisted under this program will not be subject to a minimum average number of bedrooms per unit requirement.
Eligible Uses and Activities
Funds can be used to make loans to eligible borrowers to provide affordable housing for moderate, low- and very low-income households, including but not limited to the following:
(1) acquisition and rehabilitation of eligible rental properties; (2) acquisition and conversion of non-residential property to multifamily or Single-Room Occupancy rental housing units;
(3) new construction of rental housing units;
(4) acquisition and rehabilitation or construction of Single-Room Occupancy housing units and/or transitional housing;
(5) predevelopment loans up to a period of 24 months for site acquisition, predevelopment activities, including professional services which cannot be obtained on a contingency basis, and construction. Such loans may be extended for up to 18 months with an additional 12-month extension option at the discretion of the Housing Manager; and
Religious Organizations
All projects must be used exclusively for secular purposes, and must be available to all persons regardless of religion. The housing may not be used for worship or religious instruction.
Project Monitoring
The City shall monitor annually any housing affordable to households of very-low,
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Packet Pg. 955 Attachment: Attachment D - MSGS Attachment to HTF Guidelines (7980 : Affordability Agenda) low- or moderate-income funded with these trust funds. The City will require owners or managers of the housing developments to submit an annual report to the City.
The annual report will include information on rental rates, family income, and family size of occupants.
Security
The loan or grant shall be secured by a Deed of Trust and Promissory Note which may be subordinated to deeds of trust securing other Federal, State, or City loans, or loans from conventional financing institutions used in conjunction with a City Housing Trust Fund Loan on the same property. The City must obtain written commitments to protect the City’s investment in the event of a default. The City must approve all requests for subordination.
The loan or grant shall be further secured by recorded Covenants and Restrictions, running with the land, to ensure that Program funds are used to provide long-term affordable rental housing opportunities for very-low, low- and moderate-income households. The Borrower and the City shall execute and record Covenants and Restrictions regulating project rents, tenant selection procedures, use of project income, management and maintenance, transfer of property, and permitted forms of ownership and use, including a prohibition on conversion of the project to condominium or stock cooperative ownership for the term of the recorded Covenants and Restrictions. The recorded Covenants and Restrictions shall provide for the longest feasible time. Notwithstanding the above, the Covenants and Restrictions would in no event be shorter than any other term of a Regulatory Agreement or Covenant recorded concurrently with the City’s Covenants and Restrictions. The Covenants and Restrictions shall be recorded with the Deed of Trust, but shall remain senior to all third-party financing sources to ensure that the Covenants and Restrictions survive a foreclosure sale or deed in lieu of transfer.
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Packet Pg. 956 Attachment: Attachment D - MSGS Attachment to HTF Guidelines (7980 : Affordability Agenda) City Council
Report
City Council Meeting: October 27, 2026
Agenda Item: 11.B
1 of 6
To: Mayor and City Council
From: Matthew Hallock, Fire Chief, Fire Department
Subject: Adoption of Resolution Proclaiming a Local Emergency for the 2026-2027 El Niño Winter Season
Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of no possibility of significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines; and
2. Adopt the proposed resolution of the City Council of the City of Santa Monica Proclaiming the Existence of a Local Emergency for the 2026-2027 El Niño Winter Season.
Summary
Earlier this year, meteorologists and weather experts began noticing a warming pattern in the Pacific Ocean that correlates with a stronger-than-normal El Niño event.
Throughout the year, this warming has only increased and the meteorologists and weather experts have indicated that there is a near certainty of a Super El Niño event occurring for the 2026-2027 winter season. According to the National Weather Service (NWS) and the National Oceanic and Atmospheric Administration (NOAA), El Niño is an oceanic phenomenon. The agency believes that there is uncertainty in the atmospheric response to current El Niño conditions. However, experts forecast this season’s El Niño to be one of the strongest on record, possibly exceeding El Niño conditions that prompted eight major storm events in 1982-1983 that caused significant damage, destroying the lower deck of the Santa Monica Pier and with it, large cranes and vehicles. El Niño events can disrupt normal weather patterns in the United States and
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globally. Potential impacts to Santa Monica include heavy rains, flooding, beach erosion, downed trees, landslides, infrastructure damage, and other disruptions.
Staff recommends the adoption of the attached proposed resolution proclaiming the existence of a local emergency for the 2026-2027 El Niño winter season. This proclamation will expedite and streamline the City’s response to the potential storms.
Discussion
On June 2, 2026, the World Meteorological Organization declared the start of the 2026- 2027 El Niño and estimated an 80% probability that El Niño conditions will emerge over the summer. The National Oceanic and Atmospheric Administration (NOAA) issued an advisory on October 8, 2026, stating that El Niño continues to strengthen, with a strong-to-very strong El Niño likely through January-March 2027, over 83% chance. On October 15, 2026, the NOAA released its 2026-2027 U.S. Winter Outlook which shows how a very strong El Niño could impact the nation’s winter weather. Wetter than average conditions are likely across the southern U.S., from California to Florida and along the Eastern Seaboard.
With El Niño conditions already presenting at historic levels and continuing to strengthen, on September 21, 2026, California Governor Gavin Newsom proclaimed a state of emergency in anticipation of the historic El Niño storm season. This action mobilizes state resources ahead of the potential winter storms and other impacts, and directs state agencies to begin protecting vulnerable communities, prepare roads and critical infrastructure, stage emergency supplies, and assist local partners with reducing flood, landslide, and coastal risks.
Santa Monica’s hazard profile is covered extensively in the City’s Local Hazard Mitigation Plan (LHMP), which details the City’s vulnerabilities to extreme weather events, landslides, flooding and other natural disasters. The Plan details areas within the City most prone to coastal flooding as well as storm flooding. According to the LHMP, there are 85 beach-front properties located within a 100-Year Flood Zone, meaning that any year the property has a 1% chance of flooding in storm events. Urban flooding may occur in other areas throughout the city if intense rainfall overwhelms drainage infrastructure. This type of flooding is more likely to occur when a Flash Flood Warning is issued.
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On September 23, 2026, Los Angeles County proclaimed a local emergency for the anticipated arrival of El Niño conditions. This proclamation is intended to strengthen coordination among county departments and state partners, inspect and maintain flood-control infrastructure, prepare sandbag distribution sites, and assist with public outreach and other emergency preparations.
Recent events have already shown the impacts of El Niño – warming ocean waters by 3-4 degrees Celsius, raising sea levels about a foot higher than normal and increasing the amount of hurricane activity in the Pacific Ocean, resulting in higher wave heights and frequent storm surges. Beach cities such as Newport Beach, Long Beach, and Huntington Beach have already experienced an above normal number of “King” tides related to warm ocean water, in addition to significant beach erosion, flooding, and structural damage (nearby homes, businesses, pier, boardwalk). In fact, while Santa Monica’s inaugural Ocean Way Festival was canceled due to significant beach erosion caused by Hurricane Marie, this seems merely a prelude to the coming El Niño-fueled winter storms.
A very strong El Niño is expected to have the following potential impacts to the City:
• Increased potential for repeated heavy-rain events and saturated ground • Rapid urban flooding where drainage capacity is exceeded • Coastal wave action, beach erosion, and potential high-surf impacts • Falling trees, downed power lines, traffic disruption, and outages • Slope instability and debris movement, especially near steep terrain and neighboring burn-affected areas
• Bluff erosion with mud and debris falling on to Pacific Coast Highway City departments traditionally have the following roles and responsibilities during a storm response. These roles are regularly tested during drills and exercises and during coordination in smaller storm events.
Department Roles & Responsibilities
Emergency Management Cross-departmental Planning and
Coordination (including management of
multiple working groups); Coordination
with local/state/federal partners; EOC
Coordination/Management; Weather
event monitoring; Alert and warning;
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Public and stakeholder education
Fire Incident Response (traffic collisions,
flooding, water rescues, downed
trees/power lines); Community sandbag
distribution
Police Incident Response; Traffic Control/Traffic
Management
Public Works Beach Maintenance/Monitoring; Facility
Management/Maintenance;
Clearing/Monitoring Storm Drains/Catch
Basins; Downed Tree Response; Debris
Removal; Road Repairs; Bluff stability
monitoring; Sandbag Management
Community Development Property damage/safety assessments Communications Public Messaging (website, social media, news, etc.)
Human Services Outreach w/Vulnerable Populations;
Shelter Referrals
Preparations are already underway in the City to mitigate those impacts to our residents and community. Staff across all departments are engaged in identifying life safety risks, strengthening critical systems, and formalizing a continuity of operations during an emergency response to an El Niño event. Staff is also engaging residents, visitors, businesses, hotels, schools, and major employers for storm preparedness, pre-storm advisories, alerts and updates during the storms, and recovery after the storms. These actions build upon the City’s annual winter storm preparedness measures. City department preparedness and mitigation efforts include the following:
• Public Works construction of sand berms to reduce sand erosion on the beach and along storm drain outflows
• Public Works inspections and repairs on city facility roofs, gutters, and drains to prevent leaks and flooding
• Public Works cleaning of over 600 catch basins
• Fire Department purchase of additional sandbags for distribution at Fire Stations • Preparing “Storm Event” website with pre-storm and response information in five languages. Website will be promoted in all major storm event SMAlerts for improved community language access.
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• During storm events, temporarily relaxing criteria for persons experiencing homelessness to access shelter, allowing both first responders and outreach teams to refer people to shelter, regardless of their history of homelessness in the City.
The public has an important role today in mitigating potential storm impacts, especially to protect their property. Residents and businesses are encouraged to take the following steps to prepare for winter storms:
• Know your property’s flooding risk by checking FEMA flood maps or Cal OES’s My Hazards website
• If you experience flooding or ponding near your property, prepare sandbags. Ten empty sandbags are available at every Santa Monica fire station. A sandbag filling station is available in Clover Park’s parking lot • Use sunny days to prepare your property. Clear gutters, downspouts, storm drains and bioswales of leaves and other debris.
• Inspect and repair roofs, doorways and windows to prevent leaks • Sign up for Santa Monica’s mass notification system, SMAlerts, to receive multi-lingual weather warnings All of this information and more can be found on the City’s Extreme Weather and Emergency Preparedness webpages.
The proposed resolution supports the ability for the City to rapidly identify, procure, stage, preposition, and deploy equipment, supplies, services, and other resources throughout the City.
Environmental Review
Based on the record above, it can be seen with certainty that the Resolution Proclaiming the Existence of a Local Emergency for the 2026-27 El Niño winter season, which allows the City to prepare and respond to the forecasted severity of this year’s El Niño event through various means, including, but not limited to, streamlined procurement, will have no effect on the environment, and therefore, is categorically exempt from CEQA pursuant to Section 15061(b)(3) (Common Sense Exemption) of the CEQA Guidelines.
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Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of the recommended action. Staff will return to Council if specific budget actions are required in the future.
Prepared By: Jonathan Tang, Administrative Services Officer Approved Forwarded to Council
Attachments:
A. RESO- Proclaiming Local Emergency (El Nino storms)
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1 City Council Meeting: October 27, 2026 Santa Monica, California
RESOLUTION NUMBER (CCS)
(City Council Series)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA PURSUANT TO CHAPTER 2.16 OF THE SANTA MONICA MUNICIPAL CODE
PROCLAIMING THE EXISTENCE OF A LOCAL EMERGENCY DUE TO THE
ANTICIPATED EXTREME WEATHER CONDITIONS TO BE CAUSED BY THE FORECASTED 2026-2027 EL NIÑO EVENT
WHEREAS, California Government Code Section 8630 empowers the Santa Monica City Council to proclaim the existence of a local emergency when there is extreme peril to the safety of persons and property within the territorial limits of the City of Santa Monica; and
WHEREAS, Santa Monica Municipal Code Chapter 2.16 authorizes the City Manager, as the Director of Emergency Services (“Director”), to request that the City Council proclaim the existence or threatened existence of a local emergency if the City Council is in session; and
WHEREAS, Chapter 2.16 defines an “emergency” to mean “the actual or threatened existence of conditions of disaster or of extreme peril to the safety of persons and property within this City caused by such conditions as … fire, flood, storm … or other conditions … likely to be beyond the control of the services, personnel, equipment, and facilities of this City…”; and
WHEREAS, a threatened emergency of extreme peril to the safety of persons and property exists for the City of Santa Monica due to the forecasted 2026-2027 El Niño winter weather season which has created the likelihood for extreme weather related impacts to the City, including possible high winds, substantial precipitation, elevated coastal baseline water levels, high tides, large waves, high surf, coastal flooding, beach
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Packet Pg. 963 Attachment: RESO- Proclaiming Local Emergency (El Nino storms) (7994 : Local Emergency for 2026-2027 El Niño Storms) 2 erosion, closure and damage to highways and roads, evacuation orders and warnings in areas impacted by burn scars, debris flows, river and urban flooding, land movement incidents, and widespread power outages; and
WHEREAS, on October 15, 2026, the National Oceanic and Atmospheric Administration's National Weather Service Climate Prediction Center issued an advisory that this year’s El Niño event is strengthening, with a greater than 90% chance of a very strong event during the fall and winter of 2026-2027 for the northern hemisphere; and WHEREAS, the advisory projects an 83% chance that the event will reach historic strength during the October through December 2026 season, defined as a three-month Relative Oceanic Niño Index, and exceeding the strength of all prior El Niño events in the historical record beginning in 1950; and
WHEREAS, on September 21, 2026, Governor Gavin Newsom proclaimed a State of Emergency related to the anticipated impacts of the 2026-2027 El Niño season and directed State agencies to take early actions to protect vulnerable communities, critical infrastructure, and emergency response capabilities; and WHEREAS, the City of Santa Monica is a community that is particularly vulnerable to coastal and storm-related hazards due to its extensive 3-mile coastline and beach, low-lying areas, and its proximity to other flood-prone areas; and WHEREAS, Santa Monica has recently experienced impacts from the current El Niño season when, in early September 2026, swell and rainfall from Hurricane Marie eroded the beach south of the Santa Monica Pier, and runoff from the Pico-Kenter storm drain outfall cut a channel through the beach and undermined a beach access ramp, which resulted in the City’s cancelation of the Ocean Way Festival; and WHEREAS, Santa Monica’s past experience with strong El Niño events include
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Packet Pg. 964 Attachment: RESO- Proclaiming Local Emergency (El Nino storms) (7994 : Local Emergency for 2026-2027 El Niño Storms) 3 several storms during the 1982-83 winter season when a 400ft section of the westernmost end of the Pier was destroyed, and in 1997-98 when the City’s beach was temporarily closed due to sewage outflows and approximately 25 tons of material from the Palisades Park bluffs fell onto the California Incline and Pacific Coast Highway; and WHEREAS, based upon the forecasted severity of this year’s El Niño event, and by reason of the magnitude of its potential impacts, and the need to protect the health, safety and welfare of the residents and property of the City of Santa Monica, there exists the possibility that these extreme impacts may exceed the City's normal day-to-day operational capabilities and may require extraordinary preparedness measures, expedited procurement, additional personnel and contractual resources, and enhanced coordination with neighboring jurisdictions, regional agencies, Los Angeles County, the State of California, federal agencies, utility providers, transportation agencies, and other public and private partners; and
WHEREAS, the ability to rapidly procure equipment, supplies, materials, services, and other resources; enter into agreements and contracts; mobilize personnel; and coordinate with other governmental and private entities is necessary to ensure the City is adequately prepared to respond to the potential impacts of the 2026–2027 El Niño and winter storm season; and
WHEREAS, on September 22, 2026, the Long Beach City Council proclaimed the existence of a local emergency due to the impacts from Hurricane Marie and the developing 2026-27 El Niño event; and
WHEREAS, on September 23, 2026, the Chair of the Los Angeles County Board of Supervisors proclaimed the existence of a local emergency for the anticipated 2026- 2027 El Niño event; and
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Packet Pg. 965 Attachment: RESO- Proclaiming Local Emergency (El Nino storms) (7994 : Local Emergency for 2026-2027 El Niño Storms) 4 WHEREAS, on September 26, 2026, the Malibu City Council declared the existence of a local emergency due to the threat of extreme weather conditions caused by the forecasted 2026-27 El Niño event.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES RESOLVE AS FOLLOWS:
SECTION 1. It is hereby proclaimed that a local emergency now exists throughout the City. It is further proclaimed and ordered that during the existence of this local emergency the powers, functions, and duties of the Director of Emergency Services and the emergency organization of this City shall be those prescribed by State law and by the ordinances and resolutions of this City.
SECTION 2. The City Council authorizes the City Manager, the Emergency Services Manager, the Purchasing Agent, or designees delegated in accordance with the City’s Procurement Policy and Santa Monica Municipal Code section 2.24.090, to:
a. Shorten or waive all required notice periods and competitive solicitation procedures set forth in Chapter 2.24 and the City’s Procurement Policy; b. Secure in the open market at the best reasonable price, contracts for public works projects, goods and services;
c. Negotiate or execute such contracts, agreements, applications or other documents with such other federal, state or local agencies or other groups and organizations as are necessary to provide or obtain emergency aid, assistance or services to the City of Santa Monica; and
d. Contract for the immediate expenditure of public funds to safeguard life, health or property.
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Packet Pg. 966 Attachment: RESO- Proclaiming Local Emergency (El Nino storms) (7994 : Local Emergency for 2026-2027 El Niño Storms) 5 SECTION 3. The City Council further authorizes the City Manager, in capacity as the Director of Emergency Services, to take all additional actions related to the protection of life and property that are reasonably necessary to respond to the local emergency.
SECTION 4. In accordance with Santa Monica Municipal Code Section 2.16.090, any expenditures made in connection with the emergency activities under this Proclamation, including mutual aid activities, shall be conclusively deemed for the direct protection and benefit of the persons and property of the City of Santa Monica.
SECTION 5. In accordance with California Government Code section 8630, the City Council shall review the need for continuing the local emergency proclaimed herein every sixty (60) days until this resolution is terminated by the City Council.
SECTION 6. The City Clerk shall certify to the adoption of this Resolution, and thenceforth and thereafter the same shall be in full force and effect.
APPROVED AS TO FORM:
HEIDI VON TONGELN
City Attorney
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Report
City Council Meeting: October 27, 2026
Agenda Item: 12.A
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To: Mayor and City Council
From: Jing Yeo, Director, Administration
Subject: Introduction and First Reading of an Ordinance to Approve Development Agreement for a Digital Display Located at 1355 Third Street Promenade/301 Santa Monica Boulevard and the Installation of a Reconstructed Historic Blade Sign
Recommended Action
Staff recommends that the City Council:
1. Adopt findings of categorical exemptions pursuant to Sections 15301 (Existing Facilities), 15303 (New Construction or Conversion of Small Structures), 15311 (Accessory Structures), 15331 (Historical Resource Restoration/Rehabilitation), and 15332 (In-Fill Development Projects) of the California Environmental Quality Act (CEQA) Guidelines;
2. Introduce an Ordinance for first reading to approve Development Agreement 26ENT-0124 for a Digital Display Located at 1355 Third Street Promenade/301 Santa Monica Boulevard and the Installation of a Reconstructed Historic Blade Sign.
Summary
On June 2, 2026, the applicant, XYZ Now LLC, submitted Development Agreement (DA) application 26ENT-0124 for installation and operation of a new full motion, digital display at 1355 Third Street Promenade/301 Santa Monica Boulevard, the northeast corner of Third Street Promenade and Santa Monica Boulevard. The Digital Display will display paid on-premise and off-premise advertising and community content including civic announcements, community interest content, public safety information, public art programming, events information, and local business spotlights. The proposed DA also provides for the installation of a reconstructed historic blade sign for on-site
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branding/identification of the building’s future tenants as well as an on-site commemorative installation depicting the history of the project site.
Discussion
On December 16, 2025, the City Council adopted the Downtown Digital Display District Ordinance (Santa Monica Municipal Code Section 9.61.205), establishing regulations that permit a limited number of digital displays within designated locations in Downtown Santa Monica as part of the City’s economic recovery strategy. The Digital Display District Ordinance allows up to 16 digital displays in the Downtown, which include 12 digital displays at designated corner locations along the Third Street Promenade and four digital displays at Santa Monica Place.
The Ordinance establishes the regulatory framework to enable large-format digital displays at the 16 permitted locations. The Ordinance establishes standards that would be applicable to all new digital displays, including but not limited to:
• Community Benefits • Design Authority
• Permitted Location • Requirements for Landmark Buildings • Display Type • Energy
• Projections/Encroachments • Hours of Operation
• Maximum Display Area • Maintenance
• Content • Illumination
• Audio
Each new digital display in the District is required to be processed through a development agreement and adhere to the requirements of the Ordinance.
To date, the Council has approved seven digital displays through four development agreements pursuant to the Ordinance, four at Santa Monica Place shopping center and three along the Promenade located at 1253 Third Street Promenade, 1202 Third Street Promenade, and 1310 Third Street Promenade. The proposed digital display at 1355 Third Street Promenade/301 Santa Monica Boulevard represents the eighth digital display proposed in the Downtown Digital Display District. The proposed DA for the Digital Display is being processed pursuant to the Ordinance and is required to provide meaningful community benefits.
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Staff recommends that the City Council consider the following key issues in its decision to approve the DA for the project:
• How well the proposed Digital Display, blade sign, and negotiated community benefits advances with the City’s vision of Downtown as a thriving economic and cultural center, consistent with the City’s Land Use and Circulation Element and Downtown Community Plan;
• The degree to which the project features and negotiated community benefits drives economic recovery and revitalization of the Third Street Promenade and the Downtown district as a whole;
• Whether the project design concept is appropriate to the existing Landmark building and surrounding context;
• Whether the proposed display provides innovation with civic responsibility; and • Whether the project and its community benefits supports the City’s public objectives for increasing economic investment, City revenue generation, cultural enrichment opportunities, and activation of public spaces to support community services and needs in Santa Monica.
Project Description
Application 26ENT-0124 is for a development agreement that would allow a new full motion, curved Digital Display proposed to be installed at the corner above the ground floor of the existing vacant commercial building at 1355 Third Street Promenade/301 Santa Monica Boulevard. The existing building is a multi-story commercial structure designated as a City Landmark (Junipher Building) and occupies one of the corner locations identified in the Ordinance as eligible for a digital display.
Address 1355 Third Street Promenade/301 Santa Monica Boulevard Parcel Size: Approximately 15,000 sf
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Zoning District: Downtown Community Plan – Bayside Conservation (BC) Existing On-Site
Improvements:
Display Type Building mounted, full motion
Dimensions Approximately 54’-9” width by 18’-3” by height Projections 8’ onto Promenade; 8’ onto Santa Monica Boulevard
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Rendering of Proposed Digital Display
The proposed Digital Display, which would wrap the western and southern elevations of the building, has been designed in collaboration with a qualified historic preservation consultant. The display is elevated above the storefront but below the parapet of the building, preserving visibility of the Landmark’s important character defining features such as the terracotta stringcourse at top of storefronts and below the parapet. The proposed display incorporates a minimalist design, with a champagne bronze finish.
The display would provide approximately 1,000 square feet of display area with overall dimensions of approximately 54’-9” in width and 18’-3” in height. The design of the display has incorporated initial staff comments, with the bottom trim being reduced in width to ensure subtlety. The display is elevated above the first row of windows to preserve daylight into the ground-floor tenant spaces and minimize impacts to the primary façade.
Installation of the Digital Display would be conducted under the guidance of a structural engineer with experience in historic buildings. The display would be connected to the existing building via the use of outriggers. Where these connections occur, full face bricks of the building would be salvaged, crated, and stored onsite for future reinstallation.
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The distance from street level to the bottom of sign is approximately 25’. The display will be visible to drivers traveling eastbound on Santa Monica Boulevard and to pedestrians walking along the Third Street Promenade. The Digital Display would project out approximately 8’ onto the Promenade and 8’ into the Santa Monica Boulevard right-of-way. This projection would require an encroachment permit from the City’s Public Works Department and would be subject to Section 9.21.180 of the Santa Monica Municipal Code (SMMC) to ensure that it does not constitute a hazardous visual obstruction.
Additionally, in alignment with the building’s historical condition, the applicant proposes to install a two-sided, blade sign on the Santa Monica Boulevard façade of the building for on-premises tenant identification in support of the DA’s minimum building occupancy requirements. The blade sign, measuring approximately 19’-4” in height and 3’ in width, would re-construct an architectural sign feature that previously existed on the building for the Kress department store during its period of significance (1930s). The blade sign would be reconstructed in general conformance with the Secretary of the Interior’s Standards for the Treatment of Historic Properties and would consist of a painted metal sign panel with LED bulb lettering providing tenant identification. The blade sign would be oriented vertically and installed approximately 25’ above the sidewalk level to the bottom of the sign. The blade sign would connect to the existing building with the use of outriggers, providing a minimum 2” clearance from the sign to the building face. Similar to the Digital Display, where these connections occur, full face bricks of the building would be salvaged, crated, and stored onsite for future reinstallation.
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Kress Department Store Blade Sign (1936)
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Proposed Reconstructed Blade Sign
Development Agreement Overview
DA’s are negotiated contracts between the City and an applicant that specify the design parameters, development standards, and requirements of a project. DA’s provide some flexibility from the development standards of the Zoning Code in return for some level of public benefit. While a DA is an alternative to the standard development approval process, in practice, it is similar to other public review processes where Council makes the final decision. The City has more discretion in imposing conditions and requirements on the proposed project and since DA’s are negotiated contracts, both parties must agree to all terms. A DA is adopted by ordinance. Pursuant to a DA, the City can negotiate community benefits within the bounds of its police power and statutory authority.
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The proposed DA is included as Attachment C and is being processed in accordance with the Ordinance.
Terms of the Development Agreement
The applicant of the proposed Digital Display will be required to provide community benefits pursuant to the DA throughout the 30-year term of the agreement plus two 10- year options. Section 2.5 of the DA enumerates the negotiated community benefits for the project, which are generally established in the Ordinance. The applicant has proposed meaningful community benefits that include financial contributions and allocated display time for City art and community content. The following discussion presents a summary of the community benefits that have been negotiated in good faith between the City and applicant.
Financial Contribution
The installation of large format, digital displays on the Promenade provides a valuable opportunity to generate financial revenue for the City and to stimulate commercial activity in the City’s Downtown. Pursuant to the SMMC Section 9.61.205(F)(1), the DA for the project includes a revenue-sharing percentage along with a minimum annual guarantee that will be paid to the City. The required revenue-sharing and minimum annual guarantee model ensures that the City would receive a steady stream of financial proceeds that could be used for public improvements, citywide services, public arts progr
amming, and City programming. In addition, the applicant is providing a financial contribution for improvements to the Third Street Promenade.
Below is a summary of the financial terms for the proposed DA:
• One time community benefit payment of $30,000 to be used by the City for its evaluation of future improvements to the Third Street Promenade and/or implementation of proposed improvements to the Third Street Promenade.
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• One time community benefit payment of $500,000 to be paid within 30 days of issuance of a Certificate of Occupancy or final building permit approval of the Digital Display. If this one-time payment is not made on or before June 30, 2027, the amount will escalate by 3% on June 30, 2027 and annually by 3% each June 30th thereafter until it is made.
• Ongoing community benefit payment in an amount equal to the greater of:
➢ The Revenue Share Contribution, which will be based on 20% of the annual gross revenue received for advertising on the display. This revenue share contribution shall be paid annually.
➢ Minimum annual guarantee (MAG) of $500,000 which shall be paid quarterly, with a 3% annual escalation starting on June 30, 2027 over the 30-year term of the agreement. This escalation rate reflects an average annual rate of inflation. Additionally, to account for market saturation as more digital displays become operational in the District, the MAG would de-escalate by 3% when the 10th digital display in the District “goes live”, and by an additional 3% for every display thereafter (e.g., 3% reduction for the 10th digital display, additional 3% reduction for the 11th digital display, etc.).
• City maintains the right to audit twice per year for records relevant to the determination of gross revenues
City and Art Content
One community benefit in the negotiated DA that does not have monetized value is allocated display time for curated City and Art content. Consistent with the SMMC Section 9.61.206(F)(2), the Applicant is required to allocate 20% of the total annual display time for community content such as civic news, public service announcements, emergency notifications, Amber Alerts, community event updates, and/or cultural arts.
Based on the permitted operational hours as established SMMC Section 9.61.205(G), up to 12 minutes of City and Art content would be displayed per hour for the Digital
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Display. The City also has the reserved right to consolidate its allocated time into multiple blocks per hour to facilitate special promotional activities in the City.
As required in SMMC Section 9.61.205(G), the operator of the Digital Display would be required to participate in a City-administered Digital Display City Content Program that will highlight civic information, cultural programming, and local art. The program would ensure that City and Art Content is displayed and managed in a coordinated manner through the City. This ensures that the Digital Display not only serves commercial purposes but also acts as public communication and cultural platforms, reflecting Santa Monica’s values of creativity, innovation, and civic pride.
Unlike traditional physical art installations, the proposed Digital Display offers the flexibility to continually refresh and rotate art content, creating opportunities for seasonal showcases, artist residencies, or themed collaborations. The required City and Art Content allocation ensures that the display regularly features community and art programming—such as short video art, digital sculpture, animation, or civic storytelling—bringing art to thousands of daily visitors on the Promenade.
Building Occupancy
The proposed Digital Display would also implement the City’s strategic economic development and placemaking goals, consistent with the objective of the Ordinance.
The existing commercial building has been vacant for more than six years. As an additional community benefit, the applicant is required to adhere to minimum building occupancy standards, which would reactivate the project site. As specified in the DA, no more than 50% of the rentable floor area within the existing building’s above grade levels (excluding the basements) or the entire ground floor level of the existing building is permitted to remain unoccupied for more than 12 months. If this occupancy threshold is not met, then the DA requires the MAG Contribution to be increased by 25% (non-compounded) on a daily basis. Additionally, the DA provides the City the right to shut off the display if the occupancy threshold is not met within three years and the right to terminate the DA if threshold is not met within five years.
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Key Issues
Historic – The existing building at 1355 Third Street Promenade (the Junipher Building) was designated as a Santa Monica Landmark on September 8, 2014, and is recognized for its architectural significance and contribution to the historic commercial development of Downtown Santa Monica. Constructed during the period when the Third Street commercial corridor was evolving into Santa Monica's primary downtown shopping district, the building retains the architectural characteristics that define its historic significance. Despite alterations to portions of the ground floor storefront over time to accommodate changing commercial tenants, the building retains sufficient integrity to convey its historic significance through its massing, scale, architectural detailing, upper-story fenestration, decorative cornice line, and primary façade composition.
Character-defining features include, but are not limited to, the building's overall massing and corner orientation; symmetrical façade composition; vertical bays defined by pilasters; recessed window openings; decorative cornice, terracotta stringcourse at top of storefronts and below parapet, catenary hooks, masonry wall construction; and the rhythm and proportions of the upper-story fenestration. These architectural elements collectively convey the property’s historic significance and contribute to the character of the surrounding historic commercial streetscape. The proposed Digital Display has been designed to avoid permanent alteration of these character-defining features. According to the applicant’s historic preservation consultant, the installation has been designed to be reversible, allowing removal of the display in the future without permanently damaging the historic building fabric.
On July 13, 2026, the Landmarks Commission reviewed the proposed Digital Display and provided non-binding consultation regarding the display. Pursuant to SMMC Section 9.61.205(H)(7)(b), the City Manager certifies that, after consultation with the Landmarks Commission the proposed Digital Display:
• Is reversible in accordance with the Secretary of the Interior’s Standards; • Avoids materially impairing the significance of the designated Landmark; and
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• Preserves the physical characteristics that convey the building’s historic significance behind the display.
Therefore, the City Manager certification is consistent with SMMC Section
9.61.205(H)(7)(b).
The Landmarks Commission also endorsed the concept of including an image of the existing Landmark building in its previous historic context on the Digital Display at regular intervals as part of the public programming, requested the applicant review the necessity of the “flair” of the display’s projection onto Santa Monica Boulevard, and endorsed the concept of a commemorative historic plaque to be installed at the property. Although the Landmarks Commission’s comments are non-binding, these suggestions have been incorporated into the DA. Specifically with regard to the Landmarks Commission’s concern about the angled “flair” of the display, the applicant has reduced the projection of the Digital Display onto Santa Monica Boulevard from 10’ to 8’.
A historic report (see Attachment D) was prepared by HRG, the City’s historic consultant, to analyze the potential effects of the proposed Digital Display and the blade sign on the significance and integrity of the existing Landmark building. The report determined that the proposed Digital Display would be installed in a manner that is reversible; would not materially alter the Junipher Building such that its significance would be materially impaired; and all physical characteristics that convey the Junipher Building’s significance would remain intact. While the display would partially obscure some features at the southwest corner of the building at the third and fourth floors, the partially obscured features would remain intact behind the display screen, and the rest of the building’s character-defining features, which constitute the majority of its exterior historic fabric, would remain fully visible. Specifically, the display would not affect the Junipher Building’s other distinctive features and materials including its form and massing, tripartite articulation, symmetrical composition, glazed face brick veneer, pilasters, mullions, fenestration, terracotta stringcourses, cornices, and architectural terracotta ornament, which will remain intact and visible.
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Additionally, the metal blade sign would be compatible in size, scale, proportion, and design with the Junipher Building; is located at the building’s southeast corner and as such, would not damage or obscure character-defining features and materials; and would be consistent with historic signage utilized at the Junipher Building during the period of significance, including previous blade signs. Therefore, the Digital Display and the blade sign would not cause a substantial adverse change in the significance of the Landmark and/or Landmark Property and would not have a significant effect on the environment as defined by CEQA.
Tree Removal – The applicant is proposing the removal of the first two existing street trees along the north side of Santa Monica Boulevard, west of the Promenade to provide an unobstructed viewshed of the proposed Digital Display for vehicles traveling eastbound on Santa Monica Boulevard. The two street trees are Koelreuteria bipinnata trees, one measuring approximately 11” in diameter (Tree A) and the other approximately 3.8” in diameter (Tree B). The applicant commissioned a tree report to assess the condition of the street trees and their viability for relocation. The report determined that due to their compromised conditions, both existing street trees should be removed - with the second smaller tree (Tree B) relocated to another location.
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Location of Proposed Street Tree Removals
The Urban Forest Commission, the City’s advisory body for street tree removals, requested review of the proposed Digital Display and the applicant’s proposed street tree removals. Pursuant to the Urban Forest Commission’s request, the applicant presented information on the proposed removal of the two street trees and the proposed restitution set forth in the DA, detailed below, at their September 9, 2026 meeting. After discussion and review, the Urban Forest Commission expressed general reluctance for removal of otherwise healthy street trees for digital displays and indicated that approval of the applicant’s tree removal request would establish a precedent for future requests.
Therefore, the Urban Forest Commission recommended denial of removal of the two street trees.
The City’s Public Landscape Division agrees that there is an unavoidable conflict between the Digital Display authorized by the DA and the Digital Display District
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Ordinance, on the one hand, and Tree A and Tree B, on the other hand. This conflict cannot be sufficiently mitigated through periodic pruning of the two street trees, nor through redesign/repositioning of the Digital Display because the Digital Display’s positioning – generally located above the second floor windows and below the top of the fourth floor windows of the Landmark building – corresponds with: (a) guidance of a Qualified Historic Preservation Professional using the Secretary of the Interior’s Standards for the Treatment of Historic Properties, including the importance of ensuring that the character-defining terracotta stringcourse at the top of the storefronts and below the parapet will remain fully exposed consistent with the Existing Building’s designation as a City Landmark and (b) the viewshed necessary to support the Digital Display’s financial success and viability, including the need to support the community benefits required by the Digital Display District Ordinance and the DA. The City’s Public Landscape Division has further determined that Tree A is not a good candidate for relocation due to its current health.
The DA thus proposes that the City remove and replace Tree A and Tree B, subject to the following conditions:
1. Owner must provide City with written notice of commencement of construction of the Digital Billboard no earlier than ninety (90) days prior to the anticipated commencement of construction (“Notice of Construction”);
2. Concurrently with the Notice of Construction, Owner must pay to the City the amount of Twenty Thousand Dollars ($23,000) (the “Street Tree Contribution”), to cover the following: (A) the value of Tree A, (B) the cost of removing Tree A and Tree B, (C) the cost of replacing Tree A and Tree B with a species that is a single trunk specimen with mature maintenance height of 10 to 12 feet (“Replacement Trees”). The final determination of the species satisfying this criterion will be selected by the City’s Urban Forester, including, for example, a Marina Strawberry Tree or Tristaniopsis laurnina ‘Luscious” species or similar stature species; (D) the cost of transplanting Tree B to another location that does not impair viewing of the Digital Display; (E) the cost of planting two new street trees of species determined by the Urban Forester in any vacant tree wells within
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Downtown Santa Monica; and (F) costs of ancillary sidewalk and/or hardscape repairs.
3. Upon receiving the Notice of Construction and the Street Tree Contribution, City will have up to sixty (60[PL3.1]) days to remove Tree A and Tree B. The City will have no obligation to remove the trees until Owner has obtained a building permit for the Digital Display.
The City will generally maintain a normal and customary schedule for tree maintenance.
Owner may maintain and/or prune the Replacement Trees to supplement the City’s level of maintenance and/or pruning under the guidance of a licensed arborist and solely to avoid them growing beyond a stabilized mature maintenance height of 10 to 12 feet; provided that Owner obtains the prior approval of the City’s Urban Forester and any required City permits.
Blade Sign - Subsequent to submittal of the DA application and after review by the Landmarks Commission, the applicant requested that the proposed DA include the approval of the blade sign to facilitate commercial leasing of the existing building to support compliance with the building occupancy standards in the DA. Typically the blade sign would require a sign adjustment, as it exceeds the size and placement limitations in the Sign Code, and approval of a Certificate of Appropriateness as an alteration to a designated historic resource. The DA would streamline the approval process by having the City Council make the findings for the sign adjustment and assess its consistency with the findings for a Certificate of Appropriateness for the blade sign since no Certificate of Appropriateness or other Landmarks Commission review would be required for its installation. This streamlined approval of the reconstructed blade sign would allow the sign to be utilized for tenant identification (an important consideration for attracting and securing future tenants), thereby supporting compliance with the DA’s building occupancy requirements for a building which has been vacant for more than six years.
The DA authorizes approval of a sign adjustment for the Blade Sign, subject to the
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following required findings pursuant to SMMC Section 9.61.130:
1. The strict application of the provisions of the Sign Code would result in practical difficulties or unnecessary hardships for the business or property owner, which would be inconsistent with the purposes of the Sign Code, and which would arise from unique physical or topographic circumstances or conditions of project design;
2. The granting of the requested variance would not constitute a grant of special privilege inconsistent with limitations imposed on similarly zoned properties or inconsistent with the purposes of the Zoning Ordinance;
3. The granting of the requested variance would not be incompatible with other nearby signs, other elements of street and site furniture, or with adjacent structures. Compatibility shall be determined by the relationships of the elements of form, proportion, scale, color, materials, surface treatment, overall sign size and the size and style of lettering; and
4. The granting of the variance would not be inconsistent with the purposes of the Sign Code.
As stated in the findings provided in Attachment E, the requested sign adjustment is warranted because strict application of the Sign Code would create practical difficulties for the Landmark property by preventing the reconstruction of a historically significant upper-level blade sign in its original location and orientation. The approximately 60- square-foot, double-sided sign is substantially larger than the maximum allowable sign area in the Sign Code, but the additional sign area is necessary to maintain its historic visibility, particularly given existing street trees. The adjustment would not constitute a special privilege because the building, which is a designated historic resource that was originally constructed in 1912 and the original blade sign predates the prohibition on upper-level signage. The proposed blade sign reconstructs an important architectural and tenant-identification feature that historically characterized the building. The blade sign is appropriately scaled and compatible with the Landmark building and surrounding streetscape, is located near the Third Court alley, and will not detract from nearby businesses. Additionally, the Blade Sign replaces a similar sign for Kress department
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store that adorned the building during the 1930s.The adjustment is consistent with the purposes of the Sign Code because the reconstructed sign is historically accurate, integrated with the building’s distinctive Beaux Arts design, and enhances the building’s architectural character and visibility while serving its tenant-identification function.
In addition, as analyzed in HRG’s historic report, the proposed blade sign complies with SMMC Section 9.56.140(A) and the required Certificate of Appropriateness finding in that the proposed work would not detrimentally change, destroy or adversely affect any exterior feature of the Landmark or Landmark Parcel upon which such work is to be done. As discussed above, the blade sign would be compatible in size, scale, proportion, and design with the Junipher Building; is located at the building’s southeast corner and as such, would not damage or obscure character-defining features and materials; and would be consistent with historic signage utilized at the Junipher Building during the period of significance, including previous blade signs.
As established in the DA, any future changes to the on-premises lettering and/or logo affixed to the reconstructed Blade Sign would be processed through the issuance of a staff-level certificate of appropriateness from the Landmarks Commission Secretary. An encroachment permit from the City’s Public Works Department will be required and would be subject to SMMC Section 9.21.180, Hazardous Visual Obstructions, to ensure that it does not constitute a hazardous visual obstruction. The DA allows the blade sign to remain as a nonconforming sign pursuant SMMC Section 9.61.240, Removal or Modification of Nonconforming Signs, after termination of the DA.
Lighting/Driver Distraction – There are no light sensitive uses adjacent to the property.
As required by the Ordinance, the display would be required to comply with the illumination and driver distraction safety standards established in SMMC Section
9.61.205(I). A Lighting Study would be required prior to the issuance of the permit for construction of the display to ensure compliance with these standards.
Community Outreach
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On July 9, 2026, at 6:00 pm, the applicant held an on-line community meeting for the project, via Zoom. The community meeting was also noticed, including the meeting Zoom link, on the on-site signage, as well as on the home page of the website for the project. There were no attendees despite the public noticing that was provided.
Public hearing notices for the Planning Commission’s discussion were mailed 20 days prior to the hearing date to all residents and property owners within 750’ of the subject property and mailed to community members who have previously attended meetings or requested to be placed on the project mailing list, exceeding the noticing requirements for a public hearing by the Planning Commission under SMMC 9.60.100.
Planning Commission Review
On October 7, 2026, the Planning Commission conducted a public hearing to consider a recommendation to the City Council on the DA. The Commission was generally in support of the project but expressed concern about the removal of the existing street trees. The Commission voted to recommend approval of the DA to City Council with the condition that the proposed restitution amount for the street trees be increased to the equivalent of filling two additional tree wells within the Downtown area. In response to the Commission’s recommendation, the applicant has proposed the restitution to be increased to $23,000.
Development Agreement Findings
In order to approve the DA, the City Council is required to determine that it meets the findings of SMMC Section 9.60.110, Development Agreements, and Section
9.61.205(F)(16) of the Digital Display District Ordinance.
SMMC Section 9.60.110 Findings
1. The proposed Development Agreement is consistent with the objectives, policies, general land uses and programs specified in the general plan and any applicable specific plan. The project site is located in the Land Use and Circulation Element’s Downtown District and has a Downtown Core General Plan Land Use
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Designation. Goals and policies in this District are geared primarily toward reinforcing the Downtown as the focus of the City, encouraging a broad mix of uses and new investment in the District that creates dynamic daytime and evening activity, and reinforces the Downtown as the place with the greatest concentration of activity in the City. The proposed Development Agreement supports the City’s goals to encourage economic vitality, enhance placemaking, and promote creative, high-quality design within the Downtown. Goal LU2 establishes Downtown as a thriving creative and cultural center with a unique concentration of innovative businesses, performance spaces, museums and programmed events. The proposed Development Agreement is consistent with Goal LU3, which imagines Santa Monica’s Downtown continues to be the economic center for the City, providing a diverse and flexible mix of uses that can meet future resident, business and visitor demand and also consistent with Goal CCP2 which calls for Downtown to be a thriving and diverse economic force that supports the city’s vitality, fiscal stability and high levels of community services.
The proposed Development Agreement is also aligned with Goal CCP5: The Third Street Promenade continues to anchor the Downtown’s retail and public space experience with updated features and activities.
2. The proposed Development Agreement is compatible with the uses authorized in the district in which the real property is located, in that the project site is located within the Downtown – Bayside Conservation (BC) District, which permits a variety of active commercial and entertainment-oriented uses. The proposed Digital Display would complement the existing entertainment, retail, dining, and visitor activities. It will enhance the visual and economic activity of the Promenade while complying with operational and design standards established in the Digital Display District Ordinance, including limits on brightness, operating hours, and maintenance. These measures ensure the display complements the district’s entertainment character without negatively affecting nearby light-sensitive residential uses. The proposed Development Agreement is also consistent with Policy CCP5.1 that states new public art should be encouraged and located to enhance the pedestrian experience and create an immersive arts
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experience and Policy PPS4.3 calling for the Third Street Promenade to be regularly updated to remain consistent with the surrounding areas in terms of infrastructure, landscaping, signage and aesthetic upgrades.
3. The proposed Development Agreement is in conformity with the public necessity, public convenience, general welfare, and good land use practices by establishing clear parameters for the Digital Display design, operation, and maintenance, while providing substantial community benefits. These include revenue-sharing with the City, a minimum annual financial guarantee, and a 20% allocation of screen time for civic and cultural content such as public safety messages, community event information, and local art. Consistent with the Digital Display District Ordinance, the proposed Development Agreement also advances good land use practices by concentrating digital displays within a focused geographic area and ensuring high-quality design standards that reinforce the City’s goals for a safe, engaging, and economically vibrant urban environment.
4. The proposed Development Agreement will not be detrimental to the health, safety and general welfare. The proposed Development Agreement includes multiple safeguards to protect public health and safety. Illumination levels, transition speeds, and display operations are regulated to minimize glare, driver distraction, and light spillover onto nearby residences. The display incorporates automatic dimming technology and is required to power off between 1:00 a.m. and sunrise. The Digital Display will not show flashing or scrolling text and other visual effects that could compromise safety. Collectively, these measures ensure the display operates safely and responsibly without detrimental impacts to the public or surrounding community.
5. The proposed Development Agreement will not adversely affect the orderly development of the property in that the Digital Display will be installed on an existing commercial building, designed to integrate architecturally with the structure. The proposed Development Agreement includes building occupancy
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standards to promote active ground-floor use, thereby supporting economic activity and maintaining the vitality of the Promenade.
6. The proposed Development Agreement will have a positive fiscal impact on the City. Through a negotiated revenue-sharing structure and minimum annual guarantee, the Development Agreement will provide an ongoing source of funding to support City programs, services, and public art initiatives. The proposed Development Agreement will also include a one-time payment contribution to the City upon completion of the Digital Display and a financial contribution for Downtown improvements. In addition, by activating a key Promenade intersection and attracting visitors, the project will contribute to increased economic activity, benefiting nearby businesses and generating additional tax revenues for the City.
SMMC Section 9.61.205(F)(16) Findings
1. The Digital Display is consistent with the goals, objectives, purposes and provisions of the Santa Monica Land Use and Circulation Element and the Downtown Community Plan, as amended from time to time. The project supports the City’s goals to encourage economic vitality, enhance placemaking, and promote creative, high-quality design within the Downtown consistent with the Land Use and Circulation Element and Downtown Community Plan. As indicated above, the proposed Digital Display aligns with the City’s efforts to reinvigorate the Third Street Promenade and surrounding areas as a vibrant, pedestrian-oriented entertainment district.
2. The Digital Display complies with the regulations established in the Digital Display District Ordinance. The proposed Digital Display complies with all applicable standards and requirements established in the Digital Display District Ordinance for the Third Street Promenade. The project adheres to regulations
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governing display size, design review, energy use, illumination, hours of operation, and content.
3. The Digital Display would not otherwise result in a threat to the general health, safety, and welfare of City residents, based on factors including but not limited to such factors as distracted driving, pedestrian and driver safety, light and glare, or aesthetics. The Digital Display would implement multiple safeguards developed through the City’s Digital Display District Ordinance and supporting Lighting Study, which evaluated potential light and glare impacts for all anticipated display locations within the District. The display is designed and regulated to minimize driver distraction and visual clutter through controlled transition speeds, fade effects, and the prohibition of flashing, scrolling, or strobing imagery. Light levels are limited to prevent excessive brightness and protect nearby residences from glare or light trespass. Automatic dimming and shutoff systems will continuously adjust luminance based on ambient lighting conditions, and the display will remain off between 1:00 a.m. and sunrise. These requirements ensure the display operates in a manner consistent with pedestrian and driver safety, visual comfort, and the City’s aesthetic and environmental goals.
4. The Digital Display provides substantial economic and public benefits that would not otherwise accrue to the public in the absence of its installation. The DA includes a revenue-sharing model and a minimum annual guarantee that will generate consistent, long-term funding to support City programs, public improvements, and community services. The display will also allocate 20% of total annual operating time for City and Art content, such as public safety messages, community events, and public art, enhancing the City’s public communication and cultural programming. The DA contributes to Downtown revitalization efforts by providing a monetary contribution to Downtown improvements, activating a highly visible corner on the Third Street Promenade, supporting local businesses, and strengthening the area’s identity as a premier entertainment and cultural destination.
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Environmental Review
As further detailed in the CEQA analysis, the proposed Digital Display is categorically exempt from CEQA pursuant to Section 15301 (Class 1 – Existing Facilities), Section 15303 (Class 3 - New Construction or Conversion of Small Structures), and Section 15311 (Class 11 - Accessory Structures), Section 15331 (Class 31 - Historic Resource Rehabilitation/Restoration), and Section 15332 (Class 32 – Infill Projects) of the CEQA Guidelines.
• Section 15301 of the CEQA Guidelines exempts the operation, repair, maintenance, permitting, or minor alteration of existing public or private structures, facilities, mechanical equipment or topographical features, involving negligible or no expansion of use beyond that existing at the time of the lead agency's determination. Projects that fall into this class of exemption include interior or exterior alterations and new copy on existing on and off-premise signs and additions to existing structures provided that the addition will not result in an increase of more than: (1) 50 percent of the floor area of the structures before the addition, or 2,500 square feet, whichever is less; or (2) 10,000 square feet. The Digital Display that would be affixed to the existing building and the installation of the blade sign would result in a minor alteration of the existing building. No expansion of the land uses or existing structure is proposed. Therefore, the project is exempt under Section 15301.
• Section 15303 of the CEQA Guidelines exempts the construction and location of limited numbers of new small facilities or structures; installation of small new equipment and facilities in small structures; and the conversion of existing small structures from one use to another where only minor modifications are made in the exterior of the structure. Projects that fall into this class of exemption include accessory (appurtenant) structures including garages, carports, patios, swimming pools, and fences. The Digital Display would be an accessory structure to the existing building and therefore, is exempt under Section 15303. • Section 15311 of the CEQA Guidelines exempts the construction, or placement of minor structures accessory to (appurtenant to) existing commercial, industrial, or institutional facilities. Projects that fall into this class of exemption include
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construction, or placement of minor structures accessory to (appurtenant to) existing commercial, industrial, or institutional facilities, including but not limited to: (a) On-premise signs. The Digital Display would be an accessory structure to existing building, and therefore, is exempt under Section 15311. • Section 15331 of the CEQA Guidelines exempts projects limited to maintenance, repair, stabilization, rehabilitation, restoration, preservation, conservation or reconstruction of historical resources in a manner consistent with the Secretary of the Interior’s Standards for the Treatment of Historic Properties with Guidelines for Preserving, Rehabilitating, Restoring, and Reconstructing Historic Buildings (“the Standards”). As analyzed in the Historic Resources Assessment report, the project conforms with all the Standards, except Standards 2 and 9. As noted in the Secretary of the Interior’s Guidelines, “the Secretary of the Interior’s Standards for Treatment of Historic Properties are only regulatory for projects receiving federal grant-in-aid funds otherwise, the Standards and Guidelines are intended only as general guidance for work on any historic building.). Therefore, as discussed in detail in the attached CEQA analysis, since the digital display is designed to be reversible and is generally consistent with all but two of the Standards, the project is exempt pursuant to Section 15331. • Section 15332 of the CEQA Guidelines exempts projects characterized as in-fill development meeting the conditions below.
o The project is consistent with the applicable general plan designation and all applicable general plan policies as well as with applicable zoning designation and regulations.
o The proposed development occurs within city limits on a project site of no more than five acres substantially surrounded by urban uses. o The project site has no value, as habitat for endangered, rare or threatened species.
o Approval of the project would not result in any significant effects relating to traffic, noise, air quality, or water quality.
o The site can be adequately served by all required utilities and public services.
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The project meets the qualifications of the in-fill exemption as it would be generally consistent with the general plan, and would be installed on a site of no more than 5 acres in an urban area that has no value for endangered, rare, or threatened species.
Additionally, the installation of the Digital Display would not result in significant effects related to traffic, noise, air quality or water quality, and the displays can be adequately served by all required utilities and public service. Therefore, the project is exempt under Section 15332.
In addition, none of the exceptions specified in Section 15300.2 of CEQA Guidelines would apply that would preclude the use of these CEQA exemptions as indicated in the CEQA analysis. Therefore, the project is categorically exempt pursuant to Sections 15301, 15303, 15311, 15331, and 15332 of the CEQA Guidelines.
Past Council Actions
Meeting Date Description
December 16, 2025 Council adoption of the Digital Display District Ordinance for the Third Street Promenade and the Santa Monica Place
shopping center
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of recommended action. Staff will return to Council if specific budget actions are required in the future.
Approval of the DA is expected to generate revenue to the City’s General Fund of approximately $500,000 in the first year after the Digital Display is completed and operational, based on the MAG established in the DA. Additionally, as an added community benefit that is required in the Ordinance, the City will receive a one-time contribution payment of $500,000 per display (which will escalate by 3% starting on June 30, 2027 and annually thereafter). The DA also specifies a one-time community benefit payment of $30,000 to be used by the City for its evaluation of future improvements to the Third Street Promenade.
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Prepared By: Rachel Kwok, Environmental Planner
Approved Forwarded to Council
Attachments:
A. A. 1355 3rd DA 2026.10.20
B. B. Digital Display Exhibit B-1_2026.10.19
C. C. Blade Sign Exhibit B-2_2026.10.19
D. D. HRG_Report_1355 3rd St_Sep 2026
E. E. Heritage Conformance Review Memo 2026.07.08
F. F. Heritage Blade Sign Reconstruction Report 2026.09.09 G. G. Sign Adjustment Findings Council
H. H. City Manager Certification 9.61.205(H)(7)(b)
I. ORD-ord-First Reading 1355 3rd DA
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Recording Requested By:
City of Santa Monica
When Recorded Mail To:
City of Santa Monica
Santa Monica City Attorney's Office
1685 Main Street, Third Floor
Santa Monica, CA 90401
Attention: City Attorney
_______________________________________________________________________ Space Above Line For Recorder's Use
No Recording Fee Required
California Government Code Section 27383
DEVELOPMENT AGREEMENT
BETWEEN
CITY OF SANTA MONICA
AND
XYZ NOW LLC
FOR A DIGITAL DISPLAY
AT 1355 THIRD STREET PROMENADE/301 SANTA MONICA BOULEVARD __________________, 2026
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Packet Pg. 996 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade i
TABLE OF CONTENTS
RECITALS ..................................................................................................................................1 ARTICLE 1 DEFINITIONS.........................................................................................................5 ARTICLE 2 DESCRIPTION OF THE DIGITAL DISPLAY AND BLADE SIGN ...................8
2.1 General Description ..........................................................................................................8
2.2 Principal Components of the Digital Display ...................................................................9
2.3 No Obligation to Develop.................................................................................................9
2.4 Vested Rights..................................................................................................................10
2.5 Project and Community Benefits....................................................................................11
2.6 Street Tree Removal, Relocation, Restitution and Replacement....................................21
2.7 Maintenance and Upgrades.............................................................................................22
2.8 Removal of Digital Display ............................................................................................22
2.9 Projections, Design, and Operation Standards................................................................23
2.10 Coastal Commission Review..........................................................................................23
2.11 Owner Solely Responsible for Compliance with The Terms and Conditions of this Agreement .........................................................................................23
2.12 Operator Not a Third-Party Beneficiary to this Agreement............................................24
2.13 Relationship to Owner/Operator Agreements.................................................................24 ARTICLE 3 CONSTRUCTION.................................................................................................24
3.1 [Reserved.]......................................................................................................................24
3.2 Construction Hours.........................................................................................................24
3.3 Outside Building Permit Issuance Date ..........................................................................24
3.4 Construction Period ........................................................................................................25
3.5 Extended Vested Rights..................................................................................................25
3.6 Existing Building Repairs, Remodeling, Reconstruction or Redevelopment and/or Digital Display Damage ......................................................................................26
3.7 City Termination Option.................................................................................................26 ARTICLE 4 FEES, EXACTIONS, AND CONDITIONS .........................................................27
4.1 Fees, Exactions, and Conditions.....................................................................................27
4.2 Conditions on Modifications...........................................................................................27
4.3 Implementation of Conditions of Approval....................................................................27
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ARTICLE 5 EFFECT OF AGREEMENT ON CITY LAWS AND REGULATIONS .............27
5.1 Development Standards for the Digital Display and Blade Sign; Existing Regulations. ....................................................................................................27
5.2 Permitted Subsequent Code Changes .............................................................................28
5.3 Common Set of Existing Regulations.............................................................................30
5.4 Conflicting Enactments...................................................................................................30
5.5 Timing of Development..................................................................................................30 ARTICLE 6 DESIGN APPROVAL...........................................................................................31
6.1 Design Review................................................................................................................31
6.2 Compliance with Digital Display District Ordinance.....................................................31
6.3 Commemorative Installation...........................................................................................31 ARTICLE 7 CITY TECHNICAL PERMITS.............................................................................31
7.1 Definitions.......................................................................................................................31
7.2 Diligent Action by City...................................................................................................32
7.3 Conditions for Diligent Action by the City.....................................................................32
7.4 Duration of Technical City Permits................................................................................33 ARTICLE 8 AMENDMENT AND MODIFICATION..............................................................33
8.1 Amendment and Modification of Development Agreement ..........................................33 ARTICLE 9 TERM ....................................................................................................................34
9.1 Effective Date .................................................................................................................34
9.2 Term................................................................................................................................34 ARTICLE 10 PERIODIC REVIEW OF COMPLIANCE ...........................................................35
10.1 City Review ....................................................................................................................35
10.2 Evidence of Reasonable Good Faith Compliance ..........................................................35
10.3 Information to be Provided to Owner.............................................................................35
10.4 Notice of Breach; Cure Rights........................................................................................35
10.5 Failure of Periodic Review .............................................................................................36
10.6 Termination of Development Agreement .......................................................................36
10.7 City Cost Recovery.........................................................................................................36 ARTICLE 11 DEFAULT .............................................................................................................36
11.1 Notice and Cure ..............................................................................................................36
11.2 Remedies for Monetary Default......................................................................................37
11.3 Remedies for Non-Monetary Default .............................................................................37
11.4 Modification or Termination of Agreement by City.......................................................39
11.5 Cessation of Rights and Obligations...............................................................................40
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11.6 Completion of Improvements.........................................................................................40 ARTICLE 12 MORTGAGEES ....................................................................................................40
12.1 Encumbrances on the Property .......................................................................................40 ARTICLE 13 TRANSFERS AND ASSIGNMENTS ..................................................................42
13.1 Transfers and Assignments.............................................................................................42
13.2 Release Upon Transfer....................................................................................................42 ARTICLE 14 INDEMNITY TO CITY ........................................................................................43
14.1 Indemnity ........................................................................................................................43
14.2 City’s Right to Defense...................................................................................................43 ARTICLE 15 GENERAL PROVISIONS ....................................................................................44
15.1 Notices............................................................................................................................44
15.2 Entire Agreement; Conflicts...........................................................................................44
15.3 Binding Effect.................................................................................................................45
15.4 Agreement Not for Benefit of Third Parties...................................................................45
15.5 No Partnership or Joint Venture .....................................................................................45
15.6 Estoppel Certificates.......................................................................................................45
15.7 Time ................................................................................................................................46
15.8 Excusable Delays............................................................................................................46
15.9 Governing Law ...............................................................................................................47
15.10 Cooperation in Event of Legal Challenge to Agreement................................................47
15.11 Attorneys’ Fees...............................................................................................................47
15.12 Recordation.....................................................................................................................47
15.13 No Waiver.......................................................................................................................47
15.14 Construction of this Agreement......................................................................................48
15.15 Other Governmental Approvals......................................................................................48
15.16 Jurisdiction and Venue....................................................................................................49
15.17 Exhibits...........................................................................................................................49
15.18 Counterpart Signatures....................................................................................................49
15.19 Certificate of Performance..............................................................................................49
15.20 Interests of Owner...........................................................................................................50
15.21 Operating Memoranda ....................................................................................................50
15.22 Acknowledgments, Agreements and Assurance on the Part of Owner ..........................50
15.23 Waiver of Protest ............................................................................................................51
15.24 Not a Public Dedication..................................................................................................51
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15.25 Other Agreements...........................................................................................................51
15.26 Severability and Termination..........................................................................................51
15.27 Community Development Director Approval ................................................................51
15.28 City Manager Approval ..................................................................................................51 Exhibit “A” Legal Description of Property
Exhibit “B-1” Digital Display Plans
Exhibit “B-2” Blade Sign Plans
Exhibit “C” SMMC Article 9 (Planning and Zoning)
Exhibit “D” Conditions of Approval
Exhibit “E” Permitted Fees and Exactions
Exhibit “F” Form of Assignment and Assumption Agreement Exhibit “G” Digital Display District Ordinance
Exhibit “H” Advertising Content Standards
Exhibit “I” Form of Encroachment Permit for Digital Display Exhibit “J” Form of Encroachment Permit for Blade Sign
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Packet Pg. 1000 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 1 DEVELOPMENT AGREEMENT
This Development Agreement (“Agreement”), dated ____________, 2026, is entered into by and between XYZ NOW LLC, a California limited liability company (the “Owner”) and the CITY OF SANTA MONICA, a municipal corporation organized and existing pursuant to the laws of the State of California and the Charter of the City of Santa Monica (the “City”), with reference to the following facts:
RECITALS
A. Pursuant to California Government Code Section 65864 et seq. and Chapter 9.60 of the Santa Monica Municipal Code (collectively, the “Development Agreement Statutes”), the City is authorized to enter into binding development agreements with persons or entities having a legal or equitable interest in real property for the development of such real property.
B. Owner is the owner of approximately 7,483 square feet of land located in the City of Santa Monica, State of California, commonly known as 1355 Third Street Promenade, also known as 301 Santa Monica Boulevard, as more particularly described in Exhibit “A” attached hereto and incorporated herein by this reference (the “Property”).
C. The Property is developed with an existing commercial building (the “Existing Building”) that includes approximately 18,439 rentable square feet above-grade (excluding the basements).
D. The City has included the Property within the Downtown Core land use designation under the City’s 2010 Land Use and Circulation Element of its General Plan (the “LUCE”). The Property is in the Bayside Conservation “BC” (Promenade) District under the Downtown Community Plan (“DCP”) and is located within the Bayside Conservation “BC” (Third Street Promenade Area) designation under the City’s Zoning Ordinance, and is located within the boundaries of the Digital Display District. The Property is also located in the California Coastal Zone.
E. On September 8, 2014, the Santa Monica Landmarks Commission designated the Existing Building, also known as the Junipher Building, as a City Landmark and the Property as a Landmark Parcel. (13LM-011.)
F. The City and Owner desire to allow Owner to install, operate, maintain, and repair a high-quality LED digital display and associated sign structure (the “Digital Display”) on the Existing Building for displaying paid static or full motion on-premises and/or off-premises advertising, artistic creations, civic announcements of public interest or importance and content promoting the City and/or its rich history, including Downtown Santa Monica and the Third Street Promenade. The operation of the Digital Display will generate revenues for the City through the Community Benefit Payment set forth in this Agreement.
G. Owner has advised the City of Owner’s intent to allow a third party billboard operator to operate and own, lease, or license the Digital Display from Owner during the term of this Agreement.
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Packet Pg. 1001 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 2 H. On June 3, 2026, Owner filed an application for a Development Agreement (26ENT-0124), pursuant to Santa Monica Municipal Code (“SMMC”) Section 9.60.020 (the “Development Application”). The Development Application proposes an approximately one thousand (1,000) square foot full motion, animated Digital Display to be installed under guidance by a Qualified Historic Preservation Professional to wrap around the corner of the west and south facades of the Existing Building generally above the second floor windows and below the top of the fourth floor windows.
I. The design of the Digital Display is more particularly depicted on the Digital Display Plans dated October 19, 2026 and attached hereto as Exhibit “B-1” (the “Digital Display Plans”).
J. After filing the Development Application, Owner made a request to add an historic blade sign for on-site advertising of future tenants of the Existing Building that could be approved as part of the Development Application both (a) to streamline the approval process and (b) because Owner believes this additional tenant signage could facilitate leasing of the Existing Building. The design of the Blade Sign is more particularly depicted on the Blade Sign Plans dated October 19, 2026 and attached hereto as Exhibit “B-2” (the “Blade Sign Plans”).
K. A Qualified Historic Preservation Professional (as defined in Article 1 of this Agreement) has been retained by the applicant team to advise it with respect to the location/positioning and design of the Digital Display and, more recently, the Blade Sign.
Subsequent to filing the Development Application, City also retained a Qualified Historic Preservation Professional to advise it with respect to the location/positioning and design of the Digital Display and Blade Sign.
L. Upon filing the Development Application, Owner scheduled a virtual community meeting and also held meetings with community members and stakeholders, including various preservation advocates, regarding the proposed Digital Display and Development Agreement.
Following some of that initial outreach, Owner elected to pursue reconstruction of the historic Blade Sign as well, as added incentive to attract quality tenants for the Existing Building and in an effort to evoke more of the Existing Building’s history.
M. Owner has paid all necessary costs and fees associated with the City’s processing of the Development Application and this Agreement.
N. The primary purpose is to allow for a Digital Display on the Property to (1) create a visually stimulating and informative experience at the corner of Santa Monica Boulevard and the Third Street Promenade; (2) promote the City, including the Third Street Promenade, and the arts, (3) attract visitors and patrons to the Promenade; (4) complement the City’s Entertainment District; as well as (5) generate a new source of revenue for the City, while at the same time respecting the prominence of the Existing Building, a City-designated Landmark and its Beaux Arts inspired design and character-defining features. The Parties desire to enter into this Agreement in conformance with the Development Agreement Statutes in order to achieve the development of the Digital Display and Blade Sign on the Property. The purposes of the Blade Sign are (1) facilitate occupancy of the building as required by Section 2.5.5 of this Agreement and (2) reestablish an aspect of the Existing Building’s historic architectural integrity.
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Packet Pg. 1002 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 3 O. The Digital Display and Blade Sign are also consistent with and implement numerous LUCE, DCP, and Historic Preservation Element goals and policies including:
• LUCE Goal D1 - “Maintain Downtown’s competitive advantage as a premier local and regional shopping, dining, and entertainment destination, and support its evolution in order to respond to changing market conditions.” • LUCE Goal E1 - “Create an economic base that satisfies the commercial service needs of the City’s residents while providing employment opportunities and a strong fiscal infrastructure for the City.”
• LUCE Goal E4 - “Support the retail sector in order to provide for the needs of local residents and visitors and augment sales tax revenues.” • LUCE Policy E1.1 – “Make land use decisions that respond to changing market conditions and meet the needs of City residents and visitors.” • LUCE Goal HP 1 - “Preserve and protect historic resources in Santa Monica through the land use decision-making process.”
• LUCE Policy HP 1.3 - “Ensure that new development, alterations or remodeling on, or adjacent to, historic properties are sensitive to historic resources and are compatible with the surrounding historic context.”
• LUCE Goal HP 2 - “Preserve and protect historic resources through the development of economic incentives and neighborhood conservation approaches.” • LUCE Policy E4.6 - “Support Downtown as Santa Monica’s primary destination for comparison retail, including a mix of local, national and international shops and restaurants that serve residents, visitors and area employees.” • DCP Goal CCP2 - “Downtown continues to be a thriving and diverse economic force that supports the city’s vitality, fiscal stability and high levels of community services.”
• Goal CCP5 - “The Third Street Promenade continues to anchor the Downtown’s retail and public space experience with updated features and activities.” • Policy CCP5.1 - “New public art should be encouraged and located to enhance the pedestrian experience and create an immersive arts experience.” • Action CCP5.1A - “Install Pathway Art, Banners and Urban Design Features to support the walking experience and to promote awareness of Downtown’s cultural offerings.”
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Packet Pg. 1003 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 4 • Policy CCP5.2 - “Consider opportunity for negotiated development agreement art contributions to be aggregated in order to facilitate the acquisition of significant public art pieces.”
• DCP Goal LU3 - “Santa Monica’s Downtown continues to be the economic center for the City, providing a diverse and flexible mix of uses that can meet future resident, business and visitor demand.”
• “The Bayside Conservation district is considered the pedestrian and economic heart of the City. Anchored by the Third Street Promenade, it is a vibrant urban atmosphere supported by a broad mix of building types, office space, entertainment, retail, restaurants, cafes, salons and exercise studios. The DCP supports the continued expansion of the central retail district by increasing the energy and pedestrian traffic on streets around the Promenade.” (DCP p. 22-23.) • Historic Preservation Element Goal 3 – “Increase public awareness of the history of Santa Monica and historic preservation in the City.”
• Historic Preservation Element Objective 3.2 – “Promote the benefits of owning historic property.”
• Historic Preservation Element Objective 3.8 – “Encourage the installation of plaques and/or public art related to historic buildings and sites in the City.” • Historic Preservation Element Policy 3.8.3 – “Investigate the possibility of coordinating historic preservation and public art programming.” • Historic Preservation Element Policy 4.1.3 – “Allow for appropriate additions to and adaptive reuse of historic resources.”
• Historic Preservation Element Goal 5 – “Promote the preservation of historic and cultural resources through incentives and technical assistance.” • Historic Preservation Element Objective 5.2 – “Promote and award incentives.” P. The City Council has determined that a development agreement is appropriate for the proposed development of the Digital Display and Blade Sign on the Property. This Agreement will (1) eliminate uncertainty in planning for the Digital Display and Blade Sign and result in the orderly development of (i) the Digital Display in accordance with the Digital Display District Ordinance and (ii) Blade Sign in accordance with the SMMC findings and criteria, (2) assure installation of necessary improvements on the Property, (3) provide for public infrastructure and services appropriate to development of the Digital Display and Blade Sign, (4) secure for the City improvements that benefit the public, (5) ensure the provision of community benefits as envisioned in the LUCE, DCP, and the Digital Display District Ordinance, and (6) otherwise achieve the goals and purposes for which the Development
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Packet Pg. 1004 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 5 Agreement Statutes were enacted. The City Council has also determined that the Blade Sign meets the sign adjustment findings in SMMC Section 9.61.130 and certificate of appropriateness findings in SMMC Section 9.56.140.
Q. This Agreement is consistent with the public health, safety, and welfare needs of the residents of the City and the surrounding region. The City has specifically considered and approved the impacts and benefits of the development of the Digital Display and Blade Sign on the Property in accordance with this Agreement. The Digital Display will provide a number of significant project and community benefits as set forth in Section 2.5 of this Agreement.
R. The City Council has found that the provisions of this Agreement are consistent with the relevant provisions of the City’s General Plan, including the LUCE, the DCP, the Digital Display District Ordinance, and the 1992 LUP.
S. On July 13, 2026, the City’s Landmarks Commission held a duly noticed public hearing on the Development Agreement as detailed in Section 6.2 of this Agreement.
T. On October 7, 2026, the City's Planning Commission held a duly noticed public hearing on the Development Application and this Agreement, and at such hearing, the Planning Commission recommended that the City Council approve the Digital Display and Blade Sign including this Agreement.
U. On ____________, 2026, the City Council held a duly noticed public hearing on the updated Development Application and this Agreement, and at such hearing the City determined the Digital Display and Blade Sign are exempt from the California Environmental Quality Act (“CEQA”) pursuant to a Class 1 exemption (existing facilities) per CEQA Guidelines Section 15301, a Class 3 exemption (new construction or conversion of small structures) per CEQA Guidelines Section 15303, a Class 11 exemption (accessory structures) per CEQA Guidelines Section 15311, a Class 31 exemption (historical resource restoration/rehabilitation) per CEQA Guidelines Section 15331, and a Class 32 categorial exemption (in-fill development) per CEQA Guidelines Section 15332 and introduced for first reading Ordinance No. ______approving this Agreement.
V. On ____________, 2026 the City Council adopted Ordinance No. ______ approving this Agreement.
NOW THEREFORE, in consideration for the covenants and conditions hereinafter set forth, the Parties hereto do hereby agree as follows:
ARTICLE 1
DEFINITIONS
Capitalized terms not defined below shall have the meanings set forth in the City’s Zoning Ordinance. The terms defined below, whether capitalized or not, have the meanings in this Agreement as set forth below unless the Agreement expressly requires otherwise:
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Packet Pg. 1005 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 6 1.1 “1992 LUP” means the Coastal Land Use Plan in effect as of the Effective Date unless otherwise indicated in this Agreement.
1.2 “Agreement” means this Development Agreement.
1.3 “Annual Gross Revenues” means Gross Revenues received in a calendar year.
1.4 “Blade Sign” means the projecting sign referenced in Recital “J” that will be attached perpendicular to the Existing Building’s southern façade.
1.5 “Blade Sign Plans” means the plans for the Blade Sign that are attached to this Agreement as Exhibit “B-2”.
1.6 “Building Permit” means any permit required by SMMC Section 8.08.050(a) and any successors thereto.
1.7 “Business Day” means a business working day for City Employees.
1.8 “Calendar Quarter” means the periods between and including (a) January 1st and March 31st, (b) April 1st and June 30th, (c) July 1st and September 30th, and (d) October 1st and December 31st of any calendar year.
1.9 “City Council” means the City Council of the City of Santa Monica, or its designee.
1.10 “City Manager” means the City Manager or his or her designee.
1.11 “Community Development Director” means the Community Development Department Director of the City of Santa Monica, or his or her designee.
1.12 “Days” means calendar days.
1.13 “DCP” has the meaning set forth in Recital “D”.
1.14 “Digital” means of, relating to, or utilizing devices constructed or working by the methods or principles of electronics. “Digital” also means composed of data in the form of especially binary digits.
1.15 “Digital Display” means a display utilizing digital technology with a display face to broadcast a message containing static or animated content, for on and off-premises advertising, including without limitation the Digital Display referenced in Recital “F”.
1.16 “Digital Advertising Services” means advertisement services on the Digital Display, including advertisements in the form of banner advertising, search engine advertising, interstitial advertising, and other comparable advertising services.
1.17 “Digital Display District Ordinance” means Ordinance No. 2839, adopted by the City Council on January 13, 2026 and included in Exhibit “G”.
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Packet Pg. 1006 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 7 1.18 “Digital Display District” means the Digital Display District identified in the Digital Display District Ordinance.
1.19 “Digital Display Commencement Date” means the date a Certificate of Occupancy or final building permit signoff, as applicable, for the Digital Display is/has been issued.
1.20 “Digital Display Plans” mean the plans for the Digital Display that are attached to this Agreement as Exhibit “B-1”.
1.21 “Discretionary Approvals” are actions which require the exercise of judgment or a discretionary decision, and which contemplate and authorize the imposition of revisions or additional conditions, by the City, including any board, commission, or department of the City and any officer or employee of the City. Discretionary Approvals do not include Ministerial Approvals.
1.22 “Effective Date” has the meaning set forth in Section 9.1 below.
1.23 “General Plan” or “City General Plan” means the General Plan of the City of Santa Monica, and all elements thereof including the LUCE, as of the Effective Date, unless otherwise indicated in this Agreement.
1.24 “Gross Revenues” means income or revenue generated by the Digital Display from all sources, before any expenses (including lease or license payments to Owner) or taxes, computed according to generally accepted accounting principles.
1.25 “Including” means “including but not limited to.”
1.26 “Legal Action” means any action in law or equity.
1.27 “Ministerial Approvals” mean any action which merely requires the City (including any board, commission, or department of the City and any officer or employee of the City), in the process of approving or disapproving a permit or other entitlement, to determine whether there has been compliance with applicable statutes, ordinances, regulations, or conditions of approval. Without limiting the generality of the foregoing, the exercise of duties and/or professional judgment by any City official referenced in SMMC Article 7 (Public Works) and Article 8 (Building Regulations), as amended from time to time, shall be considered a Ministerial Approval.
1.28 “Operator” means the party responsible for operating the Digital Display.
1.29 “Owner” means XYZ NOW LLC, a California limited liability company or any successor in interest to the Property.
1.30 “Parties” mean both the City and Owner, and “Party” means either the City or Owner, as applicable.
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Packet Pg. 1007 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 8 1.31 “Permitted Digital Display Area” means no more than one thousand (1,000) square feet.
1.32 “Person” means an individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company, or other entity, domestic or foreign.
1.33 “Qualified Historic Preservation Professional” means an architectural historian and/or historic architect with at least seven (7) years of relevant experience who satisfies The Secretary of the Interior’s Professional Qualification Standards for History, Architectural History, and/or Architecture pursuant to 36 CFR part 61.
1.34 “Santa Monica Conservancy” means the Santa Monica Conservancy, a California nonprofit public benefit corporation, or successor entity.
1.35 “SMMC” means the Santa Monica Municipal Code, including the Zoning Ordinance, in effect on the Effective Date unless specifically stated to refer to the Santa Monica Municipal Code as it may be in effect at some other time.
1.36 “Transfer” means the transfer of title to property by the execution of the deed or other instrument.
1.37 “Zoning Ordinance” means the City of Santa Monica Comprehensive Land Use and Zoning Ordinance (Chapters 9.01 to 9.68 of the SMMC) in effect on the Effective Date, set forth in its entirety as part of Exhibit “C” (Planning and Zoning).
ARTICLE 2
DESCRIPTION OF THE DIGITAL DISPLAY AND BLADE SIGN
2.1 General Description.
(a) General Description of Digital Display. The Digital Display includes the proposed improvement of the Property as more particularly described in this Agreement and on the Digital Display Plans, which present the Digital Display in concept. If there is a conflict or inconsistency between the text of this Agreement and the Digital Display Plans, the Digital Display Plans will prevail; provided, however, that omissions from the Digital Display Plans shall not constitute a conflict or inconsistency with the text of this Agreement. (b) General Description of Blade Sign. As shown on the Blade Sign Plans, the Blade Sign that was historically attached to the Existing Building to identify one of the building’s key tenants will be reconstructed in general conformance with the Secretary of the Interior’s Standards for the Treatment of Historic Properties and available for use for identification signage for a tenant or tenants within the Existing Building. If there is a conflict or inconsistency between the text of this Agreement and the Blade Sign Plans, the Blade Sign Plans will prevail; provided, however, that omissions from the Blade Sign Plans shall not constitute a conflict or inconsistency with the text of this Agreement.
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Packet Pg. 1008 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 9 (c) Detailed plans and specifications for the construction of the Digital Display and Blade Sign (collectively, the “Construction Plans and Specifications”), including, without limitation, structural plans and working drawings, shall be prepared by Owner subsequent to the Effective Date based upon the Digital Display Plans and Blade Sign Plans, and nothing herein shall be interpreted by the Owner as a pre-approval of the Construction Plans and Specifications by the City Building Official or City Engineer.
2.2 Principal Components of the Digital Display. The Digital Display consists of the following principal components, as well as the other components delineated in the Digital Display Plans, all of which are hereby approved by the City subject to the other provisions of this Agreement: an approximately one thousand (1,000) square foot full motion, LED digital/animated display/billboard to be installed as shown on the Digital Display Plans to the façade of the Existing Building, while ensuring that the terracotta stringcourse at the top of the storefronts and below the parapet remain fully exposed. The Digital Display may display static or full motion animated illuminated/digital content seven days per week including paid on-premises and/or off-premises advertising, public service content, artwork, civic announcements, charitable content and, as detailed in Section 2.5, content promoting the City and/or its rich history, including Downtown Santa Monica (such as the walking tours provided by the Santa Monica Conservancy) and the Third Street Promenade, and other City content. The Digital Display may display such illuminated/digital content during the hours specified in the Digital Display District Ordinance.
2.3 No Obligation to Develop.
2.3.1 Except as specifically provided herein:
(a) Nothing in this Agreement shall be construed to require Owner to proceed with the construction of the Digital Display or Blade Sign; provided, however that Owner may not proceed with installation of the Blade Sign unless and until Owner proceeds with construction of the Digital Display.
(b) The decision to proceed or to forbear or delay in proceeding with construction of the Digital Display or Blade Sign shall be in Owner’s sole discretion; provided, however, that Owner may not proceed with installation of the Blade Sign unless and until Owner proceeds with construction of the Digital Display.
(c) Except as provided in this Agreement, the decision to proceed or to forbear or delay in proceeding with construction of the Digital Display or Blade Sign shall be in Owner’s sole discretion.
(d) Notwithstanding Sections 2.3.1(a) and (b) above: (i) the Community Development Director may authorize installation of the Blade Sign prior to commencement of construction of the Digital Display through a Minor Modification pursuant to Section 2.4.2 provided Owner is moving forward diligently with obtaining the required permits for construction of the Digital Display, and (ii) nothing in this Agreement precludes Owner from pursuing alternate City approvals to install the Blade Sign independent of the Digital Display and/or this Agreement.
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Packet Pg. 1009 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 10 2.3.2 Failure to Proceed. Except as provided in Section 2.3.1, failure by Owner to proceed with construction of the Digital Display or Blade Sign shall not result in any loss or diminution of development rights for the Digital Display or Blade Sign, except upon expiration of Owner’s Vested Rights pursuant to this Agreement, or the termination of this Agreement.
2.3.3 Conditions of Approval. Notwithstanding any provision of this Section 2.3 to the contrary, Owner shall be required to implement all conditions of approval required under this Agreement in accordance with and at the time specified in Exhibit “D” and may be subject to all remedies specified in this Agreement for the failure to implement these conditions of approval as and when so required.
2.4 Vested Rights.
2.4.1 Approval of Digital Display Plans. The City hereby approves the Digital Display Plans as the conceptual scope of the Digital Display and the Blade Sign Plans as the conceptual scope of the Blade Sign. The City shall maintain a complete copy of the Digital Display Plans and Blade Sign Plans, stamped “Approved” by the City, in the Office of the City Clerk, and Owner shall maintain a complete copy of the Digital Display Plans and Blade Sign Plans, stamped “Approved” by the City, in its offices or at the Property. The Digital Display Plans and Blade Sign Plans to be maintained by the City and Owner shall be in a half-size set.
2.4.2 Minor Modifications to Digital Display. Owner, with the approval of the Community Development Director, may make minor changes to the Digital Display, Blade Sign, Digital Display Plans or Blade Sign Plans (“Minor Modifications”) without amending this Agreement; provided that the Community Development Director makes the following specific findings that the Minor Modifications: (i) are generally consistent with the Digital Display’s or Blade Sign’s, as applicable, overall qualities and characteristics as approved by the City Council; (ii) are consistent with the provisions, purposes and goals of this Agreement; (iii) are not detrimental to the public health, safety, convenience or general welfare; (iv) are consistent with the LUCE, DCP, and Digital Display District Ordinance; and (v) will not significantly and adversely affect the project and community benefits (Section 2.5) associated with the Digital Display, unless expressly authorized in Section 2.5. For the avoidance of doubt, any Minor Modification approving an increase or decrease in the square footage in a Digital Display shall document the proportionate increased or decreased One-Time Community Benefit and MAG Contribution in compliance with the Digital Display District Ordinance then in effect. The Community Development Director shall notify the Planning Commission and City Council in writing of any Minor Modifications approved pursuant to this Section 2.4.2. Any proposed change which the Community Development Director denies as not qualifying for a Minor Modification based on the above findings will only be processed as a Major Modification.
2.4.3 Modifications Requiring Amendment to this Agreement. Owner shall not make any “Major Modifications” (defined below) to the Digital Display or Blade Sign without first amending this Agreement to permit such Major Modifications. A “Major Modification” means the following:
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Packet Pg. 1010 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 11 (a) Any increase in the square footage of the Digital Display above the maximum display area allowed by the Digital Display District Ordinance, as it may be amended from time to time;
(b) Any material variation in the design, dimensions, or location of the Digital Display or Blade Sign (except as permitted as a Minor Modification pursuant to Section
2.4.2) that renders such aspects out of substantial compliance with the Digital Display Plans or Blade Sign Plans, as applicable, after Coastal Commission approval; (c) Any deviation from the Digital Display District Ordinance, as it may be amended from time to time;
(d) Any other change that would reduce or materially alter the project and community benefits as set forth in Section 2.5, unless expressly authorized in Section 2.5; and
(e) Any extension of the Term beyond the extensions provided for in Section 9.2.5.
If a proposed modification does not exceed the Major Modification thresholds established above, then the proposed modification may be reviewed as a Minor Modification in accordance with Section 2.4.2.
2.4.4 City Consent to Modification. The City may impose customary fees, exactions, and conditions, in connection with its approval of a Minor or Major Modification, subject to any applicable law. Notwithstanding anything to the contrary herein or in the Existing Regulations, if the Community Development Director approves a Minor Modification or if the City approves a Major Modification (and the corresponding amendment to this Agreement for such Major Modification), as the case may be, Owner shall not be required to obtain any other Discretionary Approvals for such modification in the case of certain Major Modifications.
2.4.5 Right to Develop. Subject to the provisions of Section 2.3.1 and Section
3.3, below, during the Term (as defined in Section 9.2 below) of this Agreement, Owner shall have the vested rights (the “Vested Rights”) to (a) develop and construct the Digital Display and Blade Sign in accordance with the following: (i) the Digital Display Plans and Blade Sign Plans, as applicable, (as the same may be modified from time to time in accordance with this Agreement); (ii) any Minor Modifications approved in accordance with Section 2.4.2; (iii) any Major Modifications which are approved pursuant to Section 2.4.3; and (iv) the requirements and obligations of Owner related to the improvements which are specifically set forth in this Agreement, and (b) operate the Digital Display pursuant to the terms of this Agreement and through the Term of this Agreement. The City shall have no further discretion over the elements of the Digital Display or Blade Sign which have been delineated in the Digital Display Plans and Blade Sign Plans (as the same may be modified from time to time in accordance with this Agreement).
2.5 Project and Community Benefits. Set forth below in this Section 2.5 are the project and community benefits that will be provided by the Digital Display.
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Packet Pg. 1011 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 12 2.5.1 One-Time Community Benefit Contribution. Within thirty (30) Days of issuance of the Digital Display Commencement Date, Owner shall pay a one-time community benefits contribution to the City in the amount of Five Hundred Thousand Dollars ($500,000) (the “One-Time Community Benefit Payment”). If the One-Time Community Benefit Payment is not made on or before June 30, 2027, then it shall escalate by three percent (3%) on June 30, 2027, and annually by three percent (3%) each June 30 thereafter until it is made.
2.5.2 Ongoing Community Benefit Contribution. Commencing on the Digital Display Commencement Date and continuing for each calendar year during the remainder of the Term, Owner shall pay to the City an amount (the “Ongoing Community Benefit Contribution”) equal to the greater of: (a) the Revenue Share Contribution (as set forth in subsection (a) below), and (b) the applicable MAG Contribution (as set forth in subsection (b) below).
(a) Revenue Share Contribution. Owner shall pay to the City (“Revenue Share Contribution”) an amount equal to twenty percent (20%) of the Annual Gross Revenues received for Digital Advertising Services. Such Revenue Share Contribution shall be paid annually to the City in accordance with Section 2.5.2(d) below.
(b) Minimum Annual Guaranteed Contribution. Beginning on the Digital Display Commencement Date and in accordance with the timing specified in Section 2.5.2(c) below, Owner shall pay to the City a minimum annual guaranteed payment (the “MAG
Contribution”) equal to Five Hundred Thousand Dollars
($500,000), which amount shall escalate by three percent (3%) commencing on June 30, 2027, and annually by three percent (3%) each June 30 thereafter.
Notwithstanding the foregoing, if the City approves more than nine (9) digital displays in the Digital Display District, as it may be amended from time to time, then commencing with the first quarterly MAG Contribution after such additional digital display’s Digital Display Commencement Date, the MAG Contribution otherwise due under this Agreement shall be reduced by three percent (3%) per digital display exceeding nine (9) (e.g., 3% reduction at the Digital Display Commencement Date for the 10th digital display, additional 3% reduction at the Digital Display Commencement Date for the 11th digital display, etc.).
Notwithstanding anything to the contrary herein, in no event will the City be required to pay or refund any sum to Owner as a result of the MAG Contribution reduction.
(c) Timing of MAG Contribution. Commencing with the Digital Display Commencement Date, the MAG Contribution shall be paid quarterly in arrears to City on or before the thirtieth (30th) day
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Packet Pg. 1012 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 13 following the expiration of each Calendar Quarter during the Term and shall be prorated for any partial Calendar Quarter based on the number of Days within such time period. Concurrent with payment of the MAG Contribution, Owner shall submit confirmation in writing of the amount of the MAG Contribution paid and
documenting any increases/decreases in the MAG Contribution compared with the prior quarterly MAG Contribution payment including citations to the relevant section of this Agreement supporting any such increase/decrease (e.g. 2.5.2(g) late payment,
2.5.5 failure to meet occupancy threshold, 2.5.2(b) saturation,
2.5.2(h) abatement credit, 3.6 temporary removal) and any relevant documentation.
(d) Revenue Share Contribution Timing. The Revenue Share Contribution shall be paid annually in arrears no later than forty-five (45) Days following the end of the year to which the Revenue Share is attributable (the “Reconciliation Payment Date”). No later than the Reconciliation Payment Date, Owner shall submit to the City a statement of the Revenue Share Contribution calculation for the immediately preceding year (January 1-December 31) along with a reconciliation statement (collectively, the “Reconciliation Statement”), reflecting the calculation of the Revenue Share Contribution due and owing for such calendar year (the “Annual Reconciliation”). If the amount of Revenue Share Contribution payable by Owner set forth in the Reconciliation Statement is more than the amount of MAG Contribution actually paid by Owner for such year (including any Supplemental MAG, if applicable), Owner shall pay the difference between the Revenue Share Contribution and the MAG Contribution (including any
Supplemental MAG, if applicable) paid to the City concurrently with the submission of the Reconciliation Statement for that year. (e) Statements of Annual Gross Receipts; Reconciliation Statement.
The Reconciliation Statement shall be accompanied by the signed certificate of the designated representative of the Owner, certifying specifically that (i) such report presents fairly and accurately reflects the Annual Gross Revenues of the calendar year, and (ii) the said Annual Gross Revenues conform with and are computed in
compliance with the definition of Annual Gross Revenues. (f) Records. For the purpose of permitting verification by City of any amount due to City as Revenue Share Contribution, Owner shall keep and preserve, or cause to be kept and preserved by Operator, for at least three (3) years after each calendar year as to such calendar year, and during the Term shall keep at the Property or at Operator’s premises at a designated location in Los Angeles County, a general ledger, required receipts and disbursement journals, and such sales records and other supporting
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Packet Pg. 1013 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 14 documentation together with original or duplicate books and records which shall disclose in detail all information required to permit City to verify Gross Revenues and which shall conform to and be in accordance with generally accepted accounting principles consistently applied. Not more than two (2) times per calendar year, after five (5) Business Days advance written notice to Owner or Operator, City or its employees, agents and/or accountants, shall have the right during business hours to make an examination or audit and copy of such books and records relevant to the determination of Gross Revenues (which examination may be conducted physically at the Property or Operator’s premises in Los Angeles County or by Owner or Operator making available such books and records by electronic means). If such audit discloses that, in any calendar year, the Revenue Share Contribution owed to City is greater than the Revenue Share Contribution paid to City for such period, Owner shall pay to City, within ten (10) Days of notice thereof accompanied by reasonable documentary evidence thereof, such liability. In addition, if such audit shall disclose that Owner has underpaid by four percent (4%) or more any Revenue Share Contribution payable by Owner, then in such event, within ten (10) Days following written notice by City of the costs of such audit and amount due of the Revenue Share Contribution plus interest accompanied by reasonable documentary evidence thereof, Owner shall pay the cost of such audit, all Revenue Share Contribution then payable, plus interest as set forth in subparagraph (g), below, on such the amount of Revenue Share Contribution owed, calculated from the date such additional Revenue Share Contribution was originally due and payable. In the event Owner fails to pay the costs of audit, Revenue Share Contribution due and interest thereon, within the ten (10) calendar day period specified herein, then such failure shall constitute a Default, as that term is defined in Article 11.
(g) Late Payment. If any installment of the MAG Contribution (including any Supplemental MAG, if applicable) and/or Revenue Share Contribution is not received by City within five (5) Business Days after Owner’s receipt of written notice of such delinquency, then Owner shall pay to City a late charge equal to five percent (5%) of the overdue amount, plus interest on the unpaid amount at five percent (5%) per annum pro rated daily for the delinquency period until paid.
(h) Impairment of Use.
(1) Abatement Event. Subject to the provisions herein and except as to any Replacement Trees installed pursuant to Section 2.6.2 and subsequently maintained by Owner, Owner may receive a
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Packet Pg. 1014 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 15 pro rated daily abatement credit (for the period described in Section 2.5.2(h)(5) below) against the MAG Contribution due to (i) any improvements, landscaping, vegetation, signage or structures installed or placed by City in the public sidewalks or public right of way after the Effective Date of this Agreement, (ii) utility services necessary to operate the Digital Display being interrupted for a period exceeding two (2) Business Days and such interruption is not caused by the acts or omissions of Owner or any tenant on the Property, which utility services may include, but are not limited to, electric, data, and/or internet service, (iii) commencement of an eminent domain proceeding by City or (iv) the use of the Digital Display or the visibility of the Digital Display are materially impaired as a result of (x) the City’s failure to perform any of its obligations under this Agreement (y) any act, event or condition listed under Section 15.8.1 below, or (z) the acts or omissions of any third party but not those of Owner, Operator, or any other tenant on the Property (each individually or collectively constituting an “Abatement Event”).
(2) Abatement Harm. If an Abatement Event occurs, then
abatement shall only apply if the visibility of the Digital Display has been substantially and materially impaired, which results in material adverse impact on Owner’s or Operator’s ability to sell advertisements on the Digital Display or collect revenues from sold advertisements (“Abatement Harm”), as evidenced by any advertiser (whether subject to an advertising contract with Owner or a potential future advertiser or any Operator) rejecting the Owner or Operator’s proof of
performance in the form of photos, canceling such advertising contract or declining to renew or extend advertising time on the Digital Display, or an advertiser declining to purchase advertising time on the Digital Display in each case, directly as a result of the Abatement Event.
(3) Notice of Abatement Event. In the event of any claim by Owner for abatement due to an Abatement Event, Owner shall provide written notice to the City no later than ten (10) Days upon learning of the alleged commencement of the Abatement Event. Owner and City shall meet and confer within five (5) Business Days of City’s receipt of the notice from Owner. (4) Documentation of Abatement Event and Abatement Harm.
Prior to meeting and conferring with the City and as a pre-condition to receiving any abatement, Owner shall provide a certified claim statement (“Certified Claim”), signed by the designated representative of the Owner, certifying (i) the
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Packet Pg. 1015 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 16 detailed nature of the claimed Abatement Event and Abatement Harm, (ii) that such claimed impairment will have a material and substantial impact on the revenue generation of the Digital Display and (iii) providing documentation of the Abatement Event and the Abatement Harm, including but not limited to photos and any advertiser communications evidencing a
rejection of the proof of performance, exercising a right of cancellation or refusal to renew, or an advertiser declining to purchase advertising time on the Digital Display due to the Abatement Event (“Claim Documentation”).
(5) Abatement Period. The abatement of the MAG Contribution as permitted by this Section shall commence upon the date Owner provides notice to the City as required by Section 2.5.2(h)(4) and continue so long as the Abatement Harm continues due to the Abatement Event (“Abatement Period”).
(6) Abatement Credit Timing. Owner understands, acknowledges and agrees that Owner has no right to withhold the MAG
Contribution until and unless the meet and confer period has been completed, and the Owner has provided the Certified Claim and Claim Documentation to City, after which point the City reserves all rights to protest and/or dispute the Certified Claim, or any portion thereof, and exercise its rights under and in accordance with Article 11. The daily abatement credit in this Section 2.5.2(h) shall be applied to the next MAG
Contribution for the Abatement Period. For the avoidance of doubt, (i) the abatement of the MAG Contribution during the Abatement Period shall in no way reduce or abrogate Owner’s obligation to pay City the Revenue Share Contribution in accordance with Section 2.5.2, and (ii) the Abatement Credit shall be deducted from the applicable MAG Contribution and the Owner shall pay City an amount equal to the greater of the Revenue Share Contribution and the MAG Contribution as
adjusted.
(7) Parties’ Collaboration on Abatement Cure. During the meet and confer period provided in subparagraph (h)(3), the Parties shall discuss how to best mitigate and cure the Abatement Event to minimize scope and duration of the Abatement Harm and, if the Abatement Event is attributable to the City under subparagraphs (h)(1)(i), (h)(1)(iii), or (h)(1)(iv)(x), City shall use reasonable good faith efforts to assist with curing such Abatement Event.
(8) No Right to Abatement Attributable to Owner’s Actions.
Notwithstanding any provisions to the contrary, Owner shall have no right to abatement for impairment of use under
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Packet Pg. 1016 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 17 subparagraph (h) that are attributable to Owner, Operator, or any other tenant on the Property, including, without limitation, in the event of Owner’s Existing Building repairs, remodeling, reconstruction or redevelopment which is separately governed by Section 3.6.
(9) No City Obligation to Undertake Landscaping Above and Beyond Customary Level of Services. Notwithstanding
anything to the contrary in this Agreement, City has no obligation to provide any public services above and beyond the customary level of services provided by City in the vicinity of the Digital Display as of the Effective Date, including, without limitation, tree trimming.
(i) Breach or Default. Without limiting the generality of Article 11, events of Breach or Default shall include: (i) Owner’s failure to pay any amounts owed to City within fourteen (14) Days of when due; (ii) Owner’s failure to provide a Reconciliation Statement within fourteen (14) Days of when due; (iii) an audit by City disclosing an underpayment to City of more than four percent (4%); and (iv) City’s inability to perform an audit in accordance with generally accepted auditing standards because Owner has failed to maintain records and/or provide access in accordance with this Agreement. Nothing in this Section modifies the notice and cure provisions in Article 11 applicable to events of Breach or Default.
(j) Public Records Act Request. As the Reconciliation Statement and/or other information provided by Owner to the City pursuant to this Agreement may contain confidential and/or propriety financial information and/or trade secrets, City agrees it shall notify Owner upon receipt of a Public Records Act (Gov’t Code Sections 7920, et seq.) request pertaining to any Reconciliation or other financial documents provided by Owner pursuant to this Agreement and shall not provide access to any such documents to the requesting party or any members of the public unless and until the City has notified Owner in writing of the request and provided Owner with at least ten (10) Days to object to disclosure of such documents on the basis such information is exempt from disclosure under the Public Records Act. If Owner notifies the City in writing of such an objection within the ten (10) day period, then City shall not provide such documents to the requesting party or any other member of the public except in the event of a court order and provided Owner fully indemnifies and defends the City in any litigation related to the withholding of such documents. Nothing in this Agreement shall constitute a waiver or diminishment of any of
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Packet Pg. 1017 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 18 the exemptions to disclosure provided in the California Public Records Act or other law.
2.5.3 City and Art Content Allocation. Owner shall provide for the display of “City Content Allocation” in accordance with the Digital Display District Ordinance. (a) Flexible Use. Any of the City Content Allocation not used by the City may, in the City’s sole discretion, be relinquished back to Owner at no cost so that Owner may, at its sole discretion, either (1) make it available for paid advertising or (2) display non-City art and civic and/or charitable programming. If used for paid advertising, revenue generated shall be considered as part of the Annual Gross Revenues.
(b) Reporting and Recordkeeping. On an annual basis prior to or concurrent with delivery of the Reconciliation Statement, the Owner shall provide the City Manager with a report demonstrating compliance with the City Content Allocation as specified in this Section 2.5.3 for the prior calendar year. The annual City Content Allocation report will include playback logs sourced from the content management system used to operate the Digital Display. The playback logs will indicate times and durations of all the various paid advertising and all other non-commercial content that has been displayed over the past year, as well as a cumulative summary of all commercial and non-commercial content displayed over that timeframe. The playback logs shall be retained by Owner or its third-party advertising Operator for a minimum of three (3) years following the conclusion of the calendar year to which such records pertain.
2.5.4 Commemorative Installation. In recognition of the Existing Building’s status as an officially designated City Landmark, Owner shall install a permanent commemorative installation on the Property in an area accessible or visible to the public that portrays one or more aspects of the history and significance of the site as reflected in the Findings and Determinations of the City’s Landmarks Commission (13LM-011). The commemorative installation may include, but is not limited to, a plaque, photograph(s), postcard(s), illustration(s), map(s), etching, display board, video screen, narrative or electronic content in a creative medium. The commemorative installation shall be developed with guidance from a Qualified Historic Preservation Professional and will be reviewed by the City’s Landmarks Commission in a public hearing but will not require a Certificate of Appropriateness.
If the City’s Landmarks Commission does not hold such public hearing within 60 Days of Owner’s written request, then the exhibits shall be reviewed by the City’s Landmarks Commission Liaison or other staff as designated by the Community Development Director’s designee. In the process of designing such commemorative installation, the design team shall also consult with and consider suggestions or refinements that might be offered by representatives from the Santa Monica Conservancy. If the commemorative installation is not installed within two (2) years of issuance of Certificate of Occupancy or final permit sign-off, as applicable, for the Digital Display, then City may, subject to the notice and cure provisions of Article 11, obligate Owner to shut off the Digital Display until such time as the commemorative installation is installed.
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Packet Pg. 1018 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 19 2.5.5 Existing Building Occupancy.
(a) Occupancy Threshold. Beginning on the Digital Display Commencement Date, if either (i) more than fifty percent (50%) of the rentable floor area within the Existing Building’s above-grade levels (i.e., excluding the basements) or (ii) the entire ground floor level of the Existing Building ("Occupancy Threshold") remains unoccupied for more than twelve (12) consecutive months during the Term, then for the period commencing on the first (1st) day following such twelve (12) month period and ending on the first (1st) day thereafter that the occupancy level of the Existing Building satisfies the Occupancy Threshold (“Occupancy Threshold Period”), the MAG Contribution shall be increased by twenty-five percent (25%) (non-compounded) on a daily prorated basis during the Occupancy Threshold Period (“Supplemental MAG Contribution”). Any late payments of the Supplemental MAG Contribution shall be subject to Section 2.5.2(g). Except as provided in subparagraph (c) with respect to floor area leased to a tenant in effect as of the Effective Date, “occupied” for purposes of this Section 2.5.5 means rentable floor area in the Existing Building that is physically occupied by a tenant (not vacant) and open for business based upon the tenant’s occupancy classification. Per Recital “J”, the Blade Sign is contemplated to assist Owner with satisfying the Occupancy Threshold.
(b) Payment of Supplemental MAG Contribution. The Supplemental MAG Contribution shall be applied to the next MAG Contribution following the commencement of the Occupancy Threshold Period. For the avoidance of doubt, the payment of the Supplemental MAG Contribution shall in no way reduce or abrogate Owner’s obligation to pay City the Revenue Share Contribution in accordance with Section 2.5.2. (c) Deferment of Commencement of Occupancy Threshold Period. In the event that the occupancy level of the Existing Building is beneath the Occupancy Threshold and the Owner is using reasonable good faith efforts to cause the occupancy level of the Existing Building to satisfy the Occupancy Threshold (and has provided City with reasonable supporting documentation of such commercially reasonable efforts), then the City Manager may provide up to two twelve (12) month extensions before the Supplemental MAG Contribution is owed to City. Moreover, rentable floor area in the Existing Building shall not be deemed unoccupied for the purposes of this paragraph if (A) such floor area is leased to a tenant under a lease that existed as of the Effective Date, (B) such lease prevents the tenant from being held in default solely for ceasing operations, provided other lease terms (e.g., rent payments) are fulfilled, and (C) such non-continuous operation provision (or similar) is the primary reason that Owner has not terminated such lease in order to place a new tenant into such floor area. (d) Major Repair, Remodeling or Reconstruction. During any period that any major repair, remodeling or reconstruction is being undertaken with respect to the Existing Building, which prevents occupancy of the building by one or more commercial tenants during the period of such major repair, remodeling or reconstruction, the occupancy level of the Existing Building shall be deemed to satisfy the Occupancy Threshold, regardless of the actual occupancy level of the Existing Building during such period, provided that the repair, remodeling or reconstruction is proceeding with due diligence under an active Building Permit and in no event for longer than a period of twenty four (24) months, which time can be extended by the City Manager based on substantial evidence that the failure to achieve the Occupancy Threshold is based on any of the events occurring under Section 15.8.1. The twenty four (24)
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Packet Pg. 1019 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 20 month period shall begin to run from the date that the Owner obtains an active and valid building permit that has been issued by the City to undergo the applicable repair, remodeling or reconstruction. The occupancy level of the Existing Building shall also be deemed to satisfy the Occupancy Threshold, regardless of the actual occupancy level of the Existing Building during such period that Owner has active and valid permits that have been issued by the City for the Existing Building to undergo mandatory seismic strengthening required under the City’s Seismic Retrofit Ordinance, or other work necessary to comply with any applicable laws or regulations implemented following the Effective Date, provided that the work is being diligently pursued, as determined by the City Manager or designee.
(e) The Supplemental MAG Contribution is the City's sole and exclusive remedy for the failure to meet the Occupancy Threshold and failure to satisfy the Occupancy Threshold shall not constitute a Default by Owner so long as Owner is paying the increased MAG Contribution required by subsection (a). Notwithstanding the foregoing remedy, (i) if the occupancy level of the Existing Building is beneath the Occupancy Threshold for more than four (4) consecutive years during the Term, City may as an alternative sole and exclusive remedy, subject to the notice and cure provisions of Article 11, obligate Owner to shut off the Digital Display until such time as the Occupancy Threshold is met and (ii) if the occupancy level of the Existing Building is beneath the Occupancy Threshold for more than five (5) consecutive years during the Term and the Owner does not demonstrate good faith efforts to lease rentable floor area or entire ground floor area of the Existing Building, City may, subject to the notice and cure provisions of Article 11, terminate this Agreement. (f) On an annual basis concurrent with delivery of the Reconciliation Statement, Owner shall notify the City in writing whether the Occupancy Threshold is satisfied, and if it is not satisfied, the date the Existing Building first failed to satisfy the Occupancy Threshold. In addition, concurrent with delivery of the quarterly MAG Contribution required in Section 2.5.2, if any rentable floor area has become unoccupied since payment of the last quarterly MAG Contribution, Owner shall notify the City Manager of the date the floor area became unoccupied.
2.5.6 Content. Owner agrees that the Digital Display shall comply with the Advertising Content Standards in Exhibit “H”.
2.5.7 Display of Existing Building and Historic Photography of Existing Building. In recognition of the Existing Building’s status as an officially designated City Landmark, Owner shall ensure the Digital Display presents, on times specified by the City as part of the City Content Allocation, (1) a simulation of the Existing Building’s façade on the digital screen and/or (2) historic imagery of the Existing Building documenting one or more moments of the Existing Building’s period of historic significance. Owner shall be responsible for any costs associated with procuring and producing/developing the imagery as described in this Section 2.5.7. Owner may seek and the Community Development Director may approve changes to any of the requirements in this Section 2.5.7 as a minor modification pursuant to Section 2.4.2 so long as the overall community benefits provided in Section 2.5 are not materially reduced.
2.5.8 Downtown Improvements Contribution. Owner has paid to the City Thirty Thousand Dollars ($30,000.00) to be used by the City for its evaluation of future
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Packet Pg. 1020 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 21 improvements to the Third Street Promenade and/or implementation of proposed improvements to the Third Street Promenade.
2.6 Street Tree Removal, Relocation, Restitution and Replacement.
2.6.1 Public Works Director Determination. Consistent with the Urban Forest Master Plan, the City’s Director of Public Works has determined that there is an unavoidable conflict between the Digital Display authorized by both this Agreement and the Digital Display District Ordinance, on the one hand, and two existing street trees located along north side of Santa Monica Boulevard across Third Street Promenade to the west of the Property (labeled as “Tree A” and “Tree B” on the Digital Display Plans), on the other hand. Based on thorough evaluation of the facts and circumstances, the City’s Director of Public Works has further determined that such conflict cannot be sufficiently mitigated through periodic pruning of the two street trees, nor through redesign/repositioning of the Digital Display because the Digital Display’s positioning--generally located above the second floor windows and below the top of the fourth floor windows of this Landmark building-- corresponds with: (a) guidance of a Qualified Historic Preservation Professional using the Secretary of the Interior’s Standards for the Treatment of Historic Properties, including the importance of ensuring that the character-defining terracotta stringcourse at the top of the storefronts and below the parapet will remain fully exposed consistent with the Existing Building’s designation as a City Landmark and (b) the viewshed necessary to support the Digital Display’s financial success and viability, including the need to support the community benefits required by the Digital Display District Ordinance and Section 2.5 of this Agreement. Given this final determination by the City’s Public Works Director, there is no need to seek an advisory opinion from the Urban Forest Commission. The City’s Director of Public Works, working in consultation with the City’s Public Landscape Division, has further determined that Tree A is not a good candidate for relocation due to its current health.
2.6.2 Tree A and Tree B Removal and Replacement. City shall remove and replace Tree A and Tree B, subject to the following conditions:
(i) Owner shall provide City with written notice of commencement of construction of the Digital Billboard no earlier than ninety (90) days prior to the anticipated commencement of construction (“Notice of Construction”); (ii) Concurrently with the Notice of Construction, Owner shall pay to the City the amount of Twenty Three Thousand Dollars ($23,000) (the “Street Tree Contribution”), to cover the following: (A) the value of Tree A, (B) the cost of removing Tree A and Tree B, (C) the cost of replacing Tree A and Tree B with a species that is a single trunk specimen with mature maintenance height of 10 to 12 feet (“Replacement Trees”); provided, however, that the final determination of the species satisfying this criterion shall be selected by the City’s Urban Forester, including, for example, a Marina Strawberry Tree or Tristaniopsis laurnina ‘Luscious” species or similar stature species; (D) the cost of transplanting Tree B to another location that does not impair viewing of the Digital Display; (E) the cost of planting two new street trees of species determined by the Urban Forester in any vacant tree wells within Downtown Santa Monica; and (F) costs of
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Packet Pg. 1021 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 22 ancillary sidewalk and/or hardscape repairs. The Street Tree Contribution amount shall be adjusted automatically on January 1st of each year beginning on January 1, 2028 by a percentage equal to the appropriate Construction Cost Index as published by Engineering News Record, or its successor publication, for the preceding 12 months.
(iii) Upon receiving the Notice of Construction and the Street Tree Contribution, City shall have up to sixty (60) days to remove Tree A and Tree B; provided, however, that City shall have no obligation to remove the trees until Owner has obtained a building permit for the Digital Display. City and Owner shall coordinate in good faith to ensure that the Digital Display and Blade Sign installation does not interfere with the removal and/or replacement of Tree A and Tree B.
(iv) Nothing herein shall be interpreted to apply to the removal and/or replacement of any trees other than Tree A and Tree B.
2.6.3 Pruning. City generally maintains a normal and customary schedule for tree maintenance within the City and intends to follow such schedule during the Term of this Agreement. Notwithstanding such stated intent, nothing in this Agreement shall be interpreted as a warranty or guaranty of any specific level, scope or frequency of such maintenance for the Replacement Trees. Owner may maintain and/or prune the Replacement Trees to supplement the City’s level of maintenance and/or pruning under the guidance of a licensed arborist and solely to avoid them growing beyond a stabilized mature maintenance height of 10 to 12 feet; provided that Owner obtains the prior approval of the City’s Urban Forester and any required City permits.
City agrees that if Owner applies for a permit to prune the Replacement Trees, City shall not unreasonably delay, condition, or withhold approval.
2.7 Maintenance and Upgrades. After the Building Official’s final approval or sign-off, as applicable, for the Digital Display and for as long as the Digital Display is in place, Owner shall maintain the Digital Display (including its support structure) in safe, attractive and good condition, clean and free of graffiti. In the event the Digital Display malfunctions or becomes damaged or otherwise requires repair, Owner shall complete the needed repair as soon as practicable and in any event respond within one (1) Business Day after receiving notice from the City of the need for maintenance. Provided that any such repair work is limited to the Digital Display itself or its entablature, no City approvals will be required. In addition, Owner may replace, update, or upgrade all or any portion of the Digital Display provided that (a) the size and orientation of the Digital Display are not altered and (b) the Digital Display complies with the Digital Display District Ordinance. Any modifications proposed as part of the replacement, update or upgrade of the Digital Display shall be reviewed under Sections 2.4.2-2.4.4 and/or Article 6, as applicable.
2.8 Removal of Digital Display. At the end of the Term of this Agreement (or if this Agreement is terminated earlier pursuant to this Agreement), Owner shall remove the Digital Display and patch/repair the façades of the Existing Building. Provided the patch/repair of the facades of the Existing Building is done in consultation with a Qualified Historic Preservation Professional retained by Owner and in a manner consistent with the Secretary of the Interior’s
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Packet Pg. 1022 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 23 Standards, the patch/repair work shall be reviewed and approved by the City’s Landmarks Commission Secretary. Notwithstanding the foregoing, Owner shall not be required to remove the Digital Display if Owner and City have entered into an extension of this Agreement or a new agreement regarding the continued operation of the Digital Display on the Property. Further, Owner shall not be required to remove the Digital Display for up to six (6) months following such expiration or termination if Owner and the City are in reasonable good faith negotiations to enter into a new agreement regarding the operation of the Digital Display and the City Manager has approved such non-removal. Notwithstanding any such removal of the Digital Display, the Blade Sign may remain in place as a non-conforming sign if there is an existing tenant at the time of removal of the Digital Display and for so long as the Blade Sign is used for tenant identification, pursuant to SMMC Section 9.61.240(B) (Removal or Modification of Nonconforming Signs) in effect at that time and pursuant to the terms of the encroachment agreement governing the Blade Sign (as described in Section 2.9). Nothing in this Agreement precludes Owner from pursuing alternate City approvals to install the Blade Sign independent of this Agreement; provided, however, that if Owner obtains an independent approval to install the Blade Sign, Owner shall be deemed to have forfeited all rights with respect to the Blade Sign under this Agreement and Owner shall still be required to execute an encroachment agreement, the form of which is included in Exhibit “J” (Form of Encroachment Permit for Blade Sign), with any minor text modifications necessary to reflect the independent approval prior to obtaining a building permit for installation.
2.9 Projections, Design, and Operation Standards.
(a) Projections from the Existing Building, design, and operation of the Digital Display shall conform to the Digital Display District Ordinance. City approval of any encroachment permit pursuant to SMMC Section 9.61.205(H)(3) for the Digital Display and for the Blade Sign shall be documented in encroachment agreements, the forms of which are included in Exhibit “I” (Form of Encroachment Permit for Digital Display) and Exhibit “J” (Form of Encroachment Permit for Blade Sign), respectively. (b) Exemption From City Sign Code. For avoidance of doubt, the applicability of this Section 2.9 to the Digital Display and reconstructed Blade Sign shall be exempt from the City’s Sign Code (SMMC Chapter 9.61) and shall not count toward any sign area limits in the City’s Sign Code.
2.10 Coastal Commission Review. After the Effective Date of the Development Agreement, the Community Development Director, or his or her designee, shall provide Owner with a fully completed and executed Section 2 of the Local Agency Review Form (Appendix B of the Coastal Development Permit Application) and shall stamp and return to Owner two sets of Digital Display Plans and Blade Sign Plans within 15 Days after receiving such a written request and the associated processing fee from Owner.
2.11 Owner Solely Responsible for Compliance with The Terms and Conditions of this Agreement. Owner shall comply with any act or obligation to be performed by or on the part of Owner under the terms of this Agreement or cause Operator to comply with any act or obligation to be performed by or on the part of Owner under the terms of this Agreement, with the same force and effect as if performed by Owner. Operator’s failure to comply with
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Packet Pg. 1023 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 24 the terms of this Agreement shall not be deemed to excuse Owner’s obligations under this Agreement and City shall have no obligation to seek any remedies against Operator for Operator’s violation of this Agreement, it being understood, acknowledged and agreed to by Owner that Owner is solely responsible for the obligations attributed to Owner under this Agreement.
2.12 Operator Not a Third-Party Beneficiary to this Agreement. Owner understands, acknowledges and agrees that Operator is not a third party beneficiary to this Agreement. As a condition precedent to the Effectiveness of this Agreement, Operator shall acknowledge and consent, on behalf of itself and its successors and assigns, that Operator has no right to claim third party beneficiary status under this Agreement.
2.13 Relationship to Owner/Operator Agreements. Nothing in this Agreement modifies any agreements between Owner and Operator as between themselves, separate and apart from the obligations to the City.
ARTICLE 3
CONSTRUCTION
3.1 [Reserved.]
3.2 Construction Hours. Owner shall be permitted to perform construction related to the Digital Display and Blade Sign between the hours of 8:00 a.m. to 6:00 p.m. Monday through Friday, and 9:00 a.m. to 5:00 p.m. Saturday; provided that interior construction work which does not generate noise of more than thirty (30) decibels beyond the Property’s property lines may also be performed between the hours of 7:00 a.m. to 8:00 a.m. and 6:00 p.m. to 7:00 p.m.
Monday through Friday, and 8:00 a.m. to 9:00 a.m. and 5:00 p.m. to 6:00 p.m. Saturday.
Notwithstanding the foregoing, pursuant to SMMC Section 4.12.110(e), Owner has the right to seek a permit from the City authorizing construction activity during the times otherwise prohibited by this Section.
3.3 Outside Building Permit Issuance Date.
i. Subject to Section 3.5, if Owner has not been issued a building permit for the Digital Display by the “Outside Building Permit Issuance Date” (defined below), then on the day after the Outside Building Permit Issuance Date, without any further action by either Party, this Agreement shall automatically terminate and be of no further force or effect. For purposes of clarity, if Owner has not been issued a building permit for the Digital Display by the Outside Building Permit Issuance Date, the City shall not be required to pursue its remedies under Section 11.4 of this Agreement, and this Agreement shall, instead, automatically terminate. “Outside Building Permit Issuance Date” means the date that is two (2) years after the Effective Date; provided that the Outside Building Permit Issuance Date shall automatically be extended by applicable Excusable Delays and otherwise in accordance with the remainder of this Article 3.
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Packet Pg. 1024 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 25 ii. If the approval by the California Coastal Commission of the Digital Display does not occur within six (6) months of the submittal by Owner to the Coastal Commission, then the Outside Building Permit Issuance Date shall automatically be extended one month for each additional month or partial month greater than six (6) that the Coastal Commission approval is delayed. If issuance of the building permit for the Digital Display does not occur within four (4) months of Owner’s submittal of a complete plan check application for the Digital Display and Owner is diligently processing such plan check application, including, without limitation, responding in a timely and responsive manner to City building official comments, then the Outside Building Permit Issuance Date shall automatically be extended one month for each additional month or partial month greater than four (4) that the building permit issuance is delayed.
iii. At any time after the Effective Date but before the Outside Building Permit Issuance Date, Owner may deliver written notice to the Community Development Director, requesting an extension of the Outside Building Permit Issuance Date for an additional twelve (12) months. The Community Development Director shall grant such extension if Owner can demonstrate substantial progress has been made towards obtaining a building permit and show reasonable cause why Owner will not be able to obtain the building permit for the Digital Display by the Outside Building Permit Issuance Date and can demonstrate that: (a) the condition of the Property will not adversely affect public health or safety and (b) the continued delay will not create any unreasonable visual or physical detriment to the neighborhood. iv. If Owner has not been issued a building permit for the Blade Sign by the “Outside Building Permit Issuance Date” (as it may be extended), then Owner’s vested rights to install the Blade Sign pursuant to this Agreement shall terminate.
3.4 Construction Period.
i. Construction of the Digital Display shall be completed no later than eighteen (18) months from issuance of the building permit for the Digital Display. If a building permit for all or part of the Digital Display expires (e.g., is not timely exercised) or lapses and the Outside Building Permit Issuance Date has not expired, Owner may file for renewal of such building permit or a new/replacement building permit prior to the Outside Building Permit Issuance Date, as it may be extended pursuant to Section 3.3 above.
ii. Installation of the Blade Sign shall be completed no later than eighteen (18) months from issuance of the building permit; provided, however, that a building permit for the Blade Sign shall not be issued until either (a) a building permit has been issued for the Digital Display or (b) the City has issued a Minor Modification allowing issuance of the Blade Sign in accordance with Sections 2.3.1(d) and 2.4.2. If a building permit for all or part of the Blade Sign expires (e.g., is not timely exercised) or lapses and the Outside Building Permit Issuance Date has not expired, Owner may file for renewal of such building permit or a new/replacement building permit prior to the Outside Building Permit Issuance Date, as it may be extended pursuant to Section 3.3 above.
3.5 Extended Vested Rights. Notwithstanding any other provision of this Agreement, if prior to the Outside Building Permit Issuance Date (as it may be extended) and/or end of the construction period in Section 3.4, Owner pays to the City twenty-five percent (25%) of the
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Packet Pg. 1025 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 26 MAG Contribution specified in Section 2.5.2(b) prorated on a daily basis (“Partial MAG Payment”), then the Outside Building Permit Issuance Date and/or the construction period specified in Section 3.4, as applicable, shall automatically be extended so long as such Partial MAG Payment continues quarterly up to a maximum of five (5) years from the Effective Date; provided, however, that City shall have, as its exclusive remedy, the right to terminate this Agreement, subject to the notice and cure provisions under Article 11 if the Outside Building Permit Issuance Date extends beyond five (5) years from the Effective Date and/or the construction period specified in Section 3.4 extends beyond three (3) years.
3.6 Existing Building Repairs, Remodeling, Reconstruction or Redevelopment and/or Digital Display Damage. In the event that (a) the Existing Building undergoes a major repair, remodeling, reconstruction or redevelopment that results in or requires removal of the Digital Display and/or Blade Sign or (b) the Digital Display and/or Blade Sign is damaged or destroyed so as to be inoperable during the Term of this Agreement due to actions or events that are outside the reasonable control of the Owner, Operator, or any other tenant on the Property:
i. Owner shall be entitled to reinstall and/or reconstruct the Digital Display and/or Blade Sign in accordance with this Agreement if: (a) the major repair, remodeling, reconstruction or redevelopment that results in or requires removal of the Digital Display and/or Blade Sign, as applicable, is proceeding with due diligence and (b) the Owner is not in Breach of this Agreement.
ii. The Term of this Agreement shall toll during the period the Digital Display is removed and shall resume on the date of issuance of a certificate of occupancy (or final building permit signoff, as applicable) for the reconstructed Digital Display by the applicable City building authorities (the “Temporary Removal Period”). For the avoidance of doubt, the MAG Contribution shall continue to escalate in accordance with Section 2.5.2(b) during any Temporary Removal Period.
iii. The MAG Contribution in Section 2.5 shall abate on a day-for-day basis during any Temporary Removal Period. Notwithstanding the foregoing, if at Owner’s election, in its sole discretion, and with City approval, Owner installs temporary scaffolding to allow a temporary substitute for the Digital Display to be installed on the Property during any Temporary Removal Period, Owner shall pay the City ten percent (10%) of Gross Revenues from the temporary substitute display no later than sixty (60) Days from the end of the Temporary Removal Period.
iv. Notwithstanding anything to the contrary in this Agreement, the calculation of the Temporary Removal Period under Section 3.6(ii) and the abatement under Section 3.6(iii) shall not apply to any temporary removal of the Blade Sign, it being understood and agreed to by the undersigned parties that the MAG Contribution is solely based upon the operation of the Digital Display.
3.7 City Termination Option. Notwithstanding anything in the foregoing to the contrary, in the event the Temporary Removal Period (x) exceeds three (3) years under the circumstances described in Section 3.6(a) (the Existing Building undergoes a major repair, remodeling, reconstruction or redevelopment that requires removal of the Digital Display) and
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Packet Pg. 1026 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 27 such circumstances are not caused by any act, event or condition listed under Section 15.8.1; (y) exceeds six (6) years under the circumstances described in Section 3.6(a) (the Existing Building undergoes a major repair, remodeling, reconstruction or redevelopment that requires removal of the Digital Display) and such circumstances are caused by any act, event or condition listed under Section 15.8.1; or (z) exceeds eighteen (18) months under the circumstances described in Section 3.6(b) (the Digital Display is damaged or destroyed during the Term of this Agreement), then the City may exercise, as its exclusive remedy, the right to terminate this Agreement, subject to the notice and cure provisions under Article 11. Alternatively, if the City does not exercise its right to terminate this Agreement, the Partial MAG Payment shall continue for so long as the City does not exercise the right to terminate.
ARTICLE 4
FEES, EXACTIONS, AND CONDITIONS
4.1 Fees, Exactions, and Conditions. Except as expressly set forth in Section 2.5 (relating to Community Benefits), Section 4.2 (relating to modifications), and Section 5.2 (relating to Subsequent Code Changes) below, the City shall charge and impose only those fees, exactions, conditions, and standards of construction set forth in this Agreement, including Exhibits “D” and “E”, respectively, attached hereto, and no others. If any of the conditions set forth on Exhibit “D” is satisfied by others, Owner shall be deemed to have satisfied such conditions. Notwithstanding the foregoing, except to the extent specifically provided otherwise, this Agreement does not require Owner to pay any exactions nor implement any conditions of approval if Owner does not obtain a building permit for the Digital Display and/or Blade Sign, as applicable, prior to expiration of the Outside Building Permit Issuance Date including any extensions thereof or any tolling thereof in accordance with Sections 3.3 and/or 3.5.
4.2 Conditions on Modifications. The City may impose fees, exactions, and conditions in connection with its approval of Minor or Major Modifications, provided that all fees, exactions, and conditions shall be in accordance with any applicable law.
4.3 Implementation of Conditions of Approval. Owner shall be responsible to adhere to the conditions of approval set forth in Exhibit “D” in accordance with the timelines established in Exhibit "D".
ARTICLE 5
EFFECT OF AGREEMENT ON CITY LAWS AND REGULATIONS
5.1 Development Standards for the Digital Display and Blade Sign; Existing Regulations. The following development standards and restrictions set forth in this Section 5.1 govern the use and development of the Digital Display and Blade Sign and shall constitute the Existing Regulations, except as otherwise expressly required by this Agreement. Nothing herein shall be deemed to apply to the Existing Building, excluding the Digital Display and Blade Sign.
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Packet Pg. 1027 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 28 5.1.1 Defined Terms. The following terms shall have the meanings set forth below:
(a) “Existing Regulations” collectively means all of the following which are in force and effect as of the Effective Date: (i) the General Plan (including, without limitation, the LUCE); (ii) the DCP, (iii) the Zoning Ordinance except as modified herein; (iv) the Digital Display District Ordinance; (v) any and all ordinances, rules, regulations, standards, specifications and official policies of the City governing, regulating or affecting the design, development, building, construction, occupancy or use of buildings, signs/billboards, and improvements or any exactions therefore, except as amended by this Agreement; (v) the City’s 1992 LUP; and (vi) the development standards and procedures in Article 2 of this Agreement. (b) “Subsequent Code Changes” collectively means all of the following which are adopted or approved subsequent to the Effective Date, whether such adoption or approval is by the City Council, any department, division, office, board, commission or other agency of the City, by the people of the City through charter amendment, referendum, initiative or other ballot measure, or by any other method or procedure: (i) any amendments, revisions, additions or deletions to the Existing Regulations; or (ii) new codes, ordinances, rules, regulations, standards, specifications and official policies of the City governing or affecting the design, development, construction, occupancy or use of building, signs/billboards, or improvements or any exactions therefor. “Subsequent Code Changes” includes, without limitation, any amendments, revisions or additions to the Existing Regulations imposing or requiring the payment of any fee, special assessment or tax.
5.1.2 Existing Regulations Govern the Digital Display and Blade Sign. Except as provided in Section 5.2, development of the improvements that will comprise the Digital Display and Blade Sign, including without limitation, the development standards for the design, development, construction, or use of such Digital Display and Blade Sign, and any exactions therefore, shall be governed by the Existing Regulations. The City agrees that this Agreement is consistent with the Digital Display District Ordinance, General Plan, including the LUCE and the DCP, and the 1992 LUP. Any provisions of the Existing Regulations inconsistent with the provisions of this Agreement, to the extent of such inconsistencies and not further, are hereby deemed modified to that extent necessary to effectuate the provisions of this Agreement. The Digital Display and Blade Sign shall be exempt from: (a) all Discretionary Approvals or review by the City or any agency or body thereof, other than review of modifications to the Digital Display and/or Blade Sign as expressly set forth in Sections 2.4.2 and 2.4.3; (b) the application of any subsequent local sign, billboard, and/or digital display moratoria, sign, billboard, and/or digital display rationing systems or other restrictions on sign, billboard, and/or digital displays which would adversely affect the rate, timing, or phasing of construction of the Digital Display and/or Blade Sign, and (c) Subsequent Code Changes which are inconsistent with this Agreement.
5.2 Permitted Subsequent Code Changes.
5.2.1 Applicable Subsequent Code Changes. Notwithstanding the terms of Section 5.1, this Agreement shall not prevent the City from applying to the Digital Display and/or Blade Sign the following Subsequent Code Changes set forth below in this Section 5.2.1.
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Packet Pg. 1028 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 29 (a) Processing fees and charges imposed by the City to cover the estimated actual costs to City of processing applications for development approvals including:
(i) all application, permit, and processing fees incurred for the processing of this Agreement, any administrative approval of a Minor Modification, or any amendment of this Agreement in connection with a Major Modification; (ii) all building plan check and building inspection fees for work on the Digital Display and/or Blade Sign in effect at the time an application for a grading permit or building permit is applied for; (iii) the public works plan check fee and public works inspection fee for public improvements constructed and installed by Owner; (iv) fees for monitoring compliance with any development approvals; (v) and utility charges. (b) General or special taxes, including, but not limited to, property taxes, sales taxes, parcel taxes, transient occupancy taxes, business taxes, which may be applied to the Property or to businesses occupying the Property; provided that (i) the tax is of general applicability City-wide and does not burden the Property disproportionately to other similar developments within the City; and (ii) the tax is not a levy, assessment, fee or tax imposed for the purpose of funding public or private improvements on other property located within the Downtown Community Plan area as of the Effective Date.
(c) Procedural regulations relating to hearing bodies, petitions, applications, notices, documentation of findings, records, manner in which hearings are conducted, reports, recommendations, initiation of appeals, and any other matters of procedure; provided such regulations are uniformly imposed by the City on all matters, do not result in any unreasonable decision-making delays and do not affect the substantive findings by the City in approving this Agreement or as otherwise established in this Agreement. (d) Regulations governing construction standards and specifications which are of general application that establish standards for the construction and installation of structures and associated improvements, including, without limitation, the City’s Building Code, Plumbing Code, Mechanical Code, Electrical Code and Fire Code; provided that such construction standards and specifications are applied on a City-wide basis and do not otherwise limit or impair the Digital Display and/or Blade Sign approvals granted in this Agreement unless adopted to meet (i) health and safety concerns, (ii) in the event of replacement of the Digital Display during the Term, City-wide green building or energy standards clearly applicable to electronic digital displays, or (iii) in the event of replacement of the Blade Sign during the Term, City-wide green building or energy standards clearly applicable to illuminated signs. (e) Any City regulations to which Owner has consented in writing, which consent may be withheld by Owner in its sole discretion. (f) Collection of such fees or exactions as are imposed and set by governmental entities not controlled by City but which are required to be collected by City. (g) Wastewater/water connection fees, including capital facility and construction fees, which are adopted by the City Council from time to time and apply generally throughout the City.
(h) Regulations which do not impair the rights and approvals granted to Owner under this Agreement. For the purposes of this Section 5.2.1(h), regulations which
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Packet Pg. 1029 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 30 impair Owner’s rights or approvals include, but are not limited to, regulations which (i) materially increase the cost of the Digital Display and/or Blade Sign (except as provided in Section 5.2.1(a), (b), and (d) above), (ii) materially delay development of the Digital Display and/or Blade Sign or would cause a material change in the uses of the Digital Display and/or Blade Sign as provided in this Agreement, or (iii) materially impair the development, operation or use of the Digital Display and/or Blade Sign.
(i) Generally applicable codes or actions necessary to comply with a declaration of a Water Shortage Emergency pursuant to the California Water Code.
5.2.2 New Rules and Regulations. This Agreement shall not be construed to prevent the City from applying new rules, regulations and policies in those circumstances specified in Government Code Section 65866.
5.2.3 State or Federal Laws. In the event that state or federal laws or regulations, enacted after the Effective Date, prevent or preclude compliance with one or more of the provisions of this Agreement, such provisions of this Agreement shall be modified or suspended as may be necessary to comply with such state or federal laws or regulations; provided that this Agreement shall remain in full force and effect to the extent it is not inconsistent with such laws or regulations and to the extent such laws or regulations do not render such remaining provisions impractical to enforce.
5.3 Common Set of Existing Regulations. Prior to the Effective Date, the City and Owner shall use reasonable efforts to identify, assemble and copy three identical sets of the Existing Regulations, to be retained by the City and Owner, so that if it becomes necessary in the future to refer to any of the Existing Regulations, there will be a common set of the Existing Regulations available to all Parties.
5.4 Conflicting Enactments. Except as provided in Section 5.2 above, any Subsequent Code Change which would conflict in any way with or be more restrictive than the Existing Regulations shall not be applied by the City to any portion of the Digital Display and/or Blade Sign. Owner may, in its sole discretion, give the City written notice of its election to have any Subsequent Code Change applied to any portion of the Digital Display and/or Blade Sign as it may have an interest in, in which case such Subsequent Code Change shall be deemed to be an Existing Regulation insofar as that portion of the Digital Display and/or Blade Sign is concerned.
If there is any conflict or inconsistency between the terms and conditions of this Agreement and the Existing Regulations, the terms and conditions of this Agreement shall control.
5.5 Timing of Development. The California Supreme Court held in Pardee Construction Co. v. City of Camarillo, 37 Cal.3d 465 (1984), that failure of the parties in that case to provide for the timing of development resulted in a later adopted initiative restricting the timing of development to prevail over the parties’ agreement. It is the intent of Owner and the City to cure that deficiency by expressly acknowledging and providing that any Subsequent Code Change that purports to limit the installation and/or operation of the Digital Display and/or Blade Sign shall not prevail over this Agreement.
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Packet Pg. 1030 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 31 ARTICLE 6
DESIGN APPROVAL
6.1 Design Review. Notwithstanding any provision of the SMMC or any interim zoning ordinance to the contrary:
(a) the Digital Display District Ordinance shall set forth the design approval required, if any, for the Digital Display’s design, colors, and/or materials; and (b) Because the City Council has made the findings as described in Recital P, no certificate of appropriateness or other Landmarks Commission review shall be required for installation of the Blade Sign. Notwithstanding the forgoing, the on-premises lettering and/or logo that will be affixed to the reconstructed Blade Sign for a key tenant(s) of the Existing Building may be changed by Owner from time to time through the issuance of a Certificate of Appropriateness from the Landmarks Commission Secretary.
6.2 Compliance with Digital Display District Ordinance. In accordance with the Digital Display District Ordinance, (a) the City’s Landmarks Commission held a duly noticed public hearing on July 13, 2026 to review and provide feedback on the Digital Display Plans and (b) on ____________, 2026, the City Manager certified that (i) the Digital Display is installed in a manner that is reversible as defined by the Secretary of the Interior Standards for the Treatment of Historic Properties, (ii) the Digital Display will not materially alter the Existing Building such that its significance would be materially impaired, and (iii) all physical characteristics that convey the Existing Building’s significance will remain intact behind the Digital Display screen, as determined by a Qualified Historic Preservation Professional.
6.3 Commemorative Installation. The commemorative installation required by Section 2.5.4 of this Agreement shall be reviewed by City’s Landmarks Commission in a public hearing as set forth in Section 2.5.4.
ARTICLE 7
CITY TECHNICAL PERMITS
7.1 Definitions. For purposes of this Agreement, the following terms shall have the meanings set forth below:
7.1.1 “Technical City Permits” means any Ministerial Approvals, consents or permits from the City or any office, board, commission, department, division or agency of the City, which are necessary for the actual construction of the Digital Display and/or Blade Sign or any portion thereof in accordance with the Digital Display Plans and/or Blade Sign Plans, as applicable, and this Agreement. Technical City Permits include, without limitation (a) building permits, (b) related mechanical, electrical, plumbing and other technical permits, (c) demolition, excavation and grading permits, (d) encroachment permits, (e) off-site improvement permits, and (f) temporary and final certificates of occupancy.
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Packet Pg. 1031 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 32 7.1.2 “Technical Permit Applications” means any applications required to be filed by Owner for any Technical City Permits.
7.2 Diligent Action by City.
7.2.1 Upon satisfaction of the conditions set forth in Section 7.3, the City shall accept the Technical Permit Applications filed by Owner with the City and shall diligently proceed to process such Technical Permit Applications to completion.
7.2.2 Upon satisfaction of the conditions set forth in Section 7.3, the City shall diligently issue the Technical City Permits which are the subject of the Technical Permit Applications.
7.3 Conditions for Diligent Action by the City.
7.3.1 Acceptance and Processing of Technical Permit Applications. The obligation of the City to accept and diligently process the Technical Permit Applications which are filed by Owner for the Digital Display and/or Blade Sign, and then issue the Technical City Permits for the Digital Display and/or Blade Sign, is subject to the satisfaction of the following conditions:
(a) Owner shall have completed and filed all Technical Permit Applications which are required under the administrative procedures and policies of the City which are in effect on the date when the Technical Permit Application is filed; provided that such procedures and policies are uniformly in force and effect throughout the City; and (b) Owner shall have paid all processing and permit fees established by the City in connection with the filing and processing of any Technical Permit Application which are in effect on the date when the Technical Permit Application is filed; provided that such fees are uniformly in force and effect throughout the City.
7.3.2 Issuance of a Technical City Permit. The obligation of the City to issue a Technical City Permit for the Digital Display and/or Blade Sign which is the subject of a Technical Permit Application filed by Owner is subject to the satisfaction of the following conditions (and only such conditions and no others):
(a) Owner shall have complied with all of its obligations under this Agreement, including those in Exhibit “D”, which are required to be performed prior to or concurrent with the issuance of the Technical City Permits for the proposed Digital Display and/or Blade Sign, as applicable;
(b) Owner shall have received any permits or approvals from other governmental agencies which are required by law to be issued prior to or concurrent with the issuance of the Technical City Permits for the proposed Digital Display, Blade Sign or offsite improvements, as applicable;
(c) The proposed Digital Display and/or Blade Sign conforms to the development standards for such Digital Display and/or Blade Sign, as applicable, established in
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Packet Pg. 1032 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 33 this Agreement. In the event that a proposed Digital Display and/or Blade Sign is not in conformance with the applicable development standards, Owner shall have the right to seek any relief from such standards under the procedures then available in the City; and (d) The proposed Digital Display, Blade Sign, or offsite improvements, as applicable, conforms to the Administrative and Technical Construction Codes of the City (Article VIII of the SMMC) (the “Technical Codes”) in effect on the date that the Technical Permit Application is filed.
7.3.3 New Technical Requirements. From time to time, the City’s Technical Codes may be amended to meet new technical requirements related to techniques of building and construction/installation of digital displays and/or signs, as applicable. If the sole means of achieving compliance for the Digital Display and/or Blade Sign with such revisions to the Technical Codes made after the Effective Date (“New Technical Requirements”) would require an increase from the allowable Projections from Buildings into Minimum Setbacks or Height Projections established in this Agreement for the Digital Display and/or Blade Sign, then the Community Development Director is hereby authorized to grant Owner limited relief from the allowable Projections from Buildings into Minimum Setbacks or Height Projections without amending this Agreement if the requested relief is in compliance with the City’s General Plan.
Any such approval shall be granted only after the Community Development Director’s receipt of a written request for such relief from Owner. Owner is required to supply the Community Development Director with written documentation of the fact that compliance with the New Technical Requirements cannot be achieved by some other method. Any such relief shall only be granted to the extent necessary in the Community Development Director’s determination for Owner to comply with the New Technical Requirements.
7.4 Duration of Technical City Permits. The duration of Technical City Permits issued by the City for the Digital Display and/or Blade Sign, and any extensions of the time period during which such Technical City Permits remain valid, shall be established in accordance with the Technical Codes in effect at the time that the Technical City Permits are issued. Subject to Section 3.4, the lapse or expiration of a Technical City Permit shall not preclude or impair Owner from subsequently filing another Technical Permit Application for the same matter during the Term of this Agreement, which shall be processed by the City in accordance with the provisions of this Article 7. Notwithstanding anything to the contrary in this Agreement, if Owner obtains building permits for the Digital Display and/or Blade Sign and, at any time after the Outside Building Permit Issuance Date, such building permits expire or are revoked pursuant to the applicable terms of the SMMC (as the same may be amended from time to time), then Owner may not subsequently apply for new building permits for the Digital Display and/or Blade Sign, as applicable, without first obtaining the prior written consent of the Community Development Director, which may be granted or withheld in the Community Development Director’s sole discretion.
ARTICLE 8
AMENDMENT AND MODIFICATION
8.1 Amendment and Modification of Development Agreement. Except as provided in
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Packet Pg. 1033 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 34 Section 2.4.2, subject to the notice and hearing requirements of the applicable Development Agreement Statutes, this Agreement may be modified or amended from time to time only with the written consent of Owner and the City or their successors and assigns in accordance with the provisions of the SMMC and Section 65868 of the California Government Code.
ARTICLE 9
TERM
9.1 Effective Date. This Agreement shall be dated, and the obligations of the Parties hereunder shall be effective as of the date the ordinance approving this Agreement becomes effective (the “Effective Date”). The Parties shall execute this Agreement within ten (10) Business Days of the Effective Date.
9.2 Term.
9.2.1 Term of Agreement. The term of this Agreement shall commence on the Effective Date and shall continue for thirty (30) years thereafter (the “Term”), unless the Term is otherwise terminated pursuant to Section 11.4, after the satisfaction of all applicable public hearing and related procedural requirements, or pursuant to Section 3.3 or Section 9.2.2.
Notwithstanding the foregoing, if the approval by the California Coastal Commission of the Digital Display does not occur within six (6) months of the submittal by Owner of the Digital Display to the Coastal Commission, then the Term shall automatically be extended one month for each additional month or partial month greater than six (6) months that the Coastal Commission approval is delayed; provided, however, that Owner is diligently pursuing Coastal Commission approval. Nothing in this Section 9.2.1 modifies any tolling of the Term provided for in other sections of this Agreement, including Section 3.6(ii).
9.2.2 Early Removal and Termination. At or after three (3) years after the Digital Display Commencement Date, Owner may, at its sole discretion, remove the Digital Display. Prior to removal of the Digital Display, Owner shall provide the City with at least one hundred twenty (120) Days notice of its election to remove the Digital Display and terminate this Agreement. Such notice shall specify the date Owner intends to remove the Digital Display (the “Early Termination Date”). Upon Owner’s removal of the Digital Display in accordance with Section 2.8 and payment of any outstanding Ongoing Community Benefit Contribution accrued through the Early Termination Date plus an early termination fee in the amount of Two Hundred and Fifty Thousand Dollars ($250,000) (the “Early Termination Fee”), this Agreement shall automatically terminate.
9.2.3 Termination Certificate. Upon termination of this Agreement, the Parties hereto shall execute an appropriate certificate of termination in recordable form (a “Termination Certificate”), which shall be recorded in the official records of Los Angeles County.
9.2.4 Effect of Termination. Except as expressly provided herein, none of the Parties' respective rights and obligations under this Agreement shall survive the Term.
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Packet Pg. 1034 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 35 9.2.5 Extensions Available. Prior to its expiration, the Term of this Agreement may be extended for up to two (2) – ten (10) year extensions without the necessity of filing and processing an application to amend this Agreement; provided, however, that (i) each such extension shall be subject to the mutual agreement the Owner and City Manager, each acting in their sole discretion, and shall, upon mutual agreement, be memorialized in the form of an amendment to this Agreement; and (ii) Owner provides documentation of a current leasing or licensing contract between Owner and a billboard operator to evidence continuing use of the Digital Display beyond the original Term, as extended by any authorized extension. Owner understands, acknowledges, and agrees that such amendment to be negotiated may include revisions to this Agreement, including, without limitation, Section 2.5.
ARTICLE 10
PERIODIC REVIEW OF COMPLIANCE
10.1 City Review. The City shall review compliance with this Agreement once each year, on or before March 31st (each, a “Periodic Review”), in accordance with this Article 10 in order to determine whether or not Owner is out-of-compliance with any specific term or provision of this Agreement.
10.2 Evidence of Reasonable Good Faith Compliance. On or before October 1st of each year, Owner shall deliver to the City a written report demonstrating that Owner has been in reasonable good faith compliance with this Agreement during the twelve (12) month period prior to the anniversary of the Effective Date. The written report shall be provided in the form established by the City at the time of the first annual report, if any, which form shall not change materially thereafter without Owner’s consent. For purposes of this Agreement, the phrase “reasonable good faith compliance” shall mean the following: (a) compliance by Owner with the requirements of the Existing Regulations, except as otherwise modified by this Agreement; and (b) compliance by Owner with the terms and conditions of this Agreement, subject to the existence of any specified Excusable Delays (as defined in Section 15.8 below) which prevented or delayed the timely performance by Owner of any of its obligations under this Agreement.
Without limiting the generality of the foregoing, demonstration of reasonable good faith compliance shall mean Owner’s satisfaction of requirements under Section 2.5.2 at the time that the report is submitted.
10.3 Information to be Provided to Owner. Prior to any public hearing concerning the Periodic Review of this Agreement, the City shall deliver to Owner a copy of all staff reports prepared in connection with a Periodic Review, written comments from the public and, to the extent practical, all related exhibits concerning such Periodic Review. If the City delivers to Owner a Notice of Breach pursuant to Section 11.1 below, the City shall concurrently deliver to Owner a copy of all staff reports prepared in connection with such Notice of Breach, all written comments from the public, and all related exhibits concerning such Notice of Breach.
10.4 Notice of Breach; Cure Rights. If during any Periodic Review, the City reasonably concludes on the basis of substantial evidence that Owner has not demonstrated that it
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Packet Pg. 1035 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 36 is in reasonable good faith compliance with this Agreement, then the City may issue and deliver to Owner a written Notice of Breach pursuant to Section 11.1 below, and Owner shall have the opportunity to cure the default identified in the Notice of Breach during the cure periods and in the manner provided by Section 11.2 and Section 11.3, as applicable.
10.5 Failure of Periodic Review. The City’s failure to review at least annually compliance by Owner with the terms and conditions of this Agreement shall not constitute or be asserted by any Party as a breach by any other Party of this Agreement.
10.6 Termination of Development Agreement. If Owner fails to timely cure any material item(s) of non-compliance set forth in a Notice of Breach, then the City shall have the right but not the obligation to initiate proceedings for the purpose of terminating this Agreement pursuant to Section 11.4 below.
10.7 City Cost Recovery. Following completion of each Periodic Review, Owner shall reimburse the City for its actual and reasonable costs incurred in connection with such review after provision of a reasonably detailed invoice by the City.
ARTICLE 11
DEFAULT
11.1 Notice and Cure.
11.1.1 Breach. If either Party fails to substantially perform any term, covenant or condition of this Agreement which is required on its part to be performed (a “Breach” or “Default”), the non-defaulting Party shall have those rights and remedies provided in this Agreement; provided that such non-defaulting Party has first sent a written notice of Breach (a “Notice of Breach”), in the manner required by Section 15.1, specifying the precise nature of the alleged Breach (including references to pertinent Sections of this Agreement and the Existing Regulations or Subsequent Code Changes alleged to have been breached), and the manner in which the alleged Breach may satisfactorily be cured. If the City alleges a Breach by Owner, the City shall also deliver a copy of the Notice of Breach to any Secured Lender of Owner which has delivered a Request for Notice to the City in accordance with Article 12.
11.1.2 Monetary Breach. In the case of a monetary Breach by Owner, Owner shall promptly commence to cure the identified Breach and shall complete the cure of such Breach within sixty (60) Days after receipt by Owner of the Notice of Breach; provided that if such monetary Breach is the result of an Excusable Delay or the cure of the same is delayed as a result of an Excusable Delay, Owner shall deliver to the City reasonable evidence of the Excusable Delay.
11.1.3 Non-Monetary Breach. In the case of a non-monetary Breach by either Party, the alleged defaulting Party shall promptly commence to cure the identified Breach and shall diligently prosecute such cure to completion; provided that the defaulting Party shall complete such cure within thirty (30) Days after receipt of the Notice of Breach or provide evidence of Excusable Delay that prevents or delays the completion of such cure. The thirty (30)
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Packet Pg. 1036 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 37 day cure period for a non-monetary Breach shall be extended as is reasonably necessary to remedy such Breach; provided that the alleged defaulting Party commences such cure promptly after receiving the Notice of Breach and continuously and diligently pursues such remedy at all times until such Breach is cured.
11.1.4 Excusable Delay. Notwithstanding anything to the contrary contained in this Agreement, the City’s exercise of any of its rights or remedies under this Article 11 shall be subject to the provisions regarding Excusable Delay in Section 15.8 below.
11.2 Remedies for Monetary Default. If there is a Breach by Owner in the performance of any of its monetary obligations under this Agreement which remains uncured (a) sixty (60) Days after receipt by Owner of a Notice of Breach from the City and (b) after expiration of Secured Lender’s Cure Period under Section 12.1 (if a Secured Lender of Owner has delivered a Request for Notice to the City in accordance with Section 12.1), then an “Event of Monetary Default” shall have occurred by Owner and the City shall have available any right or remedy provided in this Agreement, at law or in equity. All of said remedies shall be cumulative and not exclusive of one another, and the exercise of any one or more of said remedies shall not constitute a waiver or election in respect to any other available remedy.
11.3 Remedies for Non-Monetary Default.
11.3.1 Remedies of Parties. If any Party receives a Notice of Breach from the other Party regarding a non-monetary Breach, and the non-monetary Breach remains uncured:
(a) after expiration of all applicable notice and cure periods, and (b) in the case of a Breach by Owner, after the expiration of Secured Lender’s Cure Period under Section 12.1 (if a Secured Lender of Owner has delivered a Request for Notice to the City in accordance with Section
12.1), then an “Event of Non-Monetary Default” shall have occurred and the non-defaulting Party shall have available any right or remedy provided in this Agreement, or provided at law or in equity except as prohibited by this Agreement. All of said remedies shall be cumulative and not exclusive of one another, and the exercise of any one or more of said remedies shall not constitute a waiver or election in respect to any other available remedy.
11.3.2 Specific Performance. The City and Owner acknowledge that monetary damages and remedies at law generally are inadequate and that specific performance is an appropriate remedy for the enforcement of this Agreement. Therefore, unless otherwise expressly provided herein, the remedy of specific performance shall be available to the non-defaulting party if the other Party causes an Event of Non-Monetary Default to occur.
11.3.3 Writ of Mandate. The City and Owner hereby stipulate that Owner shall be entitled to obtain relief in the form of a writ of mandate in accordance with Code of Civil Procedure Section 1085 or Section 1094.5, as appropriate, to remedy any Event of Non-Monetary Default by the City of its obligations and duties under this Agreement. Nothing in this Section 11.3.3, however, is intended to alter the evidentiary standard or the standard of review applicable to any action of, or approval by, the City pursuant to this Agreement or with respect to the Digital Display or Blade Sign.
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Packet Pg. 1037 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 38 11.3.4 No Damages Relief Against City. It is acknowledged by Owner that the City would not have entered into this Agreement if the City were to be liable in damages under or with respect to this Agreement or the application thereof. Consequently, and except for the payment of attorneys’ fees and court costs, the City shall not be liable in damages to Owner, and Owner covenants on behalf of itself and its successors in interest not to sue for or claim any damages:
(a) for any default under this Agreement;
(b) for the regulatory taking, impairment or restriction of any right or interest conveyed or provided hereunder or pursuant hereto; or (c) arising out of or connected with any dispute, controversy or issue regarding the application or interpretation or effect of the provisions of this Agreement.
The City and Owner agree that the provisions of this Section 11.3.4 do not apply for damages which:
(x) do not arise under this Agreement;
(y) are not with respect to any right or interest conveyed or provided under this Agreement or pursuant to this Agreement; or
(z) do not arise out of or which are not connected to any dispute, controversy, or issue regarding the application, interpretation, or effect of the provisions of this Agreement or the application of any City rules, regulations, or official policies.
11.3.5 Enforcement by the City. The City, at its discretion, shall be entitled to apply the remedies set forth in Chapters 1.09 and 1.10 of the SMMC as the same may be amended from time to time and shall follow the notice procedures of Chapter 1.09 and 1.10 respectively in lieu of Section 11.1 of this Agreement if these remedies are applied.
11.3.6 No Damages Against Owner. It is acknowledged by the City that Owner would not have entered into this Agreement if Owner were to be liable in damages in connection with any non-monetary default hereunder. Consequently, and except for the payment of attorneys’ fees and court costs, Owner shall not be liable in damages to the City for any nonmonetary default, and the City covenants on behalf of itself not to sue for or claim any damages:
(a) for any non-monetary default hereunder or;
(b) arising out of or connected with any dispute, controversy or issue regarding the application or interpretation or effect of the provisions of this Agreement.
The City and Owner agree that the provisions of this Section 11.3.6 do not apply for damages which:
(a) are for a monetary default; or
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Packet Pg. 1038 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 39 (b) do not arise out of or which are not connected with any dispute, controversy or issue regarding the application, interpretation, or effect of the provisions of this Agreement to or the application of any City rules, regulations, or official policies; or (c) constitute Damages which arise under Section 14.1.
11.3.7 No Damages Against City. It is acknowledged by the Owner that City would not have entered into this Agreement if City were to be liable for damages in connection with any non-monetary default hereunder. Consequently, and except for the payment of attorneys’ fees and court costs, City shall not be liable in damages to the Owner for any nonmonetary default, and the Owner covenants on behalf of itself not to sue for or claim any damages.
11.3.8 No Other Limitations. Except as expressly set forth in this Section 11.3, the provisions of this Section 11.3 shall not otherwise limit any other rights, remedies, or causes of action that either the City or Owner may have at law or equity after the occurrence of any Event of Non-Monetary Default.
11.4 Modification or Termination of Agreement by City.
11.4.1 Default by Owner. If Owner causes either an Event of Monetary Default or an Event of Non-Monetary Default, then the City may commence proceedings to modify or terminate this Agreement pursuant to this Section 11.4.
11.4.2 Procedure for Modification or Termination. The procedures for modification or termination of this Agreement by the City for the grounds set forth in Section
11.4.1 are as follows:
(a) The City shall provide a written notice to Owner (and to any Secured Lender of Owner which has delivered a Request for Notice to the City in accordance with Section 12.1) of its intention to modify or terminate this Agreement unless Owner (or the Secured Lender) cures or corrects the acts or omissions that constitute the basis of such determinations by the City (a “Hearing Notice”). The Hearing Notice shall be delivered by the City to Owner in accordance with Section 15.1 and shall contain the time and place of a public hearing to be held by the City Council on the determination of the City to proceed with modification or termination of this Agreement. The public hearing shall not be held earlier than:
(i) thirty-one (31) Days after delivery of the Hearing Notice to Owner or (ii) if a Secured Lender has delivered a Request for Notice in accordance with Section 12.1, the day following the expiration of the “Secured Lender Cure Period” (as defined in Section 12.1). (b) If, following the conclusion of the public hearing, the City Council: (i) determines that an Event of Non-Monetary Default has occurred or the Owner has not been in reasonable good faith compliance with this Agreement pursuant to Section 10.1, and (ii) further determines that Owner (or the Secured Lender, if applicable) has not cured (within the applicable cure periods) the acts or omissions that constitute the basis of the determination under clause (i) above or if those acts or omissions could not be reasonably remedied prior to the public hearing that Owner (or the Secured Lender) has not in reasonable good faith commenced to cure or correct such acts or omissions prior to the public hearing or is not diligently and continuously proceeding therewith to completion, then upon making such conclusions, the City Council may
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Packet Pg. 1039 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 40 modify or terminate this Agreement. The City cannot unilaterally modify the provisions of this Agreement pursuant to this Section 11.4. Any such modification requires the written consent of Owner. If the City Council does not terminate this Agreement, but proposes a modification to this Agreement as a result of the public hearing and Owner does not (within five (5) Business Days of receipt) execute and deliver to the City the form of modification of this Agreement submitted to Owner by the City, then the City Council may elect to terminate this Agreement at any time after the sixth day after Owner’s receipt of such proposed modification.
11.5 Cessation of Rights and Obligations. If this Agreement is terminated by the City pursuant to and in accordance with Section 11.4, the rights, duties and obligations of the Parties under this Agreement shall cease as of the date of such termination, except only for those rights and obligations that expressly survive the termination of this Agreement. In such event, any and all benefits, including money received by the City prior to the date of termination, shall be retained by the City.
11.6 Completion of Improvements. Notwithstanding the provisions of Sections 11.2,
11.3, 11.4, and 11.5, if prior to termination of this Agreement, Owner has performed substantial work and incurred substantial liabilities in reasonable good faith reliance upon a building permit issued by the City, then Owner shall have acquired a vested right to (a) complete construction of the Digital Display and/or Blade Sign, as applicable, in accordance with the terms of the building permit and this Agreement, subject to its continuing obligations with respect to all outstanding project and community benefits (Section 2.5) and, (b) use and maintain such Digital Display and/or Blade Sign upon completion for the purposes provided in this Agreement. Any Digital Display and/or Blade Sign completed pursuant to this Section 11.6 shall be considered legal non-conforming subject to all City ordinances standards and policies as they then exist governing legal non-conforming signs/digital displays and associated structures unless the Digital Display and/or Blade Sign otherwise complies with the development standards for signs/digital displays the district in which it is located and the signs/digital display is otherwise permitted or conditionally permitted in the district.
ARTICLE 12
MORTGAGEES
12.1 Encumbrances on the Property. This Agreement shall not prevent or limit Owner (in its sole discretion), from encumbering the Property (in any manner) or any portion thereof or any improvement thereon by any mortgage, deed of trust, assignment of rents or other security device securing financing with respect to the Property (a “Mortgage”). Each mortgagee of a mortgage or a beneficiary of a deed of trust (each, a “Secured Lender”) on the Property shall be entitled to the rights and privileges set forth in this Article 12. Any Secured Lender may require from the City certain interpretations of this Agreement. The City shall from time to time, upon request made by Owner, meet with Owner and representatives of each of its Secured Lenders to negotiate in reasonable good faith any Secured Lender’s request for interpretation of any part of this Agreement. The City will not unreasonably withhold, condition or delay the delivery to a Secured Lender of the City’s written response to any such requested interpretation.
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Packet Pg. 1040 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 41 12.1.1 Mortgage Not Rendered Invalid. Except as provided in Section 12.1.2, neither entering into this Agreement nor a Breach of this Agreement, nor any Event of Monetary Default nor any Event of Non-Monetary Default shall defeat, render invalid, diminish, or impair the lien of any Mortgage made in reasonable good faith and for value.
12.1.2 Priority of Agreement. This Agreement shall be superior and senior to the lien of any Mortgage. Any acquisition or acceptance of title or any right or interest in or with respect to the Property or any portion thereof by a Secured Lender or its successor in interest (whether pursuant to foreclosure, trustee’s sale, deed in lieu of foreclosure, lease termination or otherwise) shall be subject to all of the terms and conditions of this Agreement, including any monetary payments owed to City under this Agreement.
12.1.3 Right of Secured Lender to Cure Default.
(a) A Secured Lender may give notice to the City, specifying the name and address of such Secured Lender and attaching thereto a true and complete copy of the Mortgage held by such Secured Lender, specifying the portion of the Property that is encumbered by the Secured Lender’s lien (a “Request for Notice”). If the Request for Notice has been given, at the same time the City sends to Owner any Notice of Breach or Hearing Notice under this Agreement, then if such Notice of Breach or Hearing Notice affects the portion of the Property encumbered by the Secured Lender’s lien, the City shall send to such Secured Lender a copy of each such Notice of Breach and each such Hearing Notice from the City to Owner. The copy of the Notice of Breach or the Hearing Notice sent to the Secured Lender pursuant to this Section 12.1.3(a) shall be addressed to such Secured Lender at its address last furnished to the City. The period within which a Secured Lender may cure a particular Event of Monetary Default or Event of Non-Monetary Default shall not commence until three Business Days after the City has sent to the Secured Lender such copy of the applicable Notice of Breach or Hearing Notice.
(b) After a Secured Lender has received a copy of such Notice of Breach or Hearing Notice, such Secured Lender shall thereafter have a period of time (in addition to any notice and/or cure period afforded to Owner under this Agreement) equal to: (a) twenty (20) Days in the case of any Event of Monetary Default and (b) thirty (30) Days in the case of any Event of Non-Monetary Default, during which period the Secured Lender may provide a remedy or cure of the applicable Event of Monetary Default or may provide a remedy or cure of the applicable Event of Non-Monetary Default; provided that if the cure of the Event of Non-Monetary Default cannot reasonably be completed within thirty Days, Secured Lender may, within such 30-day period, commence to cure the same and thereafter diligently prosecute such cure to completion (a “Secured Lender’s Cure Period”). If Owner has caused an Event of Monetary Default or an Event of Non-Monetary Default, then each Secured Lender shall have the right to remedy such Event of Monetary Default or an Event of Non-Monetary Default, as applicable, or to cause the same to be remedied prior to the conclusion of the Secured Lender’s Cure Period and otherwise as herein provided. The City shall accept performance by any Secured Lender of any covenant, condition, or agreement on Owner’s part to be performed hereunder with the same force and effect as though performed by Owner.
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Packet Pg. 1041 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 42 (c) The period of time given to the Secured Lender to cure any Event of Monetary Default or an Event of Non-Monetary Default by Owner which reasonably requires that said Secured Lender be in possession of the Property to do so, shall be deemed extended to include the period of time reasonably required by said Secured Lender to obtain such possession (by foreclosure, the appointment of a receiver or otherwise) promptly and with due diligence; provided that during such period all other obligations of Owner under this Agreement, including, without limitation, payment of all amounts due, are being duly and promptly performed.
12.1.4 Secured Lender Not Obligated Under this Agreement. (a) No Secured Lender shall have any obligation or duty under this Agreement to perform the obligations of Owner’s or the affirmative covenants of Owner’s hereunder or to guarantee such performance unless and until such time as a Secured Lender takes possession or becomes the owner of the estate covered by its Mortgage. If the Secured Lender takes possession or becomes the owner of any portion of the Property, then from and after that date, the Secured Lender shall be obligated to comply with all provisions of this Agreement, including payment of any outstanding monetary obligations of Owner owed to City prior to the date the Secured Lender became the fee owner of the Property. (b) Nothing in Section 12.1.4(a) is intended, nor should be construed or applied, to limit or restrict in any way the City’s authority to terminate this Agreement, as against any Secured Lender as well as against Owner if any curable Event of Monetary Default or an Event of Non-Monetary Default is not completely cured within the Secured Lender’s Cure Period.
ARTICLE 13
TRANSFERS AND ASSIGNMENTS
13.1 Transfers and Assignments.
13.1.1 Not Severable from Ownership Interest in Property. This Agreement shall not be severable from Owner’s interest in the Property and any transfer of the Property or any portion thereof, shall automatically operate to transfer the benefits and burdens of this Agreement with respect to the transferred Property or transferred portions, as applicable.
13.1.2 Transfer Rights. Owner may freely sell, ground lease, transfer, exchange, hypothecate, encumber or otherwise dispose of its interest in the Property (collectively referenced herein as “Transfer”), without the consent of the City. Owner shall, however, give written notice to the City, in accordance with Section 15.1, of any transfer of the Property, disclosing in such notice (a) the identity of the transferee of the Property (the “Property Transferee”) and (b) the address of the Property Transferee as applicable.
13.2 Release Upon Transfer. Upon Transfer of the rights and interests of Owner to the Property, Owner shall be released from its obligations under this Agreement to the extent of Transfer with respect to the Property if: (a) Owner has provided written notice of such Transfer to City; and (b) the Property Transferee executes and delivers to City a written agreement in
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Packet Pg. 1042 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 43 which the Property Transferee expressly and unconditionally assumes all of the obligations of Owner under this Agreement with respect to the Property in the form of Exhibit “F” attached hereto (the “Assumption Agreement”). Upon such Transfer of the Property and the express assumption of Owner’s obligations under this Agreement by the Property Transferee, the City agrees to look solely to the Property Transferee for compliance with the provisions of this Agreement. Any such Property Transferee shall be entitled to the benefits of this Agreement as “Owner” hereunder and shall be subject to the obligations of this Agreement. Failure to deliver a written Assumption Agreement hereunder shall not affect the transfer of the benefits and burdens as provided in Section 13.1, provided that the transferor shall not be released from its obligations hereunder unless and until the executed Assumption Agreement is delivered to the City.
ARTICLE 14
INDEMNITY TO CITY
14.1 Indemnity. Owner agrees to and shall defend, indemnify and hold harmless the City, its City Council, boards and commissions, officers, agents, employees, volunteers and other representatives (collectively referred to as “City Indemnified Parties”) from and against any and all loss, liability, damages, cost, expense, claims, demands, suits, attorney’s fees and judgments (collectively referred to as “Damages”), including but not limited to claims for damage for personal injury (including death) and claims for property damage arising directly or indirectly from the following: (1) for any act or omission of Owner or of its officers, board members, agents, employees, volunteers, contractors, subcontractors or other persons acting on its behalf, including Owner’s tenants and/or Operator (collectively referred to as the “Owner Parties”) which occurs during the Term and relates to this Agreement; and (2) for any act or omission related to the operations of Owner Parties. Owner’s obligation to defend, indemnify and hold harmless applies to all actions and omissions of Owner Parties as described above caused or alleged to have been caused in connection with the Digital Display and/or Blade Sign or this Agreement, except to the extent any Damages are caused by the negligence or willful misconduct of any City Indemnified Parties or any content provided by the City for display on the Digital Display and/or Blade Sign. This Section 14.1 applies to all Damages suffered or alleged to have been suffered by the City Indemnified Parties regardless of whether or not the City prepared, supplied or approved plans or specifications or both for the Digital Display and/or Blade Sign. The provisions of this Section shall survive the termination of the Agreement.
14.2 City’s Right to Defense. The City shall have the right to approve legal counsel retained by Owner to defend any claim, action or proceeding which Owner is obligated to defend pursuant to Section 14.1, which approval shall not be unreasonably withheld, conditioned or delayed. If any conflict of interest results during the mutual representation of the City and Owner in defense of any such action, or if the City is reasonably dissatisfied with legal counsel retained by Owner, the City shall have the right, at Owner’s cost and expense, (a) to have the City Attorney undertake and continue the City’s defense, or (b) with Owner’s approval, which shall not be reasonably withheld or delayed, to select separate outside legal counsel to undertake and continue the City’s defense.
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Packet Pg. 1043 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 44 ARTICLE 15
GENERAL PROVISIONS
15.1 Notices. Formal notices, demands and communications between the Parties shall be deemed sufficiently given if delivered to the principal offices of the City or Owner, as applicable, by (i) personal service, or (ii) express mail, Federal Express, or other similar overnight mail or courier service, regularly providing proof of delivery, or (iii) certified mail, postage prepaid, return receipt requested. Such notice shall be addressed as follows:
To City:
City of Santa Monica
1685 Main Street, Room 204
Santa Monica, CA 90401
Attention: City Manager
With a copy to:
City of Santa Monica
1685 Main Street, Mail Stop 28
Santa Monica, CA 90401
Attn: Community Development Department Director
To Owner:
XYZ NOW LLC
2800 Olympic Blvd, Floor 1
Santa Monica, CA 90404
United El Segundo, Inc.
Attn: Jeff Appel; Legal
9815 National Blvd.
Los Angeles, CA 90034
With a copy to:
Grant Carpenter
2800 Olympic Blvd, Floor 1
Santa Monica, CA 90404
Notice given in any other manner shall be effective when received by the addressee. Any Party may change the addresses for delivery of notices to such Party by delivering notice to the other Party in accordance with this provision.
15.2 Entire Agreement; Conflicts. This Agreement represents the entire agreement of the Parties. This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous agreements between the Parties or their predecessors in interest with respect to all or any part of the subject matter hereof. Should any or all of the provisions of this Agreement be found to be in conflict with any other provision or provisions found in the Existing Regulations, then the provisions of this Agreement shall
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Packet Pg. 1044 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 45 prevail.
15.3 Binding Effect. The Parties intend that the provisions of this Agreement shall constitute covenants which shall run with the land comprising the Property during the Term for the benefit thereof and that the burdens and benefits thereof shall bind and inure to the benefit of all successors-in-interest to the Parties hereto in accordance with Article 13. Every Party who now or hereafter owns or acquires any right, title, or interest in or to any portion of the Digital Display and/or Blade Sign during the Term is and shall be conclusively deemed to have consented and agreed to every provision contained herein, to the extent relevant to said right, title or interest, whether or not any reference to this Agreement is contained in the instrument by which such person acquired an interest in the Digital Display and/or Blade Sign.
15.4 Agreement Not for Benefit of Third Parties. This Agreement is made and entered into for the sole protection and benefit of Owner and the City and their respective successors and assigns. No other person shall have any right of action based upon any provision of this Agreement.
15.5 No Partnership or Joint Venture. Nothing in this Agreement shall be deemed to create a partnership or joint venture between the City and Owner or to render either Party liable in any manner for the debts or obligations of the other.
15.6 Estoppel Certificates. Either Party and any Secured Lender may, at any time, and from time to time, deliver written notice to the other Party requesting such Party to certify in writing (each, an “Estoppel Certificate”): (a) that this Agreement is in full force and effect, (b) that this Agreement has not been amended or modified either orally or in writing, or if so amended, identifying the amendments, (c) whether or not, to the knowledge of the responding Party, the requesting Party is in Breach or claimed Breach in the performance of its obligations under this Agreement, and, if so, describing the nature and amount of any such Breach or claimed Breach, and (d) whether or not, to the knowledge of the responding Party, any event has occurred or failed to occur which, with the passage of time or the giving of notice, or both, would constitute an Event of Monetary Default or an Event of Non-Monetary Default and, if so, specifying each such event. A Party receiving a request for an Estoppel Certificate shall execute and return such Certificate within thirty (30) Days following the receipt of the request therefor.
If the party receiving the request hereunder does not execute and return the certificate in such 30- day period and if circumstances are such that the Party requesting the notice requires such notice as a matter of reasonable business necessity, the Party requesting the notice may seek a second request which conspicuously states “FAILURE TO EXECUTE THE REQUESTED ESTOPPEL CERTIFICATE WITHIN FIFTEEN (15) DAYS SHALL BE DEEMED WAIVER PURSUANT TO SECTIONS 15.6 AND 15.13 OF THE DEVELOPMENT AGREEMENT” and which sets forth the business necessity for a timely response to the estoppel request. If the Party receiving the second request fails to execute the Estoppel Certificate within such 15-day period, it shall be conclusively deemed that the Agreement is in full force and effect and has not been amended or modified orally or in writing, and that there are no uncured defaults under this Agreement or any events which, with passage of time of giving of notice, of both, would constitute a default under the Agreement. The City Manager shall have the right to execute any Estoppel Certificate requested by Owner under this Agreement. The City acknowledges that an Estoppel Certificate may be relied upon by any Property Transferee, Secured Lender or other party. The Estoppel
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Packet Pg. 1045 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 46 Certificate shall be provided in lieu of zoning compliance letters authorized pursuant to SMMC Section 9.38.020(E), or any successor thereto.
15.7 Time. Time is of the essence for each provision of this Agreement of which time is an element.
15.8 Excusable Delays.
15.8.1 In addition to any specific provisions of this Agreement, non-performance by Owner of its obligations under this Agreement shall be excused when it has been prevented or delayed in such performance by reason of any act, event or condition beyond the reasonable control of Owner (collectively, “Excusable Delays”) for any of the following reasons:
(a) War, insurrection, walk-outs, riots, acts of terrorism, floods, pandemic, earthquakes, fires, casualties, acts of God, or similar grounds for excused performances;
(b) Governmental restrictions or moratoria imposed by the City or by other governmental entities or the enactment of conflicting State or Federal laws or regulations; (c) The imposition of injunctive relief, restraining orders, restrictions or moratoria by judicial decisions or by litigation, contesting the validity, or seeking the enforcement or clarification of, this Agreement, whether instituted by Owner, the City or any other person or entity, or the filing of a lawsuit by any Party arising out of this Agreement or any permit or approval Owner deems necessary or desirable for the implementation of the Digital Display and/or Blade Sign;
(d) The institution of a referendum pursuant to Government Code Section 65867.5 or a similar public action seeking to in any way invalidate, alter, modify or amend the ordinance adopted by the City Council approving and implementing this Agreement; (e) Inability to secure necessary labor, materials or tools, due to strikes, lockouts, or similar labor disputes or due to a global pandemic; and/or (f) Failure of the City to timely perform its obligations hereunder, including its obligations under Section 7.2 above.
15.8.2 Under no circumstances shall the inability of Owner to secure financing be an Excusable Delay to the obligations of Owner except to the extent the inability to secure financing is directly associated with war, insurrection, walk-outs, riots, acts of terrorism, floods, pandemic, earthquakes, fires, casualties, acts of God or similar grounds beyond the control of Owner.
15.8.3 In order for an extension of time to be granted for any Excusable Delay, Owner must deliver to the City written notice of the commencement of the Excusable Delay within sixty (60) Days after the date on which Owner becomes aware of the existence of the
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Packet Pg. 1046 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 47 Excusable Delay. The extension of time for an Excusable Delay shall be for the actual period of the delay.
15.8.4 Nothing contained in this Section 15.8 is intended to modify the terms of either Section 5.1.2 or Section 5.5 of this Agreement.
15.9 Governing Law. This Agreement shall be governed exclusively by the provisions hereof and by the laws of the State of California, without regard to any choice of law provisions thereof.
15.10 Cooperation in Event of Legal Challenge to Agreement. If there is any court action or other proceeding initiated by a third-party that includes any challenge to the validity, enforceability or any term or provision of this Agreement, the City’s CEQA determination for the Digital Display and/or Blade Sign, and/or any other City approvals contemplated by this Agreement, then Owner shall indemnify, hold harmless, pay all costs actually incurred, and provide defense in said action or proceeding, with counsel reasonably satisfactory to both the City and Owner. The City shall cooperate with Owner in any such defense as Owner may reasonably request.
15.11 Attorneys’ Fees. If any Party commences any action for the interpretation, enforcement, termination, cancellation or rescission of this Agreement or for specific performance for the Breach of this Agreement, the prevailing Party shall be entitled to its reasonable attorneys’ fees, litigation expenses and costs. Attorneys’ fees shall include attorneys’ fees on any appeal as well as any attorneys’ fees incurred in any post-judgment proceedings to collect or enforce the judgment. Such attorneys’ fees shall be paid whether or not such action is prosecuted to judgment. In any case where this Agreement provides that the City or Owner is entitled to recover attorneys’ fees from the other, the Party so entitled to recover shall be entitled to an amount equal to the fair market value of services provided by attorneys employed by it as well as any attorneys’ fees actually paid by it to third Parties. The fair market value of the legal services for public attorneys shall be determined by utilizing the prevailing billing rates of comparable private attorneys.
15.12 Recordation. Parties shall cause this Agreement to be recorded against title to the Property in the Official Records of the County of Los Angeles in accordance with California Government Code Section 65868.5. The cost, if any, of recording this Agreement shall be borne by Owner.
15.13 No Waiver. No waiver of any provision of this Agreement shall be effective unless in writing and signed by a duly authorized representative of the Party against whom enforcement of a waiver is sought and referring expressly to this Section 15.13. No delay or omission by either Party in exercising any right or power accruing upon non-compliance or failure to perform by the other Party under any of the provisions of this Agreement shall impair any such right or power or be construed to be a waiver thereof, except as expressly provided herein. No waiver by either Party of any of the covenants or conditions to be performed by the other Party shall be construed or deemed a waiver of any succeeding breach or nonperformance of the same or other covenants and conditions hereof of this Agreement.
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Packet Pg. 1047 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 48 15.14 Construction of this Agreement. The Parties agree that each Party and its legal counsel have reviewed and revised this Agreement and that any rule of construction to the effect that ambiguities are to be resolved against the drafting Party shall not apply in the interpretation of this Agreement or any amendments or exhibits thereto.
15.15 Other Governmental Approvals. Owner may apply for such other permits and approvals as may be required for development of the Digital Display and/or Blade Sign in accordance with this Agreement from other governmental or quasi-governmental agencies having jurisdiction over the Property including, without limitation, applying for approval by the California Coastal Commission. The City shall reasonably cooperate with Owner in its endeavors to obtain such permits and approvals.
15.15.1 Further Assurances; Covenant to Sign Documents. Each Party shall take all actions and do all things, and execute, with acknowledgment or affidavit, if required, any and all documents and writings, which may be necessary or proper to achieve the purposes and objectives of this Agreement.
15.15.2 Processing. Upon satisfactory completion by Owner of all required preliminary actions and payments of appropriate processing fees, if any, the City shall, subject to all legal requirements, promptly initiate, diligently process, and complete at the earliest possible time all required steps, and expeditiously act upon any approvals and permits necessary for the development by Owner of the Digital Display and Blade Sign in accordance with this Agreement, including, but not limited to, the following:
(a) the processing of applications for and issuing of all Discretionary Approvals requiring the exercise of judgment and deliberation by City; (b) the holding of any required public hearings; and
(c) the processing of applications for and issuing of all City Technical Permits requiring the determination of conformance with the Existing Regulations.
15.15.3 No Revocation. The City shall not revoke or subsequently disapprove any approval or future approval for the Digital Display or Blade Sign once issued by the City provided that the Digital Display or Blade Sign, as applicable, is in accordance with such approval. Any revocation or subsequent disapproval by the City shall state in writing the reasons why the development of the Digital Display and/or Blade Sign is not deemed to be in accordance with such approval and the suggested actions to be taken in order for approval to be granted.
15.15.4 Processing During Third Party Litigation. If any third party lawsuit is filed against the City or Owner relating to this Agreement, the City shall not delay or stop the development, processing or construction of the Digital Display and/or Blade Sign, or issuance of the City Technical Permits, unless the third party obtains a court order preventing the activity.
The City shall not stipulate to or fail to oppose the issuance of any such order. Notwithstanding the foregoing and without prejudice to the provisions of Section 15.8.1(c), after service on the City or Owner of the initial petition or complaint challenging this Agreement or the Digital Display and/or Blade Sign, the Owner may apply to the Community Development Director for a tolling of the applicable deadlines for Owner to otherwise comply with this Agreement. The
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Packet Pg. 1048 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 49 Community Development Director shall approve such tolling, consistent with the standard in Section 15.27, for up to five years during the pendency of the litigation and shall provide Owner with notice of his or her decision on the tolling request within forty (40) Days of receiving Owner’s request.
15.15.5 State, Federal or Case Law. Where any state, federal or case law allows the City to exercise any discretion or take any act with respect to that law, the City shall, in an expeditious and timely manner, at the earliest possible time, (i) exercise its discretion in such a way as to be consistent with, and carry out the terms of, this Agreement and (ii) take such other actions as may be necessary to carry out in reasonable good faith the terms of this Agreement.
15.16 Jurisdiction and Venue. Any legal action or proceeding among the Parties arising out of this Agreement shall be instituted in the Superior Court of the County of Los Angeles, State of California, in any other appropriate court in that County, or in the Federal District Court in the Central District of California. The parties agree that venue exists in either court, and each party expressly waives any right to transfer to another venue. The parties further agree that either court will have personal jurisdiction over the parties to this Agreement.
15.17 Exhibits. The following exhibits which are part of this Agreement are attached hereto and each of which is incorporated herein by this reference as though set forth in full:
Exhibit “A” Legal Description of the Property
Exhibit “B-1” Digital Display Plans
Exhibit “B-2” Blade Sign Plans
Exhibit “C” SMMC Article 9 (Planning and Zoning)
Exhibit “D” Conditions of Approval
Exhibit “E” Permitted Fees and Exactions
Exhibit “F” Form of Assignment and Assumption Agreement Exhibit “G” Digital Display District Ordinance
Exhibit “H” Advertising Content Standards
Exhibit “I” Form of Encroachment Permit for Digital Display Exhibit “J” Form of Encroachment Permit for Blade Sign
Except as to the Digital Display Plans and Blade Sign Plans, which shall be treated in accordance with Section 2.1 above, the text of this Agreement shall prevail in the event that any inconsistencies exist between the Exhibits and the text of this Agreement.
15.18 Counterpart Signatures. The Parties may execute this Agreement on separate signature pages which, when attached hereto, shall constitute one complete Agreement.
15.19 Certificate of Performance. Upon the completion of the Digital Display or upon performance of this Agreement or its earlier revocation and termination, the City shall provide Owner, upon Owner’s request, with a statement (“Certificate of Performance”) evidencing said completion, termination or revocation and the release of Owner from further obligations
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Packet Pg. 1049 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 50 hereunder, except for any further obligations which survive such completion, termination or revocation. The Certificate of Performance shall be signed by the appropriate agents of Owner and the City and shall be recorded against title to the Property in the official records of Los Angeles County, California. Such Certificate of Performance is not a notice of completion as referred to in California Civil Code Section 3093.
15.20 Interests of Owner. Owner represents to the City that, as of the Effective Date, it is the owner of the entire Property, subject to encumbrances, easements, covenants, conditions, restrictions, and other matters of record.
15.21 Operating Memoranda. The provisions of this Agreement require a close degree of cooperation between the City and Owner. During the Term of this Agreement, clarifications to this Agreement and the Existing Regulations may be appropriate with respect to the details of performance of the City and Owner. If and when, from time to time, during the term of this Agreement, the City and Owner agree that such clarifications are necessary or appropriate, they shall effectuate such clarification through operating memoranda approved in writing by the City and Owner, which, after execution, shall be attached hereto and become part of this Agreement and the same may be further clarified from time to time as necessary with future written approval by the City and Owner. Operating memoranda are not intended to and cannot constitute an amendment to this Agreement but mere ministerial clarifications, therefore public notices and hearings shall not be required for any operating memorandum. The City Attorney shall be authorized, upon consultation with, and approval of, Owner, to determine whether a requested clarification may be effectuated pursuant to the execution and delivery of an operating memorandum or whether the requested clarification is of such character to constitute an amendment of this Agreement which requires compliance with the provisions of Section 8.1 above. The authority to enter into such operating memoranda is hereby delegated to the City Manager and the City Manager is hereby authorized to execute any operating memoranda hereunder without further action by the City Council.
15.22 Acknowledgments, Agreements and Assurance on the Part of Owner.
15.22.1 Owner’s Faithful Performance. The Parties acknowledge and agree that Owner’s faithful performance in developing the Digital Display and/or Blade Sign on the Property and in constructing and installing certain public improvements pursuant to this Agreement and complying with the Existing Regulations will fulfill substantial public needs.
The City acknowledges and agrees that there is good and valuable consideration to the City resulting from Owner’s assurances and faithful performance thereof and that same is in balance with the benefits conferred by the City on the Digital Display and Blade Sign. The Parties further acknowledge and agree that the exchanged consideration hereunder is fair, just and reasonable. Owner acknowledges that the consideration is reasonably related to the type and extent of the impacts of the Digital Display and Blade Sign on the community and the Property, and further acknowledges that the consideration is necessary to mitigate the direct and indirect impacts caused by Owner on the Property.
15.22.2 Obligations to be Non-Recourse. As a material element of this Agreement, and in partial consideration for Owner’s execution of this Agreement, the Parties
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Packet Pg. 1050 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 51 each understand and agree that the City’s remedies for breach of the obligations of Owner under this Agreement shall be limited as described in Sections 11.2 through 11.4 above.
15.23 Waiver of Protest. Owner acknowledges and agrees that by executing this Agreement, Owner waives any and all claims and rights, if any, under Government Code Section 66020 to protest fees, dedications, reservations, or exactions required by this Agreement (hereinafter “exactions”), including the City’s right to request and receive the exaction pursuant to this Agreement, the total exaction amount if specified by the Agreement, and the formula for subsequently calculating exactions if the formula is established by the Existing Regulations.
Notwithstanding the above, if the amount of any exaction is not expressly set forth in this Agreement, Owner reserves the right to protest the subsequent calculation of this amount.
15.24 Not a Public Dedication. Nothing in this Agreement shall be deemed to be a gift or dedication of the Property, or of the Digital Display and/or Blade Sign, or any portion thereof, to the general public, for the general public, or for any public use or purpose whatsoever, it being the intention and understanding of the Parties that this Agreement be strictly limited to and for the purposes herein expressed for the installation, maintenance, and operation of the Digital Display and/or Blade Sign as private property. Owner shall have the right to prevent or prohibit the use of the Property, or the Digital Display and/or Blade Sign, or any portion thereof, including common areas and building and improvements located thereon, by any person for any purpose inimical to the development of the Digital Display and/or Blade Sign, including without limitation to prevent any person or entity from obtaining or accruing any prescriptive or other right to use the Property or the Digital Display or the Blade Sign.
15.25 Other Agreements. The City acknowledges that certain additional agreements may be necessary to effectuate the intent of this Agreement and facilitate development of the Digital Display and/or Blade Sign. The City Manager is hereby authorized to prepare, execute, and record those additional agreements.
15.26 Severability and Termination. If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid or unenforceable, or if any provision of this Agreement is superseded or rendered unenforceable according to any law which becomes effective after the Effective Date, the remainder of this Agreement shall be effective to the extent the remaining provisions are not rendered impractical to perform, taking into consideration the purposes of this Agreement.
15.27 Community Development Director Approval. Whenever this Agreement requires Community Development Director review and approval, such review and approval shall be undertaken in reasonable good faith and with due diligence and shall not be unreasonably withheld, conditioned or delayed.
15.28 City Manager Approval. Whenever this Agreement requires City Manager review and approval, such review and approval shall not preclude the City Manager from consulting with the City Council before rendering an approval.
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Packet Pg. 1051 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 52 This Agreement is executed by the Parties on the date first set forth above and is made effective on and as of the Effective Date.
OWNER:
XYZ NOW LLC,
a California limited liability company
By: _______ DRAFT _____________
Name: _________________________
Title: __________________________
CITY:
CITY OF SANTA MONICA,
a municipal corporation
By: _______ DRAFT _____________
Name: _________________________
City Manager
ATTEST:
By: _______ DRAFT _____________
Name: _________________________
Interim City Clerk
APPROVED AS TO FORM:
By: _________ DRAFT ___________
Name: _________________________
City Attorney
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Packet Pg. 1052 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade 53 ACKNOWLEDGEMENT AND CONSENT BY OPERATOR
As of the Effective Date of this Agreement, Orange Barrel Media, LLC, a Delaware limited liability company is the Operator as defined in Section 1.28 of this Agreement. Operator confirms its understanding of this Agreement, including but not limited to, Section 2.5 (Project and Community Benefits) and 2.12 (Operator Not a Third-Party Beneficiary to this Agreement).
OPERATOR:
ORANGE BARREL MEDIA, LLC,
a Delaware limited liability company
By: ___ DRAFT ________________
Peter D. Scantland
Chief Executive Officer
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Packet Pg. 1053 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade Exhibit “
A”
EXHIBIT “A”
LEGAL DESCRIPTION OF PROPERTY
APN: 4291-012-010
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Packet Pg. 1054 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade Exhibit “B
-1”
EXHIBIT “B-1”
DIGITAL DISPLAY PLANS [Behind this Page.]
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Packet Pg. 1055 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade Exhibit “
B-2”
EXHIBIT “B-2”
BLADE SIGN PLANS [Behind this Page.]
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Packet Pg. 1056 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade Exhibit “C”
EXHIBIT “C”
SMMC ARTICLE 9 (PLANNING AND ZONING)
[Behind this Page and included in Exhibit “G” (Digital Display District Ordinance).] Because the Digital Display District Ordinance is already included in Exhibit “G”, it is not duplicated in this Exhibit “C”; however it augments this Exhibit “C” SMMC Article 9 (Planning and Zoning).
The Parties determined that none of the City’s interim zoning ordinances in effect as of the Effective Date are relevant to this Agreement, and therefore, they are not included in this Exhibit “C”.
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Packet Pg. 1057 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade Exhibit “D”
EXHIBIT “D”
CONDITIONS OF APPROVAL
Project Specific Conditions
1. The Digital Display shall provide the project and community benefits as established in Section 2.5 of this Agreement.
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Packet Pg. 1058 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade Exhibit “E”
EXHIBIT “E”
PERMITTED FEES AND EXACTIONS
1. Owner shall pay the following fees and charges that are within the City’s jurisdiction and at the rate in effect at the time payments are made:
(a) Upon submittal for plan check, Owner shall pay City plan check fees; (b) Prior to issuance of construction permits, Owner shall pay the following City fees and all other standard fees imposed on similar development projects, which may include:
• Building, Plumbing, Mechanical, Electrical, Grading, Seismic Mapping, Landscape, Excavation and Shoring Permit fees (collected by Building & Safety)
• Construction and Demolition (C&D) Waste Management performance security fee (SMMC Chapter 8.108) (collected by the Public Works Department)
(c) Upon inspection of the project during the course of construction, City inspection fees.
These fees shall be reimbursed to Owner in accordance with the City's standard practice should Owner not proceed with development of the project.
2. Prior to issuance of permits for any construction work in the public right-of-way, or use of public property, Owner shall pay the following City fees:
• Use of Public Property Permit fees (SMMC 7.04.670) (Public Works Department)
• Utility Excavation Permit fee (SMMC 7.06.070) (Public Works Department) • Street Permit fee (SMMC 7.04.790) (Public Works Department)
3. Owner shall reimburse the City for its ongoing actual costs to monitor the project’s compliance with this Development Agreement. The City shall bill Owner for staff time and any material used pursuant to the hourly fees in effect at the time monitoring is performed. Owner shall submit payment to the City within 30 days after receipt of an invoice for same from the City.
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Packet Pg. 1059 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade Exhibit “F”, Page 1
EXHIBIT “F”
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
Recording Requested By and
When Recorded Mail To:
XYZ NOW LLC
2800 Olympic Blvd, Floor 1
Santa Monica, CA 90404
________________________________________________________________________
ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT (“Agreement”) is made and entered into by and between ___________________________, a _____________________________ (“Assignor”), and ________________________, a __________________ (“Assignee”).
R E C I T A L S
[NOTE TO DRAFTER: This form Assignment and Assumption Agreement is drafted for a purchase and sale of the full Project Site. If the transfer is other than a purchase and sale and/or less than the entire Project Site is being transferred, this form needs to be revised. Notably, if less than the entire Project Site is being transferred and/or the Project Site or any portion therefore is being transferred to more than one owner, this form needs to be revised to add joint and several liability for all owners of the Project Site.] A. The City of Santa Monica (“City”) and Assignor entered into that certain Development Agreement dated _______________, ____ (the “Development Agreement”), with respect to the real property located in the City of Santa Monica, State of California more particularly described in Exhibit “A” attached hereto (the “Project Site”).
B. Assignor has obtained from the City certain development approvals and permits with respect to the development of the Project Site, including without limitation, approval of the Development Agreement for the Project Site (collectively, the “Digital Display Approvals”).
C. Assignor intends to sell, and Assignee intends to purchase, the Project Site.
D. In connection with such purchase and sale, Assignor desires to transfer all of the Assignor’s right, title, and interest in and to the Development Agreement and the Digital Display Approvals with respect to the Project Site. Assignee desires to accept such assignment from Assignor and assume the obligations of Assignor under the Development Agreement and the Digital Display Approvals with respect to the Project Site.
THEREFORE, the parties agree as follows:
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Packet Pg. 1060 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade Exhibit “F”, Page 2
1. Assignment. Assignor hereby assigns and transfers to Assignee all of Assignor’s right, title, and interest in and to the Development Agreement and the Digital Display Approvals with respect to the Project Site. Assignee hereby accepts such assignment from Assignor.
2. Assumption. Assignee expressly assumes and agrees to keep, perform, and fulfill all the terms, conditions, covenants, and obligations required to be kept, performed, and fulfilled by Assignor under the Development Agreement and the Digital Display Approvals with respect to the Project Site.
3. Effective Date. The execution by City of the attached receipt for this Agreement shall be considered as conclusive proof of (a) delivery of this Agreement (b) the assignment and assumption contained herein, and (c) the release of Assignor in accordance with Section 13.2 of the Development Agreement. This Agreement shall be effective upon its recordation in the Official Records of Los Angeles County, California, provided that Assignee has closed the purchase and sale transaction and acquired legal title to the Project Site.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the dates set forth next to their signatures below.
“ASSIGNOR”
_________________________________
“ASSIGNEE”
_____________________________
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Packet Pg. 1061 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade Exhibit “F”, Page 3
RECEIPT BY CITY
The attached ASSIGNMENT AND ASSUMPTION AGREEMENT is received by the City of Santa Monica on this ___ day of ________________, ________.
CITY OF SANTA MONICA
___________________________________
By: _______________________________
Community Development Director
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Packet Pg. 1062 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade Exhibit “
G”
EXHIBIT “G”
Digital Display District Ordinance [Behind this Page.]
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Packet Pg. 1063 Attachment: A. 1355 3rd DA 2026.10.20 (7865 : Introduction and First Reading of an Ordinance to Approve the 1355 Third Street Promenade City Council Meeting: January 13, 2026 Santa Monica, California ORDINANCE NUMBER 2839 (CCS)
(City Council Series)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA ADDING MUNICIPAL CODE SECTION 9.61.205 TO ESTABLISH A DIGITAL DISPLAY
DISTRICT TO PERMIT DIGITAL DISPLAYS TO BE APPROVED BY DEVELOPMENT
AGREEMENT IN SPECIFIED LOCATIONS ALONG THIRD STREET PROMENADE
AND SANTA MONICA PLACE
WHEREAS, the City of Santa Monica Municipal Code currently does not permit off-premises advertising via static or digital billboards in the City; and WHEREAS, in 1985, the City Council adopted Ordinance Number 1333 (CCS) adopting the City’s Sign Code, which, in part, prohibited off-premises advertising, including billboards, and signs were deemed meritorious or removed over a 15-year amortization period, and since that time, off-premises advertising has remained prohibited; and
WHEREAS, the ordinance proposes creation of a Digital Display District within Downtown Santa Monica, which is considered the pedestrian and economic heart of the City, and specifically at the Third Street Promenade and the adjacent Santa Monica Place shopping mall which anchors the south end of the Promenade; and WHEREAS, the Downtown Community Plan uniquely identifies the area for its lively mix of pedestrian-oriented uses with dynamic activity day and night, with land use regulations that support a diversity of entertainment and cultural options, in particular cultural amenities such as museums, theaters, and cinemas; and WHEREAS, the Third Street Promenade and adjacent Santa Monica Place shopping mall are an essential component of the City’s economic sustainability,