Agenda packet — City Council and Concurrent Authorities, November 1, 2022 (part 1 of 2)

City Council/Successor Agency to the
Redevelopment Agency/Public
Financing Authority/Parking Authority
Concurrent
City of Stockton
Meeting Agenda - - Revised
City Council/Successor
Agency of the
Redevelopment
Agency/Public Financing
Authority/Parking Authority
Concurrent Agenda
Kevin J. Lincoln II (At Large) Mayor/Chair
Christina Fugazi (District 5) Vice Mayor/Vice Chair
Sol Jobrack (District 1)
Daniel R. Wright (District 2)
Paul Canepa (District 3)
Susan Lenz (District 4)
Kimberly Warmsley (District 6)
Council Chamber, City Hall, 425 N. El Dorado
Street, Stockton CA
4:00 PMTuesday, November 1, 2022
Closed Session 4:00 PM :: Regular Session 5:30 PM

1. CLOSED SESSION CALL TO ORDER/ROLL CALL

2. ADDITIONS TO CLOSED SESSION AGENDA

3. ANNOUNCEMENT OF CLOSED SESSION

3.1 22-1026

CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION
Number of Cases: Three
Name of Case: Fire Battalion Chief Erik Patten, (Workers’ Compensation Appeals Board Case No.

ADJ11395242)
Name of Case: Ralph Lee White v. City Council of Stockton, et al. (San Joaquin County Superior Court Case No.

STK-CV-UOCT-2018-4379)
Name of Case: Kurt Wilson v. City Council of Stockton, et al. (San Joaquin County Superior Court Case No.

STK-CV-UVM-2019-12404)
This Closed Session is authorized pursuant to section 54956.9(d) (1) of the Government Code.

Department: City Attorney
Note: This item was amended 2022-10-28 by the Office of the City Attorney

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1 November 1, 2022City Council/Successor Agency to
the Redevelopment Agency/Public
Financing Authority/Parking
Authority Concurrent
Meeting Agenda - - Revised

3.2 22-1027

CONFERENCE WITH LABOR NEGOTIATOR
Recommended Action: Agency Designated Representative: City Manager Harry Black Employee Organizations: Unrepresented Units, Stockton City Employees' Association, Operating Engineer's Local 3, Mid-Management/Supervisory Level Unit, Unrepresented Management/Confidential, Law Department, Stockton Police Management Association, Stockton Firefighters Local 456 International Association of Firefighters, Stockton Fire Management, Stockton Police Officers' Association (SPOA)
This Closed Session is authorized pursuant to section 54957.6(a) of the Government Code.

Department: City Attorney

3.3 22-1028 PUBLIC EMPLOYEE PERFORMANCE EVALUATION:

Recommended Action: City Manager
This Closed Session is authorized pursuant to Government Code section 54957.

Department: City Attorney

3.4 22-1029 PUBLIC EMPLOYEE PERFORMANCE EVALUATION:

Recommended Action: City Attorney
This Closed Session is authorized pursuant to Government Code section 54957.

Department: City Attorney

3.5 22-1030 PUBLIC EMPLOYEE PERFORMANCE EVALUATION:

Recommended Action: City Clerk
This Closed Session is authorized pursuant to Government Code section 54957.

Department: City Attorney

3.6 22-1031 CONFERENCE WITH LEGAL COUNSEL - POTENTIAL LITIGATION Number of Cases: One
Based on existing facts and circumstances, there is significant exposure to litigation pursuant to Government Code section 54956.9(d)(2).

Department: City Attorney

3.7 22-1044 CONFERENCE WITH LEGAL COUNSEL - INITIATION OF

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2 November 1, 2022City Council/Successor Agency to
the Redevelopment Agency/Public
Financing Authority/Parking
Authority Concurrent
Meeting Agenda - - Revised

LITIGATION
Number of Cases: One
This Closed Session is authorized pursuant to Government Code section 54956.9(d)(4) to discuss matters pertaining to the initiation of litigation.

Department: City Attorney

4. CLOSED SESSION PUBLIC COMMENT*

5. RECESS TO CLOSED SESSION

6. REGULAR SESSION CALL TO ORDER/ROLL CALL

7. INVOCATION/PLEDGE TO FLAG

8. REPORT OF ACTION TAKEN IN CLOSED SESSION

9. ADDITIONS TO REGULAR SESSION AGENDA***

10. RECOGNITIONS, ANNOUNCEMENTS, OR REPORTS

10.1 22-1069
PROCLAMATION: HOMELESS YOUTH AWARENESS MONTH -
NOVEMBER 2022
Department: Office of the Mayor

10.2 22-1072 PROCLAMATION: FAMILY COURT AWARENESS MONTH - NOVEMBER 2022
Department: Office of the Mayor

11. PUBLIC COMMENTS* – MATTERS NOT ON THE AGENDA

12. CONSENT AGENDA

12.1 22-1061 ORDINANCE AMENDING TITLE 5, CHAPTER 5.90, SECTIONS

5.90.060, 5.90.070, 5.90.150, 5.90.160, AND 5.90.250, AND TITLE 10, CHAPTER 10.12, SECTION 10.12.220 OF THE STOCKTON

MUNICIPAL CODE RELATING TO THE REGULATION OF PEDICABS
Recommended Action:

RECOMMENDATION
It is recommended that the City Council approves an ordinance amending Title 5, Chapter 5.9, Sections 5.90.060, 5.90.070, 5.90.150, 5.90.160, and

5.90.250, and Title 10, Chapter 10.12, Section 10.12.220 of the Stockton Municipal Code relating to the regulation of pedicabs.

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3 November 1, 2022City Council/Successor Agency to
the Redevelopment Agency/Public
Financing Authority/Parking
Authority Concurrent
Meeting Agenda - - Revised
Department: City Manager
Attachment A - Proposed Ordinance Update (Redline)
Proposed Ordinance - Pedicab Ordinance Update
Attachments:

12.2 22-1045 APPROVE A RESOLUTION RESCINDING RESOLUTION 2022-06-14-1506 AUTHORIZING THE CITY TO SUBMIT FOR A

GRANT AWARD FROM THE COUNTY OF SAN JOAQUIN
Recommended Action:

RECOMMENDATION
It is recommended that the City Council approve a resolution to:

1. Rescind the resolution authorizing the City to submit an application for a one-time capital grant to the County of San Joaquin in the amount of $8,116,629;

2. Withdraw the contingent appropriation of American Rescue Plan Act (ARPA) funds to the Salvation Army; and

3. Authorize the City Manager, or designee to take appropriate and necessary actions to carry out the purpose and intent of this resolution.

Department: Economic Development
Proposed Resolution - Rescinding 2022-06-14-1506
Exhibit 1 - Approved Resolution 12022-06-14-1506
Attachments:

12.3 22-0879 ADOPT RESOLUTION TO AUTHORIZE THE STREETLIGHT POLE REPLACEMENT FY 2021-22 SB1 PROJECT
Recommended Action: RECOMMENDATION
It is recommended that the City Council adopt a resolution to:

1. Approve Notice of Exemption No. NOE24-22 under the California Environmental Quality Act for the Streetlight Pole Replacement FY 2021-22 SB1, Project No. WD22006.

2. Approve the plans and specifications for the Streetlight Pole Replacement FY 2021-22 SB1, Project No. WD22006.

3. Award a Construction Contract in the amount of $178,600 to St. Francis Electric, LLC of San Leandro, CA, for the Streetlight Pole Replacement FY 2021-22 SB1, Project No. WD22006.

It is also recommended that the City Manager be authorized to take appropriate and necessary actions to carry out the purpose and intent of this resolution.

Department: Public Works

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4 November 1, 2022City Council/Successor Agency to
the Redevelopment Agency/Public
Financing Authority/Parking
Authority Concurrent
Meeting Agenda - - Revised
Attachment A - Vicinity Map
Proposed Resolution
Exhibit 1 - Notice of Exemption
Exhibit 2 - Construction Contract
Attachments:

13. ADMINISTRATIVE MATTERS

14. UNFINISHED BUSINESS

15. NEW BUSINESS

15.1 22-1071

APPROVE BY MOTION THE ENTERPRISE RISK ASSESSMENT
REPORT
Recommended Action: RECOMMENDATION
It is recommended that City Council approve by motion the final Enterprise Risk Assessment Report, dated August 16, 2022.

Department: City Auditor
Attachment A - Enterprise Risk Assessment Report
PPT - 15.1 - Enterprise Risk Assessment Report
Attachments:

16. HEARINGS**

16.1 22-0826 ADOPTION OF AN ORDINANCE APPROVING A DEVELOPMENT

AGREEMENT BETWEEN THE SPANOS FAMILY TRUST AND THE

CITY OF STOCKTON FOR THE DELTA COVE PROJECT
Recommended Action:

RECOMMENDATION
It is recommended that the City Council approve the following:

1. A Finding that the project is categorically exempt from CEQA, pursuant to the CEQA Guidelines, section 15061(b)(3) (General Rule) of Title 14 of the California Code of Regulations; and

2. An Ordinance approving a Development Agreement for the Delta Cove Project.

It is also recommended that the City Manager be authorized to take appropriate and necessary actions to carry out the purpose and intent of the Ordinance.

Department: Community Development

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5 November 1, 2022City Council/Successor Agency to
the Redevelopment Agency/Public
Financing Authority/Parking
Authority Concurrent
Meeting Agenda - - Revised
Attachment A - Location and Context Map
Attachment B - Project Plans
Attachment C - Planning Commission Reso 2022-09-22-0501 Proposed Ordinance - Delta Cove
Exhibit 1 - Draft Development Agreement
PPT - 16.1 - Delta Cove Development Agreement
Attachments:

17. CITY MANAGER'S UPDATE

18. COUNCIL COMMENTS

19. ADJOURNMENT

INFORMATIONAL ITEMS

1. 22-1068

COUNCIL COMMITTEE/BOARD AND COMMISSION MINUTES
Recommended Action: RECOMMENDATION
Information item only. No action required.

Department: City Clerk
LegislationEnvironmental 2022-04-20
LegislationEnvironmental 2022-05-18
LegislationEnvironmental 2022-06-22
Measure A 2022-04-25
Measure A 2022-06-06
Attachments:

CERTIFICATE OF POSTING
I declare, under penalty of perjury, that I am employed by the City of Stockton and that I caused this agenda to be posted in the City Hall notice case on October 28, 2022 in compliance with the Brown Act.

Eliza R. Garza, CMC
City Clerk
By: ________________________________

Deputy

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6 November 1, 2022City Council/Successor Agency to
the Redevelopment Agency/Public
Financing Authority/Parking
Authority Concurrent
Meeting Agenda - - Revised
*Citizens may comment on any subject within the jurisdiction of the City Council/Successor Agency to the Redevelopment Agency/Public Finance Authority/Parking Authority, including items on the Agenda. Each speaker is limited to three minutes. Speakers must submit “Request to Speak” cards to the City Clerk, and be prepared to speak when called. No speaker cards will be received after the close of the Citizen’s Comments portion of the meeting.
**Speakers should hold comments on items listed as a Hearing until the Hearing is opened. If a large number of people desire to speak at a Hearing, the Mayor/Chair may reduce the amount of time allocated to each speaker to three (3) minutes.
***Additions to the Agenda - Government Code Section 54954.2(b)(2), allows members of the City Council present at the meeting to take immediate action, with either a two-thirds or unanimous vote, to place an item on the agenda that action must be taken and that the item came to the attention of the City subsequent to the agenda being posted.

All proceedings before this meeting body are conducted in English. The City of Stockton does not furnish language interpreters and, if one is needed, it shall be the responsibility of the person needing one.

In accordance with the Americans With Disabilities Act and California Law, it is the policy of the City of Stockton to offer its public programs, services and meetings in a manner that is readily accessible to everyone, including those with disabilities. If you are a person with a disability and require a copy of a public hearing notice, or an agenda and/or agenda packet in an appropriate alternative format; or if you require other accommodation, please contact the Office of the City Clerk located at 425 North El Dorado Street, Stockton, California 95202 during normal business hours or by calling (209) 937-8458, at least 5 days in advance of the hearing/meeting. Advance notification within this guideline will enable the City/Agency to make reasonable arrangements to ensure accessibility.

Materials related to an item on this agenda submitted to City Council after distribution of the agenda packet are available for public inspection in the City Clerk's Office at 425 North El Dorado Street, Stockton, California 95202, during normal business hours. Such documents are also available on the City's website at www.stocktongov.com subject to staff's ability to post the documents before the meeting.

CHALLENGING CITY DECISIONS: The time limit within which to commence any lawsuit or legal challenge to any quasi-adjudicative decision made by the City is governed by Section 1094.6 of the Code of Civil Procedure, unless a shorter limitation period is specified by any other provision. Under Section 1094.6, any lawsuit or legal challenge to any quasi-adjudicative decision made by the City must be filed no later than the 90th day following the date on which such decision becomes final. Any lawsuit or legal challenge, which is not filed within that 90-day period, will be barred. If a person wishes to challenge the nature of the above section in court, they may be limited to raising only those issues they or someone else raised at the meeting described in this notice, or in written correspondence delivered to the City of Stockton, at or prior to the meeting. In addition, judicial challenge may be limited or barred where the interested party has not sought and exhausted all available administrative remedies.

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7 City of Stockton
Legislation Text
File #: 22-1069, Version: 1
PROCLAMATION: HOMELESS YOUTH AWARENESS MONTH - NOVEMBER 2022 City of Stockton Printed on 10/25/2022Page 1 of 1
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8 City of Stockton
Legislation Text
File #: 22-1072, Version: 1
PROCLAMATION: FAMILY COURT AWARENESS MONTH - NOVEMBER 2022 City of Stockton Printed on 10/25/2022Page 1 of 1
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9 City of Stockton
Legislation Text
File #: 22-1061, Version: 1
ORDINANCE AMENDING TITLE 5, CHAPTER 5.90, SECTIONS 5.90.060, 5.90.070, 5.90.150,

5.90.160, AND 5.90.250, AND TITLE 10, CHAPTER 10.12, SECTION 10.12.220 OF THE

STOCKTON MUNICIPAL CODE RELATING TO THE REGULATION OF PEDICABS

RECOMMENDATION
It is recommended that the City Council approves an ordinance amending Title 5, Chapter 5.9, Sections 5.90.060, 5.90.070, 5.90.150, 5.90.160, and 5.90.250, and Title 10, Chapter 10.12, Section

10.12.220 of the Stockton Municipal Code relating to the regulation of pedicabs.

Summary
This item is a continued discussion from the October 18, 2022 Council meeting.

Pursuant to Legislative Committee direction, staff reviewed existing City law concerning pedicabs in the areas of permitting requirements, insurance requirements, presence at special events, and areas of permissible operation. The proposed ordinance (Attachment A) eases permitting requirements, increases insurance minimums for the benefit of the public, and expands pedicabs’ access in the City.

DISCUSSION
Background
A pedicab is a bicycle which has passenger seats or pulls passengers by way of a sidecar or trailer as a means of transportation for hire. Pedicab regulations were enacted at the October 18, 2011, meeting of the City Council and codified at SMC Chapter 5.90. That chapter regulates the permitting process for pedicab operators and their vehicles.

Ordinarily, all bicycles within the City are prohibited from being ridden within walking areas of private shopping centers, parking areas, and upon sidewalks, unless otherwise posted by the City, within areas zoned Commercial, including downtown. (SMC § 10.12.220). At its December 16, 2014, meeting, Council amended that section of the SMC to create an exemption for lawfully operating pedicabs within: (i) Janet Leigh Plaza, (ii) Joan Darrah Waterfront Promenade, and (iii) DeCarli Square.

Present Situation
Pedicab operating permits and pedicabs decals
Pursuant to Chapter 5.90, pedicab operators must possess each of the following:

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10 File #: 22-1061, Version: 1
· A business license, for the purpose of collecting business license revenue; · A pedicab operator license, which allows the Stockton Police Department to investigate applicants. For example, pedicab operators must possess a valid California driver’s license, and may not have certain criminal offenses in the prior seven years; and · A pedicab decal, to ensure pedicabs satisfy the safety requirements outlined in SMC section

5.90.130. For example, the pedicabs must have proper lights and mirrors.

Presently, the business license, operator license, and decal each remain valid for one-year periods.

The proposed ordinance will allow operator licenses and decals to be valid for three-year periods.

Business licenses must still be renewed annually, as this is the maximum licensing period allowed in the City. Staff believe a three-year period for operator permits and decals balances the interests of pedicab operators not having to expend renewal costs on a more frequent basis, with the City’s interest in performing checks on the background of pedicab operators and their vehicles.

Live Scan fingerprinting is presently only required for new pedicab applicants and those operators who allow their license to lapse. Staff does not recommend reducing or eliminating this practice, as Live Scans are only performed as-needed for its enhanced background check capabilities.

Insurance Requirements
The proposed ordinance increases insurance minimums from $100,000/$300,000 bodily injury and $50,000 property damage to a $1,000,000 per-occurrence commercial general liability policy. This increase is recommended by the California Joint Powers Risk Management Authority and City’s Risk Services and matches nearby jurisdictions like the City of Sacramento.

Locations of Operation
The proposed amendment expands the locations where pedicabs may operate by permitting pedicabs upon sidewalks and walkways within the area of the Stockton Arena and Ballpark. However, pedicabs within that area would be subject to the direction of the City and its agents: chiefly, contracted event staff. Those staff have the knowledge and expertise to regulate vehicular and pedestrian traffic during large events and will be able to direct pedicabs during these high-traffic situations, so they do not create a safety risk or obstruction.

Pursuant to Committee request, staff were asked to investigate expanding pedicab access to sidewalks and pathways in and around parks. Upon review, staff confirmed pedicabs are already permitted to ride in parks.

Special Events
Pursuant to Committee request, staff reviewed feasibility of allowing pedicabs to operate at City- hosted special events. After consideration, staff do not recommend a general allowance for such operation, as allowing pedicabs to operate in heavily foot-trafficked environments raise too many safety concerns. A comparison to horse-drawn carriages at City-hosted events was discussed at the City of Stockton Printed on 10/25/2022Page 2 of 3
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11 File #: 22-1061, Version: 1
previous Committee meeting; those carriages were limited to specific routes in roped off/caution- taped pathways which had staff present along the route. Staff may not have the time or resources to organize the same safeguards at every City-hosted event for pedicabs, which can be smaller, quicker, and more agile than a carriage. This is not to say that pedicabs may not have a presence at any City-hosted event. Rather, staff may consider incorporating pedicabs as a vendor at City-hosted events, similar to every other third-party participant.

For special events where the City is not the host, an event organizer is able to include a pedicab operator on the special event permit application. Pedicab operators are welcome to inquire with the Community Services Department to get information on upcoming special events.

FINANCIAL SUMMARY
There is no direct impact to the General Fund as a result of passing this ordinance.

Attachment A - Pedicab Ordinance - Redlined
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12 ATTACHMENT A
ORDINANCE NO.

AN ORDINANCE AMENDING TITLE 5, CHAPTER 5.90, SECTIONS 5.90.060, 5.90.070,

5.90.150, 5.90.160, AND 5. 90.250, AND TITLE 10, CHAPTER 10.12, SECTION

10.12.220 OF THE STOCKTON MUNICIPAL CODE RELATING TO THE REGULATION OF PEDICABS.

BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF STOCKTON, AS FOLLOWS:

SECTION I. AMENDMENT OF CODE

Title 5, Chapter 5.90, sections 5.90.060, 5.90.070, 5. 90.150, 5.90.160, and

5.90.250 of the Stockton Municipal Code are amended and shall read as follows:

5.90.060 Duration of validity of pedicab operating permit.

Pedicab operating permits s hall be valid for a period of one three (13) years from date of issuance.

5.90.070 Pedicab operating permit renewal.

Pedicab operating permits shall be renewable annually upon filing and approval of a new application and payment of a pedicab operating permit fee as determined by the City Council.

5.90.150 Duration of valid ity of pedicab decal.

Pedicab decals shall be valid for a period of one three (13) years from date of issuance.

5.90.160 Pedicab decal renewal.

Pedicab decals shall be renewable annually upon filing of a new application and payment of a pedicab decal fee.

5.90.250 Insurance requirements.

In order to ensure the safety of the public, it is unlawful for any person who owns a pedicab to allow it to be operated or driven or to obtain a permit for its operation under this chapter unless and until said person has complied with the provisions of this section.

A. The owner or operator of any pedicab operated under this chapter shall maintain, at no cost to the City, a commercial general liability insurance policy insuring the public against any loss or damage that may result to any person or property from the 13 ATTACHMENT A
operation of the pedicab, and which satisfies the following: must secure his or her ability to answer to any claim for damage to person or property which may arise against him or her by reason of the operation of said pedicab as follows:

1. Public liability insurance in the minimum limits of $100,000.00 for injury or death to any person and $300,000.00 for injury or death of more than one (1) person in the same accident;

2. Public liability insurance for property damage in the minimum amount of $50,000.00 for any one (1) occurrence;

1. Coverage shall be at least as broad as ISO CGL Form 00 01 on an occurrence basis for bodily injury, including death, of one or more persons, property damage and personal injury, with limits of not less than one million dollars ($1,000,000.00) per occurrence.

32. The policy of insurance is endorsed to provide a hold harmless clause in favor or the City;

43. The policy provide that 30-days’ notice of cancellation of insurance be sent to the Police Chief; and

54. A certificate evidencing insur ance shall be filed with the Police Chief and the risk manager for the City, and must name the City, its officers, agents and employees as additional insureds.

B. The insurance required under this section shall remain in full force, at a level at least equal to the minimum requirements se t forth above, or the pedicab decal will be subject to revocation or suspension pursuant to this chapter.

SECTION II. AMENDMENT OF CODE

Title 10, Chapter 10.12, section 10.12. 220 of the Stockton Municipal Code is amended and shall read as follows:

10.12.220 Riding bicycl es on sidewalks.

A. No person shall ride or attempt to ride any bicycle upon or over any walking area situated inside a private shopping center or parking area, or over any sidewalk space in the following areas unless signs permitting such riding are posted:

Areas zoned:

1. CO Commercial Office District;

2. CN Commercial Neighborhood District;
14 ATTACHMENT A

3. CG Commercial General District;

4. CD Commercial Downtown District;

5. CL Commercial Large-Scale District.

B. The City Manager or authorized representative may post signs permitting the riding of bicycles in any of the above areas or portions of the above areas if it is found and determined after a traffic engineering and sa fety survey, that such riding will not endanger pedestrian traffic, public or private safety.

C. Whenever any person is riding a bicycle upon or over any walking area situated inside a private shopping center or parking area, or over any sidewalk or sidewalk space, such person shall yield the right-of-way to any pedestrian and shall give an audible signal before overtaking and passing such pedestrian.

D. The provisions of subsection A of this section shall not apply to the following persons:

1. Peace officers, as defined in Penal Code Section 830, and emergency personnel who are acting within the course and scope of their employment;

2. Operators of pedicabs while otherwise lawfully operating a pedicab pursuant to the terms of a valid permit issued in accordance with Chapter 5.90 of this Code, and at reasonable speeds based on conditions but never more than 5 miles per hour, upon:
a. Janet Leigh Plaza, Joan Darrah Waterfront Promenade , and DeCarli Square.
b. Within the area of the Stockton arena and ballpark, subject to the limitations, prohibitions, and directions of the property owner, owner’s agents, and law enforcement officers to facilitate the free flow of vehicular and pedestrian traffic and ensure public safety. Notwithstanding t he foregoing, pedicabs shall not operate within a parking structure.

SECTION III. SEVERABILITY

If any section of this ordinance or the application thereof to any person or circumstance is held invalid, the invalidity shall not affect other provisions or applications of the act which can be given without the invalid provisions or application, and to this end the provisions of this act are severable.

SECTION IV. EFFECTIVE DATE

This ordinance shall take effect and be in fu ll force thirty (30) days after its passage.

15 ATTACHMENT A

ADOPTED: ___________________

EFFECTIVE: ___________________

_____________________________
KEVIN J. LINCOLN, II
Mayor of the City of Stockton
ATTEST:

______________________________
ELIZA R. GARZA, CMC
City Clerk of the City of Stockton

16 ORDINANCE NO.

AN ORDINANCE AMENDING TITLE 5, CHAPTER 5.90, SECTIONS 5.90.060, 5.90.070,

5.90.150, 5.90.160, AND 5.90.250, AND TITLE 10, CHAPTER 10.12, SECTION

10.12.220 OF THE STOCKTON MUNICIPAL CODE RELATING TO THE REGULATION OF PEDICABS.

BE IT ORDAINED BY THE CITY COUNCIL OF T HE CITY OF STOCKTON, AS FOLLOWS:

SECTION I. AMENDMENT OF CODE

Title 5, Chapter 5.90, section s 5.90.060, 5.90.070, 5.90.150, 5.90.160, and

5.90.250 of the Stockton Municipal Code are amended and shall read as follows:

5.90.060 Duration of validity of pedicab operating permit.

Pedicab operating permits shall be valid for a period of three (3) years from date of issuance.

5.90.070 Pedicab operating permit renewal.

Pedicab operating permits shall be renewable upon fi ling and approval of a new application and payment of a pedicab operating permit fee as determined by the City Council.

5.90.150 Duration of validity of pedicab decal.

Pedicab decals shall be valid for a period of three (3) years from date of issuance.

5.90.160 Pedicab decal renewal.

Pedicab decals shall be renewable upon filing of a new application and payment of a pedicab decal fee.

5.90.250 Insurance requirements.

1. Coverage shall be at least as broad as ISO CGL Form 00 01 on an occurrence basis for bodily injury, including death, of one or more persons, property 17 damage and personal injury, with limits of not less than one million dollars ($1,000,000.00) per occurrence.

2. The policy of insurance is endorsed to provide a hold harmless clause in favor or the City;

3. The policy provide that 30 -days’ notice of cancellation of insurance be sent to the Police Chief; and
4 A certificate evidencing insurance shall be filed with the Police Chief and the risk manager for the City, and must name the City, its officers, agents and employees as additional insureds.

B. The insurance required under this section shall remain in full force, at a level at least equal to the minimum requirements set forth above, or the pedicab decal will be subject to revocation or suspension pursuant to this chapter.

SECTION II. AMENDMENT OF CODE

Title 10, Chapter 10.12, section 10.12.220 of the Stockton Municipal Code is amended and shall read as follows:

10.12.220 Riding bicycles on sidewalks.

Areas zoned:

1. CO Commercial Office District;

2. CN Commercial Neighborhood District;

3. CG Commercial General District;

4. CD Commercial Downtown District;

5. CL Commercial Large-Scale District.

B. The City Manager or authorized representat ive may post signs permitting the riding of bicycles in any of the above areas or portions of the above areas if it is found and determined after a traffic engineering and safety survey, that such riding will not endanger pedestrian traffic, public or private safety.

1. Peace officers, as defined in Penal Code Section 830, and emergency personnel who are acting within the course and scope of their employment;

2. Operators of pedicabs while otherwise lawfully operating a pedicab pursuant to the terms of a valid permit issued in accordance with Chapter 5.90 of this Code, and at reasonable speeds based on conditions but never more than 5 miles per hour, upon:
a. Janet Leigh Plaza, Joan Darrah Waterfront Promenade, and DeCarli Square.
b. Within the area of the Stockton arena and ballpark, subject to the limitations, prohibitions, and direction s of the proper ty owner, owner’s agents, and law enforcement officers to facilitate the free flow of vehicular and pedestrian traffic and ensure public safety. Notwithstanding the foregoing, pedicabs shall not operate within a parking structure.

3. Operators of pedicabs within a City -hosted special event area where the operator has been granted written authorization from the City Manager, Director of Community Services, or designee, limited to the times, locations, and other terms specified in the written authorization and as further directed or rescinded by City officials.

SECTION III. SEVERABILITY

SECTION IV. EFFECTIVE DATE

This ordinance shall take effect and be in full force thirty (30) days after its passage.

ADOPTED: ___________________

EFFECTIVE: ___________________

_____________________________
KEVIN J. LINCOLN, II
ATTEST: Mayor of the City of Stockton

______________________________
ELIZA R. GARZA, CMC
City Clerk of the City of Stockton
19 City of Stockton
Legislation Text
File #: 22-1045, Version: 1
APPROVE A RESOLUTION RESCINDING RESOLUTION 2022-06-14-1506 AUTHORIZING THE

CITY TO SUBMIT FOR A GRANT AWARD FROM THE COUNTY OF SAN JOAQUIN

RECOMMENDATION
It is recommended that the City Council approve a resolution to:

1. Rescind the resolution authorizing the City to submit an application for a one-time capital grant to the County of San Joaquin in the amount of $8,116,629;

2. Withdraw the contingent appropriation of American Rescue Plan Act (ARPA) funds to the Salvation Army; and

3. Authorize the City Manager, or designee to take appropriate and necessary actions to carry out the purpose and intent of this resolution.

Summary
On June 14, 2022, the City Council adopted Resolution Number 2022-06-14-1506, authorizing the City to submit for a grant award from the County of San Joaquin to acquire and develop a low-barrier shelter program for homeless individuals (Exhibit 1 to the Resolution). A new Notice of Funding Availability will be issued to expand existing programs will be issued.

DISCUSSION
Background
On September 14, 2021, Council approved the City of Stockton’s American Rescue Plan Act (ARPA) funding distribution. This approval included $12.15 million for Homelessness/Housing, under which $3,600,000 was approved for Low Barrier Shelter Beds under the category, Housing Support:

Services for Unhoused Persons.

Under the rules issued by the United States Department of Treasury, ARPA funds must be obligated by December 31, 2024, and expended by December 31, 2026.

On December 12, 2021, Council directed the City Manager to pursue capital grant funds from San Joaquin County for 125 low barrier shelter beds.

On March 8, 2022, the City’s Department of Economic Development released a Notice of Request for Project Concepts and Funding Availability for Low Barrier Shelter Beds.

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20 File #: 22-1045, Version: 1
On April 18, 2022, four (4) submissions were received and reviewed, of which two were deemed incomplete without full narrative responses.

On June 14, 2022, the City Council adopted Resolution Number 2022-06-14-1506, authorizing the City to apply for grant award from the county of San Joaquin to acquire and develop a low-barrier shelter program for homeless individuals and authorize the appropriation of $4,971,450 of American Rescue Plan Act Funds, and total County grant funds, to the Salvation Army of Stockton for daily costs associated with operating a 125-bed shelter and capital project needs.

On August 18, 2022, and on October 12, 2022, Salvation Army of Stockton provided information to City Staff that attempts to secure property that meet County requirements for the proposed low barrier shelter program were unsuccessful.

On October 12, 2022, City Staff and Salvation Army of Stockton mutually agreed to stop movement on the project.

Present Situation
It is necessary to update and reissue the Notice of Funding Availability for the (ARPA) grant funds for low-barrier, interim sheltering for homeless individuals. Staff recommends reissuing the NOFA to focus on expansions of existing successful programs.

FINANCIAL SUMMARY
There is no financial impact to the City’s General Fund or any other unrestricted funds due to this action. The Low-Barrier Shelter Program ARPA funds will be reallocated to an Economic Development Projects under the Special Grant Fund, General Admin Division, Covid-19 program.

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21 Resolution No.

STOCKTON CITY COUNCIL

RESOLUTION RESCINDING RESOLUTION 2022-06-14-1506 AUTHORIZING THE CITY TO

APPLY FOR A GRANT AWARD FROM THE COUNTY OF SAN JOAQUIN TO ACQUIRE

AND DEVELOP A LOW-BARRIER SHELTER PROGRAM FOR HOMELESS INDIVIDUALS

The City Council approved a Resolution Authorizing the City to Apply for a Grant Award from the County of San Joaquin to Acquire and Develop a Low -Barrier Shelter Program for Homeless individuals; and

City staff requests the rescinding of Resolution 2022-06-14-1506 Authorizing the City to Apply for Grant Award from the County of San Joaquin to Acquire and Develop a Low -Barrier Shelter Program for Homeless individuals; and

BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF STOCKTON, AS FOLLOWS:

1. Rescinds the Resolution Authorizing the City to Apply for Grant Award from the County of San Joaquin in the amount of $8,116,629 (Resolution No. 20 22-06-14-1506), attached and incorporated as Exhibit 1;

2. Withdraw the contingent appropriation of American Rescue Plan Act (ARPA) funds to the Salvation Army;

3. The City Manager is authorized to take whatever actions are necessary and appropriate to carry out the purpose and intent of this Resolution.

PASSED, APPROVED, and ADOPTED November 1, 2022 .

KEVIN J. LINCOLN II
Mayor of the City of Stockton

ATTEST:

ELIZA R. GARZA, CMC
City Clerk of the City of Stockton

22 EXHIBIT 1
23 City of Stockton
Legislation Text
File #: 22-0879, Version: 1
ADOPT RESOLUTION TO AUTHORIZE THE STREETLIGHT POLE REPLACEMENT FY 2021-22 SB1 PROJECT

RECOMMENDATION
It is recommended that the City Council adopt a resolution to:

1. Approve Notice of Exemption No. NOE24-22 under the California Environmental Quality Act for the Streetlight Pole Replacement FY 2021-22 SB1, Project No. WD22006.

2. Approve the plans and specifications for the Streetlight Pole Replacement FY 2021-22 SB1, Project No. WD22006.

3. Award a Construction Contract in the amount of $178,600 to St. Francis Electric, LLC of San Leandro, CA, for the Streetlight Pole Replacement FY 2021-22 SB1, Project No. WD22006.

It is also recommended that the City Manager be authorized to take appropriate and necessary actions to carry out the purpose and intent of this resolution.

Summary
The Streetlight Pole Replacement FY 2021-22 SB1 project will remove and replace 10 existing non- standard streetlight poles that have exceeded their life expectancy along Robinhood Drive with new galvanized streetlight poles (Attachment A). The project was included in the 2021-26 Five-Year Capital Improvement Plan (CIP).

On July 21, 2022, the City received five bids for this project. Staff recommends award of the Construction Contract to the lowest responsive bidder, St. Francis Electric, LLC, in the amount of $178,600. Staff also recommends that Council adopt a resolution approving Notice of Exemption No.

NOE24-22 under the California Environmental Quality Act (CEQA) and approving the plans and specifications for the project. Construction is anticipated to begin and be completed by winter 2022, weather permitting.

DISCUSSION
Background
The City is responsible for the operation and maintenance of approximately 19,000 streetlights. The majority of these streetlights are mounted on galvanized poles, but approximately 62 streetlight poles are non-galvanized. These non-galvanized poles rust over time.

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The Streetlight Pole Replacement FY 2021-22 SB1 project will remove and replace 10 existing non- galvanized poles that have exceeded their life expectancy along Robinhood Drive with new galvanized streetlight poles (Attachment A). The remaining 52 non-galvanized streetlight poles located in neighborhoods adjacent to Pacific Avenue in central Stockton will be removed and replaced in future phases as warranted by changing conditions and/or as additional funding becomes available.

On July 26, 2016, Council adopted a Community Workforce and Training Agreement (CWTA). The CWTA became effective August 25, 2016, and applies to all Public Works projects over $1 million that are bid after that date. On July 16, 2019, by Motion No. 2019-07-16-1403, Council extended the CWTA term to August 25, 2024. The CWTA was not applied to this project as the estimated construction cost is less than $1 million.

Present Situation
On June 30, 2022, the Streetlight Pole Replacement FY 2021-22 SB1, Project No. WD22006, was advertised for bids. On July 21, 2022, five bids were received with the following results:

COMPANY NAME BID AMOUNT ADJUSTED BID AMOUNT
(local preference applied)
St. Francis Electric, LLC $ 178,600 $ 178,600
(San Leandro, CA)
Tim Paxin’s Pacific Excavation, Inc. $ 195,530 $ 195,530 (Elk Grove, CA)
Ray’s Electric $ 218,000 $ 218,000
(Oakland, CA)
PTM General Engineering Services $ 228,028 $ 228,028
(Riverside, CA)
Tennyson Electric, Inc. $ 246,565 $ 246,565
(Livermore, CA)
Engineer’s Estimate $ 208,000
The requirements of Stockton Municipal Code (SMC) section 3.68.090, Local Business Preference, apply to this project. Application of the Local Business Preference has no effect on the bid order.

The Local Employment Ordinance, SMC section 3.68.095, also applies to this contract.

The bid from St. Francis Electric, LLC, the lowest responsive bidder, is regular in all respects and has the proper license to perform the work. Staff recommends Council approve the plans and specifications for the project and award a Construction Contract to St. Francis Electric, LLC of San Leandro, CA, in the amount of $178,600.

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The project is in conformance with the City’s General Plan, pursuant to California Government Code, section 65402, and is categorically exempt from the requirements of CEQA as specified under Section 15301(c) of the CEQA Guidelines. As a result, the project has been granted a Categorical Exemption. The activities related to this project constitute a discretionary project under the City’s jurisdiction and qualifies as a project that does not have a significant effect on the environment. The resolution will approve the filing of Notice of Exemption No. NOE24-22 under CEQA. Construction is anticipated to begin and be completed by winter 2022, weather permitting.

FINANCIAL SUMMARY
Council approved the Road Maintenance and Rehabilitation Account (RMRA) funding in the amount of $231,000 on May 11, 2021, by Resolution No. 2021-05-11-1208, and appropriated funding to the Streetlight Pole Replacement FY 2021-22 SB1, Project No. WD22006, Account No. 4570-715- 800007-240-241-30-45-000-000. There is sufficient funding in the project to award a Construction Contract to St. Francis Electric, LLC in the amount of $178,600.

There is no impact to the City’s General Fund or any other unrestricted fund as a result of taking the recommended actions.

Attachment A - Vicinity Map
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26 SUMMIT PL
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LEGEND
!( Non-Galvanized Poles
Streetlight Pole Replacement FY21-22 SB1
Project No. WD22006

CITY OF STOCKTON

DEPARTMENT OF PUBLIC WORKS

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ATTACHMENT A
27 Resolution No.

STOCKTON CITY COUNCIL

RESOLUTION APPROVING THE NOTICE OF EXEMP TION NO. NOE24 -22,

APPROVING THE PLANS AND SPECIFICATIONS, AND AWARDING A

CONSTRUCTION CONTRAC T FOR THE STREETLIGH T POLE REPLACEMENT FY 2021-22 SB1, PROJECT NO. WD22006

On July 21, 2022, the City Clerk of the City of Stockton opened, examined, and publicly declared the sealed proposals or bids offered for the Streetlight Pole Replacement FY 2021-22 SB1, Project No. WD22006; and

The project will remove and repla ce 10 existing non -standard poles that have exceeded their life expectancy along Robinhood Drive with new galvanized streetlight poles; and

St. Francis Electric, LLC is the lowest responsive bidder , in the amount of $178,600, and its bid is regular and responsive in all respects; and

The project is categorically exempt from the requirements of the California Environmental Quality Act (CEQA) as specified under section 15301 (c) of the CEQA Guidelines, because this is a discretiona ry project under the City’s jurisdiction and qualifies as a project which has been determined to not have a significant effect on the environment; now, therefore,

BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF STOCKTON , AS FOLLOWS:

1. The City Council approves the filing of Notice of Exemption No. NOE24-22 under the CEQA for the Streetlight Pole Replacement FY 2021 -22 SB1, Project No.

WD22006, a copy of which is attached as Exhibit 1 and incorporated by this reference.

2. The City Council approves the plans and specifications for the Streetlight Pole Replacement FY 2021-22 SB1, Project No. WD22006.

3. The City Council award s a Construction Contract between the City of Stockton and St. Francis Electric, LLC, in the amount of $178,600, and the City Manager is authorized and directed to execute same, a copy of which is attached as Exhibit 2 and incorporated by this reference.

//
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28 4. The City Manager is hereby authorized to take whatever actions are necessary and appropriate to carry out the purpose and intent of this Resolution.

PASSED, APPROVED, and ADOPTED November 1, 2022 .

___________________________
KEVIN J. LINCOLN, II
Mayor of the City of Stockton

ATTEST:

___________________________
ELIZA R. GARZA, CMC
City Clerk of the City of Stockton

29 TO: COUNTY CLERK

COUNTY OF SAN JOAQUIN
44 N. San Joaquin St., Ste. 260
Stockton, CA 95202

CITY OF STOCKTON

NOTICE OF EXEMPTION
FROM: Lead Agency
City of Stockton
c/o Public Works Department
22 East Weber Avenue, Suite 301
Stockton, CA 95202
NOTICE OF EXEMPTION PURSUANT TO PUBLIC RESOURCES CODE SECTION 21152(B) AND CALIFORNIA CODE OF REGULATIONS TITLE 14, SECTION 15062

PROJECT DATA
Project Title: STREETLIGHT POLE REPLACEMENT. FY2021-22 SB1, PROJECT NO. WD22006 CEQA Exemption File No.: NOE 24-22
Applicant: City of Stockton Public Works Department
Project Description/Location: The City of Stockton's Public Works Department will be removing and replacing existing streetlight poles with brand new galvanized streetlight poles. See attachment A for more information.

DETERMINATION/FINDING OF EXEMPTION
The above-described activity/project is exempt from the environmental assessment requirements of the California Environmental Quality Act (CEQA) pursuant to the following section(s) of the State CEQA Guidelines (California Code of Regulations, Title 14):

The activity is not a "project" as defined in CEQA Guidelines Section 15378.

The activity is exempt under the "general rule" at CEQA Guidelines Section15061(B)(3).

The project is "Statutorily Exempt" per CEQA Guidelines Section: ___ _ _ X_ The project is "Categorically Exempt" per CEQA Guidelines Section 15301(c).

BASIS FOR FINDING OF EXEMPTION
The activity does not qualify as a project and/or clearly could not have a significant effect on the environment and, therefore, CEQA does not apply.
_x_ The activity constitutes a discretionary project under the City's jurisdiction and qualifies as a project which has been determined not to have a significant effect on the environment and, therefore, is exempt from the provisions of CEQA under the above-noted statutory or categorical exemption(s).

JODI ALMASSY, DIRECTOR

PUBLIC WORKS DEPARTMENT
By_µ,µ�-
Amanpre,et Grewal, Project Manager
July 8. 2022
(DATE OF PREPARATION)
(DATE. OF FINAL APPROVAL)

AFFIDAVIT OF FILING AND POSTING
I declare that on the date stamped above, I received and posted this notice or included it on a list of such notices which was posted as required by California Public Resources Code Section 21152(8). Said notice or list of notices will remain posted · for 35 days from the filing date.

Signature Title
Posting Period Ending Date
EXHIBIT 1
30 Local Cons
truction Contract – ST. FRANCIS ELECTRIC, LLC – PROJECT NO. WD22006 ( Updated 07/12/22)

CONSTRUCTION CONTRACT
This contract is made and entered into on _____________, by and between ST.

FRANCIS ELECTRIC, LLC , a STATE OF CALIFORNIA CORPORATION, with a business address at 975 CARDEN STREET, SAN LEANDRO, CA 94577 , hereinafter called "CONTRACTOR," and CITY OF STOCKTON, a municipal corporation, hereinafter called "CITY."
W I T N E S S E T H:

WHEREAS
, plans and specifications for the construction of STREETLIGHT POLE REPLACEMENT FY 2021-22 SB1 (PROJECT NO. WD22006) , hereinafter called “PROJECT,” were regularly adopted by Council Resolution No. __________________, on _________________; and
WHEREAS, the contract for said work was regularly awarded to CONTRACTOR, by Council Resolution No. __________________, on ________________.

NOW, THEREFORE, in consideration of the promises and of the mutual covenants herein contained, the parties hereto expressly agree as follows:

CONTRACTOR agrees:

1. SCOPE OF SERVICES. To do the work and furnish all the labor, materials, tools, equipment, and insurance required for the construction of PROJECT in accordance with the plans and specifications adopted on _____________, by Council Resolution No. __________________. The "contract documents," which include the bid documents, project plans, specifications, all letters of clarification, and the City of Stockton Standard Specifications and Plans, are incorporated into and made a part of this contract by this reference to the same extent as if fully set forth.

2. COMPENSATION. To do and perform the work contemplated hereby in a good and workmanlike manner and to furnish all labor, materials, tools, and equipment necessary therefore at the prices specified in Exhibit A, attached hereto and by reference made a part hereof, under the direction of and to the complete satisfaction of the Director of Public Works of the City of Stockton. Total compensation for services and reimbursement for costs shall not exceed $178,600.00, or as otherwise mutually agreed to in a Contract Change Order.

3. INSURANCE. CONTRACTOR shall not commence any work before obtaining, and shall maintain in force at all times during the duration and performance of this contract, the policies of insurance specified in Exhibit B, which is attached to this contract and incorporated by this reference, and as provided in the “contract documents” including Section 7-1.06 of the City of Stockton Standard Specifications and Plans as adopted on September 27, 2016, by Council Resolution No. 2016-09-27, effective September 27, 2016.

EXHIBIT 2

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31 Loc
al Construction Contract – ST. FRANCIS ELECTRIC, LLC – PROJECT NO. WD22006 ( Updated 07/12/22)
It shall be a requirement under this agreement that any available insurance proceeds broader than or in excess of the specified minimum insurance coverage requirements and/or limits shall be available to the Additional Insured.

Furthermore, the requirements for coverage and limits shall be (1) the minimum coverage and limits specified in this Agreement; or (2) the broader coverage and maximum limits of coverage of any insurance policy or proceeds available to the named Insured; whichever is greater.

The Additional Insured coverage under the CONTRACTOR’s policy shall be “primary and non-contributory” and will not seek contribution from the City of Stockton’s insurance or self-insurance and shall be at least as broad as ISO CG 20 01 04 13.

The limits of insurance required in this agreement may be satisfied by a combination of primary and umbrella or excess insurance. Any umbrella or excess insurance shall contain or be endorsed to contain a provision that such coverage shall also apply on a primary and non-contributory basis for the benefit of the City of Stockton (if agreed to in a written contract or agreement) before the City of Stockton’s own insurance or self- insurance shall be called upon to protect it as a named insured.

All self-insured retentions (SIR) must be disclosed to the City’s Risk Management for approval and shall not reduce the limits of liability. Payment Bond in the amount of the self-insured retention (SIR) may be required.

Policies containing any self-insured retention (SIR) provision shall provide or be endorsed to provide that the SIR may be satisfied by either the named insured or the CITY.

The CITY reserves the right to obtain a full certified copy of any insurance policy and endorsements.

Failure to exercise this right shall not constitute a waiver of right to exercise later.

CONTRACTOR shall maintain insurance as required by this contract to the fullest amount allowed by law and shall maintain insurance for a minimum of five years following the completion of this project. In the event contractor fails to obtain or maintain completed operations coverage as required by this agreement, the City at its sole discretion may purchase the coverage required and the cost will be paid by contractor.

CONTRACTOR agrees to include with all Subcontractors in their subcontract the same requirements and provisions of this agreement including the indemnity and insurance requirements to the extent they apply to the scope of the Subcontractor’s work.

Subcontractors hired by CONTRACTOR agree to be bound to CONTRACTOR and the CITY in the same manner and to the same extent as CONTRACTOR is bound to the CITY under the Contract Documents. Subcontractor further agrees to include these same provisions with any Sub-subcontractor. A copy of the CITY Contract Document Indemnity EXHIBIT 2

Page 2 of 40 ends

32 Local Construction Contract – ST. FRANCIS ELECTRIC, LLC – PROJECT NO. WD22006 ( Updated 07/12/22)
and Insurance provisions will be furnished to the Subcontractor upon request. The General CONTRACTOR shall require all sub-contractors to provide a valid certificate of insurance and the required endorsements included in the agreement prior to commencement of any work and contractor will provide proof of compliance to the City.

4. INDEMNITY AND HOLD HARMLESS. With the exception that this section shall in no event be construed to require indemnification by Contractor to a greater extent than permitted under the public policy of the State of California, Contractor shall indemnify, protect, defend with counsel approved by City and at Contractor’s sole cost and expense, and hold harmless City, its Mayor, Council, officials, representatives, agents, employees, and volunteers from and against any and all claims, causes of action, liabilities, judgments, awards, losses, liens, claims, stop notices, damages, expenses, and costs (including without limitation attorneys’ fees, expert and consultant fees, and other expenses of litigation) of every nature, including, but not limited to, death or injury to persons, or damage to property, which arise out of or are in any way connected with the work performed, materials furnished, or services provided under this Agreement, or from any violation of any federal, State, or municipal law or ordinance, or City Policy, by Contractor or Contractor’s officers, agents, employees, volunteers or subcontractors.

Contractor shall not be obligated to indemnify or defend City for claims finally determined by a court of law or arbitrator to arise from the active negligence or willful misconduct of the City. It is the intent of the Parties that this indemnity obligation is at least as broad as is permitted under California law. To the extent California Civil Code sections 2782, et seq., limit the defense or indemnity obligations of Contractor to City, the intent hereunder is to provide the maximum defense and indemnity obligations allowed by Contractor under the law. The indemnity set forth in this section shall not be limited by insurance requirements or by any other provision of this Agreement.

With exception that this section shall in no event be construed to require indemnification, including the duty to defend, by Contractor to a greater extent than permitted under the public policy of the State of California, the parties agree that Contractor’s duty to defend City is immediate and arises upon the filing of any claim against the City for damages which arise out of or are in any way connected with the work performed, materials furnished, or services provided under this Agreement by Contractor or Contractor’s officers, agents, employees, volunteers or subcontractors. Contractor’s duties and obligations to defend the City shall apply regardless of whether or not the issue of the City’s liability, breach of this Agreement, or other obligation or fault has been determined.

Contractor shall be immediately obligated to pay for City’s defense costs of the claim, including, but not limited to, court costs, attorney’s fees and costs, expert consultant and witness fees and costs, other witness fees, document reproduction costs, arbitration fees, and, if after final judgment an appeal is pursued, all of such costs for the appeal.

At the conclusion of the claim, if there is any determination or finding of sole active negligence or willful misconduct on the part of the City, City will then reimburse Contractor for amounts paid in excess of Contractor’s proportionate share of responsibility for the damages within 30 days after Contractor provides City with copies of all bills and expenses incurred in the defense of the claim(s). It is agreed between the EXHIBIT 2

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33 Loc
al Construction Contract – ST. FRANCIS ELECTRIC, LLC – PROJECT NO. WD22006 ( Updated 07/12/22)
parties that this reimbursement provision assures Contractor is not obligated to defend or indemnify City in an amount greater than provided for under California law, including, without limitation, California Civil Code sections 2782, 2782.6, and 2782.8.

With the exception that this section shall in no event be construed to require indemnification by Contractor to a greater extent than permitted under the public policy of the State of California, and in addition to the other indemnity obligations in this Agreement, Contractor shall indemnify, defend, and hold harmless City, its Mayor, Council, officials, representatives, agents, employees, and volunteers from and against all claims, losses, expenses, and costs including, but not limited to, attorneys’ fees, arising out of any claim brought against the City by an employee, office, agent, or volunteer of Contractor, regardless of whether such claim may be covered by any applicable workers compensation insurance. Contractor’s indemnification obligation is not limited in any way by any limitation on the amount or type of damages, compensation, or benefits payable by or for the Contractor under workers’ compensation acts, disability acts, or other employee benefit acts.

The City’s acceptance of the insurance certificates required under this Agreement does not relieve the CONTRACTOR from its obligation under this paragraph. The indemnification obligations of this section shall survive the termination of this agreement.

Any exceptions to this language may result in a proposal being deemed non-responsive.

CONTRACTOR/Subcontractor's responsibility for such defense and indemnity obligations shall survive the termination or completion of this agreement for the full period of time allowed by law.

The defense and indemnification obligations of this agreement are undertaken in addition to, and shall not in any way be limited by, the insurance obligations contained in this agreement. If any section, subsection, sentence, clause or phrase of this indemnification is for any reason held to be invalid or unconstitutional, such decision shall not affect the validity of the remaining portions of this indemnification.

5. STANDARD PLANS AND SPECIFICATIONS. The performance of said work and the furnishing of said materials shall be executed in accordance with Section 8-

1.04B of the City of Stockton Standard Specifications and Plans as adopted on September 27, 2016, by Council Resolution No. 2016-09-27-1213, effective September 27, 2016, and the provisions of the issued project specifications.

The Director of Public Works will furnish CONTRACTOR a weekly statement showing the number of days charged to the contract for the preceding week, the number of days specified for completion of the contract, and the number of days remaining to complete the contract. CONTRACTOR will be allowed one (1) week in which to file a written protest setting forth in what respects said weekly statement is incorrect, otherwise the statement shall be deemed to have been accepted by CONTRACTOR as correct.

EXHIBIT 2

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34 Loc
al Construction Contract – ST. FRANCIS ELECTRIC, LLC – PROJECT NO. WD22006 ( Updated 07/12/22)

6. WORKING DAYS. This work shall be diligently prosecuted to completion before the expiration of 40 WORKING DAYS beginning on the tenth calendar day after the date shown on the Notice to Proceed. It is agreed by the parties to the contract that in case all the work called for under the contract in all parts and requirements, is not finished or completed within the number of days as set forth, damage will be sustained by the CITY, and that it is and will be impracticable and extremely difficult to ascertain the actual damage which CITY will sustain in the event of and by reason of such delay; and it is therefore agreed that CONTRACTOR will pay to CITY the sum of NINE HUNDRED AND NO/100 DOLLARS ($900.00) per day for each and every calendar days delay in finishing the work in excess of the number of days prescribed; and CONTRACTOR agrees to pay said liquidated damages as herein provided, and in case the same are not paid, agrees that CITY, may deduct the amount thereof from any monies due or that may become due CONTRACTOR under the contract.

It is further agreed that in case the work called for under the contract is not finished and completed in all parts and requirements within the number of days as specified, the CITY shall have the right to increase the number of days or not, as may seem best to serve the interest of CITY, and if the CITY decides to increase the said number of days, the CITY shall further have the right to charge to CONTRACTOR, CONTRACTOR's heirs, assigns or sureties, and to deduct from the final payment for the work, all or any part, as may be deemed proper, the liquidated damages as specified or the actual cost of engineering, inspection, superintendence, and other overhead expenses which are directly chargeable to the contract, and which accrue during the period of such extension, whichever is greater, except the cost of final surveys and preparation of final estimate shall not be included in such charges.

A working day shall not include, nor shall CONTRACTOR be assessed with liquidated damages nor the additional cost of engineering and inspection during any delay beyond the time named for the completion of the work caused by acts of God or of the public enemy, acts of CITY, fire, floods, epidemics, quarantine restrictions, strikes, and freight embargoes and subject to approval by the Director of Public Works, inability to get materials ordered by CONTRACTOR or subcontractor due to such causes provided that CONTRACTOR shall notify the Director of Public Works in writing of the causes of delay within five (5) working days from the beginning of any such delay, and the Director shall ascertain the facts and the extent of the delay, and Director's findings of the facts thereon shall be final and conclusive.

If CONTRACTOR is delayed by reason of alterations made in these specifications, or by any act of the Director of Public Works or of the CITY, not contemplated by the contract, the time of completion shall be extended proportionately and CONTRACTOR shall be relieved during the period of such extension of any claim for liquidated damages, engineering or inspection charges or other penalties. CONTRACTOR shall have no claim for any other compensation for any such delay.

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al Construction Contract – ST. FRANCIS ELECTRIC, LLC – PROJECT NO. WD22006 ( Updated 07/12/22)

7. CONFORMANCE TO APPLICABLE LAWS. Contractor shall comply with all applicable Federal, State, and Municipal laws, rules, and ordinances. Contractor shall not discriminate in the employment of persons or in the provision of services under this Contract on the basis of any legally protected classification, including race, color, national origin, ancestry, sex or religion of such person.
a. TITLE VI
Tit
le VI of the Civil Rights Act of 1964 requires that “no person in the United States shall, on the grounds of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving federal financial assistance.” (42 USC Section 2000d)
http://www.dol.gov/oasam/regs/statutes/titlevi.htm.

The
City of Stockton requires compliance with the requirements of Title VI in all of its programs and activities regardless of funding source. b. DISCRIMINATION AND HARASSMENT POLICY
The
City of Stockton has a Discrimination and Harassment Policy (Exhibit C). The purpose of this policy is to reaffirm the CITY’s commitment to demonstrating respect for all individuals by strictly prohibiting discrimination and harassment, including sexual harassment in the workplace, to define the types of behavior and conduct prohibited by this policy, and to set forth a procedure for reporting, investigating, and resolving complaints of discrimination and harassment in the workplace.
c. LABOR STANDARDS PROVISIONS/CALIFORNIA LABOR CODE
The
bidder shall understand that conditions set forth in Chapter 1, Part 7, Division 2 of the California Labor Code shall be considered part of the contract agreement.
https://leginfo.legislature.ca.gov/faces/codes displayText.xhtml?lawCode= LAB&division=2.&title=&part=7.&chapter=1.&article=2.
d. P

REVAILING WAGE
CONT
RACTOR and any subcontractor shall pay each employee engaged in the trade or occupation not less than the prevailing hourly wage rate. In accordance with the provisions of Section 1770 of the Labor Code, the Director of Department of Industrial Relations of the State of California has determined the general prevailing wage and employer payments for health and welfare, pension, vacation, travel time, and subsistence pay as provided for in Section 1773.1, apprenticeship or other training programs EXHIBIT 2

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36 Loc
al Construction Contract – ST. FRANCIS ELECTRIC, LLC – PROJECT NO. WD22006 ( Updated 07/12/22)
authorized by Section 3093 and similar purposes applicable to the work to be done. CONTRACTOR performing the work under this contract shall obtain a copy of the wage rate determination and shall distribute copies to each subcontractor. As the wage determination for each craft reflects an expiration date, it shall be the prime CONTRACTOR and each subcontractor's responsibility to ensure that the prevailing wage rates of concern is current and paid to the employee.
i. The CONTRACTOR performing the work shall be responsible for obtaining a copy of the State wage rate determination. State wage rates may be obtained at
http://www.dir.ca.gov/OPRL/pwd/Determinations/Northern/Northern.pd f. The CONTRACTOR shall be responsible for posting said wage rates at a prominent location at the work site and shall maintain same in a good readable condition for the duration of the work.
ii. Should the CONTRACTOR choose to work on a Saturday, Sunday or on a holiday recognized by the Labor Unions, the CONTRACTOR shall reimburse the CITY the actual cost of engineering, inspection, superintendence, and or other overhead expenses which are directly chargeable to the contract. Should such work be undertaken at the request of the CITY, reimbursement will not be required. To conform strictly with the provisions of Division 2, Part 7, Chapter 1, Article 2, of the Labor Code of the State of California. To forfeit as a penalty to CITY the sum of TWENTY-FIVE AND NO/100 DOLLARS ($25.00) for each laborer, worker, or mechanic employed by CONTRACTOR, or by any subcontractor under CONTRACTOR, in the execution of this contract, for each calendar day during which any laborer, worker, or mechanic is required or permitted to work more than eight (8) hours and who is not paid the general prevailing rate of per diem wages for holiday and overtime work in violation of the provisions of Sections 1770 to 1781 of the Labor Code of the State of California. That all sums forfeited under the provisions of the foregoing sections shall be deducted from the payments to be made under the terms of this contract.
iii. The CONTRACTOR to whom the contract is awarded shall ensure that the prime and each subcontractor will in accordance with Section 1776 of the Labor Code, maintain certified payroll records. A copy of said records shall be provided with each invoice to the Public Works Department, Attention Contract Compliance Officer. It shall be the CONTRACTOR’S responsibility to obtain copies of the current prevailing wage rate determination for all subcontractors. Additionally, certified payroll records must be uploaded to the DIR website as required by labor code.

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37 Loc
al Construction Contract – ST. FRANCIS ELECTRIC, LLC – PROJECT NO. WD22006 ( Updated 07/12/22)
iv. The CONTRACTOR shall comply with the provisions established in Section 1777.5 of the Labor Code concerning the 1) certified approval by local joint apprenticeship committees for the employment and training of apprentices, and 2) contribution of funds to administer and conduct apprenticeship programs, if applicable to the job. e. LOCAL EMPLOYMENT ORDINANCE
Pur
suant to Stockton Municipal Code Section 3.68.095 the CONTRACTOR and all subcontractors shall make a good faith effort to employ at least 50 percent of the workforce on this project from local residents, as measured by total labor work hours. Failure of any CONTRACTOR or subcontractor to comply with these requirements shall be deemed a material breach of the contract or subcontract. CONTRACTORS and subcontractors shall maintain records necessary for monitoring their compliance with section

3.68.095.
f. SANCTIONS
Deliverables
must conform with all applicable federal, state, and local laws. Such conformity includes compliance with federal sanctions, and Contractor certifies that it has not and will not engage in prohibited transactions with sanctioned persons or entities.

CITY agrees:

8. COMPENSATION. To pay CONTRACTOR for the work herein
contemplated in the following manner: Progress payments will be made on or about the first day of each calendar month, in such sum as shall make the aggregate of payment up to such day equal to ninety-five percent (95%) of the proportional contract price, upon the basis of the progress certificate of the Director of Public Works as to the amount of work done and the proportional amount of the contract price represented therefore; and all of the remaining part of the contract price not as aforesaid paid, shall be paid at the expiration of thirty-five (35) days from the completion of said work of construction and the certification by the Director of Public Works of such completion.

9. SECURITIES. Pursuant to Section 22300 of the Public Contract Code, CONTRACTOR will be permitted, at its request and sole expense, to substitute securities for any monies withheld by the CITY to ensure performance under the contract. Said securities will be deposited either with the CITY or with a State or federally chartered bank as escrow agent. Securities eligible for this substitution are those listed in Section 16430 of the California Government Code or bank or savings and loan certificates of deposit.

CONTRACTOR shall be the beneficial owner of any securities substituted for monies withheld and shall receive any interest thereon.

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38 Loc
al Construction Contract – ST. FRANCIS ELECTRIC, LLC – PROJECT NO. WD22006 ( Updated 07/12/22)

10. CHANGE ORDERS. CITY reserves the right to make such alterations, deviations, additions to or omissions from the plans and specifications, including the right to increase or decrease the quantity of any item or portion of the work, as may be deemed by the Engineer to be necessary or advisable and to require such extra work as may be determined by the Engineer to be required for the proper completion or construction of the whole work contemplated.

Any such changes will be set forth in a contract change order which will specify, in addition to the work done in connection with the change made, adjustment of contract time, if any, and the basis of compensation for such work. A contract change order will not become effective until approved by the City Manager and/or the City Council.

Processing of change orders shall be in accordance with Section 4-1.05A of the City of Stockton Standard Specifications and Plans as adopted by Council on September 27, 2016, by Resolution No. 2016-09-27-1213, effective September 27, 2016, or as otherwise amended by Council. When the compensation for an item of work is subject to adjustment under the provisions of Standard Specifications and Plans, Section 4-1.05A, CONTRACTOR shall, upon request, promptly furnish the Engineer with adequate detailed cost data for such item of work.

11. AUDITS. CITY reserves the right to periodically audit all charges made by CONTRACTOR to CITY for services under the contract. Upon request, CONTRACTOR agrees to furnish CITY, or a designated representative, with necessary information and assistance.

CONTRACTOR agrees that CITY or its delegate will have the right to review, obtain and copy all records pertaining to performance of the contract. CONTRACTOR agrees to provide CITY or its delegate with any relevant information requested and shall permit CITY or its delegate access to its premises, upon reasonable notice, during normal business hours for the purpose of interviewing employees and inspecting and copying such books, records, accounts, and other material that may be relevant to a matter under investigation for the purpose of determining compliance with this requirement.

CONTRACTOR further agrees to maintain such records for a period of three (3) years after final payment under the contract.
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EXHIBIT 2
40 STREETLIGHT POLE REPLACEMENT
FY 2021-22 SB1
PROJECT NO. WD22006

BIDD ING SCHEDULE
Each bidder shall bid each item, including all alternate bid(s). Failure to bid an item shall be just cause for considering the bid as non-responsive. Line item costs should include all Contractor's overhead and profit and indirect costs. Bids not presented on City forms shall be cause for considering the bid as non-responsive.

Item Descrip ti on Unit Quantity Unit price Total Price 1 Mobilization LS 1 5,000.00 5,000.00
2 Traffic Control LS 1 5,000.00 5,000.00
3 Erosion Control LS 1 $7,600.00 $7,600.00
Remove Existing Light Pole,
4 Equipment & Foundation (Existing LED EA 10 4,500.00 45,000.00 fixtures to be reused) 5 Install Type 15 Street Light Foundation EA 10 4,000.00 including Pull Box 40,000.00 Install New Streetlight Pole with Mast
6 Arm (Reuse existing LED fixtures from EA
removed poles)
10 7,600.00 76,000.00
TOTAL BID $178,600.00
BIDDER'S NAME __ St.Fran_c_is_E_lect_ri __ G __ , LLC __ _ Bid Forms Last Revised 12/31/20

EXHIBIT A
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41 NOTE: The City of Stockton is now using the online insurance program PINS Advantage. Once you have been awarded a contract you will receive an email from the City’s online insurance program requesting you to forward the email to your insurance provider(s). Please see attached flyer regarding PINS Advantage.

Insurance Requirements for Construction Contracts
Contractor shall procure and maintain for the duration of the contract, and for five (5) years thereafter, insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder by the Contractor, their agents, representatives, employees, or subcontractors. In the event contractor fails to obtain or maintain completed operations coverage as required by this agreement, the City, at its sole discretion, may purchase the coverage required and the cost will be paid by the contractor.

MINIMUM SCOPE AND LIMIT OF INSURANCE
Coverage shall be at least as broad as:

1. Commercial General Liability (CGL): Insurance Services Office (ISO) Form CG 00 01 covering CGL on an “occurrence” basis, including products and completed operations, property damage, bodily injury and personal & advertising injury with limits no less than $2,000,000 per occurrence. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location (ISO CG 25 03 or 25 04) or the general aggregate limit shall be twice the required occurrence limit.

2. Automobile Liability: Insurance Services Office Form CA 0001 covering Code 1 (any auto), with limits no less than $2,000,000 per accident for bodily injury and property damage.

3. Workers’ Compensation insurance as required by the State of California, with Statutory Limits, and Employers’ Liability insurance with a limit of no less than $1,000,000 per accident for bodily injury or disease.

4. Surety Bonds as described below.

It shall be a requirement under this agreement that any available insurance proceeds broader than or in excess of the specified minimum insurance coverage requirements and/or limits shall be available to the Additional Insured. Furthermore, the requirements for coverage and limits shall be (1) the minimum coverage and limits specified in this Agreement; or (2) the broader coverage and maximum limits of coverage of any Insurance policy or proceeds available to the named insured; whichever is greater. No representation is made that the minimum insurance requirements of this agreement are sufficient to cover the obligations of the Contractor under this agreement.

EXHIBIT B
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42 Limits of Insurance
The limits of insura
nce required in this agreement may be satisfied by a combination of primary and umbrella or excess insurance. Any umbrella or excess insurance shall contain or be endorsed to contain a provision that such coverage shall also apply on a primary and non-contributory basis before the City’s own insurance or self-insurance shall be called upon to protect it as a named insured.

Other Insurance Provisions
The insurance policies are to contain, or be endorsed to con tain, the following
provisions:

Additional Insured Status
The City
of Stockton, its officers, officials, employees, and volunteers are to be covered as additional insureds on the CGL policy with respect to liability arising out of work or operations performed by or on behalf of the Contractor including materials, parts, or equipment furnished in connection with such work or operations. General liability coverage can be provided in the form of an endorsement to the Contractor’s insurance (at least as broad as ISO Form CG 20 10 11 85 or if not available, through the addition of both CG 20 10, CG 20 26, CG 20 33, or CG 20 38; and CG 20 37 if a later edition is used). Additional insured Name of Organization shall read “City of Stockton, its officers, officials, employees, and volunteers.” Policy shall cover City of Stockton, its officers, officials, employees, and volunteers for all locations work is done under this contract.

Primary Coverage
The Additi
onal Insured coverage under the Contractor’s policy shall be “primary and non-contributory” and will not seek contribution from the City’s insurance or self- insurance and shall be at least as broad as CG 20 01 04 13. The City of Stockton does not accept endorsements limiting the Contractor’s insurance coverage to the sole negligence of the Named Insured.

Claims Made Policies – (Note – applicable only to professional and/or pollution liability)
If an
y coverage required is written on a claims-made coverage form:

1. The retroactive date must be shown, and this date must be before the execution date of the contract or the beginning of contract work.

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

3. If coverage is canceled or non-renewed, and not replaced with another claims-made policy form with a retroactive date prior to the contract effective, or start of work date, the Contractor must purchase extended reporting period coverage for a minimum of five (5) years after completion of contract work.

4. A copy of the claims reporting requirements must be submitted to the City of Stockton for review.

5. If the services involve lead-based paint or asbestos identification/remediation, the Contractors Pollution Liability policy shall not contain lead-based paint or asbestos exclusions. If the services involve mold identification/remediation, the Contractors Pollution Liability policy shall not contain a mold exclusion, and the definition of Pollution shall include microbial matter, including mold.

Notice of Cancellation
Each insu
rance policy required above shall provide that coverage shall not be canceled, except with notice to the City of Stockton.

Waiver of Subrogation
Contractor hereby gra
nts to City of Stockton a waiver of any right to subrogation which any insurer of said Contractor may acquire against the City of Stockton by virtue of the payment of any loss under such insurance. Contractor agrees to obtain any endorsement that may be necessary to affect this waiver of subrogation, but this provision applies regardless of whether or not the City of Stockton has received a waiver of subrogation endorsement from the insurer. The Workers’ Compensation policy shall be endorsed with a waiver of subrogation in favor of the City of Stockton for all work performed by the Contractor, its employees, agents and subcontractors.

Self-Insured Retentions
All Self-i
nsured retentions must be disclosed to Risk Management for approval and shall not reduce the limits of liability. The City of Stockton may require the Contractor to purchase coverage with a lower retention or provide proof of ability to pay losses and related investigations, claim administration, and defense expenses within the retention.

The policy language shall provide, or be endorsed to provide, that the self-insured retention may be satisfied by either the named insured or City of Stockton.

Acceptability of Insurers

EXHIBIT B
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44 Insurance is to be placed with insurers with a current A.M. Best’s rating of no less than A:VII, unless otherwise acceptable to the City of Stockton.

Verification of Coverage
Contractor shall furnish the City of Stockton with original certificates and amendatory endorsements or copies of the applicable policy language effecting coverage required by this clause. All certificates and endorsements are to be received and approved by the City of Stockton Risk Services befo
re work commences. However, failure to obtain the
required documents prior to the work beginning shall not waive the Contractor’s obligation to provide them. The City of Stockton reserves the right to require complete, certified copies of all required insurance policies, including endorsements required by these specifications, at any time.

Contractor shall, prior to the commencement of work under this Agreement, provide the City of Stockton with a copy of its declarations page(s) and endorsement page(s) for each of the required policies.

Subcontractors
Contractors shall require and verify that all subcontractors, or other parties hired for this work, purchase and maintain
coverage for indemnity and insurance requirements
as least as broad as specified in this agreement to the extent they apply to the scope of the subcontractor’s work with the same certificate of insurance requirements and naming as additional insureds all parties to this contract. Contractor shall include the following language in their agreement with Subcontractors: Subcontractors hired by Contractor agree to be bound to Contractor and City in the same manner and to the same extent as Contractor is bound to City under the contract documents and provide a valid certificate of insurance and the required endorsements included in the agreement as proof of compliance prior to commencement of any work and to include this same requirement for any subcontractors they hire for this work. A copy of the owner contract document indemnity and insurance provisions will be furnished to the subcontractor upon request. Contractor shall provide proof of such compliance and verification to the City upon request.

Surety Bonds
Contractor shall provide the following Surety Bonds:

1. Bid bond

2. Performance bond

EXHIBIT B
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45 3. Payment bond (or Labor and Material bond)

4. Maintenance bond
The Payment Bond and the Performance Bond shall be in a sum equal to one hundred percent (100%) of the contract price. If the Performance Bond provides for a one-year warranty a separate Maintenance Bond is not necessary. If the warranty period specified in the contract is for longer than one year a Maintenance Bond equal to 10% of the contract price is required. Bonds shall be duly executed by a responsible corporate surety, authorized to issue such bonds in the State of California and secured through an authorized agent with an office in California.

Special Risks or Circumstances
City of Stockton reserves the right to modify these requirements, including limits, based on the nature of
the risk, prior experience, insurer, coverage, or other special circumstances.

Certificate Holder Address
Proper address for mailing certificates, endorsements and notices shall be:

City of Stockton
Attn: City Risk Services
400 E Main Street, 3rd Floor – HR
Stockton, CA 95202

EXHIBIT B
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70 City of Stockton
Legislation Text
File #: 22-1071, Version: 2

APPROVE BY MOTION THE ENTERPRISE RISK ASSESSMENT REPORT

RECOMMENDATION
It is recommended that City Council approve by motion the final Enterprise Risk Assessment Report, dated August 16, 2022.

Summary
At its August 15, 2022 meeting, the Council Audit Committee approved the City’s Enterprise Risk Assessment Report (Attachment A), prepared by Moss Adams LLP, to be provided to the full Council for approval.

Attachment A - Enterprise Risk Assessment Report 08-16-2022 City of Stockton Printed on 10/25/2022Page 1 of 1
powered by Legistar™
71 This report is intended for the internal use of City of Stockton , and may not be provided to, used, or relied upon by any third parties.

Proprietary & Confidential

FINAL REPORT
City of Stockton

ENTERPRISE RISK ASSESSMENT
August 16, 2022
Moss Adams LLP
999 Third Avenue, Suite 2800
Seattle, WA 98104
(206) 302-6500

ATTACHMENT A
72 Enterprise Risk Assessment Report

FOR INTERNAL USE OF CITY OF STOCKTON ONLY

Table of Contents
Executive Summary 1
A. Scope and Methodology 1
Definition of Levels 1
B. Risk Assessment Results 3
Comparison to Questionnaire Results 4
Progress Since Prior Assessment 5
Project Scope and Approach 7
A. Scope 7
B. Approach 7
Risk Assessment Questionnaire 8
Risk Assessment Framework 9
Risk Assessment Results 11
A. High Risk Categories 11
Human Capital and Resources 11
Information Technology 13
Organization and Staffing 15
Procurement and Contracting 17
Public Safety and Security 19
B. Moderate-to-High Risk Categories 22
Capital Improvement Program 22
External Environment 24
Management and Leadership 26
Policies, Procedures, and Processes 28
C. Moderate Risk Categories 29
Accounting and Finance 29
Asset Management Tracking 31
Compliance 32
Ethics, Fraud, Waste, and Abuse 34

ATTACHMENT A
73 Table of Contents – Continued
Enterprise Risk Assessment Report

FOR INTERNAL USE OF CITY OF STOCKTON ONLY
Governance 35
Internal Controls 37
Reputation and Public Perception 38
Risk Programs 40
D. Low-to-Moderate Risk Categories 41
Funding and Economics 41
Operations and Service Delivery 43
Planning and Strategy 45
Appendix A: Survey Results 48
Survey Respondent Profile 48
Perceived Risk 49
Appendix B: Vacancy Rate by Department 57

ATTACHMENT A
74 Enterprise Risk Assessment Report | 1

FOR INTERNAL USE OF THE CITY OF STOCKTON ONLY

EXECUTIVE SUMMARY
The City of Stockton engaged its internal auditor, Moss Adams LLP, to conduct an independent enterprise risk assessment to assess the City’s overarching areas of risk. The risk assessment provides an objective perspective into the opportunities for improvement that exist across the City and serves as a helpful tool for management to prioritize initiatives. To assess the overall risk level of City government operations and the different risk categories, the enterprise risk assessment process followed conventional Enterprise Risk Management (ERM) methodology as defined by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and embraced by the Institute of Internal Auditors (IIA). This assessment was conducted under the oversight of the Audit Committee.

Within the context of City of Stockton’s (the City) established guiding principles and strategic goals, this enterprise risk assessment provides a way for the City’s leadership to measure uncertainty related to Stockton’s ability to achieve its strategic objectives and operate effectively. Risks are identified, analyzed, and measured by the level of inherent vulnerability, the level of preparedness to mitigate them, and the impact such negative events could have on Stockton should they occur. This assessment serves as our basis for determining possible actions for managing and mitigating uncertainty, both on an inherent and a residual basis.

For each of the risk factor categories, Moss Adams assigned an overall inherent risk level rating. The risk levels are intended to provide City leadership with a means of prioritizing remediation efforts.

Definitions of each risk level are explained in the tables below.

RISK LEVEL DEFINITIONS
Risk Significance
High  Represents significant risks that should be addressed immediately.

Moderate- to- High  Represents serious risks that should be addressed expeditiously.

Moderate  Represents moderate risks that should be addressed as soon as reasonably possible.

Low- to- Moderate  Represents ordinary risks that should be addressed during the next review cycle.

Low  Represents a minor threat to the organization.

ATTACHMENT A
75 Enterprise Risk Assessment Report | 2

FOR INTERNAL USE OF THE CITY OF STOCKTON ONLY

IMPACT LEVEL DEFINITIONS
Impact Significance
High  Threatens the success of the organization/service delivery.

Moderate- to- High  Substantial impact on time, cost, or quality.

Moderate  Notable impact on time, cost, or quality.

Low- to- Moderate  Minor impact on time, cost, or quality.

Low  Negligible impact.

LIKELIHOOD LEVEL DEFINITIONS
Likelihood Significance
Almost Certain  Almost certain to occur with current risk conditions.

Likely  Very likely to occur with current risk conditions.

Reasonable Possibility  Likely to occur with current risk conditions.

Unlikely  May occur with current risk conditions.

Remote  Unlikely to occur with current risk conditions.

PREPAREDNESS LEVEL DEFINITIONS
Preparedness Significance
Substantial  Risk preparedness activities are robust and likely to be sustained, with readily available evidence attesting to this level of achievement.

Significant  Risk preparedness efforts are well established, documented, and stable.

Moderate  Deliberate risk preparedness efforts are under way; important gaps remain.

Limited  Preliminary risk preparedness efforts have been initiated, though few, if any, have been implemented.

Minimal  Minimal risk preparedness activity.

ATTACHMENT A
76 Enterprise Risk Assessment Report | 3

FOR INTERNAL USE OF THE CITY OF STOCKTON ONLY

TRAJECTORY DEFINITIONS
Trajectory Significance
Increasing  Inherent risk is increasing in current conditions.

Flat  Inherent risk is holding steady in current conditions.

Decreasing  Inherent risk is decreasing in current conditions.

The risk assessment evaluated the City’s risk in 20 categories that cover strategy, staffing, finance and systems, and operations. Overall, the City’s risk rating increased over the last three years, which is consistent with trends in most municipalities. External factors including the COVID-19 pandemic, emphasis on social justice in policing, and the Great Resignation impact environmental uncertainty and are significant trends impacting local government operations.

The table below presents the summary results of the risk assessment, presenting each of the risk categories by overall risk level from highest risk ranking to lowest. Each risk category is assigned a rating in the categories of potential impact, likelihood, preparedness, and trajectory.

RISK CATEGORY IMPACT LIKELIHOOD PREPAREDNESS TRAJECTORY High Risk
Human Capital and Resources  High Likely Limited Increasing Information Technology  High Likely Limited Increasing Organization and Staffing  High Almost Certain Limited Increasing Procurement and Contracting  High Likely Limited Increasing Public Safety and Security  High Likely Limited Increasing Moderate- to- High Risk
Capital Improvement Program  Moderate-to-
High
Reasonable
Possibility Moderate Flat
External Environment  Moderate-to-
High
Reasonable
Possibility Moderate Increasing
Management and Leadership  High Likely Moderate Increasing Policies, Procedures, and
Processes  Moderate-to-
High
Reasonable
Possibility Significant Flat
Moderate Risk
Accounting and Finance  Moderate-to-
High
Reasonable
Possibility Limited Flat

ATTACHMENT A
77 Enterprise Risk Assessment Report | 4

FOR INTERNAL USE OF THE CITY OF STOCKTON ONLY

RISK CATEGORY IMPACT LIKELIHOOD PREPAREDNESS TRAJECTORY Asset Management Tracking  Moderate Reasonable
Possibility Moderate Flat
Compliance  Moderate-to-
High
Reasonable
Possibility Moderate Decreasing
Ethics, Fraud, Waste, and Abuse  Moderate Unlikely Moderate Flat Governance  Moderate-to-
High
Reasonable
Possibility Moderate Flat
Internal Controls  Moderate Reasonable
Possibility Moderate Flat
Reputation and Public
Perception  Moderate Unlikely Moderate Flat
Risk Programs  Moderate Reasonable
Possibility Moderate Increasing
Low- to- Moderate Risk
Funding and Economics  Moderate Unlikely Significant Flat Operations and Service Delivery  Moderate Unlikely Significant Decreasing Planning and Strategy  Moderate Unlikely Significant Decreasing In addition to interviews and document review, Moss Adams conducted an employee survey to understand the perceived risk level of each category. In general, staff survey responses were either aligned with or lower than the Risk Assessment results.

RISK FACTOR
RISK

ASSESSMENT
SURVEY

RESULTS
Accounting and Finance Moderate Moderate
Asset Management Tracking Moderate Low-to-Moderate
Capital Improvement Program Moderate-to-High Low-to-Moderate Compliance Moderate Low-to-Moderate
External Environment Moderate-to-High Moderate
Ethics, Fraud, Waste, and Abuse Moderate Moderate
Funding and Economics Moderate Moderate

ATTACHMENT A
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RISK FACTOR
RISK

ASSESSMENT
SURVEY

RESULTS
Governance Moderate Moderate
Human Capital and Resources High Moderate-to-High
Information Technology High Low-to-Moderate
Internal Controls Moderate Moderate
Management and Leadership Moderate-to-High Moderate
Operations and Service Delivery Low-to-Moderate Moderate Organization and Staffing High Moderate-to-High
Planning and Strategy Low-to-Moderate Moderate
Policies, Procedures, and Processes Moderate-to-High Moderate Procurement and Contracting High Moderate
Public Safety and Security High Moderate-to-High
Reputation and Public Perception Moderate Moderate
Risk Programs Moderate Moderate
Overall Risk Moderate Moderate
The assessment results show that the City of Stockton has reduced its overall risk level since 2013, but risks increased between 2019 and 2022. As noted previously, this is a trend among local governments in response to a variety of uncontrollable external factors that have intensified since 2020.

RATINGS
RISK CATEGORY 2013 2016 2019 2022
Accounting and Finance High Moderate-to-
High
Moderate-to-
High Moderate 
Asset Management Moderate-to-
High
Moderate-to-
High
Moderate-to-
High Moderate 
Capital Program Moderate-to-
High
Moderate-to-
High High Moderate-to-
High 
Compliance High Moderate-to-
High Moderate Moderate 

ATTACHMENT A
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RATINGS
RISK CATEGORY 2013 2016 2019 2022
Ethics, Fraud, Waste, and
Abuse
Moderate-to-
High Moderate Low-to-
Moderate Moderate 
Funding and Economics High Moderate-to-
High Moderate Moderate 
Governance Low-to-
Moderate Moderate Low-to-
Moderate Moderate 
Human Capital and
Resources High Moderate-to-
High Moderate High 
Internal Controls High Moderate-to-
High Moderate Moderate 
Information Technology High Moderate Moderate-to-
High High 
Management High Moderate-to-
High Moderate Moderate-to-
High 
Operations and Service
Delivery
Moderate-to-
High Moderate Moderate Low-to-
Moderate 
Organization and Staffing High Moderate-to-
High
Moderate-to-
High High 
Policies, Procedures, and
Processes High Moderate-to-
High
Low-to-
Moderate Moderate

Planning and Strategy Not Assessed Not Assessed Moderate-to- High
Low-to-
Moderate 
Procurement and Contracting High High High High 
Public Safety and Security High Moderate-to-
High
Low-to-
Moderate High 
Risk Programs Moderate Moderate Moderate Moderate 
Reputation Not Assessed Not Assessed Moderate Moderate  External Environment Not Assessed Not Assessed Not Assessed Moderate-to- High N/A
Overall Risk Level High Moderate-to-
High Moderate Moderate-to-
High

ATTACHMENT A
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PROJECT SCOPE A ND APPROACH
The City of Stockton engaged its internal auditor, Moss Adams LLP, to conduct an independent enterprise risk assessment to assess the City’s overarching areas of risk. To assess the overall risk level of City government operations and the different risk categories, the enterprise risk assessment process followed conventional Enterprise Risk Management (ERM) methodology as defined by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and embraced by the Institute of Internal Auditors (IIA). This assessment was conducted under the oversight of the Audit Committee.

Moss Adams evaluated 20 categories of risk—and business processes within each—that collectively make up operations across the organization. Risk identification includes identifying current levels of risk, the City’s level of preparedness in terms of mitigation efforts, and what reasonably foreseeable risks may have a significant impact on the organization. The objective of risk identification is to identify the most important areas of risk and lay the foundation for subsequent management of these risks.

The enterprise risk assessment process is reported on at a specific point in time—the risk assessment phase, which was conducted from February 2022 through July 2022. Both the risk ratings and trajectory levels are directly connected to this timing.

The enterprise risk assessment process consists of four primary phases of work: 1) planning, 2) fact finding, 3) risk assessment, and 4) risk reporting. Planning included requesting documents, identifying who to interview, and identifying who to include in the survey process. Fact finding encompassed document review, analysis of existing data, interviews, and a web-based survey sent to City employees. The risk assessment included analysis of the level of uncertainty associated with each factor, including the potential for impact on the City’s operations. Risk reporting entails the development of draft and final deliverables, along with follow-up discussions with management and presentation to key stakeholders.

The activities and goals for each phase are described in detail below.

ATTACHMENT A
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PLANNING
We began plannin g our assessment by requesting a standard set of documents from the City, including (but not limited to) prior risk assessments, audits, public website documents, and financial reports. We used these to identify the first round of individuals to interview and additional document needs based on business process/functional areas.

FACT FINDING
Fact-finding encompasses analysis of received documents, employee and Cou
ncilmember interviews, and soliciting additional employee feedback via an online survey. In this phase, our aim is to gather information in order to gain a clear understanding of Stockton’s government and the way it operates to achieve its goals and purpose.

RISK ASSESSMENT
With the information collected and compiled, we performed a risk assessment that includes a comprehensive review and analysis of the 20 categories of risk factors. This analysis included the inherent vulnerabilities, the level of preparedness efforts to mitigate risks, and the likely impact a negative event may have.

RISK REPORTING
During this phase, we developed the dr aft version of this report to engage in review and discussion with senior leadership. This report becomes the final deliverable, which is then presented to City of Stockton leadership and the Audit Committee.

The enterprise risk assessment process relies on evidence obtained from City of Stockton employees. By design, the assessment process requires access to all senior leadership and many department and division managers. Input was obtained from employees from all Stockton departments, through a combination of interviews and a web-based questionnaire. Full disclosure of information has been assumed in this process.

Distribution of a risk assessment questionnaire offered staff the opportunity to identify perceived strengths and weaknesses of Stockton’s government operations, which helps us assess potential opportunities for improvement and identify areas of specific vulnerability. The questionnaire posed a variety of statements to employees, including rating scale questions as well as open-ended questions for each of the risk categories. The questionnaire was sent out to supervisor level and above employees and was open for submission between March 29 and April 26. Out of the 1,738 employees invited to take the survey, 340 individuals submitted responses (a participation rate of

19.6%). The consolidated results of the survey are listed in Appendix A of this report.

ATTACHMENT A
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For each of the risk categories assessed, our risk assessment presents an overview of the risk condition at the City of Stockton, including the current risk level, risk preparedness, negative event impact, and risk level trajectory. Risk mitigation identifies potential strategies for each category, and the residual risk level represents the probable risk exposure shift after risk mitigation efforts. The elements below make up the risk assessment framework, which are industry standards and defined by COSO’s ERM methodology.

RISK LEV EL DEFINITIONS
Risk Significance
High  Represents significant risks that should be addressed immediately.

Moderate- to- High  Represents serious risks that should be addressed expeditiously.

Moderate  Represents moderate risks that should be addressed as soon as reasonably possible.

Low- to- Moderate  Represents ordinary risks that should be addressed during the next review cycle.

Low  Represents a minor threat to the organization.

IMPACT LEVEL DEFINITIONS
Impact Significance
High  Threatens the success of the organization/ service delivery.

Moderate- to- High  Substantial impact on time, cost, or quality.

Moderate  Notable impact on time, cost, or quality.

Low- to- Moderate  Minor impact on time, cost, or quality.

Low  Negligible impact.

ATTACHMENT A
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LIKELIHOOD LEVEL DEFINITIONS
Likelihood Significance
Almost Certain  Almost certain to occur with current risk conditions.

Likely  Very likely to occur with current risk conditions.

Reasonable Possibility  Likely to occur with current risk conditions.

Unlikely  May occur with current risk conditions.

Remote  Unlikely to occur with current risk conditions.

Significant  Risk preparedness efforts are well established, documented, and stable.

Moderate  Deliberate risk preparedness efforts are under way; important gaps remain.

Limited  Preliminary risk preparedness efforts have been initiated, though few, if any, have been implemented.

Minimal  Minimal risk preparedness activity.

TRAJECTORY DEFINITIONS
Trajectory Significance
Increasing  Inherent risk is increasing in current conditions.

Flat  Inherent risk is holding steady in current conditions.

Decreasing  Inherent risk is decreasing in current conditions.

ATTACHMENT A
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RISK ASSESSMENT RESULTS
Overall Risk Rating High
Impact Likelihood Preparedness Trajectory
High Likely Limited Increasing
Risk Mitigation
● Develop formalized HR policies and procedures.
● Clarify the roles, responsibilities, and authority of HR within the City’s decentralized structure.
● Complete a classification and compensation
study and implement changes to increase the
competitiveness of the City of Stockton as an
employer.
● Evaluate the feasibility of charter amendments to
streamline and modernize hiring and promotional
processes.

Survey Rating
Moderate
Residual Risk
Moderate
Risk Areas: Risks associated with labor management/contracts, employee performance, training, compensation, benefits, turnover, grievances, overtime, resource availability, and communication.

Scope: Human capital and resource practices can span functions including hiring, orientation, training, evaluating, counseling, career planning, compensation and benefits, and housing the policies that define an organization’s expected levels of integrity, ethical behavior and competence.

Current Risk Condition at City of Stockton
In FY 2021-22, the City’s Human Resources Department (HR) budgeted 19 full-time employees (FTEs). HR employees are responsible for a variety of activities, including workforce planning and training, employee and labor relations, benefits administration, and risk management activities.

Across the City, there is a lack of clarity around the roles, responsibilities, and authority of HR due to leadership turnover, the City’s preference for decentralized internal services, and gaps in policies and procedures. These challenges affect HR’s ability to effectively deliver services and meet Citywide HR- related goals.

While HR has taken steps to improve operations, including outsourcing the development of core policies and procedures, staffing challenges have affected the department’s ability to effectively deliver services. HR has experienced significant turnover in the department, particularly at the leadership level. In 2021, HR’s overall turnover rate was 48%. HR has been able to fill many of its vacancies, but many employees are new in their roles, including HR’s Director, Assistant Director, and Deputy Director. Even when new employees are strong, turnover can result in a loss of institutional knowledge and challenges in providing services while new staff are hired and trained.

ATTACHMENT A
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Additionally, the City’s ERP implementation efforts resulted in significant increases to HR’s workload, further exacerbating challenges effectively delivering services to other City departments.

Approximately 14% of positions across the City are vacant (see Appendix B for a breakdown of vacancies by department). As noted within the Organization and Staffing section, recruiting qualified employees continues to present challenges due to several factors including the City’s proximity to the Bay Area, which results in increased competition for qualified staff. Sixty-seven percent of survey respondents rated the City’s current efforts to attract, develop, and retain employees as poor or terrible and 60% rated the competitiveness of the City’s compensation and benefits packages as poor or terrible. These challenges are also being faced by other municipalities as the industry struggles to recruit and retain new talent due to differences in compensation packages with the private sector.

EMPLOYEE SURVEY

Additionally, the City’s civil service hiring requirements contribute to a sub-optimal process to fill positions. For example, a typical recruitment takes between 31 and 162 days and some departments report feeling that they are unable to hire the best candidate for the position due to rigid educational and testing requirements. This further exacerbates the City’s struggle to hire and retain candidates with expertise and innovative ideas that would elevate City operations. In response to its recruitment and retention challenges, HR plans to complete a job classification and compensation study and develop a recruitment and retention plan and reported efforts to market the City as an employer of choice.

Despite being one of the most diverse cities in the nation, the City does not have a formal diversity, equity, and inclusion program. Hiring a diverse workforce can be challenging due to the City’s civil service system, which is dictated by the City’s charter and does not align with best practices. The City’s charter also prescribes a testing-based process for most promotional opportunities, which can hinder retention of high-performing employees. Increasing staff diversity can lead to more innovation, better organizational performance, and increased employee morale. 1% 6% 26% 29% 38%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

HOW WOULD YOU RATE THE CITY'S CURRENT EFFORTS TO
ATTRACT, DEVELOP, AND RETAIN EMPLOYEES?
Excellent Good Average Poor Terrible
2% 13% 26% 28% 32%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

HOW WOULD YOU RATE THE COMPETITIVENESS OF THE
CITY'S COMPENSATION AND BENEFITS?
Excellent Good Average Poor Terrible

ATTACHMENT A
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Overall Risk Rating High
Impact Likelihood Preparedness Trajectory
High Likely Limited Increasing
Risk Mitigation
● Ensure City employees receive adequate training
on the new ERP system.
● Evaluate the City’s ERP implementation process
to identify issues that could affect operations
moving forward and develop a plan for
addressing them.
● Develop and implement an IT disaster recovery
plan and business continuity plan.
● Continue to prioritize cybersecurity efforts.

Survey Rating
Moderate
Residual Risk
Moderate-to-High
Risk Areas: Risks associated with the design, development, implementation, administration, operations, and maintenance of information systems including change management and system development life cycle. Also includes risks to infrastructure, system performance, data architecture and management, integration, back-up, security, and controls.

Scope: The importance and pervasiveness of information technology and information systems continues to rapidly expand, regardless of the organization.

Current Risk Condition at City of Stockton
In FY 2021-22, the City’s Information Technology Department (IT) 52 budgeted FTEs. IT employees are responsible for a variety of activities, including overseeing the City’s information technology strategy, providing enterprise-wide technology support, and protecting and preserving the integrity of the City’s data. Overall, staff reported satisfaction with service from the City’s IT department.

However, supply chain issues resulting from the COVID-19 pandemic have affected the City’s ability to purchase new and replacement IT equipment in a timely manner, which has had some effect on business operations.

EMPLOYEE SURVEY
21% 34% 29% 11% 5%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

HOW WOULD YOU RATE THE QUALITY OF THE INTERNAL
CUSTOMER SERVICE PROVIDED TO STAFF BY THE IT TEAM?
Excellent Good Average Poor Terrible

ATTACHMENT A
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Additionally, the City has experienced numerous challenges implementing its new enterprise resource planning (ERP) system, the implementation of which is led by the Administrative Services Department (ASD). There has been difficulty in recruiting and retaining implementation team staffing, including at the leadership level. Without consistent leadership, there has been inconsistent oversight and project management over the ERP implementation process. Staff reported minimal communication and end- user involvement, confusion about processes, and significant unanticipated impacts on staff workload throughout implementation. Many of the challenges noted in interviews and survey responses appear to be driven by staff turnover and informal change management processes. These factors have also contributed to project delays.

The City’s ERP system is more than 30 years old and change management is a natural challenge.

Employees reported numerous change management concerns, including:
• Undefined accountability or ownership of the implementation process • Unclear roles and responsibilities related to the implementation process • A lack of effective communication across the organization • Insufficient training on the new system
Additionally, the City did not adequately redesign and improve business processes in advance of implementation to ensure its business processes took advantage of the new system’s capabilities.

Failure to reassess the implementation process in a timely manner could result in increased business costs over time and the system’s inability to meet business needs once fully implemented. For example, there is a risk that data in the system may be unusable or inconsistent given best practices do not appear to have been followed in system implementation, such as using consistent naming conventions. Departments reported the need for workarounds in the system and/or working outside of the system due to the system’s inability to meet their needs. This presents a risk that the system will not be fully utilized moving forward either due to system limitations or poor user adoption.

Cybersecurity
Cybersecurity is a known area of high risk for local governments across the country. It is also a rapidly changing environment, continually exposing the City to new and evolving risk areas. In alignment with best practice, the City has a dedicated cybersecurity position. The City also relies on outside contractors for additional cybersecurity monitoring. Management reported cybersecurity efforts have matured in recent years. The City has invested in education and training for employees, including twice-annual training and phishing tests. However, the City needs an IT disaster recovery plan and business continuity plan to ensure the City is prepared for potential cyberattacks or other disasters that could affect the City’s IT infrastructure and, ultimately, City operations. Continuing to prioritize these efforts will be critical given increases in the number and complexity of cyberattacks against local governments in recent years.

ATTACHMENT A
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Overall Risk Rating High

Impact

Likelihood

Preparedness

Trajectory
High Almost Certain Limited Increasing

Risk Mitigation
● Develop a workforce plan to strategically scale
staffing over time.
● Develop a workforce recruitment and retention
strategy to address staffing and hiring challenges.
● Develop and implement a formal and regularly
occurring succession planning process to ensure
continuity of business operations when staff leave
positions.

Survey Rating
Moderate

Residual Risk
Moderate

Risk Areas: Risks associated with how personnel are organized, as well as staffing levels and skills.

Scope: An entity’s organizational structure provides the framework to plan, execute, control, and monitor its activities. Organization and staffing encompass hierarchy, chain of command, span of control, and staffing levels. Staffing includes specific positions, counts, and capacity. A relevant organizational structure includes defining key areas of authority and responsibility and establishing appropriate lines of reporting.

Current Risk Condition at City of Stockton
The City’s lean staffing model, combined with increased turnover and difficulty with recruiting, has resulted in capacity challenges across the organization and increased risk in this area compared to the City’s 2019 Enterprise Risk Assessment. These are common challenges in cities across the country and many cities are experiencing increasing risk trajectories in this area.

Since FY 2018-19, the City’s staffing has increased by 31 budgeted FTE positions, to a total of 1,736 budgeted FTEs. In accordance with its Long-Range Financial Plan, the City has restricted staffing level increases that are not associated with a dedicated funding source. As a result, many positions post-bankruptcy have stretched to fulfill additional job functions and duties and City employees continue to experience high workloads. As vacancy rates rose, employees continued to take on additional tasks, which presents the risk of employee burnout and role confusion.

Sixty-one percent of survey respondents indicated that staffing levels within their department are inadequate, and 62% indicated staffing levels across the City are inadequate. In interviews, staff reported numerous impacts of inadequate staffing, including difficulty effectively delivering internal services like recruiting and contract management, as well as challenges implementing the City’s new ERP system. Insufficient staffing can result in chronic issues when unaddressed. Understaffed departments often become focused on crisis management or day-to-day operations, rather than operating strategically and identifying process efficiencies. Additionally, City staff may become burned out and less productive, thereby perpetuating increased turnover. Continuing a practice that began to save expenses during the bankruptcy, the City relies on staff augmentation and retired annuitants to

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fill key staffing gaps. While these strategies offer reduced costs, they are temporary measures that can also result in loss of internal capacity and knowledge over time.

EMPLOYEE SURVEY
According to the City’s proposed FY 2022-23 budget, the City is taking steps to begin strategically growing after several years of restricting staff growth post-bankruptcy. Formalizing a strategic workforce expansion plan could help the City prioritize and address staffing concerns, while continuing to take the City’s long-term financial health into account.

In addition to an already lean staff, the City is experiencing high vacancy and turnover rates. The City reports high vacancy and turnover rates due to several factors including a high number of retirements, difficulty recruiting, and the volatile job market. If the City does not address these high vacancy and turnover rates, it risks being unable to meet its goals as well as having to pay higher costs to provide services due to decreased productivity, increased hiring and training costs, and overtime costs. These costs can be even higher in public safety departments, where staff are more susceptible to workplace injuries. High vacancy and turnover rates can also lead to low staff morale due to remaining employees taking on increased workloads.

The City is also experiencing difficulty effectively recruiting for open positions. Staff report this is the result of several factors, including the salaries and flexibility offered by other public agencies, perceptions of the City’s image and reputation in the region, and the City’s civil service rules, which make positions difficult to fill and extends the length of time required for the hiring process.

Additionally, HR lacks adequate recruiting staff to support department recruiting efforts. For years, HR has limited recruitments to one recruitment per month for each department, which does not meet the demand for filling open positions and can create fairness concerns among larger departments. It is critical the City take steps, such as developing and implementing a recruitment and retention strategy, to address these challenges and fill vacancies.

The City’s difficulty with recruitment and retention are further challenged by the absence of a deliberate and standardized succession planning process. With increased turnover, there is a 2% 14% 22% 35% 26%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

HOW WOULD YOU RATE THE ADEQUACY OF CURRENT
STAFFING LEVELS WITHIN YOUR DEPARTMENT?
Excellent Good Average Poor Terrible
1% 4% 33% 45% 17%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

HOW WOULD YOU RATE THE CURRENT STAFFING LEVELS
ACROSS THE CITY AS A WHOLE?
Excellent Good Average Poor Terrible

ATTACHMENT A
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significant amount of institutional knowledge and technical expertise at increased risk of being lost.

Institutionalizing succession planning efforts across departments will help the City decrease risk in this area.

Overall Risk Rating High

Impact

Likelihood

Preparedness

Trajectory
High Likely Limited Increasing

Risk Mitigation
● Centralize the City’s procurement function and
ensure the division receives appropriate
resources and authority.
● Review, update, and strengthen procurement
policies and procedures; provide employee
training on the updated policies and procedures.
● Consider adding additional resources to the
Procurement Division to increase employee
bandwidth and operational effectiveness.
● Reconsider the procurement approval process to
gain efficiencies.

Survey Rating
Moderate

Residual Risk
Moderate

Risk Areas: Risks associated with purchasing processes (e.g., specifications development, bidding, selection) and contract administration (e.g., compliance with terms and conditions, payments, change orders) for goods, services, and capital programs.

Scope: Procurement and contracting includes purchasing processes (e.g., purchase orders, bidding, selection) and contract administration (e.g., compliance with terms and conditions, payments, change orders) for goods, services, and capital programs.

Current Risk Condition at City of Stockton
The City’s Procurement Division is housed within the Administrative Services Department (ASD) and staffed by seven FTEs, which is consistent with the 2019 assessment. Multiple vacancies coupled with increased workload due to the ERP implementation and grant funding results in limited bandwidth to manage activities.

COVID-19 has also affected procurement processes. Supply chain issues impact available resources and the City’s ability to meet deadlines for grant funding, which has increased procurement activities.

Currently, the Procurement Division is not positioned to manage the amount of funds that will come into and be distributed by the City. For example, the City has not been able to spend most American Rescue Plan Act (ARPA) dollars due to procurement issues and delays. Staff report concerns about the potential for having to give back grant dollars because of procurement delays in Municipal Utilities Department (MUD) and Public Works (PW). To effectively balance the need to adhere to grant compliance requirements and expeditiously award contracts, the City should evaluate existing processes and systems for potential efficiencies.

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ERP implementation has presented procurement-related challenges. Because processes have changed and system glitches are occurring, staff must divert time to responding to help desk tickets related to the ERP procurement module. The division currently struggles to process invoices on contracts in a timely manner. One roadblock in the approval process is that there is no delegated signature authority for the City Manager when they are unavailable, which presents both inefficiencies and does not align with best practices. In addition, there are currently no automated notifications sent to approvers, which continues to slow down the process.

Procurement in the City is decentralized, and departments are largely responsible for purchasing goods and services needed to accomplish their goals. For example, PW primarily conducts its own procurement activities, including the development, negotiation, and issuing of its contracts. This reportedly was due to the historical lack of technical knowledge about public works procurement needs and operations within the Procurement Division. Conversely, MUD moved, and continues to fund, a dedicated purchasing position from its own department to reside within the Procurement Division, which helps ensure that Procurement understands and responds to the operational needs of the department in a timely manner.

Decentralized purchasing and contract administration allows operating departments more autonomy and flexibility to meet their unique needs, but it also creates a significant risk of failure as purchasing capacity is not strong or reinforced with formal policies and procedures, frequent training, and accountability. This includes a lack of standard naming conventions or expectations for contracts, which results in inconsistencies in data management and reporting across the City, as noted previously in the Information Technology section. This could put the City at risk of noncompliance with procurement rules and regulations.

City employees report that procurement processes take a significant amount of time to complete, which results in frustrations and burdens as additional resources must be dedicated to the process and the delivery of needed goods and services is often delayed. Additionally, departments sometimes receive conflicting messages from Purchasing staff, further exacerbating unclear processes and expectations to fulfill the City’s purchasing needs. In the survey, staff reported the need training, standard policies and procedures, and enforcement of the policies and procedures as some employees are able to perform workarounds of the current, vague policies and procedures.

ATTACHMENT A
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EMPLOYEE SURVEY

Employees expressed confusion about procurement and contracting processes, citing constant change that is not communicated Citywide. Although the City has recently implemented new procurement policies, the procedures have not been developed or implemented. The City plans to update procurement procedures, but the initiative has been delayed with the ongoing ERP changes.

The lack of updated procurement policies and procedures also impacts the ability of City leaders to understand and enforce the policies.

Overall Risk Rating High

Impact

Likelihood

Preparedness

Trajectory
High Likely Limited Increasing

Risk Mitigation
● Develop comprehensive emergency operations
plans with associated training for City employees
and stakeholders.
● Continue to explore and strengthen strategies to
address public safety staffing needs.
● Continue to monitor crime trends and develop
strategies for reducing crime on an ongoing
basis.

Survey Rating
Moderate

Residual Risk
Moderate

1% 23% 35% 25% 17%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

HOW WOULD YOU RATE THE DOCUMENTATION OF
PURCHASING POLICIES AND PROCEDURES?
Excellent Good Average Poor Terrible
2% 17% 45% 23% 14%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

HOW WOULD YOU RATE THE PROCESS NEEDED TO ACQUIRE
THE GOODS AND SERVICES YOUR DIVISION NEEDS?
Excellent Good Average Poor Terrible

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Risk Areas: Risks associated with public safety services, including level of services, funding, and community issues.

Scope: Public safety includes emergency services such as law enforcement, fire, dispatch, and community disaster response programs.

Current Risk Condition at City of Stockton
The Police and Fire Departments comprise the City’s public safety functions. These two functions were responsible for 76% of the City’s FY 2021-22 general fund operating expenditures (56% Police and 20% Fire). The City has significantly improved public safety outcomes in recent years, although its reputation of being a high-crime community persists. Over half (55%) of employees reported the overall feeling of safety as below average. Additionally, 48% rated the effectiveness of the City’s public safety services delivered to the City as average and 23% rated effectiveness as below average.

EMPLOYEE SURVEY
Fire
In FY 2021-22, the Fire Department had 183 budgeted sworn firefighter FTEs, an increase of one position over the previous year. The Fire Department also had 41 budgeted non-sworn FTEs, equal to the previous year. The rate of firefighters per 1,000 people in Stockton is 0.5, which is low for a city the size of Stockton. A report by the National Fire Protection Association in 2019 found the rate of firefighters per 1,000 people in cities with 250,000 to 499,999 ranged from 0.47 to 2.37.

The Fire Department experienced high levels of turnover in recent years. Firefighters are reportedly leaving the City for several reasons, including retirement eligibility, higher benefits and pay in nearby cities, and an increasingly high workload. The department also had trouble recruiting new firefighters.

Management reported recruiting challenges are largely a result of pay and benefits being low in comparison to nearby cities, particularly given high workloads within the City. 10% 35% 32% 23%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

HOW WOULD YOU RATE THE OVERALL FEELING OF SAFETY IN
THE COMMUNITY?
Excellent Good Average Poor Terrible
5% 24% 48% 17% 6%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

HOW WOULD YOU RATE THE EFFECTIVENESS OF THE PUBLIC
SAFETY SERVICES DELIVERED TO THE CITY?
Excellent Good Average Poor Terrible

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The Fire Department’s call volume continues to increase, resulting in increased risk of staff burnout and elevated workers’ compensation claims. The Stockton dispatch center experienced a 20% increase in call volume in 2020 and staff reported additional increases in 2021. The number of authorized sworn firefighters has not increased to accommodate these additional service calls.

Police
In FY 2021-22, the Police Department had 485 budgeted sworn police officers, which is the same number as in the previous fiscal year. Measure A, which expires in 2024, funds 120 of these officers.

The Police Department also had 228 budgeted civilian FTEs, an increase of two positions over the previous year. Similar to the Fire Department, officers face increased safety risks due to elevated call volume and the nature of calls in the City. The department has deprioritized responses to certain calls to avoid cutting patrol.

The former Police Chief retired at the end of 2021 and the City recently conducted a nationwide search that resulted in the appointment of a new Chief. The prior chief was a well-respected local leader who led significant cultural and operational reforms in the Department. Councilmembers have significant concerns about the potential cultural and community relations impacts of a change in Police Department leadership. Additionally, the Police Department is experiencing trouble recruiting new officers due to the same challenges the Fire Department is experiencing—high workload and low pay and benefits compared to other nearby cities.

The Police Department has a current strategic plan in place that includes goals and strategies related to reducing crime, increasing community trust, recruiting a qualified and diverse workforce, and employing highly trained and knowledgeable staff. Violent and property crime rates decreased overall between 2019 and 2021. However, first quarter crime rates in 2022 are higher than expected in certain areas, including criminal homicide and theft. The department monitors progress on its goals using a dashboard that is updated monthly, in alignment with best practices.

FIGURE 1: CRIME RATE TRENDS FROM FY 201 9 TO 2021
1416
1293
1151
0 200
400
600
800
1000
1200
1400
1600
2019 2020 2021
Violent Crime Rate
4041
3079
2625
0 500
1000
1500
2000
2500
3000
3500
4000
4500
2019 2020 2021
Property Crime Rate

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The Office of Violence Prevention (OVP)
OVP works to reduce gang/group gun violence within the City of Stockton, using data-driven partnership programs and strategies. Staffing in OVP is at risk given positions are largely reliant on Measure A funding. Additionally, staff reported difficulty filling peacekeeper roles because candidates need to have existing community connections to be effective.

Overall Risk Rating Moderate-to-High
Impact Likelihood Preparedness Trajectory
Moderate-to-High Reasonable Possibility Moderate Flat
Risk Mitigation
● Account for additional delays or increased costs
due to COVID-19 impacts and labor constraints in
budgets and project schedules.
● Develop policies, procedures, and processes to
effectively leverage available grant funding.
● Continue to plan for annual funded projects
based on prioritized CIP and quantified capital
needs.

Survey Rating
Moderate
Residual Risk
Moderate
Risk Areas: Risks associated with capital asset management (including preservation and maintenance), tracking, reporting, accountability, and inventory.

Scope: In construction, issues of risk are closely tied to schedule, site unknowns and budget issues. In addition, construction contracts must be monitored to ensure full compliance with equal employment opportunity, discrimination, and prevailing wage and fair labor standards laws.

Current Risk Condition at City of Stockton
The Capital Improvement Program includes buildings, parks, golf courses, utilities, and the transportation system. The Capital Improvement Plan (CIP) is a five-year planning document that is updated annually, along with the City’s operational budget. Budgeted funds for each project cover costs for design, construction, equipment and land purchases, project administration, and contingencies. PW is responsible for the delivery of a majority of the City’s capital projects, and funding primarily comes from taxes and grant funding.

The City has continually improved its financial state over the last 10 years, which indicates it may be positioned to focus on more strategic capital improvement projects in upcoming years. However, the City lacks staff capacity in MUD and PW, as well as internal service departments, to execute projects.

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Due to a lack of resources, the City has historically taken a deferred maintenance approach where the City prioritizes permanent or temporary repairs of infrastructure after significant issues are identified. For example, there is a backlog of roads that need resurfacing and potholes that need filled. Now that the City is more financially stable and can take advantage of state and federal infrastructure funding opportunities, it should start to redirect its focus on long-term improvements. Of the employees surveyed, 54% rate the City’s process to identify and prioritize CIP as average while only 18% rated the process as excellent or good.

EMPLOYEE SURVEY

The City’s 2021-2026 five-year CIP budget totaled $1.02 billion. The plan includes municipal utility projects valued at $328 million, transportation projects for $298 million, and other Citywide projects valued at $399 million. The CIP also included a one-time contribute to the Waterfront Office Towers in the amount of $12.4 million. Most of the CIP is focused on maintaining existing facilities and infrastructure with the exception of a new facility for library and recreation services. Operations for this facility will be funded through the Strong Communities fund (Measure M). • Public Safety Facilities – The Fire Department has outdated infrastructure and at least one fire station reportedly needs replacement in the upcoming years, but the Fire Department lacks funding and resources to manage these needs. The City’s CIP includes some projects to address these facilities, primarily related to asphalt repair, but does not address the bigger infrastructure needs. Reconstruction of Fire Station 1 is in the CIP with an anticipated start date of 2025 and $2,487,000 in expenses, which have not been funded.
• Transportation – The City received several federal and state grants totaling $14.1 million to improve its transportation system. These projects will improve traffic, safety, and personal mobility and accommodate for city growth and development. As many of these funds are grants, the City will need to ensure all grant funds are used appropriately and fully. • Utilities – Upgrades related to the Regional Wastewater Control Facility Modifications Project is 50% complete and is set to finish in 2024. These upgrades are necessary for the City to meet stricter treated wastewater discharge limits required by the State of California. Other improvements are also planned to maintain facilities and ensure state regulations are followed for compliance. MUD is working on creating master plans with the Water Master Plan adopted in 2020, and is developing the Wastewater and Stormwater plans next.

Many of the buildings currently housing City offices are in significant need of repair or remodel. The City acquired the Waterfront Office Towers buildings in January 2018 to serve as the permanent City Hall, but construction has been delayed and resulted in budget increases. Nationwide increases in construction costs likely contributed to a portion of increased costs associated with the Waterfront Tower renovation project.
1% 17% 54% 20%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

HOW WOULD YOU RATE THE PROCESS THE CITY USES TO
IDENTIFY AND PRIORITIZE CIP?
Excellent Good Average Poor Terrible

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Another challenge in effectively implementing the City’s CIP relates to staffing levels. There are high levels of vacancies in MUD and PW, which present challenges in managing daily work. In order to execute projects, these roles will need to be filled by qualified employees who the City can retain.

Both departments reported that project completion often hinges on the ability to recruit qualified candidates, which presents difficulties in the ability to deliver projects when they are limited to one recruitment per month as large departments. The Procurement Division also lacks the capacity to timely manage bidding, contracts, and invoice processing, which leads to project delays.

Overall Risk Rating Moderate-to-High

Impact

Likelihood

Preparedness

Trajectory
Moderate-to-High Reasonable Possibility Moderate Increasing

Risk Mitigation
● Consider the impacts of a growing population on
City services and expanding community needs.
● Continue cross-functional efforts to collaborate
internally on homelessness and consider
engaging local service agencies for additional
support.

Survey Rating
Moderate

Residual Risk
Moderate

Risk Areas: Risks associated with events outside of an organization’s control.

Scope: External risks typically include economic trends, natural disasters, climate change, affordable housing, and regulatory changes.

Current Risk Condition at City of Stockton
The City’s population continues to expand, increasing the need to evolve community dynamics and City service delivery needs. As the population grows, the City should consider impacts to infrastructure, transportation, housing, and additional capacity at the City to handle the increase in community needs from public safety to systems and technology. The Great Resignation presents challenges in filling critical positions across a variety of industries and locations. This trend not only impacts the City’s ability to recruit and retain qualified applicants but may also impact local economy and small businesses.

COVID-19 has impacted the City over the last two years and may continue to do so. Some of these impacts include a shifting workforce, changing policies, remote work options, additional precautions needed for frontline workers, communication with the community, shifting priorities, and supply chain issues. COVID-19 may not be the last pandemic or endemic impacting the entire community at one time. The City needs to be prepared for the next health or natural disaster, which could range from health concerns to earthquakes and fires.

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Like many cities in California, Stockton has also experienced an increase in homelessness.

Approximately 73% of survey respondents reported a perceived high risk of homelessness in the community. This risk impacts City employees at work and the community as a whole due to increased need for affordable housing, public transit, and mental health services.

EMPLOYEE SURVEY
The City intends to form an interdepartmental task force to help address homelessness collaboratively and has already instituted several groups to help with changes, including the following:
• The Fire Department has a homeless outreach team and is managing increases in emergency calls.
• The Police Department has a team of strategic community officers and mental health officers on bikes.
• Public Works has increased cleanup efforts in local spaces. • EDD is planning housing projects and managing more homeless work with the increase in homelessness-related grants.
5% 8% 22% 32% 32%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

WHAT IS THE PERCEIVED RISK OF THE LACK OF AFFORDABLE
HOUSING AT THE CITY?
Low Risk Low-to-Moderate Moderate Moderate-to-High High Risk 1%3% 5% 19% 73%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

WHAT IS THE PERCEIVED RISK OF HOMLESSNESS IN THE
COMMUNITY?
Low Risk Low-to-Moderate Moderate Moderate-to-High High Risk

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Overall Risk Rating Moderate-to-High

Impact

Likelihood

Preparedness

Trajectory
High Likely Moderate Flat

Risk Mitigation
● Improve and enforce management training for
managers across the City to improve consistent
application of expectations.
● Streamline the communication process and
implement downward communication to all City
staff.
● Develop opportunities for managers to actively
collaborate across the City.

Survey Rating
Moderate

Residual Risk
Moderate

Risk Areas: Risks associated with organizational leadership, management practices, leadership strategic activities, and operating styles.

Scope: Management's philosophy and operating style affect the way an organization is managed, including the kinds of risks accepted. The attitude and daily operating style of top management affect the extent to which actions are aligned with risk philosophy and appetite.

Current Risk Condition at City of Stockton
Since 2019, there has been significant leadership turnover and subsequent culture changes within the organization. Turnover in some key positions, including the City Manager, all three Deputy City Managers, and all but one director-level position over the last three years has contributed to culture changes that also resulted in fluctuating expectations and business processes across the City. These changes can present challenges, but also bring about reinvigorated collaboration among the team.

Councilmembers reported confidence in the current department directors’ leadership and energy. As the City hires and retains new leadership, it should focus on supporting consistent management training. Staff surveyed reported there is little management training, and it is often self-motivated and not enforced or required for all managers. Management training is a critical factor in retaining and growing high-performing employees, developing leadership succession, and improving employee morale.

Approximately 24% of employees said that senior leadership at the City works extremely or very well together and approximately 20% of employees surveyed reported the quality of senior leadership is excellent or good. Comments in the survey noted that downward communication related to processes and changes is inconsistent. This can create confusion among staff and prolong new processes from being implemented timely and correctly. Staff report that leadership regularly communicates about broad topics like COVID-19 updates but infrequently shares messages related to City operations or strategy. In addition, while some department managers may communicate, staff often feel siloed from

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other departments and desire more opportunities to collaborate and improve Citywide customer service.

EMPLOY EE SURVEY

Staff surveyed report lack of communication about Citywide goals and vision. Full management support on projects can be a challenge as department directors have different priorities (see Planning and Strategy section). The ERP, for example, has run into challenges with adequately staffing and training employees on new implementations due to competing projects that take staff away from ERP implementation. This can contribute to budget, staffing, scheduling, and other resource conflicts between competing priorities. In addition, some staff report a lack of consistency in enforcing Citywide policies and procedures, which can contribute to confusion and negatively impact employee morale across teams.
3% 21% 34% 25% 26%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

HOW WELL DO YOU FEEL THAT THE SENIOR LEADERSHIP
TEAM AT STOCKTON WORKS TOGETHER?
Extremely well Very well Moderately well Slightly well Not well at all 5% 15% 35% 27% 19%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

HOW WOULD YOU RATE THE QUALITY OF THE

COMMUNICATION YOU RECEIVE FROM THE CITY'S SENIOR
LEADERSHIP?
Excellent Good Average Poor Terrible

ATTACHMENT A
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Overall Risk Rating Moderate-to-High

Impact

Likelihood

Preparedness

Trajectory
Moderate-to-High Reasonable Possibility Limited Flat

Risk Mitigation
● Continue to update and develop City policies and
procedures.
● Communicate policy and procedures Citywide,
including appropriate messaging related to where
policies and procedures are stored for future
reference.
● Provide training on updated policies and
procedures to support consistency across
departments.

Survey Rating
Moderate

Residual Risk
Low-to-Moderate

Risk Areas: Risks associated with policies, processes, and procedures, including efficiency, effectiveness, and level of documentation.

Scope: Policies and procedures play a critical role in providing the guidance required to ensure all functions operate efficiently, effectively, safely, and consistently across the organization. A policy establishes what should be done, and procedures effect the policy. Policies and procedures also play an important role in protecting against the loss of institutional knowledge.

Current Risk Condition at City of Stockton
Several years ago, the Council Policy Manual and Administrative Directives were taken offline to change the format and evaluate appropriateness of authority. Although the City recently placed the Council Policy Manual back online, several policies were orphaned in the process. These policies were intended to be included in the Administrative Directives, which are incomplete. Finally, policies that are finalized are inaccessible to the majority of City staff.

Currently, the City has outdated policies and procedures in critical areas (HR, IT, and ERP-related) as well as draft policies and procedures that have not been approved yet. Some policies that are in place are vague and lack specific measures to support employee accountability.

The City operates in a highly decentralized manner, which enables departments to adjust processes to meet their needs but can also create inefficiencies in the event of insufficient guidance and oversight. It’s important for the City to have processes in place to mitigate the risks associated with decentralized operations. Areas that should be consistent include naming conventions, record keeping practices, procurement, and other administrative practices. In addition, with the continued implementation of the ERP, some processes have changed, but policies and procedures have not been updated to reflect these new changes.

Since the last risk assessment in 2019, only five new citywide policies and procedures have been updated and approved. Due to staff workloads, delays continue to persist. The City Manager’s Office

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recently expressed a renewed interest in prioritizing policy and procedure updates. The City has a plan in place to assign and track high priority policies and procedures over the next year. A key component to effectively adopting updated policies and procedures is ensuring that they are communicated and accessible to staff. The City created a central location to store policies and procedures, but some employees are still unaware of this location.

Overall Risk Rating Moderate

Impact

Likelihood

Preparedness

Trajectory
Moderate-to-High Reasonable Possibility Limited Flat

Risk Mitigation
● Continue to train employees on using the ERP
system to access financial reports and budget
data.
● Strategize ways to continue to gain efficiencies in
the ERP system.
● Continue recruiting efforts for the Payroll Division
and monitor the payroll ERP implementation to
ensure proper controls are in place and working
effectively.

Survey Rating
Moderate

Residual Risk
Low-to-Moderate

Risk Areas: Risks associated with fiscal control, budgeting, ongoing information tracking and management, revenue capture, and transaction processing. Also, risks associated with financial reporting (content, distribution, assembly, utilization, frequency, formatting, accuracy, and reliability).

Scope: The role of accounting and financial functions in risk mitigation is focused on recordkeeping and compliance through recording, classifying, summarizing, and reporting financial transactions. Financial reporting includes deliverables such as the Annual Comprehensive Financial Report (ACFR), monthly financials for budgetary comparison, and other compliance reports such as an organization’s Single Audit.

Reliable financial information is fundamental to planning, budgeting, evaluating vendor performance, assessing partnerships, and a range of other operational and strategic activities.

Current Risk Condition at City of Stockton
Overall, employees report satisfaction with the services provided by the Finance team, with 53% of survey respondents reporting that the quality of services is good or excellent. Most employees (76%) also report satisfaction with the budgeting process. These areas of strength within ASD should be commended and built upon, especially given the impact of ERP implementation on financial operations.

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The City completed the first and second phases of the ERP system, which included core financial functions such as revenue, accounts receivable, and business licensing. The next phase of the ERP includes payroll, employee self-service, and expense reports. Though several financial functions have improved from the previous antiquated system, challenges remain particularly with reporting.

Throughout interviews and survey responses, staff reported challenges in pulling reports from the system and tracking budget data. Employees also reported receiving minimal training on how to use the system to complete tasks. Without proper training on the system, employees track budget information manually, decreasing efficiency and the intended use of the system. This also decreases the accuracy of the information and, due to lean staffing, budget information is not always updated timely or tracked.

With the transition to the new ERP system, employees are still learning the new system and how to retrieve correct and accurate reports for financial reporting. During FY 2021-22, some financial reports were still run from the legacy financial system. Most respondents (69%) reported the financial reporting information they received or have access to is moderately useful to slightly useful due in part to training around the ERP system.

EMPLOYEE SURVEY
5% 20% 35% 34% 5%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

HOW USEFUL IS THE FINANCIAL REPORTING INFORMATION
THAT YOU RECEIVE/HAVE ACCESS TO ON A REGULAR BASIS?
Extremely useful Very useful Moderately useful Slightly useful Not useful at all

EMPLOYEE SURVEY
13% 40% 35% 9% 4%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

HOW WOULD YOU RATE THE QUALITY OF THE INTERNAL
CUSTOMER SERVICE PROVIDED BY THE FINANCE TEAM?
Excellent Good Average Poor Terrible
6% 18% 52% 16% 8%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

HOW WOULD YOU RATE YOUR EXPERIENCE OF THE CITY'S
BUDGETING PROCESS?
Excellent Good Average Poor Terrible

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The Payroll Division has experienced recent turnover and faced challenges in providing accurate and timely W-2 information to employees. For example, hundreds of W-2 forms had to be corrected multiple times due to inaccurate benefit calculations errors and had to be re-sent this year. As payroll is not yet implemented into the ERP, the process is highly manual and relies on Excel spreadsheets that lack controls, which the ERP system is intended to provide. However, the success of this implementation requires that vacant positions for qualified staff be filled in a timely manner to support the project.

Overall Risk Rating Moderate

Impact

Likelihood

Preparedness

Trajectory
Moderate Reasonable Possibility Moderate Flat

Risk Mitigation
● Complete a physical inventory of existing assets
and review fixed asset tracking processes and
procedures.
● Continue to collect, curate, and strengthen asset
data to more efficiently and effectively operate,
maintain, and replace assets.
● Provide training on asset management and
tracking expectations to departments.

Survey Rating
Moderate

Residual Risk
Low-to-Moderate

Risk Areas: Risks associated with ongoing maintenance, management, tracking, reporting, accountability, accounting, and physical safeguarding of assets.

Scope: Asset management includes the supply, deployment, and maintenance of the City’s resources; it includes physical or logical access to data and locations (offices, warehouses, etc.). Asset management is inclusive of the connected strategies, processes, people, and technology that are the foundation for enabling the City to meet service levels and minimize the overall cost of asset ownership.

Current Risk Condition at City of Stockton
The City’s asset management activities are primarily led by (but not limited to) the Public Works Department (which manages facilities, forestry, solid waste, transportation, fleet, and parks maintenance) and the Municipal Utilities Department (which manages water, wastewater, and stormwater infrastructure). The Economic Development Department (EDD) is responsible for parking assets, marina assets, and entertainment venues.

Due to financial constraints, the City has historically approached asset management reactively, and has not adequately kept up with maintenance and repair needs. As a result, deferred facility maintenance, aging equipment, and obsolete technologies continue to be Citywide concerns. As of 2018, the last time the City had a comprehensive evaluation of City facilities, it was estimated deferred maintenance costs totaled approximately $48 million, with an additional $1.1 million needed

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for material costs. As noted previously in the Capital Improvement Program section, millions of dollars in unfunded projects has rendered the City unable to address ongoing needs like resurfacing and filling potholes. Deferred maintenance presents a financial and liability risk to the City, as routine maintenance almost always costs less than extraordinary or corrective maintenance or replacement.

When routine maintenance is deferred, the life of an asset is shortened, and infrastructure typically needs to be rebuilt or replaced earlier than expected.

Since 2019, the City has made some improvements to asset tracking. For example, IT asset management has reportedly improved, and the City is able to more easily and accurately track hardware provided to employees. Additionally, the City is currently implementing a fleet management system. While the City made improvements, asset tracking expectations remain decentralized, with different departments using unique systems to track information and some departments not tracking assets at all. For example, EDD does not have an asset management system for parking and lacks plans related to asset replacement. Since accounting for assets is decentralized to the departments, more training should be provided to personnel to ensure employees know how assets should be tracked. Citywide oversight of asset management should also be improved to ensure all departments are tracking assets appropriately.

Overall Risk Rating Moderate

Impact

Likelihood

Preparedness

Trajectory
Moderate-to-High Reasonable Possibility Moderate Decreasing

Risk Mitigation
● Address the internal control deficiencies noted in
the 2021 Financial Statement Audit.
● Prioritize the development of grants management
policies, procedures, and resources to support
compliance with requirements.

Survey Rating
Moderate

Residual Risk
Low-to-Moderate

Risk Areas: Risks associated with compliance with laws, regulations, and requirements, including grants.

Scope: Risks organizations face when they are unable to follow internal policies, government laws and regulations, and may be subject to legal penalties and financial fines.

Current Risk Condition at City of Stockton
With the implementation of the ERP across the core financial functions, ASD has implemented better controls, such as adjusting approvals necessary for purchases and transactions. There have also been changes around access controls and roles and responsibilities within the system. These improvements will help resolve some historical audit findings related to internal controls and

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strengthen the City’s overall control environment. Although control improvements have been made, the City has not yet realized efficiencies that were intended to be gained from the new ERP.

Implementation of the ERP led to some deficiencies in Internal Controls over Financial Reporting in the 2021 Financial Statement Audit. This included the following:
• The City did not reconcile its bank in a timely fashion and was unable to reconcile its operating account. As a result, there was a discrepancy in the amount of $785,277. • Instruction was not clear on the data input and, as a result, the depreciation was miscalculated. • There are fewer options for reporting and providing details in the ERP system. This caused some differences in the subsidiary ledgers and the general ledgers that the accounting team was still resolving during the year-end audit.

As the City continues to refine its use of the new ERP system, it should take these findings into account to appropriately remediate them and prevent future audit findings.

EMPLOYEE SURVEY

The City currently does not have a system to track grants, nor is there standard process for tracking and monitoring. Only 16% of survey respondents would rate the quality of systems used to track and monitor grants for compliance purposes as excellent or good. Most respondents (39%) responded systems are average, with the final third (32%) of respondents reporting concerns with existing grant monitoring systems.

The City has received increased levels of grant funding in the last few years, particularly COVID-19 relief funds. To manage the additional workload associated with grants management, the City recently hired a Grants Manager and has a Grants Analyst position currently in recruitment. These positions are in place to help the City manage and monitor grants on an ongoing basis. However, grant policies and procedures have not been developed, which presents challenges and risk in the City’s decentralized environment.

Employees reported previous grants had to be returned because they were not spent down due to a lack of proper monitoring or issues related to conflicts of interest. With approximately $14.1 million in in federal and state grant funds for transportation purposes alone, it is imperative that the City have systems and processes in place to accurately and efficiently monitor grants to ensure all funds are spent down and used in accordance with the contract and other relevant guidance. This funding should also support the hiring of sufficient staff to manage the projects, as noted in the Organization and Staffing and Capital Improvement Program sections.
3% 13% 39% 22% 10%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

HOW WOULD YOU RATE THE QUALITY OF SYSTEMS USED TO
TRACK AND MONITOR GRANTS FOR COMPLIANCE PURPOSES?
Excellent Good Average Poor Terrible

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Compliance is decentralized to owner departments throughout the City. Currently, the City relies primarily on reactive evaluations of its compliance with regulatory requirements and City policies, which involve ongoing monitoring, testing, and reporting completed by the internal and external auditors. However, the City lacks an effective proactive approach to ensuring compliance, which is characterized by employees being aware of requirements and actively operating to comply with them.

Development of grant-related policies and procedures that also define employee accountability should be prioritized to support compliance across the City.

Overall Risk Rating Moderate

Impact

Likelihood

Preparedness

Trajectory
Moderate Unlikely Moderate Flat

Risk Mitigation
● Develop and implement policies and procedures
to reduce fraud, waste, and abuse (FWA) risk,
including an FWA policy and procedure,
procurement procedures, and segregation of
duties procedures.
● Provide regular FWA training to City employees.
● Continue strengthening internal controls and
assess opportunities for control automation.

Survey Rating
Moderate

Residual Risk
Low-to-Moderate

Risk Areas: Risks associated with misappropriation of funds, extravagant spending, using one’s position to accomplish a specific outcome, and/or the intent to deceive.

Scope: The employees of the City are entrusted with public funds and have a duty to use those funds economically, efficiently, effectively, and ethically. When employees do not honor this obligation, it could result in instances of fraud, waste, or abuse. Fraud, waste, and abuse are defined as follows:
● Fraud: A dishonest and deliberate course of action that results in obtaining money, property, or an advantage to which employees or an official committing the action would not be normally entitled. ● Waste: The needless, careless, or extravagant expenditure of funds, incurring of unnecessary expenses, or mismanagement of resources or property.
● Abuse: The intentional, wrongful, or improper use or destruction of resources, or seriously improper practice that does not involve prosecutable fraud.

Current Risk Condition at City of Stockton
In accordance with best practices, the City operates an ethics hotline that provides a mechanism for employees and residents to anonymously report ethical concerns and potential instances of FWA.

The City has also established a code of ethics for employees and City officials and policies and procedures related to conflicts of interest. However, the City does not have key policies related to discrimination, harassment, and retaliation, which are critical to promote and enforce an ethical environment.

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The City has undertaken a multi-year process to strengthen its internal controls and reduce fraud, waste, and abuse (FWA) risks. However, the City does not have formalized FWA policies or procedures and has not conducted regular fraud training for employees. Supervisors, managers, and business analysts across the City should be provided regular FWA training since they are in positions that enable access to data and information that could reveal anomalies. Additionally, the City does not have specific financial management procedures that could reduce the risk of FWA, including procedures related to procurement and segregation of duties.

Sixty-nine percent of survey respondents rated FWA risks as moderate or higher. This is an increase from the 2019 Risk Assessment, where 60% of employees rated FWA risk as moderate or higher.

The increase may be due to additional awareness of FWA opportunities and weaknesses in City controls.

EMPLOYEE SURVEY
Overall Risk Rating Moderate
Impact Likelihood Preparedness Trajectory
Moderate-to-High Reasonable Possibility Moderate Flat
Risk Mitigation
● Provide improved onboarding to governance
board members, including Councilmembers and
Commissioners.
● Consider the development of a long-term
strategic plan.
● Clarify the roles and responsibilities of
governance board members, including
Councilmembers and Commissioners.

Survey Rating
Moderate
Residual Risk
Low-to-Moderate
7% 25% 44% 15% 10%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2022 RISK RATING FOR ETHICS, FRAUD, WASTE, AND ABUSE
Low Low-to-Moderate Moderate Moderate-to-High High

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Risk Areas: Risks associated with ongoing oversight; ethics and values; control environment; policy management; risk management; accountability; performance management; coordination and communication; and defined roles, responsibilities, and authorities.

Scope: Governance is a process of overseeing an organization’s management of risk and control processes and is ultimately the responsibility of an organization’s board of directors. Management is responsible for identifying and managing risks.

Current Risk Condition at City of Stockton
The Council sets annual priorities during a joint Council-City management retreat at the beginning of each fiscal year. Councilmembers report this practice is highly informative and collaborative.

However, the City does not maintain a long-term strategic plan and some Councilmembers are concerned about the stability of goals and priorities year-over-year in a revenue constrained environment. Additionally, Councilmembers expressed a desire for better onboarding and more information on key issues facing the City.

Most survey respondents rated the quality of the strategic direction for the City provided by City Council as average or higher. However, Councilmembers and Commissioners often submit ad hoc requests for additional information, which creates additional work for staff and, depending on the nature of the request, may contribute to tension between Councilmembers and City staff. Increasing clarity on the roles and responsibilities between Councilmembers/Commissioners and staff could improve these relationships and reinforce policy governance. In addition to these internal collaboration efforts, the City should also work with local service provider agencies to support outreach and connection with needed services.

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EMPLOYEE SURVEY

Overall Risk Rating Moderate

Impact

Likelihood

Preparedness

Trajectory
Moderate Reasonable Possibility Moderate Flat

Risk Mitigation
● Ensure internal controls are incorporated into
ERP implementation.
● Train employees on internal controls and the
importance of proper controls.
● Balance the need for appropriate checks and
balances with efficient operations.

Survey Rating
Moderate

Residual Risk
Low-to-Moderate

Risk Areas: Risks associated with preventive controls (e.g., tone at the top, policies and procedures, passwords), detective controls (e.g., segregation of duties, reconciliations, variance reports), and corrective controls (e.g., changes to policies and procedures, training, and loss of privileges).

Scope: Control activities are the processes and procedures that help ensure that management’s risk responses are carried out; they are not performed simply for their own sake or because it seems to be the “right or proper” thing to do. Control activities occur throughout the organization, at all levels and in all functions. They include a range of activities—as diverse as approvals, authorizations, verifications, reconciliations, reviews of operating performance, security of assets, and segregation of duties. Internal controls are designed to provide reasonable assurance about the achievement of an organization’s objectives with regard to the reliability of financial reporting, efficiency and effectiveness of operations, and compliance with applicable laws and regulations.

Current Risk Condition at City of Stockton
Many departments noted that work quality is highly dependent on the employee conducting the work due to the lack of comprehensive policies and procedures and related training. With the implementation of ERP, there have been some improvements in internal controls. However, lack of training and staff expertise in the ERP limits the effectiveness of some internal controls and 4% 15% 51% 20% 10%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

HOW WOULD YOU RATE THE QUALITY OF THE STRATEGIC

DIRECTION FOR THE CITY OVERALL PROVIDED BY CITY
COUNCIL?
Excellent Good Average Poor Terrible

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contributes to staff workarounds to get tasks done. Further exacerbating these additional steps are staffing level constraints. Without sufficient staff to properly process activities in a manual and time- intensive way, there are limitations on the quality of the work and robust checks and balances to review activities.

Some new control procedures have slowed down processes and there are still many hard copy approvals required. For example, staff reports used to take around 3 weeks to prepare and review prior to submission to Council. Additional reviews were added, and this process now takes around 6 to 8 weeks, which can slow operations.

Internal controls over procurement continue to be an area of elevated risk due to decentralization and a lack of standardization across the City. Procurement and the routing of contracts were identified by multiple staff as an area of both confusion and difficulty, in terms of review, authorization, and approvals. Due to cumbersome and time-consuming processes, some employees may try to find workarounds or resort to more manual processes that are not in compliance.

Overall Risk Rating Moderate

Impact

Likelihood

Preparedness

Trajectory
Moderate Unlikely Moderate Flat

Risk Mitigation
● Engage with community members to analyze
threats and opportunities to strengthen the City’s
reputation and identify opportunities to celebrate
City “wins” with the public.
● Develop and implement a reputation
management framework, a supporting
communications plan that incorporates
participation from all departments, and supporting
policies and procedures.

Survey Rating
Moderate

Residual Risk
Low-to-Moderate

Risk Areas: Risks associated with the City’s reputation and the public’s perception of the organization, including its competency (financial performance, safety and security, responsiveness), transparency (openness and integrity) and guardianship (demonstrating care and consideration).

Scope: The reputation of an organization refers to how a broad group of stakeholders perceive the accumulated decisions, actions, and behaviors of the people within an organization. This social judgement is influenced both directly and indirectly by interactions with employees, with programs and services, and by commentary in the public domain (e.g., news stores, press releases, social media).

Current Risk Condition at City of Stockton
The operations of a local government like the City of Stockton are complex, multi-faceted, and impact the lives of residents directly and indirectly every single day. In a society that is connected to the

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instantaneous, 24-hour news cycle across the internet, residents have increasingly high expectations around transparency of decision-making, effective use of financial resources, and instant action or results. Given the City of Stockton’s history with bankruptcy and high crime rates, it will likely continue to be a challenge to overcome the public’s perception of City operations. Additionally, the City’s reputation continues to be hampered by a struggle to find lasting solutions to homelessness.

Employees and elected officials report the need to build trust across the community and to tell the story of successful local government programs and services. Some 58% of employees believe that the City has a negative (poor or terrible) reputation with the community, up from 44% in the 2016 Risk Assessment. No respondents reported that the City has an excellent reputation and only 6% reported that it had a good reputation.

EMPLOYEE SURVEY
The
City’s methods of communication have historically been decentralized across various departments, without a proactive, clear, and consistent “voice” of the City. Additionally, the City does not have a marketing or strategic public information program to keep the community informed on City initiatives and respond to media attention. This is especially important since the City lacks a robust local newspaper, and staff and Councilmembers report limited access to the community through traditional media. A public information program could help the City demonstrate its efforts to the community and rebuild trust.

Like many other West Coast cities, homelessness is a significant challenge for Stockton. Currently, the City lacks a designated point person and process to coordinate homelessness solutions. This function spans both the Police Department and Economic Development; however, neither has clear roles or responsibilities to effectively manage homeless populations. Additionally, homelessness is a multi-jurisdictional issue that requires significant collaboration not only within the City, but also with other partners such as the County, State, and non-profit organizations. The City’s reputational impact of increasing homelessness has resulted in a greater local burden to address the issue. 6% 36% 44% 14%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

WHAT KIND OF REPUTATION DOES THE CITY OF STOCKTON
HAVE WITH THE COMMUNITY?
Excellent Good Average Poor Terrible

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Overall Risk Rating Moderate

Impact

Likelihood

Preparedness

Trajectory
Moderate Reasonable Possibility Moderate Increasing

Risk Mitigation
● Balance Public Safety workloads to a
manageable level to reduce ongoing impacts of
workers’ compensation claims.
● Hire an emergency manager to oversee
emergency management planning.

Survey Rating
Moderate

Residual Risk
Low-to-Moderate

Risk Areas: Risks associated with administration of the employee health and safety and operational risk management programs, as well as emergency management and business continuity planning programs.

Scope: Risk programs include administration of the general liability, workers’ compensation, safety, disability management, and property programs. Risk efforts also include contract/insurance certificate review, insurance procurement, emergency preparedness programs, and continuity of operations planning.

Current Risk Condition at City of Stockton
The City established the General liability and Workers’ Compensation funds to create financial stability for the impacts of liability, property damage, and workers’ compensation claims. The City self- insures a portion of its claims, up from $1 million to $1.25, to reduce its costs; excess insurance is used for large claims.

The Fire Departments has realized a significant increase in workers’ compensation and post- traumatic stress injury (PTSI) retirements in the last few years due to staffing shortages and high levels of overtime among staff (see “Public Safety and Security” section). As workloads increase, so does the risk of injuries, which further compounds staffing in public safety departments. Workload increases and COVID-19 have also increased the number and duration of workers’ compensation claims in the Police Department.

Emergency Management
The City has increased its focus on emergency management in response to the COVID-19 pandemic and is currently seeking a dedicated emergency manager to oversee emergency management planning. Currently, this function is not adequately staffed to develop a comprehensive Emergency Operations Plan and ensure adequate education, training, and exercises required to prepare staff for an emergency.

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Approximately 74% of those surveyed reported they have not received emergency properness training in the last year and several employees responded there is little communication about emergency planning.

EMPLOYEE SURVEY

Overall Risk Rating Low-to-Moderate

Impact

Likelihood

Preparedness

Trajectory
Moderate-to-High Reasonable Possibility Significant Flat

Risk Mitigation
● Seek innovative funding solutions to support the
increased prioritization of addressing deferred
maintenance needs and major capital projects.
● Continue efforts to revise the L-RFP to allow for
strategic and fiscally responsible growth.
● Seek continuation of Measure A funding to
support ongoing public safety needs.

Survey Rating
Moderate

Residual Risk
Low-to-Moderate

Risk Areas: Risks associated with revenue sources (rates, fees, grants, and taxes), funding levels, cash management, liquidity, expenditure rates and commitments, debt management, and inter-organizational business.

Scope: The internal, local, regional, and other funding and economics factors that impact the organization’s ability to maintain operations and deliver programs and services. Whether within the City’s realm of influence (or outside of their control), the funding and economic factors impact the City’s long-term fiscal stability as well as its ability to mitigate the negative impacts of extraordinary risk such as earthquakes, fires, floods, and national economic volatility.
7% 74%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

HAVE YOU RECEIVED TRAINING IN EMERGENCY

PREPAREDNESS PROVIDED BY THE CITY WITHIN THE LAST
YEAR?
Yes, delivered online No, no training Yes, In person Yes, both online and in-person

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Current Risk Condition at City of Stockton
Fiscal sustainability is one of the City’s key strategies to achieving its goals. The state of the City’s various funds continues to improve since its exit from bankruptcy in FY 2014-15 and the City now ranks in the top five most fiscally healthy cities in California, based on debt (or surplus) per capita. As of 2020, the investment research firm Standard & Poor’s rated most of the City’s Enterprise Fund Debt with an A or A- rating, which are upper medium grade ratings. The exception was the City’s Parking Revenue Bonds, which received a lower medium grade rating (BBB-). While the City of Stockton is generally fiscally healthy, some of the City’s funding is at risk of expiring, such as funding from Measure A, which expires in 2024. Measure A provides funding for law enforcement, crime prevention services, and other public safety-related City services.

As part of its fiscal sustainability efforts, the City maintains a comprehensive Long-Range Financial Plan (L-RFP) to help guide and inform financial decisions. The L-RFP is routinely updated based on current revenue and expenditure trends. While the City has largely focused on maintaining service levels post-bankruptcy, the City recently updated assumptions in the L-RFP to plan for strategic growth in future years. According to the City’s proposed FY 2022-23 budget, these changes will allow the City to add one to two new full-time positions on an annual basis and allocate an additional $750,000 annually to maintenance needs.

The City’s Reserve Policy calls for the City to maintain a 17% operating reserve (approximately two months of expenditures) and establish additional reserves for known contingencies, unforeseen revenue changes, infrastructure failures, and catastrophic events. In FY 2021-22, the General Fund is projected to end with an available fund balance of $74.9 million, of which $47.2 million is required to be put into reserves. While the City’s reserve policy is strong, the City’s need for known contingencies is far greater than its available reserve funds. For example, the City estimates its unfunded infrastructure needs are nearly $700 million.

According to the City’s FY 2022-23 proposed budget, General Fund expenditures are projected to generally exceed or be level with General Fund revenues for the next 15 years, except for FY 2022- 23, when expenditures are projected to be higher than revenues due to one-time expenses for capital projects and Council priority projects funded by savings in prior years.

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FIGURE 2: GENERAL FUND BUDGET FROM LONG RANGE FIN ANCIAL PLAN, UPDATED FY 2022- 23

Overall Risk Rating Low-to-Moderate

Impact

Likelihood

Preparedness

Trajectory
Moderate Unlikely Significant Decreasing

Risk Mitigation
● Continue to evaluate opportunities to leverage
performance data to increase efficiency and
effectiveness in operations.
● Conduct a regular resident engagement survey to
inform improvements to services as the
community grows.
● Evaluate the capacity of departments, including
EDD, to effectively serve the community.

Survey Rating
Moderate

Residual Risk
Low-to-Moderate

Risk Areas: Risks associated with community expectations, level of service commitments, scheduling, program/service delivery, sustainability, quality, process efficiencies, and resource allocation.

Scope: Day-to-day operations across the organization and efficient and effective delivery of the City’s programs and services in alignment with goals, vision, and mission.

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Current Risk Condition at City of Stockton
The City of Stockton covers approximately 64.75 square miles and is the 13th most populous city in California. According to the US Census Bureau, an estimated 322,120 residents resided in the City as of July 2021, an increase of approximately 10% since 2010. The City provides a full range of services to residents, including:
• Emergency services
• Police
• Animal control
• Fire suppression and
rescue
• Fire prevention
• Water distribution
• Wastewater treatment
• Stormwater collection
• Road construction and
maintenance
• Solid waste and recycling
• Park, tree, and streets
maintenance
• Development planning
• Library services
• Recreation services
• Golf courses
• Business attraction and
retention
• Commercial loan programs
• Parking
• Affordable housing
• Venue management,
including marina and
ballpark
The City has established performance measures related to key areas of service delivery. In May 2020, the City of Stockton established the Office of Performance and Data Analytics (ODPA).

According to the City’s FY 2021-22 budget, ODPA is responsible for establishing and implementing a comprehensive performance management program for the City of Stockton that includes:
• A performance scorecard tied to the City’s One Page Strategic Plan • A StocktonStat program to drive cross-departmental performance management • An Innovation Lab focused on streamlining municipal processes • An open data portal featuring datasets and dashboards Management reported the City’s increased focus on data and the implementation of the City’s open data portal has helped the City better identify what’s working and what’s not working to improve processes. These efforts will help the City continue to improve its operations and service delivery moving forward.

The COVID-19 pandemic has significantly impacted City operations over the last several years. The City adjusted services to comply with regional stay-at-home orders and support the health and safety of residents. Additionally, EDD significantly shifted operations to focus on distributing aid to the community during the pandemic. The City of Stockton received $27 million of Coronavirus Relief Funds (CRF). With these funds, the City supported small businesses, provided millions in dollars to families for rental and mortgage assistance, and strengthened support for homelessness initiatives.

Additionally, the City distributed personal protective equipment (PPE) and provided other support to the community.

As the pandemic slows, EDD has been able to shift some of its focus back to economic development.

However, EDD has also largely focused on housing and homelessness efforts, which affects its ability to effectively focus on economic development needs in the City. It’s important EDD has the capacity to focus on economic development needs in the City to encourage job creation and business

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retention and expansion, both of which support an improved economy due to increased tax revenue for the community and improved quality of life for residents.

With the economy recovering, the City experienced substantial development growth in 2021. The Community Development Department (CDD) issued approximately 2,700 more permits in 2021 than in 2020. Alongside this growth, CDD has become more efficient and reduced the amount of time it takes to process a permit. Still, the effectiveness of development and permitting processes are challenged by changes in the development market, such as changes in cannabis legislation.

Development and permitting processes are also reliant on other departments, which can cause challenges if other departments are untimely or if coordination is ineffective. The City has been working to improve communication and coordination between departments to improve service delivery.

Overall Risk Rating Low-to-Moderate
Impact Likelihood Preparedness Trajectory
Moderate Unlikely Significant Decreasing
Risk Mitigation
● Continue to strengthen and evolve strategic
planning and performance monitoring efforts.
● Align Citywide planning and provide feedback
opportunities to employees and community
members.

Survey Rating
Moderate
Residual Risk
Low-to-Moderate
Risk Areas: Risks associated with how the organization plans for operations, strategy, and the future, including both short-term and long-range planning.

Scope: A comprehensive planning framework builds upon the strategic goals and dives into the next layer of planning, which looks at the strategic objectives for not only the enterprise, but sets objectives for the departments, divisions, programs, and individual roles.

Current Risk Condition at City of Stockton
The City conducts annual planning efforts that include establishing tiered goals and an associated work plan. Goals are limited to an annual basis and therefore lack long-term outcome focus. The City’s short-term focus continues to be on crime, homelessness, education, and short-term economic development efforts.

In FY 2020-21, the City’s annual goals included:

Tier 1

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1. Develop solutions to address homelessness, including increasing the affordable housing supply

2. Focus on crime reduction in focus areas

3. Prioritize resource allocation to focus areas within Council Districts

4. Develop the core downtown
Tier 2

1. Develop business incentives and tools for underserved neighborhoods

2. Work with education partners to improve quality of life, increase literacy, fund college scholarships, and develop the workforce

3. Engage private employers and the business community in workforce development and job placement (including people with criminal records) and develop an employment pipeline for Stockton residents to City of Stockton employers
These goals are also tied to the City’s newly formed performance measures to enable improved monitoring and evaluation of initiatives.

The City completed the Envision Stockton 2040 General Plan in 2018 that outlines goals and policies related to the City’s land use in the coming decades. Several key topics in this plan include land use, transportation, safety, community health, and housing along with applicable policies and action items to guide the City in making decisions about each of the above topics. The City is now in a place financially to focus on long-term strategic planning with a focus on growth.

Only 33% of survey respondents rated the quality of the City’s strategic planning activities as excellent or good. Most employees reported the reason for low rating is due to a lack of involvement in planning. More than half (68%) of survey respondents believe that the City involves key stakeholders either slightly well or not well at all. Employees reported that they are rarely involved in planning or decision-making. As the City’s greatest asset, involving employees in decision-making supports employee investment and dedication to a project or goal.

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EMPLOYEE SURVEY
Some employees report that Citywide organizational planning is not cohesive throughout the organization. This weakens planning efforts, since it does not give staff the opportunity to dialogue, collaborate, and plan for upcoming changes. Some departments report that staff receive little communication from management about updates to planning or strategy. When decisions are made and employees must carry out the tasks associated with new plans, employees may have little time to dedicate to new tasks, may have competing priorities, or may need to update policies and procedures, which can lead to rushed projects and employee burnout. Adequate staffing has a major impact on planning and strategy.
4% 29% 41% 18% 8%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

HOW WOULD YOU RATE THE QUALITY OF THE CITY'S
STRATEGIC PLANNING ACTIVITIES?
Excellent Good Average Poor Terrible
2% 8% 33% 32% 36%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

HOW WELL DOES THE CITY SOLICIT INPUT FROM ALL
IMPACTED STAKEHOLDERS DURING PLANNING ACTIVITIES?
Extremely well Very well Moderately well Slightly well Not well at all

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APPENDIX A: SURVEY RESULTS1

RESPONENT TENURE WITH

THE CITY OF STOCKTON

SURVEY PARTICIPATION BY DEPARTMENT

1 Data in this section is reported as a% of total responses; the values may not total to 100% due to rounding. 11% 10% 21% 21% 9% 29%
<1 year 1-2 years 3-5 years 6-10 years 11-15 years >15 years 4%
2%
1%
7%
3%
14%
3%
3%
4%
7%
16%
1%
25%
9%
Administrative Services
City Attorney
City Clerk
City Manager
Community Development
Community Services
Economic Development
Fire
Human Resources
Information Technology
Municipal Utilities
Office of the Mayor
Police
Public Works

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AVERAGE EMPLOYEE SURVEY RISK RATINGS

Answer Scoring Values
1 Low
2 Low- to- Moderate
3 Moderate
4 Moderate- to- High
5 High

ACCOUNTING & FINANC E

2.9 2.6

2.9 2.9

3.0 3.4

3.0 3.2

3.5 2.7

3.0 3.3

3.1 3.7

3.0 2.9

3.3 3.5

3.3 3.1
Accounting and Finance
Asset Management Tracking
Capital Improvement Program
Compliance
Ethics, Fraud, Waste, and Abuse
External Environment
Funding and Economics
Governance
Human Capital and Resources
Information Technology
Internal Controls
Management and Leadership
Operations and Service Delivery
Organization and Staffing
Planning and Strategy
Policies, Procedures, and Processes
Procurement and Contracting
Public Safety and Security
Reputation and Public Perception
Risk Programs
6% 29% 42% 13% 10%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Low Low-to-Moderate Moderate Moderate-to-High High

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ASSET MANAGEMENT

TRACKING

CAPITAL IMPROVMEENT

PROGRAM COMPLIANCE
11% 32% 44% 5% 7%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Low Low-to-Moderate Moderate Moderate-to-High High
27% 40% 13% 11%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Low Low-to-Moderate Moderate Moderate-to-High High
3% 24% 54% 13% 6%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Low Low-to-Moderate Moderate Moderate-to-High High

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EXTERNAL ENVIRONMENT

FUNDING & ECONOMICS

ETHICS, FRAUD, WASTE &
ABUSE

2% 13% 41% 29% 15%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Low Low-to-Moderate Moderate Moderate-to-High High
6% 27% 44% 12% 12%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Low Low-to-Moderate Moderate Moderate-to-High High
7% 25% 44% 15% 10%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Low Low-to-Moderate Moderate Moderate-to-High High

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GOVERNANCE

HUMAN CAPITAL &

RESOURCES

INFORMATION TE CHNOLOGY

2% 19% 49% 15% 15%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Low Low-to-Moderate Moderate Moderate-to-High High
4% 14% 36% 22% 24%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Low Low-to-Moderate Moderate Moderate-to-High High
9% 36% 38% 8% 9%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Low Low-to-Moderate Moderate Moderate-to-High High

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INTERNAL CONTROLS MANAGEMENT & LEADERSHIP OPERATIONS & SERVICE

DELIVERY
7% 23% 45% 13% 13%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Low Low-to-Moderate Moderate Moderate-to-High High
4% 21% 41% 17% 18%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Low Low-to-Moderate Moderate Moderate-to-High High
6% 26% 41% 12% 16%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Low Low-to-Moderate Moderate Moderate-to-High High

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ORGANIZATION & STAFFING

PLANNING & STRATEGY

POLICIES , PROCEDURES &

PROCESSES

2% 11% 31% 28% 28%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Low Low-to-Moderate Moderate Moderate-to-High High
5% 27% 38% 18% 12%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Low Low-to-Moderate Moderate Moderate-to-High High
12% 22% 40% 16% 11%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Low Low-to-Moderate Moderate Moderate-to-High High

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PROCUREMENT &

CONTRACTING

PUBLIC SAFETY
& SECURITY

REPUTATION & PUBLIC

PERCEPTION
6% 15% 39% 24% 17%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Low Low-to-Moderate Moderate Moderate-to-High High
3% 17% 31% 25% 24%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Low Low-to-Moderate Moderate Moderate-to-High High
5% 16% 42% 19% 17%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Low Low-to-Moderate Moderate Moderate-to-High High

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RISK PROGRAMS
5% 25% 41% 16% 12%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Low Low-to-Moderate Moderate Moderate-to-High High

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APPENDIX B: VACANCY RATE BY DEPARTMENT
The table below shows the vacancy rate by each city department as of March 30, 2022.

Department Budgeted
Positions* Filled Positions Vacancies Vacancy Rate
Administrative Services 84 77 7 8.3%
City Attorney 12 10 2 16.7%
City Clerk 7 7 0 0.0%
City Council 10 10 0 0.0%
City Manager 33 30 3 9.1%
Community Development 48 40 8 16.7%
Community Services 114 105 9 7.9%
Economic Development 25 20 5 20.0%
Fire 233 208 25 10.7%
Human Resources 30 28 2 6.7%
Information Technology 52 38 14 26.9%
MUD 218 198 20 9.2%
Police 713 596 117 16.4%
Public Works 168 136 32 19.0%
Total 1,747 1,503 244 14.0%
*Budgeted positions reflect positions that were added throughout the fiscal year and therefore may not tie to the FY2021-22 budget document.

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ATTACHMENT A
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City of Stockton
Enterprise Risk Assessment
City Council Meeting
November 1, 2022
Agenda Item 15.1
133
Overview
I. Introduction
II. Risk Assessment Process
III. Risk Assessment Results
2 134
Introduction
3 As the City’s chartered internal auditor, Moss Adams
conducted its triennial enterprise risk assessment.

The Enterprise Risk Assessment (ERA) was conducted
between March 2022 and July 2022 and focused on
assessing at a high level the current state of the City’s:
• Risk conditions
• Internal controls
• Operational efficiency and effectiveness
• Policies and procedures
• Compliance
City of Stockton Enterprise Risk Assessment
135
The process to identify and assess risks considers both internal and external factors.

As part of this risk assessment, Moss Adams used a variety of techniques, both qualitative and quantitative, to identify external and internal factors that contribute to risk. Risk assessments involve a dynamic and iterative process to identify and analyze risks to the City’s ability to achieve its objectives, forming a basis for determining how risks should be managed.

We leveraged best practices to identify opportunities for improvement and provide recommendations. Moss Adams performed this work under AICPA consultancy standards
.

Introduction
City of Stockton Enterprise Risk Assessment4
136
Project
Methodology
5 City of Stockton Enterprise Risk Assessment
137
Assessment
Framework
For each of the risk categories
assessed, our assessment
includes an overview of each
risk condition, including the
current risk level, likelihood,
impact, preparedness, and
trajectory.
6 City of Stockton Enterprise Risk Assessment
138
Risk Trends
7 In general, municipalities have faced increasing levels of risk due to external factors over the last two years. • COVID-19 pandemic
• Public safety
• Supply chain issues
• Labor shortages
• Inflation
City of Stockton Enterprise Risk Assessment
139
Risk
Assessment
Results
8 RISK CATEGORY OVERALL RISK LEVEL
Human Capital and Resources High
Information Technology High
Organization and Staffing High
Procurement and Contracting High
Public Safety and Security High
Capital Improvement Program Moderate to High
External Environment Moderate to High
Management and Leadership Moderate to High
Policies, Procedures, and Processes Moderate to High
Accounting and Finance Moderate
Asset Management Tracking Moderate
Compliance Moderate
Ethics, Fraud, Waste, and Abuse Moderate
Governance Moderate
Internal Controls Moderate
Reputation and Public Perception Moderate
Risk Programs Moderate
Funding and Economics Low to Moderate
Operations and Service Delivery Low to Moderate
Planning and Strategy Low to Moderate
City of Stockton Enterprise Risk Assessment
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• Ongoing efforts to automate and modernize processes with ERP imp
lementation
• Strong financial position
• Implementation of the Office of Performance and Data Analytics Effective Practices
9 City of Stockton Enterprise Risk Assessment
141
High Risk Categories
10 City of Stockton Enterprise Risk Assessment
Impact Likelihood Preparedness Trajectory
Human Capital and Resources HIGH LI K E LY LIMITED INCREASING Information Technology HIGH LI K E LY LIMITED INCREASING Organization and Staffing HIGH ALMOST CERTAIN LIMITED INCREASING Procurement and Contracting HIGH LI K E LY LIMITED INCREASING Public Safety and Security HIGH LI K E LY LIMITED INCREASING 142
Moderate-to-High Risk Categories
11 City of Stockton Enterprise Risk Assessment
Impact Likelihood Preparedness Trajectory
Capital Improvement Program MODERATE TO HIGH

REASONABLE

POSSIBILITY

MODERATE FLAT
External Environment MODERATE TO HIGH

REASONABLE

POSSIBILITY

MODERATE INCREASING
Management and Leadership HIGH LI K E LY MODERATE INCREASING Policies, Procedures, and Processes MODERATE TO HIGH

REASONABLE

POSSIBILITY

SIGNIFICANT FLAT
143
Questions?
12 City of Stockton Enterprise Risk Assessment
144
The material appearing in this presentation is for informational purposes only and should not be construed as advice of any kind, including, without limitation, legal, accounting, or investment advice. This information is not intended to create, and receipt does not constitute, a legal relationship, including, but not limited to, an accountant-client relationship. Although this information may have been prepared by professionals, it should not be used as a substitute for professional services. If legal, accounting, investment, or other professional advice is required, the services of a professional should be sought.

Assurance, tax, and consulting offered through Moss Adams LLP. Investment advisory offered through Moss Adams Wealth Advisors LLC. 13 City of Stockton Enterprise Risk Assessment
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City of Stockton
Legislation Text
File #: 22-0826, Version: 1

ADOPTION OF AN ORDINANCE APPROVING A DEVELOPMENT AGREEMENT BETWEEN THE

SPANOS FAMILY TRUST AND THE CITY OF STOCKTON FOR THE DELTA COVE PROJECT

RECOMMENDATION
It is recommended that the City Council approve the following:

1. A Finding that the project is categorically exempt from CEQA, pursuant to the CEQA Guidelines, section 15061(b)(3) (General Rule) of Title 14 of the California Code of Regulations; and

2. An Ordinance approving a Development Agreement for the Delta Cove Project.

It is also recommended that the City Manager be authorized to take appropriate and necessary actions to carry out the purpose and intent of the Ordinance.

Summary
On October 19, 2010, the Stockton City Council approved a General Plan amendment, rezone, a Planned Development, a Vesting Tentative Map, and an Addendum/Initial Study to a previously certified Environmental Impact Report for a project known as “Delta Cove” (P09-160). These entitlements were required to establish a new 1,545-unit residential community with parks, open space, commercial use, and a 280-unit condominium project on three vacant parcels totaling 360 acres.

The Vesting Tentative Map (VTM) was subject to the typical timing requirements of the Subdivision Map Act (state regulation) and City subdivision regulations (Stockton Municipal Code Title 16, Division 6), requiring an expiration on September 9, 2012. Provided the VTM remained valid, all other project entitlements remained valid as well. By means of State regulatory granted and Planning Commission granted extensions, the VTM has remained valid up to now. Since the project has received the maximum amount of approval for map extensions granted per the Subdivision Map Act and Stockton Municipal Code, the entitlements were set to expire on September 9, 2022.

Spanos Family Trust, (Applicant) has applied for a new Development Agreement to preserve the approved entitlements and ensure the eventual completion of the project. The Agreement extends the timeframe to develop and complete the project another 15 years, with the possibility of a 5-year extension (20 years total), from the effective date of City Council approval (30 days after approval).

All the original approved entitlements will remain unchanged. Staff is recommending approval based on the analysis and supported findings provided below and in the proposed Resolution.

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On September 22, 2022, the Planning Commission voted 5-0 (Jones and Mountain absent) approving a recommendation to the City Council to adopt an ordinance approving the Delta Cove DA.

DISCUSSION
Background
The subject site consists of three parcels identified as Assessor’s Parcel Numbers 071-170-02, 071- 170-05, and 071-170-04 and is located adjacent to and west of the Twin Creeks Estates Subdivision, south of the Spanos Park West Development and Bear Creek, and both east and north of the Sanctuary Project (also known as Shima Tract) and Mosher Slough (Attachment A - Location and Context Map).

On October 19, 2010, the Stockton City Council approved a General Plan amendment, rezone, a Planned Development, a Vesting Tentative Map (VTM), and an Addendum/Initial Study to a previously certified Environmental Impact Report for a project known as “Delta Cove” (P09-160).

These entitlements were required to establish a new 1,545-unit residential community with parks, open space, commercial use, and a 280-unit condominium project on three vacant parcels totaling 360 acres (Attachment B - Project Plans). Since the project has received the maximum amount of approval extensions granted per the Subdivision Map Act and Stockton Municipal Code, the project was set to expire on September 9, 2022.

Spanos Family Trust, (Applicant) has applied for a new Development Agreement to ensure the completion of the project and extend the project entitlements. By filing an application for the Development Agreement, the expiration date for the project is paused, until a final decision is made on the application request. A Development Agreement (DA) is a voluntary legal contract between a local jurisdiction and an entity that owns or controls property within the jurisdiction. The DA details the obligations of both parties and specifies the standards and conditions that will govern the development of that property. Per Stockton Municipal Code (SMC) Section 16.128, the Planning Commission is the recommending authority for new DAs and is responsible for the DA annual compliance monitoring. The City Council is the final approving authority and must conduct a public hearing to adopt a new DA by ordinance.

Present Situation
Spanos Family Trust, (Applicant) has applied for a new Development Agreement to ensure the completion of the project by extending the approval to 15 years, with the possibility of a 5-year extension (20 years total), from the effective date of City Council approval. The Development Agreement is being requested with the proposed project that identifies a range of developer and City obligations and responsibilities for how the Project development may occur in the coming years. The DA does not propose to change the project description, standards, or required obligations, and all the original approvals will remain unchanged. The DA is solely intended to extend approval of the project to 2042 (Proposed Ordinance and Exhibit 1 - Draft Development Agreement).

STAFF ANALYSIS
The proposed actions have been reviewed per the policies of the General Plan, Stockton Municipal City of Stockton Printed on 10/25/2022Page 2 of 5
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Code (SMC), and terms of the Development Agreement. Per SMC 16.128.080 (Findings), a DA can be supported by the City based on the following findings or approval:

1. The Development Agreement is in the best interests of the City, as it would promote housing, commercial, and recreational development and employment opportunities associated with those uses. The Project includes 1,164 single family residential development, 381 multi-family residential development, 8.31 acres of commercial uses, 162-acres of parks and open space and other public facilities including school and fire facilities. The development of the variety of residential development within the Project will support the affordability of housing options and provide new community amenities for Stockton residents. The community will benefit from the completion of the project via the new infrastructure improvements, new jobs, housing opportunities, and civic amenities including trails, parks, and schools.

2. The Development Agreement complies with the City Development Code and other applicable ordinances and regulations, particularly the regulations of Chapter 16.128 pertaining to development agreements.

3. The Development Agreement is consistent with the general land uses objectives, policies, and programs of the General Plan, and the original approval. General Plan compliance includes providing housing towards meeting the City Regional Housing Needs Allocation, providing infrastructure to greenfield areas (LU-6.1E), and providing civic amenities likes open space and parks (LU-3.3E). The Development Agreement would permit the applicant more time to establish the community and provide a mix of land use development opportunities in Stockton, consistent with the General Plan goals and policies, including the creation of jobs.

4. The Development Agreement will not endanger, jeopardize, or otherwise constitute a hazard to the public convenience, health, interest, safety, or general welfare in that projects constructed pursuant to it are required to comply with all health and safety regulations, zoning requirements, infrastructure provision, and General Plan policies. Future construction to implement the project would include enhanced flood protection measures, new open space and trail connections, and new streets that would include lighting and pedestrian access throughout the project.

5. The Development Agreement complies with the conditions, requirements, restrictions, and terms of Section 16.128.060(B) (Preparation and Content - Proposed Development Agreement).

6. While the Development Agreement itself is not subject to the California Environmental Quality Act (CEQA) and the City’s CEQA Guidelines, the Project EIR anticipated potential impacts and proposed mitigation measures that have been incorporated to mitigate all identified impacts to a less-than-significant level. The EIR is also referenced in the DA to ensure compliance by the Applicant.

On August 8, 2022, the Development Review Committee (DRC) reviewed the requested Development Agreement and recommended that the Planning Commission approve the proposed agreement. The DRC found that the request for the DA would not adversely affect the provisions of the General Plan, applicable provisions of the Development Code, the previous approvals, or the character of the site or its surroundings, because the site is still designated for the same uses as City of Stockton Printed on 10/25/2022Page 3 of 5
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previously approved. The capacities of community resources would not be changed because all required infrastructure and public facilities would be provided for the project, per the Conditions of Approval on the Tentative Map, which would be extended via the new DA. Therefore, the required findings in Section 16.128.080 of the SMC for Development Agreements can be made in the affirmative.

Environmental Review
The proposed request for a new DA is exempt from CEQA according to CEQA Guideline Section 15061(b)(3) (General Rule) of Title 14 of the California Code of Regulations. Under the general rule exemption, a project that has no potential for causing a significant effect on the environment is exempt from further CEQA review. The proposed Project creates a new Development Agreement for an approved project and will not result in a physical change to the existing project properties.

Construction of the project would have to adhere to the certified Delta Cove Environmental Impact Report (EIR) and the 2017 Addendum to the EIR. All mitigation measures identified in the Certified FEIR and the project’s Mitigation Monitoring and Reporting program remain applicable to the project, and no new mitigation is required.

PUBLIC COMMENT
A virtual neighborhood meeting was held on August 10, 2022, to discuss the proposed DA by the Applicant and City per 16.88.025 (Review Procedures). Notice for the meeting was mailed to all property owners within 300 feet of all subject sites. The meeting was attended by the Developer and city staff, but no citizens attended the meeting or submitted comments on the Project.

Planning Commission
On September 22, 2022, the Stockton Planning Commission recommended that the City Council approve the proposed Project. No written comments were submitted just prior to, or at, the Planning Commission hearing. The Planning Commission voted 5-0 (Jones and Mountain absent) approving a recommendation to the City Council to adopt an ordinance approving the Delta Cove DA (Attachment C - Planning Commission Resolution 2022-09-22-0501).

Public Notice
Notice for the City Council meeting was published in the Record on October 20, 2022, and a mailed notice was sent to all property owners included within the DA boundary and within 300 feet of the subject sites at least ten (10) days before the hearing, in accordance with SMC Section 16.88.030. To date, Staff has not received any comments from the public on this Project.

FISCAL IMPACT
All application fees were paid to cover staff time for processing the requested actions. According to the approved project materials, the proposed project will result in a positive effect on the City to cover expenses associated with new or expanded public facilities and services as a result of the collection of one-time utility connection and Public Facilities Fees (PFF). Other plan check and permit fees will be generated based on construction valuation. In addition to the immediate permit fee revenue, the City of Stockton Printed on 10/25/2022Page 4 of 5
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project estimates that the long-term result of the fully completed project will primarily increase annual property taxes and some minor sales tax revenue during the construction of the project and at completion.

Attachment A - Location and Context Map
Attachment B - Project Plans
Attachment C - Planning Commission Resolution 2022-09-22-0501 City of Stockton Printed on 10/25/2022Page 5 of 5
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Delta Cove Planned Development • 5
LEGEND
City Limits
Sphere of Influence
Delta Cove PD Area
ExhIbIT 1.4: AERIAL PhOTOGRAPh
ExhIbIT 1.3: VIcINITy MAP
Source:

San Joaquin County, California -
Geographic Information Systems

PROJECT SITE

MOSHER SLOUGH

BEAR CREEK

OTTO DRIVE

TWIN CREEKS

RESIDENTIAL AREA

SHIMA TRACT

FUTURE TRINITY PKWY
“Stockton Sphere of Influence”
exhibit dated September 9, 2009
Delta Cove Project Area
Attachment A
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Planned Development (PD) Project
P09-160
Planned Development (PD3-08)
Adopted November 13, 2008
Delta Cove Planned Development Amendment
(P09-160)
August 26, 2010
All of the Delta Cove Project Materials can be downloaded from the Stockton Community Development Department website at:
http://www.stocktonca.gov/government/departments/communityDevelop/ cdPlanEnvDelt.html
Attachment B
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42 • Delta Cove Planned Development
eXHibit 4.1: ConCeptU aL Land pLan
Legend
Residential Low density (0-8.7 du/ac)
Residential Medium density (8.8-17.4 du/ac)
Residential High density (17.5-29.0 du/ac)
Commercial neighborhood
Public Facility (neighborhood Sports Park/School)
Open Space / Parks
School
Site
Neighborhood
SportS park
1 2
3 MoSher SloUgh
otto driVe
triNit Y parkWaY
bear creek
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EXHIBIT 1

ORDINANCE NO.

AN ORDINANCE APPROVING THE DEVELOPMENT AGREEMENT FOR THE

DELTA COVE PROJECT

BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF STOCKTON, AS FOLLOWS:

SECTION I. FINDINGS

Pursuant to Stockton Municipal Code section 16.128.080, the City Council of the City of Stockton hereby finds:

A. The Development Agreement is in the best interests of the City, as it would promote housing, commercial, and recreational development and employment opportunities associated with those uses. The Project includes 1,164 single family residential development, 381 multi -family residential development, 8.31 acres of commercial uses, 162 -acres of parks and open space and other public facilities including school and fire facilities. The development of a variety of res idential development within the Project will support the affordability of housing options and provide new community amenities for Stockton residents. The community will benefit from the completion of the project via the new infrastructure improvements, new jobs, and housing opportunities, and civic amenities including trails, parks, and schools. The Project will also add needed infrastructure for Trinity Parkway and Otto Drive that would allow adjacent Sanctuary Projects to be developed and provide additional housing and civic opportunities.

B. The Development Agreement complies with the City Development Code and other applicable ordinances and regulations, particularly the regulations of Chapter 16.128 pertaining to development agreements.

C. The Development Ag reement is consistent with the general land uses objectives, policies, and programs of the General Plan, and the original approval. General Plan compliance includes providing housing towards meeting the City Regional Housing Needs Allocation, providing infrastructure to greenfield areas (LU -6.1E), and providing civic amenities likes open space and parks (LU -3.3E). The Development Agreement would permit the applicant more time to establish the community and provide a mix of land use development opportunities in Stockton, consistent with the General Plan goals and policies, including the creation of jobs.

D. The Development Agreement will not endanger, jeopardize, or Attachment C
164
EXHIBIT 1

otherwise constitute a hazard to the public convenience, health, interest, safety, or general welfare in that projects constructed pursuant to it are required to comply with all health and safety regulations, zoning requirements, infrastructure provision, and General Plan policies. Future construction to implement the project would include enhanced f lood protection measures, new open space and trail connections, and new streets that would include lighting and pedestrian access throughout the project.

E. The Development Agreement complies with the conditions, requirements, restrictions, and terms of Sect ion 16.128.060(B) (Preparation and Content - Proposed Development Agreement).

F. While the Development Agreement itself is exempt from the California Environmental Quality Act (CEQA) and the City’s CEQA Guidelines per section 15061(b)(3) (General Rule) , the Project EIR anticipated potential impacts and proposed mitigation measures that have been incorporated to mitigate all identified impacts to a less -than-significant level. The EIR is also referenced in the DA to ensure compliance by the Applicant.

SECTION II. DEVELOPMENT AGREEMENT

Pursuant to Stockton Municipal Code Section 16.128.070, the Stockton City Council has conducted a public hearing, and hereby approves the Development Agreement for the Delta Cove Park Project, attached as Exhibit 1a in substantially the form to be executed, based on the above findings.

SECTION III. EFFECTIVE DATE

This Ordinance shall take effect and be in full force thirty (30) days after its passage.

ADOPTED:

EFFECTIVE:

ATTEST:

KEVIN J. LINCOLN II
Mayor of the City of Stockton

ELIZA R. GARZA, CMC
City Clerk of the City of Stockton2
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Exhibit 1a
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ORDINANCE NO.

AN ORDINANCE APPROVING THE DEVELOPMENT AGREEMENT FOR THE DELTA

COVE PROJECT

BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF STOCKTON, AS FOLLOWS:

SECTION I. FINDINGS

Pursuant to Stockton Municipal Code section 16.128.080, the City Council of the City of Stockton hereby finds:

A. The Development Agreement is in the best interests of the City, as it would promote housing, commercial, and recreational development and employment opportunities associated with those uses. The Project includes 1,164 single family residential development, 381 multi -family residential development, 8.31 acres of commercial uses, 162 -acres of parks and open space and other public facilities including school and fire facilities. The development of a variety of residential development within the Project will support the affordability of housing options and provide new community amenities for Stockton residents. The community will benefit from the completion of the project via the new infrastructure improvements, new jobs, and housing opportunities, and civic amenities including trails, parks, and schools. The Project will also add needed infrastructure for Trinity Parkway and Otto Drive that would allow adjacent Sanctuary Projects to be developed and provide addition al housing and civic opportunities.

D. The Development Agreement will not endanger, jeopardize, or otherwise constitute a hazard to the public convenience, health, interest, 210

safety, or general welfare in that projects constructed pursuant to it are required to comply with all health and safety regulations, zoning requirements, infrastructure provision, and General Plan policies. Future construction to implement the project would include enhanced f lood protection measures, new open space and trail connections, and new streets that would include lighting and pedestrian access throughout the project.

E. The Development Agreement complies with the conditions, requirements, restrictions, and terms of Section 16.128.060(B) (Preparation and Content - Proposed Development Agreement).

F. While the Development Agreement itself is exempt from the California Environmental Quality Act (CEQA) and the City’s CEQA Guidelines per section 15061(b)(3) (General Rule), the Project EIR anticipated potential impacts and proposed mitigation measures that have been incorporated to mitigate all identified impacts to a less-than-significant level. The EIR is also referenced in the DA to ensure compliance by the Applicant.

SECTION II. DEVELOPMENT AGREEMENT

Pursuant to Stockton Municipal Code Section 16.128.070, the Stockton City Council has conducted a public hearing, and hereby approves the Development Agreement for the Delta Cove Project, attached as Exhibit 1, to be executed, based on the above findings.

SECTION III. EFFECTIVE DATE

This Ordinance shall take effect and be in full force thirty (30) days after its passage.

ADOPTED:

EFFECTIVE:

ATTEST:

KEVIN J. LINCOLN II
Mayor of the City of Stockton

ELIZA R. GARZA, CMC
City Clerk of the City of Stockton

211

DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (“Agreement”) dated for the convenience of the Parties this ____ day of __________, 20__, (“Agreement Date”), is entered into by and between DEAN SPANOS and DEA SPANOS BERBERIAN, CO-TRUSTEES OF THE ALEX AND FAYE SPANOS FAMILY TRUST (“ Developer”), the CITY OF STOCKTON, a California municipal corporation (“City”). Developer and City are sometimes referred to individually herein as a “Party” and collectively as the “Parties.”
NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein and other considerations, the value and adequacy of which are hereby acknowledged, the Parties hereby agree as follows:

RECITALS

A. In order to strengthen the public planning process, encourage private participation in comprehensive planning and reduce the economic costs and risks of development, the Legislature of the State of California enacted section 65864 et seq . of the Government Code (“Development Agreement Statute”), which authorizes a city and a developer having a legal or equitable interest in real property to enter into a binding, long- term development agreement, establishing certain development rights in the property.

B. In accordance with the Development Agreement Statute, the City Council has adopted a development agreement ordinance codified as Chapter 16.128 of the City’s Municipal Code (“Development Agreement Ordinance”), which authorizes the execution of development agreements and sets forth the required contents and form of those agreements. The provisions of the Development Agreement Statute and the City’s Development Agreement Ordinance are collectively referred to herein as the “Development Agreement Law.”

C. Developer has a legal and/or equitable in terest in certain real property consisting of approximately 360 acres located in Stockton, as more particularly described on Exhibit A and shown on Exhibit B to this Agreement (“Property” or “Project Site”). The Property is generally located west of Interstate 5, north and east of Mosher Slough. The overall Project Site is vacant and is currently located within City limits.

D. Developer proposes to plan, develop, construct, operate and maintain on the Project Site, a development containing residential, commercial, professional, and business uses, consistent with the Planned Development. Any reference in this Agreement to the “Project” shall mean and include the “Project Site,” and any reference in this Agreement to the “Project Site” shall mean and include the “Project.”

E. In accordance with the California Environment Quality Act (Pub. Res. Code §§21000, et seq.) and its Guidelines (C.C.R., Title 14, §§15000, et seq.), as each is amended from time to time (“CEQA”), City certified as adequate and complete the FEIR for the Project.

F. As of the execution of this Agreement by the Parties, various land use regulations, EXHIBIT 1 - Draft Development Agreement
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entitlements, grants, permits and other approvals have been adopted, issued, and/or granted by City relating to the Project (collectively “Existing Approvals”), including, without limitation, all of the following:

1. Final Environmental Impact Report:

a. Final Environmental Impact Report (FEIR11- 05) for the Preserve Residential Project (Stockton City Council Resolution No. 08-0496);

b. Addendum/Initial Study to Previously- Certified Final Environmental Impact Report (P09- 160) for the Delta Cove Planned Development Project (Stockton City Council Resolution No. 10-0355);

2. Vesting Tentative Map (Map contained in Exhibit C and Conditions of Approval contained in Exhibit D):

a. Vesting Tentative Map for large lots (VTM P09-160) (Stockton City Council Resolution No. ___________);

b. Two-Year Time Extension and Amendments to the Previous Conditions of Approval for the Delta Cove Vesting Tentative Map, Located West of Interstate 5 (I -5), and Bounded by Bear Creek to the North, Mosher Slough to the South and West, and the Existing Twin Creeks Estates Neighborhood to the East (TM14-07/P15-500) (Stockton Planning Commission Resolution No. 2017-08-10-0501);

c. Two-Year Time Extension for an Approved Vesting Tentative Map (Delta Cove, VTMP09-160/P19- 0585) (Stockton Planning
Commission Resolution No. 2020-05-14-0301; and

d. One-Year Time Extension for an Approved Vesting Tentative Map for Del ta Cove (VTM P09-160/P19- 0585) (Stockton Planning Commission Resolution No. 2021-06-24-0302.

3. General Plan Amendment (GPA11-05) (Stockton City Council Resolution 08-0497);

4. Planned Development (PD 03-08) Adopted 11/13/2008 (“Planned Development”);

5. Zoning approval (Z-13-05) (“Zoning”);

G. The Project’s “Subsequent Approvals ” (each referred to individually as a “Subsequent Approval”) shall mean those City permits, entitlements, approvals, or other grants of authority (and all text, terms and conditions of approval related thereto), that may be necessary or desirable for the development of the project, that are sought by Developer, and that are granted EXHIBIT 1 - Draft Development Agreement
213
by City after the City Council adopts the Approving Ordinance (defined below), including without limitation, and subdivision maps. The Project’s Existing Approvals and the Subsequent Approvals shall collectively be referred to as the “Project Approvals.”

H. On ______________, 20___ following a duly noticed and conducted public hearing, the Planning Commission of the City (“ Planning Commission”), the hearing body for purposes of the Development Agreement Statute and Enabling Resolution, adopted Resolutions that affirmed CEQA compliance for this Agreement, adopted findings that this Agreement is consistent with the City’s General Plan and the Existing Approvals and recommended that this Agreement be approved by the City Council.

I. On _________, 20__ following a duly noticed and conducted public hearing, the Stockton City Council (“ City Council”) introduced and adopted Ordinance No. ________, an ordinance that affirms CEQA compliance, that adopts findings that this Agreement is consistent with the City’s General Plan and the Existing Approvals, that approves this Agreement, and that directs this Ag reement’s execution by City (“ Approving Ordinance”). The City adopted the Approving Ordinance on _____________, 20__ and the Approving Ordinance became effective thirty (30) days later (“Effective Date”).

J. This Agreement sets forth, among other things, the applicable fees, policies, and zoning requirements that apply to development of the Project and provides Developer with a vested right to develop the Project on the Property in accordance with the City’s General Plan, and the land use designations and zoning applicable to the Property, each as in effect as of the Effective Date. Consistent with State policy expressed by Government Code section 65864, this Agreement is intended to reduce the uncertainty of the planning and entitlement process which can result in waste of resources and escalation of housing costs; provide certain assurances that Developer may proceed with development of the Project in accordance with the Project Approvals and Applicable Law (as defined herein) and subject to the terms of this Agreement; strengthen the public planning process; encourage private participation in comprehensive planning; and reduce the economic costs of development.

K. Under this Agreement, Developer will provide substantial public benefits in connection with the Project as follows:

1. Infrastructure Improvements

a. Traffic connectivity and improved circulation associated with the Project will provide convenient access to existing and future commercial shopping centers.

b. The Project will provide connection of the Twin Creeks neighborhood from Otto Drive to the existing Trinity Parkway bridge at Bear Creek.

c. New connectivity from the Project will reduce trips from Otto Drive to Hammer Lane and I-5 northbound to Eight Mile Road.

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d. Development of the Project will accelerate installation of traffic and circulation improvements that will provide improved levels of service at intersections at Hammer Lane and I -5 northbound and the Eight Mile Road interchange and improved access to the McAuliffe Middle School located on McAuliffe Road located east of I-5 via the Trinity Parkway bridge.

e. The Project will provide connectivity to future development to the south and west from Hammer Lane to Shima Tract and the I-5 and Hammer Lane interchange.

2. Civic and Municipal Benefits for Stockton Residents:

a. The Project includes single family residential development, multi-family residential development, commercial uses, open space and park and other public facilities including school and fire fac ilities. The development of the variety of residential development within the Project will support the affordability of housing options and provide new community amenities for Stockton residents.

b. The Project includes amenities including a pedestrian trail system throughout the Project that will connect to the existing trail system at Westlake and Spanos Park West and the future trail system included at proposed projects on Shima Tract and Hammer Lane, a large community park and small neighborhood parks for existing and new Stockton residents.

3. Economic Benefits to City of Stockton:

a. Permits and plan check fees associated with the approval of improvement plans and final maps associated with the Project will add to financial resources to support the City of Stockton Permit Center.

b. New residents living within the Project will be added to local employment base for Stockton and San Joaquin County that could attract new business.

c. Building Permits for the Project will continue to deliver revenue that support employment at the City of Stockton during
installation of the land development improvements and home construction within the Project.

d. The development will support the success of the Stockton EXHIBIT 1 - Draft Development Agreement
215
Economic Stimulus Plan (“SESP”) and continue to promote local employment for Stockton residents.

e. The Community Facility Districts (“CFDs”) planned for the Project will finance the installation and maintenance of public infrastructure improvements.

f. The Project will provide improved access to existing and future commercial development and thereby increase sales tax revenue to the benefit of the City of Stockton and its residents.

g. The addition of the residential units and commercial development within the Project will increase property tax revenue to the City of Stockton and San Joaquin County.

L. As provided in this Agreement, the Parties intend to work in good faith to consider potential use of public financing for certain Public Benefit Facilities needed in connection with the Project and as identified in Section 6.1.2 under the Statewide Community Infrastructure Program, a program created to facilitate tax exempt financing of eligible impact fee and public improvement costs (“ SCIP”) (or other similar program established by the California Statewide Community Development Authority (“ CSCDA”)) or the Mello -Roos Community Facilities Act of 1982 (Government Code sections 53311 et seq. ) (“Mello-Roos Act”). The financing of such items through SCIP (or other similar CSCDA program) or a Mello-Roos Act community facilities district (“CFD”) would fulfill the express legislative goals of the Development Agreement Statute; strengthen the public planning process by linking development rights to financing of public facilities; encourage participation by private landowners in the comprehensive planning required by such financing; reduce economic risk and costs of development by spreading the costs of needed facilities over time; and allow Developer, in exchange for voluntary participation in such financing programs, to proceed with development in accordance with existing City policies, rules and regulations. The Development Agreement contains simila r financing provisions addressing the potential use of SCIP (or other similar CSCDA program), a Mello -Roos Act CFD or private financing to finance construction and/or acquisition of certain public facilities needed in connection with the Project.

M. In addition to the potential new capital facilities CFD or SCIP financing mechanisms described above, Developer has agreed to include all of the Property, other than those portions thereof to be dedicated in fee to City for public facilities, in the Citywi de Landscape Maintenance District 96 -2 and the Citywide Services and Maintenance CFD -2018-03 mandated by Council Policy 5.05 and the City’s Capital Financing and Debt Management Policy, or in its own LMD and CFD with similar requirements as the Citywide La ndscape Maintenance District 96-2 and Citywide Services and Maintenance CFD-2018-03. In order to ensure private funding of ongoing maintenance of all City owned water quality detention basins and facilities, Developer has further agreed to either (a) cause all of the Property, except portions thereof to be dedicated in fee to City for public uses, to be annexed into the City’s existing Storm Water Maintenance Assessment District No. 2005- 02 or (b) establish a new CFD maintenance district and a special tax levy for such purpose that would include all of the Property, except portions thereof to be EXHIBIT 1 - Draft Development Agreement
216
dedicated in fee to City for public uses, with the option to be selected by City.

N. City has further determined that by entering into this Agreement, City will furthe r the purposes set forth in the Development Agreement Ordinance and City will benefit from an increased range of housing options and publicly accessible civic and recreational space created by the Project for residents of City.

O. For the reasons recited herein, City and Developer have determined that the Project is a development for which this Agreement is appropriate. This Agreement will eliminate uncertainty regarding Project Approvals, thereby encouraging planning for, investment in, and commitment to use and development of the Property. Development of the Property in accordance with the terms of this Agreement will in turn provide substantial public benefits to the City, thereby achieving the goals and purposes for which the Development Agreement Law was enacted.

P. The terms and conditions of this Agreement have undergone review by City staff, the Planning Commission and the City Council at publicly noticed meetings, and have been found to be fair, just and reasonable, in conformance with the Development Agreement Law and consistent with the goals, policies, standards and land use designations specified in the General Plan, and consistent with the requirement under Government Code Section 65867.5, and further, the City Council finds that the economic interes ts of City’s citizens and the public health, safety and welfare will be best served by entering into this Agreement.

Q. City has approved this Agreement by Ordinance No. , adopt ed by the City
Council on , 20 (“ Enacting Ordinance”).

AGREEMENT

ARTICLE 1.

DEFINITIONS

“Advanced Costs” is defined in Section 6.1.3.

“Agreement” means this Development Agreement and all Exhibits hereto.

“Agreement Date” means the reference date identified in the preamble to this Agreement.

“Annual Review” is defined in Section 10.1.

“Applicable City Regulations” is defined in Section 4.2.

“Applicable Law” means the Applicable City Regulations and all State and Federal laws and regulations applicable to the Property and the Project as such State and Federal laws are enacted, adopted, and amended from time to time, as more particularly described in Section 4.5 (Changes in Applicable Law).

“Assignee” is defined in Section 13.3.

EXHIBIT 1 - Draft Development Agreement
217

“Assignment” is defined in Section 13.2.

“Capital Financing and Debt Management Policy” means the City’s Debt Management Policy for Capital and Land Secured Financing, Policy Number 17.01.040, with an effective date of October 30, 2018, as it may be amended from time to time.

“CEQA” is defined in Recital E.

“CEQA Guidelines” means the State CEQA Guidelines (California Code of Regulations, Title 14, section 15000, et seq.), as amended from time to time.

“CFD” is defined in Recital L.

“CFD Bonds” is defined in Section 6.1.4.

“Changes in Applicable Law” is defined in Section 4.5.

“City” means the City of Stockton, a California municipal corporation.

“City Council” means the City Council of the City of Stockton.

“City Manager” means the City’s City Manager or his or her designee.

“City Parties” means and includes City and its elected and appointed officials, officers, agents, employees, contractors and representatives.

“Claims” means liabilities, obligations, orders, claims, damages, fines, penalties and expenses, including attorneys’ fees and costs.

“Connection Fees” means those fees charged by City on a citywide basis or by a utility provider to utility users as a cost for connecting water, sanitary sewer, and other applicable utilities, except for any such fee or portion thereof that constitutes an Impact Fee, as defined below.

“Consultant Fees” is defined in Section 5.2.

“CSCDA” is defined in Recital L.

“Default” is defined in Section 14.1.

“Developer” is defined in the first paragraph and its permitted successors.

“Development Agreement Law” is defined in Recital B.

“Development Agreement Ordinance” is defined in Recital B.

EXHIBIT 1 - Draft Development Agreement
218
“Development Agreement Statute” is defined in Recital A.

“Effective Date” means the date that this Agreement becomes effective as determined under Section 3.1.

“Enacting Ordinance” refers to the Ordinance identified in Recital Q.

“Exactions” means exactions that have been imposed by City under this Agreement or in connection with the Existing Approvals, including requirements for acquisition, dedication or reservation of land, and obligations to construct on-site or off-site public and private infrastructure improvements such as roadways, utilities or other improvements necessary to support the Project, whether such exactions constitute subdivision improvements, mitigation measures in connection with environmental review of the Project, or impositions made under Applicable City Regulations.

The term “Exactions” also includes future exactions imposed by City in connection with the issuance of Subsequent Approvals provided such future exactions are contemplated by the Existing Approvals or otherwise permitted by the terms of this Agreement. For purposes of this Agreement, Exactions do not include Impact Fees.

“Existing Approvals” is defined in Recital E.

“Extension Term” is defined in Section 3.2.2.

“FEIR” is defined in Recital E.

“Final” means the date on which (1) all applicable appeal periods for the filing of any administrative appeal challenging the issuance or effectiveness of each of the Existing Approvals and this Agreement shall have expired and no such appeal shall have been filed; (2) in the event of any administrative appeal or Litigation Challenge challenging any of the Existing Approvals and/or this Agreement, that the administrative appeal or Litigation Challenge is settled or there is a final determination or judgment upholding the Existing Approvals and this Agreement, as applicable, and the administrative appeal or Litigation Challenge is no longer subject to appeal.

“General Plan” means the Envision Stockton 2040 General Plan of the City of Stockton adopted by the City Council on December 4, 2018.

“HOA” is defined as a Home Owner’s Association.

“Impact Fees” means the monetary amount charged by City in connection with a development project for the purpose of defraying all or a portion of the cost of mitigating the impacts of the development project or development of the public facilities related to the development project, including, any “fee” as that term is defined by Government Code section 66000(b). For purposes of this Agreement, a fee that meets both the definitions of an Impact Fee and an Exaction will be considered to be an Impact Fee. Impact Fees do not include Other Agency Fees.

“Impact Fee Lock Period” is defined in Section 5.1.

EXHIBIT 1 - Draft Development Agreement
219

“Initial Term” is defined in Section 3.2.1.

“Litigation Challenge” is defined in Section 9.1.1.

“Litigation Delay” is defined in Section 15.4.2.

“LMD-96-2” is defined in Section 6.2.6.

“Major Modification” is defined in Section 12.2.

“Mello-Roos Act” is defined in Recital L.

“Minor Modification” is defined in Section 12.2.

“Mortgage” means any mortgage, deed of trust, security agreement, and other like security instrument encumbering all or any portion of the Property, or any of the Developer’s rights under this Agreement.

“Mortgagee” means the holder of any Mortgage, and any successor, assignee or transferee of any such Mortgage holder.

“Municipal Code” means and refers to the Municipal Code of the City of Stockton, as amended from time to time.

“New City Laws ” means and includes any ordinances, resolutions, orders, rules, official policies, standards, specifications, guidelines or other regulations, which are promulgated or adopted by the City (including but not limited to any City agency, body, department, officer or employee) or its electorate (through their power of initiative or otherwise) after the Effective Date.

“Notice of Breach” is defined in Section 14.1.

“Other Agency Fees” means fees and charges imposed by other governmental agencies which in some cases are collected by City on behalf of such other agencies.

“Party/Parties” is defined in the introductory paragraph preceding the Recitals of this Agreement.

“Permitted Delay” is defined in Section 15.4.1.

“Planning Commission” means the Planning Commission of the City of Stockton.

“Prevailing Wage Laws” is defined in Section 7.2.1.

“Processing Fees” means all fees charged on a City -wide basis to cover the cost of City EXHIBIT 1 - Draft Development Agreement
220
processing of Subsequent Approvals and further including any required supplemental or further environmental review, plan checking, inspection and monitoring at the rates which are in effect at the time those permits, approvals, parcel and/or subdivision maps, entitlements, reviews or inspections are applied for or requested.

“Project” is defined in Recital D.

“Project Approvals ” means the Existing Approvals and, when and as approved in accordance with the terms of this Agreement, the Subsequent Approvals.

“Property” is defined in Recital C.

“Public Benefit Facilities” is defined in Section 6.1.2.

“Special Tax” is defined in Section 6.1.5.

“Subdivision Map Act ” means California Government Code sections 66410 through 66499.58, as it may be amended from time to time.

“Subsequent Approvals” is defined in Section 8.1.

“Subsequent Discretionary Approvals” is defined in Section 8.1.2.

“Subsequent Ministerial Approvals” is defined in Section 8.1.1.

“Term” is defined in Section 3.2.1.

ARTICLE 2.

REPRESENTATIONS AND WARRANTIES

2.1 City Representations and Warranties. Ci
ty represents and warrants to Developer
that:

2.1.1 Corporation Formation and Powers. City is a municipal corporation, and has all necessary powers under the laws of the State of California to enter into and perform the undertakings and obligations of City under this Agreement.

2.1.2 Duly Authorized. The execution and delivery of this Agreement and the performance of the obligations of City hereunder have been duly authorized by all necessary City Council action and all necessary approvals have been obtained.

2.1.3 Valid Obligation . Thi
s Agreement is a valid obligation of City and is
enforceable in accordance with its terms.

The f
oregoing representations and warranties are made as of the Agreement Date.

During the Term of this Agreement, City shall, upon learning of any fact or condition which would EXHIBIT 1 - Draft Development Agreement
221
cause any of the warranties and representations in this Section 2.1 not to be true, immediately give written notice of such fact or condition to Developer.

2.2 Developer Representations and Warranties. D eveloper represents and warrants to City that:

2.2.1 Company Formation and Powers. Developer has all necessary powers under the laws of the State of California to own property and in all other respects enter into and perform the undertakings and obligations of Developer under this Agreement.

2.2.2 Duly Authorized. The execution and delivery of this Agreement and the performance of the obligations of Developer hereunder have been duly authorized by all necessary corporate, partnership or company action and all necessary shareholder, member or partner approvals, as applicable, have been obtained.

2.2.3 Valid Obligation. Thi
s Agreement is a valid obligation of Developer and is
enforceable in accordance with its terms.

2.2.4 Developer’s Property Interest. Developer has a legal or equitable interest in each of the parcels comprising the Property.

2.2.5 No Bankruptcy. Developer has not (a) made a general assignment for the benefit of creditors; (b) filed any voluntary petition in bankruptcy or suffered the filing of any involuntary petition by Developer’s creditors; (c) suffered the appointment of a receiver to take possession of all, or substantially all, of Developer’s assets; (d) suffered the attachment or other judicial seizure of all, or substantially all, of Developer’s assets; or (e) admitted in writing its inability to pay its debts as they come due.

The f
oregoing representations and warranties are made as of the Agreement Date. During the Term of this Agreement, Developer shall, upon learning of any fact or condition which would cause any of the warranties and representations in this 2.2 not to be true, immediately give written notice of such fact or condition to City.

ARTICLE 3.

EFFECTIVE DATE AND TERM

3.1 Effective Date. The Effective Date of this Agreement (“Effective Date ”) shall be
the later of (a) the date that is thirty (30) days after the date the Enacting Ordinance is adopted, or (b) the date this Agreement is fully executed by the Parties. Said date shall function as the Effective Date for purposes of this Agreement. The Parties acknowledge that section 65868.5 of the Development Agreement Statute requires that this Agreement be recorded with the County Recorder no later than ten (10) days after the City enters into this Agreement, and that the burdens of this Agreement shall be binding upon, and the benefits of this Agreement shall inure to, all permitted successors in interest to the Parties to this Agreement. The City Clerk shall cause such recordation.

EXHIBIT 1 - Draft Development Agreement
222

3.2 Term

3.2.1 Initial Term of Agreement . Subj ect to extension for Litigation Delay as provided in Section 15.4.2 below, the “ Initial Term” of this Agreement shall commence on the Effective Date and shall expire on the 15 th anniversary of the Effective Date, unless extended or earlier terminated as provided herein. As used herein “Term ” means the Initial Term, plus any Extension Term (defined below).

3.2.2 Extension of Initial Term . T he Initial Term of this Agreement shall be extended from the date of expiration of the Initial Term until the date which is five (5) years following the expiration of the Initial Term (“ Extension Term”), provided that at the end of the Initial Term the following must be completed and/or complied with:

(a) De
veloper is not, at the time, in Default of any of its obligations hereunder following notice and expiration of applicable cure periods;

(b) the applicable Developer warranties and representations in Section

2.2 above continue to be true and correct;

(c) Developer has obtained a large lot Final Map for the Project (which may include a Subdivision Improvement Agreement with security for phased performance); and
(d) The City of Stockton Community Development Director is satisfied that Developer has either (i) substantially completed the work specified as Phase 1 and Phase 2 as set forth in the Delta Cove Planned Development, or (ii) substantially commenced the work specified within the Master Agreement (defined below) by the end of the Initial Term. The Master Agreement is an agreement (to be agreed upon during the Term) between City and Developer regarding the phasing of the Project pursuant to Condition 19 of the Vesting Tentative Map for large lots (VTM P09-160).

Following the expiration of the Term, or the earlier completion of development of the Project and satisfaction o f all of Developer's obligations in connection therewith, this Agreement shall be deemed terminated and of no further force and effect.

3.2.3 Memorandum of Extension. If the conditions under Section 3.2.2 are met and an Extension Term applies, City and Developer agree to execute, acknowledge and record in the Official Records of San Joaquin County a memorandum evidencing the Extension Term.

ARTICLE 4.

DEVELO

PMENT OF THE PROPERTY

4.1 Vested Rights . The Property is hereby made subject to the provisions of this Agreement. Developer shall have the vested right to develop the Property and the Project in accordance with and subject to the Existing Approvals, the Subsequent Approvals, Applicable Law and this Agreement, which shall control the permitted uses, density and intensity of use of the Property, rate of development, and the maximum height and size of buildings on the Property.

EXHIBIT 1 - Draft Development Agreement
223

4.2 Applicable City Regulations. C ity and Developer acknowledge and agree that per the Development Agreement Statute, City is restricted in its authority to limit its police power by contract and that the particular limitations, reservations and exceptions set forth in this Agreement are intended to reserve to City those selected police powers that cannot be so limited.

Notwithstanding the foregoing reservations and exceptions, it is the intent of City and Developer that this Agreement be construed to provide Developer with rights afforded by law, including but not limited to, the Development Agreement Statute. Therefore, the laws, rules, regulations, official policies, standards, and specifications of City applicable to the development of the Property and Project shall be, collectively, the following “Applicable City Regulations”:

4.2.1 Project Approvals and Agreement. Those rules, regulations, official policies, standards, and specifications of the City set forth in the Project Approvals and this Agreement;

4.2.2 City Rules as of Effective Date . W
ith respect to matter s not addressed by
and not otherwise inconsistent with the Project Approvals and this Agreement, those laws, rules, regulations, official policies, standards and specifications (including City ordinances and resolutions) in force and effect on the Effective Date governing permitted uses, building locations, timing and manner of construction, densities, intensities of uses, heights and sizes, subdivisions and requirements for on- and off-site infrastructure and public improvements, including the City’s zoning development standards applicable to the Project and the Property;

4.2.3 Procedural Rules. Ne
w City Laws that relate to hearing bodies, petitions,
applications, notices, findings, records, hearings, reports, recommendations, appeals and any other matter of procedure imposed at any time, provided such New City Laws are uniformly applied on a City-wide basis to all substantially similar types of development projects and properties;

4.2.4 Building Codes . Ne
w City Laws that revise City’s uniform construction
codes, including City’s building code, plumbing code, mechanical code, electrical code, fire code, grading code and other uniform construction codes, as of the date of permit issuance, provided, that such New City Laws are uniformly applied on a City- wide basis to al l substantially similar types of development projects and properties;

4.2.5 Public Health and Safety. New City Laws that are necessary to protect physical health and safety of the public; provided, that such New City Laws are uniformly applied on a City-wide basis to all substantially similar types of development projects and properties;

4.2.6 New City Laws Not in Conflict. New City Laws that do not materially interfere with Developer’s vested rights under this Agreement or the Project Approvals;

4.2.7 New City Laws Mandated by Changes in Applicable Law. Ne w City Laws
mandated by Changes in Applicable Law as provided in Section 4.5 below; and

4.2.8 Other New City Laws . N
ew City Laws that do not apply to the Property
and/or the Project due to the limitations set forth above , but which the Parties mutually agree in EXHIBIT 1 - Draft Development Agreement
224
writing shall be incorporated into the Applicable City Regulations, including conforming changes in the capacity of certain Public Benefit Facilities.

4.3 Life of Project Approvals . The term of any and all Project Approvals shall automatically be extended for the longer of the Term of this Agreement or the term otherwise applicable to such Project Approvals. Without limiting the generality of the foregoing, pursuant to the Subdivision Map Act, any vesting or tentative maps heretofore or hereafter approved in connection with development of the Project or the Property shall be extended for the Term (and may be subject to other extensions provided under the Subdivision Map Act). In the event that this Agreement is terminated prior to the expiration of the Term, the term of any Project Approval and the vesting period for any subdivision map approved as a Project Approval shall be the term otherwise applicable to the approval, which shall commence to run on the date that the Project Approval was issued. If upon expiration of earlier termination of this Agreement and the Project Approvals, Developer has not developed the entirety of the Property consistent with this Agreement and the Project Approvals, then the City Council, i n its discretion, at any time may change the underlying and use designations or entitlements applicable to the parcels comprising such Property consistent with all Applicable Laws and procedures.

4.4 Timing of Development. Ci
ty and Developer acknowledge that Developer cannot
at this time predict what portions of the Project will be included within any phase of the Project, when or the rate at which the phases will be developed or the order in which each phase will be developed. Such decisions can depend upon numerous factors that are not within the control of Developer, such as market orientation and demand, interest rates, absorption rates of residential units, availability of financing and other similar factors. In particular, and not in any limitation of any of the foregoing, since the California Supreme Court held in Pardee Construction Co. v. The Town of Camarillo, 37 Cal.3d 465 (1984), that the failure of the parties therein to consider and expressly provide for the timing of development resulted in a later -adopted initiative restricting the timing of development prevailing over such parties’ agreement, it is the desire to avoid that result by acknowledging that, except as otherwise provided for in this Agreement (including with respect to phasing of the Public Benefit Facilities and other public improvements and community benefits), Developer’s vested rights under this Agreement include the right to develop the Property and the Project in such order and at such rate and at such times as Developer deems appropriate in the exercise of its discretion, subject to the terms, requirements and conditions of the Existing Approvals and this Agreement, including provisions addressing required phasing of on- and-off site public improvements.

4.5 Changes in Applicable Law. As
provided in Section 65869.5 of the Development
Agreement Law, this Agreement shall not preclude the applicability to the Project of changes in laws, regulations, plans or policies, to the extent that such changes ar e specifically mandated and required by (i) changes in State or Federal laws or (ii) any regional governmental agency that, due to the operation of State law (and not the act of City through a memorandum of understanding, joint exercise of powers authority, or otherwise that is undertaken or entered into following the Effective Date) (“Changes in Applicable Law”). In the event Changes in Applicable Law prevent or preclude compliance with one or more provisions of this Agreement, the Parties shall meet and confer in good faith in order to determine whether such provisions of this Agreement shall be modified or suspended, or performance thereof delayed, as may be necessary to comply with EXHIBIT 1 - Draft Development Agreement
225
Changes in Applicable Law. Following the meeting between the Parties, the provisions of this Agreement may, to the extent legally feasible, and upon mutual agreement of the Parties, be modified or suspended, but only to the minimum extent necessary to comply with such Changes in Applicable Law. In such event, this Agreement together with any required modifications shall continue in full force and effect. Nothing in this Agreement shall preclude Developer from contesting by any available means (including administrative or judicial proceedings) such Changes in Applicable Law or their applicability to the Project.

ARTICLE 5.

FEES, EXACTIONS, AND IMPACT FEE CREDITS

5.1 Processing Fees . Ci
ty may charge, and Developer agrees to pay, all uniformly applied Processing Fees for land use approvals, parcel and/or subdivision maps, grading and building permits, general plan maintenance fees, and other entitlements and permits that are applied for on any or all portions of the Project.

5.2 Consultant Fees.

In addition to charging the foregoing Processing Fees, City, in its reasonable discretion and following consultation with Developer, may contract with one or more outside inspectors, engineers or consultants to perform all or any portion of the monitoring, inspection, testing and evaluation services to be performed in connection with construction a nd development of the Project (“ Consultant Fees”). Developer shall pay to City, within thirty (30) days following City’s written demand therefor and the City’s submission of invoices, the full amount of all Consultant Fees, plus a fifteen percent (15%) administration charge. The Consultant Fees, together with the associated administrative charge, shall be in addition to, and not in lieu of, the Processing Fees; provided, however, City agrees not to double-charge Developer (through the imposition of both a Processing Fee and Consultant Fee) for any individual monitoring, inspection, testing or evaluation service.

5.3 Connection Fees. De
veloper shall pay Connection Fees lawfully adopted by the City, and/ or any Connection Fees assessed by third- party utility providers and other agencies assessing such fees at the rates in effect from time to time.

5.4 Other Agency Fees. Not
hing in this Agreement shall preclude City from collecting from Developer Other Agency Fees, which the City is required or has agreed to collect pursuant to Applicable Law.

5.5 Exactions. Ci
ty may impose and Developer shall comply with those Exactions required by this Agreement and the Existing Approvals. In addition, City may impose Exactions in connection with the Subsequent Approvals provided such Exactions are contemplated by the Existing Approvals or otherwise permitted by the terms of this Agreement.

5.6 Area of Benefit . Cons
istent with Municipal Code section 16.72.050, Area of
Benefit, City shall use good faith, diligent efforts to create one or mor e “Areas of Benefit” to facilitate third party developer’s reimbursement of Developer for its/their respective prorate share of the out -of-pocket third party costs incurred by Developer in connection with the design and construction of certain eligible ove rsized storm drainage facilities, sanitary sewer main line EXHIBIT 1 - Draft Development Agreement
226
extensions, water main extensions, street improvements and traffic signals, which the City determines benefits properties in addition to the Property. After establishing each Area of Benefit and Developer’s completion and City’s acceptance of the applicable oversized facilities, City shall reimburse Developer from Area of Benefit fees paid by third party developer(s) if and when they develop their properties in the future; however, such Area of Bene fit reimbursement obligations shall be subject to the provisions of City Municipal Code section 16.72.050(f) limiting Areas of Benefit to a term of twenty (20) years.

5.7 Taxes and Assessments. Developer covenants and agrees to pay prior to delinquency all existing taxes and assessments and any and all new taxes or assessments that are adopted after the Effective Date and which conform to the terms of this Agreement, including Section 6.1 below. Nothing herein shall be deemed to limit Developer’s right to pay any new or increased taxes or assessments under protest and pursue a challenge in law or equity to any such new or increased taxes or assessments.

ARTICL
E 6.

FINANCING AND PUBLIC IMPROVEMENTS

6.1 Financi
ng Tools for Public Improvement Capital Costs.

6.1.1 Potential SCIP or CFD Formation . Subj ect to Section 6.1.6 below, the Parties shall cooperate in good faith to establish (i) a capital facilities CFD pursuant to the Mello- Roos Act and the City’s Capital Financing and Debt Management Policy or (ii) a SCIP or other program established under the authority of CSCDA, which is consistent with the Project Approvals and Applicable Law. Nothing herein shall obligate Developer to use public financing sources to pay the costs of Public Benefit Facilities (defined below). If a CFD option is utilized the boundaries of the CFD shall be coextensive with those of the Property unless the Parties otherwise agree and, upon the filing of a petition by Developer pursuant to Government Code section 53318(c), the City Council shall consider adoption of a resolution of intention to establish the CFD and, following adoption, City shall use good faith, diligent efforts, in compliance with Government Code sections 53318 et seq. , to establish and implement the CFD pursuant to the terms of this Agreement, including scheduling of necessary public hearings and adoption of a resolution of formation.

Developer shall cooperate with City in the pursuit of SCIP financing or formation of a CFD, as applicable, including the timely submission of all petitions, waivers and consents. City, at Developer’s expense (but subject to reimbursement as provided in Section 6.1.3 below), shall be responsible for conducting all proceedings for the establishment of the CFD or use of SCIP financing, including the adoption of all resolutions, ordinances and orders and recording of maps, notices, releases and the conduct of all hearings, elections and other public meetings under the Mello-Roos Act to establish the CFD, levy the Special Taxes and, as appropriate, provide for issuance of the CFD Bonds.

6.1.2 Public Benefit Facilities. Subj
ect to the cap on the total tax and assessment
rate set forth in Section 6.1.5 below, the CFD, if utilized, shall finance the design and acquisition or construction of those public facilities necessary for development of the Project which may lawfully be financed under the Mello- Roos Act and other applicable law, including (i) off -site backbone public improvements which are not described in the PFFP; and (ii) to the extent proceeds EXHIBIT 1 - Draft Development Agreement
227
of CFD Bonds remain available after all non- PFFP backbone offsite public improvements ha ve been fully funded, on- site, in -tract pu blic improvements, including park improvements, storm drainage improvements, public roadways and sidewalks (collectively, the “ Public Benefit Facilities”). Public Benefit Facilities shall specifically exclude off -site public improvements described in the PFFP. Financing of the Public Benefit Facilities with CFD Bonds shall be subject to approval of the City, based on the unqualified written opinion of a Council -approved bond counsel that interest on the CFD Bonds will be federally tax exempt. The Parties a gree that in connection with issuance of the CFD Bonds, Developer and City will enter into a funding and acquisition agreement in a form reasonably acceptable to City’s bond counsel setting forth, among other things, the procedures for and mechanism by which Developer will be reimbursed, out of available proceeds of the CFD Bonds, for Public Benefit Facilities constructed and/or paid for by Developer. If a SCIP is utilized, the SCIP shall similarly prioritize financing of off -site backbone public improvements which are not described in the PFF.

6.1.3 Advance of Expenses; Reimbursement. Developer shall advance to City the actual out of pocket costs of undertaking a SCIP financing or formation of the CFD, sale of CFD Bonds, and other costs and expenses associated with the SCIP or CFD, as applicable (“Advanced Costs”). Such Advanced Costs may include, without limitation, legal, financial, appraisal and engineering costs and expenses associated with (i) formation of the CFD; (ii) determination of the rate and method of apportionment and levy of the Special Tax; (iii) review and approval of the plans and specifications for construction of the Public Benefit Facilities; (iv) determination of the value of property; (v) sale of CFD Bonds; and (vi) any other costs or expenses reasonably incurred in connection with the CFD or SCIP as applicable. All such Advanced Costs, together with those reasonable out-of-pocket legal, engineering and financial services costs incurred by Developer directly related to establishment and implementation of the CFD or SCIP financing which have been approved by the City Manager or his or her designee in his or her reasonable discretion and which may lawfully be financed under the Mello- Roos Act or SCIP, if applicable, and other Applicable Law, shall be reimbursed to Developer from proceeds of the sale of CFD Bonds or the SCIP financing, as applicable, to the extent permitted by Applicable Law.

6.1.4 Issuance of CFD Bonds . If
a CFD is utilized then, upon successful
formation of the CFD and approval of the Special Tax, and subject to the restrictions in this Section

6.1.4 and in Section 6.1.5 below, bonds shall be issued (“ CFD Bonds”), the proceeds of which shall be used to finance the Public Benefit Facilities, to the extent the Public Benefit Facilities legally and feasibly may be financed utilizing this method of financing. The amounts, timing, use and terms of the issuance and sale of the CFD Bonds shall be determined by the City, in consultation with the Developer and the City’s bond counsel, financial advisors and/or underwriters, and shall provide for priority use of funding to ensure completion of applicable off- site public infrastructure improvements needed for the Project. Subject to the state of development of the Property and prevailing bond market conditions, the timing of the sale of the CFD Bonds shall be coordinated, as closely as possible, with the phasing of the development of the Property to provide financing for the Public Benefit Facilities in a timely fashion to meet the needs of the respective phases of development of the Project. If necessary, the CFD Bonds may be issued in series to help correspond to such phases. Developer agrees to assist the City in the issuance of the CFD Bonds by providing financial and development information reasonably required for due diligence and disclosures relating to issuance of the CFD Bonds and to provide for any required EXHIBIT 1 - Draft Development Agreement
228
continuing disclosures under applicable securities laws.

6.1.5 Special Tax. If a CFD financing is utilized then the CFD shall be authorized to levy, and Developer shall approve (by affirmative vote or other legally acceptable method), a tax (“Special Tax”) in accordance with the rate and method of apportionment of such Special Tax approved in the completed proceedings for the CFD. The Speci al Tax shall be determined and collected annually by the City against all taxable parcels as defined by the rate and method of apportionment of the Special Tax for the CFD. The Special Tax shall be collected in the same manner and at the same time as ad valorem property taxes, unless some other method of collection is specified by the City. The Special Tax shall be set at an amount sufficient to pay the estimated annual principal of and interest on the CFD Bonds, together with required debt service coverage requirements and the annual costs of calculation, collection and disbursement of the Special Tax and the annual administration, engineering, and inspection costs associated with the CFD; provided, however, per the City’s Capital Financing and Debt Management Policy the Special Tax so set shall be in an amount such that, at the time the rate and method of apportionment of the Special Tax is approved, the estimated total annual taxes and assessments to be levied on each taxable parcel within the CFD district shall not exceed 2.00% of the parcel’s projected assessed valuation based on a reasonable estimate of the sale price for the parcel and the residential or commercial unit to be constructed thereon, which estimated sale price has been approved by t he City Manager or his or her designee in his or her reasonable discretion. The rate and method of apportionment shall be drafted to allow a property owner to permanently satisfy the Special Tax (and remove the lien thereof) as to any taxable parcel by prepayment pursuant to Section 53344 of the Mello-Roos Act.

6.1.6 City’s Reservation of Discretion. I
t is expressly acknowledged, understood
and agreed by the Parties that (i) City reserves full and complete discretion with respect to legally required findings that must be made in connection with the proposed use of the SCIP or formation of a CFD, (ii) nothing in this Agreement is intended to or shall limit City’s ability to adopt legally required findings with respect to participation in the SCIP or formation of the CFD, and (iii) nothing in this Agreement is intended to or shall prejudge or commit to City regarding the findings and determinations to be made with respect thereto.

6.1.7 Costs If No SCIP or CFD Is Utilized . I
n the event that City is unable to
make the legally required findings in connection with the proposed use of the SCIP or formation of the CFD and the issuance of CFD Bonds for any reason, City shall not be liable for any resulting costs to Developer and Developer shall nonetheless be responsible for constructing all of the Public Benefit Facilities at its expense (but subject to potential reimbursement of excess fair share costs as provided in Section 5.6 above).

6.1.8 Developer’s Cooperation. In connection with the establishment and implementation of a SCIP or CFD financing, Developer (i) will execute all necessary petitions and ballots and waive all election waiting and protest periods at City’s request and prior to the issuance of any building permit on any phase of the Project; (ii) support City’s adoption of local policies related to use of SCIP or CFD financing, as applicable; (iii) cooperate in the development of rate and method of apportionment in the case of a CFD; and (iv) if a CFD is utilized, allow special tax liens to encumber all phases of the Project in order to accomplish the required Public Benefit EXHIBIT 1 - Draft Development Agreement
229
Facilities construction projects.

6.1.9 Developer’s Consent. In the event City and Developer mutually agree upon use of a CFD or SCIP financing then Developer will be deemed to have irrevocably consented to the formation of the CFD or SCIP as applicable, the issuance of CFD Bonds or SCIP bonds, the imposition of the Special Tax against the Property at rates and pursuant to a method of apportionment appropriate to fund the debt service on the CFD Bonds or SCIP bonds sold to finance the Public Benefit Facilities, and agreed not to protest or object to formation of the CFD or SCIP or levy of an appropriate Special Tax consistent herewith. Developer has agreed to the financing provisions set forth in this Section 6.1 and to perform the obligations hereunder in exchange for the consideration and benefits provided to Developer by City under this Agreement, including the vested right to develop the Property. Developer acknowledges and agrees that first priority in use of CFD Bonds or SCIP financing proceeds shall be for off -site Public Benefit Facilities as provided in Section 6.1.2 above.

6.1.10 Notification of Fees, Taxes, and Ass ess
ments. Developer shall provide
actual and conspicuous notice to potential homeowners, in a form reasonably acceptable to the City and in compliance with all applicable legal requirements (including applicable provisions of Government Code § 53341.5) of any and all fees, taxes, and assessments to be charged to any and all purchasers of real property interests in the Project. Developer shall provide potential homeowners with a written and itemized notice of such projected costs and the manner in which they will be charged to the potential homeowner, which notice the potential homeowner shall sign.

Developer shall retain a copy of each signed notice in Developer’s files for at least fifteen (15) years following the date of such notice and shall provide a copy of each such signed notice to the City’s Community Development Director.

6.1.11 Limited Liability of City . Not
withstanding any other provision of this
Agreement, City shall not be liable for or obligated to pay any costs or expenses in connection with a SCIP or CFD financing or the Public Benefit Facilities except to the extent monies are available (from Advanced Costs, SCIP proceeds, proceeds of CFD Bonds, or Special Taxes) and specifically authorized by law for payment of such costs or expenses.

ARTICL
E 7.

DEVELOPMENT STANDARDS AND REQUIREMENTS

7.1 Compliance with Applicable Law. De
veloper, at its sole cost and expense, shall
comply with requirements of, and obtain all permits and approvals required by Applicable Law, including requirements of regional, State and Federal agencies having jurisdiction over the Project.

7.2 Prevailing Wage Requirements.

7.2.1 Public Benefit Facilities. D eveloper acknowledges and agrees that all public improvements paid for directly or indirectly with the proceeds of CFD Bonds or other public funds, including all Public Benefit Facilities, will constitute construction, alteration, demolition, installation, or repair work done under contract and paid for in whole or in part out of public funds as provided under California Labor Code section 1720. Accordingly, Developer shall comply with, EXHIBIT 1 - Draft Development Agreement
230
and cause its contractors and subcontractors to comply with, all State Labor Code requirements and implementing regulations of the Department of Industrial Relations pertaining to “public works,” including the payment of prevailing wages in connection with development of the Project (collectively, “Prevailing Wage Laws”). Developer shall require the contractor for the Project or any portion thereof involving any such publicly financed improvements, to submit, upon request by City, certified copies of payroll records to City, and to maintain and make records available to City and its designees for inspection and copying to ensure compliance with Prevailing Wage Laws. Developer shall also include in each of its contractor agreements, a provision in form acceptable to City, obligating the contractor to require its contractors and/or subcontractors to comply with Prevailing Wage Laws, and to submit, upon request by City, certified copies of payroll records to City and to maintain and make such payroll records available to City and its designees for inspection and copying during regular business hours at the Property or at another location within City.

7.2.2 Developer Indemnity. Developer shall defend (with counsel reasonably acceptable to the City), indemnify, assume all responsibility for, and hold harmless City and its officers, officials, employees, volunteers, agents and representatives from and against any and all present and future liabilities, obligations, or ders, claims, damages, fines, penalties and expenses (including attorneys’ fees and costs) arising out of or in any way connected with Developer’s or its contractors’ obligations to comply with all Prevailing Wage Laws, including any and all Claims that may be made by contractors, subcontractors or other third party claimants pursuant to Labor Code sections 1726 and 1781.

7.3 Community Benefit. The Project provides the Infrastructure Improvements, Civic and Municipal Benefits for Stockton Residents and Economic Benefits to the City of Stockton as detailed in Recital K.

ARTICL
E 8.

COOPERATION AND IMPLEMENTATION

8.1 Subseq uent Approvals. Certain subsequent land use approvals, entitlements, and permits other than the Existing Approvals (collectively, “ Subsequent Approvals ”), will be necessary or desirable for implementation of the Project. The Subsequent Approvals may include the following ministerial and discretionary applications and permits: amendments of the Existing Approvals, grading permits, building permits, sewer and water connection permits, certificates of occupancy, lot line adjustments, site plans, development plans, land use plans, building plans and specifications, parcel maps and/or subdivision maps, conditional use permits, design review, demolition permits, improvement agreements, encroachment permits, and any amendments to, or repealing of, any of the foregoing. In connection with any Subsequent Approval, the City shall exercise its discretion in accordance with Applicable Law, the Project Approvals and, as provided by this Agreement, including the reservations of authority set forth herein.

8.1.1 Subsequent Ministerial Approvals. “Subse
quent Ministerial Approvals ”
are permits or approvals that are required by Applicable Law and that are to be issued upon compliance with uniform, objective standards, and regulations. They include applications for road construction permits or authorizations; grading and excavation permits; building permits, EXHIBIT 1 - Draft Development Agreement
231
including electrical, plumbing, mechanical, Title 24 Electrical, and Title 24 Handicap permits or approvals; certificates of occupancy; encroachment permits; water connection permits; and any other similar permits required for the development and operation of the Project.

8.1.2 Subsequent Discretionary Approvals. All other Subsequent Approvals, including amendments of the Project Approvals, site development plan or development area plan approvals, improvement agreements, architectural r eview permits, use permits, lot line adjustments, subdivision maps, preliminary and final development plans, re-zonings, permits that are not Subsequent Ministerial Approvals, re -subdivisions, and any amendments to, or repealing of, any of the foregoing, are “Subsequent Discretionary Approvals”.

8.2 Processing Applications for Subsequent Approvals.

8.2.1 Developer Covenant to Timely Submit Complete Applications. Developer acknowledges that City cannot begin processing applications for Subsequent Approvals until Developer submits complete applications on a timely basis. Developer shall use its best efforts to (i) provide to City in a timely manner any and all documents, applications, plans, and other information necessary for City to carry out its obligation s hereunder; and (ii) cause Developer’s planners, engineers, and all other consultants to provide to City in a timely manner all such documents, applications, plans and other materials required under Applicable Law. It is the express intent of Developer and City to cooperate and diligently work to obtain any and all Subsequent Approvals.

8.2.2 City Covenant to Timely Process Complete Applications. Upon submission by Developer of all appropriate applications and processing fees for any pending Subsequent Approval, City shall, to the full extent allowed by law, promptly and diligently, subject to City ordinances, policies and procedures regarding hiring and contracting, commence and complete all steps necessary to act on Developer’s currently pending Subsequent Approval applications including: (i) providing at Developer’s expense and subject to Developer’s request and prior approval, reasonable overtime staff assistance, additional staff and/or staff consultants for concurrent, expedited planning and processing of each pending Subsequent Approval application; (ii) if legally required, providing notice and holding public hearings; and (iii) acting on any such pending Subsequent Approval application.

8.2.3 Processing Consistent with Vested Rights. With the Existing Approval s, City has made a final policy decision that the Project is in the best interests of the public health, safety and general welfare. Applications for Subsequent Ministerial Approvals that are consistent with this Agreement and the Existing Approvals shall be processed and considered in a manner consistent with the vested rights granted by this Agreement and shall be deemed to be tools to implement those final policy decisions and shall be approved by City so long as they are consistent with this Agreement and the Existing Approvals. While City expressly reserves its discretion with respect to all Subsequent Discretionary Approvals, City agrees that it shall not use its authority in considering any application for a Subsequent Discretionary Approval to change the policy decisions reflected by the Existing Approvals, including by reducing the density or number of residential units or changing the permitted uses of the Property or the permitted rate of development, or otherwise to prevent development of the Proj ect as set forth in the Existing EXHIBIT 1 - Draft Development Agreement
232
Approvals.

8.2.4 City Discretion. Nothing herein shall limit the ability of City to require the necessary reports, analysis, or studies to assist in determining that the requested Subsequent Ministerial Approval is consistent with this Agreement and the Existing Approvals. If the City determines that an application for a Subsequent Ministerial Approval is not consistent with this Agreement or the Existing Approvals and should be processed as an application for a Subsequent Discretionary Approval rather than a Subsequent Ministerial Approval, the City shall specify in writing the reasons for such determination and may propose a modification which would be processed as a Subsequent Ministerial Approval. Developer shall then either modify the application to conform to this Agreement and the Existing Approvals, as the case may be, or the City shall process the application as an application for a Subsequent Discretionary Approval.

8.3 Other Agency Subsequent Approvals; Authority of City. Ot her public agencies
not within the control of City may possess authority to regulate aspects of the development of the Property separately from or jointly with City, and this Agreement does not limit the authority of such other public agencies. Nevertheless, City shall be bound by, and shall abide by, its covenants and obligations under this Agreement in all respects when dealing with any such agency regarding the Property. City shall cooperate with Developer, to the extent appropriate and as permitted by law, in Developer’s efforts to obtain, as may be required, Other Agency Subsequent Approvals.

8.4 Subseq
uent CEQA Review. The City has certified the FEIR, which evaluates the environmental effects of full development, operation and use of the Project, and ha s imposed all feasible mitigation measures to reduce the significant environmental effects of the Project. The Parties understand that the FEIR is intended to be used not only in connection with the Existing Approvals, but also, to the extent legally permitted, in connection with necessary Subsequent Approvals. However, the Parties acknowledge that certain Subsequent Approvals may legally require additional analysis under CEQA. For example, a change in the Project could require additional analysis under CEQA if the triggering conditions identified in CEQA Guidelines section 15162 are met. In the event supplemental or additional CEQA review is required for a Subsequent Approval, City shall limit such supplemental or additional CEQA review to the scope of anal ysis mandated by CEQA in light of the scope of City’s discretion to be exercised in connection with the Subsequent Approval. Developer acknowledges that, if the City determines based upon supplemental or additional CEQA review that the Project will result in new significant effects or substantially increase the severity of effects that were identified in the EIR, City may require additional feasible mitigation measures necessary to mitigate such impacts. In the event further mitigation measures are identified by such additional environmental review, City may require, and Developer shall comply at its expense with, all feasible mitigation measures necessary to substantially lessen new or substantially more severe significant environmental impacts of the Project, which were not foreseen at the time of execution of this Agreement.

ARTICL
E 9.

THIRD PARTY LEGAL CHALLENGE, INDEMNITY AND INSURANCE

9.1 Cooperation in the Event of Legal Challenge.

EXHIBIT 1 - Draft Development Agreement
233

9.1.1 Cooperation by Parties. City and Developer shall cooperate in the defense of any court action or proceeding instituted by a third party or other governmental entity or official challenging the validity of any provision of this Agreement or the Project Approvals (“Litigation Challenge”), and the Parties shall keep each other informed of all developments relating to such defense, subject only to confidentiality requirements that may prevent the communication of such information.

9.1.2 Potential Joint Defense . I
f Developer desires to contest or defend a
Litigation Challenge and the Parties determine to undertake a joint defense or contest of such Litigation Challenge: i) the Parties will cooperate in the joint defense or contest of such challenge; ii) Developer shall select the attorney(s) to undertake such defense, subject to City’s approva l, which shall not be unreasonably withheld; iii) Developer will take the lead role in defending such Litigation Challenge; iv) upon Developer’s request, City shall enter into a joint defense agreement in a form reasonably acceptable to the City Attorney t o facilitate the sharing of materials and strategies related to the defense of such Litigation Challenge without waiver of attorney client privilege; v) Developer shall reimburse City, within forty -five (45) days following City’s written demand therefor, which may be made from time to time during the course of such litigation, all reasonable costs incurred by City in connection with the Litigation Challenge.

9.1.3 Potential Separate Defense. If Developer desires to contest or defend any Litigation Challenge and if at any time one or both of the Parties determine that they require separate representation: i) Developer shall take the lead role in defending such Litigation Challenge; ii) Developer shall be separately represented by legal counsel of its choice; iii) in any action or proceeding, City shall be separately represented by the legal counsel of its choice, selected after consultation with Developer (including consultation as to the scope and budget for such separate representation), with reasonable costs of such representation to be paid by Developer; iv) Developer shall reimburse City, within forty-five (45) days following City’s written demand therefor, which may be made from time to time during the course of such litigation, all reasonable costs incurred by City in connection with the Litigation Challenge; v) prior to exceeding any previously established budget for the separate City legal representation, City shall confer with and obtain Developer’s input on any proposed budget augmentation or scope revision; and vi) upon Developer’s request, City shall enter into a joint defense agreement in a form reasonably acceptable to the City Attorney to facilitate the sharing of materials and strategies related to the defense of such Litigation Challenge without waiver of attorney client privilege.

9.1.4 Cost Awards and Proposed Settlements. Developer shall indemnify, defend, and hold harmless City Parties from and against any damages, attorneys’ fees or cost awards, assessed or awarded against City by way of judgment, se ttlement, or stipulation entered in connection with a Litigation Challenge. Any proposed settlement of a Litigation Challenge by a Party shall be subject to the approval of the other Party, such approval not to be unreasonably withheld, conditioned or delayed. If the terms of the proposed settlement would constitute an amendment or modification of this Agreement or any Project Approvals, the settlement shall not become effective unless such amendment or modification is approved by City in accordance with Applicable Law, and the City reserves its full legislative discretion with respect thereto.

9.2 Indemnity. De
veloper shall indemnify, at City’s request defend, and hold the City EXHIBIT 1 - Draft Development Agreement
234
Parties harmless from and against any and all Claims arising directly as a result o f Developer’s acts, omissions, negligence or willful misconduct in connection with Developer’s performance under this Agreement or arising directly as a result of Developer’s (or Developer’s contractors, subcontractors, agents, or employees) work performed in connection with the development of the Property or the Project, including without limitation, Claims involving bodily injury, death or property damage. Developer’s indemnification obligations set forth in this Section shall not apply to the extent any such Claims are the result of the sole negligence or willful misconduct of any City Party.

9.3 Insurance. P
rior to commencement of construction of the Project, Developer shall procure and maintain, or cause its contractor(s) to procure and maintain, until the earlier of (a) the expiration of the Term; or (b) the completion of the Project, a commercial general liability policy in an amount not less than Five Million Dollars ($5,000,000) combined single limit, including contractual liability together with a comprehensive automobile liability policy in the amount of Two Million Dollars ($2,000,000), combined single limit. Such policy or policies shall be written on an occurrence form, so long as such form of policy is then commonly available in the commercial insurance marketplace and shall be placed with insurers with a current A.M. Best’s rating of no less than A -:VII or a rating otherwise approved by the City in its sole discretion. If Developer desires to satisfy the foregoing insurance requirements through its contractor, then Developer shall require in its construction contract with the general contractor that said general contractor comply with all of the requirements of this Section 9.3. Developer or its contractor shall furnish at City’s request appropriate certificate(s) of insurance evidencing the insurance coverage required hereunder, and City Parties shall be named as additional insured parties in such policies.

The certificate of insurance shall contain a statement of obligation on the part of the carrier to notify City of any material change, cancellation or termination of the coverage at least thirty (30) days in advance of the effective date of any such material change, cancellation or termination (ten (10) days advance notice in the case of cancellation for nonpayment of premiums) where the insurance carrier provides such notice to the Developer. Coverage provided hereunder by Developer or its contractor shall be primary insurance and shall not be contributing with any insurance, self-insurance or joint self -insurance maintained by City, and the policy shall contain such an endorsement. The insurance policy or the endorsement shall contain a waiver of subrogation for the benefit of City.

ARTICL
E 10.

ANNUAL REVIEW

10.1 Periodic Review. A s required by California Government Code Section 65865.1 and pursuant to Section 16.128.110 of the Development Agreement Ordinance, the City of Stockton Planning Commission shall review this Agreement and all actions taken pursuant to the terms of this Agreement with respect to the development of the Project every twelve (12) months to determine good faith compliance with this Agreement (“ Annual Review”). Specifically, the Annual Review shall be conducted for the purposes of determining good faith compliance with the terms and/or conditions of this Agreement. Each Annual Review shall also document the status of Project development. In the event the Planning Commission recommends modification or termination of this Agreement in connection with such Annual Review, the action to e ffectuate such modification or termination must be taken by City Council.

EXHIBIT 1 - Draft Development Agreement
235

10.2 Conduct of Periodic Review. The annual review shall be conducted as provided in this Section 10.2. By December 1st of each year, Developer shall provide documentation of its good faith compliance with this Agreement during the calendar year, including a completed annual review form in a form reasonably specified by City from time to time. The information required to be provided as part of the annual review may include, among other i tems, the status of all roadway extensions; the status of anticipated final maps; the status of Project phasing, including infrastructure and Public Parks completed per Infrastructure Phasing Plan; and the status of building permit issuances. If the City Manager finds good faith compliance by Developer with the terms of this Agreement, Developer shall be notified in writing and the review for that period shall be concluded. If the City Manager is not satisfied that Developer is performing in accordance with the terms and conditions of this Agreement, the City Manager shall prepare a written report specifying why the Developer may not be in good faith compliance with this Agreement, refer the matter to the City Council, and notify Developer in writing at least fifteen (15) business days in advance of the time at which the matter will be considered by the City Council. This notice shall include the time and place of the City Council’s public hearing to evaluate good faith compliance with this Agreement, a copy of the City Manager’s report and recommendations, if any, and any other information reasonably necessary to inform Developer of the nature of the proceeding. The City Council shall conduct a public hearing at which Developer must submit evidence that it ha s complied in good faith with the terms and conditions of this Agreement. Developer shall be given an opportunity to be heard at the hearing. The findings of the City Council on whether Developer has complied with this Agreement for the period under review shall be based upon substantial evidence in the record. If the City Council determines, based upon substantial evidence, that Developer has complied in good faith with the terms and conditions of this Agreement, the review for that period shall be concluded. If the City Council determines, based upon substantial evidence in the record, that Developer has not complied in good faith with the terms and conditions of this Agreement, or there are significant questions as to whether Developer has complied with the terms and conditions of this Agreement, the City Council, at its option, may continue the hearing and may notify Developer of the City’s intent to meet and confer with Developer within thirty (30) days of such determination, prior to taking further action. Following such meeting, the City Council shall resume the hearing in order to further consider the matter and to make a determination regarding Developer’s good faith compliance with the terms and conditions of this Agreement. In the event City determines Developer is not in good faith compliance with the terms and conditions of this Agreement, City may give the Developer a written Notice of Breach, in which case the provisions of Article 14, below, shall apply.

10.3 Failure to Conduct Annual Review. Fa
ilure of City to conduct an annual review
shall not constitute a waiver by the City of its rights to otherwise enforce the provisions of this Agreement nor shall Developer have or assert any defense to such enforcement by reason of any such failure to conduct an annual review.

ARTICL
E 11.

MORTGAGEE PROTECTION

11.1 Mortgagee Protection. Ne ither entering into this Agreement nor a breach hereof shall defeat, render invalid, diminish, or impair the lien of any Mortgage made in good faith and EXHIBIT 1 - Draft Development Agreement
236
for value. Nothing in this Agreement shall prevent or limit Developer, at its sole discretion, from granting one or more Mortgages encumbering all or a portion of Developer’s interest in the Property or portion thereof or improvement thereon as security for one or more loans or other financing, but all of the terms and conditions contained in this Agreement shall be binding upon and effective against and shall run to the benefit of Mortgagee who acquires title or possession to the Property, or any portion thereof, by foreclosure, trustee’s sale, deed in lieu of foreclosure or otherwise. Developer shall pro vide the City with a copy of the deed of trust or mortgage within ten (10) days after its recording in the official records of San Joaquin County; provided, however, that Developer’s failure to provide such document shall not affect any Mortgage, including without limitation, the validity, priority, or enforceability of such Mortgage.

11.2 Mortgagee Not Obligated No M
ortgagee (including one who acquires title or
possession to the Property, or any portion thereof, by foreclosure, trustee’s sale, deed in lieu of foreclosure or otherwise) shall have any obligation to construct or complete construction of improvements, or to guarantee such construction or completion; provided, however, that a Mortgagee shall not be entitled to devote the Property to any use except in full compliance with this Agreement and the other Project Approvals nor to construct any improvements thereon or institute any uses other than those uses or improvements provided for or authorized by this Agreement, or otherwise under the Project Approvals. Except as otherwise provided in this Section

11.2, all of the terms and conditions contained in this Agreement and the other Project Approvals shall be binding upon and effective against and shall run to the benefit of any person or entity, including any Mortgagee, who acquires title or possession to the Property, or any portion thereof.

11.3 Notice of Default to Mortgagee .

If City receives a notice from a Mortgagee
requesting a copy of any Notice of Default given Developer hereunder and specifying the address for service thereof, then City agrees to use its diligent, good faith efforts to deliver to such Mortgagee, concurrently with service thereon to Developer, any Notice of Default given to Developer. Each Mortgagee shall have the right during the same period available to Developer to cure or remedy, or to commence to cure or remedy, the event of Default claimed, or the areas of noncompliance set forth in City’s Notice of Default. If a Mortgagee is required to obtain possession in order to cure any Default, the time to cure shall be tolled so long as the Mortgagee is attempting to obtain possession, including by appointment of a receiver or foreclosure, but in no event may this period exceed 120 days from the date the City delivers the Notice of Default to Developer.

11.4 No Supersedure . Not
hing in this Article 11 shall be deemed to supersede or release a Mortgagee or modify a Mortgagee’s obligations under any subdivision or public improvement agreement or other obligation incurred with respect to the Project outside this Agreement, nor shall any provision of this Article 11 constitute an obligation of City to such Mortgagee, except as to the notice requirements of Section 11.3.

ARTICL
E 12.

AMENDMENT OF AGREEMENT AND PROJECT APPROVALS

12.1 Amendment by Written Consent. Exc ept as otherwise expressly provided herein (including Article 10 relating to City’s annual review and Article 14 relating to termination in the event of a breach), this Agreement may be terminated, modified, or amended only by mutual EXHIBIT 1 - Draft Development Agreement
237
written consent of the Parties hereto or their successors in interest or assignees and in accordance with the provisions of Government Code sections 65967, 65867.5 and 65868, and City Municipal Code Section 16.128.

12.2 Major Modifications to Agreement . Any a
mendment to this Agreement which
affects or relates to (a) the Term; (b) permitted uses of the Property; (c) provisions for the reservation or dedication of land; (d) conditions, terms restrictions or requirements for subsequent discretionary actions; (e) the type, location, density and intensity of the use of the Property or the maximum height or size of proposed buildings; or (f) monetary contributions or providing of other community benefits by Developer, shall be deemed a “ Major Modification” and shall require giving of notice and a public hearing before the Planning Commission and City Council. Any amendment which is not a Major Modification shall be deemed a “Minor Modification” and shall not, except to the extent otherwise required by Applicable Law, require notice of public hearing before the Parties may execute an amendment hereto. The City Manager or his or her designee shall have the authority to determine if an amendment is a Major Modification or a Minor Modification.

12.3 Minor Modification . T
he City Manager or his or her designee shall have the
authority to review and approve amendments to this Agreement provided that such amendments are not Major Modification. No public notice shall be required for a Minor Modification.

12.4 Requirement for Writing. No m
odification, amendment or other change to this
Agreement or any provision hereof shall be effective for any purpose unless specifically set forth in writing which refers expressly to this Agreement and is signed by duly authorized representatives of both City and Developer.

ARTICL
E 13.

ASSIGNMENT

13.1 General. Be cause of the necessity to coordinate development of the entirety of the Property pursuant to plans for the Project, particularly with respect to the provision of on- and off- site public improvements and public services and benefits, certain restrictions on the right of Developer to assign or transfer its interest under this Agreement with respect to the Property, or any portion thereof, are necessary in order to assure the achievement of the goals, objectives and public benefits of the Project and this Agreement. Developer agrees to and accepts the restrictions set forth in this Article 13 as reasonable and as a material inducement to City to enter into this Agreement.

13.2 Notice of Assignment. D
eveloper shall provide the City with written notice of any proposed transfer or assignment of Developer’s rights or obligations hereunder (each, an “Assignment”) at least thirty (30) days prior to such Assignment and request City’s consent to such Assignment, as provided herein. Each such notice of proposed Assignment shall be accompanied by evidence of the corporate, limited liability company or other legal entity’s existence and good standing and a proposed form of Assignee’s assumption of Developer’s obligations hereunder substantially in the form of Exhibit E , which would be recorded in the Official Records of San Joaquin County concurrent with the transfer. Developer shall pay the EXHIBIT 1 - Draft Development Agreement
238
actual costs borne by City in connection with its review of the proposed Assignment, including the costs incurred by the City Attorney’s Office.

13.3 Assignment Processing. Not
withstanding any other limitations in this Article 13,
Developer may, upon provision of Notice, execution of an agreement documenting such Assignment in accordance with Secti on 13.2, and provision of evidence of entity formation and good standing, at any time, assign its rights and obligations under this Agreement with respect to all or any portion of the Property without the consent of City to any person, partnership, joint venture, firm, company, corporation or other entity (any of the foregoing, an “Assignee”) acquiring all or a portion of the Property.

13.4 Release of Transferring Developer. Upon a transfer of all or a portion of the Property, Developer shall be released from any further liability or obligations hereunder with respect to the portion so transferred and the Assignee shall be deemed to be the Developer under this Agreement with respect to such transferred Property as specified in the assignment and assumption agreement provided: (i) neither Developer nor Assignee is in default under this Agreement at the time of such transfer; (ii) Developer and Assignee have executed and acknowledged and delivered to City for recordation in the Official Records of the County an assignment and assumption agreement substantially in the form of Exhibit E attached hereto; and (iii) the Assignee has expressly assumed for the benefit of City the obligations of Developer as to the portion of the Property so transferred. No release of De veloper shall be effective unless and until each of the above conditions have been met. Notwithstanding anything to the contrary contained in this Agreement, if a Assignee Defaults under this Agreement, such Default shall not constitute a Default by Developer (or any other Assignee) with respect to any other portion of the Property hereunder and shall not entitle City to terminate or modify this Agreement with respect to such other portion of the Property.

13.5 Intentionally Omitted.

13.6 Partial Assi
gnment. Subject to the limitations set forth in this Article 13, in the event of a transfer of a portion of the Property, Developer shall have the right to assign its rights, duties and obligations under this Agreement that are applicable to the transferred portion, and retain all rights, duties and obligations applicable to the retained portions of the Property. Upon Developer’s request, City, at Developer’s expense, shall cooperate with Developer and any proposed Assignee to allocate rights, duties and obligations under this Agreement and the Project Approvals between the assigned portion of the Property and the retained Property. Assignee shall succeed to the rights, duties, and obligations of Developer only with respect to the parcel or parcels, or portion of the Property so purchased, transferred, ground leased or assigned, and Developer shall continue to be obligated under this Agreement with respect to any remaining portions of the Property retained by Developer and not assigned.

13.7 Successive Assignme
nt. In the event there is more than one Assignment under the provisions of this Article 13, the provisions of this Article 13 shall apply to each successive Assignment and Assignee.

13.8 Other Permitted Transfers. The
provisions in this Article 13 shall not be deemed
EXHIBIT 1 - Draft Development Agreement
239
to prohibit or otherwise restrict Developer from (i) granting easements or licenses or modifying existing easements to facilitate development of the Property consistent with the Project Approvals; encumbering the Property or any portion hereof or of the improvements thereon by a Mortgage securing financing with respect to the Property or Project; (iii) transferring all or a portion of the Property pursuant to a foreclosure, conveyance in lieu of foreclosure, or other remedial action in connection with a Mortgage, or to any transferee from a Mortgagee or owner of the Property upon foreclosure or after a conveyance in lieu of foreclosure; (iv) transferring title to individual residential units and obtaining evidence of termination of this Agreement with respect to any such transferred units; or (v) transferring any completed components of project common areas, and certain limited obligations that are appropriate, to an HOA

ARTICLE 14.

DEFAULT; REMEDIES; TERMINATION

14.1 Breach and Default. S
ubject to Permitted Delays or by mutual consent in writing, and except as otherwise provided by this Agreement, breach of, failure, or delay by either Party to perform any term or condition of this Agreement shall constitute a “Default.” In the event of any alleged Default of any term, condition, or obligation of this Agreement, the Party alleging such Default shall give the defaulting Party notice in writing specifying the nature of the alleged Default and the manner in which the Default may be satisfactorily cured (“ Notice of Breach ”). The defaulting Party shall cure the Default within thirty (30) days following receipt of the Notice of Breach, provided, however, if the nature of the alleged Default is non -monetary and such that it cannot reasonably be cured within such thirty (30) day period, then the commencement of the cure within such time period, and the diligent prosecution to completion of the cure thereafter at the earliest practicable date, shall be deemed to be a cure, provided that if the cure is not diligently prosecuted to completion, then no additional cure period shall be provided. If the alleged failure is cured within the time provided above, then no Default shall exist, and the noticing Party shall take no further action to exercise any remedies available her eunder. If the alleged failure is not cured, then a Default shall exist under this Agreement and the non- defaulting Party may exercise any of the remedies available under this Agreement. Further, as provided in Section 13.6 above, following transfer of a portion of the Property and partial assignment of this Agreement to an Assignee, a Default by such Assignee under this Agreement shall not constitute a Default by Developer (or any other Assignee) with respect to any other portion of the Property hereunder and shall not entitle City to terminate or modify this Agreement with respect to such other portion of the Property.

14.2 Withholding of Permits . In t
he event of a Default by Developer (where the
determination of such Default has been made by the City Council based on substantial evidence presented at a noticed public hearing), City shall have the right to refuse to issue any permit or other Subsequent Approvals to which Developer would otherwise have been entitled pursuant to this Agreement until such Default is cured. This provision is in addition to and shall not limit any actions that City may take to enforce the conditions of the Project Approvals.

14.3 Termination. In t
he event of a Default by a Party, the non- defaulting Party shall have the right to terminate this Agreement upon giving notice of intent to terminate pursuant to Government Code section 65868 and regulations of City implementing such section. Following EXHIBIT 1 - Draft Development Agreement
240
notice of intent to terminate, the matter shall be scheduled for consideration and review in the manner set forth in Government Code section 65867 and City regulations implementing said section. Following consideration of the evidence presented in said review before the City Council, a Party alleging Default by the other Party may give written notice of termination of this Agreement to the other Party. Termination of this Agreement shall be subject to the provisions of Section 14.8. Where Developer is the defaulting Party and Developer has previously conveyed portions of the Property and partially assigned this Agreement to one or more third party transferees, City’s right to terminate this Agreement shall be limited to those portion(s) of the Property then owned by Developer.

14.4 Specific Performance for Violation of a Condition . I f City issues a P roject
Approval pursuant to this Agreement in reliance upon a specified condition being satisfied by Developer in the future, and if Developer then fails to satisfy such condition, City, in addition to its other rights and remedies available under public improvement agreements, performance bonds or other instruments, shall be entitled to specific performance for the purpose of causing Developer to satisfy such condition.

14.5 Legal Actions.

14.5.1 Institution of Legal Actions. In addition to any other rights or remedies and subject to the limitation of damages in Section 14.7, a Party may institute legal action to cure, correct or remedy any Default, to enforce any covenants or agreements herein, to enjoin any threatened or attempted violation thereof, or to obtain any other remedies consistent with the purpose of this Agreement. Any such legal action shall be brought in the Superior Court for San Joaquin County, California, except for actions that include claims in which the Federal District Court for the Eastern District of the State of California has original jurisdiction, in which case the Eastern District of the State of California shall be the proper venue.

14.5.2 Acceptance of Service of Process . In t
he event that any legal action is
commenced by Developer agains t City, service of process on City shall be made by personal service upon the City Clerk of City or in such other manner as may be provided by law. In the event that any legal action is commenced by City against Developer, service of process on Developer shall be made by personal service upon D eveloper’s registered agent for service of process, or in such other manner as may be provided by law.

14.6 Rights and Remedies are Cumulative. The
rights and remedies of the Parties are
cumulative, and the exercise by a Party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same Default or any other Default by the other Party, except as otherwise expressly provided herein.

14.7 No Dam
ages. In no event shall a Party, or its boards, commissions, officers, agents, or employees, be liable in damages, including without limitation, actual, consequential, or punitive damages, for any Default under this Agreement. It is expressly understood and agreed that the sole legal remedy available to a Party for a breach or violation of this Agreement by the other Party shall be an action in mandamus, specific performance or other injunctive or declaratory relief to enforce the provisions of this Agreement by the other Party, or to terminate this Agreement. This EXHIBIT 1 - Draft Development Agreement
241
limitation on damages shall not preclude actions by a Party to enforce payments of monies or the performance of obligations requiring an obligation of money from the other Party under the terms of this Agreement including, but not limited to, obligations to pay attorneys’ fees and obligations to advance monies or reimburse monies. In connection with the foregoing provisions, each Party acknowledges, warrants and represents that it has been fully informed with respect to, and represented by counsel of such Party’s choice in connection with, the rights and remedies of such Party hereunder and the waivers herein contained, and after such advice and consultation has presently and actually intended, with full knowledge of such Party’s rights and remedies otherwise available at law or in equity, to waive and relinquish such rights and remedies to the extent specified herein, and to rely to the extent herein specified solely on the remedies provided for herein with respect to any breach of this Agreement by the other Party.

14.8 Surviving Provisions.

In the event this Agreement is terminated, neither Party shall have any further rights or obligations hereunder, except for those obligations of Devel oper set forth in Sections 9.1, 9.2 and that expressly survive termination.

ARTICL
E 15.

MISCELLANEOUS PROVISIONS

15.1 Incorporation of Recitals, Exhibits and Introductory Paragraph. T he Recitals contained in this Agreement, the introductory paragraph preceding the Rec itals and the Exhibits attached hereto are hereby incorporated into this Agreement as if fully set forth herein.

15.2 Covenants Binding on Successors and Assigns and Run with Land. Except as otherwise more specifically provided in this Agreement, this Agreement and all of its provisions, rights, powers, standards, terms, covenants and obligations, shall be binding upon the Parties and their respective successors (by merger, consolidation, or otherwise) and assigns, and all other persons or entities acquiring the Property, or any interest therein, and shall inure to the benefit of the Parties and their respective successors and assigns, as provided in Government Code section 65868.5.

15.3 Notice. Any notice, demand or request which may be permitted, required or desired to be given in connection herewith shall be given in writing and directed to the City and Developer as follows:

If to the City: City Clerk
City of Stockton
425 N. El Dorado St, 1
st Floor
Stockton , CA 95202
Telephone: (209) 937-8458
with copies to: City Manager City
of Stockton
425 N. El Dorado St, 2nd Floor
Stockton , CA 95202 Telephone:
(209) 937-8212
EXHIBIT 1 - Draft Development Agreement
242
and: City Attorney City
of Stockton
425 N. El Dorado St, 1st Floor
Stockton , CA 95202 Telephone:
(209) 937-8333

If to Developer:

Telephone: ( ) -_

Notices are deemed effective if delivered by certified mail, return receipt requested, or commercial courier, with delivery to be effective upon verification of receipt. Any Party may change its respective address for notices by providing written notice of such change to the other Parties.

15.4 Permitted and Litigation Relayed Delays.

15.4.1 Permitted Delay . Per formance by either of the Parties of an obligation hereunder shall be excused during any period of “Permitted Delay.” Permitted Delay shall mean delay beyond the reasonable control of a Party caused by (a) calamities, including without limitation earthquakes, floods, and fire; (b) civil commotion; (c) riots or terrorist acts; (d) strikes or other forms of material labor disputes; (e) shortages of materials or supplies; or (f) vandalism.

A Party’s financial inability to perform or obtain financing or adverse economic conditions generally shall not be grounds for claiming a Permitted Delay. The Party claiming a Permitted Delay shall notify the other Party of its intent to claim a Permitted Delay, the specific grounds of the same and the anticipated period of the Permitted Delay within thirty (30) business days after the occurrence of the conditions which establish the grounds for the claim. If notice by the Party claiming such extension is sent to the other Party more than thirty (30) days after the commencement of the caus e, the period shall commence to run only thirty (30) days prior to the giving of such notice. The period of Permitted Delay shall last no longer than the conditions preventing performance. In no event shall any Permitted Delay extend the Term of this Agreement.

15.4.2 Litigation Delay. If t
his Agreement or any of the Existing Approvals are
still not Final as a result of a Litigation Challenge (a “Litigation Delay”), then the Initial Term of this Agreement and the time within which each Party shall be required to perform any act under this Agreement shall be extended by the period of time between the Annexation Date and the date on which the Existing Approvals and this Agreement all become Final, subject to an outside date that is 36 months after the Effective Date, at which point there shall be no further extension of the Term as a result of any Litigation Delay, unless approved by the City Council in its sole, absolute discretion.

15.5 Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same EXHIBIT 1 - Draft Development Agreement
243
instrument.

15.6 Waivers. Not withstanding any other provision in this Agreement, any failures or delays by any Party in asserting any of its rights and remedies under this Agreement shall not operate as a waiver of any such rights or remedies or deprive any such Party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. A Party may specifically and expressly waive in writing any condition or breach of this Agreement by the other Party, but no such waiver shall constitute a further or continuing waiver of any preceding or succeeding breach of the same or any other provision.

Consent by one Party to any act by the other Party shall not be deemed to imply consent or waiver of the necessity of obtaining such consent for the same or similar acts in the future.

15.7 Construction of Agreement. Al
l Parties have been represented by counsel in the
preparation and negotiation of this Agreement and this Agreement shall be construed according to the fair meaning of its language. The rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in interpreting this Agreement. Unless the context clearly requires otherwise, (a) the plural and singular numbers shall each be deemed to include the other; (b) the masculine, feminine, and neuter genders shall each be deemed to include the others; (c) “shall,” “will,” or “agrees” are mandatory, and “may” is permissive; (d) “or” is not exclusive; (e) “includes” and “including” are not limiting; and (f) “days” means calendar days unless specifically provided otherwise.

15.8 Headings. S
ection headings in this Agreement are for convenience only and are not intended to be used in interpreting or construing the terms, covenants, or conditions of this Agreement.

15.9 Severability. If
any term or provision of this Agreement, or the application of any term or provision of this Agreement to a specific situation, is found to be invalid, or unenforceable, in whole or in part for any reason, the remaining terms and provisions of this Agreement shall continue in full force and effect unless an essential purpose of this Agreement would be defeated by loss of the invalid or unenforceable provisions, in which case any Party may terminate this Agreement by providing written notice thereof to the other Party.

15.10 Time is of the Essence . T
ime is of the essence of this Agreement. All
references to time in this Agreement shall refer to the time in effect in the State of California.

15.11 Extension of Time Limits. T
he time limits set forth in this Agreement may
be extended by mutual consent in writing of the Parties in accordance with the provisions of this Agreement.

15.12 Signatures. The
individuals executing this Agreement represent and warrant that they have the right, power, legal capacity, and authority to enter into and to execute this Agreement on behalf of the respective legal entities of Developer and the City.

15.13 Entire Agreement. Thi
s Agreement (including all exhibits attached hereto, each EXHIBIT 1 - Draft Development Agreement
244
of which is fully incorporated herein by reference), integrates all of the terms and conditions mentioned herein or incidental hereto, and constitutes the entire understanding of the Parties with respect to the subject matter hereof, and all prior or contemporaneous oral agreements, understandings, representations and statements, and all prior written agreements, understandings, representations, and statements are terminated and superseded by this Agreement.

15.14 Estoppel Certificate. Developer or its lender may, at any time, and from time to time, deliver written notice to the City requesting the City to certify in writing that: (a) this Agreement is in full force and effect; (b) this Agreement has not been amended or modified or, if so amended or modified, identifying the amendments or modifications; and (c) Developer is not in Default of the performance of its obligations, or if in Default, to describe therein the nature and extent of any such Defaults. Developer shall pay, within thirty (30) days following receipt of City’s invoice, the actual costs borne by City in connection with its review of the proposed estoppel certificate, including the costs expended by the City Attorney’s Office in connection therewith.

The C
ommunity Development Director shall be authorized to execute any certificate requested by Developer hereunder. The form of estoppel certificate shall be in a form reasonably acceptable to the City Attorney. The Community Development Director shall execute and return such certificate within thirty (30) days following Developer’s request therefor. Developer and City acknowledge that a certificate hereunder may be relied upon by tenants, assignees, investors, partners, bond counsel, underwriters, bond holders and Mortgagees. The request shall clearly indicate that failure of the City to respond within the thirty- day period will lead to a second and final request. Failure to respond to the second and final request within fifteen (15) days of receipt thereof shall be deemed approval of the matters set forth in the estoppel certificate.

15.15 Recordation of Termination. Upon c
ompletion of performance of the Parties or
termination of this Agreement, a written statement acknowledging such completion or termination shall be recorded by City in the Official Records of San Joaquin County.

15.16 City Approvals and Actions. Wh
enever a reference is made herein to an action or
approval to be undertaken by City, the City Manager or his or her designee is authorized to act on behalf of City, unless specifically provided otherwise or the context requires otherwise.

15.17 Negation of Partnership. T
he Parties specifically acknowledge that the Project is a private development, that no Party to this Agreement is acting as the agent of any other in any respect hereunder, and that each Party is an independent contracting entity with respect to the terms, covenants and conditions contained in this Agreement. None of the terms or provisions of this Agreement shall be deemed to create a partnership between or among the Parties in the businesses of Developer, the affairs of the City, or otherwise, or cause them to be considered joint venturers or members of any joint enterprise.

15.18 No Third-Pa
rty Beneficiaries. This Agreement is made and entered into for the sole protection and benefit of the signatory Parties and their successors and assigns, including Mortgagees. No other person shall have any right of action based upon any provision in this Agreement.

EXHIBIT 1 - Draft Development Agreement
245

15.19 Standard for Consents and Approvals . In cases where the written consent or approval of a party is required hereunder and a standard of review and/or timeline for the granting or withholding of such consent or approval is not set forth, such consent or approval shall not be unreasonably withheld, conditioned or delayed.

15.20 Governing State Law. T
his Agreement shall be construed in accordance with the laws of the State of California, without reference to its choice of law provisions.

15.21 Exhibits. The
following exhibits are attached to this Agreement and are hereby incorporated herein by this reference for all purposes as if set forth herein in full.

Exhibi
t A: Prope rty Description
Exhibit B: Site Plan
Exhibit C: Approved Vested Tentative Map
Exhibit D: Approved Conditions of Approval
Exhibit E: Form of Assignment and Assumption Agreement

[signatures on following page]

EXHIBIT 1 - Draft Development Agreement
246

IN WITNESS WHEREOF, the City and Developer have executed this Agreement as of the Effective Date.

CITY:

CITY OF STOCKTON,
a California municipal corporation

By: ______________________________

[Signature must be notarized]
ATTEST:

By:

ELIZA R. GARZA, CMC

CITY CLERK
APPROVED AS TO FORM:

By:

CITY ATTORNEY

DEVELOPER:

THE ALEX AND FAYE SPANOS FAMILY
TRUST

By: _________________________________

DEAN SPANOS,
Co-Trustee

By: _________________________________

DEA SPANOS BERBERIAN,
Co-Trustee

[Signatures must be notarized]

EXHIBIT 1 - Draft Development Agreement
247

EXHIBIT A
The land referred to is situated in the County of San Joaquin, City of Stockton, State of California, and is described as follows:

PARCEL ONE:

Revised Parcel A of Amended Parcel Map filed for record July 15, 1986 in Book 14 of Parcel Maps at Page 94 of Official Records, San Joaquin County.

EXCEPTING THEREFROM One Hundred Percent (100%) of all oil, mineral, gas, and other hydrocarbon substances below a depth of five hundred (500) feet, without the right of surface entry, as reserved by H & N Farms, a general partnership in the Deed recorded May 13, 1986 as Document No. 86033667 of Official Records of San Joaquin County.

APN: 071-170-0 5
PARCEL TWO:

Revised Parcel B of Amended Parcel Map filed for record July 15, 1986 in Book 14 of Parcel Maps at Page 94 of Official Records, San Joaquin County.

EXCEPTING THEREFROM One Hundred (100) percent of all oil, mineral, gas, and other hydrocarbon substances below a depth of five hundred (500) feet, without the right of surface entry, as reserved by John M. Hammer, Jr., a married man as his sole and separate property in the Deed recorded May 13, 1986 as Document No. 86033663 of Official Records of San Joaquin County.

APN: 071-170-04
PARCEL THREE:

Revised Parcel C of Amended Parcel Map filed for record July 15, 1986 in Book 14 of Parcel Maps at Page 94 of Official Records, San Joaquin County.

EXCEPTING THEREFROM as a mineral interest and not as a royalty interest , one hundred percent (100%) of all oil, mineral, gas, and other hydrocarbon substances below a depth of five hundred (500) feet under
the real property described herein, without any rights to the surface or any portion of said real property lying above a depth of 500 feet from the surface, as reserved as John Miles Hammer, Sr., a widower, et al in the Deed recorded November 13, 1985 as Document No. 85076562 of Official Records of San Joaquin County.

APN: 071-170-02
EXHIBIT 1 - Draft Development Agreement
248

EXHIBIT B

EXHIBIT 1 - Draft Development Agreement
249

EXHIBIT C

EXHIBIT 1 - Draft Development Agreement
250

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EXHIBIT D
EXHIBIT 1 - Draft Development Agreement
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Page 1 of 12 ends

City Council and Concurrent AuthoritiesNovember 1, 2022

City Council and Concurrent Authorities
November 1, 2022