Watsonville City Council
June 14, 2022

REPORT TITLE 39
AP-60 Public Housing – 91.220(h)
Introduction
Effective January 2021, the eight formerly “public housing” complexes located in the City of Watsonville were converted for use in the Section 8 Housing Choice Voucher (HCV) program. These complexes are now owned and operated by New Horizons Affordable Housing and Development Inc., a nonprofit subsidiary of the Housing Authority of the County of Santa Cruz (HACSC). The HACSC offers tenant-based Housing Choice Vouchers (formerly Section 8) that can be used in Watsonville. The HACSC also offers Project Based Vouchers (PBVs), which are allocated to specific units, and have been utilized to fully develop and occupy two projects in Watsonville, at the Pippin Orchard Apartments and Pajaro Valley Shelter Services. The HACSC and New Horizons have their own policies and procedures for inspections and maintenance of the units they or own or manage that are occupied by voucher users.

Actions planned during the next year to address the needs to public housing The HACSC has issued a request for proposals for Project Based Vouchers (PBV). The Request for Proposals (RFP) is typically published on an ongoing basis to provide interested parties in the community with the opportunity to request Project Based Vouchers. The HACSC has conditionally approved Project Based Vouchers for 37 units in Eden Housing’s 1482 Freedom Blvd development, 43 units for MidPen’s Miles Lane development, 37 units for MidPen’s Pippin Phase II development, and 78 units for Shangri-La’s 1620 West Beach Street Homekey development project in Watsonville. The commitment of Project Based Vouchers is often vital to the successful financing of an affordable housing development.

The HACSC invites affordable housing development though the PBV RFP process as published on their website.

Actions to encourage public housing residents to become more involved in management and participate in homeownership
Public housing residents participate in a Resident Advisory Board that meets annually to review and discuss proposed changes to the Housing Authority’s Agency Plan.

The HACSC administers a small Family Self Sufficiency (FSS) program for Housing Choice Voucher program participants, through which FSS families establish a self-sufficiency goal. As the household makes progress toward their goal, and their income increases, HACSC puts the increase in their portion of rent into an escrow account on their behalf. When the family achieves the goal, they receive all of the money in the escrow account. Some families in this program have established a goal of homeownership and have used their escrow money towards the down payment of a home.

If the PHA is designated as troubled, describe the manner in which financial assistance will be provided or other assistance
Not applicable. The Housing Authority of the County of Santa Cruz is designated by HUD as a High Performer.

Discussion
The HACSC will continue to offer Housing Choice Vouchers and manage the affordable units in Watsonville owned by New Horizons Affordable Housing and Development Inc. HACSC will continue to provide additional programs and services including security deposit assistance, landlord signing bonuses and a landlord risk mitigation program

REPORT TITLE 40
AP-65 Homeless and Other Special Needs Activities – 91.220(i) Introduction
The City of Watsonville is part of the Homeless Action Partnership (HAP) is a broad-based, community-wide action team, which has met every two months since 1996 to implement a Continuum of Care (CoC) strategy for resolving homelessness. The HAP’s vision is that all Santa Cruz County residents will have the stable housing and appropriate services they need to live in dignity and reach their highest potential. Its mission is to develop and implement a coordinated system of housing and services for preventing and ending homelessness in Santa Cruz County. A CoC strategy organizes and delivers housing and services to meet the specific needs of homeless people as they move from the streets to stable housing and maximize self-sufficiency. A CoC strategy includes housing and services for a variety of homeless subgroups, including families, chronically homeless, seriously mentally ill, chronic substances abusers, veterans, persons with HIV/AIDS, victims of domestic violence, and unaccompanied youth Describe the jurisdictions one-year goals and actions for reducing and ending homelessness including Reaching out to homeless persons (especially unsheltered persons) and assessing their individual needs The City of Watsonville has several short term goals for addressing homelessness over the next program year. These include; The vision of the strategic plan is that the diverse residents of Santa Cruz County will have access to safe, stable housing, residents will have incomes to support their well-being, and will have access to culturally competent services empowering them to meet their basic needs and lead dignified lives.

Our mission is to prevent, dramatically reduce, and eventually end homelessness and its impact on communities throughout Santa Cruz County by implementing effective programs and strategies, by working collaboratively to increase key resources and change systems to better meet the needs of diverse homeless sub-populations, and by engaging all persons and organizations needed to work together for these purposes.

The most recent Santa Cruz County Point-in-Time (PIT) count was conducted February 28, 2022, these results will be available in the spring. The available information is from PIT conducted on January 31, 2019 and is as follows. Enumeration teams consisting of approximately 95 local volunteers canvassed all 52 U.S Census Tracts in Santa Cruz County to directly observe persons in non-shelter, non-service, public locations. Local shelters and institutions reported their occupancy for the night prior to the count, to insure that all homeless individuals and families both sheltered and unsheltered , were counted. Individual needs were assessed via a full year of extensive community participation and feedback from over 250 stakeholders, including people who have experienced homelessness themselves. At the very core of these strategic priorities is the intent to use the evidence -based Vulnerability Index and Service Prioritization Decision Assistance Tool (VI-SPDAT)1 to match individuals and families to the most appropriate housing and service intervention available. In this way, residents experiencing the longest-term, chronic homelessness – often the most visible –will be prioritized for services. As our Continuum of Care partnership evolves, we are moving to Implementing and operating a single coordinated entry system that will place homelessness data and data systems, including CoC-wide Homeless Management Information System (HMIS) into one secure database accessible by all of the CoC partners. This will make it even more possible to make any door – the right door” for accessing services in our community.

Addressing the emergency shelter and transitional housing needs of homeless persons The CoC’s goal is to limit the stay in transitional and emergency shelter and back into housing as quickly as possible, discharge planning as way to prevent homelessness among persons leaving other systems of care, and emergency shelter and transitional housing as an interim housing solution pending the availability of suitable permanent housing.

REPORT TITLE 41
Under the Ten-Year Plan, community members:

Delivered extensive prevention and rapid rehousing services (including financial assistance and housing stabilization services) through the federal HPRP, state administered Emergency Solutions Grants (ESG), federal CalWORKS Housing Support Program, federal Supportive Services for Veteran Families (SSVF) program, and County and City sources (that target senior and medically frail persons). Through a $4 million HPRP grant alone, 14 agencies collaborated to serve 885 households (2,053 persons), 83% of whom retained or obtained permanent housing.45Coordinated strategically with representative from the Foster Care, Mental Health, Public Health, and Corrections systems to implement protocols to avoid discharging people to homelessness and to help prevent institutional recidivism.
 Developed new emergency shelter programs to cope with influx of persons newly homeless, including the 90- bed Rebele Family Shelter, 46-bed Paul Lee Loft Shelter for adults, and 12-bed Paget Center for homeless veterans, while maintaining a sizable preexisting stock of emergency shelter and transitional housing, serving varied populations and subpopulations such as families, adults, seriously mentally ill, persons with drug or alcohol issues, emancipating foster youth, persons with HIV/AIDS, and farm workers.  Piloted nationally recognized, innovative models of permanent supportive housing for persons experiencing chronic homelessness with serious mental illness and substance addictions, including the 13-bed Nuevo Sol project, 33-bed MATCH project, and 36-bed Shelter Plus Care program.

Emphasized housing the most medically vulnerable persons as part of the national 100,000 Homes Campaign, succeeded in housing more 200 from this population, and the Housing Authority of the County of Santa Cruz created 120 Housing Choice Voucher preference slots for program participants. Our short term goals (one to three years) are to 1.

Establish a countywide steering committee of representatives of the key partners serving families to develop a method for identifying families most in need of prevention services. 2. Target 10% of the permanent supportive housing beds and 50% of the rapid rehousing beds proposed above to families to meet the relative need. 3. Provide the new rapid rehousing programs in collaboration with existing family interim housing to assure a continuum of services. 4. Sustain existing family (and domestic violence) shelters to meet the scale of need (including for woman only and women with children). Coordinate common lengths of stay, self-sufficiency goals and outcomes among all family shelters. 5. Working with coordinated entry, develop common policies and a shared family waiting list, making appropriate housing interventions, based on severity of need. 6. Link children experiencing homelessness and their families to the County Office of Education Students in Transition Program. 7. Advocate for a “limited local preference” for families experiencing homelessness who are on the waiting list for the Housing Choice Voucher Program.

Helping homeless persons (especially chronically homeless individuals and families, families with children, veterans and their families, and unaccompanied youth) make the transition to permanent housing and independent living, including shortening the period of time that individuals and families experience homelessness, facilitating access for homeless individuals and families to affordable housing units, and preventing individuals and families who were recently homeless from becoming homeless again The Continuum of Care (CoC) is working on obtaining more permanent, supportive housing in our community by marketing and educating property and complex owners that subsidized housing is such a bad thing as some have stereotyped it to be. The monthly rent is guaranteed and supportive services such as budgeting and health care are often packaged with the voucher. This action should free up more transitional housing and make more emergency shelter available.

Helping low-income individuals and families avoid becoming homeless, especially extremely low-income

REPORT TITLE 42
individuals and families and those who are: being discharged from publicly funded institutions and systems of care (such as health care facilities, mental health facilities, foster care and other youth facilities, and corrections programs and institutions); or, receiving assistance from public or private agencies that address housing, health, social services, employment, education, or youth needs.

Community resources for people recently released from mental and physical health institutions are The Santa Cruz County Mental Health Team with services that include Coordinated Care Treatment Teams for Older Adults Team, a Recovery Team (26 and above)that provides coordinated care to individuals with chronic mental illnesses with severe functional impairments, a South County Adult (SCA) Team that provides coordinated care to mental health patients living in Watsonville and the southern areas of Santa Cruz County who are in need of case management, medication services and therapy, and a Transition Age Youth (TAY) Team (Youth 18-25)that will coordinate care to young adults with a major mental illness who are in need of case management, medication services, therapy as well as vocational and educational supports.

Also serving this targeted population is The Homeless Persons Health Project (HPHP) provides services throughout Santa Cruz County to homeless or marginally housed youth, adults, and families with children.

The Recuperative Care Center (RCC) is operated through a partnership between HSC and the County Homeless Persons’ Health Project (HPHP), with the support and investment of Dominican Hospital/Dignity Health, Watsonville Community Hospital, Central California Alliance for Health, Hospice of Santa Cruz, the County Health Services Agency, and the Health Improvement Partnership.

Discussion
The City of Watsonville will continue to participate in the Santa Cruz County Continuum of Care (CoC)to find ways to assist homeless persons, especially chronically homeless individuals and families, veterans and their families and unaccompanied youth. The City will use a combination of federal, state, and local resources to rapidly re -house and stabilize homeless individuals, especially chronically homeless individuals and families, families with children, veterans and their families and unaccompanied youth. The City of Watsonville will work with local service providers, housing authorities, and the Veterans Administration via the CoC to secure housing assistance for the homeless in Santa Cruz County.

REPORT TITLE 43
AP-75 Barriers to affordable housing – 91.220(j)
Introduction:

Many factors can impact development and affect affordable housing such as market conditions, environmental/physical constraints, government codes, and budgetary limitations. Watsonville is committed to finding ways to alleviate these constraints and address the needs of the community as previously discussed and outlined below.

Actions it planned to remove or ameliorate the negative effects of public policies that serve as barriers to affordable housing such as land use controls, tax policies affecting land, zoning ordinances, building codes, fees and charges, growth limitations, and policies affecting the return on residential investment Barriers such as those discussed previously are considered and addressed in the City’s Housing Element and General Plan, which the City is currently in the process of updating. Programs such as the First Time Homebuyer and Housing Rehabilitation Programs will continue to be offered and the City will continue to operate its Inclusionary Housing Program to provide and preserve affordable housing. Code enforcement activities will continue to be carried out to eliminate blight, which can affect investment, depress property values and impact the quality of life in a neighborhood.

In addition, the City has and will continue to seek out funding available for programs that support affordable housing and/or to assist with costs associated with development of affordable housing. Financial and non-financial support will continue to be provided to other programs, developers and governmental agencies involved in affordable housing and supportive services. Watsonville has and will continue to actively participate with other agencies and organizations in programs and policies that could affect the housing or the quality of life in Watsonville.

Discussion:

Watsonville’s budgetary constraints, which is further affected by decisions and issues at the state and national 13, have limited the funding available to address local housing and infrastructure needs and supportive services. Consequently, the City has had to look for other ways of addressing the housing needs of the community.

As part of the City Council’s Strategic Plan, Housing is one of the Council’s top priorities, including expanding quality housing opportunities, preserving existing affordable housing for Watsonville residents, and reviewing housing and land use policies that maximize development potential. Areas of focus include community education and outreach, Affordable and low-income units and rental housing, workforce housing opportunities, and homeownership assistance.

The City of Watsonville still faces a number of challenges in addressing local housing needs.

These include diminishing affordability in northern Santa Cruz County jurisdictions that increases the demand for lowercost housing in Watsonville. This market demand increases housing prices, resulting in overpayment and overcrowding for Watsonville residents.

REPORT TITLE 44
AP-85 Other Actions – 91.220(k)
Introduction:

The greatest obstacle to meeting any underserved need is the lack of sufficient funding, including:
 Limited availability of funding from federal, state and other sources  Limited availability of developable land
 High cost of housing and provisions in the area, which increases the difficulty of meeting affordable housing needs; and
 Reduced or frozen funding from the state, and other sources due to inadequate state revenue Actions planned to address obstacles to meeting underserved needs Most of the obstacles identified above are beyond the control of the City of Watsonville. The reduction in State and Federal funding limits the City’s ability to address needs, however, staff actively seeks to leverage any funding to the extent possible and continue to lobby State and Federal agencies to provide adequate funding. The limited availability of land is caused by County actions, however we continue to seek opportunities to address needs by utilizing infill strategies. The high cost of housing is directly attributable to the artificial limits on housing growth that are placed on the City by the County and State, but the City is seeking to maximize the available opportunities to increase the supply of housing. In addition to exploring potential updates to the City's infill policies in order to allow higher densities in transit corridors, the City is proposing an Expanded Urban Service Line in its 2030 General Plan. If the Plan is approved, it could potentially allow annexation of additional buildable land to the City limits.

The City is committed to finding new ways to fund these activities through leveraging the existing available funds and by seeking to implement other special tax districts to deal with blight and poverty issues.

The City will continue to work with non-profit housing and service providers to collaborate on improving awareness and expansion of available resources to address the needs of the homeless population.

Actions planned to foster and maintain affordable housing Low to 0% interestloans will continue to be offered through the City’s First Time Homebuyer and Housing Rehabilitation Programs. These Programs provide gap financing to make it more affordable for low income individuals to purchase a home and financial/technical assistance to low income homeowners or homeowners who rent to low income households make repairs to an existing home.

The City’s Economic Development efforts have resulted in a substantial increase in jobs in Watsonville in spite of the COVID-19 pandemic. The Economic Development program includes business retention, expansion, attraction and gardening efforts. While the City is constrained by a lack of developable land, the City has been able to find users for nearly all of the existing opportunity sites, and are actively working to rehabilitate and increase job density in areas that have underutilized spaces. The City also works with local partner agencies like the El Pájaro Community Development Corporation, the Small Business Development Center and the Workforce Investment Board to provide education, job training, incubation/acceleration and other efforts to ensure the workforce is properly trained and prepared to take new jobs as they become available. Staff also works closely with the local community college, universities and other

REPORT TITLE 45
institutions of higher learning to identify potential new business development opportunities, and to coordinate existing

REPORT TITLE 46
workforce needs.

Targeted Code enforcement is another important tool in preserving and maintaining the quality of existing housing. Inspection and monitoring efforts provided by an active Targeted Code Enforcement Program to ensure a safe and healthy environment and reduce the cost burdens that can impact affordability, especially when combined with other housing assistance programs.

The City will continue to look for opportunities to assist developers, non-profits, and other providers in preserving and constructing affordable housing to meet the needs of the community. Currently, the City’s main affordable housing resource is its Inclusionary Housing Program. This Program either collects an in-lieu fee for new construction or requires a percentage of new housing construction (7 or more units) be restricted for purchase or rent by low to above moderate income households at affordable prices. The income limits for this Program are based on 70% of the AMI. The fees collected are used to further affordable housing goals.

Actions planned to reduce lead-based paint hazards
All applicants assisted through the City’s Housing Rehabilitation Program will be provided information on lead-based paint. If the unit was built prior to 1978, it will be tested for LBP and any hazards will be abated. Contractors working with the Program will be required to obtain EPA Lead-Safe Certification and use safe work practices when performing work on pre-1978 units.

In addition, those homes purchased using the City’s First Time Homebuyer or through the Inclusionary Housing Programs will be inspected as part of the application process and any lead-based paint hazards that are found will be required to be abated prior to funding approval.

Actions planned to reduce the number of poverty-level families The City of Watsonville will support various public service programs, both with CDBG funding and its own General Fund, to provide essential services aimed at helping to reduce the number of poverty-level families, including supporting programs that meet the critical needs of family, such as food and medical care.

Actions planned to develop institutional structure
One of the Institutional gaps identified was that not all services are located in the City of Watsonville. As a result, residents must travel to receive some services. The City will continue to work with service providers to offer services in Watsonville, and will support those programs that do so. New applicants for Social Service Grant funding are required to complete a Focus Watsonville addendum that specifically seeks to identify services and resources provided in Watsonville, including:
 What percentage of this grant will be used for Watsonville residents?  How many unduplicated clients were from Watsonville last year?  Do you have a Watsonville office?
 What is the number of your Watsonville Staff?
 How many of Watsonville staff speak Spanish?
 Race / Ethnicity of Watsonville staff and clients

REPORT TITLE 47
 Briefly describe your accomplishments in Watsonville in the past 12 months  Specify how you coordinate with other agencies to provide services in Watsonville.

A regional online and telephone referral service called 2-1-1 offers a comprehensive listing of services in the County.

Actions planned to enhance coordination between public and private housing and social service agencies To ensure an environment of mutual cooperation is an important goal of Watsonville. City efforts to support local agencies, other jurisdictions, developers and providers of housing and supportive services will continue to involve participation on various boards, at various meetings and events as well as project collaborations. Opportunities to encourage and assist affordable housing efforts will continue to be pursued through improved development procedures, assistance and cooperation.

Discussion:

The City of Watsonville will continue to support providers of housing and supportive services utilizing all available resources to meet the needs of its residents and businesses. Many of the obstacles limiting the City's ability to meet these needs are beyond the City's control such as limited funding, lack of developable land, and government regulations imposed by the County and State. However, the City continues to actively pursue opportunities to expand avai lable resources and identify other means of addressing the needs of its community.

REPORT TITLE 48
Program Specific Requirements
AP-90 Program Specific Requirements – 91.220(l)(1,2,4)
Introduction:

The City of Watsonville will follow all HUD regulations in the implementation of programs and activities in the 2022-2023 Annual Action Plan concerning the use of program income, forms of investment, and overall low- and moderate-income benefit for the CDBG program.

The following provides additional information about the CDBG program income and program requirements.

Projects planned with all CDBG funds expected to be available during the year are identified in the Projects Table. The following identifies program income that is available for use that is included projects to be carried out.

Community Development Block Grant Program (CDBG)
Reference 24 CFR 91.220(l)(1)
Projects planned with all CDBG funds expected to be available during the year are identified in the Projects Table. The following identifies program income that is available for use that is included in projects to be carried out.

1. The total amount of program income that will have been received before the start of the next program year and that has not yet been reprogrammed 80,000

2. The amount of proceeds from section 108 loan guarantees that will be used during the year to address the priority needs and specific objectives identified in the grantee's strategic plan. 0

3. The amount of surplus funds from urban renewal settlements 0

4. The amount of any grant funds returned to the line of credit for which the planned use has not been included in a prior statement or plan 0

5. The amount of income from float-funded activities 0
Total Program Income: 80,000
Other CDBG Requirements

1. The amount of urgent need activities 0

2. The estimated percentage of CDBG funds that will be used for activities that benefit persons of low and moderate income. Overall Benefit - A consecutive period of one, two or three years may be used to determine that a minimum overall benefit of 70% of CDBG funds is used to benefit persons of low and moderate income. Specify the years covered that include this Annual Action Plan. 100.00%

REPORT TITLE 49
This Action Plan is being designated as year three of a one-year overall benefit period consisting of 2022.

6/9/2022 7:45:27 PM
C:\Program Files\eSCRIBE\TEMP\19451210581\19451210581,,,Report - Proposed Community Investment Transactions and Use Tax.docx Agenda Report
MEETING DATE: Tuesday, June 14, 2022
TO: City Council
FROM: PARKS & COMMUNITY SERVICES DIRECTOR CALUBAQUIB
SUBJECT: RECEIVE REPORT AND APPROVE PROPOSED LANGUAGE FOR AN ORDINANCE ADDING A NEW ARTICLE 15 (COMMUNITY
INVESTMENT TRANSACTIONS AND USE TAX) OF CHAPTER 6
(TAXATION) OF TITLE 3 (FINANCE) OF THE WATSONVILLE

MUNICIPAL CODE TO BE ADMINISTERED BY THE CALIFORNIA

STATE BOARD OF EQUALIZATION
STATEMENT OF ISSUES:

A proposed ordinance for a one-half cent general transactions and use tax for consideration by voters during the November 2022 election.

RECOMMENDED ACTION:

It is recommended that the City Council receive a report and approve proposed language for an ordinance adding a new Article 15 (Community Investment Transactions and Use Tax) of Chapter 6 (Taxation) of Title 3 (Finance) of the Watsonville Municipal Code to be administered by the California State Board of Equalization and to be approved by voters.

DISCUSSION:

BACKGROUND
Through the pandemic and in the recent couple of years, the City has engaged in a series of community engagement efforts, budget workshops and community surveys. Consistently, through these efforts, the City received feedback indicating the community’s desire to increase investment in Parks and roads infrastructure, claiming the need for positive spaces and programs for youth and children and need for maintenance of parks, trails and sloughs.

It is well researched and documented that parks and recreation facilities and programs have profound positive impacts on a community’s health, well-being and quality of life. Close to home parks encourage active lifestyles and reduce health costs, increase community engagement and reduce crime, increase property values and make cities more climate resilient. Additionally, recreation programs play a key role in prevention and diversion as they provide young people with assets to become thriving adults, keep kids safe and away from crime, improve the health and well-being of youth and seniors and strengthen community unity.

6/9/2022 7:45:27 PM
C:\Program Files\eSCRIBE\TEMP\19451210581\19451210581,,,Report - Proposed Community Investment Transactions and Use Tax.docx The continued effect of COVID-19 on work environments, schools and daily life have encouraged community members to seek more time outdoors to get some fresh air, relieve stress, exercise and find a sense of normalcy. Throughout the pandemic, parks and public land have seen some of their highest usage in modern times, and Watsonville is no different.

Numerous scientific studies demonstrate that the availability of accessible, safe and quality parks and open space is crucial to personal and community well-being. This fact has been underscored by the pandemic, especially in disadvantaged communities and communities of color.

According to the Trust for Public Land, “Parks are proving to be an essential part of how we cope and recover from this crisis…As officials reimagine park policy in real time, equitable access is becoming a driving factor in decision-making…Decisions made in the next few months will determine whether the outdoors become more accessible and equitable and further benefit the health of communities, or slide backward…The pandemic highlights that in too many communities, access to the outdoors is considered a privilege when it should be a right.” Investment in our parks and open spaces is more crucial now than ever.

This community prioritization began to become apparent pre-pandemic, through polling of likely voters that was conducted in 2019 for the renewal of the Measure G Public Safety Sales Tax. Polling revealed that afterschool and youth violence prevention programs are a top community priority. Accordingly, the renewal measure (which became Measure Y), included an eight percent (8%) carve out for the Parks and Community Services Department, generating approximately $340,000 annually or 5% of the Department’s annual budget.

Following budget cuts implemented at the beginning of the pandemic in 2020, community members have requested time and time again during many public meetings for an increased investment in City services, such as parks and recreation, that affect the quality of life. As COVID restrictions began to lift and parks and recreation programs began to reopen, the Council restored many of these budget reductions. In addition, the Council highlighted identifying sustainable funding for parks and recreation services in its 2021-2023 Strategic Plan, specifically by prioritizing the following goals:
 2- Fiscal Health – Sustainable Parks Funding
 3- Infrastructure and Environment – Parks and Road Infrastructure  5 - Community Engagement and Well-Being – Parks Accessibility, Services for Youth  6 - Public Safety – Youth Development
 7 - Efficient and High Performing Government – Financial Management Furthermore, the City’s Ad-Hoc Committee on Policing and Social Equity’s Final Report included a recommendation to “Develop and Increase Programs for Youth and Families.” This recommendation stated that “Prevention and early intervention programs are critical in creating better pathways for youth. Increasing the inventory of prevention and youth development programs will provide a greater range of support and opportunities for Watsonville youth and families in the Watsonville community.” This recommendation specifically outlined the following actions:

6/9/2022 7:45:27 PM
C:\Program Files\eSCRIBE\TEMP\19451210581\19451210581,,,Report - Proposed Community Investment Transactions and Use Tax.docx  Develop programs and services that keep youth from becoming police involved as well as stopping deeper involvement in the criminal justice system.  Prioritize funding for Parks & Recreation services, in order to create and sustain more programs for community youth that are not affiliated with the Police Department.  Expand youth prevention and intervention programs in the 2022-2023 budget that have demonstrated success.
 Consider the expansion of parks and recreation activities and service as a form of prevention and a support for families.
 Explore feasibility of a special sales tax measure for voters to consider on the November 2022 ballot that provides long term sustainable funding for Parks and Community Services Programs.
 Provide a fund that supports families in receiving low cost to free programming in the Parks and Recreation Department.
 Keep parks clean, well maintained and provide adequate lighting.  Create public spaces for youth to create art.

Additional funding is needed to help maintain after-school programs, anti-gang activities, and recreation programs that keep youth and teens off the streets, out of trouble and away from drugs and gangs as these places and programs have proven to be even more critical during hard times. Sustainable funding is also needed for other services that contribute to the quality of life. Further investment is needed in other priority areas that make Watsonville a great place to live, work and play, such as road safety and conditions, maintenance of community infrastructure and facilities and Library services.

In alignment with both the Council Strategic Plan and the Ad Hoc Committee’s recommendations, staff worked with Godbe Research to conduct a poll to test support of a half-cent sales tax for parks and recreation services. In February 2022, a telephone and online poll of 486 likely voters for the November 2022 election was conducted. Poll results were shared with the Council during its meeting on April 26, 2022. This poll revealed that about 68% of voters would support such a measure. The poll also tested support for various elements of a measure. Some of the top priorities included:
 Safe places for kids
 Afterschool programs
 Maintain streets, trails, parks and playgrounds
 Senior meals and services
It was shared that although polling showed the possibility of passing a special sales tax that requires two-thirds approval, there are many variables at play and testing for arguments against the measure dropped support to 63%. It was discussed that passing a general sales tax, requiring 50% voter approval, had a higher chance for success.

In addition, polling along with input gathered in the development of the Council’s Strategic Plan and the Strategic Plan itself, identify several other community priorities that could also be funded through a general tax, in addition to parks and recreation services. These include:
 Fixing roads and potholes
 Maintaining Library hours and services

6/9/2022 7:45:27 PM
C:\Program Files\eSCRIBE\TEMP\19451210581\19451210581,,,Report - Proposed Community Investment Transactions and Use Tax.docx  Addressing homelessness and mental health issues
 Creating jobs and supporting local businesses

PROPOSED ORDINANCE
The proposed ordinance outlines the structure and accountability measures for a new general half-cent sales tax that creates sustainable funding for parks, recreation and other quality of life services, facilities and programs. Specifics of the measure include:
 Would not affect essential purchases, such as groceries and medicine.  A sales tax would be paid both by residents and visitors who work or shop in Watsonville
 Would provide locally controlled revenue to keep neighborhoods, parks and recreational facilities clean, safe and well maintained, provide youth and senior programming and other essential city services.
 Funds could not be taken by the State or County and all local sales tax dollars would stay in Watsonville.
 The measure would require fiscal accountability protections, including independent citizen oversight, mandatory financial audits, and yearly reports to the community.  Requires periodic assessment of community needs.
 Would last until repealed by voters.

If this ordinance is approved, staff will return to the Council with a ballot question and the opportunity for the Council to call for election. This ordinance will not be effective unless and until it is approved by the voters.

STRATEGIC PLAN:
 2- Fiscal Health – Sustainable Parks Funding, Capital Planning  3- Infrastructure and Environment – Parks and Road Infrastructure  5 - Community Engagement and Well-Being – Parks Accessibility, Partnerships & Health, Services for Youth
 6 - Public Safety – Youth Development
 7 - Efficient and High Performing Government – Financial Management FINANCIAL IMPACT:

The proposed half-cent transactions and use tax measure would generate approximately $5 million annually to assist the City funding parks and recreation services, quality of life services and other general government use.

ALTERNATIVE ACTION:

The Council could elect to:

1. Adopt the Ordinance with changes

2. Not adopt the Ordinance
ATTACHMENTS AND/OR REFERENCES (If any):

None.

Ord No. (CM) 1
Meeting Date: 061422
ORDINANCE NO. (CM)

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
WATSONVILLE ADDING A NEW ARTICLE 15 (COMMUNITY
INVESTMENT TRANSACTIONS AND USE TAX) OF CHAPTER 6
(TAXATION) OF TITLE 3 (FINANCE) OF THE WATSONVILLE

MUNICIPAL CODE TO BE ADMINISTERED BY THE CALIFORNIA

STATE BOARD OF EQUALIZATION AND TO BE APPROVED BY
VOTERS
WHEREAS, the impact of COVID-19 on the local economy and City revenues, combined with escalating operating costs, constrains the City’s ability to maintain the quality of services provided and address its capital needs; and WHEREAS, without additional revenues, the City will be compelled to make spending reductions to programs and services that may jeopardize the public health, safety and general welfare of residents and visitors as well as curtail funding for maintenance, construction and other improvements to City facilities, infrastructure and the natural environment; and
WHEREAS, increased tax revenues would provide a secure, local revenue stream that would enable to the City to invest in repair and expansion of aging parks, playgrounds and trails; creating safe places for kids; maintaining after-school and gang prevention programs; fixing potholes and maintaining streets; expanding library access and services for seniors; and creating employment opportunities; and WHEREAS, all funds from a local revenue measure must stay in the City of Watsonville and cannot be taken by the State; and
WHEREAS, the City Council has determined that fiscal necessity requires the placement before the voters at the November 8, 2022 general election of a measure for a transactions and use (sales) tax at the rate of one-half percent (0.5%) on the sale of

Ord No. (CM) 2
Meeting Date: 061422
tangible personal property and the storage, use, or other consumption of such property until repealed by the voters; and
WHEREAS, the transactions and use tax to be submitted to the voters is a general tax that can be used for any legitimate governmental purpose; it is not a commitment to any particular actions or purposes, and any specific purposes recited in the ballot measure are non-exclusive examples only. This tax is a general tax and shall be approved if the measure receives at least a simple majority of affirmative votes.

Table of Contents
SECTION 1. FINDINGS. ................................................................................................. 3 SECTION 2. ENACTMENT............................................................................................. 3 ARTICLE 15 ................................................................................................................ 3 COMMUNITY INVESTMENT TRANSACTIONS AND USE TAX................................. 3 Sec. 3-6.1501 Title. .............................................................................................. 3 Sec. 3-6.1502 Program Priorities.......................................................................... 3 Sec. 3-6.1503 Operative date............................................................................... 5 Sec. 3-6.1504 Purpose......................................................................................... 5 Sec. 3-6.1505 Contract with State........................................................................ 6 Sec. 3-6.1506 Transactions tax rate..................................................................... 6 Sec. 3-6.1507 Place of sale.................................................................................. 6 Sec. 3-6.1508 Use tax rate................................................................................... 7 Sec. 3-6.1509 Adoption of provisions of State law. .............................................. 7 Sec. 3-6.1510 Limitations on adoption of State law and collection of use taxes... 7 Sec. 3-6.1511 Permit not required........................................................................ 9 Sec. 3-6.1512 Exemptions and exclusions........................................................... 9 Sec. 3-6.1513 Amendments. .............................................................................. 13 Sec. 3-6.1514 Enjoining collection forbidden...................................................... 14 Sec. 3-6.1515 Annual Audit and Public Report. ................................................. 14 Sec. 3-6.1516 Termination date. ........................................................................ 14 SECTION 3. CEQA FINDINGS. .................................................................................... 15 SECTION 4. PUBLICATION. ........................................................................................ 15 SECTION 5. SEVERABILITY........................................................................................ 16 SECTION 6. EFFECTIVE DATE. .................................................................................. 16 o-0-o

Ord No. (CM) 3
Meeting Date: 061422

NOW, THEREFORE, THE PEOPLE OF THE CITY OF WATSONVILLE,
CALIFORNIA, DO HEREBY ORDAIN AS FOLLOWS:

SECTION 1. FINDINGS.

The people of the City of Watsonville do hereby find that the above recitals are true and correct and material to the adoption of this Ordinance.

SECTION 2. ENACTMENT.

Title 3 (Finance) of the Watsonville Municipal Code is hereby amended by adding a new Article 15 (Community Investment Transactions and Use Tax) of Chapter 6 (Taxation) to read in words and figures as follows:

ARTICLE 15

COMMUNITY INVESTMENT TRANSACTIONS AND USE TAX
Sec. 3-6.1501 Title.

This article shall be known as the City of Watsonville Community Investment Transactions and Use Tax. The City of Watsonville hereinafter shall be called “City.” This article shall be applicable in the incorporated territory of the City of Watsonville.

Sec. 3-6.1502 Program Priorities.

The community investment transactions and use tax measure will provide a secure, local revenue stream to the City of Watsonville that will be used for general fund purposes to support investment in our community such as: repair and expand aging parks, playgrounds and trails; create safe places for kids; maintain after-school and gang prevention programs; fix potholes and maintain streets; expand library access and services for seniors; create employment opportunities; invest in community partners; and general government use. Detailed expenditure plans shall be developed to explain

Ord No. (CM) 4
Meeting Date: 061422
how the funds will be spent if the one-half of one (0.50%) percent sales tax is approved by voters.

The revenue generated by this transactions and use tax measure will enable the City to invest, maintain, improve and sustain general fund expenses that directly affect the quality of life of Watsonville residents as prioritized by the community needs assessment survey.
(a) The City shall commission an independent third-party to conduct a community needs assessment survey at least once every decade, no later than two years after final decennial census data is available. This survey shall be used to update the short-term, and long-term investment of the revenue generated by this transactions and use tax measure in a way that is consistent with current community needs. The first assessment should be conducted by July 2032, paid for by the measure. (b) Oversight: The City Revenue Measure Oversight Committee shall serve in an oversight capacity to at least bi-annually review revenues and expenditures and provide second independent verification that all expenditures are being made as promised to Watsonville residents. The findings of both the Revenue Measure Oversight Committee shall be reviewed by the City Council at a publicly noticed meeting of the Council and made available to the public.
(c) The Community Investment Tax Measure will be in effect until repealed by Watsonville voters.
(d) Contingency/Reserve Fund. A community investment sales tax measure contingency/reserve fund shall be consistent with the General Fund reserve policy of the City.

Ord No. (CM) 5
Meeting Date: 061422
Sec. 3-6.1503 Operative date.
“Operative date” shall mean the first day of the first calendar quarter commencing more than one hundred ten (110) days after the adoption of this Article.

Sec. 3-6.1504 Purpose.

This Article is adopted to achieve the following purposes, among others, and directs that the provisions hereof be interpreted in order to accomplish these purposes:
(a) To impose a retail transactions and use tax in accordance with the provisions of Part 1.6 (commencing with Section 7251) and Section 7285.91 of Part 1.7 both in Division 2 of the Revenue and Taxation Code which authorizes the City to adopt this tax ordinance which shall be operative if a majority of the electors voting on the measure vote to approve the imposition of the tax at an election called for that purpose.

This tax is a general tax whose proceeds shall be deposited in the City’s general fund and expended for any lawful purpose of the City.
(b) To adopt a retail transactions and use tax that incorporates provisions identical to those of the Sales and Use Tax Law of the State of California insofar as those provisions are not inconsistent with the requirements and limitations contained in Part 1.6 of Division 2 of the Revenue and Taxation Code. (c) To adopt a retail transactions and use tax that imposes a tax and provides a measure therefore that can be administered and collected by the California Department of Tax and Fee Administration in a manner that adapts itself as fully as practicable to, and requires the least possible deviation from, the existing statutory and administrative procedures followed by the California Department of Tax and Fee Administration in administering and collecting the California State Sales and Use Taxes.

Ord No. (CM) 6
Meeting Date: 061422
(d) To adopt a retail transactions and use tax ordinance that can be administered in a manner that will be, to the greatest degree possible, consistent with the provisions of Part 1.6 of Division 2 of the Revenue and Taxation Code, minimize the cost of collecting the transactions and use taxes, and at the same time, minimize the burden of record keeping upon persons subject to taxation under the provisions of this article.

Sec. 3-6.1505 Contract with State.

Prior to the Operative Date, the City shall contract with the California Department of Tax and Fee Administration to perform all functions incident to the administration and operation of this transaction and use tax article; provided, that if the City shall not have contracted with the California Department of Tax and Fee Administration prior to the operative date, it shall nevertheless so contract and in such a case the operative date shall be the first day of the first calendar quarter following the execution of such a contract.

Sec. 3-6.1506 Transactions tax rate.

For the privilege of selling tangible personal property at retail, a tax is hereby imposed upon all retailers in the incorporated territory of the City at the rate of one-half of one (0.50%) percent of the gross receipts of any retailer from the sale of all tangible personal property sold at retail in the City on and after the Operative Date and until repealed by voters.

Sec. 3-6.1507 Place of sale.

For the purposes of this article, all retail sales are consummated at the place of business of the retailer unless the tangible personal property sold is delivered by the

Ord No. (CM) 7
Meeting Date: 061422
retailer or his agent to an out-of-state destination or to a common carrier for delivery to an out-of-state destination. The gross receipts from such sales shall include delivery charges, when such charges are subject to the State sales and use tax, regardless of the place to which delivery is made. If a retailer has no permanent place of business in the State or has more than one (1) place of business, the place or places at which the retail sales are consummated shall be determined under rules and regulations to be prescribed and adopted by the California Department of Tax and Fee Administration.

Sec. 3-6.1508 Use tax rate.

An excise tax is hereby imposed on the storage, use or other consumption in the incorporated territory of the City of tangible personal property purchased from any retailer on or after the Operative Date and until repealed by the voters, for storage, use or other consumption in the City at the rate of one-half of one (0.50%) percent of the sales price of the property. The sales price shall include delivery charges when such charges are subject to State sales or use tax regardless of the place to which delivery is made.

Sec. 3-6.1509 Adoption of provisions of State law.

Except as otherwise provided in this article and except insofar as they are inconsistent with the provisions of Part 1.6 of Division 2 of the Revenue and Taxation Code, all of the provisions of Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code are hereby adopted and made a part of this article as though fully set forth herein.

Sec. 3-6.1510 Limitations on adoption of State law and collection of use taxes.

Ord No. (CM) 8
Meeting Date: 061422
In adopting the provisions of Part 1 of Division 2 of the Revenue and Taxation Code:
(a) Wherever the State of California is named or referred to as the taxing agency, the name of City shall be substituted therefor. However, the substitution shall not be made when:
(1) The word “State” is used as a part of the title of the State Controller, State Treasurer, State Board of Control, California Department of Tax and Fee Administration, State Treasury, or the Constitution of the State of California; (2) The result of that substitution would require action to be taken by or against this City or any agency, officer, or employee thereof rather than by or against the California Department of Tax and Fee Administration, in performing the functions incident to the administration or operation of this article. (3) In those sections, including but not necessarily limited to sections referring to the exterior boundaries of the State of California, where the result of the substitution would be to:
(i) Provide an exemption from this tax with respect to certain sales, storage, use or other consumption of tangible personal property which would not otherwise be exempt from this tax while such sales, storage, use or other consumption remains subject to tax by the State under the provisions of Part 1 of Division 2 of the Revenue and Taxation Code; or

Ord No. (CM) 9
Meeting Date: 061422
(ii) Impose this tax with respect to certain sales, storage, use, or other consumption of tangible personal property which would not be subject to tax by the State under the said provision of that code. (4) In Sections 6701, 6702 (except in the last sentence thereof), 6711, 6715, 6737, 6797 or 6828 of the Revenue and Taxation Code. (b) The word “City” shall be substituted for the word “State” in the phrase “retailer engaged in business in this State” in Section 6203 and in the definition of that phrase in Section 6203.
(1) “A retailer engaged in business in the District” shall also include any retailer that, in the preceding calendar year or the current calendar year, has total combined sales of tangible personal property in this state or for delivery in the State by the retailer and all persons related to the retailer that exceeds five hundred thousand dollars ($500,000). For purposes of this section, a person is related to another person if both persons are related to each other pursuant to Section 267(b) of Title 26 of the United States Code and the regulations thereunder.

Sec. 3-6.1511 Permit not required.

If a seller’s permit has been issued to a retailer under Section 6067 of the Revenue and Taxation Code, an additional transactor’s permit shall not be required by this article.

Sec. 3-6.1512 Exemptions and exclusions.
(a) There shall be excluded from the transactions tax and the use tax the amount of any sales tax or use tax imposed by the State of California or by any city, city

Ord No. (CM) 10
Meeting Date: 061422
and county, or county pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law or the amount of any State-administered transactions or use tax. (b) There are exempted from the computation of the amount of transactions tax the gross receipts from:
(1) Sales of tangible personal property, other than fuel or petroleum products, to operators of aircraft to be used or consumed principally outside the county in which the sale is made and directly and exclusively in the use of such aircraft as common carriers of persons or property under the authority of the laws of this State, the United States, or any foreign government. (2) Sales of property to be used outside the City which is shipped to a point outside the City, pursuant to the contract of sale, by delivery to such point by the retailer or his agent, or by delivery by the retailer to a carrier for shipment to a consignee at such point. For the purposes of this subsection, delivery to a point outside the City shall be satisfied:
(i) With respect to vehicles (other than commercial vehicles) subject to registration pursuant to Chapter 1 (commencing with Section 4000) of Division 3 of the Vehicle Code, aircraft licensed in compliance with Section 21411 of the Public Utilities Code, and undocumented vessels registered under Division 3.5 (commencing with Section 9840) of the Vehicle Code, by registration to an out-of-City address and by a declaration under penalty of perjury, signed by the buyer, stating that such address is, in fact, his or her principal place of residence; and

Ord No. (CM) 11
Meeting Date: 061422
(ii) With respect to commercial vehicles, by registration to a place of business out of the City and declaration under penalty of perjury, signed by the buyer, that the vehicle will be operated from that address. (3) The sale of tangible personal property if the seller is obligated to furnish the property for a fixed price pursuant to a contract entered into prior to the operative date of this Article.
(4) A lease of tangible personal property which is a continuing sale of such property, for any period of time for which the lessor is obligated to lease the property for an amount fixed by the lease prior to the operative date of this Article.
(5) For the purposes of subsections (b)(3) and (4) of this section, the sale or lease of tangible personal property shall be deemed not to be obligated pursuant to a contract or lease for any period of time for which any party to the contract or lease has the unconditional right to terminate the contract or lease upon notice, whether or not such right is exercised.
(c) There is exempted from the use tax imposed by this article the storage, use or other consumption in this City of tangible personal property:
(1) The gross receipts from the sale of which have been subject to a transactions tax under any State-administered transactions and use tax ordinance.
(2) Other than fuel or petroleum products purchased by operators of aircraft and used or consumed by such operators directly and exclusively in the use of such aircraft as common carriers of persons or property for hire or

Ord No. (CM) 12
Meeting Date: 061422
compensation under a certificate of public convenience and necessity issued pursuant to the laws of this State, the United States, or any foreign government.

This exemption is in addition to the exemptions provided in Sections 6366 and 6366.1 of the Revenue and Taxation Code of the State of California.
(3) If the purchaser is obligated to purchase the property for a fixed price pursuant to a contract entered into prior to the operative date of the this article.
(4) If the possession of, or the exercise of any right or power over, the tangible personal property arises under a lease which is a continuing purchase of such property for any period of time for which the lessee is obligated to lease the property for an amount fixed by a lease prior to the operative date of the this article.
(5) For the purposes of subsections (c)(3) and (4) of this section, storage, use, or other consumption, or possession of, or exercise of any right or power over, tangible personal property shall be deemed not to be obligated pursuant to a contract or lease for any period of time for which any party to the contract or lease has the unconditional right to terminate the contract or lease upon notice, whether or not such right is exercised.
(6) Except as provided in subsection (c)(7) of this section, a retailer engaged in business in the City shall not be required to collect use tax from the purchaser of tangible personal property, unless the retailer ships or delivers the property into the City or participates within the City in making the sale of the

Ord No. (CM) 13
Meeting Date: 061422
property, including, but not limited to, soliciting or receiving the order, either directly or indirectly, at a place of business of the retailer in the City or through any representative, agent, canvasser, solicitor, subsidiary, or person in the City under the authority of the retailer.
(7) “A retailer engaged in business in the City” shall also include any retailer of any of the following: vehicles subject to registration pursuant to Chapter 1 (commencing with Section 4000) of Division 3 of the Vehicle Code, aircraft licensed in compliance with Section 21411 of the Public Utilities Code, or undocumented vessels registered under Division 3.5 (commencing with Section 9840) of the Vehicle Code. That retailer shall be required to collect use tax from any purchaser who registers or licenses the vehicle, vessel, or aircraft at an address in the City.
(d) Any person subject to use tax under this article may credit against that tax any transactions tax or reimbursement for transactions tax paid to a district imposing, or retailer liable for a transactions tax pursuant to Part 1.6 of Division 2 of the Revenue and Taxation Code with respect to the sale to the person of the property the storage, use or other consumption of which is subject to the use tax.

Sec. 3-6.1513 Amendments.

All amendments subsequent to the effective date of this this article to Part 1 of Division 2 of the Revenue and Taxation Code relating to sales and use taxes and which are not inconsistent with Parts 1.6 and 1.7 of Division 2 of the Revenue and Taxation Code, and all amendments to Parts 1.6 and 1.7 of Division 2 of the Revenue and

Ord No. (CM) 14
Meeting Date: 061422
Taxation Code, shall automatically become a part of this article; provided, however, that no such amendment shall operate so as to affect the rate of tax imposed by this article.

Sec. 3-6.1514 Enjoining collection forbidden.

No injunction or writ of mandate or other legal or equitable process shall issue in any suit, action or proceeding in any court against the State or the City, or against any officer of the State or the City, to prevent or enjoin the collection under this article, or Part 1.6 of Division 2 of the Revenue and Taxation Code, of any tax or any amount of tax required to be collected.

Sec. 3-6.1515 Annual Audit and Public Report.

Annually the City Council retains an independent auditor to conduct an audit of and provide audited financial statements for all of the City’s financial activities. The auditor shall include an accounting of the revenue received from the tax collected pursuant to this Article and expenditures therefore in the audited financial statements.

The auditor’s report shall be presented to the Council and made available to the public.

Additionally, the City Manager or his or her designee shall annually prepare and present to the Council and the public a report in conjunction with the audit that reviews the status and performance of the programs and services funded wholly or partially with proceeds of the tax authorized by this Article.

Sec. 3-6.1516 Termination date.

The tax levied by this article shall continue until repealed by voters from the operative date of this article.

Ord No. (CM) 15
Meeting Date: 061422
SECTION 3. CEQA FINDINGS.

For purposes of the California Environmental Quality Act (Public Resources Code Section 21000, et seq.), a “project” is defined in State CEQA Guidelines Section 15378 (a) as “the whole of an action, which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment”. The people of the Watsonville hereby find that the proposed Ordinance will not result in any change in the environment and thus is not a project subject to the requirements of CEQA. Additionally, the proposed Ordinance involves the creation of a government funding mechanism which does not involve any commitment to any specific project which may result in a potentially significant impact on the environment and thus the proposed Ordinance is not a project subject to the requirements of CEQA pursuant to CEQA Guidelines Section 15378 (b)(4). Further, even if the adoption of this Ordinance was deemed to be a project subject to CEQA, the people of the City of Watsonville find the proposed Ordinance is exempt from CEQA under the common sense exemption set forth in Section 15061(b)(3), which provides that CEQA only applies to projects which have the potential for causing a significant effect on the environment, and thus where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA.

SECTION 4. PUBLICATION.

This ordinance shall be published in compliance with the provisions of the City Charter.

Ord No. (CM) 16
Meeting Date: 061422
SECTION 5. SEVERABILITY.

If any provision of this Ordinance or the application thereof to any person or circumstance is held invalid, the remainder of the Ordinance and the application of such provision to other persons or circumstances shall not be affected thereby.

SECTION 6. EFFECTIVE DATE.

This Ordinance relates to the levying and collecting of the City transactions and use tax and shall take effect ten (10) days after the certification by the City Council of the election returns indicating passage of the Ordinance by a majority of voters voting in the election.
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6/9/2022 9:11:44 PM
C:\Program Files\eSCRIBE\TEMP\21113796162\21113796162,,,Recommended Budget for Fiscal Year 2022-23 and Related Actions.docx Agenda Report
MEETING DATE: Tuesday, June 14, 2022
TO: City Council
FROM: ADMINISTRATIVE SERVICES DIRECTOR CZERWIN
SUBJECT: RECOMMENDED BUDGET FOR FISCAL YEAR 2022-23 AND

RELATED ACTIONS
STATEMENT OF ISSUES:

Section 1103 of the City’s Charter requires that at least 30 days prior to the beginning of the fiscal year, the City Manager present to the City Council the proposed budget for the following fiscal year. Sections 1104 and 1105 further outline the public hearing process and actions the Council may take before adopting the budget prior to the beginning of the fiscal year on July 1.

June 14, is the first of two noticed public hearings during which the Fiscal Year 2022-23 budget will be discussed. The budget and related actions will be heard again at the June 28th meeting.

RECOMMENDED ACTION:
1) Receive a presentation on the proposed FY 2022-23 budget; 2) Introduce, for first reading only, waiving full reading of the text, an ordinance increasing the compensation for each member of the City Council from $607.75 to $638.14, per month, as permitted by Government Code Section 36516; and 3) Introduce, for first reading only, waiving full reading of the text, an uncodified ordinance instructing Santa Cruz County to levy and collect property tax on taxable property within the City of Watsonville for fiscal year July 1, 2022 to June 30, 2023 at the levy rate of 0.077%, and allocating proceeds to the Retirement Fund.

DISCUSSION:

The City Council holds at least two public meetings to consider and adopt the annual City budget.

At the first meeting, on June 14, 2022, staff recommends the Council receive a presentation on the budget, and introduce two related ordinances: one increasing Council Member and Mayor compensation by the amount permitted by the Government Code; and one instructing the County to levy and collect certain property taxes.

Budget Highlights
The Budget for Fiscal Year FY 2022-23 for the City of Watsonville totals $210,341,192 as summarized in Table 1 below.

6/9/2022 9:11:44 PM
C:\Program Files\eSCRIBE\TEMP\21113796162\21113796162,,,Recommended Budget for Fiscal Year 2022-23 and Related Actions.docx Table 1: Fiscal Year 2021-22 and FY 2022-23 Budget Summary Watsonville’s finances remain on a steady path. For the most part, our revenue increases are able to match our expenditure increases. The high levels of inflation seen in the economy at large are impacting limited areas of our budget, both revenue and expenses. We do continue to see large year over year increases in CalPERS retirement costs, although those are expected to begin decreasing in coming years. We also continue to have a backlog of unfunded capital needs and the inability to expand service levels in some areas requested by the public and our departments. The steady approach we have taken to budgeting in recent years has paid off in that our funds have the reserves needed to manage future economic shocks should they occur. There is also room for optimism in future years as the peak of CalPERS costs seems to be approaching. The Fiscal Year 2022-23 budget presented today reflects a fairly status quo budget with few changes from the previously proposed two-year budget presented last year.

General Fund
The General Fund is projected to increase operating expenditures and revenues in the next years and spend down on accumulated Fund Balance. Last year’s biennial budget proposed a spend down of previous years’ Fund Balance with a commitment to capital improvements at Ramsay park. The proposed budget is balanced operationally and results in proposed ending fund balances that will meet the City’s policy of 20% reserves. There are some operational changes in some departments; most being entirely or partially funded by their own revenue changes. Other departments are being held mostly flat, aside from cost increases to salary and benefits, materials and contracts.

General
Funds
Special
Revenue
Funds
Debt
Service
Enterprise
Funds
Internal
Service
Funds
Private
Trust
Fund
Total all
Funds
Projected Resources 2022-23
Revenues 48,560,784 18,997,561 - 60,928,894 20,222,676 4,623,883 153,333,799 Transfers In 5,821,244 143,195 814,198 150,761 - - 6,929,398 Total Gross Resources 54,382,028 19,140,756 814,198 61,079,655 20,222,676 4,623,883 160,263,197 Interfund Transfer Adjustment (29,454,991)
Total Net Resources 130,808,206
Projected Expenditures
Operations 51,301,895 13,084,615 - 50,652,222 20,196,676 1,327,492 136,562,901 Capital 12,775,325 16,706,359 - 32,347,499 1,658,867 - 63,488,050 Transfers Out 180,956 4,703,184 - 435,817 - 1,609,441 6,929,398 Debt Service - - 814,198 859,695 - 1,686,950 3,360,843
Total Gross Uses 64,258,176 34,494,158 814,198 84,295,233 21,855,543 4,623,883 210,341,192 Interfund Transfer Adjustment (29,454,991)
Total Net Uses 180,886,201
Surplus / (Shortfall) (9,876,147) (15,353,402) - (23,215,578) (1,632,867) - (50,077,995)

6/9/2022 9:11:44 PM
C:\Program Files\eSCRIBE\TEMP\21113796162\21113796162,,,Recommended Budget for Fiscal Year 2022-23 and Related Actions.docx Revenues:

Property Tax- We are budgeting base property tax to be basically flat compared to the estimated FY 2021-22 collections for a total of $13,544,545. Property taxes are collected based on County Assessor rolls that were formally closed in January of 2022. According to county projections, our overall assessed value is likely to rise by approximately 4.3%.

However, that is expected to be offset by a reduced residual payment from former redevelopment areas due to increases in recognized obligation payment schedules. That reduction is a temporary situation due to new recognized obligations and we expect that in future years the residual receipts will increase once again.

Sales Tax – Sales tax is our revenue source most impacted by the current inflationary environment. It is expected to be essentially flat from predicted year end FY 2021-22 numbers. However, that is nearly 10% above the previously proposed FY 2022-23 budget.

What we are seeing is a full recovery to pre-pandemic levels in all categories of sales tax.

Furthermore, as expected, there are increases in both fuel and auto and transportation categories as prices have increased due to supply chain and world-wide events. This is also why we are projecting level amounts for next fiscal year as hopefully prices in both of those categories stabilize.

Sales Tax is 25% of General Fund revenue. The City also is supported by sales tax in a number of special funds including the Measure R Library, the Measure Y Public Safety Sales tax, and Measure D transportation. Each of these funds is likewise impacted by similar assumptions discussed later in this report.

Hotel Tax – Hotel tax is a much smaller percentage of the City’s overall revenue mix, but was the revenue stream most impacted by the pandemic with FY 2020-21 receipts being only 65% of FY 2018-19 receipts. FY 2021-22 is on track to be our highest earning year yet despite the fact that two of our hotels were repurposed during the pandemic and are no longer serving as hotels. During that time, the new hotel on Lee Road opened and is more than making up for that loss. We assume that FY 2022-23 will reflect slight growth over FY 2021-22 levels.

Utility User Tax- Utility User Tax represents about 8.2% of General Fund revenues. This tax stream tends to be more stable as it is a tax on telecommunication services, electricity, gas and water. This revenue has been basically flat in the current year and we are expecting normal growth of 2% in the budget year.

Community Development Department Revenues – The Community Development Department charges fees for many of its services including inspections, plan check, and permit issuance.

The department has been incredibly busy recently and their revenues reflect that. Their FY 2021-22 revenues are expected to be their highest year yet, topping over $2 million.

Revenues in this department can be fairly volatile and are completely dependent on the development happening in the community, so while we are assuming an increase in revenue from the prior proposed FY 2022-23 budget, we are not assuming receipts will be quite as high as they are this year. The revenue increase will be used to fund some staffing and material increases in the department to help keep up with demand for services. Should revenues fall, the department will also be expected to decrease expenditures.

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C:\Program Files\eSCRIBE\TEMP\21113796162\21113796162,,,Recommended Budget for Fiscal Year 2022-23 and Related Actions.docx Parks and Community Services Revenues – The Parks and Community Services Department has worked hard this year to restore their staffing and service offerings to the community after difficult pandemic times. However, due to continued use of the Ramsay Park Family Center as a Covid testing site, and now construction taking place in that area, they have not been able to completely return to their normal course offerings. We are looking forward to the return of special events and more sports and recreation offerings this upcoming year, but are keeping revenue expectations moderate and in line with pre-pandemic levels.

Other General Fund revenues make up smaller portions of the overall revenues and we are projecting fewer fluctuations. This includes items like business licenses and parking permits, franchise fees, lease revenues, and interest. Each item was analyzed on its own and by reviewing past experience. Two items of note; first, the Finance Department recently completed an updated Cost Allocation Plan study which reviewed and updated how general fund administrative services are recovered by other funds as itis common practice to review and update these revenues every five years. Second, the transfers in to the General Fund include a $1 million one-time pass-through item as part of the newly recognized redevelopment obligations as discussed above under property taxes. This has a corresponding one time million-dollar expense and neither are expected to repeat in future years. Table 2 below summarizes all the revenue impacts described above.

Table 2: General Fund Revenue Summary
Expenditures
As discussed above, this is for the most part a status quo budget. This means that increases or decreases in expenditures are due to natural changes in costs due to contracts, benefits, or FY 2022-23 FY 2022-23
Revenues Actuals Projection
Previously
Proposed
Proposed
Budget
Property Tax 12,585,390 13,433,085 13,665,969 13,544,545 Sales Tax 12,817,984 13,432,874 12,484,443 13,680,442
Utility 3,993,803 4,132,451 4,256,424 4,215,100
Hotel 766,626 1,173,440 1,208,643 1,400,000
Transfer In 4,711,893 4,126,938 4,146,299 5,631,717
Other Revenues 6,300,269 4,171,123 5,067,229 4,366,948
41,175,965 40,469,911 40,829,008 42,838,752
CDD 1,628,324 2,044,748 1,801,000 1,959,056
Police 915,331 1,278,695 1,322,020 1,597,100
Fire 1,017,949 953,906 489,051 509,592
PCS 355,906 847,836 1,062,500 974,250
PW 149,947 274,493 304,321 391,785
Other 2,710,018 2,859,595 2,997,522 3,178,954
Total GF Revenue 47,953,440 48,729,184 48,805,422 51,449,489 FY 2020-21 FY 2021-22

6/9/2022 9:11:44 PM
C:\Program Files\eSCRIBE\TEMP\21113796162\21113796162,,,Recommended Budget for Fiscal Year 2022-23 and Related Actions.docx market prices but do not reflect a policy change in the way the City operates. The few exceptions or significant changes in costs are described below.

Salaries– Salaries, including contractual increases with existing employees and bargaining groups, make up 50% of General Fund operating expenditures and therefore represent the greatest increase in costs. There are some department specific changes to positions and salaries to be discussed in the departmental section below.

Unfunded Actuarial Liability (UAL) – The City’s UAL increases continue to be a challenge. In FY 2022-23 UAL costs will increase by $500,000. UAL costs will represent 12% of the General Fund operating budget. UAL costs are expected to continue to rise much faster than our revenues in each of the next three fiscal years, peaking in FY 2024-25. After that, we expect to see a gradual decline in UAL costs as both the effects of major policy changes in CalPERS begin to show their effects and as the results of the 21% investment returns from FY 2020-21 begin to roll in. However, returns in FY 2021-22 are rumored to be negative and will have a corresponding negative effect in future years. Nevertheless, we expect the UAL to have a decreasing impact on our budget in future years. Meanwhile, we continue to analyze ways to smooth out the impact of the rises in the upcoming years. See chart 1 for the estimated General Fund UAL costs in the next ten years as percentage of projected General Fund Revenues.

Chart 1: Projected General Fund UAL as a Percentage of Revenues Other Benefits –Normal retirement costs will see some interesting and hard to predict changes in future years. Generally, we see this cost ever so slightly declining as members of the classic retirement plan retire and are replaced by newer PEPRA employees with lesser retirement benefits. However, the 21% investment returns in CalPERS in FY 2020-21

6/9/2022 9:11:44 PM
C:\Program Files\eSCRIBE\TEMP\21113796162\21113796162,,,Recommended Budget for Fiscal Year 2022-23 and Related Actions.docx triggered a policy change which will lower their presumed discount rate starting in FY 2023-24 which will in turn increase normal costs for all retirement groups that same year. Other salarybased benefits such as Social Security, and Medicare are expected to rise at similar rates to salaries. The City of Watsonville has fared better than most cities in relation to health benefits in recent years with little to no increases.

Other non-position costs – Other citywide non-position impacts to the General Fund are minimal. They include increases for Water, Sewer, and Solid Waste services according to the utility rate schedule, increases to City Attorney, fuel, and fleet costs. Other items include increases to our JPA contracts with the County for 911 and Animal Shelter services. Here you will also see the $1 million pass through expense as described above.

Table 3: General Fund Expenses by Category
Select Department Changes
All departments are impacted by the citywide impacts described above. In addition, several departments are proposing changes that are highlighted and described below.

FY 2021-22 FY 2022-23 FY 2022-23
Expenditures Actual
Revised
Budget
Previously
Proposed
Proposed
Budget
SALARY 22,824,534 24,025,297 25,022,356 25,257,070
CalPERS UAL 4,347,908 5,553,068 6,069,875 6,055,594
CalPERS Normal Cost 2,610,413 2,987,961 3,122,410 2,989,986 OTHER BENEFITS 4,776,180 4,317,690 4,412,076 4,528,306
Total Salary and Benefits 34,559,035 36,884,016 38,626,717 38,830,956 Utilities 400,878 1,237,626 1,250,492 1,289,720
Contract Services 4,961,563 6,654,809 6,619,698 7,056,039 Materials and Supplies 671,025 912,288 925,188 1,111,527 Other Charges 2,325,997 727,937 704,183 2,215,295
Transfers Out 292,561 273,391 228,134 180,956
Capital 569,803 750,000 845,000 765,000
Carryforward 565,530 2,787,766
One-time Caital 3,053,957 4,207,483 4,207,483
Total Expenditures 43,780,862 51,059,554 53,406,895 58,444,742 FY 2020-21

6/9/2022 9:11:44 PM
C:\Program Files\eSCRIBE\TEMP\21113796162\21113796162,,,Recommended Budget for Fiscal Year 2022-23 and Related Actions.docx Police Department – We are adding two Police Officer positions to the Police Department budget. PVUSD recently agreed to expand and return the School Resource Officer (SRO) program at both Pajaro Valley and Watsonville High Schools. One of those positions was added back to the Police Department budget at mid-year with the reinstatement of the pilot program. The second requested SRO position we are adding back now. This is cost neutral as it is paid for by revenue from the school district. The second officer position is an unfunded position, meaning the department has the position authority to hire, but not the funds. This is done in acknowledgment that the Police Department has regular turnover among its police officer positions and that there is a long lead time (often 18 months) between recruitment and when a new officer is able to serve on patrol due to training times. By increasing the department’s position count it will allow them to recruit more and compensate for one or two positions that are vacant at any given time. With the addition of these two positions the department is still one police officer position lower than pre-pandemic.

Fire Department – The Fire Department is adding a civilian Fire Inspector position. The department is looking to add more consistency to its Fire Inspection program in line with the outside analysis of department operations conducted earlier this year. The cost of the position is expected to be partially offset by increases in inspection revenues.

Parks and Community Services Department- The Parks Department while not proposing many changes to its operating budget is proposing changes to some of its staffing in order to better recruit and retain staff and therefore provide better consistency and quality of services to the community. The department is increasing the minimum salary at which it will recruit temporary employees. It is also proposing to convert some of its temporary positions into full time benefitted positions providing both better employment and growth to our employees and a higher level of service to our community.

General Government- In this area we are seeing an increase to our City Attorney costs. As the City transitions from a model with essentially a full-time on-site attorney, to a contract, model we are seeing a rise in costs. This was somewhat expected. Both the departments and the City Attorney are working together to control the growth in this area.

Community Development Department – As described above the revenue section, the Community Development Department continues to see a high demand for its services. To meet that demand the department is moving half of a Principal Planner position back into its budget and is proposing to fund a temporary Assistant Planner position. All of the increases of this department are paid for with their own expected revenue increases. If their revenues or demand for services declines they will be expected to reduce their budget accordingly.

Public Works- The General Fund side of the Public Works Department includes costs associated with building and facility maintenance and costs related to streets and sidewalks not covered by special revenue funds. We have provided some increases in the facilities and maintenance area as our aging buildings and facilities require investment to help prevent even more expensive repairs in the future. We have also increased some contracts used for trail and slough maintenance.

6/9/2022 9:11:44 PM
C:\Program Files\eSCRIBE\TEMP\21113796162\21113796162,,,Recommended Budget for Fiscal Year 2022-23 and Related Actions.docx Table 4: General Fund Operating Budget by Department
Five Year Outlook
Our five-year projection assumes no new programmatic changes. It is a snapshot of “If we were to continue doing what we are doing, what would it cost.” To that end it takes the budget described above and adds some assumed inflationary factors to both the revenues and expenses. This of course will be refined and updated each year as information becomes available, as economic conditions change, as new priorities arise, and as decisions are made to keep the City’s budget in balance. Table 5 reflects the General Fund’s five-year outlook considering the changes and assumptions described above.

Table 5: General Fund Five-Year Outlook
While the prospect of a nearly $1.5 million deficit in the next two years may seem alarming, it is primarily driven by changes in CalPERS UAL costs as described above. That the outlook in FY 2022-23 FY 2022-23
Expenditures Actual
Revised
Budget
Previously
Proposed
Proposed
Budget
Police 18,570,928 20,195,912 21,141,109 21,157,804
Fire 8,060,767 7,956,138 8,306,447 8,450,550
PCS 3,426,769 5,366,337 5,622,022 5,778,605
General Gov't 3,293,660 3,723,235 3,564,876 3,977,256
Non Dept 5,801,274 2,930,698 2,772,985 3,974,921
CDD 2,302,633 2,916,910 2,909,995 3,076,486
Finance 1,570,314 1,711,099 1,778,654 1,753,650
PW 1,299,439 1,625,627 1,668,240 1,900,571
Library 542,428 585,686 590,085 614,646
IT (7,702) -
Total Depts 44,860,510 47,011,642 48,354,413 50,684,489 Capital 569,803 4,299,662 5,052,482 7,760,249
Total Expenditures 45,430,313 51,311,304 53,406,895 58,444,738 FY 2020-21 FY 2021-22
FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27
Revenue 51,449,489 51,706,049 53,276,228 54,777,452 56,372,690 Expense* 51,449,489 52,626,547 53,750,174 54,162,976 55,230,259 Net Difference (0) (920,499) (473,946) 614,475 1,142,431 Carryforward 2,787,766
Ramsay 4,207,483
6,995,249
*Capital Funded by available Fund Balance

6/9/2022 9:11:44 PM
C:\Program Files\eSCRIBE\TEMP\21113796162\21113796162,,,Recommended Budget for Fiscal Year 2022-23 and Related Actions.docx years four and five is positive provides some real hope for the future. As discussed above changes in UAL costs are driving both the deficit and the savings projections in the five-year outlook. As we continue to explore and analyze ways to smooth out or lower our costs in the next few years, including perhaps the use of $1 million still on reserve for this purpose, I am optimistic that the City can achieve balanced budgets in future years without major reductions in costs and hopefully lead to an increased capacity to serve our community and address currently unfunded needs.

Select Special Revenue and Internal Service Funds
Library Fund
The Library fund is supported through a county special sales and use tax and a joint allocation of property tax from the County. The County has proposed an extension to the current JPA agreement for Fiscal Year 2022-23 which will likely result in an increase in revenue driven by sales tax patterns described above. The department is not proposing a significant operational change at this time. However, they are also proposing to transition temporary and part time positions to full time when opportunities arise from turnover. The fund is likely to add to its fund balance in FY 2022-23 and is looking to use some of that fund balance in future years for building renovations.

ARPA
The entire $18.2 million American Rescue Plan Act (ARPA) allocation to the City of Watsonville was authorized on September 14, 2021, therefore the public will not see the full $18.2 million included in this budget. We continue to follow the plan adopted last September and appropriate projects and contracts as needed. What you will find in this budget is carryforward of already begun ARPA projects, new appropriation for streets and safety projects, and a request for three positions. ARPA guidelines allow for the rehiring of government positions eliminated due to the pandemic. We have since used that money to restore a Recreation Supervisor Position in the Parks and Community Services Department and are requesting to fund an additional Accountant II in the Finance Department and an Administrative Assistant II in the City Manager Department. Both departments have yet to restore higher level positions eliminated during the FY 2020-21 budget process and are finding their current staff being stretched thin as other departments and services have been restored.

The costs of all three positions are assumed to move back into the General Fund in year FY 2024-25 of the five-year plan.

Gas Tax, SB, and Measure D
Despite the increase in gas prices, both the Gas Tax and SB1 funds will not see dramatic increases in revenues and formulas as both funds are built on a fixed price per gallon and not a percentage of sales. In fact, there is reason to believe that funding from these measures may decrease in future years with the increasing presence of electric vehicles. Measure D is somewhat different as it is based on a local county sales and use tax measure and therefore will increase with sales tax increases described above. The City now uses Gas Tax less for major construction projects and more for regular road maintenance and repairs. We have found that using our own crews and equipment allows us to be more responsive and efficient than contracting this work out. The project plan for SB1 and Measure D can be found in the

6/9/2022 9:11:44 PM
C:\Program Files\eSCRIBE\TEMP\21113796162\21113796162,,,Recommended Budget for Fiscal Year 2022-23 and Related Actions.docx capital plan. Both funds are carrying forward past projects not yet completed in addition to requesting funding for new projects. The transportation arm of the Public Works Department has been very successful in recent years in receiving grants for transportation projects in addition to these special revenue funds.

Measure Y (formerly G)
In March 2020, Watsonville voters overwhelmingly voted to pass Measure Y to renew the existing half cent public safety sales and use tax. Tax receipts have been higher than expected this fiscal year, and as described above, we are expecting it to level off next year. All three departments made significant operational restorations last year and this coming year and are not proposing significant changes. Police and Fire are proposing to use their accumulated fund balance to invest in station repairs and special equipment for their departments.

Innovation & Technology – Since the creation of the IT Internal Service Fund, the department has had a number of position vacancies and therefore was not able to complete all budgeted projects and accumulated a fund balance. Going into next fiscal year, the department is now near full staffing including a new director. The department is expected to work on a number of important projects next year including updating the audio and visual capabilities in the City Council Chamber and Community Rooms.

MSC (Fleet Management) – The Municipal Service Center or Fleet Management division was moved to its own internal service fund last year. Since then, this division has been perhaps the most impacted by inflation and supply chain issues. You will see significant increases to their fuel and supplies budget. They are funded by charging other departments for their services. This division is also under relatively new management and is implementing several software and operational changes to become more efficient and transparent to departments.

6/9/2022 9:11:44 PM
C:\Program Files\eSCRIBE\TEMP\21113796162\21113796162,,,Recommended Budget for Fiscal Year 2022-23 and Related Actions.docx Table 6: Select Special Revenue and Internal Service Funds Select Enterprise Funds
The Utility Enterprises of Wastewater, Water, and Solid Waste are proposing minimal changes to their operating budgets. Unlike the General Fund, much of the cost increases in the Utility enterprises are not driven by personnel but by the cost of capital, the costs of materials and supplies, and in the case of Solid Waste, the cost of disposal contracts. The Public Works and Utilities Department is proposing some internal reorganization of its administrative and engineering teams as a way to better track and allocate costs to each of the utilities.

The Airport fund is supported through three revenue streams, leasing of commercial properties, leasing of aviation hangars, and aviation fuel sales. The department is proposing minimal operational changes, as they are already a lean operation. You will see the increases in fuel costs reflected on both their expenditure and revenue side. They are expected to add to their growing fund balance in the next fiscal year in order to build reserves for future capital investments.
0250 -

LIBRARY
0262 -
ARPA FUNDAMERICAN
RELIEF
PLAN
0305 - GAS
TAX
0306 - SB
1 - GAS TAX

FUNDING
0310 -

SALES TAX

MEASURE Y
0312 -

MEASURE D
-

TRANSPOR
TATION
FUND
0760 - MSC

INTERNAL

SERVICE
FUND
0790 -

INFORMATI
ON &

TECHNOLO
GY ISF
Projected Resources 2022-23
Revenues 4,065,849 - 1,314,339 955,000 5,184,351 971,903 3,411,647 3,410,335 Transfers In - - - - - - - -
Total Gross Resources 4,065,849 - 1,314,339 955,000 5,184,351 971,903 3,411,647 3,410,335 Projected Expenditures
Operations 3,736,643 293,208 756,936 - 4,661,658 - 3,411,647 3,410,335 Capital 10,000 4,227,929 900,992 1,793,764 2,268,304 3,824,243 - 1,632,867 Transfers Out 159,283 - - - 286,307 - - -
Debt Service - - - - - - - -
Total Gross Uses 3,905,926 4,521,137 1,657,928 1,793,764 7,216,269 3,824,243 3,411,647 5,043,202 Surplus / (Shortfall) 159,923 (4,521,137) (343,589) (838,764) (2,031,918) (2,852,340) - (1,632,867) Projected Fund / Cash Balance 6/30/2022 1,266,693 17,752,778 553,816 1,818,282 3,323,825 3,264,859 133,673 2,136,620 Projected Fund / Cash Balance 6/30/2023 1,426,616 13,231,641 210,227 979,518 1,291,907 412,519 133,673 503,753

6/9/2022 9:11:44 PM
C:\Program Files\eSCRIBE\TEMP\21113796162\21113796162,,,Recommended Budget for Fiscal Year 2022-23 and Related Actions.docx Table 7: Select Enterprise Funds
Five-Year Capital Improvement Plan
The Five-Year Capital Plan helps the City prioritize its funding and planning for longer term structural needs. The requests for carryforward this year are larger than the requests for new projects. Carryforwards are projects that have been authorized in the past but have yet to be completed for various reasons. This year, some of those reasons included staff shortages, supply chain issues, and cost increases. This Capital Improvement Plan includes some major funding commitments that will have a lasting impact on the Watsonville community.

The General Fund share of our capital plan is comparatively little and generally pays for facility maintenance. Next year we are proposing to continue maintenance projects to a number of park facilities along with a continued commitment to the revitalization of Ramsay Park. We are also conducting a facilities assessment to help inform future CIP programs.

In the Utilities funds, engineering staff has had a busy year in getting over 11 total projects in the Water and Sewer enterprise fund CIP through the design process. Many of these projects will start construction at the end of the fiscal year or beginning of next year, all of which have a total construction value of over $40,000,000. Highlights include:
0710 -
WASTE
WATER
0720 -
WATER
0730 -

AIRPORT
0740 -
SOLID
WASTE
0741 -

LANDFILL

CLOSURE
Projected Resources 2022-23
Revenues 17,068,157 23,094,698 4,203,780 16,480,409 -
Transfers In - - - - 150,761
Total Gross Resources 17,068,157 23,094,698 4,203,780 16,480,409 150,761 Projected Expenditures
Operations 15,675,261 15,356,433 4,052,802 15,337,009 150,761 Capital 8,947,019 18,238,344 60,000 1,682,904 3,419,232 Transfers Out 202,513 31,651 5,056 196,597 -
Debt Service 485,078 13,888 23,037 337,692 -
Total Gross Uses 25,309,871 33,640,316 4,140,895 17,554,202 3,569,993 Surplus / (Shortfall) (8,241,714) (10,545,618) 62,885 (1,073,793) (3,419,232) Projected Fund / Cash Balance 6/30/2022 10,806,713 26,958,860 201,585 4,956,979 3,960,291 Projected Fund / Cash Balance 6/30/2023 2,564,999 16,413,242 264,470 3,883,186 541,059

6/9/2022 9:11:44 PM
C:\Program Files\eSCRIBE\TEMP\21113796162\21113796162,,,Recommended Budget for Fiscal Year 2022-23 and Related Actions.docx  Green Valley Rd. and Freedom Blvd. Water and Sewer Improvements $3,742,000 beginning construction breaks ground June 27th.  Zone 2 Water Reservoir $10,000,000 in design. Recently awarded $5,000,000 IWRM grant
 WWTF Electrical System Hazard Mitigation Improvements Project $16,000,000  WWTF Levee Embankment Stabilization Project $2,200,000 recently awarded FEMA/CalOES HMGP grant
 Completed the decking/cover and concrete project at Corralitos Filter Plant.  PLC upgrade at Well 19 (complete) and Corralitos Filter Plant (expected completion August 2022)
 Zone 2 well installed (well housing and pump station expected completion in 22/23
 Hames Reservoir interior coating/seismic retrofit (expected completion June 2022)
 Sydney and Jehl Avenue sewer, storm, and water improvements totaling $1,328,000
The City’s Water Services crews have also replaced over 1.1 miles of aging water main throughout the City this fiscal year and are on target to meet that goal next fiscal year as well, with the main project planned being the Silver Leaf, Green Meadow, and Green Valley Road area water main replacement.

The Solid Waste team is conducting the studies necessary to complete the closing of the Phase III at the landfill and preparing to open Phase IV which we believe will be a more efficient way of providing this service to our residents as opposed to the transportation and contract costs required to haul our trash to Monterey. In addition, the Solid Waste team is excited about the prospect of our first electric collection vehicle partially funded through two grants totaling $550,000.

The Traffic division, funded through the gas tax, SB1, ARPA, Measure D, and grants is working on many projects. In particular they are looking forward to the construction of Freedom Blvd from Alta Vista Ave to Green Valley Rd. The work will include reconstruction of the roadway, including striping, pavement markings and signs; provisions for accessible sidewalks, installation of curb ramps and installation of a traffic signal at intersection of Freedom Boulevard and Sydney Avenue. They are also working on the design of Green Valley Road improvements from Freedom Blvd to the city limits. Improvements will include reconstruction of existing roadway, installation of a median island to encourage safer turning movements, removal and replacement of existing driveways and curb ramps that do not comply with existing accessibility standards, and restriping roadway to provide for bike lanes where none exist.

Unfunded Capital Needs
Despite a plan which expects to fund over $149 million of capital projects over the next five years, we still have over $37 million of unfunded capital projects. The majority of these are not for “wish list” items but for basic maintenance and updates to our facilities and equipment, and improvements to the City’s most used parks. We will continue to seek grants, financing opportunities, and other funds to invest in our capital assets.

6/9/2022 9:11:44 PM
C:\Program Files\eSCRIBE\TEMP\21113796162\21113796162,,,Recommended Budget for Fiscal Year 2022-23 and Related Actions.docx Table 8: Capital Improvement Program by Funding Source
STRATEGIC PLAN:

The current balanced budget meets Strategic Plan goal Number 2 of fiscal health by presenting a balanced budget, preserving the General Fund Reserve, and looking ahead to ensure the long-term financial health of the City.

FINANCIAL IMPACT:

Appropriate Fiscal Year 2022-23 spending of $210,341,192.

ALTERNATIVE ACTION:

The City Council may direct staff to present different alternatives for the budget or make changes to the current recommendation.

ATTACHMENTS AND/OR REFERENCES (If any):
1) Proposed 2022-23 Budget:
https://cityofwatsonville.org/DocumentCenter/View/19029/2022-2023-Draft-Budget 2) Gann Limit for Fiscal year 2022-23
FY 22/23 FY 23/24 FY 24/25 FY 25/26 FY 26/27
General Fund 4,972,483 1,333,000 1,270,000 205,000 135,000 Grants 177,952 5,204,518 - 730,000 1,700,000
Transporation 2,115,000 3,737,000 4,225,000 3,225,000 3,000,000 Airport 60,000 55,000 25,000 125,000 -
Water 9,361,798 9,234,667 25,798,738 4,264,979 13,969,428 Wastewater 2,810,448 19,232,234 1,530,881 629,326 8,073,465 Solid Waste / Landfill 3,738,803 6,010,000 450,000 825,387 910,930 Other 4,997,547 1,560,000 1,770,000 860,000 990,000
Total 28,234,031 46,366,419 35,069,619 10,864,692 28,778,823

Attachment 2
Proposition 4 Calculation
For Fiscal Year 2022-23
Spending Limit Calculation
[a] 2021-22 Limit $ 152,484,767
Calculation of Growth Factor
Change in Population 7.550%
Non-resident, New Const. Assessment Growth -0.03
Change in California Per Capita Person Income
[b] Growth Factor (1.0755 *1) 1.07550000
[c] 2022-23 Limit ( [a] multiplied by [b] ) $ 163,997,367 2022-23 Gann Limit Proposed Spending
Proposed General Fund Spending $ 51,449,489
Less Non-tax General Fund Revenues:

Transfers In (non-tax) (151,968)
Use of Money and Property (2,761,507)
Fees (11,632,527)
In-lieu Charges -
Other non-tax revenue -
[d] Spending Subject to the Gann Limit $ 36,903,487
Remaining Capacity ( [d] subtracted from [c] ) $ 127,093,880

1 Reso No. (CM)
C:\Program Files\eSCRIBE\TEMP\21135434700\21135434700,,,Ordinance - Council Compensation 2022.docx bvf 6/9/2022 9:13:55 PM
ORDINANCE NO. (CM)

AN UNCODIFIED ORDINANCE OF THE CITY OF WATSONVILLE

INCREASING THE COMPENSATION FOR EACH MEMBER OF THE

CITY COUNCIL, AND THE MAYOR, PER MONTH, AS PERMITTED BY CALIFORNIA GOVERNMENT CODE SECTION 36516
WHEREAS, on June 22, 2021, the City Council enacted Ordinance No. 1418-21 (CM), in which it increased City Council compensation. The increase comprised an increase in salary from $578.81 per month to $607.75, which included a $10 per month contribution by the City for the provision of a term life insurance policy for all Council Members and the Mayor; and
WHEREAS, Government Code Section 36516(a)(4) provides that a city council may enact or amend an ordinance increasing compensation provided that the increase shall not exceed an amount equal to five percent (5%) for each calendar year from the operative date of the last adjustment of the salary when the ordinance or amendment is enacted, and that no ordinance shall be enacted or amended to provide automatic future increases in salary; and
WHEREAS, Government Code Section 36516(d) provides that any amounts paid by a city for retirement, health and welfare, and federal social security benefits shall not be included for purposes of determining salary, provided that the same benefits are available and paid by the city for its employees; and
WHEREAS, all Council Members and the Mayor receive a life insurance benefit that is also provided to City employees. The City pays that benefit on behalf of the Council, at a cost of $10 per month. This amount is included in the salary paid to Council Members; and

2 Reso No. (CM)
C:\Program Files\eSCRIBE\TEMP\21135434700\21135434700,,,Ordinance - Council Compensation 2022.docx bvf 6/9/2022 9:13:55 PM
WHEREAS, pursuant to City of Watsonville Charter Section 502, the Mayor shall receive as compensation $100 per month in addition to her compensation as a member of the Council.

WHEREAS, it is deemed fair and equitable that this ordinance be enacted to implement the will of the electorate which delegated the right to approve such increase to the Council.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF WATSONVILLE, CALIFORNIA, DOES HEREBY ORDAIN AS FOLLOWS:

SECTION 1. ENACTMENT.

That the salaries of the Mayor and Council Members shall be increased by 5%, from $ from $607.75 to $638.14 per month for each City Council Member, including the Mayor. The Mayor shall receive an additional $100 for a total compensation amount of $738.14. These compensation amounts include a $10 per month contribution by the City for a life insurance benefit. All increases shall be effective December 24, 2022.

SECTION 2. RECITALS.

The City Council finds and determines the foregoing recitals to be true and correct and hereby makes them a part of this Ordinance.

SECTION 3. CALIFORNIA ENVIRONMENTAL QUALITY ACT.

The City Council finds that this Ordinance is exempt from the provisions of the California Environmental Quality Act (“CEQA”) pursuant to Section 15060(c)(2) and 15060(c)(3) of the State CEQA Guidelines, because it will not result in a direct or reasonably foreseeable indirect physical change in the environment and is not a “project,” as defined in Section 15378 of the CEQA Guidelines.

3 Reso No. (CM)
C:\Program Files\eSCRIBE\TEMP\21135434700\21135434700,,,Ordinance - Council Compensation 2022.docx bvf 6/9/2022 9:13:55 PM
SECTION 4. SEVERABILITY.

If any section, subsection, subdivision, paragraph, sentence, clause or phrase of this Ordinance, or its application to any person or circumstance, is for any reason held to be invalid or unenforceable, such invalidity or unenforceability shall not affect the validity or enforceability of the remaining sections, subsections, subdivisions, paragraphs, sentences, clauses or phrases of this Ordinance, or its application to any other person or circumstance. The City Council declares that it would have adopted each section, subsection, subdivision, paragraph, sentence, clause or phrase hereof, irrespective of the fact that any one or more other sections, subsections, subdivisions, paragraphs, sentences, clauses or phrases hereof be declared invalid or unenforceable.

SECTION 5. PUBLICATION.

This ordinance shall be published in the Watsonville Register-Pajaronian and/or Santa Cruz Sentinel in compliance with the provisions of the Charter of the City of Watsonville.

SECTION 6. EFFECTIVE DATE.

This ordinance shall be in force and take effect thirty (30) days after its final adoption.
******************************

Ord No. 1419-21 (CM)
C:\Program Files\eSCRIBE\TEMP\21113876436\21113876436,,,Ordinance - Budget Retirement Levy 2022.docx ri 6/9/2022 9:11:44 PM
1 ORDINANCE NO. (CM)

AN UNCODIFIED ORDINANCE OF THE CITY COUNCIL OF THE CITY OF

WATSONVILLE INSTRUCTING THE COUNTY OF SANTA CRUZ TO

LEVY AND COLLECT A PROPERTY TAX ON TAXABLE PROPERTY IN

THE CITY OF WATSONVILLE FOR THE FISCAL YEAR BEGINNING
JULY 1, 2022, FIXING THE RATE OF 0.077% THEREOF AND

ALLOCATING TAX REVENUES TO THE RETIREMENT FUND
WHEREAS, the limitation provided for in Proposition 13, codified at California State Constitution Article XIIIA, does not apply to indebtedness approved by the voters prior to July 1, 1978, the effective date of Article XIIIA; and
WHEREAS, the voters of the City of Watsonville approved the levy and collection of a tax sufficient to meet all obligations of the City to the State Employees Retirement System, or other system for the retirement of City employees, in 1960, prior to the effective date of Article XIIIA, when they approved and adopted the Charter of the City of Watsonville; and
WHEREAS, pursuant to Ordinance No. 437-78 (CM), as amended by Ordinance No. 670-85 (CM), the County of Santa Cruz is authorized to levy and collect ad valorem taxes on taxable property within the City of Watsonville; and WHEREAS, on November 7, 2006, at a Special Municipal Election, the voters of the City of Watsonville approved Section 1122(b)(3) of the Charter of the City of Watsonville establishing the tax rate for the above-described tax as not to exceed 7.7 cents on each One Hundred and no/100th ($100.00) Dollars of assessed valued.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF WATSONVILLE, CALIFORNIA, DOES HEREBY ORDAIN AS FOLLOWS:

SECTION 1. ENACTMENT. The County of Santa Cruz is hereby instructed to levy upon the taxable property of the City of Watsonville for fiscal year beginning July 1, 2022,

Ord No. 1419-21 (CM)
C:\Program Files\eSCRIBE\TEMP\21113876436\21113876436,,,Ordinance - Budget Retirement Levy 2022.docx ri 6/9/2022 9:11:44 PM
2 a property tax which is hereby fixed at the rate of 0.077% (pursuant to Subsection 1122(b)(3) of the Charter of the City of Watsonville), designated and to be allocated and divided among the funds of the City, as described and attached hereto on Exhibit A, the Budget for Fiscal Year 2022-23, adopted by the City Council on June 28, 2022.

SECTION 2. RECITALS.

The City Council finds and determines the foregoing recitals to be true and correct and hereby makes them a part of this Ordinance.

SECTION 3. CALIFORNIA ENVIRONMENTAL QUALITY ACT.

The City Council finds that this Ordinance is exempt from the provisions of the California Environmental Quality Act (“CEQA”) pursuant to Section 15060(c)(2) and 15060(c)(3) of the State CEQA Guidelines, because it will not result in a direct or reasonably foreseeable indirect physical change in the environment and is not a “project,” as defined in Section 15378 of the CEQA Guidelines.

SECTION 4. SEVERABILITY.

If any section, subsection, subdivision, paragraph, sentence, clause or phrase of this Ordinance, or its application to any person or circumstance, is for any reason held to be invalid or unenforceable, such invalidity or unenforceability shall not affect the validity or enforceability of the remaining sections, subsections, subdivisions, paragraphs, sentences, clauses or phrases of this Ordinance, or its application to any other person or circumstance. The City Council declares that it would have adopted each section, subsection, subdivision, paragraph, sentence, clause or phrase hereof, irrespective of the fact that any one or more other sections, subsections, subdivisions, paragraphs, sentences, clauses or phrases hereof be declared invalid or unenforceable.

Ord No. 1419-21 (CM)
C:\Program Files\eSCRIBE\TEMP\21113876436\21113876436,,,Ordinance - Budget Retirement Levy 2022.docx ri 6/9/2022 9:11:44 PM
3 SECTION 5. EFFECTIVE DATE.

This ordinance shall take effect immediately upon adoption in accordance with Section 608(c) of the Charter of the City of Watsonville.

SECTION 6. PUBLICATION.

The City Clerk is hereby directed to cause this ordinance to be published in one regular issue of the Watsonville Register-Pajaronian and/or Santa Cruz Sentinel in compliance with the provisions of the Charter of the City of Watsonville within fifteen (15) days after its adoption.
***********************************

Ord No. 1419-21 (CM)
C:\Program Files\eSCRIBE\TEMP\21113876436\21113876436,,,Ordinance - Budget Retirement Levy 2022.docx ri 6/9/2022 9:11:44 PM
4 The foregoing ordinance was introduced and adopted at a regular meeting of the Council of the City of Watsonville, held on the day of June , 2022, by Member , who moved its introduction and adoption, which motion being duly seconded by Member , was upon roll call carried and ordinance adopted, ordered printed and published by the following vote:

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:
_______________________________
Ari Parker, Mayor
ATTEST:
_____________________________
City Clerk
_______________________
Date
APPROVED AS TO FORM:
_____________________________
City Attorney
EFFECTIVE DATE:
************************************

CERTIFICATION

STATE OF CALIFORNIA

COUNTY OF SANTA CRUZ
I, Beatriz Vázquez Flores, City Clerk of the City of Watsonville, in the County of Santa Cruz, State of California, hereby certify that the attached Ordinance No. (CM) is a true and correct copy of the original of said ordinance as it appears upon the official records of said City of Watsonville.
________________________________
Irwin Ortiz, City Clerk
Date__________________________

6/9/2022 5:43:16 PM
C:\Program Files\eSCRIBE\TEMP\17431526292\17431526292,,,Report - Strengthening Community Support Program.docx Agenda Report
MEETING DATE: Tuesday, June 14, 2022
TO: City Council
FROM: PARKS & COMMUNITY SERVICES DIRECTOR CALUBAQUIB
SUBJECT: RESOLUTION APPROVING A CONTRACT WITH PVPSA FOR A

STRENGTHENING FAMILIES COMMUNITY MENTAL HEALTH
SUPPORT PROGRAM IN THE AMOUNT OF $200,000
STATEMENT OF ISSUES:

This report concerns the approval of a contract with Pajaro Valley Prevention and Student Assistance Program (PVPSA) to provide a community wellness program in the amount of $200,000 over two years, through the City of Watsonville’s funding from the Federal American Rescue Plan Act (ARPA).

RECOMMENDED ACTION:

It is recommended that the Watsonville City Council adopt a resolution approving an American Rescue Plan Act Sub-Recipient Contract with PVPSA for the provision of a Strengthening Families Community Mental Health Support Program, in an amount not to exceed $200,000 for two years ($100,00 for FY 2022-2023 and $100,000 for FY 2023-2024) utilizing funds from the City of Watsonville’s ARPA allocation; and authorizing the City Manager Pro Tempore to execute the Sub-Recipient Contract.

DISCUSSION:

It has been well documented that the COVID-19 pandemic has had many adverse effects on the mental health and wellbeing of individuals of all ages. These effects in Watsonville have been linked to reduced student performance and attendance and increased demand for mental health services from non-profit and healthcare providers.

In response to this, the City Council adopted a budget for the City’s American Rescue Plan Act (ARPA) allocation that includes $200,000 to address community mental health support services. These funds were included based on feedback from community members and stakeholder groups.

The proposed contract with PVPSA would enable PVPSA to modify the Strengthening Families curriculum to include an action-oriented approach to healing. The Parks and Community Services Department currently partners with PVPSA to offer the YESS Program (Youth Enrichment Support Services), which provides youth and families support to reach academic success and a healthy social-emotional balance through case management services. YESS families participate in the Strengthening Families curriculum. This proposed program further

6/9/2022 5:43:16 PM
C:\Program Files\eSCRIBE\TEMP\17431526292\17431526292,,,Report - Strengthening Community Support Program.docx expands the reach of Strengthening Families beyond YESS Program participants and expands the curriculum to specifically address mental health issues that have been exacerbated by the pandemic. PVPSA was selected to lead this work as a sole source due to the organization’s existing partnership with the City that has led to the success of the Strengthening Families program. It is anticipated that expansion in reach and scope of this proven program will help to address the mental health needs of our community.

As research has shown, coordinated community efforts that engage community members to volunteer in helping fellow community members may be both unifying and beneficial to building a sense of community which increased well-being and reduced depression and anxiety (Bowe, Wakefield, Kellezi, et al. 2021). Recognizing that families are at the core of the community fabric in Watsonville, this curriculum incorporates community involvement efforts into the eightweek curriculum. Invitation of key community leaders that align with weekly topics will be incorporated. PVPSA will plan and implement the above described program for six (6) cohorts per fiscal year, with up to twelve (12) families per cohort (up to 144 families over two years).

Families will meet weekly to attend one and one half hour sessions throughout the eight-week program, which will culminate in the presentation of family-led projects that benefit their neighborhood.

The goals of this program are:
 Goal 1: Families will participate in family engagement activities  Goal 2: Families will be linked to appropriate level of services  Goal 3: Reduce trauma and other mental health symptoms  Goal 4: Families will engage in a community project
The Watsonville Police Department has helped to identify key neighborhoods where calls for service for crime and mental health needs have been most prevalent. This program will strategically recruit families from these neighborhoods and program sessions will take place in, or as close as possible to, the neighborhoods where participants live. Potential families will be identified through referral from City, PVPSA, PVUSD and partner programs, as well as through general marketing efforts.

Program funds will be used to hire a fulltime case manager to lead the program, program supplies, incentives for participation and childcare.

STRATEGIC PLAN:

The proposed program is in alignment with the Council Priorities of 5-Community Engagement & Well-Being and 6-Public Safety by providing community mental health support services.

FINANCIAL IMPACT:

The proposed contract with PVPSA has a financial impact of $100,000 for Fiscal Year 2022- 2023 and $100,000 for Fiscal Year 2023-2024, for a total of $200,000. Funding for this program is from the City’s ARPA allocation. This service is considered sole source in that PVPSA has locally based, trained staff to offer the Strengthening Families curriculum and the understanding of community needs to expand said curriculum to meet current mental health needs; the agency infrastructure needed to support program staff and case managers; and

6/9/2022 5:43:16 PM
C:\Program Files\eSCRIBE\TEMP\17431526292\17431526292,,,Report - Strengthening Community Support Program.docx trusted relationships with community members and organizations required to successfully execute this program.

ALTERNATIVE ACTION:

The Council could elect to not approve this contract
ATTACHMENTS AND/OR REFERENCES (If any):

None.

Reso No. (CM)
Meeting Date: 012522 AJS ______ TV ______ WPD ______
1 RESOLUTION NO. __________ (CM)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WATSONVILLE

APPROVING A CONTRACT WITH PAJARO VALLEY PREVENTION AND
STUDENT ASSISTANCE PROGRAM, INC. (PVPSA), A CORPORATION,

FOR THE PROVISION OF A STRENGTHENING FAMILIES COMMUNITY

MENTAL HEALTH SUPPORT PROGRAM, IN AN AMOUNT NOT TO
EXCEED $200,000 FOR TWO YEARS ($100,000 FOR FY 2022-2023 AND $100,000 FOR FY 2023-2024), UTILIZING FUNDS FROM THE CITY OF WATSONVILLE’S ARPA ALLOCATION; AND AUTHORIZING CITY

MANAGER PRO TEMPORE TO EXECUTE SAME
It is recommended that the Watsonville City Council adopt a resolution approving a contract with PVPSA for the provision of a Strengthening Families Community Mental Health Support Program, in an amount not to exceed $200,000 for two years, utilizing funds from the City of Watsonville’s ARPA allocation; and authorizing the City Manager Pro Tempore to execute the contract.

WHEREAS, PVPSA has locally based, trained staff to offer the Strengthening Families curriculum and the understanding of community needs to expand said curriculum to meet current mental health needs; the agency infrastructure needed to support program staff and case managers; and trusted relationships with community members and organizations required to successfully execute this program, and WHEREAS, PVPSA is a sole source in proving this program in that the City currently partners with PVPSA to offer the Strengthening Families program to the community through the Youth Enrichment Support Services program and this contract would expand the reach and scope of this successful program.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF WATSONVILLE, CALIFORNIA, AS FOLLOWS:

Reso No. (CM)
Meeting Date: 012522 2

1. This action is exempt from the requirements of the California Environmental Quality Act (CEQA) in accordance with CEQA Guidelines Section 15378(b)(5), in that adopting a Resolution approving an Agreement with PVPSA does not meet CEQA's definition of a “project,” because the action does not have the potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment, and because the action constitutes organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment and if a “project,” is exempt under the “common sense” exception (14 Cal. Code Regs. § 15061(b)(3)) because it can be seen with certainty that there is no possibility that this action may have a significant effect on the environment.

2. That the Contract between the City of Watsonville and Pajaro Valley Prevention and Student Assistance Program, Inc., a corporation, in an amount not to exceed $200,000, [$100,00 for FY 2022-2023 and $100,000 for FY 2023-2024] a copy of which Contract is attached hereto and incorporated herein by this reference, to provide a Strengthening Families Community Mental Health Support Program.

3. That the City Manager Pro Tempore be and is hereby authorized and directed to execute said Contract for and on behalf of the City of Watsonville in the form attached hereto with minor revisions that may be approved by the City Manager Pro Tempore and the City Attorney.
********************************

SUBRECIPIENT AGREEMENT TO USE CORONAVIRUS RELIEF FUNDS FROM THE

AMERICAN RESCUE PLAN ACT BETWEEN THE CITY OF WATSONVILLE AND PAJARO VALLEY PREVENTION AND STUDENT ASSISTANCE PROGRAM, INC.

WHEREAS, the American Rescue Plan Act of 2021 (ARPA) established the Coronavirus State and Local Fiscal Recovery Funds under sections 602 and 603 of the Social Security Act to help states and localities address the economic and health consequences of the pandemic; and
WHEREAS, the United States Department of Treasury has adopted guidance regarding the use of ARPA funds to respond to the COVID-19 public health emergency and its economic impacts through four categories
 To respond to the public health emergency or its negative economic impacts, including assistance to households, small business, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality;
 To respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers;  For the provision of government services to the extent of the reduction in revenue due to the COVID-19 public health emergency relative to revenues collected in the most recent full fiscal year prior to the emergency; and
 To make necessary investments in water, sewer, and broadband infrastructure; and
WHEREAS, City of Watsonville (“City”) has received ARPA funding from the State of California as a passthrough from the federal government to respond to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19); and
WHEREAS, the PAJARO VALLEY PREVENTION AND STUDENT
ASSISTANCE PROGRAM, INC. (“Sub-recipient”) has represented and demonstrated to City that Sub-recipient has the appropriate skill, training, qualifications, and experience to render the services called for under this Agreement.

NOW, THEREFORE, in consideration of the foregoing promises, the parties hereto agree that the use of American Rescue Plan Funds be conveyed by the City to the Sub-recipient, subject to the following award information, conditions, and limitations:

A. Award Information
Awarding Agency: City of Watsonville
Subrecipient Names: PAJARO VALLEY PREVENTION AND STUDENT ASSISTANCE PROGRAM, INC.

Subrecipient SAM #: _____________________ (must actively maintain registration)
Federal Awarding Agency: US Dept. of Treasury
CFDA #: 21.019 – American Rescue Plan Funds
DocuSign Envelope ID: 134943A4-0152-47EC-92C6-CC9AC81D3F5C

Period of Performance: July 1, 2022 – June 30,2024
Amount of Award and Budget: Total of $200,000.00 between two fiscal years as follows: FY 2022-2023: $100,000.00 and FY 2023-2024:
$100,000.00. Funding must be spent by the end of calendar year 2024.

B. Grant Amount
The City of Watsonville will award an amount, not to exceed $200,00.00 in ARPA Funds to the PAJARO VALLEY PREVENTION AND STUDENT
ASSISTANCE PROGRAM, INC. to provide a Strengthening Families Community Mental Health Support Program.

C. General Objectives

1. Nothing contained in this Agreement is intended to, or shall be construed in any manner, as creating or establishing the relationship of employer/employee between the parties. PAJARO

VALLEY PREVENTION AND STUDENT ASSISTANCE
PROGRAM, INC. shall at all times remain an “independent contractor” with respect to the services to be performed under this Agreement. City of Watsonville shall be exempt from payment of all unemployment compensation, FICA, retirement, life and/or medical insurance and Workers’ Compensation Insurance as PAJARO

VALLEY PREVENTION AND STUDENT ASSISTANCE
PROGRAM, INC. is an independent entity.

2. PAJARO VALLEY PREVENTION AND STUDENT ASSISTANCE
PROGRAM, INC. shall hold harmless and indemnify the City of Watsonville from any and all claims, actions, suits, charges and judgments whatsoever that arise out of PAJARO VALLEY
PREVENTION AND STUDENT ASSISTANCE PROGRAM, INC.
performance or nonperformance of the services or subject matter called for in this Agreement.

3. City of Watsonville or PAJARO VALLEY PREVENTION AND
STUDENT ASSISTANCE PROGRAM, INC. may amend this
Agreement at any time provided that such amendments make specific reference to this Agreement, and are executed in writing, and signed by a duly authorized representative of both
organizations. Such amendments shall not invalidate this Agreement, nor relieve or release City of Watsonville or PAJARO

VALLEY PREVENTION AND STUDENT ASSISTANCE
PROGRAM, INC. from its obligations under this Agreement. • City of Watsonville may, in its discretion, amend this Agreement to confirm with federal, state, or local
governmental guidelines, policies and available funding amounts, or for other reasons. If such amendments result in a change in the funding, the scope of services, or schedule of the activities to be undertaken as part of this Agreement, such modifications will be incorporated only by written DocuSign Envelope ID: 134943A4-0152-47EC-92C6-CC9AC81D3F5C

amendment signed by both the City of Watsonville and

PAJARO VALLEY PREVENTION AND STUDENT
ASSISTANCE PROGRAM, INC..

4. Either party may terminate this Agreement at any time by giving written notice to the other party of such termination and specifying the effective date thereof at least 30 days before the effective date of such termination. In the event of any termination for convenience, all finished or unfinished documents, data, studies, surveys, reports, or other materials prepared by PAJARO VALLEY PREVENTION AND STUDENT ASSISTANCE PROGRAM, INC.
under this Agreement shall, at the option of the City of Watsonville, become the property of the City of Watsonville.
• City of Watsonville may also suspend or terminate this Agreement, in whole or in part, if PAJARO VALLEY

PREVENTION AND STUDENT ASSISTANCE PROGRAM,
INC. materially fails to comply with any term of this
Agreement, or with any of the rules, regulations, or
provisions referred to herein; and the City of Watsonville may declare PAJARO VALLEY PREVENTION AND
STUDENT ASSISTANCE PROGRAM, INC. ineligible for any
further participation in City of Watsonville’s award
agreements, in addition to other remedies as provided by law. In the event there is probable cause to believe PAJARO

VALLEY PREVENTION AND STUDENT ASSISTANCE
PROGRAM, INC. is in noncompliance with any applicable
rules or regulations, City of Watsonville may withhold
funding.

D. Award Assurances
A signature on this Agreement indicates that PAJARO VALLEY PREVENTION AND STUDENT ASSISTANCE PROGRAM, INC. is
capable of and agrees to meet the following requirements, and that all information contained in this proposal is true and correct.

1. Adopt and maintain a system of internal controls which results in the fiscal integrity and stability of the organization, including the use of Generally Accepted Accounting
Principles (GAAP).

2. Compliance with state insurance requirements for general, professional, and automobile liability; workers’ compensation and employer’s liability; and, if advance funds are required, commercial crime insurance.

3. These award funds will not be used to supplant existing financial support for current programs.

4. No portion of these award funds will be subcontracted without prior written approval unless expressly identified in the award agreement.

DocuSign Envelope ID: 134943A4-0152-47EC-92C6-CC9AC81D3F5C

5. Compliance with the requirements of the Civil Rights Act of 1964, as amended, and the Rehabilitation Act of 1973, P.L. 93-112, as amended, and any relevant program-specific
regulations, and shall not discriminate against any employee for employment because of race, national origin, creed, color, sex, religion, age, disability, or handicap condition (including AIDS and AIDS related conditions).

6. Compliance with the Americans with Disabilities Act of 1990 (P.L. 101-136), 42 U.S.C. 12101, as amended, and
regulations adopted thereunder contained in 28 CFR 26.101-

36.999 inclusive, and any relevant program-specific
regulations.

7. Compliance with Title 2 of the Code of Federal Regulations (CFR) and any guidance in effect from the Office of
Management and Budget (OMB) related (but not limited to) audit requirements for grantees that expend $750,000 or more in Federal awards during the grantee’s fiscal year must have an annual audit prepared by an independent auditor in accordance with the terms and requirements of the
appropriate circular. Certifications that neither Court Appointed Advocates for Children nor its principals are presently debarred, suspended, proposed for debarment,
declared ineligible, or voluntarily excluded from participation in this transaction by any Federal department or agency.

This certification is made pursuant to regulations
implementing Executive Order 12549, Department and
Suspension, 28 C.F.R. pt. 67 §67.510, as published as pt.

VII of May 26, 1988, Federal Register (pp. 19150-19211). No funding associated with this award will be used for lobbying.

8. Disclosure of any existing or potential conflicts of interest relative to the performance of services resulting from this award.

9. Provision of a work environment in which the use of tobacco products, alcohol, and illegal drugs will not be allowed.

All activities funded with ARPA funds must meet one of the ARPA program’s National Objectives: benefit low- and moderate-income persons; aid in the prevention or elimination of slums or blight; or meet community development needs having a particular urgency, as defined in 24 CFR 570.208.

The Sub-recipient certifies that the activity (ies) carried out under this Agreement will meet the General Objective of PAJARO VALLEY PREVENTION AND STUDENT ASSISTANCE PROGRAM, INC. persons and will use these funds for provision of a Strengthening Families Community Mental Health Support Program.

DocuSign Envelope ID: 134943A4-0152-47EC-92C6-CC9AC81D3F5C

I. SCOPE OF SERVICE
Pajaro Valley Prevention and Student Assistance (PVPSA) Program and City of Watsonville’s Strengthening Families Curriculum
Recognizing that families are at the core of the community fabric in Watsonville, CA, this curriculum incorporates community involvement efforts into the 8-week curriculum. Invitation of key community leaders that align to weekly topics will be incorporated. Each session meets for 1.5 hours each session and culminates with a graduation.

Week 1: Introduction of Strengthening Families Program, Handling and Dealing with Stress, and Identification of family engagement in Community Action Project.

Week 2: Communication for Better Relationships and Family Meetings; Finalization of Community Action Project
Week 3: Handling Peer Pressure and Alcohol & Drug Education; Community Action Project timeline mapping
Week 4: Learning from Parents/Caregivers; How to Problem Solve; Community Action Project Presentation to Group
Week 5: All About Relationships, Dating and Sexuality; Community Action Project Resource mapping
Week 6: Managing Emotions, Setting Limits and Coping with Anger; Community Action Project Prep Time
Week 7: Community Action Project Implementation Week
Week 8: Graduation!
PVPSA Scope of Work
 Plan and implement the above described program for six (6) cohorts per fiscal year, with up to twelve (12) families per cohort.  Provide all staff and materials required for implementation of the program and as outlined in the attached budget.
 Work with City staff to identify and secure strategic locations and facilities for all cohort sessions.
 Lead marketing efforts for the program and recruit families to maximize participation.
 Provide City with a monthly report by the 10th of each month that outlines participation, successes, challenges and a budget update.  Provide a program evaluation and summary following the conclusion of each cohort.
 Bill the City monthly for services rendered.

Goals
Goal 1: Families will participate in family engagement activities Goal 2: Families will be linked to appropriate level of services Goal 3: Reduce trauma and other mental health symptoms
Goal 4: Families will engage in a community project
DocuSign Envelope ID: 134943A4-0152-47EC-92C6-CC9AC81D3F5C

Outcomes
Outcome #1: 72 Families will participate in family engagement activities Outcome #2: 100 % of the participant families will receive a family needs assessment and will be linked to appropriate support based on needs identified.

Outcome #3: 85% of families participating in the Strengthening Families Program will demonstrated increased understanding of parental resilience and social emotional connection as demonstrated by the pre and post surveys Outcome #4: 100% of the participating families will develop a sturdier emotional connection to the community as demonstrated by pre/post surveys For tracking purposes and accountability, all information and assessments pertaining to student care will be submitted and tracked using noteable, our electronic health record system that PVPSA uses to document all case management and behavioral health care services that are grant funded.

Additionally, pre/post surveys will be collected for all participants that attend the monthly workshops
City will Provide:
 Access to City facilities for cohort sessions.
 Support in advertising for program and recruiting families.  Support and partnership in program design and direction.

II. TIME OF PERFORMANCE
Services of the Sub-recipient shall start on the 1st day of July 2022. This Agreement shall expire on June 30, 2024, provided, however, that the term of this Agreement and the provisions herein shall be extended to cover any additional time period during which the Sub-recipient remains in control of ARPA funds.

III. PAYMENT
It is expressly agreed and understood that the total amount to be paid by the City under this contract shall not exceed $ 200,000.00. Requests for the payment of eligible expenses incurred after July 1, 2022 and directly related to Covid-19. All payments will be made on a reimbursement basis.

Payments are contingent upon certification that the Sub-recipient’s financial management system complies with standards specified in OMB Circular A-110, and Title 2 of the Code of Federal Regulations (CFR).

Sub-recipient shall submit a request for payment for services on a monthly basis by letter to Director, or said Director's designated representative. Such request for payment shall cover the preceding monthly period during the term hereof, shall note the City's purchase order number for this contract, shall contain a detailed listing of the total number of items or tasks or hours for which payment is DocuSign Envelope ID: 134943A4-0152-47EC-92C6-CC9AC81D3F5C

requested, the individual dates on which such services were rendered, and invoices for reimbursable expenses, if any. Upon receipt in the Office of Director of said payment request, Director shall cause payment to be initiated to Subrecipient for appropriate compensation.

IV. NOTICES
Notices required by this Agreement shall be in writing and delivered via mail (postage prepaid), commercial courier, or personal delivery or sent by facsimile or other electronic means. Any notice delivered or sent as aforesaid shall be effective on the date of delivery or sending. All notices and other written communications under this Agreement shall be addressed to the individuals in the capacities indicated below, unless otherwise modified by subsequent written notice. Communication and details concerning this contract shall be directed to the following contract representatives:

The City Pajaro Valley Prevention and Student
Assistance Program, Inc.

City of Watsonville PAJARO VALLEY
City Clerk’s Office PREVENTION AND STUDENT
275 Main Street, Suite 400 ASSISTANCE PROGRAM, INC.

Watsonville, CA 95076 335 East Lake Avenue
Telephone (831) 768-3040 Watsonville, CA 95076
Fax (831) 761-0736 Telephone (831) 728-6445
V. ADMINISTRATIVE REQUIREMENTS
A. Financial Management

1. Accounting Standards
The Sub-recipient agrees to comply with OMB Circular A-110, Single AuditOMB Circular A-131 and Title 2 of the Code of Federal Regulations (CFR) and agrees to adhere to the accounting principles and procedures required therein, utilize adequate internal controls, and maintain necessary source documentation for all costs incurred.

2. Cost Principles
The Sub-recipient shall administer its program in conformance with OMB Circular A-122, “Cost Principles for Non-Profit Organizations,” as applicable for all costs incurred whether charged on a direct or indirect basis.

DocuSign Envelope ID: 134943A4-0152-47EC-92C6-CC9AC81D3F5C

B. Documentation and Record-Keeping

1. Records to be Maintained
The Sub-recipient shall maintain all records required by the federal regulations specified in Title 2 of the Code of Federal Regulations (CFR) that are pertinent to the activities to be funded under this Agreement. Such records shall include but not be limited to:
a. Records providing a full description of each activity undertaken; b. Records demonstrating that each activity undertaken meets one of the categories of the ARPA Funding;
c. Records required to determine the eligibility of activities; d. Records required to document the acquisition, improvement, use or disposition of real property acquired or improved with ARPA funding;
e. Records documenting compliance with the fair housing and equal opportunity components of the ARPA program;
f. Financial records as required by Title 2 of the Code of Federal Regulations (CFR).

2. Retention
The Sub-recipient shall retain all financial records, supporting documents, statistical records, and all other records pertinent to the Agreement for a period of five (5) years. The retention period begins on the date of the submission of the Grantee’s annual performance and evaluation report to ARPA in which the activities assisted under the Agreement are reported on for the final time. Notwithstanding the above, if there is litigation, claims, audits, negotiations or other actions that involve any of the records cited and that have started before the expiration of the four-year period, then such records must be retained until completion of the actions and resolution of all issues, or the expiration of the four-year period, whichever occurs later.

3. Client Data
The Sub-recipient shall maintain client data demonstrating client eligibility for services provided. Such data shall include, but not be limited to, client name, address, income level or other basis for eligibility, and description of service provided. Such information shall be made available to City monitors or their designees for review upon request.

4. Disclosure
The Sub-recipient understands that client information collected under this contract is private and the use or disclosure of such information, when not directly connected with the administration of the City's or the Sub-recipient's DocuSign Envelope ID: 134943A4-0152-47EC-92C6-CC9AC81D3F5C

responsibilities with respect to services provided under this contract, is prohibited unless written consent is obtained from such person receiving service and, in the case of a minor, that of a responsible parent/guardian.

5. Close-outs
The Sub-recipient’s obligation to the City shall not end until all close-out requirements are completed. Activities during this close-out period shall include, but are not limited to: making final payments, disposing of program assets (including the return of all unused materials, equipment, unspent cash advances, program income balances, and accounts receivable to the City), and determining the custodianship of records. Notwithstanding the foregoing, the terms of this Agreement shall remain in effect during any period that the Sub-recipient has control over ARPA funding.

6. Audits and Inspections
All Sub-recipient records with respect to any matters covered by this Agreement shall be made available to the Grantee, grantor agency, and the Comptroller General of the United States or any of their authorized representatives, at any time during normal business hours, as often as deemed necessary, to audit, examine, and make excerpts or transcripts of all relevant data. Any deficiencies noted in audit reports must be fully cleared by the Sub-recipient within 30 days after receipt by the Sub-recipient. Failure of the Sub-recipient to comply with the above audit requirements will constitute a violation of this contract and may result in the withholding of future payments. The Sub-recipient hereby agrees to have an annual agency audit conducted in accordance with current City policy concerning sub-recipient audits and OMB Circular A-131 (formerly known as A-133 Audit) if applicable.

C. Reporting and Payment Procedures

1. Budgets
The Sub-recipient will submit a detailed contract budget of a form and content prescribed by the City for approval by the City. The City and the Sub-recipient may agree to revise the budget from time to time in accordance with existing City policies.

2. Indirect Costs
If indirect costs are charged, the Sub-recipient will develop an indirect cost allocation plan for determining the appropriate City share of administrative costs and shall submit such plan to the City for approval, in a form specified by the City.

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3. Payment Procedures
The City will pay to the Sub-recipient funds available under this Agreement based upon information submitted by the Sub-recipient and consistent with any approved budget and City policy concerning payments.

PAJARO VALLEY PREVENTION AND STUDENT ASSISTANCE
PROGRAM, INC. agrees to:
• To request reimbursement, accompanied by supporting documentation, for the subrecipient’s operational costs and personnel salaries and benefits.

4. Progress Reports
The Sub-recipient shall submit quarterly Progress Reports to the Grantee in the form, content, and frequency as required by the City.

5. Levels of Accomplishments – Goals and Performance Measures The Sub-recipient agrees to provide the levels of program services listed under Paragraph I. A. of this Agreement.

6. Staffing
Any changes in the Key Personnel or their general responsibilities under this project are subject to the prior approval of the City.

7. Performance Monitoring
The City will monitor the performance of the Sub-recipient on a quarterly basis against Activities/Goals and Performance standards as stated above. Substandard performance as determined by the City will constitute noncompliance with this Agreement. If action to correct such substandard performance is not taken by the Sub-recipient within a reasonable period of time after being notified by the City, contract suspension or termination procedures will be initiated.

8. PAJARO VALLEY PREVENTION AND STUDENT ASSISTANCE
PROGRAM (Subrecipient) proposed uses of the funds provided as payment under sections 601, 602 and 603 of the Social Security Act will be used only to cover those costs that:
a. Respond to the public health emergency or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality;
b. Respond to workers performing essential work during the COVID-19 DocuSign Envelope ID: 134943A4-0152-47EC-92C6-CC9AC81D3F5C

public health emergency by providing premium pay to eligible workers; c. Are for the provision of government services to the extent of the reduction in revenue due to the COVID-19 public health emergency relative to revenues collected in the most recent full fiscal year prior to the emergency; and
d. Are necessary investments in water, sewer, or broadband infrastructure.

9. PAJARO VALLEY PREVENTION AND STUDENT ASSISTANCE
PROGRAM understands that any funds provided pursuant to this certification cannot be used for depositing funds into any pension fund.

10.PAJARO VALLEY PREVENTION AND STUDENT ASSISTANCE
PROGRAM understands that funds received pursuant to this certification cannot be used for expenditures for which PAJARO VALLEY PREVENTION AND STUDENT ASSISTANCE PROGRAM, INC. has
received any other emergency COVID-19 supplemental funding (whether state, federal or private in nature) for that same expense.

D. Procurement

1. Compliance
The Sub-recipient shall comply with current City policy concerning the purchase of equipment and shall maintain inventory records of all nonexpendable personal property as defined by such policy as may be procured with funds provided herein. All program assets (unexpended ARPA funding, property, equipment, etc.) shall revert to the City upon termination of this Agreement.

2. OMB Standards
Unless specified otherwise within this Agreement, the Sub-recipient shall procure all materials, property, or services in accordance with the requirements of 24 CFR 84.40—48.

3. Travel
The Sub-recipient shall obtain written approval from the City for any travel outside the metropolitan area with funds provided under this Agreement.

E. Use and Reversion of Assets
The use and disposition of real property and equipment under this Agreement shall follow the requirements of Title 2 of the Code of Federal Regulations (CFR), as applicable, which include but are not limited to the following:

1. The Sub-recipient shall transfer to the City any ARPA funds on hand and any accounts receivable attributable to the use of funds under this Agreement at the time of expiration, cancellation, or termination.

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2. Real property under the Sub-recipient’s control that was acquired or improved, in whole or in part, with funds under this Agreement in excess of $25,000 shall be used to meet one of the categories pursuant to 24 CFR 570.208 until five (5) years after expiration of this Agreement. If the Sub-recipient fails to use ARPA-assisted real property in a manner that meets an ARPA National Objective for the prescribed period of time, the Sub-recipient shall pay the City an amount equal to the current fair market value of the property less any portion of the value attributable to expenditures of non-ARPA funds for acquisition of, or improvement to, the property. Such payment shall constitute program income to the City. The Sub-recipient may retain real property acquired or improved under this Agreement after the expiration of the five-year period or such longer period of time as the City deems appropriate.

3. In all cases in which equipment acquired, in whole or in part, with funds under this Agreement is sold, the proceeds shall be program income (prorated to reflect the extent to that funds received under this Agreement were used to acquire the equipment). Equipment not needed by the Subrecipient for activities under this Agreement shall be (a) transferred to the City for the ARPA program or (b) retained after compensating the City [an amount equal to the current fair market value of the equipment less the percentage of non-ARPA funds used to acquire the equipment].

VI. PERSONNEL & PARTICIPANT CONDITIONS
A. Civil Rights

1. Compliance
The Sub-recipient agrees to comply with Title VI of the Civil Rights Act of 1964 as amended, Title VIII of the Civil Rights Act of 1968 as amended, Section 104(b) and Section 109 of Title I of the Housing and Community Development Act of 1974 as amended, Section 504 of the Rehabilitation Act of 1973, the Americans with Disabilities Act of 1990, the Age Discrimination Act of 1975, Executive Order 11063, and Executive Order 11246 as amended by Executive Orders 11375, 11478, 12107 and 12086.

2. Nondiscrimination
The Sub-recipient agrees to comply with the non-discrimination in employment and contracting opportunities laws, regulations, and executive orders referenced in 24 CFR 570.607, as revised by Executive Order 13279. The applicable non-discrimination provisions in Section 109 of the HCDA are still applicable.

3. Section 504
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The Sub-recipient agrees to comply with all Federal regulations issued pursuant to compliance with Section 504 of the Rehabilitation Act of 1973, (29 U.S.C. 794), which prohibits discrimination against the individuals with disabilities or handicaps in any Federally assisted program. The City shall provide the Sub-recipient with any guidelines necessary for compliance with that portion of the regulations in force during the term of this Agreement.

B. Affirmative Action

1. Women- and Minority-Owned Businesses (W/MBE)
The Sub-recipient will use its best efforts to afford small businesses, minority business enterprises, and women’s business enterprises the maximum practicable opportunity to participate in the performance of this contract. As used in this contract, the terms “small business” means a business that meets the criteria set forth in section 3(a) of the Small Business Act, as amended (15 U.S.C. 632), and "minority and women’s business enterprise" means a business at least fifty-one (51) percent owned and controlled by minority group members or women. For the purpose of this definition, "minority group members" are Afro-Americans, Spanish-speaking, Spanish surnamed or Spanish-heritage Americans, Asian-Americans, and American Indians. The Sub-recipient may rely on written representations by businesses regarding their status as minority and female business enterprises in lieu of an independent investigation.

2. Access to Records
The Sub-recipient shall furnish and cause each of its own sub-recipients or subcontractors to furnish all information and reports required here under and will permit access to its books, records and accounts by the City, HUD or its agent, or other authorized Federal officials for purposes of investigation to ascertain compliance with the rules, regulations and provisions stated herein.

3. Equal Employment Opportunity and Affirmative Action (EEO/AA) Statement
The Sub-recipient will, in all solicitations or advertisements for employees placed by or on behalf of the Sub-recipient, state that it is an Equal Opportunity or Affirmative Action employer.

C. Employment Restrictions

1. Prohibited Activity
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The Sub-recipient is prohibited from using funds provided herein or personnel employed in the administration of the program for: political activities; inherently religious activities; lobbying; political patronage; and nepotism activities.

2. Labor Standards
The Sub-recipient agrees to comply with the requirements of the Secretary of Labor in accordance with the Davis-Bacon Act as amended, the provisions of Contract Work Hours and Safety Standards Act (40 U.S.C 327 et seq.,), and all other applicable Federal, state and local laws and regulations pertaining to labor standards insofar as those acts apply to the performance of this Agreement. The Sub-recipient agrees to comply with the Copeland Anti-Kick Back Act (18 U.S.C. 874 et seq.) and its implementing regulations of the U.S. Department of Labor at 29 CFR Part

5. The Sub-recipient shall maintain documentation that demonstrates compliance with hour and wage requirements of this part. Such documentation shall be made available to the City for review upon request.

The Sub-recipient agrees that, except with respect to the rehabilitation or construction of residential property containing less than eight (8) units, all contractors engaged under contracts in excess of $2,000.00 for construction, renovation or repair work financed in whole or in part with assistance provided under this contract, shall comply with Federal requirements adopted by the City pertaining to such contracts and with the applicable requirements of the regulations of the Department of Labor, under 29 CFR, Parts 1, 3, 5 and 7, governing the payment of wages and ratio of apprentices and trainees to journey workers; provided that, if wages rates higher than those required under the regulations are imposed by state or local law, nothing hereunder is intended to relieve the Subrecipient of its obligation, if any, to require payment of the higher wage.

The Sub-recipient shall cause or require to be inserted in full, in all such contracts subject to such regulations, provisions meeting the requirements of this paragraph.

3. "Section 3" Clause
a. Compliance
Compliance with Title 2 of the Code of Federal Regulations (CFR) and any guidance in effect from the Office of Management and Budget (OMB) related (but not limited to) audit requirements for grantees that expend $750,000 or more in Federal awards during the grantee’s fiscal year must have an annual audit prepared by an independent auditor in accordance with the terms and requirements of the appropriate circular. Certifications that neither Court DocuSign Envelope ID: 134943A4-0152-47EC-92C6-CC9AC81D3F5C

Appointed Advocates for Children nor its principals are presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from participation in this transaction by any Federal department or agency. This certification is made pursuant to regulations implementing Executive Order 12549, Department and Suspension, 28 C.F.R. pt. 67 §67.510, as published as pt. VII of May 26, 1988, Federal Register (pp. 19150-19211). No funding associated with this award will be used for lobbying.

The Sub-recipient certifies and agrees that no contractual or other legal incapacity exists that would prevent compliance with these requirements.
b. Notifications
The Sub-recipient agrees to send to each labor organization or representative of workers with which it has a collective bargaining agreement or other contract or understanding, if any, a notice advising said labor organization or worker's representative of its commitments under this Section 3 clause and shall post copies of the notice in conspicuous places available to employees and applicants for employment or training.
c. Subcontracts
The Sub-recipient will include this Section 3 clause in every subcontract and will take appropriate action pursuant to the subcontract upon a finding that the subcontractor is in violation of regulations issued by the grantor agency. The Sub-recipient will not subcontract with any entity where it has notice or knowledge that the latter has been found in violation of regulations under Title 2 of the Code of Federal Regulations (CFR) and will not let any subcontract unless the entity has first provided it with a preliminary statement of ability to comply with the requirements of these regulations.

D. Conduct

1. Assignability
The Sub-recipient shall not assign or transfer any interest in this Agreement without the prior written consent of the City thereto; provided, however, that claims for money due or to become due to the Sub-recipient from the City under this contract may be assigned to a bank, trust company, or other financial institution without such approval. Notice of any such assignment or transfer shall be furnished promptly to the City.

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2. Hatch Act
The Sub-recipient agrees that no funds provided, nor personnel employed under this Agreement, shall be in any way or to any extent engaged in the conduct of political activities in violation of Chapter 15 of Title V of the United States Code (U.S.C.).

3. Conflict of Interest
The Sub-recipient agrees to abide by the provisions of Title 2 of the Code of Federal Regulations (CFR), which include (but are not limited to) the following:
a. The Sub-recipient shall maintain a written code or standards of conduct that shall govern the performance of its officers, employees or agents engaged in the award and administration of contracts supported by Federal funds.
b. No employee, officer or agent of the Sub-recipient shall participate in the selection, or in the award, or administration of, a contract supported by Federal funds if a conflict of interest, real or apparent, would be involved.
c. No covered persons who exercise or have exercised any functions or responsibilities with respect to ARPA-assisted activities, or who are in a position to participate in a decisionmaking process or gain inside information with regard to such activities, may obtain a financial interest in any contract, or have a financial interest in any contract, subcontract, or agreement with respect to the ARPA-assisted activity, or with respect to the proceeds from the ARPA-assisted activity, either for themselves or those with whom they have business or immediate family ties, during their tenure or for a period of one (1) year thereafter. For purposes of this paragraph, a “covered person” includes any person who is an employee, agent, consultant, officer, or elected or appointed official of the Grantee, the Sub-recipient, or any designated public agency.

The Sub-recipient further agrees to avoid all conflicts of interest or appearance of conflicts of interest in the performance of this Agreement. Sub-recipient shall file a FPPC Form 700 disclosure statement, which form shall be filed with the City Clerk within thirty (30) days from the effective date of this Agreement as applicable.

No member, officer, or employee of the City, during their tenure, or for one (1) year thereafter, shall have any interest, direct or indirect, in this Agreement or the proceeds thereof and Sub-recipient agrees not to allow, permit, grant, transfer, or otherwise do anything which DocuSign Envelope ID: 134943A4-0152-47EC-92C6-CC9AC81D3F5C

will result in such member, officer, or employee of the City from having such interest.

4. Lobbying
The Sub-recipient hereby certifies that:
a. No Federal appropriated funds have been paid or will be paid, by or on behalf of it, to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement;
b. If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this Federal contract, grant, loan, or cooperative agreement, it will complete and submit Standard Form-LLL, “Disclosure Form to Report Lobbying,” in accordance with its instructions; and
c. It will require that the language of paragraph (d) of this certification be included in the award documents for all subawards at all tiers (including subcontracts, subgrants, and contracts under grants, loans, and cooperative agreements) and that all Subrecipients shall certify and disclose accordingly:
d. Lobbying Certification
This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by section 1352, title 31, U.S.C. Any person who fails to file the required certification shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure.

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5. Copyright
If this contract results in any copyrightable material or inventions, the City and/or grantor agency reserves the right to royalty-free, non-exclusive and irrevocable license to reproduce, publish or otherwise use and to authorize others to use, the work for government purposes.

6. Religious Activities
The Sub-recipient agrees that funds provided under this Agreement will not be utilized for inherently religious activities prohibited by Title 2 of the Code of Federal Regulations (CFR), such as worship, religious instruction, or proselytization.

VII. ENVIRONMENTAL CONDITIONS

A. Air and Water
The Sub-recipient agrees to comply with the following requirements insofar as they apply to the performance of this Agreement:
- Clean air Act, 42 U.S.C., 7401, et seq.;
- Federal Water Pollution Control Act, as amended, 33 U.S.C., 1251, et seq., as amended, 1318 relating to inspection, monitoring, entry, reports, and information, as well as other requirements specified in said Section 114 and Section 308, and all regulations and guidelines issued thereunder;
- Environmental Protection Agency (EPA) regulations pursuant to 40 C.F.R., Part 50, as amended.

B. Flood Disaster Protection
In accordance with the requirements of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4001), Sub-recipient shall assure that for activities located in an area identified by the Federal Emergency Management Agency (FEMA) as having special flood hazards, flood insurance under the National Flood Insurance Program is obtained and maintained as a condition of financial assistance for acquisition or construction purposes (including rehabilitation).

C. Historic Preservation
The Sub-recipient agrees to comply with the Historic Preservation requirements set forth in the National Historic Preservation Act of 1966, as amended (16 U.S.C. 470) and the procedures set forth in 36 CFR Part 800, Advisory Council on Historic Preservation Procedures for Protection DocuSign Envelope ID: 134943A4-0152-47EC-92C6-CC9AC81D3F5C

of Historic Properties, insofar as they apply to the performance of this Agreement.

In general, this requires concurrence from the State Historic Preservation Officer for all rehabilitation and demolition of historic properties that are fifty years old or older or that are included on a Federal, state, or local historic property list.

VIII. SEVERABILITY
If any provision of this Agreement is held invalid, the remainder of the Agreement shall not be affected thereby and all other parts of this Agreement shall nevertheless be in full force and effect.

IX. SECTION HEADINGS AND SUBHEADINGS
The section headings and subheadings contained in this Agreement are included for convenience only and shall not limit or otherwise affect the terms of this Agreement.

X. WAIVER
The City’s failure to act with respect to a breach by the Sub-recipient does not waive its right to act with respect to subsequent or similar breaches. The failure of the City to exercise or enforce any right or provision shall not constitute a waiver of such right or provision.

XI. INDEPENDENT CONSULTANT
It is understood and agreed that Sub-recipient, in the performance of the work and services agreed to be performed by Sub-recipient, shall act as and be an independent Sub-recipient and not an agent or employee of City, and as an independent Sub-recipient, shall obtain no rights to retirement benefits or other benefits which accrue to City's employees, and Sub-recipient hereby expressly waives any claim it may have to any such rights.

XII. INDEMNIFICATION
Sub-recipient represents that Sub-recipient has the expertise and experience necessary to perform the services and duties agreed to be performed by Subrecipient under this Contract, and City is relying upon the skill and knowledge of Sub-recipient to perform said services and duties. Sub-recipient agrees to defend, indemnify and hold harmless City, its officers, agents, and employees, against any loss or liability arising out of or resulting in any way from work performed by or on behalf of Sub-recipient under this Contract or the errors or omissions by Sub-recipient.

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XIII. INSURANCE
A. Auto and Commercial General Liability Insurance. Sub-recipient shall also maintain in full force and effect for the term of this Contract, automobile insurance and commercial general liability insurance with an insurance carrier satisfactory to City, which insurance shall include protection against claims arising from bodily and personal injury, including death resulting therefrom, and damage to property resulting from any actual occurrence arising out of the performance of this Contract. The amounts of insurance shall not be less than the following:
(1) Commercial general liability insurance, or equivalent form, with a combined single limit of not less than $1,000,000.00 per occurrence. If such insurance contains a general aggregate limit, such limit shall apply separately to each project Sub-recipient performs for City.

Such insurance shall (a) name City, its appointed and elected officials, and its employees as insureds; and (b) be primary with respect to insurance or self-insurance programs maintained by City and (c) contain standard separation of insured's provisions.
(2) Business automobile liability insurance, or equivalent form, with a combined single limit of not less than $1,000,000.00 per occurrence. Such insurance shall include coverage for owned, hired and non-owned automobiles.

B. Workers’ Compensation Insurance. In accordance with the provisions of Section 3700 of the Labor Code, Sub-recipient shall be insured against liability for Workers’ Compensation or undertake self-insurance. Sub-recipient agrees to comply with such provisions before commencing performance of any work under this Contract.

C. Proof of Insurance to City before Notice to Proceed to Work. Subrecipient shall satisfactorily provide certificates and endorsements of insurance to the City Clerk before Notice to Proceed to Work of this Contract will be issued.

Certificates and policies shall state that the policy shall not be canceled or reduced in coverage without thirty (30) days written notice to City. Approval of insurance by City shall not relieve or decrease the extent to which Sub-recipient may be held responsible for payment of damages resulting from services or operations performed pursuant to this Contract. Sub-recipient shall not perform any work under this Contract until Sub-recipient has obtained the required insurance and until the required certificates have been submitted to the City and approved by the City Attorney. If Sub-recipient fails or refuses to produce or maintain the insurance required by these provisions, or fails or refuses to furnish City required proof that insurance has been procured and is in force and paid for, City shall have the right at City's election to forthwith terminate this Contract immediately without any financial or contractual obligation to the City. As a result of such termination, the City reserves the right to employ another Sub-recipient to complete the project.

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D. Written notice. Sub-recipient shall provide immediate written notice if (1) any insurance policy required by this Agreement is terminated; (2) any policy limit is reduced; (3) or any deductible or self-insured retention is increased.

XIV. TERMINATION
A. City and Sub-recipient shall have the right to terminate this Agreement, without cause, by giving not less than ten (10) days written notice of termination.

B. If Sub-recipient fails to perform any of its material obligations under this Agreement, in addition to all other remedies provided by law, City may terminate this Agreement immediately upon written notice.

C. The City Manager is empowered to terminate this Agreement on behalf of City.

D. In the event of termination, Sub-recipient shall deliver to City copies of all work papers, schedules, reports and other work performed by Subrecipient and upon receipt thereof, Sub-recipient shall be paid in full for services performed and reimbursable expenses incurred to the date of termination.

XV. COMPLIANCE WITH LAWS
Sub-recipient shall comply with all applicable laws, ordinances, codes and regulations of the federal, state and local governments. Sub-recipient shall obtain and maintain a City of Watsonville business license during the term of this Agreement.

XVI. GOVERNING LAW
City and Sub-recipient agree that the law governing this Agreement shall be that of the State of California. Any suit brought by either party against the other arising out of the performance of this Agreement shall be filed and maintained in the Courts of the County of Santa Cruz.

XVII. PRIOR CONTRACTS AND AMENDMENTS
This Agreement represents the entire understanding of the parties as to those matters contained herein. No prior oral or written understanding shall be of any force or effect with respect to those matters covered hereunder. This Agreement may only be modified by a written amendment.

XVIII. CONFIDENTIAL INFORMATION
Except as may be required by law, all data, documents, discussions, or other information developed or received by or for Sub-recipient in performance of this Agreement are confidential and not to be disclosed to any person except as authorized by the City Manager.

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XIX. OWNERSHIP OF MATERIALS
All reports, documents or other materials developed or received by Sub-recipient or any other person engaged directly by Sub-recipient to perform the services required hereunder shall be and remain the property of City without restriction or limitation upon their use.

XX. COVENANT AGAINST CONTINGENT FEES
The Sub-recipient covenants that Sub-recipient has not employed or retained any company or person to solicit or secure the Agreement, and that Sub-recipient has not paid or agreed to pay any company or person, any fees, commissions, percentage, brokerage fee, gift, or any other consideration contingent on or resulting from the award or making of this Agreement. For breach or violation of this covenant, the City shall have the right to annul this Agreement without liability, or in its discretion, to deduct from the contract price or consideration or otherwise recover, the full amount of such fee, commission, percentage fee, gift, or contingency.

XXI. ENTIRE AGREEMENT
This agreement constitutes the entire agreement between the City and the Subrecipient for the use of funds received under this Agreement and it supersedes all prior or contemporaneous communications and proposals, whether electronic, oral or written between the City and the Sub-recipient with respect to this Agreement.

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WITNESS THE EXECUTION HEREOF, on the day and year first hereinabove written.

CITY

CITY OF WATSONVILLE
BY ______________________________
Tamara Vides, Interim City Manager

ATTEST:

BY ______________________________
Irwin Ortiz, City Clerk
APPROVED AS TO FORM:

BY ______________________________
Samantha W. Zutler, City Attorney

SUB-RECIPIENT

PAJARO VALLEY PREVENTION AND
STUDENT ASSISTANCE PROGRAM, INC.

BY_________________________________
Erica Padilla-Chavez, Chief Executive Officer
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