Watsonville City Council
June 24, 2025

1 CITY COUNCIL AGENDA REPORT
MEETING DATE: Tuesday, June 24, 2025
TO: CITY COUNCIL
RECOMMENDED BY: AIRPORT DIRECTOR WILLIAMS
APPROVED BY: TAMARA VIDES, CITY MANAGER
SUBJECT: RESOLUTION APPROVING A THREE-YEAR AIRPORT GROUND LEASE WITH NATE’S TREE SERVICE, INC.

RECOMMENDATION:

It is recommended that the City Council approve a three (3) year ground lease with Nate’s Tree Service, Inc., for 10,000 square feet at the approach end of Runway 27.

BACKGROUND:

Nate’s Tree Service Inc. has been in business for over 36 years and is based in Sonoma, California. Nate’s Tree Service, Inc. offers a full range of tree care services such as pruning, trimming, removal stump grinding, and emergency storm response. Their team is comprised of certified arborists and experienced technicians.

DISCUSSION:

In March 2025 a foreman with Nate’s Tree Service’s Inc. expressed the desire to lease property located at the end approach of Runway 27. Nate’s Tree Services, Inc. entered a three-year contract with PG&E and needed a fenced area for staging 25 work vehicles and three bucket trucks. On occasion, vehicles not associated with Nate’s Tree Service, Inc. may be left on the premises after business hours.

The negotiated ground lease is three years at a fair market rate averaging $700.00 per month with an annual Consumer Price Index (CPI) adjustment every July 1st beginning on the second year of the lease and each July 1st thereafter.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION:

2 N/A
STRATEGIC PLAN:

Infrastructure & Environment
FINANCIAL IMPACT:

The ground lease would provide revenue of $700.00 per month to the Airport Enterprise Fund.

ALTERNATIVE ACTION:

Alternatives include not approving the ground lease.

ATTACHMENTS AND/OR REFERENCES (IF ANY):

None.

Reso No. (CM)
Meeting Date: 062425 SWZ ______ TV ______ Airport ______ 1 RESOLUTION NO.__________ (CM)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

WATSONVILLE APPROVING A THREE-YEAR GROUND LEASE
AGREEMENT BETWEEN THE CITY OF WATSONVILLE AND NATE’S
TREE SERVICE, INC., FOR THE USE OF CITY OWNED PROPERTY
LOCATED AT THE APPROACH END OF RUNWAY 27 AND

AUTHORIZING AN DIRECTING THE CITY MANAGER TO EXECUTE
SAME

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

1. Leasing property 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. Any improvements on the property will be subject to separate environmental analysis.

2. That the Lease for City owned property located at the end approach of Runway 27, between the City of Watsonville and Nate’s Tree Service, Inc. a corporation, a copy of which Lease is attached hereto and incorporated herein by this reference, and is hereby approved.

3. That the City Manager is hereby authorized and directed to execute such Lease for and on behalf of the City of Watsonville with minor revisions that may be approved by the City Manager and the City Attorney. *******************************

GROUND LEASE BETWEEN CITY OF WATSONVILLE AND NATE’S TREE SERVICE, INC. 4916-4651-3980 v1
THIS GROUND LEASE ("Lease"), is made and entered into to be effective June 01, 2025 (“Effective Date”) by and between the CITY OF WATSONVILLE, a municipal corporation ("City"), and Nate’s Tree Service, Inc. ("Tenant").

THE PARTIES AGREE AS FOLLOWS:

1. Premises.

City does hereby rent and Tenant does hereby hire and take from City certain real property and if applicable, improvements, consisting of 10,000 square feet at the approach end of Runway 27, in the Watsonville Municipal Airport (“Premises”). The Premises are outlined in red on Exhibit "A." Tenant also has the right of ingress and egress to such Premises.

2. Term
a. The term of this Ground Lease shall be three (3) years, commencing June 1, 2025 and expiring on May 31, 2028 ("Lease Term"), at an agreed rent of approximately $0.075 per square foot per month at the sum of $750.00 (seven hundred and fifty dollars) per month.
b. Rent is due and shall be paid in advance on the 10th day of each and every month during the term of this Lease, commencing June 1, 2025. Rent not received by the 10th of the month shall be assessed a ten percent (10%) late payment penalty. c. The rent shall be adjusted annually, every July 1st beginning on the second year of the lease and each July 1st thereafter using the rate of April to April change in the Consumer Price Index (CPI) for All Urban Consumers San Francisco-Oakland-San Jose, California. In no event will the annual rental increase be more than five percent (5%). d. If, on any rental adjustment date, there shall not exist a CPI in the same format as recited herein, the parties shall substitute the Consumer Price Index for a comparable index published by the Bureau of Labor Statistics or similar or successor governmental agency as may then be in existence and most nearly equivalent thereto (i.e.: the Wholesale Price Index). If the parties are unable to agree on a successor index in the event the aforesaid index is no longer reporting, then the parties shall refer the choice of the successor index to arbitration in accordance with rules of the American Arbitration Association.

3. Use.

The Premises shall be used as a staging area for 25 work vehicles and three bucket trucks. On occasion, vehicles not associated with the Tenant’s business may be left on the Premises after business hours. Hours of operation are 5:30am- 6:00pm Monday- Friday. The General Foreman of Nate’s Tree Service Inc. will have access to the gate attached to the Premises.

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4. Termination.

Both Parties shall have the right to unilaterally terminate this Lease at any time upon thirty (30) days written notice. The terminating Party shall provide written notice to the other Party of such termination to the address provided in Section 39 of this Lease.

5. Prohibited Uses.

The Premises shall not be used for any other use not expressly allowed in Section 3 of this Lease.

6. Improvements to Premises.

If any improvements are proposed by the Tenant, Tenant shall submit a written description of the proposed improvements to the Airport Director together with two sketches drawn to scale. The Airport Director will review the proposal and provide written comments with a recommendation and forward the same to the City Manager for review within 30 days.

7. Conditions of Construction.

Before construction is commenced on the Premises, and before any building materials have been delivered to the Premises by Tenant or under Tenant's authority, Tenant shall comply with all the following conditions or procure City’s written waiver of the conditions. City shall not unreasonably disapprove preliminary plans and specifications. a. Provide City the plans and specifications of the project and four (4) copies of the site plan.
b. Notify City of Tenant's intention to commence working on the improvement at least ten (10) days before commencement of any such work or delivery of any materials. City shall have the right to post and maintain on the Premises any notices of non-responsibility provided for under applicable law. c. Furnish City with a true copy of Tenant's contract with the general contractor and with evidence of the general contractor's financial condition for City's approval.

The contract shall give City the right, but not the obligation, to assume Tenant's obligations and rights under that contract if Tenant should default. d. Tenant shall comply with all applicable codes, ordinances, or regulations, and requirements for permits and approvals, including, but not limited to, a grading permit, building permit, zoning and planning requirements, and approvals from various governmental agencies.
e. Tenant shall require from the contractor: (i) certificates of insurance evidencing coverage for "Builder's risk," (ii) evidence of Worker's Compensation Insurance covering all persons employed in connection with the work and with respect to whom death or bodily injury claims could be asserted against City or the Premises, and (iii) evidence that contractor has paid or caused to be paid all premiums for the coverage described in this sub- paragraph and premiums

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sufficient to assure maintenance of all insurance during the anticipated course of the work.

8. New Construction Completion Date.

Once work has begun on one area, Tenant shall with reasonable diligence manage all construction of improvements. If the Tenant fails to commence construction within two (2) weeks following execution of this Lease, the City may elect to terminate this Lease by five (5) days written notice.

9. Protection of City against Cost or Claim.

Tenant shall pay or cause to be paid the total cost and expense of all works of improvements, as that phrase is defined in the mechanic's lien law in effect at the place of construction when the work begins. No such payment shall be construed as rent. Tenant shall not suffer or permit to be enforced against the Premises or any part of it any mechanic's, materiel man’s, contractor's, or sub-contractor's lien arising from any work of improvement, however it may arise. However, Tenant may in good faith and at Tenant's own expense contest the validity of any such asserted lien, claim, or demand, provided Tenant has furnished the bond required in California Civil Code Section 3143. Tenant shall defend and indemnify City against all liability and loss of any type arising out of work performed on the Premises by Tenant, together with reasonable attorney's fees and all costs and expenses incurred by City in negotiating, settling, defending, or otherwise protecting against such claims.

10.Notice of Completion.

On completion of the work of improvement, Tenant shall file or cause to be filed a notice of completion. Tenant hereby appoints City as Tenant's attorney in fact to file the notice of completion on Tenant's failure.

11.Ownership of Improvements During Term.

All buildings and improvements constructed on the Premises by Tenant as permitted or required by this Lease shall, during this Lease Term, be and remain the property of Tenant; provided, however, that Tenant shall have no right to waste, destroy, demolish or remove the improvements except as expressly provided in this Lease; and provided, further, that Tenant's rights and powers with respect to the improvements are subject to the terms and limitations of this Lease. City and Tenant covenant for themselves, and all persons claiming under or through them, that the improvements are real property. All buildings and improvements existing on the Premises, as of the Effective Date are City's property, free of all claims to or against them by Tenant or any third person.

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12.Ownership of Improvements at Termination.

Except as specified in Section 12 of this Lease, all buildings and improvements placed or constructed on said Premises, as well as any and all other alterations, additions, improvements, and fixtures, except furniture and trade fixtures, made or placed in or on said Premises by Tenant or any other person, shall be considered part of the real property of said Premises and on expiration or sooner termination of this Lease, or the exercised option, shall remain on said Premises and become the property of City free and clear of any liens or encumbrances whatsoever and without the payment of any consideration therefore.

13.Removal of Fixtures.

At the normal expiration of the Lease Term, provided Tenant is not in default, Tenant shall have the right to remove any and all trade fixtures, provided all resultant injuries to the Premises and remaining improvements, except for ordinary wear and tear, are completely remedied and Tenant complies with City's reasonable requirements respecting the resultant appearance. Any such items not so removed within thirty (30) days of termination shall become the property of City free and clear of any liens or encumbrances whatsoever and without payment of consideration therefore.

14.No Subordination.

City shall not subordinate the fee title to the Premises to any security transaction to enable Tenant to obtain financing for the new improvements. The Premises are now and shall remain free and clear of any liens, encumbrances or other Tenant obligations to third person.

15.Utilities.

If available and desired by the Tenant, the Tenant shall pay for all water, gas, heat, light, power, telephone service, garbage disposal, storm and sanitary sewer services, and all other services supplied to the Premises, including installation and connection of such services from the main source thereof, including City meters, and hold harmless the City therefore.

16.Possessory Interest Tax.

Pursuant to Section 107.6 of the State Revenue and Taxation Code the City hereby gives notice that the property interest to Tenant under this Lease may be subject to property taxation as a possessory interest and the Tenant acknowledges that it shall be subject to payment of property tax if a possessory interest tax is levied on the property interest.

17.Alterations and Additions.

Except as otherwise provided by Section 5 of this Lease, Tenant shall not make

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any alterations or improvements to or erect any additional structures on the Premises without prior written consent of City. Any alterations or additions approved by City shall be constructed at the sole expense of Tenant.

18.Compliance with rules, regulations and laws.

In the use and occupancy of the Premises and in the conduct of all business, activities and transactions thereon, Tenant will comply with all applicable laws, ordinances, rules, regulations and orders of the City or any governmental subdivision, body or authority, including all federal, state and municipal laws and ordinances and all rules and regulations of the Federal Aviation Agency and the City of Watsonville rules and regulations concerning the operations of the Watsonville Municipal Airport and environs.

19.Storage of Materials, Equipment.

No materials, supplies, products, equipment or other personal property shall be stored or permitted to remain on any portion of the Leased Premises without City's prior written consent. Tenant shall store personal property items, supplies, materials and combustibles inside the buildings, if the buildings are situated on the property in a safe, neat and sanitary manner. Tenant shall provide or cause to be provided adequate enclosures, screened areas and/or suitable covered metal receptacles within the Premises for the short-term accumulation and storage of solid waste, such as rubbish, trash, garbage, sludge, discarded machinery or parts and any other solid industrial wastes. Such enclosures and/or screened areas shall be designed in such a way as to prevent, odors, fumes, attraction of pests, and dispersal of wastes due to wind or water runoff, and shall be serviced regularly by qualified waste removal and disposal services.

20.Environmental Considerations.
a. Tenant shall not commit, or suffer to be committed, any waste upon the Premises, or any nuisance or other act or thing, which may disturb the quiet enjoyment of the use of Watsonville Municipal Airport or surrounding property. Tenant shall ensure that no untreated liquid waste from any type of operation will enter the airport storm drainage system or sanitary system.
b. Tenant shall at all times comply with all applicable laws, rules and regulations of federal, state or local governmental agencies, including, but not limited to, the City of Watsonville, Santa Cruz County, and responsible Regional Air and Water Quality Control Boards. Tenant shall not permit any activity which directly or indirectly produces objectionable or unlawful amounts or levels of air pollution (gases, particulate matter, odors, fumes, smoke, or dust), water pollution, noise, glare, heat emissions, electronic or radio interference with navigational and communication facilities for the operation of the Airport and for its use by aircraft, trash or refuse accumulation, vibration, prop-wash, or jet blast, or which is hazardous or dangerous by reason or risk of explosion, fire or

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harmful emission. Any waste oil storage tanks shall be in approved containers and in accordance with environmental and fire protection regulations. c. Hazardous Substances. The term "Hazardous Materials" shall mean any toxic substance, hazardous substance, hazardous material, or hazardous waste, pollutant or contaminant which is or during the term of this Lease becomes regulated by any local governmental authority, the State of California, or the United States government, including, but not limited to any, material or substance which is defined as a "hazardous waste," "extremely hazardous waste" or "restricted hazardous waste" under local, State, or federal law and as determined by the Fire Department. Except in strict compliance with all government approvals, applicable laws and regulations pertaining to Hazardous Materials, and in accordance with the provisions of this Lease, Tenant shall not cause or permit the presence, use, handling, generation, emission, release, discharge, storage, or disposal of any Hazardous Materials on, under, in or about the Premises, excepting the presence of any Hazardous Materials on, under, in or about the Premises as of the date of this Lease or the migration to or seepage of Hazardous Materials from surrounding or adjacent property; and shall not cause or permit the transportation of any such materials.

21.Hazardous Materials to or from the Premises.
a. Tenant shall at all times notify City of any Hazardous Materials present, used, generated, handled, emitted, released, discharged, stored or disposed of on or from the Premises. Notwithstanding the foregoing, notice shall not be required for Hazardous Materials present on the Premises in reasonable quantities which are commonly used in machining facilities including, but not limited to, cleaning materials, motor oils, and hydraulic fluids provided such Hazardous Materials are used and disposed of in accordance with law, or for materials which are first designated as Hazardous Materials after expiration of the term of this Lease. Tenant shall also institute operating procedures designed to handle Hazardous Materials consistent with prudent industry practice, including evidence of a licensed agent removal service. City shall have the right to inspect the Premises on 24-hours prior notice for compliance with the provisions of this Section.
b. Indemnification by City. City shall indemnify, protect, defend, and hold harmless Tenant and Tenant's successors and assigns, officers, directors, employees, agents, subtenants and assignees, from and against all liability, and foreseeable consequential damages, penalties, expenses and costs of any required or necessary remediation, repair, removal, clean up or detoxification, of the Premises and surrounding properties, and from and against the preparation of any clean up, remediation, closure or other required plans, whether such action is required or necessary during or following the term of this Lease, to the full extent that the same is attributable to the use, handling, generation, emission, release, storage, discharge or disposal of hazardous material by City, its agents, employees, and contractors.

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21. Repairs.
a. If the Premises includes a building(s) the City shall maintain the exterior of the Premises, including outside walls and roof, except in the event that repairs or replacements are necessary thereto because of negligence or misconduct of the Tenant or if Tenant fails to notify City in writing within three (3) days of the need to repair. b. Tenant shall maintain Premises, including, but not limited to, interior plumbing (i.e., sanitary sewer obstructions), interior walls, doors, hardware, alarms, internal lights and fixtures, heating, electrical systems (including internal lights and fixtures) etc., in as good order, condition and repair as they shall be upon the commencement of the Lease Term. Any addition to the electrical system installed by Tenant shall remain the responsibility of the Tenant. Tenant shall keep drainage ditches and gutters free of debris.

22. Freedom from Liens.

Tenant shall not create or permit to be created or to remain, and covenants to remove and discharge promptly, at its cost and expense, all liens, claims, stop notices, encumbrances and charges upon the Premises, or Tenant's leasehold interest therein which arise out of the use or occupancy of the Premises by Tenant or anyone using or occupying the Premises with the consent or sufferance of Tenant, or by reason of labor or materials furnished or claimed to have been furnished to Tenant for any construction, alteration, addition or repair of any part of the Premises. Tenant shall give City fifteen (15) day’s notice prior to commencing any work on the Premises, so that City shall have a reasonable time within which to post notices of non-responsibility.

23. Holding Over.

If Tenant shall hold possession of the Premises after the Lease Term ends, Tenant shall become a Tenant from month to month at the rental and upon the terms herein specified and shall continue to be such tenant until the tenancy shall be terminated by City on thirty (30) day’s notice or until Tenant shall have given at least thirty (30) day’s notice of Tenant's intention to terminate the tenancy. The provisions of this Lease, so far as applicable, shall govern such tenancy, except that the monthly rent for such tenancy shall be the same as the last full month's rental rate.

24. Abandonment.

Tenant shall not vacate or abandon the Premises at any time during the Lease Term. If Tenant abandons, vacates or surrenders the Premises or be dispossessed by process of law, or otherwise, any personal property belonging to Tenant and left on the Premises shall be deemed to be abandoned and at the option of City shall become City's property free from all claims of Tenant. In the event Tenant abandons the Premises, City shall have the option to terminate this Lease by giving Tenant notice of belief of abandonment pursuant to California Civil Code Section 195 1.3 or City has the remedy described in California Civil Code Section 1951.4, i.e., City may continue the Lease after breach and abandonment and recover rent as it becomes due, if Tenant has the right to

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sublet or assign, subject to reasonable limitations as provided in paragraph 25.

25. Assignment or Subletting.
a. Tenant shall not assign or encumber any interest in this Lease or in the Premises, or sublease all or any part of the Premises, or allow any other person or entity (except Tenant's authorized representatives) to occupy or use all or any part of the Premises, without City's written consent, and consent to one assignment or sublease shall not be construed as consent to any subsequent assignment or subleasing. b. If Tenant is a corporation or partnership, any dissolution, merger, consolidation or other reorganization of Tenant or the sale or transfer of controlling percentage of the capital stock of Tenant or the sale of twenty five percent (25%) of the value of the assets of Tenant shall be deemed a voluntary assignment. The phrase "controlling percentage" means the ownership of and the right to vote stock possessing at least twenty five percent (25%) of the total combined voting power of all classes of Tenant's capital stock issued outstanding and entitled to vote for the election of directors. City shall not unreasonably withhold consent, but City may nevertheless condition consent upon such factors as the identity, reputation, financial worth and stability and operating ability of any proposed assignee or subtenant. Unless prior written consent of City shall have been obtained, any transfer, or attempted assignment or transfer, of this Lease or any interest therein, or any subletting, either by voluntary or involuntary act of Tenant or by operation of law or otherwise, shall at the option of the City terminate this Lease, and any such purported assignment, transfer or subletting without such consent shall be null and void. c. Assignment.

1. Tenant shall not have the right to assign this Lease, except by Leasehold mortgage, without the written consent of City, which shall not be unreasonably withheld.

If Tenant desires to assign the Lease, Tenant shall comply with the following procedures:
(a) Tenant shall give City at least sixty (60) days prior written notice of its desire to assign the Lease.
(b) Tenant shall simultaneously provide City with the assignee's name, business organization, financial statement, and other documentation as may be requested by City.
(c) Tenant shall provide City with a true copy of the proposed assignment and the proposed assignee shall, in recordable form, expressly assume all the covenants and conditions of this Lease.
(d) Tenant shall provide City with copies of any financial agreements, schedule of payments, mortgage or encumbrance on the Leasehold estate. (e) Tenant shall pay City at the time the request to assign is submitted, a deposit of Five Thousand Dollars ($5,000.00) to offset City's expenses, including attorney's fee, in evaluating and documenting the assignment. City shall charge said deposit at the then current hourly rate for staff time charged to the Airport. Any balance of said deposit shall be refunded to Tenant, and any excess amount charged, excluding said deposit, shall be paid by Tenant.

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2. City and Tenant hereby deem it reasonable for the City to refuse to consent to a proposed assignment in the following circumstances:
(a) City may object to any proposed assignment if, in the City's sole opinion, the proposed assignee is not a qualified assignee in terms of financial strength, business experience or reputation or the ability to operate the fixed base operation and provide the required services in a manner consistent with the purposes for which this Lease was granted.
(b) City may object on any other reasonable grounds.

3. The effective date of the assignment shall not occur until sixty (60) days after the Tenant's notice of the proposed assignment unless, within that time, City gives notice of a valid objection or refusal of consent as set forth in subsection A. (3) hereof. If City gives notice of a valid objection and withholds consent, the Lease will not be assigned. d. Subletting.

1. It is understood and agreed that, from time to time, Tenant may request City's permission to sublet portions of the Premises and City shall not unreasonably withhold consent, provided:
(a) Each sublease made shall be subject and subordinate to the right of the City and the provisions of each sublease shall conform to the provisions of this Lease as far as practicable.
(b) The sublease does not affect an assignment of the Lease as prohibited elsewhere.
(c) Tenant includes the following information with its request to sublease, the name, address, a true copy of the proposed sublease, and appropriate documentation as evidence the subtenant is qualified to conduct business on the Airport and such subtenant will provide the type of development and services required under the provisions of this Lease.
(d) Subtenant provides insurance coverage(s) as appropriate, in accordance with Lease provision(s), INSURANCE, the same as if the subtenant were a lessee.

2. If Tenant is in the default of monetary obligations to City pursuant to this Lease, Tenant immediately and irrevocably assigns to City, as security for Tenant's obligations under this Lease, all rent from any subletting of all or a part of the Leased Premises as permitted by this Lease, and City, as assignee and as attorney- in-fact for Tenant, or a receiver for Tenant appointed on City's application, may collect such rent and apply it toward Tenant's obligations under this Lease; except that, until the occurrence of an act of default by Tenant, Tenant shall have the right to collect such rent.

It is understood and agreed by the parties hereto that the above assignment provisions do not apply to heirs by will.

26. Signs, Posters, Buildings and Towers.
a. No advertising signs, posters or similar devices shall be erected, displayed or maintained in, on, about or above the Premises or the structures thereon without a sign permit and the written approval of the Airport Manager.

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b. No structures erected on the Premises shall exceed the height limit fixed by any City zoning ordinance or regulations of the Airport or Federal Aviation Authority. Tenant in its operations shall not unreasonably interfere with the property, interests, operations or activities of the City or of other tenants of the City.

27. Taxes.
a. Tenant will pay all fees, taxes, assessments and licenses levied, imposed or required by any governmental subdivision, body or authority on or in respect to any improvements or property placed on the Premises by Tenant or any person with its permission
b. The use, occupancy or possessory rights of Tenant in the Premises includes but is not limited to:

1. Any business, activity or transaction conducted thereon by Tenant;

2. City license and permits;

3. Commercial Operator Permit fee.

28. Payment of Rent and Services.

Notwithstanding any other provision of this Lease, all rents shall be paid to City of Watsonville, c/o Finance Department, by delivering or mailing to the address provided in Section 39.

29. Security Deposit.
a. On execution of this Lease, Tenant shall deposit the sum of Seven Hundred and Fifty Dollars ($750.00) representing one (1) month’s rent in cash as security for the faithful performance of the terms, covenants and conditions of this Lease. b. If Tenant is in default, City can use the security deposit or any portion of it, to cure the default or to compensate City for all damages or loss sustained by City resulting from Tenant's default if the notice requirements have been observed. Tenant shall immediately, on demand, pay to City a sum equal to the portion of the security deposit expended or applied by City as provided in this paragraph so as to maintain the security deposit in the sum initially deposited. Upon final accounting by City, any balance of said deposit shall be refunded to Tenant.

30. Indemnification by Tenant.
a. Tenant shall indemnify, protect, defend, and hold harmless City and City's successors and assigns, officers, directors, employees, agents, subtenants and assignees, from and against all liability, and foreseeable consequential damages, penalties, expenses and costs of any required or necessary remediation, repair, removal, clean up or detoxification, of the Premises and surrounding properties, and from and against the preparation of any clean up, remediation, closure or other required plans, whether such action is required or necessary during or following the term of this Lease, to the full

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extent that the same is attributable to the use, handling, generation, emission, release, storage, discharge or disposal of hazardous material by Tenant, its agents, employees, and contractors.
b. The indemnification provisions of the foregoing shall survive the termination of this Lease.
c. City makes no representation or warranty, express or implied, as to the physical condition of the Premises, including, but not limited to the condition of the exterior or interior of the structure, ground, soil, surface water or groundwater. the geology, the presence of known and unknown faults, the presence of any Hazardous Materials or other kinds of contamination or pollutants of any kind in the air, soil, groundwater or surface water, or the suitability of the Premises for the construction and use of the improvements thereon.

31. Waiver of Damages and Indemnification.

City shall not be liable to Tenant for any injury or damage that may result to any person or property by or from any cause whatsoever, except as results from acts of the sole negligence on the part of City, its agents, servants, employees or invitees. Without limiting the generality of the foregoing waiver, it is expressly extended to injury or damage caused by water leakage of any character from the roof(s), wall(s), basement or any part of the property, or caused by gas, oil, electricity or any other cause in or about the Premises or the building(s). Tenant agrees to hold City harmless from, and to defend City against, any and all claims or liability for any death of for injury to any person or damage to any property, whatsoever, occurring in, on or about the Premises.

32. Hold Harmless.
a. Tenant shall save, protect, indemnify, and hold harmless City, its elective and appointive boards, commissions, officers, agents, and employees from any and all claims, cost or liability of any kind allegedly suffered, incurred or threatened, including personal injury, death, property damage, inverse condemnation, or any combination of these, foreseeable or unforeseeable, arising directly or indirectly from or connected with any acts performed pursuant to this Lease, or any omission to perform, including, but not limited to, claims, costs or liability resulting from: (I) The conduct, negligent or otherwise, of Tenant, its subtenant(s), assignee(s), or any officer(s), agent(s) or employee(s) of one or more of them; (2) The joint conduct of the City and Tenant, regardless of whether the City is concurrently, active or passively negligent or not negligent at all; or (3) The sole concurrent conduct of any other person or entity. b. The above promise and agreement in this section is not conditioned or dependent on whether Tenant or City has prepared, supplied or approved any plan(s) or specification(s) in connection with this Lease, or has insurance or other indemnification covering any of these matters, or that the alleged damage resulted partly from any negligent or willful misconduct of City.
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liability and claim for damages by reason of any injury to any person or persons including, Tenant, or property of any kind whatsoever and to whomsoever belonging, including Tenant, from any cause or causes whatsoever while in, upon, or in any way connected with the Premises during the term of this Lease or any extension hereof or any occupancy hereunder, Tenant hereby covenanting and agreeing to indemnify and save harmless City from all liability, loss, cost, attorneys fees, and obligations on account of or arising out of any such injuries or losses however occurring.

33. Breach.

After service of ten (10) days written notice thereof by City on Tenant any one of the following shall constitute a breach of this Lease by Tenant:
a. The appointment a general assignment by Tenant for the benefit of creditors, or of a Receiver to take possession of all or substantially all of the assets of Tenant, or b. Period of twenty (20) days, or
c. A default in the performance of any other covenant or condition of this Lease on the part of Tenant to be performed for a period of twenty (20) days.

34. Insurance.
a. During the rental term, Tenant, at Tenant's sole expense, shall secure and maintain in force such policies of insurance as will protect it from claims for damages or injury resulting from bodily injury, including death, and for the loss or damage to property of others which may arise from operations of this Lease. Such insurance shall contain statements that:

1. these policies shall also apply to City, as an Additional Named Insured;

2. the insurance afforded by these policies applies severally as to each insured, except that the inclusion of more than one insured shall not operate to increase the limit of the company's liability, and the inclusion hereunder of any person or organization as an insured shall not affect any right which such person or organization would have as a claimant if not so included;

3. the insurance shall be primary insurance over any other insurance carried by City, which other insurance shall be considered excess only;

4. the above policies specifically include coverage indemnifying City as set forth in this Lease;

5. the policies may not be canceled, nor the coverage reduced until thirty (30) days after a written notice of such cancellation or reduction in coverage is delivered to City at the address contained herein;

6. the insurance companies named herein waive any all rights of subrogation against City. Such liability insurance shall be written with limits of at least Two Million Dollars ($2,000,000.00), combined single limits, and shall be written by companies acceptable to City.

7. The limit of liability insurance coverage shall be adjusted commensurate with inflation and other liability factors upon adoption of resolution of the City Council

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of City. Certificates of Insurance evidencing the above obligations shall be delivered to City on prior commencement of operations covered by this agreement. b. City, at Tenant's cost, shall cooperate fully with Tenant to maximize any recovery following an insured casualty. All policies of fire and extended coverage or other casualty insurance required by subparagraphs (e) and (g) below shall provide that proceeds there under shall be paid to City and Tenant as their interests may appear. c. All policies required to be maintained by Tenant pursuant to the terms of this Lease shall be issued by companies authorized to do business in the State of California with a financial rating of at least "A" in the most recent edition of Best Insurance Reports. Tenant shall pay premiums therefore and shall deliver annually to City Certificates of Insurance that such policies are in effect. If Tenant fails or refuses to procure or maintain the insurance coverage required hereunder, or fails or refuses to furnish City with proof that coverage has been procured and is in full force and paid for, City shall have the right, at City's election and without notice to Tenant, but without any obligation to do so, to procure and maintain such coverage. Tenant shall reimburse City on demand for any premiums City so pays in connection with such procurement. d. Fire Insurance Required if Structures are within Ground Leased: During the Lease Term, Tenant, at Tenant's sole expense, shall insure for fire and extended coverage risks all buildings, personal property, improvements, and alterations in, on, or about the Leased Premises. Such insurance shall be in an amount not less than eighty percent (80%) of insurable, full replacement cost of such buildings and improvements, and shall include vandalism and malicious mischief endorsements. Said fire insurance policies shall contain loss payable endorsements in favor of the parties as their respective interests may appear hereunder. The CITY OF WATSONVILLE shall be named as additional insured in such policy or policies.
e. Fire or Casualty:

1. Destruction of Tenant Owned Building. In the event of extensive damage (greater than fifty percent (50%)) to or destruction of buildings or other improvements on the Leased Premises owned by Tenant as provided in Section 11 of this Lease ("Tenant Improvements"), Tenant shall determine whether to repair or replace the Tenant Improvements. If it is determined to repair or replace the Tenant Improvements, the proceeds of any insurance policy paid on account of such damage or destruction shall be used to defer the cost of repairing or replacing the Tenant Improvements. Tenant shall complete all repairs within a reasonable time. If it is determined not to repair or replace the Tenant Improvements, Tenant may terminate this Lease upon written notice to City within thirty (30) days of such damage or destruction. If Tenant terminates this Lease pursuant hereto, after deducting any proceeds payable to Tenant's lender pursuant to the following paragraph, the remaining proceeds of any insurance policy paid on account of such damage or destruction shall be distributed to City and Tenant pursuant to the following formula: City's share shall be the product of the amount of the remaining proceeds multiplied by a fraction, the numerator which is the number of months since the commencement date of this Lease until the date of the casualty causing such damage or destruction, and the denominator of which is four hundred and twenty (420). Tenant's share shall be the excess of the remaining proceeds after subtracting the City's share. In

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the event of termination of the Lease pursuant to this Section 33 (e) (l), Tenant shall remove the Tenant Improvements and, restore the City owned building to its prior condition at Tenant's sole cost and expense prior to the date of termination of the Lease.

2. All fire and extended coverage insurance policies insuring the Tenant Improvements may have a loss payable clause in favor of any lender of Tenant, including, but not limited to, any mortgagee of Tenant, as such lender's interest may appear.

3. Destruction of City Owned Premises. If during the term of this Lease the City owned Premises, as provided in Section 11 of this Lease, shall be damaged or destroyed to the extent of fifty percent (50%) of its valuation or at a repair cost estimated by the City Building Official to exceed the sum of Twenty Five Thousand Dollars ($25,000.00) by fire, the elements, or any other cause, then this Lease shall, at City's option, cease and become null and void from the date of such damage, or destruction, and Tenant shall immediately surrender the entire Premises to City and shall pay rent only to the time of such surrender.

4. If the City owned Premises shall be damaged by fire, or other cause, so as to be capable of being repaired within a reasonable time, City shall have the option to repair the same and during the time that the repairs are being made, City shall remit to Tenant a just and fair portion of the rent according to the nature of the damage sustained and according to the extent that Tenant is deprived of the use of the City owned Premises.

Should the estimated time to repair damage exceed one hundred twenty (120) days, the Tenant may, at his option, terminate, this Lease. In such event both parties shall be released from further obligations under the terms of this Lease. f. Workers' Compensation: Tenant, at Tenant's sole expense, must obtain and maintain workers' compensation insurance covering all its employees, and said insurance must be kept in force during the entire term of this Lease. g. Notice: Each party hereto shall give to the other prompt and timely notice of any claim made or suit instituted coming to its knowledge which in any way directly, contingently or otherwise, affects or might affect either, and both shall have the right to participate in the defense of the same to the extent of its own interest.

35. Litigation Expenses.

If either party shall bring an action against the other by reason of the breach of any covenant, warranty or condition hereof, or otherwise arising out of this Lease, whether for declaratory or other relief, the prevailing party in such suit shall be entitled to its costs of suit and reasonable attorney fees, which shall be payable whether or not such action is prosecuted to judgment. "Prevailing Party" within the meaning of this paragraph shall include without limitation a party who brings an action against the other after the other's breach or default, if such action is dismissed upon the other's breach or default, if such action is dismissed upon the other's payment of the sums allegedly due or performance of the covenant's allegedly breached, or if the plaintiff obtains substantially the relief sought by it in the action.

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36. Surrender of Premises.

Tenant agrees to surrender the Premises and any addition thereto at the termination of the tenancy herein created in the same condition as the Premises were in at the beginning of the tenancy or at the time of completion of the improvements as the case may be, reasonable use and wear thereof and damage by act of God or the elements excepted. The voluntary or other surrender of this Lease by Tenant or a mutual cancellation thereof shall not work a merger, and shall, at the option of City, terminate all or any existing subleases or sub tenancies, or may, at the option of City, operate an assignment to City of any or all such sublease or sub tenancies.

37. Waiver.

Any waiver, expressed or implied, by either party of any breach by the other party of any agreement, term or condition of this Lease shall not be, or be construed to be, a waiver of any subsequent breach of a like or other agreement, term of condition hereof; and the acceptance of rent hereunder shall not be, or be construed to be, a waiver of any breach of any agreement, term or condition of this Lease, except as to the payment of rent so accepted. The rights and remedies of either party under this Lease shall be cumulative and in addition to any and all other rights and remedies which either party has or may have.

38. Quiet Enjoyment.

City covenants and warrants that upon Tenant's paying the rent and observing and performing all of the terms, covenants, and conditions on Tenant's part to be observed and performed hereunder, Tenant shall and may peaceably and quietly enjoy the Premises hereby demised, subject nevertheless to the terms and conditions of this Lease.

39. Notices.

All notices, consents, waivers or other communications which this Lease requires or permits either party to give to the other shall be in writing and shall be served personally or delivered by registered or certified mail, return receipt requested, made upon or addressed to the respective parties as follows:

To City: To Tenant:

City Clerk
City of Watsonville
275 Main Street, Suite 400
Watsonville, CA 95076
Angelo Ortega
Nate’s Tree Service, Inc.

P. O. Box 5489
Sonora, CA 95370
or such other address as may be contained in a notice from either party to the other given pursuant to this section. Notice of registered or certified mail shall be deemed to be given forty-eight (48) hours from the time of postmarking if mailed within the United States (excluding Alaska).

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40. Recordation.

Neither party, without the consent of the other, shall cause or permit the original nor any copy of this Lease to be recorded, filed or published in any public place.

41. Tenant to Assume All Unknown Expenses.

Notwithstanding the existence of a provision therefore in this Lease, Tenant shall assume, pay and be obligated for any and all costs and expenses toward the operation, protection, maintenance of the Premises, known or unknown, expressed or unexpressed, it being the intention of the parties for this to be a triple net lease to City.

42. Right of City to Enter for Inspection.

City shall have the right to enter upon the Premises at all reasonable times during the term of this Lease for the purpose of making any inspection it may deem expedient to the proper enforcement of this Lease.

43. Nondiscrimination
Tenant hereby covenants that Tenant in its use of the Premises and any and all structures, buildings and improvements located here on shall conduct the fixed base operation or any other activity hereafter authorized by the City on the Premises on a nonexclusive and non-discriminatory basis in all respects with regard to any person, firm or group of persons. Tenant shall not act in any manner prohibited by Part 15 of the Federal Aviation Regulations and further agrees to be nondiscriminatory also with respect to price or cost of services or goods and in every other fashion.

44. Enforcement of Nondiscrimination Clause.

City shall have the right to take such action against the Tenant as the United States Government may direct or request to enforce the terms of the preceding paragraph on behalf of the United States Government or on behalf of any of its citizens or the City itself.

45. Other Operations.

It is understood that the use authorized at the Watsonville Municipal Airport by this Lease is not given to Tenant exclusively but may be given to any other Tenant at the Airport at the sole discretion of the City.

46. Condemnation.

If the whole or any substantial part of the Premises shall be taken by any paramount public authority under the power of eminent domain then the term of this Lease shall cease as to the part so taken from the date the possession of that part shall be taken for any public purpose, and from that day Tenant shall have the right either to

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cancel this Lease or to continue in the possession of the remainder of the Premises under the term herein provided, except that the square foot rental shall be reduced in proportion to the amount of the Premises taken. Damages awarded for such taking shall be apportioned between the City and Tenant in a ratio relating to the number of years expired and remaining in the Lease Term between City and Tenant respectively; provided, however, that City shall not be entitled to any portion of the award made for loss of business installation or improvements belonging to Tenant.

47. Nondiscrimination- (FAA, MBE, DB Requirements).
a. The Tenant, for itself, its heirs, personal representatives, successors in interest, and assigns, as a part of the consideration for this Lease, does hereby covenant and agree as a covenant running with the land that in the event facilities are constructed, maintained, or otherwise operated on the Premises for a purpose for which a Department of Transportation (DOT) program or activity is extended or for another purpose involving the provision of similar services or benefits, the Tenant shall maintain and operate such facilities and services in compliance with all other requirements imposed pursuant to Title 49, Code of Federal Regulations, DOT, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in Federally- Assisted Programs of the Department of TransportationEffectuation of Title VI of the Civil Rights Act of 1964, and as such Regulations may be amended.
b. The Tenant for itself, its personal representatives, successors in interest, and assigns, as a part of the consideration hereof, does hereby further covenant and agree as a covenant running with the land that: (a) no person on the grounds of race, color or national origin shall be excluded from participation in, denied the benefits of, or be otherwise subjected to discrimination in the use of facilities; (b) that in the construction of any improvements on, over, or under such land and the furnishing of services thereon, no person on the grounds of race, color, or national origin shall be excluded from participation in, denied the benefits of, or otherwise be subject to discrimination; (c) that the Tenant shall use the with all other requirements imposed by or pursuant to Title 49, Code of Federal Regulations, Department of Transportation, Subtitle A, Office of the Secretary, Part 2 1, Nondiscrimination in Federally-Assisted Programs of the Department of Transportation-Effectuation of Title VI of the Civil Rights Act of 1964, and as such Regulations may be amended.
c. Tenant shall furnish its accommodations and/or services on a fair, equal and not unjustly discriminatory basis to all users thereof and it shall charge fair, reasonable and not unjustly discriminatory prices for each unit or service; PROVIDED, THAT the Tenant may be allowed to make reasonable and nondiscriminatory discounts, rebates or other similar type of price reductions to volume purchasers. d. Tenant shall insert the provisions of this section in any lease agreement or contract by which Tenant grants a right of privilege to any person, firm or corporation to render accommodations and/or services to the public on the Premises.

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48. Remedy for Discrimination.
a. In the event of breach of any of the nondiscrimination covenants identified in Paragraph 48, City shall have the right to terminate this Lease and to reenter and repossess the Premises and the facilities thereon, and hold the same as if this Lease had never been made or issued. The provision does not become effective until the procedures of 49 CFR Part 21 are followed and completed including expiration of appeal rights. b. Non-compliance with paragraph 51 shall constitute a material breach thereof and in the event of such non-compliance City shall have the right to terminate this Lease and the estate hereby created without liability therefore or at the election of the City or the United States either or both Governments shall have the right to judicially enforce paragraph 48.

49. Affirmative Action.

Tenant assures that it will undertake an affirmative action program as required by 14 CFR Part 152, Subpart E, to insure that no personal shall be on the grounds of race, creed, color, national origin, or sex be excluded from participating in any employment activities covered in 14 CFR, Subpart E. Tenant assures that no person shall be excluded on these grounds from participating in or receiving the services or benefits of any program or activity covered by such subpart. Tenant assures that it will require that its covered by such subpart. Tenant assures that it will require that its covered sub organizations provide assurances to the Tenant that they similarly will undertake affirmative action programs and that they will require assurances from their suborganizations, as provided by 14 CFR Part 152, subpart 2, to the same effect.

50. Subordination to Future FAA Agreements.

This Lease shall subordinate to the provisions and requirements of any existing or future agreement between the City and the United States, relative to the development, operation or maintenance of the Airport.

51. Notice to Federal Aviation Administration.

Tenant shall comply with the notification and review requirements covered in Part 77 of the Federal Aviation Regulations in the event of future construction of a building planned for the Premises, or in the event of any planned modification or alteration of any present or future building or structure situated on the Premises.

52. Non-Exclusive Right.

It is understood and agreed that nothing herein contained shall be construed to grant or authorize the granting of an exclusive right within the meaning of Section 308 of the Federal Aviation Act.

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53. Terms.

All the provisions of this Lease shall be deemed and construed to be "covenants" as though the words imported such covenants were used in each separate paragraph hereof, except when expressed as conditions.

54. Governing Law.

This Lease shall be construed and enforced in accordance with the laws of the State of California.

55. Binding Effect.

This Lease and the covenants and agreements herein contained shall bind and inure to the benefit of the parties hereof, their heirs, successors, executors, administrators, and when permitted assigns.

56. Time is of the Essence.

Time is of the essence regarding this Lease.

57. Consent.

Whenever consent or approval of either party is required, that part shall not unreasonably withhold such consent or approval.

58. Corporate Status.

If either party is a corporation, that party shall deliver to the other party on execution of this Lease, a certified copy of a resolution of its governing body authorizing the execution of this Lease and naming the officers that are authorized to execute this Lease on behalf of the corporation.

59. Brokers.

Each party represents that it has not had dealings with any real estate broker, finder, or other party, with respect to this Lease in any manner. Each party shall hold harmless the other party from all damages resulting from any claims that may be asserted against the other party by any broker, finder, or other person, with whom the other party has or purportedly has dealt.

60. Exhibits.

All exhibits referred to are attached to this Lease and incorporated by reference.

61. Entire Agreement.

This Lease contains the entire agreement of the parties, and by signing this Lease

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they agree that there is no other written or oral agreement, promise, or representation between them respecting the Premises. This Lease shall bind and inure to the benefit and advantage of the assigns of City, and of the heirs, executors, administrators, and when permitted hereunder the assigns of Tenant.

IN WITNESS WHEREOF, the parties hereto have executed this Lease the day and year first above written.

CITY OF WATSONVILLE
a municipal corporation
NATE’S TREE SERVICE, INC.
a corporation
By: ______________________________
Tamara Vides, City Manager
Date: ____________________________
Attest:

By: ______________________________
Irwin Ortiz, City Clerk
Date: _____________________________
Approved as to form:

By:_______________________________
Samantha Zutler, City Attorney
Date: _____________________________
By: ______________________________
Angelo Ortega, General Foreman
Date: ____________________________
06/12/2025

100x100 sq/ft
Exhibit A

1 CITY COUNCIL AGENDA REPORT
MEETING DATE: Tuesday, June 24, 2025
TO: CITY COUNCIL
WRITTEN BY: PRINCIPAL MANAGEMENT ANALYST ZAVALA
RECOMMENDED BY: CITY MANAGER VIDES
APPROVED BY: TAMARA VIDES, CITY MANAGER
SUBJECT: LEASE BETWEEN THE CITY OF WATSONVILLE AND IN SOOK YUM, DBA TOP USA CO., FOR RETAIL SPACE IN THE BEACH ST. PARKING GARAGE RECOMMENDATION:

It is recommended that the City Council adopt a resolution authorizing the City Manager to execute a Lease and any amendments of a non-substantive nature subject to legal approval by the City Attorney with In Sook Yum, dba Top USA Co., for retail units 21, 27, and 31 located in the Watsonville Beach Street Parking Garage.

BACKGROUND:

In Sook Yum has been a tenant of retail units 21, 27, and 31 in the Watsonville Beach Street Parking Garage since February 13, 1995, under a lease agreement approved initially by the City Council with Sang Park, In Sook Yum, Ho Suk William, Kyoung Sook Suh, and Kwan Hoi Koo. Since then, the lease has been amended and/or extended multiple times. The most recent term expired on May 13, 2024.

Since the expiration, the tenant has continued to occupy the premises and pay rent on a month-to-month basis. Over time, the original partners have withdrawn from the business, leaving In Sook Yum as the sole proprietor.

The leased premises include approximately 8,424 square feet of retail space and 510 square feet of storage.

DISCUSSION:

In Sook Yum would like to continue leasing the premises. The key terms of the recommended lease, which is attached, are as follows:

2 1. Term: Initial five-year lease ending June 30, 2030, with one option to extend for an additional five-year term.

2. Premises: Approximately 8,424 square feet of retail space and 510 square feet of storage

3. Rent:
 Base rent of $5,209.90 per month
 Common Area Maintenance (CAM) charge of $1,200 per month Base rent will be adjusted on an annual basis beginning the second year of the initial term, using the Aprilto-April change in the Consumer Price Index (CPI) for All Urban Consumers San Francisco-OaklandHayward Metropolitan Area, with an annual cap of 3%.

If tenant chooses to exercise the five-year extension, rent for the extension term will be set at the thencurrent market rate, with annual CPI-based increases thereafter.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION:

This action is not a project as defined under CEQA; therefore, no environmental review is required.

STRATEGIC PLAN:

Economic Development - The recommended action is consistent with the City’s Strategic Plan goals to strengthen economic development by supporting and retaining local businesses.

FINANCIAL IMPACT:

The lease will generate $76,918.80 in rental income to the Parking Fund during the first year and a subsequent increase up to 3% each year thereafter for the duration of the lease.

ALTERNATIVE ACTION:

The City Council may choose not to authorize the lease. This would require the City to seek a new tenant, potentially resulting in a loss of rental revenue and a vacancy period of unspecified duration.

ATTACHMENTS AND/OR REFERENCES (IF ANY):

None

1 Reso No. ______ (CM)
Reference: Reso No’s 53-14 and 146-20 (Amend)
Meeting Date: 062425 SWZ ______ TV ______ CM ______
RESOLUTION NO. ___________ (CM)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WATSONVILLE APPROVING A FIVE (5) YEAR LEASE WITH ONE (1) FIVE (5) YEAR OPTION

TO EXTEND, BETWEEN THE CITY OF WATSONVILLE AND IN SOOK YUM, DBA TOP USA CO. FOR 21, 27 AND 31 WEST BEACH STREET,

WATSONVILLE, CALIFORNIA, AND AUTHORIZING AND DIRECTING THE

CITY MANAGER TO EXECUTE SAME, AND ANY AMENDMENTS THERETO

OF A NON-SUBSTANTIVE NATURE SUBJECT TO APPROVAL BY THE CITY

ATTORNEY

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

1. Leasing property 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.

Any improvements on the property will be subject to separate environmental analysis.

2. That the five-year Lease between the City of Watsonville and In Sook Yum, dba Top USA Co., for 21, 27 and 31 West Beach Street, Watsonville, California, a copy of which Lease is attached hereto and incorporated herein by this reference, is fair and equitable and is hereby ratified and approved.

3. That the City Manager be and is hereby authorized and directed to execute said Lease for the original term, and if properly exercised, the one (1) five-year option term, and any amendments thereto of a non-substantive nature subject to legal approval on behalf of the City of Watsonville.
******************************************

Lease Agreement/ IN SOOK YUM, DBA TOP USA CO. Page 1 of 27 Rev.: 06-10-2025

COMMERCIAL PROPERTY LEASE AGREEMENT

BY AND BETWEEN

CITY OF WATSONVILLE, CALIFORNIA
AND
IN SOOK YUM, DBA TOP USA CO.

This lease agreement (“Lease”) is dated _____________________________ and is by and between the City of Watsonville, California, a chartered California municipal corporation (“City”) and In Sook Yum, an individual, dba Top USA Co. (“Lessee”). City and Lessee may be referred to individually as a “Party” or collectively as the “Parties” or the “Parties to this Lease.” The City Manager serves as Contract Administrator for this Lease on behalf of the City Council.

RECITALS:

A. City owns the property at 21, 27 and 31 West Beach Street, Watsonville, California, consisting of eight thousand four hundred and twenty four (8,424) square feet of retail space and five hundred and ten (510) square feet of storage space.

B. City wishes to lease the Property to Lessee.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, stipulated and agreed, Lessee and City mutually agree as follows:

AGREEMENTS:

LEASE PROVISIONS

1. PREMISES; BUILDING AND PROJECT.

1.1 General. City hereby leases to Lessee, and Lessee hires from City, certain real property located in the City of Watsonville, County of Santa Cruz, State of California, commonly known as 21, 27 and 31 West Beach Street, Watsonville, California, consisting of approximately 8,424 square feet of retail space and 510 square feet of storage space (the “Premises”) within the Property commonly referred to as the Beach Street Garage (the “Building”), located on an approximately .74 acre parcel (collectively, including the Building, the “Project”), all as more particularly described or identified in Exhibit A attached hereto and incorporated herein by reference. The Project excludes, and Lessee is the sole owner of, the items identified on the Inventory of Fixtures set forth in Exhibit B attached hereto and incorporated herein by reference.

1.2 Pro Rata Share. Lessee’s pro rata share (“Pro Rata Share”) is percent (80%), which represents the percentage that the rentable area of the Premises bears to the total rentable area of the Building. As of the Commencement Date this equates to $1,200 per month, as the amount agreed upon by the parties to be Lessee’s share of the Common Area Expenses. These expenses may be reassessed and updated by the Lesse from time to time.

Docusign Envelope ID: 7750EB29-A3B4-4C4E-BF86-16E8C4C60A09

Lease Agreement/ IN SOOK YUM, DBA TOP USA CO. Page 2 of 27 Rev.: 06-10-2025

2. TERM; COMMENCEMENT DATE.

2.1 Lease Term. The term of this Lease shall be for Five (5) years (the “Initial Term”), commencing at 12:01 am on July 1, 2025 (“Commencement Date”) and ending on June 30, 2030. Lessee shall, at the expiration of the term of this lease, or upon its earlier termination, surrender the Premises in as good condition as it is now at the date of this lease, reasonable wear and tear excepted. City shall have the right, upon the termination of the term or upon a breach, to enter the Premises and take possession of it.

2.2 Option to Extend Lease Term. Lessee is granted the option to extend the term of this Lease (the “Renewal Option”) upon and subject to all of the provisions contained herein, except for Base Rent and the Renewal Option, for one (1) five (5) year period (the “Extended Term”) following expiration of the Initial Term. The Renewal Option may be exercised only by giving notice of exercise of the Renewal Option (“Option Notice”) to City at least six (6) months before the expiration of the Initial Term. If Lessee is in default beyond the period of notice and opportunity to cure provided in Section 16.1 of this Lease on the date of giving the Option Notice, the Option Notice will be totally ineffective. If Tenant is in default beyond the period of notice and opportunity to cure provided in Section 16.1 of this Lease on the date the Extended Term is to commence, the Extended Term will not commence and this Lease will expire at the end of the Initial Term as it may have previously been extended.

3. RENT.

3.1 Base Rent. Lessee shall pay base rent (“Base Rent”) in the amount of Five thousand two hundred nine dollars and ninety cents ($5,209.90) per month. All rent, including Base Rent, shall be paid in lawful money of the United States of America without deduction or offset. Base Rent shall be payable on the first day of each and every month commencing on the Commencement Date, at a place (or places) as may be designated in writing from time to time by City. Base rent shall be adjusted annually, beginning the second year of the Initial Term, using as the basis for calculating the adjustment, the rate of April to April change in the Consumer Price Index (CPI) for All Urban Consumers San Francisco-Oakland-Hayward Metropolitan Area, not to exceed three percent (3%) per year.

3.1.1 Late Charge. Lessee acknowledges late payment by Lessee to City of rent will cause City to incur costs not contemplated by this Lease, the exact amount of such costs being extremely difficult and impracticable to fix. Such costs include, without limitation, processing, accounting and late charges that may be imposed on City. Therefore, if City does not receive any installment of rent due from Lessee within ten (10) days after the date such rent is due, Lessee shall pay to City an additional sum of ten percent (10%) of the overdue rent as a late charge. The parties agree this late charge represents a fair and reasonable estimate of the costs City will incur by reason of late payment by Lessee. Acceptance of any late charge shall not constitute a waiver of Lessee’s default with respect to the overdue amount, nor prevent City from exercising any of the other rights and remedies available to City.

3.1.2 Rent. The term “Rent” as used in this Lease shall mean Base Rent and any other amounts owing from Lessee to the City pursuant to this Lease.

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3.2 Extended Term Base Rent. Base Rent of the Premises payable during the Extended Term as of the Extended Term commencement date shall be equal to the Market Rate (as hereinafter defined) adjusted annually, beginning the second year of the Extended Term, using as the basis for calculating the adjustment, the rate of April to April change in the Consumer Price Index (CPI) for All Urban Consumers San Francisco-Oakland-Hayward Metropolitan Area, not to exceed three percent (3%) per year. City shall, in response to and within thirty (30) days of City's receipt of Lessee's notice of its intent to exercise the Option, give Lessee written notice of the applicable Market Rate, as reasonably determined in good faith by City.

3.2.1 The term “Market Rate” shall mean, the then prevailing annual rental rate per square foot of rentable area for space in comparable buildings in the City of Watsonville which has been built out for occupancy, comparable in area and location and quality to the space for which such rental rate is being determined (to the extent that quoted rental rates in the building, as applicable, vary with regard to location), being leased for a duration comparable to the Extended Term for terms commencing on or about the Extended Term commencement date for non-sublease, non-encumbered, non-equity space. The determination of the Market Rate shall take into consideration rental concessions and abatements, the “as is” condition of the Premises, operating expenses and tax expenses, other adjustments to base rental and other comparable factors. Notwithstanding anything to the contrary contained herein, in no event shall the Market Rent as determined hereunder be less than the Base Rent owing immediately prior to the commencement of the Extended Term.

3.2.2 Not later than sixty (60) days after City's notice to Lessee of the Market Rate, Lessee shall give notice to City of Lessee's election to: (i) accept City's determination of Market Rate; or (ii) to have the Market Rate determined by the “arbitration” procedure set forth in subsection 3.2.3 below. If Lessee fails to notify City within said sixty (60) day period of Lessee's election, Lessee shall be deemed to have accepted City's determination of the then Market Rate and to have waived its rights to an “arbitration” thereof. Lessee's notice under either subsection (i) or (ii) above shall be deemed Lessee's exercise of the Option.

3.2.3 If Lessee has timely elected to have an “arbitration” of the amount(s) and component(s) of the then Market Rate, then the following shall be utilized to make and implement such election: Upon the valid exercise of Lessee's election to have an “arbitration” of the then Market Rate, then not later than ten (10) days after Lessee's notice to have such an “arbitration” of the then Market Rate, City and Lessee shall each designate, by written notice give to the other party setting forth the designated person's address, a qualified appraiser who shall have had at least ten years’ experience relevant to the commercial retail space in the Watsonville market area (the “Arbitrators”). It is expected that the Arbitrators will familiarize themselves with this Lease, the exhibits and riders hereto and such other documents as are deemed relevant by the Arbitrators or either or both of them. Each of the Arbitrators shall submit to City and Lessee, within sixty (60) days after his or her appointment, his or her written determination of the then Market Rate with respect to the Premises. If the lower of said two determinations is not less than ninety-five percent (95%) of the other determination, then the average of the two determinations shall be deemed to be the then Market Rate and conclusive and binding as between the parties. If such not be the case, then the Arbitrators shall mutually select a third qualified and impartial Appraiser who shall also have had at least ten years' experience relevant to the commercial retail space in the Watsonville market area (the “Third Docusign Envelope ID: 7750EB29-A3B4-4C4E-BF86-16E8C4C60A09

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Arbitrator”). The Third Arbitrator shall, within sixty (60) days of his appointment, deliver his written determination to City and Lessee of which of the Arbitrator's Market Rate determinations is most accurate, and that determination shall be the deemed Market Rate which shall be conclusive and binding as between the parties. Each party shall be responsible for all fees and costs incurred in the determination of Market Rate by their own Arbitrator, and the parties shall share equally the fees and costs incurred in the determination of Market Rate by the Third Arbitrator. If Lessee becomes obligated to pay Rent with respect to the Extended Term prior to when the applicable Market Rate has been determined in accordance with the foregoing, Lessee shall commence paying Rent utilizing City's determination of the then Market Rate. Following determination of the applicable Market Rate in accordance with the foregoing, City and Lessee shall, by a cash payment within thirty (30) days of the date of such determination, adjust between themselves the difference, if any, between the Rent paid by Lessee pursuant to the foregoing sentence and the Rent actually owed by Lessee pursuant to the terms of this Lease for that time period.

4. SECURITY DEPOSIT.

Lessee has tendered to City an amount of Zero Dollars ($0) as a security deposit. City confirms that it is not currently holding any security deposit from Lessee under this Lease or any prior lease agreements. City may use these funds as are reasonably necessary to remedy any Lessee breach(s) or default(s) under this Lease, including without limitation in the payment of rent, to repair damages caused by Lessee, or expenses incurred to clean the Premises upon termination of tenancy. If any portion of the security deposit is used towards rent or damages at City’s sole discretion, Lessee agrees to reinstate said total security deposit upon receipt of five (5) days written notice. Any remaining balance of the security deposit shall be returned by City to Lessee at such time after termination of this Lease that all of Lessee’s obligations under this Lease have been fulfilled, reduced by such amounts as may be required by City to remedy defaults on the part of Lessee in the payment of Rent or other obligations of Lessee under this Lease, to repair damage to the Premises, Building, or Project caused by Lessee and to clean the Premises. City may use and co-mingle the security deposit with other funds of City. Lessee hereby waives the provisions of the California Civil Code section 1950.7, and all other provisions of any laws, now or hereinafter in force, which restricts the amount or types of claim that a landlord may make upon a security deposit or imposes upon a landlord (or its successors) any obligation with respect to the handling or return of security deposits.

5. DUTIES OF LESSEE.

5.1 Lessee shall not use the image of the Premises or Project, the name of City or any other identifying sign or symbol associated with the Premises or Project or City to undertake any action or representation than those specifically assigned to Lessee as a duty under this Lease.

5.2 Lessee shall protect and maintain the Premises. Lessee shall assume the responsibility for the guarding and safekeeping of all personal property located at the Premises.

5.3 Lessee shall not make any interior renovation or remodeling or make any major changes to the Premises or remove any objects, which are not the property of Lessee without the prior written consent of the City Manager or her designee.

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6. USE OF PREMISES/COMMON AREAS.

6.1 Permitted Uses. Lessee shall use the Premises solely as a retail use and for no other purpose. Without limiting the foregoing, Lessee agrees not to use or permit use of the Premises for any unlawful purpose, and not to commit or permit any waste or nuisance in or about the Premises. Lessee will not use Premises in a manner that increases the risk of fire, cost of fire insurance or improvements thereon. No unreasonable sign or placard shall be painted, inscribed or placed in or on or about the Premises or Project; and no tree or shrub thereon (if any) shall be destroyed or removed or other waste committed of said Premises or Project. No bicycles, motorcycles, automobiles or other mechanical means of transportation shall be placed anywhere on the Premises or Project except for areas (if any) identified by the City from time to time. No repair, storage, overhaul or modification of any motor vehicle shall take place on or about the Premises or Project. Lessee, at his/her expense, shall keep the Premises in as good condition as it was at the beginning of the term hereof, reasonable wear and tear excepted.

6.2 Prohibited Uses. Lessee shall not use Premises for any purpose not expressly permitted hereunder. Lessee shall not (i) create, cause, maintain or permit any nuisance or waste in, on or about the Premises or permit or allow the Premises to be used for any unlawful or immoral purpose, and (ii) do or permit to be done anything in any manner which unreasonably disturbs the users of the Project or the occupants of neighboring property. Specifically, and without limiting the above, Lessee agrees not to cause any unreasonable odors, noise, vibration, power emissions or other item to emanate from the Premises. No materials or articles of any nature shall be stored outside upon any portion of the Premises.

6.3 Condition, Use of Premises. At no cost to Lessee, City either has, or shall, supply, furnish, install, finish and deliver in warm vanilla shell, the Premises, in full compliance with all applicable laws (including, without limitation, the ADA), regulations and building codes applicable to new construction, disregarding variances and grandfathered/grandmothered rights, all at City’s sole cost and expense, and which shall comprise and is defined as the “Base Building”.

6.4 Use of Adjacent Parking Lot. Lessee and its customers shall have the right to use the unreserved, unassigned parking spaces located in the City parking lot as shown on Exhibit A on a first come basis. These parking spaces are made available to all of the tenants/lessees of the Building and are part of the Project’s “Common Areas” (defined in Section 6.6 below).

6.5 Overloading. Lessee shall not do anything on the Premises that will cause damage to the Premises, the Building, or the Project. Lessee shall not suffer or allow the Premises to be used in any manner that will harm or impair the structural strength of the Building nor to suffer or allow to be installed or operated on the Premises, or the Building, any machinery or apparatus whose weight or vibration would harm or impair the structural strength of the Premises or the Building. Lessee shall not place a load upon the floor or roof of the Premises without the City’s prior written consent, which consent may be conditioned on moving by skilled licensed handlers, or which exceeds the load per square foot which such floor or roof was designed to carry. Business machines and mechanical equipment used by Lessee which cause vibration or noise that may be transmitted to the Building structure or to any leased space to such a degree as to be reasonably objectionable to the City or to any other tenants in the Building shall Docusign Envelope ID: 7750EB29-A3B4-4C4E-BF86-16E8C4C60A09

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be placed and maintained by Lessee at its expense, in settings of cork, rubber, or spring-type vibration eliminators sufficient to eliminate such vibration or noise.

6.6 Common Areas.

6.6.1 The term “Common Areas” shall mean and refer to all areas within the exterior boundaries of the Project which are now or hereafter made available for general use, convenience, and benefit of the City and other persons entitled to occupy space in the Project, including, without limiting the generality of the foregoing, roofs, exterior walls, structural parts of the Building and structural floor, pipes and conduits, outside lighting fixtures (if any), automobile parking areas (if any), driveways, sidewalks, landscaped and planted areas, and HVAC and plumbing systems and similar common areas, facilities, and systems. Lessee and its employees and invitees are, except as otherwise specifically provided in this Lease, authorized, empowered, and privileged to use the Common Areas in common with other persons during the Term of this Lease. City agrees to maintain and operate, or cause to be maintained and operated (except as hereinafter provided with reference to cost of maintenance), the Common Areas at all times for the benefit and use of the customers and patrons of Lessee, and of other lessees, owners, and occupants of the Project.

6.6.2 City shall keep or cause the Common Areas to be kept in a neat, clean, and orderly condition, and shall repair any damage to the facilities thereof, but all Common Area Expenses shall be charged and prorated in the manner hereinafter set forth. “Common Area Expenses” shall include, but not be limited to, all sums expended in connection with the Common Areas for all general maintenance and repairs, resurfacing, painting, restriping, cleaning, sweeping and janitorial services; maintenance and repair of sidewalks, curbs, and Project signs; sprinkler systems, planting and landscaping (if any); lighting and other utilities; directional signs; maintenance and repair of any fire protection systems, lighting systems, storm drainage systems and other utility systems outside of the Premises; all maintenance and repair costs and expenses, except as to cost of replacement of the roof, exterior walls, structural parts of the Premises and structural floor, and pipes and conduits outside the leased Premises in the Project that furnish the leased Premises with various utilities (except to the extent that the same are the obligations of the appropriate utility company or are otherwise Lessee’s obligation pursuant to Section 7.1 or other provision of this Lease), incurred by the City pursuant to Section

7.2; personnel to implement such services; real and personal property taxes and assessments on the improvements and land comprising the Project; any governmental imposition or surcharge imposed upon the City or assessed against any portion of the Common Areas; all costs and expense pertaining to any security alarm system for the lessees in the Project (if any); depreciation on maintenance and operating machinery and equipment (if owned) and rental paid for such machinery and equipment (if rented); and adequate public liability and property damage insurance on the Common Areas. In addition, the Common Area Expenses shall include a management fee of ten percent (10%) of the total of all other Common Area Expenses, adjusted from time to time as provided herein. The City may cause any or all of those services to be provided by an independent contractor or contractors.

6.6.3 From and after the Commencement Date, and throughout the term hereof, Lessee shall pay to the City, on the first day of each calendar month, the amount of $1,200 per month, as the an amount agreed upon by the parties to be Lessee’s share of the Common Area Expenses. These expenses may be reassessed and updated by the Lessee from time to time.

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6.6.4 Failure of Lessee to pay any of the charges as in this Section 6.6 required to be paid shall constitute a default under the terms hereof in like manner as failure to pay Base Rent when due.

6.6.5 The City shall at all times have the right and privilege of determining the nature and extent of the Common Areas, and of making such changes therein and thereto from time to time which in its sole discretion it deems to be desirable and in the best interest of all persons using the Common Areas, including without limitation the location and relocation of driveways, entrances, exits, automobile parking spaces (if any), installation of prohibited areas, landscaped areas, utilities, and all other facilities thereof.

6.6.6 Nothing contained herein shall be deemed to create any liability upon the City for any damage to motor vehicles of customers or employees or for loss of property from within such motor vehicles.

6.6.7 The City shall have the right to establish, and from time to time change, alter, and amend, and to enforce against Lessee and the other users of the Common Areas such reasonable rules and regulations (including the exclusion of employees’ parking therefrom) as the City in its sole discretion may deem necessary or advisable for the proper and efficient operation and maintenance of the Common Areas. The rules and regulations herein provided may include, without limitation, the hours during which the Common Areas shall be open for use.

6.6.8 City shall retain the sole and absolute discretion in the modification of the Common Areas, which may include the rearrangement, increase or decrease of the areas, and the manner in which the areas are utilized. City shall also have the right at any time and from time to time during the term hereof to exclude and restrain any person from use or occupancy thereof, excepting, however, bona fide customers, patrons, and service suppliers of Lessee, and other tenants of the City who make use of the Common Areas fully in accordance with the rules and regulations established by the City from time to time with respect thereto. The rights of Lessee hereunder in and to the Common Areas shall at all times be subject to the rights of the City, the other tenants of the Project to use the same in common with Lessee, and it shall be the duty of Lessee to keep all of the Common Areas free and clear of any obstructions created or permitted by Lessee or resulting from Lessee’s operation and permit the use of the Common Areas only for normal parking, ingress and egress by said customers, patrons, and service suppliers to and from the Building.

6.6.9 If in the sole discretion of the City unauthorized persons are using any of the Common Areas by reason of the presence of Lessee in the Premises, Lessee, upon demand of the City, shall enforce such rights against all such unauthorized persons by appropriate proceedings. Nothing herein shall affect the rights of the City at any time to remove any such unauthorized persons from said areas or to restrain the use of any of said areas by unauthorized persons.

7. MAINTENANCE AND REPAIRS.

7.1 Lessee’s Obligations. Lessee agrees at all times during the term hereof, at its own expense, to repair, replace and maintain in good and tenantable condition the Premises and every Docusign Envelope ID: 7750EB29-A3B4-4C4E-BF86-16E8C4C60A09

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part thereof (except that portion of the Premises to be maintained by the City as hereinafter provided) and including, without limitation, the utility meters, pipes and conduits, all fixtures, air conditioning equipment and heating equipment, if any, exclusively serving the Premises and other equipment therein, including any equipment installed by Lessee which is part of said system, the storefront or storefronts, all signs, locks and closing devices, and all window sash, casement or frames, door and door frames, floor coverings, including carpeting, terrazzo or other special flooring, and all such items of repair, maintenance, allocation and improvement or reconstruction as may at any time or from time to time be required by a governmental agency having jurisdiction thereof. Tenant will not place or suffer to be placed or maintained on any exterior door, roof, wall or window of the building within which the Leased Premises are located any sign, awning or canopy, or advertising matter or other thing of any kind, and will not place or maintain or permit, or suffer to be placed or maintained, any decoration, lettering or advertising matter on the glass of any window or door of the said building within which the Leased Premises are located without first obtaining Landlord's written approval. In no event shall any: (a) neon, flashing or moving sign(s), or (b) sign( s) which shall interfere with the visibility of any sign, awning, canopy, advertising matter, or decoration of any kind of any other business or occupant of the Beach Street Garage of which the Leased Premises are a part, be permitted hereunder. Tenant further agrees to maintain any such sign, awning, canopy, decoration, lettering, advertising matter or other thing as may be approved in good condition and repair at all times. Lessee shall contract with a qualified service company for the monthly maintenance of the air conditioning equipment or heating, ventilating and air conditioning equipment, as the case may be, exclusively serving the Premises, with a copy of the service contract to be furnished to the City upon execution of this Lease and a copy of any subsequent contracts to be furnished from time to time during the term of this Lease provided that, at the City’s sole election, the City may so contract directly with a qualified service company, and Lessee shall promptly reimburse the City for the full cost of same.

Maintenance of all glass, both exterior and interior, is the sole responsibility of Lessee, and any glass broken shall be promptly replaced by Lessee with glass of the same kind, size and quality.

Upon surrender of the Premises, Lessee shall deliver the Premises to the City in good order, condition and state of repair, but shall not be responsible for damages resulting from ordinary wear and tear.

7.2 City Obligations. Subject to the foregoing provisions and to the reimbursement by Lessee described in Section 6.6, the City shall keep and maintain in good and tenantable condition and repair the roof, exterior walls, structural parts of the Premises and structural floor, and pipes and conduits outside the Premises that furnish the Premises with various utilities (except to the extent that the same are the obligations of the appropriate utility company or are otherwise Lessee’s obligation pursuant to Section 7.1 or other provision of this Lease); provided, however, that the City shall not be required to make repairs necessitated by reason of the negligence of Lessee or anyone claiming under Lessee, by reason of failure of Lessee to perform or observe any conditions or agreements of this Lease, or by reason of alterations, additions, or improvements made by Lessee or anyone claiming under Lessee. As used in this Section, “exterior walls” shall not include storefronts, plate glass, window cases or window frames, doors or door frames, security grilles or similar enclosures. It is understood and agreed that the City shall be under no obligation to make any repairs, alterations, renewals, replacements or improvements to and upon the Premises or the mechanical equipment exclusively serving the Premises at any time except as this Lease expressly provides. Anything to the contrary contained in this Lease notwithstanding, the City shall not in any way be liable to Lessee for failure to make repairs as herein specifically required of it unless Lessee has previously notified the City, Docusign Envelope ID: 7750EB29-A3B4-4C4E-BF86-16E8C4C60A09

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in writing, of the need for such repairs and the City has failed to commence and complete said repairs within a reasonable period of time following receipt of Lessee’s written notification.

7.3 Lessee’s Failure to Maintain. If Lessee refuses or neglects to make repairs or maintain the Premises, or any part thereof, in a manner reasonably satisfactory to the City, the City shall have the right, upon giving Lessee reasonable written notice of its election to do so, to make such repairs or perform such maintenance on behalf of and for the account of Lessee. In such event the cost of such work shall be paid by Lessee as additional rent promptly upon receipt of an invoice therefor. In addition, the City shall include a management fee on the work that was completed by the City on behalf of the Lessee, in the amount of fifteen percent (15%) that may be adjusted from time to time as provided herein.

7.4 Waiver of Legal Rights. Lessee waives the benefits of any law existing now or at any time during the term of this Lease and any extension thereof or thereafter giving Lessee rights or remedies as a result of the physical condition of the Premises, the Building, or Project and, without limitation, Sections 1932, 1933, 1941, 1941.2, 1942 and 1942.1 of the Civil Code of California and all right to make repairs at the expense of the City or to terminate this Lease as provided in those Civil Code sections or otherwise, except as expressly provided herein.

8. HAZARDOUS MATERIALS.

8.1 Compliance with Laws. Lessee shall not cause or permit any Hazardous Material (as defined below) to be brought upon, kept or used in or about the Premises or Project by Lessee, its agents, employees, contractors or invitees.

8.2 Termination of Lease. City shall have the right to terminate the Lease in City’s sole and absolute discretion in the event that (i) any anticipated use of the Premises by Lessee involves the generation or storage, use, treatment, disposal or release of Hazardous Material in a manner or for a purpose prohibited or regulated by any governmental agency, authority or Hazardous Materials laws; (ii) Lessee has been required by any lender or governmental authority to take remedial action in connection with Hazardous Material contaminating the Premises, if the contamination resulted from Lessee’s action or use of the Premises; or (iii) Lessee is subject to an enforcement order issued by any governmental authority in connection with the release, use, disposal or storage of a Hazardous Material on the Premises.

8.3 Assignment and Subletting. If (i) any anticipated use of the Premises by any proposed assignee or sublessee involves the generation or storage, use, treatment or disposal or release of Hazardous Material in a manner or for any purpose, (ii) the proposed assignee or sublessees has been required by any prior landlord, lender or governmental authority to take remedial action in connection with Hazardous Material contaminating a property, if the contamination resulted from such party’s action or use of the property in question, or (iii) the proposed assignee or sublessee is subject to an enforcement order issued by any governmental authority in connection with the release, use, disposal or storage of a Hazardous Material, then it shall not be unreasonable for City to withhold its consent to an assignment or subletting to such proposed assignee or sublessee.

8.4 Hazardous Materials Defined. The term “Hazardous Material(s)” shall mean any toxic or hazardous substance, material or waste or any pollutant or contaminant or infectious or Docusign Envelope ID: 7750EB29-A3B4-4C4E-BF86-16E8C4C60A09

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radioactive material, including but not limited to, those substances, materials or wastes regulated now or in the future under any of the following statutes or regulations and any and all of those substances included within the definitions of “hazardous substances,” “hazardous waste,” “hazardous chemical substance or mixture,” “imminently hazardous chemical substance or mixture,” “ toxic substances,” “hazardous air pollutant,” “toxic pollutant” or “solid waste” in the (a) “CERCLA” or “Superfund” as amended by SARA, 42 U.S.C. Sec. 9601 et seq., (b) RCRA, 42 U.S.C. Sec. 6901 et seq., (c) CWA., 33 U.S.C. Sec. 1251 et seq., (d) CAA, 42 U.S.C. 78401 et seq., (e) TSCA, 15 U.S.C. Sec. 2601 et seq., (f) The Refuse Act of 1899, 33 U.S.C. Sec. 407, (g) OSHA, 29 U.S.C. 651 et seq. (h) Hazardous Materials Transportation Act, 49 U.S.C. Sec. 1801 et seq., (i) USDOT Table (40 CFR Part 302 and amendments) or the EPA Table (40 CFR Part 302 and amendments), (j) California Superfund, Cal. Health & Safety Code Sec. 25300 et seq., (k) Cal. Hazardous Waste Control Act, Cal. Health & Safety Code Section 25100 et seq., (l) Porter-Cologne Act, Cal. Water Code Sec. 13000 et seq., (m) Hazardous Waste Disposal Land Use Law, Cal. Health & Safety Code Sec. 25220 et seq., (n) “Proposition 65,” Cal. Health and Safety Code Sec. 25249.5 et seq., (o) Hazardous Substances Underground Storage Tank Law, Cal. Health & Safety Code Sec. 25280 et seq., (p) California Hazardous Substance Act, Cal.

Health & Safety Code Sec. 28740 et seq., (q) Air Resources Law, Cal. Health & Safety Code Sec. 39000 et seq., (r) Hazardous Materials Release Response Plans and Inventory, Cal. Health & Safety Code Secs. 25500-25541, (s) TCPA, Cal. Health and Safety Code Secs. 25208 et seq., and (t) regulations promulgated pursuant to said laws or any replacement thereof, or as similar terms are defined in the federal, state and local laws, statutes, regulations, orders or rules.

Hazardous Materials shall also mean any and all other substances, materials and wastes which are, or in the future become regulated under applicable local, state or federal law for the protection of health or the environment, or which are classified as hazardous or toxic substances, materials or wastes, pollutants or contaminants, as defined, listed or regulated by any federal, state or local law, regulation or order or by common law decision, including, without limitation, (i) trichloroethylene, tetracholoethylene, perchloroethylene and other chlorinated solvents, (ii) any petroleum products or fractions thereof, (iii) asbestos, (iv) polychlorinated biphenyls, (v) flammable explosives, (vi) urea formaldehyde, and (vii) radioactive materials and waste.

8.5 City’s Right to Perform Tests. At any time prior to the expiration of the Lease Term, City shall have the right to enter upon the Premises in order to conduct tests of water and soil and to deliver to Lessee the results of such tests to demonstrate that levels of any Hazardous Materials in excess of permissible levels has occurred as a result of Lessee’s use of the Premises.

Lessee shall be solely responsible for and shall indemnify, protect, defend and hold City harmless from and against all claims, costs and liabilities including actual attorneys’ fees and costs arising out of or in connection with any removal, remediation, cleanup, restoration and materials required hereunder to return the Premises and any other property of whatever nature to their condition existing prior to the appearance of the Hazardous Materials. The testing shall be at Lessee’s expense if City has a reasonable basis for suspecting and confirms the presence of Hazardous Materials in the soil or surface or groundwater in on, under, or about the Premises or the Project, which has been caused by or resulted from the activities of Lessee, its agents, employees, contractors or invitees.

8.6 Hazardous Materials Indemnity. Lessee shall indemnify, defend (by counsel reasonably acceptable to City), protect and hold the City harmless from and against any and all claims, liabilities, penalties, forfeitures, losses and/or expenses, including, without limitation, diminution in value of the Premises or Project, damages for the loss or restriction on use of the Docusign Envelope ID: 7750EB29-A3B4-4C4E-BF86-16E8C4C60A09

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rentable or usable space or of any amenity of the Premises or Project, damages arising from any adverse impact or marketing of the Premises or Project and sums paid in settlement of claims, response costs, cleanup costs, site assessment costs, attorneys’ fees, consultant and expert fees, judgments, administrative rulings or orders, fines, costs of death of or injury to any person or damage to any property whatsoever (including, without limitation, groundwater, sewer systems and atmosphere), arising from, or caused or resulting, either prior to or during the Lease Term, in whole or in part, directly or indirectly, by the presence or discharge in, on, under or about the Premises or Project by Lessee, Lessee’s agents, employees, licensees or invitees or at Lessee’s direction, of Hazardous Material, or by Lessee’s failure to comply with any Hazardous Materials Law, whether knowingly or by strict liability. Lessee’s indemnification obligations shall include, without limitation, and whether foreseeable or unforeseeable, all costs of any required or necessary Hazardous Materials management plan, investigation, repairs, cleanup or detoxification or decontamination of the Premises or Project, and the presence and implementation of any closure, remedial action or other required plans, and shall survive the expiration of or early termination of the Lease Term. For purposes of the indemnity provided herein, any acts or omissions of Lessee or its employees, agents, customers, sublessees, assignees, contractors or subcontractors of Lessee (whether or not they are negligent, intentional, willful or unlawful) shall be strictly attributable to Lessee.

9. UTILITIES.

Lessee shall pay prior to delinquency, and shall indemnify and hold the City harmless from, all costs incurred in installation, hook-up, delivery, and repair of all utilities and services whatsoever supplied to or consumed by Lessee on the Premises including, but not limited, to gas, water, sewer, electricity, telecommunications service, janitorial, garbage pickup and disposal, onPremises landscaping installation and maintenance (if any) and other public utilities. City shall not be responsible for providing any utilities or services to Lessee whatsoever, and shall not be liable to Lessee for any interruption or failure of any utility services to the Premises from any cause whatsoever, nor shall such interruption or failure constitute a constructive eviction or give rise to a right of rent offset or abatement or affect the obligations of Lessee under this Lease in any other way whatsoever.

10. ALTERATIONS.

10.1 Alterations. Lessee shall not make any alterations to the Premises or the Building without the prior written consent of the City which consent shall not be unreasonably withheld.

City shall be deemed to have reasonably withheld or withdrawn consent unless each and every proposed alteration (i) shall not, individually or in the aggregate, lessen the fair market value of the Premises or the Building, or materially affect the usefulness of the Premises or the Building, either for Lessee’s business or the business of potential successor tenants, (ii) be accompanied by all final plans and specifications with any deviation therefrom constituting a separate alteration subject to this Section 10, (iii) be constructed by a California licensed contractor and under the direction of a California licensed architect satisfactory to the City, and (iv) once consented to by the City, shall be completed expeditiously in a good and workmanlike manner, with first class quality materials, and in compliance with all applicable legal and insurance requirements, (v) shall be constructed in strict compliance with the additional conditions set forth in Section 10.4 hereof, and (vi) shall become a “Lessee Improvement” and part of the Premises and subject to this Lease, provided, at the City’s option, Lessee shall remove any such alteration and restore the Docusign Envelope ID: 7750EB29-A3B4-4C4E-BF86-16E8C4C60A09

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Premises to their condition prior to the making of same, normal wear and tear excepted, upon the expiration or earlier termination of the term hereof. The City shall exercise its option by 30 days’ notice given no later than 30 days after such expiration or termination and, if Lessee has not so removed and restored within 30 days after the City gives said notice, Lessee shall pay the City upon demand the reasonable rental value of the Premises during the period beginning with the date immediately following said 30 days after the City gives its notice and ending with the date upon which the removal and restoration is completed and the City may, but shall not be obligated to, remove such alteration and restore the Premises and Lessee also shall pay the City its cost of same upon demand.

10.2 Required Alterations. Subject to Section 10.1 above, Lessee shall, at its sole cost, make any alteration, addition, or change to the Premises of any sort, substantial or insubstantial, ordinary or extraordinary, foreseeable or unforeseeable, whether structural or otherwise, as may be required by law due to the existence of, or Lessee’s use or occupancy of, the Premises or as a result of Lessee’s application for any permit or governmental approval, provided that the City may elect to make same, in which case Lessee shall reimburse the City promptly upon demand for all costs of the City’s making same.

10.3 Security for Completion. Before commencing any proposed alteration, Lessee, if requested by the City, shall furnish to the City security reasonably satisfactory to the City guaranteeing to the City the completion of the proposed alteration within a reasonable time, free and clear of all liens and, if available, all encumbrances, chattel mortgages, conditional bills of sale, security agreements and other claims and charges (other than those, if any, permitted hereunder) and in accordance with any plans and specifications theretofore approved by the City and, if required under any City encumbrance, by the City’s lender.

10.4 Additional Conditions. Lessee further covenants and agrees that no alterations will be made except in compliance with, and Lessee hereby covenants that it will comply with, each of the following provisions:

10.4.1 Before any alterations are begun, Lessee shall procure, at its own sole cost and expense, all necessary permits from all governmental authorities and shall, on demand, deliver photocopies thereof to the City;

10.4.2 All alterations shall be made in compliance and conformity with all applicable laws;

10.4.3 In making any alterations, Lessee shall not violate the terms or conditions of any insurance policy obtained or required pursuant to the provisions of this Lease affecting or relating to the Premises or any part thereof;

10.4.4 Promptly after the completion of any alterations, Lessee shall procure, at Lessee’s own sole cost and expense, all permits of governmental authorities for the completed alterations as may be required by any applicable laws, if any, and, on demand, shall promptly deliver photocopies thereof to the City; and

10.4.5 Lessee shall pay all costs, expenses and liabilities arising out of, in connection with, or by reason of, any alterations, and shall keep the Premises, Building and Docusign Envelope ID: 7750EB29-A3B4-4C4E-BF86-16E8C4C60A09

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Project free and clear of all liens, claims and encumbrances in any way arising out of, in connection with, or by reason of, any alterations.

10.5 No City Contribution. The City shall not be required to make any contribution to the cost of any alterations or any part thereof, and Lessee covenants that the City shall not be required to pay any cost, expense or liability arising out of or in connection with or by reason of any alterations and shall indemnify and hold the City harmless from and against, and shall reimburse the City upon demand for, all such costs, expenses and liabilities (including, without limitation, reasonable attorneys’ fees and disbursements).

10.6 Notice. If Lessee makes any alterations to the Premises as provided in this Section 10, the alterations shall not be commenced until ten (10) days after the City has received written notice from Lessee stating the date the installation of the alterations is to commence so that the City can post and record an appropriate notice of nonresponsibility at the Premises.

10.7 Manner; Cost. Any alterations by Lessee shall be made in a manner that will not interfere with the quiet enjoyment of the other tenants in the Building. Lessee shall pay prior to delinquency all cost for construction done by it or caused by it to be done on the Premises as permitted by this Lease. Lessee shall also reimburse the City upon demand for all costs the City incurs in reviewing any proposed alteration, including without limitation, architect, engineer and legal fees. Upon completion of any such work, Lessee shall have recorded in the office of the County Recorder of Santa Clara County a Notice of Completion as required or permitted by law.

10.8 Mechanic’s Liens. Lessee shall keep the Premises, the Building and the Project free and clear of all mechanic’s liens resulting from construction done by or for Lessee.

10.9 Trade Fixtures. Lessee shall have the right at any time, and from time to time during the term of this Lease, at Lessee’s sole cost and expense, to install in or on the Premises such items, herein called “trade fixtures,” for use in Lessee’s trade or business as Lessee may, in its reasonable discretion, deem advisable, except that all such Lessee’s trade fixtures, furniture, furnishings, signs, and other personal property not permanently affixed to the Premises must be new when installed in, or attached to, the Premises. (All items identified on the Inventory of Fixtures, Exhibit B, shall be subject to all provisions of this Lease governing fixtures.) Any and all such trade fixtures shall remain the property of Lessee, and may be removed by Lessee at any time or times prior to the expiration or sooner termination of this Lease so long as Lessee is not in default hereunder, so long as Lessee shall immediately replace the same with similar personal property of comparable or better quality, except that Lessee shall not be obligated to replace such personal property at the expiration or earlier termination of this Lease, and Lessee shall immediately repair all damage caused by such removal and restore the Premises to substantially the condition they were in prior to the installation of such fixtures so that no trace remains of their presence at the Premises. At all times during the term of this Lease, Lessee shall maintain such trade fixtures in a good, first class condition.

10.10 Removal. Any trade fixtures described in this Section 10 that are not removed from the Premises by Lessee on the date of expiration or sooner termination, regardless of cause, of this Lease shall be deemed abandoned by Lessee and shall automatically become the property of the City and Lessee shall hold City harmless as to all claimants with respect to same.

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10.11 Insurance. In the event that Lessee shall make any permitted improvements to the Premises under the provisions of this Section 10, Lessee agrees to carry such insurance as the City may reasonably request covering any such improvements, it being expressly understood and agreed that none of such improvements shall be insured by the City under the insurance it may carry upon the Building, nor shall the City be required to reconstruct any such improvements under any circumstances whatsoever, notwithstanding the provisions of Section 13.

11. TAXES.

11.1 Personal Property Taxes. Lessee shall pay prior to delinquency all taxes, license fees and public charges assessed or levied against Lessee or or Lessee’s Improvements, trade fixtures, furnishings, equipment and other personal property.

11.2 Assessments and Special Taxes. As a municipal corporation, City’s fee interest in the Project is exempt from the 1% general property tax levy and therefore property taxes will not be levied and will not be passed through to lessee or other tenants of the Project during City’s ownership of the Project. However, if and to the extent the Project or portion thereof is subject to special taxes or assessments, Lessee shall pay Lessee’s share of all such assessment and special taxes, if any, (other than possessory interest taxes on Lessee’s leasehold interest which shall be paid 100% by Lessee) which become due and payable to City on or before the later of ten (10) days prior to the delinquency thereof or three (3) days after the date on which Lessee receives a copy of the special tax or assessment bill and notice of City’s determination hereunder. Lessee’s liability to pay special taxes and assessments shall be prorated on the basis of a three hundred sixty-five (365) day year to account for any fraction or portion of a tax year included in the Lease term at the commencement or expiration of the Lease.

11.3 Revenue and Taxation Code Notice; Possessory Interest Taxes. Lessee specifically acknowledges it is familiar with §107.6 of the California Revenue and Taxation Code, realizes that a possessory interest subject to property taxes may be created, agrees to pay any such tax in full and without proration, and hereby waives any rights Lessee may have under said California Revenue and Taxation Code §107.6. City shall have no obligation to pay any possessory interest tax. No such possessory interest tax or any other tax payable by Lessee shall in any way reduce or substitute for the rent, charges or fees required to be paid as a condition of this Lease or as otherwise required by City.

12. HOLD HARMLESS/INDEMNIFICATION.

12.1 Indemnification. To the extent permitted by law, Lessee agrees to protect, defend, hold harmless and indemnify City, its City Council, commissions, officers, agents, volunteers, and employees from and against any claim, injury, liability, loss, cost, and/or expense or damage, however same may be caused, including all costs and reasonable attorney’s fees in providing a defense to any claim arising therefrom for which City shall become legally liable arising from Lessee’s negligent, reckless, or wrongful acts, errors, or omissions with respect to or in any way connected with this Lease. Lessee shall give City immediate notice of any claim or liability hereby indemnified against.

12.2 Waiver of Claims. Lessee waives any claims against City for injury to Lessee’s business or any loss of income therefrom, for damage to Lessee’s property, or for injury or death Docusign Envelope ID: 7750EB29-A3B4-4C4E-BF86-16E8C4C60A09

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of any person in or about the Premises or the Project, from any cause whatsoever, except to the extent caused by City’s active negligence or willful misconduct.

13. DAMAGE, DESTRUCTION AND TERMINATION.

13.1 Uninsured Risks. If, during the Term of this Lease, the Premises or the Building are totally or partially destroyed from a risk not covered by the insurance described in Section

19.2, the City, at its option, may elect to terminate this Lease by giving notice to Lessee or may elect to restore the same. However, as to destruction which was caused by an act or omission of Lessee, its employees, agents, invitees or permittees, Lessee shall reimburse the City the full cost of the restoration of the Premises, Building shell, and all leasehold improvements therein under any circumstances. If the City elects to restore the Premises or the Building, Lessee shall be entitled to a proportionate reduction of rent while such repairs are being made. Such reduction shall be in an amount which bears the same proportion to the Base Rent as the floor area of that portion of Premises which has been damaged or is otherwise unusable by Lessee, bears to the total floor area of the Premises, except that if the damage or destruction is to more than 50% of the square footage of the Premises and Lessee ceases to occupy the Premises, such proportionate reduction shall be 100%.

13.2 Insured Risks.

13.2.1 If, during the Term of this Lease, the Premises or the Building are totally or partially destroyed from a risk covered by insurance described in Section 19.2, the City shall forthwith repair the same to substantially the same condition they were in immediately prior to the destruction and to the extent of proceeds received under such insurance, provided such repairs can be made within ninety (90) days under then existing law. Such destruction shall in no way annul or void this Lease, except that Lessee shall be entitled to a proportionate reduction of rent while such repairs are being made, including but not limited to the foregoing ninety days, such proportionate reduction to be equal to, and granted upon the City’s receipt of, the proceeds received by the City from any rental interruption insurance maintained by Lessee. Such reduction shall be in an amount which bears the same proportion to the minimum monthly rent as the floor area of that portion of the Premises which has been damaged or is otherwise unusable by Lessee bears to the total floor area of the Premises. If such repairs cannot be made in 90 days, the City may, at its option, make same within a reasonable time, this Lease continuing in full force and effect and the rent being proportionately reduced as aforesaid. In the event that the City does not so elect to make such repairs which cannot be made in 90 days, or such repairs cannot be made under such then existing law, this Lease shall terminate.

13.2.2 Notwithstanding any other provision of this Lease, if, at any time during the term of this Lease, the Premises or the Building are totally or partially destroyed and (i) the total cost to repair the Premises or the Building exceeds One Hundred Thousand Dollars($100,000), or (ii) twenty percent (20%) of the Building is damaged or destroyed (and whether or not any portion of the Premises is also damaged or destroyed), the City may elect to terminate this Lease by written notice to Lessee. Determination of the extent of damage or destruction and the time for effectuating repair shall be made by the City based upon written appraisals and insurance adjustment reports, and shall be final and binding on the Parties.

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13.3 Extent of Obligation. Notwithstanding the foregoing, the City shall not be required to repair, reconstruct, or restore damage or destruction by fire or other cause to any portion of the Premises constructed by or for Lessee, and Lessee shall at its sole cost and expense fully restore or replace its stock in trade, trade fixtures, furniture, furnishings, equipment, and other personal property. Lessee shall commence all such replacement and restoration work promptly following the occurrence of any such damage or destruction, and shall diligently prosecute such work to completion. Lessee hereby waives any statutory rights of termination which may arise by reason of any partial or total destruction of the Premises or any part thereof.

Upon termination of the Lease under any of the provisions of this Section 13, the Parties shall be released thereby from any further obligations hereunder except for obligations which, prior to the date of such termination, had already accrued, and except as provided in the following sentence.

In the event of such a termination, all proceeds from Lessee’s insurance which pertain to alterations or improvements to the Premises which would otherwise become the property of the City upon expiration or termination of this Lease shall be disbursed and paid to the City.

13.4 Force Majeure/Excusable Delay. Except as provided in this Lease, any act of City or Lessee required by this Lease to be done within a specified time shall be subject to Excusable Delay. Lessee’s obligation to pay Rent, however, is not excused by this Section. “Excusable Delay” means prevention, delay or stoppage due to strikes, lockouts, labor disputes, Acts of God, inability to obtain labor, materials or reasonable substitutes, governmental restrictions, governmental regulation, governmental controls, judicial orders, enemy, or hostile governmental actions, civil commotion, fire or other casualty, and other causes beyond the reasonable control of Lessee or City (excepting, however, City’s or Lessee’s financial inability), which shall excuse the performance by City or Lessee for a period equal to the prevention, delay or stoppage, except the obligations imposed with regard to rent to be paid by Lessee pursuant to this Lease. In the event any work performed by Lessee or Lessee’s contractors results in a strike, lockout, and/or labor dispute, the strike, lockout, and/or labor dispute shall not excuse the performance by Lessee of the provisions of this Lease.

13.5 Waiver. City and Lessee waive the provisions of any statutes which relate to termination of leases when leased property is destroyed and agree that such event shall be governed by the terms of this Lease.

14. SIGNS.

Lessee shall not construct, maintain or place any signs, advertising or other exterior decoration (collectively, “Signs”) upon the exterior of the Premises or Project, or modify any existing Signs, without prior written consent of City. Any Sign that Lessee has the right to place, construct or maintain shall comply with all laws at all times during the term of this Lease, and Lessee shall obtain any approval required by such law. City makes no representation with respect to Lessee’s ability to obtain such approval.

15. ASSIGNMENT AND SUBLETTING.

15.1 City’s Consent Required. Lessee shall not assign this Lease, nor any interest therein, and shall not sublet or encumber the Premises or any part thereof, nor any right or privilege appurtenant thereto, nor allow or permit any other person(s) to occupy or use the Premises, or any portion thereof, without the prior written consent of City, such consent not to be Docusign Envelope ID: 7750EB29-A3B4-4C4E-BF86-16E8C4C60A09

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unreasonably delayed, withheld, or denied. This Lease shall be binding upon any permitted assignee or successor of Lessee. Consent by City to one assignment, subletting, occupation or use by another person shall not be deemed to be consent to any subsequent assignment, subletting, occupation or use by another person. No assignment, subletting, or encumbrance by Lessee shall release it from or in any way alter any of Lessee’s obligations under this Lease. Any assignment, subletting, encumbrances, occupation or use contrary to the provisions of this Lease shall be void and shall constitute breach of this Lease. City may assign any of its rights hereunder without notice to Lessee.

15.2 No Release of Lessee. No subletting or assignment as approved by City shall release Lessee of Lessee’s obligation or alter the primary liability of Lessee to pay the rent and to perform all other obligations by Lessee hereunder. The acceptance of rent by City from any other person shall not be deemed to be a waiver by City of any provision hereof. In the event of default by any approved assignee or other successor of Lessee in the performance of any of the terms hereof, City may proceed directly against Lessee without the necessity of exhausting remedies against such assignee or successor.

16. DEFAULTS; REMEDIES.

16.1 Defaults. The occurrence of any one or more of the following events shall constitute a material default or breach of this Lease by Lessee:

16.1.1 Abandonment of the Premises by Lessee as defined by California Civil Code § 1951.3;

16.1.2 Failure by Lessee to make any payment of rent or any other payment required to be made by Lessee hereunder, as and when due, where such failure shall continue for a period of ten (10) business days after written notice thereof from City to Lessee. In the event City serves Lessee with a Notice to Pay Rent or Quit pursuant to applicable Unlawful Detainer statutes, such Notice to Pay Rent or Quit shall also constitute the notice required by this subparagraph;

16.1.3 Failure by Lessee to observe or perform any of the covenants, conditions or provisions of this Lease in any material respect to be observed or performed by Lessee where such failure shall continue for a period of thirty (30) days after written notice thereof from City to Lessee; provided, however, that if the nature of Lessee’s default is such that more than thirty (30) days are reasonably required for its cure, then Lessee shall not be deemed to be in default if Lessee commenced such cure within said thirty (30) day period and thereafter diligently prosecutes such cure to completion;

16.1.4 Making by Lessee of any general arrangement or assignment for the benefit of creditors; Lessee’s becoming a “debtor” as defined in 11 U.S.C. § 101 or any successor statute thereto (unless, in the case of a petition filed against Lessee, the same is dismissed within sixty (60) days); the appointment of a bankruptcy trustee or receiver to take possession of all or substantially all of Lessee’s assets located at or on the Premises or of Lessee’s interest in this Lease where possession is not restored to Lessee within thirty (30) days; or the attachment, execution or other judicial seizure of all or substantially all of Lessee’s assets Docusign Envelope ID: 7750EB29-A3B4-4C4E-BF86-16E8C4C60A09

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located at or on the Premises or of Lessee’s interest in this Lease, where such seizure is not discharged within thirty (30) days.

16.2 Remedies. In the event of any material default or breach by Lessee, City may at any time thereafter, following any notice required by statute, and without limiting City in the exercise of any right or remedy which City may have by reason of such default or breach:

16.2.1 Terminate Lessee’s right to possession of the Premises by any lawful means, in which case this Lease shall terminate and Lessee shall immediately surrender possession of the Premises and all alterations to City. In such event, City shall be entitled to recover from Lessee all damages incurred by City by reason of Lessee’s default including, but not limited to, the cost of recovering possession of the Premises and alterations, expenses of reletting, including necessary renovation and alteration of the Premises and alterations, reasonable attorneys’ fees, the worth at the time of the award of the unpaid rent that had been earned at the time of termination of this Lease and the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of such award exceeds the amount of such rental loss for the same period that Lessee proves could be reasonably avoided.

16.2.2 Maintain Lessee’s right to possession, in which case this Lease shall continue in effect whether or not Lessee shall have abandoned the Premises. In such event, City shall be entitled to enforce all of City’s rights and remedies under this Lease, including the right to recover rent as it becomes due hereunder.

16.2.3 Pursue any other remedy now or hereafter available to City under the laws or judicial decisions of the State of California.

16.3 No Relief from Forfeiture after Default. Lessee waives all rights of redemption or relief from forfeiture under California Code of Civil Procedure §§ 1174 and 1179, and any other present or future law, in the event Lessee is evicted or City otherwise lawfully takes possession of the Premises by reason of any default or breach of this Lease by Lessee.

17. INTEREST ON PAST-DUE OBLIGATIONS.

Except as expressly provided herein, any amount due City when not paid when due shall bear interest at the lesser of ten percent (10%) per year or the maximum rate then allowable by law from the date due.

18. CITY’S ACCESS.

18.1 Access for Inspection. City and City’s agents shall have the right to enter the Premises at reasonable times, upon not less than twenty-four (24) hours prior notice to Lessee or less in case of an emergency), for the purpose of inspecting same, showing same to prospective purchasers, lenders, lessees or others, and making such alterations, repairs, improvements or additions to the Premises as City may deem necessary. City may at any time place on or about the Premises any ordinary “For Sale” signs and City may at any time during the last one hundred twenty (120) days of the term hereof place on or about the Premises any ordinary “For Lease” signs, all without rebate of rent or liability to Lessee.

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18.1.1 City will conduct Premises inspections on a quarterly basis to identify maintenance issues that require attention. City will provide to Lessee a report specifying such maintenance issues as are identified that are Lessee’s responsibility under this Lease, and if appropriate, City will provide the estimated cost for services to perform the maintenance.

18.2 No Warranty. Except as otherwise stated in this Lease, Lessee hereby acknowledges that neither the City nor any employees or agents of the City has made any oral or written warranties or representations to Lessee relative to the condition or use by Lessee of said Premises and Lessee acknowledges that Lessee assumes all responsibility regarding the Occupational Safety and Health Act, the legal use and adaptability of the Premises and compliance with all applicable laws and regulations in effect during the term of this Lease.

18.3 Security Measures. City shall have the right to require a reasonable security system, device, operation or plan be installed and implemented to protect the Premises or any alterations. Should City, in its sole discretion, require Lessee to install such a security system, Lessee agrees to bear the sole cost and expense of any security system, device, operation or plan and the installation and implementation thereof. Lessee shall obtain City’s prior approval before installing or implementing any security system, device, operation or plan.

19. INSURANCE.

19.1 Lessee Insurance. Lessee’s responsibility for the Premises begins immediately upon the Commencement Date and Lessee, at its sole cost and expense, and at no cost to City, shall provide and maintain in full force and effect during the entire term of this Lease insurance coverage in an amount(s) and in a form acceptable to City as set forth in Exhibit C attached hereto and incorporated herein by reference. Said policies shall be maintained with respect to Lessee’s employees, if any, and all vehicles operated on the Premises. The policies shall include the required endorsements, certificates of insurance and coverage verifications as described in Exhibit C. Lessee also agrees to secure renter’s liability insurance.

19.2 Fire Insurance on Building. City shall maintain insurance (or self-insurance through City’s joint pool coverage plan) covering the Building.

20. CONTRACT FOR ADMINISTRATIVE SERVICE.

To the extent that this Lease is a contract for administrative services, the City Council entered into such agreement upon recommendation of the City Manager pursuant to Section 1108 of the City’s Charter. The policy decision with respect to the services was made by the City Council and not by the City Manager.

21. DISPUTE RESOLUTION.

21.1 Unless otherwise mutually agreed to or as provided in Section 21.5, any controversies between Lessee and City regarding the construction or application of this Lease, and claims arising out of this Lease or its breach shall be submitted to mediation within thirty (30) days of the written request of one Party after the service of that request on the other Party.

21.2 The Parties may agree on one mediator. If they cannot agree on one mediator, the Party demanding mediation shall request the Superior Court of Santa Clara County to appoint a Docusign Envelope ID: 7750EB29-A3B4-4C4E-BF86-16E8C4C60A09

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mediator. The mediation meeting shall not exceed one day (eight (8) hours). The Parties may agree to extend the time allowed for mediation under this Lease.

21.3 The costs of mediation shall be borne by the Parties equally.

21.4 Except as provided in Section 21.5, mediation under this section is a condition precedent to filing an action in any court. In the event of litigation arising out of any dispute related to this Lease, the Parties shall each pay their respective attorney’s fees, expert witness costs and cost of suit, regardless of the outcome of the litigation.

21.5 Nothing in this Section shall require the City to mediate any eviction, unlawful detainer, or other exercise of remedies following the expiration of the Term of this Lease as provided in Section 2 or any termination of this Lease under Section 16.

22. PAYMENTS/PARTIAL PAYMENTS.

Payments shall be effective upon receipt. City may apply any payment received from Lessee at any time against any obligation due and owing by Lessee under this Lease, regardless of any statement appearing on or referred to in any remittance from Lessee or any prior application of such payments. Acceptance by City of a partial payment of rent or other charges shall not be considered or construed to waive any right of City or affect any notice of legal proceedings, unless both Parties shall agree otherwise in writing. The receipt by City of a partial payment of any amount due to City endorsed as payment in full will be deemed to be a partial payment only, and any endorsements or statements on the check or any letter accompanying the check shall not be deemed an accord and/or satisfaction, and, notwithstanding said endorsements, City may accept and deposit said check without prejudice to its right to recover the balance. Lessee’s obligation (without prior notice or demands) to pay rent and all other amounts due hereunder shall be absolute and unconditional, and not subject to any abatement, set off, defense, recoupment or reduction.

23. NON-LIABILITY OF OFFICIALS AND EMPLOYEES OF THE CITY.

No official or employee of City shall be personally liable for any default or liability under this agreement.

24. NON-DISCRIMINATION.

Lessee covenants it shall not discriminate based upon race, color, creed, religion, sex, marital status, age, handicap, national origin or ancestry in any activity pursuant to this agreement.

25. CONFLICT OF INTEREST.

Lessee shall at all times avoid conflict of interest or appearance of conflict of interest in performance of this agreement.

26. MEMORANDUM OF LEASE.

Lessee shall not record this Lease or a memorandum thereof, or any other reference to this Lease, without the prior written consent of the City. Lessee, upon the request of the City, shall execute Docusign Envelope ID: 7750EB29-A3B4-4C4E-BF86-16E8C4C60A09

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and acknowledge a Memorandum of Lease for recording in the official records of Santa Clara County. Upon termination or expiration of this Lease, Lessee shall execute and record a quitclaim deed as to its leasehold interest.

27. ESTOPPEL CERTIFICATE.

Lessee shall, from time to time, upon at least ten (10) days prior written notice from City, execute, acknowledge and deliver to City a statement in writing (i) certifying this Lease is unmodified and in full force and effect, or, if modified, stating the nature of the modification and certifying that the Lease, as modified, is in full force and effect, and the date to which the rental and other charges, if any, have been paid; and, (ii) acknowledging that there are not to Lessee’s knowledge, any defaults, or stating if any defaults are claimed, any statement may be relied upon by any prospective purchaser or encumbrancer of the Project.

28. LIENS.

Lessee agrees at its sole cost and expense to keep the Premises, Building and Project free and clear of any and all claims, levies, liens, encumbrances or attachments.

29. VACATING.

Upon termination of the tenancy, Lessee shall completely vacate the Premises, Building and Project, including the removal of any and all of its personal property and fixtures (whether or not identified on the Inventory of Fixtures (Exhibit B). Before departure, Lessee shall return keys and the Premises (including Lessee Improvements) to City the same condition in which it was received. Lessee shall allow City to inspect the Premises to verify the condition of the Premises and its contents.

30. ABANDONMENT.

Lessee’s absence from the Premises for three (3) consecutive days, without prior notice, during which time rent or other charges are delinquent, shall be deemed abandonment of the Premises and a material default by Lessee entitling City to the remedies in Section 16 above, including the right to terminate this Lease. In the event of such termination, City shall be authorized to enter and take possession and to remove and dispose of the property of Lessee and its employees, agents, contractors and invitees without any liability whatsoever to City.

31. PROPRIETARY AND GOVERNMENTAL ROLES; ACTIONS BY CITY.

Except where clearly and expressly provided otherwise in this Lease, the capacity of the City in this Lease shall be as owner and lessor of property only (“Proprietary Capacity”), and any obligations or restrictions imposed by this Lease on the City shall be limited to that capacity and shall not relate to, constitute a waiver of, supersede or otherwise limit or affect its governmental capacities, including enacting laws, inspecting structures, reviewing and issuing permits, and all of the other legislative and administrative or enforcement functions pursuant to federal, state or local law (“Governmental Capacity”). When acting in its Proprietary Capacity, discretionary actions may be undertaken by the City Manager or other designees as designated by the City Manager to the extent otherwise provided for in this Lease. In addition, nothing in this Lease shall supersede or waive any discretionary or regulatory approvals required to be obtained from Docusign Envelope ID: 7750EB29-A3B4-4C4E-BF86-16E8C4C60A09

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the City under applicable law, nor guarantee that the City, in its Governmental Capacity, will grant any particular request for a license, permit or other regulatory approval. Lessee understands that the City may grant or deny such request in its sole discretion, and may impose such terms and conditions as it deems consistent with that discretion and applicable laws.

32. HOLDOVER.

Lessee has no right to retain possession of the Premises or any portion thereof beyond the expiration or termination of this Lease. In the event that Lessee holds over after the expiration of the term without executing a new lease, then such holding over shall be construed as a tenancy from month-to-month, subject to all conditions, provisions and obligations of this Lease insofar as they are applicable to a month-to-month tenancy, except that the Base Rent portion of the rent shall be increased to 150% of the amount of the Base Rent payable immediately prior to the expiration or termination of the Lease, as the case may be. Nothing contained herein shall be construed as consent of City to any holding over by Lessee.

33. NOTICES.

All notices to the Parties shall, unless otherwise requested in writing, be sent to City addressed as follows:

City of Watsonville
City Clerk
275 Main Street, Suite 400
Watsonville, CA 95076
And to Lessee addressed as follows:

Lessee’s Notice Address:

In Sook Yum
27 West Beach Street
Watsonville, CA 95076
Notices may be served upon Lessee in person or by first class mail or by certified mail to Lessee whether or not said mailing is accepted by Lessee. If notice is sent via facsimile, a signed, hard copy of the material shall also be mailed. The workday the facsimile was sent shall control the date notice was deemed given if there is a facsimile machine generated document on the date of transmission. A facsimile transmitted after 1:00 P.M. on a Friday shall be deemed to have been transmitted on the following Monday. These addresses shall be used for service of process.

34. TIME.

Time shall be of the essence in this Lease.

35. MISREPRESENTATIONS.

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Any statements submitted to City in the Application to Rent by Lessee (if applicable) are considered inducements to execute this Lease. Misrepresentations shall entitle City to terminate this Lease at any time.

36. AMENDMENTS.

It is mutually agreed that no oral Leases have been entered into and that no alteration or variation of the terms of this Lease shall be valid unless made in writing and signed by the Parties to this Lease.

37. INDEPENDENT LEGAL ADVICE.

Each Party represents and warrants to the other the following: they have carefully read this Lease, and in signing this Lease, they do so with full knowledge of any right which they may have; they have received independent legal advice from their respective legal counsel as to the matters set forth in this Lease, or have knowingly chosen not to consult legal counsel as to the matters set forth in this Lease; and, they have freely signed this Lease without any reliance upon any agreement, promise, statement or representation by or on behalf of the other party, or their respective agents, employees, or attorneys, except as specifically set forth in this Lease, and without duress or coercion, whether economic or otherwise.

38. SERVICE CHARGE.

A service charge of twenty dollars ($20.00) will be made for each check that must be resubmitted for payment.

39. SIGNING AUTHORITY.

If this Lease is not signed by all Lessees named herein, the person actually signing warrants that he/she has the authority to sign for the others.

40. CHANGE OF LOCKS.

Lessee may install new locks on all exterior doors. Lessee shall advise City of such action and shall provide City with keys to said locks. Lessee shall also deliver to City the old locks with keys. Upon termination, Lessee shall leave new locks that shall become the property of City.

41. CAPTIONS/RECITALS.

The captions of the various sections, paragraphs and subparagraphs of this Lease are for convenience only and shall not be considered or referred to in resolving questions of interpretation. All of the recitals of this Lease, and the defined terms set forth therein, are incorporated into and made a part of this Lease by this reference.

42. REPAIRS.

Except as expressly provided in this Lease, City shall have no obligation to repair or maintain the Premises or any alterations thereto or facilities placed therein. Lessee expressly waives the benefit of any statute now or hereinafter in effect which would otherwise afford Lessee the right Docusign Envelope ID: 7750EB29-A3B4-4C4E-BF86-16E8C4C60A09

Lease Agreement/ IN SOOK YUM, DBA TOP USA CO. Page 24 of 27 Rev.: 06-10-2025
to make repairs at City’s expense or to terminate this Lease because of City’s failure to keep Premises in good order, condition and repair. Lessee shall not call on City to make any improvements or repairs to said property of any kind whatsoever.

43. SURRENDER OF LEASE NOT MERGER.

The voluntary or other surrender of this lease by Lessee, or a mutual cancellation thereof, shall not work a merger, and shall, at the option of City, terminate all or any existing subleases or subtenancies, or may, at the option of City, operate as an assignment to it of any and all such subleases or subtenancies.

44. INTEGRATED DOCUMENT; AMENDMENTS.

This Lease, including any exhibits attached hereto, embodies the entire agreement between City and Lessee and its terms and conditions. No other understanding, agreements, conversations or otherwise, with any officer, agent or employee of City prior to execution of this Lease shall affect or modify any of the terms or obligations contained in any documents comprising this Lease. Any such verbal agreement shall be considered as unofficial information and in no way binding upon City. This Lease may be modified only by a written amendment duly executed by the Parties to this Lease, pursuant to Section 37 entitled “Amendments.” All agreements with City are subject to approval of the City Council before City shall be bound thereby.

45. WAIVER.

Waiver by City of one or more conditions of performance or any breach or condition under this Lease shall not be construed as a waiver(s) of any other condition of performance or subsequent breaches or conditions. The subsequent acceptance by a Party of the performance of any obligation or duty by another Party shall not be deemed to be a waiver of any term or condition of this Lease. The exercise of any remedy, right, option or privilege hereunder by City shall not preclude City from exercising the same or any and all other remedies, rights, options and privileges hereunder and City’s failure to exercise any remedy, right, option or privilege at law or equity, or otherwise which City may have, shall not be construed as a waiver.

46. INTERPRETATIONS.

In construing or interpreting this Lease, the word “or” shall not be construed as exclusive and the word “including” shall not be limiting. The Parties agree that this Lease shall be fairly interpreted in accordance with its terms without any strict construction in favor of or against any other Party.

47. SEVERABILITY CLAUSE.

If any provision of this Lease is held to be illegal, invalid or unenforceable in full or in part, for any reason, then such provision shall be modified to the minimum extent necessary to make the provision legal, valid and enforceable, and the other provisions of this Lease shall not be affected thereby.

48. GOVERNING LAW.

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This Lease shall be governed and construed in accordance with the statutes and laws of the State of California.

49. VENUE.

In the event that suit shall be brought by any Party to this Lease, the Parties agree that venue shall be exclusively vested in the state courts of the County of Santa Clara.

50. COMPLIANCE WITH LAWS.

Lessee shall not use the Premises or permit anything to be done in or about the Premises which will in any way conflict with any law, statute, zoning restriction, ordinance or governmental law or rule, regulation, or requirement, including any Hazardous Materials laws or regulations, of any duly constituted public authorities now in force or which may hereafter be enacted or promulgated, or which will subject City to any liability for injury to any person or property by reason of any business operation being conducted in or about the Premises. To the extent required due to Lessee’s specific use of the Premises, alterations of the Premises made by Lessee, or as a result of Lessee’s application for permits or authorizations, Lessee shall, at its sole cost and expense, promptly comply with all applicable laws, statutes and ordinances, governmental rules, regulations, orders, permits, licenses, approvals, authorizations, federal and state disability laws, and other requirements including the Americans with Disabilities Act (“ADA”) of 1990 (42 U.S.C. 12101 et seq.), together with any amendment thereto or regulations promulgated under any of the foregoing, and any state or local ordinances or codes enacted pursuant thereto, and with all requirements of any board or fire insurance underwriters or other similar bodies, now or hereafter constituted, relating to or affecting the condition, use, or occupancy of the Premises by Lessee, any improvements or alterations made by, on behalf of, or for Lessee, or any other Lessee acts or omissions. The final judgment of any court of competent jurisdiction or the admission of Lessee in any action against Lessee, whether City be a party thereto or not, that Lessee has violated any laws shall be conclusive of that fact as between City and Lessee. Lessee, within ten (10) days after receipt, shall provide City with copies of any notices it receives regarding a material violation or alleged material violation of any Laws.

Lessee shall also cause its agents, contractors, subcontractors, employees, customers, and subtenants to comply with all applicable laws.

51. COUNTERPARTS; ELECTRONIC SIGNATURES.

This Lease may be executed in counterparts, each of which shall be deemed to be an original, but both of which shall constitute one and the same instrument; and, the Parties agree that signatures on this Lease, including those transmitted electronically by email or facsimile, shall be sufficient to bind the Parties.

52. ACCESSIBILITY; DISABILITY LAWS.

52.1 The Premises have not undergone an inspection by a Certified Access Specialist.

52.2 “A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or Docusign Envelope ID: 7750EB29-A3B4-4C4E-BF86-16E8C4C60A09

Lease Agreement/ IN SOOK YUM, DBA TOP USA CO. Page 26 of 27 Rev.: 06-10-2025
tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises.”

52.3 Since compliance with the ADA and other federal and state disability laws (collectively, “Disability Laws”) is dependent upon Lessee’s specific use of the Premises, City makes no warranty or representation as to whether or not the Premises comply with Disability Laws. In the event that Lessee’s use of the Premises requires modifications or additions to the Premises in order to be in compliance with Disability Laws, Lessee agrees to make any such necessary modifications and/or additions at Lessee’s sole cost and expense.

53. OFAC COMPLIANCE.

Lessee represents and warrants to City that Lessee is not a party with whom City is prohibited from doing business pursuant to the regulations of the Office of Foreign Assets Control (“OFAC”) of the U.S. Department of the Treasury, including those parties named on OFAC’s Specially Designated Nationals and Blocked Persons List. Lessee is currently in compliance with, and shall at all times during the term of this Lease remain in compliance with, the regulations of OFAC and any other governmental requirement relating thereto. In the event of any violation of this section, City shall be entitled to immediately terminate this Lease and take such other actions as are permitted or required to be taken under law or in equity. LESSEE

SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS CITY FROM AND AGAINST

ANY AND ALL CLAIMS, DAMAGES, LOSSES, RISKS, LIABILITIES AND EXPENSES (INCLUDING ATTORNEYS' FEES AND COSTS) INCURRED BY CITY ARISING FROM OR RELATED TO ANY BREACH OF THE FOREGOING CERTIFICATIONS. These indemnity obligations shall survive the expiration or earlier termination of this Lease.

54. NO BROKERAGE.

City is represented in this transaction by SELF (“City’s Agent”). Brokerage fees, commissions or other payments owed to City’s Agent, if any, in connection with this Lease transaction shall be paid by City per the terms of a separate agreement between City and City’s Agent. Lessee represents and warrants to City that Lessee is represented in this transaction by SELF (“Lessee’s Agent”). Fees, if any, payable to Lessee’s Agent, if applicable, shall be paid pursuant to separate agreement(s) between City’s Agent and Lessee’s Agent or between Lessee and Lessee’s Agent.

Lessee shall indemnify and defend City from and against any claims made by Lessee’s Agent or any other person or entity purporting to represent Lessee in this transaction for any finder’s fee, brokerage fee, commission or other payment claiming through Lessee or its affiliates with respect to the execution of this Lease or the consummation of the transaction contemplated hereby.
[Remainder of page intentionally left blank]
[Signatures on next page]
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Lease Agreement/ IN SOOK YUM, DBA TOP USA CO. Page 27 of 27 Rev.: 06-10-2025
CITY OF WATSONVILLE, CALIFORNIA, a chartered California municipal corporation
Dated: ________________________
ATTEST:

By
By:

Irwin Ortiz
City Clerk
APPROVED AS TO FORM:

By________________________________
Samantha W. Zutler
City Attorney
Tamara Vides
City Manager
“CITY”
IN SOOK YUM, AN INDIVIDUAL, DBA TOP USA CO., INC.

Dated: ___________________________________
By: _________________ __________________
Name: _______________ In Sook Yum _________
Title: _____________President________________
Local Address: 27 West Beach Street, Watsonville CA. 95076 Email Address: [email protected]________________
Telephone: _________831-419-6135________________
“LESSEE”
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Lease Agreement/ IN SOOK YUM, DBA TOP USA CO. Exhibit A Page 1 of 1 Rev.: 06-10-2025

COMMERCIAL PROPERTY LEASE AGREEMENT

BY AND BETWEEN

CITY OF WATSONVILLE, CALIFORNIA
AND
IN SOOK YUM, DBA TOP USA CO.

EXHIBIT A

DESCRIPTION/SITE PLAN OF PREMISES, BUILDING

AND PROJECT INCLUDING PARKING LOT
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Lease Agreement/ IN SOOK YUM, DBA TOP USA CO. Exhibit B Page 1 of 1 Rev.: 06-10-2025

COMMERCIAL PROPERTY LEASE AGREEMENT

BY AND BETWEEN

CITY OF WATSONVILLE, CALIFORNIA
AND
IN SOOK YUM, DBA TOP USA CO.

EXHIBIT B

INVENTORY OF FIXTURES
The premises in being delivered unfurnished in a “warm vanilla shell”.

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Lease Agreement/ IN SOOK YUM, DBA TOP USA CO. Exhibit C Page 1 of 2 Rev.: 06-10-2025

COMMERCIAL PROPERTY LEASE AGREEMENT

BY AND BETWEEN

CITY OF WATSONVILLE, CALIFORNIA
AND
IN SOOK YUM, DBA TOP USA CO.

EXHIBIT C

INSURANCE REQUIREMENTS
Lessee shall procure and maintain for the duration of the contract insurance against claims for injuries to persons or damages to property which may arise from or in connection with the Lessee’s operation and use of the leased premises. The cost of such insurance shall be borne by the Lessee.

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

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

2. Workers’ Compensation Insurance as required by the State of California, with Statutory Limits, and Employer’s Liability Insurance with limits of no less than $1,000,000 per accident for bodily injury or disease. (This applies to lessees with employees).

3. Property insurance against all risks of loss to any tenant improvements or betterments, at full replacement cost with no coinsurance penalty provision.

If the Lessee maintains broader coverage and/or higher limits than the minimums shown above, the City requires and shall be entitled to the broader coverage and/or the higher limits maintained by the Lessee. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City.

B. OTHER INSURANCE PROVISIONS:

The insurance policies are to contain, or be endorsed to contain, the following provisions:

1. Additional Insured Status: The City, its officers, officials, employees, and volunteers are to be covered as additional insureds on the CGL policy with respect to liability arising out of work or operations performed by or on behalf of the Lessee including materials, parts, or equipment furnished in connection with such work or operations. General liability coverage can Docusign Envelope ID: 7750EB29-A3B4-4C4E-BF86-16E8C4C60A09

Lease Agreement/ IN SOOK YUM, DBA TOP USA CO. Exhibit C Page 2 of 2 Rev.: 06-10-2025
be provided in the form of an endorsement to the Lessee’s insurance (at least as broad as ISO Form CG 20 10).

2. Primary Coverage: For any claims related to this contract, the Lessee’s insurance coverage shall be primary insurance coverage at least as broad as ISO CG 20 01 04 13 as respects the City, its officers, officials, employees, and volunteers. Any insurance or selfinsurance maintained by the City, its officers, officials, employees, or volunteers shall be excess of the Lessee’s insurance and shall not contribute with it.

3. Legal Liability Coverage: The property insurance is to be endorsed to include Legal Liability Coverage (ISO Form CP 00 40 04 02 or equivalent) with a limit equal to the replacement cost of the leased property.

4. Notice of Cancellation: Each insurance policy required above shall provide that coverage shall not be canceled, except with thirty (30) days’ prior written notice to the City.

5. Waiver of Subrogation: Lessee hereby grants to City a waiver of any right to subrogation which any insurer of said Lessee may acquire against the City by virtue of the payment of any loss under such insurance. Lessee agrees to obtain any endorsement that may be necessary to affect this waiver of subrogation, but this provision applies regardless of whether or not the City has received a waiver of subrogation endorsement from the insurer.

6. Acceptability of Insurers: Insurance is to be placed with insurers authorized to conduct business in the state with a current A.M. Best’s rating of no less than A: VII, unless otherwise acceptable to the City.

7. Self-Insured Retentions: Self-insured retentions must be declared to and approved by the City. The City may require the Lessee to purchase coverage with a lower retention or provide proof of ability to pay losses and related investigations, claim administration, and defense expenses within the retention. The policy language shall provide, or be endorsed to provide, that the self-insured retention may be satisfied by either the named insured or City.

8. Verification of Coverage: Lessee shall furnish the City with original Certificates of Insurance including all required amendatory endorsements (or copies of the applicable policy language effecting coverage required by this clause) and a copy of the Declarations and Endorsement Page of the CGL policy listing all policy endorsements to City before occupying the premises. However, failure to obtain the required documents prior to the work beginning shall not waive the Lessee’s obligation to provide them. The City reserves the right to require complete, certified copies of all required insurance policies, including endorsements, required by these specifications, at any time.

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

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1 CITY COUNCIL AGENDA REPORT
MEETING DATE: Tuesday, June 24, 2025
TO: CITY COUNCIL
WRITTEN BY: On-Call Traffic Engineer Rodriguez
RECOMMENDED BY: PUBLIC WORKS & UTILITIES DIRECTOR LINDBERG APPROVED BY: TAMARA VIDES, CITY MANAGER
SUBJECT: RESOLUTION TO ACCEPT GRANT FUNDS AND EXECUTE AND

NEGOTIATE AGREEMENT WITH THE FEDERAL HIGHWAY

ADMINISTRATION
RECOMMENDATION:

Adopt a resolution to do the following:

1. Accept Federal Highway Administration (FHWA) Safe Streets for All (SS4A) program grant funds in the amount of $320,000 for the preparation of transportation plans and studies;

2. Authorize the City Manager to negotiate and execute an agreement with the Federal Highway Administration and all necessary amendments in a form approved by the City Attorney, and appropriate such funds to the Special Grants Fund [0260].

BACKGROUND:

The Federal Highway Administration (FHWA) implemented a grant program in FY2022-23 known as the Safe Streets for All (SS4A) program. The program is intended to help government agencies develop analysis-based traffic projects and program recommendations to improve roadway safety for all travel modes. The SS4A program includes three grant types: 1) Safety Action Plan grants for the development of studies, 2) Implementation grants to build projects and implement programs developed in approved Safety Action Plans, and 3) Demonstration and planning grants to help provide demonstration projects during the development of Safety Action Plans.

The city submitted a grant proposal during Fall 2024 during the SS4A 3rd round of calls for projects. The city targeted the Safety Action Plan program to develop a focused traffic study that included the following elements:

2  Active Transportation Plan
 Local Road Safety Plan
 Citywide Plan Line Study
The city requested a grant in the amount of $320,000 with an $80,000 local match for a project total of $400,000.

DISCUSSION:

The SS4A program is currently the only federally approved roadway safety grant program funded in the current federal government budget. This fact highlights the priority of the SS4A program for the current administration. FHWA aims to have all government agencies across the union to develop Safety Action Plan studies using data-driven and community-based input methods. This is in part due to concerns that projects funded in the past that faced public criticism were not properly vetted during the planning phase.

FHWA has gone a step further in the current 4th cycle of the program that limits Implementation grants to projects that are in completed and approved Safety Action Plans. Watsonville is fortunate to have received a grant in last year’s 3rd cycle of the program. Staff plans to immediately release a Request for Proposals upon execution of the grant funding agreement with the FHWA so that the city can qualify for Implementation grants in 2026. The study will also qualify Watsonville for State of California and regional grant funding programs.

The Safety Action Plan will include three focused study efforts:
1) Active Transportation Plan
This will include an update of the Bicycle and Pedestrian Master Plans to consolidate and expand network recommendations to better link neighborhoods with public facilities including schools, shopping centers, and recreation facilities. The city will include development of new Safe Routes to School – Preferred Routes to School maps for all public schools that service the Watsonville community.
2) Local Road Safety Plan
This will include analyzing traffic volume and historical collision data to identify high-priority corridors and intersections. Mitigation projects and programs will be developed to improve infrastructure, reducing crashes and improving safety for vulnerable road users. 3) Citywide Plan Line Study
This effort will allow the city to develop conceptual plans (15%) demonstrating how mitigation measures will be implemented so that residents can better understand roadway changes if a project is implemented. When appropriate, the plan line drawings will be expanded to complete signage and striping plans that can be implemented in upcoming street resurfacing programs. This effort can also include the development of school-focused improvements such as enhanced crosswalks or implementation of All Way STOP controls, etc.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION:

3 Approval of the Grant Agreement is not a project pursuant to the California Environmental Quality Act (CEQA) because it can be seen with certainty based on substantial evidence in the record that the approval constitutes a government fiscal activity that does not involve any commitment to any specific project that may result in a potentially significant physical impact on the environment. (CEQA Guidelines section 15378(b)(4).

Further, the approval is an administrative activity that would not have the potential to either (1) cause a direct physical change in the environment or (2) cause a reasonably foreseeable indirect physical change in the environment due to preparation of the Active Transportation Plan, Local Road Safety Plan and Citywide Plan Line Study. Therefore, any CEQA analysis would be speculative at this time. Even if approval of the professional services agreement were to be considered a project under CEQA, it would be exempt pursuant to CEQA Guidelines Section 15061(b)(3). Approval of the agreement is an administrative action involving no physical change in the environment and does not enable or otherwise affect development.

Therefore, it can be seen with certainty that there is no possibility that the agreement approval may have a significant effect on the environment.

STRATEGIC PLAN:

Preparation of the Active Transportation Plan, Local Road Safety Plan, and Citywide Plan Line Study supports General and Strategic Plan strategies for:

Infrastructure & Environment
Public Safety
Community Engagement & Well-being
FINANCIAL IMPACT:

The Safety Action Plan project is estimated to cost approximately $400,000. The SS4A Program will provide a grant in the amount of $320,000 that is reimbursable as the project is developed. Grant funds will be appropriated to the [260] Special Grants Fund. A local match of $80,000 is required to supplement the grant. The City anticipates the $80,000 local match to come from existing Measure D funds.

ALTERNATIVE ACTION:

No reasonable alternatives are known at this time.

ATTACHMENTS AND/OR REFERENCES (IF ANY):

1. DRAFT FHWA SS4A Funding Agreement

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1. Federal Award No. 2. Effective Date
See No. 16 Below

3. Assistance
Listings No.

20.939

4. Award To
City of Watsonville
250 Main St
Watsonville, CA 95076
Unique Entity Id.: KM1BKS1MGU5
TIN No.: 94-6000451

5. Sponsoring Office
U.S. Department of Transportation
Federal Highway Administration
Office of Safety
1200 New Jersey Avenue, SE
HSSA-1, Mail Drop E71-117
Washington, DC 20590

6. Period of Performance
Effective Date of Award – 12/31/202954 months

7. Total Amount
Federal Share:

Recipient Share:

Other Federal Funds:

Other Funds:

Total:
$320,000
$80,000
$0
$0
$400,000

8. Type of Agreement
Grant

9. Authority
Section 24112 of the Infrastructure Investment
and Jobs Act (IIJA, Pub. L. 117–58, November
15, 2021)

10. Procurement Request No.

HSA250503PR[insert PR Number]

11. Federal Funds Obligated
$320,000

12. Submit Payment Requests To
See Article 5.

14. Description of the Project
Development of Safety Action Plan for the City of Watsonville, CA.

Includes Active Transportation Plan and Local Road Safety Plan.

13. Accounting and Appropriations Data
[insert Data]

RECIPIENT

15. Signature of Person Authorized to Sign
___________________________________
Signature Date
Name: Courtney Lindberg
Title: Public Works and Utilities Director

FEDERAL HIGHWAY ADMINISTRATION

16. Signature of Agreement Officer
______________________________________
Signature Date
Name: Veronica Jacobson
Title: Agreement Officer
Attachment 1

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U.S. DEPARTMENT OF TRANSPORTATION

GRANT AGREEMENT UNDER THE
FISCAL YEAR 2024 SAFE STREETS AND ROADS FOR ALL GRANT PROGRAM This agreement is between the United States Department of Transportation’s (the “USDOT”) Federal Highway Administration (the “FHWA”) and the City of Watsonville, CA (the “Recipient”).

This agreement reflects the selection of the Recipient to receive a Safe Streets and Roads for All (“SS4A”) Grant for the development of a Safety Action Plan that includes Active Transportation Plan and Local Road Safety Plan elements.

The parties therefore agree to the following:

ARTICLE 1

GENERAL TERMS AND CONDITIONS

1.1 General Terms and Conditions.
(a) In this agreement, “General Terms and Conditions” means the content of the document titled “General Terms and Conditions Under the Fiscal Year 2024 Safe Streets and Roads for All (“SS4A”) Grant Program,” dated March 17, 2025, which is available at https://www.transportation.gov/grants/ss4a/grantagreements under “Fiscal Year 2024.” Articles 7–33 are in the General Terms and Conditions. The General Terms and Conditions are part of this agreement. (b) The Recipient acknowledges that it has knowledge of the General Terms and Conditions. Recipient also states that it is required to comply with all applicable Federal laws and regulations including, but not limited to, the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR part 200); National Environmental Policy Act (NEPA) (42 U.S.C. § 4321 et seq.); and Build America, Buy America Act (IIJA, div. G §§ 70901-27). (c) The Recipient acknowledges that the General Terms and Conditions impose obligations on the Recipient and that the Recipient’s non-compliance with the General Terms and Conditions may result in remedial action, termination of the SS4A Grant, disallowing costs incurred for the Project, requiring the Recipient to refund to the FHWA the SS4A Grant, and reporting the non-compliance in the Federal-governmentwide integrity and performance system.

Attachment 1

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ARTICLE 2

APPLICATION, PROJECT, AND AWARD

2.1 Application.

Application Title: FY24 Safe Streets and Road for All
Application Date: 8-29-2024

2.2 Award Amount.

SS4A Grant Amount: $320,000

2.3 Federal Obligation Information.

Alternative #1: The city plans to pursue Alternative 1 for the obligation of SS4A grant funding.

Federal Obligation Type: Single

2.4 Budget Period.

Alternative #1: All funds are being obligated at once.

Budget Period: See Block 6 of Page 1

2.5 Grant Designation.

Designation: Planning and Demonstration
ARTICLE 3

SUMMARY PROJECT INFORMATION

3.1 Summary of Project’s Statement of Work.

Planning and Demonstration Narrative:

The FY24 Safe Streets and Roads for All project for the City of Watsonville, CA will develop a Safety Action Plan for the City with focused Active Transportation Plan and Local Road Safety Plan elements.

The project will be completed in one phase.

Base Phase: Pre-NEPA: This is a Planning grant for development of a Safety Action Plan, no NEPA requirements are planned.

Option Phase 1: Final Design, Right-of-Way, and Utility Relocation: Not Applicable Option Phase 2: Construction: Not Applicable
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3.2 Project’s Estimated Schedule.

Action Plan Schedule
Milestone Schedule Date
Planned Final Plan Publicly Available
Date:
11/31/2029
Planned SS4A Final Report Date: 12/31/2029
Project’s Estimated Costs.
(a) Eligible Project Costs
Eligible Project Costs
SS4A Grant Amount: $320,000
Other Federal Funds: $0
State Funds: $0
Local Funds: $80,000
In-Kind Match: $0
Other Funds: $0
Total Eligible Project Cost: $400,000
(b) Cost Classification Table – For Planning and Demonstration Grants with demonstration activities and Implementation Grants Only
Not Applicable
(c) Indirect Costs
Indirect costs are allowable under this Agreement in accordance with 2 CFR part 200 and the Recipient’s approved Budget Application. In the event the Recipient’s indirect cost rate changes, the Recipient will notify FHWA of the planned adjustment and provide supporting documentation for such adjustment. This Indirect Cost provision does not operate to waive the limitations on Federal funding provided in this document. The Recipient’s indirect costs are allowable only insofar as they do not cause the Recipient to exceed the total obligated funding. Attachment 1

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ARTICLE 4

CONTACT INFORMATION

4.1 Recipient Contact(s).

Courtney Lindberg
Public Works and Utilities Director
City of Watsonville
250 Main Street
M: (805) 320-0944
[email protected]

4.2 Recipient Key Personnel.

Name Title or Position
Murray Fontes Watsonville, Asst. Director
Jaime O. Rodriguez Consultant – Transportation Division

4.3 USDOT Project Contact(s).

Safe Streets and Roads for All Program Manager
Federal Highway Administration
Office of Safety
HSSA-1, Mail Stop: E71-117
1200 New Jersey Avenue, S.E.

Washington, DC 20590
202-366-2822
[email protected]
and
Agreement Officer (AO)
Federal Highway Administration
Office of Acquisition and Grants Management
HCFA-42, Mail Stop E62-310
1200 New Jersey Avenue, S.E.

Washington, DC 20590
202-493-2402
[email protected]
and
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Division Administrator – California
Agreement Officer’s Representative (AOR)
650 Capitol Mall
Sacramento, CA 95814
916-498-5015
[email protected]
and
Mike Shami
California Division Office Lead Point of Contact
Discretionary Grants Manager
650 Capitol Mall
Sacramento, CA 95814
M: (916) 498-5853
[email protected]
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ARTICLE 5

USDOT ADMINISTRATIVE INFORMATION

5.1 Office for Subaward and Contract Authorization.

USDOT Office for Subaward and Contract Authorization: FHWA Office of Acquisition and Grants Management

SUBAWARDS AND CONTRACTS APPROVAL
Note: See 2 CFR § 200.331, Subrecipient and contractor determinations, for definitions of subrecipient (who is awarded a subaward) versus contractor (who is awarded a contract).

Note: Recipients with a procurement system deemed approved and accepted by the Government or by the Agreement Officer (the “AO”) are exempt from the requirements of this clause. See 2 CFR 200.317 through 200.327.

In accordance with 2 CFR 200.308(f)(6), the recipient or subrecipient shall obtain prior written approval from the USDOT agreement officer for the subaward, if the subaward activities were not proposed in the application or approved in the Federal award. This provision is in accordance with 2 CFR 200.308 (f) (6) and does not apply to procurement transactions for goods and services. Approval will be issued through written notification from the AO or a formal amendment to the Agreement.

The following subawards and contracts are currently approved under the Agreement by the AO. This list does not include supplies, material, equipment, or general support services which are exempt from the pre-approval requirements of this clause.

5.2 Reimbursement Requests
(a) The Recipient may request reimbursement of costs incurred within the budget period of this agreement if those costs do not exceed the amount of funds obligated and are allowable under the applicable cost provisions of 2 C.F.R. Part 200, Subpart E. The Recipient shall not request reimbursement more frequently than monthly.
(b) The Recipient shall use the DELPHI iSupplier System to submit requests for reimbursement to the payment office. When requesting reimbursement of costs incurred or credit for cost share incurred, the Recipient shall electronically submit supporting cost detail with the SF-270 (Request for Advance or Reimbursement) or SF-271 (Outlay Report and Request for Reimbursement for Construction Programs) to clearly document all costs incurred. (c) The Recipient’s supporting cost detail shall include a detailed breakout of all costs incurred, including direct labor, indirect costs, other direct costs, travel, etc., and the Recipient shall identify the Federal share and the Recipient’s share of costs. If the Recipient does not provide sufficient detail in a request for reimbursement, the Agreement Officer’s Representative (the “AOR”) may withhold processing that request until the Recipient provides sufficient detail. (d) The USDOT shall not reimburse costs unless the AOR reviews and approves the costs to ensure that progress on this agreement is sufficient to substantiate payment.

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(e) In the rare instance the Recipient is unable to receive electronic funds transfers (EFT), payment by EFT would impose a hardship on the Recipient because of their inability to manage an account at a financial institution, and/or the Recipient is unable to use the DELPHI iSupplier System to submit their requests for disbursement, the FHWA may waive the requirement that the Recipient use the DELPHI iSupplier System. The Recipient shall contact the Division Office Lead Point of Contact for instructions on and requirements related to pursuing a waiver. (f) The requirements set forth in these terms and conditions supersede previous financial invoicing requirements for Recipients.

ARTICLE 6

SPECIAL GRANT TERMS

6.1 SS4A funds must be expended within five years after the grant agreement is executed and DOT obligates the funds, which is the budget period end date in section 10.3 of the Terms and Conditions and section 2.4 in this agreement.

6.2 The Recipient demonstrates compliance with civil rights obligations and nondiscrimination laws, including Titles VI of the Civil Rights Act of 1964, the Americans with Disabilities Act (ADA), and Section 504 of the Rehabilitation Act, and accompanying regulations. Recipients of Federal transportation funding will also be required to comply fully with regulations and guidance for the ADA, Title VI of the Civil Rights Act of 1964, Section 504 of the Rehabilitation Act of 1973, and all other civil rights requirements.

6.3 SS4A Funds will be allocated to the Recipient and made available to the Recipient in accordance with FHWA procedures.

6.4 The Recipient of a Planning and Demonstration Grant acknowledges that the Action Plan will be made publicly available and agrees that it will publish the final Action Plan on a publicly available website.

6.5 The Recipient of a Planning and Demonstration Grant that involves a demonstration activity agrees to provide an assessment of each demonstration activity and update the existing Action Plan, which will incorporate the information gathered in the Action Plan’s list of projects or strategies and/or inform another part of the existing Action Plan. The Recipient also agrees that demonstration activities are temporary in nature and must be removed and/or ended following the conclusion of the project if the assessment of the demonstration activities does not affirm that the activities provide safety benefits.

6.6 There are no other special grant requirements.

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ATTACHMENT A

PERFORMANCE MEASUREMENT INFORMATION
Study Area: Entire City Limits of the City of Watsonville, CA Baseline Measurement Date: 10-31-2025
Baseline Report Date: 12-31-2025
Table 1: Performance Measure Table
Measure Category and Description
Measurement
Frequency and
Reporting
Deadline
Costs Project Costs: Quantification of the cost
of each eligible project carried out using
the grant
Within 120 days
after the end of the
period of
performance
Lessons Learned and
Recommendations
Lessons Learned and Recommendations:

Description of lessons learned and any
recommendations relating to future
projects or strategies to prevent death and
serious injury on roads and streets.

Within 120 days
after the end of the
period of
performance
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ATTACHMENT B

CHANGES FROM APPLICATION
Describe all material differences between the scope, schedule, and budget described in the application and the scope, schedule, and budget described in Article 3. The purpose of Attachment B is to clearly and accurately document any differences in scope, schedule, and budget to establish the parties’ knowledge and acceptance of those differences. See Article 11 for the Statement of Work, Schedule, and Budget Changes. If there are no changes, please insert “N/A” after “Scope,” “Schedule,” or “Budget.” If there are changes to the budget, please complete the table below. Otherwise, leave the table below blank.

Not Applicable
Scope: N/A
Schedule:

Budget:

The table below provides a summary comparison of the project budget.

Fund Source
Application Section 3.3
$ % $ %
Previously Incurred Costs
(Non-Eligible Project Costs)
Federal Funds
Non-Federal Funds
Total Previously Incurred Costs
Future Eligible Project Costs
SS4AFunds
Other Federal Funds
Non-Federal Funds
Total Future Eligible Project
Costs
Total Project Costs
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ATTACHMENT C
[RESERVED]
Attachment 1

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ATTACHMENT D
[RESERVED]
Attachment 1

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ATTACHMENT E

LABOR AND WORK

1. Efforts to Support Good-Paying Jobs and Strong Labor Standards The Recipient states that rows marked with “X” in the following table are accurate:

X
The Recipient or a project partner promotes robust job creation by supporting good-paying jobs directly related to the project with free and fair choice to join a union. (Describe robust job creation and identify the good-paying jobs in the supporting narrative below.)
The Recipient or a project partner will invest in high-quality workforce training programs such as registered apprenticeship programs to recruit, train, and retain skilled workers, and implement policies such as targeted hiring preferences. (Describe the training programs in the supporting narrative below.) The Recipient or a project partner will partner with high-quality workforce development programs with supportive services to help train, place, and retain workers in good-paying jobs or registered apprenticeships including through the use of local and economic hiring preferences, linkage agreements with workforce programs, and proactive plans to prevent harassment. (Describe the supportive services provided to trainees and employees, preferences, and policies in the supporting narrative below.)
The Recipient or a project partner will partner and engage with local unions or other worker-based organizations in the development and lifecycle of the project, including through evidence of project labor agreements and/or community benefit agreements. (Describe the partnership or engagement with unions and/or other worker-based organizations and agreements in the supporting narrative below.)
The Recipient or a project partner will partner with communities or community groups to develop workforce strategies. (Describe the partnership and workforce strategies in the supporting narrative below.) The Recipient or a project partner has taken other actions related to the Project to create good-paying jobs with the free and fair choice to join a union and incorporate strong labor standards. (Describe those actions in the supporting narrative below.)
The Recipient or a project partner has not yet taken actions related to the Project to create good-paying jobs with the free and fair choice to join a union and incorporate strong labor standards but, before beginning construction of the Project, will take relevant actions described in Attachment B. (Identify the relevant actions from Attachment B in the supporting narrative below.) The Recipient or a project partner has not taken actions related to the Project to improve good-paying jobs and strong labor standards and will not take those actions under this award.

2. Supporting Narrative.

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This Planning project anticipates the use of professional consultant services; no construction activities are planned.

ATTACHMENT F

CRITICAL SECURITY INFRASTRUCTURE AND RESILIENCE

1. Efforts to strengthen the Security and Resilience of Critical Infrastructure against both Physical and Cyber Threats.

The Recipient states that rows marked with “X” in the following table are accurate:

The Recipient demonstrates, prior to the signing of this agreement, effort to consider and address physical and cyber security risks relevant to the transportation mode and type and scale of the activities.

The Recipient appropriately considered and addressed physical and cyber security and resilience in the planning, design and oversight of the project, as determined by the Department and the Department of Homeland Security.

The Recipient complies with 2 CFR 200.216 and the prohibition on certain telecommunications and video surveillance services or equipment.

2. Supporting Narrative.

N/A. The grant does not include purchase of Information Technology and/or Operational Technology.

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ATTACHMENT G
[RESERVED]
Attachment 1

Reso No. ______ (CM)
Meeting Date: 062425 SWZ ______ TV ______ PWU ______
1 RESOLUTION NO.__________ (CM)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

WATSONVILLE ACCEPTING FEDERAL HIGHWAY ADMINISTRATION

SAFE ROUTES FOR ALL GRANT FUNDING, IN THE AMOUNT OF
$320,000 FOR PREPARATION OF TRANSPORTATION PLANS AND

STUDIES, AND AUTHORIZING THE CITY MANAGER TO NEGOTIATE

AND EXECUTE AN AGREEMENT WITH THE FEDERAL HIGHWAY

ADMINISTRATION AND ALL NECESSARY AMENDMENTS IN A FORM
APPROVED BY THE CITY ATTORNEY; AND APPROPRIATE SUCH
FUNDS TO THE SPECIAL GRANTS FUND [260]
WHEREAS, the City of Watsonville submitted a grant proposal to the Federal Highway Administrations (FHWA) Safe Streets for All program and received a grant in the amount of $320,000 for development of an Active Transportation Plan, a Local Road Safety Plan and a Citywide Plan Line Study.

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

1. Approval of the Grant Agreement is not a project pursuant to the California Environmental Quality Act (CEQA) because it can be seen with certainty based on substantial evidence in the record that the approval constitutes a government fiscal activity that does not involve any commitment to any specific project that may result in a potentially significant physical impact on the environment. (CEQA Guidelines section 15378(b)(4).

Further, the approval is an administrative activity that would not have the potential to either (1) cause a direct physical change in the environment or (2) cause a reasonably foreseeable indirect physical change in the environment due to preparation of the Active Transportation Plan, Local Road Safety Plan and Citywide Plan Line Study. Therefore, any CEQA analysis would be speculative at this time. Even if approval of the agreement

Reso No. (CM)
Meeting Date: 062425 2
were to be considered a project under CEQA, it would be exempt pursuant to CEQA Guidelines Section 15061(b)(3). Approval of the agreement is an administrative action involving no physical change in the environment and does not enable or otherwise affect development. Therefore, it can be seen with certainty that there is no possibility that the agreement approval may have a significant effect on the environment.

2. That the Council hereby accepts the FHWA Safe Street for All grant funds, in the amount of $320,000 for preparation of transportation plans and studies.

3. That the City Manager is hereby authorized to negotiate and execute an agreement with the FHWA.

4. The City Manager is hereby authorized and directed to negotiate and execute on behalf of the City of Watsonville all necessary amendments in a form approved by the City Attorney.

5. That the $320,000 in grant funds is hereby appropriated to the Special Grants Fund [0260] to a new project created by the Finance Department. ************************************

City Manager
Report
June 24, 2025

Spirit of
Watsonville Parade
Date: Friday, July 4.

Time: 12:30 PM.

The parade route will begin at the corner of Freedom
Boulevard and Main Street and continue down Main
Street, ending at the crossroads of First and Rodriguez Streets.

Sponsored by:

Driscoll’s & the Santa Cruz Beach Boardwalk

Fireworks
Report Illegal fireworks to
(831) 471-1151

Elections
Workshop
Watsonville Public Library
July 2, 2025
5:00 pm
The workshop will discuss how elections are
administered, the types of accessibility services
provided, and how information reaches voters. Hosted
by Santa Cruz County Clerk

Green Valley Rd.

Phase 3 of the project will be completed by
Wednesday, June 25th.

The final layer of 2 inches of asphalt will be
applied overnight on June 30th and July 1st
between 7:00pm and 5am.

Mountain
Lion
For those who live near the area, please:
• Bring pets indoors, especially at night
• Keep a close eye on young children when outside
• If you see a mountain lion, do not approach
and call 9-1-1 immediately
If you encounter a mountain lion:
• Do not run
• Do not stare into its eyes
• Spread your arms wide to appear bigger to the lion
• Make loud noises

Watsonville
Academy
Apply now for the 2025 Watsonville Academy!
This free nine-week program gives Watsonville residents and business owners a behind-the-scenes look at City
operations.

Sessions are held every other Thursday,
July 24 – Nov. 13 from 6 to 8pm.

Apply by July 11 at Watsonville.gov

National
Night Out
Join us on Tuesday, August 5, as neighborhoods
across Watsonville, come together to celebrate
National Night Out.

Here in Watsonville, residents are invited to host their own block parties, BBQs, or neighborhood get-togethers.

Local organizations and nonprofits can also get involved by setting up a table at the official City-sponsored site, where families can enjoy games, giveaways, and more.

Those interested in participating must register by July 15 using this link: https://bit.ly/4n7bgJR

Callaghan
Pickleball
Court Opening
These exciting improvements were made possible by
Measure R and Measure Y, continuing to bring safer,
more vibrant parks to Watsonville.

Link to Video: VIDEO

Watsonville
High Pool
Officially Open
for the Summer

DATES LOCATION
June 17 - August 10 250 E. Beach Street
HOURS
Monday- Friday 1:15PM - 2:55PM
Saturdays 12PM - 2PM
COST
$5 daily drop-in $42 individual summer pass
$77 family summer pass
For additional questions, call Parks and Community Services Department at 831-768-3240. Page 424 of 682
Homelessness
Action Plan
Currently in draft mode – anticipated to be
presented to the Council in August 2025

Thank you
watsonville.gov Page 426 of 682
1 CITY COUNCIL AGENDA REPORT
MEETING DATE: Tuesday, June 24, 2025
TO: CITY COUNCIL
RECOMMENDED BY: DEPUTY CITY MANAGER CALUBAQUIB
APPROVED BY: TAMARA VIDES, CITY MANAGER
SUBJECT: ORDINANCES AMENDING TITLE 5, CHAPTER 12 AND TITLE 10 OF THE

WATSONVILLE MUNICIPAL CODE
RECOMMENDATION:

That the City Council:

1. Adopt an Ordinance amending Title 5, Chapter 12 of the Watsonville Municipal Code, and

2. Adopt an Ordinance amending Title 10 of the Watsonville Municipal Code BACKGROUND:

Title 5 of the Watsonville Municipal Code addresses “Public Welfare, Morals and Conduct.” Chapter 12 of this title addresses “Parades” and was last revised in 1976. Staff recommends amending this Chapter in its entirety in order to:
 Establish regulations for all events on public property, inclusive of parades and also including, but not limited to, concerts, circuses, fairs, festivals, block parties, street fairs, community events, on the water activities (such as boat races) with spectators on public land, mass participation sports (such as marathons and other running events), athletic or sporting events, and community celebrations and observances.
 Establish permitting provisions intended to protect the Constitutional rights of the people of the City of Watsonville to assemble and speak on public property.

Title 10 of the Watsonville Municipal Code addresses “Public Parks, Playgrounds and Recreation Facilities.” Chapters of this Title currently consist of:

1. Rules and Regulations Relating to Boating, Use, and Conduct in the Pinto Lake Recreation Area and Providing Fees Therefor – Last revised in 1988

2. Park Rules and Regulations – Last revised in 1980

3. Skateparks in City Parks – Last revised in 2012

2 Staff recommend amending this Title in order to:
 Update regulations for park use to meet current community needs.  Expand regulations to include use and conduct at all City parks, public facilities, and parking lots.  Establish permitting provisions intended to protect the Constitutional rights of the people of the City of Watsonville to assemble and speak on public property.

DISCUSSION:

The first proposed Ordinance amends Title 5, Chapter 12, Parades, -to comprise a new Title 5, Chapter 12, Events on Public Property. The second proposed Ordinance amends Title 10, Public Parks, Playgrounds and Recreation Facilities to comprise a new Title 10, Public Parks, Public Facilities and Parking Facilities, including Chapter 1, Activities in City Parks, Public Facilities, and Public Parking Facilities, and Chapter 2, City Skate Park and Bicycle Pump Track Facilities.

Special Events (Proposed Title 5, Chapter 12 – Events on Public Property) Currently, Chapter 12, Title 5 relates only to parades on City property. The proposed Ordinance intends to more comprehensively address events on City property, while protecting the Constitutional rights of the people to peaceably assemble and protest in the City’s public spaces. The proposed revisions to the Municipal Code also create a mechanism for cost recovery and use charges to the extent authorized by law and while not unduly impacting the viability of special events in the City.

The proposed revision to Chapter 12 of Title 5 of the Watsonville Municipal Code establishes a permitting system for special events in the City and creates three categories of special events on public property that would require a permit:

1. Any assembly of more than 250 persons gathering for a common purpose under the direction or control of a person;

2. Any assembly of people requiring closure of a City street without regard to the number of attendees; or

3. Any other assembly of people that will require the use of City public services for police regulation, monitoring or control, erecting barriers, or traffic control, parking needs that will exceed the capacity of the venue, or that will significantly interfere with the normal use and operation of the public right-of-way for travel.

The following events/activities would not require permits under the proposed Chapter 5-12:

1. Constitutionally protected expressive activity on City owned, controlled, or maintained property that does not meet one of the three criteria above;

2. Activities on school grounds;

3. Spontaneous events occasioned by breaking news, under certain conditions;

4. Activities conducted by a governmental agency acting within the scope of its authority. (Proposed Ordinance § 5-12.020.)
The proposed Ordinance defines expressive activity as “conduct, the sole or principal object of which is the expression of opinion, views, or ideas protected by the First Amendment of the U.S. Constitution,” and includes, but is not limited to “public oratory and distribution of literature” (Proposed Ordinance § 5-12.010(i).)
The City Manager (or his/her designee) would issue Special Event Permit applications. The proposed Ordinance provides that the Council may set Special Event Application fees and fees to recover costs for

3 safety services (such as public safety personnel, solid waste and recycling services, and traffic control costs) by resolution. These fees are currently adopted annually.

Use of Parks and Public Facilities (Proposed Title 10 Chapter 1 - Activities In City Parks, Public Facilities, And Public Parking Facilities)
Currently, Title 10 contains three Chapters regarding the use of City parks. The proposed Ordinance amends the entirety of Title 10, to comprise a new Title 10, Chapter 1, regarding the use of City Parks, Public Facilities and Public Parking Facilities and a new Title 10, Chapter 2, governing the use of the City’s skateparks and bicycle pump tracks.

The proposed Title 10-1 establishes rules and regulations regarding the use of City facilities, buildings, and parks. The proposed Ordinance sets forth prohibited activities in City Parks (Proposed §§ 10-1.050 and 10-1.060), prohibited activities in City Buildings (§ 10-1.050 and 10-1.070), and prohibited activities in public parking facilities (§ 10-1.050 and 10-1.080.) In addition to these general use regulations, the proposed Ordinance also establishes a permitting requirement for the use of City parks or facilities.

These provisions seek to ensure compliance with Constitutional prerogatives protecting freedom of speech and assembly.

Under these proposed revisions, organizers of the following events or activities will be required to obtain a permit from the City Manager (or his/her designee):
 Gatherings or events of 75 or more people in the City Plaza, Pinto Lake Park, Franich Park, or Ramsay Park;
o Events of more than 250 individuals will be subject to the Special Event provisions, discussed above.
 Gatherings or events in any City park or public building which will require paid admission, to the exclusion of the general public, without regard to the number of attendees;  Gatherings or events at City parks or public facilities beyond the operational hours of the park or facility;
 Camping permits, issued pursuant to Chapter 5-36 of the Municipal Code.  Use of temporary structures or buildings, including the use of bounce houses in City Parks or public facilities;
 Use of fireworks in City Parks or public facilities; or  Use of chemical toilets in City parks in City Parks or public facilities.

However, if the event requiring exclusive use of one of the named parks above would be considered “expressive activity,” it would instead be subject to the Special Events permitting requirements discussed above. Similar to the proposed Special Events Chapter above, the City Council may also adopt a resolution establishing fees for the use of Parks or Public Facilities. (Proposed Ordinance § 10-1.160.) Skate Parks (Proposed Title 10, Chapter 2 – City Skae Park and Bicycle Pump Track Facilities) The proposed Title 10-2 establishes rules, regulations, and permitting regulations for the use or rental of City Skate Parks and Bicycle Pump Tracks.

The proposed Ordinance updates the City’s rules and regulations for use of public spaces and facilities, while protecting the constitutional rights of the people of the City of Watsonville to peaceably assemble

4 and speak on public property. The Watsonville Parks and Recreation Commission recommended that the Council adopt this ordinance during its meeting on June 5, 2025.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION:

Adoption of Ordinances amending Title 5, Chapter 12 and Title 10 of the Watsonville Municipal Code, is not subject to review under the California Environmental Quality Act (CEQA) pursuant to Public Resources Code Section 21000, et seq. and the CEQA Guidelines (14 Cal. Code Regs. §§ 15000 et. seq.), including without limitation, Public Resources Code section 21065 and California Code of Regulations 15378(a), as this is not a “project” that may cause a direct, or reasonably foreseeable indirect, physical change in the environment. In addition, if adoption of the Ordinance were considered to be a “project”, it would be exempt under CEQA Guidelines Section 15323 – Normal Operations of Facilities for Public Gatherings. The Ordinance regulates the use of existing public spaces and facilities without expanding or altering their normal operations. The spaces and facilities have a history of being used for the same or similar uses, for at least three years. The Ordinance ensures public parks and facilities continue to be available for public use and enjoyment without impacting the intensity of uses or changing the operations of said facilities.

Finally, adoption of the Ordinance is also exempt from CEQA pursuant to 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. The Ordinance does not propose or permit any new development, nor does it increase (or change in any way) the land use, density, or development regulations applicable to any property.

STRATEGIC PLAN:
 Infrastructure & Environment – The proposed Ordinance changes regulate use of public property with the intent protecting and preserving these spaces.  Community Engagement & Well-Being – The proposed Ordinance serves to protect the safety of the public while using public property.
 Public Safety - The proposed Ordinance serves to protect the safety of the public while using public property.

FINANCIAL IMPACT:

There are no fiscal impacts associated with the adoption of the proposed Ordinance.

ALTERNATIVE ACTION:

The Council may elect to:

1. Not adopt these ordinance amendments,

2. Adopt one or more of the proposed ordinance amendments Chapters, but not all, or

3. Adopt one or more of the proposed ordinance Chapters with changes.

ATTACHMENTS AND/OR REFERENCES (IF ANY):

None

4930-5590-6126 v1
ORDINANCE NO. _______
AN ORDINANCE OF THE CITY OF WATSONVILLE AMENDING TITLE 5, CHAPTER 12 OF THE WATSONVILLE MUNICIPAL CODE RELATING

TO PARADES
WHEREAS, the United States Constitution and California Constitution guarantee the right of the people to peaceably assemble and speak or protest in public places; and WHEREAS, the City of Watsonville intends to protect these Constitutional rights of the people of Watsonville to peaceably assemble and protest in the City’s public places; and
WHEREAS, the City wishes to provide a coordinated process for managing public places to ensure the health and safety of participants, residents, workers, and other visitors, and to prohibit illegal activities from occurring during special events; and WHEREAS, the City values its open spaces and parks as a space for the public to enjoy the serenity of nature, and wishes to limit the commercial activity present in those spaces; and
WHEREAS, regulation of commercial activity in public parks and open spaces is necessary to ensure the public’s use and enjoyment of natural resources and recreational opportunities and to prevent undue concentration of commercial activity that unreasonably interferes with the scenic and natural character of the City’s parks and open spaces; and
WHEREAS, the City also wishes to create a mechanism for cost recovery and use charges, to the extent authorized by law, while not unduly impacting the viability of special events in public places; and
WHEREAS, the City intends to update its existing permitting requirements for special events in public places to protect the rights of the people to peaceably assemble, as well as to protect and conserve those spaces.

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

Section 1. Findings
The City Council of the City of Watsonville does hereby find that the above referenced recitals are true and correct and incorporated into this Ordinance.

Section 2. Amend Title 5, Chapter 12 of the Watsonville Municipal Code Title 5, Chapter 12, Parades, is hereby amended in its entirety to read as set forth in Exhibit A, attached hereto and incorporated herein by reference.

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Section 3. Environmental Review
The City Council finds and determines that this Ordinance, which regulates the use and enjoyment of public property and open spaces, is not subject to review under the California Environmental Quality Act (CEQA) pursuant to Public Resources Code Section 21000, et seq. and the CEQA Guidelines (14 Cal. Code Regs. §§ 15000 et. seq.), including without limitation, Public Resources Code section 21065 and California Code of Regulations 15378(a), as this is not a “project” that may cause a direct, or reasonably foreseeable indirect, physical change in the environment. In addition, if adoption of the Ordinance were considered to be a “project”, it would be exempt under CEQA Guidelines Section 15323 – Normal Operations of Facilities for Public Gatherings. The Ordinance regulates the use of existing public spaces and facilities without expanding or altering their normal operations. The spaces and facilities have a history of being used for the same or similar uses, for at least three years. The Ordinance ensures public parks and facilities continue to be available for public use and enjoyment without impacting the intensity of uses or changing the operations of said facilities. Finally, adoption of the Ordinance is also exempt from CEQA pursuant to 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. The Ordinance does not propose or permit any new development, nor does it increase (or change in any way) the land use, density, or development regulations applicable to any property.

Section 4. Severability
If any section, subsection, sentence, clause or phrase or word of this Ordinance is for any reason held to be unconstitutional, unlawful or otherwise invalid by a court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance.

Section 5. Effective Date
This Ordinance shall take effect thirty (30) days after passage by the City Council.

Section 6. Publication
The City Clerk is directed to publish this Ordinance as required by State law.

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TITLE 5 PUBLIC WELFARE, MORALS AND CONDUCT
Chapter 12 - EVENTS ON PUBLIC PROPERTY
5-12.010 Purpose; Definitions.

The purpose of this Chapter is to protect the First Amendment rights of the people of Watsonville to peaceably assemble and/or protest in the City’s public places and to establish the least restrictive and reasonable time, place and manner regulation of these activities. It is further intended to provide a coordinated process for managing special events to ensure the health and safety of event patrons, residents, workers, and other visitors, to prohibit illegal activities from occurring at special events, and to create mechanisms for cost recovery and use charges, to the extent authorized by law, while not unduly impacting the viability of special events.

Whenever the following words and phrases are used in this chapter they shall have the meanings ascribed to them in this Section:
(a) “Applicant” means any person who seeks a permit under this Chapter to organize a Special Event.
(b) “Application” means a form approved by the City Manager which an Applicant must submit pursuant to Section 5-12.030.
(c) “Assembly” means the assembling or coming together of a number of persons for a particular purpose.
(d) "City" refers to the City of Watsonville, California. (e) “City Property” means all real property and improvements owned, operated, or controlled by the City. City property includes, but is not limited to, City Hall, police and fire facilities, recreational facilities, parks, libraries, streets, and sidewalks.
(f) "Park" means a park, playground, recreation center or any other area, building or grounds in the City, owned or used by the city and devoted to active or passive recreation.
(g) “Chief of Police” means the Chief of Police or designee. (h) "City Manager" means the City Manager or designee.
(i) “Expressive Activity” means conduct, the sole or principal object of which is the expression of opinion, views, or ideas, protected by the First Amendment of the U.S. Constitution. Expressive activity includes, but is not limited to, public oratory and distribution of literature.
(j) “Organize” means to organize, operate, manage, stage, promote, sponsor or carry on a special event.
(k) “Organizer” means the person who organizes, operates, manages, stages, promotes, sponsors or carries on a Special Event.

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(l) “Permittee” means any person that has been issued a Special Event permit in accordance with this Chapter.
(m)"Person" means any person, firm, partnership, association, corporation, company or organization of any kind.
(n) “Special Event” means any of the following:

1. Any organized assemblage of more than two hundred (250) persons at any public place, public property, or public facility which is to gather for a common purpose under the direction or control of a person; or

2. Any organized assemblage at any public place, public property, or public facility which is to gather for a common purpose under the direction or control of a person or organization and that requires closure of a City street; or

3. Any other organized assemblage conducted by a person for a common or collective use, purpose or benefit which shall require extensive use of City public services for police regulation, monitoring or control, erecting barriers, or traffic control, parking needs that will exceed the capacity of the venue, or that will significantly interfere with normal use and operation of public right-of-way for travel; For illustrative purposes, examples of special events include, but are not limited to, concerts, parades, circuses, fairs, festivals, block parties, street fairs, community events, on the water activities (such as boat races) with spectators on public land, mass participation sports (such as marathons and other running events), athletic or sporting events, and community celebrations and observances conducted on public property or public rights of way.
(o) “Special Event Venue” means the area for which a Special Event permit has been issued.
(p) "Vehicle" has the same definition as California Vehicle Code section 415, but excludes vehicles in the service of the City.
5-12.020 Permit—Required—Activities designated.
(a) Except when expressly provided pursuant to the terms of a permit, lease, or contract which has been specifically authorized by the City Council, no person shall conduct a Special Event or cause or permit the same upon any public street, alley, park, dedicated open space, or any other public building or grounds in the city unless there has first been obtained from the City Manager a special event permit to do so, and such permit shall be carried by the person heading or leading such activity.

A. Exempt Activities:

1. Any Expressive Activity on City owned, controlled, or maintained property not otherwise considered a Special Event, provided that the Expressive Activity will conform with applicable traffic regulations, laws or controls. If practicable, the organizers should give notice to the City Manager at least

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four (4) hours prior to the event informing the City of the date and time of the event and provide an estimate of the approximate number of persons who will be participating.

2. Activities on school grounds, which are exempt from the requirements of this Chapter.

3. Spontaneous events which are occasioned by news or affairs coming into public knowledge less than forty-eight hours prior to such event may be conducted on City property without the Organizers or Sponsors having to obtain a Special Event Permit if all of the following factors are satisfied:
i. The spontaneous event does not impede vehicular traffic or violate regulations regarding pedestrian and vehicular traffic; ii. The Organizer or Sponsor provides the police chief or designee with at least four (4) hours of prior notice of the spontaneous event; and
iii. The location where the spontaneous event is to be
conducted has not been previously rented, reserved, or
otherwise obligated to another use in accordance with
established City policies and procedures for use and/or rental of City facilities.

4. Activities conducted by a governmental agency acting within the scope of its authority.
(b) Additional permits and requirements. In addition to a Special Event Permit pursuant to this Chapter, organizers are responsible for obtaining all other relevant permits and approvals for events on public property, including, but not limited to:
(1) Use of parks, public facilities and parking facilities will also require an Exclusive Use/ Facility Use Permit as described in Section 10-1.110.b. (2) Events involving the closure of streets require a traffic control plan certified by an traffic engineer.
(3) Events or activities, which require a special use permit as described in Part 5 of Chapter 14-12 of this Code.
(4) Amplified Sound permit pursuant to Chapter 5-34.
(5) Any permits required by other governmental agencies including, but not limited to the Department of Alcoholic Beverage Control, Fire Marshal, County Health or CalTrans.
5-12.030 Permit—Application.

Any person desiring to Organize a Special Event pursuant to Section 5-12.020, shall file an Application with the City Manager at least sixty days before the date of the proposed Special Event, however applications may not be submitted more than one year before the date of the proposed Special Event. The City Manager shall create a form

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Application which shall include, and Applicants shall be required to provide, the following information:
(a) The name of the person or responsible organization requesting a permit to conduct the special event or activity, use a sound amplifying system, or to serve and/or sell alcohol;
(b) If the special event or activity is proposed to be conducted for, on behalf of, or by an organization, the name, address and telephone number of the headquarters of the organization, and the authorized and responsible head of such organization; (c) The name, address and telephone number of the person who will be responsible for the conduct of the Special Event;
(d) The name, address and telephone number of the person or organization to whom the permit is desired to be issued;
(e) The date or dates when the Special Event is to be conducted; (f) The location or the route to be traveled, the starting point and the termination point; (g) The approximate number of persons, and the number and nature of any animals and vehicles, which will participate in the Special Event;
(h) The time when such Special Event will start and terminate; (i) Whether such Special Event will occupy all or a portion of the width of any City street;
(j) The location by streets of any assembly area or areas for the Special Event; (k) The time at which the Organizer will begin to set-up and will complete tear-down activities at the Special Event Venue;
(l) The names of individuals and/or corporations duly registered in the state who will agree in writing to hold the City harmless and indemnify City, pursuant to Section 5-

12.050(b);
(m)Such other information as may be required by the City to enable the City Manager to make adequate and appropriate arrangements for proper policing of the proposed special event or activity or public use of a sound amplifying system, need for City services, or service and/or sale of alcohol.
(n) A traffic control plan, certified by a traffic engineer if the Applicant requests closure of City streets for the proposed Special Event.
5-12.040 Permit—Issuance conditions.
(a) In deciding whether to approve an Application, no consideration may be given to the message of the proposed Special Event, the content of speech, or the identity or associational relationships of the Applicant(s) or Organizer(s). The City Manager shall issue a Permit if the City Manager determines the following:

1. The Application includes all information required by this Chapter and no evidence suggests that the Applicant has knowingly made a false, misleading, or fraudulent statement to the City in the application process;

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2. The conduct of such Special Event will not substantially interrupt the safe and orderly movements of pedestrian or vehicle traffic, particularly the traffic contiguous to its route;

3. The conduct, nature or location of the Special Event will either not require the dedicated use of police personnel as determined by the Chief of Police, or the Applicant provides for the required police personnel and/or private security personnel, licensed by the state of California, that the Chief of Police determines is necessary to ensure the proper movement of traffic and preserve the safety and security of the community including those attending or participating in the Special Event;

4. The concentration of persons, animals and vehicles during the Special Event will not unduly interfere with fire and police protection of, or emergency medical response to, Special Event Venue or areas contiguous thereto;

5. The conduct of the Special Event will not unduly interfere with the movement of firefighting or other emergency equipment en route to an emergency;

6. The proposed Special Event will not present substantial safety, noise, environmental, or traffic hazards considering the number of participants and proposed location, such as to endanger the health or safety of the event participants, general public or city employees, which cannot be adequately remedied by reasonable traffic control and other safety measures.

7. The Applicant has applied for or obtained all required permits, licenses, insurance coverages, or other authorizations or entitlements required for the Special Event. No permit will be issued by the City, or if first issued any issued permit will be revoked, if any required permit, license, policy or other authorization or entitlement is not obtained or is revoked after initially being issued;

8. The Applicants have entered into a hold harmless agreement for the protection of City as specified in subsection (b) of Section 5-12.050 of this chapter;

9. Payment, if applicable, of any and all related deposits and/or fees.

10.The Special Event is not scheduled to occur at a location and time in conflict with another Special Event already permitted or that can be permitted to another Application that submitted an Application first in time, or is in conflict with City-sponsored programming.
5-12.050 Permit—Terms.
(a) The permit, if issued by the City Manager, shall set forth the pertinent information required by Section 5-12.040 of this chapter, and shall be signed by the Organizer who will be responsible for the conduct of the Special Event.

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(b) Each Permittee shall execute a hold harmless agreement in a form approved by the City agreeing to defend, indemnify, and hold harmless the City against losses and liabilities incurred from the willful or negligent acts or omissions of the permittee or its officers, employees, and agents. If City property is destroyed or damaged by reason of permittee’s special event and the damage or destruction is directly attributable to the permittee, the permittee shall reimburse the City for the actual replacement or repair cost of the destroyed or damaged property. Nothing in this provision shall require a permittee to indemnify the City from claims or losses occasioned by the reaction of third parties to Expressive Activity at the Permittee’s Special Event. (c). Except as otherwise prohibited by law, the Permittee shall procure and maintain in full force and effect during the term of the permit a policy of insurance from a reliable insurance company authorized to do business in the state, which policy includes the City, its boards, officers, agents, employees, and volunteers as either named insureds or additional named insureds and which provides the coverage that the City Manager determines to be commercially reasonable and adequate under the circumstances. The City Manager shall maintain a list of applicable insurance limits and coverages required that is determined solely on the size of the event, the use of vehicles, and the nature of the facilities involved. If the City Manager determines that a particular use, event, or activity which is for a permit period of no more than one day does not present a substantial or significant public liability or property damage exposure for the City or its officers, agents, employees, or volunteers, the City Manager may give a written waiver of the insurance requirements of this Section.
5-12.060 Permit—Notice of rejection.

The City Manager shall act upon the Application for a permit within 10 business days after the filing thereof. If the City Manager disapproves the Application, the City Manager shall mail to the Applicant within ten days after the date upon which the Application was filed, a notice of the disapproval, including a statement of the reasons for the denial. Such notice shall be mailed or emailed to the Applicant at his/her email address or physical address as given on his/her Application. 5-12.070 Right to appeal.

Any person who has been denied a permit pursuant to this Section may appeal the denial pursuant to Chapter 1-4 of this Code.
5-12.080 Late Application approval.

The City Manager may consider any Application for a permit to conduct a Special Event which is filed less than sixty days before the date of the Proposed Special Event if time and City resources permit. The City Manager shall not consider the content or viewpoint of the speech or conduct proposed by the Application and Special Event in determining whether to consider a late Application under this Section.

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5-12.090 Interference.

It is unlawful for any person to obstruct, impede or interfere with any authorized assembly, person, vehicle or animal participating in a Special Event for which a Special Event permit has been issued.
5-12.100 City Manager Authority.

The City Manager is authorized to take any action, including to promulgate policies or procedures, in furtherance of the administration of this Chapter. 5-12.110 Violation.
(a) It is unlawful for any person to violate any of the provisions of this chapter. (b) Anyone violating, or refuses to abide by, any provision of this chapter shall be subject to the penalties set forth in Chapter 2 of Title 1 of this Code and will be held financially responsible to the maximum extent provided by law for any and all damage caused.

In addition to fines, for any subsequent violations within any consecutive twelve-month period, the City Manager may order the exclusion of the violator from the use of any Park or Public Facility for a period of time as determined at his or her reasonable discretion. 5-12.120– Applicable fees.

Special Event Permit Application fees pursuant to this Chapter may be established by Resolution of the City Council. Applicants shall pay Application fees upon submittal of the Application to the City for review. Where a Special Event requires street closure, barriers, or other infrastructure, the Applicant shall pay such fees as may be established by resolution of the City Council for traffic control and relating municipal expenses, including but not limited to public safety, services, solid waste and recycling services, building inspections, traffic control, and any other applicable fees. Additionally, use of City buildings or facilities shall be subject to any use or rental fees established by the City.

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ORDINANCE NO. _______

AN ORDINANCE OF THE CITY OF WATSONVILLE AMENDING TITLE
10 RELATING TO PUBLIC PARKS, PUBLIC FACILITIES, AND

PARKING FACILITIES, OF THE WATSONVILLE MUNICIPAL CODE
WHEREAS, the City of Watsonville (“City”) values its open spaces and parks as a space for the public to enjoy the serenity of nature, and wishes to limit the commercial activity present in those spaces; and
WHEREAS, the City wishes to provide a coordinated process for managing events in City parks and recreation facilities to ensure the health and safety of event patrons, residents, workers, and other visitors, and to prohibit illegal activities from occurring at special events consisting of expressive activities; and WHEREAS, the United States Constitution and California Constitution guarantee the right of the people to peaceably assemble and speak or protest in public places; and WHEREAS, the City intends to protect these Constitutional rights of the people of Watsonville to peaceably assemble and protest in the City’s public spaces, including City parks, public facilities and parking facilities; and WHEREAS, the City also wishes to create a mechanism for cost recovery and use charges, to the extent authorized by law, while not unduly impacting the viability of events; and
WHEREAS, regulation of commercial activity in public parks and open spaces is necessary to ensure the public’s use and enjoyment of natural resources and recreational opportunities and necessary to prevent undue concentration of commercial activity that unreasonably interferes with the scenic and natural character of the City’s parks and open spaces; and
WHEREAS, the City intends to update its existing permitting requirements for the City’s public parks, open spaces, facilities and parking areas to protect the rights of the people to peaceably assemble, as well as to protect and conserve those spaces.

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

Section 1. Findings
The City Council of the City of Watsonville does hereby find that the above referenced recitals are true and correct and incorporated into this Ordinance.

Section 2. Amend Title 10 of the Watsonville Municipal Code Title 10, Public Parks, Public Facilities, and Parking Facilities, is amended in its entirety

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to read as set forth in Exhibit B, attached hereto and incorporated herein by reference.

Section 3. Environmental Review
The City Council finds and determines that this Ordinance, which regulates the use and enjoyment of public property and open spaces, is not subject to review under the California Environmental Quality Act (CEQA) pursuant to Public Resources Code Section 21000, et seq. and the CEQA Guidelines (14 Cal. Code Regs. §§ 15000 et. seq.), including without limitation, Public Resources Code section 21065 and California Code of Regulations 15378(a), as this is not a “project” that may cause a direct, or reasonably foreseeable indirect, physical change in the environment. In addition, if adoption of the Ordinance were considered to be a “project”, it would be exempt under CEQA Guidelines Section 15323 – Normal Operations of Facilities for Public Gatherings. The Ordinance regulates the use of existing public spaces and facilities without expanding or altering their normal operations. The spaces and facilities have a history of being used for the same or similar uses, for at least three years. The Ordinance ensures public parks and facilities continue to be available for public use and enjoyment without impacting the intensity of uses or changing the operations of said facilities. Finally, adoption of the Ordinance is also exempt from CEQA pursuant to 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. The Ordinance does not propose or permit any new development, nor does it increase (or change in any way) the land use, density, or development regulations applicable to any property.

Section 4. Severability
If any section, subsection, sentence, clause or phrase or word of this Ordinance is for any reason held to be unconstitutional, unlawful or otherwise invalid by a court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance.

Section 5. Effective Date
This Ordinance shall take effect thirty (30) days after passage by the City Council.

Section 6. Publication
The City Clerk is directed to publish this Ordinance as required by State law.

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TITLE 10 PUBLIC PARKS, PUBLIC FACILITIES, AND PARKING FACILITIES Chapter 10.1 ACTIVITIES IN CITY PARKS, PUBLIC FACILITIES, AND PUBLIC PARKING

FACILITIES
10-1.010 Definitions.

As used in this chapter, the following terms shall have the meanings set forth herein or as otherwise specified in the guidelines referenced herein. Where terms are not defined, they shall have their ordinary accepted meanings within the context with which they are used. (a) “Applicant” means any individual, corporation, partnership, trust, nonprofit organization, association, group or other business entity or organization who seeks a permit under this Chapter. For purposes of this Chapter, “applicant” includes the organizer of the event, responsible for coordination and management of the event on the day or days of the event. (b) Boat” shall mean any vessel or device in or upon which persons or property may be transported upon, over, or under the surface of the water. (c) “Camping” shall have the same meaning as Chapter 5-36.01. (d) "City" refers to the City of Watsonville, California. (e) "City Manager" means the City Manager or designee.
(f) “Expressive Activity” shall have the same definition as set forth in Chapter 5-12. (g) "FAA" refers to Federal Aviation Administration.
(h) "Park" means a park, playground, open space area, trail, or any other area, or grounds in the city, owned or used by the City and devoted to active or passive recreation including parking lots constructed directly in and around the park to serve the customers of the park and includes Skate Parks and Bicycle Pump Tracks, as defines in Section 10-2.010. (i) "Person" means any person, firm, partnership, association, corporation, company or organization of any kind.
(j) “Permit” means a permit issued by the City of Watsonville pursuant to this Chapter. (k) Pinto Lake Recreation Area”, for convenience referred to in this chapter as “Pinto Lake”, or “the Lake”, shall include the waters of Pinto Lake within the boundaries of the City property, as well as the lands owned by the City contiguous to the Lake and devoted to recreational uses and facilities, including, but not limited to, boating, fishing, and other water activities. (l) “Public Facility” means all Public Buildings and Public Parking Facilities as defined in this section.
(m)"Public Building" means City-owned buildings including general governmental buildings, recreation centers, libraries, restrooms, public service centers and any other building used by the City for public purposes.
(n) "Public Parking Facilities" means a City-owned parking lot or parking facility constructed to provide parking to a general area of the City that is not primarily a "Park" or "Public Building" as defined.
(o) “Refuse” means any broken glass, ashes, grease, food waste boxes, shopping carts garbage, trash, bottles, cans, papers, ashes, food and vegetable material, rubbish, industrial wastes, animal waste, grass clippings, tree or shrub pruning or any other discarded substance, matter, or thing, whether liquid or solid.

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(p) "Unmanned Aircraft" means an aircraft weighing less than fifty-five pounds, including everything that is onboard or otherwise attached to the aircraft, that can be flown without the possibility of direct human intervention from within or on the aircraft. (q) "Vehicle" has the same definition as California Vehicle Code section 415, but excludes vehicles in the service of the City.
(r) “Wheeled Vehicles” means a bicycle, skateboard, roller skates, in-line skates, scooter or other wheeled device powered by human activity or by motor and includes electric bicycles. 10-1.020 General provisions.

The provisions of this chapter shall apply to all Parks and Public Facilities to facilitate the pursuit and enjoyment of leisure activities and for the general welfare of the community.

The following principles shall govern use of Parks and Public Buildings:
a) Parks and Public Buildings are primarily intended for the use and enjoyment by residents of Watsonville.
b) Public recreation services, spaces, and activities should be available to all Watsonville residents without discrimination as to race, religion, gender, identity, economic status, or any protected status;
10-1.030 Operating hours and Closures.
(a) Operating hours for Parks and Public Facilities are established as follows, unless authorized by permit or agreement by the City Manager:
(1) Parks. All Parks shall be open from sunrise to sunset and remain closed from sunset to sunrise;
(2) Public Facilities. Operating hours shall be established by the City Manager. (b) The opening and closing hours of Parks and Public Facilities shall be posted at each entrance and exit thereof for public information.
(c) Curfew. Unless authorized by City permit, it shall be unlawful for any person to be or remain in a Park or Public Facility when closed to the public. (d) The City Manager may close all or any portion of any Park or Public Facility to the public at any time, and for any interval of time, as is reasonably necessary for the preservation and protection of the Park or Public Facility.
10-1.040 Park or Public Facility Regulations.

The City Manager is authorized to take any action, including to promulgate policies or procedures, in furtherance of the administration of this Chapter. 10-1.050 Parks and Public Facilities – Prohibited Conduct The following conduct is prohibited in all Parks and Public Facilities, unless otherwise permitted by the City:
(a) Damage to Property. No person may mark, deface, disfigure, injure, tamper with or displace or remove any buildings, bridges, tables, benches, fireplaces, railings, barriers, signs markers, monuments, trash receptacles, paving or paving materials, water lines, or other public utilities or part or appurtenances whatsoever, either real or personal;

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(b) Failure to Properly Use Restrooms. All patrons of Public Facilities shall cooperate in maintaining restrooms in a neat and sanitary condition; (c) Removal of or Damage to Vegetation. No person may dig, remove, or damage any soil, rock, stones, trees, shrubs or plants, down timber or other wood or materials. Nor shall any person attach any rope, wire or other contrivance to any tree or plant or use stakes or penetrate the ground deeper than 8” without prior approval by the City; (d) Climbing, Standing, Sitting. No person may climb, stand or sit on trees, monuments, buildings or walls, vases, fountains, railing, fence or upon any other property not designated or customarily used for such purposes;
(e) Hunting Animals. No person may hunt, molest, frighten, kill, trap, chase, tease, shoot or throw anything at any animal; nor shall any person remove or have in possession the young of any animal, or the eggs or nest or young of animals; (f) Releasing Animals. Except as otherwise regulated by law, no person may lead, ride, drive, keep or let loose any animal, reptile or fowl of any kind in any Park or Public Facility unless under proper control by the animal's owner or attendant. Dogs in Parks must comply with Section 10-1.060(a). The owner shall be responsible for any damage or injury that may be caused by the animal;
(g) Feeding Nondomestic Animals. No person may feed domestic or nondomestic animals any food, including breads, seeds, nuts or other foods or give or offer, or attempt to give any known noxious or toxic substance as many cause unintentional harm, illness, or death; (h) Horse Riding. No person may ride a horse, except on designated trails or by permit. Where permitted, horses shall be thoroughly broken and properly restrained, and ridden with due care, and shall not be allowed to graze or go unattended, nor shall they be hitched to any rock, tree, or shrub;
(i) Use of Intoxicating Substances. Consumption of alcoholic beverages or use of any other intoxicating substance is prohibited in all Parks and Public Facilities, except pursuant to valid City-issued permit. Moreover, no person may enter or remain in a Park or Public Facility while under the influence of any illegal drug or alcohol when the consumption of alcohol is not approved as part of a City-issued permit; (j) Use of Illegal Drugs. No person may use any controlled substance in a manner that is prohibited under state or federal law;
(k) Smoking. No person may engage in smoking activities as defined by Section 5-37.06 of the Watsonville Municipal Code.
(l) Unauthorized Gambling. Playing, betting at or against, or wagering on for money, chips, shell, credit or any other representative of value any game that is prohibited by the Penal Code of the State of California is prohibited within all Parks and Public Facilities; (m)Possession of Firearms, Weapons. No person may use, carry or possess firearms of any description, or air rifles, spring guns, bows and arrows, slings, BB guns, pellet guns, airsoft guns, orbeez guns, sling shots or any other forms of weapons potentially dangerous to wildlife or human safety. Shooting into Parks or Public Facilities from beyond Park or Public Facility boundaries is similarly prohibited;
(n) Pollution of Waters. No person may throw, discharge or otherwise place in the waters of any fountain, pond, lake, or other body of water in or adjacent to any Park or Public Facility, or any tributary, stream, storm sewer or drain flowing into such waters, any substance which will or may result in the pollution of such waters;

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(o) Disposal of Refuse. No person may dump, deposit or leave any refuse on Park or Public Facility grounds. Refuse shall be placed in the proper receptacles where these are provided; and where such receptacles are not provided, the individual generating the Refuse shall remove all such Refuse and properly dispose of elsewhere; (p) Storage of Personal Property. No person may store, contain, or otherwise leave personal property unattended where not otherwise approved by a City-issued permit; (q) Public Bathing, Swimming. No person may swim, bathe or wade in any restrooms, fountains, ponds, lakes or streams not specifically provided for that purpose and so posted. Swimming in the nude or nude sunbathing is prohibited anywhere in a Park or Public Facility; (r) Camping. Camping is only permitted in the City in accordance with Chapter 5-36 of the Municipal Code;
(s) Discharge or Lighting of Fireworks Prohibited in City Parks. No person may bring, possess or set off, or otherwise cause to explode or discharge or burn, any firecrackers, torpedoes, rockets or other fireworks or explosives of flammable material or discharge them or throw them into any Park or Public Facility or any roadway adjacent thereto. This prohibition includes any substance, compound, mixture or articles that, in conjunction with any other substance or compound, would be dangerous from any of the foregoing standpoints. This prohibition also includes fireworks that may otherwise be legal to possess within this State; (t) Fires. No person may make or kindle a fire for any purpose except at places provided for such purpose, nor leave a fire at a place provided for such purpose before the fire is completely extinguished, nor utilize a designated BBQ pit without disposing of remnants in provided bins;
(u) Use of Cooking Equipment without a City Permit. No person may use cooking equipment within Parks or Public Facilities without a City-issued permit or approval, and proper disposal and containment requirements for food scraps, grease, or other food remnants in accordance with posted signs. Use of City-provided barbeque pits is permitted by reservation, or if not reserved, on a first come, first served basis; (v) Powered Model Airplanes, Watercraft, or Rockets. Use powered model airplanes, watercraft, or rockets at any time, without permit;
(w) Powered Cars, or Trucks. Use powered cars, or trucks in a manner that is dangerous, negligent, careless, reckless or that otherwise poses a risk of harm, danger or injury to life or property or in a manner which may interfere, in any way, with another person or entity's right to privacy, right to quiet enjoyment of his/her property, business operations or recreational activities;
(x) Unmanned Aircraft. No person may use unmanned aircraft or drones, in a manner that is inconsistent with the state or federal law, including FAA regulations, or at a Park or Public Facility not designated for unmanned aircraft use by the City Manager. (y) Use of Wheeled Vehicles. No person may:
(1) Ride a Wheeled Vehicle in violation of Chapter 1 of Title 4 of this Code. (2) Ride a Wheeled Vehicle on other than a paved vehicular road or path designated for that purpose. A person shall be permitted to wheel, push or carry a Wheeled Vehicle by hand over any grassy area or wooded trail or on any paved area reserved for pedestrian use;
(3) Ride a Wheeled Vehicle and not yield the right-of-way to pedestrians.

4906-7921-8486 v5
(4) Ride a Wheeled Vehicle in a manner that interferes with entry or exit from Parks or any Public Facility.
(5) Ride a Wheeled Vehicle other than on the right-hand side of the road paving as close as conditions permit, and Wheeled Vehicles shall be kept in single file when two (2) or more are operating as a group. Wheeled Vehicle users shall at all times operate with reasonable regard to the safety of others, signal all turns, pass to the right of any vehicle they are overtaking, and pass to the right of any vehicle they may be meeting;
(6) Leave a bicycle in a place other than a bicycle rack when such is provided and there is space available;
(7) Leave a Wheeled Device lying on the ground or paving, or set against trees, or in any place or position where other persons may trip over or be injured by such device.
(z) Games. No person may take part in or play any game involving thrown or otherwise propelled objects except in areas set apart for such forms of recreation unless authorized by the City Manager. The playing of rough or potentially dangerous games to others, such as football, baseball, and soccer, shall be prohibited, except on the fields and courts or areas provided therefor;
(aa) Noise and Amplified Sound. No person or group may exceed the noise standards set forth in Section 5-8.02 of this Code. No person may employ amplified sound without a permit as required by Chapter 5-34 of this Code.
(1) It shall be unlawful to have live entertainment or sound application, with the exception of scheduled Little League games within the baseball diamond.

Radios, record players, television sets, and tape players may be used only when the volume does not exceed the volume of normal conversational speech. (bb) Merchandising, Advertising.
(1) Sales and Merchandising. Vendors offering food or any article for sale shall not obstruct pedestrian walkways, parking spaces, fields, or other natural landscapes. (2) Advertising and Signs. Paste, glue, tack, or otherwise post any sign, placard, advertisement, or inscription whatever on any tree, fence, rock, or other natural or artificial surface; advertisements and signs may only be temporarily affixed or posted to sign boards provided by the City.
(cc) Use of Vehicles and Boats.
(1) Compliance with Vehicle Code. All persons must comply with all applicable provisions of the Vehicle Code of the State in regard to equipment and operation of vehicles, together with such regulations as are contained in this chapter and any other ordinances of the City regulating traffic;
(2) Obedience to Traffic Officers, Peace Officers and Their Designees. All persons shall obey all traffic officers, peace officers and their designees, and City employees who are hereafter authorized and instructed to direct traffic in Public Facilities in accordance with the provisions of this chapter and such supplementary regulations as may be issued by the City;

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(3) Observance of Traffic Regulations. All persons shall observe carefully all traffic signs indicating speed, direction, caution, stopping or parking, and all other signs posted for proper control and to safeguard life and property;
(4) Excessive Speed. Ride or drive a vehicle at a rate of speed exceeding five (5) miles per hour.
10-1.060 Conduct in City Parks – Specifically.

The following conduct is prohibited at City Parks:
(a) Dogs. Bring, lead or unleash a dog on a playing field, ballfield or court, or unleash a dog, except in areas provided for that purpose and so posted. (b) Glass Bottles. Bring and/or dispose of glass bottles into a Park; (c) Pinto Lake Recreation Area.
(1) Ride, drive, or permit or allow any horse, cow, cat, or other domestic animal, excluding dogs, within the Pinto Lake Recreation Area without the permission of the City. In any event, such animals, if permitted by the City, shall be on a leash, properly harnessed, or otherwise adequately controlled. Dogs are permitted within Pinto Lake Park, provided that the dog remains on a leash; (2) Take fish at those locations or within an area specified in rules and regulations adopted by resolution of the Council provided such prohibited fishing areas are posted so as to provide reasonable notice of such prohibition and regulations. (3) Operate any Boat at a speed greater than five (5) miles per hour. 10-1.070 Conduct in Public Buildings – Specifically.

The following conduct is prohibited at Public Buildings:
(a) Possessing animals in any Public Building except for service animals or when the possession of the animal is approved as part of a Permit issued pursuant to 10-1.090. (b) Riding or using Wheeled Vehicles.
(c) All persons visiting Public Buildings are subject to the provisions of Title 5, Chapter 10 of this Code.
10-1.080 Conduct in Public Parking Facilities - Specifically.

No person at a City Public Parking Facility shall do any of following:
(a) Remain present in a Public Parking Facility for any other purpose than to travel to and from a vehicle parked within the Public Parking Facility; (b) Ride or use Wheeled Vehicles, bicycles, skateboards, roller skates, in-line skates, or scooter.
(c) Park a Vehicle or Boat in other than an established or designated parking area, and such use shall be in accordance with the posted directions there, and with the instructions of any attendant who may be present.
(d) Drive any vehicle on any area except paved roads or parking areas, or such other areas as may be designated as temporary parking areas by the City.

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10-1.090 Permit Required.

It shall be unlawful for any person to engage in any use of any Park or Public Facility for which a Permit is required without obtaining such a permit, except where such activity is regulated by other provisions of this Code, such as Chapter 5-12. Nothing in this Chapter shall require persons or entities to obtain a permit for Expressive Activities, where such activity is addressed by Chapter 5-12 of this Code.

The following uses or activities within all or a portion of Public Facilities or Parks require a special permit issued by the City Manager:
(a) Gatherings or Events in City Parks or Public Facilities that meet any of the following criteria:
a. Gatherings or events in the City Plaza, Pinto Lake Park, Franich Park, or Ramsay Park wherein 75 or more individuals will be present. Events wherein more than 250 individuals will be present are subject to the provisions of Chapter 5-12;
b. Gatherings or events in any City Park or Public Building or a portion thereof, wherein an individual or organization intends to host an event to the exclusion of the general public or where the general public must purchase admission. c. Gatherings or events or use of any City Park or Public Facility that exceeds the operational hours of the Park or Public Facility.
(b) Camping. Permits for Camping shall be issued pursuant to Chapter 5-36 of this Code. (c) Construct Temporary Building, Structure. Construct or erect any building or structure of whatever kind, whether permanent or temporary in character, or run or string any public service utility into, upon or across such lands;
(d) Jump houses. Erect a jump house or other inflatable structure. (e) Conduct, Advertise Professional Pyrotechnic Displays. Conduct, advertise, or plan for any professional pyrotechnic display;
(f) Chemical Toilets. Temporary use of temporary or chemical toilets. 10-1.100 Application for Permit.
a) Any individual or group desiring a permit, pursuant to Section 10-1.090 shall apply to the City Manager, in writing on a form approved by the City Manager. b) A complete application must be submitted to the City Manager at least 72 hours prior to the desired reservation or event.
10-1.110 Criteria for Approval.

The City Manager shall approve a permit pursuant to the provisions of this chapter if the City Manager determines the application meets any of the following criteria:
a) The information contained in the application, or supplemental information provided, is complete and is not materially false or misleading.
b) The Applicant has provided satisfactory evidence of insurance, where required, and has remitted any fees or deposits as required by this chapter. c) The Applicant has provided evidence of obtaining relevant permits from other state or local entities.

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d) The Park or Public Building, or portion thereof, is available for the period for which the permit is requested.
e) The area proposed for the Applicant’s use or activity can safely accommodate the number of participants expected to participate.
f) The proposed use, activity or event is compatible with the uses established for the requested Park or Public Building or portion thereof during the date or time requested. g) The proposed use does not have realistic potential to create a threat to the public health, safety or welfare, or to damage public property, that cannot be adequately remedied by reasonable traffic control, barriers, and/or other safety measures. h) The proposed use would not require the diversion of public safety or other city employees from their normal duties so as to unreasonably reduce adequate levels of service to any other portion of the city.
i) The proposed use, event or activity will not have a substantial adverse environmental impact.
j) The proposed use does not conflict with applicable provisions of any federal, state and/or local law.
k) For events or uses in the City Plaza, the proposed use is not commercial. 10-1.120 – Conditions of Approval.

Permits issued pursuant to this chapter are subject to such reasonable conditions as the City Manager may determine necessary to coordinate multiple uses of public property, assure preservation of public property and public places, prevent dangerous, unlawful uses, protect the safety of persons and property, ensure compliance with noise requirements set forth in Chapter 5-8.02 of this code, and to control vehicular and pedestrian traffic in and around the Park and/or Public Facility. These conditions may include conditions for waste management and restoration of the Park, environmental protection, conditions to ensure safe accommodation of an event’s pedestrian and vehicular traffic, indemnification and hold harmless of the City, and reasonable designation of alternate sites, times, or dates in the event of conflict with available resources.
10-1.130 Permit Holder Responsibilities.

An individual or organization issued a permit pursuant to this Chapter shall:
a) Comply with all rules and regulations and all applicable City ordinances as though the same were incorporated into the permit.
b) Comply with all conditions imposed by the permit.
c) Inform all attendees of the conditions of the permit and the applicable rules and regulations.
d) Make the permit available at the event site and shall exhibit it upon request of any city official.
10-1.140 – Revocation of Permit.

Permits issued pursuant to this Chapter may be revoked and the proposed event or use dispersed if the City Manager or designee determines:
a) That the Applicant misrepresented or misstated any material fact in their application; or b) That the Applicant damaged city property or violated permit conditions; or c) That the activity or any significant part thereof taking place on said premises is contrary to state or local law or is endangering life and/or property. 10-1.150 Right to Appeal.

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Any person who has been denied a permit pursuant to this Section may appeal the denial pursuant to Chapter 1-4 of this Code.
10-1.160 Fees.

The City Manager is authorized and directed to charge and collect such fees as may be established by resolution of the Council for the use of Parks or Public Facilities. 10-1.170 Violation.
(a) It is unlawful for any person to violate any of the provisions of this chapter. (b) Anyone violating, or refuses to abide by, any provision of this chapter shall be subject to the penalties set forth in Chapter 2 of Title 1 of this Code and will be held financially responsible to the maximum extent provided by law for any and all damage caused. (c) In addition to fines, for any subsequent violations within any consecutive twelve-month period, the City Manager may order the exclusion of the violator from the use of any Park or Public Facility for a period of time as determined at his or her reasonable discretion.

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TITLE 10 CITY PARKS, PUBLIC FACILITIES AND PARKING FACILITIES Chapter 10.2 CITY SKATE PARK AND BICYCLE PUMP TRACK FACILITIES 10-2.010 Definitions.

As used in this chapter, the following terms shall have the meanings set forth herein or as otherwise specified in the guidelines referenced herein. Where terms are not defined, they shall have their ordinary accepted meanings within the context with which they are used. (a) "Bicycle Pump Track" means City-owned property that involves a circuit of rollers, banked turns, and features designed to be ridden completely by riders “pumping” – generating momentum by up and down body movement, instead of pedaling or pushing, and includes the fence and the entire fenced-in area surrounding and including the pump track amenities. (b) "City" refers to the City of Watsonville, California. (c) "City Manager" means the City Manager or designee.
(d) “City Facility” means all Public Buildings and Facilities, Public Parking Lots and Parking Facilities, and Recreation Centers as defined in 10-2.-010(h) through (j), (e) "Park" means a park, playground, open space area, trail, or any other area, or grounds in the city, owned or used by the City and devoted to active or passive recreation including parking lots constructed directly in and around the park to serve the customers of the park. (f) "Person" means any person, firm, partnership, association, corporation, company or organization of any kind.
(g) “Public Facility” means all Public Buildings and Public Parking Facilities as defined in this section.
(h) "Public Building" means City-owned buildings including general governmental buildings, recreation center, libraries, restrooms, public service centers and any other building used by the City for public purposes.
(i) "Public Parking Facilities" means a City-owned parking lot or parking facility constructed to provide parking to a general area of the City that is not primarily a "Park" or "Public Building" as defined.
(j) "Skate Park" means City-owned property for use solely for skate boarding and skating purposes, and includes the fence and the entire fenced-in area surrounding and including the skate park amenities.
(k) "Vehicle" Vehicle" has the same definition as California Vehicle Code section 415, but excludes vehicles in the service of the City.
(l) “Wheeled Vehicles” means a bicycle, skateboard, roller skates, in-line skates, scooter or other wheeled device powered by human activity or by motor. 10-2.020 General provisions.

The provisions of this chapter shall apply to all Skate Parks and Bicycle Pump Tracks, whether permanent or temporary, in the City to provide opportunities for individuals to pursue and enjoy leisure activities and to assume the general welfare of the community. In addition to regulations

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set forth in this Chapter, Skate Parks and Bicycle Pump Tracks are subject to the provisions of Chapter 1 of Title 10.
10-2.030 Use of Skate Parks and Bicycle Pump Tracks.

The following regulations shall apply within Skate Parks and Bicycle Pump Tracks, whether permanent or temporary:
(a) Any person using a Skate Park or Bicycle Pump Track shall be subject to the provisions related to City Parks in Chapter 1 of Title 10.
(b) Skate Parks and Bicycle Pump Tracks are open in accordance with posted signage.

The City Manager may authorize exclusive use of Skate Parks or Bicycle Pump Tracks by a group or person by issuing a permit upon receipt of an application pursuant to Title 10-1 of this Code. Skate Parks and Bicycle Pump Tracks may be closed for any period of time at the sole discretion of the City Manager for any reason, including but not limited to inclement weather, repair and maintenance, health and safety emergencies, violations by users of rules and regulations, graffiti, or defacement of property. (c) No person shall use Skate Parks for any purpose other than skateboarding, scootering or inline skating or use the Bicycle Pump Track for any purpose other than bicycling; except as otherwise prohibited or permitted as designated and scheduled by the City Manager.
(d) No person under the age of twelve may enter or use Skate Parks or Bicycle Pump Tracks without the supervision of an adult.
(e) Skateboarding, inline/roller skating, bicycle jumping or any other use of Skate Parks or Bicycle Pump Tracks not otherwise designated shall be considered hazardous recreational activities. No person may engage in any act that is reckless or that pose danger to other users or spectators, including, but not limited to, body flips; riding a skateboard or bicycle facing entirely backwards; two or more individuals riding on the same skateboard or bicycle; riding a skateboard on one's knees or while sitting or lying on the skateboard; causing the skateboard intentionally to shoot out away from the rider; tandem skating or bicycling within three feet in front of or behind each rider; any acts that exceeds the skill level of the rider and presents a risk of serious injury to the rider or other persons, with the exception of those persons participating in events permitted by the City.
(f) Persons using the Skate Parks or Bicycle Pump Tracks shall obey all signage, permanent or temporary and shall follow all instructions of city staff. (g) No person shall use Skate Parks or Bicycle Pump Tracks without wearing proper safety equipment including a helmet, elbow pads, and knee pads. (h) No person shall destroy, damage, deface, place graffiti upon, temper with, remove or relocate any part of Skate Parks or Bicycle Pump Tracks, including signage notifying the hazardous nature of the activities in the Skate Park or Bicycle Pump Tracks, rules and regulations and the requirement to wear a helmet, elbow pads and knee pads. (i) No person may remain in or loiter about Skate Parks or Bicycle Pump Tracks when not using the Skate Park or Bicycle Pump Track for its permitted purposes. (j) No person shall operate any Wheeled Vehicle on the curbs or driveways of the Cityowned areas surrounding. (k) Food, drink, gum, and wax are prohibited inside Skate Park and Bicycle Pump Tracks.

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10-2.040 Signs.

Signs shall be posted with two (2") inch letters at City parks as notice to any person that they must wear a helmet, elbow pads, knee pads, and be courteous, yield the right-of-way to pedestrians, and comply with this Chapter. Signs shall also indicate that persons failing to abide by these requirements will be subject to citation pursuant to the City’s Municipal Code. 10-2.050 Enforcement—Compliance.

The City, or any City staff person showing proper identification, shall encourage compliance with and shall cause the enforcement of this Chapter and any such rule promulgated hereunder. 10-2.060 Violation.
(a) It is unlawful for any person to violate any of the provisions of this Chapter. (b) Anyone violating, or refusing to abide by, any provision of this Chapter shall be subject to the penalties set forth in Chapter 2 of Title 1 of this Code and will be held financially responsible to the maximum extent provided by law for any and all damage caused. (c) In addition to fines, for any subsequent violations within any consecutive twelve-month period, the City Manager may order the exclusion of the violator from the use of any park or facility for a period of time as determined at his or her reasonable discretion. 10-2.070 Adoption of rules and regulations.

The City Manager is authorized to take any action, including to promulgate policies or procedures, in furtherance of the administration of this Chapter.

SPECIAL EVENTS
AND

PARKS ORDINANCES
City of Watsonville
June 2025

Recommended Action
That the City Council Adopt an Ordinance to Repeal and Replace:
• Title 5, Chapter 12 – “Parades” → "Events on Public Property" • Title 10 – "Public Parks, Playgrounds and Recreation Facilities” → “City parks, Public Facilities and Parking Lots”

Background –
Title 5
Current:
• Focused solely on parades (last
revised 1976)
Proposed:
• Covers all public events (e.g.,
concerts, festivals, races)
• Protects Constitutional rights to
assemble and speak (Expressive
Activities)
• Adds permitting and cost recovery
mechanisms for all events

Special Events (Title 5,
Chapter 12)
Permit Required 60 Days Prior For:
• Assemblies of 250+ people
• Any event requiring street closures
• Events requiring City services (police, barriers,
traffic, etc.)

Exemptions
Permit Not Required For:
• School activities
• Governmental events
• Small expressive activities
• “Conduct whose principal object is the expression
of opinion, views, or ideas protected by the First
Amendment.” – Includes Public speaking and Literature distribution • Must conform with applicable traffic regulations,
laws or controls
• Provide 4-hour notice, if practicable
• Spontaneous news-driven events with the past 48 hours • Must not impede vehicular traffic
• Provide 4-hour notice, if practicable
• In a space not previously reserved

Special Events (Title 5, Chapter 12)
Organizers are responsible for obtaining all other relevant permits and approvals, including:
• Permits for use of parks, public facilities and parking facilities • Certified traffic control plans
• Special use permit
• Amplified Sound permit
• Any permits required by other governmental agencies including, but not limited to the Department of Alcoholic Beverage Control, Fire Marshal, County Health or CalTrans.

Background –Title
10 Current:
• Rules for parks and skateparks
• Last revised 1980, 2012
Proposed:
• Unified rules for parks, public facilities,
and parking
• Updates to meet current community
needs
• Adds expressive activity protections

Title 10, Chapter 1 – Park, Public
Buildings and Parking Facilities
Notable Updates
Prohibited activities in Parks and Public Facilities
• Alcohol - Consumption of alcoholic beverages prohibited, except pursuant to valid City-issued permit
•Drones - Use of unmanned aircraft or drones, in a manner that is inconsistent with the state or federal law, or at a Park or Public Facility not designated by the City Manager
• Sidewalk Vending - Offering food or any article for sale while obstructing pedestrian walkways, parking spaces, fields, or other natural landscapes

Title 10, Chapter 1 – Park, Public
Buildings and Parking Facilities
Notable Updates
Prohibited activities in City Buildings (§ 10-1.050 and 10-1.070) • Animals - Possess animals in any Public Building except for service animals
Prohibited activities in Public Parking Facilities (§ 10-1.050 and 10-1.080.)
• Remain present in a Public Parking Facility for any other purpose than to travel to and from a vehicle parked within the Public Parking Facility
• Ride or use Wheeled Vehicles, bicycles, skateboards, roller skates, in-line skates, or scooter

Title 10, Chapter 1 –
Park and Facility Use
Permit Required For:
• 75+ people in City Plaza, Pinto Lake, Franich,
Ramsay Parks
• Events with paid admission excluding public
• Use outside operational hours
• Use of structures - e.g., bounce house, porta
potties, event tents
• Fireworks
• Camping

Title 10, Chapter 2 –
Skateparks & Pump Tracks
• Adds conduct in Pump Tracks
• Establishes use and rental rules
• Aligns with updated safety and conduct
standards

Violations
Subject to the penalties set forth in Chapter 2 of Title 1

Recommended Action
That the City Council Adopt an Ordinance to Repeal and Replace:
• Title 5, Chapter 12 – “Parades” → "Events on Public Property" • Title 10 – "Public Parks, Playgrounds and Recreation Facilities” → “City parks, Public Facilities and Parking Lots”
Park and Recreation Commission recommended approval on June 4, 2025.

QUESTIONS

1 CITY COUNCIL AGENDA REPORT
MEETING DATE: Tuesday, June 24, 2025
TO: CITY COUNCIL
RECOMMENDED BY: ADMINISTRATIVE SERVICES DIRECTOR DURAN
APPROVED BY: TAMARA VIDES, CITY MANAGER
SUBJECT: RECOMMENDED BUDGET FOR FISCAL YEARS 2025-27 AND RELATED

ACTIONS
RECOMMENDATION:

Staff will present the proposed Budget Plan for Fiscal Years 2025-2027, including a 5-year Capital Improvement Plan.

It is recommended that the City Council and Successor Agency, and Successor Housing Agency Boards of the City of Watsonville review the proposed FY 2025-26 and FY 2026-27 Budget Plan and take the following actions and any appropriate motions:

DISCUSSION:

Appropriate motions:

The City Council and Successor Agency and Successor Housing Agency Board of the City of Watsonville will consider the following actions at its June 24, 2025, meeting:
1) Approve a resolution adopting the Fiscal Year 2025-26 Budget, including the associated transfers of funds and approve the Five-Year Capital Improvement Program and position changes as highlighted and summarized in the staff report. 2) Resolution establishing the “Total Annual Appropriations” pursuant to State Constitution Article XIIIB for Fiscal Year FY 2025-26 (Proposition 4 GANN spending limit) 3) Ordinance instructing Santa Cruz County to levy and collect property tax on taxable property within the City of Watsonville for fiscal year beginning July 1, 2025, to June 30, 2026, at the levy rate of

0.077% and allocating proceed to the Retirement Fund
4) Successor Housing Resolution authorizing the expenditure of low and moderate-income housing funds.

2 5) Successor Agency Resolution finds that the use of taxes allocated from the Watsonville 2000 Redevelopment Project outside the project area will be of benefit to the project area. 6) Approve a resolution adopting various rates and fees at the Airport 7) Approve a resolution adopting facility rental fee schedule for the Parks and Community Services Department
Table 1: Fiscal Year FY 2025-26 and Fiscal Year 2026-27 Budget Summary Budget appropriations for fiscal year 2025-26 are $309,520,897, including a $122,579,258 General Fund.

It includes 420.25 full-time equivalent (FTE) positions across 12 departments that provide a range of public safety, infrastructure and support services. We are requesting a new staff member from the Water Fund, the position requested is Water Operations Supervisor. We are also proposing/including staffing reduction of 16.75 across all funds.

The proposed budget for the City of Watsonville is a balanced financial plan developed for a two-year planning period. It reflects our continued commitment to fiscal responsibility while focusing on the delivery of essential services to our community. The budget aligns available resources with the City Council’s priorities and strategic goals, supporting public safety, infrastructure and community programs.

As a planning document, it provides a framework for maintaining services levels, promoting long-term financial sustainability, and ensuring the well-being of Watsonville residents.

We are presenting a budget that will provide for proposed budget savings to present a balanced General Fund budget. Table 2 below provides a summary of the vacant positions removed to balance the General Fund. This is a balanced budget that maintains Council approved reserves.

This budget report was prepared to provide new and updated information. This allows for an expedited budget review and adoption process. We are presenting a budget that will provide for proposed budget savings to present a balanced General Fund budget. This is a balanced budget that maintains Council approved reserves. Today, the City Council is conducting a second study session on the proposed budget for the next fiscal year and is considering it for adoption.

Our revenues have increased from the draft budget to this final document in the amount of $1,747,174, this revenue is made up of grant revenue and an operating transfer in. Additionally, the appropriation General Fund
Total Special Total Debt Total
Enterprise
Total
Internal
Total
Private Trust
Total Total All Funds
Projected Resources 2025-26
Total Resources 105,214,742 28,543,299 1,786,993 88,417,440 24,117,936 419,145 248,499,555 Total Uses 122,579,258 42,374,041 1,786,993 116,508,357 25,777,588 494,660 309,520,897 Surplus / (Shortfall) (17,364,516) (13,830,742) - (28,090,917) (1,659,652) (75,515) (61,021,342) Projected Resources 2026-27
Total Resources 71,823,206 21,114,151 286,161 96,625,721 25,115,663 419,145 215,384,047 Total Uses 74,922,372 21,610,044 144,521 93,091,558 26,112,585 422,883 216,303,963 Surplus / (Shortfall) (3,099,166) (495,893) 141,640 3,534,163 (996,922) (3,738) (919,916)

FUND ANALYSIS SUMMARY

3 requests have decreased by $6,610,484. Primarily these decreases are due to a reduction in carryforward capital project funding needs. A detailed line-item explanation of each of these changes requested is included as “Exhibit B”, this document represents our “technical changes”. This document includes the identified changes from the draft budget document to the final budget document. Most of the line items requested in this document stem from the CIP carryover projects and their respective grant revenue line items.

City Charter. Under the Charter of the City of Watsonville, sections 1103-1105 instruct that the City Manager must prepare and present a proposed budget for the ensuing fiscal year at least 30 days before the beginning of next fiscal year. The Charter requires the budget to include:
a) An itemized statement of estimated income and revenues from all sources for the year that the budget is to cover.
b) An itemized statement of the proposed expenditures is recommended by the City Manager for each office, department, or agency for the year which the budget is to cover. c) The probable amount required to be levied and raised by property taxation; and d) Other information the City Manager may deem essential, or as the Council may require.

The Charter requires that “the Council shall proceed to consider the proposed budget and may increase, decrease or omit any item or insert new items therein.” It further requires that a public hearing be held, grants the authority for Council to make any final modifications and then requires that before to the beginning of the ensuing fiscal year, “the Council shall adopt the budget with revisions, if any.” General Fund
While the City is experiencing slowing or moderate growth in its major General Fund revenue sources, this growth is outpaced by rising costs, particularly in the areas of salaries, employee benefits and contractual services. These rising costs continue to place significant pressure on the City’s financial resources. As we put this budget together, we recognize that uncertainty with inflation, interest rates, unpredictability stemming from larger economic uncertainty and threats to federal funding are of concern. To present a balanced budget, staff conducted a thorough review of all authorized positions that had been vacant since the start of our last fiscal year budget process and were on a temporary hiring pause and have made a reduction in those positions. These difficult but prudent decisions were made to ensure the City remains fiscally responsible while continuing to provide essential services to the community. This budget has reduced 14 vacant positions across several departments.

All of our labor agreements, apart those of our Service Employees International Union (SEIU) group, were up for negotiations at the same time this year. As part of our last contract with some of the labor groups, the City did conduct a comprehensive salary survey for most positions. The proposed budget includes cost-of-living adjustments (COLAs) and limited equity adjustments as a way to recognize and value the hard work and dedication of our employees and support the retention of professional talent.

We are experiencing operational expenditures exceeding our initial budget projections. The increased costs are in several areas, specifically salaries, insurance costs, PERS Unfunded Liability, legal and other

4 contract services. Rising pension liabilities are due to the underperformance of the Public Employee’s Retirement System (CALPERS) investment earnings.

The rise in salaries also increased the costs of insurance and retirement. Unfunded liability estimates are provided by CalPERS and are used in the budget preparation. In June 2023, those were provided assuming that the investment return rate by CalPERS would be 6.8%. However, the revised amount now payable for the upcoming fiscal year is with the investment rate of return of 5.8%. Annual payment on the Unfunded Accrued Liability (UAL) is the amortized dollar amount needed to fund past service credit earned (or accrued) for members who are currently receiving benefits, active members, and for members entitled to deferred benefits, as of the valuation date. The Unfunded PERS liability costs are anticipated to remain high until 2032. At which point, there should be some relief as the PEPRA formula provides for some relief in costs. The proposed increase in legal costs is to align these expenditures with a more realistic budget. In previous years, we’ve had to request additional legal budget appropriations during the mid-year review. Other contract services include the Animal Shelter and 911 JPA increased costs.

Pursuant to City Council directions and in coordination with our City Manager’s Office, we executed a targeted expenditure reductions – consisting of a 1% baseline operational cuts across multiple general fund departments and reduction of select vacant positions. These structural adjustments generated the necessary budgetary savings to sustain departmental service levels and strategic growth initiatives while still preserving a balanced General Fund with no deficits.

Table 2 – Vacant General Fund Positions Reduced to Balance Budget Position Department
Number
of FTE
Assistant City Manager City Manager 1
Custodian Public Works 1
Assistant Finance Director Finance 1
IT Analyst II Innovative Technology 1
Development Review Tech Community Development 1
Police Officer Police 2
Recration Coordinator Police 1
Police Clerk II Police 1
Fire Inspector Fire 1
Sr Admin Analyst Parks and Recreation 1
Totals 11

5 Additional vacant positions were eliminated in the Grants and Housing Funds due to the associated grant funding ending. These reductions reflect positions that were unfunded because of the expiration of their respective special funding sources.

Table 3- Grant and Housing Funds Positions Reduced due to Funding Ending Revenues:

The following chart illustrates the composition of revenues in the General Fund for FY 2025-26.

Chart 1: General Fund Revenues by Type for Fiscal Year 2025-26 Position Department
Number
of FTE
Recreation Specialist Parks and Recreation 1
Program Coordinator Police 1
Administrative Analyst Community Development 1
Totals 3

6 Property Tax- We are budgeting base property tax to be 3.6% higher than the estimated collections for FY 2024-25 resulting in a total of $14,943,741. Property taxes are collected based on County Assessor rolls that were formally closed in January of 2025. Normal Prop 13 assessed CPI growth maximum allowed is 2% but we have continued to see modest growth and properties changing hands and this is increasing our property tax base.

Sales Tax – The category of sales represents 34% of General Fund revenues, which has positioned itself as our top General Fund revenue source. This is due to the passage of Measure R. Measure R adds a ½ cent sales tax that is a true showing of our communities forward thinking and strong support to fund key community priorities, which include streets and roads, libraries and parks. Additionally, the City is also supported by sales tax in various special funds including the Library, Measure Y Public Safety Sales tax, and Measure D Transportation Tax. Similar assumptions discussed in this report also affect each of these funds.

Over the past few years, sales tax has experienced robust growth. However, in the upcoming year, we are projecting modest increases. We cannot continue to assume the increases above budget we have been receiving, as nationwide car sales are slowing, uncertainty with tariffs, and the lower economy in general will start to affect this revenue stream. The table below shows the City’s share of the County’s

9.75% sales tax:

Table 4: Breakdown of Santa Cruz sales tax.

Hotel Tax – Hotel Tax represents a relatively smaller proportion of the City’s overall revenue mix. Hotel Tax is projected to grow by about 3% next fiscal year 2025-26.

7 Utility User Tax- Utility User Tax represents about 6.8% 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 3% in the next budget year.

Community Development Department Revenues – The Community Development Department charges fees for various services, such as inspections, plan check, and permit issuance. The department is expected to see lower than budgeted revenues in the current year. They are further planning for decrease planning permit revenues due to several factors, including few projects in the planning pipeline, reduced revenues from the streamlined approval process for infill projects downtown (involving only an Administrative Design Review Permit [~$4,000 per project] and streamlined environmental review because of the adopted Downtown Watsonville Specific Plan and associated EIR.

Furthermore, anticipated cooling market conditions and reduced new housing starts because of increased construction costs and uncertainty with tariffs on lumber and building materials.

Parks and Community Services Revenues – The Parks and Community Services Department is projecting modest increases in their departmental revenue over their current fiscal year collections. The Parks and Community Services department brings exceptional value, particularly through its low-cost services for our residents, especially children and seniors. The department has partnered with the Pajaro Valley Unified School District and is collaborating with the school district and in this way are leveraging resources to better serve the community. Parks staff are busy working on the Ramsay Park Renaissance Project and we will have a very much improved park space when we finalize this project. This budget does include a lease revenue bond issuance of $12MM to help fund the Ramsay Park and Plaza Improvement project upgrades. We are using legally available general funds including Measure R for this issuance.

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. The budget does assume the use of $7.9MM of American Rescue Plan Act (ARPA) funds over the next fiscal year. We are using those funds to help fund the Ramsay Park Renaissance Project. At 26 acres, Ramsay Park is the City’s largest park and is often considered the community’s hub for recreation. The last major renovations to the site were completed over 30 years ago, bringing in new play structures and a ballfield, with the skatepark and pump track added in the past decade. It is important to highlight that these funds must be spent for its specific purpose by December 2026. The ARPA funds present us with a unique opportunity to address a pressing community call for reinvestment of this key space is demonstrated by a two-decade-long conversation with the community through countless meetings with hundreds of residents over three state grant applications that ultimately went unfunded, especially regarding improvements to the soccer field and play areas.

Table 5 below summarizes all the revenue categorized by type described above.

Table 5: General Fund Revenue Summary