Agenda packet — Watsonville City Council, August 26, 2025 (part 3 of 8)

4 ALTERNATIVE ACTION:

The Council could elect to:
 Appropriate greater or lesser amounts for event services/supplies and/or event elements. Staff would scale event to fit the budget.
 Not appropriate funds for event services or event elements. The winter event may not take place if FWPCS are not able to raise enough funds to cover all event costs and event elements would not be purchased.

ATTACHMENTS AND/OR REFERENCES (IF ANY):

None.

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Reso No. (CM)
Meeting Date: 082625 SWZ ______ TV ______ PCS ______
1 RESOLUTION NO.__________ (CM)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
WATSONVILLE APPROPRIATING $32,000 TO THE GENERAL FUND
AND $33,000 TO THE GENERAL FUND CAPITAL IMPROVEMENT PLAN

FOR A WINTER SPECIAL EVENT
WHEREAS, for many decades the Parks and Community Services Department (PCS) has installed lights and planned and implemented a Holiday Tree Lighting Ceremony in November/December of each year; and
WHEREAS, in many years during the month of December, PCS has implemented an additional winter event, as budgets have allowed and with the support of generous community donations; and
WHEREAS, high special event attendance is indicative of the community building value that many residents place in in-person City special events; and WHEREAS, several City Council Members have requested that the City create additional winter festivities and events in the downtown.

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

1. This action is exempt from the requirements of the California Environmental Quality Act (CEQA) in accordance with CEQA Guidelines Section 15378(b)(5), in that hosting a special event does not meet CEQA's definition of a “project,” because the action does not have the potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment and if a “project,” is exempt under the “common sense” exception (14 Cal. Code Regs. § 15061(b)(3)) because it can be seen with certainty that there is no possibility that this action may have a significant effect on the environment, and 14 C.C.R. § 15061 (minor alterations to land).

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Reso No. (CM)
Meeting Date: 082625
2 2. The Council hereby authorizes the appropriation of $32,000 to the General Fund for winter special event expenses and $33,000 to the General Fund Capital Improvement Plan for the purchase of winter event elements, for a total of $65,000. **************************************

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1 CITY COUNCIL AGENDA REPORT
MEETING DATE: Tuesday, August 26, 2025
TO: CITY COUNCIL
WRITTEN BY: SR. FINANCIAL ANALYST DIAZ
RECOMMENDED BY: PUBLIC WORKS & UTILITIES DIRECTOR LINDBERG APPROVED BY: TAMARA VIDES, CITY MANAGER
SUBJECT: AUTHORIZE THE TRANSFER OF THE RECYCLED WATER FACILITY ELECTRICAL UPGRADE PROJECT #15250 FROM THE WATER FUND TO THE WASTEWATER FUND, IN THE AMOUNT OF $1,350,000
RECOMMENDATION:

Adopt a resolution authorizing the transfer of the Recycled Water Facility Electrical Upgrade Project #15250 from the Water Fund to the Wastewater Fund.

BACKGROUND:

This project was approved at the June 24th, 2025, Council meeting as part of the Water Fund Capital Improvement Program. A resolution is recommended authorizing the transfer of the Recycled Water Facility Electrical Upgrades project #15250 from the Water Fund to the Wastewater Fund, in the amount of $1,350,000.

DISCUSSION:

This project is planned in the Recycled Water Facility Capital Improvements budget for fiscal year 25/26 within the Wastewater Enterprise Fund 532. The city owns, maintains, and operates the Recycled Water Treatment Facility, and the Pajaro Valley Water Management Agency (PV Water) reimburses the city for these costs, including this project which is also in their fiscal year 25/26 budget.

This project was budgeted under the wrong fund and staff is requesting the transfer of this project from the Water Fund to the Wastewater Fund.

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2 CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION:

This project is exempt from the California Environmental Quality Act (“CEQA”) pursuant to Section 15301(b), because it involves the repair, maintenance, and minor alteration of existing electrical equipment for a publicly owned sewerage utility. Further, none of the exceptions to the CEQA exemption apply. This is because the project will have no impact on environmental resources of hazardous or critical concern and will not result in or contribute to cumulative impacts. There are no unusual circumstances associated with the project that would result in a significant effect on the environment, nor would the project impact scenic resources. The project is not situated on a hazardous waste site and would not impact any historic resources. Therefore, the proposed project is exempt from CEQA.

STRATEGIC PLAN:

This action is consistent with strategic plan goal:

Infrastructure & Environment

FINANCIAL IMPACT:

This request is for the transfer of the Recycled Water Facility Upgrades Project from the Water Fund #0720-913-7855-15250 to the Wastewater Fund #0710-911-7855-15250 ALTERNATIVE ACTION:

No reasonable alternatives are known at this time.

ATTACHMENTS AND/OR REFERENCES (IF ANY):

None.

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1 Reso No. ______ (CM)
Meeting Date: 082625 SWZ ______ TV ______ PWU ______
RESOLUTION NO. (CM)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

WATSONVILLE AUTHORIZING THE TRANSFER OF THE RECYCLED
WATER FACILITY ELECTRICAL UPGRADE PROJECT #15250 FROM
THE WATER FUND (0720) TO THE WASTEWATER FUND (0730) IN THE AMOUNT OF $1,350,000 (FROM ACCOUNT # 0720-913-7855-15250 TO 0710-911-7855-15250)
WHEREAS, on June 24, 2025, the City Council adopted Resolution approving the Recycled Water Facility Electrical Upgrade project #15250 (“Project”) as part of the Water Fund Capital Improvement Plan; and
WHEREAS, this Project is planned in the Recycled Water Facility Capital Improvement budget for fiscal year 2025/2026 within the Wastewater Enterprise Fund in the amount of $1,350,000; and
WHEREAS, this Project was inadvertently budgeted under the Water Fund. Staff recommends transferring the Project to the Wastewater Fund.

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

1. This Project is exempt from the California Environmental Quality Act (“CEQA”) pursuant to Section 15301(b), because it involves the repair, maintenance, and minor alteration of existing electrical equipment for a publicly owned sewerage utility.

Further, none of the exceptions to the CEQA exemption apply. This is because the Project will have no impact on environmental resources of hazardous or critical concern and will not result in or contribute to cumulative impacts. There are no unusual circumstances associated with the Project that would result in a significant effect on the environment, nor would the project impact on scenic resources. The Project is not situated on a

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2 Reso No. ______ (CM)
Meeting Date: 082625
hazardous waste site and would not impact on any historic resources. Therefore, the Project is exempt from CEQA. Transferring funding of the Project from one fund to another has no environmental impacts.

2. That the Council hereby approves the transfer of the Recycled Water Facility Electrical Project from the Water Fund, 0720-913-7855-15250, to the Wastewater Fund, 0710-911-7855-15250, in the amount of $1,350,000. ********************************

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1 CITY COUNCIL AGENDA REPORT
MEETING DATE: Tuesday, August 26, 2025
TO: CITY COUNCIL
WRITTEN BY: PRINCIPAL MANAGEMENT ANALYST ZAVALA
RECOMMENDED BY: CITY MANAGER VIDES
APPROVED BY: TAMARA VIDES, CITY MANAGER
SUBJECT: RESOLUTION GRANTING CONSENT TO SANTA CRUZ

COUNTY TO FORM THE SANTA CRUZ MOUNTAINS WINE

IMPROVEMENT DISTRICT
RECOMMENDATION:

Adopt a resolution granting consent to the County of Santa Cruz (County) to establish the Santa Cruz Mountains Wine Improvement District (SCMWID).

BACKGROUND:

The County is working with the Santa Cruz Mountains Winegrowers Association (SCMWA) to form the SCMWID pursuant to the Property and Business Improvement District Law of 1994 (94 Law). The County has requested the inclusion of the City of Watsonville in the SCMWID by resolution (Attachment 1).

The SCMWID is a benefit assessment district proposed to create a revenue source to help fund Marketing & Brand Awareness and Business Improvement & Special Project efforts for wineries in the Santa Cruz Mountains. This approach has been used successfully in other wine regions throughout the country to provide the benefit of driving increased sales revenue directly to payors. The SCMWID includes all wineries, existing and in the future, located generally within the boundaries of the cities of Santa Cruz, Saratoga, Scotts Valley, Capitola, and Watsonville, the towns of Los Gatos, Portola Valley, and Woodside, and portions of the unincorporated areas of the Counties of Santa Cruz, Santa Clara, and San Mateo.

DISCUSSION:

Winery owners decided to pursue formation of the SCMWID in order to create a revenue source devoted to marketing SCMWID as a premier wine destination and increasing demand for visitation at assessed

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2 wineries in order to increase winery sales revenue. If established, the SCMWID would generate approximately $575,000 on an annual basis for promotion of wineries in the SCMWID.

WINE IMPROVEMENT DISTRICTS
Wine Improvement Districts (WIDs) utilize the efficiencies of private sector operation in the market-based promotion of business districts. These special assessment districts allow assessed business owners to organize their efforts to increase sales and promotional efforts. Business owners within the WID fund the WID, and those funds are used to provide services that are desired by and benefit the assessed businesses within the WID.

WID benefits:
 Funds cannot be diverted for other government programs;  They are customized to fit the needs of each destination;  They allow for a wide range of services; including destination marketing, business promotion activities, and sales lead generation;
 They are designed, created and governed by those who will pay the assessment; and  They provide a stable funding source for business promotion.

In California, WIDs are primarily formed pursuant to the Property and Business Improvement District Law of 1994 (94 Law). This law allows for the creation of special benefit assessment districts to raise funds within a specific geographic area. The key difference between WIDs and other special benefit assessment districts is that funds raised are returned to the private non-profit corporation governing the WID.

MANAGEMENT DISTRICT PLAN
The Management District Plan (Attachment 2) includes the proposed boundary of the SCMWID, a service plan and budget and a proposed means of governance. The SCMWID will include all wineries, existing and in the future, located generally within the boundaries of the cities of Santa Cruz, Saratoga, Scotts Valley, Capitola, and Watsonville, the towns of Los Gatos, Portola Valley, and Woodside, and portions of the unincorporated areas of the Counties of Santa Cruz, Santa Clara, and San Mateo.

The annual assessment rate is one percent (1%) of gross direct to consumer sales revenue on winery sales.

Beginning in the second year of the SCMWID term, the assessment rate may be increased by the Owners’ Association to a maximum rate of two percent (2%) of gross direct to consumer sales revenue on winery sales. The maximum increase or decrease in a year shall be no more than one-half of one percent (0.5%).

If the assessment rate is increased, it may subsequently be decreased but shall not be decreased below a minimum of one percent (1%) of gross direct to consumer sales revenue on winery sales.

Revenue generated from the SCMWID is intended only to provide programs and services for assessed wineries, all of which are located in California. Sales made outside of the state of California are not subject to assessment due to a lack of benefit. Assessment dollars will not be spent on any programs or activities

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3 to benefit individual wineries outside of the state of California. Assessment dollars may be spent outside of California to elevate the notoriety of the Santa Cruz Mountains as a premier winery destination with the desired outcome of increased in-person visitation to wineries paying the assessment.

The proposed SCMWID will have a five (5) year term, beginning November 1, 2025, or as soon as possible thereafter, and ending five (5) years from its start date. The assessment will be implemented beginning November 1, 2025. Once per year beginning on the anniversary of SCMWID formation there is a thirty (30) day period in which winery owners paying fifty percent (50%) or more of the assessment may protest and begin proceedings to terminate the SCMWID.

The County or a third-party collection agency shall be responsible for collecting the assessment on a quarterly basis from each assessed winery. The County or a third-party collection agency shall forward the assessments to the Santa Cruz Mountains Winegrowers Association (SCMWA), which will have the responsibility of managing SCMWID programs as provided in the Management District Plan. The County or a third-party collection agency shall be paid a fee equal to two percent (2%) of the amount of assessment collected to cover its costs of collection and administration.

SCMWID ESTABLISHMENT PROCESS
August 5, 2025 RESOLUTION OF INTENTION HEARING (COMPLETED) Upon the submission of a written petition, signed by the winery owners in the proposed SCMWID who will pay more than fifty percent (50%) of the assessments proposed to be levied, the Board of Supervisors (Board) may initiate proceedings to establish the SCMWID by the adoption of a resolution expressing its intention to establish the SCMWID.

Petition Status: Petitions in favor of SCMWID formation were submitted by 43 assessed wineries, which represent 57.36% of the total SCMWID assessment. This majority petition allows the Board to initiate proceedings for SCMWID formation at the August 5, 2025, meeting.

August 5, 2025 RESOLUTION REQUESTING CONSENT (COMPLETED) Upon adoption of the Resolution of Intention, the County must request consent from all jurisdictions to be included in the proposed SCMWID. Consent must be received from the jurisdictions prior to the final public hearing for their jurisdiction to be included in the established SCMWID.

No later than August 9, 2025 NOTICE (COMPLETED)
The 94 Law requires the County to mail written notice to the owners of all wineries proposed to be assessed within the SCMWID. Mailing the notice begins a mandatory forty-five (45) day period in which assessed winery owners may protest SCMWID formation.

September 9, 2025 PUBLIC MEETING
Allow public testimony on the formation of the SCMWID and levy of assessments. No Board action required.

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4 September 23, 2025 FINAL PUBLIC HEARING
If written protests are received from the owners of wineries in the proposed SCMWID which will pay fifty percent (50%) or more of the assessments proposed to be levied, and protests are not withdrawn so as to reduce the protests to less than fifty percent (50%), no further proceedings to levy the proposed assessment against such wineries shall be taken for a period of one (1) year from the date of the finding of a majority protest by the Board.

If the Board, following the public hearing, decides to establish the proposed SCMWID, the Board shall adopt a resolution of formation.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION:

N/A
STRATEGIC PLAN:

Economic Development
FINANCIAL IMPACT:

None immediately. The County or a third-party collection agency will receive a fee of two percent (2%) of the amount collected to cover its costs of administration. Because the SCMWID programs are intended to increase visitation to the County, there may be an increase in sales tax collections.

ALTERNATIVE ACTION:

The City Council could choose not to adopt the Resolution Granting Consent.

ATTACHMENTS AND/OR REFERENCES (IF ANY):

1. Adopted Resolution of the County of Santa Cruz Requesting Consent from the City of Watsonville.

2. SCMWID Management District Plan

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1 RESOLUTION NO. 159-2025

RESOLUTION OF THE SANTA CRUZ COUNTY BOARD OF SUPERVISORS

REQUESTING CONSENT OF THE CITIES OF SANTA CRUZ, SARATOGA, SCOTTS VALLEY, CAPITOLA, AND WATSONVILLE; THE TOWNS OF LOS GATOS, PORTOLA VALLEY AND WOODSIDE; AND THE COUNTIES OF

SANTA CLARA AND SAN MATEO TO FORM THE SANTA CRUZ

MOUNTAINS WINE IMPROVEMENT DISTRICT
WHEREAS, the Board of Supervisors of the County of Santa Cruz desires to begin proceedings to form the Santa Cruz Mountains Wine Improvement District (SCMWID); and
WHEREAS, winery owners have requested that the Board form the SCMWID; and WHEREAS, a portion of the territory proposed to be included in the SCMWID lies within the boundaries of the cities of Santa Cruz, Saratoga, Scotts Valley, Capitola, and Watsonville (cities); the towns of Los Gatos, Portola Valley, and Woodside (towns); and portions of the unincorporated areas of the counties of Santa Clara and San Mateo (counties), as shown on the map attached hereto as Exhibit A and incorporated herein by such attachment; and
WHEREAS, the area of the cities, towns, and counties which lies within the boundaries of the proposed SCMWID will, in the opinion of the Board, benefit from the improvements and activities, and the purpose sought to be accomplished by the work can best be accomplished by a single comprehensive scheme of work;

NOW, THEREFORE, BE IT RESOLVED BY THE SANTA CRUZ COUNTY BOARD OF SUPERVISORS THAT:

Section 1: The above recitals are true and correct.

Section 2: Consent of the cities, towns, and counties through their respective City Councils, Town Councils and Boards of Supervisors, is hereby requested to form the SCMWID, and to grant to the Santa Cruz County Board of Supervisors jurisdiction for all the purposes in connection with creation, operation, and future renewals of the proposed SCMWID.

Section 3: The Clerk of the Board is hereby directed to transmit a certified copy of this Resolution to the City Clerk of the cities of Santa Cruz, Saratoga, Scotts Valley, Capitola, and Watsonville; to the Town Clerk of the towns of Los Gatos, Portola Valley, and Woodside; and to the County Clerk of the counties of Santa Clara and San Mateo.

PASSED AND ADOPTED by the Board of Supervisors of the County of Santa Cruz, State of California, this 5th day of August, 2025, by the following vote:

Docusign Envelope ID: 379CD258-E7AD-4838-B4E6-F4983EFB31E3 Adopted 8/5/2025 Board of Supervisors
DOC-2025-627 27.c
Docusign Envelope ID: 0E3885AE-3042-4ABB-8613-48F9E4D04FE5 Attachment 1

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2 AYES: Supervisors Koenig, De Serpa, Cummings, Martinez and Hernandez NOES: None
ABSENT: None
ABSTAIN: None
______________________________
Felipe Hernandez
Chair of the Board
ATTEST: ___________________________
Juliette Rezzato
Clerk of the Board
APPROVED AS TO FORM:
______________________________
Jason M. Heath
Office of the County Counsel
Docusign Envelope ID: 379CD258-E7AD-4838-B4E6-F4983EFB31E3 Resolution 159-2025
Docusign Envelope ID: 0E3885AE-3042-4ABB-8613-48F9E4D04FE5 8/6/2025
8/6/2025
Attachment 1

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3 Exhibit A: SCMWID Boundary Map
Docusign Envelope ID: 379CD258-E7AD-4838-B4E6-F4983EFB31E3 Docusign Envelope ID: 0E3885AE-3042-4ABB-8613-48F9E4D04FE5 Attachment 1

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Certificate Of Completion
Envelope Id: 379CD258-E7AD-4838-B4E6-F4983EFB31E3 Status: Completed Subject: Complete with Docusign: Resolution Requesting Consent SCMWID.pdf Source Envelope:

Document Pages: 3 Signatures: 1 Envelope Originator:

Certificate Pages: 4 Initials: 0 Peter Detlefs
AutoNav: Enabled
EnvelopeId Stamping: Enabled
Time Zone: (UTC-08:00) Pacific Time (US & Canada)
701 Ocean Street
Santa Cruz, CA 95060
[email protected]
IP Address: 76.209.242.199
Record Tracking
Status: Original
7/11/2025 12:12:56 PM
Holder: Peter Detlefs
[email protected]
Location: DocuSign
Security Appliance Status: Connected Pool: FedRamp
Storage Appliance Status: Connected Pool: County of Santa Cruz Location: Docusign Signer Events Signature Timestamp
Jason M. Heath
[email protected]
County Counsel
County of Santa Cruz
Security Level: Email, Account Authentication
(None)
Signature Adoption: Pre-selected Style
Using IP Address: 63.194.190.100
Sent: 7/11/2025 12:13:27 PM
Viewed: 7/11/2025 12:46:38 PM
Signed: 7/11/2025 12:47:29 PM
Electronic Record and Signature Disclosure:

Accepted: 7/11/2025 12:46:38 PM
ID: ea3475d9-678d-4b7b-b7e7-d291d83c0054
In Person Signer Events Signature Timestamp
Editor Delivery Events Status Timestamp
Agent Delivery Events Status Timestamp
Intermediary Delivery Events Status Timestamp
Certified Delivery Events Status Timestamp
Carbon Copy Events Status Timestamp
Witness Events Signature Timestamp
Notary Events Signature Timestamp
Envelope Summary Events Status Timestamps
Envelope Sent Hashed/Encrypted 7/11/2025 12:13:27 PM
Certified Delivered Security Checked 7/11/2025 12:46:38 PM Signing Complete Security Checked 7/11/2025 12:47:29 PM Completed Security Checked 7/11/2025 12:47:29 PM
Payment Events Status Timestamps
Electronic Record and Signature Disclosure
Docusign Envelope ID: 0E3885AE-3042-4ABB-8613-48F9E4D04FE5 Attachment 1

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All notices and disclosures will be sent to you electronically Electronic Record and Signature Disclosure created on: 2/28/2022 5:23:37 PM Parties agreed to: Jason M. Heath
Docusign Envelope ID: 0E3885AE-3042-4ABB-8613-48F9E4D04FE5 Attachment 1

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Unless you tell us otherwise in accordance with the procedures described herein, we will provide electronically to you through the DocuSign system all required notices, disclosures, authorizations, acknowledgements, and other documents that are required to be provided or made available to you during the course of our relationship with you. To reduce the chance of you inadvertently not receiving any notice or disclosure, we prefer to provide all of the required notices and disclosures to you by the same method and to the same address that you have given us. Thus, you can receive all the disclosures and notices electronically or in paper format through the paper mail delivery system. If you do not agree with this process, please let us know as described below. Please also see the paragraph immediately above that describes the consequences of your electing not to receive delivery of the notices and disclosures electronically from us.

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Docusign Envelope ID: 0E3885AE-3042-4ABB-8613-48F9E4D04FE5 Attachment 1

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Docusign Envelope ID: 0E3885AE-3042-4ABB-8613-48F9E4D04FE5 Attachment 1

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Certificate Of Completion
Envelope Id: 0E3885AE-3042-4ABB-8613-48F9E4D04FE5 Status: Completed Subject: Complete with Docusign: Resolution 159-2025 requesting consent to form the Santa Cruz Mountains...

Source Envelope:

Document Pages: 7 Signatures: 2 Envelope Originator:

Certificate Pages: 5 Initials: 0 Elizabeth Padilla
AutoNav: Enabled
EnvelopeId Stamping: Enabled
Time Zone: (UTC-08:00) Pacific Time (US &
Canada)
Stamps: 1 701 Ocean Street
Santa Cruz, CA 95060
[email protected]
IP Address: 63.194.190.100
Record Tracking
Status: Original
8/6/2025 2:55:29 PM
Holder: Elizabeth Padilla
[email protected]
Location: DocuSign
Security Appliance Status: Connected Pool: FedRamp
Storage Appliance Status: Connected Pool: County of Santa Cruz Location: Docusign Signer Events Signature Timestamp
Felipe Hernandez
[email protected]
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(None)
Signature Adoption: Uploaded Signature Image
Using IP Address: 63.194.190.100
Sent: 8/6/2025 3:05:24 PM
Viewed: 8/6/2025 3:06:11 PM
Signed: 8/6/2025 3:06:36 PM
Electronic Record and Signature Disclosure:

Accepted: 7/17/2023 11:30:46 AM
ID: 2a2f0d4d-8f3b-4197-9c0c-4b7e9be9c82a
Juliette Rezzato
[email protected]
Chief Deputy Clerk of the Board of Supervisors
County of Santa Cruz
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(None)
Signature Adoption: Pre-selected Style
Using IP Address: 63.194.190.100
Sent: 8/6/2025 3:06:37 PM
Viewed: 8/6/2025 3:26:15 PM
Signed: 8/6/2025 3:26:29 PM
Electronic Record and Signature Disclosure:

Accepted: 5/11/2022 7:47:21 AM
ID: 050883f5-a40c-4427-bdbd-fa282a697a25
CBD eSignature
[email protected]
County of Santa Cruz
Security Level: Email, Account Authentication
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Using IP Address: 63.194.190.100
Sent: 8/6/2025 3:26:30 PM
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Signed: 8/6/2025 4:02:21 PM
Freeform Signing
Electronic Record and Signature Disclosure:

Accepted: 6/20/2024 3:08:48 PM
ID: 4b7794de-1393-406f-a9a3-56a92d4b90d7
In Person Signer Events Signature Timestamp
Editor Delivery Events Status Timestamp
Agent Delivery Events Status Timestamp
Intermediary Delivery Events Status Timestamp
Attachment 1

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Certified Delivery Events Status Timestamp
Carbon Copy Events Status Timestamp
Peter Detlefs
[email protected]
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All notices and disclosures will be sent to you electronically Electronic Record and Signature Disclosure created on: 2/28/2022 5:23:37 PM Parties agreed to: Felipe Hernandez, Juliette Rezzato, CBD eSignature, Peter Detlefs Attachment 1

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Attachment 1

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2025-2030

SANTA CRUZ MOUNTAINS WINE IMPROVEMENT DISTRICT

MANAGEMENT DISTRICT PLAN
May 20, 2025 Prepared pursuant to the Property and Business Improvement District Law of 1994, Streets and Highways Code Section 36600 et seq.

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Contents
I. OVERVIEW ........................................................................................................................................3 II. BACKGROUND ................................................................................................................................5 III. BOUNDARY.......................................................................................................................................6 IV. ASSESSMENT BUDGET AND SERVICES................................................................................8 A. Annual Service Plan............................................................................................................ 8 B. Annual Budget .................................................................................................................. 10 C. California Constitutional Compliance .............................................................................. 11 D. Assessment........................................................................................................................ 12 E. Overdue Charges and Interest........................................................................................... 13 F. Time and Manner for Collecting Assessments................................................................. 14 V. GOVERNANCE...............................................................................................................................15 A. Owners’ Association......................................................................................................... 15 B. Brown Act and California Public Records Act Compliance ............................................ 15 C. Annual Report................................................................................................................... 15 APPENDIX 1 – LAW....................................................................................................................................16 APPENDIX 2 – ASSESSED WINERIES* ...............................................................................................28 Prepared by
Civitas
(800)999-7781
www.civitasadvisors.com
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SCMWID Management District Plan 3
May 20, 2025
I. OVERVIEW
Developed by wineries in the Santa Cruz Mountains and by the Santa Cruz Mountains Winegrowers Association (SCMWA), the Santa Cruz Mountains Wine Improvement District (SCMWID) is an assessment district proposed to provide specific benefits to payors, by funding marketing & brand awareness and business improvement & special projects efforts for assessed wineries. This approach has been used successfully in other wine regions throughout the country to provide the benefit of driving increased sales revenue directly to payors.

Location: The SCMWID includes all wineries, existing and in the future, located generally within the boundaries of the cities of Santa Cruz, Saratoga, Scotts Valley, Capitola, and Watsonville, the towns of Los Gatos, Portola Valley, and Woodside, and portions of the unincorporated areas of the Counties of Santa Cruz, Santa Clara, and San Mateo.

A detailed boundary description and a boundary map are included in Section III of this Management District Plan (Plan).

Services: The SCMWID is designed to provide specific benefits directly to payors by increasing winery sales and revenue therefrom. Marketing, brand awareness, business improvement, and special projects efforts will promote assessed wineries in the SCMWID to increase winery sales revenue.

Budget: The total SCMWID annual assessment budget for the initial year of its five (5) year operation is anticipated to be approximately $575,000. A similar budget is expected to apply to subsequent years, but this budget is expected to fluctuate as sales do, as wineries open and close, and if the assessment rate is increased or decreased pursuant to this Management District Plan (Plan).

Cost: The annual assessment rate is one percent (1%) of gross direct to consumer sales revenue on winery sales. Beginning in the second year of the SCMWID term, the assessment rate may be increased by the Owners’ Association to a maximum rate of two percent (2%) of gross direct to consumer sales revenue on winery sales. The maximum increase or decrease in a year shall be no more than one-half of one percent (0.5%). If the assessment rate is increased, it may subsequently be decreased but shall not be decreased below a minimum of one percent (1%) of gross direct to consumer sales revenue on winery sales.

Based on the benefit received, assessments will not be collected on wholesale, purchases made outside of the state of California, or purchases made pursuant to contracts executed prior to November 1, 2025. Revenue generated from the SCMWID is intended only to provide programs and services for assessed wineries, all of which are located in California. Sales made outside of the state of California are not subject to assessment due to a lack of benefit. Assessment dollars will not be spent on any programs or activities to benefit individual wineries outside of the state of California.

Assessment dollars may be spent outside of California to elevate the notoriety of the Santa Cruz Mountains as a premier winery destination with the desired outcome of increased in-person visitation to wineries paying the assessment.

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SCMWID Management District Plan 4
May 20, 2025
Collection: The County of Santa Cruz (County) or a third-party collection agency shall be responsible for collecting the assessment on a quarterly basis (including any delinquencies, overdue charges and interest) from each assessed winery located in the boundaries of the SCMWID. The County or a third-party collection agency shall take all reasonable efforts to collect the assessments from each assessed winery.

Duration: The SCMWID will have a five (5) year life, beginning on November 1, 2025, or as soon as possible thereafter, and ending five (5) years from its start date. After five (5) years, the SCMWID may be renewed pursuant to the Property and Business Improvement District Law of 1994, Streets and Highways Code section 36600 et seq. (94 Law) if winery owners support continuing the SCMWID programs.

Management: The SCMWA shall serve as the Owners’ Association to provide improvements and activities for the SCMWID. The Owners’ Association is charged with managing funds and implementing programs in accordance with this Plan, and must provide annual reports to the County.

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SCMWID Management District Plan 5
May 20, 2025
II. BACKGROUND
Wine Improvement Districts (WIDs) are an evolution of the traditional Business Improvement District (BID). BIDs utilize the efficiencies of private sector operation in the market-based promotion of business districts. BIDs allow business owners to organize their efforts to increase sales and promotional efforts. Business owners within the district fund a BID, and those funds are used to provide services that the businesses desire and benefit the businesses within the district.

Business Improvement District services may include, but are not limited to:
➢ Marketing of the District
➢ Business Promotion Activities
➢ Infrastructure Improvements
In California, BIDs are formed pursuant to the 94 Law. This law allows for the creation of special benefit assessment districts to raise funds within a specific geographic area. The key difference between BIDs and other special benefit assessment districts is that funds raised are managed by the private non-profit corporation governing the district.

There are many benefits to Business Improvement Districts:
➢ Funds cannot be diverted for other government programs; ➢ Services are customized to fit the needs of each district; ➢ They allow for a wide range of services, including those listed above; ➢ Business Improvement Districts are designed, created and governed by those who will pay the assessment; and
➢ They provide a stable funding source for business promotion.

The 94 Law is provided in Appendix 1 of this document.

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SCMWID Management District Plan 6
May 20, 2025
III. BOUNDARY
The SCMWID includes all wineries, existing and in the future, located generally within the boundaries of the cities Santa Cruz, Saratoga, Scotts Valley, Capitola, and Watsonville, the towns of Los Gatos, Portola Valley, and Woodside, and portions of the unincorporated areas of the Counties of Santa Cruz, Santa Clara, and San Mateo. Specifically, the boundaries of the SCMWID are as follows:

Starting at the intersection of State Route 84 and State Route 1, the boundaries proceed south along the State Route 1 until intersecting the AVA boundaries at 122°16'44" W, 37°6'16" N. It follows the boundaries of the AVA boundaries until intersecting the City of Santa Cruz where it goes south along the city boundary line until intersecting with the county line of Santa Cruz County.

It proceeds along the county line until intersecting with State Route 1 where it heads north until intersecting State Route 152. It follows along State Route 152 until 121°41'38" W, 36°59'29" N where it starts to follow the AVA boundary line heading north. When it intersects with the city limits of San Jose it goes south and west around the city limits, until continuing northwest along the AVA lines.

When it intersects with Cinnabar Hills Road at 121°49'7" W, 37°10'28" N. It follows Cinnabar Hills Road and joins Bertram Road where it continues north mering with Almaden Road and continuing to head north. Upon intersecting with the city limits of San Jose and proceeding northwest until intersecting with W Valley Freeway and heading northwest along the W Valley Freeway until intersecting with the boundary line for the city of Campbell and heading south-west until rejoining the boundary for San Jose and heading west. It jumps and continues west when intersecting with the City of Cupertino. At 122°4’21" W, 37°18'2" N the boundary line joins the AVA and follows the AVA northwest. It avoids all areas that are in the city of Cupertino and heads northwest.

At 122°5'17" W, 37°19'41" N it begins to follow the boundaries of the city of Cupertino again, heading north until merging with Interstate 280 and heading north west along the line. Upon intersecting the city of Palo Alto it follows the city boundary line south and around until the coordinates of 122°12'6" W, 37°21'30" N, where the boundaries follow the AVA boundaries heading north until intersecting Alpine Road, where it proceeds north east. When intersecting with Golden Oak Drive it heads west until turning into Peak Lane and heading south at the intersection of Peak Lane and Cervantes Road and heading east on Cervantes Road.

At the intersection with Westridge Drive it heads south until intersecting with Portola Road. It travels along Portola Road north west until turning southwest at the intersection of Wayside Road. Once Wayside Road intersects with the AVA boundaries it turns and following the AVA boundaries north.

Once it intersects with Woodside Road and Interstate 280 the boundaries head north along Woodside Road until intersecting with Fernside Street where it heads north west along the city boundary line for Redwood City. At 122°16'46" W, 37°27'37" N, it stops following Redwood City's boundary line and proceeds southwest along the boundary line for the city of Woodside. Once it intersects with Interstate 280 it proceeds north west along the interstate until intersecting with State Route 92 where it heads west along the highway until reuniting with the AVA boundaries and proceeding southwest along the AVA boundary line to the starting point.

The term “winery” as used herein means: A business, primarily used for the retail marketing and sales of wine and related goods, open to all settings at which wine and related goods can be sold, including but not limited to: publicly available settings, by appointment only reservations, or private and exclusive tastings. The term wine tasting facility includes, but is not limited to, vineyard locations with Attachment 2

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SCMWID Management District Plan 7
May 20, 2025
onsite tastings and hospitality and retail rooms on site at producing wineries, which must be agricultural facilities used for the processing (fermentation when combined with any two of the following: crushing, pressing, aging, blending or bottling) of wine grapes into wine or the refermenting of still wine into sparkling wine, as well as stand-alone tasting rooms in commercial areas.

All wine tasting facilities must possess a Type 02 Department of Alcohol Beverage Control license or a Type 17 (Beer and Wine Wholesaler) and Type 20 (Off-Sale Beer and Wine) License combination.

A complete listing of assessed wineries within the SCMWID can be found in Appendix 2. A map of the SCMWID boundaries is shown below.

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SCMWID Management District Plan 8
May 20, 2025
IV. ASSESSMENT BUDGET AND SERVICES
A. Annual Service Plan
Assessment funds will be spent to provide specific benefits conferred or privileges granted directly to the payors that are not provided to those not charged, and which do not exceed the reasonable cost to the County of conferring the benefits or granting the privileges. The privileges and services provided with the SCMWID funds are marketing & brand awareness and business improvement & special projects efforts available only to assessed wineries.

A service plan assessment budget has been developed to deliver services that benefit the assessed wineries. A detailed annual assessment budget will be developed and approved by the SCMWA. The chart below illustrates the initial annual assessment budget allocations. The total initial assessment budget is estimated to be $575,000.

Although actual revenues will fluctuate due to market conditions, the proportional allocations of the assessment budget shall remain the same. However, the County and the SCMWA Board shall have the authority to adjust budget allocations between the categories by no more than fifteen percent (15%) of the total budget per year. A description of the proposed improvements and activities for the initial year of operation is below. The same activities are proposed for subsequent years. In the event of a legal challenge against the SCMWID, any and all assessment funds may be used for the costs of defending the SCMWID. In the first year of operation, the costs of creating the SCMWID may be repaid by deducting repayment funds proportionally from budget categories. Repayment costs shall not exceed $75,000.

Each budget category includes all costs related to providing that service. For example, the marketing & brand awareness budget includes the cost of staff time dedicated to overseeing and implementing the marketing & brand awareness program. Staff time dedicated purely to administrative tasks is allocated to the administration & operations portion of the budget. The costs of an individual staff Marketing & Brand
Awareness, 55%,
$316,250
Business Improvement
& Special Projects, 10%,
$57,500
Administration
& Operations,
23%, $132,250
Contingency / Reserve, 10%,
$57,500
Collection Fee, 2%,
$11,500
Initial Annual Assessment Budget - $575,000
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SCMWID Management District Plan 9
May 20, 2025
member may be allocated to multiple budget categories. The staffing levels necessary to provide the services below will be determined by the SCMWA on an as-needed basis.

Marketing & Brand Awareness
A marketing & brand awareness program will promote the SCMWID as a premium winegrowing region and as a leader in the global wine community. The marketing & brand awareness program will have a central theme of promoting the SCMWID as a desirable place to experience Santa Cruz Mountains wineries, and as a desirable area to purchase wines and other estate produced products.

The program has the goal of increasing demand for visitation to the winegrowing region, retail sales, affinity for SCMWID grapes and wines, and recognition at and for assessed wineries, and may include but is not limited to the following activities:
• Advertising – across any and all media channels to promote assessed wineries on a local, regional or national level, including but not limited to: digital, print, television, radio and strategic brand partnerships;
• Media Relations – Promoting assessed wineries through development of media relations strategies, including but not limited to: media familiarization tours, proactive media pitching and influencer relations;
• Digital Marketing – Utilizing paid, earned and owned social media to increase awareness of and engagement with assessed wineries;
• Events – Developing and executing special events that attract potential customers to assessed wineries, enhancing community engagement and visibility; • Trade & Industry Engagement – Ensuring representatives are provided the opportunity to attend trade shows, meetings, industry conferences, road shows, and events to promote assessed wineries; Create programs that engage key trade and industry influencers with the Santa Cruz Mountains;
• Print Collateral – Preparing and producing collateral, promotional materials such as brochures, flyers and maps for assessed wineries;
• Brand Enhancement – Brand development initiatives to increase awareness and demand for assessed wineries;
• Consumer Analytics – Identify and leverage consumer demographic, geographic and psychographic data to target messaging that markets Santa Cruz Mountains as a premier, unique wine destination to attract customers to assessed wineries; and • Wine Club Signups – Promote wine club membership for assessed wineries to build customer loyalty and enhance the SCMWID brand.

Business Improvement & Special Projects
The business improvement & special projects program will seek to attract and retain wineries within the SCMWID, and fund special projects designed to promote and benefit the assessed wineries. This program aims to cultivate a thriving wine community by fostering collaboration among producers and enhancing the region’s appeal as a premier destination. Through targeted initiatives, the program will empower wineries to innovate and grow their businesses sustainably. The business improvement & special projects programs may include, but is not limited to:
• Customer Engagement Projects – Develop and execute special projects that drive customer engagement with assessed wineries to increase sales;
• Signage Program – Coordinate local signage for the Santa Cruz Mountains wine region; • Training Programs – Provide training and resources for assessed wineries focused on sales, hospitality, marketing, media relations, and operational best practices to enhance staff effectiveness;
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SCMWID Management District Plan 10
May 20, 2025
• Educational Programs – Create educational programs for assessed wineries with the goal of increasing visitation, sales, and brand value;
• Market Research and Evaluation – Conduct comprehensive market research, fund awareness and best practice studies, and maintain a robust district database to evaluate the SCMWID’s visibility and operational success among target market segments; • Guest Communication Support – Assist assessed wineries with the development of guest communications and point-of-sale materials to enhance customer interactions; • Advocacy – Advocate for business-friendly policies that facilitate capital investment and growth opportunities throughout the SCMWID; and
• Liaison Support – Designate personnel who will serve as a liaison between winery owners and government agencies to facilitate growth and business development on assessed wineries.

Administration & Operations
The administration & operations portion of the budget shall be utilized for administrative staffing costs, office costs, advocacy, and other general administrative costs such as insurance, legal, and accounting fees.

Contingency / Reserve
The budget includes a contingency line item to account for lower than anticipated assessments. If there are contingency funds collected, they may be held in a reserve fund or utilized for other programs, administration or renewal costs at the discretion of the Owners’ Association. Policies relating to contributions to the reserve fund, the target amount of the reserve fund, and expenditure of monies from the reserve fund shall be set by the Owners’ Association. Contingency/reserve funds may be spent on SCMWID programs or administrative and renewal costs in such proportions as determined by the Owners’ Association.

Collection Fee
The County or a third-party collection agency shall be paid a fee up to two percent (2%) of the amount of assessment collected to cover its costs of collection and administration.

B. Annual Budget
The total five (5) year assessment budget is projected at approximately $575,000 annually, or approximately $4,887,500 through 2030 if maximum assessment rate increases are adopted. This amount may fluctuate as winery sales do, as wineries open and close, and if the assessment rate is increased or decreased pursuant to this Plan.

The annual assessment rate is one percent (1%) of gross direct to consumer sales revenue on winery sales. Beginning in the second year of the SCMWID term, the assessment rate may be increased by the Owners’ Association to a maximum rate of two percent (2%) of gross direct to consumer sales revenue on winery sales. The maximum increase or decrease in a year shall be no more than one-half of one percent (0.5%). If the assessment rate is increased, it may subsequently be decreased but shall not be decreased below a minimum of one percent (1%) of gross direct to consumer sales revenue on winery sales.

The table below demonstrates the estimated maximum budget with the assumption that assessment rate will be increased at the earliest opportunity, as it is a required disclosure, it is not the anticipated course of action. Alternate courses of action may be taken in regard to implementing the assessment rate increase other than what is demonstrated in the chart below, within the parameters of this Plan.

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SCMWID Management District Plan 11
May 20, 2025
Estimated Annual Budget if Maximum Assessment Rates are Adopted C. California Constitutional Compliance
The SCMWID assessment is not a property-based assessment subject to the requirements of Proposition 218. Courts have found Proposition 218 limited the term ‘assessments’ to levies on real property.1 Rather, the SCMWID assessment is a business-based assessment, and is subject to Proposition 26. Pursuant to Proposition 26 all levies are a tax unless they fit one of seven exceptions.

Two of these exceptions apply to the SCMWID, a “specific benefit” and a “specific government service.” Both require that the costs of benefits or services do not exceed the reasonable costs to the County of conferring the benefits or providing the services.

1. Specific Benefit
Proposition 26 requires that assessment funds be expended on, “a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege.”2 The services in this Plan are designed to provide targeted benefits directly to assessed wineries, and are intended only to provide benefits and services directly to those wineries paying the assessment. These services are tailored not to serve the general public, businesses in general, or parcels of land, but rather to serve the specific wineries within the SCMWID. The activities described in this Plan are specifically targeted to increase sales for assessed wineries within the boundaries of the SCMWID, and are narrowly tailored. SCMWID funds will be used exclusively to provide the specific benefit of increased winery sales revenue directly to the assessees. Assessment funds shall not be used to feature non-assessed wineries in SCMWID programs, or to directly generate sales for non-assessed wineries. The activities paid for from assessment revenues are business services constituting and providing specific benefits to the assessed wineries.

The assessment imposed by this SCMWID is for a specific benefit conferred directly to the payors that is not provided to those not charged. The specific benefit conferred directly to the payors is an increase in winery sales revenue. The specific benefit of an increase in sales revenue for assessed wineries will be provided only to wineries paying the district assessment, with marketing, brand awareness, business improvement, and special projects efforts promoting wineries paying the SCMWID assessment. The marketing & brand awareness and business improvement & special projects efforts programs will be designed to increase sales revenue at each assessed winery. Because 1 Howard Jarvis Taxpayers Association v. City of San Diego (1999) 72 Cal App. 4th 230 2 Cal. Const. art XIII C § 1(e)(1)
Year
Marketing &
Brand
Awareness
Business
Improvement
& Special
Projects
Administration
& Operations
Contingency/
Reserve
Collection
Fee
Total
2025-2026 $316,250 $57,500 $132,250 $57,500 $11,500 $575,000 2026-2027 $474,375 $86,250 $198,375 $86,250 $17,250 $862,500 2027-2028 $632,500 $115,000 $264,500 $115,000 $23,000 $1,150,000 2028-2029 $632,500 $115,000 $264,500 $115,000 $23,000 $1,150,000 2029-2030 $632,500 $115,000 $264,500 $115,000 $23,000 $1,150,000 Total $2,688,125 $488,750 $1,124,125 $488,750 $97,750 $4,887,500 Attachment 2

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SCMWID Management District Plan 12
May 20, 2025
they are necessary to provide the marketing & brand awareness and business improvement & special projects efforts that specifically benefit the assessed wineries, the administration and contingency services also provide the specific benefit of increased sales revenue to the wineries.

Although the SCMWID, in providing specific benefits to payors, may produce incidental benefits to non-paying businesses, the incidental benefit does not preclude the services from being considered a specific benefit. The legislature has found that, “A specific benefit is not excluded from classification as a ‘specific benefit’ merely because an indirect benefit to a nonpayor occurs incidentally and without cost to the payor as a consequence of providing the specific benefit to the payor.”3

2. Specific Government Service
The assessment may also be utilized to provide, “a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product.” 4 The legislature has
recognized that marketing and promotions services like those to be provided by the SCMWID are government services within the meaning of Proposition 265. Further, the legislature has determined that “a specific government service is not excluded from classification as a ‘specific government service’ merely because an indirect benefit to a nonpayor occurs incidentally and without cost to the payor as a consequence of providing the specific government service to the payor.”6

3. Reasonable Cost
SCMWID services will be implemented carefully to ensure they do not exceed the reasonable cost of such services. The full amount assessed will be used to provide the services described herein. Funds will be managed by the SCMWA and reports submitted on an annual basis to the County. Only assessed wineries will be featured in marketing materials, receive sales leads generated from SCMWIDfunded activities, be featured in advertising campaigns, and benefit from other SCMWID-funded services. The assessed winery list (Appendix 2) was compiled from records provided by each jurisdiction and complies with the requirements of the 94 Law. Pursuant to Streets and Highways Code Section 36615, the County Board of Supervisors’ (Board of Supervisors) determination of ownership is final and conclusive, with no obligation to obtain other information. Non-assessed wineries will not receive these, nor any other, SCMWID-funded services and benefits.

The SCMWID -funded programs are targeted directly to benefit assessed wineries. SCMWID funds shall only be spent to benefit the assessed wineries, and shall not be spent on that portion of any program which directly generates incidental sales for non-assessed wineries.

D. Assessment
The annual assessment rate is one percent (1%) of gross direct to consumer sales revenue on winery sales. Beginning in the second year of the SCMWID term, the assessment rate may be increased by the Owners’ Association to a maximum rate of two percent (2%) of gross direct to consumer sales revenue on winery sales. The maximum increase or decrease in a year shall be no more than one-half of one percent (0.5%). If the assessment rate is increased, it may subsequently be decreased but shall not be decreased below a minimum of one percent (1%) of gross direct to consumer sales revenue on winery sales.
3 Government Code § 53758(a)
4 Cal. Const. art XIII C § 1(e)(2)
5 Government Code § 53758(b)
6 Government Code § 53758(b)
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SCMWID Management District Plan 13
May 20, 2025
Based on the benefit received, assessments will not be collected on wholesale, purchases made outside of the state of California or purchases made pursuant to contracts executed prior to November 1, 2025. Revenue generated from the SCMWID is intended only to provide programs and services for assessed wineries, all of which are located in California. Sales made outside of the state of California are not subject to assessment due to a lack of benefit. Assessment dollars will not be spent on any programs or activities to benefit individual wineries outside of the state of California. Assessment dollars may be spent outside of California to elevate the notoriety of the Santa Cruz Mountains as a premier winery destination with the desired outcome of increased in-person visitation to wineries paying the assessment.

The assessment was calculated based on the total cost of the activities to be provided for the benefit of the wineries within the SCMWID with costs allocated based on the proportional benefit conferred to each winery. Activities funded by the SCMWID are specifically targeted to increase winery sales revenue at assessed wineries. All winery sales do not represent the same benefit to the payors. For example, a higher priced winery sale is of greater benefit than a lower priced winery sale because the assessee derives greater revenue. To account for this benefit differential and to make sure the benefits are proportional, an assessment formula based on a percentage of revenue has been selected. The proposed formula accurately reflects greater benefit to assessed wineries with higher priced winery sales.

The term “gross direct to consumer sales revenue” as used herein means: all direct-to-consumer (DTC) sales of wine, wine club shipments (whether shipped or picked up), tasting room sales, merchandise, food, revenue from orders placed via telemarketing, telephone, online, email, whether carried out at the time of purchase, shipped or picked up at a later date (pre-sales). “Gross direct to consumer sales revenue” shall not include any sales made outside of the state of California.

The assessment is levied upon and a direct obligation of the assessed winery. However, the assessed winery may, at its discretion, pass the assessment on to customers. The amount of assessment, if passed on to each customer, shall be disclosed in advance and separately stated from the amount charged and any other applicable taxes, and each customer shall receive a receipt for payment from the business. If the SCMWID assessment is identified separately it shall be disclosed as the “SCMWID Assessment.” The assessment is imposed solely upon, and is the sole obligation of the assessed winery even if it is passed on to customers. The California Department of Tax and Fee Administration (CDTFA) issued a written opinion that state sales tax applies to the revenue generated from business improvement district (BID) assessments on items where state sales tax is levied. In light of CDTFA’s opinion, businesses that pay both state sales tax and SCMWID assessments on sales are advised to collect sales tax on the assessment revenue.

Bonds shall not be issued.

E. Overdue Charges and Interest
The SCMWID shall reimburse the County or third-party collection agency for any costs associated with collecting unpaid assessments.

1. Original Delinquency
Any winery that fails to remit any assessment imposed by this Plan within the time required shall pay an overdue charge of ten percent (10%) of the amount of the assessment in addition to the assessment.

2. Continued Delinquency
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SCMWID Management District Plan 14
May 20, 2025
Any winery that fails to remit any delinquent remittance on or before a period of thirty (30) days following the date on which the remittance first became delinquent shall pay a second delinquency overdue charge of ten percent (10%) of the assessment in addition to the assessment and the ten percent (10%) overdue charge first imposed.

3. Fraud
If the County or third-party collection agency determines that the nonpayment of any remittance due under this article is due to fraud, an overdue charge of twenty-five percent (25%) of the amount of the assessment shall be added thereto in addition to the overdue charges stated in subsections one (1) and two (2) of this section.

4. Interest
In addition to the overdue charges imposed, any winery who fails to remit any assessment imposed by this section shall pay interest at the rate of one-quarter of one percent (0.25%) per month or fraction thereof on the amount of the assessment, exclusive of overdue charges, from the date on which the remittance first became delinquent until paid.

F. Time and Manner for Collecting Assessments
The SCMWID assessment will be implemented beginning November 1, 2025 or as soon as possible thereafter, and ending five (5) years from its start date. The County or a third-party collection agency will be responsible for collecting the assessment on a quarterly basis (including any delinquencies, overdue charges and interest) from each winery located in each jurisdiction within the SCMWID. The County or a third-party collection agency shall take all reasonable efforts to collect the assessments from each winery. The County or a third-party collection agency shall forward the assessments collected to the Owners’ Association.

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SCMWID Management District Plan 15
May 20, 2025
V. GOVERNANCE
A. Owners’ Association
The Board of Supervisors, through adoption of this Plan, has the right, pursuant to Streets and Highways Code §36651, to identify the body that shall implement the proposed program, which shall be the Owners’ Association of the SCMWID as defined in Streets and Highways Code §36612. The Board of Supervisors has determined that SCMWA shall serve as the Owners’ Association for the SCMWID.

B. Brown Act and California Public Records Act Compliance An Owners’ Association is a private entity and may not be considered a public entity for any purpose, nor may its board members or staff be considered to be public officials for any purpose. The Owners’ Association is, however, subject to government regulations relating to transparency, namely the Ralph M. Brown Act and the California Public Records Act. These regulations are designed to promote public accountability. The Owners’ Association acts as a legislative body under the Ralph M. Brown Act (Government Code §54950 et seq.). Thus, meetings of the SCMWA Board and certain committees must be held in compliance with the public notice and other requirements of the Brown Act.

Accordingly, the Owners’ Association shall publicly report any action taken and the vote or abstention on that action of each member present for the action. The Owners’ Association is also subject to the record keeping and disclosure requirements of the California Public Records Act.

C. Annual Report
The SCMWA shall present an annual report at the end of each year of operation to the Board of Supervisors pursuant to Streets and Highways Code §36650 (see Appendix 1). The annual report shall include:
• Any proposed changes in the boundaries of the improvement district or in any benefit zones or classification of businesses within the district.
• The improvements and activities to be provided for that fiscal year. • An estimate of the cost of providing the improvements and the activities for that fiscal year. • The method and basis of levying the assessment in sufficient detail to allow each business owner to estimate the amount of the assessment to be levied against his or her business for that fiscal year.
• The estimated amount of any surplus or deficit revenues to be carried over from a previous fiscal year.
• The estimated amount of any contributions to be made from sources other than assessments levied pursuant to this part.

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APPENDIX 1 – LAW
CURRENT THROUGH ALL LEGISLATION OF THE 2024 REGULAR AND SPECIAL SESSIONS

STREETS AND HIGHWAYS CODE
DIVISION 18. PARKING
PART 7. PROPERTY AND BUSINESS IMPROVEMENT DISTRICT LAW OF 1994 CHAPTER 1. General Provisions
ARTICLE 1. Declarations
36600. Citation of part

This part shall be known and may be cited as the “Property and Business Improvement District Law of 1994.” 36601. Legislative findings and declarations; Legislative guidance

The Legislature finds and declares all of the following:
(a) Businesses located and operating within business districts in some of this state’s communities are economically disadvantaged, are underutilized, and are unable to attract customers due to inadequate facilities, services, and activities in the business districts. (b) It is in the public interest to promote the economic revitalization and physical maintenance of business districts in order to create jobs, attract new businesses, and prevent the erosion of the business districts. (c) It is of particular local benefit to allow business districts to fund business related improvements, maintenance, and activities through the levy of assessments upon the businesses or real property that receive benefits from those improvements.
(d) Assessments levied for the purpose of conferring special benefit upon the real property or a specific benefit upon the businesses in a business district are not taxes for the general benefit of a city, even if property, businesses, or persons not assessed receive incidental or collateral effects that benefit them. (e) Property and business improvement districts formed throughout this state have conferred special benefits upon properties and businesses within their districts and have made those properties and businesses more useful by providing the following benefits:
(1) Crime reduction. A study by the Rand Corporation has confirmed a 12-percent reduction in the incidence of robbery and an 8-percent reduction in the total incidence of violent crimes within the 30 districts studied.
(2) Job creation.
(3) Business attraction.
(4) Business retention.
(5) Economic growth.
(6) New investments.
(f) With the dissolution of redevelopment agencies throughout the state, property and business improvement districts have become even more important tools with which communities can combat blight, promote economic opportunities, and create a clean and safe environment. (g) Since the enactment of this act, the people of California have adopted Proposition 218, which added Article XIII D to the Constitution in order to place certain requirements and restrictions on the formation of, and activities, expenditures, and assessments by property-based districts. Article XIII D of the Constitution provides that property-based districts may only levy assessments for special benefits. (h) The act amending this section is intended to provide the Legislature’s guidance with regard to this act, its interaction with the provisions of Article XIII D of the Constitution, and the determination of special benefits in property-based districts.
(1) The lack of legislative guidance has resulted in uncertainty and inconsistent application of this act, which discourages the use of assessments to fund needed improvements, maintenance, and activities in property-based districts, contributing to blight and other underutilization of property. (2) Activities undertaken for the purpose of conferring special benefits upon property to be assessed inherently produce incidental or collateral effects that benefit property or persons not assessed. Therefore, for special benefits to exist as a separate and distinct category from general benefits, the incidental or collateral effects of those special benefits are inherently part of those Attachment 2

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special benefits. The mere fact that special benefits produce incidental or collateral effects that benefit property or persons not assessed does not convert any portion of those special benefits or their incidental or collateral effects into general benefits. (3) It is of the utmost importance that property-based districts created under this act have clarity regarding restrictions on assessments they may levy and the proper determination of special benefits. Legislative clarity with regard to this act will provide districts with clear instructions and courts with legislative intent regarding restrictions on property-based assessments, and the manner in which special benefits should be determined.
36602. Purpose of part

The purpose of this part is to supplement previously enacted provisions of law that authorize cities to levy assessments within property and business improvement districts, to ensure that those assessments conform to all constitutional requirements and are determined and assessed in accordance with the guidance set forth in this act.

This part does not affect or limit any other provisions of law authorizing or providing for the furnishing of improvements or activities or the raising of revenue for these purposes. 36603. Preemption of authority or charter city to adopt ordinances levying assessments

Nothing in this part is intended to preempt the authority of a charter city to adopt ordinances providing for a different method of levying assessments for similar or additional purposes from those set forth in this part. A property and business improvement district created pursuant to this part is expressly exempt from the provisions of the Special Assessment Investigation, Limitation and Majority Protest Act of 1931 (Division 4 (commencing with Section 2800)).
36603.5. Part prevails over conflicting provisions

Any provision of this part that conflicts with any other provision of law shall prevail over the other provision of law, as to districts created under this part.
36604. Severability

This part is intended to be construed liberally and, if any provision is held invalid, the remaining provisions shall remain in full force and effect. Assessments levied under this part are not special taxes.

ARTICLE 2. Definitions
36606. “Activities”

“Activities” means, but is not limited to, all of the following that benefit businesses or real property in the district:
(a) Promotion of public events.
(b) Furnishing of music in any public place.
(c) Promotion of tourism within the district.
(d) Marketing and economic development, including retail retention and recruitment. (e) Providing security, sanitation, graffiti removal, street and sidewalk cleaning, and other municipal services supplemental to those normally provided by the municipality. (f) Other services provided for the purpose of conferring special benefit upon assessed real property or specific benefits upon assessed businesses located in the district. 36606.5. “Assessment”

“Assessment” means a levy for the purpose of acquiring, constructing, installing, or maintaining improvements and providing activities that will provide certain benefits to properties or businesses located within a property and business improvement district.
36607. “Business”

“Business” means all types of businesses and includes financial institutions and professions.

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36608. “City”

“City” means a city, county, city and county, or an agency or entity created pursuant to Article 1 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code, the public member agencies of which includes only cities, counties, or a city and county, or the State of California. 36609. “City council”

“City council” means the city council of a city or the board of supervisors of a county, or the agency, commission, or board created pursuant to a joint powers agreement and which is a city within the meaning of this part. 36609.4. “Clerk”

“Clerk” means the clerk of the legislative body.
36609.5. “General benefit”

“General benefit” means, for purposes of a property-based district, any benefit that is not a “special benefit” as defined in Section 36615.5.
36610. “Improvement”

“Improvement” means the acquisition, construction, installation, or maintenance of any tangible property with an estimated useful life of five years or more including, but not limited to, the following:
(a) Parking facilities.
(b) Benches, booths, kiosks, display cases, pedestrian shelters and signs. (c) Trash receptacles and public restrooms.
(d) Lighting and heating facilities.
(e) Decorations.
(f) Parks.
(g) Fountains.
(h) Planting areas.
(i) Closing, opening, widening, or narrowing of existing streets. (j) Facilities or equipment, or both, to enhance security of persons and property within the district. (k) Ramps, sidewalks, plazas, and pedestrian malls.
(l) Rehabilitation or removal of existing structures.
36611. “Management district plan”; “Plan”

“Management district plan” or “plan” means a proposal as defined in Section 36622. 36612. “Owners’ association”

“Owners’ association” means a private nonprofit entity that is under contract with a city to administer or implement improvements, maintenance, and activities specified in the management district plan. An owners’ association may be an existing nonprofit entity or a newly formed nonprofit entity. An owners’ association is a private entity and may not be considered a public entity for any purpose, nor may its board members or staff be considered to be public officials for any purpose. Notwithstanding this section, an owners’ association shall comply with the Ralph M. Brown Act (Chapter 9 (commencing with Section 54950) of Part 1 of Division 2 of Title 5 of the Government Code), at all times when matters within the subject matter of the district are heard, discussed, or deliberated, and with the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code), for all records relating to activities of the district. 36614. “Property”

“Property” means real property situated within a district.

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36614.5. “Property and business improvement district”; “District”

“Property and business improvement district,” or “district,” means a property and business improvement district established pursuant to this part.
36614.6. “Property-based assessment”

“Property-based assessment” means any assessment made pursuant to this part upon real property. 36614.7. “Property-based district”

“Property-based district” means any district in which a city levies a property-based assessment. 36615. “Property owner”; “Business owner”; “Owner”

“Property owner” means any person shown as the owner of land on the last equalized assessment roll or otherwise known to be the owner of land by the city council. “Business owner” means any person recognized by the city as the owner of the business. “Owner” means either a business owner or a property owner. The city council has no obligation to obtain other information as to the ownership of land or businesses, and its determination of ownership shall be final and conclusive for the purposes of this part. Wherever this part requires the signature of the property owner, the signature of the authorized agent of the property owner shall be sufficient. Wherever this part requires the signature of the business owner, the signature of the authorized agent of the business owner shall be sufficient. 36615.5. “Special benefit”

(a) “Special benefit” means, for purposes of a property-based district, a particular and distinct benefit over and above general benefits conferred on real property located in a district or to the public at large. Special benefit includes incidental or collateral effects that arise from the improvements, maintenance, or activities of property-based districts even if those incidental or collateral effects benefit property or persons not assessed. Special benefit excludes general enhancement of property value. (b) “Special benefit” also includes, for purposes of a property-based district, a particular and distinct benefit provided directly to each assessed parcel within the district. Merely because parcels throughout an assessment district share the same special benefits does not make the benefits general. 36616. “Tenant”

“Tenant” means an occupant pursuant to a lease of commercial space or a dwelling unit, other than an owner.

ARTICLE 3. Prior Law
36617. Alternate method of financing certain improvements and activities; Effect on other provisions

This part provides an alternative method of financing certain improvements and activities. The provisions of this part shall not affect or limit any other provisions of law authorizing or providing for the furnishing of improvements or activities or the raising of revenue for these purposes. Every improvement area established pursuant to the Parking and Business Improvement Area Law of 1989 (Part 6 (commencing with Section 36500) of this division) is valid and effective and is unaffected by this part.

CHAPTER 2. Establishment
36620. Establishment of property and business improvement district

A property and business improvement district may be established as provided in this chapter. 36620.5. Requirement of consent of city council

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A county may not form a district within the territorial jurisdiction of a city without the consent of the city council of that city. A city may not form a district within the unincorporated territory of a county without the consent of the board of supervisors of that county. A city may not form a district within the territorial jurisdiction of another city without the consent of the city council of the other city. 36621. Initiation of proceedings; Petition of property or business owners in proposed district

(a) Upon the submission of a written petition, signed by the property or business owners in the proposed district who will pay more than 50 percent of the assessments proposed to be levied, the city council may initiate proceedings to form a district by the adoption of a resolution expressing its intention to form a district. The amount of assessment attributable to property or a business owned by the same property or business owner that is in excess of 40 percent of the amount of all assessments proposed to be levied, shall not be included in determining whether the petition is signed by property or business owners who will pay more than 50 percent of the total amount of assessments proposed to be levied. (b) The petition of property or business owners required under subdivision (a) shall include a summary of the management district plan. That summary shall include all of the following:
(1) A map showing the boundaries of the district.
(2) Information specifying where the complete management district plan can be obtained. (3) Information specifying that the complete management district plan shall be furnished upon request.
(c) The resolution of intention described in subdivision (a) shall contain all of the following:
(1) A brief description of the proposed improvements, maintenance, and activities, the amount of the proposed assessment, a statement as to whether the assessment will be levied on property or businesses within the district, a statement as to whether bonds will be issued, and a description of the exterior boundaries of the proposed district, which may be made by reference to any plan or map that is on file with the clerk. The descriptions and statements do not need to be detailed and shall be sufficient if they enable an owner to generally identify the nature and extent of the improvements, maintenance, and activities, and the location and extent of the proposed district. (2) A time and place for a public hearing on the establishment of the property and business improvement district and the levy of assessments, which shall be consistent with the requirements of Section 36623.
36622. Contents of management district plan

The management district plan shall include, but is not limited to, all of the following:
(a) If the assessment will be levied on property, a map of the district in sufficient detail to locate each parcel of property and, if businesses are to be assessed, each business within the district. If the assessment will be levied on businesses, a map that identifies the district boundaries in sufficient detail to allow a business owner to reasonably determine whether a business is located within the district boundaries. If the assessment will be levied on property and businesses, a map of the district in sufficient detail to locate each parcel of property and to allow a business owner to reasonably determine whether a business is located within the district boundaries.
(b) The name of the proposed district.
(c) A description of the boundaries of the district, including the boundaries of benefit zones, proposed for establishment or extension in a manner sufficient to identify the affected property and businesses included, which may be made by reference to any plan or map that is on file with the clerk. The boundaries of a proposed property assessment district shall not overlap with the boundaries of another existing property assessment district created pursuant to this part. This part does not prohibit the boundaries of a district created pursuant to this part to overlap with other assessment districts established pursuant to other provisions of law, including, but not limited to, the Parking and Business Improvement Area Law of 1989 (Part 6 (commencing with Section 36500)). This part does not prohibit the boundaries of a business assessment district created pursuant to this part to overlap with another business assessment district created pursuant to this part. This part does not prohibit the boundaries of a business assessment district created pursuant to this part to overlap with a property assessment district created pursuant to this part. (d) The improvements, maintenance, and activities proposed for each year of operation of the district and the estimated cost thereof. If the improvements, maintenance, and activities proposed for each year of operation are the same, a description of the first year’s proposed improvements, maintenance, and activities Attachment 2

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and a statement that the same improvements, maintenance, and activities are proposed for subsequent years shall satisfy the requirements of this subdivision.
(e) The total annual amount proposed to be expended for improvements, maintenance, or activities, and debt service in each year of operation of the district. If the assessment is levied on businesses, this amount may be estimated based upon the assessment rate. If the total annual amount proposed to be expended in each year of operation of the district is not significantly different, the amount proposed to be expended in the initial year and a statement that a similar amount applies to subsequent years shall satisfy the requirements of this subdivision.
(f) The proposed source or sources of financing, including the proposed method and basis of levying the assessment in sufficient detail to allow each property or business owner to calculate the amount of the assessment to be levied against their property or business. The plan also shall state whether bonds will be issued to finance improvements.
(g) The time and manner of collecting the assessments.
(h) The specific number of years in which assessments will be levied. In a new district, the maximum number of years shall be five. Upon renewal, a district shall have a term not to exceed 10 years.

Notwithstanding these limitations, a district created pursuant to this part to finance capital improvements with bonds may levy assessments until the maximum maturity of the bonds. The management district plan may set forth specific increases in assessments for each year of operation of the district. (i) The proposed time for implementation and completion of the management district plan. (j) Any proposed rules and regulations to be applicable to the district. (k)
(1) A list of the properties or businesses to be assessed, including the assessor’s parcel numbers for properties to be assessed, and a statement of the method or methods by which the expenses of a district will be imposed upon benefited real property or businesses, in proportion to the benefit received by the property or business, to defray the cost thereof. (2) In a property-based district, the proportionate special benefit derived by each identified parcel shall be determined exclusively in relationship to the entirety of the capital cost of a public improvement, the maintenance and operation expenses of a public improvement, or the cost of the activities. An assessment shall not be imposed on any parcel that exceeds the reasonable cost of the proportional special benefit conferred on that parcel. Only special benefits are assessable, and a property-based district shall separate the general benefits, if any, from the special benefits conferred on a parcel. Parcels within a property-based district that are owned or used by any city, public agency, the State of California, or the United States shall not be exempt from assessment unless the governmental entity can demonstrate by clear and convincing evidence that those publicly owned parcels in fact receive no special benefit. The value of any incidental, secondary, or collateral effects that arise from the improvements, maintenance, or activities of a propertybased district and that benefit property or persons not assessed shall not be deducted from the entirety of the cost of any special benefit or affect the proportionate special benefit derived by each identified parcel.
(3) In a property-based district, properties throughout the district may share the same special benefits. In a district with boundaries that define which parcels are to receive improvements, maintenance, or activities over and above those services provided by the city, the improvements, maintenance, or activities themselves may constitute a special benefit. The city may impose assessments that are less than the proportional special benefit conferred, but shall not impose assessments that exceed the reasonable costs of the proportional special benefit conferred. Because one or more parcels pay less than the special benefit conferred does not necessarily mean that other parcels are assessed more than the reasonable cost of their special benefit. (l) In a property-based district, a detailed engineer’s report prepared by a registered professional engineer certified by the State of California supporting all assessments contemplated by the management district plan.
(m) Any other item or matter required to be incorporated therein by the city council. 36623. Procedure to levy assessment

(a) If a city council proposes to levy a new or increased property assessment, the notice and protest and hearing procedure shall comply with Section 53753 of the Government Code. (b) If a city council proposes to levy a new or increased business assessment, the notice and protest and hearing procedure shall comply with Section 54954.6 of the Government Code, except that notice shall be Attachment 2

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mailed to the owners of the businesses proposed to be assessed. A protest may be made orally or in writing by any interested person. Every written protest shall be filed with the clerk at or before the time fixed for the public hearing. The city council may waive any irregularity in the form or content of any written protest. A written protest may be withdrawn in writing at any time before the conclusion of the public hearing. Each written protest shall contain a description of the business in which the person subscribing the protest is interested sufficient to identify the business and, if a person subscribing is not shown on the official records of the city as the owner of the business, the protest shall contain or be accompanied by written evidence that the person subscribing is the owner of the business or the authorized representative. A written protest that does not comply with this section shall not be counted in determining a majority protest.

If written protests are received from the owners or authorized representatives of businesses in the proposed district that will pay 50 percent or more of the assessments proposed to be levied and protests are not withdrawn so as to reduce the protests to less than 50 percent, no further proceedings to levy the proposed assessment against such businesses, as contained in the resolution of intention, shall be taken for a period of one year from the date of the finding of a majority protest by the city council. (c) If a city council proposes to conduct a single proceeding to levy both a new or increased property assessment and a new or increased business assessment, the notice and protest and hearing procedure for the property assessment shall comply with subdivision (a), and the notice and protest and hearing procedure for the business assessment shall comply with subdivision (b). If a majority protest is received from either the property or business owners, that respective portion of the assessment shall not be levied. The remaining portion of the assessment may be levied unless the improvement or other special benefit was proposed to be funded by assessing both property and business owners. 36624. Changes to proposed assessments

At the conclusion of the public hearing to establish the district, the city council may adopt, revise, change, reduce, or modify the proposed assessment or the type or types of improvements, maintenance, and activities to be funded with the revenues from the assessments. Proposed assessments may only be revised by reducing any or all of them. At the public hearing, the city council may only make changes in, to, or from the boundaries of the proposed property and business improvement district that will exclude territory that will not benefit from the proposed improvements, maintenance, and activities. Any modifications, revisions, reductions, or changes to the proposed assessment district shall be reflected in the notice and map recorded pursuant to Section 36627. 36625. Resolution of formation

(a) If the city council, following the public hearing, decides to establish a proposed property and business improvement district, the city council shall adopt a resolution of formation that shall include, but is not limited to, all of the following:
(1) A brief description of the proposed improvements, maintenance, and activities, the amount of the proposed assessment, a statement as to whether the assessment will be levied on property, businesses, or both within the district, a statement on whether bonds will be issued, and a description of the exterior boundaries of the proposed district, which may be made by reference to any plan or map that is on file with the clerk. The descriptions and statements need not be detailed and shall be sufficient if they enable an owner to generally identify the nature and extent of the improvements, maintenance, and activities and the location and extent of the proposed district. (2) The number, date of adoption, and title of the resolution of intention. (3) The time and place where the public hearing was held concerning the establishment of the district.
(4) A determination regarding any protests received. The city shall not establish the district or levy assessments if a majority protest was received.
(5) A statement that the properties, businesses, or properties and businesses in the district established by the resolution shall be subject to any amendments to this part. (6) A statement that the improvements, maintenance, and activities to be conferred on businesses and properties in the district will be funded by the levy of the assessments. The revenue from the levy of assessments within a district shall not be used to provide improvements, maintenance, or activities outside the district or for any purpose other than the purposes specified in the resolution of intention, as modified by the city council at the hearing concerning establishment of the district.

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district boundaries to create a special or specific benefit to the assessed parcels or businesses may be provided, but shall be limited to marketing or signage pointing to the district. (7) A finding that the property or businesses within the area of the property and business improvement district will be benefited by the improvements, maintenance, and activities funded by the proposed assessments, and, for a property-based district, that property within the district will receive a special benefit.
(8) In a property-based district, the total amount of all special benefits to be conferred on the properties within the property-based district.
(b) The adoption of the resolution of formation and, if required, recordation of the notice and map pursuant to Section 36627 shall constitute the levy of an assessment in each of the fiscal years referred to in the management district plan.
36627. Notice and assessment diagram

Following adoption of the resolution establishing district assessments on properties pursuant to Section 36625, the clerk shall record a notice and an assessment diagram pursuant to Section 3114. No other provision of Division 4.5 (commencing with Section 3100) applies to an assessment district created pursuant to this part. 36628. Establishment of separate benefit zones within district; Categories of businesses

The city council may establish one or more separate benefit zones within the district based upon the degree of benefit derived from the improvements or activities to be provided within the benefit zone and may impose a different assessment within each benefit zone. If the assessment is to be levied on businesses, the city council may also define categories of businesses based upon the degree of benefit that each will derive from the improvements or activities to be provided within the district and may impose a different assessment or rate of assessment on each category of business, or on each category of business within each zone. 36628.5. Assessments on businesses or property owners

The city council may levy assessments on businesses or on property owners, or a combination of the two, pursuant to this part. The city council shall structure the assessments in whatever manner it determines corresponds with the distribution of benefits from the proposed improvements, maintenance, and activities, provided that any propertybased assessment conforms with the requirements set forth in paragraph (2) of subdivision (k) of Section 36622. 36629. Provisions and procedures applicable to benefit zones and business categories

All provisions of this part applicable to the establishment, modification, or disestablishment of a property and business improvement district apply to the establishment, modification, or disestablishment of benefit zones or categories of business. The city council shall, to establish, modify, or disestablish a benefit zone or category of business, follow the procedure to establish, modify, or disestablish a property and business improvement district. 36630. Expiration of district; Creation of new district

If a property and business improvement district expires due to the time limit set pursuant to subdivision (h) of Section 36622, a new management district plan may be created and the district may be renewed pursuant to this part.

CHAPTER 3. Assessments
36631. Time and manner of collection of assessments; Delinquent payments

The collection of the assessments levied pursuant to this part shall be made at the time and in the manner set forth by the city council in the resolution levying the assessment. Assessments levied on real property may be collected at the same time and in the same manner as for the ad valorem property tax, and may provide for the same lien priority and penalties for delinquent payment. All delinquent payments for assessments levied pursuant to this part may be charged interest and penalties.

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36632. Assessments to be based on estimated benefit; Classification of real property and businesses; Exclusion of residential and agricultural property

(a) The assessments levied on real property pursuant to this part shall be levied on the basis of the estimated benefit to the real property within the property and business improvement district. The city council may classify properties for purposes of determining the benefit to property of the improvements and activities provided pursuant to this part.
(b) Assessments levied on businesses pursuant to this part shall be levied on the basis of the estimated benefit to the businesses within the property and business improvement district. The city council may classify businesses for purposes of determining the benefit to the businesses of the improvements and activities provided pursuant to this part.
(c) Properties zoned solely for residential use, or that are zoned for agricultural use, are conclusively presumed not to benefit from the improvements and service funded through these assessments, and shall not be subject to any assessment pursuant to this part. 36633. Time for contesting validity of assessment

The validity of an assessment levied under this part shall not be contested in an action or proceeding unless the action or proceeding is commenced within 30 days after the resolution levying the assessment is adopted pursuant to Section 36625. An appeal from a final judgment in an action or proceeding shall be perfected within 30 days after the entry of judgment.
36634. Service contracts authorized to establish levels of city services

The city council may execute baseline service contracts that would establish levels of city services that would continue after a property and business improvement district has been formed. 36635. Request to modify management district plan

The owners’ association may, at any time, request that the city council modify the management district plan. Any modification of the management district plan shall be made pursuant to this chapter. 36636. Modification of plan by resolution after public hearing; Adoption of resolution of intention

(a) Upon the written request of the owners’ association, the city council may modify the management district plan after conducting one public hearing on the proposed modifications. The city council may modify the improvements and activities to be funded with the revenue derived from the levy of the assessments by adopting a resolution determining to make the modifications after holding a public hearing on the proposed modifications. If the modification includes the levy of a new or increased assessment, the city council shall comply with Section 36623. Notice of all other public hearings pursuant to this section shall comply with both of the following:
(1) The resolution of intention shall be published in a newspaper of general circulation in the city once at least seven days before the public hearing.
(2) A complete copy of the resolution of intention shall be mailed by first class mail, at least 10 days before the public hearing, to each business owner or property owner affected by the proposed modification.
(b) The city council shall adopt a resolution of intention which states the proposed modification prior to the public hearing required by this section. The public hearing shall be held not more than 90 days after the adoption of the resolution of intention.
36637. Reflection of modification in notices recorded and maps

Any subsequent modification of the resolution shall be reflected in subsequent notices and maps recorded pursuant to Division 4.5 (commencing with Section 3100), in a manner consistent with the provisions of Section 36627. 36638. Assessment as government imposed fee on Civ C § 1770 transaction [Operative July 1, 2024]

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(a) A business assessment pursuant to this part is a fee imposed by a government on the transaction for purposes of paragraph (29) of subdivision (a) of Section 1770 of the Civil Code. (b) This section shall become operative on July 1, 2024.

CHAPTER 3.5. Financing
36640. Bonds authorized; Procedure; Restriction on reduction or termination of assessments

(a) The city council may, by resolution, determine and declare that bonds shall be issued to finance the estimated cost of some or all of the proposed improvements described in the resolution of formation adopted pursuant to Section 36625, if the resolution of formation adopted pursuant to that section provides for the issuance of bonds, under the Improvement Bond Act of 1915 (Division 10 (commencing with Section 8500)) or in conjunction with Marks-Roos Local Bond Pooling Act of 1985 (Article 4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the Government Code). Either act, as the case may be, shall govern the proceedings relating to the issuance of bonds, although proceedings under the Bond Act of 1915 may be modified by the city council as necessary to accommodate assessments levied upon business pursuant to this part. (b) The resolution adopted pursuant to subdivision (a) shall generally describe the proposed improvements specified in the resolution of formation adopted pursuant to Section 36625, set forth the estimated cost of those improvements, specify the number of annual installments and the fiscal years during which they are to be collected. The amount of debt service to retire the bonds shall not exceed the amount of revenue estimated to be raised from assessments over 30 years.
(c) Notwithstanding any other provision of this part, assessments levied to pay the principal and interest on any bond issued pursuant to this section shall not be reduced or terminated if doing so would interfere with the timely retirement of the debt.

CHAPTER 4. Governance
36650. Report by owners’ association; Approval or modification by city council

(a) The owners’ association shall cause to be prepared a report for each fiscal year, except the first year, for which assessments are to be levied and collected to pay the costs of the improvements, maintenance, and activities described in the report. The owners’ association’s first report shall be due after the first year of operation of the district. The report may propose changes, including, but not limited to, the boundaries of the property and business improvement district or any benefit zones within the district, the basis and method of levying the assessments, and any changes in the classification of property, including any categories of business, if a classification is used.
(b) The report shall be filed with the clerk and shall refer to the property and business improvement district by name, specify the fiscal year to which the report applies, and, with respect to that fiscal year, shall contain all of the following information:
(1) Any proposed changes in the boundaries of the property and business improvement district or in any benefit zones or classification of property or businesses within the district. (2) The improvements, maintenance, and activities to be provided for that fiscal year. (3) An estimate of the cost of providing the improvements, maintenance, and activities for that fiscal year.
(4) The method and basis of levying the assessment in sufficient detail to allow each real property or business owner, as appropriate, to estimate the amount of the assessment to be levied against his or her property or business for that fiscal year.
(5) The estimated amount of any surplus or deficit revenues to be carried over from a previous fiscal year.
(6) The estimated amount of any contributions to be made from sources other than assessments levied pursuant to this part.
(c) The city council may approve the report as filed by the owners’ association or may modify any particular contained in the report and approve it as modified. Any modification shall be made pursuant to Sections 36635 and 36636.

The city council shall not approve a change in the basis and method of levying assessments that would impair an authorized or executed contract to be paid from the revenues derived from the levy of Attachment 2

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SCMWID Management District Plan 26
May 20, 2025
assessments, including any commitment to pay principal and interest on any bonds issued on behalf of the district.
36651. Designation of owners’ association to provide improvements, maintenance, and activities

The management district plan may, but is not required to, state that an owners’ association will provide the improvements, maintenance, and activities described in the management district plan. If the management district plan designates an owners’ association, the city shall contract with the designated nonprofit corporation to provide services.

CHAPTER 5. Renewal
36660. Renewal of district; Transfer or refund of remaining revenues; District term limit

(a) Any district previously established whose term has expired, or will expire, may be renewed by following the procedures for establishment as provided in this chapter. (b) Upon renewal, any remaining revenues derived from the levy of assessments, or any revenues derived from the sale of assets acquired with the revenues, shall be transferred to the renewed district. If the renewed district includes additional parcels or businesses not included in the prior district, the remaining revenues shall be spent to benefit only the parcels or businesses in the prior district. If the renewed district does not include parcels or businesses included in the prior district, the remaining revenues attributable to these parcels shall be refunded to the owners of these parcels or businesses. (c) Upon renewal, a district shall have a term not to exceed 10 years, or, if the district is authorized to issue bonds, until the maximum maturity of those bonds. There is no requirement that the boundaries, assessments, improvements, or activities of a renewed district be the same as the original or prior district.

CHAPTER 6. Disestablishment
36670. Circumstances permitting disestablishment of district; Procedure

(a) Any district established or extended pursuant to the provisions of this part, where there is no indebtedness, outstanding and unpaid, incurred to accomplish any of the purposes of the district, may be disestablished by resolution by the city council in either of the following circumstances:
(1) If the city council finds there has been misappropriation of funds, malfeasance, or a violation of law in connection with the management of the district, it shall notice a hearing on disestablishment.
(2) During the operation of the district, there shall be a 30-day period each year in which assessees may request disestablishment of the district. The first such period shall begin one year after the date of establishment of the district and shall continue for 30 days. The next such 30-day period shall begin two years after the date of the establishment of the district. Each successive year of operation of the district shall have such a 30-day period. Upon the written petition of the owners or authorized representatives of real property or the owners or authorized representatives of businesses in the district who pay 50 percent or more of the assessments levied, the city council shall pass a resolution of intention to disestablish the district. The city council shall notice a hearing on disestablishment.
(b) The city council shall adopt a resolution of intention to disestablish the district prior to the public hearing required by this section. The resolution shall state the reason for the disestablishment, shall state the time and place of the public hearing, and shall contain a proposal to dispose of any assets acquired with the revenues of the assessments levied within the property and business improvement district. The notice of the hearing on disestablishment required by this section shall be given by mail to the property owner of each parcel or to the owner of each business subject to assessment in the district, as appropriate. The city shall conduct the public hearing not less than 30 days after mailing the notice to the property or business owners. The public hearing shall be held not more than 60 days after the adoption of the resolution of intention.
36671. Refund of remaining revenues upon disestablishment or expiration without renewal of district; Calculation of refund; Use of outstanding revenue collected after disestablishment of district

Attachment 2

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SCMWID Management District Plan 27
May 20, 2025
(a) Upon the disestablishment or expiration without renewal of a district, any remaining revenues, after all outstanding debts are paid, derived from the levy of assessments, or derived from the sale of assets acquired with the revenues, or from bond reserve or construction funds, shall be refunded to the owners of the property or businesses then located and operating within the district in which assessments were levied by applying the same method and basis that was used to calculate the assessments levied in the fiscal year in which the district is disestablished or expires. All outstanding assessment revenue collected after disestablishment shall be spent on improvements and activities specified in the management district plan. (b) If the disestablishment occurs before an assessment is levied for the fiscal year, the method and basis that was used to calculate the assessments levied in the immediate prior fiscal year shall be used to calculate the amount of any refund.

Attachment 2

Page 571 of 1416 ends

SCMWID Management District Plan 28
May 20, 2025
APPENDIX 2 – ASSESSED WINERIES*
Owner Name Business Name Address City, State,
Zip
Doon To Earth 10 Parade St., Suite
B
Aptos CA
95003
Armitage Wines 105 C Post Office
Dr
Aptos CA
95003
Salamandre Wine Cellars
L-Pship
108 Don Carlos Dr Aptos CA
95003
Saison Winery (Formerly
Partage)
11025 Alba Rd Ben Lomond
CA 95005
Sandar And Hem Wines 111 Corte Madera
Rd
Portola Valley
CA 94028
Kissed By An Angel
Wines
1210 Mount
Hermon Road
Scotts Valley
CA 95066
Left Bend Winery 12536 Spring
Blossom Ct.

Saratoga CA
95070
Maison Areion 140 Sunrise Drive Woodside CA
94062
Roudon-Smith Winery 14572 Big Basin
Way, Suite A
Saratoga CA
95070
Regan Vineyards &
Winery
1610 Green Valley
Rd
Corralitos CA
95076
La Vida Bella Vineyard 1624 Chardonnay
Ridge Rd
Aptos CA
95003
Ridge Vineyards 17100 Montebello
Rd
Cupertino CA
95014
Kings Mountain
Vineyards
187 Kings
Mountain Road
Woodside CA
94062
Lexington Wine
Co./Thomas Fogarty
Winery & Vineyards
19501 Skyline Blvd Woodside CA
94062
Mccarthy Family Estate
Vineyards
20108 Foster Road Los Gatos CA
95033
Birichino 204 Church Street Santa Cruz CA
95060
Gali Vineyards 21 W. Main St. Los Gatos CA
95030
Sante Arcangeli Family
Wines
216-A Stage Road Pescadero CA
94060
Domaine Eden 23000 Congress
Springs Rd
Saratoga CA
95070
Silver Mountain Vineyards 269 Silver
Mountain Dr
Los Gatos CA
95033
Santa Cruz Mountain
Vineyard
334 Ingalls St Suite
A
Santa Cruz CA
95060
Attachment 2

Page 572 of 1416 ends

SCMWID Management District Plan 29
May 20, 2025
Owner Name Business Name Address City, State,
Zip
Equinox 334 Ingalls St, Unit
C
Santa Cruz CA
95060
Aptos Vineyard 400 Belle Monti
Avenue
Aptos CA
95003
Alfaro Family Vineyards
& Winery
420 Hames Road Corralitos CA
95076
Wargin Wines 5015 Soquel Dr Soquel CA
95073
Clos De La Tech 535 Eastview Way Woodside CA
94062
Windy Oaks Estate
Vineyards & Winery
550 Hazel Dell Rd Corralitos CA
95076
Neely Wine 555 Portola Road Portola Valley
CA 94028
Ferrari Ranch Wines 65 Magnifico Vita
Lane
Corralitos CA
95076
Charmant Vineyards 800 Larsen Road Aptos CA
95003
3P Winery L.L.C. 3P Winery 3490 Soquel San
Jose Rd
Soquel CA
95073
Alamitos Winery 23505 Alamitos Rd San Jose CA
95120
Amy Dilly Preaseau and
Jacques Noel Preaseau
Valley Vista Vineyards 110 Valley View
Rd
Watsonville
CA 95076
Anatum Winery Broaddus, Christopher
James
371 Falcon View
Terr
Watsonville
CA 95076
Aptos Creek Vineyard Aptos Creek Vineyard 520 Nisene
Meadows Ct
Aptos CA
95003
Aptos Vineyard Aptos Vineyard, LLC 105 Post Office Dr
Ste C
Aptos CA
95003-3953
Aptos Vineyard, LLC Aptos Vineyard 369 Silver
Mountain Dr
Los Gatos CA
95033
Armitage Wines Corp. Armitage Wines Corp 705 Canham Rd Scotts Valley CA 95066
Arpent, LLC Birichino 825 Walnut Ave Santa Cruz CA
95060
Bargetto's Santa Cruz
Winery, Inc.

Bargetto 3535 N Main St Soquel CA
95073
Beauregard Vineyards
LLC/Partage Wine Co. LLC
Beauregard
Vineyards/Partage Wine
Co. LLC
10 Pine Flat Rd Santa Cruz CA
95060
Beauregard, Andre Jacques West Cliff Wines 704 Soquel Ave Ste B
Santa Cruz CA
95062-2333
Bhoomanchi Vineyards LLC Bhoomanchi Vineyards 369 Silver Mountain Dr
Los Gatos CA
95033
Attachment 2

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SCMWID Management District Plan 30
May 20, 2025
Owner Name Business Name Address City, State,
Zip
Big Basin Vineyards Big Basin Vineyards LLC 525 Pacific Ave Santa Cruz CA 95060-7175
Big Basin Vineyards LLC Big Basin Vineyards 830 Memory Ln Boulder Creek CA
95006
Bottle Jack Wines Ritchey Iv, John Lloyd 328 Ingalls St D Santa Cruz CA 95060-5882
Brooks, Thomas Edwin Tom Brooks Winery 90 Country Estates Dr
Santa Cruz CA
95060-9776
Brosseau Wines LLC First Growth Wine
Company
22090 Mt Eden
Road
Saratoga CA
95070
Bruce Cantz Four Gates Winery 503 Happy Valley
Rd
Santa Cruz CA
95065
Charmant 800 Larsen Road Aptos CA
95003
Christopher Broaddus Anatum 375 Falcon View
Ter
Watsonville
CA 95076
Clos De La Tech LLC Clos De La Tech 1000 Fern Hollow
Rd
La Honda CA
94020
Clos Tita Winery Estrada, David S 4 Kendall Ln Santa Cruz CA 95066
Coastal Range Vineyards Coastal Range Vineyards,
Inc.
420 Lost Pear Way
A 24X36 Structure
Santa Cruz CA
95065-9725
Coastal Range Vineyards,
Inc.

Inversion Wines 75 Mt Hermon Rd Scotts Valley,
CA 95066
Corralitos Ridge Vineyards
Corporation/Private Vine
Wines, LLC
Corralitios Ridge
Winery
815 Almar Ave
Unit H
Santa Cruz CA
95060
Craig, Anthony Sonnet Wine Cellars 369 Silver
Mountain Dr
Los Gatos CA
95033
David Bruce Winery, Inc. David Bruce Winery 21439 Bear Creek Rd
Los Gatos CA
95033
David Lee Moulton Burrell Schoolvineyards 24060 Summit Rd Los Gatos CA 95033
Dee Vine Wines Dee Vine Wines 34 Big Tree Wy Woodside CA 94062-3775
Devincenzi Cellars LLC/A
& A Los Gatos Winery LLC
24572 Hutchinson
Rd
Los Gatos CA
95033
Donald E. Naumann Naumann Vineyards 16505 Montebello
Rd
Cupertino CA
95014
Dorsa Management
Company, LLC
La Rusticana D'Orsa 15680 Kennedy Rd Los Gatos CA
95032
Equinox Jackson, Barry Cook 427 Swift St # C Santa Cruz CA 95062
Everett Family Farm LLC Everett Family Farm, LLC 2119 Old San Jose Rd
Soquel CA
95073
Attachment 2

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SCMWID Management District Plan 31
May 20, 2025
Owner Name Business Name Address City, State,
Zip
Farm Day Family Winery,
LLC
Farm Day Family Winery,
LLC
18157 Wagner Rd Los Gatos CA
95032-6619
Fernwood Cellars, Inc. Fernwood Cellars, Inc. 7137 Redwood Retreat Rd
Gilroy CA
95020
Florez Wines J. G. Jelks Wines L.L.C. 2487 Freedom
Blvd Unit 3
Watsonville
CA 95076-
1049
Full Circle Wines LLC Full Circle Wines 7090 Mcadams Ln Felton CA 95018-9454
Gali Vineyards, Inc. Gali Vineyards 362 Old Smith Rd Watsonville CA 95076
Garage Winemaker LLC Baccarossa 19620 Redberry Dr Los Gatos CA 95303
Garrod Trust Cooper-Garrod Vineyards 22645 Garrod Rd Saratoga CA 95070
Ghost Oaks Winery Inc. El Vaquero Winery 18 Hangar Way
Unit C
Watsonville
CA 95076
Ghost Oaks Winery, Inc. El Vaquero Winery 2901 Freedom
Blvd
Corralitos CA
95076
Gliessman, Stephen Richard Condors Hope Ranch 144 De La Costa Ave
Santa Cruz CA
95060
Green Earth Zayante Green Earth Liangs Inc 420 Old Mount Rd Felton CA 95018
Griffin Hill Vineyards, LLC 18035 Skyline Blvd Los Gatos CA 95033
Hallcrest Vineyards, Inc. Hallcrest Vineyards 379 Felton Empire Rd
Felton CA
95018
Hartmann, Robert Frank Las Nietas Vineyard 335 Via Concha Aptos CA 95003-5604
Heart O The Mountain Heart O The Mountain
LLC
705 Canham Rd Scotts Valley
CA 95066-
2729
Henry M. And Linda J.

Mchenry
Mchenry Vineyard 6821 Bonny Doon
Rd
Santa Cruz CA
95060
Hicks, Alan Ainsley Ainsley Family Vineyard 2805 Pleasant Valley Rd
Aptos CA
95003-9785
Hillcrest Winery Rexford Winery 429 Ingalls St Santa Cruz CA 95060
Hoffacker, Bernhard Joseph Portola Hills Vineyard 801 La Honda Rd Woodside CA 94062-4808
Hovis, Linda Closs Linda Vista Wines 118 Via Novella Aptos CA 95003
Hwy 9 Winery, LLC Hwy 9 Winery 120 Gail Dr Felton CA
95018-9631
Attachment 2

Page 575 of 1416 ends

SCMWID Management District Plan 32
May 20, 2025
Owner Name Business Name Address City, State,
Zip
Integrity Wines, Lp, Integrity
Wines, LLC, Gp/Reya
Cellars, LLC
12 Hands Winery/Reya
Cellars
135 Aviation Way
Ste
16 Watsonville
CA 95062
J. Edward Muns Muns Vineyard 25600 Loma Prieta
Ave
Los Gatos CA
95033
James & Margaret A. Alberti Alberti Vineyard 106 Richardson Rd Santa Cruz CA 95065
James D. Ross And Jenny N.

Ross
Rosscienda Vineyard 1172 Redwood
Heights Rd Bldg
Aptos CA
95003
James, Kathleen Ann Charles Usher 24110 Congress
Springs Rd
Saratoga CA
95070-9706
Jeffrey M. Barranti J.M. Barranti Vineyards 24842 Skyland Rd Los Gatos CA 95033
John D. Benedetti Sante Arcangeli Family
Wines
23 Blake Ave Corralitos CA
95076
John Lloyd Ritchey Iv Bottle Jack Cellars 1088 La Madrona Dr
Santa Cruz CA
95060
Kathryn Kennedy Winery Kathryn Kennedy Winery 13180 Pierce Rd Saratoga CA 95070
Kennedy Hill Associates
LLC
Kennedy Hill Associates
LLC
15050 Kennedy Rd Los Gatos CA
95032
King, David James People's Beverage
Company, The
1214 Fair Ave Santa Cruz CA
95060-5838
Kingston Family Vineyards
LLC
Kingston Family
Vineyards
520 La Mesa Dr Portola Valley
CA 94028
Kissed By An Angel Wines,
LLC
Kissed By An Angel
Wines
2535 7Th Ave Unit
4 Santa Cruz CA
95062
Kissed By An Angel Wines,
LLC
Kissed By An Angel
Wines, LLC
75 Mt Hermon Rd Scotts Valley,
CA 95066
La Barbera Family Winery
LLC
Labarbera Family Winery 6591 Woodcliff Ct San Jose CA
95120-4551
La Madrona Vineyard And
Winery
1851 La Madrona
Dr
Santa Cruz CA
95060
La Magnifico Vita, LLC Ferrari Ranch Wines 65 Magnifico Vita Ln
Watsonville
CA 95076-
0385
La Vida Bella Vineyard, LLC La Vida Bella Vineyard 44 Oak Tree Ln Aptos CA 95003
Lago Lomita Vineyards, LLC Lago Lomita Vineyards,
LLC
25200 Loma Prieta
Ave
Los Gatos CA
95033
Lester Company, LLC Lester Estate Wines 1950 Pleasant
Valley Rd
Aptos CA
95003
Lexington Hills LLC Lexington Hills 19802 Old Santa
Cruz
Hwy
Los Gatos CA
95033
Attachment 2

Page 576 of 1416 ends

SCMWID Management District Plan 33
May 20, 2025
Owner Name Business Name Address City, State,
Zip
Little Ridge Vineyards, LLC Little Ridge Vineyard 153 Las Colinas Rd Corralitos CA 95076
Lokteff Winery & Vineyards,
LLC
Wrights Station Vineyard
& Winery
24250 Loma Prieta
Ave
Los Gatos CA
95033
Loma Prieta Winery L.L.C. Loma Prieta Winery 26985 Loma Prieta Way
Los Gatos CA
95033
Los Altos Vineyards, LLC. Byington 21850 Bear Creek
Rd
Los Gatos CA
95030
Lost Cellars, LLC Unwritten Wines 70 Tripp Ct Woodside CA 94062-4232
M E V Corporation Mount Eden Vineyards 23000 Congress
Springs Rd
Saratoga CA
95070
M.E.V. Corporation Mount Eden Vineyards 22020 Mount
Eden Rd
Saratoga CA
95070
Madson Wines LLC Madson Wines 328 Ingalls St Ste
G
Santa Cruz CA
95060
Margins Wine Cubby Margins Wine LLC 402 Ingalls St Ste
18 Santa Cruz CA
95060-5800
Margins Wine LLC Margins Wine 2487 Freedom
Blvd
Unit 3
Watsonville
CA 95076
Martella LLC/Thomas
Fogarty Winery, LLC
Martella Wines/Thomas
Fogarty Winery
5937 Alpine Rd Portola
Valley CA
94028
Martin Ranch Winery, Inc. Martin Ranch 6675 Redwood
Retreat Rd
Gilroy CA
95020
Mayo, Keegan Keoni Mayo Cellars 1008 Cayuga St Santa Cruz CA 95062-2422
Michael & Lynne
Muccigrosso
Muccigrosso
Vineyards
21450 Bear Creek
Rd
Los Gatos CA
95033
Michael V. & Lois E. Sones Sones Cellars 334 B Ingalls St Ste B
Santa Cruz CA
95060
Mindego Ridge Winery 9645 Alpine Rd La Honda CA
94020
Mja Vineyards LLC Mja Vineyard 328 Ingalls St Santa Cruz CA 95060
Monte Roble Vineyards
LLC/Silver Mountain
Vineyards
Left Bend/Silver
Mountain Vineyard
369 Silver
Mountain
Dr
Los Gatos CA
95033
Nazario Ranch Vineyards
LLC
Nazario Ranch Vineyards 22484 Eden Valley
Ct
Saratoga CA
95070-9757
Neely Wines 575 Portola Rd Portola Valley
CA 94028
Attachment 2

Page 577 of 1416 ends

SCMWID Management District Plan 34
May 20, 2025
Owner Name Business Name Address City, State,
Zip
Nicholson Vineyards
Winery,
Inc.

Nicholson Vineyards
Winery,
Inc.
2800 Pleasant
Valley
Rd
Aptos CA
95003
Nicolas Vonderheyden (Gp)
-
Chaine D'Or Vineyards,
Limited
Partnership
Chaine D'Or Vineyards 140 Sunrise Dr Woodside CA
94062
Old Oak Vineyard, Inc. House Family Winery 13330 Old Oak Way
Saratoga CA
95070
Overshine Wine Co Overshine Cellars, LLC 103 Stockton Ave Capitola CA 95010
P &Amp; M Staiger Staiger, Marjorie 1300 Hopkins
Gulch Rd
Boulder Creek
CA 95006
Pacific Rim Marketing Pacific Rim Marketing Inc 1306 Via Tornasol Aptos CA 95003-5654
Partage Wine Co. LLC Partage Wine 346 N Santa Cruz
Ave
Los Gatos CA
95030-7243
Patland Estate Vineyards
LLC
Patland Estate Vineyards 110 Madera Ct Los Gatos CA
95032-5720
Patrick James And Molly
Claire Surgalski
16252 Niles Rd Los Gatos CA
95033
Pelio Vineyard, LLC Pelio Vineyard 14573 Big Basin
Way
Saratoga CA
95070
Peter Serventi Serventi Ranch 65 Litchfield Ln Watsonville CA 95076
Peter Thibodeau Thibodeau Vineyard 431 Coyote Ridge
Rd
Aptos CA
95003
Phil & Peggy Crews Pelican Ranch
Winery
2364 Bean Creek
Rd Dr
Scotts Valley
CA 95066
Picchetti Winery Inc Picchetti Winery Inc 13100 Montebello Rd
Cupertino CA
95014
Pleasant Valley Vineyards Handley, Cathy Lynn 600 Pleasant Vly Rd
Aptos CA
95003
Private Vine Wines Private Vine Wines, LLC 815 Almar Ave Unit H
Santa Cruz CA
95060-5873
Prolific Vines Vineyard LLC Prolific Vines 165 Happy Acres Rd
Los Gatos CA
95032-5704
R And W Pursuits LLC R & W Vineyards 15060 Montebello
Rd
Cupertino CA
95014
Rachael Henrichsen 1120 17Th Ave
Bldg
Rear
Santa Cruz CA
95062
Radonich Bros Vineyards
LLC
Radonich Bros Vineyards
LLC
25205 Apple Hill
Rd
Los Gatos CA
95033-9719
Attachment 2

Page 578 of 1416 ends

SCMWID Management District Plan 35
May 20, 2025
Owner Name Business Name Address City, State,
Zip
Raffaelli Vineyards, LLC Raffaelli Vineyards 3357 Chardonnay Rd
Soquel CA
95073
Randal Lee West And Larae
West
Freedom Wineworks 2321 Freedom
Blvd
Watsonville
CA 95076
Ratka, Michael Patrick Split Barrel Cider 285 Allen Rd Woodside CA 94062-4401
Redwood Ridge Estate LLC Redwood Ridge Estate 21435 Summit Rd Los Gatos CA 95033-8400
Regan Vineyards Winery,
LLC
Regan Vineyards Winery,
LLC
1772 Seascape
Blvd
Aptos CA
95003-5864
Rhys Vineyards, LLC Rhys Vineyards 11715 Skyline Blvd Los Gatos CA 95033
Richard & Mary Kay Alfaro Alfaro Family Farm
& Vineyards
496 Hames Rd Corralitos CA
95076
Ridge Vineyards, Inc. Ridge Vineyards, Inc. 18100 Montebello Rd
Cupertino CA
95014
Robert J. Goldspink Granite Ridge
Vineyard
895 Granite Ridge
Dr
Santa Cruz CA
95065
Robert's Ranch Vineyards,
Inc.

Robert’s Ranch Vineyards,
Inc.
875 Roberts Rd Ben Lomond
CA 95005
Roy S. Fellom And Roy E.

Fellom
Fellom Ranch
Vineyards
17075 Montebello
Rd
Cupertino CA
95014
Russian Ridge Winery LLC Russian Ridge Winery 20245 Skyline Blvd Woodside CA 94062-3729
Saison 346 N Santa Cruz
Ave
Los Gatos CA
95030
Santa Cruz Cider Company Santa Cruz Cider
Company LLC
65 Hanger Wy C Watsonville
CA 95076-
2476
Santa Cruz Mountain
Vineyard LLC
Santa Cruz
Mountain Vineyard
334 A Ingalls St Santa Cruz CA
95060
Santa Cruz Vineyards Santa Cruz Vineyards LPship2300 Jarvis Rd Santa Cruz CA 95065
Sante Arcangeli Family
Wines
Sante Arcangeli Family
Wines LLC
154 Aptos Village
Way C1
Aptos CA
95003
Sante Arcangeli Family
Wines LLC
Sante Arcangeli Family
Wines
79 North St Pescadero CA
94060
Savannah-Chanelle
Vineyards, Inc.
23600 Congress
Springs Rd
Saratoga CA
95070
Schroeder Schroeder &Amp;
Deits LLC
Los Gatos Wines 19135 Overlook
Rd
Los Gatos CA
95030-4115
Scotts Valley Winery, LLC Scotts Valley Winery 2364 Bean Creek Rd
Scotts Valley
CA 95066
Silver Mountain Vineyards Silver Mountain Vineyards 328 Ingalls St D Santa Cruz CA 95060-5882
Attachment 2

Page 579 of 1416 ends

SCMWID Management District Plan 36
May 20, 2025
Owner Name Business Name Address City, State,
Zip
Sonnet 69 Silver Mountain
Dr
Los Gatos CA
95033
Soquel Vineyards 8063 Glen Haven
Rd
Soquel CA
95073
Spanish Ranch Winery, LLC Spanish Ranch
Winery
24000 Spanish
Ranch Rd
Los Gatos CA
95033
Steelhead Engineering, Inc. 1850 Day Valley
Rd
Aptos CA
95003
Stockwell Cellars, Inc. Stockwell Cellars 1100 Fair Ave Bldg A
Santa Cruz CA
95060
Storrs Winery & Vineyard,
Ltd.
1560 Pleasant
Valley Rd
Aptos CA
95003
Storrs Winery & Vineyard,
Ltd.

Storrs Winery 303 Potrero St Ste
35,8
Santa Cruz CA
95060
Strategy Partners
International
Windy Oaks Estate 380 Sweetwood
Way
Corralitos CA
95076
Sunridge Wines LLC Sunridge Wines LLC 433 Sunridge Dr Scotts Valley CA 95066-
4938
Tanuki Cider Honda, Robert Satoshi 334 Ingalls St # B Santa Cruz CA 95060-5880
Testarossa Vineyards, LLC Testarossa
Vineyards
300 College Ave Los Gatos CA
95030
The Mountain Winery 14831 Pierce Road Saratoga
The Ragavan Family 2000
Living Trust
Valencia Wineries 45 Valencia Ct Portola Valley
CA 94028-
7923
The Schaadt Wine Group,
LLC
Regale Winery And
Vineyards
24040 Summit Rd Los Gatos CA
95033
Tmr Cellars LLC Tmr Cellars, LLC 416 Bahr Dr Ben Lomond CA 95005-
9643
Tomaino, Kathryn,
Vidovich,
John, Michael & Mary Jane
Vidovich Vineyards 18101 Montebello
Rd
Cupertino CA
95014
Us Grant 2300 Jarvis Rd Santa Cruz CA
95065
Walsh Wine LLC Ser 13 Mesa Way Watsonville
CA 95076-
9656
Walsh Wine LLC Ser 427 C Swift St Santa Cruz CA
95060
Wargin Wines Wargin Wines LLC 5015 Soquel Dr Soquel CA
95073
Attachment 2

Page 580 of 1416 ends

SCMWID Management District Plan 37
May 20, 2025
Owner Name Business Name Address City, State,
Zip
Wolff And Father Wines Wolff, Leonard Frank 514 Calabasas Rd Watsonville CA 95076-
0412
Woodside Farm Vineyard
LLC
Woodside Farm Vineyard 1 Vintage Ct Woodside CA
94062
Workman, Michael Lee Weener'S Leap Cellars 14918 Three Oaks Ct
Saratoga CA
95070-5500
*The list was developed with the most reliable information provided; however, the list may contain discrepancies. This list shall include any future to-be opened businesses. Any business that may have been missed in this list, but is still within the boundaries of the SCMWID, shall also be subject to assessment.

Attachment 2

Page 581 of 1416 ends

1 Reso No. ______ (CM)
Meeting Date: 082625 SWZ ______ TV ______ CM ______
RESOLUTION NO. ___________ (CM)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

WATSONVILLE GRANTING CONSENT TO THE COUNTY OF SANTA

CRUZ TO FORM THE SANTA CRUZ MOUNTAINS WINE IMPROVEMENT

DISTRICT
WHEREAS, the County of Santa Cruz (County) is beginning the process to form the Santa Cruz Mountains Wine Improvement District (SCMWID) pursuant to the Property and Business Improvement District Law of 1994, Streets and Highways Code section 36600 et seq., for the benefit of driving increased business sales directly to assessed wineries; and
WHEREAS, the proposed SCMWID includes all wineries, existing and in the future, located generally within the boundaries of the cities of Santa Cruz, Saratoga, Scotts Valley, Capitola, and Watsonville; the towns of Los Gatos, Portola Valley, and Woodside; and portions of the unincorporated areas of the Counties of Santa Cruz, Santa Clara and San Mateo; and
WHEREAS, the County Board of Supervisors has requested consent from the City of Watsonville to form the SCMWID in the City of Watsonville with adoption of County Resolution No. 159-2025, dated August 5, 2025.

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

1. This action 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.

2. The City grants consent to Santa Cruz County to include the City of Watsonville in the SCMWID, for the formation of the SCMWID and future renewals, and

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2 Reso No. ______ (CM)
Meeting Date: 082625
jurisdiction for all purposes in connection with creation, operation, and future renewals of the proposed SCMWID.

3. The City Clerk of the City of Watsonville is hereby directed to transmit a certified copy of this Resolution to the County of Santa Cruz Clerk of the Board. ******************************************

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1 Reso No. ______ (CM)
Reference: Ordinance No. 1462-24 (Amend)
Meeting Date: 070825 SWZ ______ TV ______
ORDINANCE NO. (CM)

AN UNCODIFIED ORDINANCE OF THE CITY OF WATSONVILLE

INCREASING THE COMPENSATION FOR EACH MEMBER OF THE

CITY COUNCIL, AND THE MAYOR, PER MONTH, AS PERMITTED BY CALIFORNIA GOVERNMENT CODE SECTION 36516
WHEREAS, on February 27, 2024, the City Council enacted Ordinance No. 1462- 24 (CM), in which it increased City Council compensation. The increase comprised an increase in salary from $670.03 per month to $1,600 per month, which included a $10 per month contribution by the City for the provision of a term life insurance policy for all Council Members and the Mayor; and
WHEREAS, Government Code Section 36516(a)(4) provides that a city council may enact or amend an ordinance increasing compensation provided that the increase shall not exceed an amount equal to five percent (5%) for each calendar year from the operative date of the last adjustment of the salary when the ordinance or amendment is enacted, and that no ordinance shall be enacted or amended to provide automatic future increases in salary; and
WHEREAS, Government Code Section 36516(d) provides that any amounts paid by a city for retirement, health and welfare, and federal social security benefits shall not be included for purposes of determining salary, provided that the same benefits are available and paid by the city for its employees; and
WHEREAS, all Council Members and the Mayor receive a life insurance benefit that is also provided to City employees. The City pays that benefit on behalf of the Council, at a cost of $10 per month. This amount is included in the salary paid to Council Members; and

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2 Reso No. ______ (CM)
Reference: Ordinance No. 1462-24 (Amend)
Meeting Date: 070825
WHEREAS, pursuant to City of Watsonville Charter Section 502, the Mayor shall receive an additional 25% of that amount as compensation for services as mayor; and
WHEREAS, it is deemed fair and equitable that this ordinance be enacted to implement the will of the electorate which delegated the right to approve such increase to the Council; and
WHEREAS, allowing adjustments for inflation may help city councils become more diverse because increased compensation can help individuals across different income levels receive sufficient income from their service to help ensure that they can continue to serve the public and support their families; and
WHEREAS, increasing compensation for Councilmembers reflects the significant time commitment required to serve as a Councilmember; and WHEREAS, allowing Councilmembers to receive benefits similar to those received by City staff is consistent with Section 36516 and furthers the goal of increasing access to service on the City Council; and
WHEREAS, Section 36516 permits the City Council to increase its salary by 5% to $1,679.50 by Ordinance.

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

SECTION 1. ENACTMENT.

That the salaries of the Mayor and Council Members shall be increased by 5%, from $1,600.00 to $1,679.50 per month for each City Council Member, including the Mayor. These compensation amounts include a $10 per month contribution by the City

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3 Reso No. ______ (CM)
Reference: Ordinance No. 1462-24 (Amend)
Meeting Date: 070825
for a life insurance benefit. The Mayor shall also receive supplemental compensation as permitted by Section 502 of the City Charter. These amounts shall include a $10 per month contribution by the City for a life insurance benefit for a total compensation amount of $2,099.37. All increases shall be effective December 20, 2025.

SECTION 2. RECITALS.

The City Council finds and determines the foregoing recitals to be true and correct and hereby adopts them as findings demonstrating the need for the increased compensation and hereby makes them a part of this Ordinance.

SECTION 3. CALIFORNIA ENVIRONMENTAL QUALITY ACT.

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

SECTION 4. SEVERABILITY.

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

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4 Reso No. ______ (CM)
Reference: Ordinance No. 1462-24 (Amend)
Meeting Date: 070825
fact that any one or more other sections, subsections, subdivisions, paragraphs, sentences, clauses or phrases hereof be declared invalid or unenforceable.

SECTION 5. PUBLICATION.

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

SECTION 6. EFFECTIVE DATE.

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

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City Manager
Report
August 26, 2025

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Safety Improvements
Across our City
Continue!
Over the past month, the City has completed or is working on several traffic safety improvements across Watsonville, including new and repaired flashing crosswalks, upcoming beacon installations, restriping along key school routes, and new all-way STOP signs at multiple intersections.

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Sister City
Display Case
Completed
Watsonville’s Sister City display case is now complete, showcasing gifts and mementos presented to our community by our international sister cities. This collection highlights the bonds of friendship and cultural exchange that connect
Watsonville to communities around the world.

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Mutual
Aid Support
Watsonville Fire crews assisted at the Gifford Fire in San Luis Obispo and Santa Barbara counties, working
alongside Central Fire, Santa Cruz City, Scotts Valley, and Zayante.

All crews have returned safely, and their support was
highly appreciated.

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Watsonville Fire
Department:

New Recruit
Academy Starting
Starts September 29, lasting 18 weeks
WFD has collaborated with HR and the City
Communications Team to increase visibility, and
recruitment efforts have yielded excellent
candidates.

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Fire in the Sky
Airport Open House
This Saturday, August 30, 2025
Watsonville Municipal Airport
100 Aviation Way
Gates open at 4:30 PM
Free Admission & Parking
LINK: VIDEO

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Salsa
y Salsa
Watsonville Youth Center
Friday, Sept. 12
1:30pm – 6:00pm
Winners will be announced Sept. 13, 3:30 – 5:30
PM, at Second Saturday with live Salsa music on
the Youth Center stage.

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Senior
Prom
October 18
2 – 6pm
Awards ceremony honoring local organizations &
community leaders
Dinner & dancing to close out the evening
Put on your dancing shoes and join us for a magical
night!

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September is
National
Preparedness Month
September is National Preparedness Month, and while
the month is ending, preparedness is something we
should practice all year long.
• Make a plan
• Build an emergency kit
• Understand emergency terminology
• Stay connected with emergency alerts
Preparedness is a community effort. Let’s stay ready, stay informed, and keep Watsonville safe. Find year-round
resources at Watsonville.gov Page 596 of 1416
ACE
Hardware
Watsonville Locations:
451 Main Street
1056 E. Lake Avenue
1820 Freedom Boulevard
LINK: Video

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Happy Retirement
Chief Zamora
VIDEO LINK: https://youtu.be/ohHeFgkZGBo

Page 598 of 1416 ends

Thank you
watsonville.gov Page 599 of 1416
Wa ts onville Polic e
De pa rtme nt’s Us e of
Flock Sa fe ty
August 26, 2025 Wats onville , CA Page 600 of 1416
With Persistent Staffing
Shortages, La w
Enforc e me nt Age nc ie s
Are Se e king Ne w
Stra te gie s to Ma ximize
Effic ie nc y
of age ncie s
e xpe rie ncing an
office r s hortage
85%
Age ncie s re port
having too fe w
s worn office r
candidate s
65%
Ne w PERF s urve y s hows police age ncie s are los ing office rs fas te r than A Cris is For Law Enforce me nt IACP the y can hire ne w one s . April, 2023

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3 Colla bora tive
Polic ing Te c hnology
A force multiplie r e na bling a ge nc ie s of a ll s ize s to solve significantly more crime
- WPD has utilize d Flock since 2023
- Our program consists of 20 cameras throughout Watsonville - In the last 6 months, office rs have initiate d use of the syste m on 98 se parate calls for se rvice and/ or inve stigations
- Incre asing the numbe r of came ras would he lp e stablish a more e ffe ctive program in Watsonville ; inte nt is to grow the program

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Flock Sa fe ty Progra m
- Flock Safe ty LPR provide s the de partme nt with
indiscriminate e vide nce from fixe d locations.
- Flock Safe ty provide s all of the mainte nance so
that City staff (Police , Public Works, IT) can focus
on othe r tasks/ proje cts.

INFRASTRUCTURE-FREE
Re duce time to value
and utility costs with fullse rvice de ployme nt.
24/ 7 COVERAGE
Capture obje ctive ve hicle
data around the clock to
multiply your force .

REAL-TIME ALERTS
• CA SVS
• NCMEC (Ambe r Ale rt)
• Custom Hot Lists

ETHICALLY BUILT
• No facial re cognition
• No spe e d tracking
• Indiscriminate e vide nce

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5 Privacy Measures Already in Place
All data is owne d by Watsonville PD
and will never be sold to private third
partie s.

Private Flock custome rs never have
acce ss to gove rnme nt data or hotlists.

All data is stored with end -to -end
encryption including:

FBI (CJ IS)
NDAA
SOC2 (Type II)
SOC3
ISO 27001
Highe r Education Community Ve ndor
Asse ssme nt Tool (HECVAT), HIPAA
FERPA
We are also aligne d with the se curity
protocols e stablishe d by NIST
Cybe rse curity as we ll as the Cloud
Se curity Alliance CAIQ frame work.

Flock automatically deletes data after 30
days by de fault.

Only Watsonville PD de cide s who the y
share data with, if at all.

Flock does not have facial recognition .

The syste m can only be se arche d for
ve hicle characte ristics.

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6 Transparency Portal
Eve ry se arch re quire s a re giste re d
ID along with a se arch re ason or
case number.

Search reason and user number
save d inde finite ly- available audit
trail.

Flock e ncourage s all age ncie s to
imple me nt re gular audits to e nsure
proper usage.

Flock provide s our department with
the option to publish a
Transpare ncy Portal on our
we bsite .

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7 New Product Features
Flock Safe ty has re ce ntly launche d a pre ve ntative tool that will block a use r who pe rforms an impe rmissible se arch from acce ssing data. This tool will be applie d to all California age ncie s. If a use r conducts a se arch of California ne tworks with a se arch re ason that include s variations on ke y words that violate the California Value s Act, the y will not be able to proce e d with this se arch of California LPR data.

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WPD Policy
LPR shall only be used for official
law enforcement business
Training is required prior to
access/use
CAD Incident Details Report
Number and/or case number AND
search reason required for every
inquiry
Regularly conducted audits
Watsonville PD LPR Use Policy:

Community values do not have to
be compromised in order to achieve
public safety goals
Transparency + Accountability = Trust

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Success and Impact in
Watsonville Violent crime (homicide, attemped
homicide, shooting into occupied
dwelling, etc )
Hit- and-run traffic collisions
Missing persons
Thefts (stolen vehicles, burglary,
commercial theft, etc )
Type of investigations that have
benefitted from the use of Flock :

Arrest of Attempted
Murder Suspect
Shooting Series Throughout
Santa Cruz County
Vehicle Pursuits

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KEY TAKEAWAYS
● Flock technology assists our community by
providing e ffe ctive te chnology to he lp
achie ve public safe ty goals
● Watsonville PD is committe d to
transpare ncy and accountability
● Flock’s new product fe ature s in conjunction
with the de partme nt’s strong policy e nsure s
data privacy and prope r use
10

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1 CITY COUNCIL AGENDA REPORT
MEETING DATE: Tuesday, August 26, 2025
TO: CITY COUNCIL
WRITTEN BY: HOUSING MANAGER LANDAVERRY
RECOMMENDED BY: COMMUNITY DEVELOPMENT DIRECTOR BRLETIC
APPROVED BY: TAMARA VIDES, CITY MANAGER
SUBJECT: AMENDMENTS TO CHAPTER 14-46 (AFFORDABLE HOUSING ORDINANCE) WITHIN TITLE 14 (ZONING) OF THE WATSONVILLE

MUNICIPAL CODE
RECOMMENDATION:

Approve, for first reading only, waiving full reading of the text, amendments to Chapter 14-46 (Affordable Housing Ordinance) within Title 14 (Zoning) of the Watsonville Municipal Code).

BACKGROUND:

The original Affordable Housing Ordinance was adopted by the Watsonville City Council in 1991 to provide affordable housing to Watsonville residents. In 2001, the City Council adopted the current Affordable Housing Ordinance to reflect the actual income of Watsonville residents, codified in Chapter 14-46 of the Watsonville Municipal Code. The current Ordinance requires that 15% to 20% of new residential development projects of seven (7) or more units built in the City be affordable to Watsonville families with very low, low, median, moderate and above moderate incomes, based on Watsonville household median income.

DISCUSSION:

Building on the existing Affordable Housing Ordinance and in furtherance of the Housing Element goals and policies on affordable housing, staff has been working with the City Attorney’s office to prepare the attached draft Affordable Housing Ordinance Update for review and approval.

On June 3, 2025, staff, along with the City Attorney’s office presented an overview of the proposed changes to the Watsonville Municipal Code to the Planning Commission for discussion and feedback. The

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2 Planning Commissioners asked several clarifying questions, expressed their general support for the staff's recommendations, and adopted Resolution No. 09-25 (PC), recommending City Council amend Chapter 14-46 (Affordable Housing Ordinance) within Title 14 (Zoning) of the Watsonville Municipal Code and find that the proposed amendments are not a “project” under the California Environmental Quality Act (CEQA).

Minor revisions to the Ordinance include updates to the Definitions sections to comply with current State law or make elements of the Ordinance clearer and more consistent. The proposed amendments are designed to be easier to understand, make it easier for applicants to comply, simplify administration and oversight, and increase transparency by consolidating most affordable housing requirements, eliminating conflicting requirements, and standardizing and simplifying certain processes and requirements.

The proposed Affordable Housing Ordinance Update has the following key features:
 Local Preference: The update codifies the City’s longstanding practice to require that affordable housing units required as part of an affordable housing agreement with the City provide a local preference for those applying for units. Including the City’s local preference policy in the ordinance strengthens the requirement and ensures that this longstanding practice is transparent to all stakeholders. The purpose of the local preference policy for affordable housing units is to increase the probability that current residents can remain in the community despite increasing market rate rents and housing prices. It is also designed to maximize the effect of an improved jobs-to-housing ratio by increasing local housing opportunities for local employees.
 Density Bonus: This section has been deleted since this chapter no longer has density bonus provisions; density bonus is now in chapter 14-47.
 Prevailing Interest Rate: The update sets the prevailing interest rate initially as the average 30-year fixed interest rate mortgage available on a particular date from lenders located in Santa Cruz County then offering such loan product to Watsonville residents. The City Council may amend the prevailing interest rate from time to time, but no more often than once every six months and no less than annually or within a reasonable time after income limits are published by the State Department of Housing and Community Development, whichever occurs later.
 Downtown Core: This section has been deleted since the City now has an adopted Downtown Specific Plan which codifies requirements for residential development in the downtown area.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION:

Amending Chapter 14 (Affordable Housing Ordinance) within Title 14 (Zoning) of the Watsonville Municipal Code, is not subject to review under the California Environmental Quality Act (CEQA) pursuant

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3 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 CEQA Guidelines section 15378, 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 the “common sense” exemption (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:

The proposed ordinance is consistent with the Housing goal in the City’s Strategic Plan by providing sufficient, quality housing opportunities and expanding housing programs for all City residents.

FINANCIAL IMPACT:

The recommended action will not impact the General Fund.

ALTERNATIVE ACTION:

The City Council could suggest additional revisions which staff could develop into a revised ordinance.

ATTACHMENTS AND/OR REFERENCES (IF ANY)1. Amended Adopting Ordinance – WMC 1) Chapter 14-46 Affordable Housing Ordinance - redlined

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Attachment 1

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EXHIBIT “A”
Chapter 14-46
AFFORDABLE HOUSING ORDINANCE*
Sections:
14-46.010 Title.
14-46.020 Purpose.
14-46.030 Definitions.
14-46.040 Applicability.
14-46.050 Exceptions.
14-46.060 General standards.
14-46.070 Affordable housing in-lieu fees.
14-46.0980 Priority processing.
14-46.1090 Project application.
14-46.1100 Affordable Housing Agreement processing.
14-46.1210 Program requirements.
14-46.1320 Program income and asset limits.
14-46.1430 Affordable rental unit requirements.
14-46.1540 Affordable ownership requirements.
14-46.1650 Release Fees.
14-46.1760 Default, foreclosure and release of units.
14-46.1870 Conflict of interest.
14-46.1980 Violations.
14-46.200 Effect of chapter.
* Prior ordinance history: Ords. 866-91, 1026-97 and 1061-98. 14-46.010 Title.

The provisions of this Chapter shall be known collectively as the Affordable Housing Ordinance of the City of Watsonville.
(§ 1, Ord. 1107-01 C-M, eff. July 26, 2001)
14-46.020 Purpose.

It is the City’s intent to maintain an affordable housing requirement that implements the City’s General Plan policies guiding land use and housing development. (§ 1, Ord. 1107-01 C-M, eff. July 26, 2001)
14-46.030 Definitions.

For purposes of this Chapter, unless otherwise apparent from the context, certain words and phrases used in this Chapter are defined as follows:
(a) “Affordable” shall mean a category of housing that may be purchased or rented by a household with very low, low, median, moderate or above moderate income as defined by this Chapter and/or any State or Federal affordable housing program, and/or

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Attachment 1

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a household that receives any type of affordable housing choice voucher or rental subsidy.
(b) “Affordable Housing Agreement” shall mean any written agreement between the owner or developer of a residential development project and the City, in a form approved by the City, that specifies how the requirements of this chapter shall be satisfied and which is secured against the property. Such agreement may be secured by a deed of trust encumbering affordable housing developed as part of the project. The Affordable Housing Agreement shall include:
(1) The total number of units in the project;
(2) The total number, where applicable, of rental and/or ownership affordable units;
(3) The total number, and number by income category, of the affordable units, including the number of units set aside for households that receive any housing choice vouchers or other affordable rental subsidies, if any; (4) The area (square footage), number of bedrooms, and type (single-family, multifamily, apartment, etc.) of the market-rate units and affordable units (by income category and as a total), including the number of units set aside for households that receive any housing choice vouchers or other affordable rental subsidies, if any; (5) The term of affordability for the affordable units; (6) Any density bonus, incentives and/or other assistance to be provided by the City or other public agency or its Redevelopment Agency; (7) Provision for periodic monitoring by the City (or its designee) for compliance with the provisions of this Chapter;
(8) Provision requiring the owner or developer to establish and maintain a local sales office;
(9) Provision requiring the local sales office to offer all written materials in both English and Spanish, and to employ individuals fluent in both English and Spanish; (810) A recordable copy of that portion of any tentative map which shall depict (as applicable) all market-rate and designated affordable units or lots by income category; and
(911) Other terms or conditions requested by the City.
(c) “Affordable Housing Fund” shall mean any fund that is established and administered by the City to be used exclusively to increase and/or improve the supply, and/or reduce the cost of housing.
(d) “Affordable Unit” shall mean any are dwelling units which are affordable dwelling unit or single room occupancy unit affordable to extremely low, very low, low, median, moderate or above-moderate income households as defined by this part or by any federal or state housing program and/or to recipients of housing choice vouchers or

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other public rental assistance and are subject to rental, sale, or resale provisions to maintain affordability. by income, rent level, and/or sales price to eligible above moderate, moderate, median, low or very low income households as defined, required, regulated and allowed by this Chapter.
(e) “Applicant” shall mean any person or entity seeking City real property development permits and approvals.
(f) “Commercial Development Project” shall mean any development project involving primarily nonresidential uses including but not limited to retail, office, servicecommercial, neighborhood-commercial, tourist-commercial and mixed-use projects. (g) “Declaration of Covenants and Restrictions” shall mean a recorded document that attaches the conditions and requirements of this Chapter to the title of an affordable ownership unit.
(h) “Density” shall mean the minimum net land area calculated in Sections 14-16.205, 305 and 405 of this Code.
(i) “Density Bonus” shall mean any density increase above the maximum density otherwise allowable under State Density Bonus Law (Government Code 65915 et seq. or as may be amended from time to time), the General Plan and/or zoning regulations because a project meets or exceeds State Density Bonus Law requirements and/or exceeds the affordable housing requirements of this Chapter. (ji) “Development Project” shall mean any activity for which a subdivision map and/or zoning permit is required. Changes in ownership, tenancy, management or use, and/or the exceptions contained in Subsection 14-46.050 are not a Development Project. (k) “Downtown Core” shall mean the geographic area within the City of Watsonville bounded by the Pajaro River, Rodriguez Street, East and West Lake Avenue, and Union Street.
(lj) “Eligible Purchaser” shall mean any household qualified to purchase an affordable unit both: (i) according to household income, and (ii) as a first time homebuyer, as defined in Section 2.3 of the City’s Homebuyer Program Guidelines (published January 30, 2004 July 30, 2018 and as revised from time to time), and any other State or federal program. published by the Division of Community Affairs of the Department of Housing and Community Development of the California Business and Transportation Agency.

Requirement (i) does not apply if the purchaser is at the same time selling a home within the City of Watsonville at a price that is for not more than ninety-five (95%) percent of the Watsonville median sales price for all units (market-rate and affordable) as set forth in the Watsonville Affordable Housing Ordinance Qualifying Maximum Income and Maximum Rents and Sales Prices, determined from time to time by resolution of the City Council.
(mk) “Eligible Renter” shall mean any household qualified, according to household income or eligibility for a housing choice voucher or other affordable rent subsidy, to rent an affordable unit.

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(nl) “Housing Price Index (HPI)” shall mean the Santa Cruz—Watsonville Metropolitan Statistical Area Housing Price Index as published from time to time by the Office of Federal Housing Enterprise Oversight Federal Housing Finance Agency. (om) “Household” shall mean all persons occupying or planning to occupy an affordable unit within ninety (90) days of the close of escrow for an ownership unit and within ninety (90) days of signing a lease for a rental unit. (pn) “Incentive, Local” shall mean any concession that may be granted by the City to an applicant who exceeds the affordable housing requirements of this Chapter. Any Local Incentive shall be in addition to any State law incentive or concession pursuant to State Density Bonus law (Government Code section 65915 et seq., as may be amended from time to time.)
(qn) “Income” shall mean the total household revenue from all sources. Income from the following persons shall be included when calculating the household income:
(1) all persons who will be on title to the property;
(2) the spouse of a title holder if the spouse will reside on the property; and (3) other persons over the age of twenty-three (23) eighteen (18) who will reside on the property, subject to the exceptions provided in the City’s Homebuyer Program Guidelines.
(ro) “Income Category” shall mean any classification of the amount of household income as defined below:
(1) “Very Low Income” shall mean, for the purposes of determining the eligibility of a household to occupy an affordable unit, the lower of the following: the household income equal to or less than eighty (80%) percent of the annual Watsonville median household income, adjusted for household size; of or up to fifty (50%) percent of Santa Cruz County’s area median income, adjusted for household size as published by the State Department of Housing and Community Development for Santa Cruz Countyas set forth in Section 6932 of Title 25 of the California Code of Regulations (25 CCR 6932). For purposes of determining the maximum sales price or rent level for an affordable unit, the household income equal to or less than fifty (50%) percent of the annual Watsonville median household income, adjusted for household size shall be used.
(2) “Low (or Lower) Income” shall mean, for purposes of determining the eligibility of a household to occupy an affordable unit, the household income equal to or less than 100 percent of the annual Watsonville median household income, adjusted for household size, or between 50 percent and 80 percent of Santa Cruz County’s median household income, adjusted for household size as published by the State Department of Housing and Community Development for Santa Cruz County. For purposes of determining the maximum rent level for an affordable unit, the household income equal to or less than eighty (80%) percent of the annual Watsonville median household income, adjusted for household size.

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(3) “Median Income” shall mean, for purposes of determining the eligibility of a household to occupy an affordable unit, the lower of the following: the household income equal to or less than 120 percent of the annual Watsonville median household income, adjusted for household size or eighty (80%) percent of Santa Cruz County’s median income as adjusted for household size pursuant to Section 6932 of Title 25 of the California Code of Regulations. For purposes of determining the maximum sales price or rent level for an affordable unit, the household income equal to or less than 100 percent of the annual Watsonville median household income, adjusted for household size.
(4) “Moderate Income” shall mean, for purposes of determining the eligibility of a household to occupy an affordable unit, the household income equal to or less than 150 percent of the annual Watsonville median household income, adjusted for household size, or between 80 percent and 120 percent of Santa Cruz County’s median household income, adjusted for household size as published by the State Department of Housing and Community Development for Santa Cruz County. For purposes of determining the maximum sales price for an affordable unit, the household income equal to or less than 120 percent of the annual Watsonville median household income, adjusted for household size.
(5) “Above Moderate Income” shall mean, for purposes of determining the eligibility of a household to occupy an affordable unit, the household income equal to or less than 170 percent of the annual Watsonville median household income, adjusted for household size. For purposes of determining the maximum sales price for an affordable unit, the household income equal to or less than 150 percent of the annual Watsonville median household income, adjusted for household size. (sp) “Industrial Development Project” shall mean any development project involving primarily nonresidential uses including, but not limited to, warehousing, light industrial and manufacturing uses.
(tq) “In-lieu fee” shall mean any fee paid pursuant to this Chapter to the City by owners of residential, commercial or industrial development projects as an alternative to the production of affordable units.
(ur) “Market-Rate Unit” shall mean any dwelling unit not subject to the rental, initial sale or resale provisions of this Chapter.
(vs) “Market Value” shall mean the highest price a willing buyer would pay and a willing seller would accept, or a willing tenant would pay and a willing landlord would accept, both being fully informed and in an open market for a particular dwelling unit. (wt) “Owner” shall mean any person or persons with legal and equitable title to a property proposed for development.
(xu) “Prevailing Interest Rate” shall initially mean, and going forward be based on, the average 30-year fixed interest rate mortgage available on a particular date from lenders located in Santa Cruz County then offering such loan product to Watsonville residents. The prevailing interest rate shall initially be set by the Community Development Director based on the above calculation and may be amended adopted by the Watsonville City Council from time to time, but no more often than once every six

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months or within a reasonable time after income limits are published by the State Department of Housing and Community Development, whichever occurs later. (yv) “Program” shall mean this Affordable Housing Program, consisting of affordable units created or in-lieu fees generated, as a result of the affordable housing requirements of this Chapter.
(zw) “Release Fee” shall mean the amount to be paid to the City’s Affordable Housing Fund by the owner of an Affordable Unit that is released from the Declaration of Conditions and Restrictions required by this Chapter. A formula for calculating the release fee may be adopted from time to time by Council resolution. Release fees for a developer at the time of the initial sale and release fees for an owner re-selling an affordable unit may not necessarily be calculated in the same manner and will be determined by the Watsonville City Council.
(aax) “Residential Development Project” shall mean any development project resulting in the subdivision of land and/or the construction of dwellings including but not limited to single-family detached homes, townhouses, apartments, condominiums, live/work studios and single room occupancy units.
(bb) “Section 8" shall mean Section 8 of the United States Housing Act of 1937 as it may be amended or replaced.
(ccy) “Watsonville Median Household Income” shall mean seventy (70%) percent of Santa Cruz County’s median household income, as adjusted for family size and rounded upward to the nearest Fifty and no/100ths ($50.00) Dollar increment. This figure is determined annually and is derived from the State Department of Housing and Community Development (HCD) publication of annual income data for counties by income categories pursuant to Section 6932 of Title 25 of the California Code of Regulations.
(§ 1, Ord. 1107-01 C-M, eff. July 26, 2001, as amended by § 1, Ord. 1161-03 C-M, eff.

October 23, 2003, and § 1, Ord. 1186-05 C-M, eff. April 7, 2005) 14-46.040 Applicability.
(a) Projects Required to Produce Affordable Units. Residential development projects of seven (7) or more units or lots shall meet the following requirements:

Projects with 7-50 New Units or Lots
15% Affordable
Housing
Requirement
(For-Sale,
Ownership
Projects)
20% Affordable
Housing
Requirement
(Rental Projects)
Required
Components:

Required
Components:

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5% Above
Moderate
5% Median
5% Moderate 5% Low
5% Median 510% Very Low or
recipients of any
housing choice
voucher or
affordable housing
subsidy
5% for Section 8
15% Total 20% Total
Projects with more than 50 new units or lots
20% Affordable
Housing
Requirement
(For-Sale,
Ownership
Projects)
20% Affordable
Housing
Requirement
(Rental Projects)
Required
Components:

Required
Components:
10% Above
Moderate
5% Median
5% Moderate 5% Low
5% Median 510% Very Low or
recipients of any
housing choice
voucher or
affordable housing
subsidy
5% for Section 8
20% Total 20% Total
(1) The five (5%) percent set aside for Section 8 units must first be made available to the County of Santa Cruz Housing Authority for at least one-month period from the date of marketing for a new unit, or receipt by the owner of a notice of vacancy for an existing unit. The requirement to provide Section 8 units will depend upon the

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availability of households holding certificates and vouchers who are seeking housing at the time the unit is available for occupancy.
(21) If the total number of affordable units required in the project (derived by multiplying the required fifteen (15%) percent or twenty (20%) percent by total project units) conflicts with the total number of component affordable units (derived by summing the required component units by income category), then the total number and not the total of the component numbers shall prevail. Also, any excess required affordable units shall be restricted to the lowest required income category.

For example, in a for-sale, ownership project of thirty (30) units, with a fifteen (15%) percent affordable housing requirement (thus yielding five (5) affordable units), with a component obligation of five (5%) percent above moderate income (two (2) units), five (5%) percent moderate income (two (2) units) and five (5%) percent median income (two (2) units), the total of the component affordable units is six (6). In this case, the project would be required to provide a total of five (5) not six (6) affordable units, consisting of a mix of two (2) moderate income units, two (2) median income units, and one above moderate income unit.
(32) If, pursuant to Subsection (a), two (2) or fewer units are required, one or both of such units may be produced at the moderate income level or below for an ownership development or at the low or very low income level for a rental development.
(43) Fractional Numbers. To determine the number of affordable units required in a project by income level, fractional units less than or equal to .49 shall be rounded down to the first whole number unit, and fractional units equal to or greater than .50 shall be rounded up to the next higher whole number unit. In determining the number of units required for each income level, fractional percentages equal to or greater than .50 shall be applied to the lowest applicable income level. (b) Projects Required to Pay an In-Lieu Fee. The following categories of projects are subject to this Chapter and required to pay an affordable housing in-lieu fee:
(1) Residential development projects or land divisions that include six (6) or fewer new units or lots, unless the developer elects to provide an affordable unit as provided in Subsection (c) of Section 14-46.07 of this Chapter; (2) New Ccommercial and industrial development projects exceeding 1,000 square feet of gross floor area; and
(3) Condominium conversions as defined by Article 2 (commencing with Section 13-3.201) of the Watsonville Subdivision Ordinance.
(c) Projects within the Downtown Core. Residential development projects and residential lot subdivisions of seven (7) or more units or lots that are, by virtue of their size, subject to the requirements of Subsection 14-46.04(a) but are located within the City of Watsonville’s Downtown Core, may provide the required affordable units at a location outside of the Downtown Core but within the Watsonville City Limits. (dc) Federal, State and Agency Assisted Housing Projects. Affordable housing projects, funded through Federal and State housing programs, or assisted by the

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Redevelopment Agency City pursuant to an Owner Participation Agreement or Disposition and Development Agreement, whose percentage of rent or price restricted units meet or exceed that required by this Chapter, thereby satisfy the requirements of this Chapter in its entirety.
(§ 1, Ord. 1107-01 C-M, eff. July 26, 2001, as amended by § 1, Ord. 1161-03 C-M, eff.

October 23, 2003)
14-46.050 Exceptions.

The following categories of activities are not subject to the provisions of this Chapter:
(a) Commercial and industrial development projects equal to or less than 1,000 square feet of gross floor area;
(b) The following residential uses:
(1) Residential additions, repairs or remodels that do not result in the creation of additional dwelling units,
(2) Addition living units (also known as secondTwo-unit developments, dwelling units created through urban lot splits, granny accessory dwelling units and/or junior accessory dwelling units ),
(3) Farm labor housing,
(4) Shelters, including emergency shelters and low-barrier navigation centers as defined by state law, and
(5) Any nonenclosed structure for which a building permit is required; (c) Other uses:
(1) Congregate care developments that offer nursing and medical services, (2) Emergency projects or projects exempted by Council for health and safety reasons,
(3) Churches, temples, mosques, and synagogues,
(4) City owned buildings,
(5) Project replacing or restoring a structure damaged or destroyed by fire, flood, earthquake or other disaster occurring within three years prior to the application for the new structure(s),
(6) Lot line adjustments that do not result in the creation of new buildable residential lot(s),
(7) Detached carports, garage structures, or other nonhabitable commercial or residential detached structures of less than 1,000 square feet, (8) Unenclosed vehicular entry structures for commercial or residential use, (9) Parking structures (public or private) for commercial or residential use, and

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(10) Projects for which an approved tentative map or vesting tentative map exists, or for which a construction permit was issued prior to the effective date of this Chapter July 26, 2001 and which continue to have unexpired permits. (11) Child care facilities
(§ 1, Ord. 1107-01 C-M, eff. July 26, 2001)
14-46.060 General standards.
(a) Affordable Unit Requirements.
(1) The minimum square footage and bathrooms required per unit are shown as follows:

No. of
Bedrooms/Afford.

Unit
Min. Sq.

Footage/Unit
Min. # of
Bathrooms/Unit
Single Room
Occupancy
(Furnished)
250 sq. ft. .501
Studio 400 sq. ft. 1
One 550 sq. ft. 1
Two 850 sq. ft. 1
Three 1,050 sq. ft. 1.50
Four 1,250 sq. ft. 1.752

1. 0.50 bath consists of a sink and toilet, provided common showers are located elsewhere within the project.

2. 10.75 bath consists of a sink, toilet and shower or a bathtub. (b) Minimum Affordable Unit Standards. The applicant may reduce the interior amenity level of the affordable units as long as each affordable unit meets the following Minimum Affordable Unit Standards and any other provisions of this Chapter:
(1) Have complete interior and exterior painting or other finished wall coverings; (2) Contain stove, dishwasher and oven, and other built-in kitchen appliances if the woodwork calls for it;
(3) Contain built-in kitchen cabinets;
(4) Contain washer and dryer hookups; or for rental units (at a minimum) a centrally located laundry facility;
(5) Have a paved parking area, with a sidewalk connecting the parking area and unit entrance;
(6) Contain rain gutters and down spouts;

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(7) Require that multi-level affordable units provide at least a half bath (toilet and sink) on each level of living space unless a level of living space is comprised solely of an entryway or an entryway and a laundry room and/or utility room. (c) Size. Affordable units may contain less square footage than market-rate units within the same project, but must meet the minimum square footage requirements of Subsection 14-46.060(a) (Affordable Unit Requirements). (d) Bedroom Mix. Affordable units must be proportionately distributed by number of bedrooms throughout the project, using the same ratio as the market-rate portion of the project. For example, if fifty (50%) percent of the market-rate units contain two (2) bedrooms and fifty (50%) percent contain three (3) bedrooms within a project, that same ratio of two (2) and three (3) bedroom units shall prevail in the affordable portion of the project.
(e) Appearance. The street frontage facade of affordable units shall be substantially similar to the market-rate units in terms of design, materials and finished quality. (f) Distribution. Affordable units shall be evenly distributed throughout the project with the following exceptions:
(1) Clustering. If the project contains a variety of product (any combination of one or more of the following types of residential products: single-family detached, condominiums, townhouses, and apartment buildings), the distinct product types may be clustered together; however, there shall be an affordable component of each product type.
(2) Corner Lots. Two (2) adjacent, affordable townhouse units may be sited on corner lots.
(g) Timing.
(1) Construction of Affordable Units. Where an affordable unit or unit(s) is constructed pursuant to this Chapter, each such affordable unit shall be constructed concurrently with or prior to construction of the market-rate units within the same project and phase of such project. Development shall occur in a proportionate ratio to the market-rate units except as may otherwise be established in an Affordable Housing Agreement.
(2) Occupancy of Affordable Units. Where an affordable unit or unit(s) is constructed pursuant to this Chapter, the affordable housing requirement shall be met prior to or concurrently with the issuance of a certificate of occupancy or final inspection for the first market-rate unit in the same project or phase of the project as identified by the conditions of approval and/or an Affordable Housing Agreement. In no case shall the last market-rate unit in the project receive a certificate of occupancy or final inspection prior to the last affordable unit being released for occupancy or occupied.
(h) Price. Affordable units shall be sold at a price affordable to eligible purchasers or rented at a level affordable to eligible renters in compliance with this Chapter.

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(i) Term of Affordability. Affordable ownership units created as a result of this Chapter shall remain affordable for a minimum period of forty-five (45) years from the date of the initial sale. Affordable rental units created as a result of this Chapter shall remain affordable for a minimum period of fifty-five (55) years from the date of the initial Certificate of Occupancy. All affordable units shall be deed restricted accordingly. (§ 1, Ord. 1107-01 C-M, eff. July 26, 2001, as amended by § 1, Ord. 1161-03 C-M, eff.

October 23, 2003)
14-46.070 Affordable housing in-lieu fees.
(a) In-Lieu Fees. Affordable housing in-lieu fees for applicable projects shall be established by resolution of the Council and adjusted annually by fifty (50%) percent of the annual percentage increase in the House Price Index as defined by this Chapter. (b) Timing of Payment. In-lieu fees shall be paid either before or concurrently with the issuance of each building permit for each applicable project unit or, in the case of a subdivision of land, prior to recording of the final map. In the event a developer is unable to sell an affordable unit within the time period specified, the in-lieu fee shall be paid prior to offering the released unit at the market-rate price. (c) Providing Affordable Unit(s) Instead of Paying the In-Lieu Fee. An applicant otherwise required to pay an in-lieu fee by this Chapter may instead provide an affordable ownership unit not exceeding the above moderate income level or an affordable unit for rent not exceeding the median income level or for rent a unit to a Section 8 tenant eligible for any housing choice voucher or other affordable rent subsidy. All such units shall be deed and time restricted as required by Subsection (i) of Section 14-46.060.
(§ 1, Ord. 1107-01 C-M, eff. July 26, 2001, as amended by § 1, Ord. 1161-03 C-M, eff.

October 23, 2003)
14-46.0980 Priority processing.

A project providing affordable units equal to fifty (50%) percent or more of the total project units shall be entitled to priority processing as follows:
(a) Upon certifying that the application is complete and eligible for priority processing, a project shall be immediately assigned to City development review staff; and (b) The project shall be processed by City development review staff in advance of all nonpriority items.
(§ 1, Ord. 1107-01 C-M, eff. July 26, 2001)
14-46.100090 Project application.

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(a) The method (provision of units or payment of an in-lieu fee) pursuant to Section 14-46.070 to be used to meet the project’s affordable housing requirements of this Chapter;
(b) The number, type and location of affordable units, or a preliminary calculation of in-lieu fees if applicable;
(c) A request specifying any incentives available under Section 14-46.08 of this Chapter being requested;
(dc) Site layout, grading, parking and other site features, and building elevations, layouts and dimensions for both affordable and market-rate units, including copies of relevant plans; and
(e) Request for a density bonus, if applicable, pursuant to Section 14-46.08 of this Chapter; and
(fd) Any other information that the City determines necessary to adequately evaluate the project’s affordable housing provisions.
(§ 1, Ord. 1107-01 C-M, eff. July 26, 2001)
14-46.1100 Affordable Housing Agreement processing.
(a) A draft Affordable Housing Agreement shall be completed prepared in a form approved by the City and executed by the applicant for projects with seven (7) or more units or lots in response to an application’s condition of development approval on a form provided by the City.
(b) A draft Agreement shall be reviewed by the City for compliance with project approvals, City policies and standards, and applicable codes. (c) The Agreement shall be approved by the Council upon approval and signing of the Agreement by the parties; and be recorded and binding on all future owners and successors in interest in the project for the time period specified. (d) The Agreement shall be recorded prior to the filing of the final map or commencement of construction where no map is required.
(e) Supplemental Documents. Upon the sale or transfers of each affordable unit, the City may use a Declaration of Covenants and Restrictions and/or Promissory Note and Deed of Trust to further secure the City’s rights under this Chapter and provide constructive notice to the public.
(§ 1, Ord. 1107-01 C-M, eff. July 26, 2001)
14-46.1210 Program requirements.

Only eligible renters and purchasers as defined herein households qualifying as very low, low, median, moderate or above moderate income shall be eligible to rent, purchase or occupy affordable units developed or funded in compliance with this Chapter (see Subsection 14-460.03(r) for a definition of income categories and Subsection 14-46.040(a) for the percentage mix of eligible income categories by size and type of project). Preference shall be given to current residents of the City of

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Watsonville, who have lived in, worked in or received municipal services from the City for at least one year. Purchasers of an affordable ownership unit may not own any real property at the time escrow closes for an affordable ownership unit or at the date of occupancy for an affordable rental unit. Exceptions to these program requirements or appeals may be considered at the discretion of the City Manager. (§ 1, Ord. 1107-01 C-M, eff. July 26, 2001, as amended by § 1, Ord. 1161-03 C-M, eff.

October 23, 2003)
14-46.1320 Program income and asset limits.
(a) Income Limits.
(1) Income eligibility to purchase or rent affordable units created pursuant to this Chapter shall be determined at the time of sale or rental of the affordable unit. (2) Income eligibility shall be based on household size and income category and shall be established by resolution from time to time by the Council. (3) For purposes of computing eligibility and pricing of affordable units created pursuant to this Chapter, the Watsonville median household income shall be used unless otherwise noted.
(b) Asset Limits. There are no asset limits for prospective renters or purchasers of affordable units created pursuant to this Chapter except that renters or purchasers shall not be eligible for or receive any tax advantages associated with the ownership of any other real property at the time of purchase or rental of an affordable unit. (§ 1, Ord. 1107-01 C-M, eff. July 26, 2001, as amended by § 1, Ord. 1161-03 C-M, eff.

October 23, 2003)
14-46.1430 Affordable rental unit requirements.
(a) Rent Levels. Maximum allowable rent levels by number of bedrooms shall be determined by resolution from time to time by Council, based on the Rent Formula described in Subsection 14-46.1430(b) and may be increased no more frequently than annually after unit occupancy. The maximum allowable income for determining eligibility to rent is higher than that used to determine the maximum rent level (see Subsection 14-46.030(r)).
(b) Rent Formula. Rent for an affordable rental unit shall be calculated as follows:
(1) STEP ONE: Determine maximum annual household income for unit as follows:
(i) Determine income category for unit (Very low, Low or Median). (ii) Determine household size for unit, assuming a family size one person larger than the number of bedrooms in the affordable unit. For example, the household size for a three (3) bedroom unit shall be four (4) persons and for a studio shall be one person.
(iii) Determine annual household income for unit based on income category and family size using the most recent City of Watsonville Affordable Housing

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Ordinance Qualifying Maximum Income, and Maximum Rents and Sales Prices adopted by resolution by the Council.
(2) STEP TWO: Determine monthly household allowance available for rent as follows:
(i) Multiply the annual household income limit derived in Step One by .30 to obtain an annual household allowance of thirty (30%) percent of income. Round that figure up to the nearest Fifty and no/100ths ($50.00) Dollars to get the annual household allowance.
(ii) Divide the annual household allowance by twelve (12). Round this figure up to the nearest Fifty and no/100ths ($50.00) Dollars to get the monthly household allowance which amount is the maximum rental payment.
(iii) For Section 8 housing choice voucher or affordable rental subsidy recipients Households: Use the rent formula and amounts established by the Federal Department of Housing and Urban Development (HUD) for the Section 8 Peach applicable program.
(c) Eligibility. All affordable rental units shall be rented to either:
(1) A median, low or very low income household; or
(2) Households participating in the Section 8 Program or its successor any affordable housing choice voucher or rental subsidy program. (d) Eligibility Determination Process. Prospective renters of affordable units shall be screened and determined eligible by the owner (or his designee) prior to taking occupancy. The City reserves the right to audit any owner of an affordable unit after providing twenty-four (24) hour written notice. Any deficiencies noted in the City’s audit report must be fully cleared by the owner within thirty (30) days after receipt or constitute a violation of this Chapter, except as to evictions of ineligible tenants; such evictions must be properly corrected and completed within 120 days after receipt. (e) Lease Requirements.
(1) All households renting affordable units shall be offered standard lease agreements; and
(2) Lease terms shall be for at least a twelve (12) month period. (f) Notice. The owner of an affordable rental unit shall notify tenants at least sixty (60) days prior to the expiration of the restrictions of this Chapter or the conversion of the affordable rental unit to an affordable ownership status, and advise the tenants that this termination or conversion may mean that rents will increase or the unit shall be sold. (g) Marketing.
(1) Any marketing communication advertising an affordable rental unit shall substantially disclose the affordable housing rental and eligibility restrictions required by this Chapter.

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(2) All marketing materials shall be provided in both English and Spanish. (23) Marketing and rental of an affordable rental unit shall be performed by the property owner (or his designee).
(34) No person shall market or rent an affordable rental unit for more than the levels prescribed by this Chapter.
(45) Affordable rental units shall be marketed exclusively to existing City of Watsonville residents who have lived in, worked in or received municipal services from the City for at least one year for two (2) weeks at least thirty (30) business days before any marketing to other persons.
(56) Conversion to condominiums.
(i) Conversion of an affordable rental unit to an ownership status shall be subject to Article 2 of Title 13 of the Watsonville Municipal Code. (ii) Affordable units shall be deed restricted and affordable sales price levels shall be maintained, should such conversion to ownership be approved. (iii) Conversion of a very low or low income affordable rental unit to ownership status shall not be permitted while an Affordable Housing Agreement is in effect for such unit, unless specifically approved by resolution of the Council. Said resolution would establish the maximum sales price and income category for said unit(s). Conversion of a median priced affordable rental unit to ownership status may be permissible, but only to a median priced ownership unit. (iv) The owner of an affordable rental unit shall notify tenants at least sixty (60) days prior to any conversion to affordable ownership status and advise that this conversion signifies that the unit shall be sold. Existing tenants shall receive first right of refusal to purchase the affordable rental unit proposed for conversion. (h) Management and Monitoring. Affordable rental units shall be managed by the owner or the owner’s agent in compliance with the requirements of this Chapter and the terms of the Affordable Housing Agreement Management and monitoring documentation shall be supplied to the City within twenty-four (24) hours after written notice has been received from the City in order to ensure compliance with this Chapter. (§ 1, Ord. 1107-01 C-M, eff. July 26, 2001, as amended by § 1, Ord. 1161-03 C-M, eff.

October 23, 2003, and § 1, Ord. 1186-05 C-M, eff. April 7, 2005) 14-46.1540 Affordable ownership requirements.
(a) Primary Place of Residence Requirement. The purchaser of an affordable ownership unit shall occupy the unit as his/her primary place of residence. If the unit ceases to function as a primary residence, it shall be sold according to the requirements of this Chapter or subject to the requirements of Subsection 14-46.1540(c). (1) STEP ONE: Determine annual household unit income limit. (i) Determine income category for unit (Median, Moderate or Above Moderate).

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(ii) Determine household size, assigning a family size one person more than the number of bedrooms in the affordable unit. For example, the household size for a three (3) bedroom unit would be four (4) persons and for a studio would be one person.
(iii) Determine the maximum annual household income limit for the unit based on income category and family size using the most recent City of Watsonville Affordable Housing Ordinance Qualifying Maximum Income, and Maximum Rents and Sales Prices adopted by resolution by the Council. (2) STEP TWO: Determine monthly household allowance permitted to be used for a mortgage payment as follows:
(i) Multiply the annual household income limit derived in Step One by .30 to obtain an annual household allowance of thirty (30%) percent of income. Round up to the nearest Fifty and no/100ths ($50.00) Dollars to obtain the annual household allowance.
(ii) Divide the annual household allowance by twelve (12). Round up to the nearest Fifty and no/100ths ($50.00) Dollars to determine the household allowance which is the maximum mortgage payment allowed. (3) STEP THREE: Determine the maximum mortgage that can be financed for a thirty (30) year fully amortized fixed-rate mortgage:
(i) Determine Apply the City Council-adopted prevailing interest rate. (ii) Determine the amount of the monthly mortgage payment (principal paydown and interest). (4) STEP FOUR: Determine maximum allowable unit sales price: Assuming a mortgage of ninety-five (95%) percent of the sales price, divide the principal amount of the mortgage by 0.95 and round to the nearest Fifty and no/100ths ($50.00) Dollars. The result is the maximum allowable price of the affordable unit. (b) Marketing.
(1) Any marketing communication advertising an affordable ownership unit shall fully disclose the affordable housing price and eligibility restrictions contained in this Chapter.
(2) Marketing and sale of an affordable ownership unit shall be performed by the owner (or his designee), who shall market the affordable ownership unit for no more than the maximum sales price established by the City, excluding closing costs. (3) The purchaser of an affordable unit shall not pay more in closing costs than that which is reasonable and customary in Santa Cruz County. (4) The seller of an affordable unit shall pay any real estate sales commission associated with the transaction.
(5) All marketing materials shall be provided in both English and Spanish.

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(c) Conversion.
(1) Conversion of an affordable ownership unit to a rental status shall not be permitted unless a hardship can be demonstrated and an administrative hardship received, pursuant to administrative guidelines approved by Council resolution from time to time.
(2) Affordable rent levels shall be maintained, should conversion from an affordable ownership to an affordable rental status be approved. (d) Financing. First mortgages obtained to purchase an affordable unit created as a result of this Affordable Housing Ordinance shall be fixed interest rate and fully amortized for, at minimum, thirty (30) year term with no negative amortization. An otherwise qualified purchaser may be assisted by the federal Mortgage Credit Certificate (MCC) Program, City First Time Homebuyers Program, or other any available homebuyer assistance programs.
(e) Escrow Process.
(1) Sales Price and Purchaser Eligibility Certification. Prior to the close of escrow, the owner (or his designee) shall certify sales price and buyer eligibility compliance with the requirements of this Chapter. This determination shall be subject to audit by the City with twenty-four (24) hour written notice. Any deficiencies noted in the City’s audit report shall be fully cleared by the owner within thirty (30) days after written notice by the City, or constitute a violation of this Chapter and the Affordable Housing Agreement. It shall be a separate and discrete violation of this Chapter to allow escrow to close without City approval of such audit. (2) Restrictions. Escrow shall prepare and have the buyer sign the Declaration of Covenants and Restrictions and/or Promissory Note and Deed of Trust to further secure the City’s rights under this Chapter and provide constructive notice to the public.
(f) Sales Procedure for New Affordable Units.
(1) Notice of Intent to Sell.
(i) When a new affordable unit is fully completed, ready for final inspection and available for sale, the owner shall send a written “Notice of Intent to Sell” to the City.
(ii) In response to the Notice, the City shall inform the owner of the current maximum allowable sales price.
(2) Sales Price Formula. The maximum allowable sales price for a new affordable unit shall be based on the following formula and the income limits established by resolution from time to time by the Council. The formula to determine maximum allowable sales price for an affordable unit shall be as follows:
(i) STEP ONE: Determine the annual income for a household, based on whether the unit is designated for occupancy by an above moderate, moderate,

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or median income household using Watsonville above moderate, moderate, or median household incomes:
(aa) Determine household size, assuming one person larger than the number of bedrooms in the affordable unit (for example, the household size for a three (3) bedroom unit shall be four (4) persons and for a studio, shall be one person).
(ab) Given the household size determined above, locate the household’s maximum annual income for purposes of determining the maximum sales price. (Note: The income limit for determining eligibility to purchase is higher than that used to determine the maximum sales price [see Subsection 14-

46.030(r)]).
(ii) STEP TWO: Determine the monthly household allowance available for a mortgage payment:
(aa) Multiply the income limit to be used to calculate the maximum sales price derived above by .30 to obtain annual housing allowance of thirty (30%) percent of income.
(ab) Divide the annual housing allowance by twelve (12) to obtain a monthly housing allowance.
(iii) STEP THREE: Determine the maximum mortgage that can be financed for a thirty (30) year fully amortized fixed-rate home mortgage:
(aa) Determine Apply the City Council-adopted prevailing interest rate. (ab) Determine the principal amount of the mortgage payment. (iv) STEP FOUR: Determine the maximum allowable unit sales price:

Assuming a mortgage of ninety-five (95%) percent of the sales price, divide the principal amount of the mortgage by 0.95. The result is the maximum allowable sales price of the affordable unit.
(g) Inability to Sell.
(1) If the owner (or his designee) of an affordable unit, having made a good faith effort that included listing the affordable unit on the Multiple Listing Service (MLS), fails to find an eligible purchaser within 180 days from the date of final inspection or maximum sales price determination, whichever is later, the owner shall notify the City in writing no later than the 150th day of their inability to sell. The owner (or his designee) shall submit a notice identifying the steps taken, with documentation, of the attempted sale.
(2) The City or its Redevelopment Agency shall have a first right of refusal to purchase the affordable unit at the last advertised restricted price. If after thirty (30) days following notice as described above under Subsection 14-46.1540(g)(1), the City or its Redevelopment Agency fails to exercise this option, the affordable unit may be sold at a market-rate price, and the owner (or his designee) must pay a release fee to the City’s Affordable Housing Fund.

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Attachment 1

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(h) Resale Procedure for Existing Affordable Units.
(1) Notice of Intent to Sell.
(i) When an existing affordable unit becomes available for resale, the owner shall send a written “Notice of Intent to Sell” form to the City. (ii) In response to the Notice, the City shall inform the owner of the current maximum allowable sales price.
(2) Resale Price Formula. The maximum allowable resale price for existing affordable units shall be derived using one of the two following methods, whichever yields the highest price for the owner:
(i) The maximum allowable sales price formula as established by this Chapter (see Subsection (f)(2) of Section 14-46.1540); or
(ii) The original sales price plus fifty (50%) percent of the increase in the House Price Index since the date of purchase.
(3) Damage Repair Costs. If the City finds that the owner, through neglect, abuse or lack of adequate maintenance, has damaged an affordable unit, the City may require repairs be made at the owner’s expense and be financed prior to sale or through the escrow account.
(4) Marketing. Any marketing of existing affordable units shall fully disclose this Chapter’s affordable housing price and eligibility restrictions:
(i) Marketing and sale of existing affordable units shall be performed by the owner (or his designee) for no more than the maximum sales price established by the City, excluding closing costs.
(ii) The purchaser of an affordable unit shall not pay more in closing costs than that which is reasonable and customary in Santa Cruz County. (iii) The seller of an affordable unit shall pay any real estate sales commission associated with the transaction.
(5) Inability to Resell Affordable Units.
(i) In the event the owner of an existing affordable unit, having made a good faith effort that included listing the affordable unit on the Multiple Listing Service (MLS), fails to find an eligible purchaser to take title to the unit within 240 days from the date of maximum sales price determination, the owner (or his designee) shall notify the City in writing, no less than thirty (30) days following the end of that 240-day period. The owner (or his designee) shall submit a notice identifying the steps taken, with documentation, of the attempted sale. (ii) The City or its Redevelopment Agency shall have an option to purchase the affordable unit for an amount that is the highest of the following: the value of the first mortgage; the value of the first and second mortgage combined if the second mortgage is a purchase money second mortgage provided by a

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governmental body; or the appraised value of the affordable unit with the affordability covenants intact, as determined by an appraiser mutually agreeable to the City and the owner, who employs standard appraisal practices. (iii) If, after thirty (30) days following the owner’s (or his designee’s) notice, the option is not exercised, the affordable unit may be sold at market-rate, and the owner (or his designee) must pay a release fee to the City’s Affordable Housing Fund.
(i) Refinance of Affordable Ownership Units. Owners desiring to refinance their affordable units shall notify the City (or its designee) prior to refinance and shall not encumber the property through the refinance process for an amount greater than the maximum sales price established by the City using the House Price Index as set forth in Subsection 14-46.030(n) at the time of owner notice.
(§ 1, Ord. 1107-01 C-M, eff. July 26, 2001, as amended by § 1, Ord. 1161-03 C-M, eff.

October 23, 2003, and § 1, Ord. 1186-05 C-M, eff. April 7, 2005) 14-46.1650 Release Fees.

Upon resale or refinance of an affordable unit, the owner shall pay a fee to the City for the maximum sales price determination, monitoring, loan, and other document preparation processes as may be required. The fee shall be established by resolution from time to time by the Council and changed as needed, based on fifty (50%) percent of the annual percentage increase in the House Price Index. In addition, the City may charge each prospective purchaser of an existing affordable unit a fee for the determination of eligibility.
(§ 1, Ord. 1107-01 C-M, eff. July 26, 2001)
14-46.1760 Default, foreclosure and release of units.
(a) Option to Purchase. In the event a notice of default is recorded on an affordable unit, the City or its designee shall have the option to purchase the unit paying the amount that the owner would have received on the date of the foreclosure sale under the resale formula established by Subsection 14-46.1540(h)(2) of this Chapter. Out of this sum, the lien holder(s) shall be paid the amount of any funds due, including but not limited to, the loan balance, charges, taxes and assessments; the owner shall be paid any remaining funds.
(1) In the event the City (or its designee) does not exercise its option to purchase the affordable unit prior to the trustee’s sale or judicial foreclosure, the unit shall be free from the restrictions of this Chapter, and the owner shall be deemed in compliance with the provisions of this Chapter, with the exception of the provisions of Subsection 14-46.1760(b) below.
(b) Single family units that have never been sold to individual owner-occupants, and multiple family dwelling units, shall not be released from the restrictions of this Chapter through a trustee’s sale or judicial foreclosure. In addition, affordable units shall not be released if any of the following occurs:
(1) the City is not provided a copy of the Notice of Default within ten (10) days of its filing;

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(2) the owner does not allow the City to exercise its option to purchase; or (3) the lender has over encumbered the property and refuses to release its interest in the property for the maximum allowable sales price. (c) The owner of an affordable unit shall not use this property as collateral for an amount exceeding ninety-five (95%) percent of the maximum sales price allowed by Subsection 14-46.1540(f)(2) of this Chapter unless specifically allowed in writing by the City. All second mortgages require the prior, written approval of the City and are subject to guidelines established by the City.
(§ 1, Ord. 1107-01 C-M, eff. July 26, 2001)
14-46.1870 Conflict of interest.

Following are those individuals who, by virtue of their position or relationship, are found to be ineligible to purchase or rent an affordable unit as their residence:
(a) All employees and officials of the City of Watsonville who have, by the authority of their position, policy making authority or influence affecting City housing programs; (b) The owner or developer of, or applicant for, an affordable housing project or affordable unit; and
(c) The immediate relatives, employees and anyone gaining significant economic benefit from a direct business association with public employees, officials, developers, applicants or owners ineligible to purchase or rent an affordable unit. (§ 1, Ord. 1107-01 C-M, eff. July 26, 2001)
14-46.1980 Violations.
(a) It shall be unlawful and a violation of this Chapter for the applicant or owner of an affordable unit or any employee or agent of such applicant or owner to:
(1) Sell or rent an affordable dwelling unit to anyone who has not first been qualified as eligible;
(2) Sell or rent an affordable unit to any person who has a conflict of interest as defined by this Chapter;
(3) Sell an affordable unit for an amount exceeding the maximum sales price or rent an affordable unit for an amount exceeding the maximum rent level; (4) Solicit, require or accept in connection with the sale or rental of an affordable unit any payment or other contribution of cash, property or services from a purchaser or tenant the value of which, when added to the purchase price or rent paid for an affordable unit, would exceed the maximum sales price or maximum rent level prescribed by this Chapter;
(5) Willfully and knowingly make a false statement or representation, or knowingly fail to disclose a material fact for the purpose of qualifying as eligible to purchase or rent an affordable unit under this Chapter; or
(6) Violate any other provision of this Chapter.

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Any applicant or other person whose interests are adversely affected by any determination in regard to the requirements of this Chapter may appeal in accordance with the provisions of Chapter 14-10, Part 9 11 of this Code to the Council. The appeal shall set forth specifically wherein the action fails to conform to the provisions of this Chapter.
(§ 1, Ord. 1107-01 C-M, eff. July 26, 2001)
14-46.200 Effect of Chapter.

This Chapter shall only apply to projects for which final approval is granted or final map is recorded after the effective date of this Ordinance. Ordinance 866-91 (CM) (Chapter 14-46) shall remain in effect for those projects approved and final maps recorded prior to the effective date of this Ordinance.
(§ 1, Ord. 1107-01 C-M, eff. July 26, 2001)

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1 Ordinance No. ______ (CM)
Reference:

Meeting Date: 082625 SWZ ______ TV ______ CDD ______
ORDINANCE NO. Introduction (CM)

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
WATSONVILLE AMENDING CHAPTER 14-46 (AFFORDABLE HOUSING

ORDINANCE) OF THE WATSONVILLE MUNICIPAL CODE
WHEREAS, the City of Watsonville (“City”) last updated its Affordable Housing Ordinance (“AHO”), Chapter 14-46 of the Watsonville Municipal Code (“WMC”), in 2001; WHEREAS, in 2018 the City commissioned the preparation of two nexus studies to support the establishment of the AHO’s in-lieu fees, and adopted the nexus studies; WHEREAS, Program C.5 of the City’s certified 2023-2031 Housing Element requires the City to continue to implement the AHO to ensure that the private sector assists in meeting the housing needs of all income groups in the City; WHEREAS, the City has identified certain clarifying updates to the AHO that are necessary to ensure that the AHO is correctly implemented and optimized to promote growth in the City’s affordable housing stock;
WHEREAS, the proposed amendments are all as shown in Exhibit A, attached hereto and incorporated herein by this reference, with additions shown in underline and deletions shown in strikethrough;
WHEREAS, the proposed amendments, among other things, clarify the methodology and process to calculate and establish prevailing interest rates utilized in the provision of affordable housing, clarify the City’s local preference and other eligibility requirements for the affordable housing program, and make other clarifying edits to be consistent with State law definitions and other sections of the WMC; WHEREAS, the proposed amendments do not impact or otherwise affect the adopted in-lieu fees;

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2 Ordinance No. ______ (CM)
Reference:

Meeting Date: 082625
WHEREAS, in accordance with WMC Chapter 14-10, Part 9 (Public Hearing Notice Provisions) and California Government Code Section 65091, notice of this public hearing was published in the newspaper and posted at City Hall; WHEREAS, the Planning Commission, at a regularly scheduled public meeting on June 3, 2025, conducted a duly-noticed public hearing, accepted public comment and reviewed the proposed amendments to the AHO and the associated determination under the California Environmental Quality Act (“CEQA”), and voted to adopt Resolution No. 09- 25 (PC) recommending the City Council adopt the proposed AHO amendments and associated CEQA determination;
WHEREAS, the City Council held a duly-noticed public hearing on the proposed AHO amendments at its meeting of August 26, 2025;
WHEREAS, the proposed action 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 CEQA Guidelines Section 15378, as the action is not deemed to be 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 the “common sense” exemption (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; and

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3 Ordinance No. ______ (CM)
Reference:

Meeting Date: 082625
WHEREAS, the City Council has considered all evidence received, both oral and documentary, and the matter was submitted for recommendation.

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

SECTION 1: RECITALS.

The foregoing recitals are true and correct and incorporated herein.

SECTION 2: ENACTMENT.

1. That the City Council of the City of Watsonville does hereby make the findings required by Watsonville Municipal Code §14-12.807:
(a) That the proposed amendments are consistent with the policies embodied in the General Plan. The recommended amendments to chapter 14-46 are consistent with and/or further the following goals and policies in the General Plan:
• Goal 2: Expand and protect housing opportunities for all economic segments and special needs groups within the community. • Policy 2.1: Encourage the provision of jobs and housing by annexing areas outside of city limits but within the urban growth boundary for new housing opportunities and promoting the City’s affordable housing programs with Watsonville businesses.
• Policy 2.2: Continue to offer and promote homeownership assistance programs to lower- and moderate-income households to purchase housing and give preference, to the extent possible, to those who work or live in Watsonville.

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4 Ordinance No. ______ (CM)
Reference:

Meeting Date: 082625
• Goal 3: Provide housing opportunity for Watsonville’s share of the regional housing need for all income and special needs groups. • Policy 3.1: Encourage the production of housing that meets the needs of all economic segments, including lower-, moderate-, and above moderate-income households, to achieve a balanced community. • Policy 3.2: Provide high quality rental and ownership housing opportunities for current and future residents that are affordable to a diverse range of income levels.
• Program C.4 Affordable Housing Ordinance: Under the City’s adopted Affordable Housing Ordinance, developers are required to set aside a certain portion of units (up to 20 percent) in projects of seven or more units for targeted income level groups. Due to the cost of single-family homes, homeownership projects are required to set aside units for median, moderate, and above-moderate income households. The term of affordability is a minimum of 45 years. Developers may be eligible for density bonus provisions under State Density Bonus Law by providing the minimum percent of affordable units as required by the Affordable Housing Ordinance.
• The City will continue to implement the Affordable Housing Ordinance to ensure that the private sector assists in meeting the housing needs of Watsonville.
• Goal 4: Where appropriate, mitigate unnecessary governmental constraints to the maintenance, improvement, and development of housing.

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5 Ordinance No. ______ (CM)
Reference:

Meeting Date: 082625
(b) That the proposed amendments are compatible to the extent possible with the actual and general planned use of the adjacent properties. The recommended amendments do not impact uses or development standards and are confined to the provision of affordable units associated with development City-wide. Therefore, the proposed amendments are consistent with this finding.

2. That the City Council does hereby adopt the amendments to WMC Chapter 14-46 attached hereto as Exhibit A;

3. That the City Clerk of the City of Watsonville is hereby authorized and directed to make the zoning code text amendments, attached hereto as Exhibit A, and to designate the effective date and number of the ordinance authorizing the change.

SECTION 3: CEQA.

The City Council hereby finds that this action 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 CEQA Guidelines Section 15378, as the action is not deemed to be 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 the “common sense” exemption (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.

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6 Ordinance No. ______ (CM)
Reference:

Meeting Date: 082625
SECTION 4: PUBLICATION.

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

SECTION 5: SEVERABILITY.

If any section, subsection, phrase or clause of this ordinance is for any reason held to be unconstitutional, such decision shall not affect the validity of the remaining portions of this ordinance. The City Council hereby declares that it would have passed this and each section, subsection, phrase or clause thereof irrespective of the fact that any one or more sections, subsections, phrase or clauses be declared unconstitutional on their face or as applied.

SECTION 6: EFFECTIVE DATE.

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

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4900-5911-7408 v1
EXHIBIT “A”
Chapter 14-46
AFFORDABLE HOUSING ORDINANCE*
Sections:
14-46.010 Title.
14-46.020 Purpose.
14-46.030 Definitions.
14-46.040 Applicability.
14-46.050 Exceptions.
14-46.060 General standards.
14-46.070 Affordable housing in-lieu fees.
14-46.080 Priority processing.
14-46.090 Project application.
14-46.100 Affordable Housing Agreement processing.
14-46.110 Program requirements.
14-46.120 Program income and asset limits.
14-46.130 Affordable rental unit requirements.
14-46.140 Affordable ownership requirements.
14-46.150 Release Fees.
14-46.160 Default, foreclosure and release of units.
14-46.170 Conflict of interest.
14-46.180 Violations.
* Prior ordinance history: Ords. 866-91, 1026-97 and 1061-98. 14-46.010 Title.

The provisions of this Chapter shall be known collectively as the Affordable Housing Ordinance of the City of Watsonville.
(§ 1, Ord. 1107-01 C-M, eff. July 26, 2001)
14-46.020 Purpose.

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4900-5911-7408 v1
a household that receives any type of affordable housing choice voucher or rental subsidy.
(b) “Affordable Housing Agreement” shall mean a written agreement between the owner or developer of a residential development project and the City, in a form approved by the City, that specifies how the requirements of this chapter shall be satisfied and which is secured against the property. Such agreement may be secured by a deed of trust encumbering affordable housing developed as part of the project. The Affordable Housing Agreement shall include:
(1) The total number of units in the project;
(2) The total number, where applicable, of rental and/or ownership affordable units;
(3) The total number, and number by income category, of the affordable units, including the number of units set aside for households that receive any housing choice vouchers or other affordable rental subsidies, if any; (4) The area (square footage), number of bedrooms, and type (single-family, multifamily, apartment, etc.) of the market-rate units and affordable units (by income category and as a total), including the number of units set aside for households that receive any housing choice vouchers or other affordable rental subsidies, if any; (5) The term of affordability for the affordable units; (6) Any density bonus, incentives and/or other assistance to be provided by the City or other public agency;
(7) Provision for periodic monitoring by the City (or its designee) for compliance with the provisions of this Chapter;
(8) Provision requiring the owner or developer to establish and maintain a local sales office;
(9) Provision requiring the local sales office to offer all written materials in both English and Spanish, and to employ individuals fluent in both English and Spanish; (10) A recordable copy of that portion of any tentative map which shall depict (as applicable) all market-rate and designated affordable units or lots by income category; and
(11) Other terms or conditions requested by the City.
(c) “Affordable Housing Fund” shall mean any fund that is established and administered by the City to be used exclusively to increase and/or improve the supply, and/or reduce the cost of housing.
(d) “Affordable Unit” shall mean any are dwelling units which are affordable to extremely low, very low, low, median, moderate or above-moderate income households

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4900-5911-7408 v1
as defined by this part or by any federal or state housing program and/or to recipients of housing choice vouchers or other public rental assistance and are subject to rental, sale, or resale provisions to maintain affordability.
(e) “Applicant” shall mean any person or entity seeking City real property development permits and approvals.
(f) “Commercial Development Project” shall mean any development project involving primarily nonresidential uses including but not limited to retail, office, servicecommercial, neighborhood-commercial, tourist-commercial and mixed-use projects. (g) “Declaration of Covenants and Restrictions” shall mean a recorded document that attaches the conditions and requirements of this Chapter to the title of an affordable unit.
(h) “Density” shall mean the minimum net land area calculated in Sections 14-16.205, 305 and 405 of this Code.
(i) “Development Project” shall mean any activity for which a subdivision map and/or zoning permit is required. Changes in ownership, tenancy, management and/or the exceptions contained in Subsection 14-46.050 are not a Development Project. (j) “Eligible Purchaser” shall mean any household qualified to purchase an affordable unit both: (i) according to household income, and (ii) as a first time homebuyer, as defined in the City’s Homebuyer Program Guidelines (published July 30, 2018 and as revised from time to time), and any other State or federal program. (k) “Eligible Renter” shall mean any household qualified, according to household income or eligibility for a housing choice voucher or other affordable rent subsidy, to rent an affordable unit.
(l) “Housing Price Index (HPI)” shall mean the Santa Cruz—Watsonville Metropolitan Statistical Area Housing Price Index as published from time to time by the Federal Housing Finance Agency.
(m) “Household” shall mean all persons occupying or planning to occupy an affordable unit within ninety (90) days of the close of escrow for an ownership unit and within ninety (90) days of signing a lease for a rental unit.
(n) “Income” shall mean the total household revenue from all sources. Income from the following persons shall be included when calculating the household income:
(1) all persons who will be on title to the property;
(2) the spouse of a title holder if the spouse will reside on the property; and (3) other persons over the age of eighteen (18) who will reside on the property, subject to the exceptions provided in the City’s Homebuyer Program Guidelines.

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4900-5911-7408 v1
(o) “Income Category” shall mean any classification of the amount of household income as defined below:
(1) “Very Low Income” shall mean, for the purposes of determining the eligibility of a household to occupy an affordable unit, the lower of the following: the household income equal to or less than eighty (80%) percent of the annual Watsonville median household income, adjusted for household size or up to fifty (50%) percent of Santa Cruz County’s area median income, adjusted for household size as published by the State Department of Housing and Community Development for Santa Cruz County.

For purposes of determining the maximum sales price or rent level for an affordable unit, the household income equal to or less than fifty (50%) percent of the annual Watsonville median household income, adjusted for household size shall be used. (2) “Low (or Lower) Income” shall mean, for purposes of determining the eligibility of a household to occupy an affordable unit, the household income equal to or less than 100 percent of the annual Watsonville median household income, adjusted for household size, or between 50 percent and 80 percent of Santa Cruz County’s median household income, adjusted for household size as published by the State Department of Housing and Community Development for Santa Cruz County. For purposes of determining the maximum rent level for an affordable unit, the household income equal to or less than eighty (80%) percent of the annual Watsonville median household income, adjusted for household size. (3) “Median Income” shall mean, for purposes of determining the eligibility of a household to occupy an affordable unit, the lower of the following: the household income equal to or less than 120 percent of the annual Watsonville median household income, adjusted for household size or eighty (80%) percent of Santa Cruz County’s median income as adjusted for household size pursuant to Section 6932 of Title 25 of the California Code of Regulations. For purposes of determining the maximum sales price or rent level for an affordable unit, the household income equal to or less than 100 percent of the annual Watsonville median household income, adjusted for household size.
(4) “Moderate Income” shall mean, for purposes of determining the eligibility of a household to occupy an affordable unit, the household income equal to or less than 150 percent of the annual Watsonville median household income, adjusted for household size, or between 80 percent and 120 percent of Santa Cruz County’s median household income, adjusted for household size as published by the State Department of Housing and Community Development for Santa Cruz County. For purposes of determining the maximum sales price for an affordable unit, the household income equal to or less than 120 percent of the annual Watsonville median household income, adjusted for household size.
(5) “Above Moderate Income” shall mean, for purposes of determining the eligibility of a household to occupy an affordable unit, the household income equal to or less than 170 percent of the annual Watsonville median household income, adjusted for household size. For purposes of determining the maximum sales price

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4900-5911-7408 v1
for an affordable unit, the household income equal to or less than 150 percent of the annual Watsonville median household income, adjusted for household size. (p) “Industrial Development Project” shall mean any development project involving primarily nonresidential uses including, but not limited to, warehousing, light industrial and manufacturing uses.
(q) “In-lieu fee” shall mean any fee paid pursuant to this Chapter to the City by owners of residential, commercial or industrial development projects as an alternative to the production of affordable units.
(r) “Market-Rate Unit” shall mean any dwelling unit not subject to the rental, initial sale or resale provisions of this Chapter.
(s) “Market Value” shall mean the highest price a willing buyer would pay and a willing seller would accept, or a willing tenant would pay and a willing landlord would accept, both being fully informed and in an open market for a particular dwelling unit. (t) “Owner” shall mean any person or persons with legal and equitable title to a property proposed for development.
(u) “Prevailing Interest Rate” shall initially mean, and going forward be based on, the average 30-year fixed interest rate mortgage available on a particular date from lenders located in Santa Cruz County then offering such loan product to Watsonville residents. The prevailing interest rate shall initially be set by the Community Development Director based on the above calculation and may be amended by the Watsonville City Council from time to time, but no more often than once every six months or within a reasonable time after income limits are published by the State Department of Housing and Community Development, whichever occurs later. (v) “Program” shall mean this Affordable Housing Program, consisting of affordable units created or in-lieu fees generated, as a result of the affordable housing requirements of this Chapter.
(w) “Release Fee” shall mean the amount to be paid to the City’s Affordable Housing Fund by the owner of an Affordable Unit that is released from the Declaration of Conditions and Restrictions required by this Chapter. A formula for calculating the release fee may be adopted from time to time by Council resolution. Release fees for a developer at the time of the initial sale and release fees for an owner re-selling an affordable unit may not necessarily be calculated in the same manner and will be determined by the Watsonville City Council.
(x) “Residential Development Project” shall mean any development project resulting in the subdivision of land and/or the construction of dwellings including but not limited to single-family detached homes, townhouses, apartments, condominiums, live/work studios and single room occupancy units.
(y) “Watsonville Median Household Income” shall mean seventy (70%) percent of Santa Cruz County’s median household income, as adjusted for family size and

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4900-5911-7408 v1
rounded upward to the nearest Fifty and no/100ths ($50.00) Dollar increment. This figure is determined annually and is derived from the State Department of Housing and Community Development publication of annual income data for counties by income categories.
(§ 1, Ord. 1107-01 C-M, eff. July 26, 2001, as amended by § 1, Ord. 1161-03 C-M, eff.

Projects with 7-50 New Units or Lots
15% Affordable
Housing
Requirement
(For-Sale,
Ownership
Projects)
20% Affordable
Housing
Requirement
(Rental Projects)
Required
Components:

Required
Components:
5% Above
Moderate
5% Median
5% Moderate 5% Low
5% Median 10% Very Low or
recipients of any
housing choice
voucher or
affordable housing
subsidy
15% Total 20% Total
Projects with more than 50 new units or lots
20% Affordable
Housing
Requirement
(For-Sale,
Ownership
Projects)
20% Affordable
Housing
Requirement
(Rental Projects)

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4900-5911-7408 v1
Required
Components:

Required
Components:
10% Above
Moderate
5% Median
5% Moderate 5% Low
5% Median 10% Very Low or
recipients of any
housing choice
voucher or
affordable housing
subsidy
20% Total 20% Total
(1) If the total number of affordable units required in the project (derived by multiplying the required fifteen (15%) percent or twenty (20%) percent by total project units) conflicts with the total number of component affordable units (derived by summing the required component units by income category), then the total number and not the total of the component numbers shall prevail. Also, any excess required affordable units shall be restricted to the lowest required income category.

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4900-5911-7408 v1
(1) Residential development projects or land divisions that include six (6) or fewer new units or lots, unless the developer elects to provide an affordable unit as provided in Subsection (c) of Section 14-46.07 of this Chapter; (2) New commercial and industrial development projects exceeding 1,000 square feet of gross floor area; and
(3) Condominium conversions as defined by Article 2 (commencing with Section 13-3.201) of the Watsonville Subdivision Ordinance.
(c) Federal, State and Agency Assisted Housing Projects. Affordable housing projects, funded through Federal and State housing programs, or assisted by the City pursuant to an Owner Participation Agreement or Disposition and Development Agreement, whose percentage of rent or price restricted units meet or exceed that required by this Chapter, thereby satisfy the requirements of this Chapter in its entirety. (§ 1, Ord. 1107-01 C-M, eff. July 26, 2001, as amended by § 1, Ord. 1161-03 C-M, eff.

October 23, 2003)
14-46.050 Exceptions.

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(5) Project replacing or restoring a structure damaged or destroyed by fire, flood, earthquake or other disaster occurring within three years prior to the application for the new structure(s),
(6) Lot line adjustments that do not result in the creation of new buildable residential lot(s),
(7) Detached carports, garage structures, or other nonhabitable commercial or residential detached structures of less than 1,000 square feet, (8) Unenclosed vehicular entry structures for commercial or residential use, (9) Parking structures (public or private) for commercial or residential use, and (10) Projects for which an approved tentative map or vesting tentative map exists, or for which a construction permit was issued prior to July 26, 2001 and which continue to have unexpired permits.
(11) Child care facilities
(§ 1, Ord. 1107-01 C-M, eff. July 26, 2001)
14-46.060 General standards.
(a) Affordable Unit Requirements.
(1) The minimum square footage and bathrooms required per unit are shown as follows:

No. of
Bedrooms/Afford.

Unit
Min. Sq.

Footage/Unit
Min. # of
Bathrooms/Unit
Single Room
Occupancy
(Furnished)
250 sq. ft. .501
Studio 400 sq. ft. 1
One 550 sq. ft. 1
Two 850 sq. ft. 1
Three 1,050 sq. ft. 1.50
Four 1,250 sq. ft. 1.752

1. 0.50 bath consists of a sink and toilet, provided common showers are located elsewhere within the project.

2. 0.75 bath consists of a sink, toilet and shower or a bathtub.

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(b) Minimum Affordable Unit Standards. The applicant may reduce the interior amenity level of the affordable units as long as each affordable unit meets the following Minimum Affordable Unit Standards and any other provisions of this Chapter:
(1) Have complete interior and exterior painting or other finished wall coverings; (2) Contain stove, dishwasher and oven, and other built-in kitchen appliances if the woodwork calls for it;
(3) Contain built-in kitchen cabinets;
(4) Contain washer and dryer hookups; or for rental units (at a minimum) a centrally located laundry facility;
(5) Have a paved parking area, with a sidewalk connecting the parking area and unit entrance;
(6) Contain rain gutters and down spouts;
(7) Require that multi-level affordable units provide at least a half bath (toilet and sink) on each level of living space unless a level of living space is comprised solely of an entryway or an entryway and a laundry room and/or utility room. (c) Size. Affordable units may contain less square footage than market-rate units within the same project, but must meet the minimum square footage requirements of Subsection 14-46.060(a) (Affordable Unit Requirements). (d) Bedroom Mix. Affordable units must be proportionately distributed by number of bedrooms throughout the project, using the same ratio as the market-rate portion of the project. For example, if fifty (50%) percent of the market-rate units contain two (2) bedrooms and fifty (50%) percent contain three (3) bedrooms within a project, that same ratio of two (2) and three (3) bedroom units shall prevail in the affordable portion of the project.
(e) Appearance. The street frontage facade of affordable units shall be substantially similar to the market-rate units in terms of design, materials and finished quality. (f) Distribution. Affordable units shall be evenly distributed throughout the project with the following exceptions:
(1) Clustering. If the project contains a variety of product (any combination of one or more of the following types of residential products: single-family detached, condominiums, townhouses, and apartment buildings), the distinct product types may be clustered together; however, there shall be an affordable component of each product type.
(2) Corner Lots. Two (2) adjacent, affordable townhouse units may be sited on corner lots.
(g) Timing.

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(1) Construction of Affordable Units. Where an affordable unit or unit(s) is constructed pursuant to this Chapter, each such affordable unit shall be constructed concurrently with or prior to construction of the market-rate units within the same project and phase of such project. Development shall occur in a proportionate ratio to the market-rate units except as may otherwise be established in an Affordable Housing Agreement.
(2) Occupancy of Affordable Units. Where an affordable unit or unit(s) is constructed pursuant to this Chapter, the affordable housing requirement shall be met prior to or concurrently with the issuance of a certificate of occupancy or final inspection for the first market-rate unit in the same project or phase of the project as identified by the conditions of approval and/or an Affordable Housing Agreement. In no case shall the last market-rate unit in the project receive a certificate of occupancy or final inspection prior to the last affordable unit being released for occupancy or occupied.
(h) Price. Affordable units shall be sold at a price affordable to eligible purchasers or rented at a level affordable to eligible renters in compliance with this Chapter. (i) Term of Affordability. Affordable ownership units created as a result of this Chapter shall remain affordable for a minimum period of forty-five (45) years from the date of the initial sale. Affordable rental units created as a result of this Chapter shall remain affordable for a minimum period of fifty-five (55) years from the date of the initial Certificate of Occupancy. All affordable units shall be deed restricted accordingly. (§ 1, Ord. 1107-01 C-M, eff. July 26, 2001, as amended by § 1, Ord. 1161-03 C-M, eff.

October 23, 2003)
14-46.070 Affordable housing in-lieu fees.
(a) In-Lieu Fees. Affordable housing in-lieu fees for applicable projects shall be established by resolution of the Council and adjusted annually by fifty (50%) percent of the annual percentage increase in the House Price Index as defined by this Chapter. (b) Timing of Payment. In-lieu fees shall be paid either before or concurrently with the issuance of each building permit for each applicable project unit or, in the case of a subdivision of land, prior to recording of the final map. In the event a developer is unable to sell an affordable unit within the time period specified, the in-lieu fee shall be paid prior to offering the released unit at the market-rate price. (c) Providing Affordable Unit(s) Instead of Paying the In-Lieu Fee. An applicant otherwise required to pay an in-lieu fee by this Chapter may instead provide an affordable ownership unit not exceeding the above moderate income level or an affordable unit for rent not exceeding the median income level or for rent to a tenant eligible for any housing choice voucher or other affordable rent subsidy. All such units shall be deed and time restricted as required by Subsection (i) of Section 14-46.060. (§ 1, Ord. 1107-01 C-M, eff. July 26, 2001, as amended by § 1, Ord. 1161-03 C-M, eff.

October 23, 2003)

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14-46.080 Priority processing.

All applications for residential development permits and/or tentative map approval shall include a reasonably complete description of the following. These requirements shall not supersede the requirements for density bonus or other state law incentive projects described elsewhere in this Title:
(a) The method (provision of units or payment of an in-lieu fee) pursuant to Section 14-46.070 to be used to meet the project’s affordable housing requirements of this Chapter;
(b) The number, type and location of affordable units, or a preliminary calculation of in-lieu fees if applicable;
(c) Site layout, grading, parking and other site features, and building elevations, layouts and dimensions for both affordable and market-rate units, including copies of relevant plans; and
(d) Any other information that the City determines necessary to adequately evaluate the project’s affordable housing provisions.
(§ 1, Ord. 1107-01 C-M, eff. July 26, 2001)
14-46.100 Affordable Housing Agreement processing.
(a) A draft Affordable Housing Agreement shall be prepared in a form approved by the City and executed by the applicant for projects with seven (7) or more units or lots in response to an application’s condition of development approval. (b) A draft Agreement shall be reviewed by the City for compliance with project approvals, City policies and standards, and applicable codes. (c) The Agreement shall be approved by the Council upon approval and signing of the Agreement by the parties; and be recorded and binding on all future owners and successors in interest in the project for the time period specified. (d) The Agreement shall be recorded prior to the filing of the final map or commencement of construction where no map is required.

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(e) Supplemental Documents. Upon the sale or transfers of each affordable unit, the City may use a Declaration of Covenants and Restrictions and/or Promissory Note and Deed of Trust to further secure the City’s rights under this Chapter and provide constructive notice to the public.
(§ 1, Ord. 1107-01 C-M, eff. July 26, 2001)
14-46.110 Program requirements.

Only eligible renters and purchasers as defined herein shall be eligible to rent, purchase or occupy affordable units developed or funded in compliance with this Chapter (see Subsection 14-460.03(r) for a definition of income categories and Subsection 14-

46.040(a) for the percentage mix of eligible income categories by size and type of project). Preference shall be given to current residents of the City of Watsonville, who have lived in, worked in or received municipal services from the City for at least one year. Exceptions to these program requirements or appeals may be considered at the discretion of the City Manager.
(§ 1, Ord. 1107-01 C-M, eff. July 26, 2001, as amended by § 1, Ord. 1161-03 C-M, eff.

October 23, 2003)
14-46.120 Program income and asset limits.
(a) Income Limits.
(1) Income eligibility to purchase or rent affordable units created pursuant to this Chapter shall be determined at the time of sale or rental of the affordable unit. (2) Income eligibility shall be based on household size and income category and shall be established by resolution from time to time by the Council. (3) For purposes of computing eligibility and pricing of affordable units created pursuant to this Chapter, the Watsonville median household income shall be used unless otherwise noted.
(b) Asset Limits. There are no asset limits for prospective renters or purchasers of affordable units created pursuant to this Chapter except that renters or purchasers shall not be eligible for or receive any tax advantages associated with the ownership of any other real property at the time of purchase or rental of an affordable unit. (§ 1, Ord. 1107-01 C-M, eff. July 26, 2001, as amended by § 1, Ord. 1161-03 C-M, eff.

October 23, 2003)
14-46.130 Affordable rental unit requirements.
(a) Rent Levels. Maximum allowable rent levels by number of bedrooms shall be determined by resolution from time to time by Council, based on the Rent Formula described in Subsection 14-46.130(b) and may be increased no more frequently than annually after unit occupancy. The maximum allowable income for determining eligibility to rent is higher than that used to determine the maximum rent level. (b) Rent Formula. Rent for an affordable rental unit shall be calculated as follows:

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(1) STEP ONE: Determine maximum annual household income for unit as follows:
(i) Determine income category for unit (Very low, Low or Median). (ii) Determine household size for unit, assuming a family size one person larger than the number of bedrooms in the affordable unit. For example, the household size for a three (3) bedroom unit shall be four (4) persons and for a studio shall be one person.
(iii) Determine annual household income for unit based on income category and family size using the most recent City of Watsonville Affordable Housing Ordinance Qualifying Maximum Income, and Maximum Rents and Sales Prices adopted by resolution by the Council.
(2) STEP TWO: Determine monthly household allowance available for rent as follows:
(i) Multiply the annual household income limit derived in Step One by .30 to obtain an annual household allowance of thirty (30%) percent of income. Round that figure up to the nearest Fifty and no/100ths ($50.00) Dollars to get the annual household allowance.
(ii) Divide the annual household allowance by twelve (12). Round this figure up to the nearest Fifty and no/100ths ($50.00) Dollars to get the monthly household allowance which amount is the maximum rental payment.
(iii) For housing choice voucher or affordable rental subsidy recipients: Use the rent formula and amounts established by each applicable program. (c) Eligibility. All affordable rental units shall be rented to either:
(1) A median, low or very low income household; or
(2) Households participating in any affordable housing choice voucher or rental subsidy program.
(d) Eligibility Determination Process. Prospective renters of affordable units shall be screened and determined eligible by the owner (or his designee) prior to taking occupancy. The City reserves the right to audit any owner of an affordable unit after providing twenty-four (24) hour written notice. Any deficiencies noted in the City’s audit report must be fully cleared by the owner within thirty (30) days after receipt or constitute a violation of this Chapter, except as to evictions of ineligible tenants; such evictions must be properly corrected and completed within 120 days after receipt. (e) Lease Requirements.
(1) All households renting affordable units shall be offered standard lease agreements; and
(2) Lease terms shall be for at least a twelve (12) month period.

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(f) Notice. The owner of an affordable rental unit shall notify tenants at least sixty (60) days prior to the expiration of the restrictions of this Chapter or the conversion of the affordable rental unit to an affordable ownership status, and advise the tenants that this termination or conversion may mean that rents will increase or the unit shall be sold. (g) Marketing.
(1) Any marketing communication advertising an affordable rental unit shall substantially disclose the affordable housing rental and eligibility restrictions required by this Chapter.
(2) All marketing materials shall be provided in both English and Spanish. (3) Marketing and rental of an affordable rental unit shall be performed by the property owner (or his designee).
(4) No person shall market or rent an affordable rental unit for more than the levels prescribed by this Chapter.
(5) Affordable rental units shall be marketed exclusively to existing City of Watsonville residents who have lived in, worked in or received municipal services from the City for at least one year for at least thirty (30) business days before any marketing to other persons.
(6) Conversion to condominiums.
(i) Conversion of an affordable rental unit to an ownership status shall be subject to Article 2 of Title 13 of the Watsonville Municipal Code. (ii) Affordable units shall be deed restricted and affordable sales price levels shall be maintained, should such conversion to ownership be approved. (iii) Conversion of a very low or low income affordable rental unit to ownership status shall not be permitted while an Affordable Housing Agreement is in effect for such unit, unless specifically approved by resolution of the Council. Said resolution would establish the maximum sales price and income category for said unit(s). Conversion of a median priced affordable rental unit to ownership status may be permissible, but only to a median priced ownership unit. (iv) The owner of an affordable rental unit shall notify tenants at least sixty (60) days prior to any conversion to affordable ownership status and advise that this conversion signifies that the unit shall be sold. Existing tenants shall receive first right of refusal to purchase the affordable rental unit proposed for conversion. (h) Management and Monitoring. Affordable rental units shall be managed by the owner or the owner’s agent in compliance with the requirements of this Chapter and the terms of the Affordable Housing Agreement Management and monitoring documentation shall be supplied to the City within twenty-four (24) hours after written notice has been received from the City in order to ensure compliance with this Chapter.

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(§ 1, Ord. 1107-01 C-M, eff. July 26, 2001, as amended by § 1, Ord. 1161-03 C-M, eff.

October 23, 2003, and § 1, Ord. 1186-05 C-M, eff. April 7, 2005) 14-46.140 Affordable ownership requirements.
(a) Primary Place of Residence Requirement. The purchaser of an affordable ownership unit shall occupy the unit as his/her primary place of residence. If the unit ceases to function as a primary residence, it shall be sold according to the requirements of this Chapter or subject to the requirements of Subsection 14-46.140(c). (1) STEP ONE: Determine annual household unit income limit. (i) Determine income category for unit (Median, Moderate or Above Moderate). (ii) Determine household size, assigning a family size one person more than the number of bedrooms in the affordable unit. For example, the household size for a three (3) bedroom unit would be four (4) persons and for a studio would be one person.
(iii) Determine the maximum annual household income limit for the unit based on income category and family size using the most recent City of Watsonville Affordable Housing Ordinance Qualifying Maximum Income, and Maximum Rents and Sales Prices adopted by resolution by the Council. (2) STEP TWO: Determine monthly household allowance permitted to be used for a mortgage payment as follows:
(i) Multiply the annual household income limit derived in Step One by .30 to obtain an annual household allowance of thirty (30%) percent of income. Round up to the nearest Fifty and no/100ths ($50.00) Dollars to obtain the annual household allowance.
(ii) Divide the annual household allowance by twelve (12). Round up to the nearest Fifty and no/100ths ($50.00) Dollars to determine the household allowance which is the maximum mortgage payment allowed. (3) STEP THREE: Determine the maximum mortgage that can be financed for a thirty (30) year fully amortized fixed-rate mortgage:
(i) Apply the City Council-adopted prevailing interest rate. (ii) Determine the amount of the monthly mortgage payment (principal paydown and interest). (4) STEP FOUR: Determine maximum allowable unit sales price: Assuming a mortgage of ninety-five (95%) percent of the sales price, divide the principal amount of the mortgage by 0.95 and round to the nearest Fifty and no/100ths ($50.00) Dollars. The result is the maximum allowable price of the affordable unit. (b) Marketing.

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(1) Any marketing communication advertising an affordable ownership unit shall fully disclose the affordable housing price and eligibility restrictions contained in this Chapter.
(2) Marketing and sale of an affordable ownership unit shall be performed by the owner (or his designee), who shall market the affordable ownership unit for no more than the maximum sales price established by the City, excluding closing costs. (3) The purchaser of an affordable unit shall not pay more in closing costs than that which is reasonable and customary in Santa Cruz County. (4) The seller of an affordable unit shall pay any real estate sales commission associated with the transaction.
(5) All marketing materials shall be provided in both English and Spanish. (c) Conversion.
(1) Conversion of an affordable ownership unit to a rental status shall not be permitted unless a hardship can be demonstrated and an administrative hardship received, pursuant to administrative guidelines approved by Council resolution from time to time.
(2) Affordable rent levels shall be maintained, should conversion from an affordable ownership to an affordable rental status be approved. (d) Financing. First mortgages obtained to purchase an affordable unit created as a result of this Affordable Housing Ordinance shall be fixed interest rate and fully amortized for, at minimum, thirty (30) year term with no negative amortization. An otherwise qualified purchaser may be assisted by any available homebuyer assistance programs.
(e) Escrow Process.
(1) Sales Price and Purchaser Eligibility Certification. Prior to the close of escrow, the owner (or his designee) shall certify sales price and buyer eligibility compliance with the requirements of this Chapter. This determination shall be subject to audit by the City with twenty-four (24) hour written notice. Any deficiencies noted in the City’s audit report shall be fully cleared by the owner within thirty (30) days after written notice by the City, or constitute a violation of this Chapter and the Affordable Housing Agreement. It shall be a separate and discrete violation of this Chapter to allow escrow to close without City approval of such audit. (2) Restrictions. Escrow shall prepare and have the buyer sign the Declaration of Covenants and Restrictions and/or Promissory Note and Deed of Trust to further secure the City’s rights under this Chapter and provide constructive notice to the public.
(f) Sales Procedure for New Affordable Units.

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(1) Notice of Intent to Sell.
(i) When a new affordable unit is fully completed, ready for final inspection and available for sale, the owner shall send a written “Notice of Intent to Sell” to the City.
(ii) In response to the Notice, the City shall inform the owner of the current maximum allowable sales price.
(2) Sales Price Formula. The maximum allowable sales price for a new affordable unit shall be based on the following formula and the income limits established by resolution from time to time by the Council. The formula to determine maximum allowable sales price for an affordable unit shall be as follows:
(i) STEP ONE: Determine the annual income for a household, based on whether the unit is designated for occupancy by an above moderate, moderate, or median income household using Watsonville above moderate, moderate, or median household incomes:
(aa) Determine household size, assuming one person larger than the number of bedrooms in the affordable unit (for example, the household size for a three (3) bedroom unit shall be four (4) persons and for a studio, shall be one person).
(ab) Given the household size determined above, locate the household’s maximum annual income for purposes of determining the maximum sales price. (Note: The income limit for determining eligibility to purchase is higher than that used to determine the maximum sales price [see Subsection 14-

46.030(r)]).
(ii) STEP TWO: Determine the monthly household allowance available for a mortgage payment:
(aa) Multiply the income limit to be used to calculate the maximum sales price derived above by .30 to obtain annual housing allowance of thirty (30%) percent of income.
(ab) Divide the annual housing allowance by twelve (12) to obtain a monthly housing allowance.
(iii) STEP THREE: Determine the maximum mortgage that can be financed for a thirty (30) year fully amortized fixed-rate home mortgage:
(aa) Apply the City Council-adopted prevailing interest rate. (ab) Determine the principal amount of the mortgage payment. (iv) STEP FOUR: Determine the maximum allowable unit sales price:

Assuming a mortgage of ninety-five (95%) percent of the sales price, divide the

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principal amount of the mortgage by 0.95. The result is the maximum allowable sales price of the affordable unit.
(g) Inability to Sell.
(1) If the owner (or his designee) of an affordable unit, having made a good faith effort that included listing the affordable unit on the Multiple Listing Service (MLS), fails to find an eligible purchaser within 180 days from the date of final inspection or maximum sales price determination, whichever is later, the owner shall notify the City in writing no later than the 150th day of their inability to sell. The owner (or his designee) shall submit a notice identifying the steps taken, with documentation, of the attempted sale.
(2) The City shall have a first right of refusal to purchase the affordable unit at the last advertised restricted price. If after thirty (30) days following notice as described above under Subsection 14-46.140(g)(1), the City fails to exercise this option, the affordable unit may be sold at a market-rate price, and the owner (or his designee) must pay a release fee to the City’s Affordable Housing Fund. (h) Resale Procedure for Existing Affordable Units.
(1) Notice of Intent to Sell.
(i) When an existing affordable unit becomes available for resale, the owner shall send a written “Notice of Intent to Sell” form to the City. (ii) In response to the Notice, the City shall inform the owner of the current maximum allowable sales price.
(2) Resale Price Formula. The maximum allowable resale price for existing affordable units shall be derived using one of the two following methods, whichever yields the highest price for the owner:
(i) The maximum allowable sales price formula as established by this Chapter (see Subsection (f)(2) of Section 14-46.140); or
(ii) The original sales price plus fifty (50%) percent of the increase in the House Price Index since the date of purchase.
(3) Damage Repair Costs. If the City finds that the owner, through neglect, abuse or lack of adequate maintenance, has damaged an affordable unit, the City may require repairs be made at the owner’s expense and be financed prior to sale or through the escrow account.
(4) Marketing. Any marketing of existing affordable units shall fully disclose this Chapter’s affordable housing price and eligibility restrictions:
(i) Marketing and sale of existing affordable units shall be performed by the owner (or his designee) for no more than the maximum sales price established by the City, excluding closing costs.

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(ii) The purchaser of an affordable unit shall not pay more in closing costs than that which is reasonable and customary in Santa Cruz County. (iii) The seller of an affordable unit shall pay any real estate sales commission associated with the transaction.
(5) Inability to Resell Affordable Units.
(i) In the event the owner of an existing affordable unit, having made a good faith effort that included listing the affordable unit on the Multiple Listing Service (MLS), fails to find an eligible purchaser to take title to the unit within 240 days from the date of maximum sales price determination, the owner (or his designee) shall notify the City in writing, no less than thirty (30) days following the end of that 240-day period. The owner (or his designee) shall submit a notice identifying the steps taken, with documentation, of the attempted sale. (ii) The City shall have an option to purchase the affordable unit for an amount that is the highest of the following: the value of the first mortgage; the value of the first and second mortgage combined if the second mortgage is a purchase money second mortgage provided by a governmental body; or the appraised value of the affordable unit with the affordability covenants intact, as determined by an appraiser mutually agreeable to the City and the owner, who employs standard appraisal practices.
(iii) If, after thirty (30) days following the owner’s (or his designee’s) notice, the option is not exercised, the affordable unit may be sold at market-rate, and the owner (or his designee) must pay a release fee to the City’s Affordable Housing Fund.
(i) Refinance of Affordable Ownership Units. Owners desiring to refinance their affordable units shall notify the City (or its designee) prior to refinance and shall not encumber the property through the refinance process for an amount greater than the maximum sales price established by the City using the House Price Index as set forth in Subsection 14-46.030(n) at the time of owner notice.
(§ 1, Ord. 1107-01 C-M, eff. July 26, 2001, as amended by § 1, Ord. 1161-03 C-M, eff.

October 23, 2003, and § 1, Ord. 1186-05 C-M, eff. April 7, 2005) 14-46.150 Release Fees.

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14-46.160 Default, foreclosure and release of units.
(a) Option to Purchase. In the event a notice of default is recorded on an affordable unit, the City or its designee shall have the option to purchase the unit paying the amount that the owner would have received on the date of the foreclosure sale under the resale formula established by Subsection 14-46.140(h)(2) of this Chapter. Out of this sum, the lien holder(s) shall be paid the amount of any funds due, including but not limited to, the loan balance, charges, taxes and assessments; the owner shall be paid any remaining funds.
(1) In the event the City (or its designee) does not exercise its option to purchase the affordable unit prior to the trustee’s sale or judicial foreclosure, the unit shall be free from the restrictions of this Chapter, and the owner shall be deemed in compliance with the provisions of this Chapter, with the exception of the provisions of Subsection 14-46.160(b) below.
(b) Single family units that have never been sold to individual owner-occupants, and multiple family dwelling units, shall not be released from the restrictions of this Chapter through a trustee’s sale or judicial foreclosure. In addition, affordable units shall not be released if any of the following occurs:
(1) the City is not provided a copy of the Notice of Default within ten (10) days of its filing;
(2) the owner does not allow the City to exercise its option to purchase; or (3) the lender has over encumbered the property and refuses to release its interest in the property for the maximum allowable sales price. (c) The owner of an affordable unit shall not use this property as collateral for an amount exceeding ninety-five (95%) percent of the maximum sales price allowed by Subsection 14-46.140(f)(2) of this Chapter unless specifically allowed in writing by the City. All second mortgages require the prior, written approval of the City and are subject to guidelines established by the City.
(§ 1, Ord. 1107-01 C-M, eff. July 26, 2001)
14-46.170 Conflict of interest.

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(§ 1, Ord. 1107-01 C-M, eff. July 26, 2001)
14-46.180 Violations.
(a) It shall be unlawful and a violation of this Chapter for the applicant or owner of an affordable unit or any employee or agent of such applicant or owner to:
(1) Sell or rent an affordable dwelling unit to anyone who has not first been qualified as eligible;
(2) Sell or rent an affordable unit to any person who has a conflict of interest as defined by this Chapter;
(3) Sell an affordable unit for an amount exceeding the maximum sales price or rent an affordable unit for an amount exceeding the maximum rent level; (4) Solicit, require or accept in connection with the sale or rental of an affordable unit any payment or other contribution of cash, property or services from a purchaser or tenant the value of which, when added to the purchase price or rent paid for an affordable unit, would exceed the maximum sales price or maximum rent level prescribed by this Chapter;
(5) Willfully and knowingly make a false statement or representation, or knowingly fail to disclose a material fact for the purpose of qualifying as eligible to purchase or rent an affordable unit under this Chapter; or
(6) Violate any other provision of this Chapter.

Any applicant or other person whose interests are adversely affected by any determination in regard to the requirements of this Chapter may appeal in accordance with the provisions of Chapter 14-10, Part 11 of this Code to the Council. The appeal shall set forth specifically wherein the action fails to conform to the provisions of this Chapter.
(§ 1, Ord. 1107-01 C-M, eff. July 26, 2001)

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Affordable
Housing
Ordinance
Update
Presented by:

Carlos Landaverry, Housing Manager
Leila J. Moshref-Danesh,
Burke, Williams & Sorensen, LLP

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Background
1991: Initial ordinance adopted
2001: Major revision to reflect
income data
Ordinance requires 15–20% of
units in new residential projects
(7+ units) to be affordable

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Why
Update the
Ordinance
Now?
Align Align with 6th Cycle Housing
Element Goals & Policies
Comply Comply with current State
laws
Improve Improve clarity and simplify
compliance
Strengthen Strengthen implementation
and transparency

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Key
Updates in
the
Ordinance
Local Preference codified
Density Bonus removed
(moved to Ch. 14-47)
Downtown Core section
removed
Prevailing Interest Rate
clarified

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Local
Preference
Explained
Prioritizes current
residents and local
workers
Helps retain community
members despite rising
housing costs
Enhances jobs-tohousing balance

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Prevailing
Interest
Rate
Average 30-Year Fixed
Local lenders offering
mortgage loans to
Watsonville Residents
Initially set by the
Community
Development Director

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Price
Calculation
Factors &
Assumptions
Unit Size Bedroom count
Household
Size One person more than the
number of bedrooms
Household
Income Maximum annual household
income limit
Mortgage
Payment Monthly household
allowance permitted for a
mortgage payment

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CEQA
Determination
Not a “project” under
CEQA (§15378)
Categorically exempt
(§15060(c)(2)(3),
§15061(b)(3))
No significant
environmental impact

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General Plan
Consistency
Expand and
protect
housing for all
groups
Meet regional
housing needs
Reduce
governmental
barriers to
housing

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Planning
Commission
June 3, 2025
Meeting
Recommended
the City Council:

1. Adopt the
updated
Ordinance

2. Affirm CEQA
Exemption

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Questions
&
Discussion

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1 CITY COUNCIL AGENDA REPORT
MEETING DATE: Tuesday, August 26, 2025
TO: CITY COUNCIL
WRITTEN BY: ASSISTANT COMMUNITY DEVELOPMENT DIRECTOR ORBACH

ASSISTANT COMMUNITY DEVELOPMENT DIRECTOR MEEK
RECOMMENDED BY: COMMUNITY DEVELOPMENT DIRECTOR BRLETIC
APPROVED BY: TAMARA VIDES, CITY MANAGER
SUBJECT: 6TH CYCLE HOUSING ELEMENT IMPLEMENTATION
RECOMMENDATION:

1. Introduce, for first reading only, waiving full reading of the text, an Ordinance Amending the Downtown Specific Plan Related to Implementation of Programs within the 6th Cycle 2023-2031 Housing Element; and

2. Introduce, for first reading only, waiving full reading of the text, an Ordinance Amending Sections of Title 14 of the Watsonville Municipal Code Related to Implementation of Programs within the 6 th Cycle 2023-2031 Housing Element.

BACKGROUND:

On September 26, 2023, the City of Watsonville accepted a $180,000 Regional Early Access Planning (REAP) 2.0 Grant from the Association of Monterey Bay Area Governments (AMBAG) for the implementation of programs in the City’s 6th Cycle Housing Element.

In 2024, due to state budget shortfalls, the grant amount was reduced by approximately six percent to $169,380.

On September 17, 2024, the California Department of Housing and Community Development (HCD) provided the City with a findings letter stating that the Draft City of Watsonville 2023-2031 Housing Element was in substantial compliance with the requirements of Housing Element law, stating:
“The revised draft, including revisions, element meets the statutory requirements that were described in HCD’s May 10, 2024 review. The housing element will substantially comply with State

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Watsonville City CouncilAugust 26, 2025

Watsonville City Council
August 26, 2025