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Home My WebLink About11-21-2017 Agenda Packet Tuesday, November 21, 2017 4:00 PM REGULAR MEETING Council Hearing Room 990 Palm Street San Luis Obispo Page 1 CALL TO ORDER: Mayor Heidi Harmon ROLL CALL: Council Members Carlyn Christianson, Aaron Gomez, Andy Pease, Vice Mayor Dan Rivoire and Mayor Heidi Harmon PUBLIC COMMENT ON CLOSED SESSION ITEM CLOSED SESSION A. CONFERENCE WITH LEGAL COUNSEL—EXISTING LITIGATION Paragraph (1) of subdivision (d) of Government Code § 54956.9; Name of case withheld as it arises out of an administrative proceeding involving a confidential personnel matter pending before the Personnel Board and is otherwise exempt from disclosure per Gov. Code § 54954.5 (c) and under the California Public Records Act. B. CONFERENCE WITH LEGAL COUNSEL—ANTICIPATED LITIGATION Significant exposure to litigation pursuant to paragraph (2) of subdivision (d) of Government Code § 54956.9: One case. A point has been reached where, in the opinion of the legislative body of the local agency on the advice of its legal counsel, based on existing facts and circumstances, there is a significant exposure to litigation against the local agency. The existing facts and circumstances exposing the City to litigation arise out of a confidential personnel matter and therefore are exempt from disclosure pursuant to the California Public Records Act. Continue to next page Packet Pg 1 San Luis Obispo City Council Agenda November 21, 2017 Page 2 C. CONFERENCE WITH LABOR NEGOTIATORS Pursuant to Government Code § 54957.6 Agency Negotiators: Monica Irons, Nickole Sutter, Rick Bolanos, Derek Johnson, Christine Dietrick Represented Employee Organizations: San Luis Obispo City Employee’s Association (SLOCEA) San Luis Obispo Police Officer’s Association (POA) San Luis Obispo Police Staff Officer’s Association (SLOPSOA) International Association of Firefighters Local 3523 Unrepresented Employees: Unrepresented Management Employees Unrepresented Confidential Employees D. CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION Paragraph (1) of subdivision (d) of Government Code § 54956.9; Name of case: Application of Pacific Gas and Electric Company for Approval of the Retirement of Diablo Canyon Power Plant, Implementation of the Joint Proposal, And Recovery of Associated Costs Through Proposed Ratemaking Mechanisms (U39E) A: 16-08- 006 ADJOURNED TO THE REGULAR MEETING OF NOVEMBER 21, 2017 TO BEGIN AT 6:00 PM IN THE COUNCIL CHAMBER Packet Pg 2 San Luis Obispo City Council Agenda November 21, 2017 Page 3 6:00 PM REGULAR MEETING Council Chamber 990 Palm Street CALL TO ORDER: Mayor Heidi Harmon ROLL CALL: Council Members Carlyn Christianson, Aaron Gomez, Andy Pease, Vice Mayor Dan Rivoire and Mayor Heidi Harmon PLEDGE OF ALLEGIANCE: Council Member Carlyn Christianson CITY ATTORNEY REPORT ON CLOSED SESSION PRESENTATIONS 1. PROCLAMATION - MAYOR'S MONARCH PLEDGE (HARMON – 5 MINUTES) 2. PROCLAMATION - NATIONAL HOSPICE PALLIATIVE CARE MONTH (HARMON – 5 MINUTES) PUBLIC COMMENT PERIOD FOR ITEMS NOT ON THE AGENDA (not to exceed 15 minutes total) The Council welcomes your input. You may address the Council by completing a speaker slip and giving it to the City Clerk prior to the meeting. At this time, you may address the Council on items that are not on the agenda. Time limit is three minutes. State law does not allow the Council to discuss or take action on issues not on the agenda, except that members of the Council or staff may briefly respond to statements made or questions posed by persons exercising their public testimony rights (gov. Code sec. 54954.2). Staff may be asked to follow up on such items CONSENT AGENDA Matters appearing on the Consent Calendar are expected to be non-controversial and will be acted upon at one time. A member of the public may request the Council to pull an item for discussion. Pulled items shall be heard at the close of the Consent Agenda unless a majority of the Council chooses another time. The public may comment on any and all items on the Consent Agenda within the three minute time limit. Packet Pg 3 San Luis Obispo City Council Agenda November 21, 2017 Page 4 3. WAIVE READING IN FULL OF ALL RESOLUTIONS AND ORDINANCES (GALLAGHER) Recommendation: Waive reading of all resolutions and ordinances as appropriate. 4. MINUTES OF OCTOBER 17, 2017 AND NOVEMBER 7, 2017 (GALLAGHER) Recommendation: Approve the minutes of the City Council meetings of October 17, 2017 and November 7, 2017. 5. ORDINANCE ADOPTION - ESTABLISHING A SPECIAL TAX FOR THE AVILA RANCH COMMUNITY FACILITIES DISTRICT NO. 2017-1 (HERMANN / L. JOHNSON) Recommendation: Adopt Ordinance No. 1642 (2017 Series) entitled “An Ordinance of the City Council of the City of San Luis Obispo, California, as legislative body of Avila Ranch Community Facilities District No. 2017-1, levying a Special Tax against nonexempt real property within the district to finance certain facilities, services and incidental expenses.” 6. SUPPLEMENTAL EMPLOYEE POLICY AND MINIMUM WAGE INCREASE (IRONS / ROLTGEN) Recommendation: 1. Adopt the revised Supplemental Employee Policy, formerly the Temporary Employee Policy, and authorize the City Manager to approve future administrative updates; and 2. Adopt a Resolution entitled “A Resolution of the City Council of the City of San Luis Obispo, California, establishing and adopting a supplemental employee salary schedule and superseding previous resolutions in conflict” as necessary to comply with California Fair Wage Act of 2016 requiring a minimum wage of $11.00 per hour effective January 1, 2018. 7. AUTHORIZATION TO RELEASE A REQUEST FOR PROPOSALS FOR APPOINTED OFFICIALS’ EVALUATIONS CONSULTANT SPECIFICATION NO. 91636 (IRONS / ROLTGEN) Recommendation: Authorize staff to advertise for bids and authorize the City Manager to award the consultant contract to the lowest responsible bid within the contract budget of $17,000. Packet Pg 4 San Luis Obispo City Council Agenda November 21, 2017 Page 5 8. STREETS MAINTENANCE DUMP TRUCK, TRANSFER DUM P TRAILER, AND SWEEPER TRUCK PURCHASE, SPECIFICATION NO. 91589 & 91595 (GRIGSBY / BRADFORD / BOCHUM / SHUCK) Recommendation: 1. Adopt a Resolution entitled “A Resolution of the City Council of the City of San Luis Obispo, California, approving Equipment Lease”; and 2. Approve the lease purchase and authorize the Finance Director to execute a purchase order to Gibbs Truck Centers in the amount of $256,204.06 for one 2018 International HX series heavy duty dump truck outfitted with a Reliance transfer dump set; and 3. Approve the lease purchase and authorize the Finance Director to execute a purchase order to the Sweeper Shop in the amount of $303,052.78 for one 2018 Freightliner M2 heavy duty truck outfitted with a Schwarze M6 Avalanche sweeper unit; and 4. Authorize the City Manager, Finance Director and City Attorney to execute all related documents on behalf of the City to execute a five-year loan agreement not to exceed approved budget; and 5. Authorize the surplus designation of Fleet Asset No. 9713, a 1994 Freightliner heavy duty dump truck, Fleet asset 1102, a 2007 Reliance transfer dump trailer, and Fleet Asset No. 0817, a 2008 International street sweeper truck by sale, auction, trade-in or other method in accordance with the City’s policies and procedures as prescribed in the Financial Management Manual Section 405-L and 480. PUBLIC HEARING ITEMS AND BUSINESS ITEMS 9. PUBLIC HEARING - RESOLUTION OF INTENT TO APPLY THE PENDING CAPITAL FACILITIES FEE PROGRAM AND WATER AND WASTEWATER CAPACITY AND CONNECTION FEE PROGRAM TO NEW DEVELOPMENT (CODRON / FOWLER – 30 MINUTES) Recommendation: Adopt a Resolution entitled “A Resolution of the City Council of the City of San Luis Obispo, California, setting forth intent to apply the pending Capital Facilities Fee Program and Water and Wastewater Capacity and Connection Fee Program to new development” should those projects be issued building permits on or after the publication of the updated development impact fee program. Packet Pg 5 San Luis Obispo City Council Agenda November 21, 2017 Page 6 10. CODE ENFORCEMENT PRIORITIES (CODRON / SCHNEIDER – 120 MINUTES) Recommendation: Receive a presentation, take public testimony, and provide direction to staff regarding: 1. Overall code enforcement priorities to guide the allocation of staff time and other resources in the Building and Safety Division of the Community Development Department (CDD); and 2. Direction regarding the use of enforcement tools - such as recorded notices of violation and increased and new fees and fines - to improve the efficiency and effectiveness of code enforcement activities; and 3. The scope and priority of a Safe Housing Outreach and Education Program for landlords and tenants; and 4. Additional program activities and enhancements to pursue as resources permit. 11. DIABLO CANYON NUCLEAR POWER PLANT- JOINT PROPOSAL PROPOSED DECISION (JOHNSON – 30 MINUTES) Recommendation: Receive a report on the Administrative Law Judge’s Proposed Decision for the Joint Proposal to close the Diablo Canyon Nuclear Power Plant and authorize the City to advocate for legislation if necessary to fund the Community Impacts Mitigation Program (CIMP). 12. ORDINANCE INTRODUCTION - AMENDMENT AND READOPTION OF THE CURRENT ELECTION CAMPAIGN REGULATIONS (HERMANN / GALLAGHER – 15 MINUTES) Recommendation: Reaffirm City law by amending and readopting Chapters 2.40.010 through 2.40.140 of the City of San Luis Obispo Municipal Code by Ordinance entitled “An Ordinance of the City Council of the City of San Luis Obispo, California, readopting and amending Chapter 2.40 of the Municipal Code related to Election Campaign Regulations.” Packet Pg 6 San Luis Obispo City Council Agenda November 21, 2017 Page 7 COUNCIL LIAISON REPORTS AND COMMUNICATIONS (Not to exceed 15 minutes) Council Members report on conferences or other City activities. At this time, any Council Member or the City Manager may ask a question for clarification, make an announcement, or report briefly on his or her activities. In addition, subject to Council Policies and Procedures, they may provide a reference to staff or other resources for factual information, request staff to report back to the Council at a subsequent meeting concerning any matter, or take action to direct staff to place a matter of business on a future agenda. (Gov. Code Sec. 54954.2). ADJOURNMENT The Regular City Council Meeting of December 5, 2017 was previously cancelled. The next Regular City Council Meeting is scheduled for Tuesday, December 12, 2017 at 4:00 p.m. and 6:00 p.m., in the Council Chamber, 990 Palm Street, San Luis Obispo, California. LISTENING ASSISTIVE DEVICES are available for the hearing impaired--please see City Clerk. The City of San Luis Obispo wishes to make all of its public meetings accessible to the public. Upon request, this agenda will be made available in appropriate alternative formats to persons with disabilities. Any person with a disability who requires a modification or accommodation in order to participate in a meeting should direct such request to the City Clerk’s Office at (805) 781-7100 at least 48 hours before the meeting, if possible. Telecommunications Device for the Deaf (805) 781-7107. City Council regular meetings are televised live on Charter Channel 20. Agenda related writings or documents provided to the City Council are available for public inspection in the City Clerk’s Office located at 990 Palm Street, San Luis Obispo, California during normal business hours, and on the City’s website www.slocity.org. Persons with questions concerning any agenda item may call the City Clerk’s Office at (805) 781-7100. Packet Pg 7 Page intentionally left blank. Packet Pg 8 San Luis Obispo Page 1 Tuesday, October 17, 2017 Regular Meeting of the City Council CALL TO ORDER A Regular Meeting of the San Luis Obispo City Council was called to order on Tuesday, October 17, 2017 at 3:30 p.m. in the Council Hearing Room, located at 990 Palm Street, San Luis Obispo, California, by Mayor Harmon. ROLL CALL Council Members Present: Council Members Carlyn Christianson, Aaron Gomez, Andy Pease, Vice Mayor Dan Rivoire, and Mayor Heidi Harmon. Council Members Absent: None City Staff Present: Derek Johnson, City Manager; Christine Dietrick, City Attorney; Jon Ansolabehere, Assistant City Attorney; Shelly Stanwyck, Parks and Recreation Director, Robert A. Hill, Natural Resources Manager and Carrie Gallagher, City Clerk; were present at Roll Call. Other staff members presented reports or responded to questions as indicated in the minutes. PUBLIC COMMENT ON CLOSED SESSION ITEMS None. ---End of Public Comment--- CLOSED SESSION A. CONFERENCE REGARDING PROPERTY NEGOTIATIONS Pursuant to Government Code § 54956.8 Property: San Luis Obispo County APNs 070-241-013; 070-271-013; 073-321-008; 073-341-003; 073-341-029; 073-341-034; 073-341-036; 073-341-037 Packet Pg 9 4 San Luis Obispo City Council Minutes of October 17, 2017 Page 2 Agency Negotiators: Derek Johnson, City Manager; J. Christine Dietrick, City Attorney Jon Ansolabehere, Assistant City Attorney Shelly Stanwyck, Parks and Recreation Director Robert A. Hill, Natural Resources Manager Negotiating Parties: Gabriel Miossi Kathy Henderson Sam Garkovich Dell Hemingway for Miossi Brothers La Cuesta Ranch, Inc. Under Negotiation: Price and terms of payment ADJOURNED AT 3: 55 PM TO THE REGULAR MEETING OF OCTOBER 17, 2017 TO BEGIN AT 4:00 PM IN THE COUNCIL CHAMBER Packet Pg 10 4 San Luis Obispo City Council Minutes of October 17, 2017 Page 3 CALL TO ORDER A Regular Meeting of the San Luis Obispo City Council was called to order on Tuesday, October 17, 2017 at 4:00 p.m. in the Council Chamber, located at 990 Palm Street, San Luis Obispo, California, by Mayor Harmon. ROLL CALL Council Members Present: Council Members Carlyn Christianson, Aaron Gomez, Andy Pease, Vice Mayor Dan Rivoire, and Mayor Heidi Harmon. Council Members Absent: None City Staff Present: Derek Johnson, City Manager; Christine Dietrick, City Attorney; and Carrie Gallagher, City Clerk; were present at Roll Call. Other staff members presented reports or responded to questions as indicated in the minutes. STUDY SESSION 1. PRELIMINARY RESULTS OF THE CAPITAL FACILITIES FEE PROGRAM NEXUS STUDY AND THE WATER AND WASTEWATER CAPACITY AND CONNECTION FEE PROGRAM STUDY: STUDY SESSION Community Development Director Michael Codron and EPS, Inc Consultants Ashleigh Kanat and Teifion Rice-Evans provided an in-depth staff report with the use of a Power Point presentation and responded to Council questions. Mayor Harmon exited the dais at 4:25 pm, she returned to the dais at 4:27 pm. Public Comments: Andrew Hacklemann C.M. Florence Stephen Peck, representing Planning Development Charlene Rosales, SLO Chamber of Commerce Brian Schwartz Marshall Ochylski Arryn Abbott, representing Robbins Reed ---End of Public Comment--- Packet Pg 11 4 San Luis Obispo City Council Minutes of October 17, 2017 Page 4 By consensus, Council did the following: 1. Participated in a study session and received a presentation on the preliminary results of the Capital Facilities Fee Program Nexus Study and the Water and Wastewater Capacity and Connection Fee Program Study; and 2. Received public input and provided guidance to staff regarding fee options; and 3. Directed staff to return on November 7, 2017, with applicable ordinances and resolutions to implement the updated Capital Facilities Fee Program as directed by City Council. ADJOURNED AT 5:45 PM TO THE REGULAR MEETING OF OCTOBER 17, 2017 TO BEGIN AT 6:00 PM CALL TO ORDER A Regular Meeting of the San Luis Obispo City Council was called to order on Tuesday, October 17, 2017 at 6:00 p.m. in the Council Chamber, located at 990 Palm Street, San Luis Obispo, California, by Mayor Harmon. ROLL CALL Council Members Present: Council Members Carlyn Christianson, Aaron Gomez, Andy Pease, Vice Mayor Dan Rivoire, and Mayor Heidi Harmon. Council Members Absent: None City Staff Present: Derek Johnson, City Manager; Christine Dietrick, City Attorney; and Carrie Gallagher, City Clerk; were present at Roll Call. Other staff members presented reports or responded to questions as indicated in the minutes. PLEDGE OF ALLEGIANCE Council Member Pease led the Pledge of Allegiance. CITY ATTORNEY REPORT ON CLOSED SESSION City Attorney Dietrick stated that there was no reportable action for Closed Session Item A PUBLIC COMMENT ON ITEMS NOT ON THE AGENDA David Brodie Kit Gould Jan Marx Sandra Marshall Harry Busselen John Ashbaugh Packet Pg 12 4 San Luis Obispo City Council Minutes of October 17, 2017 Page 5 Cheryl McLean ---End of Public Comment--- CONSENT AGENDA Council Member Gomez reported his recusal of this item due to a current business relationship with the project applicant and exited the dais at 6:27 pm he returned and took his seat on the dais at 6:36 pm. ACTION: MOTION BY COUNCIL MEMBER GOMEZ, SECOND BY COUNCIL MEMBER CHRISTIANSON, CARRIED 5-0 to approve Consent Calendar Items 2 thru 3 and 5 thru 7. MOTION BY COUNCIL MEMBER CHRISTIANSON, SECOND BY COUNCIL MEMBER PEASE, CARRIED 4-0 (GOMEZ RECUSED) to approve Consent Calendar Item 8. ITEM 4 WAS CONTINUED TO THE OCTOBER 24, 2017 COUNCIL MEETING. THE PUBLIC COMMENT PERIOD HAS BEEN EXTENDED UNTIL OCTOBER 24TH. 2. WAIVE READING IN FULL OF ALL RESOLUTIONS AND ORDINANCES CARRIED 5-0, waive reading of all resolutions and ordinances as appropriate. 3. MINUTES OF AUGUST 15, 2017, SEPTEMBER 26, 2017, AND OCTOBER 3, 2107 CARRIED 5-0, to approve the minutes of the City Council meetings of August 15, 2017, September 26, 2017 and October 3, 2017. 4. MITIGATED NEGATIVE DECLARATION OF ENVIRONMENTAL IMPACTS FOR THE LAGUNA LAKE DREDGING AND SEDIMENT MANAGEMENT PROJECT This item was continued to the October 24th City Council meeting. The public comment period has been extended until October 24th. Recommendation: Adopt a Resolution entitled “A Resolution of the City Council of the City of San Luis Obispo, California, adopting a Mitigated Negative Declaration for the Laguna Lake Dredging and Sediment Management Project.” 5. ACCEPTANCE OF SUBDIVISION IMPROVEMENTS FOR TRACT 2707 (953 ORCUTT, TR 151-03) CARRIED 5-0, adopt Resolution No. 10837 (2017 Series) entitled “A Resolution of the City Council of the City of San Luis Obispo, California, accepting the public improvements, certifying completion of the private improvements, and authorizing release of the securities for Tract 2707 (953 Orcutt Road, TR 151-03).” Packet Pg 13 4 San Luis Obispo City Council Minutes of October 17, 2017 Page 6 6. CALIFORNIA OFFICE OF EMERGENCY SERVICES (CALOES) HAZARD MITIGATION GRANT APPLICATION CARRIED 5-0, 1. Authorize City staff to prepare and submit a grant application to State of California Office of Emergency Services for Flood Hazard Mitigation; and 2. Adopt Resolution No. 10838 (2017 Series) entitled “A Resolution of the City of San Luis Obispo, California, regarding Hazard Mitigation Grant Program and Pre-Disaster Mitigation Program;” and 3. Authorize the City Manager to approve an amount not to exceed $75,000 for the preparation of the application; and 4. Authorize the City Manager or designee to execute any other required grant application documentation. 7. MARGARITA LIFT STATION REPLACEMENT PROJECT AWARD, SPECIFICATION NO. 91214A CARRIED 5-0, Award a contract to Specialty Construction, Inc. in the amount of $1,290,215 for the Margarita Lift Station Replacement Project, Specification No. 91214A. Council Member Gomez reported his recusal of this item due to a current business relationship with the project applicant. 8. ADOPTION OF A RESOLUTION DENYING, IN PART, AND UPHOLDING, IN PART, AN APPEAL OF THE ARCHITECTURAL REVIEW COMMISSION’S DECISION TO DENY A REQUEST TO MODIFY APPROVED COLORS AND BUILDING DESIGN FOR A REMODELED BUILDING AT 1135 SANTA ROSA STREET Public Comments: Ben Kulick, Applicant Richard Beller ---End of Public Comment--- CARRIED 4-0, (GOMEZ RECUSED) adopt Resolution No. 10839 (2017 Series) entitled “A Resolution of the City Council of the City of San Luis Obispo, California, denying in part, and upholding in part, an Appeal of the Architectural Review Commission’s decision to deny a request to modify approved colors and building design for a remodeled building, and directing that an alternative modification to colors or design be considered by the Architectural Review Commission for final decision. (1135 Santa Rosa Street, APPL-1070-2017)” Packet Pg 14 4 San Luis Obispo City Council Minutes of October 17, 2017 Page 7 PUBLIC HEARING ITEMS AND BUSINESS ITEMS 9. 2016-17 ANNUAL REPORT OF THE TOURISM BUSINESS IMPROVEMENT DISTRICT (TBID) Tourism Manger Molly Cano and Sands Inn & Suites, General Manager, Matthew F. Wilkins provided an in-depth staff report with the use of a Power Point presentation, and responded to Council questions. Public Comments: None ---End of Public Comment--- ACTION: MOTION BY COUNCIL MEMBER CHRISTIANSON, SECOND BY COUNCIL MEMBER GOMEZ, CARRIED 5-0 to: 1. Receive and approve the Tourism Business Improvement District (TBID) Board’s 2016- 17 annual report; and 2. Adopt Resolution No. 10840 (2017 Series) entitled “A Resolution of the City Council of the City of San Luis Obispo, California, declaring its intention to continue the San Luis Obispo Tourism Business Improvement District, to continue the basis for and to levy the assessment for the District, and to set a date for the public hearing on the District and the assessment for 2017-18” at the same rate as in the fiscal year 2016-17. 10. PUBLIC HEARING - PILOT PROGRAM FOR WINTER OPEN SPACE HOURS OF USE Parks and Recreation Director Shelly Stanwyck, and Natural Resource Manager Robert Hill provided an in-depth staff report with the use of a Power Point presentation and responded to Council questions. Public Comments: Sara Von Schwind Connor Culhane Greg Bettencourt Jan Marx Sandra Marshall Cheryl McLean, opposes program John Ashbaugh Phil Ashley Kathleen O’Neill Mary Ciesinoki, ECOSLO Dale Stoker Camille Small Packet Pg 15 4 San Luis Obispo City Council Minutes of October 17, 2017 Page 8 Harry Busselen Mila Vujovich – LaBarre Diana Scamiett Lisa Hall John Madonna ---End of Public Comment--- RECESS Council recessed at 8:30 p.m. and reconvened at 8:43 p.m., with all Council Members present. Recommendation: 1. Pursuant to prior Council direction, receive a staff presentation on a proposed two-year pilot program to extend the hours of use of the Cerro San Luis Natural Reserve when daylight savings time is not in effect; and 2. Adopt a Resolution entitled “A Resolution of the City Council of the City of San Luis Obispo, California, adopting a Mitigated Negative Declaration for a pilot program for winter open space hours of use.” ACTION: MOTION BY VICE MAYOR RIVOIRE, SECOND BY COUNCIL MEMBER GOMEZ, CARRIED 3-2 (CHRISTIANSON, NO) (PEASE, NO) to: Continue this item to a date uncertain. The public comment period was previously extended until October 24th. 11. PUBLIC HEARING - WATER AND WASTEWATER CAPACITY AND CONNECTION FEES Utilities Director Carrie Mattingly, Utilities Deputy Director Arron Floyd, Utilities Projects Manager Jennifer Metz, and HDR Engineering, Inc. Consultant Shawn Koorn provided an in-depth staff report with the use of a Power Point presentation and responded to Council questions. Public Comments: None ---End of Public Comment--- By consensus, item was received and Council approved item be continued and brought back In Connection with AB 1600 Fees. 1. Consider options for water and wastewater capacity and connection fees; and 2. Adopt Resolution No. 10841 (2017 Series) entitled “A Resolution of the City Council of the City of San Luis Obispo, California, Amending Water and Wastewater Capacity and Packet Pg 16 4 San Luis Obispo City Council Minutes of October 17, 2017 Page 9 Connection Fees,” selecting option 2 for water and option 4 for wastewater effective January 1, 2018. COUNCIL COMMUNICATIONS AND LIAISON REPORTS Council Member Pease reported attending the Latino Outreach Council and the rail road museum event. Vice Mayor Rivoire reported attending the SLOCOG meeting and noted positive feedback. Mayor Harmon reported attending Indigenous People Day Sunrise Ceremony, the rail road museum event and noted hosting the Mayor’s Advisory Body Quarterly Report. ADJOURNMENT The meeting was adjourned at 9:41 p.m. Adjourn to a Special City Council Meeting to be held on Tuesday, October 24, 2017 at 6:00 p.m. in the Council Chamber, 990 Palm Street San Luis Obispo, California. The next Regular City Council Meeting is scheduled for Tuesday, November 7, 2017 at 4:00 p.m., and 6:00 p.m., in the Council Chamber, 990 Palm Street, San Luis Obispo, California. __________________________ Carrie Gallagher City Clerk APPROVED BY COUNCIL: XX/XX/2017 Packet Pg 17 4 San Luis Obispo Page 1 Tuesday, November 7, 2017 Regular Meeting of the City Council CALL TO ORDER A Regular Meeting of the San Luis Obispo City Council was called to order on Tuesday, November 7, 2017 at 6:00 p.m. in the Council Chamber, located at 990 Palm Street, San Luis Obispo, California, by Mayor Harmon. ROLL CALL Council Members Present: Council Members Carlyn Christianson, Aaron Gomez, Andy Pease, Vice Mayor Dan Rivoire, and Mayor Heidi Harmon. Council Members Absent: None City Staff Present: Derek Johnson, City Manager; Christine Dietrick, City Attorney; Greg Hermann, Acting Assistant City Manager; and Carrie Gallagher, City Clerk; were present at Roll Call. Other staff members presented reports or responded to questions as indicated in the minutes. PLEDGE OF ALLEGIANCE Vice Mayor Rivoire led the Pledge of Allegiance. APPOINTMENTS 1. APPOINTMENTS TO VARIOUS CITY ADVISORY BODIES City Clerk Gallagher presented the contents of the report. Public Comments: None ---End of Public Comments--- Packet Pg 18 4 San Luis Obispo City Council Minutes of November 7, 2017 Page 2 ACTION: MOTION BY COUNCIL MEMBER GOMEZ, SECOND BY COUNCIL MEMBER CHRISTIANSON, CARRIED 5-0 1. Confirm the appointment of Alex Karlin to the Administrative Review Board to complete an unexpired term through March 31, 2018; and 2. Confirm the appointment of Micah Smith to the Architectural Review Commission to complete an unexpired term through March 31, 2018; and 3. Confirm the appointment of Jeannette McClure to the Citizens’ Revenue Enhancement Oversight Commission to complete an unexpired term through June 30, 2020; and 4. Confirm the appointment of Samuel Hughes to the Human Relations Commission to complete an unexpired term through March 31, 2019; and 5. Confirm the appointment of Torina Wilson to the Mass Transportation Committee, as the ASI student representative, to complete an unexpired term through March 31, 2019; and 6. Confirm the appointment of Calvin Stevens to the Personnel Board to complete an unexpired term through March 31, 2021 PUBLIC COMMENT ON ITEMS NOT ON THE AGENDA Dave Hannings Jermaine Washington Monisha Rios ---End of Public Comment--- Mayor Harmon expressed interest in agendizing the formation of an International Sister City relationship between the City of San Luis Obispo and Puerto Rico. Due to a lack of a second, the item failed. CONSENT AGENDA ACTION: MOTION BY COUNCIL MEMBER PEASE, SECOND BY COUNCIL MEMBER CHRISTIANSON, CARRIED 5-0 to approve Consent Calendar Items 2 thru 8. 2. WAIVE READING IN FULL OF ALL RESOLUTIONS AND ORDINANCES CARRIED 5-0, to waive reading of all resolutions and ordinances as appropriate. 3. CONSIDERATION OF THE HUMAN RELATION COMMISSION’S RECOMMENDED PRIORITIES FOR THE 2018 COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) AND GRANTS-IN-AID (GIA) PROGRAMS CARRIED 5-0, to: 1. Approve Community Development Block Grant and Grants-In-Aid funding priorities for Packet Pg 19 4 San Luis Obispo City Council Minutes of November 7, 2017 Page 3 2018, as recommended by the Human Relations Commission; and 2. Make a determination pursuant to Section 15061 (b)(3) General Rule and Section 15306 Categorical Exemption of the CEQA Guidelines that developing priorities for funding will not have a significant effect on the environment and is exempt from environmental review. 4. STRATEGY TO UPDATE THE PARKS AND RECREATION GENERAL PLAN ELEMENT AND MASTER PLAN, AND REQUEST FOR PROPOSALS FOR CONSULTANT SERVICES CARRIED 5-0, to: 1. As recommended by the Parks and Recreation Commission, approve the Project Plan for the update of the Parks and Recreation General Plan Element and Master Plan; and 2. Approve the Request for Proposals for consultant services associated with updating the Parks and Recreation General Plan Element and Master Plan, Specification No. 91635, and authorize staff to advertise for proposals; and 3. Authorize the City Manager to execute the agreement with the selected consultant if costs are within the approved budget. 5. FY 2017-18 APPLICATION FOR DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL AND THE OFFICE OF TRAFFIC SAFETY LOCAL ENFORCEMENT GRANT CARRIED 5-0, to: 1. Authorize the Police Department to accept a grant award from the Department of Alcoholic Beverage Control and the Office of Traffic Safety for FY 2017-18 not to exceed $16,000; and 2. Authorize the Chief of Police to execute all grant related documents and authorize the Finance Director to make the necessary budget adjustments upon the award of the grant. 6. VEHICLE & EQUIPMENT SURPLUS DESIGNATION AND AUTHORIZATION OF SALE CARRIED 5-0, to authorize the surplus designation and disposal of surplus units in accordance with the City’s policies and procedures as prescribed in the Financial Management Manual Sections 405-L, 480-A and 480-B. Packet Pg 20 4 San Luis Obispo City Council Minutes of November 7, 2017 Page 4 7. ORDINANCE ADOPTION - BEVERAGE STRAWS UPON REQUEST CARRIED 5-0, to adopt Ordinance 1640 (2017 Series) entitled “An Ordinance of the City Council of the City of San Luis Obispo, California, adding Chapter 8.09 to the San Luis Obispo Municipal Code regulating single-use beverage straws.” 8. ORDINANCE ADOPTION - REGULATING THE SALE AND DISTRIBUTION OF SINGLE-USE PLASTIC BOTTLES AND ESTABLISHING REGULATIONS TO INCREASE AVAILABILITY OF WATER BOTTLE FILLING STATIONS CARRIED 5-0, to adopt Ordinance 1641 (2017 Series) entitled “An Ordinance of the City Council of the City of San Luis Obispo, California, adding Chapter 8.07 to the San Luis Obispo Municipal Code regulating single-use plastic beverage bottles on City property less than 21 ounces in size.” PUBLIC HEARING ITEMS AND BUSINESS ITEMS 9. PUBLIC HEARING - ANNUAL PUBLIC HEARING FOR THE TOURISM BUSINESS IMPROVEMENT DISTRICT Tourism Manager Cano provided an in-depth staff report and responded to Council questions. City Clerk Gallagher stated that there were 2 written protests received and validated in advance of the Public Hearing, in addition there was 0 un-validated protest received during the Public Hearing and based on the total percentage needed, this does not amount to a legally sufficient protest. Public Comments: None ---End of Public Comment--- ACTION: MOTION BY COUNCIL MEMBER CHRISTIANSON, SECOND BY VICE MAYOR RIVOIRE, CARRIED 5-0 to adopt Resolution No. 10845 (2017 Series) entitled “A Resolution of the City Council of the City of San Luis Obispo, California, declaring the basis for and the levy of the assessment for the San Luis Obispo Tourism Business Improvement District, and affirming the establishment of the district” for fiscal year 2017-18. Packet Pg 21 4 San Luis Obispo City Council Minutes of November 7, 2017 Page 5 10. PUBLIC HEARING - IMPLEMENTING ACTIONS FOR THE AVILA RANCH COMMUNITY FACILITIES DISTRICT NO. 2017-1 City Manager Johnson and Economic Development Manager Johnson provided an in-depth staff report and responded to Council questions. Public Comments: None ---End of Public Comment--- City Clerk Gallagher Certified the Election. Advance the formation of the Avila Ranch Community Facilities District (CFD) by taking the following action: ACTION: MOTION BY VICE MAYOR RIVOIRE, SECOND BY COUNCIL MEMBER CHRISTIANSON, CARRIED 5-0 to: 1. Adopt the Avila Ranch Resolution No. 10846 (2017 Series) entitled “A Resolution of the City Council of the City of San Luis Obispo, California, in its capacity as legislative body of the Avila Ranch Community Facilities District No. 2017-1, certifying the results of the October 26, 2017 Special Election of the district, establishing an appropriations limit for the district, and making findings pursuant to Section 53328 and 53328.3 of the California Government Code”; and ACTION: MOTION BY VICE MAYOR RIVOIRE, SECOND BY COUNCIL MEMBER CHRISTIANSON, CARRIED 5-0 to: 2. Introduce Ordinance No. 1642 (2017 Series) entitled “An Ordinance of the City Council of the City of San Luis Obispo, California, as legislative body of Avila Ranch Community Facilities District No. 2017-1, levying a special tax against nonexempt real property within the district to finance certain facilities, services and incidental expenses.” 11. SETTING THE STAGE – PROCESS FOR DEVELOPING A FISCAL HEALTH RESPONSE PLAN City Manager Johnson and Economic Development Manager Johnson provided an in-depth staff report and responded to Council questions. Mayor Harmon exited the dais at 6:54 pm, she returned at 6:56 pm. Public Comments: Steve Barasch Leslie Halls Packet Pg 22 4 San Luis Obispo City Council Minutes of November 7, 2017 Page 6 ---End of Public Comment--- Council consensus, to receive and file a report on the process to develop a Fiscal Health Response Plan as consistent with the City’s 2017-19 Fiscal Sustainability and Responsibility Major City Goal. 12. APPOINTMENTS TO THE 2018 COUNCIL COMPENSATION COMMITTEE Acting Assistant City Manager Herman and City Clerk Gallagher provided an in-depth staff report with the use of a Power Point presentation and responded to Council questions. Public Comments: None ---End of Public Comment--- ACTION: MOTION BY COUNCIL MEMBER PEASE, SECOND BY COUNCIL MEMBER CHRISTIANSON, CARRIED 5-0 to: Appoint, John Ewan (Previously Elected Official), Frank Guyton (Personnel Board Member), Louis Matheny, Dale Stoker and Brett Strickland (Member-at-large and Committee Members) to the Council Compensation Committee, effective immediately and sunsetting upon presentation of its recommendations to the City Council, and direct them to: 1. Review the full Council compensation package and make recommendations to the City Council no later than May 1, 2018, and 2. Review compensation for Planning Commission and Architectural Review Commission members in conjunction with its review of Council compensation. LIAISON REPORTS AND COMMUNICATIONS Council Member Pease stated that she serves on the Water Resources Advisory Committee and noted an upcoming Water Law Informational Forum, she invited other members to attend, she also reported on attending the Parks and Recreation Park tour update, she pointed out notable improvements at Laguna Lake Golf course, a new off leash area for dogs, Damon Garcia grass renovation, pickle ball courts and the new Sinsheimer Playground. Council Member Gomez reported on attending several meetings pertaining to the City’s plastic ban. Mayor Harmon reported on attending Make a Difference Day at Cal Poly as well as the City’s Arbor Day Celebration, the Central Coast Economic Forum, and the Women’s Shelter film fundraiser. Packet Pg 23 4 San Luis Obispo City Council Minutes of November 7, 2017 Page 7 ADJOURNMENT The meeting was adjourned at 7:45 p.m. to the next Regular City Council Meeting scheduled for Tuesday, November 21, 2017 at 4:30 pm and 6:00 p.m., in the Council Hearing Room and Council Chamber, 990 Palm Street, San Luis Obispo, California. __________________________ Carrie Gallagher City Clerk APPROVED BY COUNCIL: XX/XX/2017 Packet Pg 24 4 Meeting Date: 11/21/2017 FROM: Greg Hermann, Acting Assistant City Manager Prepared By: Lee Johnson, Economic Development Manager SUBJECT: ADOPTION OF AN ORDINANCE ESTABLISHING A SPECIAL TAX FOR THE AVILA RANCH COMMUNITY FACILITIES DISTRICT NO. 2017-1 RECOMMENDATION Adopt Ordinance No. 1642 (2017 Series) establishing a Special Tax for the Avila Ranch Community Facilities District NO. 2017-1. DISCUSSION On October 24, 2017 the City Council voted 5-0 to adopt the Avila Ranch Community Facilities District 2017-1 Resolution of Formation and called for and set the date of the required landowner election to be held on October 26, 2017. On November 7, 2017 the City Council, given the canvass of the election results by the City Clerk, adopted a Resolution Certifying the Election Results and introduced Ordinance No. 1642 (2017 Series), establishing a Special Tax for the Avila Ranch Community Facilities District 2017-1. Ordinance No. 1642 (2017) is now ready for adoption. The Special Tax schedule created by the Ordinance conforms to the Rate and Method of Apportionment included in the Resolution of Formation. The Ordinance will become effective 30 days after its adoption but no special taxes will be levied sooner than July 2018, at which time the City Council, by Resolution, may establish a Special Tax levy for the Avila Ranch Community Facilities District. This levy may be less than, but not higher than, the special tax schedule set forth in the Special Tax Ordinance. CONCURRENCES The Community Development Director concurs that the proposed CFD is consistent with the entitlements granted for the project. The Public Works Director concurs that the revenue generated by the CFD will be sufficient to cover the costs and obligations associated with City services to be provided, and that the mechanism exists to adjust those costs and revenues accordingly. ENVIRONMENTAL REVIEW In accordance with Sections 15162 & 15163 of the CEQA Guidelines, an Addendum to the certified Final Environmental Impact Report (FEIR) prepared for the Avila Ranch project has been prepared to address the formation of a CFD, a funding mechanism intended to implement development under the Avila Ranch project. The Addendum did not find that the CFD would introduce new or modified environmental impacts that were not alread y previously disclosed and analyzed through the certified Final EIR. All mitigation measures prescribed for the approved development project would still apply with the implementation of the CFD, and no new mitigation measures would be required. Further, on October 24, the City determined that the Packet Pg 25 5 formation of a CFD for the Avila Ranch project is categorically exempt from CEQA review pursuant to Section 15306 and 15061(b)(3) of the CEQA Guidelines. FISCAL IMPACT The Avila Ranch CFD provides fiscal mitigation to the City for its revenue shortfall associated with the existing property tax exchange agreement with San Luis Obispo County. Accordingly, it facilitates a positive fiscal impact for the City from the Avila Ranch Project. Attachments: a - Ordinance Levying Special Tax b - Exhibit A - Avila Ranch Rate and Method of Apportinment c - Exhibit B - Avila Ranch CFD - List of Services Packet Pg 26 5 O 1642 ORDINANCE NO. 1642 (2017 Series) AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, AS LEGISLATIVE BODY OF AVILA RANCH COMMUNITY FACILITIES DISTRICT NO. 2017-1, LEVYING A SPECIAL TAX AGAINST NONEXEMPT REAL PROPERTY WITHIN THE DISTRICT TO FINANCE CERTAIN FACILITIES, SERVICES AND INCIDENTAL EXPENSES WHEREAS, the City Council of the City of San Luis Obispo has established Avila Ranch Community Facilities District No. 2017-1 (the “District”) pursuant to the Mello-Roos Community Facilities Act of 1982 (Section 53311 et. seq. of the California Government Code) (the “Act”); and WHEREAS, by Resolution No. 10844 (2017 Series), the City Council of the City of San Luis Obispo, in its capacity as legislative body of the District, submitted the levy of a special tax (“Special Tax”) to the qualified electors of the District at a special election called for October 26, 2017 (the “Special Election”); and WHEREAS, by its Resolution No. 10846 (2017 Series), the City Council of the City of San Luis Obispo, in its capacity as legislative body of the District, certified that more than two- thirds of the votes cast at the Special Election were in favor of levying the Special Tax. NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, IN ITS CAPACITY AS LEGISLATIVE BODY OF AVILA RANCH COMMUNITY FACILITIES DISTRICT NO. 2017-1, ORDAINS AS FOLLOWS: SECTION 1. The recitals stated above are true and correct. SECTION 2. The Special Tax is levied pursuant to Section 53340 of the Act against all non-exempt parcels of real property within the District at the Rate and Method of Apportionment set forth in Exhibit A, which is incorporated by reference. SECTION 3. Except where funds are otherwise available, the Services Component of the Special Tax shall be levied annually, for an indefinite period, with no expiration or sunset, for the purpose of funding the facilities, services, and incidental expenses described in Exhibit B, which is incorporated by reference (the “Authorized Services and Facilities”). Such annual levies shall be ordered by resolution of the City Council at the same rate or a lower rate than the rate provided by this Ordinance. Notwithstanding the foregoing, no Special Tax to pay for public facilities will be levied against any parcel after Fiscal Year 2035-2036. For the purposes of this Section, “public facilities” does not include services described in Section 53313 of the Act. SECTION 4. The Special Tax is secured by a continuing lien, imposed pursuant to Sections 3114.5 and 3115.5 of the California Streets and Highways Code. This lien is a Packet Pg 27 5 Ordinance No. 1642 (2017 Series) Page 2 O 1642 continuing lien against all nonexempt real property in the District, and shall secure each levy of the Special Tax. SECTION 5. The Special Tax shall be collected in the same manner as ordinary ad valorem property taxes are collected and shall be subject to the same penalties and the same procedure, sale, and lien priority in case of delinquency as is provided for ad valorem taxes. SECTION 6. Proceeds of the Special Tax will be deposited in a special account and used only for the purpose of financing Authorized Expenses. SECTION 7. An annual report will be filed by the Finance Officer of the City at least once a year containing a description of the amount of funds and the status of an y project that is an Authorized Expense. SECTION 8. The City does not, solely by virtue of this Ordinance, or solely by virtue of the levy or collection of the Special Tax, assume any obligation to provide any particular service or to purchase, construct, expand, improve, or rehabilitate any property of any particular kind. SECTION 9. The City’s Department of Finance, which is located which is located at 990 Palm Street, San Luis Obispo, CA and whose telephone number is (805) 781-7124 (the “Finance Department”), will be responsible for preparing the annual roll of Special Tax obligations with respect to the District and for estimating future tax levies pursuant to Section 53340.2 of the Act. SECTION 10. The City Council has not specified conditions under which the obligation to pay the Special Tax against a particular parcel of land may be prepaid and permanently satisfied. SECTION 11. If any section, subsection, sentence, clause, phrase or portion of this Ordinance is for any reason held to be invalid or unconstitutional by any court of competent jurisdiction, such decision shall not affect the validity of the remainder of the Ordinance. The City Council hereby declares that it would have adopted this Ordinance, and each section, subsection, sentence, clause, phrase or portion hereof, irrespective of that fact that any one or more sections, subsections, sentences, clauses, phrases or portions be declared invalid or unconstitutional. SECTION 12. The City Clerk shall certify to the adoption of this Ordinance and shall cause this ordinance, or a summary thereof, to be published as required by law. INTRODUCED on the ____ day of ____, 2017, AND FINALLY ADOPTED by the Council of the City of San Luis Obispo on the ____ day of ____, 2017, on the following vote: AYES: NOES: ABSENT: Packet Pg 28 5 Ordinance No. 1642 (2017 Series) Page 3 O 1642 ____________________________________ Mayor Heidi Harmon ATTEST: ____________________________________ Carrie Gallagher City Clerk APPROVED AS TO FORM: _____________________________________ J. Christine Dietrick City Attorney IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, this ______ day of ______________, _________. ______________________________ Carrie Gallagher City Clerk Packet Pg 29 5 A-1 EXHIBIT A City of San Luis Obispo Avila Ranch Community Facilities District No. 2107-1 (Services) San Luis Obispo County, California AMENDED RATE, METHOD OF APPORTIONMENT, AND MANNER OF COLLECTION OF SPECIAL TAX 1. Basis of Special Tax Levy A Special Tax authorized under the Mello-Roos Community Facilities Act of 1982 (Act) applicable to the land in the Avila Ranch Community Facilities District No.2017-1 (Services) (CFD) of the City of San Luis Obispo (City) shall be levied and collected according to the tax liability determined by the City through the application of the appropriate amount or rate, as described below. 2. Definitions “Act” means the Mello-Roos Community Facilities Act of 1982, as amended, Sections 53311 and following of the California Government Code. “Administrative Expenses” means the actual or estimated costs incurred by the City to form the CFD and to determine, levy, and collect the Special Taxes, including compensation of City employees for administrative work performed in relation to the CFD, the fees of consultants and legal counsel, the costs of collecting installments of the Special Taxes on the general tax rolls, preparation of required reports, and any other costs required to administer the CFD as determined by the City. “Administrator” means the City Manager of the City, or her or his designee. “Affordable Unit” means a Unit built on a Parcel of Single-Family Parcel for which an Affordable Housing Agreement has been entered into for the property designating the Unit as affordable. The City Manager, or its designee, shall determine which Units are designated as Affordable Units and maintain an Affordable Unit Listing, which shall contain all designated buildable parcels by tract and lot number, and in the case of Large Lots Parcels remaining before May 1 of the preceding Fiscal Year, the number of designated Affordable Units for each such Large Lot Parcel; all entries shall indicate the effective date of designation. The Affordable Unit Listing also shall be updated to reflect those Units no longer qualifying as Affordable Units, also known as Market- Rate Units. The Affordable Unit Listing, which shall contain all qualifying Affordable Units as of April 30, shall be made available to the Administrator by July 1 of each year for purposes of determining the Maximum Special Tax for Parcels pursuant to Section 4. Packet Pg 30 5 Avila Ranch CFD No. 2017-1 (Services) Rate and Method of Apportionment and Manner of Collerciton of Special Tax October 11, 2017 . A-2 C:\users\hgoodwin\appdata\roaming\iqm2\minutetraq\slocityca@slocityca.iqm2.com\work\attachments\3455.docx “Annual Infrastructure Costs” means for each Fiscal Year, the total cost of (1) Authorized Facilities and (2) any amounts needed to cure actual or estimated delinquencies in Special Taxes for the current or previous Fiscal Year. “Annual Services Costs” means for each Fiscal Year, the total cost of (1) Authorized Services, (2) Administrative Expenses, and (3) any amounts needed to cure actual or estimated delinquencies in Special Taxes for the current or previous Fiscal Year. “Assessor’s Parcel Map” means an official map of the County Assessor designating parcels by Assessor’s Parcel Number. “Assessor's Parcel Number” means the Parcel and Parcel number as recorded by the County Assessor on the equalized tax roll. “Authorized Facilities” means those facilities, as listed in the resolution forming the CFD. “Authorized Services” mean those services, as listed in the resolution forming the CFD. “Base Year” means the Fiscal Year beginning July 1, 2018 and ending June 30, 2019. “Building Permit” means a permit issued by the City for the construction of a Residential Use structure. “Building Square Foot(age)” has the same meaning as that defined for the School Mitigation Fee by California Government Code Section 65995 for “Assessable Space,” which is “all of the square footage within the perimeter of a residential structure, not including any carport, walkway, garage, overhang, patio, enclosed patio, detached accessory structure, or similar area” as determined upon issuance of the initial Building Permit. “CFD” means the Avila Ranch Community Facilities District No. 2017-1 (Services) of the City of San Luis Obispo, San Luis Obispo County, California. “City” means the City of San Luis Obispo in San Luis Obispo County, California. “Council” means the City Council of the City of San Luis Obispo acting for the CFD under the Act. “County” means the County of San Luis Obispo, California. “County Assessor’s Parcel” means a lot or Parcel with an assigned Assessor’s Parcel Number in the maps used by the County Assessor in the preparation of the tax roll. “Developed Parcel” means any Taxable Parcel with a Building Permit issued for Residential Uses. “Development Plan” means a condominium plan, apartment plan, site plan, or other development plan that identifies such information as the type of structure, acreage, square footage, or number of Units that are approved to be developed on Single Family Parcels and Multifamily Residential Use Parcels. “Final Map Parcel” means a Parcel designated for development as a single-family residence which is part of a Final Subdivision Map. Packet Pg 31 5 Avila Ranch CFD No. 2017-1 (Services) Rate and Method of Apportionment and Manner of Collerciton of Special Tax October 11, 2017 . A-3 C:\users\hgoodwin\appdata\roaming\iqm2\minutetraq\slocityca@slocityca.iqm2.com\work\attachments\3455.docx “Final Subdivision Map” means a recorded map designating the final Parcel Subdivision for individual single family residential Parcels. “Fiscal Year” means the period starting July 1 and ending the following June 30. “Infrastructure Special Tax” means the Special Tax identified in Attachment 1 for each Land Use Category identified to fund the costs of Authorized Facilities. The Infrastructure Special Tax is increased by the Infrastructure Special Tax Escalation Factor in each Fiscal Year following the Base Year. “Infrastructure Special Tax Escalation Factor” means a factor of 2 percent in any Fiscal Year following the Base Year by which the Special Tax for the previous Fiscal Year will be increased for the current Fiscal Year. “Land Use Category” means the categories of taxable land uses shown in Attachment 1. “Large Lot Parcel” means a Parcel created by a Large Lot Subdivision Map. “Large Lot Subdivision Map” means a recorded subdivision map creating Parcels by land use. However, the Large Lot Subdivision Map does not delineate Single-Family Parcels. A Final Subdivision Map will create individual Single Family Parcels. “Market-Rate Unit” means a Unit that is not an Affordable Unit. “Maximum Annual Special Tax” means the greatest amount of Special Tax that can be levied against a Parcel in a given Fiscal Year. The Maximum Annual Special Tax is the sum of the Fiscal Services Special Tax and Infrastructure Special Tax assigned to each Taxable Parcel. “Maximum Annual Special Tax Revenue” means the greatest amount of revenue that can be collected in total from a group of Parcels (such as Developed Parcels) by levying the Special Tax. “Multifamily” or “Multifamily Residential Use” means any Parcel or Development Project designated or developed for more than one residential dwelling unit per parcel. Such uses may consist of apartments, condominiums, townhomes, time-share units, row houses, duplexes, or triplexes. “Municipal Costs Index” means the index published by American City & County. “Other Land Use” means a Parcel with land uses other than Residential Uses. Such Parcels are Tax-Exempt Parcels “Parcel” means any County Assessor’s Parcel in the CFD based on the equalized tax rolls of the County. “Public Parcel” means any Parcel that is or is intended to be publicly owned, as designated in any final map that is normally exempt from the levy of general ad valorem property taxes under California law, including public streets; schools; parks; and public drainageways, landscaping, wetlands, greenbelts, and open space. “Remainder Parcel” means a Parcel that is created as the result of the recordation of a Large Lot Parcel Map or Final Small Lot Subdivision Map, which results in a Parcel within the boundaries of a Large Lot Parcel, that has not been mapped for final development approval. Such a Packet Pg 32 5 Avila Ranch CFD No. 2017-1 (Services) Rate and Method of Apportionment and Manner of Collerciton of Special Tax October 11, 2017 . A-4 C:\users\hgoodwin\appdata\roaming\iqm2\minutetraq\slocityca@slocityca.iqm2.com\work\attachments\3455.docx Remainder Parcel may contain taxable and tax-exempt uses, such as Residential Uses, and Public Parcels, such as school or park sites. Once designated as a Remainder Parcel, such Parcel will be considered a Large Lot Parcel for the purposes of future Subdivision s and for the provisions of Sections 4 through 6. “Residential Use” means a Parcel designated for residential use, such as single family residential units, residential condominiums, townhouses, Multifamily Residential Uses, or apartments. “RMA” means the Rate and Method of Apportionment of the Special Tax. “Services Special Tax” means the Special Tax identified in Attachment 1 for each Land Use Category identified to fund the costs of Authorized Services. The Services Special Tax is increased by the Services Special Tax Escalation Factor in each Fiscal Year following the Base Year. “Services Special Tax Escalation Factor” an annual percentage increase in the Fiscal Mitigation Special Tax and Local Area Special Tax based upon the Consumer Price Index (CPI) (prior calendar year annual average, San Francisco, All Urban Consumers (CPI-U) Index), the CPI (prior calendar year annual average, Pacific West Cities, All Urban Wage Earners and Clerical Workers), or the Municipal Cost Index annual average, whichever is greater, but not exceeding four (4) percent. “Single Family Parcel” means, in any Fiscal Year, all Parcels in the CFD for which a building permit was issued or may be issued for construction of a Unit that is a single family residential, residential condominium, or townhouse Unit. “Special Tax(es)” mean(s) any tax levy under the Act in the CFD. “Subdivision” or “Subdivided” means a division of a Parcel into two or more Parcels through the Subdivision Map Act process. A Subdivision may also include the mer ging of two or more Parcels to create new Parcels. “Tax Collection Schedule” means the document prepared by the Administrator for the County Auditor-Controller to use in levying and collecting the Special Taxes each Fiscal Year. “Taxable Parcel” means any Parcel that is not a Tax-Exempt Parcel. “Tax-Exempt Parcel” means a Parcel not subject to the annual Special Tax. Tax-Exempt Parcels include Public Parcels, Undeveloped Parcels, and Other Use Parcels. Certain privately-owned Parcels also may be exempt from the levy of annual Special Taxes including common areas owned by homeowner’s associations or property owner associations, wetlands, detention basins, water quality ponds, and open space, as determined by the Administrator. “Undeveloped Parcel” means a Parcel that is a Large Lot Parcel or Remainder Parcel. “Unit” means (a) for Single Family Parcel dwelling unit; and (b) for Multifamily Residential Use Parcel, such as an individual residential unit in an apartment building. Packet Pg 33 5 Avila Ranch CFD No. 2017-1 (Services) Rate and Method of Apportionment and Manner of Collerciton of Special Tax October 11, 2017 . A-5 C:\users\hgoodwin\appdata\roaming\iqm2\minutetraq\slocityca@slocityca.iqm2.com\work\attachments\3455.docx 3. Duration of the Special Tax Parcels in the CFD will remain subject to the Services Special Tax in perpetuity. Parcels in the CFD will be subject to the Infrastructure Special Tax through FY 2035-36. If the Special Tax ceases to be levied, the City will direct the County Recorder to record a Notice of Cessation of Special Tax. Such notice will state that the obligation to pay the Special Tax has ceased and that the lien imposed by the Notice of Special Tax Lien is extinguished. The Notice of Cessation of Special Tax, in addition, will identify the book and page of the Book of Maps of Assessment and Community Facilities Districts where the map of the boundaries of the CFD is recorded. 4. Administrative Tasks Administrative tasks required of the Administrator are discussed below: A. Annual Special Tax Escalation. The Administrator shall increase the Fiscal Mitigation Special Tax and Local Area Special Tax by the Services Special Tax Escalation Factor in each Fiscal Year following the Base Year. The Administrator shall increase the Infrastructure Special Tax Infrastructure Special Tax Escalation Factor in each Fiscal Year following the Base Year. B. Assignment of the Maximum Annual Special Tax to Taxable Parcels. As Taxable Parcels are Subdivided or combined, the Administrator will assign the Maximum Annual Special Tax to each new Taxable Parcel based on the records of the City: 1. Assignment of the Maximum Annual Special Tax to Developed Parcels. The Services Special Tax and Infrastructure Special Tax are assigned to Developed Parcels using the following procedures. a. Identify the Building Square Footage for the Residential Use for the Taxable Parcel, as identified in the Building Permit. b. Identify the Land Use Category for the Taxable Parcel based upon the Residential Use type and Building Square Footage in Attachment 1. c. Assign the Services Special Tax for the Taxable Parcel based upon the Land Use Category using the criteria identified in Sections 4.B.1.a and 4.B.1.b, and as increased by the Services Special Tax Escalation Factor and Infrastructure Special Tax Escalation Factor. d. Assign the Infrastructure Special Tax for the Taxable Parcel based upon the Land Use Category using the criteria identified in Sections 4.B.1.a and 4.B.1.b, and as increased by the Infrastructure Special Tax Escalation Factor. e. Sum the Services Special Tax and Infrastructure Special Tax to determine the Maximum Annual Special Tax for the Taxable Parcel. Packet Pg 34 5 Avila Ranch CFD No. 2017-1 (Services) Rate and Method of Apportionment and Manner of Collerciton of Special Tax October 11, 2017 . A-6 C:\users\hgoodwin\appdata\roaming\iqm2\minutetraq\slocityca@slocityca.iqm2.com\work\attachments\3455.docx 2. Assignment of the Maximum Annual Special Tax to Final Map Parcels. The Services Special Tax and Infrastructure Special Tax are assigned to Final Map Parcels using the following procedures. a. Assign the Services Special Tax for the Final Map Parcel, as shown in Attachment 1, and as increased by the Services Special Tax Escalation Factor. b. Assign the Infrastructure Special Tax for the Final Map Parcel, as shown in Attachment 1, and as increased by the Infrastructure Special Tax Escalation Factor. c. Sum the Services Special Tax and Infrastructure Special Tax to determine the Maximum Annual Special Tax for the Taxable Parcel. 3. Assignment of the Maximum Annual Special Tax to Undeveloped Parcels. Undeveloped Parcels are not subject to the Maximum Annual Special Tax. C. Affordable Units that Become Market Rate Units. If, in any Fiscal Year, a Unit that previously had been designated as an Affordable Unit no longer qualifies as such, the City shall update the Affordable Unit Listing by denoting the change in status of the Unit, together with the effective date thereof. The Maximum Annual Special Tax on the Unit that no longer qualifies as an Affordable Unit shall be increased to double the amount that would have applied in that Fiscal Year if the Unit had remained as an Affordable Unit. In subsequent Fiscal Years, this increased Maximum Annual Special Tax shall continue to escalate by the Tax Escalation Factor. D. Conversion of a Tax-Exempt Parcel to a Taxable Parcel. If a Tax-Exempt Parcel is not needed for public use and is converted to a taxable use or transferred to a private owner, it shall become subject to the Special Tax. The Maximum Annual Special Tax for such a Parcel will be assigned according to the provisions of Section 4.A and 4.B. E. Taxable Parcel Acquired by a Public Agency. A Taxable Parcel acquired by a public agency shall be reclassified as a Tax-Exempt Parcels and is no longer subject to the Special Tax levy. F. Maintenance of Parcel Records. The Administrator will maintain a development status for each Parcel within the CFD as Parcels are Subdivided and developed. The record will contain the Assessor’s Parcel Number, Land Use Category, number of Units per Taxable Parcel, the Fiscal Mitigation Special Tax, Local Area Special Tax, Infrastructure Special Tax, and Maximum Annual Special Tax for each Taxable Parcel. 5. Assignment of the Maximum Annual Special Tax A. Classification of Parcels. By June 30 of each Fiscal Year, using the Definitions in Section 2, the Administrator shall cause: 1. Each Parcel to be classified as a Taxable Parcel or Tax-Exempt Parcel. 2. Each Parcel to be classified as a Developed Parcel, Final Map Parcel, or an Undeveloped Parcel. Packet Pg 35 5 Avila Ranch CFD No. 2017-1 (Services) Rate and Method of Apportionment and Manner of Collerciton of Special Tax October 11, 2017 . A-7 C:\users\hgoodwin\appdata\roaming\iqm2\minutetraq\slocityca@slocityca.iqm2.com\work\attachments\3455.docx B. Assignment of the Maximum Annual Special Tax to Taxable Parcels. The Maximum Annual Special Tax will be assigned to each Taxable Parcel each Fiscal Year using the procedures (not all steps may be applicable for each such Parcel) in Section 4. 6. Calculating Annual Special Taxes The Administrator will compute the Annual Costs and determine the annual Special Tax levy for each Taxable Parcel based on the assignment of the Special Tax in Section 5. The Administrator will then determine the tax levy for each Taxable Parcel using the following process: A. Compute the Annual Services Costs using the definition of Annual Services Costs in Section 2. B. Calculate the Services Special Tax levy for each Taxable Parcel by the following steps: Step 1: Compute 100 percent of the Services Special Tax revenue for all Developed Parcels. Step 2: Compare the Annual Services Costs with the amount calculated in the previous step. Step 3: If the Annual Services Costs are lower than the amount calculated in Step 1, decrease proportionately the Services Special Tax levy for each Developed Parcel until the revenue from the Special Tax levy equals the Annual Services Costs. Step 4: If the Annual Services Costs are greater than the amount calculated in Step 1, increase proportionately the Services Special Tax levy for each Final Map Parcel until the revenue from the Special Tax levy equals the Annual Services Costs, or 100 percent of the Services Special Tax for all Final Map Parcels, if needed to fund Annual Services Costs. C. Compute the Annual Infrastructure Costs using the definition of Annual Infrastructure Costs in Section 2 D. Calculate the Infrastructure Special Tax levy for each Taxable Parcel by the following steps: Step 1: Compute 100 percent of the Infrastructure Special Tax revenue for all Developed Parcels. Step 2: Compare the Annual Infrastructure Costs with the amount calculated in the previous step. Step 3: If the Annual Infrastructure Costs are lower than the amount calculated in Step 1, decrease proportionately the Infrastructure Special Tax levy for each Developed Parcel until the revenue from the Special Tax levy equals the Annual Infrastructure Costs. Step 4: If the Annual Infrastructure Costs are greater than the amount calculated in Step 1, increase proportionately the Infrastructure Special Tax levy for each Final Map Parcel until the revenue from the Special Tax levy equals the Annual Services Costs, or 100 percent of the Services Special Tax for all Final Map Parcels, if needed to fund Annual Infrastructure Costs. Packet Pg 36 5 Avila Ranch CFD No. 2017-1 (Services) Rate and Method of Apportionment and Manner of Collerciton of Special Tax October 11, 2017 . A-8 C:\users\hgoodwin\appdata\roaming\iqm2\minutetraq\slocityca@slocityca.iqm2.com\work\attachments\3455.docx E. Sum the amount determined in Sections 6.B and 6.D above. F. Levy on each Taxable Parcel the amount calculated in Section 6.E above. G. Prepare the Tax Collection Schedule and, unless an alternative method of collection has been selected pursuant to Section 9, send it to the County Auditor requesting that it be placed on the general, secured property tax roll for the Fiscal Year. The Tax Collection Schedule will not be sent later than the date required by the Auditor for such inclusion. The Administrator will make every effort to correctly calculate the Special Tax for each Parcel. It will be the burden of the taxpayer to correct any errors in the determination of the Parcels subject to the tax and their Special Tax assignments. 7. Interpretation, Application and Appeal of Special Tax Formula and Procedures Any taxpayer who feels that the amount of the Special Tax assigned to a Parcel is in error may file a notice with the Administrator appealing the levy of the Special Tax. The Administrator will then promptly review the appeal, and if necessary, meet with the applicant. If the Administrator verifies that the tax should be modified or changed, the Special Tax levy will be corrected and, if applicable in any case, a refund will be granted. Interpretations may be made by Resolution of the Council for purposes of clarifying any vagueness or ambiguity as it relates to the Special Tax rate, the method of apportionment, the classification of properties, or any definition applicable to the CFD. Without Council approval, the Administrator may make minor, non-substantive administrative and technical changes to the provisions of this Exhibit that do not materially affect the rate, method of apportionment, and manner of collection of the Special Tax for purposes of the administrative efficiency or convenience or to comply with new applicable federal, state or local law. 8. Prepayment of the Special Tax Obligation The Special Tax for a Taxable Parcel may not be prepaid. The Special Tax is collected to fund Authorized Services in perpetuity, or until the Council determines that the Special Tax should no longer be collected. 9. Manner of Collection The Special Tax will be collected in the same manner and at the same time as ad valorem property taxes, provided, however, that the Administrator or its designee may directly bill the Special Tax and may collect the Special Tax at a different time, such as on a monthly or other periodic basis, or in a different manner, if necessary, to meet the City’s financial obligations. Packet Pg 37 5 Avila Ranch CFD No. 2017-1 (Services) Rate and Method of Apportionment and Manner of Collerciton of Special Tax October 11, 2017 . A-9 C:\users\hgoodwin\appdata\roaming\iqm2\minutetraq\slocityca@slocityca.iqm2.com\work\attachments\3455.docx Attachment 1 Avila Ranch CFD No. 2017-1 (Services) Maximum Annual Special Tax - Base Year of FY 2018-19 No. of Services Infrastructure Maximum Annual Land Use Category Units Special Tax Special Tax Special Tax [1][2] [3][4] Single Family Residential - ≥ 1,500 Sq. Ft.322 $2,749.80 $300.00 $3,049.80 Single Family Residential - <1,500 Sq. Ft.76 $1,832.86 $200.00 $2,032.86 Multifamily Residential - ≥ 1,500 Sq. Ft.38 $2,749.80 $300.00 $3,049.80 Multifamily Residential - < 1,500 Sq. Ft.252 $1,832.86 $200.00 $2,032.86 Affordable Multifamily Residential 32 $916.43 $100.00 $1,016.43 Undeveloped Parcels [5] Other Land Uses $0.00 $0.00 $0.00 Public and Deed Restricted Land $0.00 $0.00 $0.00 "att1" [1] This Special Tax rate will be increased by the Services Special Tax Escalator in each Fiscal Year following the Base Year of FY 2018-19. [2] This Special Tax rate will be increased by the Infrastructure Special Tax Escalator in each Fiscal Year following the Base Year of FY 2018-19. [3] This Special Tax may be collected in each Fiscal Year through FY 2035-36. This Special Tax will no longer be collected following FY 2035-36. [4] Beginning with FY 2035-39, the Maximum Annual Special Tax will be equal to the Services Special Tax as the Infrastructure Special Tax will no longer be collected beyond FY 2035-36.. [5] Undeveloped Parcels are Final Map Parcels without a Building Permit. Packet Pg 38 5 Exhibit B City of San Luis Obispo CFD No. 2017 -1 (Services ) Draft List of Authorized Services List of Authorized Services The authorized services to be funded from the levy and collection of annual special taxes include those set forth below in addition to the costs associated with collecting and administering the special taxes, annually administering the District, and costs associated with forming the District. The authorized services to be funded include: 1. Maintenance and lighting of parks, parkways, streets, roads, and open space. 2. Flood and storm protection services, including, but not limited to, the operation and maintenance of storm drainage systems. 3. Police protection services, including, but not limited to, criminal justice services. However, criminal justice services shall be limited to providing services for jails, detention facilities, and juvenile halls. 4. Fire protection and suppression services, and ambulance and paramedic services. 5. Maintenance and operation of any real property or other tangible property with an estimated useful life of five or more years that is owned by the local agency or by another local agency pursuant to an agreement entered into under Section 53316.2. List of Authorized Facilities The authorized facilities to be funded from the levy and collection of annual special taxes include: 1. Local park, recreation, parkway, and open-space facilities. 2. The district may also finance the construction or undergrounding of water transmission and distribution facilities, natural gas pipeline facilities, telephone lines, facilities for the transmission or distribution of electrical energy, and cable television lines to provide access to those services to customers who do not have access to those services or to mitigate existing visual blight. 3. The district may also finance the acquisition, improvement, rehabilitation, or maintenance of any real or other tangible property, whether privately or publicly owned, for flood and storm protection services, including, but not limited to, storm drainage and treatment systems and sandstorm protection systems. 4. A community facilities district may also finance the purchase, construction, expansion, improvement, or rehabilitation of any real or other tangible property with an estimated useful life of five years or longer or may finance planning and design work that is directly related to the purchase, construction, expansion, or rehabilitation of any real or tangible property. The facilities need not be physically located within the Dstrict. Packet Pg 39 5 Page intentionally left blank. Packet Pg 40 5 Meeting Date: 11/21/2017 FROM: Monica Irons, Human Resources Director Prepared By: Brittani Roltgen, HR Administrative Assistant SUBJECT: SUPPLEMENTAL EMPLOYEE POLICY AND MINIMUM WAGE INCREASE RECOMMENDATION 1. Adopt the revised Supplemental Employee Policy (Attachment A), formerly the Temporary Employee Policy, and authorize the City Manager to approve future administrative updates; and 2. Adopt a resolution modifying the Supplemental Employee Salary Schedule as necessary to comply with California Fair Wage Act of 2016 requiring a minimum wage of $11.00 per hour effective January 1, 2018 (Attachments B & C). DISCUSSION Background A qualified supplemental, or temporary, work force is instrumental to the City of San Luis Obispo’s ability to provide consistent services to the community by adjusting more easily and quickly to workload fluctuations, unexpected vacancies, leaves of absence, or demands resulting from limited-term projects, seasonal, or peak periods. A supplemental work force also provides programs that would otherwise be difficult to staff due to the intermittent, seasonal, or non- traditional work hours (e.g. early mornings, weekends, evenings, etc.). For example, the City’s Parks and Recreation Department employs over 200 supplemental, part-time (less than 30 hours per week on average) employees at any given time. While many of these employees are seasonal (working only 3-5 months), they sustain programs and services important to the community; providing before and after school care, summer children’s camps, ensuring pool safety, special events, senior programs, and maintenance of the golf course and open space. Supplemental employees are used throughout all City departments and in some cases, the City has experienced increasing difficulty recruiting and retaining qualified candidates. In particular, supplemental positions that require certifications or State licenses such as childcare teachers and lifeguards have been particularly challenging during the past few years, causing staff to take interim actions to ensure the continuance of these programs. These interim actions have included reassigning full-time staff temporarily to cover supplemental staff shifts and starting supplemental employees with certifications or licenses at higher than normal steps in the salary range. Policy Update Reflects Legislative Changes and Addresses some Recruitment and Retention Challenges To address these recruitment and retention challenges, a committee with representation from nearly every department, coordinated by Human Resources staff, reviewed the Supplemental Employee Policy (formerly the Temporary Employee Policy) and suggested modifications. The Packet Pg 41 6 first modification was to move away from referring to this class of employees as “temporary” and start referring to them as “supplemental”. This more accurately reflects the contributions of these employees, which supplements the efforts of regular staff. In many cases supplemental staff return season after season and accumulate considerable knowledge of City operations and the community and labeling them as “temporary” did not recognize this. Additional proposed changes to the Supplemental Employee Policy were made to add clarity as to when and how a supplemental position may be used and to address retention challenges. For example, historically supplemental employees worked the equivalent of a half a year of full time employment before being considered for a salary increase. Those limitations meant a seasonal employee may have to work three to four seasons before being consid ered for a salary increase, even though their contribution likely increased every season. The revised policy affords a supervisor greater discretion to increase the salary of key performers, employees with enhanced skills sets, or those who possess difficult to find certifications or licenses with Department Head and Human Resources approval. Other proposed changes to the Policy document compliance with relatively recent changes in state and federal regulations under the California Fair Wage Act of 2016, The Healthy Workplaces, Healthy Families Act of 2014 (Paid Sick Leave law), the Patient Protection and Affordable Care Act of 2010 (ACA), and the California Public Employees’ Retirement System (CalPERS). The ACA requires employers to offer “affordable” health coverage to those employees expected to work 30 hours or more per week for four months or more and the Paid Sick Leave law requires employers to provide up to three days or 24 hours of paid sick leave per year. CalPERS places restrictions on the use of CalPERS retirees including limitations on the wages provided and the duration of the assignment. The City is compliant with these laws and has appropriately budgeted for the associated costs. The California Fair Wage Act of 2016 is designed to incrementally increase the California minimum wage to $15 per hour by 2022. The first increase in minimum wage from $10 to $10.50 per hour took effect January 1, 2017, the second scheduled increase increases minimum wage to $11 per hour effective January 1, 201 8, and subsequent increases will be $1 per hour each January through 2022. Salary Schedule Reflects Minimum Wage Increase The City’s lowest Supplemental Employee Salary range starts at $10.50 per hour, after being adjusted in January 2017 to meet the initial increase in minimum wage. The first three steps in the lowest Supplemental Salary Range need to increase to $11 per hour to meet the January 2018 requirements. This proposal complies with state law even though it does not fully address recruitment and retention issues, market comparability, or internal equity at this time. However, given the City enacted its Fiscal Health Contingency Plan in February 2017 and is trying to minimize cost increases, this approach appears most reasonable at this time. It is important to note that future minimum wage increases will be much more impactful as minimum wage becomes on par with the rates currently paid to returning seasonal employees, employees with certifications or state licenses, or in lead positions. When minimum wage reaches the level historically paid for the higher skill sets, the City will likely need to adjust more of its Supplemental Salary Ranges to ensure an appropriate level of differentiation. This analysis along with updated market data can better inform future adjustments in Supplemental Salary Packet Pg 42 6 Schedules to maintain compliance with minimum wage and address any remaining recruitment and retention challenges. FISCAL IMPACT Adoption of the Supplemental Employee Policy has no direct fiscal impacts. The increase in minimum wage in January 2018 was anticipated, thus funds in the amount of $14,000 were set aside for the 2017-18 budget. The fiscal impact of adjusting those employees currently earning less than the anticipated 2018 minimum wage is estimated to be $8,300 for fiscal year 2017-18. ALTERNATIVES Do not adopt the Supplemental Employee Policy and modified Supplemental Employee Salary Schedule. This is not advised as it would put the City in a position of being non-compliant with Federal law. Attachments: a - Supplemental Employee Policy b - Resolution Supplemental Employee Salary Schedule c - Supplemental Employee Salary Schedule Packet Pg 43 6 Supplemental Employee Policy GENERAL POLICY It is the policy of the City of San Luis Obispo to hire supplemental employees to meet temporary needs of the City that result from emergencies, special projects of a short-term nature, extra-help, seasonal work, un-programmed surges in workload, occasional hours for an ongoing need, and to provide substitutes for or support to regular employees to maintain optimal service levels. Supplemental Employees shall be compensated on an hourly basis, supervised by regular City staff (exceptions may be made in the Parks and Recreation Department) and perform specific tasks as defined by the City. Authorization for all supplemental employee hiring shall be approved in advance by both the department head or designee and the Department of Human Resources via an HR Requisition Form. Compensation for supplemental employees is to be in alignment with the City’s supplemental salary schedule. ADMINISTRATION OF SUPPLEMENTAL EMPLOYEE POLICY The Department of Human Resources shall be responsible for coordinating the recruitment and selection of supplemental employees and administering the City’s Supplemental Employee Policy. The Parks and Recreation Department shall be responsible for coordinating their department’s recruitment and selection of supplemental employees in accordance with this policy. Department heads and their supervisory personnel are responsible for implementing the Supplemental Staff Policy in their respective departments. POSITION ANALYSIS Seasonal Worker: Hired to work on a part or full-time basis during a season to respond to an increase in demand. Occasional: Hired to fill a temporary need over a specific period, such as backfilling a Full Time Equivalent (FTE) that is out on leave/vacation/worker’s comp, or to help with a special project. Hired as needed to accommodate periods of increased workloads. Irregular Schedule: Hired to respond to an increase in demand for a position that is not a FTE. Number of hours worked in a fiscal year vary. Limited Benefit Employee: Some Parks and Recreation supplemental employees are eligible for time off benefits. These employees receive paid time off in the amount of 3% hours worked, up to a maximum accrual of 40 hours. Packet Pg 44 6 Supplemental Employee Policy Revised October 2017 Page 2 of 11 Supplemental Employees Hired part-time to supplement the City’s regular workforce in a position that does not have an associated line-item position. Contract Employee: These positions are for periods of employment typically greater than six months but less than two years. Contract employees may receive some of the same benefits as regular employees in the bargaining group their classification is within if it is expressly written in to their employment contract. Other contract employees may have other negotiated benefits that differ from a bargaining unit. Heath insurance (medical, dental, vision, life) is an optional benefit for contract employees, offered at the department’s discretion. City contribution is aligned with equivalent employee group benefits. TEMPORARY HIRING OF RETIREES  Temporary full-time or temporary part-time employment of retirees under the California Public Employees Retirement System (PERS) shall be permitted in cases where temporary service is desired.  The PERS retiree is limited to 960 hours per fiscal year. These hours include periods of time worked for any PERS agency in the State of California. Under no circumstances shall a PERS Retiree work for any PERS agency for more than a total of 960 hours per fiscal year or be assigned to the City through a temporary agency. Other limitations may apply, including the amount of compensation that may be offered. Refer to CalPERS Employment After Retirement Handbook for further information. Retired Annuitant: An employee that has retired from a CalPERS agency that meets the criteria to work for less than 960 hours in a fiscal year. These criteria include:  Hired to be used as extra-help  Has specialized skills needed to perform the work  Their retirement date must be 180 days before their hire date Benefits Supplemental Employee Health Contribution: Supplemental employees working shifts greater than 30 hours per week or 130 hours per month on a continuous basis for at least four months will be eligible for employee-only health insurance. The contribution is adjusted annually to ensure affordability as defined by the Affordable Care Act (ACA). Nationwide Retirement: The City of San Luis Obispo does not participate in Social Security but has implemented a retirement system which satisfies the IRS and the Social Security Act [20 CFR 1200(b)]. This shall be accomplished by the use of a Deferred Compensation Plan eligible under section 457(b) of the Code. All employees of the City of San Luis Obispo who are not eligible to participate in the Public Packet Pg 45 6 Supplemental Employee Policy Revised October 2017 Page 3 of 11 Employees Retirement System (CalPERS) must participate in this defined contribution plan. Employee contribution is 7.5% of salary. CalPERS Retirement: Supplemental employees who have previously been enrolled in CalPERS or exceed 1,000 paid hours in a fiscal year will be enrolled into CalPERS (paid hours include regular, sick leave, overtime). *For more information, please refer to Exhibit A Paid Sick Leave: In compliance with California Law Assembly Bill 1522 – Healthy Workplaces, Healthy Families Act of 2014 (AB 1522), effective July 1, 2015 the City will provide all supplemental staff (with the exception of retired annuitants) paid sick leave at the accrual rate of one (1) hour of sick leave for every 30 hours worked, up to three (3) days or 24 hours of paid sick leave to be provided in a 12-month period. More details can be found in the City’s Paid Sick Leave Policy. Personal Time-off (PTO): Parks and Recreation Limited Benefit (LBT) employees are pre-approved positions that work over 1,000 hours per fiscal year and are eligible for personal time off (PTO) benefits. These employees receive PTO in the amount of 3% of hours worked, up to a maximum accrual of 40 hours which is cashed out upon termination. PTO does not count towards hours worked for purposes of overtime calculation. RESPONSIBILITY FOR SUPPLEMENTAL RECRUITMENT & SELECTION The Department of Human Resources shall be responsible for the application of the Supplemental Employee Policy. From time to time the Human Resources Director and City Manager may be required to make amendments to this policy to comply with federal and state laws. HUMAN RESOURCES DEPARTMENT It shall be the responsibility of the Department of Human Resources to assist all department heads and their staff in the recruitment and selection of all supplemental staff and contract employees (except for Parks and Recreation) which includes:  Advertising the position.  Accepting, tracking and maintaining the applications.  Scheduling pre-employment physical examinations (if required).  Advising and assisting departments in solving performance problems or other policy issues with supplemental employees.  Orienting supplemental employees. Packet Pg 46 6 Supplemental Employee Policy Revised October 2017 Page 4 of 11 Department Heads / Supervisors The department heads / supervisors or designee have primary responsibility for the implementation of the Supplemental Staff Policy within their department/division. It is the responsibility of the department heads / supervisors or designee to:  Determine if funding is available within the department budget to hire temporary help.  Determine with the assistance of the Human Resources Department if a pre-employment physical is needed.  Schedule an orientation with the Human Resources Department on the first day of employment. Parks and Recreation will orient their own supplemental employees CRITERIA FOR SUPPLEMENTAL STAFF TO EXCEED 1,000 HOURS Supplemental staff are not eligible for PERS retirement benefits unless they exceed 1,000 paid hours (regular, sick leave, OT) in a fiscal year or the employee has previously qualified for PERS retirement. If the supplemental employee is projected to exceed 1,000 hours a City Manager report requesting approval to allow a supplemental employee to exceed 1,000 hours in a fiscal year should contain the following information:  Name, classification, and hire date of the supplemental employee.  A discussion of the critical need for the employee to work more than 1,000 hours in a fiscal year.  A brief description of the employee’s work assignment.  Hours worked to date and estimated date employee will exceed 1,000 hours.  The time frame of the expected need for this employee to work more than 1,000 hours per fiscal year.  Training the department has invested in this employee.  The recruitment difficulties the department has experienced, if any.  The anticipated increases in costs for PERS retirement. Estimate the dollar amount for the remainder of the current fiscal year and for the next full fiscal year.  Any alternatives, including hiring more supplemental employees to keep them under the 1,000-hour limit.  The consequences if the request is not approved.  Other information to support the request. See Appendix A for a sample City Manager Report. Packet Pg 47 6 Supplemental Employee Policy Revised October 2017 Page 5 of 11 BARGAINING UNIT Supplemental staff are not covered by nor represented by any bargaining unit. COMPENSATION Salary All supplemental employees shall be paid in accordance with the Supplemental Employee Salary Ranges. The starting step of pay can be assigned at the discretion of the Department Head. Rationale for placing an employee above Step 1 will be specified on the Personnel Action Form. If an employee is performing two different jobs within the City, they will code their timecard with the appropriate account number for each different job and submit a Personnel Action Form. Overtime Overtime is defined as all hours preauthorized by management and worked by the supplemental employee more than forty (40) hours worked in a work period. All overtime shall be authorized in writing by the department head or designee prior to being worked. Overtime shall be compensated in cash at one and one half (1 1/2) times the employee’s regular rate of pay. Criteria for Step Increase Step increases shall not be automatic or simply a function of time in position. Consideration for a step increase shall be based on both the employee’s satisfactory performance and the accumulation of working 1,040 hours at a current step. 1,040 hours is considered half-time, as a full-time employee works 2,080 hours per year. A discretionary increase will be considered upon completion of 1,040 hours of City employment. Any step increase recommended by the Department Head must be in alignment with the City’s Supplemental Employee Salary Ranges. Increases are not applied retroactively. Increases are not intended to imply long-term continuation of employment, but to recognize performance and address retention of critical skills and certifications to avoid unnecessary turnover costs. Increases larger than one step must be accompanied by appropriate written justification and are allowed one time within a salary range. Salary Range Adjustments Per the City’s Compensation Philosophy, supplemental employee salary ranges will be evaluated periodically for market competitiveness, effectiveness, and compliance with State law. Packet Pg 48 6 Supplemental Employee Policy Revised October 2017 Page 6 of 11 Multiple Classifications For employees working in multiple classifications, the department will need to list out all classifications (including account, department, supervisor, pay rate) on a Personnel Action Form. EVALUATIONS FOR CONTRACT EMPLOYEES Contract employees with a term of more than one year will be evaluated using the guidelines below. The format of evaluations is up to the discretion of the department; they may use the evaluation template or write a memo. Management/Exempt Employees Within two weeks of employment, the supervisor will work with the employee to create their goals. This will provide a framework within which the employee will be evaluated. At the six-month mark an evaluation is recommended, but not required. An annual evaluation will then be required for the duration of their contract, as well as updated goals each year. Non-Exempt Employees Within two weeks of employment, the supervisor will work with the employee to set expectations. This will provide a framework within which the employee will be evaluated. At the six-month mark an evaluation is recommended, but not required. An annual evaluation will then be required for the duration of their contract. EMPLOYMENT OPPORTUNITY PROGRAM Supplemental employees who meet the minimum qualifications are eligible to compete for open positions as part of the Employment Opportunities Program (EOP). The Program is designed to give current employees a window of opportunity to apply for and possibly transfer or promote into another classification when there is a vacancy prior to the start of an outside recruitment. TERMINATION Per the Personnel Rules and Regulations (2.36.190 D 3) a supplemental employee may be removed at any time without the right of appeal or hearing. Packet Pg 49 6 Supplemental Employee Policy Revised October 2017 Page 7 of 11 Exhibit A Type Duration Mandatory Benefits Health Cont. PERS Seasonal FT <6 M No Contract Must offer upon hire if the employee will be working 30 hours on average over a four-month period. Must offer if the employee works 30 hours on average over a four-month period. Must enroll upon hire if they are expected to exceed the 1,000-hour limit within a fiscal year. Must enroll if the employee exceeds the 1,000-hour limit within a fiscal year. PT <6 M No Contract No enrollment required. No enrollment required. Occasional FT <6 M No Contract Must offer upon hire if the employee will be working 30 hours on average over a four-month period. Must offer if the employee works 30 hours on average over a four-month period. Must enroll upon hire if they are expected to exceed the 1,000-hour limit within a fiscal year. Must enroll if the employee exceeds the 1,000-hour limit within a fiscal year. >6 M Contract Must offer upon hire. Must enroll upon hire. PT <6 M No Contract No enrollment required. No enrollment required. >6 M Contract Must offer upon hire if the employee will be working 30 hours on average over a four-month period. Must offer if the employee works 30 hours on average over a four-month period. Must enroll upon hire if they are expected to exceed the 1,000-hour limit within a fiscal year. Must enroll if the employee exceeds the 1,000-hour limit within a fiscal year. Ongoing FT >6 M Contract Must offer upon hire. Must enroll upon hire. PT >6 M No Contract Must offer upon hire if the employee will be working 30 hours on average over a four-month period. Must offer if the employee works 30 hours on average over a four-month period. Must enroll upon hire if they are expected to exceed the 1,000-hour limit within a fiscal year. Must enroll if the employee exceeds the 1,000-hour limit within a fiscal year. Packet Pg 50 6 Supplemental Employee Policy Revised October 2017 Page 8 of 11 Appendix A – Sample City Manager Report Final City Manager Approval Approver Name Date Approved City Administration Approver’s Initials Month/Day Reviewer Routing List Reviewer Name Date Reviewed Finance & Information Technology Reviewer Initials Month/Day Human Resources Reviewer Initials Month/Day DATE FROM: Department Head, Department Signature PREPARED BY: Name, Position Title SUBJECT: PERS Enrollment 1000 hours - Williamson RECOMMENDATION Authorize Part Time/Temporary Lifeguard Lindsey Williamson’s enrollment in the PERS system effective May 25, 2017. In this section you explain what you are asking for. DISCUSSION Background Information Lindsey Williamson was hired on July 3, 2015 and presently works two different jobs for the City: Lifeguard/City Worker 3 and Swim Instructor/ City Worker 4. On May 25, 2017 Lindsey will exceed the 1,000 hour mark limitation on part time temporary employees and therefore must be enrolled in PERS as of that date. To minimize ongoing costs she could be terminated and another temporary employee hired that would not be in PERS. This is where you include background information such as hire date, an overview of the situation, or any other important information to understanding the situation. Below, you outline specifics of why this occurrence happened / is happening, what needs to be done, and alternatives to your recommendation. Packet Pg 51 6 Supplemental Employee Policy Revised October 2017 Page 9 of 11 Significant staff transitions in Aquatics and Facilities in 2017 and Lindsey stepped up Recruitment for Aquatics staff is an on-going struggle due in part to the number of weekly shifts needing to be filled and the now recovered economy. In addition, the majority of staff are college students whose work availability is dependent on their class schedules; therefore they require a work schedule that must change from quarter to quarter to “fit” their academic schedule. Lindsey is a trained, available employee who has filled the gaps with scheduling for the past year. In Aquatics, due to the low numbers of employees and slow recruitment, Lindsey was asked to fill in for additional shifts as a swim instructor for swim lessons, lifeguards, and assist incoming staff shadow shifts in May. Why Will Staff Allow Lindsey Williamson to Exceed 1,000 hours in a Fiscal Year? Because she is a great employee, and because May and June are the busiest months of the year for Parks and Recreation, Lindsey has covered and will cover several extra shifts at the pool and facilities. She was covering for sick staff in May (the stomach flu made the rounds) and one of the only employees able to work these shifts. With the slow recruitment process, student scheduling issues, and illnesses, the options are either to allow Lindsey to work the extra hours, have regular staff work these shifts (taking away from their priorities and costing over twice as much per hour), be understaffed which would result in a safety issue, or close the pool altogether. Why is it critical to authorize this employee to be enrolled in PERS? 1. We are legally required to enroll Lindsey in PERS because she will exceed 1,000 hours in a fiscal year. Not enrolling her in PERS could subject the City to penalties that could far exceed the additional cost of PERS. In her Assigned Division continuity of staff and relationships is highly valued. Lindsey has shown a passion for the Parks and Recreation Department. Her job duties include: patron safety, recognizing and responding to emergencies, enforcing rules and regulations of the facility, head lifeguard duties, swim lesson instruction, maintaining effective working relationships with staff and the public, and assisting in lifeguard training. Lindsey is a “natural” leader and brings a positive attitude to the programs. She is an excellent communicator and the positive relationship she has cultivated with the children in her lessons and families is invaluable and irreplaceable. Lindsey’s passion and devotion to quality programming and enriching opportunities is evident in all she does. She is well liked by patrons of the pool, students she has taught, and regular users of our facilities. Significant training has been provided to this employee. Along with being trained in general City policies and procedures, Lindsey has been trained in over 80 hours of intensive and general training pertaining to Aquatics, including: First Aid and CPR, Mandated Child Abuse Reporting procedures, emergency action plans, water rescue skills, facility policies and procedures, facility safety checks, Active registration system. Packet Pg 52 6 Supplemental Employee Policy Revised October 2017 Page 10 of 11 Longer term Lindsey would be a natural fit as a LBT. Lindsey began working for the Parks and Recreation Department as a Lifeguard in Aquatics. Once she met the requirements for the lifeguarding role, she was immediately assigned higher designations and given more responsibility based on her exemplary work performance. Currently, she is a head lifeguard who is being trained for upcoming department specialist positions. Lindsey is dependable, committed, a self-starter and has exceeded all expectations. Due to all of this Lindsey would be a natural fit for a future LBT (PERS budgeted) vacancy. If the past is a guide, Parks and Rec experiences an average of one LBT vacancy a year (if not more) due to promotions and other transitions. This succession planning effort allows for program Supervisors to retain quality employees and provide programmatic consistency while reducing recruitment and training costs. If this were to occur, future PERS costs for Lindsey would be folded into her salary as PERS costs are included in the costs of limited benefit temporary employees. Consequently, if the request is not approved, Lindsey would have to be terminated resulting in the loss of consistent, hard-working, and quality employee. There would be significant training costs associated with adding another staff member of Lindsey’s caliber. What alternatives are there, including hiring more temp employees in order to keep them under the 1000-hour limit? 1. Increase tracking of all multiple division staff. Work with staff, in addition to Supervisors, to better understand the limitations present by keeping employees under the 1000 hours threshold by scheduling fewer hours for the employee per division. Doing bi-monthly Intellitime checks and balances once an employee is at or near 750 hours as related to internal staff hour tracking. 2. Lower the Department Policy Restrictions on Hours Worked. Lower the stop work threshold to 820 hours. 3. Hiring More Staff. Hiring more temporary employees for the aquatics program. This is not desired as summer is the high season while the hours are cut dramatically in the off season. It takes about a month from the time the position is opened to the employee’s start date, so if we started recruiting now it would be a position that would last for about six weeks. This position would have to undergo rigorous training to comply with safety standards and would not be worth the cost of the recruitment process for the short time they are employed. CONCURRENCES The Human Resources Director concurs with the recommendations of this report. Packet Pg 53 6 Supplemental Employee Policy Revised October 2017 Page 11 of 11 FISCAL IMPACT Assuming this employee remains an active part time employee in 2016-17 and in the current position, and roughly the same number of hours the added annual cost would be approximately $3,030. The projected increased cost of the proposed change for this employee can be accommodated within the existing budget for temporary salaries for Parks and Recreation. This is where you explain the direct fiscal impact of your recommendation, if there is any. Packet Pg 54 6 R ______ RESOLUTION NO. (2017 Series) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, ESTABLISHING AND ADOPTING A SUPPLEMENTAL EMPLOYEE SALARY SCHEDULE AND SUPERSEDING PREVIOUS RESOLUTIONS IN CONFLICT WHEREAS, the City of San Luis Obispo have remained committed to providing high quality service to the community and recognize the City’s commitment to fiscal responsibility; and WHEREAS, the City understands a qualified supplemental work force is instrumental to its ability to provide consistent high-quality services and programs to the community; and WHEREAS, the California Fair Wages Act of 2016 requires periodic adjustments in the state minimum wage; and WHEREAS, the City Council has the exclusive authority to fix the salaries and compensation of local officials and employees pursuant San Luis Obispo Charter Section 711. NOW, THEREFORE, BE IT RESOLVED, that the Council of the City of San Luis Obispo hereby adopts the Supplemental Employee Salary Schedule as set forth in Attachment A, effective December 28, 2017. The Director of Finance shall adjust the appropriate accounts to reflect the compensation changes effective December 28, 2017. Upon motion of _______________________, seconded by ___________________, and on the following vote: AYES: NOES: ABSENT: The foregoing resolution was adopted this 21st day of November, 2017. ___________________________________ Mayor Heidi Harmon ATTEST: __________________________________ Carrie Gallagher City Clerk Packet Pg 55 6 Resolution No. _____ (2017 Series) Page 2 R ______ APPROVED AS TO FORM: __________________________________ J. Christine Dietrick City Attorney IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, this ______ day of ______________, 2017. ____________________________________ Carrie Gallagher City Clerk Packet Pg 56 6 Supplemental Employee Salary Schedule CLASSIFICATION WC CLASS SCHEDULE STEPS IN RANGE 1 2 3 4 511.00$ 11.00$ 11.00$ 11.24$ 11.68$ Aquatics Cashier 5 6 8810Aquatics Maintenance Worker 5 6 9410Building & Safety Intern 5 10 8810*Childcare Aide/Camp Counselor 5 6 9410Facility Host 5 6 9410*Jr. Giants Coach 5 6 9410*Pro-shop Staff 5 6 8810*Seasonal Maintenance Worker Golf 8 6 9410*Skate Park Attendant 5 6 9410Student Intern 5 1 8810*Teen Leader 5 6 9410*Youth/Adult Sports Official 5 6 9410 1 2 3 4 511.00$ 11.24$ 11.78$ 12.37$ 12.85$ *Childcare Teacher/Lead Camp Counselor 5 6 9410CIP Engineering Assistant/Intern 3 2 8810Event Planner 5 6 9410Facility Lead 5 6 9410Fire Intern 3 5 9410Garden Assistant 5 6 9410Hydrant Maintenance Worker 3 5 9410*Jr. Giants Coordinator 5 6 9410*Lifeguard 5 6 9410Parking Booth Attendant 8 2 9410*Pro-shop Lead 6 6 8810Recreation Support Staff 5 6 9410*Skate Park Ambassador 5 6 9410*Skate Park Lead 5 6 9410*Special Needs Support Staff 5 6 9410Student Intern 6 1 8810Transportation Eng. Intern 3 2 8810Triathlon Lead 5 6 9410 1 2 3 4 511.78$ 12.37$ 12.96$ 13.61$ 14.14$ Administrative Assistant (Golf)6 6 8810Attorney Intern 5 1 8810*Childcare Head Teacher 5 6 9410Computer Training Instructor 6 6 8810Contract Classes Coordinator 5 6 8810Database Intern 3 1 8810Engineering Assistant 3 2 8810*Head Lifeguard 5 6 9410Human Resources Intern 5 1 8810IT Intern 3 1 8810*Park Ranger 1 8 6 9420*Pro-Shop Assistant 6 6 8810Pub Ed Coordinator (FD) 5 5 8810Senior Services Program Asst 5 6 8810*Swim Instructor 5 6 9410*Club STAR Director 5 6 9410 1 2 3 4 512.96$ 13.61$ 14.25$ 14.97$ 15.55$ Facilities Assistant 5 6 9410Lead Parking Attendant 8 2 9410*Park Ranger 2 8 6 9420SNAP 1 3 4 9410 1 2 3 4 514.25$ 14.97$ 15.68$ 16.46$ 17.10$ Admin Asst 6 1 9410*Aquatics Specialist (LBT) 5 6 9410Parks Maintenance Worker 8 2 9420Admin and CommunicaitonsSpecialist (LBT) 5 6 9410Community Services Specialist (LBT) 5 6 9410Facilities Specialist (LBT) 5 6 9410Program Specialist (LBT)5 6 9410*Ranger Service Specialist x2 (LBT) 8 6 9420Recording Secretary 6 10 8810SNAP II 3 4 9410*Sports Specialist (LBT) 5 6 9410Tree Climber Assistance 8 2 9410WRF Lab (20 hr. max weekly) 3 13 9410*Youth Services Specialist x6 (LBT) 5 6 9410 1 2 3 4 515.68$ 16.46$ 17.25$ 18.11$ 18.81$ Accounting Assistant 3 1 8810Adult Sports Official 5 6 9410IT Assistant/Help Desk 3 1 8810Maint Wker - Pool 8 6 9410 KeyBlue = P&R Positions * = Classifications that work with children (AB 218 doesn't apply) EEO FUNCTION & CATEGORY City Worker 2 EEO Category EEO Function 9020 905 City Worker 3 EEO Category EEO Function 9180 909 WC Code WC Code City Worker 4 EEO Category EEO Function 9240 913 City Worker 5 EEO Category EEO Function 9210 917 WC Code WC Code City Worker 6 EEO Category EEO Function 9250 921 City Worker 7 EEO Category EEO Function 9220 925 WC Code WC Code Packet Pg 57 6 Maint Wker - Streets (Farmers Market) 8 2 9410Police Operations Support Specialist 3 4 8810SNAP III 3 4 9410 1 2 3 4 517.25$ 18.11$ 18.97$ 19.92$ 20.70$ Parks Maintenance - Damon Garcia 8 2 9420Legal Assistant 5 1 8810*Special Swim Instructor (swim & classes) 5 6 9410 1 2 3 4 518.97$ 19.92$ 20.87$ 21.91$ 22.76$ Admin Asst 1 6 1 8810GIS Technician 3 1 8810Parking Enforcement Officer 3 2 9410Maintenance Worker - Streets/Asphalt 8 2 9420 1 2 3 4 520.87$ 21.91$ 22.95$ 24.10$ 25.04$ Administrative Hearing Officer 3 2 8810Heavy Equipment Mechanic 7 2 9420Landscape Inspector 3 2 9410Maintenance Worker III 8 2 9420Parking Meter Repair Worker 7 2 9410Permit Technician I 5 10 8810Planning Technician 5 10 8810Signal & Strlight Tech 7 2 9410WasteWater Collection Temp 7 13 9420 1 2 3 4 522.95$ 24.10$ 25.25$ 26.51$ 27.55$ Bicycle Programs Assistant 5 2 8810Engineering Technician 3 2 8810Paralegal51 8810Planning Technician - Senior 5 10 8810Utilities Services Tech (Entry Level)3 13 9420WRRF Operator Temp 7 13 9420Water Treatment Plant Trainee 7 13 9420 1 2 3 4 525.25$ 26.51$ 27.78$ 29.16$ 30.30$ Assistant Planner 5 10 8810Fire Inspector 3 5 9410Urban Forest Inspector 3 2 9410Utilities Services Tech (Senior)3 13 9420 1 2 3 4 527.78$ 29.16$ 30.55$ 32.08$ 33.33$ Building Inspector 3 10 9410 1 2 3 4 530.55$ 32.08$ 33.61$ 35.29$ 36.66$ Accountant 2 1 8810Associate Planner 3 10 8810Crime Analyst 2 4 8810Database Administrator 3 1 8810Plans Examiner 3 10 8810Transportation Planner-Enginner I 2 2 9410 1 2 3 4 533.61$ 35.29$ 36.97$ 38.82$ 40.33$ Engineer II 2 4 9410Senior Accountant 2 1 8810Senior Admin Analyst (PERS Retiree) 2 1 8810Transit Manager 2 12 9410 1 2 3 4 536.97$ 38.82$ 40.67$ 42.70$ 44.36$ City Clerk Project Consultant 2 1 8810 1 2 3 4 544.91$ 46.06$ Finance Consultant 2 1 8810 1 2 3 4 574.30$ Parking Budget Specialist 2 1 8810 1 2 3 4 513.04$ 14.20$ 16.00$ 17.98$ 20.10$ Mutual Aid (GS 1-5) 2 5 9420 1 2 3 4 522.40$ 24.90$ 27.57$ 30.45$ 33.54$ Mutual Aid (GS 6-10) 2 5 9420 1 2 3 4 536.84$ 44.16$ 52.51$ 62.05$ 72.99$ Mutual Aid (GS 11-15) 2 5 9420Commissioner610 8810 9900 990 60.00$ Hazard Mat. Team Business Mgr 3 5 8810 9260 940 28.00$ 29.00$ 30.00$ Engineering Consultant 3 2 8810 9451 950 48.99$ 51.56$ 55.00$ 65.00$ 75.00$ Interim Assistant City Attorney 2 1 8810 9453 953 100.00$ PERS RETIRED ANNUITANTS 1 2 3 4 5 Pkg Enforce. Officer (PERS Retiree) 3 2 9410 21.91$ 22.95$ 24.10$ 25.04$ 1 2 3 4 526.51$ 27.55$ IT Assistant (PERS Retiree) 3 1 8810 24.10$ 25.25$ 26.51$ 27.55$ Super. Admin Asst Temp (PERS Retiree)6 1 8810 26.51$ 27.55$ 1 2 3 4 5City Worker 21 EEO Category EEO Function WC Code 9499 995 City Worker 10 EEO Category EEO Function WC Code 9258 937 City Worker 11 EEO Category EEO Function WC Code 9410 941 City Worker 8 *1-2 years experience EEO Category EEO Function 9230 929 City Worker 9 *2 years experience EEO Category EEO Function 9330 933 WC Code WC Code City Worker 10 *2-4 years experience EEO Category EEO Function 9258 937 City Worker 11 EEO Category EEO Function 9410 941 WC Code WC Code City Worker 12 *AA, 5 yrs. exp, certifications EEO Category EEO Function 9460 945 City Worker 13 EEO Category EEO Function 9465 965 WC Code WC Code City Worker 14 EEO Category EEO Function 9470 966 City Worker 15 *4 yr degree , 2 yr exp, certs EEO Category EEO Function 9480 967 WC Code WC Code City Worker 16 EEO Category EEO Function 9490 968 City Worker 17 EEO Category EEO Function 9495 961 WC Code WC Code City Worker 18 EEO Category EEO Function 9496 991 City Worker 19 EEO Category EEO Function 9497 993 WC Code WC Code City Worker 20 EEO Category EEO Function 9498 994 City Worker 21 EEO Category EEO Function 9499 995 WC Code WC Code Packet Pg 58 6 Temp Senior Civil Engineer (PERS Retiree) 2 2 9410 9455 969 44.53$ 46.76$ Effective 12-28-2017 Packet Pg 59 6 Page intentionally left blank. Packet Pg 60 6 Meeting Date: 11/21/2017 FROM: Monica Irons, Director of Human Resources Prepared By: Brittani Roltgen, HR Administrative Assistant SUBJECT: AUTHORIZATION TO RELEASE A REQUEST FOR PROPOSALS FOR APPOINTED OFFICIALS’ EVALUATIONS CONSULTANT SPECIFICATION NO. 91636 RECOMMENDATION Authorize staff to advertise for bids and authorize the City Manager to award the consultant contract to the lowest responsible bid within the contract budget of $17,000. DISCUSSION Background The City Council annually evaluates the job performance of its two appointed officials, the City Manager and the City Attorney. The City uses a consultant to facilitate the process so that each appointed official receives balanced, constructive, and relevant feedback from the Council. The City of San Luis Obispo has utilized consultants from Municipal Resources Group since 2012 with consistent positive feedback from Council on the process. In 2016, Human Resources staff solicited input on other consultants who could provide similar services. Four consultants were identified including Mary Egan with Municipal Resource Group and an informal request for a proposal was sent to them. Given the track record the City has with Mary Egan and Municipal Resources Group and the responsiveness of their proposal, a one-year contract was approved. Since that time, Human Resources staff has considered opportunities to further streamline the process while still providing constructive input to the appointed officials on a regular basis and believe cost savings could be realized by executing a longer-term contract. Requesting proposals for a three-year contract with the opportunity to extend the contract for two years increases efficiency by eliminating the need to repeat the request for proposal process for five years as well as limiting potential cost increases. Historically the City has found efficiencies in having the same consultant facilitate the evaluation and goal setting process over successive years as they become familiar with Council expectations, personalities, projects and priorities, etc. and thus are more efficient in providing feedback. FISCAL IMPACT The Human Resources Administration Contract Services Account has $17,000 set aside for this purpose; however, staff has requested proposals less than that amount due to budget constraints. Therefore, there is no negative fiscal impact and an expected savings. Packet Pg 61 7 ALTERNATIVES Do not authorize the request for proposals and direct the Human Resources Department to informally solicit bids for a one-year contract. This alternative is not recommended because of the limited proposals the Human Resources Department has received in previous years when informally soliciting bids for this service. Attachments: a - Request for Proposals Appointed Officials' Evaluation Packet Pg 62 7 Notice Requesting Proposals for APPOINTED OFFICIALS EVALUATIONS The City of San Luis Obispo is requesting sealed proposals for an Appointed Officials Evaluation Consultant pursuant to Specification No. 91636. All firms interested in receiving further correspondence regarding this Request for Proposals (RFP) will be required to complete a free registration using BidSync (https://www.bidsync.com/bidsync-app- web/vendor/register/Login.xhtml). All proposals must be submitted on BidSync by 3 P.M., December 5, 2017. Proposals will be opened publicly on December 5th, 2017 at 3:15 p.m. in the City Hall Council Hearing Room, 990 Palm Street, San Luis Obispo, CA 93401. Proposals received after said time will not be considered. To guard against premature opening, each proposal shall be submitted to the Department of Finance in a sealed envelope plainly marked with the proposal title, specification number, proposer name, and time and date of the proposal opening. Proposals shall be submitted using the forms provided in the specification package. Specification packages and additional information may be obtained at the City’s BidSync website at www.BidSync.com. Please contact Purchasing Analyst Kristin Eriksson at keriksso@slocity.org with any questions. Packet Pg 63 7 1 Specification No. 91636 TABLE OF CONTENTS A. Description of Work 2 B. General Terms and Conditions 3 Proposal Requirements Contract Award and Execution Contract Performance C. Special Terms and Conditions 8 Contract Term Estimated Quantities Proposal Content Proposal Evaluation and Selection Proposal Review and Award Schedule Unrestrictive Brand Names Start and Completion of Work Accuracy of Specifications D. Agreement 13 E. Insurance Requirements 15 F. Proposal Submittal Forms 17 Proposal Submittal Summary References Packet Pg 64 7 2 Section A1 DESCRIPTION OF WORK The City is requesting proposals for a consultant to annually facilitate the evaluation and goal setting of the City’s appointed officials (City Manager and City Attorney), in compliance with the City’s Appointed Officials Evaluation Guidelines (see Section A2). Key elements that should be included in the proposal are: 1.Description of experience facilitating multi-rater evaluation, goal setting, or similar processes involving a public sector council, board, or commission. 2.Description of experience using electronic survey or input tools to make input submittal as simple as possible. 3.Description of experience taking input from multiple perspectives and facilitating common constructive feedback in a meaningful, cohesive, and actionable manner. 4.Description of experience preparing written performance evaluations and goals. 5.Description of ability to act as compensation negotiator on behalf of appointed officials. Data and analysis prepared by City staff in HR. 6.Description of ability to quickly develop rapport with Council and appointed officials, gather input by telephone, survey, and in-person and gain consensus from all five council members regarding the most critical feedback areas and performance goals. 7.Description of ability to finalize performance evaluation documents for both the City Manager and Appointed Official by working with the Mayor and HR staff. 8.Proposers must confirm that they are able to initiate the annual process in December and complete no later than May of the following year. 9.The selected consultant must be willing to partner with HR staff to reduce costs. Packet Pg 65 7 G:\Performance Management\Appointed officials\2013\AOEvaluation_ProcessGuide_RevDec2011.docx Human Resources Department City of San Luis Obispo 990 Palm Street San Luis Obispo, CA 93401 Phone 805.781.7250 • Fax 805.542.9867 Appointed Officials Evaluation Process Section A2 APPOINTED OFFICIALS' EVALUATIONS GUIDELINES Packet Pg 66 7 Table of Contents Introduction 1 The Process 2 Suggested Timeline 4 Packet Pg 67 7 G:\Performance Management\Appointed officials\2013\AOEvaluation_ProcessGuide_RevDec2011.docx 1 Introduction Our facilitated process ensures that the appointed official receives balanced, constructive, and relevant feedback from the City Council. he City Council annually evaluates the job performance of its two appointed officials, the City Manager and the City Attorney. Evaluating appointed officials is a vital role for the elected officials. In August 1989, the Council began using a facilitated process that results in a summary performance evaluation document for each appointed official. The document provides the appointed officials with written feedback that is balanced, constructive, and relevant to their positions. This process has been extremely well-received by both the Council and their appointees as the consultant discerns common themes from five potentially diverse perspectives. Over the years, the process has been reviewed and refined and is presented in the following pages. The key to the success of this approach is the willingness of those involved to communicate honestly and candidly, as well as the belief that accurate performance feedback to the City’s top managers is critical to effective management. T Packet Pg 68 7 G:\Performance Management\Appointed officials\2013\AOEvaluation_ProcessGuide_RevDec2011.docx 2 The Process I. The Human Resources Director distributes a City Manager and a City Attorney Evaluation form to each department head and the Assistant City Attorney. They also receive a Council Feedback form that provides feedback to each council member and Council as a body. Department Heads have approximately two weeks to complete the forms and forward them electronically to the consultant who summarizes the feedback, and mails confidential copies to Council Members’ homes. It is optional for department heads to identify themselves on the form. Each appointed official will also complete an evaluation form for his/her peer appointed official as well as a council feedback form and return them to the consultant. ll. Each appointed official submits the following additional materials to the consultant: • A brief summary of accomplishments in the last year and progress on future development goals identified by Council in the prior year’s evaluation document. • Proposed goals and objectives for the upcoming 12 months. lll. Council Members receive a packet of information from the consultant mailed to their home address. The packet includes: 1) Individual feedback for that Council member. 2) Feedback on the Council as a body. 3) Feedback from Department Heads on City Manager. 4) Feedback from Department Heads on City Attorney. 5) City Manager and City Attorney self-evaluation materials. 5) Blank City Manager and City Attorney performance evaluation forms for Council member to complete.  Packet Pg 69 7 G:\Performance Management\Appointed officials\2013\AOEvaluation_ProcessGuide_RevDec2011.docx 3 IV. The Consultant contacts each Council Member individually to discuss evaluation comments and obtain clarity on ratings. After speaking with all five Council Members, the consultant develops a summary document that incorporates a composite of the individual Council comments and identifies areas of disparity. The consultant then meets with the entire City Council in a properly noticed Closed Session to review the summary document and refine it as the Council reaches consensus. V. The consultant mails a copy of the finalized summary document to the Council Members at their individual home addresses with extra copies to the Mayor who distributes them to the appointed officials. The appointed officials review the summary document for future discussion with the Council. Vl. The City Council meets in Closed Session with each appointed official individually to review the evaluation. Immediately prior to the closed session evaluation interview, the consultant reviews the management compensation program and annual pay for performance guidelines with the Council. The Council will be prepared to discuss proposed compensation adjustments with the appointees following the performance evaluation interview in accordance with the City’s pay for performance management compensation program. Vll. Immediately following the compensation Closed Session, the Mayor notifies the Human Resources Director of the performance ratings and resulting compensation adjustments and forwards a copy of the summary document for inclusion in the appointed officials’ personnel files. The Human Resources Director prepares an Agenda Report to adjust each appointed official’s compensation. VIII. The Human Resources Director reviews the process annually with all participants and modifies the process as necessary and agreed. Packet Pg 70 7 G:\Performance Management\Appointed officials\2013\AOEvaluation_ProcessGuide_RevDec2011.docx 4 Suggested Timeline Week One Distribute Department Head Input questionnaires. Week Four Department Heads return completed questionnaires to the consultant via email. Week Five Appointed officials submit their documentation to the Consultant Week Six Council Members receive packet from consultant and complete their individual evaluations of the appointed officials Week Eight Council meets with the consultant individually via telephone and the consultant develops the summary document. The consultant distributes the final copy of the summary document to the Council. Week Ten The Council meets in Closed Session with the Consultant to discuss compensation parameters. Week Eleven The Council meets with the appointed officials in Closed Session to review final performance. Week Twelve The Council reports the compensation decisions in open session. Packet Pg 71 7 3 Section B GENERAL TERMS AND CONDITIONS PROPOSAL REQUIREMENTS 1. Requirement to Meet All Provisions. Each individual or firm submitting a proposal (proposer) shall meet all of the terms, and conditions of the Invitation for Bids (IFB) or Request for Proposals (RFP) specifications package. By virtue of its proposal submittal, the proposer acknowledges agreement with and acceptance of all provisions of the IFB/RFP specifications. 2. Proposal Submittal. Each proposal must be submitted on the form(s) provided in the specifications and accompanied by any other required submittals or supplemental materials. Proposal documents shall be enclosed in an envelope that shall be sealed and addressed to the Department of Finance, City of San Luis Obispo, 990 Palm Street, San Luis Obispo, CA, 93401. In order to guard against premature opening, the proposal should be clearly labeled with the proposal title, specification number, name of proposer, and date and time of proposal opening. No FAX submittals will be accepted. 3. Insurance Certificate. Each proposal must include a certificate of insurance showing: a. The insurance carrier and its A.M. Best rating. b. Scope of coverage and limits. c. Deductibles and self-insured retention. The purpose of this submittal is to generally assess the adequacy of the proposer’s insurance coverage during proposal evaluation; as discussed under paragraph 12 below, endorsements are not required until contract award. The City’s insurance requirements are detailed in Section E. 4. Proposal Quotes and Unit Price Extension. The extension of unit prices for the quantities indicated and the lump sum prices quoted by the proposer must be entered in figures in the spaces provided on the Proposal Submittal Form(s). Any lump sum bid shall be stated in figures. The Proposal Submittal Form(s) must be totally completed. If the unit price and the total amount stated by any proposer for any item are not in agreement, the unit price alone will be considered as representing the proposer’s intention and the proposal total will be corrected to conform to the specified unit price. 5. Proposal Withdrawal and Opening. A proposer may withdraw its proposal, without prejudice prior to the time specified for the proposal opening, by submitting a written request to the Director of Finance for its withdrawal, in which event the proposal will be returned to the proposer unopened. No proposal received after the time specified or at any place other than that stated in the “Notice Inviting Bids/Requesting Proposals” will be considered. All proposals will be opened and declared publicly. Proposers or their representatives are invited to be present at the opening of the proposals. 6. Submittal of One Proposal Only. No individual or business entity of any kind shall be allowed to make or file, or to be interested in more than one proposal, except an alternative proposal when specifically requested; however, an individual or business entity that has submitted a sub- proposal to a proposer submitting a proposal, or who has quoted prices on materials to such proposer, is not thereby disqualified from submitting a sub-proposal or from quoting prices to other proposers submitting proposals. Packet Pg 72 7 4 7. Cooperative Purchasing. During the term of the contract, the successful proposer will extend all terms and conditions to any other local governmental agencies upon their request. These agencies will issue their own purchase orders, will directly receive goods or services at their place of business, and will be directly billed by the successful proposer. 8. Communications. All timely requests for information submitted in writing will receive a written response from the City. Telephone communications with City staff are not encouraged, but will be permitted. However, any such oral communication shall not be binding on the City. CONTRACT AWARD AND EXECUTION 9. Proposal Retention and Award. The City reserves the right to retain all proposals for a period of 60 days for examination and comparison. The City also reserves the right to waive non - substantial irregularities in any proposal, to reject any or all proposals, to reject or delete one part of a proposal and accept the other, except to the extent that proposals are qualified by specific limitations. See the “special terms and conditions” in Section C of these specifications for proposal evaluation and contract award criteria. 10. Competency and Responsibility of Proposer. The City reserves full discretion to determine the competence and responsibility, professionally and/or financially, of proposers. Proposers will provide, in a timely manner, all information that the City deems necessary to make such a decision. 11. Contract Requirement. The proposer to whom award is made (Contractor) shall execute a written contract with the City within ten (10) calendar days after notice of the award has been sent by mail to it at the address given in its proposal. The contract shall be made in the form adopted by the City and incorporated in these specifications. 12. Insurance Requirements. The Contractor shall provide proof of insurance in the form, coverages and amounts specified in Section E of these specifications within 10 (ten) calendar days after notice of contract award as a precondition to contract execution. 13. Business License & Tax. The Contractor must have a valid City of San Luis Obispo business license & tax certificate before execution of the contract. Additional information regarding the City’s business tax program may be obtained by calling (805) 781-7134. CONTRACT PERFORMANCE 14. Ability to Perform. The Contractor warrants that it possesses, or has arranged through subcontracts, all capital and other equipment, labor, materials, and licenses necessary to carry out and complete the work hereunder in compliance with any and all federal, state, county, city, and special district laws, ordinances, and regulations. 15. Laws to be Observed. The Contractor shall keep itself fully informed of and shall observe and comply with all applicable state and federal laws and county and City of San Luis Obispo ordinances, regulations and adopted codes during its performance of the work. 16. Payment of Taxes. The contract prices shall include full compensation for all taxes that the Contractor is required to pay. Packet Pg 73 7 5 17. Permits and Licenses. The Contractor shall procure all permits and licenses, pay all charges and fees, and give all notices necessary. 18. Safety Provisions. The Contractor shall conform to the rules and regulations pertaining to safety established by OSHA and the California Division of Industrial Safety. 19. Public and Employee Safety. Whenever the Contractor’s operations create a condition hazardous to the public or City employees, it shall, at its expense and without cost to the City, furnish, erect and maintain such fences, temporary railings, barricades, lights, signs and other devices and take such other protective measures as are necessary to prevent accidents or damage or injury to the public and employees. 20. Preservation of City Property. The Contractor shall provide and install suitable safeguards, approved by the City, to protect City property from injury or damage. If City property is injured or damaged resulting from the Contractor’s operations, it shall be replaced or restored at the Contractor’s expense. The facilities shall be replaced or restored to a condition as good as when the Contractor began work. 21. Immigration Act of 1986. The Contractor warrants on behalf of itself and all subcontractors engaged for the performance of this work that only persons authorized to work in the United State pursuant to the Immigration Reform and Control Act of 1986 and other applicable laws shall be employed in the performance of the work hereunder. 22. Contractor Non-Discrimination. In the performance of this work, the Contractor agrees that it will not engage in, nor permit such subcontractors as it may employ, to engage in discrimination in employment of persons because of age, race, color, sex, national origin or ancestry, sexual orientation, or religion of such persons. 23. Work Delays. Should the Contractor be obstructed or delayed in the work required to be done hereunder by changes in the work or by any default, act, or omission of the City, or by strikes, fire, earthquake, or any other Act of God, or by the inability to obtain materials, equipment, or labor due to federal government restrictions arising out of defense or war programs, then the time of completion may, at the City’s sole option, be extended for such periods as may be agreed upon by the City and the Contractor. In the event that there is insufficient time to grant such extensions prior to the completion date of the contract, the City may, at the time of acceptance of the work, waive liquidated damages that may have accrued for failure to complete on time, due to any of the above, after hearing evidence as to the reasons for such delay, and making a finding as to the causes of same. 24. Payment Terms. The City’s payment terms are 30 days from the receipt of an original invoice and acceptance by the City of the materials, supplies, equipment, or services provided by the Contractor (Net 30). 25. Inspection. The Contractor shall furnish City with every reasonable opportunity for City to ascertain that the services of the Contractor are being performed in accordance with the requirements and intentions of this contract. All work done and all materials furnished, if any, shall be subject to the City’s inspection and approval. The inspection of such work shall not relieve Contractor of any of its obligations to fulfill its contract requirements. Packet Pg 74 7 6 26. Audit. The City shall have the option of inspecting and/or auditing all records and other written materials used by Contractor in preparing its invoices to City as a condition precedent to any payment to Contractor. 27. Interests of Contractor. The Contractor covenants that it presently has no interest, and shall not acquire any interest—direct, indirect or otherwise—that would conflict in any manner or degree with the performance of the work hereunder. The Contractor further covenants that, in the performance of this work, no subcontractor or person having such an interest shall be employed. The Contractor certifies that no one who has or will have any financial interest in performing this work is an officer or employee of the City. It is hereby expressly agreed that, in the performance of the work hereunder, the Contractor shall at all times be deemed an independent contractor and not an agent or employee of the City. 28. Hold Harmless and Indemnification. Contractor agrees to defend, indemnify, protect and hold the City and its agents, officers and employees harmless from and against any and all claims asserted or liability established for damages or injuries to any person or property, including injury to Contractor's employees, agents or officers which arise from or are connected with or are caused or claimed to be caused by the acts or omissions of Contractor, and its agents, officers or employees, in the performance of all obligations under this Agreement, and all expenses of investigating and defending against same; provided, however, that Contractor's duty to indemnify and hold harmless shall not include any claims or liability arising from the established sole negligence or willful misconduct of the City, its agents, officers or employees. 29. Contract Assignment. The Contractor shall not assign, transfer, convey or otherwise dispose of the contract, or its right, title or interest, or its power to execute such a contract to any individual or business entity of any kind without the previous written consent of the City. 30. Termination for Convenience. The City may terminate all or part of this Agreement for any or no reason at any time by giving 30 days written notice to Contractor. Should the City terminate this Agreement for convenience, the City shall be liable as follows: (a) for standard or off -the- shelf products, a reasonable restocking charge not to exceed ten (10) percent of the total purchase price; (b) for custom products, the less of a reasonable price for the raw materials, components work in progress and any finished units on hand or the price per unit reflected on this Agreement. For termination of any services pursuant to this Agreement, the City’s liability will be the lesser of a reasonable price for the services rendered prior to termination, or the price for the services reflected on this Agreement. Upon termination notice from the City, Contractor must, unless otherwise directed, cease work and follow the City’s directions as to work in progress and finished goods. 31. Termination for Cause. If, during the term of the contract, the City determines that the Contractor is not faithfully abiding by any term or condition contained herein, the City may notify the Contractor in writing of such defect or failure to perform. This notice must give the Contractor a 10 (ten) calendar day notice of time thereafter in which to perform said work or cure the deficiency. If the Contractor has not performed the work or cured the deficiency within the ten days specified in the notice, such shall constitute a breach of the contract and the City may terminate the contract immediately by written notice to the Contractor to said effect. Thereafter, neither party shall have any further duties, obligations, responsibilities, or rights under the contract except, however, any and all obligations of the Contractor’s surety shall remain in full force and effect, and shall not be extinguished, reduced, or in any manner waived by the terminations thereof. Packet Pg 75 7 7 In said event, the Contractor shall be entitled to the reasonable value of its services performed from the beginning date in which the breach occurs up to the day it received the City’s Notice of Termination, minus any offset from such payment representing the City’s damages from such breach. “Reasonable value” includes fees or charges for goods or services as of the last milestone or task satisfactorily delivered or completed by the Contractor as may be set forth in the Agreement payment schedule; compensation for any other work, services or goods performed or provided by the Contractor shall be based solely on the City’s assessment of the value of the work-in-progress in completing the overall workscope. The City reserves the right to delay any such payment until completion or confirmed abandonment of the project, as may be determined in the City’s sole discretion, so as to permit a full and complete accounting of costs. In no event, however, shall the Contractor be entitled to receive in excess of the compensation quoted in its proposal. Packet Pg 76 7 8 Section C SPECIAL TERMS AND CONDITIONS 1. Contract Award. Subject to the reservations set forth in Paragraph 9 of Section B (General Terms and Conditions) of these specifications, the contract will be awarded to the lowest responsible, responsive proposer. 3. Labor Actions. In the event that the successful proposer is experiencing a labor action at the time of contract award (or if its suppliers or subcontractors are experiencing such a labor action), the City reserves the right to declare said proposer is no longer the lowest responsible, responsive proposer and to accept the next acceptable low proposal from a proposer that is not experiencing a labor action, and to declare it to be the lowest responsible, responsive proposer. 4. Failure to Accept Contract. The following will occur if the proposer to whom the award is made (Contractor) fails to enter into the contract: the award will be annulled; any bid security will be forfeited in accordance with the special terms and conditions if a proposer’s bond or security is required; and an award may be made to the next lowest responsible, responsive proposer who shall fulfill every stipulation as if it were the party to whom the first award was made. 5. Contract Term. The supplies or services identified in these specifications will be used annually by the City between December and May of each year beginning January 2018 through May 2020. The prices quoted for these items must be valid for the entire period indicated above unless otherwise conditioned by the proposer in its proposal. 6. Contract Extension. The term of the contract may be extended by mutual written consent for an additional two years. 7. Estimated Quantities. The quantities indicated in the Detail Proposal Submittal Form are estimates based on past purchasing experience, and will be used to determine the lowest overall proposal. Actual quantities purchased during the period of this contract may vary from these estimated amounts as required by the City. 8. Supplemental Purchases. Supplemental purchases may be made from the successful bidder during the contract term in addition to the items listed in the Detail Proposal Submittal Form. For these supplemental purchases, the bidder shall not offer prices to the City in excess of the amounts offered to other similar customers for the same item. If the bidder is willing to offer the City a standard discount on all supplemental purchases from its generally prevailing or published price structure during the contract term, this offer and the amount of discount on a percentage basis should be provided with the proposal submittal. 9. Contractor Invoices. The Contractor shall deliver a monthly invoice to the City, itemized by up to 20 cost centers, with attached copies of work order forms or detail invoices (standard color or copy to be agreed upon) as supporting detail. 10. Non-Exclusive Contract. The City reserves the right to purchase the items listed in the Detail Proposal Submittal Form, as well as any supplemental items, from other vendors during the contract term. Packet Pg 77 7 9 11. Unrestrictive Brand Names. Any manufacturer’s names, trade names, brand names or catalog numbers used in the specifications are for the purpose of describing and establishing general quality levels. Such references are not intended to be restrictive. Proposals will be considered for any brand that meets or exceeds the quality of the specifications given for any item. In the event an alternate brand name is proposed, supplemental documentation shall be provided demonstrating that the alternate brand name meets or exceeds the requirements specified herein. The burden of proof as to the suitability of any proposed alternatives is upon the bidder, and the City shall be the sole judge in making this determination. 12. Delivery. Prices quoted for all supplies or equipment to be provided under the terms and conditions of this IFB or RFP package shall include delivery charges, to be delivered F.O.B. San Luis Obispo by the successful proposer and received by the City within 10 days after authorization to proceed by the City. 13. Liquidated Damages. In the event that the bidder does not meet the work completion date specified in its proposal, the award amount shall be reduced in the amount of one hundred dollars $100.00 per calendar day for each day that exceeds the completion date specified in the bidder’s proposal. As the delay in the completion of work could seriously affect the public and the efficient operation of the City to an extent incapable of precise calculation, said reduction is established as the nearest measure of damages for such delay that can be fixed at this time, and is not established as a penalty or forfeiture for the breach of agreement to complete the work. Said reductions may be invoked if completion of work exceeds the specified time for any reason. 14. Submittal of References. Each proposer shall submit a statement of qualifications and references on the form provided in the RFP package. 15. Statement of Contract Disqualifications. Each proposer shall submit a statement regarding any past governmental agency bidding or contract disqualifications on the form provided in the IFB/RFP package. 16. State Cooperative Purchasing Program. The City of San Luis Obispo participates in the State Cooperative Purchasing Program. As such, the City can purchase the items described in Section A through this program. Accordingly, the City will purchase from the State or the lowest responsible, responsive bidder, after allowing adjustments for the cost of pickup and/or delivery from the State, adjustments for after-market modifications, and adjustments for sales tax from local dealers, as it determines to be in its best interest. Packet Pg 78 7 10 17. Proposal Content. Your proposal must include the following information: Submittal Forms a. Proposal submittal summary. b. Certificate of insurance. c. References from at least three firms for whom you have provided similar services. Qualifications e. Experience of your firm in performing similar services. f. Resumes of the individuals who would be assigned to this project, including any sub- consultants. g. Standard hourly billing rates for the assigned staff, including any sub-consultants. h. Statement and explanation of any instances where your firm has been removed from a project or disqualified from proposing on a project. Work Program j. Description of your approach to completing the work. k. Tentative schedule by phase and task for completing the work. l. Estimated hours for your staff in performing each major phase of the work, including sub-consultants. m. Services or data to be provided by the City. n. Any other information that would assist us in making this contract award decision. Compensation p. Proposed compensation and payment schedule tied to accomplishing key tasks. Proposal Length and Copies q. Proposals should not exceed 25 pages, including attachments and supplemental materials. r. Two copies of the proposal must be submitted. 18. Proposal Evaluation and Selection. Proposals will be evaluated by a review committee based on the following criteria: a. Understanding of the work required by the City. b. Quality, clarity and responsiveness of the proposal. c. Demonstrated competence and professional qualifications necessary for successfully performing the work required by the City. d. Recent experience in successfully performing similar services. e. Proposed approach in completing the work. f. References. g. Background and related experience of the specific individuals to be assigned to this project. h. Proposed compensation. As reflected above, contract award will not be based solely on price, but on a combination of factors as determined to be in the best interest of the City. After evaluating the proposals and Packet Pg 79 7 11 discussing them further with the finalists or the tentatively selected contractor, the City reserves the right to further negotiate the proposed work and/or method and amount of compensation. 19. Proposal Review and Award Schedule. The following is an outline of the anticipated schedule for proposal review and contract award: a. Issue RFP 11/22/2017 b. Receive questions 11/29/2017 c. Respond to questions 11/30/2017 d. Receive proposals 12/5/2017 e. Complete proposal evaluation 12/12/2017 f. Finalize staff recommendation 12/15/2017 g. Award contract 12/20/2017 (estimate only) h. Execute contract 1/2/2018 (estimate only) i. Start work 1/15/2018 20. Ownership of Materials. All original drawings, plan documents and other materials prepared by or in possession of the Contractor as part of the work or services under these specifications shall become the permanent property of the City, and shall be delivered to the City upon demand. 21. Release of Reports and Information. Any reports, information, data, or other material given to, prepared by or assembled by the Contractor as part of the work or services under these specifications shall be the property of City and shall not be made available to any individual or organization by the Contractor without the prior written approval of the City. 22. Copies of Reports and Information. If the City requests additional copies of reports, drawings, specifications, or any other material in addition to what the Contractor is required to furnish in limited quantities as part of the work or services under these specifications, the Contractor shall provide such additional copies as are requested, and City shall compensate the Contractor for the costs of duplicating of such copies at the Contractor’s direct expense. 23. Alternative Proposals. The proposer may submit an alternative proposal (or proposals) that it believes will also meet the City’s project objectives but in a different way. In this case, the proposer must provide an analysis of the advantages and disadvantages of each of the alternatives, and discuss under what circumstances the City would prefer one alternative to the other(s). If an alternative proposal is submitted, the maximum length of the proposal may be expanded proportionately by the number of alternatives submitted. 24. Accuracy of Specifications. The specifications for this project are believed by the City to be accurate and to contain no affirmative misrepresentation or any concealment of fact. Proposers are cautioned to undertake an independent analysis of any test results in the specifications, as City does not guaranty the accuracy of its interpretation of test results contained in the specifications package. In preparing its proposal, the proposer and all subcontractors named in its proposal shall bear sole responsibility for proposal preparation errors resulting from any misstatements or omissions in the plans and specifications that could easily have been ascertained by examining either the project site or accurate test data in the City’s possession. Although the effect of ambiguities or defects in the plans and specifications will be as determined by law, any patent ambiguity or defect shall give rise to a duty of proposer to inquire prior to proposal submittal. Failure to so inquire shall cause any such ambiguity or defect to be construed against the proposer. An ambiguity or defect shall be considered patent if it is of such a nature that the proposer, assuming reasonable skill, ability and diligence on its part, knew or should have known Packet Pg 80 7 12 of the existence of the ambiguity or defect. Furthermore, failure of the proposer or subcontractors to notify City in writing of specification or plan defects or ambiguities prior to proposal submittal shall waive any right to assert said defects or ambiguities subsequent to submittal of the proposal. To the extent that these specifications constitute performance specifications, the City shall not be liable for costs incurred by the successful proposer to achieve the project’s objective or standard beyond the amounts provided therefor in the proposal. In the event that, after awarding the contract, any dispute arises as a result of any actual or alleged ambiguity or defect in the plans and/or specifications, or any other matter whatsoever, Contractor shall immediately notify the City in writing, and the Contractor and all subcontractors shall continue to perform, irrespective of whether or not the ambiguity or defect is major, material, minor or trivial, and irrespective of whether or not a change order, time extension, or additional compensation has been granted by City. Failure to provide the hereinbefore described written notice within one (1) working day of contractor’s becoming aware of the facts giving rise to the dispute shall constitute a waiver of the right to assert the causative role of the defect or ambiguity in the plans or specifications concerning the dispute. Packet Pg 81 7 13 Section D FORM OF AGREEMENT AGREEMENT THIS AGREEMENT is made and entered into in the City of San Luis Obispo on ____________________________________, by and between the CITY OF SAN LUIS OBISPO, a municipal corporation, hereinafter referred to as City, and _____________________, hereinafter referred to as Contractor. W I T N E S S E T H: WHEREAS, on , City requested proposals for a consultant to conduct appointed officials’ evaluations per Specification No. 91636. WHEREAS, pursuant to said request, Contractor submitted a proposal that was accepted by City for said services. NOW THEREFORE, in consideration of their mutual promises, obligations and covenants hereinafter contained, the parties hereto agree as follows: 1. TERM. The term of this Agreement shall be from the date this Agreement is made and entered, as first written above, until June 30, 2022. 2. INCORPORATION BY REFERENCE. City Specification No. 91636 and Contractor’s proposal dated _____________, are hereby incorporated in and made a part of this Agreement. 3. CITY’S OBLIGATIONS. For providing services as specified in this Agreement, City will pay and Contractor shall receive therefor compensation in a total sum not to exceed per fiscal year, or $ for the contract term. 4. CONTRACTOR’S OBLIGATIONS. For and in consideration of the payments and agreements hereinbefore mentioned to be made and performed by City, Contractor agrees with City to do everything required by this Agreement and the said specification. 5. AMENDMENTS. Any amendment, modification or variation from the terms of this Agreement shall be in writing and shall be effective only upon approval by the duly authorized agent of the City. Packet Pg 82 7 14 6. COMPLETE AGREEMENT. This written Agreement, including all writings specifically incorporated herein by reference, shall constitute the complete agreement between the parties hereto. No oral agreement, understanding, or representation not reduced to writing and specifically incorporated herein shall be of any force or effect, nor shall any such oral agreement, understanding, or representation be binding upon the parties hereto. 7. NOTICE. All written notices to the parties hereto shall be sent by United States mail, postage prepaid by registered or certified mail addressed as follows: City City Clerk City of San Luis Obispo 990 Palm Street San Luis Obispo, CA 93401 Contractor [ ] [ ] [ ] [ ] 8. AUTHORITY TO EXECUTE AGREEMENT. Both City and Contractor do covenant that each individual executing this agreement on behalf of each party is a person duly authorized and empowered to execute Agreements for such party. IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed the day and year first above written. CITY OF SAN LUIS OBISPO, A Municipal Corporation By:____________________________________ City Manager APPROVED AS TO FORM: CONTRACTOR ____________________________________ By:____________________________________ City Attorney Packet Pg 83 7 15 Section E INSURANCE REQUIREMENTS: Consultant Services The Contractor shall procure and maintain for the duration of the contract insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder by the Contractor, its agents, representatives, employees, or subcontractors. Minimum Scope of Insurance. Coverage shall be at least as broad as: 1. Insurance Services Office Commercial General Liability coverage (occurrence form CG 0001). 2. Insurance Services Office form number CA 0001 (Ed. 1/87) covering Automobile Liability, code 1 (any auto). 3. Workers’ Compensation insurance as required by the State of California and Employer’s Liability Insurance. 4. Errors and Omissions Liability insurance as appropriate to the consultant’s profession. Minimum Limits of Insurance. Contractor shall maintain limits no less than: 1. General Liability: $1,000,000 per occurrence for bodily injury, personal injury and property damage. If Commercial General Liability or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit. 2. Automobile Liability: $1,000,000 per accident for bodily injury and property damage. 3. Employer’s Liability: $1,000,000 per accident for bodily injury or disease. 4. Errors and Omissions Liability: $1,000,000 per occurrence. Deductibles and Self-Insured Retentions. Any deductibles or self-insured retentions must be declared to and approved by the City. At the option of the City, either: the insurer shall redu ce or eliminate such deductibles or self-insured retentions as respects the City, its officers, officials, employees and volunteers; or the Contractor shall procure a bond guaranteeing payment of losses and related investigations, claim administration and defense expenses. Other Insurance Provisions. The general liability and automobile liability policies are to contain, or be endorsed to contain, the following provisions: 1. The City, its officers, officials, employees, agents and volunteers are to be cove red as insureds as respects: liability arising out of activities performed by or on behalf of the Contractor; products and completed operations of the Contractor; premises owned, occupied or used by the Contractor; or automobiles owned, leased, hired or borrowed by the Contractor. The coverage shall contain no special limitations on the scope of protection afforded to the City, its officers, officials, employees, agents or volunteers. 2. For any claims related to this project, the Contractor’s insurance coverage shall be primary insurance as respects the City, its officers, officials, employees, agents and volunteers. Any insurance or self-insurance maintained by the City, its officers, officials, employees, agents or volunteers shall be excess of the contractor’s insurance and shall not contribute with it. 3. The Contractor’s insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer’s liability. Packet Pg 84 7 16 4. Each insurance policy required by this clause shall be endorsed to state that coverage shall not be suspended, voided, canceled by either party, reduced in coverage or in limits except after thirty (30) days’ prior written notice by certified mail, return receipt requested, has been given to the City. Acceptability of Insurers. Insurance is to be placed with insurers with a current A.M. Best’s rating of no less than A:VII. Verification of Coverage. Contractor shall furnish the City with a certificate of insurance showing maintenance of the required insurance coverage. Original endorsements effecting general liability and automobile liability coverage required by this clause must also be provided. The endorsements are to be signed by a person authorized by that insurer to bind coverage on its behalf. All endorsements are to be received and approved by the City before work commences. Packet Pg 85 7 17 PROPOSAL SUBMITTAL FORM Sample A The undersigned declares that she or he has carefully examined Specification No. 91636, which is hereby made a part of this proposal; is thoroughly familiar with its contents; is authorized to represent the proposing firm; and agrees to perform the specified work for the following cost quoted in full: BID ITEM: Appointed Officials Evaluation Consultant Services Total Base Price Other (provide detail below) TOTAL Delivery of equipment to the City to be within ________ calendar days after contract execution and written authorization to proceed.  Certificate of insurance attached; insurance company’s A.M. Best rating:___________________. Firm Name and Address Contact Phone Signature of Authorized Representative Date Packet Pg 86 7 18 REFERENCES Number of years engaged in providing the services included within the scope of the specifications under the present business name: ___________________. Describe fully the last three contracts performed by your firm that demonstrate your ability to provide the services included with the scope of the specifications. Attach additional pages if required. The Cit y reserves the right to contact each of the references listed for additional information regarding your firm’s qualifications. Reference No. 1 Customer Name Contact Individual Telephone & FAX number Street Address City, State, Zip Code Description of services provided including contract amount, when provided and project outcome Reference No. 2 Customer Name Contact Individual Telephone & FAX number Street Address City, State, Zip Code Description of services provided including contract amount, when provided and project outcome Reference No. 3 Customer Name Contact Individual Telephone & FAX number Street Address City, State, Zip Code Description of services provided including contract amount, when provided and project outcome Packet Pg 87 7 19 STATEMENT OF PAST CONTRACT DISQUALIFICATIONS The proposer shall state whether it or any of its officers or employees who have a proprietary interest in it, has ever been disqualified, removed, or otherwise prevented from bidding on, or completing a federal, state, or local government project because of the violation of law, a safety regulation, or for any other reason, including but not limited to financial difficulties, project delays, or disputes regarding work or product quality, and if so to explain the circumstances.  Do you have any disqualification as described in the above paragraph to declare? Yes  No   If yes, explain the circumstances. Executed on ______________________________ at ______________________________ under penalty of perjury of the laws of the State of California, that the foregoing is true and correct. ______________________________________ Signature of Authorized Proposer Representative Packet Pg 88 7 20 Packet Pg 89 7 Page intentionally left blank. Packet Pg 90 7 Meeting Date: 11/21/2017 FROM: Daryl Grigsby, Public Works Director Xenia Bradford, Finance Director Prepared By: Isaac Shuck, Fleet Supervisor Tim Bochum, Public Works Deputy Director SUBJECT: STREETS MAINTENANCE DUMP TRUCK, TRANSFER DUMP TRAILER, AND SWEEPER TRUCK PURCHASE, SPECIFICATION NO. 91589 & 91595 RECOMMENDATION 1. Adopt a resolution of the City Council of the City of San Luis Obispo approving Equipment Lease. 2. Approve the lease purchase and authorize the Finance Director to execute a purchase order to Gibbs Truck Centers in the amount of $256,204.06 for one 2018 International HX series heavy duty dump truck outfitted with a Reliance transfer dump set; and 3. Approve the lease purchase and authorize the Finance Director to execute a purchase order to the Sweeper Shop in the amount of $303,052.78 for one 2018 Freightliner M2 heavy duty truck outfitted with a Schwarze M6 Avalanche sweeper unit; and 4. Authorize the City Manager, Finance Director and City Attorney to execute all related documents on behalf of the City to execute a five-year loan agreement not to exceed approved budget; and 5. Authorize the surplus designation of Fleet Asset No. 9713, a 1994 Freightliner heavy duty dump truck, Fleet asset 1102, a 2007 Reliance transfer dump trailer, and Fleet Asset No. 0817, a 2008 International street sweeper truck by sale, auction, trade-in or other method in accordance with the City’s policies and procedures as prescribed in the Financial Management Manual Section 405-L and 480. DISCUSSION Background The replacement of the heavy-duty dump truck, transfer dump trailer, and street sweeper truck used daily by the Streets Maintenance staff, was approved as part of the 2017-19 Financial Plan in Fiscal Year 2017-18. Each unit is used daily by the Streets Maintenance Division and critical for asphalt and paving operations. Sweeper Truck Surplus The Fleet Maintenance Supervisor is allowed to retain one surplus street sweeper truck to back up the two front line units. Fleet asset no. 0817 street sweeper is currently being used in this capacity. When asset no. 0909 street sweeper is replaced, it will then serve as the backup unit and asset no. 0817 street sweeper will be sold at auction. Packet Pg 91 8 Cooperative Purchase versus Local Purchase Heavy Duty Dump Truck and Transfer Dump Trailer Staff recommends a purchase to Gibbs Truck Center of Santa Maria in the amount of $256,204.06 for one 2018 International HX Series heavy duty dump truck including a Reliance transfer dump set. Pursuant to City purchasing guidelines, staff explored use of a multi-year cooperative purchasing agreement with the National Joint Powers Association (NJPA) Contract No. 08176-NVS, to purchase a heavy-duty dump truck outfitted with a transfer dump set. This resulted in a quote in the amount of $256,204.06 through its approved dealer, Gibbs Truck Center of Santa Maria, for a dump truck and transfer dump set that met City specifications. There is no local dealer within the City limits for comparative pricing. Street Sweeper Staff recommends a purchase to Schwarze Industries, Inc. in the amount of $303,052.06 for a 2018 Freightliner M2 heavy duty truck outfitted with a Schwarze M6 Avalanche sweeper unit. Pursuant to City purchasing guidelines, staff explored use of a multi-year cooperative purchasing agreement with the Houston-Galveston Area Council (HGAC) Buy Contract No. SW04-16, to purchase a heavy-duty truck outfitted with a street sweeper unit. This resulted in a quote in the amount of $303,052.76 through its approved dealer, Sweeper Shop, for a heavy-duty truck with a street sweeper unit that met City specifications. There is no local dealer within the City limits for comparative pricing. FISCAL IMPACT Lease Purchase The City has strategically used lease options as ways to reduce significant variations in the costs of replacing vehicles or other specialty equipment. Due to the high cost of the dump truck and sweeper, staff proposed and Council approved debt financing of these two vehicles in the 2017- 19 Financial Plan (FY 2017-18) to stabilize the annual costs needed to be paid from the Fleet Fund. Staff is seeking the authorization to execute a lease purchase agreement for the acquisition of the new dump truck and sweeper truck. These purchases are budgeted and approved for replacement as part of the 2017-18 Financial Plan. In the 2017-19 Financial Plan, page A1-28 the estimated debt financing to acquire these vehicles. The proposed annual lease payments are within the budgeted amounts in the financial plan and the proposed financing was reviewed by PFM, the City’s independent financial advisor. The purchase costs for each vehicle listed in the table below are within the approved 2017-19 Financial Plan budget estimates. The total cost is estimated as it includes final outfitting performed by Fleet Services after the vehicle arrives onsite. Packet Pg 92 8 Project 91589 Adopted Budget Fiscal Year Purchase Cost Total Cost Heavy Duty Dump Truck 290,000 17-18 $256,204.06 $260,000 Transfer Dump Trailer Included 17-18 Included Included Project 91595 Adopted Budget Fiscal Year Purchase Cost Total Cost Sweeper Truck 305,000 17-18 $303,052.06 $305,000 ALTERNATIVES Deny Funding and Purchase. The City Council could choose to deny or defer the heavy-duty dump truck and street sweeper vehicles. Staff does not recommend this option as the replacements were approved as part of the 2017-18 Financial Plan. The vehicles above have met their useful target life in both years and mileage. Denying or deferring the purchase could result in costly maintenance and repairs due to aging vehicles. Attachments: a - Dump Truck Quote b - Sweeper Truck Quote c - Disposing of Surplus Units - Section 405-L Procedures d - Surplus Personal and Unclaimed Property Policy - Section 480-A e - Auction Firm Services - Section 480-B f - Lease-Purchase Agreement g - Resolution of City Council Approving Equipment Lease Packet Pg 93 8 Salesperson:Mario Carmona phone 805-922-5778 Date:5/25/2017 TBD Name: CITY:San Luis Obispo ST/ZIP CA 93401 Seller # PHONE:781-7046 FAX: Year New/Used Make Model Body Type Price 2018 NEW INTL HX Dump $143,360.15 $94,400.00 Doc Fee $237,760.15 7.750%$18,426.41 County exempt 4. CA Tire Tax ($1.75 each)$17.50 5. Vehicle Price Including Tax $256,204.06 $0.00 $0.00 $256,204.06 BODY TYPE TRADE ALLOW 9. Optional Svc Contract AMOUNT OWING a. (DMV) Est. Cert. of Title exempt NET TRADE ALLOW b. Origination fee STOCK # Total Other Charges $0.00 Unpaid Balance (Amount Financed)$256,204.06 This order is subject to the written acceptance of Finance Charges Gibbs Truck Centers to which it is Total of Payments $256,204.06 addressed.Deferred Payment Price $256,204.06 Note: If vehicle is Used, The Vehicle is sold "AS IS" Salesman:Mario Carmona WITH NO WARRANTY unless otherwise endorsed by Seller. PURCHASER ACKNOWLEDGES RECEIPT OF AN EXACT Date:COPY OF THIS ORDER. cell 805-680-1374 Purchaser:__________________ Date: City of San Luis Obispo City of San Luis Obispo LIABILITY INSURANCE COVERAGE FOR BODILY INJURY AND PROPERTY DAMAGE CAUSED TO OTHERS IS NOT INCLUDED 8. Unpaid Balance successive month commencing *___________________20_____, and as follows:_________________________________________ *If no date is inserted in blank, the first installment is payable one month from date of agreement. and _________installments of $____________each, and ______ installments of $__________each, payable on the same day each $0.00 City of San Luis Obispo Payment Schedule: Purchase agrees to pay "TOTAL OF PAYMENTS" (item 9 above) in _____ installments of $___________each 7. Trade Allow SERIAL # NJPA Contract # 08176-NVS ischuck@slocity.org 505hp Cummins, 4500RDS Auto Reliance Transfer Set 1. Cash Price = GIBBS INTERNATIONAL INC TBD 2. Sales Tax MODEL SERIAL # 3. Federal Excise Tax (FET) Total Down/Deposit = 25 Prado Rd GIBBS TRUCK CENTERS 365 W Betteravia Rd, Santa Maria Ca. 93455 RETAIL ORDER FOR NEW AND USED MOTOR VEHICLES AND ATTACHMENTS 04508 I hereby order from you, subject to all terms, conditions and agreements contained here. 6. Down Payment/Deposit YEAR TRADE-IN MAKE Packet Pg 94 8 Contract No.:SW04-16 Date Prepared:3/27/2017 Buying Agency:Contractor: Contact Person: Prepared By: Phone:Phone: Fax:Fax: Email:Email: Product Code:BF05 Description: 158845 Cost Cost 0 0 1725 895 0 595 1390 380 94165 Subtotal B: 99150 Cost Cost 1000 1480 1100 1270 400 1380 5000 1760 3100 1750 Subtotal C: 18240 7% D. Total Cost before any other applicable Charges, Trade-Ins, Allowances, Discounts, Etc. (A+B+C) 1 276235 = Subtotal D: 276235 Cost Cost 5415 21402.78 Subtotal E: 26817.78 303052.78 Remote Grease Point, Conveyor/Main Broom Milling Style Drag Shoes Freight Leak Detection Kit 4 Corner Strobe Kit For this transaction the percentage is: Check: Total cost of Unpublished Options (C) cannot exceed 25% of the total of the Base Unit Price plus Published Options (A+B). Freightliner M2 2018 With 300 HP Engine Upgrade Complete Set of Filters, Chassis and Sweeper Broom, Reversable Broom, Tilt Power Dual Dual Rear Strober w/Guard LED Standard Hopper Main Broom, Tube Standard C. Unpublished Options - Itemize below - Attach additional sheet if necessary (Note: Unpublished options are items which were not submitted and priced in Contractor's bid.) LED Arrowstick Arrowboard, Traffic Guide, Split LED Mirror 12" Parabolic Set Subtotal From Additional Sheet(s): Freightliner M2 2015 Camera System, Four Description Description CONTRACT PRICING WORKSHEET For Standard Equipment Purchases M6 Avalanche SE A. Product Item Base Unit Price Per Contractor's H-GAC Contract: 256-851-1151 This Worksheet is prepared by Contractor and given to End User. If a PO is issued, both documents MUST be faxed to H-GAC @ 713-993-4548. Therefore please type or print legibly. City of San Luis Obispo Mr. Isaac Shuck (805) 781-7046 ishuck@slocity.org Schwarze Industries, Inc. Joe Hendrickson 256-990-1755 Description jhendrickson@schwarze.com Description Squeegee Conveyor B. Published Options - Itemize below - Attach additional sheet if necessary - Include Option Code in description if applicable (Note: Published Options are options which were submitted and priced in Contractor's bid.) F. Total Purchase Price (D+E): Delivery Date: 60-90 ARO 20-Sets of Gutter Brooms (100 Pieces No Boxes)Subtotal From Additional Sheet(s): Quantity Ordered: 5-Main Broom Refills Sales Tax, California 7.75% X Subtotal of A + B + C: E. Other Charges, Trade-Ins, Allowances, Discounts, Etc. Description Description Packet Pg 95 8 405-17 Section 405-L: Procedures DISPOSING OF SURPLUS UNITS 1. When a unit is replaced or otherwise permanently removed from service, report to Accounting that it is surplus and available for sale. 2. Include in each such report the following information for each unit reported: City identification number (e.g., 9901) Vehicle identification number (VIN) License number Model year (e.g.,2005), make (e.g., Ford), and model (e.g., F-350) Description (e.g., one-ton truck) Assigned department (e.g., Public Works) Assigned program (e.g., Signal and Light Maintenance) Acquisition year (e.g., 2004-05) Estimated surplus value Basis of estimated surplus value (e.g., blue book, previous auction proceeds) Current odometer or hourmeter reading Justification for replacement Current location Authorization to surplus (e.g., budget document that authorized replacement or other Council authorization to replace or dispose of the unit) 3.Finance Division will dispose of surplus vehicles in accordance Section 480 of the Finance Management manual. Packet Pg 96 8 480-10 Section 480-B AUCTION FIRM SERVICES OVERVIEW To reduce staff time in the sale and disposal of property, to reduce the amount of space being used to store surplus and unclaimed property, to improve the process of estimating the value of surplus property, and to maximize the value of return on surplus property, the Department of Finance & IT is authorized to contract with an auction firm to assist staff in the sale and disposal of personal property, consumable supplies and unclaimed property on an "as available basis" after authorization is given by the Council or the Director of Finance & IT to sell or dispose of City property. The policies and procedures provided below in conjunction with the City's auction firm will provide the staff with the opportunity to systematize the sale and disposal of this property. AUCTION FIRM RESPONSIBILITIES The following responsibilities will normally be assigned to the City's auction firm by Agreement between the City and the firm selected: A. The auction firm will be required to pickup any and all "marketable" surplus property by consignment and deliver this property to their premises where it shall be inventoried, sorted, identified, and catalogued. An auction will be conducted within 30 days of receipt of property and supplies. B. The auction firm will make the necessary arrangements for offering the property for sale by auction to the most qualified buyers to obtain the highest return possible. The auction firm will advertise the auction in a manner that will obtain the maximum participation by the public in at least one newspaper of general circulation in the City of San Luis Obispo for a minimum of five days prior to a scheduled auction. C. The property consigned to the auction firm will remain the property of the City until sold or disposed in accordance with these procedures. D. Property not sold at auction will be disposed by on of the following methods: 1. Consignment to a sub-contractor specializing in unique or special equipment and material for which there is no local market. 2. Direct sale to a buyer of unique or special equipment and material for which there is no local market. 3. By sale as salvage to a local dealer or any recycling firm. 4. By destruction at an appropriate landfill site and certification thereto. 5. Returned to the City. E. The material and equipment not sold at auction will be disposed of by one of the methods described above within 15 days from the date offered at auction. For the purpose of these Packet Pg 97 8 Section 480-A SURPLUS PERSONAL AND UNCLAIMED PROPERTY POLICY OVERVIEW This policy addresses the procedures for the disposal of surplus personal property, unclaimed property, consumable supplies, and junk. The policies and procedures for the disposal or sale of surplus real property, abandoned property and resale inventory are provided in other policy documents. In preparing this policy, not all issues or exceptions could be anticipated. Accordingly, the guidance given in this policy does not relieve Staff from exercising good judgment in their stewardship of the City's property resources. Whenever there is a question or doubt between the guidance provided in this policy and the good judgment expected of a prudent person, good judgment should always be the prevailing standard, with this policy as a minimum standard. LEGISLATIVE POLICY A. Surplus Property Section 906 of the City Charter provides that the Council must approve the sale of surplus property (real or personal) with an estimated value greater than $1,000. B. Unclaimed Property 1. Chapter 3.32 of the City Municipal Code provides for the disposal of unclaimed property by the Chief of Police. This property must be held for a minimum of four months and notice of sale must be given at least five days prior to sale by publication in a newspaper of general circulation. Property not sold may be destroyed by the Police Department after public auction. 2. Sections 2080.4 and 2080.6 of the Civil Code requires any person finding property valued at $10.00 or more to turn the property over to the Police Department within a reasonable time, stating when and where the property was found and providing a description of the property. If the property was saved, a statement is required from the "finder" describing: a.From what and how it was saved. b. Whether the owner of the property is known to the "finder". c.That the property has not been secreted, withheld, or partially disposed. 480-1 Packet Pg 98 8 Surplus Personal and Unclaimed Property Policy ADMINISTRATIVE POLICY A. The Director of Finance & Information Technology (IT) is authorized to declare as surplus those items of personal property and consumable supplies estimated to be less than $1,000 in value; Council approval is required to declare personal and consumable supplies as surplus with a value of $1,000. B. Department Heads are authorized to approve the disposal of property that is essentially without value due to technical obsolescence or its unrepairable (or economically unrepairable) condition. Department Heads may dispose of such junk property in the manner they deem most appropriate, consistent with other rules, regulations, and the City's ethics policy. C. Generally, estimating the value of surplus property is made by the Department Head or designated representative. In unique and unusual cases, Finance will assist Departments in estimating the value of property by using the City's auction firm to provide a professional estimate. However, in all cases, the Department Head must approve in writing the estimated value of the property to be sold or otherwise disposed. D. The Director of Finance & IT is authorized to sell, transfer, trade, or otherwise dispose of surplus personal property, consumable supplies, or unclaimed property in the most cost effective manner. Normally the sale of this property will be at auction with a firm contracted to provide the following services: 1. Sell and dispose of personal property, consumable supplies and unclaimed property at auction. 2. Provide professional estimates as to the value of personal property and consumable supplies when required. 3. Assist in the sale of unique or special property and consumable supplies that requires the use of a "specialty house" to sell or dispose of the property. 4. Dispose of unsaleable property, supplies and equipment at an approved disposal site. E. The Director of Finance & IT may dispose of surplus property and supplies by transfer to another local government agency or non-profit organization based on the recommendation of a Department Head. Although there may be circumstances where it is appropriate to make such transfer without compensation, cash or in-kind services should generally be received in an amount equal to or greater than the estimated value provided by the City's auction firm or the Department Head. In the case of vehicles, "low blue book value" may also be considered. F. When it is a normal business practice, trade value should be obtained to determine the most cost effective method of disposal and as a standard by which to evaluate the services of the City's auction firm. There may be circumstances when trade value of 480-2 Packet Pg 99 8 Surplus Personal and Unclaimed Property Policy property may exceed auction value, in which case the Director of Finance & IT may authorize the trade of surplus property versus sale at auction based on the recommendation of the appropriate Department head. G. Advertising the sale of the City's property and unclaimed property will be made by the City's auction firm in accordance with these procedures, the Auction Services Agreement, and legislative policy. Accordingly, the advertising must disclose that the property for sale at auction is either the surplus property of the City of San Luis Obispo or is unclaimed property in the possession of the City and it must state the date and time of sale. Property sold at auction will be advertised at least five days in a newspaper of general circulation in the City of San Luis Obispo. H. Property determined to be unclaimed by the Chief of Police may be sold at public auction in accordance with these policies and procedures under the following conditions: 1. It is a thing which is commonly the subject of sale. 2. The owner cannot (with reasonable diligence) be found. 3. The owner, if identified, refuses to pay the reasonable charges incurred by the City for storing and safeguarding of the property. PROCEDURES A. Surplus Personal Property and Consumable Supplies 1. Department Heads will identify personal property and supplies that are surplus to their needs and notify the Director of Finance & IT by Memorandum to sell or dispose of property identified, in accordance with City policy and procedures. The property to be declared surplus will be listed and include the City Asset Number (if applicable), a descriptive name of the property, quantity, pickup location, estimated value, and name of the contract person with their extension number. Separate memorandums must be prepared for property estimated to exceed $1,000 in value and for property estimated to be less than $1,000 in value. The memorandum (or listing) must indicate why the property is no longer required. 2. Department Heads may request that Finance assist them in estimating the value of personal property and consumable supplies. In such instances, Finance may request the services of the City's auction firm in estimating these values. However, these services are limited and should not be used except for unique and unusual property. 3. Special handling will be required for the disposal of toxic and hazardous materials, and should be coordinated with the City's Fire Department. 480-3 Packet Pg 100 8 Surplus Personal and Unclaimed Property Policy I. After receipt of a request to dispose of personal property and consumable supplies from a Department Head, Finance will circulate the list of property to other City Departments as an advisory memorandum. The property listed may be claimed by other Departments on a first come first serve basis. After 10 days from the date of the advisory memorandum, this listing will be forwarded to the Housing Authority, San Luis Coastal Unified School District, and United Way for their information. If none of these agencies expresses interest in the remaining property items within 10 days of receiving the listing, then the property will be consigned to the City's auction firm for sale or other method of disposal as determined by the Director of Finance & IT. Except in unusual circumstances, surplus property will generally remain on site pending its final disposition. This means that it is the responsibility of the interested party to make arrangements with the disposing department to view the property, discuss its condition, and coordinate any terms of transfer such as price, timing, and transportation. J. For property with a value of $1,000 or more, the Director of Finance & IT will prepare an Agenda Report for Council approval to declare the property as surplus after review by the operating departments as described above and prior to the consignment of property to the City's auction firm. B. Evidence The provisions of this policy do not address the disposal of property which is classified as evidence. Evidence is governed by the provisions of the penal code and must be dealt with accordingly. For example, evidence may be returned to the owner, subjected to lien, or classed as contraband and accordingly destroyed. However, evidence may also be determined by the Chief of Police to be unclaimed property and, in that event, will be processed in accordance with the policies and procedures provided below. C. Unclaimed Property Unclaimed property received by the City will be processed as follows: 1. The Police Department is required to receive, hold, and safekeep all property valued at more than $10 that is found within the City limits and turned in to the Police Department for safekeeping. The owner will be notified as to where the property may be claimed if the owner's identity can reasonably be determined. 2.If the owner appears within 120 days after receipt of the property by the Police Department, proves ownership, and pays all reasonable charges, the Police Department will return the property to the owner. 3.If the reported value of the property is fifty dollars or more (and no owner appears and proves ownership within 120 days), the Police Department will publish a notice, at least once, in a newspaper of general circulation. After seven days following the first published notice the following actions will be taken if no owner appears and proves ownership of the property; 480-4 Packet Pg 101 8 Surplus Personal and Unclaimed Property Policy G. If the property was found in the course of employment by a City employee, the property shall be sold at public auction. H. The title shall vest in the person who found the property if he or she is willing to pay the cost of the publication. I. If the reported value of the property is less than $50 and no owner appears and proves ownership of the property within 120 days, the title shall vest in the person who found the property, unless the property was found in the course of employment by a City employee, in which case the property shall be sold at public auction. J. Generally, the sale of unclaimed property will be made by the City's auction firm; however, in unique circumstances, the Chief of Police may request that Police Department staff conduct the auction. When the City's auction firm is used, the firm must be notified in writing with a list of property to be sold. This list does not require a statement of estimated values. The letter will give the name of the contact person and extension number, a short title property description, a pickup location, and a pickup time. K. Prior to sale, a listing of unclaimed property shall be provided to the Director of Finance & IT, who will circulate this list as an advisory memorandum to other City Departments. The property listed may be claimed by other Departments on a first come first serve basis. After a 15 day period from the date of the advisory memorandum, the unclaimed property will be available for sale at public auction according to policy. L. The unclaimed property to be sold by the City's auction firm will be transferred on consignment in accordance with the surplus property policies. M. Any property remaining unsold after being offered at public auction may be destroyed or otherwise disposed of by the City's auction firm. Approved by the City Manager on March 1, 1990; revised on January 14, 1994. 480-5 Packet Pg 102 8 Section 480-B AUCTION FIRM SERVICES OVERVIEW To reduce staff time in the sale and disposal of property, to reduce the amount of space being used to store surplus and unclaimed property, to improve the process of estimating the value of surplus property, and to maximize the value of return on surplus property, the Department of Finance & IT is authorized to contract with an auction firm to assist staff in the sale and disposal of personal property, consumable supplies and unclaimed property on an "as available basis" after authorization is given by the Council or the Director of Finance & IT to sell or dispose of City property. The policies and procedures provided below in conjunction with the City's auction firm will provide the staff with the opportunity to systematize the sale and disposal of this property. AUCTION FIRM RESPONSIBILITIES The following responsibilities will normally be assigned to the City's auction firm by Agreement between the City and the firm selected: A.The auction firm will be required to pickup any and all "marketable" surplus property by consignment and deliver this property to their premises where it shall be inventoried, sorted, identified, and catalogued. An auction will be conducted within 30 days of receipt of property and supplies. B.The auction firm will make the necessary arrangements for offering the property for sale by auction to the most qualified buyers to obtain the highest return possible. The auction firm will advertise the auction in a manner that will obtain the maximum participation by the public in at least one newspaper of general circulation in the City of San Luis Obispo for a minimum of five days prior to a scheduled auction. C.The property consigned to the auction firm will remain the property of the City until sold or disposed in accordance with these procedures. D.Property not sold at auction will be disposed by on of the following methods: 1. Consignment to a sub-contractor specializing in unique or special equipment and material for which there is no local market. 2. Direct sale to a buyer of unique or special equipment and material for which there is no local market. 3. By sale as salvage to a local dealer or any recycling firm. 4. By destruction at an appropriate landfill site and certification thereto. 5. Returned to the City. E.The material and equipment not sold at auction will be disposed of by one of the methods described above within 15 days from the date offered at auction. For the purpose of these 480-10 Auction Firm Services Packet Pg 103 8 instructions, the City will give approval as to the disposal method based on the recommendation of the auction firm and the method that is in the best interests of the City. F.The auction firm will provide the Department of Finance & IT with a list of consigned property with a check for the net proceeds from the auction or specialty sale within 60 days of receipt of consigned material and equipment providing the following information: 1. City Asset number (if available) 2. Short title description of the property 3. Date of sale or disposal 4. Purchaser or the disposal site 5. Total purchase price 6. Auction fee 7. Net to City 8. Method of disposal (sale at auction, transfer to a specialty house for sale, direct sale as salvage, transfer to an appropriate landfill or disposal site, return to City) 480-11 Packet Pg 104 8 CALIFORNIA FIXED GENERAL EQUIPMENT LEASE Long Name of Entity: City of San Luis Obispo Address: 990 Palm Street City, State Zip: San Luis Obispo, CA 93401 Attention: Kristin Eriksson Public Finance Office: County: San Luis Obispo Amount: 600,000.00 Rate: 1.94 Maturity Date: December 1, 2022 First Pmt Date: December 1, 2018 Payment Dates: June 1 and December 1 Auto Extend: 5 Governing Body: City Council Resolution Date: November 2, 2017 Dated Date: December 1, 2017 Day: 1st State: California Packet Pg 105 8 $600,000.00 FIXED-RATE EQUIPMENT LEASE/PURCHASE AGREEMENT Dated as of December 1, 2017 by and between ZB, N.A., as Lessor and CITY OF SAN LUIS OBISPO, as Lessee BANK QUALIFIED Packet Pg 106 8 TABLE OF CONTENTS ARTICLE I. Definitions and Exhibits.................................................................................................... 2 Section 1.1 Definitions and Rules of Construction ...................................................................... 2 Section 1.2 Exhibits ........................................................................................................................ 2 ARTICLE II. Representations Covenants and Warranties .................................................................. 3 Section 2.1 Representations, Covenants and Warranties of the Lessee .................................... 3 Section 2.2 Representations, Covenants and Warranties of the Bank ...................................... 9 ARTICLE III. AGREEMENT TO LEASE; TERM OF LEASE; LEASE PAYMENTS ................... 9 Section 3.1 Lease ............................................................................................................................ 9 Section 3.2 Term ............................................................................................................................. 9 Section 3.3 Extension of Lease Term .......................................................................................... 10 Section 3.4 Lease Payments ......................................................................................................... 10 Section 3.5 Fair Rental Value...................................................................................................... 10 Section 3.6 Budget and Appropriation ....................................................................................... 11 Section 3.7 Use and Possession .................................................................................................... 11 Section 3.8 Abatement of Lease Payments in Event of Loss of Use ......................................... 11 Section 3.9 Possession of Leased Property Upon Termination ................................................ 11 Section 3.10 No Withholding ..................................................................................................... 11 Section 3.11 Net-Net-Net Lease ................................................................................................. 12 Section 3.12 Offset ...................................................................................................................... 12 ARTICLE IV. Insurance ........................................................................................................................ 12 Section 4.1 Casualty and Theft Insurance ................................................................................. 12 Section 4.2 Rental Interruption Insurance ................................................................................ 12 Section 4.3 General Insurance Provisions .................................................................................. 13 ARTICLE V. Damage, Destruction and Eminent Domain; Use of Net Proceeds ............................. 14 Section 5.1 Application of Net Proceeds ..................................................................................... 14 ARTICLE VI. Covenants With Respect to the Leased Property ....................................................... 14 Section 6.1 Assignment by the Bank ........................................................................................... 14 Section 6.2 Interest in the Leased Property and the Lease ...................................................... 14 Section 6.3 Maintenance, Utilities, Taxes and Assessments ..................................................... 15 Section 6.4 Modification of the Leased Property ...................................................................... 15 Section 6.5 Permits ....................................................................................................................... 16 Section 6.6 Bank's Right to Perform for Lessee ........................................................................ 16 Section 6.7 Bank's Disclaimer of Warranties ............................................................................ 16 Section 6.8 Indemnification. ........................................................................................................ 16 Section 6.9 Annual Financial Information ................................................................................. 16 Packet Pg 107 8 ARTICLE VII. Assignment and Subleasing ......................................................................................... 17 Section 7.1 Assignment by the Bank ........................................................................................... 17 Section 7.2 Assignment and Subleasing by the Lessee .............................................................. 17 ARTICLE VIII. Events of Default and Remedies................................................................................. 17 Section 8.1 Events of Default Defined ........................................................................................ 17 Section 8.2 Remedies on Default ................................................................................................. 18 Section 8.3 No Remedy Exclusive ............................................................................................... 18 Section 8.4 Agreement to Pay Attorneys' Fees and Expenses .................................................. 18 Section 8.5 Waiver of Certain Damages ..................................................................................... 18 ARTICLE IX. Prepayment of Lease Proceeds ...................................................................................... 18 Section 9.1 Extraordinary Prepayment From Net Proceeds .................................................... 18 Section 9.2 Prepayment ............................................................................................................... 19 ARTICLE X. Miscellaneous ................................................................................................................... 19 Section 10.1 Notices .................................................................................................................... 19 Section 10.2 System of Registration. ......................................................................................... 19 Section 10.3 Instruments of Further Assurance ...................... Error! Bookmark not defined. Section 10.4 Binding Effect ........................................................................................................ 20 Section 10.5 Amendments .......................................................................................................... 20 Section 10.6 Section Headings ................................................................................................... 20 Section 10.7 Severability ............................................................................................................ 20 Section 10.8 Entire Agreement .................................................................................................. 20 Section 10.9 Execution in Counterparts ................................................................................... 20 Section 10.10 Arbitration ............................................................................................................. 20 Section 10.11 Applicable Law...................................................................................................... 21 EXHIBIT A SCHEDULE OF LEASE PAYMENTS EXHIBIT B DESCRIPTION OF LEASED PROPERTY EXHIBIT C RESOLUTION OF GOVERNING BODY EXHIBIT D OPINION OF LESSEE’S COUNSEL EXHIBIT E SECURITY DOCUMENTS EXHIBIT F DELIVERY AND ACCEPTANCE CERTIFICATE EXHIBIT G: FORM 8038 Packet Pg 108 8 LEASE/PURCHASE AGREEMENT This Lease/Purchase Agreement, dated as of December 1, 2017, by and between ZB, N.A., a national banking association duly organized and existing under the laws of the United States of America, as lessor (the “Bank”), and CITY OF SAN LUIS OBISPO, as lessee (the “Lessee”), a public agency duly organized and existing under the Constitution and laws of the State of California (the “State”); WITNESSETH: WHEREAS, the Lessee desires to finance the acquisition of the equipment and/or other personal property described as the “Leased Property” in Exhibit B (“Leased Property”) by entering into this Lease/Purchase Agreement with the Bank (“Lease”); and WHEREAS, the Bank agrees to lease the Leased Property to the Lessee upon the terms and conditions set forth in this Lease, with rental to be paid by the Lessee equal to the Lease Payments hereunder; and WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and delivery of this Lease do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Lease; NOW, THEREFORE, in consideration of the above premises and of the mutual covenants hereinafter contained and for other good and valuable consideration, the parties hereto agree as follows: Packet Pg 109 8 2 ARTICLE I DEFINITIONS AND EXHIBITS Section 1.1 Definitions and Rules of Construction Unless the context otherwise requires, the capitalized terms used herein shall, for all purposes of this Lease, have the meanings specified in the definitions below. Unless the context otherwise indicates, words importing the singular number shall include the plural number and vice versa. The terms “hereby”, “hereof”, “hereto”, “herein”, “hereunder” and any similar terms, as used in this Lease, refer to this Lease as a whole. “Advance” shall have the meaning set forth in Section 2.1(l)(i)(D) hereof. “Authorizing Resolution” means the Resolution adopted by the Governing Body authorizing this Lease, in substantially the form attached hereto as Exhibit C. “Bank” shall have the meaning set forth in the Preamble hereof. “Business Day” means any day except a Saturday, Sunday, or other day on which banks in Salt Lake City, Utah or the State are authorized to close. “Code” means the Internal Revenue Code of 1986, as amended. “Commencement Date” means the date this Lease is executed by the Bank and the Lessee. “Fiscal Year” means the period extending from July 1 of each calendar year to June 30 of the subsequent calendar year. “Governing Body” means the governing body of the Lessee. “Lease” shall have the meaning set forth in the Whereas clauses hereof. “Lease Payment Date” shall have the meaning set forth in Section 3.4(a) hereof. “Lease Payments” means the rental payments described in Exhibit A hereto. “Leased Property” shall have the meaning set forth in the Whereas clauses hereof and in Exhibit B. “Lessee” shall have the meaning set forth in the Preamble hereof. “Net Proceeds” means insurance or eminent domain proceeds received with respect to the Leased Property, less expenses incurred in connection with the collection of such proceeds. “Obligation Instrument” shall have the meaning set forth in Section 2.1(c) hereof. “Permitted Encumbrances” means, as of any particular time: (i) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the Lessee may, pursuant to provisions of Section 6.3 hereof, permit to remain unpaid; (ii) this Lease; (iii) any contested right or claim of any mechanic, laborer, materialman, supplier or vendor filed or perfected in the manner prescribed by law to the extent permitted under Section 6.4(b) hereof; (iv) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions which exist of record as of the execution date of this Lease and which the Lessee hereby certifies will not materially impair the use of the Leased Property by the Lessee; and (v) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions established following the date of execution of this Lease and to which the Bank and the Lessee consent in writing. “Rebate Exemption” shall have the meaning set forth in Section 2.1(l)(ii)(A) hereof. “Regulations” shall have the meaning set forth in Section 2.1(l)(i) hereof. “Term” means the term of this Lease as described in Section 3.2 hereof. “State” shall have the meaning set forth in the Preamble hereof. Section 1.2 Exhibits. The Exhibits attached to this Lease are by this reference made a part of this Lease. Packet Pg 110 8 3 ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES Section 2.1 Representations, Covenants and Warranties of the Lessee. The Lessee represents, covenants and warrants to the Bank as follows: (a) Due Organization and Existence. The Lessee is a public agency of the State duly organized and existing under the Constitution and laws of the State. (b) Authorization; Enforceability. The Constitution and laws of the State authorize the Lessee to enter into this Lease and to enter into the transactions contemplated by, and to carry out its obligations under, this Lease. The Lessee has duly authorized, executed and delivered this Lease in accordance with the Constitution and laws of the State. This Lease constitutes the legal, valid and binding special obligation of the Lessee enforceable in accordance with its terms, except to the extent limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles affecting the rights of creditors generally, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against public agencies in the State. (c) No Conflicts or Default; Other Liens or Encumbrances. Neither the execution and delivery of this Lease nor the fulfillment of or compliance with the terms and conditions hereof, nor the consummation of the transactions contemplated hereby (i) conflicts with or results in a breach of the terms, conditions, provisions, or restrictions of any existing law, or court or administrative decree, order, or regulation, or agreement or instrument to which the Lessee is now a party or by which the Lessee is bound, including without limitation any agreement or instrument pertaining to any bond, note, lease, certificate of participation, debt instrument, or any other obligation of the Lessee (any such bond, note, lease, certificate of participation, debt instrument, and other obligation being referred to herein as an “Obligation Instrument”), (ii) constitutes a default under any of the foregoing, or (iii) results in the creation or imposition of any pledge, lien, charge or encumbrance whatsoever upon any of the property or assets of the Lessee, or upon the Leased Property except for Permitted Encumbrances. By way of example, and not to be construed as a limitation on the representations set forth in the immediately preceding paragraph: (A) no portion of the Leased Property is pledged or encumbered to secure or support any Obligation Instrument; and (B) the interests of the Bank in the Leased Property hereunder do not violate the terms, conditions or provisions of any restriction or revenue pledge in any agreement or instrument pertaining to any Obligation Instrument. (d) Compliance with Open Meeting Requirements. The Governing Body has complied with all applicable open public meeting and notice laws and requirements with respect to the meeting at which the Lessee’s execution of this Lease was authorized. Packet Pg 111 8 4 (e) Compliance with Bidding Requirements. Either there are no procurement or public bidding laws of the State applicable to the acquisition and leasing of the Leased Property pursuant to this Lease, or the Governing Body and the Lessee have complied with all such procurement and public bidding laws as may be applicable hereto. (f) No Adverse Litigation. There are no legal or governmental proceedings or litigation pending, or to the best knowledge of the Lessee threatened or contemplated (or any basis therefor) wherein an unfavorable decision, ruling, or finding might adversely affect the transaction contemplated in or the validity of this Lease. (g) Opinion of Lessee’s Counsel. The letter attached to this Lease as Exhibit D is a true copy of the opinion of Lessee’s Counsel. (h) Governmental Use of Leased Property. During the Term of this Lease, the Leased Property will be used solely by the Lessee, and only for the purpose of performing one or more governmental or proprietary functions of the Lessee consistent with the permissible scope of the Lessee’s authority, and the Leased Property will not be subject to any direct or indirect private business use. (i) Other Representations and Covenants. The representations, covenants, warranties, and obligations set forth in this Article are in addition to and are not intended to limit any other representations, covenants, warranties, and obligations set forth in this Lease. (j) No Defaults. The Lessee has never failed to make an appropriation or defaulted under any of its payment or performance obligations or covenants, either under any municipal lease of the same general nature as this Lease, or under any of its bonds, notes, or other obligations of indebtedness for which its revenues or general credit are pledged or are liable. (k) No Legal Violation. The Leased Property is not, and at all times during the Term of this Lease will not be in violation of any federal, state or local law, statute, ordinance or regulation. (l) General Tax and Arbitrage Representations and Covenants (i) The certifications and representations made by the Lessee in this Lease are intended, among other purposes, to be a certificate permitted in Section 1.148- 2(b) of the Treasury Regulations promulgated pursuant to Section 148 of the Code (the “Regulations”), to establish the reasonable expectations of the Lessee at the time of the execution of this Lease made on the basis of the facts, estimates and circumstances in existence on the date hereof. The Lessee further certifies and covenants as follows: (A) The Lessee has not been notified of any disqualification or proposed disqualification of it by the Commissioner of the Internal Revenue Service as an issuer which may certify bond issues. (B) To the best knowledge and belief of the Lessee, there are no facts, estimates or circumstances that would materially change the conclusions, certifications or representations set forth in this Lease, and the expectations herein set forth are reasonable. Packet Pg 112 8 5 (C) The Scheduled Term of this Lease does not exceed the useful life of the Leased Property, and the weighted average term of this Lease does not exceed the weighted average useful life of the Leased Property. (D) Each advance of funds by the Bank to finance Leased Property under this Lease (each an “Advance”) will occur only when and to the extent that the Lessee has reasonably determined and identified the nature, need, and cost of each item of Leased Property pertaining to such Advance. (E) No use will be made of the proceeds of this Lease or any such Advance, or any funds or accounts of the Lessee which may be deemed to be proceeds of this Lease or any such Advance, which use, if it had been reasonably expected on the date of the execution of this Lease or of any such Advance, would have caused this Lease or any such Advance to be classified as an “arbitrage bond” within the meaning of Section 148 of the Code. (F) The Lessee will at all times comply with the rebate requirements of Section 148(f) of the Code as they pertain to this Lease, to the extent applicable. (G) In order to preserve the status of this Lease and the Advances as other than “private activity bonds” as described in Sections 103(b)(1) and 141 of the Code, as long as this Lease and any such Advances are outstanding and unpaid: (I) none of the proceeds from this Lease or the Advances or any facilities or assets financed therewith shall be used for any “private business use” as that term is used in Section 141(b) of the Code and defined in Section 141(b)(6) of the Code; (II) the Lessee will not allow any such “private business use” to be made of the proceeds of this Lease or the Advances or any facilities or assets financed therewith; and (III) none of the Advances or Lease Payments due hereunder shall be secured in whole or in part, directly or indirectly, by any interest in any property used in any such “private business use” or by payments in respect of such property, and shall not be derived from payments in respect of such property. (H) The Lessee will not take any action, or omit to take any action, which action or omission would cause the interest component of the Lease Payments to be ineligible for the exclusion from gross income as provided in Section 103 of the Code. (I) The Lessee is a “governmental unit” within the meaning of Section 141(b)(6) of the Code. (J) The obligations of the Lessee under this Lease are not federally guaranteed within the meaning of Section 149(b) of the Code. Packet Pg 113 8 6 (K) This Lease and the Advances to be made pursuant hereto will not reimburse the Lessee for any expenditures incurred prior to the date of this Lease and do not constitute a “refunding issue” as defined in Section 1.150-1(d) of the Regulations, and no part of the proceeds of this Lease or any such Advances will be used to pay or discharge any obligations of the Lessee the interest on which is or purports to be excludable from gross income under the Code or any predecessor provision of law. (L) In compliance with Section 149(e) of the Code relating to information reporting, the Lessee will file or cause to be filed with the Internal Revenue Service Center, Ogden, UT 84201, within fifteen (15) days from the execution of this Lease, IRS Form 8038-G or 8038-GC, as appropriate, reflecting the total aggregate amount of Advances that can be made pursuant to this Lease. (M) None of the proceeds of this Lease or the Advances to be made hereunder will be used directly or indirectly to replace funds of the Lessee used directly or indirectly to acquire obligations at a yield materially higher than the yield on this Lease or otherwise invested in any manner. No portion of the Advances will be made for the purpose of investing such portion at a materially higher yield than the yield on this Lease. (N) Inasmuch as Advances will be made under this Lease only when and to the extent the Lessee reasonably determines, identifies and experiences the need therefor, and will remain outstanding and unpaid only until such time as the Lessee has moneys available to repay the same, the Lessee reasonably expects that (I) the Advances will not be made sooner than necessary; (II) no proceeds from the Advances will be invested at a yield higher than the yield on this Lease; and (III) the Advances and this Lease will not remain outstanding and unpaid longer than necessary. (O) The Lessee will either (i) spend all of the moneys advanced pursuant to this Lease immediately upon receipt thereof, without investment, on the portion of the Leased Property that is to be financed thereby; or (ii) invest such moneys at the highest yield allowable and practicable under the circumstances until they are to be spent on the portion of the Leased Property that is to be financed thereby, and track, keep records of, and pay to the United States of America, all rebatable arbitrage pertaining thereto, at the times, in the amounts, in the manner, and to the extent required under Section 148(f) of the Code and the Treasury Regulations promulgated in connection therewith. At least five percent (5%) of the total amount of moneys that are expected to be advanced pursuant to this Lease are reasonably expected to have been expended on the Leased Property within six (6) months from the date of this Lease. All moneys to be advanced pursuant to this Lease are reasonably expected to have been expended on the Leased Property no later than the earlier of: (I) the date twelve (12) months from the date such moneys are advanced; and (II) the date three (3) years from the date of this Lease. Packet Pg 114 8 7 (P) This Lease and the Advances to be made hereunder are not and will not be part of a transaction or series of transactions that attempts to circumvent the provisions of Section 148 of the Code and the regulations promulgated in connection therewith (I) enabling the Lessee to exploit the difference between tax-exempt and taxable interest rates to gain a material financial advantage, and (II) overburdening the tax-exempt bond market, as those terms are used in Section 1.148-10(a)(2) of the Regulations. (ii) Arbitrage Rebate Under Section 148(f) of the Code. With respect to the arbitrage rebate requirements of Section 148(f) of the Code, either (check applicable box): (A) Lessee Qualifies for Small Issuer Exemption from Arbitrage Rebate. The Lessee hereby certifies and represents that it qualifies for the exception contained in Section 148(f)(4)(D) of the Code from the requirement to rebate arbitrage earnings from investment of proceeds of the Advances made under this Lease (the “Rebate Exemption”) as follows: (1) The Lessee has general taxing powers. (2) Neither this Lease, any Advances to be made hereunder, nor any portion thereof are private activity bonds as defined in Section 141 of the Code (“Private Activity Bonds”). (3) Ninety-five percent (95%) or more of the net proceeds of the Advances to be made hereunder are to be used for local government activities of the Lessee (or of a governmental unit, the jurisdiction of which is entirely within the jurisdiction of the Lessee). (4) Neither the Lessee nor any aggregated issuer has issued or is reasonably expected to issue any tax-exempt obligations other than Private Activity Bonds (as those terms are used in Section 148(f)(4)(D) of the Code) during the current calendar year, including the Advances to be made hereunder, which in the aggregate would exceed $5,000,000 in face amount, or $15,000,000 in face amount for such portions, if any, of any tax- exempt obligations of the Lessee and any aggregated issuer as are attributable to construction of public school facilities within the meaning of Section 148(f)(4)(D)(vii) of the Code. For purposes of this Section, “aggregated issuer” means any entity which (a) issues obligations on behalf of the Lessee, (b) derives its issuing authority from the Lessee, or (c) is subject to substantial control by the Lessee. The Lessee hereby certifies and represents that it has not created, does not intend to create and does not expect to benefit from any entity Packet Pg 115 8 8 formed or availed of to avoid the purposes of Section 148(f)(4)(D)(i)(IV) of the Code. Accordingly, the Lessee will qualify for the Rebate Exemption granted to governmental units issuing less than $5,000,000 under Section 148(f)(4)(D) of the Code ($15,000,000 for the financing of public school facilities as described above), and the Lessee shall be treated as meeting the requirements of Paragraphs (2) and (3) of Section 148(f) of the Code relating to the required rebate of arbitrage earnings to the United States with respect to this Lease and the Advances to be made hereunder. - or - (B) Lessee Will Keep Records of and Will Rebate Arbitrage. The Lessee does not qualify for the small issuer Rebate Exemption described above, and the Lessee hereby certifies and covenants that it will account for, keep the appropriate records of, and pay to the United States, the rebate amount, if any, earned from the investment of gross proceeds of this Lease and the Advances to be made hereunder, at the times, in the amounts, and in the manner prescribed in Section 148(f) of the Code and the applicable Regulations promulgated with respect thereto. (m) Qualified Tax-Exempt Obligations. Based on the following representations of the Lessee, the Lessee hereby designates this Lease and the interest components of the Lease Payments hereunder as “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Code: (i) this Lease and the Lease Payments hereunder are not private activity bonds within the meaning of Section 141 of the Code; (ii) the Lessee reasonably anticipates that it, together with all aggregated issuers, will not issue during the current calendar year obligations (other than those obligations described in clause (iii) below) the interest on which is excluded from gross income for federal income tax purposes under Section 103 of the Code which, when aggregated with this Lease, will exceed an aggregate principal amount of $10,000,000; (iii) and notwithstanding clause (ii) above, Lessee and its aggregated issuers may have issued in the current calendar year and may continue to issue during the remainder of the current calendar year private activity bonds other than qualified 501(c)(3) bonds as defined in Section 145 of the Code. For purposes of this subsection, “aggregated issuer” means any entity which (a) issues obligations on behalf of the Lessee, (b) derives its issuing authority from the Lessee, or (c) is subject to substantial control by the Lessee. The Lessee hereby certifies and represents that it has not created, does not intend to create and does not expect to benefit from any entity formed or availed of to avoid the purposes of Section 265(b)(3)(C) or (D) of the Code. Packet Pg 116 8 9 Section 2.2 Representations, Covenants and Warranties of the Bank. The Bank is a national banking association, duly organized, existing and in good standing under and by virtue of the laws of the United States of America, has the power to enter into this Lease, is possessed of full power to own and hold real and personal property, and to lease and sell the same, and has duly authorized the execution and delivery of this Lease. This Lease, constitutes the legal, valid and binding obligation of the Bank, enforceable in accordance with its terms, except to the extent limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles affecting the rights of creditors generally. ARTICLE III AGREEMENT TO LEASE; TERM OF LEASE; LEASE PAYMENTS Section 3.1 Lease. The Bank hereby leases the Leased Property to the Lessee, and the Lessee hereby leases the Leased Property from the Bank, upon the terms and conditions set forth herein. In conjunction therewith, Lessee shall act as agent of the Bank to acquire and obtain delivery of the Leased Property and hereby agrees to cause the acquisition and delivery of the Leased Property at the times and places set forth for such acquisitions and delivery. It is hereby understood that all such Lease Payments shall be abated until the Leased Property shall be acquired and delivered with such Lease Payments resuming proportionately with the actual acquisition and delivery of such Leased Property. Concurrently with its execution of this Lease, the Lessee shall deliver to the Bank fully completed documents substantially in the forms attached hereto as Exhibits A through E and Exhibit H. Upon delivery and acceptance of the Leased Property by the Lessee, Lessee shall deliver to Bank an executed copy of the Delivery and Acceptance Certificate attached hereto as Exhibit F. As a condition to precedent to each Advance, Lessee shall provide Lessor with a completed Lease Purchase Agreement Form of Advance attached in Exhibit G along with: 1) the name and address of or wire instructions for all Payees to whom funds should be disbursed from such Advance; 2) the amount to be Advanced; 3) the purpose(s) for such Advance; and 4) all invoices of vendors showing that each obligation, item of cost, or expense has been properly incurred, is a proper charge against this Lease/Purchase Agreement, and has not been the basis for a previous Advance. Section 3.2 Term. The Term of this Lease shall commence on the date of execution hereof and shall end on December 1, 2022 (the “Maturity Date”), unless extended pursuant to Section 3.3, or unless terminated prior thereto upon the earliest of any of the following events: (a) Default and Termination. A default by the Lessee and the Bank's election to terminate this Lease under Section 8.2 hereof; Packet Pg 117 8 10 (b) Payment of All Lease Payments. The payment by the Lessee of all Lease Payments required under Section 3.4 hereof; (c) Prepayment. Upon a prepayment of Lease Payments pursuant to Article IX hereof. Section 3.3 Extension of Lease Term. If on the Maturity Date, the Lease Payments shall not be fully paid, or if the Lease Payments hereunder shall have been abated at any time and for any reason, then the Term shall be extended until all Lease Payments shall be fully paid, except that the Term shall in no event be extended ten years beyond the Maturity Date. Section 3.4 Lease Payments. (a) Time and Amount. Subject to the provisions of Section 3.8 (regarding abatement in event of loss of use of any portion of the Leased Property), and Article IX (regarding prepayment of Lease Payments), the Lessee agrees to pay to the Bank, its successors and assigns, as annual rental for the use and possession of the Leased Property, the Lease Payments (denominated into components of principal and interest) in the amounts specified in Exhibit A, to be due and payable in arrears on each payment date identified in Exhibit A (or if such day is not a Business Day, the next succeeding Business Day) specified in Exhibit A (the “Lease Payment Date”). In the event that the Lessee does not pay a Lease Payment due on the respective Lease Payment Date, the Bank shall provide prompt written notice to the Lessee of such failure to pay; provided, however, that failure to give such notice shall not excuse any event of default under such Section 8.1 hereof. (b) Rate on Overdue Payments. In the event the Lessee should fail to make any of the Lease Payments required in this Section, the Lease Payment in default shall continue as an obligation of the Lessee until the amount in default shall have been fully paid, and the Lessee agrees to pay the same with interest thereon, to the extent permitted by law, from the date such amount was originally payable at the rate equal to the original interest rate payable with respect to such Lease Payments. (c) Additional Payments. Any additional payments required to be made by the Lessee hereunder, including but not limited to Sections 4.1, 4.2, 4.3, and 6.3 of this Lease, shall constitute additional rental for the Leased Property. Section 3.5 Fair Rental Value. The Lease Payments shall be paid by the Lessee in consideration of the right of possession of, and the continued quiet use and enjoyment of, the Leased Property during each such period for which said Lease Payments are to be paid. The parties hereto have agreed and determined that such total rental represents the fair rental value of the Leased Property. In making such determination, consideration has been given to the value of the Leased Property, other obligation of the parties under this Lease (including but not limited to costs of maintenance, taxes and insurance), the uses and purposes which may be served by the Leased Property and the benefits therefrom which will accrue to the Lessee and the general public, and the transfer of the Bank's leasehold interest in the Leased Property at the end of the Term. Packet Pg 118 8 11 Section 3.6 Budget and Appropriation. Subject to the provisions of Section 3.8, the Lessee covenants to take such action as may be necessary to include all Lease Payments due hereunder in its annual budget and to make the necessary annual appropriations therefor, and to maintain such items to the extent unpaid for that Fiscal Year in its budget throughout such Fiscal Year. The covenants on the part of the Lessee herein contained shall be deemed to be and shall be construed to be duties imposed by law and it shall be the ministerial duty of each and every public official of the Lessee to take such action and do such things as are required by law in the performance of the official duty of such officials to enable the Lessee to carry out and perform the covenants and agreements in this Lease agreed to be carried out and performed by the Lessee. Section 3.7 Use and Possession. The total Lease Payments due in any Fiscal Year shall be for the Lessee's right to use and possession of the Leased Property for such Fiscal Year. Section 3.8 Abatement of Lease Payments in Event of Loss of Use. (a) Period. The obligation of the Lessee to pay Lease Payments shall be abated during any period in which by reason of damage, destruction or taking by eminent domain or condemnation with respect to any portion of the Leased Property there is substantial interference with the Lessee's right to use and possession of such portion of the Leased Property. (b) Amount. The amount of such abatement shall be determined by the Lessee such that the resulting Lease Payments represent fair consideration for the Lessee's right to use and possession of the portion of the Leased Property not damaged, destroyed or taken. Such abatement shall commence with such damage, destruction or taking and end with the substantial completion of the replacement or work or repair; provided, however, that during abatement, special sources of money, including without limitation proceeds of rental interruption insurance, shall be applied to pay the Lease Payments. (c) Repair or Replacement. In the event of such abatement, the Lessee will use its best efforts to repair or replace the damaged or destroyed or taken portion of the Leased Property, as the case may be, from Net Proceeds, subject to the requirements of Section 5.1 hereof, or special funds of the Lessee or other moneys the application of which would not result in the obligations of the Lessee hereunder constituting indebtedness of the Lessee in contravention of the Constitution and laws of the State. Section 3.9 Possession of Leased Property Upon Termination. Upon termination of this Lease pursuant to Section 3.2(a), the Lessee shall transfer the Leased Property to the Bank in such manner as may be specified by the Bank, and the Bank shall have the right to take possession of the Leased Property by virtue of the Bank’s ownership interest as lessor of the Leased Property. To the extent the Leased Property is equipment, the Lessee at the Bank’s direction shall ship the Leased Property to the destination designated by the Bank, by loading the Leased Property at the Lessee’s cost and expense, on board such carrier as the Bank shall specify. Section 3.10 No Withholding. Packet Pg 119 8 12 Notwithstanding any dispute between the Bank and the Lessee, including a dispute as to the failure of any portion of the Leased Property in use by or possession of the Lessee to perform the task for which it is leased, the Lessee shall make all Lease Payments when due and shall not withhold any Lease Payments pending the final resolution of such dispute. Section 3.11 Net-Net-Net Lease. This Lease shall be deemed and construed to be a “net-net-net lease” and the Lessee hereby agrees that the Lease Payments shall be an absolute net return to the Bank, free and clear of any expenses, charges or set-offs whatsoever, except as expressly provided herein. Section 3.12 Offset. Subject to the provisions of Section 3.8, Lease Payments or other sums payable by the Lessee pursuant to this Lease shall not be subject to offset or counterclaim and the Lessee shall not be entitled to any credit against such Lease Payments or other sums by reason of any dispute between the Lessee and the Bank, any vendor or manufacturer of any part of the Leased Property, or any other person. ARTICLE IV INSURANCE Section 4.1 Casualty and Theft Insurance. (a) Casualty and Theft Insurance: Coverage. The Lessee shall procure and maintain, or cause to be procured and maintained, throughout the Term of this Lease, insurance against loss or damage to any portion of the Leased Property caused by fire and lightning, with extended coverage and theft, vandalism and malicious mischief insurance. Said extended coverage insurance shall, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance. (b) Amount. Such insurance shall be in an amount (except that such insurance may be subject to deductible clauses of not to exceed $50,000 for any one loss) not less than the replacement cost of the Leased Property. (c) Joint or Self-Insurance. Such insurance may be maintained as part of or in conjunction with any other insurance carried or required to be carried by the Lessee, and, subject to Bank’s consent and compliance with Section 4.3(b) hereof, may be maintained in the form of self-insurance by the Lessee. (d) Payment of Net Proceeds. The Net Proceeds of such insurance shall be applied as provided in Section 5.1. Section 4.2 Rental Interruption Insurance. (a) Coverage and Amount. The Lessee shall maintain or cause to be maintained, rental income or use and occupancy insurance in an amount not less than the maximum Lease Payments payable in any one year period (calculated based upon the maximum principal component hereunder as provided in Exhibit A and an interest rate as provided in Exhibit A hereto), to insure against abatement of Lease Packet Pg 120 8 13 Payments caused by perils covered by the insurance required to be maintained as provided in Section 4.1 hereof. (b) Joint Insurance. Such insurance may be maintained as part of or in conjunction with any other rental income insurance carried by the Lessee. (c) Payment of Net Proceeds. The Net Proceeds of such rental interruption insurance shall be paid to the Bank to be credited towards the payment of the Lease Payments in the order in which such Lease Payments come due and payable. Section 4.3 General Insurance Provisions. (a) Payment of Premiums. The Lessee shall pay or cause to be paid when due the premiums for all insurance policies required by this Lease. (b) Self Insurance. The Lessee may only self insure against the risks described in Section 4.1 hereof if and to the extent such self-insurance method or plan of protection shall afford reasonable protection to the Bank in light of all circumstances, giving consideration to cost, availability and similar plans or methods of protection adopted by other public agencies in the State other than the Lessee. Insurance provided through a California joint powers authority of which the Lessee is a member or with which the Lessee contracts for insurance shall be deemed to be self-insurance for purposes hereof. Any self-insurance maintained by the Lessee pursuant to this Article IV shall comply with the following terms: (1) The self-insurance program shall include an actuarially sound claims reserve fund out of which each self-insured claim shall be paid; the adequacy of such fund shall be evaluated on an annual basis by an independent insurance consultant; and any deficiencies in any self-insured claims reserve fund shall be remedied in accordance with the recommendation of such independent insurance consultant; (2) [Reserved] (3) In the event that the self-insurance program shall be discontinued, the actuarial soundness of its claims reserve fund, as determined by an independent insurance consultant, shall be maintained. Packet Pg 121 8 14 ARTICLE V DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS Section 5.1 Application of Net Proceeds. If Net Proceeds received by the Lessee are expected to equal at least 110% of the projected costs of replacement or repair, as demonstrated in an attached reconstruction budget provided at the time, and, in the event that damage, destruction or taking results or is expected to result in an abatement of Lease Payments, such replacement or repair can be fully completed within a period not in excess of the period in which rental interruption insurance proceeds, as described in Section 4.2 together with other identified available moneys, will be available to pay in full all Lease Payments coming due during such period as demonstrated in an attached reconstruction schedule provided at the time, then such Net Proceeds shall be used by the Lessee to replace or repair the damaged or taken facilities. If the Lessee cannot make the representations regarding repair or reconstruction in the paragraph above or replacement or repair of any portion of the Leased Property is not economically feasible or in the best interest of the Lessee, then the Net Proceeds shall be applied to prepayment of Lease Payments as provided in Article IX hereof; provided that in the event of damage or destruction in whole of the Leased Property and in the event such Net Proceeds, together with any other funds then on hand are not sufficient to prepay all the Lease Payments then outstanding, then the Lessee shall not be permitted to certify that repair, replacement or improvement of all of the Leased Property is not economically feasible or in the best interest of the Lessee. In such event, the Lessee shall proceed to repair, replace or improve the Leased Property as described herein from legally available funds in the then current Fiscal Year. ARTICLE VI COVENANTS WITH RESPECT TO THE LEASED PROPERTY Section 6.1 Use of the Leased Property. The Lessee represents and warrants that it has an immediate need for, and expects to make immediate use of, all of the Leased Property to carry out and give effect to the public purposes of the Lessee, which need is not temporary or expected to diminish in the foreseeable future. Section 6.2 Interest in the Leased Property and the Lease. (a) Bank Holds Leasehold Interest During Term. During the Term of this Lease, the Bank does and shall hold an ownership interest in the Leased Property as lessor thereof. The Lessee shall take any and all actions reasonably required, including but not limited to executing and filing any and all documents reasonably required, to maintain and evidence such title and interest at all times during the Term of this Lease. (b) Title Transferred to Lessee at End of Term. Upon expiration of the Term as provided in Section 3.2(b) or 3.2(c) hereof, all right, title and interest of the Bank in and to all of the Leased Property shall be transferred to and vest in the Lessee, without the necessity of any additional document of transfer. Packet Pg 122 8 15 Section 6.3 Maintenance, Utilities, Taxes and Assessments. (a) Maintenance; Repair and Replacement. Throughout the Term of this Lease, as part of the consideration for the rental of the Leased Property, all repair and maintenance of the Leased Property shall be the responsibility of the Lessee, and the Lessee shall pay for or otherwise arrange for the payment of the cost of the repair and replacement of the Leased Property resulting from ordinary wear and tear or want of care on the part of the Lessee or any sublessee thereof. In exchange for the Lease Payments herein provided, the Bank agrees to provide only the Leased Property, as hereinbefore more specifically set forth. The Lessee waives the benefits of subsections 1 and 2 of Section 1932 of the California Civil Code, but such waiver shall not limit any of the rights of the Lessee under the terms of this Lease. (b) Tax and Assessments; Utility Charges. The Lessee shall also pay or cause to be paid all taxes and assessments, including but not limited to utility charges, of any type or nature charged to the Lessee or levied, assessed or charged against any portion of the Leased Property or the respective interests or estates therein; provided that with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, the Lessee shall be obli gated to pay only such installments as are required to be paid during the Term of this Lease as and when the same become due. (c) Contests. The Lessee may, at its expense and in its name, in good faith contest any such taxes, assessments, utility and other charges and, in the event of any such contest, may permit the taxes, assessments or other charges so contested to remain unpaid during the period of such contest and any appeal therefrom; provided that prior to such nonpayment it shall furnish the Bank with the opinion of an independent counsel acceptable to the Bank to the effect that, by nonpayment of any such items, the interest of the Bank in such portion of the Leased Property will not be materially endangered and that the Leased Property will not be subject to loss or forfeiture. Otherwise, the Lessee shall promptly pay such taxes, assessments or charges or make provisions for the payment thereof in form satisfactory to the Bank. Section 6.4 Modification of the Leased Property. (a) Additions, Modifications and Improvements. The Lessee shall, at its own expense, have the right to make additions, modifications, and improvements to any portion of the Leased Property if such improvements are necessary or beneficial for the use of such portion of the Leased Property. All such additions, modifications and improvements shall thereafter comprise part of the Leased Property and be subject to the provisions of this Lease. Such additions, modifications and improvements shall not in any way damage any portion of the Leased Property or cause it to be used for purposes other than those authorized under the provisions of State and federal law or in any way which would impair the State tax-exempt status or the exclusion from gross income for federal income tax purposes of the interest components of the Lease Payments; and the Leased Property, upon completion of any additions, modifications and improvements made pursuant to this Section, shall be of a value which is not substantially less than the value of the Leased Property immediately prior to the making of such additions, modifications and improvements. (b) No Liens. Except for Permitted Encumbrances, the Lessee will not permit (i) any liens or encumbrances to be established or remain against the Leased Property or (ii) any mechanic's or other lien to be established or remain against the Leased Property for labor or materials furnished in connection with any additions, modifications or improvements made by the Lessee pursuant to this Section; provided that if any such mechanic’s lien is established and the Lessee shall first notify or cause to be notified the Bank of the Lessee's intention to do so, the Lessee may in good faith contest any lien filed or established against the Leased Property, and in such event may permit the items so contested to remain undischarged Packet Pg 123 8 16 and unsatisfied during the period of such contest and any appeal therefrom and shall provide the Bank with full security against any loss or forfeiture which might arise from the nonpayment of any such item, in form satisfactory to the Bank. The Bank will cooperate fully in any such contest. Section 6.5 Permits. The Lessee will provide all permits and licenses necessary for the ownership, possession, operation, and use of the Leased Property, and will comply with all laws, rules, regulations, and ordinances applicable to such ownership, possession, operation, and use. If compliance with any law, rule, regulation, ordinance, permit, or license requires changes or additions to be made to the Leased Property, such changes or additions will be made by the Lessee at its own expense. Section 6.6 Bank's Right to Perform for Lessee. If the Lessee fails to make any payment or to satisfy any representation, covenant, warranty, or obligation contained herein or imposed hereby, the Bank may (but need not) make such payment or satisfy such representation, covenant, warranty, or obligation, and the amount of such payment and the expense of any such action incurred by the Bank, as the case may be, will be deemed to be additional rent payable by the Lessee on the Bank’s demand. Section 6.7 Bank's Disclaimer of Warranties. The Bank has played no part in the selection of the Leased Property, the Lessee having selected the Leased Property independently from the Bank. The Bank, at the Lessee’s request, has acquired or arranged for the acquisition of the Leased Property and shall lease the same to the Lessee as herein provided, the Bank’s only role being the facilitation of the financing of the Leased Property for the Lessee. THE BANK MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, QUALITY, DURABILITY, SUITABILITY, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR FITNESS FOR THE USE CONTEMPLATED BY THE LESSEE OF THE LEASED PROPERTY, OR ANY PORTION THEREOF. THE LESSEE ACKNOWLEDGES THAT THE BANK IS NOT A MANUFACTURER OR VENDOR OF ALL OR ANY PORTION OF THE LEASED PROPERTY, AND THAT THE LESSEE IS LEASING THE LEASED PROPERTY AS IS. In no event shall the Bank be liable for incidental, direct, indirect, special or consequential damages, in connection with or arising out of this Lease, for the existence, furnishing, functioning or Lessee's use and possession of the Leased Property. Section 6.8 Indemnification. To the extent permitted by applicable law, the Lessee hereby agrees to indemnify and hold harmless the Bank, its directors, officers, shareholders, employees, agents, and successors from and against any loss, claim, damage, expense, and liability resulting from or attributable to the acquisition, construction, or use of the Leased Property. Notwithstanding the foregoing, the Bank shall not be indemnified for any liability resulting from the gross negligence or willful misconduct of the Bank. Section 6.9 Annual Financial Information. During the term of this Lease, the Lessee covenants and agrees to provide the Bank as soon as practicable when they are available; (i) a copy of the Lessee's final annual budget for each fiscal year; (ii) a copy of the Lessee's most recent financial statements; and (iii) any other financial reports the Bank may request from time to time. Packet Pg 124 8 17 ARTICLE VII ASSIGNMENT AND SUBLEASING Section 7.1 Assignment by the Bank. The parties hereto agree that all rights of Bank hereunder may be assigned, transferred or otherwise disposed of, either in whole or in part, provided that notice of any such assignment, t ransfer or other disposition is given to Lessee. Section 7.2 Assignment and Subleasing by the Lessee. The Lessee may not assign this Lease or sublease all or any portion of the Leased Property unless both of the following shall have occurred: (i) the Bank shall have consented to such assignment or sublease; and (ii) the Bank shall have received assurance acceptable to the Bank that such assignment or sublease: (A) is authorized under applicable state law, (B) will not adversely affect the validity of this Lease, and (C) will not adversely affect the exclusion from gross income for federal income tax purposes of the interest components of the Lease Payments. ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES Section 8.1 Events of Default Defined. The following shall be “events of default” under this Lease and the terms “events of default” and “default” shall mean, whenever they are used in this Lease, any one or more of the following events: (a) Payment Default. Failure by the Lessee to pay any Lease Payment required to be paid hereunder by the corresponding Lease Payment Date. (b) Covenant Default. Failure by the Lessee to observe and perform any warranty, covenant, condition or agreement on its part to be observed or performed herein or otherwise with respect hereto other than as referred to in clause (a) of this Section, for a period of 30 days after written notice specifying such failure and requesting that it be remedied has been given to the Lessee by the Bank; provided, however, if the failure stated in the notice cannot be corrected within the applicable period, the Bank shall not unreasonably withhold their consent to an extension of such time if corrective action is instituted by the Lessee within the applicable period and diligently pursued until the default is corrected. (c) Bankruptcy or Insolvency. The filing by the Lessee of a case in bankruptcy, or the subjection of any right or interest of the Lessee under this Lease to any execution, garnishment or attachment, or adjudication of the Lessee as a bankrupt, or assignment by the Lessee for the benefit of creditors, or the entry by the Lessee into an agreement of composition with creditors, or the approval by a court of competent jurisdiction of a petition applicable to the Lessee in any proceedings instituted under the provisions of the federal bankruptcy code, as amended, or under any similar act which may hereafter be enacted. Packet Pg 125 8 18 Section 8.2 Remedies on Default. Whenever any event of default referred to in Section 8.1 hereof shall have happened and be continuing, it shall be lawful for the Bank to exercise any and all remedies available pursuant to law or granted pursuant to this Lease. Notwithstanding anything herein to the contrary, THERE SHALL BE NO RIGHT UNDER ANY CIRCUMSTANCES TO ACCELERATE THE LEASE PAYMENTS OR OTHERWISE DECLARE ANY LEASE PAYMENTS NOT THEN IN DEFAULT TO BE IMMEDIATELY DUE AND PAYABLE. Section 8.3 No Remedy Exclusive. No remedy conferred herein upon or reserved to the Bank is intended to be exclusive and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Lease or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Bank to exercise any remedy reserved to it in this Article it shall not be necessary to give any notice, other than such notice as may be required in this Article or by law. Section 8.4 Agreement to Pay Attorneys' Fees and Expenses. In the event either party to this Lease should default under any of the provisions hereof and the nondefaulting party should employ attorneys or incur other expenses for the collection of moneys or the enforcement of performance or observance of any obligation or agreement on the part of the defaulting party contained herein, the defaulting party agrees that it will pay on demand to the nondefaulting party the reasonable fees of such attorneys and such other expenses so incurred by the nondefaulting party. Section 8.5 Waiver of Certain Damages. With respect to all of the remedies provided for in this Article VIII, the Lessee hereby waives any damages occasioned by the Bank’s repossession of the Leased Property upon an event of default. ARTICLE IX PREPAYMENT OF LEASE PAYMENTS Section 9.1 Extraordinary Prepayment From Net Proceeds. The Lessee shall be obligated to prepay the Lease Payments in whole or in part on any date, from and to the extent of any Net Proceeds or other moneys pursuant to Section 5.1 hereof. The Lessee and the Bank hereby agree that such Net Proceeds or other moneys shall be credited towards the Lessee's obligations hereunder (except in the case of such prepayment of the Lease Payments in whole) pro rata among Lease Payments so that following prepayment, the remaining annual Lease Payments will be proportional to the initial annual Lease Payments. Packet Pg 126 8 19 Section 9.2 Prepayment. Subject to the terms and conditions of this Section, the Bank hereby grants an option to the Lessee to prepay in whole or in part on any Lease Payment Date at a prepayment price equal to the outstanding principal component of the Lease Payments, without premium, plus the accrued interest component of the Lease Payments to such prepayment date. To exercise this option, the Lessee must deliver to the Bank written notice specifying the date on which the prepayment is to be made (the “Closing Date”), which notice must be delivered to the Bank at least thirty (30) days prior to the Closing Date specified therein. ARTICLE X MISCELLANEOUS Section 10.1 Notices. Unless otherwise specifically provided herein, all notices shall be in writing addressed to the respective party as set forth below (or to such other address as the party to whom such notice is intended shall have previously designated by written notice to the serving party), and may be personally served, telecopied, or sent by overnight courier service or United States mail: If to Bank: ZB, N.A. One South Main, 17th Floor Salt Lake City, Utah 84133 Attention: Kirsi Hansen If to the Lessee: City of San Luis Obispo 990 Palm Street San Luis Obispo, CA 93401 Attention: Kristin Eriksson Such notices shall be deemed to have been given: (a) if delivered in person, when delivered; (b) if delivered by telecopy, on the date of transmission if transmitted by 4:00 p.m. (Salt Lake City time) on a Business Day or, if not, on the next succeeding Business Day; (c) if delivered by an overnight courier service, two Business Days after delivery to such courier properly addressed; or (d) if by United States mail, four Business Days after depositing in the United States mail, postage prepaid and properly addressed. Section 10.2 System of Registration. The Lessee shall be the Registrar for this Lease and the rights to payments hereunder. The Bank shall be the initial Registered Owner of rights to receive payments hereunder. If the Bank transfers its rights to receive payments hereunder, the Registrar shall note on this Lease the name and address of the transferee. Packet Pg 127 8 20 Section 10.3 Reserved Section 10.4 Binding Effect. This Lease shall inure to the benefit of and shall be binding upon the Bank and the Lessee and their respective successors and assigns. Section 10.5 Amendments. This Lease may be amended or modified only upon the written agreement of both the Bank and the Lessee. Section 10.6 Section Headings. Section headings are for reference only, and shall not be used to interpret this Lease. Section 10.7 Severability. In the event any provision of this Lease shall be held invalid or unenforceable by a court of competent jurisdiction, to the extent permitted by law, such holding shall not invalidate or render unenforceable any other provision hereof. Section 10.8 Entire Agreement. This Lease and the attached Exhibits constitute the entire agreement between the Bank and the Lessee and supersedes any prior agreement between the Bank and the Lessee with respect to the Leased Property, except as is set forth in an Addendum, if any, which is made a part of this Lease and which is signed by both the Bank and the Lessee. Section 10.9 Execution in Counterparts. This Lease may be executed in any number of counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 10.10 Arbitration. To the extent permitted by law, any dispute, controversy or claim arising out of or based upon the terms of this Lease or the transactions contemplated hereby shall be settled exclusively and finally by binding arbitration. Upon written demand for arbitration by any party hereto, the parties to the dispute shall confer and attempt in good faith to agree upon one arbitrator. If the parties have not agreed upon an arbitrator within thirty (30) days after receipt of such written demand, each party to the dispute shall appoint one arbitrator and those two arbitrators shall agree upon a third arbitrator. Any arbitrator or arbitrators appointed as provided in this section shall be selected from panels maintained by, and the binding arbitration shall be conducted in accordance with the commercial arbitration rules of, the American Arbitration Association (or any successor organization), and such arbitration shall be binding upon the parties. The arbitrator or arbitrators shall have no power to add or detract from the agreements of the parties and may not make any ruling or award that does not conform to the terms and conditions of this Lease. The arbitrator or arbitrators shall have no authority to award punitive damages or any other damages not measured by the prevailing party’s actual damages. Judgement upon an arbitration award may be entered in any court having jurisdiction. The prevailing party in the arbitration proceedings shall be awarded reasonable attorney fees and expert witness costs and expenses. Packet Pg 128 8 21 Section 10.11 Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. Packet Pg 129 8 22 IN WITNESS WHEREOF, the Bank has caused this Lease to be executed in its name by its duly authorized officer, and the Lessee has caused this Lease to be executed in its name by its duly authorized officer, as of the date first above written. ZB, N.A., as Lessor By _________________________________________________ Title ________________________________________________ CITY OF SAN LUIS OBISPO, as Lessee By _________________________________________________ Authorized Officer Packet Pg 130 8 EXHIBIT A SCHEDULE OF LEASE PAYMENTS 1. Interest. Interest components have been computed at the rate of one point ninety-four percent (1.94%) per annum calculated based on actual number of days elapsed during a 360 day year. 2. Payment Dates and Amounts. Packet Pg 131 8 EXHIBIT B DESCRIPTION OF LEASED PROPERTY One (1) Street Sweeper One (1) Dump Truck Packet Pg 132 8 EXHIBIT C RESOLUTION OF GOVERNING BODY A resolution approving the form of the Lease/Purchase Agreement with ZB, N.A., Salt Lake City, Utah and authorizing the execution and delivery thereof. Whereas, the City Council (the “Governing Body”) of City of San Luis Obispo (the “Lessee”) have determined that a true and very real need exists for the leasing of the property described in the Lease/Purchase Agreement presented to this meeting; and Whereas, the Lessee has reviewed the form of the Lease/Purchase Agreement and has found the terms and conditions thereof acceptable to the Lessee; and Whereas, the Governing Body has taken the necessary steps under applicable law to arrange for the leasing of such property under the Lease/Purchase Agreement; and Be it resolved by the Governing Body as follows: Section 1. The terms of said Lease/Purchase Agreement are in the best interests of Lessee for the leasing of the property described therein. Section 2. The appropriate officers and officials of the Lessee are hereby authorized and directed to execute and deliver the Lease/Purchase Agreement in substantially the form presented to this meeting and any related documents and certificates necessary to the consummation of the transactions contemplated by the Lease/Purchase Agreement for and on behalf of the Lessee. The officers and officials of the Lessee may make such changes to the Lease/Purchase Agreement and related documents and certificates as such officers deem necessary or desirable, such approval to be conclusively evidenced by the execution and delivery thereof. Section 3. The officers and officials of the Governing Body and the Lessee are hereby authorized and directed to fulfill all obligations under the terms of the Lease/Purchase Agreement. Packet Pg 133 8 I hereby certify that the foregoing is a full, true and correct copy of a resolution duly adopted by the City Council of the City of San Luis Obispo at a meeting thereof on ____________________, 2017 by the following vote of the members thereof: AYES: NOES: ABSENT: CITY OF SAN LUIS OBISPO By __________________________________________ Print Name ____________________________________ Title _________________________________________ Attest: By Secretary of the Board Packet Pg 134 8 3477 EXHIBIT D FORM OF OPINION OF COUNSEL TO LESSEE To: ZB, N.A. One South Main Street, 17th Floor Salt Lake City, Utah 84133 Gentlemen: As counsel for City of San Luis Obispo (“Lessee”), I have examined duly executed originals of the Lease/Purchase Agreement (the “Lease”) dated this 1st day of December, 2017, between the Lessee and ZB, N.A., Salt Lake City, Utah (“Bank”), and the proceedings taken by Lessee to authorize and execute the Lease (the “Proceedings”). Based upon such examination as I have deemed necessary or appropriate, I am of the opinion that: 1. Lessee is a body corporate and politic, legally existing under the laws of the State of California (the “State”). 2. The Lease and the Proceedings have been duly adopted, authorized, executed, and delivered by Lessee, and do not require the seal of Lessee to be effective, valid, legal, or binding. 3. The governing body of Lessee has complied with all applicable open public meeting and notice laws and requirements with respect to the meeting at which the Proceedings were adopted and the Lessee's execution of the Lease was authorized. 4. The Lease is a legal, valid, and binding obligation of Lessee, enforceable against the Lessee in accordance with its terms except as limited by the state and federal laws affecting remedies and by bankruptcy, reorganization, or other laws of general application affecting the enforcement of creditor's rights generally. 5. Either there are no usury laws of the State applicable to the Lease, or the Lease is in accordance with and does not violate all such usury laws as may be applicable. 6. Either there are no procurement or public bidding laws of the State applicable to the acquisition and leasing of the Leased Property (as defined in the Lease) from the Bank under the Lease, or the acquisition and leasing of the Leased Property from the Bank under the Lease comply with all such procurement and public bidding laws as may be applicable. 7. There are no legal or governmental proceedings or litigation pending or, to the best of my knowledge, threatened or contemplated (or any basis therefor) wherein an unfavorable decision, ruling or finding might adversely affect the transactions contemplated in or the validity of the Lease. 8. The adoption, execution and/or delivery of the Lease and the Proceedings, and the compliance by the Lessee with their provisions, will not conflict with or constitute a breach of or default under any court decree or order or any agreement, indenture, lease or other instrument or any existing law or administrative regulation, decree or order to which the Lessee is subject or by which the Lessee is or may be bound. __________________________ Attorney for Lessee Packet Pg 135 8 EXHIBIT E SECURITY DOCUMENTS Attach California Certificates of Title showing the following lien holder: ZB, N.A. One South Main Street, 17th Floor Salt Lake City, UT 84133 Packet Pg 136 8 EXHIBIT F DELIVERY AND ACCEPTANCE CERTIFICATE To: ZB, N.A. Reference is made to the fixed rate Equipment Lease Agreement between the undersigned (“Lessee”), and ZB, N.A. (“Lessor”), dated December 1, 2017, (“the Lease”) and to the Equipment as such term is defined therein. In connection therewith we are pleased to confirm to you the following: 1. All of the Equipment has been delivered to and received by the undersigned; all installation or other work necessary prior to the use thereof has been completed; said Equipment has been examined and/or tested and is in good operating order and condition and is in all respects satisfactory to the undersigned and as represented, and that said Equipment has been accepted by the undersigned and complies with all terms of the Lease. Consequently, you are hereby authorized to pay for the Equipment in accordance with the terms of any purchase orders for the same. 2. In the future, in the event the Equipment fails to perform as expected or represented we will continue to honor the Lease in all respects and continue to make our rental and other payments thereunder in the normal course of business and we will look solely to the vendor, distributor or manufacturer for recourse. 3. We acknowledge that Bank is neither the vendor nor manufacturer or distributor of the Equipment and has no control, knowledge or familiarity with the condition, capacity, functioning or other characteristics of the Equipment. 4. The serial number for each item of Equipment which is set forth on Exhibit “B” to the Lease is correct. This certificate shall not be considered to alter, construe, or amend the terms of the Lease. Lessee: CITY OF SAN LUIS OBISPO By: __________________________________________ (Authorized Signature) Date: ________________________________________ Packet Pg 137 8 EXHIBIT G FORM OF ADVANCE RE: . [NAME OF LESSEE] ZB, N.A. One South Main Street, 17th Floor Salt Lake City, UT 84133 You are hereby authorized to disburse with regard to the above-referenced transaction the following: ADVANCE NUMBER: __________ NAME AND ADDRESS OF PAYEE: ___________________________________ ___________________________________ ___________________________________ OR, WIRE INSTRUCTIONS OF PAYEE: ___________________________________ ___________________________________ ___________________________________ ___________________________________ AMOUNT: $ _________________________ PURPOSE FOR WHICH EXPENSE HAS BEEN INCURRED: ___________________ _______________________________________________________________________ _______________________________________________________________________ PLEASE ATTACH INVOICES. Each obligation, item of cost, or expense mentioned herein has been properly incurred, is a proper charge against the Lease/Purchase Agreement, and has not been the basis for a previous Advance. DATED: ___________________ By: ______________________________ Title: ______________________________ Packet Pg 138 8 EXHIBIT H FORM 8038 (Attached) Packet Pg 139 8 R ______ RESOLUTION NO._________(2017 Series) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, APPROVING EQUIPMENT LEASE WHEREAS, the City Council (the “Governing Body”) of City of San Luis Obispo (the “Lessee”) have determined that a true and very real need exists for the leasing of the property described in the Lease/Purchase Agreement presented to this meeting; and WHEREAS, the Lessee has reviewed the form of the Lease/Purchase Agreement and has found the terms and conditions thereof acceptable to the Lessee; and WHEREAS, the Governing Body has taken the necessary steps under applicable law to arrange for the leasing of such property under the Lease/Purchase Agreement; and. NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: SECTION 1. The terms of said Lease/Purchase Agreement are in the best interests of Lessee for the leasing of the property described therein. SECTION 2. The appropriate officers and officials of the Lessee are hereby authorized and directed to execute and deliver the Lease/Purchase Agreement in substantially the form presented to this meeting and any related documents and certificates necessary to the consummation of the transactions contemplated by the Lease/Purchase Agreement for and on behalf of the Lessee. The officers and officials of the Lessee may make such changes to the Lease/Purchase Agreement and related documents and certificates as such officers deem necessary or desirable, such approval to be conclusively evidenced by the execution and delivery thereof. SECTION 3. The officers and officials of the Governing Body and the Lessee are hereby authorized and directed to fulfill all obligations under the terms of the Lease/Purchase Agreement. Upon motion of _______________________, seconded by _______________________, and on the following roll call vote: AYES: NOES: ABSENT: The foregoing resolution was adopted this _____ day of _____________________ 2017. ____________________________________ Mayor Heidi Harmon Packet Pg 140 8 Resolution No. _____ (2017 Series) Page 2 R ______ ATTEST: ____________________________________ Carrie Gallagher, City Clerk APPROVED AS TO FORM: _____________________________________ J. Christine Dietrick City Attorney IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, this ______ day of ______________, _________. ____________________________________ Carrie Gallagher City Clerk Packet Pg 141 8 Page intentionally left blank. Packet Pg 142 8 Meeting Date: 11/21/2017 FROM: Michael Codron, Community Development Director Prepared By: Xzandrea Fowler, Deputy Director – Long Range Planning SUBJECT: RESOLUTION OF INTENT TO APPLY THE PENDING CAPITAL FACILITIES FEE PROGRAM AND WATER AND WASTEWATER CAPACITY AND CONNECTION FEE PROGRAM TO NEW DEVELOPMENT RECOMMENDATION Adopt a Resolution (Attachment A) that requires applicable development projects to participate in the pending Capital Facilities Fee Program and the Water and Wastewater Capacity and Connection Fee Program should those projects be issued building permits on or after the publication of the updated development impact fee program. DISCUSSION On October 17, 2017, the City Council participated in a study session on the preliminary results of the Capital Facilities Fee Program Nexus Study and the Water and Wastewater Capacity and Connection Fee Program Study (e.g. development impact fees). The Council provided staff with guidance regarding policy considerations and directed staff to return with more analysis of the fee burden with respect to project feasibility, impacts to affordable housing objectives, identification of alternative infrastructure funding sources, refinement of the project improvement lists, implementation phasing and additional community outreach. With any new or proposed increase in development impact fees, agencies typically encounter a “rush the planning counter” by developers in order to secure project approval or vested rights status,1 before the new fees take effect. To address this concern, staff is recommending the adoption of a resolution that provides notice that it is the City’s intent to adopt updated development impact fee programs by March 2018, and that it is the expectation that all applicable development projects that are issued building permits once those impact fees have been established will be expected to pay those fees, since they will benefit from the improvements, facilities, and services that will be covered by those fees. In addition, staff recommends that the following condition of approval language be added to applicable development projects to provide additional clarification as to which fees that development project will be subject to: In accordance with Resolution No. _______ (2017 Series), the Developer shall 1 There are different ways a property owner can obtain a vested right. Under common law, an owner has a vested right “if [the owner] has performed substantial work and incurred substantial liabilities in good faith reliance upon a permit issued by the government.” Certain State laws also convey vested rights status. For example, Gov. Code § 66474.2 requires agencies to ordinances, policies, and standards in effect at the date the local agency has determined that the application is deemed complete per the Permit Streamlining Act, but provides a caveat that the agency can impose pending policy or rules if the agency provides certain notice. Packet Pg 143 9 pay any and all development impact fees, including water and wastewater capacity charges, in the amount in effect at the time of issuance of a building permit. Background The City is in the process of updating the fees charged to new development for a range of transportation, parks, general government, public safety, and water and wastewater capital facilities that are important to meeting service expectations and maintaining quality of life in the City. The economic vitality of the City is linked to critical investment in its urban infrastructure system. While the current configuration of the existing development impact fee programs has served an important role in funding infrastructure improvements throughout the City over the last twenty years, changing economic circumstances, new Specific Plans, and the City’s recently adopted public financing policies warrant an update of these programs. Implementation The pending facility and infrastructure impact fees for general government, public safety, parks and recreation, transportation, and water and wastewater capacity and connection would be collected at the time of building permit issuance. Therefore, staff is recommending that applicable development projects be conditioned to pay the new fees if they are place afte r the project has been approved but before building permits have been issued. The intent of this condition is to provide the development community with some certainty regarding which impact fees may be levied on their project. 1. Applicable Development Projects In general, all discretionary development review projects that have received approval, are currently in process, or will be in process between now and the adoption of the updated development impact fee programs will be subject to the updated fees if building permits are issued for development of those projects on or after the updated fees have been published (which is anticipated to occur in January 2018). The following are some exceptions: • Development projects that are entitled under a vesting tract map that specified when and which development impact fees would be applied to the project; • Ministerial development review projects that receive building permit issuance prior to the adoption of the updated development impact fees (which is anticipated to occur in March 2018); and • Discretionary development review projects that have received approval or are currently in process and will have building permits issued for that development prior to the publication of the updated fee programs (which is anticipated to occur in January 2018). 2. Benefits of Resolution and Condition of Approval Language There are benefits associated with providing the development community with additional clarity regarding the City’s intent to apply updated development impact fees to new development projects. Packet Pg 144 9 Greater certainty up front as to the impact fee amount and any other requirements can be of substantial benefit to a developer in saving time and costs as opposed to the situation with little clarity and ad hoc negotiations. Since development impact fees offer a mechanism for paying a development’s fair share of costs it can be of benefit to a developer compared to a situation where the largest project or the first project in an area must pay the full cost of improvements serving the larger surrounding area while subsequent projects pay less. CONCURRENCES The proposed resolution and condition of approval language has been reviewed by the Public Works, Utilities, Fire, Administration, and Parks and Recreation departments for concurrence. ENVIRONMENTAL REVIEW Modification of rates and charges by public agencies is statutorily exempt from the California Environmental Quality Act (CEQA) under Section 15273 of the Public Resources Code because changes in fees is not intended to fund expansion of capital projects not otherwise evaluated under CEQA. FISCAL IMPACT The adoption of the proposed resolution and the use of the proposed condition of approval language will help the City to accurately forecast the maximum amount of developmen t that could contribute to the potential impact fee revenue generation. This tool will provide some assurance that applicable development projects will contribute to their fair share of the cost to provide infrastructure/facility/service benefits that are necessary to serve that new development. Accurate forecasting of potential impact fee revenue generation also helps the City identify the amount of funding that will need to come from other funding sources in order to fully fund the identified facilities, improvements, and services that are covered under the development impact fee programs. When those potential impact fee revenues fall short additional pressure is put on the General Fund to cover the funding gap. ALTERNATIVES The Council could elect to: 1. Option 1: Don’t adopt the resolution or apply the condition of approval language to discretional development review projects. Attachments: a - Resolution of Intent Packet Pg 145 9 R _______ RESOLUTION NO. _____ (2017 SERIES) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, SETTING FORTH INTENT TO APPLY THE PENDING CAPITAL FACILITIES FEE PROGRAM AND WATER AND WASTEWATER CAPACITY AND CONNECTION FEE PROGRAM TO NEW DEVELOPMENT WHERAS, in October 2012, the City Council adopted an Economic Development Strategic Plan (EDSP). The EDSP was updated in 2015. The primary goal of the plan is to help create head of household jobs, and the Plan recognizes how important infrastructure financing is to accomplish this goal; and WHEREAS, in April 2013, the City Council authorized staff to hire a consultant to undertake an infrastructure financing analysis that would include a series of study session with the Council, as an implementation measure of the EDSP. The purpose of these study sessions was to provide the Council and the community with information, context and tools to support informed decision making and direction as many as needed; and WHEREAS, on January 21, 2014, the City Council held Study Sesssion#1: Introduction and Background. This session covered the current trends in municipal infrastructure financing, gave an overview of development impacts fee and reviewed the development of the City’s existing fee programs; and WHEREAS, on February 18, 2014, the City Council held Study Session #2: Economic and Policy Implications of Development Impact Fees. This session highlighted the tools available to the City and the policy implications and trade-offs associated with the various options; and WHEREAS, on March 18, 2014, the City Council held Study Session #3: Direction for updating the City’s Development Impact Fees. This session focused on the path forward, and City Council provided direction to staff, based on the first two sessions and accompanying documents, to proceed with the update of the City’s development impact fees, to integrate fees into and prioritize projects in the City’s Capital Improvement Program, and to explore new infrastructure funding strategies to support the objectives of the Economic Development Strategic Plan with particular focus on creating head of household jobs in San Luis Obispo; and WHEREAS, on August 16, 2016, the City Council held a fourth Study Session: Public Infrastructure Financing Framework and Draft Policies. This session provided a framework for a comprehensive approach to funding the City’s public facilities and infrastructure improvements and recommended draft policies for City Council consideration. The Framework provides a systematic way of considering funding and financing options so that the City is able to construct needed public facilities and infrastructure in a manner that funds facilities and infrastructure needed to maintain and enhance the City’s quality of life for current and future residents, employees and visitors, makes efficient use of available funding sources and financing mechanisms, implements General Plan policy, is fair and equitable with respect to incidence of burden (who pays), and is consistent with economic development objectives; and Packet Pg 146 9 Resolution No. _____ (2017 Series) Page 2 R ______ WHEREAS, on August 16, 2016, the City Council held a public hearing and authorized staff to issue a Request for Proposal (RFP) for the preparation of a Public/Capital Facilities Impact Fee Program Nexus Study. The preparation of a Nexus Study was identified in the 2015 -17 Financial Plan as an Objective that supports Major City Goals in Housing, Multi-Modal Transportation, as well as supports the other important objective of Downtown. It also continues implementation of the EDSP strategy to reduce barriers to job creation, which was part of the Major City Goal in Economic Development in the 2011-13 Financial Plan; and WHEREAS, on November 23, 2016, the City requested proposals for consultant services to prepare the City’s Capital Facilities Fee Program Nexus Study per Specification No. 91356. The scope of work for the Study included a Citywide Capital Facilities Fee Program with supplemental area-specific fees as needed and only if supported by nexus logic. The Capital Faciliti es Fee Programs scope of work also included categorical subcomponents for Transportation, Parkland and Park Improvements, General Government, and Public Safety; and WHEREAS, on April 21, 2017, pursuant to said request Economic & Planning Systems. Inc. submitted a proposal that was accepted by the city for said project; and WHEREAS, on June 29, 2017, the City conducted outreach with stakeholders in the development community at a Developer’s Roundtable meeting. At this meeting the study objectives and approach were discussed; and WHERAS, on October 5, 2017, the City conducted outreach with stakeholders in the community at the San Luis Chamber of Commerce, Economic Development Committee meeting, and with stakeholders in the development community at a Developer’s Roundtable meeting. At these meetings the preliminary maximum fees calculated as part of the Capital Facilities Fee Program Nexus Study were discussed; and WHEREAS, on October 11, 2017, the Planning Commission held a study session to review the preliminary results of the Capital Facilities Fee Program Nexus Study and the Water and Wastewater Capacity and Connection Fee Program Study. During the study session the development community expressed concern that the pending changes to the City’s development impact fee programs would create uncertainty for the development community which could result in unanticipated impacts to the fiscal feasibility for development projects; and WHEREAS, On October 17, the City Council held a study session to review the preliminary results of the Capital Facilities Fee Program Nexus Study and the Water and Wastewater Capacity and Connection Fee Program Study. During the study session, the development community expressed concern that the pending changes to the City’s development impact fee programs would create uncertainty for the development community which could result in unanticipated impacts to the fiscal feasibility for development projects. The City Council provided staff with guidance regarding policy considerations and directed staff to return with more analysis of the fee burden feasibility, impacts to affordable housing objectives, identification of alternative infrastructure funding sources, refinement of project improvement lists, implementation phasing and additional community outreach; and Packet Pg 147 9 Resolution No. _____ (2017 Series) Page 3 R ______ WHEREAS, with any new or proposed increase in development impact fees, agencies typically encounter a “rush the planning counter” by developers to secure project approval or vested rights status before the new fees take effect. To address this concern, staff recommended the adoption of this Resolution that provides notice that it is the City’s intent to adopt updated development impact fee programs by March 2018, and that it is the expectation that all applicable development projects that are issued building permits once those impact fees have been established will be expected to pay those fees, since they will benefit from the improvements, facilities, and services that will be covered by those fees. In addition, staff recommends that the following condition of approval language be added to applicable development projects to provide additional clarification as to which fees that development project will be subject to: In accordance with Resolution No.______ (2017 Series), the Developer shall pay any and all development impact fees, including water and wastewater capacity and connection fees, in the amount in effect at the time of issuance of building permit. The following is a list of development review projects that would be exempt from the resolution: a) Development projects that are currently entitled under a vesting tract map that specified which development impact fees would be applied to the project; b) Ministerial development review projects that receive building permit issuance prior to the adoption of the updated development impact fee programs; and c) Discretionary development review projects that are currently in process and will have building permits issued for that development prior to the establishment of the updated development impact fee programs. WHEREAS, the City Council finds that the condition of approval language is consistent with the objectives, policies, and strategies specified in the Economic Development Strategic Plan and the General Plan of the City of San Luis Obispo, as described below, and as further detailed in the accompanying City Council staff report prepared for this action: a) Costs of Growth – Land Use Policy 1.13.9: The city shall require the costs of public facilities and services needed for new development to be borne by the new development, unless the community chooses to help pay the costs for certain development to obtain community-wide benefits. The City shall consider a range of options for financing measures so that new development pays its fair share of costs of new service and facilities which are required to serve the project, and which are reasonably related to the new growth attributable to the development. b) Economic Development Strategic Plan Policy 1.4: Ensure that the fair-share structure includes appropriate percentages for each party bearing a portion of the infrastructure costs. Utilize a consultant to lead a series of study sessions with the City Council on the City’s impact fee stricture guided by existing policies and options for the City to consider related to how impact fees are determined, calculated, and applied. c) Furthermore, the condition of approval language is consistent with the Land Use and Circulation Element overall land use policies by preserving a funding source for city- wide community benefits, including but not limited to, financial support for Packet Pg 148 9 Resolution No. _____ (2017 Series) Page 4 R ______ transportation, parks and recreation, multi-modal infrastructure, public safety, and water and wastewater infrastructure in the City. NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: SECTION 1. Recitals. The above recitals are true and correct and are incorporated herein by this reference. SECTION 2. Action. Unless exempt as set forth below, all building permits for new development within the City shall be subject to the new or increased development impact fees as described in the Recitals above. The condition of approval language is hereby approved and shall be added to all discretionary development review projects that are currently in process or will be in process between the date of this resolution and the adoption of updated development impact fee programs. Projects exempt from this requirement are as follows: a) Development projects that are currently entitled under a vesting tract map; b) Ministerial development review projects that receive building permit issuance prior to the adoption of the updated development impact fee programs; and c) Discretionary development review projects that are currently in process and will have building permits issued for that development prior to the establishment of the updated development impact fee programs. SECTION 3. Upon the effective date of this Resolution, the Community Development Director is hereby authorized and directed to apply the condition of approval language to all applicable discretionary development review projects that are currently in process or will be in process between now and the adoption of the updated development impact fee programs, unless exempt from this Resolution as described above. In accordance with Government Code § 66474.2(b)(2), the City Clerk is hereby directed to publish notice of this Resolution per Government Code section 65090(a) describing the nature of the proposed changes to the City’s development impact fee program. The notice shall be subject to the approval of the City Attorney. SECTION 3. CEQA determination. The City Council herby finds that the modification of rates and charges by public agencies is statutorily exempt from the California Environmental Quality Act (CEQA) under section 15273 of the Public Resources Code because changes in fees is not intended to fund expansion of capital projects not otherwise evaluated under CEQA. Upon motion of _______________________, seconded by _______________________, and on the following roll call vote: AYES: NOES: ABSENT: The foregoing resolution was adopted this _____ day of _____________________ 2017. Packet Pg 149 9 Resolution No. _____ (2017 Series) Page 5 R ______ ____________________________________ Mayor Heidi Harmon ATTEST: ____________________________________ Carrie Gallagher City Clerk APPROVED AS TO FORM: _____________________________________ J. Christine Dietrick City Attorney IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, this ______ day of ______________, _________. ____________________________________ Carrie Gallagher City Clerk Packet Pg 150 9 Meeting Date: 11/21/2017 FROM: Michael Codron, Community Development Director Prepared By: Anne Schneider, PE, Chief Building Official SUBJECT: CODE ENFORCEMENT PRIORITIES RECOMMENDATION Receive a presentation, take public testimony, and provide direction to staff regarding: 1. Overall code enforcement priorities to guide the allocation of staff time and other resources in the Building and Safety Division of the Community Development Department (CDD); and 2. Direction regarding the use of enforcement tools - such as recorded notices of violation and increased and new fees and fines - to improve the efficiency and effectiveness of code enforcement activities; and 3. The scope and priority of a Safe Housing Outreach and Education Program for landlords and tenants; and 4. Additional program activities and enhancements to pursue as resources permit. REPORT-IN-BRIEF This report includes a variety of recommendations related to the City’s Code Enforcement Program. Public input received during previous public forums, and during the outreach process for this effort, support an ongoing focus on safe housing through educational efforts and a voluntary Safe Housing Education and Outreach Program. Additional enforcement tools, including increased fines, are recommended to improve the effectiveness of code enforcement activities. In addition, staff has identified the costs and resources needed to more adequately address a range of other code enforcement priorities (e.g. vacation rentals, business license compliance, plastic straws upon request enforcement) as resources permit. The specific recommendations included in this report are: 1. Update code enforcement priorities (Attachment A). 2. Increase use of the “special investigation fee,” which doubles the inspection cost of a building permit when construction is permitted after the fact. 3. Increase fines for Title 8, 15 and 17 violations to achieve better compliance, as follows: Packet Pg 151 10 Adjustment Potential Impact Increase the base fine amount $100, $200, $500 to $100, $500, $1,000 Double unpaid fines after 30 days $100 citation is $200 if unpaid at 30 days Repeat violations by same owner, whether same or different property Double base fine amount 4. Increase use of recording notices of violation on a property’s title to support due diligence efforts of prospective property owners and help ensure that code enforcement cases are not passed from one property owner to another without notice or resolution.1 5. Direct staff to further evaluate a Safe Housing Education and Outreach Program and return with a proposal and necessary budget amendments for implementation as part of the 2018-19 Financial Plan Supplement. 6. Direct staff to allocate appropriate resources to address additional workload associated with third-party contracts in effect to identify businesses operatin g without a license and illegal vacation rentals. 7. Direct staff to allocate appropriate resources to enforce new City regulations including the ban on polystyrene use and sales, plastic straws upon request, and prohibition of plastic bottles and single-use cups on City property. The direction provided by the City Council on code enforcement priorities will allow CDD to assign available resources to the most important issues of concern to the Council and community. The recommendations in this report are intended to minimize the fiscal impact associated with new code enforcement activities. As discussed in the report, some initiatives – such as the Safe Housing Education and Outreach Program – will not be able to be implemented immediately and will be addressed as part of the budget process for the 2018-19 Financial Plan Supplement, or the 2019-21 Financial Plan. DISCUSSION Background Following the repeal of the Rental Housing Inspection Program (RHIP), staff was directed to evaluate opportunities to promote safe housing in the community without the use of mandatory inspections. In addition, the repeal of the program resulted in changes to the Building and Safety Division’s organizational structure. This item is intended to provide the City Council with an opportunity to provide direction for code enforcement in the City, which will give staff the opportunity to organize the division, assign resources, and prioritize workload to achieve Council’s objectives. 1 Code enforcement officers will often hear complaints from property owners that they “bought the property” with the violation and, therefore, they shouldn’t be responsible for the violation. While a person’s level of culpability will play into how the case is enforced, the fact that a person purchased a property with a violation does not absolve the new property owner’s responsibility to fix the violation. Packet Pg 152 10 Currently, there are four full-time staff in the Code Enforcement Program of CDD’s Building and Safety Division. Two Code Enforcement Officers, and two Code Enforcement Technicians (also called Neighborhood Services Officers) provide complaint-based and pro-active services, respectively. These four employees currently receive supervision directly from the Chief Building Official and the Community Development Director. Support for code enforcement activities is also provided by the Building and Safety Supervisor, and the Principal Planner. Depending on the direction of the City Council regarding priorities for the program, a new organizational structure will be developed, as resources permit. The purpose of this report is to provide the City Council with sufficient background information, including feedback from the public, to provide policy direction for code enforcement. This is proposed to be accomplished through the approval of program priorities and new enforcement tools. Once the priorities are in place, a new organizational structure can be implemented to effectively accomplish program objectives. Traditional Code Enforcement Activities The core services provided by Code Enforcement Officers focus on the resolution of complex and technically challenging issues. These issues typically require a high degree of technical expertise and investment of time to find equitable and achievable solutions. Code Officers investigate a wide variety of potential violations, including: • construction activity without proper permits, • unsafe buildings, • unsafe living conditions, • hoarding conditions, and • compliance with use permit conditions and property development and maintenance standards. Officers also perform inspections in conjunction with Fire Prevention staff for annual Sorority and Fraternity housing inspections, and downtown bar occupancy safety checks. In their day to day activity, officers investigate and work to resolve complex issues such as a change of occupancy effected by a new business moving in without the required permits and approvals. They also investigate tenant complaints related to safe housing, respond to certain noise complaints, and monitor the City’s code enforcement hotline (805-594-8188) and complaints received via the City’s website (www.slocity.org/codeenforcement). Overall, these violations take time to resolve. The most effective resolution is rarely self-evident, and time is necessary to identify and coordinate a response. At all times, the objective is to move the property towards compliance as quick and as economically as possible. Nevertheless, resolving a violation can require substantial time and money by the property owner, which creates a very challenging dynamic when the property owner has limited resources to deal with the problem. This requires that code enforcement officers work closely with the complainant, the potential violator, and staff in other City programs (e.g. building inspectors, fire inspectors, Packet Pg 153 10 planners) to identify the best solution. Community-based code enforcement takes time and attention to help a property owner through the necessary processes and requirements. In this context, clear priorities enable CDD management to allocate staff time in a manner that ensures limited resources are applied to the community’s most important code enforcement problems. Neighborhood Services The City of San Luis Obispo has been engaged in Neighborhood Wellness activities since the passage of the first Neighborhood Enhancement Ordinance (“NEO”) in 1995. Neighborhood Wellness is the coordinated effort on the part of the City and the community to evaluate, develop and implement initiatives that support the health, well-being and vitality of the neighborhoods that make up our community. Neighborhood Wellness brings together residents, visitors, businesses, and institutions who have a shared interest in making San Luis Obispo a special place to live, work and visit. Neighborhood Wellness has been a Major City Goal or Other Important Objective in five of the past seven financial plans, with the goal of improving neighborhood quality and engagement. Neighborhood Services can be distinguished from other code enforcement activities in that it is proactive. Code Enforcement Technicians are responsible for routine patrols in neighborhoods and business districts throughout the City to identify violations, then contact residents, property owners, and business owners as the case may be, and work to resolve those violations. They are looking for exterior maintenance issues such as parking on the lawn, furniture on the roof, trash cans in the street and overgrown weeds. Overall Workload Measures The current workload2 covered by code enforcement staff is illustrated in the following table. Avg. per month Active Cases Requests Rec’d Cases Closed New Cases 2 Code Officers 1st Qtr 2017 124 24 14 18 2nd Qtr 2017 139 17 14 14 3rd Qtr 2017 141 24 8 9 2 Code Technicians 1st Qtr 20173 57 16 69 77 2nd Qtr 2017 49 26 84 73 3rd Qtr 2017 49 38 53 40 *- One position vacant until Mar 2017 Measuring Success Staff recommends the development of performance measures to gauge the effectiveness of code enforcement activities. For example, the International City Management Association maintains a 2 Although this metric is helpful, it should be emphasized that, in terms of assessing true workload, the reality is that some more complicated code enforcement cases take a considerable amount of time and resour ces (i.e. hoarding cases) and others are relatively straightforward (i.e. fence height violation). 3 One position vacant until March 2017 Packet Pg 154 10 set of performance measures. A few examples of these measures are listed here. 1. Average calendar days, inspection to forced compliance 2. Average calendar days, inspection to voluntary compliance 3. Percentage of cases resolved through forced compliance 4. Total cases available for resolution during the reporting period. To accomplish this type of measurement, investment in the Energov module specific to code enforcement is required. It is anticipated that a contract will be necessary to provide programming that cannot be done in-house at a cost of $10,000, which can be funded utilizing existing department resources. With the implementation of an integrated workflow, individual activities and process results can be recorded and extracted for reporting as performance measures. This will result in considerable time savings over the hand collection and tabul ation of data that is currently required. In the end, this small investment will allow officers to handle some of the additional workload identified in this report. Proposed Priorities The following table summarizes proposed code enforcement priorities, including a few examples. A more exhaustive classification of priorities is attached (Attachment A). Timeframe for Response Activities/Situations Covered Priority 1: Immediate Response • Dangerous Buildings • Dangerous Utilities or Materials • Examples include car accidents that damage a building, structure fires or assessment after an earthquake, unpermitted construction that poses an immediate public safety risk to occupants or surrounding properties. Priority 2: 24 Hour Response • Active construction without a permit • Substandard housing- no water, heat, unsafe use • Illegal/Unsafe sewage/electrical/gas/discharge/dumping • Unsecured buildings- accessible to unauthorized persons • Public Nuisance- refrigerator with doors on left outside • Unsafe Occupancy Priority 3: 48 Hour Response • Illegal/Unpermitted construction (completed) • Garage conversion/non-habitable space used for occupancy/commercial use in residential space/zone • Grading without a permit • Interior infestation of vermin • Unsafe Occupancy- i.e. living in commercial building Priority 4: 72 Hour Response • Noise and odor violations • Business License/TOT/Vacation Rentals • Polystyrene/Straws/Water bottles Packet Pg 155 10 • Signs • Animals & waste • Fence heights & locations • Exterior infestation of vermin Priority 4 (Proactive): 72 Hour Response Neighborhood Enhancement Ordinance (NEO) violations: • Overgrown weeds • Visible storage/abandoned vehicles/furniture on roof • Front yard parking • Screening of refuse containers • Graffiti • Premise identification Priority 4 (Complaint only): 72 Hour Response Neighborhood Enhancement Ordinance (NEO) violations: • Front yard paving • Fences • Deteriorated Paint • Parking lots • Planning Permit violations • Deteriorated pavement or pathways on private property The City’s ability to have an effective code enforcement program requires alignment between the priorities, the resources available to address code violations, and enforcement tools applied consistent with the priorities (e.g. stop work orders, orders to vacate unsafe buildings, liens and notices recorded against a property, citations and fines for specific violations). Once the priorities are established, the tools for resolving violations can be effectively implemented. To the extent that additional issues may be added to this list, the response times may need to be extended to continue to enforce all codes currently under the program’s responsibility. Tools for Resolving Code Enforcement Violations Staff works daily with property owners and tenants to identify and achieve resolution of violations of the municipal code. It is normally much easier to resolve a code enforcement violation in the moment than one that is uncovered years later. When a code violation such as construction without a permit is discovered in progress, it is normally straight-forward to resolve. The facts are easier to ascertain, and property owners are normally willing to cooperate to either remove the unpermitted construction or submit plans so that a permit can be issued. The construction codes adopted by the State change about every three years and include provisions that require the use of the most current code for any building permit issued. This means that work done without a permit in 2009 cannot receive a construction permit today under the codes in effect in 2009, it must comply with the code in effect on the date of the permit application, regardless of when the work was actually done. This requirement of the building code can make it especially difficult to correct a code violation after the fact because in some instances, a new code renders the previous work obsolete even when the prior work was done “to Packet Pg 156 10 code” at the time. The Building Code does not authorize the City to issue “retroactive” permits. Code enforcement cases are discovered though a variety of ways other than direct complaints from the community. Sometimes they come up when a property is researched by a resident, owner or realtor. Other cases are discovered during routine safety inspections such as business inspections and bar checks conducted during operating hours to understand operational safety issues like overcrowding. And some are found incidentally by staff working in the community performing other tasks such as neighborhood parking enforcement, investigation of official police complaints, and other business activities of the City. In most cases, the Administrative Citation Process (Attachment B) is the primary tool that is used to communicate with the property owner, identify the corrections that need to occur and establish the penalties associated with non-compliance. This procedure relies on noticing, education, and face to face contact to avoid the need to escalate a problem to a citation and fine whenever possible. The property owner can contest the City’s allegation of a code violation us ing a multi- part appeal process. The appeal process for disputing the alleged violation is spelled out in Section 1.24 of the City’s Municipal Code and includes a review by the Department Head (“Director’s Determination”), and progresses to a review by a hearing officer, administrative review board or the Construction Board of Appeal (CBOA) as specified. There is also a process for court action that the property owner may elect. Any changes directed to the Administrative Citation Process will be brought to Council for implementation at a later date. The following discussion addresses timeframes and fine amounts, which staff recommends modifying to achieve better compliance. In addition, staff is recommending more consistent and regular use of the process of recording notices of violation so that existing code enforcement cases that are not corrected are identified on the property title to notify future owners in advance of acquiring a property with outstanding code violations. 1. Administrative Citation Process A City is authorized to develop an administrative citation process per Government Code section 53069.4. If a notice of violation is issued and there is no response, or the property owner responds but is unwilling to make the required corrections even after a formal appeal is denied, then code enforcement officers have the discretion to issue an administrative citation to achieve compliance. Citations are issued as a written letter and are posted at the building site and sent by regular and certified mailing. The citations are due to be paid within 10 days. A property owner has the right to appeal a citation. There is currently no explicit penalty for failure to pay within 10 days, however, a subsequent citation for an increased amount can be issued at the expiration of that 10-day period after staff confirms that the violation still exists. Eventually, a violation that is ignored could result in daily citations, however, most cases are resolved before getting to this point, or the underlying problems are financial in nature making fines an ineffective method to achieve compliance. Sometimes code violations are resolved, but the citations remain unpaid. Unpaid citations at least 60 days past due can be annually processed for collection through the property tax rolls. Each May the Council approves the forwarding of a list of unpaid citations to the County Assessor’s Packet Pg 157 10 office for inclusion in the subsequent years’ property tax billing and staff recommends continuing with this process. NEO Violations The majority of citations issued are for Neighborhood Enhancement Ordinance (SLOMC 17.17) violations. Citations for property maintenance violations under SLOMC 17.17 such as yard parking or furniture on the roof and as further detailed in Exhibit A, are issued in three amounts. NEO Citations Minimum Timing Amount 1st Citation 10 days after notice $50.00 2nd Citation 10 days after 1st citation $100.00 3rd Citation 10 days after 2nd citation $200.00 Repeat within 12 months Immediate issuance Restart @ 1st citation As a number of these violations occur at rental properties that are in the control of the tenant and are related to behaviors (e.g. unscreened trash cans, parking on the lawn), staff ensures that both the tenant and the property owner are fully aware of the violations. Posting at the site and mailing to the owner accomplishes the notification goal. Building, Health and Safety, and Zoning Code Violations Citations issued by the code staff for violations of the codes adopted by SLOMC Title 15, portions of SLOMC Title 8 and those SLOMC Title 17 zoning code violations exclusive of SLOMC 17.17 are currently issued in three amounts. Building Code Citations Minimum Timing Amount 1st Citation 10 days after notice $100.00 2nd Citation 10 days after 1st citation $200.00 3rd Citation 10 days after 2nd citation $500.00 Repeat within 12 months Immediate issuance Restart @ 1st citation SLOMC Title 8 is the Health and Safety code for the city and includes the regulations for expanded polystyrene, offensive odors, plastic water bottles and plastic straw regulations. SLOMC Title 17 is the zoning code crafted and adopted by the City and regulates the use and construction of property in the City. SLOMC Title 15 includes the following State adopted codes as modified for local use: California Building Code California Energy Code California Residential Code California Green Building Standards Californian Fire Code California Historical Code California Electrical Code California Existing Building Code California Mechanical Code 2016 International Property Maintenance Code California Plumbing Code 1997 Uniform Housing Code 1997 Uniform Code for the Abatement of Dangerous Buildings Packet Pg 158 10 2. Increasing Fines to Achieve Better Compliance During previous discussions of how code enforcement could be more effective in achieving compliance with standards for safe housing in the community, several suggestions were made to enhance the citation process to deter illegal construction and expedite resolution of code enforcement cases. Of course, citations are not issued until after initial contact has failed to elicit an appropriate response and the time for the property owner to address the issues covered in the citation have been exhausted. Staff is not recommending an increase to fines for NEO violations because outreach and educational efforts, proactive patrols, and the fine amounts currently levied appear to be successful in achieving compliance in these areas. However, the issue of illegal construction is prevalent in the community and increased fines are appropriate for the City Council to consider as a way to deter violations and assess an appropriate penalty when violations occur. The recommended fine increases for building code violations include: Adjustment Potential Impact Increase the base fine amount $100, $200, $500 to $100, $500, $1000 Double unpaid fines at 30 days $100 citation is $200 if unpaid at 30 days Repeat violations by same owner, whether same or different property Double base fine amount Repeat of a violation within one year at a specific property may be cited without any warning period under the current regulations. Staff has noted that this would be a more effective tool if a property owner who repeats a violation at a second separate property could be cited immediately. The City of Fresno has found that an owner who performs construction work without a permit in one location may also conduct unpermitted construction on other properties they own. The ability to cite immediately at a higher rate would hold the property owner accountable for all work performed without a permit within one year of a violation. Staff is recommending this change as an additional tool to help deter repeat violations. In addition to these fees, the building codes adopted by the City provide the authority to charge a “special investigation fee” equal to double the inspection fee for any permit issued for construction after the fact (i.e. to resolve a code enforcement violation). Staff currently uses this tool infrequently, but intends to make this an automatic fee that would apply in all cases where the permit is covering construction done in the past. This fee covers the extra effort required to inspect work after the work is completed, which can be far more complex than inspecting while the work is in progress and readily available for observation. In addition, since January 2017, a fixed code enforcement fee of $345.12 is charged to some cases to cover a portion of the costs associated with the investigation and management of the code enforcement case and collected with the building permit. Regular implementation of these fees is expected to improve cost recovery for the program and deter violations. Packet Pg 159 10 3. Recording the Notice of Violation In some cases, citations are not appropriate (e.g. when a code violation is inherited through the acquisition of a property). In other cases, financial hardship may be a contributing factor and citations do not motivate the property to comply or have the opposite impact of creating financial hardship that impairs the ability to make corrections. An alternate resolution methodology exists that allows violations that are not an imminent health and safety threat to be resolved at a later date. Recording the notice of violation against the title of the property is recommended in these cases because it gives staff the ability to “triage” the problem and avoid wasting time working towards compliance on a matter that is not a health and safety priority. The notice is recorded with the County Recorders’ Office, which acts as an alert to anyone performing due diligence prior to purchasing a property. At the time of purchase of a property, most financing agencies (banks, credit unions, savings and loans, etc.) require that these types of notices be removed from title before providing financing. This has the added benefit of compelling compliance at a time when the property owner can provide sufficient resources to correct the violation in question. It also removes the argument that the property owner did not know about a code violation if they went forward with a property purchase despite the notice. A variety of typical code enforcement cases are appropriate for recording a notice, including: • Expired building permit- no life safety concerns • Unpermitted construction- no life safety concerns • Unresolved/open code cases • RHIP violation cases- no life safety concerns • Properties listed for sale with life safety violations With the notice recorded and appropriate due diligence performed, a new owner has knowledge of existing code violations and is free to assume that obligation if they choose, or to require the violation to be resolved prior to purchase of the property. There may be circumstances where the seller will not resolve the violations, but the buyer is willing to assume the liability voluntarily. In that case, the City would work with the new property owner to accomplish compliance through an abatement agreement. This can be helpful in a case where the violations are significant and require a large investment in construction costs to resolve the violations. The new owner purchases the property knowing the scope of violations to be resolved and is typically better able to reach resolution in a timely fashion. Further, the new owner may be in a better position to finance the improvements with the purchase of the property. Overall, staff is recommending that the City Council provide direction to more fully utilize the process to record notices of violation for appropriate code enforcement cases. If this direction is supported by the City Council, staff will return with the appropriate implementing ordinances and resolutions. Staff will use the priorities established by Council to prioritize the handling of these notices, starting with the RHIP cases, as there are a significant number that need to be processed. There is a substantial effort associated with identifying and recording the notices initially, but this is a more productive use of staff time than pursuing an owner unwilling or unable to immediately resolve the violation. This change in practice is expected to be an efficiency measure overall that will result in greater compliance over time, particularly as Packet Pg 160 10 property’s change hands. This effort is expected to generate additional short-term workload of approximately .25 FTE, and on-going net additional workload of 0.05 FTE. 4. Other Tools for Resolving Code Enforcement Violations In addition to the tools mentioned above, the City has other options at its disposal to address municipal code violations. A violation of the City’s Municipal Code can be charged as either a misdemeanor or an infraction. Some violations can only be filed as an infraction. Historically, the City has not used criminal enforcement as a code enforcement tool for violations of Title s 15 or 17 of the Municipal Code, however, the option exists. In addition, the City Attorney’s office can file a civil complaint for nuisance abatement, which can include injunctive relief – such as a restraining order. For more immediate and dangerous conditions, the City may file a court action seeking the appointment of a receiver, which the City has utilized on a few occasions with demonstrable success. Proposed Safe Housing Program During public input on the RHIP repeal, there were many suggestions made about how an effective safe housing program could be structured without a mandatory inspection component. The ideas range from cooperative efforts to provide access to legal service for tenants to focused and enhanced investigation of complaints. Finding the right balance within the resources available, and making an effective investment in safe housing is the delicate balance to be achieved. Staff has identified two options that the City Council may wish to pursue with the goal of improving the safety and quality of the City’s rental housing stock. 1. Education, including referrals and transparency of information through increased availability of city records online. 2. Voluntary inspection and certificate program, with options for the inspection to be performed by the City or a third-party, and including a self-certification option. Both approaches are recommended to establish an effective program to support safe housing in the community. Funding and staffing for implementation of the selected program features would be brought forward consistent with the Fiscal Health Response Plan discussions as part of the FY 18/19 supplemental budget. 1. Education, including referrals and transparency of information There are several opportunities to provide greater transparency and to educate the public in the area of safe housing. One of the goals of the education program should be to engage and involve community members as ambassadors to those that need to understand the basic requirements of safe housing so that they can make informed decisions. The minimum standards of safe housing are concepts that are familiar and easily communicated to those that want to learn. There are many successful programs that use a “train the trainer” model of education to distribute information to a network of people who are capable of outreach to a wider population Packet Pg 161 10 base in the community. Opportunities exist to identify and educate ambassadors in a variety of groups, including Cal Poly students, Cuesta students, the Chamber of Commerce, and U40, as well as interest groups like the Realtors Association and the local American Institute of Architects chapter. Development of an education model that can be flexible for different audiences and addresses the needs of tenants, landlords, home buyers and sellers can be accomplished with a relatively minor investment. The goal of the education effort would be to empower residents to protect their own interests by giving them tools to appropriately engage in the housing marketplace. Transparency of information is another key aspect of this approach. The City of San Luis Obispo previously offered permit history online, but over the past few years that functionality was removed from the website pending implementation of the City’s new permitting software. That work has now been completed and public access to permit history is being restored to the City’s website. By providing access to information about properties, empowered tenants can review and make more informed decisions when choosing a property for their home. Development of Educational Materials Item Audience Timeframe Other Costs Safe Housing Brochure Residents 450 staff hours $10,000 PowerPoint Presentations Renters, property managers, social groups 100 staff hours $1,000 Website with links to external resources General public- all audiences 200 staff hours, ongoing maintenance $1,000 TOTAL COST 0.40 FTE $12,000 In total, staff estimates the cost of startup of the information and education component of the program to be $12,000 in one-time printing and equipment costs and approximately 5 months of full time effort to develop the program materials, rework the inspection program materials to provide a guidebook for performing a self-certification inspection, share those materials for public feedback and testing of effectiveness, and printing the materials for the educational effort. The workload associated with this effort would be approximately .4 FTE. 2. Voluntary inspection and certification program Providing the public information that they can use to evaluate the quality of housing offered for rent can be augmented by a voluntary safe housing certification program. There are a variety of ways to implement a certificate program that would help renters locate safe housing, and help property owners and managers attract educated tenants. Such a program may be offered in different ways. For instance: 1. The City can provide a program that allows landlords to receive an inspection of their property by a city staff member with certification issued by the City. The program would be operated on a cost-recovery basis. Staff would be involved in managing the program and providing the field inspections. 2. Alternatively, the City may be able to contract with a third-party to perform inspections if there are concerns about the City entering and inspecting the property. Packet Pg 162 10 A city-issued certificate could still be the outcome if the City pre-qualified the inspector. Staff would be involved in managing the program and managing and approving the third-party inspectors. 3. A program can be developed that allows a landlord to self-certify without prior verification by the City, but the certification would have to include an inspection report with joint signatures by the tenant and landlord to demonstrate compliance with the minimum habitability standards established by the State. Staff would be involved in managing the program and conducting spot verifications of the self- certifications to maintain the integrity of the program. Staff estimates the cost of startup of the inspection and certification portion of the program to be similar to the education component, with $12,000 in printing and equipment costs and approximately 6 months of full time effort to develop the program materials. The workload associated with this effort is expected to be approximately .6 FTE, although this varies depending on the option chosen. If the City Council is interested in prioritizing this effort, staff would recommend the conversion of an existing Neighborhood Services Officer (Code Enforcement Technician I) to a Safe Housing Specialist (Code Enforcement Technician II) position. Ultimately, such a proposal will have to be developed in conjunction with the City’s Fiscal Health Response Plan and staff would return to the City Council with an implementation plan in conjunction with the 2018-19 Financial Plan Supplement. In total, the cost estimate for implementing a safe housing program would be $24,000 in one-time costs, and $10,000 in ongoing costs associated with the conversion of an existing position to this new role. Other Program Activities to Prioritize as Resources Permit The following activities are areas that may be appropriate and cost-effective areas for code enforcement involvement. Enforcement in these areas is either not currently managed by CDD’s Code Enforcement Program, or resources are insufficient to perform enforcement effectively. If the City Council is interested in accomplishing additional enforcement in these areas, direction should be provided to staff to prioritize these areas as resources permit. This direction would allow staff to identify the appropriate proposals and associated resources as part of future financial planning activities. Packet Pg 163 10 1. New Business License Enforcement Workload The City has contracted for assistance in identifying and contacting businesses operating in the community without a business license. Finance is currently implementing this contracting effort with HdL Companies. It can reasonably be anticipated that some percentage of businesses identified by these efforts will result in code enforcement cases for follow up. The City collects business license fees when a business license application is received; however, there are numerous reasons why a business may not be issued a business license, including due to a pending code enforcement action. In some cases, a business may not be able to obtain approval in the location selected because of limitations associated with the zoning of the property. In other cases, the City and business benefit from highlighting work that needs to be done to accommodate the new business. For example, operating a bar in a warehouse building is an example of an operation that cannot get an “over the counter” business license in the location selected because a building permit and zoning clearance would be required. The impact on code enforcement of the effort to identify unlicensed businesses is unknown at this time but is potentially significant. Currently, an educational outreach and a pilot program is being implemented through HdL. This program involves outreach to businesses that are identified as unlicensed. In June 2016, the Council approved the business enforcement program. The pilot program will help the City determine if the enforcement program should include retroactive enforcement based on data obtained by HdL. Staff will continue to evaluate this effort and will return to Council with further recommendations if it is determined that outside business license enforcement is not financially viable without collecting previ ously unpaid business license fees. 2. Homestay Enforcement and Transient Occupancy Tax Code Enforcement staff is also supporting the contract with a consultant to identify vacation rentals operating in the community. Vacation rentals are prohibited in the City, and there is a permit process available for Homestays (which are exclusive to owner occupied homes and so presumably do not impact the availability of housing supply). Approximately 200-300 properties are currently advertising short term (less than 30 day) rentals in the City, yet there are only 49 properties approved for a homestay. The City recently entered into a contract with Host Compliance Services to identify and contact illegal vacation rentals and homestays. This is an important work effort that is expected to drive additional resource demands on code enforcement staff. The primary goal of this effort is to have the properties come in to compliance with the City’s homestay regulations. Secondarily, payment of the City’s Transient Occupancy Tax (TOT) is required for any short-term rental regardless of whether or not the homestay is permitted (vacation rentals cannot be permitted). It is a significant competitive advantage to operate a business without paying the local taxes and not potentially adhering to applicable homestay regulations. Code enforcement staff will assist as needed to support this effort. Recently, the County of San Luis Obispo negotiated an agreement with Airbnb to collect TOT taxes for properties operating as short-term rentals throughout the unincorporated County. The Packet Pg 164 10 success of this effort has caused a group of local cities to discuss a joint effort to obtain a similar agreement. Staff is currently in discussion with other cities about an approach to work together to negotiate a similar agreement. Staff recommends that all applicable TOT taxes be collected that are due under City Ordinance regardless of whether the use is permitted or not. Paying applicable TOT taxes does not convert an unpermitted homestay or vacation rental into a legal one. Rather, the collection of the fee levels the playing field until such time as 1) the property is permitted, or 2) enforcement proceedings are concluded and the property is no longer being rented as a short term rental. It is anticipated that Host Compliance Services will be able to identify up to 300 properties that are operating as illegal short-term rentals. Since only owner-occupied homes can be approved for homestays, it is anticipated that most of vacation rentals identified will be unable to come into compliance with the City’s regulations. Once the properties are identified and initial contact by the consultant is made, all instances of non-owner-occupied vacation rentals will become code enforcement cases for follow up by code enforcement staff. It is also likely that some of these owner-occupied properties will not be able to meet other requirements of our Homestay ordinance, such as parking and inability to rent detached bedrooms. These situations may lead to additional code enforcement cases for resolution. It is estimated that this work effort will generate approximately $50,000 in additional TOT remittance to the City. The additional staff work associated with resulting code enforcement cases is estimated at approximately 0.25 FTE. 3. Polystyrene, Plastic Bottles, Straws Upon Request The City has recently moved forward with a variety of new ordinances associated with the Climate Action Major City Goal that are important and valuable to the Council and community. These include a ban on use and sale of expanded polystyrene products (Styrofoam), plastic straws upon request, a ban on plastic bottles and single-use cups at City facilities and events on City property (e.g. Mission Plaza, Farmer’s Market). When these regulations are developed and go into effect, City staff gets “the word out” in a variety of ways. For example, the polystyrene ban that went into effect in 2016 included outreach through business groups such as the Chamber of Commerce, news stories in the Tribune, New Times, and on the City website, and through individual business visits. Through this process, staff has been able to get most businesses to adopt new practices and comply with the requirements. Over time, employees change, and enforcement of the regulations is sometimes necessary. Code enforcement staff deals with violations to these regulations on a complaint basis. For example, it was recently reported that the Target began offering a variety of polystyrene products on their shelves for sale. Once this was reported to the City, code enforcement staff investigated the complaint by making a site visit, spoke with the store manager, and responded to the complainant. In total, this one complaint took approximately 10 hours of code enforcement staff time to resolve. Ongoing efforts in this area are expected to generate a workload of Packet Pg 165 10 approximately 0.05 FTE on an annual basis. 4. Recreational Marijuana Enforcement The scope of the City’s regulations for recreational marijuana are unknown at this time. However, in other communities that have regulations, code enforcement plays an important role in ensuring compliance. Locally, the County of San Luis Obispo has allocated one code enforcement officer to work exclusively on enforcement of marijuana regulations. It is expected that any regulatory scheme approved by the City Council would include regulatory and administrative fees that would cover the cost of administering the program. Costs may include a portion of an FTE (full-time equivalent) for code enforcement, as well as law enforcement resources and other staff needed to properly implement ongoing regulations. It is clear that code enforcement will play a role in this effort, but it is too early in the process of developing regulations to know what the scope of that role will be. Staff expects to publish the first set of regulations by the end of the calendar year, and to potentially adopt regulations in Spring 2018 along with the Zoning Regulations update. As part of that process, staff will recommend that cost recovery for enforcement of marijuana regulations be included as part of any applicable regulatory fees. Organization and Supervision Following the repeal of the RHIP, the position of the Code Enforcement Supervisor was eliminated. This has created a significant challenge with respect to program oversight and management. The supervisor role has been assumed by the Chief Building Official, and the Community Development Director has been engaged as a resource for staff by participating in weekly meetings and providing additional oversight for day to day decision-making. While it may be ideal to have a working supervisor for the code enforcement program, a more efficient alternative would be for one of the Code Enforcement Officer positions to be reclassified as a Lead Code Enforcement Officer. Within this structure, supervision is still exercised by the Building Official, but day to day operations are managed by the Lead. Additional costs will be approximately $10,000 overall. The City Council does not need to authorize this change because it would not change the number of Full Time Equivalent employees. However, the budgetary impacts of reorganizing to accommodate workload will be considered by the Council as part of the 2018-19 Financial Plan Supplement. Public Engagement and Notification The implementation and ultimate repeal of the RHIP included a substantial amount of public engagement and notification. Following the February 2017 workshop and the eventual repeal of the inspection program, City staff conducted a series of individual community interviews to gather feedback and input on code enforcement priorities and the focus of the program post-RHIP. The following word cloud was generated from the notes that staff took during these interviews. Packet Pg 166 10 Seventeen interviews were conducted by members of the public who signed up for the opportunity to have a one on one discussion with members of City staff on the subject. Exhibit D includes the list of eight questions that were asked. Exhibit E includes the anonymized responses to the questions. In general, the responses are supportive of the staff’s recommendation to develop a program that focuses on safe housing, and prioritize code enforcement activities and responses related to unsafe occupancies. The guidance provided by Council will be used to conduct further outreach to the community to fully develop a safe housing program that meets the community needs within the resources available for those services. CONCURRENCES Community Development coordinates code en forcement activities with several other City departments to accomplish its work program. Fire, Police, Public Works, Utilities, Administration and the Attorney’s Office concur with the information included in this report. ENVIRONMENTAL REVIEW The project qualifies for a “general rule” exemption under CEQA, pursuant to Section 15061(b)(3) of the CEQA Guidelines, which covers activities “where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment”. The proposed action is a policy decision regarding implementation of existing regulations. This action does not change existing regulations, nor does it introduce the potential for any new environmental impacts. Additionally, the enforcement of regulations is categorically exempt from environmental review pursuant to Section 15321(a)(2) of the CEQA Guidelines, enforcement action by regulatory agencies. Packet Pg 167 10 FISCAL IMPACT The current Code Enforcement program generates approximately $50,000 in citations, fines and fee revenue annually. In addition, because of the investigations conducted by the code staff, building permits with total costs more than $100,000 are issued annually to correct a variety of violations. The recommendations included in this report include both enhanced revenues and additional costs, and introduce more efficient ways of conducting the program that may free up resources to accomplish other objectives. Accepting all recommendations could result in a $121,000 ongoing increase to annual revenues, a one-time cost of $72,481, and an ongoing cost of $69,189 for a total one-time cost of $72,481 and net ongoing revenue of $51,811. No new FTE are being recommended for these programs. Resources would have to be reallocated from current efforts, or efficiencies obtained, to execute the programs as described in the report. The following outlines the fiscal impacts associated with the proposed code enforcement priorities. Exhibit F summarizes this information. Positive Increases to Revenue: 1. Increasing fines for Building and Zoning Code violations – Over $21,000 per year 2. Increased use of special investigation fee (double inspection permit fees for any permit issued after the construction has already occurred) – Over $24,000 per year 3. Increased use of Code Enforcement Fee – Over $25,000 per year 4. Increased focus on vacation rental, homestay license enforcement – Over $50,000 per year 5. Increased business license compliance – Unknown, but potentially significant Potential Program Expenses: 1. Safe housing education and outreach materials – approximately $12,000 and 0.4 FTE 2. Safe housing inspection program - approximately $12,000 and 0.6 FTE 3. Reclassification of one FTE to “Lead” Code Enforcement Officer - approximately $10,000 4. Programming EnerGov software for code use - approximately $10,000 New Workload: 1. Safe housing education and outreach activities (reassign existing staff) 2. Safe housing inspection program (reassign existing staff) 3. Polystyrene, plastic bottle/cup ban, straws upon request (prioritize with existing staff) 4. Business license compliance (third-party contract expected to generate additional workload to be accommodated by existing staff) 5. Homestay, vacation rental compliance (third-party contract expected to generate additional workload to be accommodated by existing staff) 6. Marijuana regulations compliance (revenue and expenditure estimate not included in this analysis) Packet Pg 168 10 ALTERNATIVES 1. Maintain the status quo. The City Council could direct staff to not make any changes to the current priorities and allocation of resources within the Code Enforcement Program. This alternative is not recommended because new priorities will ensure that the division is able to focus on the issues that are most important to the City Council and community. 2. Provide different direction to staff. The City Council may wish to pursue alternative direction on matters such as code enforcement fines, the safe housing education and outreach program, use of code enforcement resources for vacation rental enforcement, or other areas covered by this report. 3. Continue consideration of this item and provide direction to staff. If additional information is needed to make a decision, direction should be provided to staff, and the item should be continued to a date uncertain so that additional research, public outreach, or other work can be completed before returning to the City Council for a decision. Attachments: a - Code Enforcement Priorities 2017 update draft to CC b - Distribution of workload c - Administrative Guidelines- Resolution 10347 (2012 Series) d - Code Enforcement Interview Questions e - Stakeholder Meeting Responses f - Code Priorities Chart Packet Pg 169 10 Draft Code Enforcement Priorities November, 2017 Attachment A All investigations are conducted in response to a complaint, except those priorities noted as “Proactive”. Proactive investigations are conducted as a routine part of staff’s daily workload. Complaints are received and responded to from a variety of sources including the public, other local agencies and city staff. Life Safety Hazard Priority Response Timeframe Critical 1 Upon receipt Immediate 2 24 hours Potential 3 2 Days None 4 3 Days Priority 1- Immediate Response- Proactive • Buildings damaged by accident, fire or earthquake. Any structure that may fully or partially collapse whether from damage or accident including those under active construction. Examples include car accidents that damage a building, structure fires or assessment after an earthquake. • Unsafe and/or dangerous utilities or materials require a coordinated response to any damaged utility infrastructure including water, wastewater, natural gas, propane gas, electrical wiring, or other utilities or hazardous materials with potential to endanger the public, including active illegal dumping. Examples include discovery of hazardous materials improperly stored in a residential garage such as excessive amounts of gasoline, damaged propane tanks, unknown chemical spills or abandoned unknown liquid containers. Priority 2- 24-hour Response • Active construction without a permit: Immediate assessment of the hazard to the public from unpermitted construction activity. Assessment is focused on whether the building can remain occupied based on the nature and type of work performed • Unsafe occupancy: Assessment of the hazard to the public from unpermitted occupancy or activity to properly identify necessary protections to put in place. Assessment focused on if the building can remain occupied based on the nature and type of occupancy found. Examples include persons living in a structure not approved for occupancy as a residence, business using equipment or materials (e.g. welding, vehicle repair) in a location not approved and permitted for the use. • Unsecured buildings – accessible to transients or unauthorized persons • Substandard housing – no water, heat, living/sleeping in areas not designed for habitation (garage/shed/crawl spaces) • Illegal/unpermitted construction (in progress) • Discharge of sewage • Faulty/hazardous electrical • Gas leaks/smell • Hazardous waste/illicit discharge • Public nuisances (refrigerators w/door on left outside) • Hoarding • Illegal dumping (in progress, otherwise Priority 4) Packet Pg 170 10 Draft Code Enforcement Priorities November, 2017 Attachment A Priority 3- 48-hour Response • Illegal/unpermitted construction (completed) • Garage conversions/non-habitable space to residential use • Unpermitted residential in commercial building • Automotive repair/commercial business in residential zone • Grading without a permit • Interior infestation of vermin • Minimum housing standard violations- violations of State or local codes • Noise- operating noises from a business or conduct of an outdoor activity without a permit due to noise limitations (example; outdoor band without a nightclub or special event permit or conducted in violation of such a permit) Parties, loud stereos and other personal conduct related noise violations are referred to Police Department. Priority 4- 72-hour Response • Living/sleeping in vehicles (on private property) • Operating a business without a license • Commercial Business in a residential zone • Illegal signage • Vacation rentals & unpermitted homestays • Animals (chickens/roosters) • Animal waste accumulation • Fence height or location • Exterior infestation of vermin • Styrofoam sales or use • Water bottle sales or use at City property or events • Plastic straw use at restaurants and bars Priority 4- 72-hour Response- NEO Proactive • Visible storage of various materials (trash, boxes, furniture, equipment, etc.) • Indoor furniture used outdoors • Furniture on the roof of any kind • Waste containers (storage/time on street) • Parking on unapproved location or surface • Overgrown vegetation Priority 4- 72-hour Response- NEO Complaint only • Abandoned/inoperable vehicles (on private property) • Stored vehicles in front yard- cars/boats/RV’s (on private property) • Excessive front yard paving • Deteriorated fencing • Graffiti or abandoned & deteriorated building • Violations of a planning permit (CUP, Use, development or other) Packet Pg 171 10 WORK LOAD DISTRIBUTION 2 FULL TIME CODE OFFICERS SPLITTING WORKLOAD EVENLY EXISTING WORKLOAD * Avg. % of Daily Work Priority 1 1 Priority 2 30 Priority 3 35 Priority 4 34 *See Exhibit A for detailed description of workload inlcuded in each priority category. % of Work Priority 1 Priority 2 Priority 3 Priority 4 Attachment B Packet Pg 172 10 WORK LOAD DISTRIBUTION 2 FULL TIME CODE OFFICERS SPLITTING WORKLOAD EVENLY EXISTING WORKLOAD WITH ADDITION OF NEW ORDINANCES Avg. % of Daily Work Priority 1 1 Priority 2 30 Priority 3 35 Priority 4 15 * Business License 5 Homestay 12 PolyStyrene,etc.2 *Existing Efforts under Priority 4 reduced by new workload without additional resources % of Work Priority 1 Priority 2 Priority 3 Priority 4 Business License Homestay PolyStyrene,etc. Packet Pg 173 10 WORK LOAD DISTRIBUTION 2 FULL TIME CODE OFFICERS SPLITTING WORKLOAD EVENLY EXISTING WORKLOAD WITH ADDITION OF NEW ORDINANCES AND SAFE HOUSING PROGRAM Avg. % of Daily Work Priority 1 1 Priority 2 30 Priority 3 27 * Priority 4 3 ** Business License 5 Homestay 12 PolyStyrene,etc.2 Safe Housing 20 *Existing Efforts under Priority 3 reduced by new workload without additional resources **Existing Efforts under Priority 4 reduced by new workload without additional resources % of Work Priority 1 Priority 2 Priority 3 Priority 4 Business License Homestay PolyStyrene,etc.Safe Housing Packet Pg 174 10 RESOLUTION NO . 10347 (2012 Series ) A RESOLUTION OF THE CITY OF SAN LUIS OBISPO AMENDIN G ADMINISTRATIVE GUIDELINES IN CONNECTION WITH THE ISSUANCE AN D PROCESSING OF ADMINISTRATIVE CITATIONS PURSUANT TO CHAPTER 1 .2 4 OF THE SAN LUIS OBISPO MUNICIPAL CODE AND AMENDING THE AMOUN T OF ADMINISTRATIVE FINES PAYABLE UNDER CERTAIN CITATION S WHEREAS,on October 1, 2002, the City Council of the City of San Luis Obisp o adopted Ordinance No . 1426, which added new Chapter 1 .24 to Title One of the San Lui s Obispo Municipal Code, entitled "Administrative Code Enforcement Procedures", pertaining t o the issuance of administrative citations for San Luis Obispo Municipal Code violations ; an d WHEREAS,Chapter 1 .24 of the San Luis Obispo Municipal Code provides that the City Council shall by Resolution prepare and promulgate administrative guidelines consistent with th e goals and policies of Chapter 1 .24 which establishes, among other things, the requirements fo r the contents of a Notice of Administrative Citation and the requirements for proper service o f such a Notice ; and WHEREAS,on April 10, 2012, the City Council of the City of San Luis Obisp o introduced for first reading Ordinance No . 1576 (2012 Series) which amends Chapter 1 .24 of the San Luis Obispo Municipal Code an d WHEREAS,California Government Code Section 53069 .4 and San Luis Obisp o Municipal Code Chapter 1 .24 enables the City, acting as a charter city pursuant to Article XI , Sections 5 and 7 of the State Constitution, to impose and collect civil administrative fines i n conjunction with the abatement of Municipal Code violations ; an d WHEREAS,on September 17, 2002, the City Council adopted Resolution No . 9366 , effective October 1, 2002, establishing a Fine Schedule setting forth amounts of administrativ e fines to be imposed pursuant to Chapter 1 .24 of the San Luis Obispo Municipal Code, an d adopting Administrative Guidelines ; and WHEREAS,Resolution No . 9366 was subsequently amended by Resolution No . 9677 to increase the fines for violations of Chapters 9 .12 and 9 .20 ; and WHEREAS,the City Council desires to amend the current Administrative Guidelines t o bring them into conformance with the amended Chapter 1 .24 and to lower the fine schedule fo r certain violations that do not present an immediate threat to the public health and safety . NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of San Lui s Obispo as follows : SECTION 1 . Amendments to the Administrative Guidelines for Chapter 1 .24 of the City of San Luis Obispo Municipal Code dated April 10, 2012, attached hereto as Exhibit A, ar e hereby approved . R 10347 Attachment C Packet Pg 175 10 Resolution No . 1034 7 Page 2 SECTION 2 .The Fine Schedule established by the City Council on September 17, 200 2 by Resolution No . 9366, amended by Resolution No . 9677, for administrative citations issue d pursuant to Chapter 1 .24 of the San Luis Obispo Municipal Code is hereby amended as follows : A.For a first violation of the San Luis Obispo Municipal Code, Chapter 17 .17, excepting sections 17 .17 .075(B) and 17 .17 .075(I), the administrative fine shall be the sum of Fifty Dollar s 50 .00) for each such violation . B.For the second violation of the same Code section occurring within twelve (12 ) months of the prior violation, the administrative fine shall be the sum of One Hundred Dollar s 100 .00). C.For the third violation, or additional violations thereafter, of the same Code sectio n occurring within twelve (12) months of the first violation, the administrative fine shall be the sum of Two Hundred Dollars ($200 .00). SECTION 3 .This Resolution shall go into effect upon the final passage and effectiv e date of Ordinance No . 1576 amending Chapter 1 .24 entitled "Administrative Code Enforcemen t Procedures" to the San Luis Obispo Municipal Code . Upon motion of Council Member Smith, seconded by Council Member Ashbaugh and o n the following vote : AYES :Council Members Ashbaugh, Carter and Smith, Vice Mayor Carpente r and Mayor Marx . NOES : None ABSENT : None The foregoing resolution was adopted this lo th day Of April 2012 . Sheryll Schroede r Interim City Clerk Packet Pg 176 10 EXHIBIT A ADMINISTRATIVE CITATION GUIDELINE S Updated April 2012 ) The following Guidelines have been compiled as the basic structure for implementatio n of the Administrative Citation Program (Chapter 1 .24 of the San Luis Obispo Municipal Code). Individual Departments and Divisions may vary slightly in their specific application of th e Citation Program so long as the application complies with Chapter 1 .24 . 1 .REQUESTS FOR INVESTIGATIO N All requests for investigation of a code enforcement matter are to be processed through a designated staff person . This staff person will create an enforcement case, and if appropriat e schedule a field investigation, and forward a field investigation report (FIR) form to th e appropriate supervisor/coordinator or staff. 2 .INVESTIGATION Upon receiving a field investigation report form, investigating staff when necessary ma y review Permit Plan, the City's Records File(s), and Archive Plans (as needed) in order to prepar e for their site investigation . Site investigations will be conducted with staff's safety as a hig h priority . If there is any indication of a possible hostile or confrontational environment on th e part of the property owner or other present party, City staff should consult with their superviso r and should not hesitate to request assistance from the Police Department for the purpose o f keeping the peace . Additionally, all investigations will be conducted pursuant to the requirement of law, an d in an efficient and courteous manner . Photographs/images will be obtained as needed based on the judgment of the investigators . Each field investigation report form will contain the following information : a.Date of investigation ; b.Name of investigator; c.Code sections violated ; d.Plain non-technical description of the violation ; e.Statement of remedy (what needs to be done); and f.Time frames for follow-up investigations and for final abatement . 3 .NOTICE OF VIOLATION AND/OR ADMINISTRATIVE CITATION PREPARATIO N Digital images/photos, when obtained, will be organized, numbered, and indexed as t o date, time and exact location and photographer . This will allow the City the proper foundationa l basis for using the photograph as evidence at a later time, if necessary . The identified violation s on the field investigation report form shall reference the appropriate image/photo numbers that depict the violation . The field investigation report form and the photos/images will be forwarded Packet Pg 177 10 to the designated staff person who shall be responsible for preparing the Notice of Violation and/or Administrative Citation . Once these documents are prepared and reviewed,a final copy will be prepared for posting and/or mailing to the appropriate individual or property or busines s owner. 4 .SERVICE OF NOTICE OF VIOLATION AND/OR ADMINISTRATIVE CITATIO N The Notice of Violation and/or Administrative Citation and any amended Notice o f Violation and/or Administrative Citation, shall be served by the following method : a.Personal or Mailed Notice . Personal service or certified mail, postage prepaid , return receipt requested, to each owner as required pursuant to the provisions of Chapte r 1 .24 of the Municipal Code at the address as it appears on the last equalized assessmen t roll of the County or as otherwise known to staff . The address of the owner shown on th e assessment roll shall be conclusively deemed to be the proper address for the purpose o f mailing such notice . Simultaneously, a copy of the same notice shall be sent by first clas s regular) mail to the same address . If a notice that is sent by certified mail is returne d unsigned, then servile shall be deemed effective pursuant to the regular mail, provide d the notice that was sent by regular mail is not returned . b.Failure to Receive Notice . The failure of the person with an ownership (title ) interest in the property to receive any notice served in accordance with these guideline s or Chapter 1 .24 of the Municipal Code shall not affect the validity of any proceeding s taken under this Code . If the address of the owner of record, after diligent search, canno t be found, the notice may be served by posting a copy thereof in a conspicuous place upo n the property for a period of ten (10) days . 5 .SERVING A NOTICE OF VIOLATION AND/OR ADMINISTRATIVE CITATIO N Clerical staff may be designated to process all certified mail requests while investigatio n staff will process all property posting requests themselves . Certified mail returned due to inaccurate addressing will have the mailing information confirmed and be mailed onc e more . Posting will be used in the event service by mail is unsuccessful . Posted notice s will be considered served 10 days after posting on the property in a conspicuous location . Proper posting shall consist of enclosing the Notice in some form of sealed plastic an d either securely taping it to the property or stapling or tacking the Notice to a stake and staking the property with the Notice . 6 .PROOF OF SERVIC E Proof of service of the Notice of Violation and/or Administrative Citation shall b e documented at the time of service by a declaration under penalty of perjury executed by the staff person effecting service, declaring the time and manner in which service was made and filed i n city records. Packet Pg 178 10 7 .CONTENTS OF NOTICE OF VIOLATIO N The Notice of Violation shall consist of the basic form, attached hereto as Attachment 1 , and should contain the following information : a.The correct full name of the owner or owners . b.The date on which an inspection established the Code violation . c.The Municipal Code section violated . d.The City address where the Code violation occurred . e.A narrative description of the violation established by the inspection stated i n plain, simple, non-technical language . Photographs of the violation are encouraged . f.A narrative which describes the remedies for the abatement of the identifie d violation . g. For a Notice to Correct, a statement (warning) advising the individual, property owner or business owner that if the described conditions are not abated within th e time frame specified, the City may proceed, as authorized by law, to assess an administrative fine as authorized by Chapter 1 .24 of the Municipal Code . h.A summary and statement of the procedures necessary to pay the administrative fine . i.For a Notice to Correct, a statement advising that any person having any titl e interest in the property may contest the Notice to Correct by submitting information on a form to be approved by the Director issuing the Notice t o Correct. The form must be received by the Director's Department within ten (10 ) days from the date of the Notice to Correct . The statement shall also includ e notice that failure to contest the Notice to Correct shall deem either the Buildin g Official or the Director's interpretation of any code as final . j For a Notice of Violation and/or Administrative Citation, a statement advising that any person having any title interest in the property may appeal the Administrative Citation to a Hearing Administrator . The statement shall als o include instructions has to how to request an appeal . k .A statement that the Code violation is a public nuisance and that collection o f unpaid administrative fines may, at the City's option, be enforced as a n assessment or lien against the real property . 1 .The signature of the staff person issuing the Notice of Violation and/o r Administrative Citation . m.The date the Notice of Violation and/or Administrative Citation is issued . n.Any other information deemed necessary by the City for due enforcement or fin e collection purposes . 8 .RECORDS AND RECORD KEEPING . All final City staff work documents (except those documents identified as "Confidential – Attorney/Client Communications") pertaining to the business of an enforcement case should b e immediately sent to the records division of the appropriate City Department for filing in the street files . Incoming correspondence, reports, surveys, etc . should be immediately sent to the Packet Pg 179 10 records division for filing in the street files . Enforcement staff may keep duplicates of thes e documents in their personal files if they wish . No original public records should be kept i n places other than the records division . 9 .FOLLOW-UP INVESTIGATIONS . Follow-up investigations may be scheduled by staff upon completion of the preparatio n of a Notice of Violation and/or Administrative Citation . Investigating staff will keep their cod e enforcement follow-up current . Follow-up investigations maybe scheduled as follows : a For violations which do not need permitting, at the end of the prescribed time frame ; b.At time of permit application ; and c.At time of permit issuance dates . 10 . CLOSING CASES . Enforcement cases will be closed once all applicable fines and fees have been paid in full , and the violation has been abated or a building permit has been finally inspected and approved for occupancy . 11 . APPEALS AND HEARINGS . A Notice to Correct and an Administrative Citation may be appealed in accordance with Sections 1 .24 .090 through 1 .24 .130 of the Municipal Code . 12 . PAYMENT OF ADMINISTRATIVE FINES . All fines may be paid in person at the Finance Department located at 990 Palm Street . Mailed payments are to be addressed to City of San Luis Obispo, Finance Department, 990 Pal m Street, San Luis Obispo, CA 93401-3249 . Packet Pg 180 10 Attachment D Code Enforcement Interview Questions: 1. What do you think should be the most important, highest priority, areas of concern for City code enforcement (e.g. illegal construction, unsafe dwellings, illegal occupancy)? 2. What is your experience with code enforcement? (Complaining party, property owner, tenant) 3. Of the listed violations, which do you think is the highest priority per grouping? a. Zoning violations i. Sign regulations ii. Businesses operating without the correct permits/licenses iii. Noise complaints b. Typical code enforcement complaints? i. High occupancy (e.g. six or more adults in a single-family home) ii. Garage conversion (without permits) iii. Vacation rental (these are not allowed anywhere in the city). c. Property maintenance violations? i. Yard parking (e.g. parking on a lawn or in a yard that is not an approved parking space). ii. Overgrown weeds, unkempt landscaping in the front yard. iii. Indoor furniture in the front yard. iv. Garbage cans unscreened. 4. What do you think are some ways for the City to improve renter and property owner understanding of their rights and responsibilities with respect to safe housing? 5. Based on your understanding or knowledge of the City’s housing stock, how serious of an issue is safe housing in our City, on a scale of 1-10? 6. What are your thoughts about a safe housing certificate program that the City could offer to tenants and owners who want to have their dwelling inspected to ensure it meets minimum health and safety standards? If you are a property owner would you participate? 7. Fines for code enforcement violations progressively increase from $100 to $200 to $500 in thirty day increments if a property owner is not responding to, or actively working to correct, violations that are identified on their property. Do you think these amounts are sufficient to gain compliance (eventually, fines can go to $500/day if no action is taken by the property owner?) Do you think these amounts are sufficient to deter illegal construction/occupancy in the first place? 8. Compliance deadlines for property maintenance violations are 14 days and for building/zoning violations are 30 days to obtain a permit and 90 days to complete the work once the permit is issued. Do you feel these are adequate or should they be changed? If so to what? Packet Pg 181 10 STAKEHOLDER MEETING RESPONSES MAY & JUNE 2017 Attachment E 1. Highest Priority for CE 2. Experience with CE 3a. Zoning Violation s 3b. CE Complaints 3c. Property Maintenance Violations 4.Renter/Property Owner Rights/Responsibilities 5. Rate Safe Housing in our City 6. Thoughts on Safe Housing Certificate Program 7. Fines for Code Enforcement 8. Compliance deadlines Other Comments Safety Tenant Business Operating without permits or license Garage Conversion Visible Storage Property Owner must obtain a certification before renting their house Not answered There is a need for a program. Fines should be higher Current compliance deadlines are fair. Unsafe dwellings, illegal occupancy Complaining party, property owner Noise Complaints Garage Conversions Overgrown weeds Require landlord to provide at lease signing and city send out every year Likes the idea. If he owned rentals he would participate Fines should be higher currently not enough to get compliance. 1st week $250 2nd week $500 3rd week $1000 4th week $2000 $500 daily after that Seems fair Allow property mgmt. companies to self certify. Focus on education for realtors/tenants and even enforcement throughout city. Illegal construction less of a concern with increasing home prices/new buyers Property owner and property manager. Feels enforcement is inconsistent. Noise complaints Vacation rentals Overgrown weeds Outreach/education for tenants. Utilize Cal Poly. Provide education for property management companies and for tenants through property management companies. Rated as 3-4. Stated that is also depends on definition of “serious”. As a property owner, would not pay for inspection/certificate. A certificate in itself would have no value. Possibly integrate into Cal Poly’s educated renters program Support higher fines but doesn’t think it will deter any illegal activity. 14 day for NSS violations is adequate. 30 day for to obtain a permit is not realistic. Unsafe dwellings, foolish to ignore with high percentage of rentals Neighborhood advocate, walking tours, etc. Noise High Occupancy, Garage Weeds, yard parking Work with Poly and Cuesta Overall good, but pockets are horrible where there is high density of student rentals Put criteria on business license Three months is very generous, $500 a day after three months should get their attention Revoke business license, in conjunction with fines, might ring a bell Neighborhood services and parking patrols have been successful. Anything we can do to get to the heart of the safety problem Unsafe dwellings along with more housing. Students want to live off campus but the supply doesn’t meet the demand Tenant who has lived in substandard housing Noise complaints Garage conversions. With the high cost of rent in the city, tenants have to get extra tenants just to make affordable Overgrown weeds Cal Poly needs to step up and get involved with the city. They are increasing the enrollment every year but doing nothing to help or educate the students/tenants About 70% are not up to code Landlords are bad and will not participate in a certificate program. Each house has 50-100 applications once available Keep the same. The landlords will just pass on the costs to the tenants No take on this at all The student population has no protection against landlord without the RHIP or any mandatory program. The owners will retaliate if the tenants call the city. Packet Pg 182 10 STAKEHOLDER MEETING RESPONSES MAY & JUNE 2017 Attachment E 1. Highest Priority for CE 2. Experience with CE 3a. Zoning Violation s 3b. CE Complaints 3c. Property Maintenance Violations 4.Renter/Property Owner Rights/Responsibilities 5. Rate Safe Housing in our City 6. Thoughts on Safe Housing Certificate Program 7. Fines for Code Enforcement 8. Compliance deadlines Other Comments Unsafe dwellings, educate homeowners of their rights regarding tenants Works in law and is a homeowner Businesses operating without correct permits/licenses High Occupancy & Garage conversions Overgrown vegetation Neighborhood outreach meeting with landlords, tenants and owner occupied About 70% Hated to see the RHIP go. Would be involved as something is needed. The City, Cal Poly and Cuesta need to build together an inspection program that will make owners want to be a part of a bigger picture. Parents of students could also get involved. Fines too low. At least double the fines and add large fines for illegal units/rooms 14 days are too soon to get something accomplished especially if you are out of town. Change 30 – 45 days and 90 – 120 days. Tenants need to be protected from landlord retaliation if they come forward. Neighborhood outreach programs to air out problem and educate. Cal Poly and Cuesta should fund an educational program. Sub-standard housing, over occupancy, lack of information about who’s responsible for repairs (ten/land) Professional, give out City information to clients for help. Noise Complaints High Occ Not a priority really, if she had to choose overgrown vegetation because of fire hazard Make information more accessible. Some handout that says exactly what code can and cannot help with More communication & follow through so that tenants trust the system. 7, from their experience they field calls from students who want to work with landlord to get issues fixed that are immediate life safety but done care if they are living in an illegal unit. Sounds good, but concerned that landlords will abuse the certificate program so they can charge more. The result would be that the only people who can live in safe housing are those that can afford it. Widens the gap. No opinion Seems adequate as long as tenants are being directly notified about them. If not, more time needs to be given. Handouts to third parties to hand out like “code enforcement: What we do/what we don’t do,” mold, or civil property issues. There is a missing piece in the whole process: legal advocacy for tenants/legal advice for people in bad situations to support tenants and landlords. All parties (City, CP, Cuesta, County) can subsidize. Illegal construction. Was opposed to getting rid of RHIP due to ability to find unpermitted construction. Did code enforcement for county and various local cities. Noise complaints- related to high occupancy and too many people at one place. Garage conversions Overgrown vegetation Make PDF of common dangerous situations that people may not know are dangerous (sleeping close to a water heater/garage living, etc.) 10- feels we need to be more proactive in searching for code violations. Feels we should be constantly patrolling. Thinks it is a good idea. Upset that the RHIP was repealed. Thinks they are sufficient. Feels that monetary fines are the only way to have people come into compliance. Adequate unless it is life safety. Feels we need to enlist citizens to be looking for illegal construction and code violations. They can know what to look for and if there is not a permit they can call us. Feels we should have an online permit process with reduced fees for minor permits (water heaters, shower pans, etc) and we should be requiring permit for landscaping to make sure it meets state requirements. Packet Pg 183 10 STAKEHOLDER MEETING RESPONSES MAY & JUNE 2017 Attachment E 1. Highest Priority for CE 2. Experience with CE 3a. Zoning Violation s 3b. CE Complaints 3c. Property Maintenance Violations 4.Renter/Property Owner Rights/Responsibilities 5. Rate Safe Housing in our City 6. Thoughts on Safe Housing Certificate Program 7. Fines for Code Enforcement 8. Compliance deadlines Other Comments High occupancy. If that is addressed a lot of issues (noise, parking, illegal construction) would lessen. Reporting party. Confidence level in CE is low due to previous experience. Now relies on PD for enforcement. Informed him we have more CE staff and are able to handle higher caseload. Noise complaints. Related to high occupancy and too many people at one place. High occupancy Garbage cans/beer pong tables Revisit reasons for starting RHIP in the first place. Address those deficiencies with another program. Felt Educated Renters Guide is a good start. Have property management monitor property more. 10- Feels we need to be more proactive in negotiating with Cal Poly regarding their projects. Challenge their environmental review. Student to population ratio has a huge impact on the City. Would be good with condition of re-inspection after specified time. Feels they are adequate. Doesn’t think that there would be a huge response until daily citations due to ability to pull in more rent. Property maintenance: Yes Building/zoning: Depends on how serious conditions are Feels we need to make conditions in planning for follow up inspections if plans show areas that will likely be converted. Property ownership and absentee owner flyers to outline proactive property management. All are important Complaining party Noise complaints High Occupancy Overgrown weeds, unkept landscaping in front yard Mass mailing to all properties Don’t know Too low to make people comply Seem fair City should look into rent control. Safety. Illegal occupancy not a high concern to him. He has previously lived in a garage and didn’t feel it was dangerous/unsafe. No experience with CE. Only building. Noise complaints- They have the most impact on neighbors. Vacation rentals- it takes away housing stock. Feels enforcement of high occupancy and garage conversion s could be done away with. Doesn’t feel it is a big concern. Overgrown weeds and indoor furniture in the front yard. It creates a blight for the neighborhood. Mailer to City residents that outlines the rights/ responsibilities of tenants/landlords/as well as owner occupied residences. General conduct that should be followed by everyone should be mailed to every residence. 3-No major concerns unless there is dangerous electrical. Reluctant due to requirements of RHIP checklist. Felt they were a little extreme. Would not participate in voluntary certification program due to ease of finding renters. Depends on violation, but seems to be reasonable. Depends on violation, but seems to be reasonable. Packet Pg 184 10 STAKEHOLDER MEETING RESPONSES MAY & JUNE 2017 Attachment E 1. Highest Priority for CE 2. Experience with CE 3a. Zoning Violation s 3b. CE Complaints 3c. Property Maintenance Violations 4.Renter/Property Owner Rights/Responsibilities 5. Rate Safe Housing in our City 6. Thoughts on Safe Housing Certificate Program 7. Fines for Code Enforcement 8. Compliance deadlines Other Comments All important Neighborhood rep. Businesses Noise (PD) Signs High and Garage Vacation Yard Parking worst and most difficult to enforce Encourage owners to give priority to educated owner/renter certificate holder and encourage Cuesta to adopt/implement the program Overall housing stock unsure but okay in our neighborhood City inspection prior to certification, but until there is more supply (e.g. Cal Poly builds more housing) this will make little difference. These fines are sufficient. If no action is taken there needs to be follow up to see if there is a valid reason. But the fines are not sufficient to deter new illegal construction As long as it allows for time to coordinate with appropriate trades More coordination with half-time parking person needed in neighborhoods. Code should be out on weekends. Front yard parking and widened driveways still an issue. If house has ongoing problems then suspend Business license so they can’t rent. All rentals need to have business licenses. Figure out how to enforce the High Occupancy Ordinance!!! Coordinate with Poly to advise parents of problem properties. Criteria to qualify for business license similar to home occupation permit. Identifying and labeling nuisance houses. Unsafe dwelling + high occupancy (due to obnoxious rent) Rental property owner, real estate broker Business Licenses, Noise due to high occupancy. Garage conversions without permits, Vacation rentals, high occupancy Overgrown weeds Education, pamphlets, hot line handouts, marketing About 20% not safe All rental housing should be inspected for free to renew business license. If there was a charge the rents will increase to cover the expense Eliminate the $100 and go to the $200. Needs to be paid from whomever caused the problem. NSS $50. Fine is useless and needs to be eliminated Depends on the project. Point of sale inspections. Cal Poly needs to build more on campus housing directed at married couples, Soph., juniors. Price accordingly. Unsafe Dwellings Illegal Construction Complaining Party Rental Property Owner Noise complaints. Businesses licenses for rental properties not enforced Vacation rentals (there is a minimum of 150 right now in city limits). High Occupancy Overgrown Weeds Indoor furniture in front yard Yard parking Work more on a neighborhood outreach program concentrating on different section of the city as the different areas have their own issues. 8-10 Bring back the RHIP and I will participate The first fine after the warning should be no less than $300.00 Use common sense depending on the problem. Some project cannot be completed in 90 days but overgrown vegetation Need either NSS or Code enforcement on weekends. That is when the parties happen and yard parking, noise etc. Hire a person dedicated to vacation rentals, business license. This city needs more affordable housing and not for the Packet Pg 185 10 STAKEHOLDER MEETING RESPONSES MAY & JUNE 2017 Attachment E 1. Highest Priority for CE 2. Experience with CE 3a. Zoning Violation s 3b. CE Complaints 3c. Property Maintenance Violations 4.Renter/Property Owner Rights/Responsibilities 5. Rate Safe Housing in our City 6. Thoughts on Safe Housing Certificate Program 7. Fines for Code Enforcement 8. Compliance deadlines Other Comments should be completed within 7 days homeless. Cal Poly needs to build affordable housing on campus. Unsafe dwellings Complaining party. (CEO officer in other city) Business licenses Garage conversions Yard parking Overgrown weed Focus on community outreach. Perform door to door “walk and talks,” participate in farmers market, work with realtors, HOAs, neighborhood watch 10 (Most of which is unknown) Thinks is it a good idea. Not sufficient – go up to $1000/day City of SLO is too lenient. In general, shorter time frames get better compliance. Emphasis on improving interaction with community. Unsafe dwellings Complaining party Business licenses Garage conversions Yard parking Visible storage Annual mailer to tenants. Provide tenant/landlord guide. Sign statement at time of business license to verify safe housing requirements are met. 1 (95% of houses in good condition) As a property owner, would not participate. No good outcome for PO, no value in certificate. Possibly value in certificates if it can be tied into calpoly or cuesta. Current checklist is too detailed. Not sufficient to deter illegal work or for cost recovery. Adequate Recommend enforcing business license w/signed certification from PO stating basic health and safety need are met – increased fines for violations. Take firmer stance on known, repeat offenders. Current NSS enforcement is uneven throughout city. Work w/property managers and realtor to inform of regulations and permitting process. Only issue for comment is unsafe student housing Property owner, bought seriously dilapidated houses and doing repairs- some complaints received, good working with CE NA Garage conversions NA Lack of student engagement- doesn’t think City can achieve engagement, must rely on Cal Poly & Cuesta. Charge fee on rental business license to support tenant education program. Owner certification on business license with severe penalties for violations found after certification. Extremely serious Not used unless enhanced benefits- private contractor ale to make small repairs as part of inspection- similar to gas co inspection of furnace. Extreme lack of contractors/service people to do small work in current market Maybe- getting inside the unit is most important 30 days is not sufficient to get a permit. Packet Pg 186 10 STAKEHOLDER MEETING RESPONSES MAY & JUNE 2017 Attachment E 1. Highest Priority for CE 2. Experience with CE 3a. Zoning Violation s 3b. CE Complaints 3c. Property Maintenance Violations 4.Renter/Property Owner Rights/Responsibilities 5. Rate Safe Housing in our City 6. Thoughts on Safe Housing Certificate Program 7. Fines for Code Enforcement 8. Compliance deadlines Other Comments HVAC units are unsafe None Na Na Na Hire specialty inspectors No response NA NA NA Extensive discussion about new program they want implemented regarding HVAC installation and inspection Packet Pg 187 10 Exhibit F - Fiscal Impact one time ongoing one time ongoing one time ongoing one time ongoing Increase citation amounts 0.02 $21,000 $2,955 -$2,955 $21,000 incentive to respond and resolve issues sooner Increase citation amounts unpaid at 30 days 0.02 $10,000 $2,955 $200 -$2,955 $9,800 incentive to respond and resolve issues sooner Increase use of Special Investigation fee 0.02 $14,000 $2,955 -$2,955 $14,000 incentive to obtain permits prior to construction work Increase use of Code Enforcement fee 0.02 $25,000 $2,955 $200 -$2,955 $24,800 incentive to respond and resolve issues sooner Recordation of notice of violation 0.27 0.1 $1,000 $26,661 $4,941 -$26,661 -$3,941 staff addresses highest priority cases until optimum time for lesser priority cases Increase enforcement of homestay and collection of TOT 0.25 $50,000 $23,906 $0 $26,094 equity for competing businesses, reduction in businesses operating without approval or oversight Programming Energov software for code use -0.05 $10,000 -$10,000 $0 Increased staff efficiency and better management tools Safe housing education/outreach and Inspection & Cert program Convert NSS $0 $24,000 $10,977 -$24,000 -$10,977 Improves quality of City housing stock and educates owners and renters about minimum health and safety standards for safe housing Polystyrene, Plastic Water Bottles & Straws 0.05 $0 $4,741 $0 -$4,741 general public benefit Recreational Marijuana Enforcement TBD TBD TBD TBD TBD TBD TBD TBD potential cost recovery to address negative impacts Reclassify (E) staff position to Lead Code Enforcement Officer position 0.15 $24,224 $0 -$24,224 consistent day to day supervision to allow CBO to focus on higher priorities Totals 0.35 0.5 0 $121,000 $72,481 $69,189 -$72,481 $51,811 Cost ImpactProgram Proposals Positive Impact to CityFTE Required Revenue Impact Total Impact Packet Pg 188 10 Meeting Date: 11/21/2017 FROM: Derek Johnson, City Manager SUBJECT: DIABLO CANYON NUCLEAR POWER PLANT- JOINT PROPOSAL PROPOSED DECISION RECOMMENDATION Receive a report on the Administrative Law Judge’s Proposed Decision for the Joint Proposal (Attachment A) to close the Diablo Canyon Nuclear Power Plant and authorize the City to advocate for legislation if necessary to fund the Community Impacts Mitigation Program (CIMP). DISCUSSION On November 8, 2017, Administrative Law Judge Peter V. Allen released the Proposed Decision (Attachment A) regarding the Joint Proposal to close Diablo Canyon Nuclear Power Plant (DCNPP). Until the California Public Utilities Commission (“CPUC”) hears the item and votes to approve it, modify it, or reject it; the Proposed Decision has no legal effect. The CPUC is scheduled to hear arguments on November 28, 2017 in San Francisco. City representatives are scheduled to attend this hearing. Addressing the CPUC is typically limited to authorized parties1 and public comment is not scheduled and present oral argument. No public comment has been scheduled as the purpose of t he two hearings held in Fall 2016 & 2017 were meant to provide a local forum for public input. The various parties to the Joint Proposal include PG&E, International Brotherhood of E lectrical Workers Local 1245, Coalition of California Utility Employees, Friends of the Earth, Natural Resources Defense Council, California Energy Efficiency Industry Council and Alliance for Nuclear Responsibility, County of San Luis Obispo, San Luis Coa stal Unified School District and the Coalition of Cities. Appendix A of the Proposed Decision lists over 80 parties that were either signatories to the Joint Proposal or have been granted party status to the proceedings. The broad range of interests is clearly an indication of the far-reaching implications of the Joint Proposal and the potential impacts on local communities, energy production, economy and the environment. Reaching agreement on the Joint Proposal was remarkable feat given the broad and competing interests. There is generally broad consensus that the Joint Proposal and Settlement Agreement provides the most comprehensive example and perhaps a best practice in terms of shuttering a nuclear power plant. Background On August 11, 2016, PG&E filed its application proposing to retire DCNPP upon the expiration of applicable licenses to allow for the continued operation of the plant. In addition to retiring DCNPP, PG&E’s application requested approval of: 1) procurement of three tranches of greenh ouse gas-free resources to partially replace the output of DCNPP; 2) retention, retraining, and severance programs for DCNPP employees; 3) a program that would provide funding to the local community to mitigate the economic impact of the plant’s retirement; and 4) rate recovery of various costs, including amounts spent for environmental reviews and PG&E’s now-suspended NRC license renewal 1 Parties approved by the CPUC through the adjudicatory process or parties to the Joint Proposal. Packet Pg 189 11 application. PG&E’s original application was supported by a broad list of signatories2. Protests and responses to the Joint Proposal were filed and ultimately the Joint Proposal was amended with a partial settlement. This partial settlement was reached with many parties and locally included San Luis Coastal Unified School District, County of San Luis Obispo and the Coalition of Cities. This partial settlement adjusted the Community Impacts Mitigation Program (CIMP). Attachment B provides an overview of the changes to the CIMP and the related terms. Proposed Decision The Proposed Decision accepts, modifies and rejects ce rtain portions of the Joint Proposal. Specifically, and locally most relevant, the Proposed Decision rejects the proposed Community Impact Mitigation Program (CIMP) citing concerns over fairness to the community and ratepayers, and is based on the ALJ’s conclusion that the CPUC lacks statutory authority to approve ratepayer funding of the mitigation funds and concerns about characterization of the payments as in-lieu of tax payments, which are concerns that the ALJ believes would need to be addressed through the State Legislature. The CPUC’s Proposed Decision indicates that the County, School District and Coalition of Cities can pursue two options in the future, assuming the Commission adopts the Proposed Decision. Those options include a legislative approach, working with the State of California to create legislation that expressly authorizes and/or directs this Commission to approve ratepayer funding for the Community Impact Mitigation Program, or PG&E can pledge shareholder funds to support the Communit y Impact Mitigation Program. Staff is seeking support from Council and will be requesting that the Coalition of Cities concurrently support legislation to secure CIMP funds, as well as negotiation of alternate funding mechanisms, including PG&E allocation of shareholder funding. While legislative advocacy is underway, the Coalition of Cities will also make arguments before the CPUC that the proposed settlement agreement is within their current statutory/regulatory authority and should be approved in its negotiated form. Lastly, the Proposed Decision also seeks to limit or reduce funding in other areas of the Joint Proposal. In particular, there is strong concern that the curtailment of the employee incentive program could jeopardize the retention of critical PG&E employees to operate the plant until 2025. Employees at DCNPP are highly trained and technical and losses of employees could compel PG&E to shutter the plant sooner, thus accelerating and concentrating economic impacts. Other areas of the Joint Proposal (i.e. Retirement of DCNPP, Proposed Replacement Procurement, Recovery of License Renewal Costs, Proposed Ratemaking and Cost Allocation Issues, Additional Issues) are discussed in the Proposed Decision and will be covered in Staff’s presentation on November 21st. CONCURRENCES The proposed action is consistent with the Guiding Principles (Attachment C) which were approved by the City Council on July 19, 2016. 2 Natural Resources Defense Council (NRDC), Friends of the Earth (FOE), Environment California, International Brotherhood of Electrical Workers Local 1245 (IBEW 1245), Coalition of California Utility Employees (CCUE), and the Alliance for Nuclear Responsibility (A4NR), Packet Pg 190 11 ENVIRONMENTAL REVIEW Receiving a report on the Proposed Decision is not subject to t he California Environmental Quality Act. FISCAL IMPACT According to a 2013 report prepared in coordination with the Nuclear Energy Institute, Cal Poly’s Orfalea College of Business and Productive Impact, the DCNPP impact on the county is nearly $1 billion annually, encompassing jobs, schools, infrastructure and other businesses. When DCNPPs shutter, according to the study, the county would lose over 3,200 jobs in virtually every sector and the San Luis Coastal School District would lose 11.6 percent of it s annual budget. Today’s impacts quantified in 2017 is unknown at this time. Senate Bill 968 (Monning) requires the CPUC to analyze the 1) Economic and Fiscal Impacts of DCNPP’s closure 2) Other comparable recent nuclear power plant closures and its social and financial impacts on affected communities 3) Economic impacts of the closure of San Onofre Nuclear Generating Station (SONGS). Cal Poly is in the process of securing a contract with the CPUC to complete this work by December 2018. The settlement agreement includes $400,000 to leverage the analysis from SB 968 and develop a regional economic development strategy to focus economic development activities so that there is more of an orderly economic transition to a future without DCNPP. Those funds would be eliminated under the Proposed Decision. The settlement agreement also includes a $10 million3 payment by PG&E to the County ($3.8 million) and to the Coalition of Cities ($5.7) to establish a fund for implementation of regional economic development and job creation programs. The loss of these funds would mean that the region would not have funding to implement key actions to address economic impacts. Equally important to our region is the proposed $75 million, of which $10 million will be dedicated to an educational foundation to be designated by the San Luis Coastal Unified School District (“District”). The loss of these funds would likely have a significant impact the quality of K -12 education. Finally, the Joint Proposal includes emergency planning and response readiness funding to address the continued risk to operate and close a nuclear power plant and the potential to storage of onsite spent nuclear fuels. The loss of funding could impact the capabilities of local responders to address any nuclear related incidents. 3 The $400,000 to develop the regional economic development strategy came out of the $10 million. Packet Pg 191 11 ALTERNATIVES The Council could direct Staff not to work with the Coalition, County, and/or School District to pursue legislation to address arguments that the Community Impacts Mitigation Program is not permissible under statute and enabling legislation must be passed to authorize such payments. While arguments will be made that the CIMP is allowed under existing statutes, specific legislation will make it abundantly clear that the CIMP is permissible and good public policy. Attachments: a - DCPP Proposed Decision b - Settlement Agreement Terms c - Guiding Principles Packet Pg 192 11 STATE OF CALIFORNIA EDMUND G. BROWN JR., Governor PUBLIC UTILITIES COMMISSION 505 VAN NESS AVENUE SAN FRANCISCO, CA 94102-3298 November 8, 2017 Agenda ID #16094 Ratesetting TO PARTIES OF RECORD IN APPLICATION 16-08-006: This is the proposed decision of Administrative Law Judge Peter V. Allen. Until and unless the Commission hears the item and votes to approve it, the proposed decision has no legal effect. This item may be heard, at the earliest, at the Commission’s December 14, 2017, Business Meeting. To confirm when the item will be heard, please see the Business Meeting agenda, which is posted on the Commission’s website 10 days before each Business Meeting. Parties of record may file comments on the proposed decision as provided in Rule 14.3 of the Commission’s Rules of Practice and Procedure. The Commission may hold a Ratesetting Deliberative Meeting to consider this item in closed session in advance of the Business Meeting at which the item will be heard. In such event, notice of the Ratesetting Deliberative Meeting will appear in the Daily Calendar, which is posted on the Commission’s website. If a Ratesetting Deliberative Meeting is scheduled, ex parte communications are prohibited pursuant to Rule 8.3(c)(4)(B). /s/ ANNE E. SIMON Anne E. Simon Acting Chief Administrative Law Judge AES:jt2 Attachment 198044682 FILED 11-08-17 08:00 AM 198044679 - 1 - ALJ/PVA/jt2 PROPOSED DECISION Agenda ID #16094 Ratesetting Decision PROPOSED DECISION OF ALJ ALLEN (Mailed 11/8/2017) BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Application of Pacific Gas and Electric Company for Approval of the Retirement of Diablo Canyon Power Plant, Implementation of the Joint Proposal, And Recovery of Associated Costs Through Proposed Ratemaking Mechanisms (U39E). Application 16-08-006 (See Appendix A for Appearances) DECISION APPROVING RETIREMENT OF DIABLO CANYON NUCLEAR POWER PLANT Packet Pg 194 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - i - Table of Contents Title Page DECISION APPROVING RETIREMENT OF DIABLO CANYON NUCLEAR POWER PLANT ................................................................................................................ 1 Summary ............................................................................................................................ 2 1. Background ............................................................................................................... 2 2. Issues Before the Commission ................................................................................ 6 3. Discussion and Analysis ......................................................................................... 8 3.1. Retirement of Diablo Canyon Power Plant .................................................. 8 3.2. Proposed Replacement Procurement .......................................................... 15 3.3. Proposed Employee Program ...................................................................... 22 3.4. Proposed Community Impacts Mitigation Program ................................ 31 3.5. Recovery of License Renewal Costs ............................................................ 41 3.6. Proposed Ratemaking and Cost Allocation Issues ................................... 45 3.7. Additional Issues ........................................................................................... 48 4. Comments on Proposed Decision ........................................................................ 49 5. Assignment of Proceeding .................................................................................... 49 Findings of Fact ............................................................................................................... 49 Conclusions of Law ........................................................................................................ 50 ORDER ............................................................................................................................. 51 Appendix A – List of Appearances Packet Pg 195 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 2 - DECISION APPROVING RETIREMENT OF DIABLO CANYON NUCLEAR POWER PLANT Summary Pacific Gas and Electric Company (PG&E) proposes to retire the Diablo Canyon Power Plant in 2024 and 2025, when its federal Nuclear Regulatory Commission operating licenses expire. PG&E requests Commission approval to recover in rates over $1.76 billion in costs associated with the retirement of Diablo Canyon. Those costs include $1.3 billion for energy efficiency procurement to partially replace the output of Diablo Canyon, $363.4 million for Diablo Canyon employee retention and retraining, $85 million for a Community Impacts Mitigation Program, $18.6 million in costs previously incurred for its Nuclear Regulatory Commission license renewal process, and an unspecified amount for cancelled capital projects. (PG&E Opening Brief at i-ii.) This order approves PG&E’s proposal to retire Diablo Canyon and approves $190.4 million in rate recovery for costs associated with the retirement of Diablo Canyon. Specifically, PG&E is authorized to recover in rates $171.8 million for employee retention and retraining, and $18.6 million for its license renewal activities, plus a portion of the cost of cancelled capital projects. Rate recovery for the Community Impacts Mitigation Program requires legislative authorization. Replacement procurement issues will be addressed in the Integrated Resource Planning proceeding. This proceeding is closed. 1. Background Pacific Gas and Electric Company’s (PG&E) Diablo Canyon nuclear power plant is located in coastal San Luis Obispo County, and consists of two units that have been operating since 1985 (Unit 1) and 1986 (Unit 2), with a combined generation capacity of 2,240 megawatts (MW). The units are currently licensed Packet Pg 196 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 3 - by the Nuclear Regulatory Commission (NRC) to operate until 2024 (Unit 1) and 2025 (Unit 2). On August 11, 2016, PG&E filed its application proposing to retire Diablo Canyon upon the expiration of its NRC licenses. In addition to retiring Diablo Canyon, PG&E’s application requested approval of: 1) procurement of three tranches of greenhouse gas-free resources to partially replace the output of Diablo Canyon; 2) retention, retraining, and severance programs for Diablo Canyon employees; 3) a program that would provide funding to the local community to mitigate the economic impact of the plant’s retirement; and 4) rate recovery of various costs, including amounts spent for environmental reviews and PG&E’s now-suspended NRC license renewal application. (PG&E Application at 8-12.) PG&E’s application was supported by the Natural Resources Defense Council (NRDC), Friends of the Earth (FOE), Environment California, International Brotherhood of Electrical Workers Local 1245 (IBEW 1245), Coalition of California Utility Employees (CCUE), and the Alliance for Nuclear Responsibility (A4NR), and the proposal in the application was referred as a “Joint Proposal.”1 Protests to PG&E’s application were filed by the California Large Energy Consumers Association (CLECA), Californians for Green Nuclear Power (CGNP), the Energy Producers and Users Coalition (EPUC), Energy Users Forum, Environmental Progress, LEAN Energy US, the Cities of Paso Robles, 1 The parties supporting the application are referred to as the “Joint Parties.” While generally supporting the Joint Proposal, the A4NR did not support PG&E’s request for rate recovery of its NRC license renewal costs. Packet Pg 197 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 4 - Morro Bay, San Luis Obispo, Arroyo Grande, Pismo Beach and Atascadero (filed jointly), California Solar Energy Industries Association, Sierra Club, Shell Energy North America (US), L.P. (Shell), City of Lancaster, Friends of Wild Cherry Canyon, Central Coast Wave Energy Hub, The Utility Reform Network (TURN), World Business Academy, the Commission’s Office of Ratepayer Advocates (ORA), Sonoma Clean Power Authority, Marin Clean Energy, SolarCity Corporation, City and County of San Francisco, A4NR, Women's Energy Matters (WEM), and the Green Power Institute. Responses to PG&E’s application were filed by OhmConnect, Inc, San Luis Obispo Mothers for Peace, Inc. (Mothers for Peace), Independent Energy Producers Association (IEP), South San Joaquin Irrigation District, Direct Access Customer Coalition, Alliance for Retail Energy Markets, Large-scale Solar Association, EnergyHub, CPower, EnerNOC, Inc., Comverge, Inc., California Energy Storage Alliance, San Luis Coastal Unified School District (School District), IBEW 1245, CCUE, Environmental Defense Fund (EDF), FOE, NRDC, Environment California, California Energy Efficiency Industry Council, Center for Energy Efficiency and Renewable Technologies (CEERT) and the County of San Luis Obispo (County).2 The general timeline of the proceeding was: August 11, 2016 – Application filed. September 15, 2016 – Protests and Responses filed. September 26, 2016 – PG&E Reply to Protests and Responses filed. October 6, 2016 – Pre-hearing Conference held. 2 Some responses were filed jointly by multiple parties. Packet Pg 198 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 5 - October 20, 2016 – Public Participation Hearings held in San Luis Obispo. November 18, 2016 - Scoping Memo and Ruling issued. January 27, 2017 - Intervenor testimony served. March 17, 2017 - Rebuttal testimony served. April 19 – 27, 2017 - Evidentiary hearings held. May 26, 2017 - Opening briefs filed. June 16, 2017 - Reply briefs filed. September 14, 2017 – Public Participation Hearings held in San Luis Obispo. On December 28, 2016, PG&E filed a joint motion requesting approval of a partial settlement between PG&E, the County of San Luis Obispo, the Cities of Arroyo Grande, Atascadero, Morro Bay, Paso Robles, Pismo Beach, and San Luis Obispo (collectively Local Cities), the School District, FOE, NRDC, Environment California, IBEW 1245, CCUE, and A4NR. The proposed settlement modified the Community Impacts Mitigation Program originally proposed by PG&E in its application. On February 27, 2017, PG&E notified the parties that it was withdrawing its request for two of the three tranches of replacement procurement (and associated cost recovery) that it had proposed in its application, and that this change would be reflected in its rebuttal testimony. On May 23, 2017, PG&E filed a joint motion requesting approval of a partial settlement between PG&E, A4NR, TURN, ORA, Mothers for Peace, FOE, NRDC, Environment California, IBEW 1245 and CCUE. This second proposed settlement modified PG&E’s original request for rate recovery of its NRC license renewal costs and its cancelled project costs. Packet Pg 199 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 6 - 2. Issues Before the Commission The Scoping Memo identified the following issues: Retirement of Diablo Canyon Power Plant PG&E has proposed to retire Diablo Canyon Unit 1 in 2024, and Unit 2 in 2025. Parties have proposed both earlier and later retirement dates. Parties may present testimony in support of PG&E’s proposed dates, or earlier or later retirement dates, including indefinite dates. Proposed Replacement Procurement PG&E has made a proposal for procurement of resources to partially replace Diablo Canyon’s output. Parties may present testimony supporting alternative procurement proposals, including proposals that all necessary replacement procurement should be addressed in this proceeding, that no replacement procurement should be addressed in this proceeding, or that some replacement procurement should be addressed in this proceeding. Proposed Employee Program PG&E has proposed an employee retention, retraining and severance program associated with approximately 1,500 employees at Diablo Canyon. Parties have raised questions about the cost and funding of this program. Parties may present testimony on the need for this program and its size, cost, structure, timing and its source of funding. Proposed Community Impacts Mitigation Program PG&E has proposed a community impacts mitigation program to mitigate some of the adverse economic impacts to the residents of San Luis Obispo County as a result of the planned retirement of Diablo Canyon. Parties may present testimony on the community impacts of the proposed retirement of Packet Pg 200 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 7 - Diablo Canyon, including economic and emergency response impacts, and on proposals to mitigate those impacts. Recovery of License Renewal Costs PG&E has proposed that it be granted rate recovery for costs relating to license renewal activities, including the filing of a license renewal application with the federal NRC. Parties may present testimony on whether it is reasonable for PG&E to recover some or all of these costs in rates. Proposed Ratemaking and Cost Allocation Issues PG&E has requested rate recovery for the costs of its proposals, including costs of replacement procurement, its employee program and community impacts mitigation program, and its license renewal activities, as well as other costs relating to the operation of Diablo Canyon facilities. Parties may support or criticize PG&E’s proposed rate design and cost allocation, or may present alternative rate design and cost allocation proposals. Additional Issues Not Addressed Above Parties may present testimony on issues that are within the general scope of the proceeding, as established by the record to date, that are not specifically addressed in the above sections. The Scoping Memo determined that it was premature to address land use, facilities and decommissioning issues, and that specific recommendations on those issues would not be considered at this time, but parties were allowed to present testimony recommending how to best preserve these issues for future consideration. Packet Pg 201 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 8 - 3. Discussion and Analysis 3.1. Retirement of Diablo Canyon Power Plant PG&E proposes to retire Diablo Canyon upon the expiration of its NRC licenses, which expire on November 2, 2024 for Unit 1 and August 26, 2025 for Unit 2. (Ex. PG&E-1 at 2-1.) PG&E’s forecasts and analysis indicates that in the near future there will be a significantly reduced need for electric generation from Diablo Canyon. (PG&E Opening Brief at 11-18.) Because of projected increases in energy efficiency, distributed generation, renewable generation, and customers moving to community choice aggregation (CCA) and direct access, PG&E’s conclusion is that there is simply less of a need for Diablo Canyon. (Id.) In fact, PG&E believes that the continued operation of Diablo Canyon beyond 2025 would exacerbate over-generation, requiring curtailment of renewable generation. (Id. at 16-17; Ex. PG&E-1 at 2-20.) PG&E’s analysis indicates that there is no need to replace Diablo Canyon in order to maintain system reliability. (Transcript Vol. 6 at 957-958.) PG&E has also been unequivocal that the retirement of Diablo Canyon will not have an adverse impact on local reliability. According to PG&E, because Diablo Canyon’s output is exported on the bulk transmission system, Diablo Canyon is considered a system resource only, and is not needed for local reliability: DCPP [Diablo Canyon Power Plant] is located in the Los Padres area of PG&E’s service territory, which includes the cities of: San Luis Obispo, Divide, Santa Maria, Mesa, Templeton, Paso Robles, and Atascadero. […] [M]ost of DCPP’s generation is exported to the north and east of the Los Padres division through 500 kilovolts (kV) bulk transmission lines, which includes a transmission connection between the Diablo Canyon and Midway substations. [fn. omitted] Los Padres customer demand is served through a network of 115 kV and 70 kV circuits and does not include DCPP as part of the local Packet Pg 202 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 9 - installed generation capacity as DCPP does not serve load within the division. As such, DCPP is not needed for local reliability. Unlike San Onofre Nuclear Generating Station, DCPP is considered as a system resource only and is not needed to provide support for local reliability. (Ex. PG&E-1 at 2-20 to 2-21; see also PG&E Opening Brief at 17.) A number of parties support PG&E’s determination that Diablo Canyon is not needed; in addition to the parties supporting the Joint Proposal3, other parties also agree that it is appropriate to retire Diablo Canyon: IEP concurs with PG&E’s decision not to renew the licenses of the two units of the Diablo Canyon Power Plant. Replacement resources that are both less expensive and better able to fit the needs of PG&E’s customers and the electric grid are available. (IEP Opening Brief at 7.) TURN’s economic analysis demonstrates that ratepayers would benefit from retiring Diablo Canyon and satisfying customer need with incremental renewable resources. This analysis, along with the recognition that continued operations at Diablo Canyon involve the potential for a catastrophic accident or unexpected premature shutdown, affirms the reasonableness of PG&E’s decision to permanently retire the plant by 2025. (TURN Opening Brief at 2.) The City of San Francisco supports shutting down Diablo Canyon, and states: PG&E has persuasively demonstrated that Diablo Canyon is a no longer a good fit for PG&E’s bundled customers. PG&E has shown that Diablo Canyon should be closed because of the high cost of operating Diablo Canyon, potential regulatory requirements regarding the once through cooling technique used by Diablo Canyon, and system over-generation problems related to Diablo 3 Those parties are: NRDC, FOE, Environment California, IBEW 1245, CCUE and A4NR. Packet Pg 203 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 10 - Canyon’s constant operation. [fn. omitted] PG&E showed also that continued operation of Diablo Canyon is a bad fit in the context of California’s goal of reducing GHG [greenhouse gas] emissions in part by increasing use of renewable energy resources. This is because Diablo Canyon is a baseload, relatively inflexible resource that would exacerbate overgeneration and would result in continued curtailment of renewable resources. PG&E also admits that Diablo Canyon is no longer necessary for reliability. [fn. omitted] PG&E also projects that its load will shrink considerably by the time Diablo Canyon closes. Between 2017 and 2025, PG&E forecasts that approximately 20,000 GWh [gigawatt hours] of load will migrate to CCAs . [fn. omitted] This is comparable to the amount of bundled customer load (18,500 GWh) Diablo Canyon currently serves. In PG&E’s own words “whether CCA loads depart somewhat sooner or later than expected does not change the overall conclusion that DCPP is not needed for PG&E’s customers after the expiration of the Nuclear Regulatory Commission licenses in 2024 and 2025.” [fn. omitted] (City and County of San Francisco Opening Brief at 3.) Other parties, while not actively supporting PG&E’s proposal, do not oppose it, including: ORA (ORA Opening Brief at 4),4 Alliance for Retail Energy Markets, the California Clean DG Coalition, CLECA, the Direct Access Customer Coalition, the Energy Users Forum, Marin Clean Energy, Peninsula Clean Energy, Silicon Valley Clean Energy Authority, and Sonoma Clean Power Authority (Joint Opponents Opening Brief at 2). 4 Elsewhere, however, ORA states: “ORA supports PG&E’s proposed retirement of the DCPP units at the end of their respective operating license periods in 2024 and 2025.” (Ex. ORA-2 at 4.) Packet Pg 204 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 11 - Only one active party, CGNP, argues that Diablo Canyon should continue to operate beyond 2025.5 CGNP makes three substantive arguments for keeping Diablo Canyon operating: Diablo Canyon is more cost effective than the alternative sources of supply, retiring Diablo Canyon would diminish system reliability, and retiring Diablo Canyon would have an adverse impact on GHG emissions. (CGNP Opening Brief at 5.) On the issue of the cost effectiveness of Diablo Canyon, TURN identified significant flaws and omissions in CGNP’s cost calculations and estimates. (See, TURN Reply Brief at 1-7; Transcript, vol. 8 at 1,302-1,318.) The record of this proceeding undercuts, rather than supports, CGNP’s argument that continued operation of Diablo Canyon would be cost effective. Accordingly, CGNP’s testimony on this issue is given little weight. CGNP’s argument that retiring Diablo Canyon would be detrimental to grid reliability seems to be based on the fact that Diablo Canyon has been a reliable resource, and that other generation resources have been less reliable. (CGNP Opening Brief at 40.) The reliability of the plant and the reliability of the system are separate things, and there has been clear testimony that the retirement of Diablo Canyon would not adversely affect the reliability of the system. (Transcript Vol. 6 at 957-958.)6 As Joint Opponents unequivocally state: “Diablo Canyon, an inflexible resource, is not needed either for system or local 5 One other party, Environmental Progress, made a similar argument in its protest of the application, but did not present testimony or file briefs. 6 For example, if a person owned 12 cars, but never used more than three cars at one time, selling cars 11 and 12 – even if they were more reliable than cars 9 and 10 – would not significantly change the ability to have three operable cars. Packet Pg 205 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 12 - reliability. [fn omitted] It can be retired without impacting grid reliability.” [fn. omitted] (Joint Opponents Opening Brief at 3.) CGNP’s reliability argument also appears to assume that Diablo Canyon could operate as a flexible resource that could ramp up and down to meet changing daily demand, rather than how it has been operated, as a constant-level baseload resource. (CGNP Opening Brief at 40.) PG&E points out that this is a speculative and unrealistic assumption, and would make Diablo Canyon even less cost effective: Operating in load-following mode7 would take Diablo Canyon outside of the currently authorized NRC license conditions and would require extensive technical feasibility studies, redesign of procedures, processes and systems, maintenance practices and nuclear fuel redesign. […] It is unclear if Diablo Canyon could be retrofitted to safely and reliably operate in a different operating mode, whether the NRC would approve it, and whether it would be cost-effective to do so given the reduction in capacity factor that would result if Diablo Canyon were to be frequently ramped down to minimum operating levels during the daytime hours when solar power is prevalent. (PG&E Reply Brief at 7.) Finally, CGNP argues that retiring Diablo Canyon will make it “impossible” for the state to meet its GHG reduction goals, and accordingly it should be relicensed and kept available. (CGNP Opening Brief at 41-42.) CGNP claims that the retirement of Diablo Canyon would result in California importing large amounts of fossil fuel generated electricity from PacifiCorp. (Id.) While the specific arguments made by CGNP are not well supported by the record, the GHG impact of Diablo Canyon’s retirement (and any replacement 7 In this mode Diablo Canyon would ramp up and down to meet daily variations in load. Packet Pg 206 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 13 - procurement) does need to be considered. This issue is discussed in more detail below in the section addressing replacement procurement, which finds that the question of the GHG impact of Diablo Canyon’s retirement should be addressed in the Commission’s Integrated Resource Planning (IRP) proceeding. Two parties – WEM and Mothers for Peace - argue that Diablo Canyon should be shut down earlier than PG&E’s proposed 2024/2025 timing. WEM argues that Diablo Canyon will become “commercially unreasonable” to operate well before 2024/2025, that replacement energy is also available before then, and given the risks associated with nuclear power, Diablo Canyon should be shut down no later than 2020. (WEM Opening Brief at 1-2.) Mothers for Peace similarly recommends a shutdown date of 2019/2020. (Mothers for Peace Opening Brief at 3.) WEM and Mothers for Peace base their arguments in part upon the potential dangers of nuclear power. While this Commission has broad authority over PG&E and Diablo Canyon (including non-nuclear safety), the Commission’s authority over nuclear safety is less clear; accordingly, the Commission’s decision on this issue is not based on nuclear safety. But the economics of Diablo Canyon can provide a basis for this Commission’s decision, and WEM and Mothers for Peace also argue that Diablo Canyon will be uneconomic to operate well before 2025. WEM points out that as PG&E’s bundled load decreases, more of Diablo Canyon’s output will need to be sold at a loss on the wholesale market, and that: “This foreseeable development will make continued operation of Diablo Canyon increasingly uneconomic and dysfunctional, and this will likely begin to happen before 2020, not 2025.” (WEM Opening Brief at 12.) Packet Pg 207 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 14 - Similarly, Mothers for Peace argues that Diablo Canyon costs are already high: [T]he costs of operating and maintaining Diablo Canyon are disproportionately high for the contribution the power plant makes to PG&E’s electrical generation capacity and, therefore, further investment in the continued operation of Diablo Canyon is not a prudent economical capital expense for the utility. (Id. at 8.) Mothers for Peace also raises the additional concern that PG&E will need to spend increasing amounts of money on maintenance and repair of Diablo Canyon due to its age, particularly because of the degradation of a number of major plant components. (Mothers for Peace Opening Brief at 6-9.) WEM and Mothers for Peace raise valid concerns about the current cost of operating Diablo Canyon, and the potential for significant costs that could be incurred between now and 2024/25, but those concerns cannot be considered in isolation. While shutting down Diablo Canyon in 2019/2020 might provide some short-term cost savings, it would also provide less time for replacement procurement to be considered in the IRP proceeding and for the development and deployment of additional greenhouse gas-free resources.8 The balance of facts and policy before this Commission tends to tip against a shutdown before 2024 and 2025.9 Based on the record of this proceeding, PG&E’s proposed 2024/2025 retirement schedule for Diablo Canyon provides a reasonable amount of time for the transition process, including further examination of replacement 8 An early shutdown would also accelerate the impacts on plant employees and the local community. 9 To the extent Diablo Canyon costs increase during the interim period, this balance could change. Packet Pg 208 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 15 - procurement. Accordingly, PG&E’s proposed retirement schedule for Diablo Canyon is approved. If in the interim period the facts change in a manner that indicates Diablo Canyon should be retired earlier, the Commission may reconsider this determination. 3.2. Proposed Replacement Procurement In its initial Application, PG&E proposed to partially replace Diablo Canyon with greenhouse gas-free resources in three tranches, consisting of: 1) 2,000 gross GWh of energy efficiency; 2) 2,000 GWh of GHG-free energy, including energy efficiency and Renewables Portfolio Standard (RPS) eligible energy resources; and 3) a voluntary 55 percent RPS commitment. (PG&E Application at 9.) PG&E described these three tranches as “[A] first step towards replacing Diablo Canyon with a portfolio of GHG-free resources.” (Id.) While proposing this significant procurement of resources, PG&E noted that: Additional resources beyond those specified in the Joint Proposal may be needed on a system-wide basis to replace the output of Diablo Canyon. The Joint Parties envision that this issue will primarily be addressed through the Commission’s Integrated Resource Planning process (i.e., R.16-02-007). (Id.) Multiple parties protested PG&E’s replacement procurement proposal, including Shell, Sierra Club, SolarCity, TURN, and Marin Clean Energy. While parties did not object to the idea of replacing Diablo Canyon with GHG-free resources, they challenged the feasibility, effectiveness, cost-effectiveness, cost, and cost allocation of PG&E’s specific proposal. (See, e.g. Shell Protest at 3-4, Sierra Club Protest at 6-12, SolarCity Protest at 2-7, TURN Protest at 7-11, Marin Clean Energy Protest at 7-10.) Packet Pg 209 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 16 - In their testimony, multiple parties expanded upon their criticisms of PG&E’s replacement procurement proposal. Some raised procedural objections. For example, ORA argued that no replacement procurement should be addressed in this proceeding, but it should instead be addressed in the IRP proceeding. (Ex. ORA-3 at 1-5, Ex. ORA-5 at 7-8.) Others, such as MCE, questioned the need for any replacement procurement: It is certainly possible that there is no need at all to replace the generation that will be lost when PG&E closes Diablo Canyon. …[D]iscontinued operation of the facility, from an operational perspective, is likely a solution to PG&E’s declining energy requirements in and of itself. (Ex. MCE-1 at 10.) Subsequently, on February 27, 2017, PG&E provided notice to the service list that it was withdrawing part of its replacement procurement proposal: Specifically, after careful review of the important feedback provided by parties in their January 27, 2017 opening testimony on the Diablo Canyon replacement proposal, PG&E is withdrawing the Diablo Canyon Tranches #2 and #3 replacement proposals, as well as the proposal to implement the Clean Energy Charge to recover the costs associated with Tranches #2 and #3. The Joint Parties believe that these aspects of the Diablo Canyon replacement proposal are better addressed in the Commission’s Integrated Resource Plan (“IRP”) proceeding (Rulemaking 16-02-007). (PG&E February 27, 2017 e-mail.) PG&E modified its direct testimony to reflect this change. Subsequently, the other parties took a range of positions; some parties (primarily the Joint Parties) supported PG&E’s new position, others proposed different partial replacement procurement schemes, and still others recommended that all replacement procurement be addressed in the IRP proceeding. Packet Pg 210 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 17 - Some parties recommended that the Commission approve partial replacement procurement for Diablo Canyon in this proceeding, but in a form different than that proposed by PG&E: The GPI supports the authorization in this proceeding of an early tranche of procurement of greenhouse-gas-free resources that can be brought online prior to the retirement of DCPP, but only if the procurement is primarily an all-source procurement. (GPI Opening Brief at 19, emphasis in original.) Thus, CEERT continues to strongly support the authorization of the Tranche #1 and Tranche #2 competitive solicitations in this Application, without deferral to the IRP Process, as critical “early action” GHG-free energy procurement to meet PG&E’s bundled customer need upon the retirement of Diablo Canyon and as a contingency plan in the event of early retirement or shutdown, with cost recovery approved according to existing ratemaking and cost allocation mechanisms. (CEERT Opening Brief at 7, emphasis in original.) IEP similarly argued that PG&E should immediately be directed to do an “all-source” solicitation in order to take advantage of federal tax credits for renewable generation projects that are expected to expire or decline in the near future. (IEP Opening Brief at 1-2, 11-12.) Other parties recommend that the Commission NOT authorize any replacement procurement in this proceeding, but instead advocate that the Commission should do a need analysis (and any resulting authorization) in the IRP proceeding. Those parties include Shell: The appropriate forum for consideration of all Diablo Canyon replacement procurement, including PG&E’s proposed first “tranche” of procurement, is the IRP proceeding. Ex. Shell-i at pp. 4-7 (Dyer). SB 350 provides that the investor-owned utilities’ (“IOU”) procurement planning decisions must be made in the context of a comprehensive planning process. [fn. omitted] PG&E’s Packet Pg 211 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 18 - proposal in this proceeding, to replace a portion of Diablo Canyon energy output with energy efficiency, interferes with the Commission’s ability to establish a comprehensive procurement strategy for PG&E in the IRP proceeding. (Shell Opening Brief at 2-3.) ORA makes a similar argument as well: In its testimony, ORA recommended that no replacement procurement be addressed in this proceeding. ORA continues to make that recommendation since PG&E has not withdrawn its Tranche #1 proposal, and other parties may seek Commission approval of the Tranche #2 and #3 proposals even though PG&E has withdrawn them. As ORA noted in its testimony, R.16-02-007, the Commission’s Integrated Resource Planning and Long-Term Procurement Planning rulemaking (“Integrated Resource Planning proceeding”) is the appropriate Commission proceeding to address all replacement procurement associated with the closure of the Diablo Canyon units. […] PG&E will be required to perform portfolio optimization as part of its IRP in 2017. PG&E has likely included Energy Efficiency as part of its proposed preferred resources portfolio. The correct, optimized levels of these resources will be determined in the Commission’s IRP system plan. PG&E’s proposal for replacement procurement outside of the IRP portfolio optimization process creates the potential for over-procurement in PG&E’s service territory, thereby leading to higher costs for customers and resulting in a sub-optimal resource plan. (ORA Opening Brief at 4-5, fn. omitted) In addition to arguments that replacement procurement should be addressed in the IRP proceeding rather than here, a number of parties argued that PG&E’s remaining Tranche 1 proposal itself was flawed: Packet Pg 212 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 19 - TURN supports PG&E’s intention to dramatically scale up its procurement of cost-effective EE [energy efficiency]. However, as shown in TURN’s testimony and explained below, PG&E has not met its burden of demonstrating that its Tranche 1 proposal offers the right mechanism through which to do that. [fn. omitted] In sum, Tranche 1 suffers from three fundamental design flaws: it may not be feasible, it does not ensure that the EE savings will be additional to the savings that would otherwise occur, and it does not ensure that the EE savings will still be available when Diablo Canyon comes offline. Moreover, the notion of a major EE procurement outside of PG&E’s existing EE portfolio and its new EE Business Plan is ill-conceived, and PG&E has not demonstrated that the benefits of this separate procurement will exceed the costs. (TURN Opening Brief at 20.) While acknowledging that Tranche 1 may exacerbate conditions of overgeneration and renewable curtailment, PG&E and the other Joint Parties fail to address it: PG&E witness Strauss agreed that procurement of just EE, as proposed in Tranche 1, may worsen overgeneration issues. (Joint Opponents Opening Brief at 4-5, fn. omitted.) ORA similarly opposes PG&E’s request for $1.3 billion in customer funding for its Tranche #1 EE procurement proposal and associated shareholder incentive payments. According to ORA: PG&E fails to demonstrate that its requested Tranche #1 procurement, which is an increase of more than 50% of the currently-identified energy efficiency potential, would be cost effective. (ORA Opening Brief at 10.) As ORA points out, PG&E is already required under California’s loading order for energy resources to first meet its resource needs through “all available energy efficiency…resources that are cost effective, reliable, and feasible.” (Id., quoting Pub. Util. Code § 454.5(b)(9)(C)(i).) According to ORA, PG&E has acknowledged that in D.15-10-028, the Commission set a goal for PG&E to Packet Pg 213 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 20 - procure all cost-effective and feasible EE for the years 2016-2024. For 2018-2024, the period corresponding to the Tranche #1 procurement proposal, that goal is a total of 3,741 gross GWh savings. (Id., citing Ex. PG&E-1, at 4-3, Table 4-1, lines 3-9.) ORA concludes: Yet, PG&E’s Diablo Canyon application proposes to procure an additional 2,000 gross GWh installed in its service territory in the same period 2018-2024. [fn. omitted] This represents an increase of 53.5% over currently approved goals for the years 2018-2024. Such a substantial increase in the EE potential is only possible by lowering the Commission’s threshold criteria for cost-effectiveness. Lowering the cost-effectiveness standards would burden customers with the cost of Energy Efficiency measures that provide insufficient value to qualify under current standards . (ORA Opening Brief at 11.) EPUC makes a similar argument: While labor unions, local governments, environmental organizations and shareholders all receive firm, defined benefits, there are no benefits and no protections for ratepayers. Instead they shoulder greater uncertainty and risks, and the revenue consequences as these uncertainties are resolved. These include: ● whether any replacement of DCPP’s output is needed; ● when, if ever, that replacement should be procured; ● whether the quantity of energy efficiency (EE) to be procured in Tranche 1 is feasible and whether it will be cost-effective, and ● whether the authorization of the Tranche 1 procurement will conflict with and potentially impair the targets of the Rolling Portfolio Business Plans filed by PG&E and the other utilities. [fn. omitted] The ratepayers assume the risk that all cost effective EE will have been procured through the Business Plan and each of its annual updates, and that any EE authorized in this docket will be more expensive and raise rates inefficiently. (EPUC Opening Brief at 1-2.) Packet Pg 214 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 21 - ORA and EPUC make a good point – it is not clear that PG&E could actually procure over 50% more energy efficiency than a goal that is already supposed to include all cost-effective energy efficiency (unless PG&E procures energy efficiency that is not cost effective). There is no reason to approve a $1.3 billion rate increase for a proposal that will most likely either fail to achieve its goal or will achieve a goal not worth reaching. Accordingly, PG&E’s Tranche 1 proposal is not adopted. While we are rejecting the specific replacement procurement proposed here by PG&E, the larger question remains about what, if anything, should be done here to ensure that the retirement of Diablo Canyon will not result in an increase in GHG emissions. The answer to that is that we simply cannot tell based on the record in this proceeding. Given the time between now and 2024 and 2025, the rapid changes in the California electricity market, and the growth of renewable generation and CCAs, it is not clear based on the limited record in this proceeding what level of GHG-free procurement (if any) may be needed to offset the retirement of Diablo Canyon. The IRP proceeding, however, is better equipped to make that determination. The IRP is supposed to incorporate the analysis leading to an optimized portfolio of resources, reflecting constraints such as GHG emissions, reliability, cost, and RPS and energy efficiency requirements, while ensuring safe and reliable electricity service at just and reasonable rates. (R. 16-02-007 at 13.) In short, the IRP has the ability to look at a bigger picture than this proceeding, and can better analyze the potential impacts of the retirement of Diablo Canyon and its interaction with other dynamics in the electricity markets in a manner consistent with state policies. PG&E’s previous Tranche 2 and 3 proposals would better be considered in the IRP proceeding. Packet Pg 215 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 22 - Overall, practical and policy reasons indicate that it is better for potential replacement procurement issues to be addressed in the Commission’s IRP process, rather than addressing it in a more piecemeal fashion in this proceeding. Accordingly, the need for and authorization of any replacement procurement should be addressed in the IRP proceeding.10 3.3. Proposed Employee Program PG&E proposes to implement an employee retention, severance and retraining program for its Diablo Canyon employees, and requests three related approvals from the Commission: [1]. Recover $352.1 million in costs associated with retaining approximately 1,500 employees at Diablo Canyon to ensure the plant’s continued safe and efficient operation through the end of each unit’s license in 2024 and 2025, respectively, over a 7-year period through an annual expense-only revenue requirement of $50.9 million beginning January 1, 2018 through December 31, 2024 through the Nuclear Decommissioning Non-Bypassable Charge (NDNBC). [2]. Implement the Employee Severance Program and authorize PG&E to continue to forecast and recover the cost of the Employee Severance Program in each subsequent Nuclear Decommissioning Cost Triennial Proceeding (NDCTP). [3]. Recover $11.3 million in costs associated with retraining eligible employees at Diablo Canyon and to recover these costs over a 5-year period through an annual expense-only revenue requirement of $2.3 million from January 1, 2021 through December 31, 2025 through the NDNBC. (PG&E Opening Brief at i.) 10 Or in another proceeding as determined in the IRP proceeding. Packet Pg 216 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 23 - Starting with the last one, the retraining of Diablo Canyon employees is intended to support the placement of Diablo Canyon employees who are interested in transitioning to other employment roles within PG&E as a result of the retirement of Diablo Canyon. (Ex. PG&E 1 at 7-8.) While the precise components and details of this program have not been determined, PG&E identifies possible elements of the program, including support for an internal PG&E job search, limited wage protection, professional and technical training and relocation assistance. (Id.) PG&E forecasts the cost of the retraining program to be approximately $11.3 million, to be recovered through the NDNBC. (Id. at 7-11.) PG&E also requests a new two-way expense-only subaccount (the Employee Retraining Program Subaccount) within the existing Diablo Canyon Retirement Balancing Account. The proposed retraining program is directly related to the retirement of Diablo Canyon, and the cost of the program is recoverable in rates through the NDNBC. (Pub. Util. Code sections 8322(g) and 8330.) PG&E’s request for the retraining program, the new two-way expense-only subaccount, and associated rate recovery through the NDNBC is approved. PG&E has in place an Employee Severance Program, which provides payments of specified amounts to employees whose jobs will be eliminated upon the closure of Diablo Canyon. (Ex. PG&E -1 at 7-7.) The Employee Severance Program is directly related to the decommissioning of Diablo Canyon, and $148 million in estimated costs for the program are already incorporated into Packet Pg 217 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 24 - PG&E’s decommissioning estimate. (Ex. PG&E-1 at 7-11.)11 PG&E does not request rate recovery for the severance program in this proceeding, as the forecast and recovery of costs are being addressed in PG&E’s NDCTP. (Id.) A severance program for Diablo Canyon employees is appropriate in light of the plant’s pending retirement, and the cost and ratemaking for that program should continue to be addressed in PG&E’s nuclear decommissioning proceeding. PG&E’s proposed employee retention program, however, is not so clearly related to the decommissioning of the plant. EPUC argues that the costs of the retention program are not related to the decommissioning of the plant, but rather to its continued operation: The retention program is part of the operating costs of the plant, incurred to ensure there are qualified employees to continue to operate the plant. As Ms. King testified, it has been a regular practice in the past to increase wages of plant employees to retain them. [fn. omitted] Such operating costs have been, and should continue to be, recovered through the energy rates charged to bundled customers, who benefit from the operation of the plant. (EPUC Reply Brief at 6.) In response, PG&E argues that the retention program is related to the retirement of the plant, as absent that there would not be a need for the retention plan: The only reason the Employee Program is necessary is due to the announcement that PG&E would retire and decommission the plant. Accordingly, there is a direct causal link between the closure of the plant and the Employee Program, making it appropriate to recover the costs of the Employee Program through decommissioning rates. (PG&E Reply Brief at 66.) 11 PG&E’s more recent estimate of the cost of the program is $168 million. Packet Pg 218 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 25 - At the same time, however, PG&E acknowledges that it intends to continue to operate Diablo Canyon for almost a decade before it plans to actually retire the plant. (Ex. PG&E-1 at 7-2.) Looking at PG&E’s proposal, it appears to confirm that EPUC’s position is correct: PG&E is proposing to keep operating Diablo Canyon until 2024/2025, and is proposing the retention program for the purpose of keeping the plant operating, not for the purpose of shutting it down. (PG&E Reply Brief at 49.) This is further reinforced by the fact that the retention program ends on August 31, 2023, but the plant will not completely retire until 2025. (Ex. PG&E-1 at 7-4.) Accordingly, rate recovery for the employee retention plan should come through the existing ratemaking treatment for the operation of Diablo Canyon, not through the NDNBC. In addition, there are problems with the design and the resulting cost of PG&E’s proposal. PG&E, with the support of the Joint Parties, proposes to pay retention bonuses to every employee of the plant who continues to work through specified time periods. PG&E proposes two “tiers” of retention payments. Tier 1 would run from September 1, 2016 through August 31, 2020, would provide a retention payment to each employee of 25% of the employee’s base salary at the end of each of the four years, and would cost $191.6 million. Tier 2 would run from September 1, 2020 through August 31, 2023, would provide a retention payment to each employee of 25% of the employee’s base salary at the end of each of the three years, and would cost $160.5 million. (Ex. PG&E-1 at 7-4 and 7-6.) PG&E’s estimated $352.1 million cost for the retention plan assumes that approximately 1,500 employees would be retained until August 31, 2023. (Id. at 7-6.) Packet Pg 219 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 26 - ORA and CGNP oppose PG&E’s employee retention program as proposed. ORA argues that ratepayers should not pay for the $191.6 million cost of Tier 1, but generally supports rate recovery for the $160.5 million cost of Tier 2. (ORA Opening Brief at 25.) CGNP argues that the entire retention program is unnecessary (CGNP Opening Brief at 14-17), but does note that retention payments may be necessary for a very limited set of hard-to-fill positions. (Id. at 15.) PG&E’s proposal appears to have a significant “free rider” problem that PG&E does not address, and as such the proposal is overly generous with ratepayer funding. The 1,500 employees eligible to receive the retention payments include all active full-time employees working at Diablo Canyon, plus those who support Diablo Canyon operations and those whose job or job functions would be eliminated as a result of Diablo Canyon’s retirement. Contractors and temporary or rotational employees would not be eligible. (Ex. PG&E-1 at 7-4, fn. 1.) In short, PG&E is asking the ratepayers to pay for a retention payment for every full-time PG&E employee at Diablo Canyon. As PG&E puts it: “The Employee Retention Program is aimed to keep the entire employee population retained until August 31, 2023.” (Id. at 7-6.) PG&E’s testimony does not adequately address factual questions such as how many employees would continue to work at Diablo Canyon (until it closes) without a retention payment, or how many employees would leave their employment at Diablo Canyon regardless of a retention payment. In both of Packet Pg 220 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 27 - those situations, the retention payment provides no benefit to ratepayers.12 PG&E has significant data about the Diablo Canyon workforce, including retirement eligibility, and has done modeling of potential retirements (PG&E Opening Brief at 45; Ex. PG&E-6), but has chosen to just pay every employee, rather than using that information to more efficiently use ratepayer funds. CGNP, on the other hand, has used PG&E’s data to support its analysis, and comes to a more nuanced conclusion than that embodied by PG&E’s broad-brush proposal: In response to Commission_001-Q15, PG&E witness King stated that there are 442 employees eligible for full retirement and 471 eligible for retirement with partial benefits before 2024. [fn. Omitted] These employees constitute 63% of the 1458 regular Diablo employees, and it is highly unlikely they would be eager to leave when they could continue to work towards retirement. Older workers face well-known difficulties in finding new employment, thus given the choice of transferring within PG&E vs. a severance package if their job was eliminated, there would be little incentive for employees to leave voluntarily. (CGNP Opening Brief at 15.) In another area where there is a paucity of analysis, PG&E does not address how many employees would continue to work at Diablo Canyon after its retirement, on tasks such as decommissioning, nuclear fuel storage, maintenance and security. In fact, PG&E states that it does not currently know how many employees it expects will remain at Diablo Canyon after its retirement. (Ex. PG&E-6 at 24.) Because these employees would have continuing employment after the plant retires, they would presumably have less of an 12 There may also be employees who would continue to work at Diablo Canyon only because of the retention payment, but are otherwise unhappy or unmotivated with their job, so their retention would provide little or no benefit to ratepayers. Packet Pg 221 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 28 - incentive to leave because of the retirement. But under PG&E’s proposal, all of these employees would still receive ratepayer-funded retention payments. PG&E likewise does not address the potential employment prospects for nuclear power plant employees. PG&E cites to CCUE witness Dalzell for the argument that many Diablo Canyon employees are “high-skill, high-wage workers and would be attractive candidates for other jobs.” (PG&E Opening Brief at 46.) PG&E explains the basis for that argument: The CCUE witness, Tom Dalzell, testified that based on his experience with divestiture of PG&E’s fossil fuel and geothermal generation facilities in the late 1990s, he was certain that absent an employee retention package, employees would find jobs outside of DCPP once a closure date was announced. (PG&E Opening Brief at 46.) This is not a valid comparison; there are many more fossil fuel plants than there are nuclear plants, and the situation today is different from the divestiture of plants in the 1990s. A better comparison would be to look at the relative current and forecasted supply and demand of nuclear power plant jobs and experienced nuclear power plant employees. These factors have a significant impact on how likely Diablo Canyon employees will be to look for and obtain outside employment. PG&E did not present such an analysis in this proceeding.13 While there is certainly ratepayer benefit from Diablo Canyon being operated in a safe and reliable manner until its retirement, PG&E has failed to 13 Nor did ORA or CGNP. One commenter at a public participation hearing stated: “Given the current status of the nuclear industry, there is no need to pay Diablo Canyon employees an additional $352 million in order to retain them for the eight years in question. The industry is in serious decline.” (Transcript v. 9 at 1,446.) Packet Pg 222 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 29 - show that the amount of ratepayer dollars requested is necessary or reasonable. Based on the record of the proceeding, the funding level recommended by ORA is more reasonable, and we authorize rate recovery of $160.5 million for PG&E’s employee retention program. One aspect of PG&E’s proposed employee retention program is that PG&E requested Commission approval of a very specific and detailed proposal, including a payment schedule. (Ex. PG&E-1 at 7-5.)14 Under PG&E’s approach, the specifics of the retention program would effectively be locked in place by a Commission decision, meaning that neither employees, nor unions, nor PG&E could renegotiate a new deal absent Commission approval. In essence, PG&E has delegated management of the program to the Commission. ORA proposes to provide PG&E a little more flexibility in implementing the retention program, but limiting the payments to three years, similar to PG&E’s proposed Tier 2. (ORA Opening Brief at 25-26.) Because the level of funding authorized by this decision is significantly different than the amount proposed by PG&E (and its unions), PG&E should have the opportunity to consider (and negotiate with its unions) the best way to implement the employee retention program. Accordingly, this decision authorizes rate recovery for up to $160.5 million for an employee retention program that is designed to provide incentives as needed for sufficient PG&E employees to continue working at Diablo Canyon up until the date of its retirement, but this decision does not specify a particular structure or schedule for that program. PG&E is responsible for the effective management of Diablo 14 By comparison, the PG&E’s retraining program is only a general outline and an overall budget. Packet Pg 223 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 30 - Canyon and its employees. PG&E shall file a Tier 2 Advice Letter no later than six months from the date of this decision with a description of its employee retention plan. Finally, it appears that PG&E (with the participation of at least some of its unions) has already executed retention agreements with its employees, presumably incorporating the terms proposed by PG&E in this proceeding. CCUE cites to these agreements, and the fact that 86% of IBEW 1245’s represented employees15 at Diablo Canyon have signed them, as showing that PG&E’s retention program is working. (CCUE Opening Brief at 13-14.) CGNP, however, points out that: “[T]he 86% only means that workers will accept free money until such times as they may quit.” (CGNP Reply Brief at 10.) The retention payments negotiated and agreed to by PG&E and its unions require funding from ratepayers, and accordingly require Commission approval for their funding. Why PG&E and its unions executed these agreements with individual employees in advance of Commission approval is unclear, as at the time it entered into those agreements, PG&E did not have authority to make the payments that the agreements (appear to) promise. This puts the Commission in the position of potentially saying “no” to PG&E’s proposal, while the employees may already be thinking that the answer is “yes.” PG&E should not be making promises (even implied ones) to its employees that it does not know it can keep. PG&E is not authorized to recover in rates the cost of the existing agreements. 15 410 out of 476 represented employees. Packet Pg 224 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 31 - 3.4. Proposed Community Impacts Mitigation Program In its Application, PG&E proposed a Community Impacts Mitigation Program (CIMP), which was described as follows: Diablo Canyon is one of the largest employers, taxpayers, and charitable contributors in the San Luis Obispo County area. Diablo Canyon currently contributes approximately $22 million in property taxes to the local community . With the retirement of Diablo Canyon, this could decline to zero by 2025. The Parties will support funding of continuing revenue streams to address community needs and concerns. PG&E will propose to compensate San Luis Obispo County for the loss of property taxes associated with the declining rate base in Diablo Canyon through a transition period ending in 2025. The payment in lieu of taxes will be recovered through nuclear decommissioning funding. PG&E estimates that the total cost of the Community Impacts Mitigation Program is approximately $49.5 million. As specified in Section 5.4.1, as a condition of the program, PG&E will recover the costs of the Community Impacts Mitigation Program through CPUC-approved rates for nuclear decommissioning. (PG&E Application, Attachment A (Joint Proposal) at 10-11.) Later in the proceeding, PG&E entered into a proposed settlement with the County, the Local Cities and the School District, along with the original Joint Parties.16 This proposed settlement primarily addressed the Community Impacts Mitigation Program, with PG&E agreeing to increase the payment to the communities to a total $85 million, compared to the prior $49.5 million. (Joint Motion re Settlement on Community Impacts at 2.) 16 PG&E filed a joint motion on December 28, 2016 with the County Of San Luis Obispo, the Cities of Arroyo Grande, Atascadero, Morro Bay, Paso Robles, Pismo Beach, San Luis Obispo, the San Luis Coastal Unified School District, FOE, NRDC, Environment California, IBEW 1245, CCUE, and A4NR. (Joint Motion re Settlement on Community Impacts.) Packet Pg 225 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 32 - It is uncontested that the retirement of Diablo Canyon would result in reduced local tax revenues and a loss of well-paying jobs, with a corresponding potential for significant adverse economic impacts on the local area. The question before this Commission is not whether there will be economic impacts, or even the potential size and scope of those impacts,17 but rather whether PG&E ratepayers should pay to mitigate these impacts.18 The parties presented a range of policy and legal arguments on this issue. The policy arguments focus on issues of fairness: who benefitted from Diablo Canyon, who bore the costs and risks of Diablo Canyon’s operation, and who should bear the costs and risks of the plant’s retirement. (See, e.g. County Opening Brief at 1-3, 16-17; TURN Opening Brief at 43-44.) While it is reasonable for this Commission to consider whether the proposed payment to the community is fair, the Commission must also consider whether that payment is legal. Consistent with this Commission’s decision in D.97-05-088, and in the absence of legislative authorization, the CIMP is not approved. Utility rates should be used to provide utility services, not government services, no matter how beneficial those services may be. In addition, we have some concerns about the fairness of the CIMP under the proposed settlement. Looking first at whether the CIMP under the proposed settlement is fair to PG&E, to the community, and to ratepayers, it is clear that the proposed 17 The economic impacts of the retirement of Diablo Canyon are to be studied pursuant to Pub. Util. Code § 712.5, enacted in 2016. 18 Existing support for local emergency services provided through PG&E rates is not at issue in this proceeding, and remains in effect. Packet Pg 226 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 33 - settlement on this issue is fair to PG&E. Because the cost of the payment would be recovered in rates, PG&E itself bears no out-of-pocket costs. ORA and TURN argue that PG&E’s willingness to provide funding to the community is essentially a type of charitable giving, intended to enhance PG&E’s goodwill in the community, and as such should be funded with shareholder dollars, not ratepayer dollars. (ORA and TURN Joint Comments at 6-7.) PG&E, the Local Cities and the County respond that the CIMP payments do not meet the technical definitions of a charitable gift or a goodwill payment. (PG&E Reply at 10-13; Coalition Cities19 Reply at 10-11; County Brief at 17-19.) While PG&E and its supporters may be correct that the payments (in large part due to their multiplicity of benefits) may not squarely fall into the technical definitions of charitable giving or goodwill payments, ORA and TURN raise a fair point that as a practical matter, PG&E will garner praise and enhance its reputation in the community as a result of the CIMP. (ORA and TURN Comments at 6-7.) PG&E also gets another benefit: the support (or at least non-opposition) of the settling parties for its other litigation positions. The settling parties agreed to: [S]upport the Employee Program as proposed by PG&E in its Application initiating this proceeding, and the County, the Cities, and the District agree not to oppose or to take no position on the remaining relief requested in PG&E’s Application, as modif[i]ed by the Agreement. (Joint Motion, December 28, 2016 at 2.) 19 The “Coalition Cities” are the same as the “Local Cities”: Arroyo Grande, Atascadero, Morro Bay, Paso Robles, Pismo Beach, and San Luis Obispo. Packet Pg 227 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 34 - In short, this appears to be a very good deal for PG&E – it gains some community goodwill, and gets support (or eliminates potential opposition) for its litigation positions, and all at no financial cost. The fairness to the community is less clear. While the proposed settlement’s payment of $85 million is a clear benefit to the recipient community, it is not clear that the payment is allocated fairly. The County, Local Cities, and the School District, which are parties to the proceeding, negotiated the proposed payment with PG&E, are getting a total of $85 million in funding. There are, however, other cities and local districts that will be affected by the retirement of Diablo Canyon that are not parties to the settlement, and do not receive direct funding under the proposal.20 (See, Transcript vol. 9 at 1,389-91, 1,436-37.) Overall, the amount and allocation of payments appears to have more to do with PG&E’s litigation needs than the economic needs of the community. While the community strongly supports the proposed settlement, we cannot tell from the record whether the proposed payment, and particularly its allocation, is fair to the affected communities. A clearer picture of the economic impacts on the community should be available upon completion of the assessment required under Pub. Util. Code § 712.5. Finally, it is essential to consider whether the proposed settlement is fair to PG&E’s ratepayers, who are being asked to pay the $85 million cost of the payment program. ORA and TURN oppose the proposed payment. ORA argues that the payments to be made “would effectively be a substitute for 20 They may, however, get funds allocated to them via the County. Packet Pg 228 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 35 - PG&E’s property taxes,” and should not be funded by PG&E customers. (ORA Opening Brief at 29.) In its reply brief, PG&E argues that the CIMP: “is not intended to be an in-lieu or substitute tax.” (PG&E Reply Brief at 53.) According to PG&E: “The decline in tax revenues is one measure of the magnitude of the direct fiscal impacts to local governments, and it was therefore appropriate for the settling parties to consider the size of those tax revenue declines in negotiating the appropriate amount of mitigation,” but the payment should not be thought of as a tax payment or a substitute for a tax payment. (PG&E Reply Brief at 53-55; see also County Opening Brief at 19.) One problem with this attempt to finesse the nature of the CIMP into something other than a substitute for lost tax revenue is that it is contradicted by other statements on the record: With regard to economic and fiscal impacts, the Cities argued that, at a minimum, PG&E should be required to make payments to the Cities equal to their combined property, sales, and other local taxes over the nine-year period to mitigate the decline in the taxes that the plant’s operations have traditionally provided. (Joint Motion at 10, citing to Protest.) And: ”The District intervened in this proceeding because the property tax PG&E pays for Diablo Canyon each year accounts for a significant portion of the District’s annual funding.” (Id. at 10, citing to Response of School District.) While all of the money at issue may not be specifically designated as a substitute for tax payment, as a practical matter a significant amount of the money to be collected from ratepayers is in fact a substitute for tax revenue. Accordingly, we have to analyze whether it is appropriate to substitute ratepayers for taxpayers, which raises legal as well as policy issues. Packet Pg 229 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 36 - The parties contesting this issue cite to Commission Resolution E-3535, adopted in 1998, which addressed a similar issue, also for Diablo Canyon. The parties are correct that Resolution E-3535 is on point here; but in order to understand and apply the logic of Resolution E-3535, it is essential to consider D.97-05-088, which led to the Commission’s adoption of Resolution E-3535. In the proceeding leading to D.97-05-088, in the wake of electric restructuring: The County of San Luis Obispo and the San Luis Coastal Unified School District (County) seek protection against the risk that Diablo Canyon-related property taxes will decrease precipitously and jeopardize the ability of the County to provide basic public and educational services. If the threat actually materializes, the County wants to be made whole. By its recommendation, the County seeks adoption by the Commission of a mechanism that insures that the County has the opportunity to recover the property tax revenues they had a reasonable expectation of receiving but for electric restructuring. (D.97-05-088 at 91.) In that proceeding, the Commission held that: “The County's proposal that ratepayers pay for property taxes that PG&E does not incur is not permitted under either general ratemaking principles or public utility law.” (Id. at 100.) As a result, the Commission held that the County should direct its request for relief to the Legislature, not the Commission.21 (Id.) The Commission reaches the same result today. Because the analysis set forth by the Commission in D.97-05-088 is directly on point, we quote it here at length: The County of San Luis Obispo and the San Luis Coastal Unified School District (County) seek protection against the risk that Diablo 21 The County did so, and received limited relief, which was then implemented via Resolution E-3535. Packet Pg 230 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 37 - Canyon-related property taxes will decrease precipitously and jeopardize the ability of the County to provide basic public and educational services. If the threat actually materializes, the County wants to be made whole. By its recommendation, the County seeks adoption by the Commission of a mechanism that insures that the County has the opportunity to recover the property tax revenues they had a reasonable expectation of receiving but for electric restructuring. The County recommendation is that this Commission should: • Find that $ 158 million (NPV in 1999 dollars) represents a reasonable estimate of the potential difference between property tax revenues that the County would have received from PG&E in the absence of accelerated recovery of Diablo Canyon depreciation and what the County could actually receive given restructuring. […] • Order that the $ 158 million in potentially forgone property taxes be collected by PG&E as CTC at a rate of $ 39.5 million per year during the CTC recovery period and held in a separate, segregated interest-bearing account until 2026. • Order PG&E, starting in 1999 and continuing thereafter on an annual basis, to withdraw funds from the segregated CTC account and to remit to the County the difference between the estimated tax payments based upon straight-line depreciation of Diablo Canyon through the year 2026 […] and any amount of property taxes actually determinated [sic] to be due and payable by PG&E to the County in each year, to the extent such actual taxes are less than the estimated straight-line depreciation based property taxes […]. […] The County asserts that adoption of its recommendation will provide protection against the possibility that the County will experience drastic reductions in property tax revenues as a direct result of electric restructuring. If the risk of property tax reductions does not materialize or produces lower tax revenue losses than predicted, any excess amounts otherwise reserved for payment to the County will be returned to ratepayers. The County contends that the evidence produced by it shows: Packet Pg 231 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 38 - • that the County enjoys unique status by reason of long-standing, mutual commitments with PG&E relating to the location and operation of Diablo Canyon within the County; • that electric restructuring, and PG&E's related pricing proposal for Diablo Canyon in particular, create the real possibility that the County will suffer far greater negative consequences from restructuring than any other similarly situated stakeholder, primarily in the form of dramatic reductions in the level of otherwise expected property tax revenues to be received from PG&E; • that the consequence for the County of any property tax revenue reductions resulting from PG&E's Diablo Canyon pricing proposal includes severe reductions in essential public services available to the residents and schoolchildren of San Luis Obispo County; • that the mutual commitments between the County and PG&E and, in particular, the County's reliance on PG&E's promises to provide identifiable economic benefits in exchange for siting and operating a nuclear generation facility within San Luis Obispo County, create an enforceable entitlement to a stable and predictable level of property tax revenues for the County throughout the projected operating life of Diablo Canyon; and • that the difference between property tax revenues that the County would have received from PG&E in the absence of accelerated recovery of Diablo Canyon depreciation and what the County actually receives given implementation of electric restructuring is properly recoverable (by PG&E and payable to the County)[…]. This evidence, in the opinion of the County, leads to only one conclusion of law: It is consistent with law, policy, and the public interest for the Commission to adopt a mechanism that will provide a safety net for the County by ensuring that the County's property tax receipts are unaffected by any accelerated depreciation of Diablo Canyon authorized by the Commission in conjunction with its initiative to restructure the state's electric industry. Packet Pg 232 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 39 - PG&E and ORA oppose the County. […] In addition to the problems in predicting the actual impacts of restructuring on the County, PG&E asserts that the County's proposal to recover lost property tax revenues is legally suspect. AB 1890 contains no explicit provision to allow utilities to recover costs or lost governmental revenues that they are not liable for but which are incurred by third parties, such as counties, under restructuring. In addition, as a general principle of ratemaking, utilities are not permitted to include in their cost of service payments which in fact they have not incurred or accrued, or forecast to incur, and which they have not become legally obligated to incur or accrue. ORA states that the County has not cited any statute or rule that would support its position. ORA notes that there has never been any guarantee that Diablo Canyon property tax revenues would not decrease, even in the absence of electric restructuring and PG&E's accelerated depreciation proposal. For example, if Diablo Canyon continued to perform at current levels in the future such that PG&E recovered more in revenues than intended under the original ratemaking settlement, the Commission could require a reduction in prices as was done in 1995, or the early termination of the ratemaking treatment. This would impact San Luis Obispo tax revenues, even in the absence of electric restructuring. In addition, nothing in the existing Diablo Canyon ratemaking treatment precludes the facility from shutting down, not just for catastrophic failure, but for economic reasons as well. Under such circumstances, regardless of electric restructuring, there would likely be no tax revenues for San Luis Obispo. […] […] Most telling is ORA's argument that San Luis Obispo would have the Commission impose on ratepayers what is essentially a tax that is entirely unrelated to utility service. The County's proposal that ratepayers pay for property taxes that PG&E does not incur is not permitted under either general ratemaking principles or public utility law. Section 451 of the PU Code requires: "All charges demanded or received by any public utility ... for any product or commodity furnished or to be furnished or any service rendered or to be rendered shall be just and reasonable. Every Packet Pg 233 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 40 - unjust or unreasonable charge demanded or received for such product or commodity or service is unlawful." A utility cannot charge ratepayers costs that are unrelated to the provision of any product or commodity or service, and the Commission cannot lawfully order such charges. [fn. omitted] However, ORA supports San Luis Obispo's efforts to seek relief in a more appropriate forum. It is within the state's powers, not the Commission's, to levy taxes and to disburse tax revenues. […] The arguments of PG&E and ORA are persuasive. There is no legal basis for this Commission to authorize PG&E to include in its rates and cost of service estimated property taxes which it is not lawfully obligated or forecasted to pay. Taxes which are included in rates are those in effect at the time the rates are approved, unless the existing law provides for a change at a future date. (Re Pac. Tel. & Tel. (1954) 53 CPUC 276, 295.) Absent legislative change, or Board of Equalization change, PG&E's taxes are what they are under existing law and the County's proposal will not change that fact. The County must direct its request for relief to the Legislature and the Board, not this Commission. (D.97-05-088 at 91-100.) As in 1997, this Commission is reluctant to require ratepayers to pay for the cost of local government services that are typically paid for by taxpayers, no matter how beneficial those services may be. Absent legislative authorization, utility rates should be used to provide utility services, not government services. While Resolution E-3535 subsequently did authorize ratepayer payment to the County and the School District, it is important to take into consideration what happened in between D.97-05-008 and Resolution E-3535. As described in Resolution E-3535: After the Commission's Decision was issued, the California Legislature passed into law Chapter 282, section 8660-001-0462, paragraph 3, of Statutes of 1997. This new law states that if PG&E Packet Pg 234 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 41 - and the County and School District enter into a settlement that resolves claims by the latter parties relating to the effects of AB 1890 (Brulte), enacted 1996, Chapter 854, then PG&E may recover an additional amount, not to exceed $ 10 million, through base rates in 1998. (Resolution E-3535 at 3.) In short, there was express legislative authorization for rate recovery for a payment to the community, which was implemented by Resolution E-3535. Accordingly, ratepayer funding of the CIMP is not authorized. If legislation specifically directs this Commission to provide ratepayer funding for the CIMP (or a similar payment to the community), the Commission would do so, as it did in 1998. PG&E may also choose to use shareholder funds to support the CIMP. 3.5. Recovery of License Renewal Costs In its Application, PG&E requested rate recovery for $52.688 million in costs incurred for its efforts to renew the NRC operating licenses for Diablo Canyon. (Ex. PG&E-1 at 9-1.) This request was opposed by TURN, ORA, A4NR and Mothers for Peace, who argued that PG&E should not get rate recovery for any of the costs associated with relicensing Diablo Canyon. (See, e.g. TURN Protest at 4-6; A4NR Protest at 5-13.) In late 2009, PG&E filed an application with the NRC to renew Diablo Canyon’s operating licenses. In early 2010, PG&E filed an application with this Commission requesting rate recovery for its estimate of $85 million in costs for Diablo Canyon NRC license renewal and related activities. (Ex. PG&E-1 at 9-4.) Packet Pg 235 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 42 - In that proceeding (A.10-01-022), PG&E, the Commission’s Division of Ratepayer Advocates (DRA)22 and TURN reached a tentative settlement. (D.12-02-004 at 2.) In March, 2011, prior to a hearing on the settlement, an earthquake and tsunami caused serious damage to a nuclear plant located at Fukushima, Japan, and the NRC effectively halted the relicensing of Diablo Canyon pending further seismic studies. (Id. at 2-4; Ex. PG&E-1 at 9-5 to 9-6.) The Commission then closed A.10-01-022 without addressing the proposed settlement. (D.12-02-004 at 5-7.) The proposed settlement between PG&E, DRA and TURN would have allowed PG&E rate recovery for $80 million in licensing renewal costs. (Ex. PG&E-5-2 at 5-19.) While the license renewal process at the NRC was suspended, PG&E reduced its spending on license renewal activities, but continued with some activities in order to keep its application up-to-date (Ex. PG&E-1 at 9-6) and to retain the ability to re-start and complete the license renewal process in the future. (Ex. PG&E 5-2 at 5-22.) PG&E’s license renewal spending ramped back up significantly in 2014 (although PG&E’s testimony does not clearly identify when it re-started active work on the license renewal). (Ex. PG&E -7 at 278.) PG&E did not return to the Commission to request approval for rate recovery of the license renewal costs it incurred until it filed the present application in August 2016. PG&E divides the costs it incurred for Diablo Canyon license renewal into three time periods: Original LRA Review (2009-11), LR On-Hold (2012-13), and LR Re-Start (2014-16). (Id.) PG&E’s request breaks down as follows: 22 Now ORA. Packet Pg 236 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 43 - Original LRA Review (2009-11) $23,651,457 LR On-Hold (2012-2013) $ 9,290,172 LR Re-Start $19,744,364 Total $52,687,764 For all three periods, PG&E’s original request included rate recovery for Allowance for Funds Used During Construction (AFUDC), reflecting the financing cost of the license renewal project. (Id.) TURN and A4NR questioned PG&E’s request for recovery of AFUDC, given that the license renewal project was abandoned or cancelled. (See, Transcript Vol. 8 at 1214-1246.) Subsequent to evidentiary hearings, a joint motion for adoption of a settlement agreement was filed by PG&E, A4NR, TURN, ORA, Mothers for Peace, FOE, NRDC, Environment California, IBEW 1245, and CCUE (Settling Parties). The proposed settlement addresses the costs incurred by PG&E for its license renewal activities, and recommended that PG&E be granted $18.6 million in rate recovery. (May 23, 2017 Joint Settlement Motion at 13, 15.) The motion explained the basis for this number: In approaching settlement on this issue, the Settling Parties desired to identify a set of principles upon which to base that settlement. One principle was that PG&E should recover its direct costs incurred during the time that the project was reasonably and prudently undertaken. In this regard, the Settling Parties agreed, for the purpose of compromise and without conceding their litigation positions, that the Commission should consider the project reasonably and prudently undertaken from its inception in 2009 until April 10, 2011, when PG&E requested that the Nuclear Regulatory Commission (“NRC”) defer issuance of the Diablo Canyon renewed operating licenses. [fn. omitted] The Settling Parties then agreed that PG&E should not recover the direct costs incurred subsequent to that deferral request. After reviewing the costs of the project as summarized in Exhibit PG&E-2, as corrected in Attachment 2 to this Motion, the Settling Parties submit that Packet Pg 237 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 44 - $18.6 million is a reasonable approximation of the direct costs incurred between the project inception and April 10, 2011 that should be authorized for recovery. Finally, the Settling Parties agreed that no AFUDC should be recovered for the License Renewal Project as a reasonable sharing of risk between customers and shareholders. (Id. at 12-13.) The parties opposing PG&E’s original request support the settlement. The $18.6 million figure is supported by the record, is well within the range of possible litigation outcomes in this proceeding, and provides significant ratepayer saving compared to PG&E’s original request of more than $52 million. It was reasonable for PG&E to have spent that amount of money in 2009 to 2011 to seek to renew the operating licenses for Diablo Canyon. The removal of AFUDC from the amount sought, given that the relicensing was not completed, also supports the conclusion that the amount is reasonable. The proposed settlement meets the requirements of Rule 12.1(d). While nuclear power plants are controversial, and renewal of Diablo Canyon’s licenses would have drawn opposition, the record supports a finding that PG&E’s decision to seek renewal of Diablo Canyon’s operating license (and its approach for doing so) from 2009 to April 2011 was reasonable. PG&E requested Commission approval for rate recovery of the costs of renewal at approximately the time they began to actively pursue license renewal, which provided an opportunity for parties (and the Commission) to address the reasonableness of their decision. In that proceeding, DRA and TURN agreed to a proposed settlement allowing PG&E rate recovery for its relicensing costs, which implies that they believed PG&E’s course of action to be reasonable, or at a minimum that they believed the Commission would find it reasonable. The Commission also had a potential opportunity to determine that it was Packet Pg 238 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 45 - unreasonable for PG&E to seek to renew Diablo Canyon’s NRC licenses, but did not do so. And finally, the realities on the ground in California were very different in 2009 than they are in 2017. Our current situation, with the rapid growth of renewable generation and CCAs, had not so fully manifested itself yet, making Diablo Canyon look to be a potentially more valuable asset then than it is now. There is not a good basis to now find unreasonable PG&E’s decision in 2009 to pursue relicensing of Diablo Canyon.23 Accordingly, it is reasonable to grant PG&E rate recovery for the costs (not including AFUDC) that it incurred through April 2011, as proposed by the settlement. The rate recovery structure of the proposed settlement is described: The Agreement further provides that PG&E should be authorized to recover the $18.6 million through an annual, levelized, expense-only revenue requirement to be recovered from customers over an 8-year period from January 1, 2018, through December 31, 2025, through the generation rate component of PG&E’s rates. (May 23, 2017 Joint Settlement Motion at 15.) The proposed settlement on license renewal costs is approved, including the amount of cost recovery and the ratemaking structure. The provisions of the proposed settlement addressing cancelled capital projects are discussed in the Proposed Ratemaking and Cost Allocation Issues section below. 3.6. Proposed Ratemaking and Cost Allocation Issues PG&E’s proposed ratemaking treatment for Diablo Canyon as it approaches retirement does not alter the existing ratemaking treatment, which 23 Whether PG&E was reasonable to continue relicensing activities after April 2011 is less clear, and the proposed settlement’s use of that date as a cutoff is reasonable and is supported by the record. Packet Pg 239 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 46 - has generation rates based on a depreciation schedule that assumes Diablo Canyon will be retired (and depreciated to zero) at the end of 2024 for Unit 1 and the end of 2025 for Unit 2. (PG&E Opening Brief at 70.)24 PG&E does propose to add an annual true-up to reflect actual depreciation and capital spending at Diablo Canyon. (Id., citing Ex. PG&E-1, at 10-4.) PG&E also proposes: For capital additions after 2016, PG&E proposes to simplify the recovery over the remaining years of Diablo Canyon’s operations by calculating a remaining life depreciation rate based on the vintage of the addition. Thus, a capital addition project that goes into service in 2017 would have an assumed 8-year life/depreciation schedule and a capital addition project added in 2018 would have an assumed 7-year life/depreciation schedule. Beginning in 2017, PG&E will true-up the depreciation rates for plant and capital additions set in the 2017 GRC [general rate case] with the actual costs incurred/recorded for these two categories. To implement this proposal, PG&E proposes to establish a new 2-way subaccount within the proposed Diablo Canyon Retirement Balancing Account that would be called the “Diablo Canyon Capital Depreciation Subaccount.” This subaccount would track and adjust the capital revenue requirements associated with Diablo Canyon’s net book value and capital additions. Starting in 2018, PG&E proposes to file in May of each year a Tier 3 advice letter trueing-up the prior year’s forecast to recorded costs and establishing the amount of the depreciation rate adjustment that will be incorporated into the AET advice letter for January 1 of the next year. (PG&E Opening Brief at 70-71, fn. omitted.) 24 The net plant cost for Diablo Canyon (which PG&E forecasts to be $1.805 billion) and its recovery in rates are addressed in PG&E’s GRC. Packet Pg 240 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 47 - In general, this approach (and the new subaccount) is reasonable. However, the review and true-up process should be reviewed in a GRC (or in a process established in a GRC) rather than by advice letter. For the employee retraining program, as discussed in the employee program section above, the estimated cost of $11.3 million is recoverable in rates through the NDNBC. PG&E’s request for a new two-way expense-only subaccount (the Employee Retraining Program Subaccount) within the existing Diablo Canyon Retirement Balancing Account is approved. For the employee retention program, as discussed in the employee program section above, PG&E is authorized rate recovery for up to $160.5 million through the existing ratemaking treatment for the operation of Diablo Canyon. PG&E is authorized to establish a two-way expense-only balancing account (or sub-account) consistent with this decision. PG&E shall file a Tier 2 Advice Letter no later than six months from the date of this decision with a description of its employee retention plan. For the costs of PG&E’s NRC license renewal project, as discussed in the license renewal costs section above, PG&E is authorized to recover $18.6 million for the license renewal project through an annual, levelized, expense-only revenue requirement of approximately $2.4 million to be recovered from customers over an 8-year period from January 1, 2018, through December 31, 2025, through the generation rate component of PG&E’s rates. For cancelled capital projects at Diablo Canyon, PG&E is authorized rate recovery generally consistent with the proposed settlement on relicensing costs, under which: PG&E would be authorized to recover 100% of the direct costs associated with cancelled capital projects at Diablo Canyon recorded to the project as of June 30, 2016, and would be further authorized to Packet Pg 241 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 48 - recover 25% of the direct costs associated with cancelled capital projects recorded after June 30, 2016. All other direct costs and the Allowance for Funds Used During Construction (“AFUDC”) associated with such projects would not be recovered from customers. (May 23, 2017 Joint Settlement Motion at 3.) PG&E’s original position in its Application was that: In any instance in which PG&E decided in the future to cancel Diablo Canyon capital projects, PG&E proposed that the total projects costs incurred at the time of the decision to cancel be recovered from customers.25 (Id. at 8) Accordingly, the proposed settlement results in potentially significant (albeit unquantified) cost savings to ratepayers. The proposed settlement on cancelled capital projects is approved, with one modification. PG&E should make its specific cost recovery requests through its GRC process (or another formal application), rather than through an advice letter process. 3.7. Additional Issues The Scoping Memo in this proceeding stated: It is premature to address land use, facilities and decommissioning issues. At the same time, parties expressed concern that deferring consideration of these issues could result in PG&E making changes that would preclude future options. PG&E must obtain Commission approval under Pub. Util. Code § 851 prior to selling, leasing, or otherwise encumbering utility-owned land or facilities. While some of the land at issue is owned by a subsidiary of PG&E, PG&E has committed to take no action with any of the lands and facilities, whether owned by the utility or a subsidiary, before completion of a future process including a public stakeholder process, and states that the parties will not be prejudiced by excluding these issues from 25 In addition, those capital project costs charged would include AFUDC. Packet Pg 242 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 49 - the current scope of this proceeding. PG&E is directed to abide by that commitment. (Scoping Memo at 6.) The commitments and directions in the Scoping Memo are reiterated here in order to ensure that there will be local input and further Commission review prior to the disposition of Diablo Canyon facilities and surrounding lands. All unaddressed motions are denied. 4. Comments on Proposed Decision The proposed decision of ALJ Allen was mailed to the parties in accordance with Section 311 of the Public Utilities Code, and comments were allowed under Rule 14.3 of the Commission’s Rules of Practice and Procedure. Comments were filed on _______ by _______. Reply comments were filed on ______ by ________. 5. Assignment of Proceeding Michael Picker is the assigned Commissioner and Peter V. Allen is the assigned Administrative Law Judge in this proceeding. Findings of Fact 1. Continuing operation of Diablo Canyon Unit 1 beyond 2024 and Unit 2 beyond 2025 would require renewal of NRC licenses, and would not be cost effective. 2. The retirement of Diablo Canyon will not cause adverse impacts on local or system reliability. 3. The impact of the retirement of Diablo Canyon on greenhouse gas emissions is not clear. 4. The IRP proceeding is broader in scope than this proceeding, and is considering issues including greenhouse gas emissions and optimized portfolios of generation resources. Packet Pg 243 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 50 - 5. PG&E employees at Diablo Canyon who want to transfer to other jobs at PG&E due to the retirement of Diablo Canyon may require retraining and related assistance. 6. PG&E’s proposed employee retention plan is costly and inefficient. 7. A reasonable employee retention plan may help to ensure the continued safe operation of Diablo Canyon until its retirement. 8. The CIMP is largely intended to substitute for anticipated lost tax revenue. 9. PG&E’s original request for rate recovery for relicensing costs totaled $52.688 million for expenses from 2009 through 2016, including AFUDC. 10. The proposed settlement on relicensing costs would provide PG&E $18.6 million in rate recovery for expenses from 2009 through 2011, and excludes AFUDC. 11. The proposed settlement on cancelled capital projects reduces ratepayer exposure to the cost of those projects. 12. It is premature to address land use, facilities and decommissioning issues. 13. PG&E has committed to take no action with any of the Diablo Canyon lands and facilities before completion of a future public stakeholder process. Conclusions of Law 1. PG&E’s proposal to retire Diablo Canyon Unit 1 in 2024 and Unit 2 in 2025 is reasonable, and should be approved. 2. The need for procurement to replace Diablo Canyon should be addressed in the IRP proceeding. 3. The greenhouse gas impacts of retiring Diablo Canyon and any procurement to replace Diablo Canyon should be addressed in the IRP proceeding. Packet Pg 244 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 51 - 4. Implementation of a retraining program for PG&E employees at Diablo Canyon is reasonable, and should be approved. 5. PG&E’s proposed employee retention plan is not reasonable, and should not be approved. 6. A focused and cost-effective employee retention plan for employees at Diablo Canyon is reasonable, and should be approved. 7. Having ratepayers take the place of taxpayers in paying for government services is not reasonable, and should not be approved. 8. The proposed settlement on relicensing costs is reasonable, and should be approved. 9. The proposed settlement on cancelled capital projects is reasonable as modified, and should be approved. 10. Land use, facilities and decommissioning issues do not need to be addressed in this decision. 11. The proposed settlement on NRC license renewal cost meets the requirements of Rule 12.1. ORDER IT IS ORDERED that: 1. Pacific Gas and Electric Company’s proposal to retire Diablo Canyon Unit 1 in 2024 and Unit 2 in 2025 is approved. 2. Pacific Gas and Electric Company’s “Tranche 1” proposal to procure 2,000 gigawatt hours of energy efficiency is not approved. 3. Pacific Gas and Electric Company’s withdrawn “Tranche 2” and “Tranche 3” replacement procurement proposals are not approved. Packet Pg 245 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 52 - 4. Replacement procurement will be addressed in the Integrated Resource Planning proceeding or a proceeding designated by the Integrated Resource Planning proceeding. 5. Greenhouse gas issues relating to the retirement of Diablo Canyon, including any replacement procurement, will be addressed in the Integrated Resource Planning proceeding or a proceeding designated by the Integrated Resource Planning proceeding. 6. Pacific Gas and Electric Company is authorized to recover $11.3 million in rates for its Diablo Canyon employee retraining program. 7. Pacific Gas and Electric Company’s proposed employee retention program is not approved. 8. Pacific Gas and Electric Company shall file a Tier 2 Advice Letter no later than six months from the date of this decision with a description of its employee retention plan 9. Pacific Gas and Electric Company is authorized to recover $160.5 million in rates for a Diablo Canyon employee retention program. 10. Ratepayer funding of the Community Impacts Mitigation Program is not approved. 11. The proposed settlement on Nuclear Regulatory Commission (NRC) license renewal costs is approved, and PG&E is authorized to recover $18.6 million in rates for its NRC license renewal costs. 12. The proposed settlement on cancelled capital projects is approved as modified. 13. Pacific Gas and Electric Company will take no action with respect to any of the lands and facilities, whether owned by the utility or a subsidiary, before completion of a future process including a public stakeholder process; there will Packet Pg 246 11 A.16-08-006 ALJ/PVA/jt2 PROPOSED DECISION - 53 - be local input and further Commission review prior to the disposition of Diablo Canyon facilities and surrounding lands. 14. Application 16-08-006 is closed This order is effective today. Dated , at San Francisco, California. Packet Pg 247 11 Appendix A Packet Pg 248 11 ************ SERVICE LIST A1608006*********** - 1 - ************** PARTIES ************** Marc D. Joseph Attorney At Law ADAMS, BROADWELL, JOSEPH & CARDOZO 601 GATEWAY BLVD., STE. 1000 SOUTH SAN FRANCISCO CA 94080 (650) 589-1660 MDJoseph@AdamsBroadwell.com For: IBEW Local Union 1245 and The Coalition of California Utility Employees ____________________________________________ Evelyn Kahl Counsel ALCANTAR & KAHL LLP 345 CALIFORNIA ST., STE. 2450 SAN FRANCISCO CA 94104 (415) 421-4143 EK@a-klaw.com For: Energy Producers and Users Coalition ____________________________________________ Nora Sheriff Counsel ALCANTAR & KAHL LLP 345 CALIFORNIA ST., STE. 2450 SAN FRANCISCO CA 94104 (415) 421-4143 nes@a-klaw.com For: California Large Energy Consumers Association ____________________________________________ Danielle O. Mills Dir AMERICAN WIND ENERGY ASSN CALIF CAUCUS 1970 MEADOW OAK LANE MEADOW VISTA CA 95722 (916) 320-7584 Danielle@RenewableEnergyStrat.com For: American Wind Energy Association California Caucus (AWEA) ____________________________________________ Ty Tosdal Of Counsel BRAUN BALISING MCLAUGHLIN & SMITH, P.C. 915 L. STREET, SUITE 1270 SACRAMENTO CA 95814 (916) 682-9702 Ty@TosdalLaw.com For: City of Lancaster ____________________________________________ Scott Blaising Counsel BRAUN BLAISING SMITH WYNNE P.C. 915 L STREET, SUITE 1480 SACRAMENTO CA 95814 (916) 712-3961 Blaising@Braunlegal.com For: Silicon Valley Clean Energy ____________________________________________ Kellie Smith Policy Dir. CAL. ENERGY EFFICIENCY INDUSTRY COUNCIL 1535 FARMERS LANE, SUITE 312 SANTA ROSA CA 95405 (707) 480-1844 Policy@EfficiencyCouncil.org For: California Energy Efficiency Industry Council ____________________________________________ Barbara Hale President CALIFORNIA COMMUNITY CHOICE ASSOCIATION 1125 TAMALPAIS AVE. SAN RAFAEL CA 94901 info@cal-cca.org For: California Community Choice Association (CalCCA) ____________________________________________ Brad Heavner, Policy Dir. CALIFORNIA SOLAR ENERGY INDUSTRIES 1107 9TH STREET, NO.820 SACRAMENTO CA 95814 (415) 328-2683 Brad@Calseia.org For: California Solar Energy Industries Association ____________________________________________ Gene Nelson, Ph.D., Co-Government Liaison CALIFORNIANS FOR GREEN NUCLEAR POWER 1375 EAST AVE, STE. 103 NO. 523 ARROYO GRANDE CA 93420 (805) 363-4697 Liaison@CGNP.org For: Californians for Green Nuclear Power ____________________________________________ Sam Blakeslee, Ph.D., Dir CENTRAL COAST WAVE ENERGY HUB 1530 BROAD STREET SAN LUIS OBISPO CA 93401 (805) 234-7313 Samuel@Blakeslee-Blakeslee.com For: Central Coast Wave Energy Hub ____________________________________________ Packet Pg 249 11 ************ SERVICE LIST A1608006*********** - 2 - Austin M. Yang Deputy City Attorney CITY AND COUNTY OF SAN FRANCISCO 1 DR. CARLTON B. GOODLETT PL, RM 234 SAN FRANCISCO CA 94102-4682 (415) 554-6761 Austin.Yang@sfgov.org For: City and County of San Francisco ____________________________________________ David P. Lowrey Director, Regulatory Strategy COMVERGE, INC. 999 18TH STREET, SUITE 2300 DENVER CO 80202 (626) 260-2698 DLowrey@Comverge.com For: Comverge, Inc. (Joint DR Parties) ____________________________________________ Jennifer A. Chamberlin Exe Dir - Mrkt Development / Caiso CPOWER 2633 WELLINGTON COURT CLYDE CA 94520 (925) 332-5960 JAC@CPowerEnergyManagement.com For: CPower (Joint DR Parties) ____________________________________________ Vidhya Prabhakaran Attorney DAVIS WRIGHT & TREMAINE LLP 505 MONTGOMERY STREET, SUITE 800 SAN FRANCISCO CA 94111 (415) 276-6568 VidhyaPrabhakaran@dwt.com For: South San Joaquin Irrigation District ____________________________________________ Vidhya Prabhakaran Attorney DAVIS WRIGHT TREMAINE LLP 505 MONTGOMERY ST., STE. 800 SAN FRANCISCO CA 94111-6533 (415) 276-6500 VidhyaPrabhakaran@dwt.com For: SolarCity Corporation ____________________________________________ Patrick Ferguson Attorney DAVIS WRIGHT TREMAINE, LLP EMAIL ONLY EMAIL ONLY CA 00000 (415) 276-6500 PatrickFerguson@dwt.com For: Peninsula Clean Energy ____________________________________________ Ann L. Trowbridge Attorney At Law DAY CARTER & MURPHY LLP 3620 AMERICAN RIVER DRIVE, STE. 205 SACRAMENTO CA 95864 (916) 246-7303 ATrowbridge@DayCarterMurphy.com For: California Clean DG Coalition ____________________________________________ John W. Leslie Attorney DENTONS US LLP 4655 EXECUTIVE DRIVE, SUITE 700 SAN DIEGO CA 92121 (619) 699-2536 John.Leslie@Dentons.com For: Shell Energy North America (US), L.P. ____________________________________________ Daniel W. Douglass Attorney DOUGLASS & LIDDELL 4766 PARK GRANADA, STE. 209 WOODLAND HILLS CA 91302 (818) 961-3001 douglass@energyattorney.com For: Direct Access Customer Coalition (DACC) ____________________________________________ Donald C. Liddell, Pc Counsel DOUGLASS & LIDDELL 2928 2ND AVENUE SAN DIEGO CA 92103 (619) 993-9096 liddell@EnergyAttorney.com For: California Energy Storage Alliance (CESA) ____________________________________________ Packet Pg 250 11 ************ SERVICE LIST A1608006*********** - 3 - Gregory Klatt, Attorney DOUGLASS & LIDDELL 411 E. HUNTINGTON DRIVE, STE. 107-356 ARCADIA CA 91006 (626) 802-5733 Klatt@EnergyAttorney.com For: San Luis Coastal Unified School District ____________________________________________ Matthew Vespa Attorney EARTHJUSTICE, CALIF. OFFICE 50 CALIFORNIA STREET, STE. 500 SAN FRANCISCO CA 94111 (415) 217-2000 MVespa@Earthjustice.org For: Sierra Club ____________________________________________ Andrew B. Brown, Attorney At Law ELLISON SCHNEIDER & HARRIS LLP 2600 CAPITOL AVENUE, SUITE 400 SACRAMENTO CA 95816-5905 (916) 447-2166 abb@eslawfirm.com For: Alliance for Retail Energy Market (AreM) ____________________________________________ Carolyn M. Kehrein, Consultant ENERGY MANAGEMENT SERVICES 2602 CELEBRATION WAY WOODLAND CA 95776 (530) 668-5600 cmkehrein@ems-ca.com For: Energy Users Forum ____________________________________________ Erika Diamond ENERGYHUB 232 3RD STREET, SUITE 201 BROOKLYN NY 11215 (718) 522-7051 diamond@energyhub.net For: EnergyHub (Joint DR Parties) ____________________________________________ Mona Tierney-Lloyd, Sr. Dir., Western Regulatory Affairs ENERNOC, INC. PO BOX 378 CAYUCOS CA 93430 (805) 995-1618 MTierney-Lloyd@enernoc.com For: EnerNOC, Inc. (Joint DR Parties) ____________________________________________ Dan Jacobson Legislative Dir ENVIRONMENT CALIFORNIA 3435 WILSHIRE BLVD., STE. 385 LOS ANGELES CA 90010 (916) 446-8062 X305 DJacobson@EnvironmentCalifornia.org For: Environment California ____________________________________________ Larissa Koehler Senior Attorney ENVIRONMENTAL DEFENSE FUND 123 MISSION STREET, 28TH FLOOR SAN FRANCISCO CA 94105 (415) 293-6093 lkoehler@edf.org For: Environmental Defense Fund ____________________________________________ Kara A. Woodruff, J.D. Founder FRIENDS OF WILD CHERRY CANYON 1163 PISMO ST. SAN LUIS OBISPO CA 93401 (805) 440-6650 KaraSlo@Charter.net For: Friends of Wild Cherry Canyon ____________________________________________ Mark Shahinian President FUTURE GRID COALITION 15 LAPIDGE STREET, APT. 2 SAN FRANCISCO CA 94110 (917) 902-5721 Mark.Shahinian@FutureGridCoalition.org For: Future Grid Coalition ____________________________________________ Brian T. Cragg Attorney GOODIN, MACBRIDE, SQUERI & DAY , LLP 505 SANSOME STREET, SUITE 900 SAN FRANCISCO CA 94111 (415) 392-7900 BCragg@GoodinMacBride.com For: Independent Energy Producers Association ____________________________________________ Packet Pg 251 11 ************ SERVICE LIST A1608006*********** - 4 - Megan Somogyi Attorney GOODIN, MACBRIDE, SQUERI, & DAY, LLP 505 SANSOME ST., STE. 900 SAN FRANCISCO CA 94111 (415) 392-7900 MSomogyi@GoodinMacBride.com For: County of San Luis Obispo ____________________________________________ Gregory Morris Director GREEN POWER INSTITUTE 2039 SHATTUCK AVENUE, STE 402 BERKELEY CA 94704 (510) 644-2700 GMorris@emf.net For: Green Power Institute ____________________________________________ Laurence G. Chaset Counsel KEYES & FOX LLP 436 14TH STREET, STE. 1305 OAKLAND CA 94612 (510) 314-8386 LChaset@kfwLaw.com For: World Business Academy ____________________________________________ Tim Mason Policy Director LARGE-SCALE SOLAR ASSOCIATION EMAIL ONLY EMAIL ONLY CA 00000 (510) 812-1416 Tim@LargeScaleSolar.org For: Large-Scale Solar Association ____________________________________________ Alvin S. Pak Attorney At Law LAW OFFICES OF ALVIN S. PAK 827 JENSEN COURT ENCINITAS CA 92024 (619) 209-1865 Apak@AlPakLaw.com For: Alliance for Nuclear Responsibility (A4NR) ____________________________________________ Megan M. Myers, Attorney LAW OFFICES OF SARA STECK MYERS 122 - 28TH AVENUE SAN FRANCISCO CA 94121 (415) 994-1616 MeganMMyers@yahoo.com For: Geothermal Energy Association (GEA) ____________________________________________ Sara Steck Myers, Attorney At Law LAW OFFICES OF SARA STECK MYERS 122 - 28TH AVENUE SAN FRANCISCO CA 94121 (415) 387-1904 ssmyers@att.net For: Center for Energy Efficiency and Renewable Technologies (CEERT) ____________________________________________ Shawn Marshall, Director LEAN ENERGY US PO BOX 961 MILL VALLEY CA 94941 (415) 888-8007 SMarshall@LeanEnergyUS.org For: Lean Energy US ____________________________________________ Frank R. Lindh, Attorney At Law 340 SANTA MARGARITA SAN RAFAEL CA 94901 (415) 596-3931 FrankRichLindh@gmail.com For: Friends of the Earth (FOE) ____________________________________________ Michael Callahan, Reg. Counsel MARIN CLEAN ENERGY EMAIL ONLY EMAIL ONLY CA 00000 (415) 464-6045 MCallahan@MCECleanEnergy.org For: Marin Clean Energy (MCE) ____________________________________________ Steven R. Meyers, Attorney MEYERS NAVE 555 12TH STREET, STE. 1500 OAKLAND CA 94607 (510) 808-2100 SMeyers@MeyersNave.com For: City of San Luis Obispo, Pismo Beach, Paso Robles, Arroyo Grande, Morro Bay and Atascadero. ____________________________________________ Packet Pg 252 11 ************ SERVICE LIST A1608006*********** - 5 - Ralph Cavanagh Counsel NATURAL RESOURCES DEFENSE COUNCIL 111 SUTTER STREET, 21/F SAN FRANCISCO CA 94104 (415) 875-6100 RCavanagh@nrdc.org For: Natural Resources Defense Council ____________________________________________ Matthew Duesterberg Ceo OHMCONNECT, INC. 350 TOWNSEND ST., STE. 210 SAN FRANCISCO CA 94107 (404) 881-8659 Matt@ohmConnect.com For: OhmConnect, Inc. ____________________________________________ William V. Manheim Attorney PACIFIC GAS & ELECTRIC COMPANY LAW DEPT. 77 BEALE STREET / PO BOX 7442 (B30A) SAN FRANCISCO CA 94120 (415) 973-6628 wvm3@pge.com For: Pacific Gas and Electric Company ____________________________________________ Charles R. Middlekauff PACIFIC GAS AND ELECTRIC COMPANY LAW DEPT. 77 BEALE STREET, B30A / BOX 7442 SAN FRANCISCO CA 94105 (415) 973-6971 CRMd@pge.com For: Pacific Gas and Electric Company ____________________________________________ Frank Jablonski Attorney PROGRESSIVE LAW GROUP, LLC 354 W. MAIN STREET MADISON WI 53703 (608) 258-8511 FrankJ@ProgressiveLaw.com For: Environmental Progress ____________________________________________ Marcie Milner Vp - Regulatory Affairs SHELL ENERGY NORTH AMERICA (US), L.P. 4445 EASTGATE MALL, SUITE 100 SAN DIEGO CA 92121 (858) 526-2106 marcie.milner@shell.com For: Shell Energy North America (US), L.P. ____________________________________________ Steven S. Shupe General Counsel SONOMA CLEAN POWER AUTHORITY 50 SANTA ROSA AVE., 5TH FL. SANTA ROSA CA 95404 (707) 890-8485 SShupe@SonomaCleanPower.org For: Sonoma Clean Power Authority ____________________________________________ Matthew Freedman, Staff Attorney THE UTILITY REFORM NETWORK 785 MARKET STREET, 14TH FL SAN FRANCISCO CA 94103 (415) 929-8876 X-308 matthew@turn.org For: TURN ____________________________________________ Laura J. Tudisco Legal Division 505 Van Ness Avenue, RM. 5032 San Francisco CA 94102 3298 (415) 703-2164 ljt@cpuc.ca.gov For: ORA Sabrina D. Venskus, Attorney VENSKUS & ASSOCIATES P.C. 603 WEST OJAI AVE., STE. F OJAI CA 93023 (805) 272-8628 venskus@lawsv.com For: San Luis Obispo Mothers for Peace, Inc. ____________________________________________ Jean Merrigan WOMEN'S ENERGY MATTERS PO BOX 2615 MARTINEZ CA 94553 (925) 957-6070 jnmwem@gmail.com For: Women's Energy Matters ____________________________________________ Packet Pg 253 11 ************ SERVICE LIST A1608006*********** - 6 - ********** STATE EMPLOYEE *********** Peter V. Allen Administrative Law Judge Division RM. 5022 505 Van Ness Avenue San Francisco CA 94102 3298 (415) 703-2195 pva@cpuc.ca.gov Daniel Buch Office of Ratepayer Advocates AREA 4-A 505 Van Ness Avenue San Francisco CA 94102 3298 (415) 703-2292 db1@cpuc.ca.gov Truman L. Burns Office of Ratepayer Advocates RM. 4205 505 Van Ness Avenue San Francisco CA 94102 3298 (415) 703-2932 txb@cpuc.ca.gov Leuwam Tesfai Energy CALIFORNIA PUBLIC UTILITIES COMMISSION EMAIL ONLY EMAIL ONLY CA 00000 (415) 703-2403 Leuwam.Tesfai@cpuc.ca.gov David Peck CPUC - EXEC EMAIL ONLY EMAIL ONLY CA 00000 (415) 703-1213 dbp@cpuc.ca.gov Suzanne Casazza Energy Division 505 Van Ness Avenue San Francisco CA 94102 3298 (415) 703-5906 sc8@cpuc.ca.gov Radu Ciupagea Office of Ratepayer Advocates RM. 4104 505 Van Ness Avenue San Francisco CA 94102 3298 (415) 703-5235 rc5@cpuc.ca.gov Eric Greene Energy Division AREA 4-A 505 Van Ness Avenue San Francisco CA 94102 3298 (415) 703-5560 eg1@cpuc.ca.gov Mea Halperin Office of Ratepayer Advocates 505 Van Ness Avenue San Francisco CA 94102 3298 (415) 703-1368 mh3@cpuc.ca.gov Iryna Kwasny Legal Division RM. 4107 505 Van Ness Avenue San Francisco CA 94102 3298 (415) 703-1477 iak@cpuc.ca.gov Diana L. Lee Legal Division RM. 4107 505 Van Ness Avenue San Francisco CA 94102 3298 (415) 703-4342 dil@cpuc.ca.gov Dina S. Mackin Energy Division AREA 4-A 505 Van Ness Avenue San Francisco CA 94102 3298 (415) 703-2125 dm1@cpuc.ca.gov Rachel Peterson Executive Division AREA 4-A 505 Van Ness Avenue San Francisco CA 94102 3298 (415) 757-7844 rp1@cpuc.ca.gov Robert M. Pocta Office of Ratepayer Advocates RM. 4205 505 Van Ness Avenue San Francisco CA 94102 3298 (415) 703-2871 rmp@cpuc.ca.gov Packet Pg 254 11 ************ SERVICE LIST A1608006*********** - 7 - Terrie D. Prosper Executive Division RM. 5301 505 Van Ness Avenue San Francisco CA 94102 3298 (415) 703-2160 tdp@cpuc.ca.gov James Ralph Executive Division RM. 5037 505 Van Ness Avenue San Francisco CA 94102 3298 (415) 703-4673 jr8@cpuc.ca.gov Sean A. Simon Executive Division AREA 4-A 505 Van Ness Avenue San Francisco CA 94102 3298 (415) 703-3791 svn@cpuc.ca.gov Clayton K. Tang Office of Ratepayer Advocates RM. 4205 505 Van Ness Avenue San Francisco CA 94102 3298 (415) 703-2728 ckt@cpuc.ca.gov For: ORA Sarah R. Thomas Legal Division RM. 5033 505 Van Ness Avenue San Francisco CA 94102 3298 (415) 703-2310 srt@cpuc.ca.gov David Zizmor Energy Division 505 Van Ness Avenue San Francisco CA 94102 3298 (415) 703-1575 dz1@cpuc.ca.gov ********* INFORMATION ONLY ********** Gerald Lahr ABAG PUBLICLY OWNED ENERGY RESOURCES 101 8TH STREET (P.O. BOX 2050) OAKLAND CA 94607 (510) 464-7908 jerryl@abag.ca.gov Mila A. Buckner Attorney ADAMS BROADWELL JOSEPH & CARDOZO 601 GATEWAY BLVD., STE. 1000 SOUTH SAN FRANCISCO CA 94080 (650) 589-1660 MBuckner@AdamsBroadwell.com James S. Adams 9394 MIRA DEL RIO DRIVE SACRAMENTO CA 95827 (916) 361-0606 jsadams4910@yahoo.com Donald Brookhyser Attorney At Law ALCANTAR & KAHL LLP 345 CALIFORNIA STREET, SUITE 2450 SAN FRANCISCO CA 94104 (415) 421-4143 deb@a-klaw.com For: Energy Producers and Users Coalition ____________________________________________ Nora Sheriff Counsel ALCANTAR & KAHL LLP 345 CALIFORNIA ST., STE. 2450 SAN FRANCISCO CA 94104 (415) 421-4143 nes@a-klaw.com For: California Large Energy Consumers Association ____________________________________________ Amie Burkholder ALCANTAR & KAHL, LLP 345 CALIFORNIA STREET, SUITE 2450 SAN FRANCISCO CA 94104 (415) 421-4143 filings@a-klaw.com Mike Cade Industry Specialist ALCANTAR & KAHL, LLP EMAIL ONLY EMAIL ONLY OR 00000 (503) 402-8711 wmc@a-klaw.com Packet Pg 255 11 ************ SERVICE LIST A1608006*********** - 8 - David Jay Weisman ALLIANCE FOR NUCLEAR RESPONSIBILITY EMAIL ONLY EMAIL ONLY CA 00000 DavidJayWeisman@gmail.com Rochelle Becker Executive Director ALLIANCE FOR NUCLEAR RESPONSIBILITY EMAIL ONLY EMAIL ONLY CA 93406 (858) 337-2703 Rochelle@A4NR.org Jerimiah Booream Power And Utilities Research BANK OF AMERICA MERRILL LYNCH ONE BRYANT PARK NEW YORK NY 10036 (646) 855-2109 jerimiah.booream@baml.com Josephine Moore Power And Utilities Research BANK OF AMERICA MERRILL LYNCH ONE BRYANT PARK NEW YORK NY 10036 (646) 855-1470 josephine.moore@baml.com Julien Dumoulin-Smith Head Of Us Pwr, Utilities & Alt Energy BANK OF AMERICA MERRILL LYNCH ONE BRYANT PARK NEW YORK NY 10036 (646) 855-5855 julien.dumoulin-smith@baml.com Nicholas Campanella Power And Utilities Research BANK OF AMERICA MERRILL LYNCH ONE BRYANT PARK NEW YORK NY 10036 (646) 743-2122 nicholas.campanella@baml.com Barbara Barkovich Consultant BARKOVICH & YAP EMAIL ONLY EMAIL ONLY CA 00000 (707) 937-6203 Barbara@BarkovichAndYap.com For: California Large Energy Consumers ____________________________________________ Camille Stough, Esq. BRAUN BLAISING MCLAUGHLIN & SMITH PC 915 L STREET, STE. 1480 SACRAMENTO CA 95814 (415) 314-8312 Stough@BraunLegal.com For: Silicon Valley Clean Energy ____________________________________________ Regulatory Clerk BRAUN BLAISING SMITH WYNNE 915 L STREET, STE. 1480 SACRAMENTO CA 95814 Regulatory@BraunLegal.com S. David Freeman C/O FRIENDS OF THE EARTH 1100 15TH STREET, NW, 11TH FLOOR WASHINGTON DC 20005 (310) 902-2147 greencowboysdf@gmail.com James H. Caldwell, Jr. EMAIL ONLY EMAIL ONLY CA 00000 JHCaldwellJr@gmail.com Kavya Balaraman CALIFORNIA ENERGY MARKETS EMAIL ONLY EMAIL ONLY CA 00000 (347) 342-6484 kavya@newsdata.com Matthew Barmack Dir. - Market & Regulatory Analysis CALPINE CORPORATION 4160 DUBLIN BLVD., SUITE 100 DUBLIN CA 94568 (925) 557-2267 BarmackM@calpine.com Liz Anthony Ph.D Director CENTER FOR ENERGY EFFICIENCY 1100 11TH STREET, STE. 311 SACRAMENTO CA 95814 (916) 442-7785 liz@CEERT.org Packet Pg 256 11 ************ SERVICE LIST A1608006*********** - 9 - Jeanne M. Sole Deputy City Attorney CITY AND COUNTY OF SAN FRANCISCO 1 DR. CARLTON B. GOODLETT PLACE, RM. 234 SAN FRANCISCO CA 94102-4682 (415) 554-4619 jeanne.sole@sfgov.org J. Christine Dietrick City Attorney CITY OF SAN LUIS OBISPO 990 PALM STREET, ROOM 10 SAN LUIS OBISPO CA 93401 (805) 781-7140 CDietrick@slocity.org For: City of San Luis Obispo ____________________________________________ Tam Hunt COMMUNITY RENEWABLES SOLUTIONS, LLC EMAIL ONLY EMAIL ONLY CA 00000-0000 (805) 214-6150 tam@communityRenewables.biz Howard Choy General Mgr. COUNTY OF LOS ANGELES OFFICE OF SUSTAINABILITY 1100 NORTH EASTERN AVENUE LOS ANGELES CA 90063 (323) 267-2006 HChoy@isd.lacounty.gov For: County of Los Angeles Office of Sustainability ____________________________________________ DAVIS WRIGHT TREMAINE LLP EMAIL ONLY EMAIL ONLY CA 00000 (415) 276-6500 dwtcpucdockets@dwt.com Emily P. Sangi Attorney DAVIS WRIGHT TREMAINE LLP 505 MONTGOMERY ST., STE. 800 SAN FRANCISOC CA 94111-6533 (415) 276-6500 EmilySangi@dwt.com For: SolarCity Corp. ____________________________________________ Katie Jorrie DAVIS WRIGHT TREMAINE, LLP EMAIL ONLY EMAIL ONLY CA 00000 (415) 276-6500 katiejorrie@dwt.com Constantine Lednev Associate-Us Utilities & Power Research DEUTSCHE BANK SECURITIES INC. 60 WALL STREET NEW YORK CITY NY 10005 (212) 250-2591 Constantine.Lednev@db.com Jonathan Arnold DEUTSCHE BANK SECURITIES INC. 60 WALL STREET NEW YORK NY 10005 (212) 250-3182 jonathan.arnold@db.com Donald H. Korn Principal DHK ASSOCIATES 355 N SAN ANTONIO ROAD LOS ALTOS CA 94022 (650) 941-1055 dhkorn@earthlink.net DIABLO CANYON INDEPENDENT SAFETY COMM 857 CASS STREET, STE. D MONTEREY CA 93940 Info@dcisc.org John L. Geesman Attorney DICKSON GEESMAN LLP EMAIL ONLY EMAIL ONLY CA 94612 (510) 899-4670 John@DicksonGeesman.com For: Alliance for Nuclear Responsibility ____________________________________________ Gregory Klatt DOUGLASS & LIDDELL 4766 PARK GRANADA, STE. 209 CALABASAS CA 91302 (818) 961-3002 klatt@energyattorney.com Packet Pg 257 11 ************ SERVICE LIST A1608006*********** - 10 - Sean M. Neal Attorney DUNCAN WEINBERG GENZER & PEMBROKE, P.C. 915 L STREET, STE. 1410 SACRAMENTO CA 95814 (916) 498-0121 smn@dwgp.com For: Imperial Irrigation District (IID) and Transmission Agency of Northern California (TANC) ____________________________________________ Michael Postar Attorney DUNCAN WEINBERG, GENZER & PEMBROKE EMAIL ONLY EMAIL ONLY DC 00000 (202) 467-6370 mrp@dwgp.com Nkechi Ogbue Mgr - Regulatory Affairs ECOBEE, INC. 250 UNIVERSITY AVE. SUITE 400 TORONTO ON M5H 3E5 CANADA (647) 531-2342 NkechiO@ecobee.com Ronald Liebert Attorney At Law ELLISON SCHNEIDER HARRIS & DONLAN LLP 2600 CAPITOL AVENUE, STE. 400 SACRAMENTO CA 95816 (916) 447-2166 RL@eslawfirm.com For: California Manufacturers & Technology Association (CMTA) ____________________________________________ Cynthia Mitchell ENERGY ECONOMICS, INC. EMAIL ONLY EMAIL ONLY NV 00000 (775) 324-5300 CynthiaKMitchell@gmail.com Jayant Kairam California Dir. - Clean Energy ENVIRONMENTAL DEFENSE FUND 123 MISSION STREET, 28TH FL. SAN FRANCISCO CA 94105 (512) 691-3456 JKairam@edf.org Kelly Crandall EQ RESEARCH, LLC 1580 LINCOLN STEET, SUITE 880 DENVER CO 80203 (720) 573-8109 CPUCdockets@eq-research.com Alexey Orkin Consultant FLYNN RESOURCE CONSULTANTS INC 5440 EDGEVIEW DRIVE DISCOVERY BAY CA 94505 (301) 787-6204 AlexeyOrkin@FlynnRCI.com Barry R. Flynn FLYNN RESOURCE CONSULTANTS, INC. 5440 EDGEVIEW DRIVE DISCOVERY BAY CA 94505 (888) 634-7516 BRFlynn@Flynnrci.com Pushkar Wagle FLYNN RESOURCE CONSULTANTS, INC. 2900 GORDON AVENUE, STE. 100-3 SANTA CLARA CA 95051 (888) 634-3339 PushkarWagle@flynnrci.com Damon Moglen Sr. Advisor - Climate & Energy Project FRIENDS OF THE EARTH 1100 15TH STREET NW, 11TH FL. WASHINGTON DC 20005 (202) 783-7400 DMoglen@foe.org Rhonda Mills Western Issues Rep GEOTHERMAL ENERGY ASSOCIATION EMAIL ONLY EMAIL ONLY CA 00000 Rhonda@rtides.com John Mcintyre Attorney GOODIN, MACBRIDE, SQUERI & DAY, LLP 505 SANSOME ST., STE. 900 SAN FRANCISCO CA 94111 (415) 392-7900 JMcIntyre@GoodinMacBride.com Packet Pg 258 11 ************ SERVICE LIST A1608006*********** - 11 - Lujuana Medina Regulatory Mgr. ICF 601 W. 5TH STREET, STE. 900 LOS ANGELES CA 90071 (213) 312-1781 Lujuana.Medina@ICF.com Jamie Asbury Deputy Energy Mgr., Bus / Regulartory IMPERIAL IRRIGATION DISTRICT 333 E. BARIONI BLVD. IMPERIAL CA 92251 (760) 482-3379 jlasbury@iid.com Robert A. Laurie Assistant General Counsel - Energy IMPERIAL IRRIGATION DISTRICT 333 E.BARIONI BLVD. IMPERIAL CA 92251 (760) 335-3640 RALaurie@iid.com Curt Barry Senior Writer INSIDE WASHINGTON PUBLISHERS EMAIL ONLY EMAIL ONLY CA 00000 (916) 449-6171 cbarry@iwpnews.com Jeff Hirsch JAMES J. HIRSCH & ASSOCIATES 12185 PRESILLA ROAD SANTA ROSA VALLEY CA 93012-9243 (805) 553-9000 James.J.Hirsch@gmail.com Kathy Treleven KATHY TRELEVEN CONSULTING 103 BANDOL CT. SAN RAMON CA 94582 (925) 719-3749 KTreleven@gmail.com Tim Lindl Counsel KEYES & FOX LLP 436 14TH STREET, STE. 1305 OAKLAND CA 94612 (510) 314-8385 TLindl@kfwlaw.com Jason Caudle LANCASTER CHOICE ENERGY 44933 FERN AVE. LANCASTER CA 93534 JCaudle@CityofLancaster.org Danielle O. Mills Sr. Policy Advisor LARGE-SCALE SOLAR ASSOCIATION EMAIL ONLY EMAIL ONLY CA 00000 (916) 320-7584 Danielle@LargeScaleSolar.org Shannon Eddy LARGE-SCALE SOLAR ASSOCIATION EMAIL ONLY EMAIL ONLY CA 00000 (916) 731-8371 eddyconsulting@gmail.com For: Large-Scale Solar Association ____________________________________________ Irene K. Moosen Attorney At Law LAW OFFICE OF IRENE K. MOOSEN 53 SANTA YNEZ AVENUE SAN FRANCISCO CA 94112 (415) 587-7343 irene@igc.org For: Local Government Sustainable Energy Coalition (LGSEC) ____________________________________________ Mce Regulatory MARIN CLEAN ENERGY EMAIL ONLY EMAIL ONLY CA 00000 (888) 632-3674 regulatory@mceCleanEnergy.org Dawn Weisz MARIN CLEAN ENERGY 1125 TAMALPAIS AVE. SAN RAFAEL CA 94901 DWeisz@mceCleanEnergy.org Nathaniel Malcolm Regulatory Law Clerk MARIN CLEAN ENERGY 1125 TAMALPAIS AVE. SAN RAFAEL CA 94901 (415) 464-6048 NMalcolm@mceCleanEnergy.org Packet Pg 259 11 ************ SERVICE LIST A1608006*********** - 12 - Shalini Swaroop Regulatory & Legislative Counsel MARIN CLEAN ENERGY EMAIL ONLY EMAIL ONLY CA 00000 (415) 464-6040 SSwaroop@mceCleanEnergy.org Susan Griffin Paralegal MEYERS NAVE 555 12TH STREET, STE. 1500 OAKLAND CA 94607 (510) 808-2055 sgriffin@meyersnave.com Brandon Halter Attorney MEYERS, NAVE, RIBACK, SILVER & WILSON 555 12TH STREET, STE. 1500 OAKLAND CA 94607 (510) 808-2059 BHalter@MeyersNave.com Britt Strottman Attorney At Law MEYERS, NAVE, RIBACK, SILVER & WILSON 555 12TH STREET, STE. 1500 OAKLAND CA 94607 (510) 808-2083 bstrottman@meyersnave.com Sarah M. Keane Attorney MORGAN LEWIS & BOCKIUS, LLP ONE MARKET, SPEAR STREET TOWER SAN FRANCISCO CA 94105 (415) 442-1000 sarah.keane@morganlewis.com Dustin C. Elliott Attorney MORRISON & FOERSTER LLP 425 MARKET STREET SAN FRANCISCO CA 94105 (415) 268-6286 DElliott@MoFo.com MRW & ASSOCIATES LLC EMAIL ONLY EMAIL ONLY CA 00000 (510) 834-1999 MRW@mrwAssoc.com Peter Miller NATURAL RESOURCES DEFENSE COUNCIL EMAIL ONLY EMAIL ONLY CA 00000 (415) 875-6100 pmiller@nrdc.org David Cohen NAVIGANT CONSULTING 2855 SW SCENIC DRIVE PORTLAND OR 97225 (503) 708-7852 DCohen@navigant.com Martin A. Mattes Attorney NOSSAMAN LLP 50 CALIFORNIA STREET, 34TH FL. SAN FRANCISCO CA 94111 (415) 398-3600 mmattes@nossaman.com Brian Kooiman OHMCONNECT, INC. 350 TOWNSEND ST., STE. 210 SAN FRANCISCO CA 94107 (415) 697-1271 Brian@ohmConnect.com M. Grady Mathai-Jackson Attorney PACIFC GAS & ELECTRIC COMPANY EMAIL ONLY EMAIL ONLY CA 00000 (415) 973-3386 MGML@pge.com Shilpa Ramaiya PACIFIC GAS & ELECTRIC COMPANY 77 BEALE STREET, 9BA SAN FRANCISCO CA 94105 (415) 973-3186 SRRD@pge.com PACIFIC GAS AND ELECTRIC COMPANY REGULATORY FILE ROOM PO BOX 7442 SAN FRANCISCO CA 94120 (415) 973-4377 cpuccases@pge.com Packet Pg 260 11 ************ SERVICE LIST A1608006*********** - 13 - Case Coordination PACIFIC GAS AND ELECTRIC COMPANY EMAIL ONLY EMAIL ONLY CA 94177 RegRelCPUCCases@pge.com Conor Doyle Regulatory Affairs PACIFIC GAS AND ELECTRIC COMPANY PO BOX 770000, MC B23A SAN FRANCISCO CA 94177 (415) 973-7817 JCDT@pge.com Deanna Toy PACIFIC GAS AND ELECTRIC COMPANY EMAIL ONLY EMAIL ONLY CA 00000 dct4@pge.com William Toman PACIFIC MARINE RENEWABLES, LLC 391 SOUTH COURT ST. LOS OSOS CA 93402 (707) 731-9261 WITomanium@gmail.com Jan Pepper PENINSULA CLEAN ENERGY 455 COUNTY CENTER, 4TH FL. REDWOOD CITY CA 94063 JPepper@PeninsulaCleanEnergy.com For: CalCCA ____________________________________________ Luisa F. Elkins Sr. Associate PROCOPIO, CORY, HARGREAVES & SAVITCH LLP 1117 S CALIFORNIA AVE., STE. 200 PALO ALTO CA 94304 (650) 645-9032 Luisa.Elkins@Procopio.com Sue Mara Consultant RTO ADVISORS, LLC 164 SPRINGDALE WAY REDWOOD CITY CA 94062 (415) 902-4108 sue.mara@RTOAdvisors.com Emma D. Salustro Attorney SAN DIEGO GAS & ELECTRIC COMPANY 8330 CENTURY PARK COURT, CP32D SAN DIEGO CA 92123 (858) 654-1861 ESalustro@SempraUtilities.com Brian Stevens Cleanpowersf-Power Enterprise SAN FRANCISCO PUBLIC UTILITIES COMM. 525 GOLDEN GATE AVE., 7TH FL. SAN FRANCISCO CA 94102 (415) 554-3439 BStevens@sfwater.org James Hendry Utilities Specialist SAN FRANCISCO PUBLIC UTILITIES COMM. 525 GOLDEN GATE AVE., 7TH FLOOR SAN FRANCISCO CA 94102-3220 (415) 554-1526 jhendry@sfwater.org Clean Power Sf - Power Enterprise SAN FRANCISCO PUC 525 GOLDEN GATE AVE. SAN FRANCISCO CA 94102 (415) 554-3439 RegCleanPowers@SFWater.org Lauren Alper SAN FRANCISCO PUC 525 GOLDEN GATE AVENUE, 7TH FLOOR SAN FRANCISCO CA 94103 LAlper@sfwater.org Ellen Sheffer Trustee SAN LUIS COASTAL UNIFIED SCHOOL DISTRICT EMAIL ONLY EMAIL ONLY CA 00000 esheffer@slcusd.org Sherry Lewis SAN LUIS OBISPO MOTHERS FOR PEACE, INC. PO BOX 3608 SAN LUIS OBISPO CA 93403 Sherry.Lewis66@att.net Packet Pg 261 11 ************ SERVICE LIST A1608006*********** - 14 - David A. Silberman General Counsel SAN MATEO COUNTY COUNSEL'S OFFICE 400 COUNTY CENTER, 6TH FL. REDWOOD CITY CA 94063 (650) 363-4749 DSilberman@smcgov.org For: Peninsula Clean Energy ____________________________________________ Phillip Muller President SCD ENERGY SOLUTIONS 436 NOVA ALBION WAY SAN RAFAEL CA 94903 (415) 479-1710 PhilM@SCDenergy.com Tom Habashi SILICON VALLEY CLEAN ENERGY EMAIL ONLY EMAIL ONLY CA 00000 TomH@SVCleanEnergy.org Hilary Staver Manager Regulatory & Legislative Affairs SILICON VALLEY CLEAN ENERGY AUTHORITY 333 W. EL CAMINO REAL, STE. 290 SUNNYVALE CA 94087 (408) 721-5301 Hilary.Staver@SVCleanEnergy.org Audra Hartmann Principal SMITH, WATTS & HARTMANN 925 L STREET, SUITE 220 SACRAMENTO CA 95814 (916) 446-5508 AHartmann@swmconsult.com Neal Reardon Regulatory Affairs Manager SONOMA CLEAN POWER EMAIL ONLY EMAIL ONLY CA 00000 (707) 890-8488 NReardon@SonomaCleanPower.org Case Administration SOUTHERN CALIFORNIA EDISON COMPANY 8631 RUSH STREET ROSEMEAD CA 91770 (626) 302-6906 Case.Admin@sce.com Walker A. Matthews, Iii Sr. Attorney SOUTHERN CALIFORNIA EDISON COMPANY 2244 WALNUT GROVE AVE. / PO BOX 800 ROSEMEAD CA 91770 (626) 302-6879 walker.matthews@sce.com Steve Mccarty STEVEN MCCARTY AND ASSOCIATES 2460 LAVENDER DRIVER, SUITE 101 WALNUT CREEK CA 94596 (925) 330-4776 sjm001@sbcglobal.net Alex Morris Dir - Policy & Regulatory Affairs STRATEGEN CONSULTING 2150 ALLSTON WAY, STE. 210 BERKELEY CA 94709 (310) 617-3441 amorris@strategen.com Jin Noh Sr. Consultant STRATEGEN CONSULTING 2150 ALLSTON WAY, STE.210 BERKELEY CA 94709 (703) 507-8809 JNoh@Strategen.com Yuliya Shmidt Executive Division RM. 4209 505 Van Ness Avenue San Francisco CA 94102 3298 (415) 703-2719 ys2@cpuc.ca.gov Damon Franz Dir - Policy & Electricity Markets TESLA, INC. 444 DE HARO STREET, STE. 101 SAN FRANCISCO CA 94107 (415) 636-9341 DFranz@Tesla.com Francesca Wahl Sr. Associate, Bus. Development TESLA, INC. 444 DE HARO STREET, STE. 101 SAN FRANCISCO CA 94107 (650) 435-0422 FWahl@Tesla.com Packet Pg 262 11 ************ SERVICE LIST A1608006*********** - 15 - Hayley Goodson, Staff Attorney THE UTILITY REFORM NETWORK 785 MARKET ST., STE. 1400 SAN FRANCISCO CA 94103 (415) 929-8876 X360 hayley@turn.org Kevin Kitz U.S. GEOTHERMAL, INC. 390 E. PARKCENTER BLVD., STE. 250 BOISE ID 83706 KKitz@USGeothermal.com Laura Wisland, Sr. Energy Analyst UNION OF CONCERNED SCIENTISTS 500 12TH ST., STE. 340 OAKLAND CA 94607 (510) 809-1565 lwisland@ucsusa.org Michael Cohen Western States Power Systems Engineer UNION OF CONCERNED SCIENTISTS EMAIL ONLY EMAIL ONLY CA 00000 (510) 809-1572 MCohen@ucsusa.org For: Union of Concerned Scientists ____________________________________________ Sarah Kozal, Attorney WESTERN ENERGY & WATER 500 CAPITOL MALL, STE. 2350 SACRAMENTO CA 95814 (916) 877-8872 SKozal@weawLaw.com Robert Freehling, Consultant WOMENS ENERGY MATTER E-MAIL ONLY EMAIL ONLY CA 00000 rfreeh123@sbcglobal.net Kevin Woodruff WOODRUFF EXPERT SERVICES 1127 - 11TH STREET, SUITE 514 SACRAMENTO CA 95814 (916) 442-4877 kdw@woodruff-expert-services.com Jerry B. Brown, Ph.D Director - Safe Energy Project WORLD BUSINESS ACADEMY 2020 ALAMEDA PADRE SERRA, STE. 135 SANTA BARBARA CA 93103 (805) 892-4600 JBBrown@gate.net (End of Appendix A) Packet Pg 263 11 1 Appendix 1 - Essential Services Mitigation Fund Terms (District/County/PG&E) 1. The Essential Services Mitigation Fund (“ESMF”) will be increased from $49.5 million to $75 million, of which $10 million will be dedicated to an educational foundation to be designated by the San Luis Coastal Unified School District (“District”). These funds, including the $10 million portion to be dedicated to a District educational foundation, will be distributed to San Luis Obispo County (“County”) in nine equal annual installments through 2025. The funds will be distributed on September 1st of each year, following a final and non-appealable CPUC decision approving the settlement and the Diablo Canyon Application, as revised. If final and non- appealable CPUC approval of this settlement is not obtained by September 1, 2017, the first distribution will occur 30 days after such approval is issued, unless otherwise agreed. The parties will meet and confer within 30 days of the filing of any application for rehearing or appeal of the CPUC decision approving this Settlement. The payments will continue as scheduled for the full 9 year period even in the event one or both Diablo Canyon Units closes early. The Parties accept the risk that Diablo Canyon may close before the scheduled dates in 2024 and 2025 and will not request any additional financial compensation in such an event. 2. The County will redistribute the funds based on a revision of the 2015/2016 unitary factors to the taxing jurisdictions whose unitary tax funding is negatively impacted by the closure of Diablo Canyon within two weeks of receiving the PG&E payment and will cause $2 million of the District’s share of each of the first five installment payments to be deposited into the account of the District’s designated educational foundation. The recalculation of the unitary tax factors will exclude local agencies whose funding is not impacted by unitary tax. The allocation that the County shall use in allocating the ESMF is set forth in Attachment A to this Appendix 1. 3. The parties agree that the compromise they have reached is a settlement and is not intended to be a substitute or in-lieu tax payment. Estimating potential tax revenue declines is simply one of many factors the parties considered in developing an appropriate and reasonable ESMF. 4. The ESMF will be included as part of the overall Community Impact Mitigation Program and collected in rates through the nuclear decommissioning charge over the remaining life of the plant, as described in Chapter 10 of the Diablo Canyon Application. 5. The County and District agree to support the Employee Program set forth in the Application and to not oppose the remaining provisions of the Application, as may be modified through settlements with other parties. 6. This term sheet is subject to (i) final approval by all parties; (ii) negotiation and execution of a final settlement agreement; (iii) agreement by the Joint Parties to the PG&E Joint Proposal for Diablo Canyon (to the extent the terms and conditions result in modifications to the Joint Proposal) and (iv) approval by the CPUC. Packet Pg 264 11 1 | Page Attachment A to Appendix 1: Distribution of the Essential Services Mitigation Fund The Essential Services Mitigation Fund (ESMF) of $75,000,000 is created to assist local jurisdictions whose annual budgets will be impacted by the decline in unitary tax over the next nine years. Local jurisdictions (71) currently receiving unitary tax include the County of San Luis Obispo, Incorporated Cities, Special Districts and Basic-Aid School Districts. The San Luis Obispo County Auditor-Controller-Treasurer-Tax Collector has developed Schedule 1 by starting with 2015/2016 unitary factors and redistributing the percentages allocated to agencies whose budgets are not impacted by the decline in unitary tax. Those agencies’ (non-basic aid schools and redevelopment agencies) percentages were redistributed based on the actual 2015/2016 unitary factors so that the allocations of the ESMF include only those agencies whose annual budgets are adversely impacted by the closure of Diablo Canyon. The County Auditor-Controller- Treasurer-Tax Collector will distribute the amounts identified in Schedule 1 to the 71 agencies within two weeks of receiving the annual payment by PG&E. The ESMF is not Unitary Tax and will not change any prescribed Unitary Tax distributions. The ESMF will be distributed annually in 9 equal and consecutive payments of $8,333,333.33 from PG&E to the County of San Luis Obispo on the 1st of September beginning in 2017. If final and non-appealable CPUC approval of this settlement is not obtained by September 1, 2017, the first distribution will occur 30 days after such approval, unless otherwise agreed. The payments will continue as scheduled for the full 9-year period even in the event one or both Diablo Canyon Units closes early. The total distribution to San Luis Coastal Unified School District includes $10 million that will be dedicated to an educational foundation to be designated by the District. The County will cause $2 million of the District’s share from each of the first 5 installment payments to be deposited to the account of the District’s Educational Foundation. The other receiving agencies will not be impacted by this distribution. Schedule 1 Agency Essential Services Mitigation Fund of 75 Million 9 Annual Payments of $8,333,333.33 County of San Luis Obispo – General Fund $3,106,644.19 Roads $130,559.76 Air Pollution Control District $13,202.49 San Luis Obispo County Library $223,570.15 Packet Pg 265 11 2 | Page Schedule 1 – continued Agency Essential Services Mitigation Fund of 75 Million 9 Annual Payments of $8,333,333.33 Garden Farms Water $273.50 Santa Maria Valley Water Conservation District $356.23 Cambria Community Hospital $2,823.44 Cayucos Sanitary District $4,030.04 City of Arroyo Grande $30,202.90 City of Atascadero (including sanitation) $40,440.60 City of Grover Beach $12,615.28 City of Morro Bay $104,716.70 City of Paso Robles $40,387.74 City of Pismo Beach $20,581.13 City of San Luis Obispo $76,962.63 Cachuma Resource Conservation District $210.29 Port San Luis Harbor District $170,300.53 California Valley Community Services District $1,330.71 Nipomo Community Services District $3,608.31 Cambria Community Services District $13,658.70 San Simeon Acres Community Services District $667.65 Templeton Community Services District $5,235.49 Nipomo Sewer Maintenance $103.42 Nipomo Drain Maintenance $103.42 Linne Community Services District $119.51 Grover City Street Light District #1 $2,962.49 San Luis Obispo County Flood Control District $32,067.95 Nacimiento Water Services District $39,975.20 Flood Control Zone 1 $998.60 Flood Control Zone 1A $104.57 Flood Control Zone 3 $1,807.60 Flood Control Zone 9 $3,776.08 County Waterworks No. 8 $344.74 Nipomo Lighting District $241.32 San Miguel Community Services District - Lighting $613.64 County Service Area # 23(former Santa Margarita Lighting) $227.53 County Service Area #1 $65.50 County Service Area #1 Zone A $280.39 County Service Area #1 Zone B $143.64 County Service Area #1 Zone C $52.86 County Service Area #1 Zone D $212.59 County Service Area #7 $288.43 County Service Area #7 Zone A $1,184.77 County Service Area #7 Zone B $265.45 Los Osos Community Services District Zone A $2,022.49 Los Osos Community Services District Zone B $11,629.32 Packet Pg 266 11 3 | Page Schedule 1 – continued Agency Essential Services Mitigation Fund of 75 Million 9 Annual Payments of $8,333,333.33 Los Osos Community Services District Zone C $116.06 Los Osos Community Services District Zone F $66.65 County Service Area #10 $998.60 County Service Area #12 $3,524.42 County Service Area #16 $217.19 Heritage Community Services District $1,740.95 San Miguel Sanitary District $429.78 Oceano Community Services District $5,668.72 Cayucos Fire District $1,290.49 San Miguel Community Services District - Fire $2,090.29 Santa Margarita Fire District $887.14 Arroyo Grande Cemetery District $897.48 Atascadero Cemetery District $2,489.04 Cambria Cemetery District $640.07 Cayucos-Morro Bay Cemetery District $10,058.44 Paso Robles Cemetery District $2,978.58 San Miguel Cemetery District $611.34 Santa Margarita Cemetery District $707.87 Shandon Cemetery District $480.34 Templeton Cemetery District $674.55 Avila Beach County Water District $31,330.20 Avila County Water Improvement District #1 $1,341.05 Coast Unified School District (Cayucos Elem) $16,515.47 Coast Unified School District $54,799.13 San Luis Coastal Unified School District – Note: For the first 5 distributions $2,000,000 will be deposited in the District’s Educational Foundation $4,090,809.51 Annual Total $8,333,333.33 Packet Pg 267 11 1 Appendix 2 - Economic Development Fund Terms (Coalition Cities/County/PG&E) 1. The Parties agree that the economic impacts of Diablo Canyon closure should be considered as a part of a separate CPUC proceeding following issuance of the economic analysis specified in California Public Utilities Code Section 712.5 (“Monning Report”). The Parties support Commission approval of this settlement and proceeding with consideration of the remaining scope of the Diablo Canyon Application immediately, without delay for consideration of the economic impacts of Diablo Canyon closure. 2. The Parties agree that the Diablo Canyon Application should be revised to include a $10 million payment by PG&E to the County and to the Cities of Arroyo Grande, Atascadero, Morro Bay, Paso Robles, Pismo Beach and San Luis Obispo (collectively, the “Coalition of Cities”) to establish a fund for implementation of regional economic development and job creation programs (collectively, the “Economic Development Fund”). The County and the Coalition of Cities agree to further distribute those payments pursuant to the allocation methodology set forth in Attachment A. The purpose of the Economic Development Fund is to provide immediate funding for actions to create new economic development opportunities and mitigate impacts associated with the pending closure of Diablo Canyon. 3. Within 18 months of the payment by PG&E of the Economic Development Fund, the County and each of the Coalition of Cities will prepare a report that (i) enumerates and describes the expenditures from the Economic Development Fund and (ii) assesses the results and effectiveness of the economic development measures or programs resulting from such expenditures (the “Initial Report”). The County and each of the Coalition of Cities will prepare subsequent annual updates to the Initial Report until all Economic Development Fund revenues have been expended, at which time the reporting may cease. The Initial Reports and any subsequent updates will be provided to PG&E, and PG&E will submit the reports to the CPUC and make them available to the public. Reports shall report on expenditures on a fiscal year basis. In the event payment of the Economic Development Fund is delayed by any rehearing application or appeal of the CPUC’s decision approving the Diablo Canyon Application, the County and each of the Coalition Cities shall be entitled for purposes of the specified reporting to credit against the Economic Development Fund amounts expended by the Cities for purposes of economic development and impact mitigation between the date the CPUC first issues its decision and the date of payment of the Economic Development Fund pursuant to this agreement. 4. The County and Coalition of Cities commit to spending the Economic Development Fund solely for the purposes of economic development and impact mitigation purposes. 5. PG&E shall pay $400,000 of the total Economic Development Fund to the County within 30 days of issuance of a decision by the CPUC approving the Diablo Canyon Application and thereafter shall not request any reimbursement of payment from the County or the Coalition of Cities. PG&E shall pay the remaining balance of the Economic Development Fund within 30 days of the final and non-appealable approval of the Diablo Canyon Application, as revised consistent with this Settlement, unless otherwise agreed. The parties will meet and confer within 30 days of the filing of any application for rehearing or appeal of the CPUC decision approving this Settlement. Packet Pg 268 11 2 6. Following issuance of the Monning Report (per SB 968), the Commission will institute a new proceeding to evaluate the results of the Monning Report, take comment, and consider further action. The Parties reserve all rights in such proceeding to advocate for or to oppose further funding of economic impact mitigation by PG&E and/or its customers. PG&E specifically reserves the right to assert that no additional funding, beyond the mitigation payments provided by the Diablo Canyon Application, as modified by this settlement, is required, and the County and the Coalition of Cities or any of the cities specifically reserve the right to seek additional funding beyond the Economic Development Fund. In no event shall the Coalition of Cities or the County be required to refund any amount paid under this Settlement. 7. PG&E, the County, and the Coalition of Cities agree to work together to advocate jointly for additional funding or other assistance from the State of California and Federal government agencies, and their respective legislative bodies, to support the economic transition of the local community to an era without Diablo Canyon in operation. This provision is not intended to bind any Party to any financial commitment or specific position with respect to such advocacy. 8. The Economic Development Fund will be included as part of the overall Community Impact Mitigation Program, as described in Chapter 10 of the Diablo Canyon Application. 9. The County and the Coalition of Cities agree to support the Employee Program set forth in the Application and to not oppose the remaining provisions of the Application, as may be modified through settlements with other parties. 10. This term sheet is subject to (i) final approval by all parties; (ii) negotiation and execution of a final settlement agreement; (iii) agreement by the Joint Parties to the PG&E Joint Proposal for Diablo Canyon (to the extent the terms and conditions result in modifications to the Joint Proposal); and (iv) approval by the CPUC. Packet Pg 269 11 Attachment A to Appendix 2 Distribution of Economic Development Fund County of San Luis Obispo/Coalition of Cities Total Amount County (40%) Coalition Share (60%) Regional Economic Development Arroyo Grande Atascadero Morro Bay Paso Robles Pismo Beach San Luis Obispo $10,000,000 $3,840,000* $5,760,000 $400,000** $747,422 $783,106 $497,472 $1,145,631 $767,028 $1,819,341 *The County will allocate $192,000 of this amount to the City of Grover Beach. ** To be distributed to the County for Regional Economic Development. Packet Pg 27011 1 Appendix 3 – Emergency Planning and Future Land Use Terms (County/PG&E) Emergency Planning and Preparedness 1. The specific costs and detailed plans for emergency planning and preparedness (emergency management) through the decommissioning period will be definitively proposed in the site- specific decommissioning estimate to be submitted to the CPUC as specified in Chapter 8 of PG&E's prepared testimony supporting Application 16-08-006. The purpose of this agreement is to outline the intent of what will be submitted as part of the site-specific decommissioning estimate and is subject to CPUC approval and funding in nuclear decommissioning rates. 2. The parties recognize that PG&E will continue to fund, at current funding levels, the maintenance of all emergency response-related equipment, including the public warning sirens, as well as the approximately $4 million in funding for offsite state and local emergency planning functions, as required to be adjusted pursuant to state law, through cessation of plant operations in 2025. Infrastructure that is directly maintained by PG&E as of June 21, 2016, will continue to be fully maintained by PG&E. 3. In addition to continued funding per current state law, beyond the expiration of said law, the general intent is that the maintenance of the public warning sirens and funding for offsite community and local emergency planning functions (approximately $2 million forecast in 2017) will continue until all spent fuel is in dry cask storage and the two nuclear reactors are fully decommissioned (following the surrender of the Part 50 licenses). Using the formula established in Section 8610.5 of the California Emergency Services Act, funding for offsite community and local emergency planning functions will be paid directly to the County of San Luis Obispo. 4. The funding for other emergency preparedness equipment, training, emergency planning functions, and PG&E’s emergency response personnel will be informed by the reduced risks that remain and will be more definitively proposed in the site-specific decommissioning estimate. 5. The process for development of the site-specific decommissioning estimate will include formation of a decommissioning advisory panel, which will include representation from the County of San Luis Obispo, industry experts, state and local government representatives, and affected stakeholders. 6. Parties reserve their ability to make arguments in future decommissioning proceedings regarding necessary and appropriate emergency response and preparedness actions and costs associated with Diablo Canyon following the surrender of the Part 50 licenses. Future Land Use 1. Issues surrounding the disposition of lands related to Diablo Canyon, including future land uses, will be addressed in the Diablo Canyon site-specific decommissioning plan to be submitted in PG&E’s next Triennial Nuclear Decommissioning Proceeding, and the Parties agree they are not within scope of this proceeding. 2. As stated in the October 4, 2016, letter that PG&E sent to the County, which is Attachment A to this Appendix 3, PG&E agrees to complete a site-specific decommissioning plan for the facility Packet Pg 271 11 2 before making any decisions on the disposition of the Diablo Canyon lands. As part of this process, PG&E will convene a community advisory group that will give stakeholders an opportunity to help shape the future use of PG&E’s land plans prior to finalizing the site-specific plan. In the meantime, PG&E and its affiliate companies that hold a property interest in the Diablo Canyon lands will not make any commitments on land disposition or post-retirement land use, including the Wild Cherry Canyon parcels, until the stakeholder process is completed and PG&E’s recommendations have been considered by the Commission as part of the Diablo Canyon site-specific decommissioning plan. Packet Pg 272 11 Thomas Patrick Jones Director, Strategic Initiatives 735 Tank Farm Road Suite 200 San Luis Obispo, CA 93401 805-595-6340 TPJ2@pge.com October 4, 2016 Dan Buckshi County Administrator Officer County of San Luis Obispo 1055 Monterey Street San Luis Obispo, CA 93408 Dear Mr. Buckshi: Pacific Gas and Electric Company (PG&E) has carefully reviewed the County of San Luis Obispo’s (County) September 15 response to PG&E’s Diablo Canyon Power Plant (DCPP) Application 16-08-006. One of the concerns raised by the County (and other locally-based parties) pertains to the future use of the 12,000 acres of lands surrounding DCPP after the facility is retired. In our September 26 reply to protests and responses, PG&E clarified that we do not yet have a plan for the future use of DCPP lands, that we will commence a public stakeholder process as we evaluate the options, and that we will submit a land use plan to the California Public Utilities Commission (CPUC) in the site-specific decommissioning plan for the facility, which PG&E will file as part of its next Nuclear Decommissioning Triennial Proceeding application in 2019. I am writing to assure you that PG&E intends to complete the site-specific decommissioning plan for the facility over the coming years with community input before making any decisions on the disposition of the DCPP lands. As part of this process, PG&E will convene a community advisory group that will give stakeholders an opportunity to help shape the future use of PG&E’s land plans prior to finalizing the site-specific plan. In the meantime, PG&E will not make any commitments on land disposition or post-retirement land use, including the Wild Cherry Canyon parcels, until the stakeholder process is completed and PG&E’s recommendations have been considered by the CPUC as part of the DCPP site-specific decommissioning plan. PG&E values and appreciates the active partnership of the County and other local stakeholders, and we look forward to continuing to work with you and the rest of the community in both the pending CPUC proceeding and the important decommissioning work to follow. Please feel free to contact me if I can provide any further assurance regarding these land disposition issues. Sincerely, Thomas P. Jones cc: City of Arroyo Grande City of Atascadero City Grover Beach City of Morro Bay City of El Paso de Robles City of Pismo Beach City of San Luis Obispo Friends of Wild Cherry Canyon Service List for CPUC Docket No. A.16-08-006 (via email only) "UUBDINFOU"UP"QQFOEJY 1(&0DUPCFS -FUUFSUPUIF$PVOUZ Packet Pg 273 11 Packet Pg 274 11 Meeting Date: 11/21/2017 FROM: Greg Hermann, Acting Assistant City Manager Prepared By: Carrie Gallagher, City Clerk SUBJECT: AMENDMENT AND READOPTION OF THE CURRENT ELECTION CAMPAIGN REGULATIONS RECOMMENDATIONS Reaffirm City law by amending and readopting Chapters 2.40.010 through 2.40.140 of the City of San Luis Obispo Municipal Code by Ordinance entitled “An Ordinance of the City Council of the City of San Luis Obispo, California, readopting and amending Chapter 2.40 of the Municipal Code related to Election Campaign Regulations.” (Attachment A) DISCUSSION The City's Election Campaign Regulations were first adopted in 1974. These regulations were intended to, among other things, place realistic and enforceable limits on campaign contributions and expenditures, to ensure fairness and full disclosure, and to provide an opportunity for all citizens to become candidates for public office unhindered by exorbitant campaign costs and the reality or perception of undue influence over elected officials. San Luis Obispo Municipal Code Section 2.40.140 states that at least nine months prior to the expiration of the chapter, the Council shall appoint a committee of at least five citizens to study the efficacy of the City’s campaign regulations. Past practice has been for Council Members to nominate individuals to serve on the committee by submitting names to the City Clerk. City Council was unable to find the minimally required five interested citizens as nominees to provide as recommendations to the Clerk. Section 2.40.150 states that, unless readopted, the election campaign regulations of Chapter 2.40 expire on June 30, 2018. This section forces staff and Council into an automatic designated timeframe to consider the need for a review. By eliminating this code section, Council has greater authority over deciding when a review is needed. Staff recommends the removal of section 2.40.150 Expiration Provision and recommends amending 2.40.140 to read as follows: Appointment. At least nine months prior to the expiration of this chapter, The council shall may appoint a committee of at least five citizens to study the efficacy of this chapter. the committee shall complete its deliberations and report its findings to the city council on or before January 31, 2018. Therefore, in order to continue regulating local election campaigns, staff is recommending the re-adoption of Sections 2.40.010 through 2.40.130 of the San Luis Obispo Municipal Code in their entirety (Exhibit A), amendment to Section 2.40.140 as noted above and removal of Section 2.40.150. Packet Pg 275 12 ENVIRONMENTAL REVIEW The recommended actions are not subject to the California Environmental Quality Act as it is not a project as defined under the act. FISCAL IMPACT Costs to codify the amendments were already anticipated in the City Clerk Records/Administration budget. Therefore, final adoption of the ordinance will not result in a any financial impact. ALTERNATIVES Council may choose to not readopt current Campaign Regulations and therefore, per Chapter 2.40.150 of the City of San Luis Obispo Municipal Code, current regulations would expire on June 30, 2018. This is not recommended as local Campaign Regulations provide clarity about appropriate campaign activities and create transparency and promote trust with City voters. Attachments: a - Ordinance b - Exhibit A Packet Pg 276 12 O _____ ORDINANCE NO. #### (2017 Series) AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, READOPTING AND AMENDING CHAPTER 2.40 OF THE MUNICIPAL CODE RELATED TO ELECTION CAMPAIGN REGULATIONS WHEREAS, on the 20th day of May 2014, the Council of the City of San Luis Obispo adopted Ordinance No. 1599 (2014 Series) entitled “An Ordinance of the City Council of the City of San Luis Obispo, California, amending Chapter 2.40 of the Municipal Code related to Election Campaign Regulations.” WHEREAS, Section 2.40.150 of the City of San Luis Obispo Municipal Code states that, unless readopted, Chapter 2.40 expires on June 30, 2018; and WHEREAS, the City Council desires to readopt Chapter 2.40 with minor modification in order to continue regulating local election campaigns. NOW, THEREFORE, BE IT ORDAINED by the Council of the City of San Luis Obispo as follows: SECTION 1. Sections 2.40.010 through 2.40.130 of the San Luis Obispo Municipal Code are hereby readopted in their entirety as set forth in Exhibit A attached hereto and incorporated herein by this reference. SECTION 2. Section 2.40.140 of the San Luis Municipal Code is hereby readopted and amended to read as follows: 2.40.140 Council study committee. A. Appointment. At least nine months prior to the expiration of this chapter, The council shall may appoint a committee of at least five citizens to study the efficacy of this chapter. the committee shall complete its deliberations and report its findings to the city council on or before January 31, 2018. SECTION 3. Section 2.40.150 of the San Luis Obispo Municipal Code is hereby repealed in its entirety. SECTION 4. If any provision, clause, sentence or paragraph of this chapter or the application thereof to any person or circumstances shall be held invalid, such invalidity shall not affect the other provisions of this chapter which can be given effect without the invalid provision or application, and to this end the provisions of this chapter are declared to be severable. SECTION 5. A summary of this ordinance, together with the names of Council members voting for and against, shall be published at least five (5) days prior to its final passage, in The Tribune, a newspaper published and circulated in this City. This ordinance shall go into effect at Packet Pg 277 12 Ordinance No. _________(2017 Series) O _____ the expiration of thirty (30) days after its final passage. INTRODUCED on the ______day of ___________, 2017, AND FINALLY ADOPTED by the Council of the City of San Luis Obispo on the _____ day of _____________, 2017, on the following roll call vote: AYES: NOES: ABSENT: Mayor Heidi Harmon ATTEST: Carrie Gallagher City Clerk APPROVED AS TO FORM: J. Christine Dietrick City Attorney IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, this _______day of ___________,__________. Carrie Gallagher City Clerk Packet Pg 278 12 2.40.010 Title. This chapter may be cited as the election campaign regulations of the city. 2.40.020 Purpose and intent. A. It is the purpose and intent of this chapter: 1. To promote integrity, honesty, fairness, and transparency in municipal election campaigns. 2. To prevent corruption, or the appearance of corruption, which results from the real or imagined influence of large contributions on the conduct or actions of candidates elected to office. 3. To ensure a level of discussion of public issues adequate for a viable campaign by providing voters with the information necessary to make an assessment of each candidate or measure before voting. 4. To require public disclosure of campaign contributions and expenditures made in supp ort of or in opposition to candidates or measures in municipal elections. 5. To place realistic and enforceable limits on the amounts persons may contribute in municipal election campaigns. 6. To ensure that funds contributed to a campaign committee are used solely for campaign purposes. 7. To provide full and fair enforcement of all the provisions of this chapter. B. By enacting this chapter, the council does not intend to deprive or restrict any citizen of the exercise of rights guaranteed under the United States Constitution and the California Constitution. C. The city council takes specific notice of the findings and declarations made in the Political Reform Act and finds and declares them applicable to San Luis Obispo and a basis for enacting this chapter. D. It is the intent of this chapter to impose limits on the amount of money that may be contributed to a candidate or controlled committee to achieve the purposes specified in this section. This chapter is not intended, and shall not be construed, to establish any reporting, filing, or procedural requirement in addition to, or different from, the Political Reform Act or the regulations adopted by the Fair Political Practices Commission (FPPC), except as specifically set forth in Sections 2.40.050 and 2.40.090 infra. 2.40.030 Definitions. The terms used in this chapter shall have the same definitions as specified in the Political Reform Act and FPPC regulations. In those cases where definitions in the Political Reform Act or FPPC regulations contain a specific reference to any state election, candidate, or electoral criteria, the definition shall be modified to reflect the municipal equivalent, or, in the absence of a municipal equivalent, to delete the specific reference. Packet Pg 279 12 2.40.040 Contribution limitations. A. Contributions by Persons to Candidates and/or Controlled Committees. No person shall make any contribution to a candidate and/or any controlled committee connected with that candidate, with respect to any single election, which would cause the total amount contributed by such person to the candidate and any controlled committee connected with that candidate, when combined, to exceed three hundred dollars. B. Acceptance or Solicitation by Candidates or Controlled Committees. No candidate or controlled committee shall solicit or accept any contribution from any person which would cause the total amount contributed by such person, with respect to any single election, to the candidate and/or any controlled committee connected with that candidate, when combined, to exceed the sum of three hundred dollars. C. Contributions by Candidates. The provisions of subsections A and B of this section shall not apply to contributions from a candidate or from his or her immediate family to any controlled committee connected with that candidate, nor to the expenditure, by the candidate, of his or her personal funds. For purposes of this section, “immediate family” means a candidate’s or elected officeholder’s spouse or domestic partner, and/or dependent children. D. Anonymous Contributions. No candidate or controlled committee shall accept anonymous contributions, with respect to any single election, which exceed fifty dollars. Subject to the provisions of state law, in the event a candidate or controlled committee receives an anonymous contribution that would result in a violation of this subsection, the candidate or controlled committee shall promptly pay that sum to the city for deposit into the general fund to be used to defray the costs of municipal elections. 2.40.050 Election campaign accounts. A. Campaign Bank Accounts. An individual who plans to run for a city elective office and who plans to accept contributions and make campaign-related expenditures must set up a campaign bank account at a financial institution with a branch located in the city of San Luis Obispo. B. Access to Records by City Clerk. The city clerk shall have full access at all reasonable hours to the bank’s records concerning all election campaign accounts. 2.40.060 Campaign statements. A. Required Filing Schedule. Every campaign treasurer shall file with the city clerk campaign statements as required by the provisions of the Government Code and in a format acceptable to the city clerk. B. Contents. Each state campaign statement filed shall contain the information required under the provisions of the Government Code and any contributions greater than $50. C. Filing. Each document required to be filed in this chapter shall be filed with the city clerk during business hours, and elsewhere as may be required by the Government Code. D. Publication. The city clerk shall promptly, following receipt for filing, post a copy of each campaign statement on the city of San Luis Obispo’s website for public inspection, redacting personal information in accordance with state law. The city clerk shall report on the website of any candidate and/or committee that has failed to comply by the required deadline with the campaign statement requirements pursuant to this section or state law. In addition, the city Packet Pg 280 12 clerk shall cause to be published a display ad in a newspaper of general circulation advising the public how and where to access copies of the filed campaign statements on the city of San Luis Obispo’s website, at the time mail ballots are distributed for said election. 2.40.070 Campaign signs. A. Severability. This section is a separate and severable provision of the election campaign regulations. B. Campaign Signs. Campaign signs shall not exceed three square feet per sign in residential zones and ten square feet per sign in nonresidential zones, and shall be removed no later than ten days following the election. C. Definition. “Campaign sign” means a sign intended to draw attention to or communicate a position on any issue, candidate, or measure in any national, state, local, college or university campus election, the placement of which is in conformity with Section 15.40.300 (Prohibited signs); and which otherwise is not subject to regulation under Chapter 15.40 (Sign Regulations). 2.40.080 Responsibilities of city clerk. A. Duties. In addition to any other duties required of the city clerk under this chapter, the city clerk shall: 1. Prescribe and furnish, without charge, appropriate forms for all campaign statements, documents and reports required to be filed by this chapter. 2. Determine whether required statements and declarations have been filed and, if so, whether they conform on their face with the requirements of this chapter. 3. Promptly notify all persons who have failed to file a statement in the form and at the time required by this chapter. 4. Report, in writing, apparent violations of this chapter to the city attorney. 5. Promptly, following receipt for filing, post a copy of each campaign statement on the city of San Luis Obispo’s website for public inspection. The city clerk shall report on the website of any candidate and/or committee that has failed to comply by the required deadline with the campaign statement requirements pursuant to this section or state law. In addition, the city clerk shall cause to be published one display ad in a newspaper of general circulation advising the public how and where to access copies of the filed campaign statements on the city of San Luis Obispo’s website. 6. Compile and maintain a current log of all filed statements pertaining to each reporting committee. 2.40.090 Criminal misdemeanor actions. Any person who violates any provision of this chapter is guilty of a misdemeanor. Any person who causes any other person to violate any provision of this chapter, or who aids and abets any other person in the violation of any provision of this chapter, shall be liable under t he provisions of this section. 2.40.100 Civil actions. Packet Pg 281 12 A. Any person who intentionally or negligently violates any provision of this chapter shall be liable in a civil action brought by the city attorney or by a person residing within the city for an amount not more than three times the amount of the unlawful contribution or expenditure. B. If any person files an original city campaign statement after any deadline imposed by this chapter, he or she shall pay, in addition to any other penalties provided for under this chapter, the sum of one hundred dollars per day after the deadline until the statement or report is filed. Liability may not be enforced if on an impartial basis the city clerk determines that the late filing was not willful and that enforcement of the liability will not further the purposes of this chapter. In addition, the city clerk may assess any applicable fines in accordance with state law. C. If two or more persons are responsible for any violation, they shall be jointly and severally liable. D. Any person, before filing a civil action pursuant to this section, shall first file with the city attorney a written request for the city attorney to commence the action. The request shall contain a statement of the grounds for believing a cause of action exists. The city attorney shall respond within ten days after receipt of the request indicating whether he or she intends to file a civil action. If the city attorney indicates in the affirmative and files a suit within thirty days thereafter, no other action may be brought unless the action by the city attorney is dismissed without prejudice. E. In determining the amount of liability, the court may take into account the seriousness of the violation and the degree of culpability of the defendant. If a judgment is entered against the defendant or defendants in an action, the plaintiff shall receive fifty percent of the amount recovered. The remaining fifty percent shall be deposited into the city treasury. In an action brought by the city attorney, the entire amount shall be paid to the city treasury. F. No civil action alleging a violation of any provision of this chapter shall be filed more than four years after the date the violation occurred. 2.40.110 Injunctive relief. The city attorney or any person residing in the city may sue for injunctive relief to enjoin violations or to compel compliance with the provisions of this chapter. 2.40.120 Cost of litigation. The court may award to a plaintiff or defendant who prevails in any action authorized by this chapter his or her costs of litigation, including reasonable attorneys’ fees; provided, however, no costs of litigation or attorneys’ fees shall be awarded against the city. 2.40.130 Construction of provisions. A. This chapter shall be in addition to all other city and state laws applicable to municipal elections. Unless the contrary is stated or clearly appears from the context, the definitions and terms set forth in the Government Code shall govern the interpretations of terms used in this chapter. This chapter shall be construed liberall y in order to effectuate its purposes. B. If any provision of this chapter, or the application thereof to any person or circumstance, is held invalid, the validity of the remainder of the chapter and the applicability of such provision to other persons and circumstances shall not be affected thereby. Packet Pg 282 12