HomeMy WebLinkAbout06-16-2020 Agenda Packet - Amended
Tuesday, June 16, 2020 - AMENDED
San Luis Obispo Page 1
Based on the threat of COVID-19 as reflected in the Proclamations of Emergency issued by both the Governor of
the State of California, the San Luis Obispo County Emergency Services Director and the City Council of the City
of San Luis Obispo as well as the Governor’s Executive Order N-29-20 issued on March 17, 2020, relating to the
convening of public meetings in response to the COVID-19 pandemic, the City of San Luis Obispo will be
holding all public meetings via teleconference. There will be no physical location for the Public to view the
meeting. Below are instructions on how to view the meeting remotely and how to leave public comment.
Additionally, members of the City Council are allowed to attend the meeting via teleconference and to participate
in the meeting to the same extent as if they were present.
Using the most rapid means of communication available at this time, members of the public are encouraged
to participate in Council meetings in the following ways:
1. Remote Viewing - Members of the public who wish to watch the meeting can view:
• View the Webinar (recommended for the best viewing quality):
➢ Registration URL: https://attendee.gotowebinar.com/register/4 374581141425931023
➢ Webinar ID: 675-638-075
➢ Telephone Attendee: (631) 992-3221; Audio Access Code: 910-024-452
• Televised live on Charter Cable Channel 20
• View a livestream of the meeting on the City’s YouTube channel:
https://www.youtube.com/channel/UCjSH3YJ12dVzLmQYuevI_sw
2. Public Comment - The City Council will still be accepting public comment. Public comment can be
submitted in the following ways:
• Mail or Email Public Comment
➢ Received by 3:00 PM on the day of meeting - Can be submitted via email to
emailcouncil@slocity.org or U.S. Mail to City Clerk at 990 Palm St. San Luis Obispo, CA 93401
➢ Emails sent after 3:00 PM and up until public comment is opened on the item – Limited to
one page emailed to cityclerk@slocity.org, which will then be read aloud during the public
comment period on the item specified.
• Verbal Public Comment
➢ In Advance of the Meeting - Call (805) 781-7164; state and spell your name, the agenda item
number you are calling about and leave your comment. The verbal comments must be limited to 3
minutes. All voicemails will be forwarded to the Council Members and saved as Agenda
Correspondence. Voicemails will not be played during the meeting.
➢ During the meeting – Joining the webinar (instructions above). Once the meeting has started
please put your name and the item # you would like to speak on in the questions box. During
public comment for the item your name will be called, and your mic will be unmuted. Contact the
office of the City Clerk at cityclerk@slocity.org for more information.
All comments submitted will be placed into the administrative record of the meeting.
San Luis Obispo City Council Agenda June 16, 2020 Page 2
6:00 PM
AMENDED
REGULAR MEETING
TELECONFERENCE
Broadcasted via Webinar
**AMENDMENTS ARE SHOWN IN ITALICS BELOW: AGENDA
AMENDED TO ADD ITEM A UNDER PRESENTATIONS AND ITEM B AND
C UNDER CONSENT
CALL TO ORDER: Mayor Heidi Harmon
ROLL CALL: Council Members Carlyn Christianson, Andy Pease, Erica A. Stewart,
Vice Mayor Aaron Gomez and Mayor Heidi Harmon
PRESENTATIONS
1. JUNETEENTH PROCLAMATION (HARMON – 5 MINUTES)
Recommendation:
Mayor Harmon will proclaim June 19, 2020 as “Juneteenth.”
2. MONTEREY COMMUNITY POWER PRESENTATION (JONES – 10 MINUTES)
Recommendation:
Receive a presentation about Monterey Community Power.
A. POLICE DEPARTMENT PRESENTATION REGARDING 8 CAN’T WAIT AND
COMMUNITY REQUEST FOR INFORMATION (CANTRELL – 20 MINUTES)
Recommendation:
Receive a presentation from Police Chief Deanna Cantrell.
PUBLIC COMMENT PERIOD FOR ITEMS NOT ON THE AGENDA
(not to exceed 15 minutes total)
The Council welcomes your input. 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.
San Luis Obispo City Council Agenda June 16, 2020 Page 3
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.
3. WAIVE READING IN FULL OF ALL RESOLUTIONS AND ORDINANCES
(PURRINGTON)
Recommendation:
Waive reading of all resolutions and ordinances as appropriate.
4. MINUTES REVIEW - MAY 22, 2020 SPECIAL CITY COUNCIL / DISASTER
COUNCIL MEETING AND JUNE 2, 2020 COUNCIL MEETING (PURRINGTON)
Recommendation:
Approve the minutes of the City Council meetings held on May 22, 2020 and June 2, 2020.
5. BIENNIAL REVIEW THE CITY’S CONFLICT OF INTEREST CODE
(PURRINGTON)
Recommendation:
It is recommended that the City Council direct the review of the City’s Conflict of Int erest
Code and the filing of a Biennial Notice with the City Clerk regarding such review, as
required by the Political Reform Act.
6. AUTHORIZATION TO TRANSITION TO ELECTRONIC SIGNATURES FOR
DOCUMENTS (PURRINGTON)
Recommendation:
Adopt a Resolution entitled, “A Resolution of the City Council of the City of San Luis
Obispo, California, adopting a citywide policy regarding Electronic Signature use”
authorizing, but not mandating, the use of electronically signed documents (e-signature) in
place of hand-written signatures whenever a signature is required, provided it is in
accordance with the Uniform Electronic Transaction Act (UETA).
San Luis Obispo City Council Agenda June 16, 2020 Page 4
7. EXECUTE AND DELIVER AN INSTALLMENT SALE AGREEMENT WITH
CALIFORNIA INFRASTRUCTURE AND ECONOMIC DEVELOPMENT BANK
(FLOYD / THOMPSON)
Recommendation:
Adopt a Resolution entitled, “A Resolution of the City Council of the City of San Luis
Obispo, California, authorizing the execution and delivery of an Installment Sale
Agreement, between the City and California Infrastructure and Economic Development
Bank, for financing the Water Energy Efficiency Project and taking related actions.”
8. AVTEC DISPATCH RADIO CONSOLE SUPPORT CONTRACT RENEWAL
(HERMANN / GUARDADO / WILWAND)
Recommendation:
Approve the renewal of a five-year contract to Avtec LLC. with annual payments of $23,851
for maintenance and support totaling $119,256 to maintain the City’s public safety radio
dispatching console system.
9. TOLLING AND ONE-YEAR EXTENSION OF ALL CITY DISCRETIONARY
APPROVALS DUE TO THE COVID-19 PANDEMIC EMERGENCY
(CODRON)
Recommendation:
Adopt a Resolution entitled, “A Resolution of the City Council of the City of San Luis
Obispo, California, proclaiming the continuing existence of a Local Emergency regarding
the COVID-19 Pandemic and extending the life of Discretionary Approvals, Building
Permit Applications and Cannabis Operator Permits to mitigate economic impacts and aid in
economic recovery.”
10. PUBLIC SAFETY TAIT RADIO SYSTEM MAINTENANCE AND SUPPORT
CONTRACT (HERMANN / GUARDADO / WILWAND)
Recommendation:
Approve a five-year contract with Tait Communications for the maintenance and support of
the Public Safety radio system in the amount of $25,831 paid annually for a total of
$129,155.
San Luis Obispo City Council Agenda June 16, 2020 Page 5
B. RESOLUTION RECOMMENDING PUBLIC HEALTH OFFICIALS DECLARE
RACISM A PUBLIC HEALTH EMERGENCY (JOHNSON)
Recommendation:
Adopt a Resolution entitled “A Resolution of the City of San Luis Obispo, California,
affirming the Racism is a Public Health crisis and recommending the Public Health Officials
declare Racism a Public Health Emergency.”
C. JOINT STATEMENT REGARDING RECENT EVENTS FROM COUNCILMEMBERS
PEASE AND STEWART (PEASE / STEWART)
Recommendation:
Receive and file a joint Council statement prepared by Councilmembers Andy Pease and
Erica A. Stewart regarding recent tragic events, the community’s response, and intentions to
address past and current systemic racism.
PUBLIC HEARING AND BUSINESS ITEMS
11. CONSIDERATION OF A RESOLUTION ESTABLISHING A POLICY FOR CLEAN
ENERGY CHOICE FOR NEW BUILDINGS AND IMPLEMENTATION
MEASURES INCLUDING AN ORDINANCE APPROVING LOCAL
AMENDMENTS TO THE ENERGY CODE AND AN ORDINANCE
ESTABLISHING REGULATORY FLEXIBILITY FOR A LIMITED TERM TO
SUPPORT ALL-ELECTRIC NEW BUILDINGS
(HERMANN / CODRON / READ – 60 MINUTES)
Recommendation:
1. Adopt a Resolution entitled “A Resolution of the City Council of the City of San Luis
Obispo, California, establishing a “Clean Energy Choice Policy for New Buildings” to
guide the reduction of Greenhouse Gas Emissions and use of Fossil Fuels for buildings
and transportation;” and
2. Introduce an Ordinance entitled, “An Ordinance of the City Council of the City of San
Luis Obispo, California, establishing the Clean Energy Choice Program by amending the
City of San Luis Obispo Building Code to require higher energy performance for newly
constructed structures;” and
3. Introduce an Ordinance entitled, “An Ordinance of the City Council of the City of
San Luis Obispo, California, amending Title 17 (Zoning Regulations) of the Municipal
Code supporting the Clean Energy Choice Program (PL-CODE-0062-2020)” to provide
regulatory flexibility through December 31, 2022 in support of the Clean Energy Choice
Incentive Program; and
4. Direct staff to return to Council in June 2021 with a summary of program performance
and the Carbon Offset Program for deliberation and action.
San Luis Obispo City Council Agenda June 16, 2020 Page 6
12. REVIEW OF A PROTEST (FILED BY MR. WILLIAM WALTER) FOR PAYMENT
OF ENCROACHMENT PERMIT FEES AND FOR A CONDITION OF APPROVAL
REQUIRING THE INSTALLATION OF A DECORATIVE PEDESTR IAN
LIGHTING FIXTURE (CODRON / VAN BEVEREN – 30 MINUTES)
Recommendation:
Adopt a Resolution entitled, “A Resolution of the City Council of the City of San Luis
Obispo, California, denying a protest of payment of Permit Fees for Encroachment Permit
ENCR-0780-2020, and denying a protest of a condition of approval requiring the installation
of a decorative pedestrian lighting fixture as required by ARCH-1236-2017.”
13. CEQA TRANSPORTATION IMPACT THRESHOLDS UPDATE: TRANSITION
FROM AUTO LEVEL OF SERVICE TO VEHICLE MILES TRAVELED
(HORN / SCHWARTZ – 20 MINUTES)
Recommendation:
1. Adopt a Resolution entitled, “A Resolution of the City Council of the City of San Luis
Obispo, California, adopting revised thresholds of significance for analysis of
transportation impacts under the California Environmental Quality Act pursuant to
Senate Bill 743” to replace Level of Service (LOS) with Vehicle Miles Traveled (VMT)
as the City’s performance measure for CEQA analysis of transportation impacts; and
2. Adopt a Resolution entitled, “A Resolution of the City Council of the City of San Luis
Obispo, California, approving revised Multimodal Transportation Impact Study
Guidelines.”
14. AUTHORIZATION FOR THE CITY MANAGER TO ENTER INTO
AGREEMENTS WITH THE BOARD OF TRUSTEES OF THE CALIFORNIA
STATE UNIVERSITY FOR WATER AND WASTEWATER SERVICE TO
CALIFORNIA STATE UNIVERSITY, SAN LUIS OBISPO
(FLOYD / METZ / THOMPSON – 20 MINUTES)
Recommendation:
Adopt a Resolution entitled, “A Resolution of the City Council of the City of San Luis
Obispo, California, authorizing the City Manager to enter into agreements with the Board of
Trustees of the California State University for water and wastewater service to California
State University, San Luis Obispo.”
San Luis Obispo City Council Agenda June 16, 2020 Page 7
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 next Regular City Council Meeting is scheduled for Tuesday, July 7, 2020 at 6:00 p.m., via
teleconference.
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) 781-7410.
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.
Friday, May 22, 2020
Continued Special Meeting of the City Council/Disaster Council
CALL TO ORDER
A Continued Special Meeting of the San Luis Obispo City Council/Disaster Council was called to
order on Friday, May 22, 2020 at 12:30 p.m. by Mayor Harmon, with all Council Members
teleconferencing.
ROLL CALL
Council Members
Present: Council Members Carlyn Christianson, Andy Pease, Erica A. Stewart,
Vice Mayor Aaron Gomez, and Mayor Heidi Harmon.
Absent: None
City Staff
Present: Derek Johnson, City Manager; Christine Dietrick, City Attorney; and Teresa
Purrington, City Clerk; were present at Roll Call.
PUBLIC HEARING ITEMS AND BUSINESS ITEMS
1. OPEN SLO – TEMPORARY USE OF CITY RIGHT-OF-WAY TO FACILITATE
SOCIAL DISTANCING AND SUPPORT COVID-19 ECONOMIC RECOVERY
City Manager/Emergency Services Director Derek Johnson and Transportation Manager Luke
Schwartz provided an in-depth staff report and responded to Council questions.
Public Comments:
Stephanie Stackhouse
Molly Kern
Tauria Linala
Norma Guzman
---End of Public Comment---
ACTION: MOTION BY COUNCIL MEMBER PEASE, SECOND BY COUNCIL
MEMBER CHRISTIANSON, CARRIED 5-0 to:
1. Receive summary report and staff presentation on “Open SLO”, a proposed program to
support temporary use of City right-of-way to facilitate physical distancing and re-opening
of restaurants and other local businesses; and
2. Provide feedback and direction to regarding implementation of Open SLO program; and
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3. Adopt Resolution No. 11118 (2020 Series) entitled “A Resolution of the City Council of the
City of San Luis Obispo, California, approving the City of San Luis Obispo Outdoor Public
Space Expansion Temporary COVID-19 Business Support and Recovery Program to
facilitate compliance with Public Health Orders and to mitigate economic impacts by
supporting local businesses and restaurants,” authorizing the City Manager to implement the
Open SLO program.
With the added condition that one of the four proposed parklets go outside of the Downtown
and that the lighting and hours of operation are not a nuisance to the residents.
2. ROADMAP TO REOPENING FOR CITY OPERATIONS
City Manager/Emergency Services Director Derek Johnson and Community Development
Director Michael Codron provided an in-depth staff report and responded to Council questions.
Public Comments:
None
---End of Public Comment---
ACTION: MOTION BY COUNCIL MEMBER CHRISTIANSON, SECOND BY
COUNCIL MEMBER STEWART, CARRIED 5-0 to receive and file the Roadmap to
Reopening – City Operations.
3. GRANT AND FUNDING OPPORTUNITIES FOR COVID-19 PANDEMIC
RESPONSES AND EFFORTS
Finance Director Brigitte Elke and Sustainability and Natural Resources Official Robert Hill
provided an in-depth staff report and responded to Council questions.
Public Comments:
None
---End of Public Comment---
ACTION: MOTION BY VICE MAYOR GOMEZ, SECOND BY COUNCIL MEMBER
CHRISTIANSON, CARRIED 5-0 to:
1. Adopt Resolution No. 11119 (2020 Series) entitled, “A Resolution of the City Council of the
City of San Luis Obispo, California, authorizing staff to apply for and accept all grant and
funding opportunities related to the COVID-19 Pandemic” as opportunities arise without
prior Council approval as required by the City’s Grant Management Policy (Financial
Management Manual – Section 740); and
2. Authorize staff to accept a grant award in the amount of $41,431 from the FY 2020
Coronavirus Emergency Supplemental Funding Program and
3. Authorize the City Manager to execute necessary grant documents and direct the
appropriation of monies into the COVID-19 reimbursement account.
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ADJOURNMENT
The meeting was adjourned at 2:00 p.m. The next Regular City Council Meeting is scheduled for
Tuesday, June 2, 2020 at 6:00 p.m., in the Council Chamber, 990 Palm Street, San Luis Obispo,
California.
__________________________
Teresa Purrington
City Clerk
APPROVED BY COUNCIL: XX/XX/2020
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Tuesday June 2, 2020
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, June 2,
2020 at 6:08 p.m. by Mayor Harmon, with all Council Members teleconferencing.
ROLL CALL
Council Members
Present: Council Members Carlyn Christianson, Andy Pease, Erica A. Stewart,
Vice Mayor Aaron Gomez, and Mayor Heidi Harmon.
Absent: None
City Staff
Present: Derek Johnson, City Manager; Christine Dietrick, City Attorney; and Teresa
Purrington, City Clerk; were present at Roll Call.
CITY ATTORNEY REPORT ON CLOSED SESSION
City Attorney Christine Dietrick indicated the City Council met in Closed Session regard ing one
matter of anticipated litigation as indicated on the agenda and there were no reportable actions
taken.
PUBLIC COMMENT ON ITEMS NOT ON THE AGENDA
Kris Roudenbush
---End of Public Comment---
CONSENT AGENDA
ACTION: MOTION BY VICE MAYOR GOMEZ SECOND BY COUNCIL MEMBER
CHRISTIANSON, CARRIED 5-0 to approve Consent Calendar Items 1 thru 10.
1. WAIVE READING IN FULL OF ALL RESOLUTIONS AND ORDINANCES
CARRIED 5-0, to waive reading of all resolutions and ordinances as appropriate.
2. MINUTES REVIEW - MAY 5, 2020 CITY COUNCIL MEETING AND MAY 8, 2020
SPECIAL CITY COUNCIL / DISASTER COUNCIL MEETING
CARRIED 5-0 to approve the minutes of the City Council meetings held on May 5, 2020 and
May 8, 2020.
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3. REVIEW OF A MILLS ACT HISTORICAL PROPERTY CONTRACT FOR THE
VIRGINIA LEVERING LATIMER HOUSE (A MASTER LIST RESOURCE)
CARRIED 5-0 to adopt Resolution No. 11120 (2020 Series) entitled, “A Resolution of the
City Council of the City of San Luis Obispo, California, approving a Historic Property
Preservation Agreement between the City and the owners of the Virginia Levering Latimer
House at 858 Toro Street (Application No. HIST -0048-2020).”
4. AUTHORIZATION TO CONTINUE THE COLLECTION OF MULTI-DWELLING
PROPERTY FIRE AND LIFE SAFETY INSPECTION FEES
CARRIED 5-0 to adopt Resolution No. 11121 (2020 Series) entitled, “A Resolution of the
City Council of the City of San Luis Obispo, California, authorizing the San Luis Ob ispo
County Auditor to collect fees for 2020-21 Fire and Life Safety Inspections of Multi-Dwelling
Properties containing three or more dwelling units on the Secured Property Tax Roll pursuant
to California Government Code Section 54988, Et Seq.”
5. HISTORIC SIGNIFICANCE DETERMINATION FOR A CONTRIBUTING LIST
PROPERTY AT 1156 PEACH STREET
CARRIED 5-0 to adopt Resolution No. 11122 (2020 Series) entitled, “A Resolution of the
City Council of the City of San Luis Obispo, California, removing the property at 1156 Peach
Street from the Contributing Properties List of Historic Resources (1156 Peach St, HIST -
0036-2020).”
6. AUTHORIZATION TO ADOPT THE MULTI-JURISDICTIONAL HAZARD
MITIGATION PLAN
CARRIED 5-0 to adopt Resolution No. 11123 (2020 Series) entitled, “A Resolution of the
City Council of the City of San Luis Obispo, California, approving the Disaster Mitigation
Act (DMA 2000) County of San Luis Obispo Multi-Jurisdictional Hazard Mitigation Plan
2019 Update” and accompanying City specific annex.
7. ENVIRONMENTAL SYSTEMS RESEARCH INSTITUTE (ESRI) ENTERPRISE
LICENSE RENEWAL
CARRIED 5-0 to approve an agreement with Environmental Systems Research Institute
(ESRI), Inc. for a three-year, small Government Enterprise License Agreement (ELA) in the
amount of $112,100 payable on an annual basis at $36,100 for the first year, $37,500 for the
second year, and $38,500 for the third year.
8. ORCUTT / TANK FARM ROUNDABOUT DESIGN BUDGET AMENDMENT
REQUEST (SPEC. #91611)
CARRIED 5-0 to:
1. Adopt Resolution No. 11124 (2020 Series) entitled “A Resolution of the Council of the
City of San Luis Obispo, California, approving an Amendment to the Orcutt Tank F arm
Roundabout Design and Related Budgetary Appropriations;” and
2. Appropriate from the Citywide Transportation Impact Fee Fund balance $100,435 to
support the Orcutt/Tank Farm Roundabout (Spec. #91611) design phase; and
3. Authorize the Finance Director to increase the Purchase Order to GHD for design services
in the amount of $100,435.
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9. SECOND READING AND ADOPTION OF ORDINANCE NO. 1682 (2020 SERIES)
AMENDING CHAPTER 2.40 OF THE CITY OF SAN LUIS OBISPO MUNICIPAL
CODE REQUIRING ELECTRONIC FILING OF CAMPAIGN DISCLOSURE
DOCUMENTS AND PROVIDING FOR ADMINISTRATIVE ENFORCEMENT OF
CAMPAIGN REGULATIONS VIOLATIONS
CARRIED 5-0 to adopt Ordinance No. 1682 (2020 Series) entitled, “An Ordinance of the
City Council of the City of San Luis Obispo, California, amending Title 2 of the City of San
Luis Obispo Municipal Code adding to Section 2.40.060 – Electronic Signature and
Submission of Campaign Disclosure Documents, and amending Section 2.40.100 (Civil
Actions) to provide for Administrative Enforcement of violations.”
10. FISCAL YEAR 2020-21 CENTRAL SERVICE COST ALLOCATION PLANS, COST
OF SERVICES FEE CALCULATION, AND LABOR RATES
CARRIED 5-0 to approve the 2020-21 Central Service Cost Allocation Plans including the
Cost of Services Fee Calculation, and Labor Rates.
PUBLIC HEARING ITEMS AND BUSINESS ITEMS
11. 2019-21 FINANCIAL PLAN SUPPLEMENT AND 2020-21 BUDGET
City Manager Derek Johnson, Finance Director Brigitte Elke and Principle Budget Analyst
Natalie Harnett provided an in-depth staff report 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:
1. Adopt Resolution No. 11125 (2020 Series) entitled, “A Resolution of the Council of the
City of San Luis Obispo, California, adopting the Appropriation Limits for Fiscal Year
2020-21 and revising the Appropriation Limits for Fiscal Years 2017-18, 2018-19, 2019-
20” establishing the City’s appropriation limit for 2020-21 in compliance with Article XIII
B of the State Constitutions, Gann Spending Limitation; and
2. Review and approve the 2019-21 Financial Plan Supplement and 2020-21 Budget and
approve Resolution No. 11126 (2020 Series) entitled, “A Resolution of the Council of the
City of San Luis Obispo, California, approving the 2020-21 Financial Plan Supplement
and Budget Appropriations” With the following changes:
• Added an eighth guiding principle “The city recognizes that social and economic
inequality is embedded in our systems and culture, and that recovery must integrate
deep structural transition to support the well-being and empowerment of marginalized
communities.”
• Allocate $140,000 for diversity, equity, and inclusion programs.
• Seek extension of the permits for Laguna Lake dredging, and
• Revisit recycling item in CIP in October review.
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3. Adopt Resolution No. 11127 (2020 Series) entitled, “A Resolution of the City Council of
the City of San Luis Obispo, California, deferring future parking rates increases,
suspending current hourly parking rates for parking structures, and reducing rates for
Monthly Parking Programs” to defer future parking rate increases and introduce an
Ordinance entitled, “An Ordinance of the City Council of the City of San Luis Obispo,
California, amending Section 10.52.010 (Parking Meter Zone Rates) of the San Luis
Obispo Municipal Code.”
Council Member Pease indicated she would be recusing herself from the next item due to a
financial interest. Council Member Pease left the meeting at 8:16 PM
RECESS
Council recessed at 8:17 p.m. and reconvened at 8:27 p.m., with all Council Members present.
12. REVIEW OF AN APPEAL (FILED BY SAN LUIS ARCHITECTURAL
PROTECTION) OF THE PLANNING COMMISSION’S DECISION TO APPROVE
A FOUR-STORY MIXED-USE PROJECT (545 HIGUERA STREET, 486 MARSH
STREET, ARCH-0017-2019)
Council Members Christianson, Stewart, and Vice Mayor Gomez reported having no Ex Parte
Communications regarding the project. Mayor Harmon reported Ex Parte Communications
with the neighbor Jean Martin.
Community Development Director Michael Codron and Senior Planner Shawna Scott
provided an in-depth staff report and responded to Council questions.
Public Comments:
Babak Naficy, Appellant
James Papp, Appellant
Joel Snyder, Applicant’s Architect
---End of Public Comment---
ACTION: MOTION BY COUNCIL MEMBER CHRISTIANSON, SECOND BY
COUNCIL MEMBER STEWART, CARRIED 3-1-1 (MAYOR HARMON VOTING NO
AND COUNCIL MEMBER PEASE RECUSED) to adopt Resolution No. 11128 (2020
Series) entitled, “A Resolution of the City Council of the City of San Luis Obispo, California,
denying an appeal of the Planning Commission’s approval of a 50-foot tall mixed-use project
consisting of 5,241 square feet of ground-floor retail, eight hotel suites, and 39 residential
units, including mechanical parking lifts, and a Categorical Exemption from Environmental
Review, as represented in the staff report and attachments (545 Higuera Street, 486 Marsh
Street, ARCH-0017-2019).”
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ADJOURNMENT
The meeting was adjourned at 9:25 p.m. The next Regular City Council Meeting is scheduled for
Tuesday, June 16, 2020 at 6:00 p.m., in the Council Chamber, 990 Palm Street, San Luis Obispo,
California.
__________________________
Teresa Purrington
City Clerk
APPROVED BY COUNCIL: XX/XX/2020
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Department Name: Administration
Cost Center: 1021
For Agenda of: June 16, 2020
Placement: Consent
Estimated Time: N/A
FROM: Greg Hermann, Deputy City Manager
Prepared By: Teresa Purrington, City Clerk
Kevin Christian, Deputy City Clerk
SUBJECT: BIENNIAL REVIEW THE CITY’S CONFLICT OF INTEREST CODE
RECOMMENDATION
It is recommended that the City Council direct the review of the City’s Conflict of Interest Code
(Attachment A) and the filing of a Biennial Notice with the City Clerk regarding such review, as
required by the Political Reform Act.
DISCUSSION
The Political Reform Act of 1974 (the “Act”) requires every local government agency to adopt
and maintain a conflict of interest code. The primary effect of the code is to establish disclosure
requirements for various government positions involved in the requisite level of decision-making
as set forth in the Act. The Act requires each city to adopt a local conflict of interest code
designating city positions not otherwise designated in the Act itself, that are involved in making
or participating in the making of city decisions at all levels of city government.
The Act further requires that agencies review their conflict of interest code biennially to
determine if amendments are necessary. Amendments may be necessary for the following:
• The addition, deletion, or modification of the specific types of investments, business position,
interests in real property, and sources of income which are reportable for the designated
positions.
• Addition of, reclassification of, renaming of, or deletion of designated positions.
The Act provides that no later than July 1 of each even-numbered year, code-reviewing bodies
shall direct the review of all agency codes under their jurisdiction and requires that the agency
head (City Manager), no later than October 1, shall file a statement regarding the results of that
review. The City Council is the code-reviewing body for the City’s Code and on or before July 1
it must direct the biennial review of the City’s Conflict of Inter est Code.
Previous Council Action
The City’s Conflict of Interest Code was last updated by adoption of Resolution 10938 on
September 26, 2018.
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Policy Context
The Political Reform Act of 1974, Government Code Section 81000 requires all public agencies
to adopt and maintain a conflict of interest code. Additionally: The Act requires agencies to
regularly review and update their codes when change is necessitated by changed circumstances;
requires the code-reviewing body to direct a biennial review no later than July 1 of each even-
numbered year; requires that if a change in the Code is necessitated by this review, it must be
submitted to the City Council for approval within ninety (90) days of the filing of the Local
Agency Biennial Notice with the City Clerk; and requires that the agency head (City Manager),
no later than October 1, shall file a statement regarding the results of that review. (Gov. Code
§§§ 82011(c), 87306, 87306.5.)
Public Engagement
Notice was given in the form of agenda posting for the meeting that this item is being
considered, per Brown Act public noticing rules.
CONCURRENCE
The City Attorney’s office is in concurrence.
ENVIRONMENTAL REVIEW
The California Environmental Quality Act does not apply to the recommended action in this
report, because the action does not constitute a “Project” under CEQA Guidelines Sec. 15378.
FISCAL IMPACT
Budgeted: Yes Budget Year: FY 2019-20
Funding Identified: N/A
Fiscal Analysis:
Funding Sources Current FY Cost
Annualized
On-going Cost
Total Project
Cost
General Fund N/A
State
Federal
Fees
Other:
Total N/A
Cost associated with this review and update are included in the City Clerk Department’s annual
operating budget.
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ALTERNATIVES
State law requires that direction be given to review the current City Conflict of Interest Code and
therefore staff does not recommend an alternative.
Attachments:
a - COUNCIL READING FILE - R-10938 (2018 Series) Amending the City's Conflict of
Interest Code
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blank.
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Department Name: Administration
Cost Center: 1021
For Agenda of: June 16, 2020
Placement: Consent
Estimated Time: N/A
FROM: Greg Hermann, Deputy City Manager
Prepared By: Teresa Purrington, City Clerk
Kevin Christian, Deputy City Clerk
SUBJECT: AUTHORIZATION TO TRANSITION TO ELECTRONIC SIGNATURES FOR
DOCUMENTS
RECOMMENDATION
Adopt a Resolution (Attachment A) authorizing but not mandating the use of electronically
signed documents (e-signature) in place of hand-written signatures whenever a signature is
required, provided it is in accordance with the Uniform Electronic Transaction Act (UETA).
DISCUSSION
The Federal Electronic Signatures in Global and National Commerce Act (ESIGN) of 2000
established the equivalency of e-signatures and hand-written signatures for legally binding
documents. The UETA is the State of California act that authorizes the use of an electronic
signature for transactions and contracts among parties in California, including a government
agency. Further, the State Legislature passed AB 2296 in 2016 to clarify that a digital signature
may also be used to satisfy the requirements of an electronic signature under the UETA.
Electronic and digital signatures have been used widely in the private sector, such as real estate
and mortgage transactions. Notably, they are also used by the court system where they allow for
electronic filings of documents, including briefs.
The mainstream acceptance of signing documents electronically in place of manual, hand-written
“wet” signatures has led to; increased convenience and efficiencies, decreased time and cost
associated with transmitting, approving and retaining physical documents, as well as creation of
an audit trail of the modification, editing, and final signing of documents. The environment is
also benefitted by the widespread adoption of e-signatures with less raw source tree and water
use in paper creation, a resultant lessoning of CO2 production from that process as well as
transportation of raw materials and paper distribution, and finally end-of-lifecycle paper waste
reduction.
The City has been using e -signatures to a limited degree since 2017 and more recently expanded
their use (see “Background”). Given the benefits, the City desires to expand the use of electronic
signatures to all appropriate areas of City business.
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Background
In 2017 the Council passed Ordinance 1637 specifically accepting e-signatures for applications
for electric vehicle charging stations. To take advantage of the efficiencies of e-signing, the City
began using DocuSign for routing and signing of contracts and agreements in 2018. And most
recently the City began using e-signatures for City Council Ordinances, Resolutions, and
Minutes to limit the potential spread of COVID-19.
In the past twelve-month period, the use of e-Signatures by the City has resulted in the following
environmental impact reductions: 655 kg of wood, 14,622 liters of water, 1,474 kg of CO2, and
97 kg of paper waste.
Policy Context
U.S. Code – Chapter 96 – Electronic Signatures in Global and National Commerce – As stated in
the Act, the General Intent of the ESIGN Act is:
(1) a signature, contract, or other record relating to such transaction may not be denied legal
effect, validity, or enforceability solely because it is in electronic form; and
(2) a contract relating to such transaction may not be denied legal effect, validity, or
enforceability solely because an electronic signature or electronic record was used in its
formation.
California Civil Code 1633.1 – 1633.17: The California Uniform Electronic Transactions Act
(UETA) – The objective of UETA is to place electronic records and signatures on the same level
as paper contracts and written signatures. It applies only to those transactions between parties or
entities which have agreed to conduct their business transactions by electronic means.
California Government Code 16.5 – Specifically allows public entities to utilize e-signatures and
details acceptable attributes:
16.5
(a) In any written communication with a public entity, as defined in Section 811.2, in which a
signature is required or used, any party to the communication may affix a signature by use of
a digital signature that complies with the requirements of this section. If a public entity elects
to use a digital signature, that digital signature shall have the same force and effect as the use
of a manual signature if and only if it embodies all of the following attributes:
(1) It is unique to the person using it.
(2) It is capable of verification.
(3) It is under the sole control of the person using it.
(4) It is linked to data in such a manner that if the data are changed, the digital signature is
invalidated.
(5) It conforms to regulations adopted by the Secretary of State. Initial regulations shall be
adopted no later than January 1, 1997. In developing these regulations, the secretary shall
seek the advice of public and private entities, including, but not limited to, the
Department of Information Technology, the California Environmental Protection
Agency, and the Department of General Services. Before the secretary adopts the
regulations, he or she shall hold at least one public hearing to receive comments.
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(b) The use or acceptance of a digital signature shall be at the option of the parties. Nothing
in this section shall require a public entity to use or permit the use of a digital signature.
(c) Digital signatures employed pursuant to Section 71066 of the Public Resources Code are
exempted from this section.
(d) “Digital signature” means an electronic identifier, created by computer, intended by the
party using it to have the same force and effect as the use of a manual signature. For
purposes of this section, a digital signature is a type of “electronic signature” as defined
in subdivision (h) of Section 1633.2 of the Civil Code.
(e) Nothing in this section shall limit the right of a public entity or government agency to use
and accept an “electronic signature” as defined in subdivision (h) of Section 1633.2 of the
Civil Code.
(f) Regulations adopted by the Secretary of State to implement this section apply only to a
public entity’s use of a “digital signature” and not to use of any other type of “electronic
signature” authorized in the Uniform Electronic Transactions Act (Title 2.5 (commencing
with Section 1633.1) of Part 2 of Division 3 of the Civil Code).
Note that some specific types of documents may still require hand-written (wet) signatures, or in-
person witnessing such as is currently the case with notarizations. Therefore, each type of
document authorized to use e-signatures should be vetted by the City Attorney, City Manager,
City Clerk, or other City expert on the related document codes.
Public Engagement
As this is an administrative item, no outside public engagement was sought. Public comment can
be provided to the City Council through written correspondence prior to the meeting and through
public testimony at the meeting.
CONCURRENCE
In researching this report staff found that at least three other City Department s (Attorney’s
Office, Human Resources, and Finance) were exploring and desirous of further use of e -
Signatures to capitalize on process efficiencies.
ENVIRONMENTAL REVIEW
The California Environmental Quality Act does not apply to the recommended action i n this
report, because the action does not constitute a “Project” under CEQA Guidelines Sec. 15378.
FISCAL IMPACT
Budgeted: No Budget Year: FY: 2019-20
Funding Identified: N/A
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Fiscal Analysis:
Funding Sources Current FY Cost
Annualized
On-going Cost
Total Project
Cost
General Fund N/A
State
Federal
Fees
Other:
Total
ALTERNATIVES
The Council may choose to not authorize further use of e-Signatures at this time and request staff
to; compile further statistics on the environmental impact, solicit feedback from City partners,
vendors, and contractors who have agreed to use e-Signatures with the City, and/or from those
who have not agreed to use e-Signature, for use in further evaluation.
Attachments:
a - Draft Resolution
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R _____
RESOLUTION NO. _____ (2020 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, ADOPTING A CITYWIDE POLICY
REGARDING ELECTRONIC SIGNATURE USE
WHEREAS, e-signatures (electronic signatures) that meet certain requirements are
recognized as valid and legally binding under the United States Electronic Signatures in Global
and National Commerce (“ESIGN”) Act, the California Uniform Electronic Transactions Act
(“UETA”), and California Government Code section 16. 5; and
WHEREAS, the use of e-signatures on legally binding documents has become
increasingly prevalent in the private sector but has yet to find widespread adoption by public
entities; and
WHEREAS, the benefits of using e-signatures include: reduction of paper generation;
increased efficiency for staff; increased convenience and efficiency for City residences who are in
need of City services; significant decrease in time and cost associated with transmitting, approving,
and retaining physical documents; as well as creation of an audit trail of the modification, editing,
and approval/ signing of documents; and
WHEREAS, by Ordinance 1637 the City has accepted e-signatures for electric vehicle
charging station applications since 2017, specifically, the City of San Luis Obispo Municipal Code
15.15.050, stating, “The city will accept an electronic signature on all forms, applications and other
documents in lieu of a wet signature by an applicant”; and
WHEREAS, in practice the City has been accepting e-signatures for contracts and
agreements since 2018, and
WHEREAS, to limit the chance of spreading COVID-19, City Council Resolutions,
Ordinances, and Minutes began utilizing e-signatures on March 17, 2020.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows:
SECTION 1. The City Council hereby authorizes City officials, or their designees, to
accept electronic signatures, created by a system that complies with the ESIGN Act and UETA, in
lieu of handwritten signatures on all documents, unless a handwritten signature is required by law
or by decision of the City Manager in coordination with Department head(s).
SECTION 2. “Electronic signature” has the same meaning as stated in Section 1633.2(h)
of the California Civil Code, or as may be amended.
SECTION 3. The type of documents that may utilize e-signatures include, but are not
limited to; electronic communications, transactions, contracts, agreements, permits, official
minutes, resolutions, ordinances, and other official documents, both internal and external to the
City.
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Resolution No. _____ (2020 Series) Page 2
R _____
SECTION 4. This resolution of authorization does not supersede federal, state, or local
laws that specifically require a written signature.
SECTION 5. This resolution does not limit the right or option of a party to conduct the
transaction on paper or in non-electronic form. The parties to a transaction must agree to conduct
the transaction by electronic means with the use of a City-approved signature method that complies
with applicable laws and regulations, including the capability of all parties to retain the accurately
reproduced document that was electronically signed for record purposes.
Upon motion of _______________________, seconded by ________________________,
and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this ______ day of _______________ 2020.
____________________________________
Mayor Heidi Harmon
ATTEST:
____________________________________
Teresa Purrington
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, on ______________________.
____________________________________
Teresa Purrington
City Clerk
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Department Name: Utilities
Cost Center: 6003
For Agenda of: June 16, 2020
Placement: Consent
Estimated Time: N/A
FROM: Aaron Floyd, Utilities Director
Prepared By: Jennifer Thompson, Utilities Business Manager
SUBJECT: EXECUTE AND DELIVER AN INSTALLMEN T SALE AGREEMENT WITH
CALIFORNIA INFRASTRUCTURE AND ECONOMIC DEVELOPMENT
BANK
RECOMMENDATION
Adopt a resolution authorizing the execution and delivery of an installment sale agreement,
between the City and California Infrastructure and Economic Development Bank, for financing
the Water Energy Efficiency Project and taking related actions (Attachment A).
DISCUSSION
Background
On November 19, 2019, the City Council voted 4-0-1 (Mayor Harmon Absent) to enter into an
agreement with Pacific Gas & Electric (PG&E) for implementation of the Water Energy
Efficiency Project (Project). This project will replace critical aging infrastructure with more
energy efficient equipment at the Water Treatment Plant. With this action, Council also approved
the debt financing of up to $14,300,000 for the construction of the project.
After analyzing two sources of funding, (1) a municipal lease from a commercial bank and (2) a
financing from the Infrastructure Bank (I Bank), City staff found I Bank to be the preferred
option. Staff considered the interest rate, other fees, term, and debt covenant requirements in
other existing Water Fund debt. I Bank offered the lowest interest rate of 2.5 percent (3 percent
true interest cost (TCI1)) and satisfies the debt covenants in existing Water Fund debt.
The project broke ground May 4, 2020 and is expected to be complete in July 2021. When the
agreement is executed, the Water fund will begin requesting reimbursement for project
expenditures made to-date.
Execution of Agreement
The terms of the agreement with I Bank have been reviewed and negotiated by outside Counsel,
Richards, Watson & Gerson. After adoption of this resolution, staff expects the agreement to be
executed and the transaction to close by June 18, 2020.
1 TCI includes all ancillary fees and cost along with factors related to the time value of money (TMV).
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Related Actions
The actions related to the execution of the agreement and included in the resolution are: (1)
acknowledge the City’s debt management policy; and (2) authorize the Mayor (or the Vice
Mayor) or the City Manager to execute the agreement.
Good Faith Estimate
Government Code Section 5852.1 requires the good faith estimate disclosure (of true interest
cost, finance charges, amount of proceeds, and total payment amount) to be made at a public
meeting of the City Council before the City Council can authorize the incurrence of debt with a
term longer than 13 months. The adoption of this resolution to authorize the execution and
delivery of the I Bank agreement will constitute an authorization to incur a debt with a term
longer than 13 months. The good faith estimates required by Government Code Section 5852.1
are disclosed in the fiscal impact section of this report as well as in a recital of the resolution.
Debt Management Policy
Government Code Section 8855 requires all local government issuers of debt to report the
issuance to the California Debt and Investment Advisory Commission (CDIAC). The report shall
include a certification by the issuer that it has adopted local debt policies concerning the use of
debt and that the contemplated debt issuance is consistent with those local debt policies.” The I
Bank Agreement is consistent with City’s Capital Financing and Debt Management Policy
(Attachment B). This policy is formally acknowledged in the current resolution.
Previous Council or Advisory Body Action
On May 21, 2019 the City Council adopted Resolution No. 11011 “A resolution of the City
Council of the City of San Luis Obispo, California, authorizing the submission of the application
to the California Infrastructure and Economic Development Bank (I Bank) for fin ancing the
Water Energy Efficiency project, authorizing the incurring of an obligation payable to I Bank for
the financing of the Water Energy Efficiency project if I Bank approves said application,
declaration of official intent to reimburse certain expenditures from proceeds of obligation, and
approving certain other matters in connection therewith.” This resolution allowed the City to
apply for I Bank financing.
On November 19, 2019, the City Council adopted Resolution No. 11063 “A resolution of the
City Council of the City of San Luis Obispo, California, authorizing use of water fund
unreserved working capital for the water energy efficiency project” This resolution authorized
the use of unreserved working capital for cash flow purposes.
On January 21, 2020 the City Council reviewed the good faith estimate in compliance with
Government Code Section 5851.2 disclosure requirements; adopted Resolution No. 11077, a
resolution accepting the good faith estimate; adopted Resolution No. 11078 authorizing the use
of up to $2,500,000 from Water Fund Unreserved Working Capital to pay of a State Revolving
Fund (SRF) loan as required by the I Bank loan; and authorized the use of $143,000 from Water
Fund Unreserved Working Capital to pay the I Bank origination fee.
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Policy Context
The good faith estimate public disclosure is required by State law: Government Code Section
5852.1.
Government Code section 8855(i) requires a certification by the issuer that it has adopted a local
debt policy concerning the use of debt and that the contemplated debt issuance is consistent with
the local debt policy.
Public Engagement
This is an administrative item, so no outside public engagement was completed. Public comment
can be provided to the City Council through written correspondence prior to the meeting and
through public testimony at the meeting.
CONCURRENCE
The Finance Department concurs with this recommendation.
ENVIRONMENTAL REVIEW
The City determined the activity funded by the I Bank loan, the Water Energy Efficien cy Project
is categorically exempt from the California Environmental Quality Act pursuant to CEQA
Guidelines section 15301, Class I - Existing Facilities and 15328. The exemption was filed with
the State Clearinghouse on January 24, 2019.
FISCAL IMPACT
Budgeted: Yes Budget Year: 2019-20
Funding Identified: Yes - Water Fund & Debt Financing
Fiscal Analysis:
The recommended action in this Council Agenda report does not include fiscal impacts that have
not been approved through previous council action. The good faith estimate serves as public
disclosure required to obtain financing for the Water Energy Efficiency Project.
True interest cost 3%
Finance Charge (including Origination Fee of $143,000.00
plus total Annual Fee of $485,529.46)
$628,529.46
Loan Proceeds ($14,300,000) less Finance Charges $13,671,470.54
Total Payments (including Principal and Interest through
6/1/2040 final maturity, plus Origination Fee and Annual
Fee)
$18,956,733.28
The annual debt payment is part of the Water Fund’s budget and will be considered each year
with the budget appropriation.
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ALTERNATIVES
Do not adopt the resolution to execute the agreement. This is not recommended because this
financing is necessary to complete the Water Energy Efficiency Project that replaces critical
infrastructure at the Water Treatment Plant.
Attachments:
a - Draft Resolution
b - Debt Management Policy
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R ______
RESOLUTION NO. ____ (2020 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, AUTHORIZING THE EXECUTION AND
DELIVERY OF AN INSTALLMENT SALE AGREEMENT, BETWEEN
THE CITY AND CALIFORNIA INFRASTRUCTURE AND ECONOMIC
DEVELOPMENT BANK, FOR FINANCING THE WATER ENERGY
EFFICIENCY PROJECT AND TAKING RELATED ACTIONS
WHEREAS, the California Infrastructure and Economic Development Bank (“IBank”)
administers a financing program to assist local governments with the financing of certain public
development facilities; and
WHEREAS, the City Council adopted Resolution No. 11011 (2019 Series) on May 21,
2019, approving the City’s submission of an application to IBank for assistance to finance the
City’s Water Energy Efficiency Project (the “Project”), in the principal amount not to exceed
$14,300,000; and
WHEREAS, IBank has accepted the City’s application and is willing to provide financing
for the Project (the “IBank Financing”) pursuant to the terms of an Installment Sale Agreement
(the “Installment Sale Agreement”), substantially in the form attached as Exhibit A; and
WHEREAS, pursuant to Government Code Section 5352.1, the following are good faith
estimates with respect to the IBank Financing: (i) the true interest cost will be three percent; (ii) the
finance charge of the transaction (including an origination fee and annual fees to i-Bank) will be
$628,529.46; (iii) the amount of proceeds to be received by the City less the finance charge will
be $13,671,470.54; and (iv) the total payment amount to be paid by the City (including principal
and interest components plus finance charge) under the Installment Sale Agreement will be
$18,956,733.28;
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows that:
SECTION 1. The above recitals are true and correct and are a substantive part of this
Resolution.
SECTION 2. The Installment Sale Agreement, in the form attached as Exhibit A, is
hereby approved. Each of the Mayor (or in the Mayor’s absence, the Vice Mayor), and the City
Manager (each, an “Authorized Officer”), acting individually, is hereby authorized and directed,
for and in the name and on behalf of the City, to execute and deliver the Installment Sale
Agreement in substantially said form, with such additions or changes as the Authorized Officer
executing the same may approve (such approval to be conclusively evidenced by such Authorized
Officer’s execution and delivery thereof).
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R ______
SECTION 3. Reference is hereby made to the City’s debt management policy (the “Debt
Policy”) set forth in the City’s 2019-21 Financial Plan (as approved pursuant to Resolution No.
11026 (2019 Series) and supplemented by Resolution No. 11027 (2019 Series)), under the caption
“Capital Financing and Debt Management” in the section entitled “Fiscal Policies.” The City
Council hereby finds that the IBank Financing is consistent with the Debt Policy.
SECTION 4. The Authorized Officers, the City Manager, the Finance Director, the
Utilities Director and all other officers of the City are hereby authorized, jointly and severally, to
execute and deliver any and all necessary documents and instruments and to do all things which
they may deem necessary or proper to effectuate the purposes of this Resolution and the
Installment Sale Agreement. Any actions previously taken by officers of the City consistent with
the purposes of this Resolution and such agreements are hereby ratified and confirmed.
Upon motion of _________________________, seconded by ______________________
and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of ______________, 2020.
__________________________________
Mayor Heidi Harmon
ATTEST:
________________________________
Teresa Purrington
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, on ____________________.
____________________________________
Teresa Purrington
City Clerk
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Item #2757
EXHIBIT A
3
INSTALLMENT SALE AGREEMENT
by and between the
CITY OF SAN LUIS OBISPO,
as Purchaser
and the
CALIFORNIA INFRASTRUCTURE AND
ECONOMIC DEVELOPMENT BANK (“IBANK”),
as Seller
___________________
Dated as of June 1, 2020
Agreement No. ISRF 20-135
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12767-0012\2412248v3.doc 1
INSTALLMENT SALE AGREEMENT
THIS INSTALLMENT SALE AGREEMENT, is dated as of June 1, 2020 (as defined in
Section 1.01, the “Agreement”), by and between the CITY OF SAN LUIS OBISPO, a Municipal
Corporation, as purchaser (the “Purchaser”), duly organized and validly existing under the laws of
the State of California, and the CALIFORNIA INFRASTRUCTURE AND ECONOMIC
DEVELOPMENT BANK, as seller (“IBank”), duly organized and validly existing pursuant to the
Bergeson-Peace Infrastructure and Economic Development Bank Act (the “Act,” as defined in
Section 1.01). IBank and the Purchaser are hereinafter at times collectively referred to as the
“Parties” and individually as a “Party.” Terms and words used herein with their initial letter, or
letters, capitalized shall have the meanings set forth in Section 1.01 of this Agreement, or the
meanings set forth in this paragraph, as applicable.
W I T N E S S E T H:
WHEREAS, the Purchaser has determined it is necessary to design and construct the
Project, consisting generally of certain improvements to its System that are intended to improve
System reliability, functionality, and energy efficiency;
WHEREAS, the Purchaser sought financing for the Project from IBank, payable from, and
secured by, Net System Revenues , and IBank wishes to provide such financing;
WHEREAS, on or about June 16, 2020, the City Council of the Purchaser adopted
Resolution No. ______, a copy of which is attached hereto as Exhibit A, among other things,
authorizing the purchase from IBank of the Facility, to be paid from and secured by Net System
Revenues, as evidenced by this Agreement;
WHEREAS, the Purchaser’s staff issued Proposition 218 notices necessary for the rates
and charges increases required to support the Purchaser’s System, including the Facility ;
WHEREAS, not having received written protests against the proposed increases from a
majority of parcels subject to the revised schedule of rates and charges, the Purchaser’s City
Council adopted the revised schedule of rates and charges pursuant to the terms of Resolution No.
11023 (2019 Series), and related documents, effective July 1, 2019;
WHEREAS, IBank has issued, or intends to issue, its tax-exempt Proceeds Bonds, the
proceeds of which may be used to provide all or a portion of the Facility Funds;
WHEREAS, IBank may pledge its rights, including the rights to receive payments, under
this Agreement to secure certain Secured Bonds that it has issued, or intends to issue, for the benefit
of its programs, and the Purchaser acknowledges that the issuance or existence of both the Proceeds
Bonds and the Secured Bonds impacts its rights and obligations as described herein; and
NOW, THEREFORE, in consideration of these premises and the mutual agreements herein
contained, the parties do hereby agree as follows:
ARTICLE I
DEFINITIONS, RULES OF CONSTRUCTION, AND CONDITIONS PRECEDENT
SECTION 1.01 Definitions. Unless the context clearly otherwise requires, the
capitalized terms in this Agreement shall have the respective meanings set forth below.
“2012 Bonds” means the $4,960,000 City of San Luis Obispo 2012 Water Revenue
Refunding Bonds issued by the Purchaser on January 31, 2012.
“2012 Bonds Instrument” means, collectively, any instrument evidencing, securing, or
governing the 2012 Bonds, including, without limitation, the Indenture of Trust dated as of January
1, 2012 by and between the Purchaser and U.S. Bank National Association, as trustee thereunder.
“2018 Bonds” means the $16,905,000 City of San Luis Obispo, California Water Revenue
Refunding Bonds, Series 2018, issued by the Purchaser on July 3, 2018.
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Item #2757
EXHIBIT A
12767-0012\2412248v3.doc 2
“2018 Bonds Instrument” means, collectively, any instrument evidencing, securing, or
governing the 2018 Bonds, including, without limitation, the Indenture dated as of July 1, 2018 by
and between the Purchaser and U.S. Bank National Association, as trustee ther eunder.
“Act” means the Bergeson-Peace Infrastructure and Economic Development Bank Act,
constituting Division 1 of Title 6.7 of the California Government Code (commencing at section
63000 thereof) as now in effect and as it may from time to time hereafter be amended.
“Additional Payments” means the payments made pursuant to Section 2.06.
“Agreement” means this Installment Sale Agreement, between IBank and the Purchaser,
as originally entered into and as amended from time to time pursuant to the provisions hereof.
“Amortization Schedule” means that certain amortization schedule attached hereto as
Exhibit E.
“Amortization Terms” shall have the meaning set forth in Section 2.03(d).
“Authorized Prepayment Period” has the meaning set forth in Section 2.08(b).
“Business Day” means any day, Monday through Friday, which is not a legal holiday of
the City, the State or the Trustee.
“Certificate of the Purchaser” means a written request or certificate signed by a duly
authorized representative of the Purchaser.
“Code” means the Internal Revenue Code of 1986, as amended, and any regulations
promulgated thereunder.
“Criteria” means the “Criteria, Priorities, and Guidelines for the Selection of Projects for
Financing under the ISRF Program” dated February 23, 2016, as may thereafter be amended from
time to time.
“Current Guidelines” has the meaning set forth in Section 5.07(g).
“Current Revenues” means revenues that are both received by the Purchaser and utilized
for the payment of the Purchase Price under this Agreement within a six month period.
“Debt Service” means, for any Fiscal Year, the sum of interest, and principal due and
payable under this Agreement during such Fiscal Year, the IBank Annual Fee for such Fiscal Year
and any Parity Debt Service for such Fiscal Year.
“Development Impact Fees” means fees charged by the Purchaser for the physical facilities
necessary to make a connection to the System, which fees are levied in accordance with Section
66013 of the Government Code of the State, or any successor statute.
“Effective Date” means the date on which this Agreement is last executed, as set forth on
the signature page hereto, and is the date this Agreement becomes effective and binding on the
Purchaser and IBank, subject to this Agreement’s terms and conditions.
“Enterprise Fund” means the water enterprise fund, separate and apart from the Purchaser’s
general operating funds, established by the Purchaser into which all System Revenues are
deposited and maintained by the Purchaser pursuant to Section 3.02 and in which IBank has a
certain security interest pursuant to the terms of this Agreement. The Purchaser’s Enterprise Fund
is composed of the funds received from water transmission, distribution, and sales services
provided to the Purchaser’s System customers.
“Event of Default” means any of the events described in Section 7.01.
“Facility” means those improvements financed with the Facility Funds provided by IBank
and to be sold by IBank to the Purchaser pursuant to terms and conditions of this Agreement as
more particularly described in Exhibit B, hereto.
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“Facility Costs” means the costs of the activities set forth in Exhibit B hereto for the
construction, acquisition and/or installation of the Facility, all as approved by IBank in its sole and
absolute discretion.
“Facility Delivery” has the meaning set forth in Section 2.02.
“Facility Funds” means the moneys provided by IBank to the Purchaser, as agent for IBank,
pursuant to this Agreement to purchase and/or construct the Facility as set forth in Section 2.05.
The amount of Facility Funds equals the total principal component of the Purchase Price set forth
in Section 2.03(b)(1).
“Facility Funds Reduction” means the reduction of the total Facility Funds amount by all
or a portion of the Facility Funds not disbursed previously.
“Facility Funds Reduction Request” means a written request of the Purchaser to reduce the
amount of total Facility funds by all or a portion of the Facility Funds n ot disbursed previously.
“Fiscal Year” means any twelve month period extending from July 1 in one calendar year
to June 30 of the succeeding calendar year, both dates inclusive, or any other twelve month period
selected and designated by the Purchaser as its official fiscal year period and approved by IBank.
“IBank Annual Fee” means the fee payable to IBank pursuant to Section 2.06.
“IBank Fiscal Year” means any twelve month period extending from July 1 in one calendar
year to June 30 of the succeeding calendar year, both dates inclusive.
“Independent Accountant” means any certified public accountant or firm of certified public
accountants duly licensed or registered or entitled to practice and practicing as such under the laws
of the State, appointed by the Purchaser who, or each of whom:
(a) Is in fact independent and not under the direct or indirect control of the Purchaser
or IBank;
(b) Does not have any substantial interest, direct or indirect, in the Purchaser , IBank,
or the Facility; and
(c) Is not connected with the Purchaser or IBank as a member, officer, or employee of
the Purchaser or IBank, but who may be regularly retained to make reports to the Purchaser or
IBank.
(d) “Independent Consultant” means any consultant or firm of such consultants judged
by the Purchaser to have experience in matters relating to the collection of System Revenues or
other experience with respect to the financing of System projects, as appropriate, appointed and
paid by the Purchaser who, or each of whom:
(a) Is in fact independent and not under the direct or indirect control of the
Purchaser or IBank;
(b) Does not have any substantial interest, direct or indirect, in the Purchaser
or IBank; and
(c) Is not connected with the Purchaser or IBank as a member, officer or
employee of the Purchaser or IBank, but who may be regularly retained to make reports to the
Purchaser or IBank.
“Installment Payments” means the principal and interest payments to be made by the
Purchaser to IBank in payment of the Purchase Price hereunder.
“Interest Payment Date” means June 1 and December 1 of every year in which the Purchase
Price remains unpaid.
“Investment Property” means any security or obligation, any annuity contract, or any other
investment-type property, but does not include any Tax Exempt Obligation unless such obligation
is a “specified private activity bond” within the meaning of section 57(a)(5)(C) of the Code.
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“IRS” has the meaning set forth in Section 5.07(g).
“Kessner Complaint” means Kessner, et al. v. City of Santa Clara; et al., Santa Clara
County Superior Court, Case No. 20CV364054.
“Liquidated Damages Charge” has the meaning set forth in Section 2.06(a)(4).
“Liquidated Damages Period” has the meaning set forth in Section 5.03(f).
“Maximum Annual Debt Service” means as of the date of calculation, the greatest total
Debt Service payable in any Fiscal Year during which this Agreement is in effect.
“Maximum Rate” has the meaning set forth in Section 8.23.
“Net System Revenues” means all System Revenues received by the Purchaser less the
Operations and Maintenance Costs incurred during the period in which System Revenues were
measured.
“Nongovernmental Persons” means any person or entity other than any state, or political
subdivision of a state, but excludes the United States and its agencies or instrumentalities.
“Operations and Maintenance Costs” means the reasonable and necessary costs paid or
incurred by the Purchaser for maintaining and operating the System, determined in accordance
with generally accepted accounting principles, consistently applied, including all reasonable
expenses of management, costs of repair, acquisition of material, equipment, electricity, fuel, or
water, and all other expenses necessary to maintain and preserve the System in good repair and
working order, and including all administrative costs of the Purchaser that are charged directly or
apportioned to the operation of the System, such as salaries and wages of employees, overhead,
taxes (if any), the cost of permits and licenses to operate the System and insurance premiums, and
including all other reasonable and necessary costs of the Purchaser or charges required to be paid
by it to comply with the terms hereof; but excluding in all cases depreciation, replacement and
obsolescence charges or reserves therefor and amortization of intangibles.
“Opinion of Counsel” means a written opinion of counsel of recognized national standing
in the field of law relating to municipal bonds, appointed by the Purchaser and approved by IBank,
or appointed by IBank, and in all cases paid for by the Purchaser and acceptable to IBank in its
sole and absolute discretion.
“Origination Fee” means a payment in the amount of $143,000 that shall be due and
payable by the Purchaser on the Effective Date.
“Parity Debt” means to the extent outstanding, the 2012 Bonds and the 2018 Bonds,
together with any loan, bond, note, advance, installment sale agreement, capital lease or other
indebtedness or agreement to incur or pay indebtedness, payable from and/or secured by a lien on
the Net System Revenues , on parity with the lien established by this Agreement securing the
Installment Payments and Additional Payments, issued or incurred pursuant to and in accordance
with the provisions of Section 2.11.
“Parity Debt Instrument” means, collectively, any instrument establishing, evidencing,
governing, or securing Parity Debt, including without limitation any indenture relating to such
Parity Debt, as applicable, and specifically including the 2012 Bonds Instrument and the 2018
Bonds Instrument.
“Parity Debt Service” means, for any Fiscal Year, the sum of the principal and interest due
and payable during such Fiscal Year for all outstanding Parity Debt.
“Payment Account” means the funds or accounts (or any portions of any funds or
accounts), established pursuant to Section 2.03(c) hereof, that will hold monies that the Purchaser
expects to use to pay the Purchase Price under this Agreement.
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“Phase I Environmental Site Assessment” means an investigation of the environmental
condition of the Facility, including all improvements and real property as well as surrounding
improvements and real property, to determine the possibility of contamination, based on visual
observation, interviews with knowledgeable persons, and the review of records and d atabases, in
a manner consistent with the current standards and practices employed typically by State
Registered Environmental Assessors, or other professionals licensed in the State as engineers or
geologists, performing environmental assessments in the same general geographic location as the
Facility.
“Phase II Environmental Site Assessment” means the in situ sampling and laboratory
analysis of any contamination discovered in connection with a Phase I Environmental Site
Assessment, in a manner consistent with the current standards and practices employed typically
by State Registered Environmental Assessors, or other professionals licensed in the State as
engineers or geologists, performing environmental assessments in the same general geographic
location as the Facility.
“Preliminary Costs” means architectural, engineering, surveying or soil testing costs,
reports such as environmental impact reports, Phase I or Phase II Environmental Site Assessments,
feasibility studies, rate studies and CEQA reports, and similar costs that are incurred prior to
commencement of acquisition, construction, or rehabilitation of a project, but not land acquisition,
site preparation or similar costs incident to the commencement of construction.
“Prepayment Agreement” has the meaning set forth in Section 2.08(f).
“Prepayment Request” means any written request of the Purchaser to prepay all or a portion
of the principal component of the Purchase Price.
“Prior Guidelines” has the meaning set forth in Section 5.07(g).
“Prior Guidelines Service Providers” has the meaning set forth in Section 5.07(g)(2).
“Proceeds Bonds” means bonds issued, or to be issued, by IBank the proceeds of which
may be used, in whole or part, to provide the Facility Funds.
“Prohibited Prepayment Period” has the meaning set forth in Section 2.08(a)(2).
“Prop 218 Law” means, collectively, the California Constitution article XIII D, the statutes
implementing it, and the published California Appellate Court and Supreme Court decisions
interpreting it in effect on the Effective Date and as such law may be amended or interpreted from
time to time.
“Purchase Price” means the principal amount plus the interest thereon owed by the
Purchaser to IBank under the conditions and terms hereof for the payment of the costs of the
Facility, and the incidental costs and expenses related thereto paid by IBank.
“Purchaser Representative” shall have the meaning set forth in Section 8.10 hereto.
“Rate Challenge” shall have the meaning set forth in Section 5.27 hereto.
“Replacement Agreement Covenant” shall have the meaning set forth in Section 5.11.
“Report” means a written document signed by an Independent Consultant or an
Independent Accountant, and including:
(a) A statement that the person or firm making or giving such Report has read the
pertinent provisions of this Agreement to which such Report relates;
(b) A brief statement as to the nature and scope of the examination or investigation
upon which the Report is based; and
(c) A statement that, in the opinion of such person or firm, sufficient examination or
investigation was made as is necessary to enable said consultant to express an informed opinion
with respect to the subject matter referred to in the Report.
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“Reporting Covenants” shall have the meaning set forth in Section 5.03(f).
“Revised Amortization Schedule” shall have the meaning set forth in Section 2.03(f).
“Secured Bonds” means bonds of one or more series issued, or to be issued, by IBank to
which certain rights of IBank under this Agreement, including the right to receive the Installment
Payments, may be from time to time pledged or assigned directly or indirectly as security for such
bonds.
“Senior Debt” means any loan, bond, note, advance, installment sale agreement, capital
lease or other indebtedness or agreement to incur or pay indebtedness, payable from and/or secured
by a lien on the Net System Revenues , which is senior to the lien established by this Agreement
securing the Installment Payments and Additional Payments.
“Senior Debt Instruments” means, collectively, any instrument establishing, evidencing,
governing, or securing Senior Debt, including without limitation any indenture relating to such
Senior Debt, as applicable.
“Service Contract” has the meaning set forth in Section 5.07(g).
“Service Provider” has the meaning set forth in Section 5.07(g)(1).
“State” means the State of California.
“Subordinate Debt” means any loan, bond, note, advance, installment sale agreement,
capital lease or other indebtedness or agreement to incur or pay indebtedness, payable from and/or
secured by a lien on Net System Revenues , which is subordinate to the lien established by this
Agreement securing the Installment Payments and Additional Payments.
“Subordinate Debt Instruments” means, collectively, any instrument establishing,
evidencing, governing, or securing Subordinate Debt, including without limitation any indenture
relating to such Subordinate Debt, as applicable.
“Subordinate Debt Service” means, for any Fiscal Year, the sum of the principal and
interest due and payable during such Fiscal Year for all outstanding Subordinate Debt.
“System” means the entire water production, storage, treatment, transmission, distribution,
sales, and delivery system owned or operated by the Purchaser, including but not limited to all
facilities, real and personal property, works, improvements, rights, and entitlements at any time
owned, operated or determined to be part of the System by the Purchaser for the treatment and
delivery of water, together with any necessary lands, rights, entitlements and other property useful
in connection therewith, together with all extensions thereof and improvements or additions thereto
hereafter acquired, constructed or installed by the Purchaser.
“System Revenues” means, whenever received and including any such moneys
accumulated in the Enterprise Fund at any time, all gross income and revenue received or
receivable by the Purchaser from the ownership or operation of the System, determined in
accordance with generally accepted accounting principles, consistently applied, including all rates,
fees and charges (including connection fees and charges) received by the Purchaser for the services
of the System, and all other income and revenue howsoever derived by the Purchaser from the
ownership or operation of the System or arising from the System, and also including all legally
available income from the deposit or investment of any money in the Enterprise Fund or any rate
stabilization fund, and the proceeds of any taxes that can be used legally to pay Debt Service, but
excluding in all cases any refundable deposits made to establish credit , and advances or
contributions in aid of construction, and Development Impact Fees.
“Tax Exempt Obligation” means any obligation the interest on which is excluded from
gross income for federal income tax purposes pursuant to section 103 of the Code or sect ion 103
of the Internal Revenue Code of 1954, as amended, and Title XIII of the Tax Reform Act of 1986,
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as amended, as well as stock in a regulated investment company to the extent at least ninety-five
percent (95%) of income to the stockholder is treated as interest that is excludable from gross
income under section 103 of the Code.
“Trustee” means the trustee acting in its capacity as such in connection with any Proceeds
Bonds or Secured Bonds, or any successor or assignee as therein provided, including IBank.
SECTION 1.02 Rules of Construction.
Except where the context otherwise requires, words imparting the singular number shall
include the plural number and vice versa, and pronouns inferring the masculine gender shall
include the feminine gender and vice versa. All references herein to particular articles or sections
are references to articles or sections of this Agreement. The headings, subheadings and Table of
Contents herein are solely for convenience of reference and shall not constitute a part of this
Agreement, nor shall they affect its meanings, construction or effect. Any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall not apply in
interpreting this Agreement.
SECTION 1.03. Conditions Precedent.
IBank shall have no obligation under this Agreement until the following conditions
precedent have, in IBank’s reasonable discretion, been satisfied fully.
(a) IBank shall have received two (2) copies of this Agreement bearing the Purchaser’s
original signature and IBank shall have counter-signed this Agreement and provided a copy of this
Agreement bearing its signature to the Purchaser.
(b) IBank shall have received a copy of a resolution duly adopted by the Purchaser’s
governing body approving entry into this Agreement in form and content acceptable to IBank, a
copy of which shall be attached hereto as Exhibit A.
(c) IBank shall have received an originally executed copy of an opinion of the
Purchaser’s legal counsel in form and content substantially similar to the Form of Opinion of Legal
Counsel to the Purchaser attached hereto as Exhibit D.
(d) IBank shall have received an originally executed copy of a Certificate of the
Purchaser from the Purchaser’s Utilities Engineer in form and content substantially similar to the
Form of Certificate of Utilities Engineer attached hereto as Exhibit F.
(e) IBank shall have received an originally executed copy of a Certificate of the
Purchaser from the Purchaser’s Utilities Director in form and content substantially similar to the
Form of Certificate of Purchaser’[s Utilities Director attached hereto as Exhibit G.
(f) The Purchaser shall have paid to IBank the Origination Fee.
(g) The Purchaser shall have provided satisfactory evidence that it has expended fully
its funds, or has immediately available committed funds to expend, for each of the items in Exhibit
H, Schedule of Sources and Uses of Facility Funds, denoted to be the responsibility of the
Purchaser, if any.
(h) The Purchaser shall have provided satisfactory evidence in IBank’s reasonable
discretion that as of the Effective Date the lien of this Agreement on Net System Revenues is on
Parity with the liens on Net System Revenues of the 2012 Bond Instrument and the 2018 Bond
Instrument.
ARTICLE II
TERMS OF SALE
SECTION 2.01 Purchase and Sale.
IBank hereby agrees to sell to the Purchaser, and the Purchaser hereby agrees to purchase
from IBank, the Facility under and subject to the terms of this Agreement. This Agreement
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constitutes a continuing agreement between the Purchaser and IBank to secure the full and final
payment of the Purchase Price, subject to the covenants, agreements, provisions and conditions
herein contained.
SECTION 2.02 Design, Acquisition, Construction, and Sale of the Facility.
(a) IBank hereby agrees to perform all necessary acts, including but not limited to
acquisition, entitlement, permitting, installation, design, remediation and improvement, to
construct and deliver an operational Facility (“Facility Delivery”) for the benefit of, and to sell the
Facility to, the Purchaser. In order to implement this provision, IBank hereby appoints the
Purchaser as its agent for the purpose of performing all necessary acts to achieve Facility Delivery;
and the Purchaser hereby accepts such appointment and agrees to perform all acts necessary to
achieve Facility Delivery, including, but not limited to, entry into such engineering, design and
construction contracts and purchase orders as may be necessary, as agent for IBank, to achieve
Facility Delivery. The Purchaser hereby agrees that as such agent it will cause the Facility
Delivery to be diligently pursued and completed as soon as reasonably possible given the nature
of, and inherent challenges in connection with, the construction of the Facility and prevailing
market conditions. IBank hereby agrees to sell, and hereby sells, the Facility to the Purchaser.
The Purchaser hereby agrees to purchase, and hereby purchases, the Facility from IBank.
Notwithstanding the foregoing, it is hereby expressly understood and agreed that IBank shall have
no obligations whatsoever for Facility Delivery and shall, except for providing the Facility Funds
pursuant to the terms of this Agreement, be under no liability of any kind or character whatsoever
for the payment of any costs or expenses incurred by the Purchaser (whether as agent for IBank or
otherwise) for any of the actions associated with the Facility Delivery and that all such costs and
expenses shall be paid by the Purchaser, regardless of whether Facility Funds are sufficient to
cover all such costs.
(b) The Purchaser represents and warrants that all construction contracts and
subcontracts necessary for Facility construction have been or will be awarded pursuant to all
competitive bidding requirements applicable to the Purchaser for similar construction contracts
and subcontracts.
(c) The Purchaser agrees to achieve Facility Delivery by July 1, 2021, or such later
date as consented to by IBank (which consent shall not unreasonably withheld).
(d) In the event IBank is served with a stop payment notice in connection with the
Facility, the Purchaser shall within thirty (30) days (or such longer period as may be consented to
by IBank, which consent shall not unreasonably withheld) cause such stop payment notice to be
discharged or released, whether by payment of the sum requested in such stop payment notice, by
procurement of a stop payment notice release bond, or by any other legally available means. IBank
shall withhold from the Purchaser amounts sufficient to pay the claim stated in the stop payment
notice, and to otherwise comply with applicable law, until the Purchaser provides reasonably
satisfactory evidence to IBank that such stop payment notice is released and/or discharged.
SECTION 2.03 Payment of Purchase Price; Term; Interest Rates.
(a) The Purchase Price to be paid by the Purchaser to IBank hereunder is the sum of
the principal amount of the Purchaser’s obligation hereunder plus interest, subject to prepayment
as provided in Section 2.08. Interest shall accrue on the entire principal balance, whether or not
disbursed, as set forth in the Amortization Schedule.
(b) For purposes of this Agreement:
(1) The total principal amount of the Purchase Price to be paid by the Purchaser
to IBank hereunder is $14,300,000.
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(2) The term of this Agreement commences on the Effective Date and ends on
June 1, 2040, except as sooner terminated as set forth herein or otherwise extended.
(3) The interest rate is 2.50% per annum.
(c) For purposes of compliance with Federal Tax laws applicable to IBank’s Proceeds
Bonds and/or Secured Bonds, the Purchaser hereby establishes a “Payment Account” within the
Enterprise Fund and agrees to deposit monies intended for paying such Installment Payments in
the Payment Account until the time that such Installment Payments become due and payable
whereupon the Purchaser would take steps to pay Installment Payments as provided herein.
(d) The Purchaser shall make Installment Payments of principal and interest as set forth
in the Amortization Schedule. IBank shall calculate the Amortization Schedule based on (i) the
initial principal amount of the Purchase Price as set forth in Section 2.03(b)(1) hereto, (ii) the term
of this Agreement as set forth in Section 2.03(b)(2) hereto, and (iii) the interest rate as set forth in
Section 2.03(b)(3) hereto (collectively, the “Amortization Terms”), and shall attach the
Amortization Schedule as Exhibit E hereto upon the Effective Date. Interest shall commence to
accrue hereunder on June 19, 2020, as set forth in the Amortization Schedule. All payments of
interest shall be computed on the basis of a 360-day year of 12 30-day months. In the absence of
manifest error, the Amortization Schedule shall be final, conclusive, and binding on the Purchaser.
(1) The first principal payment shall be due June 1, 2021, as set forth in the
Amortization Schedule.
(2) Interest only payments will be based upon the total outstanding principal
component of the Purchase Price, including the amounts not disbursed, using an interest rate of
2.50% per annum.
(3) Interest shall accrue on the entire outstanding principal balance of the
Purchase Price, whether or not Facility Funds have been disbursed, all as set forth in the
Amortization Schedule. Provided, however, as an offset against interest paid on undisbursed
Facility Funds, the Purchaser shall receive payment following the end of each IBank Fiscal Year
on any undisbursed portions of the Facility Funds (excepting any undisbursed Facility Funds
subject to a Facility Funds Reduction, as set forth in this Agreement) of the lesser of: (i) the actual
interest earned by IBank during such IBank Fiscal Year on the undisbursed portions of the Facility
Funds, or (ii) the interest that would have accrued during such IBank Fiscal Year on the
undisbursed portions of the Facility Funds calculated using the interest rate of this Agreement.
Said reimbursement shall be in the form of a check payable to the order of the Purchaser at the
address set forth in Section 8.09 of this Agreement on or about the ninetieth (90 th) calendar day
following the end of the IBank Fiscal Year.
(e) Commencing on the day following the end of the interest only period (if any), the
principal component of the Purchase Price shall be fully amortized over the remaining term of this
Agreement.
(f) IBank may, in its sole and absolute discretion, revise the Amortization Schedule (a
“Revised Amortization Schedule”) subsequent to the Effective Date (and promptly provide the
Purchaser a copy thereof) to (i) correct a computational error in the prior Amortization Schedule,
(ii) account for any partial prepayment permitted under Section 2.08, or (iii) account for any
Facility Funds Reduction permitted under Section 2.08. Any Revised Amortization Schedule shall
be calculated (i) such that IBank will receive the aggregate sum of all principal and interest
Installment Payments it would have received had the Amortization Schedule been calculated
correctly based on the Amortization Terms and interest commenced to accrue on June 19, 2020,
(ii) to account for any partial prepayment, or (iii) to account for any Facility Funds Reduction, as
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applicable. The Revised Amortization Schedule shall be incorporated herein automatically upon
its completion by IBank, and in the absence of manifest error, any such Revised Amortization
Schedule will be final, conclusive, and binding on the Purchaser.
(g) The obligation of the Purchaser to pay the Purchase Price by paying the Installment
Payments and Additional Payments is, subject to Section 5.10, absolute and unconditional. Until
such time as the Purchase Price shall have been paid in full, the Purchaser shall not discontinue or
suspend any Installment Payments or Additional Payments required to be paid by it under this
Agreement when due, whether or not the Facility or any part thereof is operating or operable, or
its use is suspended, interfered with, reduced, curtailed or terminated in whole or in part . The
payment of the Installment Payments and payment of the IBank Annual Fee component of the
Additional Payments shall not be subject to reduction whether by offset or otherwise and shall not
be conditional upon the performance or nonperformance by any party to any agreement for any
cause whatsoever.
SECTION 2.04 Payment on Business Days.
Whenever in this Agreement any amount is required to be paid on a day that is not a
Business Day, such payment shall be required to be made on the Business Day immediately
following such day.
SECTION 2.05 Disbursement of Facility Funds.
(a) IBank shall disburse Facility Funds solely for the purposes set forth in Exhibit H
hereto. The aggregate sum of disbursements for each category set forth in Exhibit H shall not
exceed the corresponding amounts set forth in Exhibit H. Upon compliance with disbursement
conditions set forth herein and receipt of a written request for disbursement, IBank will disburse a
portion of the Facility Funds to the Purchaser for Facility Costs in amounts of at least five thousand
dollars ($5,000), up to a total aggregate amount not to exceed the Facility Funds. All requests for
payment shall be accompanied by information and documentation as may be requested by IBank
to determine the amount of Facility Funds to be disbursed.
(b) Each disbursement request shall specify one or more of the following for Facility
Funds sought in the disbursement request:
(1) The Purchaser previously paid the Facility Costs and is requesting
reimbursement; or
(2) The Purchaser will pay the Facility Costs directly upon receipt of funds
from IBank.
(a) By submitting to IBank a disbursement request of the type set forth in subparagraph
(b)(1), above, the Purchaser represents and warrants that it has previously paid the Facility Costs
indicated in such disbursement request. By submitting to IBank a disbursement request of the type
set forth in subparagraph (b)(2), above, the Purchaser represents and warrants that it will pay the
Facility Costs indicated in such request directly upon receipt of funds from IBank.
(b) No Facility Funds shall be disbursed unless and until IBank receives
documentation, satisfactory to IBank, demonstrating that the Purchaser has incurred costs that
constitute both reasonable and necessary Facility Costs and which are consistent with the cost
categories, amounts and requirements described in this Agreement.
(c) Unless otherwise consented to in writing by IBank, the Purchaser must both:
(1) begin Facility construction no later than six months after the Effective Date; (2) achieve
Facility Delivery and commence occupation and use of the Facility by the date set forth in
paragraph 2.02(c); and (3) submit final invoices to IBank for the entire amount of the Facility
Funds no later than 35 months after the Effective Date. If the Purchaser fails to meet any of these
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conditions, IBank may, among other legally available remedies, elect to withhold any and all
undisbursed Facility Funds pursuant to Section 2.14 herein.
(d) Notwithstanding any contrary provisions of this Agreement or any related
documents, under no circumstances will IBank be obligated to make disbursements in excess of
the lesser of (i) actual Facility Costs incurred or (ii) the amount of the Facility Funds.
(e) Not more than ninety-five percent (95%) of each invoice payable from Facility
Funds designated for construction shall be disbursed until IBank receives a recorded notice of
completion for the Facility or other evidence of completion satisfactory to IBank and the Purchaser
has met all conditions precedent to final disbursement set forth herein.
SECTION 2.06 Additional Payments.
(a) The Purchaser shall pay Additional Payments to IBank as follows:
(1) A payment of the IBank Annual Fee on June 1st of each year during the term of
this Agreement in an amount equal to 0.3% of the outstanding principal component of the
remaining Installment Payments as set forth in the Amortization Schedule. Any unpaid portion of
the IBank Annual Fee shall accrue interest at the lesser of 12% per annum or the Maximum Rate;
and
(2) Amounts in each year as shall be required by IBank for the payment of
extraordinary expenses of IBank in connection with any amendment or modification of this
Agreement requested by the Purchaser, an Event of Default, or the enforcement of this Agreement
or any amendments hereto, including all expenses, fees and costs of accountants, trustees, and
attorneys, litigation costs, insurance premiums and all other extraordinary costs of IBank.
Extraordinary expenses and extraordinary costs are those documented expenses and costs related
to this Agreement that IBank determines in its reasonable discretion to be in excess of ordinary
and customary expenses and costs incurred as part of the IBank Annual Fee pursuant to this Section
2.06. IBank shall from time-to-time submit invoices to the Purchaser for such Additional
Payments, together with any appropriate supporting documents for such extraordinary costs or
expenses. The Purchaser shall pay such invoices by June 1st of the year in which the Borrower
received them and any amounts not so paid shall accrue interest at the lesser of 12% per annum or
the Maximum Rate;
(b) Reserved
(c) Unless expressly waived by IBank in writing, in the event the Purchaser fails to
cure any Reporting Covenants noncompliance as set forth in Section 5.03(f) or fails to cure any
Replacement Agreement Covenant noncompliance within 30 days after receipt by the Purchaser
of the replacement agreement from IBank as set forth in Section 5.11 of this A greement, the
amount of $1,000, shall automatically be imposed monthly as liquidated damages charged to the
Purchaser and not as a penalty (the “Liquidated Damages Charge”), and shall continue to be
imposed throughout the Liquidated Damages Period. The Purchaser shall be obligated to pay the
Liquidated Damages Charge as Additional Payments. Such Additional Payment shall be reflected
in an IBank invoice to the Purchaser. The Purchaser agrees that, under the circumstances existing
as of the date of this Agreement, such Liquidated Damages Charge represents a reasonable
estimate of the costs and expenses IBank will incur as a result of the Purchaser’s noncompliance
with the Reporting Covenants and/or the Replacement Agreement Covenant. Nothing herein shall
be construed as an express or implied agreement by IBank to forbear on its exercise of any other
rights or remedies provided by this Agreement, as a waiver of such rights or remedies, or as a
waiver of any default or Event of Default under this Agreement.
SECTION 2.07 Reserved.
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SECTION 2.08 Limitations on Prepayment and Facility Funds Reductions.
(a) Limitation on Early Prepayment. Except as provided in Section 5.10 (regarding
use of Net Proceeds for prepayment), the Purchaser is not permitted to prepay all or a portion of
the outstanding principal component of the Purchase Price during the period commencing with the
Effective Date and ending with the date that is ten (10) years after the Effective Date (the
“Prohibited Prepayment Period”).
(b) Authorized Prepayment Period. At any time, after ten (10) years from the Effective
Date (the “Authorized Prepayment Period), the Purchaser, upon satisfaction of the conditions of
this Section 2.08, may prepay all or a portion of the outstanding principal amount of the Purchase.
Further, the Purchaser shall pay to IBank all interest accrued and unpaid on the prepayment amount
through the date of prepayment, plus any Additional Payments, plus the pro rata portion of the
IBank Annual Fee.
(c) Facility Funds Reduction. During the Prohibited Prepayment Period the amount of
undisbursed Facility Funds will not be reduced and will continue to accrue interest and other
charges as set forth in this Agreement. During the Authorized Prepayment Period, upon
satisfaction of the conditions of this Section 2.08, the Purchaser may obtain a Facility Funds
Reduction. Further, the Purchaser shall pay to IBank all interest accrued and unpaid on the Facility
Funds Reduction amount through the date of the Facility Funds Reduction, plus any Additional
Payments, plus the pro rata portion of the Annual Fee.
(d) Written Request Required. The Purchaser must provide IBank with its Prepayment
Request in writing and at least ninety (90) days prior to the requested prepayment or reduction
date. IBank will not accept any prepayment funds from the Purchaser, or implement a Facility
Funds Reduction, unless and until all applicable requirements of this Section 2.08 have been met.
(e) Amendment for Partial Prepayment. If during the Authorized Prepayment Period
the Purchaser prepays a portion of the outstanding principal component of the Purchase Price
(through a prepayment pursuant to Section 2.08(c) or the obtaining of a Facility Funds Reduction
pursuant to Section 2.08(d)), then IBank and the Purchaser shall enter into an amendment to this
Agreement reflecting the terms of the prepayment, including a Revised Amortization Schedule,
and the Purchaser shall pay to IBank all interest accrued and unpaid on the prepayment amount,
plus the portion of the outstanding principal component of the Installment Payments approved for
prepayment, plus any Additional Payments, plus the pro rata portion of the Annual Fee. IBank
will not accept any prepayment, and any Facility Funds Reduction will not take effect, until the
Parties have executed such amendment to this Agreement, provided, however, IBank shall not
unreasonably delay the execution and delivery of any such amendment to this Agreement.
(f) Prepayment Agreement for Full Prepayment. In the event the Purchaser elects to
prepay the entire outstanding amount of the Purchase Price as set forth in paragraph 2.08(b), the
Parties shall enter into a prepayment agreement (a “Prepayment Agreement”) in form and content
acceptable to IBank in its reasonable discretion. IBank will not accept a full prepayment, and the
Purchaser’s obligations under this Agreement will not terminate as set forth in Section 8.05 of this
Agreement, until the Parties have executed a Prepayment Agreement; provided, however, IBank
shall not unreasonably delay the execution and delivery of a Prepayment Agreement.
SECTION 2.09 Validity of Pledge and First Lien.
The pledge of the Net System Revenues constitutes a valid pledge of and first position lien
on all of the Net System Revenues on parity with the lien(s) securing the Parity Debt.
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SECTION 2.10 Limited Obligation.
The Purchaser’s obligation to make Installment Payments is a special obligation of the
Purchaser payable solely from Net System Revenues as provided herein and does not constitute a
debt of the Purchaser or the State of California or of any political subdivision thereof within the
meaning of any constitutional or statutory debt limit or restriction.
SECTION 2.11 Permitted Additional Parity Debt.
(a) The Purchaser may, after the Effective Date, issue or incur Parity Debt in such
principal amount as shall be determined by the Purchaser subject to the requirements for additional
obligations as set forth in all existing Parity Debt Instruments and the following specific
conditions, which are hereby made conditions precedent to the Purchaser’s issuance and delivery
of such Parity Debt, provided that to the extent that an existing Parity Debt Instrument conflicts
with any of the requirements set forth in this Section 2.11, the more restrictive provision shall
prevail:
(1) No Event of Default hereunder or under any other instrument secured by
System Revenues shall have occurred and be continuing, and the Purchaser shall otherwise be in
compliance with all covenants set forth in this Agreement in all material respects; and
(2) Net System Revenues calculated pursuant to generally accepted accounting
principles, consistently applied, and excluding the proceeds of any taxes and also excluding any
balances in any fund at the beginning of the period of the computation, as shown by the books of
the Purchaser for the most recently completed Fiscal Year, or any more recent twelve month period
selected by the Purchaser ending not more than sixty (60) days prior to the adoption of the
resolution pursuant to which instrument such Parity Debt is issued or incurred, as shown by the
books of the Purchaser, plus, at the option of the Purchaser, either or both of the items below
designated in subsections (b)(1) and (b)(2), shall have amounted to at least 1.25 times the
Maximum Annual Debt Service taking into consideration the maximum annual debt service
payable in any Fiscal Year on the proposed Parity Debt, plus any regularly-occurring fees the
Purchaser is required to pay under the applicable Parity Debt Instrument, as set forth in the Report
of an Independent Accountant or Independent Consultant delivered to IBank; provided, however,
that where the proposed Parity Debt is with IBank, no Report of an Independent Accountant or
Independent Consultant shall be required.
(b) Either or both of the following allowances may be added to Net System Revenues
for the purpose of meeting the condition contained in subsection (a)(2) above:
(1) An allowance for increased System Revenues from any additions to or
improvements or extensions of the System to be made with the proceeds of such proposed Parity
Debt, and also for System Revenues from any such additions, improvements, or extensions which
have been made from moneys from any source but which, during all or any part of such Fiscal
Year or any more recent twelve month period, were not in service, all in an amount equal to ninety
percent (90%) of the estimated additional average annual System Revenues to be derived from
such additions, improvements, and extensions for the first thirty six (36) month period following
closing of the proposed Parity Debt, all as shown in the Report of an Independent Accountant or
Independent Consultant delivered to IBank; provided however, that in those instances where the
proposed Parity Debt is with IBank, no Report of an Independent Accountant or Independent
Consultant shall be required; and/or
(2) An allowance for increased System Revenues arising from any increase in
the charges made for service from the System which has become effective prior to the incurring of
such proposed Parity Debt but which, during all or any part of such Fiscal Year or any more recent
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twelve (12) month period, was not in effect in an amount equal to one hundred percent (100%) of
the amount by which System Revenues would have been increased if such increase to charges had
been in effect during the whole of such time period and any period prior to the incurring of such
proposed Parity Debt, as shown in the Report of an Independent Accountant or Independent
Consultant delivered to IBank; provided however, that where the proposed Parity Debt is with
IBank, no Report of an Independent Accountant or Independent Consultant shall be required.
(c) For purposes of making the calculations set forth in subsection (a)(2):
(1) If any Parity Debt includes capital appreciation bonds, then the accreted
value payment thereof shall be deemed a principal payment and interest that is compounded and
paid as accreted value shall be deemed due on the scheduled redemption or payment date of such
capital appreciation bond;
(2) If any Parity Debt includes interest payable pursuant to a variable interest
rate formula, the variable interest rate portion of such Parity Debt for periods when the actual
interest rate cannot yet be determined, shall be assumed to be the maximum interest rate under the
Parity Debt.
(d) The Purchaser shall deliver to IBank, prior to incurring or issuing such proposed
Parity Debt, a copy of the proposed Parity Debt Instrument and Certificate of the Purchaser
certifying that the conditions precedent to the issuance of such Parity Debt set forth in subsections
(a) and (b) above have been satisfied and, as applicable, the Report required by subsections (a) and
(b) above has been delivered; provided however, that where the proposed Parity Debt is with
IBank, no copy of the proposed Debt Instrument nor Report shall be required and the certification
required by this Section 2.11(d) may be made as part of the Parity Debt Instrument for the new
IBank Parity Debt.
(e) Notwithstanding subsections (a)(2), (b), (c), and (d) above, proposed Parity Debt to
be issued for the purpose of refunding outstanding Parity Debt may be issued without compliance
with subsections (a)(2), (b), (c) and (d) above, so long as such refunding results in lower Parity
Debt Service in each Fiscal Year after such refunding and the final maturity date of the refunding
Parity Debt is no later than the final maturity date of the refunded Parity Debt. The Purchaser shall
deliver to IBank the Parity Debt Instrument for such refunding within 30 days of such Parity Debt
issuance.
SECTION 2.12 The Purchaser’s Obligation for Other Facility Costs.
The Purchaser acknowledges and agrees that the amount of IBank’s obligations under this
Agreement is limited to the amount of the Facility Funds. As such, it is the Purchaser’s obligation
to pay all other costs associated with or needed for completion of the Facility in excess the Facility
Funds amount.
SECTION 2.13 Facility Description.
For the purposes of this Agreement, the description of each of the Facility shall be as set
forth in Exhibit B hereto.
SECTION 2.14 Withholding of Facility Funds.
(a) IBank may withhold all or any portion of the Facility Funds in the event that:
(1) The Purchaser has violated any of the material terms, provisions,
conditions, commitments, representations, warranties, or covenants of this Agreement, as
determined by IBank in its reasonable discretion, or if an Event of Default has occurred; or
(2) The Purchaser is unable to demonstrate, to the satisfaction of IBank in its
reasonable discretion, the ability to complete the Facility or to maintain adequate progress toward
completion thereof.
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(b) In the event that Facility Funds are withheld from the Purchaser, IBank shall notify
the Purchaser of the reasons, identify any conditions the Purchaser must satisfy in order to resume
disbursements, and advise the Purchaser of the time in which to remedy the failure or violation or
satisfy the applicable conditions.
(c) If Facility Funds are withheld pursuant to this section, the Purchaser remains
obligated to repay the entire amount of the Purchase Price but to the extent applicable, the
Purchaser may submit to IBank a Facility Funds Reduction Request pursuant to Section 2.08.
SECTION 2.15 Reserve Account.
In the event that (i) the Purchaser incurs Parity Debt after the Effective Date in accordance
with the requirements of Section 2.11; and (ii) such Parity Debt requires the Purchaser to establish
a reserve fund or account, unless waived in writing by IBank the Purchaser shall establish, fund,
and maintain, so long as any obligations under this Agreement remain outstanding, a reserve
account in favor of IBank in an amount equal to the reserve requir ement of such Parity Debt
multiplied by the proportion of the outstanding principal balance of the Purchase Price of this
Agreement to the Parity Debt Amount. By way of example only, if the Parity Debt is in the amount
of $10,000,000 and the reserve requirement for such Parity Debt is $1,000,000, and the outstanding
principal balance of the Purchase Price is $5,000,000, then the reserve fund or account to be
established in favor of IBank pursuant to this Section 2.15 shall be equal to $500,000
(({outstanding balance of Purchase Price}/$10,000,000) x $1,000,000). Said reserve account shall
be established and funded immediately upon the closing of the Parity Debt transaction.
SECTION 2.16 Permitted Subordinate Debt.
The Purchaser may issue or incur Subordinate Debt following the Effective Date in such
principal amount as shall be determined by the Purchaser subject to the following specific
conditions precedent to the issuance or incurrence of such Subordinate Debt.
(a) No Event of Default hereunder, and no default under any other obligation or
instrument secured by Net System Revenues, shall have occurred and be continuing, and the
Purchaser shall be in compliance with all covenants of this Agreement and any other instrument
securing, evidencing, governing, or relating to other obligations secured by, Net System Revenues.
(b) Net System Revenues calculated pursuant to generally accepted accounting
principles, consistently applied, and excluding the proceeds of any taxes and also excluding any
balances in any fund at the beginning of the period of the computation, as shown by the books of
the Purchaser for the most recently completed Fiscal Year, or any more recent twelve (12) month
period selected by the Purchaser ending not more than sixty (60) days prior to the adoption of the
resolution pursuant to which instrument such Subordinate Debt is issued or incurred, as shown by
the books of the Purchaser, shall have amounted to at least 1.10 times the aggregate sum of the
Maximum Annual Debt Service of all debt secured by Net System Revenues and the maximum
annual debt service payable in any Fiscal Year on all Subordinate Debt, including the proposed
Subordinate Debt, plus any regularly-occurring fees the Purchaser is required to pay under any
applicable Parity Debt Instrument, as set forth in the Report of an Independent Accountant or
Independent Consultant delivered to IBank.
ARTICLE III
PLEDGE OF REVENUES; APPLICATION OF FUNDS
SECTION 3.01 Pledge of Net System Revenues.
The Installment Payments and Additional Payments and all Parity Debt shall be equally
secured by a pledge of and first lien on all of the Net System Revenues, without preference or
priority for series, issue, number, dated date, sale date, date of execution or date of delivery. The
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Purchaser hereby grants a lien securing the obligations of this Agreement on Net System Revenues,
without any physical delivery thereof or further act, and such lien shall be valid and binding as
against all parties having claims of any kind in tort, contract or otherwise against the Purchaser.
Neither the Installment Payments, the Additional Payments nor this Agreement is a debt of IBank,
the State or any of its political subdivisions (other than the Purchaser) and neither IBank, the State
nor any of its political subdivisions (other than the Purchaser) is liable thereon. Pursuant to Section
5451 of the Government Code of the State, the pledge of the Purchaser’s Net System Revenues
for the repayment of the principal of, premium, if any, and interest components of the Installment
Payments constitutes a first lien and security interest which immediately attaches to such Net
System Revenues, and is effective and binding against the Purchaser and its successors and
creditors and all others asserting rights therein irrespective of whether those parties have notice of
the pledge, irrespective of whether such amounts are or may be deemed to be a fixture and without
the need for physical delivery, recordation, filing or further act.
SECTION 3.02 System Revenues to be Deposited in the Enterprise Fund.
In order to carry out its obligation to pay the Installment Payments and Additional
Payments, the Purchaser agrees and covenants that it shall maintain the Enterprise Fund as a
distinct fund separate and apart from the Purchaser’s other funds. All System Revenues received
by it shall be deposited when and as received in trust in the Enterprise Fund and shall be applied
and used only as and in the order provided herein: The Purchaser shall pay all Operations and
Maintenance Costs (including amounts reasonably required to be set aside in contingency reserves
for Operations and Maintenance Costs the payment of which is not then immediately required)
from the Enterprise Fund as they become due and payable, and all remaining money on deposit in
the Enterprise Fund shall then be used to pay Section 3.03 amounts. After making all the set asides
and payments hereinabove required to be made in each Fiscal Year, the Purchaser may expend in
such Fiscal Year any remaining money in the Enterprise Fund for any lawful purpose of th e
Purchaser. The Purchaser agrees and covenants to maintain the Enterprise Fund so long as any
portion of the Purchase Price remains unpaid.
SECTION 3.03 Priority of Payments Made from the Enterprise Fund.
The Purchaser shall promptly pay the following amounts in the following order and at the
following times:
(a) Installment Payments and Additional Payments.
(1) The Purchaser shall promptly pay to (A) IBank (i) the principal portion of
the Installment Payments, together with the IBank Annual Fee, which is due at IBank by June 1st
of each year, as set forth on the Amortization Schedule, and (ii) the interest portions of Installment
Payments, which are due at IBank by each Interest Payment Date, as set forth in the Amortization
Schedule; and (B) the trustee(s) or holder(s) of any Parity Debt, payment of Parity Debt Service
as it becomes due and payable, all on a pro rata basis.
(2) The Purchaser shall promptly pay to (A) IBank Additional Payments due
pursuant to Section 2.06, and (B) the trustee(s) or holder(s) of any other Parity Debt, payment of
any payments due under the applicable Parity Debt Instrument that are not Parity Debt Service, all
on a pro rata basis.
(b) Reserve Accounts.
Any amounts needed to replenish reserve accounts established hereunder or for any Parity
Debt, all on a pro rata basis.
(c) Approved Subordinate Debt Payments.
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Payment of Subordinate Debt Service, together with payment of any sums due under the
applicable Subordinate Debt Instrument that are not Subordinate Debt Service. all as it becomes
due and payable on Subordinate Debt pursuant to Subordinate Debt issued or incurred in
accordance with Section 2.16 hereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
SECTION 4.01 Organization; Authority.
The Purchaser is duly organized and existing as a municipal corporation under the laws of
the State and has all necessary power and authority to enter into and perform its duties (including,
but not limited to, the authority to set rents, fees, rates and charges without the approval of any
other governing body and to pledge the Net System Revenues ) under this Agreement.
SECTION 4.02 Agreement Valid and Binding.
This Agreement has been duly authorized, executed and delivered by the Purchaser and
constitutes the legal, valid and binding obligation of the Purchaser, enforceable in accordance with
its terms, except as limited by applicable bankruptcy, insolvency, debt adjustment, receivership,
fraudulent conveyance or transfer, moratorium, reorganization, arrangements or other similar laws
affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial
discretion in appropriate cases and to the limitations on legal remedies against public entities in
the State or other laws or equitable principles affecting the enforcement of creditors’ rights
generally.
SECTION 4.03 No Conflict in Execution of Agreement.
The execution and delivery by the Purchaser of this Agreement and compliance with the
provisions hereof will not conflict with or constitute a breach of or default by the Purchaser under
any law, administrative regulation, court decree, resolution, charter, by-law, or any agreement to
which the Purchaser is subject or by which it is bound or by which its properties may be affected.
SECTION 4.04 No Litigation.
Except for the Kessner Complaint, there is no action, suit, proceeding or investigation at
law or in equity before or by any court or governmental agency or body pending and notice of
which has been received by the Purchaser or, to the best of the Purchaser’s knowledge, threatened
against the Purchaser to restrain or enjoin the execution or delivery of this Agreement, or in any
way contesting or affecting the validity of this Agreement, or contesting the powers of the
Purchaser to enter into or perform its obligations under this Agreement , or that would affect the
Purchaser’s ability to perform its obligations under this Agreement , including, but not limited to,
the pledge of Net System Revenues.
SECTION 4.05 No Breach or Default.
The Purchaser is not in breach of or in default under any applicable law or administrative
regulation of the State or the United States, the Constitution of the State (including article XVI,
section 18 thereof), any applicable judgment or decree, any agreement, indenture, bond, note,
resolution, agreement or other instrument to which the Purchaser is a party or is otherwise subject
which, if not resolved in favor of the Purchaser, would have a material adverse impact on the
Purchaser’s ability to perform its obligations under this Agreement and no event has occurred and
is continuing which, with the passage of time or the giving of notice, or both, would constitute a
default or an event of default under any such instrument which, if not resolved in favor of the
Purchaser, would have a material adverse impact on the Purchaser’s ability to perform its
obligations under this Agreement.
SECTION 4.06 No Consent, Approval, or Permission Necessary.
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No consent or approval of any trustee or holder of any indebtedness of the Purchaser, any
entity to which the Purchaser is a member, or any other third party, and no consent, permission,
authorization, order or licenses of, or filing or registration with, any governm ental authority, is
necessary in connection with the execution and delivery of this Agreement or the consummation
of any transaction contemplated herein, except as have been obtained or made and as are in full
force and effect.
SECTION 4.07 Accuracy and Completeness of Information Submitted to IBank.
The information relating to the Purchaser and its System generated and submitted by the
Purchaser, and to the best of the Purchaser’s knowledge the information relating to the Purchaser
and the System generated by third parties, and in either case delivered by the Purchaser to IBank,
including, but not limited to, all information in the application for Facility Funds, was true at the
time submitted to IBank and, as of the Effective Date, remains true and correct in all material
respects; and such information did not and does not contain any untrue or misleading statement of
a material fact or omit to state any material fact necessary to make the statements therein not
misleading in light of the circumstances under which they were made.
SECTION 4.08 Financial Statements of the Purchaser.
The Purchaser’s financial statements that have been furnished to IBank were prepared in
conformity with generally accepted accounting principles, consistently applied, and fairly present
in all material respects the financial condition of the Purchaser as of the date thereof and the results
of its operations for the period covered thereby. As of the Effective Date, to the best of the
Purchaser’s knowledge, there has been no material adverse change in the business, condition
(financial or otherwise), or operations of the Purchaser since the date of such financial statements.
Notwithstanding the foregoing, the Purchase is uncertain of the economic effect of the novel
coronavirus pandemic, as a result of which the Governor of the State proclaimed a State of
Emergency on March 4, 2020, and is unable to ascertain the degree to which such economic effect
will, or will not, impact the Purchasers Net System Revenues and sums within the Enterprise Fund.
SECTION 4.09 Licenses, Permits, and Approvals for Completion of Facility.
The Purchaser has obtained, or has applied for and will obtain within a timeframe sufficient
for the Purchaser to achieve Facility Delivery and to operate the Facility by the date set forth in
paragraph 2.02(c), all licenses, entitlements, certificates, authorizations, permits and approvals
from any governmental agency or authority having jurisdiction over the Purchaser or the Facility
required to commence construction of the Facility, for Facility Delivery, and to commence
operations of the Facility.
SECTION 4.10 Authority to Operate the System.
The Purchaser has obtained all licenses, entitlements, certificates, authorizations, permits,
and approvals from any governmental agency or authority having jurisdiction over the Purchaser
or the System required for the operation of the System.
SECTION 4.11 Valid Title; No Conflict.
(a) The Purchaser, upon completion of the Facility, will have good and valid title to
the Facility sufficient to carry out the purposes of this Agreement.
(b) To the best of the Purchaser’s knowledge no officer, member of the Board of
Directors, or official of IBank has any material interest in the Facility, the Purchaser, or in the
transactions contemplated by this Agreement. IBank represents to the Purchaser that, to the best
of the IBank’s knowledge no officer, member of the Board of Directors, or official of IBank has
any material interest in the Facility, the Purchaser, or in the transactions contemplated by this
Agreement.
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SECTION 4.12 Other Liens; No Lien Senior to IBank Lien.
Except as may otherwise be described herein, as of the Effective Date, there is no other
debt or obligation that places a lien on or in any way encumbers the Purchaser’s Net System
Revenues other than the first lien established by Section 3.01 of this Agreement, and, to the extent
outstanding, the lien established by the 20012 Bonds Instrument and/or the 2018 Bonds
Instrument. Further, the Purchaser represents and warrants that the lien on Net System Revenues
established by Section 3.01 of this Agreement is not junior to any lien.
SECTION 4.13 Purchaser’s Compliance with Prop 218 Law.
The Purchaser hereby represents and warrants that, as of the Effective Date, the rates, fees
and charges it imposes on its System customers are legal, valid, and comply with the Prop 218
Law. The Purchaser further specifically warrants and represents that (i) the rates, fees and char ges
it imposes on its System customers do not exceed, in the aggregate, the funds required to operate
the System, and (ii) its method of allocating rates, fees and charges among users of the System
complies with the proportionality requirements of the Prop 218 Law. IBank acknowledges the
Purchaser has provided notice of the Kessner Complaint, in which certain plaintiffs alleged, among
other things, that the Purchaser has failed to comply with Prop 218 Law.
SECTION 4.14 No Challenge to Purchaser’s Rates, Fees and Charges.
The Purchaser hereby represents and warrants that, as of the Effective Date, there is no
action, suit, proceeding or investigation at law or in equity before or by any court or governmental
agency or body pending and notice of which has been received by the Purchaser or, to the best of
the Purchaser’s knowledge, threatened challenging Purchaser’s compliance with the Prop 218 Law
as it applies to Purchaser’s rates, fees and charges, except for the Kessner Complaint.
SECTION 4.15 Purchaser’s Compliance with Conditions Precedent to Parity Debt
Set Forth in 2012 Bonds Instrument and 2018 Bonds Instrument.
The Purchaser represents, warrants, and by the execution of this Agreement certifies as of
the Effective Date, that (1) all conditions under the 2012 Bonds Instrument and the 2018 Bonds
Instrument precedent to the lien of this Agreement being on parity with the lien imposed by the
2012 Bonds Instrument and the 2018 Bonds Instrument have been satisfied, and (2) the lien of this
Agreement is on equal priority position with the liens of each of the 2012 Bonds Instrument and
the 2018 Bonds Instrument.
SECTION 4.16 Continuing Validity of Representations and Warranties.
Unless the representations and warranties set forth in this Article IV are limited by their
express terms to a specific time period or a point in time, the foregoing representations and
warranties are true, accurate, and correct as of the Effective Date and shall continue to be true,
accurate, and correct throughout the term of this Agreement.
ARTICLE V
AFFIRMATIVE COVENANTS OF THE PURCHASER
SECTION 5.01 Punctual Payment.
The Purchaser hereby covenants to punctually pay, or cause to be paid, all payments
required hereunder when due and in all other respects in strict conformity with the terms of this
Agreement, and to faithfully observe and perform all of the conditions, covenants, and
requirements of this Agreement.
SECTION 5.02 Payment of Claims.
The Purchaser hereby covenants that, from time to time, it will pay and discharge, or cause
to be paid and discharged, any and all lawful claims for labor, mater ials or supplies, which, if
unpaid, might become liens or charges upon the System and all personal and real property related
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thereto, or upon the System Revenues or any part thereof, or upon any funds in the hands of IBank,
or which might impair the security for the payment of the Installment Payments or Additional
Payments. Provided, however, nothing herein contained shall require the Purchaser to make any
such payment so long as the Purchaser in good faith shall contest the validity of said claims and
shall act promptly to remove any liens or charges arising from said claims, by, among other things,
obtaining surety bonds to cause the release of such liens or charges.
SECTION 5.03 Books and Accounts; Financial Statements.
(a) The Purchaser hereby covenants that it will keep proper books of record and
accounts in which complete and correct entries shall be made of all transactions relating to the
System Revenues. Such books of record and accounts shall at all times during business hours be
subject to the inspection of IBank or its designee.
To the extent that any continuing disclosure certificates entered into by the Purchaser in
connection with other debt or obligations require the information required in subsections (b)
through (e), the Purchaser may submit a copy of the information and materials required by such
continuing disclosure certificate instead of providing separate statements setting forth the required
information.
(b) The Purchaser shall prepare and file with IBank annually as soon as practicable,
but in any event not later than one hundred eighty (180) days after the close of each Fiscal Year,
so long as this Agreement has not been discharged by IBank, an audited financial statement of the
Purchaser relating to the System Revenues and the Enterprise Fund for the preceding Fiscal Year,
prepared by an Independent Accountant under generally accepted accounting procedures,
consistently applied; provided, however, that in the event that such audited financial statement is
not available by the above-referenced filing date, an unaudited financial statement may be
substituted therefore. In the event an unaudited financial statement is submitted, the Purchaser
shall file the audited financial statement with IBank as soon as it becomes available. The Purchaser
will furnish to IBank such reasonable number of copies of such audited financial statements as
may be required by IBank for distribution (at the expense of the Purchaser). Alternatively, the
Purchaser may furnish electronic copies of such audited financial statements to IBank in portable
document format, or other format acceptable to IBank in its sole and absolute discretion.
(c) Simultaneously with the delivery of the annual financial statements, or more
frequently following forty-five (45) calendar days’ written notice by IBank, as IBank shall
determine in its sole and absolute discretion, the Purchaser shall deliver to IBank a Certificate of
the Purchaser stating the following:
(1) The number of System users as of the end of the Fiscal Year, or as of any
other date specified in writing by IBank in its reasonable discretion;
(2) Calculation of the coverage ratios described in Section 5.06 for the Fiscal
Year most recently ended, or for any other 12-month period as specified in writing by IBank in
its reasonable discretion, together with a certification that adopted rates and charges comply with
the requirements of that section;
(3) Notification of the withdrawal of any System user generating four percent
(4%) or more of System Revenues since the last reporting date;
(4) Any significant System facility retirements or expansions planned or
undertaken since the last reporting date;
(5) Notification of any Parity Debt or Subordinate Debt incurred since the last
reporting date and certification that there has been no default or noncompliance under any
obligation secured by System Revenues;
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(6) Certification that (i) no Event of Default has occurred or is continuing and
no other event has occurred or is continuing, which, with the passing of time or the giving of notice
or of both, would constitute an Event of Default, or (ii) describing in detail any Event of Default
that has occurred and/or any event that has occurred which, with the passing of time or giving or
giving of notice, would constitute an Event of Default;
(7) Certification that the Purchaser is in compliance in all material respects with
the terms of this Agreement, including without limitation the Tax Covenants set forth in Section
5.07 hereof, or if the Purchaser has breached any such covenant, a detailed description of such
breach;
(8) Notification of any other event or circumstance that would materially affect
completion of the Facility or the payment of the Purchase Price;
(9) To the extent the 2012 Bonds Instrument and/or the 2018 Bonds Instrument
continue to impose a lien on Net System Revenues , certification that the Purchaser has in all
material respects complied with, kept, observed, and performed, and continues to comply with,
keep, observe, and perform, all requirements, conditions, covenants, duties, and terms thereunder
for the lien on Net System Revenues created by this Agreement to be on parity with the lien on
Net System Revenues created under the 2012 Bonds Instrument and/or the 2018 Bonds Instrument,
including, but not limited to, satisfying any debt service coverage and reserve account
requirements; and
(10) Such other information as IBank may request in its reasonable discretion.
(d) Subject to any legal requirements regarding the confidentiality or privacy of such
information, the Purchaser shall, upon request, furnish to IBank, in a format provided by IBank,
information concerning employment and other public benefits connected to the Facility.
(e) The Purchaser agrees to notify IBank, immediately, by telephone promptly
confirmed in writing, if any representation made in this Agreement or any representation made in
the application for financing to IBank shall at any time so long as this Agreement is outstanding
prove untrue or incorrect in any manner that could materially adversely affect the Purchaser’s
ability to perform its obligations under this Agreement. Further, the Purchaser agrees to notify
IBank, immediately, by telephone promptly confirmed in writing, if there is a stop payment notice,
litigation or any other legal proceeding which may materially adversely impact the completion of
the Facility. Additionally, the Purchaser agrees to notify IBank, immediately, by telephone
promptly confirmed in writing, if the Purchaser breaches any covenant set forth in this Agreement.
(f) The Purchaser’s covenants set forth in paragraphs 5.03(b) through (d) hereof are
hereinafter referred to as the “Reporting Covenants.”
SECTION 5.04 Protection of IBank’s Security and Rights.
The Purchaser will preserve and protect the security for payment of the Installment
Payments and the rights of IBank thereto. From and after the Effective Date, the payment of
Installment Payments and the Annual Fee component of Additional Payments under this
Agreement shall be incontestable by the Purchaser.
SECTION 5.05 Payments of Taxes and Other Charges.
The Purchaser will pay and discharge, or cause to be paid and discharged, all taxes, service
charges, assessments and other governmental charges, or charges in lieu thereof, which may
hereafter be lawfully imposed upon the Purchaser (to the extent impacting the System or System
Revenues), the System, or the System Revenue when the same shall become due. Nothing herein
contained shall require the Purchaser to make any such payment so long as the Purchaser in good
faith shall contest the validity of said taxes, assessments, or charges and shall have adequate funds
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for the payment thereof. The Purchaser will duly observe and conform to all valid requirements
of any governmental authority relative to the System or any part thereof.
SECTION 5.06 Maintenance of System Revenues; Rate Covenant.
(a) The Purchaser hereby covenants that, to the fullest extent permitted by law, it will
fix, prescribe, charge, and collect, or cause to be fixed, prescribed, charged, and collected, in each
Fiscal Year, such rates, fees, and charges for the use of and for the service furnished by the System
so that Net System Revenues realized (excluding any Development Impact Fees), together with
any amounts on deposit in a rate stabilization fund held by the Purchaser, are in an amount which
will be sufficient to be at least equal to 125% of annual Debt Service, and at least equal to 110%
of the sum of annual Debt Service and annual Subordinate Debt Service for such Fiscal Year.
(b) The Purchaser further covenants that, to the fullest extent permitted by law, it will
fix, prescribe, charge, and collect, or cause to be fixed, prescribed, charged, and collected, in each
Fiscal Year, such rates, fees, and charges for the use of and for the service furnished by the System
so that System Revenues realized are in an amount which will be sufficient to pay the following
amounts in the following order or priority:
(1) All Operations and Maintenance Costs estimated by the Purchaser to
become due and payable in such Fiscal Year;
(2) The Installment Payments, the IBank Annual Fee, and the principal,
interest, and any regulalry-occurring fees provided for under any Parity Debt Instrument for any
outstanding Parity Debt, as each becomes due and payable during such Fiscal Year, without
preference or priority;
(3) All amounts, if any, required to restore the balance of any reserve fund
required under this Agreement or any reserve fund or accounts required under any Parity Debt
Instrument, for any outstanding Parity Debt, to the full amount of any such reserve requirement;
and
(4) All payments required to meet any other obligations of the Purchaser which
are charges, liens, or encumbrances upon, or with are otherwise payable from, the System
Revenues or the Net System Revenues during such Fiscal Year, including any Additional
Payments.
(c) If for any reason Net System Revenues, or System Revenues, as applicable, prove
insufficient to comply with the requirements of subsections (a) and (b), the Purchaser first will
engage an Independent Consultant to recommend revised rents, rates, fees, charges, savings, or
assessments, or any combination thereof, and the Purchaser will, subject to any applicable
requirements and restrictions imposed by law, including, but not limited to, the Prop 218 Law, and
subject to the good faith determination of the Purchaser that such recommendations, in whole or
in part, are in the best interests of the Purchaser, take all actions necessary to increase System
Revenues through any combination of increased rents, rates, fees, charges, savings, or assessments
and that it will do so not later than one year following the date on which Net System Revenues
first fail to meet the requirements of this Section 5.06. The Purchaser may make adjustments from
time to time in such rents, rates, fees, and charges and may make such classification thereof as it
deems necessary, but shall not reduce the rents, rates, fees, and charges then in effect unless the
Net System Revenues from such reduced rents, rates, fees, and charges will at all times be
sufficient to meet the requirements of this section. Notwithstanding the foregoing, in lieu of taking
the preceding actions with respect to the Purchaser’s failure to comply with subsection (a), the
Purchaser may within one hundred eighty (180) days following the date Net System Revenues
first fail to meet the requirements of subsection (a) either establish and fund a rate stabilization
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fund, or increase monies held in an existing rate stabilization fund, in an amount sufficient to
satisfy the requirements of subsection (a). If the Purchaser elects to proceed accordingly, it shall
provide to IBank within such one hundred eighty (180) day period evidence satisfactory to IBank
in its reasonable discretion that the amounts held in such rate stabilization fund are sufficient to
satisfy the requirements of subsection (a).
SECTION 5.07 Tax Covenants.
The Purchaser recognizes that the Facility Funds may be derived from the proceeds of, or
payments made hereunder may be pledged to secure, bonds issued or to be issued by IBank, the
interest on which is excluded from gross income for federal income tax purposes under Section
103 of the Code. In order to maintain the tax-exempt status of, and perform its obligations with
respect to, the Proceeds Bonds and Secured Bonds, the Purchaser will not take any action, or fail
to take any action, if such action or failure to take such action would adversely affect the exclusion
from gross income of the interest on the Proceeds Bonds or Secured Bonds under the Code, and
the Purchaser specifically agrees to comply with all terms and conditions contained herein and to
provide annual certification of its compliance with the tax covenants set forth in this Section 5.07.
The Facility consists of certain improvements to the System, and, to the extent appropri ate for
purposes of the covenants set forth in this Section 5.07, the Facility will be treated as used on the
same basis as the System. The Purchaser will not directly or indirectly use or make any use of the
Facility Funds or any other funds of the Purchaser, or take or omit to take any action, if such use
or action would cause the Proceeds Bonds or Secured Bonds to be “arbitrage bonds” subject to
federal income taxation by reason of section 148 of the Code. In addition, the Purchaser covenants
and agrees that it, and/or any party related to it, will not acquire Proceeds Bonds or Secured Bonds
in an amount related to the amount of the Facility Funds. The provisions of this Section 5.07 shall
survive the discharge of the Purchaser’s obligations hereunder and shall apply to the Trustee or
any other successor or assignee described in Section 8.02.
(a) Eligible Uses of Facility Funds. Unless otherwise agreed to by IBank, Facility
Funds shall be used exclusively for the following purposes: (i) to pay or reimburse the Purchaser
for capital expenditures paid with respect to the Facility that meet the requirements of subsection
(b) of this Section 5.07; (ii) the Origination Fee; and (iii) initial operating expenses directly
associated with the Facility (in aggregate amount not exceeding five percent (5%) of the amount
of the Facility Funds).
(b) Allocation of Facility Funds to Expenditures. On May 21, 2019, the Purchaser
adopted a resolution stating its official intent to be reimbursed from the proceeds of a borrowing
to finance costs of the Facility (the "Reimbursement Resolution"). Absent written agreement by
IBank, all expenditures of Facility Funds will be used to pay or reimburse the Purchaser for capital
expenditures with respect to the Facility that are either:
(1) costs that are Preliminary Costs incurred with respect to the Facility prior
to the start of construction and in an aggregate amount not exceeding twenty percent 20% of the
Facility Funds;
(2) costs paid by the Purchaser no earlier than the date which is sixty (60) days
prior to the date of the adoption of the Reimbursement Resolution; or
(3) costs paid by the Purchaser on or after the Effective Date.
In addition, Facility Funds shall be allocated to paying or reimbursing the Purchaser for
capital expenditures no later than eighteen months after the later of the date the expenditure was
paid or the date the Facility is placed in service, but in the case of costs described in clause (2),
above, such allocations must be made in all events no later than three years after the cost was paid.
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(c) Prohibited Uses of Facility Funds. The Purchaser will not loan any of the Facility
Funds to any other person or entity. The Purchaser will not use Facility Funds directly or indirectly
to make principal, interest, or premium payments with respect to any bond, note, certificate of
participation or other obligation of the Purchaser or any person or entity that is a related party to
the Purchaser within the meaning of Treasury Regulation Section 1.150-1(b).
(d) Expectations Regarding Facility Funds and Facility; No Change in Use. The
Purchaser reasonably expects and consistent with this Section 5.07 hereof to use all Facility Funds
and all of the Facility for the entire stated term to maturity of this Agreement. The Purchaser does
not expect that the Facility or any part thereof will be sold or otherwise disposed of so long as the
Purchaser’s obligations under this Agreement are not discharged. Absent written agreement by
IBank, the Purchaser hereby agrees that it will use all Facility Funds and all of the Facility as set
forth in this Section 5.07.
(e) Funds for Making Installment Payments. All amounts used to fund the Payment
Account will be deemed to have been made from the Purchaser’s funds by using a last-in, first-out
accounting method, and amounts in the Payment Account will be treated as used to pay the
Installment Payments by using a first-in, first-out accounting method. The Purchaser agrees that
the amounts used to pay Installment Payments shall be both received by the Purchaser and utilized
for the payment of Installment Payments within a ninety (90) day period. The Payment Account
will be used primarily to achieve a proper matching of revenues and Installment Payments within
each year; a matching of revenues means that revenue and Installment Payments come in and go
out at approximately the same level and the Payment Account is cleared out to a very low balance
at least one time during the year. Current Revenues in the Payment Account shall be invested
without regard to yield so long as the Purchaser complies with this section.
(f) Nongovernmental Use of Facility Funds and Facility. The Purchaser understands
that the Facility Funds and the Facility are subject to certain restrictions on the use of the Facility
Funds or the Facility by any Nongovernmental Person, other than use as a member of the general
public. For this purpose a Nongovernmental Person will be treated as “using” Facility Funds to
the extent the Nongovernmental Person:
(1) borrows Facility Funds;
(2) acquires an ownership or lease interest with respect to any portion of the
Facility;
(3) uses any portion of the Facility (e.g., as a service provider, operator, or
manager), except pursuant to a contract that meets the requirements of subsection (g) of this
Section 5.07; or
(4) in the case of a Facility that provides water, electricity, or natural gas,
acquires such output from the Facility (except pursuant to generally applicable and uniformly
applied rates that are available to the general public).
The Purchaser hereby represents and covenants that it will not allow more than five percent
(5%) of the Facility Funds or more than five percent (5%) of the Facility to be used directly or
indirectly by any Nongovernmental Person, other than as a member of the general public.
(g) Management Contracts. The Purchaser understands that an arrangement with any
person or organization (other than a state or local governmental unit) which provides for such
person or organization to manage, operate, maintain or provide services with respect to the Facility
(a “Service Contract”) can give rise to use by a Nongovernmental Person that is subject to the
limitations of Section 5.07(f) of this Agreement. However, as of the Effective Date the Internal
Revenue Service (“IRS”) has issued two sets of guidelines that describe situations in which the
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IRS would rule that a Service Contract will not be treated as giving rise to a Nongovernmental
Person’s use of the Facility: (i) the guidelines set forth in Revenue Procedu re 97-13, as amended
by Revenue Procedure 2001-39, and as amplified by Notice 2014-67 (the “Prior Guidelines”); and
(ii) the guidelines set forth in Revenue Procedure 2017-13 (the “Current Guidelines”). The
Purchaser may apply the Prior Guidelines to any Service Contract entered into before August 18,
2017 that is not modified materially or extended on or after that date (other than pursuant to a
renewal option as defined in Treasury Regulation Section 1.141-1(b)). The Purchaser may apply
the Current Guidelines to Service Contracts entered into at any time.
Commencing with the Effective Date, at least thirty (30) days prior to the execution of any
modification to, extension or renewal of, or new operations and maintenance agreement relating
to the Facility or the portion of the System directly affected by the Facility, the Purchaser shall
(i) ensure that any such instrument meets the requirements for qualified management contracts
under the Code, and (ii) provide IBank a copy of any such instrument together with an explanation
of the basis for its conclusion that such instrument meets the requirements for qualified
management contracts under the Code. Provided, however, the Purchaser is not obligated to
provide to IBank contracts for services that are solely incidental to the primary governmental
function, or functions, of the Facility or the portion of the System directly affected by the Facility
(e.g., contracts for janitorial services, landscaping services, office equipment repair, escalator
repair, elevator repair, auditing services, legal services, or similar services).
(1) Current Guidelines. Service Contracts that relate to the use or operation of
the Facility by “service providers,” as that term is used in the Current Guidelines (the “Service
Providers”), will satisfy the Current Guidelines if the requirements of each of the following
subsections is satisfied:
(i) The compensation of the Service Provider under the contract must
be reasonable for the services rendered.
(ii) The contract must not provide to the Service Provider a share of net
profits from the operation of the Facility. Compensation to the Service Provider will not be treated
as providing a share of net profits if no element of the compensation takes into account, or is
contingent upon, either the Facility’s net profits or both the Facility’s revenues and expenses for
any fiscal period. For this purpose, the elements of the compensation are the eligibility for, the
amount of, and the timing of the payment of the compensation. Further, solely for purposes of
determining whether the amount of the compensation meets the r equirements of this section
5.07(g)(1)(ii), any reimbursements of actual and direct expenses paid by the Service Provider to
unrelated parties are disregarded as compensation. Incentive compensation will not be treated as
providing a share of net profits if the eligibility for the incentive compensation is determined by
the Service Provider's performance in meeting one or more standards that measure quality of
services, performance, or productivity, and the amount and the timing of the payment of the
compensation meet the requirements of this section 5.07(g)(1)(ii).
(iii) The contract must not, in substance, impose upon the Service
Provider the burden of bearing any share of net losses from the operation of the Facility. An
arrangement will not be treated as requiring the Service Provider to bear a share of net losses if:
(A) The determination of the amount of the Service Provider's compensation and the amount of
any expenses to be paid by the Service Provider (and not reimbursed), separately and collectively,
do not take into account either the Facility’s net losses or both the Facility’s revenues and expenses
for any fiscal period, and (B) the timing of the payment of compensation is not contingent upon
the Facility’s net losses. For example, a Service Provider whose compensation is reduced by a
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stated dollar amount (or one of multiple stated dollar amounts) for failure to keep the Facility’s
expenses below a specified target (or one of multiple specified targets) will not be treated as
bearing a share of net losses as a result of this reduction.
(iv) Without regard to whether the Service Provider pays expenses with
respect to the operation of the Facility without reimbursement by the qualified user (e.g., the
Purchaser), compensation for services will not be treated as providing a share of net profits or
requiring the Service Provider to bear a share of net losses under sections 5.02(2) and 5.02(3) of
the Current Guidelines if the compensation for services is: (A) based solely on a capitation fee, a
periodic fixed fee, or a per-unit fee; (B) incentive compensation described in the last sentence of
section 5.02(2) of the Current Guidelines; or (C) a combination of these types of compensation.
(v) Deferral due to insufficient net cash flows from the operation of the
Facility of the payment of compensation that otherwise meets the requirements of sections 5.02(2)
and 5.02(3) of the Current Guidelines will not cause the deferred compensation to be treated as
contingent upon net profits or net losses under sections 5.02(2) and 5.02(3) of the Current
Guidelines if the contract includes requirements that: (A) the compensation is payable at least
annually; (B) the qualified user is subject to reasonable consequences for late payment, such as
reasonable interest rate charges or late payment fees; and (C) the qualified user will pay such
deferred compensation (with interest or late payment fees) no later than the end of five years after
the original due date of the payment.
(vi) The term of the contract, including all renewal options, must not be
greater than the lesser of 30 years or 80 percent of the reasonably expected useful life of the
Facility. For this purpose, economic life is determined in the same manner as under section 147(b)
of the Code as of the beginning of the term of the contract. A contract that is materially modified
with respect to any matters relevant to section 5 of the Current Guidelines is retested under section
5 of the Current Guidelines as a new contract as of the date of the material modification.
(vii) The qualified user must exercise a significant degree of control over
the Facility. Service Contract provides such control if it requires the qualified user to approve:
(A) The annual budget of the Facility;
(B) Capital expenditures with respect to the Facility (for this
purpose, a qualified user may show approval of capital expenditures for the Facility by approving
an annual budget for capital expenditures described by functional purpose and specific maximum
amounts);
(C) each disposition of property that is part of the Facility;
(D) rates charged for use of the Facility (for this purpose, a
qualified user may show approval of rates charged for use of the managed property by either
expressly approving such rates (or the methodology for setting such rates) or by including in the
Service Contract a requirement that the Service Provider charge rates that are reasonabl e and
customary as specifically determined by an independent third party); and
(E) the general nature and type of use of the Facility (for
example, the type of services).
(i) The qualified user bears the risk of loss upon damage or destruction
of the Facility (for example, upon force majeure). A qualified user does not fail to meet this risk
of loss requirement as a result of insuring against risk of loss through a third party or imposing
upon the Service Provider a penalty for failure to operate the Facility in accordance with the
standards set forth in the Service Contract.
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(ii) The Service Provider must agree that it is not entitled to and will not
take any tax position that is inconsistent with being a Service Provider to the qualified user with
respect to the Facility.
(iii) The Service Provider must not have a role or relationship with the
qualified user (e.g., the Purchaser) that, in effect, substantially limits the ability of the qualified
user to exercise its rights, including cancellation rights, under the Service Contract, based on all
the facts and circumstances. Accordingly:
(A) Not more than 20 percent of the voting power of the
governing body of the qualified user (or IBank) in the aggregate may be vested in the Service
Provider and its directors, officers, shareholders, partners, members and employees.
(B) The governing body of the qualified user does not include
the chief executive officer of the Service Provider or the chairperson (or equivalent executive) of
the Service Provider’s governing body.
(C) The chief executive officer of the Service Provider is not the
chief executive officer of the qualified user or any related person (within the meaning of Treasury
Regulation 1.150-1(e)) to the qualified user.
For purposes of this section 5.07(g)(1)(x), the phrase Service Provider includes related
persons (within the meaning of Treasury Regulation 1.150-1(e)) and the phrase “chief executive
officer” includes a person with equivalent management responsibilities.
(iv) the Service Provider’s use of the Facility that is functionally related
to and subordinate to the performance of its services under a Service Contract for the Facility that
meets the conditions of Section 5 of the Current Guidelines does not result in private business use
of the Facility.
(2) Prior Guidelines. Service Contracts that relate to the use or operation of the
Facility by a “service provider,” as that term is used in the Prior Guidelines (the “Prior Guideline
Service Providers”), will satisfy the Prior Guidelines if, among other ways of satisfying the Prior
Guidelines, the requirements of each of the following requirements is satisfied:
(i) The compensation of the Prior Guidelines Service Provider under
the contract must be reasonable for the services rendered.
(ii) The contract must not provide for any compensation for services
based, in whole or in part, on a share of net profits from the operation of the Facility. Generally,
compensation is not based on a share of net profits if such compensation is based on a “capitation
fee” or a “per-unit fee.” Under the Prior Guidelines, “capitation fee” means a fixed periodic
amount for each person for whom the Prior Guidelines Service Provider assumes the responsibility
to provide all needed services for a specified period (so long as the quantity and type of services
actually provided to covered persons varies substantially). Under the Prior Guidelines, a “per-unit
fee” means a fee based on a unit of service provided (e.g., a stated dollar amount for each specified
medical procedure performed). Further, compensation based on a percentage of gross revenues or
a percentage of expenses (but not both) will generally not be considered as based on a share of net
profits.
(iii) A productivity reward for services in any annual period during the
term of the contract generally also does not cause the compensation to be based on a share of net
profits of the financed facility if (a) the eligibility for the productivity award is based on the quality
of the services provided under the management contract, rather than increases in revenues or
decreases in expenses of the facility; and (b) the amount of the productivity award is a stated dollar
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amount, a periodic fixed fee, or a tiered system of stated dollar amounts or periodic fixed fees
based solely on the level of performance achieved with respect to the applicable measure.
(iv) A Service Contract providing for a compensation arrangement that
satisfies any one of the following paragraphs will meet the Prior Guidelines:
(A) All of the compensation for services is based on a stated
amount; periodic fixed fee; a capitation fee; a per-unit fee; or a combination of the preceding. The
compensation for services also may include a percentage of gross revenues, adjusted gross
revenues, or expenses of the facility (but not both revenues and expenses). The term of the
contract, including all renewal options, does not exceed five years. Such contract need not be
terminable by the Purchaser prior to the end of the term. For purposes of this subsection
5.07(g)(2)(iv)(A), a tiered productivity award as described in subsection 5.07(g)(2)(iii) will be
treated as a stated amount or a periodic fixed fee, as appropriate.
(B) For a contract with a term, including renewal options, that is
not longer than (i) the lesser of 10 years or 80 percent of the reasonably expected useful life of the
financed property, or (ii) the lesser of 15 years or 80 percent of the reasonably expected useful life
of the financed property, at least 80 percent (in the case of a contract with a term described in
(i) hereof) or at least 95 percent (in the case of a contract with a term described in (ii) hereof) is
based on a periodic fixed fee. For purposes of this paragraph, a fee does not fail to qualify as a
periodic fixed fee as a result of a one-time incentive award during the term of the contract under
which compensation automatically increases when a gross revenue or expense (but not both) is
reached if that award is equal to a single, stated dollar amount.
(v) he Prior Guidelines Service Provider may not have a role or
relationship with the qualified user (or the Purchaser) that, in effect, substantially limits the ability
of the qualified user to exercise its rights, including cancellation rights, under the Service Contract.
Accordingly, not more than 20 percent of the voting power of the governing body of the qualified
user (or the Purchaser) in the aggregate may be vested in the Prior Guidelines Service Provider
and its directors, officers, shareholders and employees. Fur thermore, the group of persons
belonging to both the governing board of the qualified user (or the Purchaser) and the Prior
Guidelines Service Provider may not include the chief executive officers of the qualified user (or
the Purchaser) and the Prior Guidelines Service Provider, or their respective governing bodies.
Finally, neither the qualified user nor the Purchaser may be members of the same “controlled
group” (within the meaning of Treasury Regulations § 1.150-1(f)) or related person as the Prior
Guidelines Service Provider.
(h) No Other Replacement Proceeds. The Purchaser is not using any Facility Funds
and hereby agrees that it will not use any Facility Funds to replace funds of the Purchaser which
are or will be used to acquire Investment Property reasonably expected to produce a yield that is
materially higher than the yield on the Installment Payments under this Agreement.
(i) Federal Guarantee. The Purchaser will not directly or indirectly use
or permit the use of any Facility Funds or take or omit to take any action that would cause the
Proceeds Bonds or Secured Bonds to be obligations that are “federally guaranteed” within the
meaning of section 149(b) of the Code. In furtherance of this covenant, the Purchaser will not
allow the payment of principal or interest under this Agreement to be guaranteed (directly or
indirectly) in whole or in part by the United States or any agency or instrumentality thereof.
(i) No Hedge Bonds. The Purchaser reasonably expects that more than eighty-five
percent (85%) of the Facility Funds will be expended for the purposes of this Agreement within
three years of the Effective Date.
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SECTION 5.08 Maintenance and Operation of System.
The Purchaser hereby covenants that, so long as any portion of the Purchase Price is unpaid,
it will at its own cost and expense maintain, preserve, keep, and operate the System, and every
portion thereof, in good condition, repair and working order as necessary to operate the System
for its intended purpose in compliance with all laws, rules, regulations, codes, and ordinances,
subject only to normal wear and tear and that it will from time to time make or cause to be made
all necessary and proper repairs, replacements, and renewals necessary to maintain the System in
such a condition. The Purchaser will maintain in full force and effect all licenses, permits, and
approvals required by any governmental agency or authority having jurisdiction over the Purchaser
or the System at any time required for the operation of the System, and will obtain any licenses,
permits, or approvals that may be required in the future by any governmental agency or authority
having jurisdiction over the Purchaser or the System, all in a timely manner so as to prevent any
interruption in System activities. IBank will have no responsibility or obligation for any of these
matters. The Purchaser further covenants that it will operate the System in an efficient and
economical manner, and will pay all Operations and Maintenance Costs as they become due and
payable.
SECTION 5.09 Assumption of Obligations.
The obligations of the Purchaser under this Agreement may not be assumed by another
entity except in connection with a transfer of the entir e System by the Purchaser and only upon
prior written approval of IBank and receipt by IBank of:
(a) an Opinion of Counsel experienced in matters relating to the tax-exempt status of
interest on any Proceeds Bonds or Secured Bonds, and approved by IBank, to the effect that such
transfer would not cause interest on the Proceeds Bonds or Secured Bonds to be included in gross
income of the holders thereof for federal income tax purposes;
(b) a Report signed by an Independent Consultant or Independent Accountant
concluding that such transfer would not materially adversely affect the security for the Installment
Payments, Additional Payments, or the rights of IBank; and
(c) evidence satisfactory to IBank that the entity assuming the Purchaser’s obligation
hereunder is eligible pursuant to the Act.
SECTION 5.10 Damage, Destruction, Title Defect, and Condemnation; Use of Net
Proceeds.
(a) If prior to the termination of the term hereof (i) the System or any part thereof is
damaged or destroyed (each of which is hereinafter called “Damaged Improvements”) by a peril
covered by a policy of insurance described in Section 5.22 hereof (an “Insured Peril”); or (ii) title
to, or the right to possession, use, or occupancy, whether permanent or temporary, of, the System
or any portion thereof or the estate of the Purchaser in the System or any portion thereof is defective
or shall be taken under the exercise of the power of eminent domain by any governmental body or
by any person or firm or corporation acting under governmental authority, then the Purchaser will
cause the net proceeds of any loss or claim paid by an insurer under an insurance policy, or
condemnation award, resulting from any damage, destruction, loss of use, loss of possession, or
impairment of title to the System or any part thereof, (the “Net Proceeds”) to be transferred to
IBank and applied as follows:
(1) Net Proceeds Exceeding Costs. Within one hundred twenty (120) days of
the date of said Insured Peril, the Purchaser shall obtain written estimate(s) of the (i) cost of the
repair, replacement, and reconstruction of the Damaged Improvements (collectively referred to
herein as the “Reconstruction”), and (ii) Net Proceeds available to pay such costs. Copies of such
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estimate(s) shall be provided to IBank. If the one hundred twenty (120) day period is insufficient
to obtain said estimates, the period may be reasonably extended by the Purchaser. If the Net
Proceeds exceed the estimated costs of Reconstruction, the Damaged Improvements shall be
repaired, replaced, and reconstructed to the same or better quality as existed before the damage
occurred. The Purchaser shall commence and manage the Reconstruction and shall complete the
Reconstruction as soon as reasonably possible after the occurrence of such damage. Any balance
of Net Proceeds remaining after the Reconstruction has been completed shall be transferred , pro
rata based on outstanding principal amount, to IBank and to any trustee or holder of any Parity
Debt, for the payment of outstanding amounts under this Agreement and any such Parity Debt
Instrument. Net Proceeds remaining after payment of the amounts specified in the previous
sentence shall be transferred to the Purchaser.
(2) Costs Exceeding Net Proceeds. If the estimated costs of Reconstruction
exceed the Net Proceeds the Purchaser, in its sole discretion, may elect to budget and appropriate
to the Reconstruction the amount of such excess, and to manage the Reconstruction as set forth in
Section 5.10(a)(5). The Purchaser shall exercise this election by written notice thereof delivered
to IBank within thirty (30) days after the Purchaser obtains the written estimate(s).
(3) Net Proceeds Sufficient to Prepay All Unpaid Installment Payments. If the
Purchaser does not exercise the election to reconstruct pursuant to the above subsection and Net
Proceeds are at least sufficient to prepay all unpaid amounts of the Purchase Price, any due and
owing Additional Payments, and any unpaid Parity Debt, such Net Proceeds shall be transferred
to IBank to prepay such Purchase Price and any due and owing Additional Payments, and to any
trustee or holder of any Parity Debt to prepay such Parity Debt . If the Net Proceeds exceed such
amounts, the Purchaser shall be entitled to the amount of proceeds remaining after such
prepayment.
(4) Net Proceeds Insufficient to Prepay All Unpaid Installment Payments. If
the Purchaser does not exercise the election to reconstruct pursuant to Section 5.10(a)(2) and Net
Proceeds are insufficient to prepay the unpaid Purchase Price hereunder and any outstanding Parity
Debt, the Purchaser, in its sole discretion, may elect to budget and appropriate funds to cause the
prepayment of the Purchase Price and due and owing Additional Payments, together with any
outstanding amounts under any Parity Debt, and the Net Proceeds, together with such funds, shall
be transferred to IBank and the holders or trustees of any Parity Debt, as applicable, with directions
to apply the proceeds to the prepayment of the Purchase Price and due and owing Additional
Payments, and outstanding amounts under any Parity Debt; provided, that if the Purchaser elects
not to appropriate funds for such prepayment, the Purchaser shall apply Net Proceeds to the
Reconstruction. If the Purchaser, in its sole discretion, elects to budget or appropriate funds for
the prepayment of the unpaid Purchase Price, due and owing Additional Payments, and outstanding
amounts under any Parity Debt, the Purchaser shall transfer such funds to IBank for the prepayment
of Purchase Price and due and owing Additional Payments and to the trustees or holders, as
applicable, of any outstanding Parity Debt for the prepayment of such Parity Debt.
(5) Management of Reconstruction. If the System or any part thereof becomes
Damaged Improvements, the Purchaser shall promptly cause, manage, and supervise the
Reconstruction.
SECTION 5.11 Entry into Replacement Agreement.
The Purchaser acknowledges that IBank intends to issue, has issued, or may issue, Secured
Bonds or Proceeds Bonds subsequent to the Effective Date of this Agreement, and that one
requirement of the Secured Bonds and/or Proceeds Bonds will be the re-entry by the Purchaser
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into an agreement to replace this Agreement. So long as the terms of the replacement agreement
are substantially identical to the term of this Agreement, the Purchaser hereby covenants and
agrees to execute the replacement agreement and any related documents and to provide required
certifications in a timely manner. The Purchaser understands and acknowledges that time is of the
essence with respect to entry into such replacement agreement as such timing is mandated by
Federal tax laws applicable to IBank’s Proceeds Bonds and/or Secured Bonds. The Purchaser’s
covenant set forth in this Section 5.11 is hereinafter referred to as the “Replacement Agreement
Covenant.”
SECTION 5.12 Further Assurances.
The Purchaser will adopt, make, execute, and deliver any and all such further resolutions,
instruments, and assurances as may be reasonably required by IBank as necessary or proper to
carry out the intention or to facilitate the performance of this Agreement and for the better assuring
and confirming unto IBank of the rights, remedies, and benefits provided in this Agreement.
SECTION 5.13 Agreement to Complete Facility Delivery.
(a) The Purchaser agrees that it will perform all acts necessary to complete Facility
Delivery, and construct, acquire, improve or install other facilities and real and personal property
deemed by the Purchaser necessary for the operation of Facility. The Purchaser may supplement
or amend the Facility description with written approval from IBank from time to time, provided
that no such supplement or amendment shall (1) cause the Facility or any portion thereof to fail to
constitute an eligible project under the Act, or (2) in any way affect the tax-exempt status of any
Proceeds Bonds or Secured Bonds.
(b) At any time, upon request of IBank, the Purchaser agrees to make available to
IBank for review and copying all then current plans and specifications for the Facility. The
Purchaser may identify any proprietary information in such plans and specifications and, to the
extent legally permissible, IBank agrees to keep such information confidential. Provided,
however, for the avoidance of doubt, and not by limitation of the foregoing, IBank may disclose
any such confidential information in connection with any Proceeds Bonds or Secured Bonds or in
the event IBank is served with a subpoena, a valid discovery request, a notice to appear and
produce documents, or a valid California Public Records Act request, seeking, or that could be
construed reasonably as seeking, such confidential information.
(c) As soon as the Facility is completed, the Purchaser shall evidence such completion
by providing a certificate to IBank stating that (i) construction of the Facility has been completed
substantially in accordance with the final plans and specifications therefor and all labor, services,
materials, and supplies used in construction have been paid for, and (ii) all other facilities necessary
in connection with the Facility have been constructed, acquired, and installed in accordance with
the final plans and specifications therefor, and all costs and expenses incurred in connection
therewith have been paid. Notwithstanding the foregoing, such certificate may state that it is given
without prejudice to any rights of the Purchaser against third parties for the payment of any amount
not then due and payable which exist at the date of such certificate or which may subsequently
exist.
(d) The Purchaser shall notify IBank forthwith upon the filing of a stop payment notice
in connection with the Facility, the tender of a claim against any payment or performance bond
related to the Facility, the recordation of a mechanics lien against Facility, the filing of litigation
in connection with the Facility, the issuance of a mandatory or prohibitory injunction related to the
Facility, or any other legal proceeding which may impact the completion of the Facility.
SECTION 5.14 Collection of Rates, Fees and Charges.
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The Purchaser will have in effect at all times rules and regulations requiring each user of
the System to pay the rates, fees, and charges applicable to the services provided by the System to
each user. Except under circumstances required by law, including Executive Order N-42-20, the
Purchaser will not permit any part of the System or any facility thereof to be used or taken
advantage of free of charge by any corporation, firm, or person, or by any public agency (including
the United States of America, the State, and any city, county, district, political subdivision, public
corporation, or agency of any thereof); provided, that the Purchaser may without charge use the
services provided by the System.
SECTION 5.15 The Purchaser’s General Responsibility.
The Purchaser is solely responsible for the Facility Delivery and the operation and
maintenance of the Facility. Any review or approval of plans, specifications, bid documents, or
other construction documents by IBank is solely for the purpose of proper administration of
Facility Funds by IBank and shall not be deemed to relieve or restrict the Purchaser’s responsibility
or result in any duty, obligation, or responsibility on the part of IBank or the officers and agents
thereof.
SECTION 5.16 The Purchaser’s Assurances and Commitments.
(a) Compliance with Laws, Regulations and the Criteria.
The Purchaser shall at all times comply, and require its direct contractors, and their
subcontractors, to comply with all State prevailing wage laws, all applicable federal and State laws,
rules and regulations, the Criteria (except for any Criteria requirement that the Purchaser pre-
qualify direct contractors for the Facility using the Department of Industrial Relation’s model pre-
qualification questionnaire, which requirement the IBank Board of Directors waived), and all local
ordinances applicable to the Facility. This specifically includes, but is not limited to
environmental, procurement and safety laws, rules, regulations and ordinances. The Purchaser
acknowledges and agrees that under no circumstances would its failure to act in accordance with
the provisions of this subsection (a) result in any duty, obligation or responsibility on the part of
IBank or the officers and agents thereof.
(b) Facility Construction Activities.
The Purchaser shall ensure that adequate supervision and inspection of Facility
construction activities are maintained. IBank, either by itself or through its designee, reserves the
right to conduct an audit of the Purchaser’s construction expenditures during construction and for
up to three years following receipt by IBank of notice of completion or other evidence of
completion satisfactory to IBank. IBank, at its discretion, may require the Purchaser to conduct
an interim and/or a final audit at the Purchaser’s expense, such audit t o be conducted by and a
Report prepared by an Independent Accountant.
SECTION 5.17 Facility Access.
The Purchaser shall ensure that IBank or its designee have suitable access to the Facility
site at all reasonable times so long as the Purchase Price remains unpaid , and at any time in the
event of an IRS audit directly or indirectly related to the Facility, and shall include provisions
ensuring such access in all contracts and subcontracts relating to the Facility.
SECTION 5.18 Operation and Maintenance of the Facility.
The Purchaser agrees to commence operation of the Facility upon the completion thereof.
The Purchaser covenants and agrees that it will, at its own cost and expense, operate and maintain
the Facility and every portion thereof, in accordance with all governmental laws, ordinances,
approvals, rules, codes, regulations, and requirements including, without limitation, such zoning,
sanitary, pollution and safety ordinances and laws, and such rules and regulations thereunder as
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may be binding upon the Purchaser. The Purchaser further covenants and agrees that it will, at its
own cost and expense, maintain, preserve, keep, and operate the Facility and will maintain, keep,
preserve, and operate the same, now or hereafter at any time constituting part of the Facility, in
good repair, working order and condition as necessary to operate the Facility for their intended
purposes, subject only to normal wear and tear, and that it will from time to time make or cause to
be made all needful and proper replacements, repairs, renewals, and improvements, in each case
to the extent necessary so that the efficiency and value of the Facility shall not be impaired. IBank
shall have no responsibility or obligation for any of these matters or for the making of additions or
improvements to the Facility.
SECTION 5.19 Performance and Payment Bonds.
(a) The Purchaser shall require its direct contractor(s) for the Facility to certify under
penalty of perjury, and provide the Purchaser with a copy of such certification, which shall be
available for IBank’s inspection, if requested, that, in connection with the construction of the
Facility, it has obtained a bond or bonds by one or more authorized surety companies satisfactory
to the Purchaser; such surety companies must be authorized to do business in California, be an
admitted surety insurer, and have an agent for service of process in California.
(b) Said bonds shall be in the following amounts and for the following purposes: (i) a
performance bond(s) in an amount not less than one hundred percent (100%) of the total amount
of the construction agreement(s) for the Facility, guaranteeing the faithful performance of the
terms of the Facility construction agreement(s), including the maintenance of the work required
under the Facility construction agreement(s) for a period of one year from the date of the
Purchaser’s final acceptance, and the prompt correction of any defective work or labor done, or
defective materials furnished, pursuant to the Facility construction agreement(s) and (ii) a payment
bond(s) in an amount not less than one hundred percent (100%) of the total amount of the Facility
construction agreement(s), securing payment to the subcontractors and to persons renting
equipment or furnishing labor or materials to such subcontractors or to the Purchaser’s direct
contractors, or to any other claimant as defined in Civil Code Section 8004, under the Facility
construction agreement(s).
SECTION 5.20 Continuing Disclosure.
Upon IBank’s reasonable request, the Purchaser shall to furnish certain financial and
operating data pertaining to the Purchaser that may be required to enable: (i) IBank to issue any,
or perform its obligations under existing, Proceeds Bonds or Secured Bonds; (ii) any underwriter
of any Proceeds Bonds or Secured Bonds to comply with Rule 15c2-12(b)(5) of the Securities and
Exchange Commission; or (iii) IBank to comply with any audit, rating agency request, or State
law.
SECTION 5.21 Notice of Purchaser Event of Default.
The Purchaser covenants that it will deliver to IBank, immediately after the Purchaser shall
have obtained knowledge of the occurrence of an Event of Default or a failure as described in
Section 7.01, the written statement of an authorized officer of the Purchaser setting forth the details
of such Event of Default or failure, and the action which the Purchaser proposes to take with
respect thereto.
SECTION 5.22 Maintenance of Insurance.
(a) The Purchaser will procure and maintain or cause to be procured and maintained
insurance on the System with responsible insurers, in such amounts and against such risks
(including damage to or destruction of the System) as are usually covered in connection with
systems similar to the System. Provided, however, such insurance shall be in an amount at least
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equal to the full replacement value of the Facility. Such insurance may be subject to a deductible
clause of not to exceed one hundred thousand dollars ($100,000) or such greater amount as may
be covered by any self-insurance or self-funding method or plan permitted by this Section.
(b) The Purchaser shall procure and maintain, or cause to be procured and maintained
a standard commercial general liability insurance policy in protection of the Purchaser, the IBank
and their directors, officers and employees and, when requested by the IBank, the Trustee,
indemnifying and defending such parties against direct or contingent loss or liability for damages
for personal injury, death or property damage related to the possession, operation or use of the
System, with a minimum combined single limit of one million dollars ($1,000,000) for personal
injury or death of one or more persons, and for property damage, in each accident or event (subject
to a deductible clause of not to exceed one hundred thousand dollars ($100,000) or such greater
amount as may be covered by any self-insurance or self-funding method or plan permitted by this
Section). IBank shall be named as an additional insured, and when requested by IBank the Trustee
shall also be named as an additional insured.
(c) The Purchaser will cause to be procured and maintained a standard, commercially
reasonable, commercial general liability policy of the direct contractor(s) for the Facility with a
minimum combined single limit of one million dollars ($1,000,000) for personal injury or death
of one or more persons, and for property damage, in each accident or event (subject to a deductible
clause of not to exceed one hundred thousand dollars ($100,000). The Purchaser and IBank shall
each be named as an additional insured under such insurance policy. The Purchaser shall also
cause to be procured and maintained a standard, commercially reasonable, worker’s compensation
insurance policy of the direct contractor(s) for the Facilit y in an amount equal to at least the
required statutory minimum. The Purchaser and IBank shall each be named as an additional
insured under such insurance policy.
(d) The Purchaser will cause to be procured and maintained by its direct contractor(s)
a builder’s risk insurance policy in an amount equal to the lesser of the Facility Funds or the amount
of the Purchaser’s direct contract(s) for the construction of the Facility.
(e) With respect to the insurance described in subsections (a) and (b) above, the
Purchaser may maintain such insurance through a combination of self-insured retention (in an
amount not to exceed $500,000) and risk sharing pool coverage programs administered by a joint
powers authority formed in the State. The Purchaser shall on the Effective Date, and annually on
each anniversary of the Effective Date thereafter, provide a Certificate of the Purchaser to IBank
certifying that the insurance required under this Section 5.22 is in effect, together with copies of
the declarations pages for each policy required hereunder and each additional insured endorsement
required hereunder.
SECTION 5.23 Facility Construction.
(a) The Facility is described in Exhibit B and the Purchaser shall make no changes
thereto or the operation thereof without the prior written consent of IBank, which consent shall be
granted or denied in IBank’s reasonable discretion. Further, IBank may condition any such
consent upon receipt of an Opinion of Counsel to the effect that any such changes will not affect
the qualification of the Facility for tax exempt financing under the Code.
(b) The Purchaser shall not enter into a contract for the construction of the Facility
unless it is in the form of a fixed price construction contract.
SECTION 5.24 Compliance with Contracts.
The Purchaser will use good faith effort to comply with, keep, observe, and perform all
agreements, conditions, covenants, and terms, express or implied, required to be performed by it
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contained in all contracts for the use of the System, and all other contracts affecting or involving
the System to the extent that the Purchaser is a party thereto.
SECTION 5.25 Maintenance of Lien Parity.
To the extent the 2012 Bonds Instrument and/or the 2018 Bonds Instrument continue to
impose a lien on Net System Revenues , the Purchaser will at all times comply with, keep, observe,
and perform all requirements, conditions, covenants, duties, and terms set forth therein for the lien
on Net System Revenues created by this Agreement to be on parity with the lien on Net System
Revenues created by the 2012 Bonds Instruments and/or the 2018 Bonds Instrument.
SECTION 5.26 Covenant to Comply with Prop 218 Law.
The Purchaser shall at all times ensure that the rates, fees and charges imposed on its
System customers comply with the Prop 218 Law. In the event any party (or p arties) institutes
litigation or an administrative proceeding challenging the Purchaser’s rates and charges or any
other aspect of its compliance with Prop 218 Law (collectively, a “Rate Challenge”), the Purchaser
shall as soon as practicable, but no later than 30 days after the Purchaser receives actual notice of
the Rate Challenge, provide IBank with written notice of such Rate Challenge. Further, the
Purchaser will expeditiously take steps to (i) diligently defend against the Rate Challenge; or
(ii) conform its rates or other practices in a manner that fully addresses the deficiencies underlying
the Rate Challenge. The Purchaser shall provide IBank with a second written notice indicating its
chosen course of action as soon as practicable.
ARTICLE VI
NEGATIVE COVENANTS OF THE PURCHASER
SECTION 6.01 Limitation on Additional Obligations; No Senior Debt.
The Purchaser hereby covenants that, until the Purchase Price has been paid in full and this
Agreement has been discharged pursuant to Section 8.05, the Purchaser shall not after the date of
this Agreement issue or incur any Senior Debt and shall not issue any bonds, notes, or other
obligations, enter into any agreement or otherwise incur any loans, advances, or obligations, which
are in any case secured by a lien on all or any part of Net System Revenues that is on parity with
the lien established hereunder for the security for the payment of the Installment Payments and
Additional Payments, excepting only Parity Debt meeting the requirements of Section 2.11 herein.
The Purchaser may issue or incur Subordinate Debt upon compliance with the requirements of
Section 2.16 herein.
SECTION 6.02 Disposition of Property.
The Purchaser hereby covenants that it will not authorize or effect the disposition of real
or personal property constituting more than ten percent (10%) of the value of the System, measured
over the term of this Agreement, unless the Purchaser first obtains and provides a copy to IBank,
of: (i) a Report of an Independent Consultant concluding that such disposition will not
substantially adversely affect the security for the payment of the Installment Payments and
Additional Payments; and (ii) an Opinion of Counsel concluding that such disposition will not
cause the interest on any Secured Bonds or Proceeds Bonds to no longer be excluded from federal
gross income. The Purchaser hereby covenants that it will not dispose of any portion of the Facility
while the Purchase Price is unpaid except for property that is not operating or is worn out, and for
the dedication of public streets and public and private utility easements.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.01 Events of Default and Acceleration.
(a) Each of the following events shall constitute an Event of Default hereunder:
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(1) Failure by the Purchaser to pay any Installment Payment, accrued interest,
prepayment premium (if any), or any Additional Payment when and as the same shall become due
and payable;
(2) Failure by the Purchaser to observe and perform any of the covenants,
agreements or conditions on its part contained in this Agreement, other than as referred to in the
preceding subsection (1), or if any representation or warranty fails to be true and correct in all
material respects, for a period of sixty (60) days after written notice has been given to the Purchaser
by IBank, or to the Purchaser and IBank, specifying such failure and requesting that such failure
be remedied; provided, however, that if the failure stated in such notice can be corrected, but not
within such sixty (60) day period, IBank may consent to an extension of such time if corrective
action is instituted by the Purchaser within such sixty (60) day period and diligently pursued until
such failure is corrected;
(3) The filing by the Purchaser of a petition or answer seeking reorganization
or arrangement under the federal bankruptcy laws or any other applicable law of the United States
of America, or if a court of competent jurisdiction shall approve a petition, filed with or without
the consent of the Purchaser, seeking reorganization under the federal bankruptcy laws or any other
applicable law of the United States of America, or if, under the provisions of any other law for the
relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the
Purchaser or of the whole or any substantial part of its property;
(4) Any representation or other written statement made by the Purchaser
contained in this Agreement, the application for financing or in any instrument furnished in
compliance with or in reference thereto shall prove to have been incorrect in any material respect
as negatively affecting the Purchaser’s performance hereunder ;
(5) An unexcused failure by the Purchaser to pay amounts due from the
Enterprise Fund under any bond, note, installment sale agreement, capital lease, or other agreement
or instrument to which it is a party relating to the borrowing of money, if such unpaid amount shall
exceed fifty thousand dollars ($50,000); and
(6) The occurrence of an event of default with respect to any Parity Debt or any
Subordinate Debt which causes all principal of such Parity Debt or Subordinate Debt to become
due and payable immediately.
(b) If an Event of Default has occurred and is continuing, IBank may (i) declare the
principal of the Purchase Price, together with the accrued interest on all unpaid installments
thereof, to be due and payable immediately, and upon any such declaration the same shall become
immediately due and payable, anything in this Agreement to the contrary notwithstanding, and (ii)
exercise any other remedies available to IBank in law or at equity. Immediately upon becoming
aware of the occurrence of an Event of Default, IBank shall give notice of such Event of Default
to the Purchaser by telephone, telecopier, facsimile or other telecommunication device, promptly
confirmed in writing. This provision, however, is subject to the condition that if, at any time after
the principal of the Purchase Price shall have been so declared due and payable, and before any
judgment or decree for the payment of the moneys due shall have been obtained or entered, the
Purchaser shall deposit with IBank a sum sufficient to pay all installments of principal of the
Purchase Price due prior to such declaration and all accrued interest thereon, with interest on such
overdue Installment Payments at the rate of the lesser of twelve percent (12%) per annum or the
maximum rate permitted by law, and the reasonable expenses of IBank (including but not limited
to attorney’s fees and costs), and any and all other defaults known to IBank (other than in the
payment of principal of and interest on the Purchase Price due and payable solely by reason of
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such declaration), including the payment of Additional Payments due and owing, shall have been
made good or cured to the satisfaction of IBank or provision deemed by IBank to be adequate shall
have been made therefor, then, and in every such case, IBank may, by written notice to the
Purchaser, rescind and annul such declaration and its consequences. However, no such rescission
and annulment shall extend to or shall affect any subsequent default, or shall impair or exhaust any
right or power consequent thereon.
SECTION 7.02 Remedies.
Upon the occurrence of an Event of Default IBank shall have the following rights, in
addition to its rights under Section 7.01:
(a) By mandamus or other action or proceeding or suit at law or in equity to enforce its
rights against the Purchaser or any member, officer , or employee thereof, and to compel the
Purchaser or any such member, officer, or employee to perform and carry out its or his duties under
law and the agreements and covenants required to be performed by it or him contained herein;
(b) By suit in equity to enjoin any acts or things which are unlawful or violate the rights
of IBank; or
(c) By suit in equity to require the Purchasers and its members, officers, and employees
to account as the trustee of an express trust.
SECTION 7.03 Application of Funds upon Default.
All amounts received by IBank pursuant to any right given or action taken by IBank under
provisions of this Agreement, or otherwise held by IBank upon the occurrence of an Event of
Default, shall be applied by IBank in the following order:
(a) First, to the payment of the costs and expenses of IBank, including reasonable
compensation to their agents and attorneys, including IBank employees, as set forth in Section
2.06; and
(b) Second, to the payment of the whole amount of Installment Payments then due and
unpaid, with interest on overdue Installment Payments at the rate of the lesser of twelve percent
(12%) per annum or the Maximum Rate; provided, however, that in the event such amounts shall
be insufficient to pay in full the amount of such Installment Payments, then such amounts shall be
applied in the following order of priority:
(1) First, to the payment of all installments of interest on the Purchase Price
then due and unpaid, on a pro rata basis in the event that the available amounts are insufficient to
pay all such interest in full;
(2) Second, to the payment of principal of all installments of the Purchase Price
then due and unpaid, other than principal having come due and payable solely by reason of
acceleration pursuant to Section 7.01, on a pro rata basis in the event that the available amou nts
are insufficient to pay all such principal in full;
(3) Third, to the payment of principal of the Purchase Price then due and unpaid
and having come due and payable solely by reason of acceleration pursuant to Section 7.01, on a
pro rata basis in the event that the available amounts are insufficient to pay all such principal in
full; and
(c) Third, to the payment to IBank of other Additional Payments as described in
Section 2.06.
SECTION 7.04 No Waiver.
Nothing in this Article VII or in any other provision of this Agreement shall affect or impair
the obligation of the Purchaser, which is absolute and unconditional, to pay from the Net System
Revenues pledged hereunder, all payments due hereunder, or affect or impair the right of action,
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which is also absolute and unconditional, of IBank to institute suit to enforce such payment by
virtue of the contract embodied in this Agreement.
A waiver of any default by IBank shall not affect any subsequent default or impair any
rights or remedies on the subsequent default. No delay or omission of IBank 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 of any such default, or an acquiescence therein, and every power and remedy conferred
upon IBank by this Article VII may be enforced and exercised from time to time and as often as
shall be deemed expedient by IBank.
If a suit, action, or proceeding to enforce any right or exercise any remedy shall be
abandoned or determined adversely to IBank, the Purchaser and IBank shall be restored to their
former positions, rights, and remedies as if such suit, action, or proceeding had not been brought
or taken.
SECTION 7.05 Remedies Not Exclusive.
No remedy herein conferred upon or reserved to IBank is intended to be exclusive of any
other remedy. Every such remedy shall be cumulative and shall be in addition to every other
remedy given hereunder, or now or hereafter existing at law or in equity or by statute or otherwise,
and may be exercised without exhausting and without regard to any other remedy conferred by
law.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01 California Law; Venue.
This Agreement shall be governed by and construed and interpreted in accordance with the
laws of the State. Any action or proceeding arising out of this Agreement shall be filed and
maintained in the Superior Court in and for the County of Sacramento, California, or in the United
States District Court in and for the Eastern District of California, unless otherwise expressly agreed
to by IBank in its sole and absolute discretion.
SECTION 8.02 Assignment of IBank’s Rights.
The Purchaser hereby agrees and acknowledges that IBank’s rights under this Agreement,
collectively or severally, may in IBank’s sole and absolute discretion be assigned by IBank, or by
the State, to any party for any purpose, including to the Trustee for the purpose of securing the
payment of any bonds, notes, or other obligations issued by IBank and secured by this Agreement
and the Installment Payments and Additional Payments, without the need for consent by the
Purchaser; provided, with respect to any such assignment. IBank and the assignee shall be
responsible for ensuring that such assignment complies with all applicable laws and regulations,
including but not limited to California Government Code Sections 5950 through 5955, and the
Purchaser shall have no responsibility or liability arising from any such non-compliance.
Accordingly, the Purchaser agrees to make all payments due hereunder to the Trustee when so
directed by IBank, notwithstanding any claim, defense, setoff or counterclaim whatsoever
(whether arising from a breach hereof or otherwise) that the Purchaser may have from time to time
against IBank. The Purchaser agrees to execute all documents, including notices of assignment
and chattel mortgages or financing statements, which IBank or the Trustee may reasonably request
in connection with any such assignment by IBank.
SECTION 8.03 Third Party Beneficiaries.
The Trustee is hereby expressly designated as a third party beneficiary hereunder for the
purpose of enforcing any of the rights hereunder assigned to said Trustee and for the purpose of
said Trustee enforcing its own rights. Nothing in this Agreement, expressed or implied, is intended
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to give to any person other than IBank, the Purchaser, and the Trustee, any right, remedy, or claim
under or by reason of this Agreement. All covenants, stipulations, promises, or agreements
contained in this Agreement by and on behalf of the Purchaser shall be for the sole and exclusive
benefit of IBank, the Trustee, and their permitted assigns.
SECTION 8.04 Successor Entities.
Whenever in this Agreement either the Purchaser or IBank is named or referred to, such
reference shall be deemed to include the permitted successors or assigns thereof, and all the
covenants and agreements in this Agreement contained by or on behalf of the Purchaser or IBank
shall bind and inure to the benefit of the respective permitted successors and assigns thereof,
whether so expressed or not. The Trustee will be IBank’s initial assignee.
SECTION 8.05 Discharge of Agreement.
Upon the Purchaser’s payment of the outstanding principal of, outstanding interest on, and
prepayment premium (if any) on the Purchase Price, together with all Additional Payments,
pursuant to this Agreement, then all obligations of IBank under this Agreement, all obligations of
the Purchaser under this Agreement with respect to the Purchase Price, and, at the written election
of the Purchaser, the pledge of and lien upon the Net System Revenues provided for in this
Agreement, shall cease and terminate, excepting only the obligations of the Purchaser pursuant to
the tax covenants herein, including but not limited to Section 5.07, indemnification obligations,
including but not limited to Section 8.14, and the choice of law and venue provisions under Section
8.01. Notice of such election shall be filed with IBank.
SECTION 8.06 Amendment.
No term or provision of this Agreement may be waived or otherwise modified except by a
written agreement signed by the Parties. The Parties acknowledge and agree that the previous
sentence shall be interpreted, enforced, and adhered to strictly, notwithstanding any legal doctrine,
rule, statute, or case law that may permit oral modification of this Agreement, or that may find
under certain circumstances the portion of this Section 8.06 requiring all modifications to this
Agreement be in writing is waived orally or by the Parties’ conduct. To the greatest extent
permissible under the law, the Parties hereby agree to waive any legal doctrine, rule, statute, or
case law that permits, or could be construed to permit, modification of this Agreement by means
other than a writing signed by both Parties.
SECTION 8.07 Waiver of Personal Liability.
No member, officer, agent, or employee of the Purchaser shall be individually or personally
liable for the payment of the principal of, premium, if any, or the interest under this Agreement;
but nothing herein contained shall relieve any such member, officer, agent, or employee from the
performance of any official duty provided by law.
SECTION 8.08 Arm’s Length Transaction.
The Purchaser acknowledges and agrees that IBank is acting solely as seller under this
Agreement and not an advisor to the Purchaser, including that: (i) the transaction contemplated
by this Agreement is an arm’s-length commercial transaction, (ii) in connection therewith and with
the financing discussions, undertakings and procedures leading up to the consummation of such
transaction, IBank is and has been acting solely as a principal and is not acting as the agent or
fiduciary of or in any way advising the Purchaser, including, without limitation, a “Municipal
Advisor” as such term is defined in Section 15B of the Securities and Exchange Act of 1934, as
amended, and the related final rules, (iii) IBank has not provided any advice or assumed an
advisory or fiduciary responsibility in favor of the Purchaser with respect to the financing
contemplated hereby or the discussions, undertakings and procedures leading thereto (irrespective
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of whether IBank, or any party related to IBank, has provided other services, or advised, or is
currently providing other services, or advising, the Purchaser on other matters) and IBank has no
obligation to the Purchaser with respect to the financing contemplated hereby except the
obligations expressly set forth in this Agreement, (iv) IBank has financial and other interests that
differ from those of the Purchaser , and (v) the Purchaser has consulted its own legal, financial and
other advisors to the extent it has deemed appropriate.
SECTION 8.09 Notices.
All written notices to be given under this Agreement shall be given by first-class mail or
personal delivery to the party entitled thereto at its address set forth below, or at such address as
the party may provide to the other party in writing from time to time, except that notices from the
Purchaser to IBank shall be given by registered mail, or by telecommunication confirmed in
writing. Notice shall be effective forty-eight (48) hours after deposit in the United States mail,
postage prepaid or, in the case of any notice to IBank, or in the case of personal delivery to any
person, upon actual receipt at the address set forth below:
If to IBank:
California Infrastructure and Economic Development Bank
Attn: Loan Servicing Manager, Agreement Number ISRF 20-135
P.O. Box 2830
Sacramento, CA 95812-2830
For overnight mail or personal delivery only:
California Infrastructure and Economic Development Bank
Attn: Loan Servicing Manager, Agreement Number ISRF 20-135
1325 J Street, Suite 1300
Sacramento, CA 95814
With a copy to the General Counsel of IBank at the same address.
If to the Purchaser: City of San Luis Obispo
879 Morro Street
San Luis Obispo, CA 93401
Attn.: Utilities Director
Or to such other address as may be designated in writing by the Purchaser.
SECTION 8.10 Contact Persons.
(a) The Executive Director of IBank or such other person as designated in writing by
IBank shall manage this Agreement for IBank and shall have authority to make determinations
and findings with respect to each controversy arising under or in connection with the interpretation,
performance, or payment for work performed under this Agreement.
(b) The Purchaser’s contact person shall be its Deputy Director Utilities - Water, or
such other person as may be designated in writing by the Purchaser (the “Purchaser
Representative”). The Purchaser’s Deputy Director Utilities - Water shall be the Purchaser
Representative for the administration of this Agreement and shall have full authority to act on
behalf of the Purchaser and may designate in writing another person or persons authorized to
request disbursement of Facility Funds. All communications given to the Purchaser’s Deputy
Director Utilities - Water shall be as binding as if given to the Purchaser.
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SECTION 8.11 Partial Invalidity.
The illegality, unenforceability, or invalidity of any provision of this Agreement with
regard to any Party or circumstance shall not render that provision illegal, unenforceable, or invalid
with regard to any other Party or circumstance. All provisions of this Agreement, in all other
respects, shall remain legal, enforceable, and valid to the fullest extent permitted by law. If any
provision of this Agreement is held to be illegal, unenforceable, or invalid by a court of competent
jurisdiction, then such provision shall be deemed severed from this Agreement and this Agreement
shall be construed and enforced as if such illegal, unenforceable, or invalid provision had never
been part hereof.
SECTION 8.12 Binding Effect.
This Agreement shall inure to the benefit of and shall be binding upon IBank and the
Purchaser and their respective successors and assigns.
SECTION 8.13 Entire Agreement.
Except as expressly stated herein, this Agreement, together with the exhibits and
attachments hereto, constitutes the entire agreement among the Parties. Except as expressly stated
herein, there are no understandings, agreements, representations or warranties, express or implied,
not specified herein or therein regarding this Agreement or the Facility financed hereunder. Any
terms and conditions of any purchase order or other document submitted by the Purchaser in
connection with this Agreement which are in addition to or inconsistent with the terms and
conditions of this Agreement will not be binding on IBank and will not apply to this Agreement.
SECTION 8.14 Indemnification.
The Purchaser shall, to the fullest extent permitted by law, indemnify, protect, hold
harmless, save and keep harmless IBank and its members, directors, officers, attorneys, advisors,
employees, and agents (collectively, the “Indemnified Parties”) from and against any and all
liability, obligations, losses, claims, demands, damages, actions, causes of action, liens, stop
payment notices, or costs whatsoever, arising from the Purchaser’s operation of the System or the
Purchaser’s performance hereunder regardless of the cause thereof (but excluding any and all
liability, obligations, losses, claims, demands, damages, actions, causes of action, liens, stop
payment notices, or costs to the extent caused by an Indemnified Party’s wrongful act), and
reasonable expenses in connection therewith, including, without limitation, counsel fees and
expenses as incurred, penalties and interest (collectively, a “Claim”), arising out of, related to or
as the result of entering into this Agreement, and the acquisition, construction, operation, use,
condition, or possession of the Facility and any portion thereof, including without limitation:
(a) any accident in connection with the operation, use, condition, or possession of the
Facility resulting in damage to property or injury to or death to any person including, without
limitation, any claim alleging latent and other defects, whether or not discoverable by the
Purchaser or IBank;
(b) patent, trademark or copyright infringement, or similar claims as a consequence of
the operation, use, occupancy, or maintenance of the Facility;
(c) strict liability in tort as a consequence of the operation, use, occupancy, or
maintenance of the Facility or the Project;
(d) any Claim based upon any environmental law or regulation relating to the Facility;
(e) any Claim of any nature directly arising from or related to the Facility, which Claim
is based upon the operation of the Facility from and after the Effective Date;
(f) the existence, placement, delivery, storage, or release of hazardous materials on or
from the Facility or contamination of property, arising therefrom;
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(g) either (a) the application of the Facility Funds, or other amounts treated as “gross
proceeds” of the Proceeds Bonds or Secured Bonds in such manner that any portion of the Proceeds
Bonds or Secured Bonds becomes an “arbitrage bond” within the meaning of Code sections
103(b)(2) and 148, with the result that interest on the Proceeds Bonds or Secured Bonds is or
becomes subject to federal income taxation of the holder of the Proceeds Bonds or Secured Bonds;
or (b) if as a result of any act, failure to act, or use of the proceeds of any portion of the Facility
Funds or the Facility, or any misrepresentation or inaccuracy in any of the representations,
warranties, or covenants contained in this Agreement or the enactment of any federal legislation
or the promulgation of any federal rule or regulation after the date of this Agreement, all or any
portion of the interest on any portion of the Proceeds Bonds or Secured Bonds becomes subject to
federal income taxation;
(h) the consummation or carrying out of any of the transactions contemplated by this
Agreement or any related document; and
(i) information provided by the Purchaser which is used in connection with the
Proceeds Bonds or the Secured Bonds.
The indemnification arising under this Section 8.14 shall continue in full force and effect
notwithstanding the full payment of all obligations hereunder and shall survive the termination of
this Agreement for any reason. Any party seeking indemnity hereunder shall promptly give notice
to the Purchaser of any Claim or liability hereby indemnified against upon learning of any
circumstances giving rise to any such Claim or liability. The Purchaser’s obligation to indemnify,
defend, protect, hold harmless, save, and keep harmless the Indemnified Parties as provided in this
Section 8.14 shall arise immediately upon any Claim covered under this Section 8.14 being
asserted against an Indemnified Party, whether orally, in writing, or in any court or administrative
action or proceeding.
SECTION 8.15 Expectations.
The undersigned is an authorized representative of the Purchaser acting for and on behalf
of the Purchaser in executing this Agreement. To the best of the knowledge and belief of the
undersigned, there are no other facts, estimates or circumstances that would materially change the
expectations as set forth herein, and said expectations are reasonable.
SECTION 8.16 Section Headings.
All section headings contained herein are for convenience of reference only and are not
intended to define or limit the scope of any provision hereof.
SECTION 8.17 Time of the Essence.
Subject to the remainder of this Section 8.17, time is of the essence with respect to this
Agreement and the performance of each obligation contained in this Agreement. Whenever the
time for performance of any obligation under this Agreement, or if under this Agreement a Party
must act by a particular time or date, or if an act is effective only if done by a particular time or
date, and the last date for performance of such obligation or the doing or effectiveness of such act
falls on a Saturday, Sunday, or legal holiday in the State, the time for performance of such
obligation or the doing or effectiveness of such act shall be extended to the next day that is not a
Saturday, Sunday, or a legal holiday in the State. The first day shall be excluded and the last day
shall be included when computing the time in which an obligation is to be performed or an act is
to be done under this Agreement. Unless otherwise provided herein all time periods shall end at
5:00 p.m. California time.
SECTION 8.18 Form of Documents.
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The form and substance of all documents and instruments to be delivered to IBank under
the terms of this Agreement, if any, shall be at all times subject to IBank’s approval, in its
reasonable discretion. No document or instrument delivered to IBank, or to be delivered to IBank,
or which is subject to the approval of IBank, shall be amended, modified, superseded, or terminated
in any respect whatsoever without IBank’s prior written approval.
SECTION 8.19 Waiver of Consequential Damages.
To the fullest extent permitted by law, the Purchaser shall not assert, and hereby waives,
any claim against IBank on any theory of liability for special, indirect, consequential, or punitive
damages (as opposed to direct actual damages) arising from, or in connection with, this Agreement.
SECTION 8.20 Nondiscrimination.
(a) During the performance of this Agreement, the Purchaser shall ensure that any
direct contractor and its subcontractors constructing the Facility shall not deny the contracts’
benefits to any person on the basis of race, color, religion, ancestry, national origin, ethnic group
identification, marital status, gender, sex, sexual orientation, age, medical condition, physical
handicap or disability, mental disability, political affiliation, or position in a labor dispute, nor
shall they discriminate unlawfully against any employee or applicant for employment because of
race, color, religion, national origin, ethnic group identification, ancestry, physical handicap or
disability, mental disability, medical condition, marital status, age, gender, sex, sexual orientation,
political affiliation, or position in a labor dispute. The Purchaser shall ensure that any direct
contractor and its subcontractor shall ensure that the evaluation and treatment of employees and
applicants for employment are free of such discrimination.
(b) The Purchaser shall ensure that any direct contractor and its subcontractors
constructing the Facility shall comply with the applicable provisions of the Fair Employment and
Housing Act (Government Code section 12900 et seq.), the regulations promulgated thereunder
(Title 2, California Code of Regulations, section 7285.0 et seq.) t he provisions of Article 9.5,
Chapter 1, Part 1, Division 3, Title 2 of the Government Code (sections 11135 -11139.5) and any
regulations promulgated thereunder.
(c) The Purchaser shall ensure that any direct contractor and its subcontractors
constructing the Facility shall not knowingly give preferential treatment of any kind whatsoever
in connection with any business transaction related to the construction or operation of the Facility
to any of its affiliates or to any business enterprise in which the Purchaser has any financial interest,
but in such business transactions shall deal at all times with such affiliates and enterprises on the
same basis as though dealing with any other parties.
(d) The Purchaser shall ensure that any direct contractor and its subcontractors
constructing the Facility shall, with respect to the Facility, give written notice of their obligations
under this section to labor organizations representing employees of the Purchaser and any
contractor or subcontractor performing work on the Facility which have a collective bargaining or
other contract with the Purchaser, such contractor or subcontractor.
(e) The Purchaser shall ensure that any direct contractor and its subcontractors
constructing the Facility shall include the provisions of this section in all subcontracts to perform
work with respect to the Facility.
SECTION 8.21 Execution in Counterparts.
This Agreement shall become enforceable upon its execution and delivery. This
Agreement may be executed and entered into in several counterparts, each of which shall be
deemed an original, and all of which shall constitute but one and the same instrument.
SECTION 8.22 Disclaimer of Warranties.
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IBank makes no warranty or representation, either express of implied, as to the value,
design, condition, merchantability, or fitness for any particular purpose or fitness for the use
contemplated by the Purchaser for the Facility, or any item thereof, or any other representation or
warranty with respect to the Facility or any item thereof.
SECTION 8.23 Usury Savings.
Nothing herein shall be construed as entitling IBank to charge, receive, or collect interest
in a sum greater than the maximum interest rate permitted to be charged by IBank to the Purchaser
under applicable law (the “Maximum Rate”). The Parties intend that this Agreement shall comply
with applicable law and that the rate or rates of interest charged hereunder shall not exceed the
Maximum Rate. If the occurrence of any circumstance, event or contingency should cause such
interest to exceed interest at the Maximum Rate, any such excess amount shall be applied to the
reduction of the unpaid principal component of the Installment Payments. As used herein, the
term “applicable law” shall mean the law in effect as of the date hereof; provided, however, that
in the event there is a change in the law which results in a different permissible rate of interest,
then this Agreement shall be governed by such new law as of its effective date.
[Signatures follow. Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be signed by
their respective officers on the dates set forth below.
CALIFORNIA INFRASTRUCTURE AND
ECONOMIC DEVELOPMENT BANK, as Seller
By:
Scott Wu
Executive Director
Date_____________________________________
CITY OF SAN LUIS OBISPO, as Purchaser
By_______________________________________
Title _____________________________________
Date_____________________________________
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EXHIBIT A
APPROVING RESOLUTION OF THE PURCHASER
[To be Attached to Executed Agreement]
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EXHIBIT B
DESCRIPTION OF FACILITY
Generally, the Facility consists of upgrades to improve System reliability and energy and
operational efficiency, and includes all necessary equipping, installation, design, engineering,
construction, construction contingency, demolition, removal, resurfacing, restoration, landscaping,
permitting, construction management, project administration, and general project development
activities. More specifically, the Facility includes the following elements:
• Improvements to the ozone disinfection processes at the Purchaser’s water
treatment plant;
• Installation of control systems at various transfer pump station upgrades to
eliminate pressure spikes and modulate pump speeds to more effectively meet
varying customer water demand;
• Replacement of an existing pump station with a larger system to efficiently
maintain the required system discharge pressure for the plant’s service water;
• Replace and upgrade System control hardware and software to allow for monitoring
and optimization of key components of the System; and
• Other components necessary or desirable in connection with an infrastructure
project of this type and that are consistent with the applicable requirements of the
IBank Act and the Criteria.
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EXHIBIT C
CONDITIONS PRECEDENT TO DISBURSEMENT
A. Conditions Precedent to Initial Disbursement
No Facility Funds shall be disbursed pursuant to this Agreement until and unless
the Purchaser has submitted the following to IBank:
(1) Insurance Certificate of the Purchaser required by Section 5.22;
B. Conditions Precedent to Disbursement for Construction Costs
No Facility Funds shall be disbursed for construction costs for the Facility until and
unless the Purchaser has submitted the following to IBank:
(1) A copy of the Purchaser’s direct contractor(s)’ builder’s risk,
commercial general liability, and worker’s compensation insurance policies satisfying the
requirements of Section 5.22, unless specifically waived by IBank;
(2) A copy of the Purchaser’s direct contractor’s payment and
performance bonds satisfying the requirements set forth in Section 5.19 of this Agreement; and
(3) A copy of the executed direct contract(s) for the Facility between
the Purchaser and its direct contractor(s), including any exhibits, attachments, or change orders, if
and when applicable.
C. Conditions Precedent to Final Disbursement
The final disbursement of Facility Funds shall not be made until the Purchaser has
provided the following to IBank:
(1) Recorded notice of completion for the Facility or other evidence of
completion satisfactory to IBank;
(2) Lien waivers for the Facility, or evidence of the passage of the
applicable statutory time periods for filing mechanics and other similar liens; and
(3) Certification by the Purchaser that the Facility has been completed
according to its approved final plans and specifications, that the completed Facility is consistent
with the definition of Facility in this Agreement and is acceptable to IBank.
.
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EXHIBIT D
FORM OF OPINION OF LEGAL COUNSEL TO PURCHASER
Attorney letterhead
To be signed and dated as of the Effective Date
City of San Luis Obispo
879 Morro Street
San Luis Obispo, CA 93401
California Infrastructure and Economic Development Bank
1325 J St. Suite 1823
Sacramento, CA 95814
RE: Installment Sale Agreement, By and Among the City of San Luis Obispo and the California
Infrastructure and Economic Development Bank (“IBank”), dated as of June 1, 2020.
Ladies and Gentlemen:
In my capacity as legal counsel to the City of San Luis Obispo (the “City”) and in connection with
the above described financing agreement (the “Financing Agreement”), I have examined the laws
pertaining to the City; the City Charter; copies of the Financing Agreement; Resolution No.
________(2020 Series) adopted by the City Council on June 16, 2020 (the “Resolution”); the City
of San Luis Obispo 2012 Water Revenue Refunding Bonds and the City of San Luis Obispo,
California Water Revenue Refunding Bonds, Series 2018, (collectively, the “Existing Bonds”) and
their respective indentures and other documents governing and securing the Existing Bonds
(collectively, the “Existing Bonds Documents”); the rate and fee structure for the City’s water
system; and such other information, opinions, certificates and documents as I considered necessary
to render this opinion.
Based upon the foregoing, it is my opinion that:
(i) the City is a municipal corporation and a public instrumentality of the State of
California duly organized and validly existing pursuant to the laws of the State of California;
(ii) the Resolution and other actions of the City approving and authorizing the
execution and delivery of the Financing Agreement were duly adopted at a meeting of the
governing body of the City which was called and held pursuant to law, in accordance with the
Charter and with all public notice required by law, and at which a quorum was present and acting
throughout, and such approval and authority is continuing and in full force and effect as of the date
hereof;
(iii) the City has the full right and lawful authority to execute and deliver the Financing
Agreement and the Financing Agreement has been duly authorized and executed on behalf of the
City and the Financing Agreement is the legal, valid and binding obligations of the City
enforceable in accordance with its terms and under the Charter, except as enforcement may be
limited by as limited by applicable bankruptcy, insolvency, debt adjustment, receivership,
fraudulent conveyance or transfer, moratorium, reorganization, arrangements or other similar laws
affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial
discretion in appropriate cases and to the limitations on legal remedies against public entities in
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the State or other laws or equitable principles affecting the enforcement of creditors’ rights
generally;
(iv) to the best of my knowledge, after due inquiry, the execution and deliver y of the
Financing Agreement and compliance with the provisions thereof, under the circumstances
contemplated thereby, does not and will not, in any material respect, conflict with or constitute on
the part of the City a breach of or default under any agreement or other instrument to which the
City is a party, including the Existing Bonds and the Existing Bonds Documents, or by which it is
bound or any existing law, regulation, court order or consent decree to which the City is subject;
(v) the obligations of the City under the Financing Agreement (a) constitutes permitted
parity obligations under the Existing Bonds Documents, and (b) are on parity with the obligations
of the City under the Existing Bonds and the Existing Bonds Documents;
(vi) the rates, fees and charges the City imposes on its water system customers are legal,
valid and comply with California Constitution article XIIID, the statues implementing it, and the
published California Appellate Court and Supreme Court decisions interpreting it;
(vii) to the best of my knowledge, after due inquiry, there is no action, suit, proceeding,
inquiry or investigation before or by any court or public body pending and notice of which has
been received by the City or threatened against or affecting the City: (1) challenging or questioning
the transactions contemplated by the Financing Agreement or any other agreement, document or
certificate related to such transactions; (2) challenging or questioning the creation, organization,
existence or powers of the City; (3) seeking to enjoin or restrain the execution of the Financing
Agreement or the construction of the Facility (as defined in the Financing Agreement) or the
collection of any of the revenues used for making payments under the Financing Agreement; (4) in
any way questioning or affecting any authority for the execution of the Financing Agreement or
the validity or enforceability of the Financing Agreement; or (6) in any way questioning or
affecting any other agreement or instrument relating to the Financing Agreement to which the City
is a party.
The opinions expressed herein are based on such examination of the law of the State as I deemed
relevant for the purposes of this opinion letter. I have not considered the effect, if any, of the laws
of any other jurisdiction upon matters covered by this opinion letter. I have assumed the
genuineness of all documents and signatures presented to me. I have assumed and relied upon the
accuracy of the factual matters represented, warranted or certified in the documents. I express no
opinion as to the status of the Financing Agreement, the Installment Payments or any other
payments thereunder, or any other documents executed and delivered in connection with the
Financing Agreement under any federal securities laws or any state securities or “Blue Sky” law
or any federal, state or local tax law. Further, I express no opinion with respect to any
indemnification, contribution, liquidated damages, penalty (including any remedy deemed to
constitute a penalty), right of set-off, arbitration, judicial reference, choice of law, choice of forum,
choice of venue, non-exclusivity of remedies, waiver or severability provisions contained in the
Financing Agreement. Without limiting any of the foregoing, I express no opinion as to any matter
other than as expressly set forth above.
I am furnishing this opinion letter as City Attorney to the City. No attorney-client relationship has
existed or exists between me and iBank by virtue of this opinion letter. This opinion letter is
rendered solely in connection with the financing described herein, and may not be relied upon by
you for any other purpose. I disclaim any obligation to update this opinion letter. This opinion
letter and the opinions expressed herein shall not extend to, and may not be used, quoted, referred
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to, or relied upon by any other person, firm, corporation or other entity without my prior written
consent.
Sincerely,
_________________________
[Insert attorney name]
City Attorney, City of San Luis Obispo
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12767-0012\2412248v3.doc E-1
EXHIBIT E
AMORTIZATION SCHEDULE
Payment
Date
Ending
Principal
Balance
Principal
Payment
Interest
Payment
Total Principal
& Interest Annual Fee Total Payment
Total Payment
Fiscal Year
Ending June 30
19-Jun-2020 $14,300,000.00
1-Dec-2020 $160,875.00 $160,875.00 $160,875.00
1-Jun-2021 $13,740,196.06 $559,803.94 $178,750.00 $738,553.94 $42,900.00 $781,453.94 $781,453.94
1-Dec-2021 $171,752.45 $171,752.45 $171,752.45
1-Jun-2022 $13,166,397.02 $573,799.04 $171,752.45 $745,551.49 $41,220.59 $786,772.08 $958,524.53
1-Dec-2022 $164,579.96 $164,579.96 $164,579.96
1-Jun-2023 $12,578,253.00 $588,144.02 $164,579.96 $752,723.98 $39,499.19 $792,223.17 $956,803.13
1-Dec-2023 $157,228.16 $157,228.16 $157,228.16
1-Jun-2024 $11,975,405.39 $602,847.62 $157,228.16 $760,075.78 $37,734.76 $797,810.54 $955,038.70
1-Dec-2024 $149,692.57 $149,692.57 $149,692.57
1-Jun-2025 $11,357,486.58 $617,918.81 $149,692.57 $767,611.37 $35,926.22 $803,537.59 $953,230.16
1-Dec-2025 $141,968.58 $141,968.58 $141,968.58
1-Jun-2026 $10,724,119.81 $633,366.78 $141,968.58 $775,335.36 $34,072.46 $809,407.82 $951,376.40
1-Dec-2026 $134,051.50 $134,051.50 $134,051.50
1-Jun-2027 $10,074,918.86 $649,200.95 $134,051.50 $783,252.44 $32,172.36 $815,424.80 $949,476.30
1-Dec-2027 $125,936.49 $125,936.49 $125,936.49
1-Jun-2028 $9,409,487.89 $665,430.97 $125,936.49 $791,367.46 $30,224.76 $821,592.21 $947,528.70
1-Dec-2028 $117,618.60 $117,618.60 $117,618.60
1-Jun-2029 $8,727,421.15 $682,066.74 $117,618.60 $799,685.34 $28,228.46 $827,913.81 $945,532.40
1-Dec-2029 $109,092.76 $109,092.76 $109,092.76
1-Jun-2030 $8,028,302.73 $699,118.41 $109,092.76 $808,211.18 $26,182.26 $834,393.44 $943,486.20
1-Dec-2030 $100,353.78 $100,353.78 $100,353.78
1-Jun-2031 $7,311,706.36 $716,596.37 $100,353.78 $816,950.16 $24,084.91 $841,035.06 $941,388.85
1-Dec-2031 $91,396.33 $91,396.33 $91,396.33
1-Jun-2032 $6,577,195.08 $734,511.28 $91,396.33 $825,907.61 $21,935.12 $847,842.73 $939,239.06
1-Dec-2032 $82,214.94 $82,214.94 $82,214.94
1-Jun-2033 $5,824,321.02 $752,874.06 $82,214.94 $835,089.00 $19,731.59 $854,820.59 $937,035.53
1-Dec-2033 $72,804.01 $72,804.01 $72,804.01
1-Jun-2034 $5,052,625.10 $771,695.92 $72,804.01 $844,499.93 $17,472.96 $861,972.89 $934,776.90
1-Dec-2034 $63,157.81 $63,157.81 $63,157.81
1-Jun-2035 $4,261,636.79 $790,988.31 $63,157.81 $854,146.13 $15,157.88 $869,304.00 $932,461.82
1-Dec-2035 $53,270.46 $53,270.46 $53,270.46
1-Jun-2036 $3,450,873.77 $810,763.02 $53,270.46 $864,033.48 $12,784.91 $876,818.39 $930,088.85
1-Dec-2036 $43,135.92 $43,135.92 $43,135.92
1-Jun-2037 $2,619,841.67 $831,032.10 $43,135.92 $874,168.02 $10,352.62 $884,520.64 $927,656.56
1-Dec-2037 $32,748.02 $32,748.02 $32,748.02
1-Jun-2038 $1,768,033.77 $851,807.90 $32,748.02 $884,555.92 $7,859.53 $892,415.45 $925,163.47
1-Dec-2038 $22,100.42 $22,100.42 $22,100.42
1-Jun-2039 $894,930.67 $873,103.10 $22,100.42 $895,203.52 $5,304.10 $900,507.62 $922,608.04
1-Dec-2039 $11,186.63 $11,186.63 $11,186.63
1-Jun-2040 $0.00 $894,930.67 $11,186.63 $906,117.31 $2,684.79 $908,802.10 $919,988.73
Total $14,300,000.00 $4,028,203.82 $18,328,203.82 $485,529.46 $18,813,733.28 $18,813,733.28
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EXHIBIT F
FORM OF CERTIFICATE OF UTILITIES ENGINEER
[letterhead]
(To be signed and dated as of the Effective Date)
California Infrastructure and Economic Development Bank
1325 J St. Suite 1823
Sacramento, CA 95814
RE: Installment Sale Agreement, By and Among the City of San Luis Obispo (the “City”) and the
California Infrastructure and Economic Development Bank (“IBank”), dated as of June 1, 2020; Facility
Useful Life.
Ladies and Gentlemen:
In my capacity as the Utilities Engineer I, Corissa Burnett do hereby certify as follows:
1. I am a Professional Civil Engineer, #89763;
2. Per industry standards for the equipment specified in the Preliminary Engineering Assessment and
Investment Grade Audit the following useful life for upgrade equipment has been validated provided proper
maintenance procedures are performed.
3. Professional industry standards and guidelines provide median year equipment life expectancy for
equipment included in this upgrade. Whereas existing equipment’s lifetimes and product specifications
provide basis for reference.
4. The City of San Luis Obispo is in the process of undertaking a project to improve the energy and
operational efficiency of the City’s water treatment, distribution, and delivery system. In particular, the
City will upgrade the ozone disinfection facility at its water treatment plant, install variable control systems
for various transfer pump station motors, upgrade the water treatment plant cooling system, and will replace
control systems at the City’s water treatment plant and throughout its water system. In referencing industry
standards, existing equipment performance lifetime and the experience industry professionals the useful
life of improvements was determined. Therefore, in my opinion, as Professional Civil Engineer, the useful
life of the aforementioned project will be at least 20 years.
I, Corissa Burnett, hereby certify that each of the foregoing is true and correct.
Dated: ______________, 20__
Sincerely,
_________________________________________
Corissa Burnett
Utilities Engineer I
of the City of San Luis Obispo
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EXHIBIT G
FORM OF CERTIFICATE OF PURCHASER’S UTILITIES DIRECTOR
Purchaser letterhead
Signed Version to be Delivered to IBank as a Condition Precedent to IBank’s Obligations
Hereunder
California Infrastructure and Economic Development Bank
1325 J St. Suite 1300
Sacramento, CA 95814
RE: Installment Sale Agreement (“ISA”), By and Among the City of San Luis Obispo and the
California Infrastructure and Economic Development Bank (“IBank”), dated as of June 1, 2020;
Payment and Release of Lien of State Water Resources Control Board Agreement No. 02 -818-
550-0.
Ladies and Gentlemen:
In my capacity as the authorized representative of the City of San Luis Obispo (the “City”), I John
Moss, do hereby certify as follows:
1. On or about March 1, 2004 the City entered into Agreement No. 02-818-550-0 (the “Water
Board Agreement”) with the State Water Resources Control Board (the “Water Board”), pursuant
to which the City borrowed $8,883,231 from the Water Board (the “Water Board Loan”). Pursuant
to the Water Board Agreement, the Water Board Loan was secured by, and was payable from, a
lien on the System Revenues (as that term is defined in the ISA).
2. I signed the Water Board Agreement on behalf of the City, I am the authorized
representative of the City for matters relating thereto, and I am authorized to make this certification
on its behalf.
3. The City has paid in full the Water Board Loan. The Water Board Agreement has
terminated and no longer imposes a lien on System Revenues or any other real or personal property
of the City.
I, John Moss, hereby certify that each of the foregoing is true and correct.
Sincerely,
__________________________________
John Moss
Utilities Director, City of San Luis Obispo
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12767-0012\2412248v3.doc H-1
EXHIBIT H
SCHEDULE OF SOURCES AND USES OF FACILITY FUNDS
SOURCES and USES
Uses Sources
IBank City Total
Construction, Design, Entitlement and Related
Activities $14,300,000 $14,300,000
IBank Origination Fee $143,000 $143,000
Total $14,300,000 $143,000 $14,443,000
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12767-0012\2412248v3.doc J-1
EXHIBIT I
Reserved
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12767-0012\2412248v3.doc J-1
EXHIBIT J
Reserved
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TABLE OF CONTENTS
Page
i
ARTICLE I DEFINITIONS, RULES OF CONSTRUCTION, AND
CONDITIONS PRECEDENT ............................................................... 2
SECTION 1.01 Definitions ................................................................................. 2
SECTION 1.02 Rules of Construction................................................................. 9
ARTICLE II TERMS OF SALE............................................................................... 10
SECTION 2.01 Purchase and Sale .................................................................... 10
SECTION 2.02 Design, Acquisition, Construction, and Sale of the Facility ...... 10
SECTION 2.03 Payment of Purchase Price ....................................................... 11
SECTION 2.04 Payment on Business Days....................................................... 12
SECTION 2.05 Disbursement of Facility Funds ................................................ 12
SECTION 2.06 Additional Payments ................................................................ 14
SECTION 2.07 Reserved .................................................................................. 14
SECTION 2.08 Limitations on Prepayment and Facility Funds Reductions ....... 15
SECTION 2.09 Validity of Pledge and First Lien.............................................. 16
SECTION 2.10 Limited Obligation ................................................................... 16
SECTION 2.11 Permitted Additional Parity Debt ............................................. 16
SECTION 2.12 The Purchaser’s Obligation for Other Facility Costs ................. 18
SECTION 2.13 Facility Description .................................................................. 18
SECTION 2.14 Withholding of Facility Funds .................................................. 18
SECTION 2.15 Reserve Account ...................................................................... 18
SECTION 2.16 Permitted Subordinate Debt ..................................................... 19
ARTICLE III PLEDGE OF REVENUES .................................................................. 19
SECTION 3.01 Pledge of Net System Revenues ............................................... 19
SECTION 3.02 System Revenues to be Deposited in the Enterprise Fund ......... 20
SECTION 3.03 Priority of Payments Made from the Enterprise Fund ............... 20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE
PURCHASER ..................................................................................... 21
SECTION 4.01 Organization ............................................................................ 21
SECTION 4.02 Agreement Valid and Binding .................................................. 21
SECTION 4.03 No Conflict in Execution of Agreement ................................... 21
SECTION 4.04 No Litigation ........................................................................... 21
SECTION 4.05 No Breach or Default ............................................................... 21
SECTION 4.06 No Consent, Approval, or Permission Necessary ...................... 22
SECTION 4.07 Accuracy and Completeness of Information Submitted to
IBank ....................................................................................... 22
SECTION 4.08 Financial Statements of the Purchaser ...................................... 22
SECTION 4.09 Licenses, Permits, and Approvals for Completion of
Facility..................................................................................... 22
SECTION 4.10 Authority to Operate the System .............................................. 23
SECTION 4.11 Valid Title................................................................................ 23
SECTION 4.12 Other Liens .............................................................................. 23
SECTION 4.13 Purchaser’s Compliance with Prop 218 Law ............................ 23
SECTION 4.14 No Challenge to Purchaser’s Rates, Fees and Charges .............. 23
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TABLE OF CONTENTS
Page
ii
SECTION 4.15 Purchaser’s Compliance with Conditions Precedent to
Parity Debt Set Forth in 2012 Bonds Instrument and 2018
Bonds Instrument ..................................................................... 24
SECTION 4.16 Continuing Validity of Representations and Warranties ........... 24
ARTICLE V AFFIRMATIVE COVENANTS OF THE PURCHASER .................... 24
SECTION 5.01 Punctual Payment .................................................................... 24
SECTION 5.02 Payment of Claims ................................................................... 24
SECTION 5.03 Books and Accounts ................................................................ 24
SECTION 5.04 Protection of IBank’s Security and Rights ................................ 26
SECTION 5.05 Payments of Taxes and Other Charges ..................................... 26
SECTION 5.06 Maintenance of System Revenues ............................................ 27
SECTION 5.07 Tax Covenants ......................................................................... 28
SECTION 5.08 Maintenance and Operation of System ..................................... 35
SECTION 5.09 Assumption of Obligations ....................................................... 35
SECTION 5.10 Damage, Destruction, Title Defect, and Condemnation ............ 35
SECTION 5.11 Entry into Replacement Agreement .......................................... 37
SECTION 5.12 Further Assurances................................................................... 37
SECTION 5.13 Agreement to Complete Facility Delivery ................................ 37
SECTION 5.14 Collection of Rates, Fees and Charges...................................... 38
SECTION 5.15 The Purchaser’s General Responsibility ................................... 38
SECTION 5.16 The Purchaser’s Assurances and Commitments ........................ 38
SECTION 5.17 Facility Access ......................................................................... 39
SECTION 5.18 Operation and Maintenance of the Facility ............................... 39
SECTION 5.19 Performance and Payment Bonds ............................................. 39
SECTION 5.20 Continuing Disclosure .............................................................. 40
SECTION 5.21 Notice of Purchaser Event of Default ....................................... 40
SECTION 5.22 Maintenance of Insurance ........................................................ 40
SECTION 5.23 Facility Construction ................................................................ 41
SECTION 5.24 Compliance with Contracts ...................................................... 41
SECTION 5.25 Maintenance of Lien Parity ...................................................... 42
SECTION 5.26 Covenant to Comply with Prop 218 Law .................................. 42
ARTICLE VI NEGATIVE COVENANTS OF THE PURCHASER .......................... 42
SECTION 6.01 Limitation on Additional Obligations ....................................... 42
SECTION 6.02 Disposition of Property ............................................................ 42
ARTICLE VII EVENTS OF DEFAULT AND REMEDIES ....................................... 43
SECTION 7.01 Events of Default and Acceleration .......................................... 43
SECTION 7.02 Remedies ................................................................................. 44
SECTION 7.03 Application of Funds upon Default .......................................... 44
SECTION 7.04 No Waiver ............................................................................... 45
SECTION 7.05 Remedies Not Exclusive .......................................................... 45
ARTICLE VIII MISCELLANEOUS ............................................................................ 46
SECTION 8.01 California Law ......................................................................... 46
SECTION 8.02 Assignment of IBank’s Rights .................................................. 46
SECTION 8.03 Third Party Beneficiaries ......................................................... 46
SECTION 8.04 Successor Entities .................................................................... 46
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TABLE OF CONTENTS
Page
iii
SECTION 8.05 Discharge of Agreement........................................................... 47
SECTION 8.06 Amendment ............................................................................. 47
SECTION 8.07 Waiver of Personal Liability .................................................... 47
SECTION 8.08 Arm’s Length Transaction........................................................ 47
SECTION 8.09 Notices..................................................................................... 48
SECTION 8.10 Contact Persons ....................................................................... 48
SECTION 8.11 Partial Invalidity ...................................................................... 49
SECTION 8.12 Binding Effect.......................................................................... 49
SECTION 8.13 Entire Agreement ..................................................................... 49
SECTION 8.14 Indemnification ........................................................................ 49
SECTION 8.15 Expectations ............................................................................ 50
SECTION 8.16 Section Headings ..................................................................... 51
SECTION 8.17 Time of the Essence ................................................................. 51
SECTION 8.18 Form of Documents ................................................................. 51
SECTION 8.19 Waiver of Consequential Damages ........................................... 51
SECTION 8.20 Nondiscrimination ................................................................... 51
SECTION 8.21 Execution in Counterparts ........................................................ 52
SECTION 8.22 Disclaimer of Warranties ......................................................... 52
SECTION 8.23 Usury Savings .......................................................................... 52
EXHIBIT A – APPROVING RESOLUTION OF THE PURCHASER
EXHIBIT B – DESCRIPTION OF FACILITY
EXHIBIT C – CONDITIONS PRECEDENT TO DISBURSEMENT
EXHIBIT D – FORM OF OPINION OF LEGAL COUNSEL TO PURCHASER
EXHIBIT E – AMORTIZATION SCHEDULE
EXHIBIT F – FORM OF CERTIFICATE OF UTILITIES ENGINEER
EXHIBIT G – FORM OF CERTIFICATE OF PURCHASER’S UTILITIES DIRECTOR
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Section 9. CAPITAL FINANCING AND DEBT MANAGEMENT
A. Capital Financing
1. The City will consider the use of debt financing only for one -time capital improvement
projects and only under the following circumstances:
a. When the project’s useful life will exceed the term of the financing.
b. When project revenues or specific resources will be sufficient to service the long -term
debt.
2. Debt financing will not be considered appropriate for any recurring purpose such as
current operating and maintenance expenditures. The issuance of short-term
instruments such as revenue, tax or bond anticipation notes is excluded from this
limitation. (See Investment Policy)
3. Capital improvements will be financed primarily through user fees, service charges,
assessments, special taxes or developer agreements when benefits can be specifically
attributed to users of the facility. Accordingly, development impact fees should be
created and implemented at levels sufficient to ensure that new development pays its fair
share of the cost of constructing necessary community facilities.
4. Transportation impact fees are a major funding source in financing transportation system
improvements. However, revenues from these fees are subject to significant fluctuation
based on the rate of new development. Accordingly, the following guidelines will be
followed in designing and building projects funded with transportation impact fees:
a. The availability of transportation impact fees in funding a specific project will be
analyzed on a case-by-case basis as plans and specification or contract awards are
submitted for City Manager or Council approval.
b. If adequate funds are not available at that time, the Council will make one of two
determinations:
• Defer the project until funds are available.
• Based on the high-priority of the project, advance funds from the General Fund,
which will be reimbursed as soon as funds become available. Repayment of
General Fund advances will be the first use of transportation impact fee funds
when they become available.
5. The City will use the following criteria to evaluate pay -as-you-go versus long-term
financing in funding capital improvements:
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a. Factors Favoring
Pay-As-You-Go Financing
1. Current revenues and adequate fund balances are available, or project phasing can be
accomplished.
2. Existing debt levels adversely affect the City's credit rating.
3. Market conditions are unstable or present difficulties in marketing.
b. Factors Favoring Long Term Financing
1. Revenues available for debt service are deemed sufficient and reliable so that long-
term financings can be marketed with investment grade credit ratings.
2. The project securing the financing is of the type which will support an investment
grade credit rating.
3. Market conditions present favorable interest rates and demand for City financings.
4. A project is mandated by state or federal requirements, and resources are
insufficient or unavailable.
5. The project is immediately required to meet or relieve capacity needs and current
resources are insufficient or unavailable.
6. The life of the project or asset to be financed is 10 years or longer.
7. Vehicle leasing when market conditions and operational circumstances present
favorable opportunities.
B. Debt Management
1. The City will not obligate the General Fund to secure long-term financings except when
marketability can be significantly enhanced.
2. An internal feasibility analysis will be prepared for each long -term financing which
analyzes the impact on current and future budgets for debt service and operations. This
analysis will also address the reliability of revenues to support debt service.
3. The City will generally conduct financings on a competitive basis. However, negotiated
financings may be used due to market volatility or the use of an unus ual or complex
financing or security structure.
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4. The City will seek an investment grade rating (Baa/BBB or greater) on any direct debt and
will seek credit enhancements such as letters of credit or insurance when necessary for
marketing purposes, availability and cost-effectiveness.
5. The City will monitor all forms of debt annually coincident with the City's Financial Plan
preparation and review process and report concerns and remedies, if needed, to the
Council.
6. The City will diligently monitor its compli ance with bond covenants and ensure its
adherence to federal arbitrage regulations.
7. The City will maintain good, ongoing communications with bond rating agencies about its
financial condition. The City will follow a policy of full disclosure on every financial report
and bond prospectus (Official Statement).
C. Debt Capacity
1. General Purpose Debt Capacity. The City will carefully monitor its levels of general -
purpose debt. Because our general-purpose debt capacity is limited, it is important that
we only use general purpose debt financing for high-priority projects where we cannot
reasonably use other financing methods for two key reasons:
a. Funds borrowed for a project today are not available to fund other projects tomorrow.
b. Funds committed for debt repayment today are not available to fund operations in
the future.
In evaluating debt capacity, general -purpose annual debt service payments should
generally not exceed 10% of General Fund revenues; and in no case should they exceed
15%. Further, direct debt will not exceed 2% of assessed valuation; and no more than
60% of capital improvement outlays will be funded from long -term financings.
2. Enterprise Fund Debt Capacity. The City will set enterprise fund rates at levels needed to
fully cover debt service requirements as well as operations, maintenance, administration
and capital improvement costs. The ability to afford new debt for enterprise operations
will be evaluated as an integral part of the City’s rate review and setting process.
D. Independent Disclosure Counsel
The following criteria will be used on a case -by-case basis in determining whether the City
should retain the services of an independent disclosure counsel in conjunction with specific
project financings:
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1. The City will generally not retain the services of an independent disclosure counsel when
all of the following circumstances are present:
a. The revenue source for repayment is under the management or control of the City,
such as general obligation bonds, revenue bonds, lease-revenue bonds or certificates
of participation.
b. The bonds will be rated or insured.
2. The City will consider retaining the services of an independent disclosure counsel when
one or more of following circumstances are present:
a. The financing will be negotiated, and the underwriter has not separately engaged an
underwriter’s counsel for disclosure purposes.
b. The revenue source for repayment is not under the management or control of the
City, such as land-based assessment districts, tax allocation bonds or conduit
financings.
c. The bonds will not be rated or insured.
d. The City’s financial advisor, bond counsel or underwriter recommends that the City
retain an independent disclosure counsel based on the circumstances of the financing.
E. Land-Based Financings
1. Public Purpose. There will be a clearly articulated public purpose in forming an
assessment or special tax district in financing public infrastructure improvements. This
should include a finding by the Council as to why this form of financing is preferre d over
other funding options such as impact fees, reimbursement agreements or direct
developer responsibility for the improvements.
New development should generally be expected to “pay its own way,” (i.e., provide
funding through one mechanism or another that funds its “proportional share” of
public improvement and infrastructure costs and ongoing operations and
maintenance costs).
(1) The City will consider the use of city-based funding sources to fund public
facility and infrastructure improvements that prov ide for the health, safety
and welfare of existing and future residents and/or provide measurable
economic development and fiscal benefits. In evaluating whether the City will
use city-based funding sources, the following evaluation criteria should be
considered:
(a) Significant public benefit, demonstrated by compliance with and
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furtherance of General Plan goals, policies, and programs
(b) Alignment with the Major City Goals and other important objectives
in place at the time of the application
(c) Head of Household Job Creation
(d) Housing Creation
(e) Circulation/Connectivity Improvements
(f) Net General Fund fiscal impact
(2) The City generally will not fund or offer public financing for
infrastructure improvements that confer only private benefit to
individual property owners or development projects.
(3) The City shall seek continuity (or improvements to) existing levels of
municipal service by assuring adequate funding for the City’s operation,
maintenance and infrastructure replacement costs.”
2. Eligible Improvements. Except as otherwise determined by the Council when
proceedings for district formation are commenced, preference in financing public
improvements through a special tax district shall be given for those public improvements
that help achieve clearly identified community facility and infrastructure goals in
accordance with adopted facility and infrastructure plans as set forth in key policy
documents such as the General Plan, Specific Plan, Facility or Infrastructure Master Plans,
or Capital Improvement Plan.
Such improvements include study, design, construction and/or acquisition of:
a. Public safety facilities.
b. Water supply, distribution and treatment systems.
c. Waste collection and treatment systems.
d. Major transportation system improvements, such as freeway interchanges; bridges;
intersection improvements; construction of new or widened arterial or collector
streets (including related landscaping and lighting); sidewalks and other pedestrian
paths; transit facilities; and bike paths.
e. Storm drainage, creek protection and flood protection improvements.
f. Parks, trails, community centers and other recreational facilities.
g. Open space.
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h. Cultural and social service facilities.
i. Other governmental facilities and improvements such as offices, information
technology systems and telecommunication systems.
School facilities will not be financed except under appropriate joint community facilities
agreements or joint exercise of powers agreements between the City and school districts.
3. Active Role. Even though land-based financings may be a limited obligation of the City,
we will play an active role in managing the district. This means that the City will select
and retain the financing team, including the financial advisor, bond counsel, trustee,
appraiser, disclosure counsel, assessment engineer and underwriter. Any costs incurred
by the City in retaining these services will generally be the responsibility of the property
owners or developer and will be advanced via a deposit when an application is filed; o r
will be paid on a contingency fee basis from the proceeds from the bonds.
4. Credit Quality. When a developer requests a district, the City will carefully evaluate the
applicant’s financial plan and ability to carry the project, including the payment of
assessments and special taxes during build-out. This may include detailed background,
credit and lender checks, and the preparation of independent appraisal reports and
market absorption studies. For districts where one property owner accounts for more
than 25% of the annual debt service obligation, a letter of credit further securing the
financing may be required.
5. Reserve Fund. A reserve fund should be established in the lesser amount of: the
maximum annual debt service; 125% of the annual average debt service; or 10% of the
bond proceeds.
6. Value-to-Debt Ratios. The minimum value-to-debt ratio should generally be 4:1. This
means the value of the property in the district, with the public improvements, should be
at least four times the amount of the assessment or special tax debt. In special
circumstances, after conferring and receiving the concurrence of the City’s financial
advisor and bond counsel that a lower value-to-debt ratio is financially prudent under the
circumstances, the City may consider allowing a value-to-debt ratio of 3:1. The Council
should make special findings in this case.
7. Appraisal Methodology. Determination of value of property in the district shall be based
upon the full cash value as shown on the ad valorem assessment roll or upon an appraisal
by an independent Member Appraisal Institute (MAI). The definitions, standards and
assumptions to be used for appraisals shall be determined by the City on a case -by-case
basis, with input from City consultants and district applicants, an d by reference to
relevant materials and information promulgated by the State of California, including the
Appraisal Standards for Land-Secured Financings prepared by the California Debt and
Investment Advisory Commission.
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8. Capitalized Interest During Construction. Decisions to capitalize interest will be made on
case-by-case basis, with the intent that if allowed, it should improve the credit quality of
the bonds and reduce borrowing costs, benefiting both current and future property
owners.
9. Maximum Burden. Annual assessments (or special taxes in the case of Mello-Roos or
similar districts) should generally not exceed 1% of the sales price of the property; and
total property taxes, special assessments and special taxes payments collected on the tax
roll should generally not exceed 2%.
10. Benefit Apportionment. Assessments and special taxes will be apportioned according to
a formula that is clear, understandable, equitable and reasonably related to the benefit
received by—or burden attributed to—each parcel with respect to its financed
improvement. Any annual escalation factor should generally not exceed 2%.
F. Development Impact Fees Guidelines and Policies
Development impact fees are one-time fees levied on new development, typically
levied at the time building permits are issued, to fund a range of the City’s public
facilities and infrastructure. Such fees are levied both on a citywide basis as well as for
specific areas (e.g., the Specific Plan Areas). The levy of development impact fees is
regulated by the State’s Mitigation Fee Act (Government Code Section 66000 et seq.).
1. Development impact fees should be set, consistent with the statutory
“nexus” analysis and findings, to fund new development’s proportional
share of public facility and infrastructure costs.
2. Improvements funded by development impact fees should be
referenced generally in the appropriate planning documents (e.g.,
General Plan, Specific Plans, etc.) and reflected in the City’s Capital
Improvement Program.
3. An exception to this policy may be created by a development agreement
between the City and a private developer. In this case public
investments are offset by measurable public benefits.
4. The City’s development impact fees can be “leveraged” through the use
of fee credit and reimbursement agreements with developers and
landowners.
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5. The City’s aggregate fee levels should not render new development that
is otherwise consistent with City plans and regulations economically
infeasible. Aggregate fee levels should be evaluated i n terms of a
reasonable standard, but not a strict limit (e.g., aggregate fee levels
should not exceed an average of approximately 10 to 12 percent of the
market value of the new development, either on a per-unit or per-
square foot basis).
6. The City may consider reductions or waivers of its development impact
fees in cases where a development project meets specific City planning
or economic development policies such as affordable housing projects.
In such cases the amount of funding foregone must be replaced with
other funding sources available to the City.
1. Special Tax District Administration. In the case of Mello-Roos or similar special tax
districts, the total maximum annual tax should not exceed 110% of annual debt service.
The rate and method of apportionment should include a back-up tax in the event of
significant changes from the initial development plan and should include procedures for
prepayments.
a. Community Facilities Districts or Assessment Districts offer a way to fund
infrastructure, maintenance, or municipal services through special taxes or
assessments levied on property owners benefiting from the thus -funded
improvements or services. It can be used for both capital improvements and
ongoing facility maintenance or services.
b. The City will consider the formation of financing districts using the State’s
assessment law or the Mello-Roos Community Facilities Act for its newly
developing areas on a case- by-case basis, consistent with technical analysis
and City priorities (i.e., capital or ongoing funding).
c. The City will consider the effect of the special tax on the City’s ability to
issue General Obligation bonds or other property-based tax measures.
d. Such districts should fund infrastructure or services serving or otherwise
providing benefit to the area subject to the assessment or special tax.
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e. Such districts can fund public facilities or infrastructure otherwise funded
with the City’s development impact fees or project-specific exactions. In
such cases the area’s development impact fee obligations will be adjusted
proportionately.
f. Within any such districts, property value-to-lien ratio should, consistent
with typical underwriting standards, be at least 4.0:1 after calculating the
value of the financed public improvements to be installed and considering
any prior or pending special taxes or improvement liens.
g. Consistent with underwriting standards and market considerations, and as a
matter of policy, the City will limit the maximum amount of special taxes to
be levied on any parcel of property within a Community Facilities District, in
any given fiscal year, together with the general property taxes, general
obligation bonds, and other special taxes and assessments levied on such
parcel, shall not exceed an amount equal to one and eight - tenths percent
(1.8 percent) of the projected assessed value of the parcel (and
improvements if applicable). How the special tax capacity is allocated
between capital and ongoing expenditures will depend upon the City’s
priorities.
h. The City shall have discretion to allow a special tax in excess of the
established limits for any lands within the CFD which are designated for
commercial or industrial uses.
i. As a part of such district formations, the City will retain a special tax consul tant to
prepare a report which recommends a special tax rate and method for the proposed
CFD and evaluates the special tax proposed to determine its ability to adequately fund
identified public facilities, City administrative costs, services (if applicable ) and other
related expenditures.
2. Foreclosure Covenants. In managing administrative costs, the City will establish minimum
delinquency amounts per owner, and for the district as a whole, on a case -by-case basis
before initiating foreclosure proceedings.
3. Disclosure to Bondholders. In general, each property owner who accounts for more than
10% of the annual debt service or bonded indebtedness must provide ongoing disclosure
information annually as described under SEC Rule 15(c)-12.
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4. Disclosure to Prospective Purchasers. Full disclosure about outstanding balances and
annual payments should be made by the seller to prospective buyers at the time that the
buyer bids on the property. It should not be deferred to after the buyer has made the
decision to purchase. When appropriate, applicants or property owners may be required
to provide the City with a disclosure plan.
G. Conduit Financings
1. The City will consider requests for conduit financing on a case -by-case basis using the
following criteria:
a. The City’s bond counsel will review the terms of the financing and render an opinion
that there will be no liability to the City in issuing the bonds on behalf of the applicant.
b. There is a clearly articulated public purpose in providing the conduit financing.
c. The applicant is capable of achieving this public purpose.
2. This means that the review of requests for conduit financing will generally be a two -step
process:
a. First asking the Council if they are interested in considering the request and
establishing the ground rules for evaluating it.
b. And then returning with the results of this evaluation and recommending approval of
appropriate financing documents if warranted.
This two-step approach ensures that the issues are clear for both the City and applicant,
and that key policy questions are answered.
3. The work scope necessary to address these issues will vary from request to request and
will have to be determined on a case-by-case basis. Additionally, the City should generally
be fully reimbursed for our costs in evaluating the request; however, this should also be
determined on a case-by-case basis.
B. Refinancing
1. General Guidelines. Periodic reviews of all outstanding debt will be undertaken to
determine refinancing opportunities. Refinancing will be considered (within federal tax
law constraints) under the following conditions:
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a. There is a net economic benefit.
b. It is needed to modernize covenants that are adversely affecting the City’s financial
position or operations.
c. The City wants to reduce the principal outstanding in order to achieve future debt
service savings, and it has available working capital to do so from other sources.
2. Standards for Economic Savings. In general, refinancing for economic savings will be
undertaken whenever net present value savings of at least five percent (5%) of the
refunded debt can be achieved.
a. Refinancing that produce net present value savings of less than five percent will be
considered on a case-by-case basis, provided that the present value savings are at
least three percent (3%) of the refunded debt.
b. Refinancing with savings of less than three percent (3%), or with negative savings, will
not be considered unless there is a compelling public policy objective.
C. Enhanced Infrastructure Financing District Guidelines and Policies
a. EIFD financing should be considered for public facilities or infrastructure
improvements that confer Citywide and/or regional benefits. This may include the
“City share” of infrastructure included in the City’s development impact fees.
b. Unless there is a Development Agreement in place that provides otherwise, EIFDs
should not be used to fund real estate projects’ proportional share of infrastructure
costs otherwise included in the City’s development impact fees or charged as project -
specific exactions (e.g., subdivision improvements).
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Department Name: Administration & IT
Cost Center: 1101
For Agenda of: June 16, 2020
Placement: Consent
Estimated Time: N/A
FROM: Greg Hermann, Deputy City Manager
Prepared By: Lynn Wilwand, Administrative Analyst
SUBJECT: AVTEC DISPATCH RADIO CONSOLE SUPPORT CONTRACT RENEWAL
RECOMMENDATION
Approve the renewal of a five-year contract to Avtec LLC. with annual payments of $23,851 for
maintenance and support totaling $119,256 to maintain the City’s public safety radio dispatching
console system.
DISCUSSION
In October 2009, the City entered into a contract with Tait Communications to replace the City’s
outdated citywide radio system. As part of that upgrade, Tait Communications brought in Avtec
LLC. to supply the dispatch radio console portion of the radio dispatch system. The radio project
was completed in February 2011, and the City entered into a support contract directly with Avtec
LLC., to enable Network Services staff to contact Avtec support directly without first needing to
go through Tait Communications.
The current five-year maintenance and support contract with Avtec LLC. is expiring on June
30th and staff is recommending renewing the support contract with Avtec LLC. for an additional
five years. Avtec LLC has been responsive and provided the support needed for the critical
dispatching console. The support that Avtec LLC. provides the City is for both hardware and
software and is 7/24/365 support which is needed to provide reliable, critical public safety radio
communications.
Previous Council or Advisory Body Action
Previous approval of the Avtec contract renewal per City Manager Report on May 28, 2015.
Covid-19 Fiscal Health Contingency Plan Evaluation of Necessity
Police and Fire provide essential public safety services for the City of San Luis Obispo. In order
to provide these services, the dispatch radio consoles are in use daily, 24 hours, 7 days a week.
The dispatch console hardware and software are critical for emergency services to be dispatched
to ensure public health and safety.
CONCURRENCE
There is concurrence from the Police and Fire Departments to renew this support contract.
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ENVIRONMENTAL REVIEW
The California Environmental Quality Act does not apply to the recommended action in this
report, because the action does not constitute a “Project” under CEQA Guidelines Sec. 15378.
FISCAL IMPACT
Budgeted: Yes Budget Year: 2021
Funding Identified: Yes
Fiscal Analysis:
Funding Sources Current FY Cost
Annualized
On-going Cost
Total Project
Cost
General Fund $23,851 $23,851 $119,256
State
Federal
Fees
Other:
Total $23,851 $23,851 $119,256
A substantial discount of $8,464 per year was negotiated for a total five-year savings of $42,318
if the renewal occurs by June 30th. This multi-year renewal also locks in the rate for the
equipment during the five-year period. The annual contract amount has been budgeted in the
Information Technology operating budget.
ALTERNATIVES
Do not award contract to Avtec LLC. Staff does not recommend this option. The dispatch radio
console system is a mission critical component of the day-to-day operations for public safety and
other City Departments. Not having support available, should a portion of the system fail, would
severely delay staff time required to fully restore system functionality, and increase the City’s
liability.
Attachments:
a - Avtec Support Renewal Quote and Terms Modified
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ScoutCare
Contract Quotation
Avtec, LLC.
100 Innovation Place
Lexington, SC 29072, USA
1-800-310-7045
1-803-358-3600
www.avtecinc.com
Date: 5/14/2020
Quotation: Q-06606
Expiration Date: 6/30/2020
Quotation To:System Information:
Miguel Guardado
City of San Luis Obispo CA
mguardad@slocity.org
System Name: City of San Luis Obispo CA
End User Organization: City of San Luis Obispo CA
Location: San Luis Obispo, CA
Current Support Expires: 6/30/2020
Eligible for Hardware Maintenance?: Yes
Dear Miguel,
A Support Contract for the Avtec console system provides you with regular software upgrades, remote factory support by
telephone, including 24x7 emergency assistance, and opportunities for recurrency training. If the system is under warranty
(including our hardware maintenance plan) you may choose to extend that for additional years, up to a total of five.
Please review the quotation below, including any notes about possible changes to the rate. In general, ScoutCare rates
are 15% percent of the list price of software. If you expand your system, the new equipment contribution is pro-rated and
added to the rate after its warranty has expired.
Year 1
Item
#
Qty Model
Number
Description List Price
(USD)
Net Price
(USD)
1 1.00 SCOUTCARE-
T1
One Additional Year of ScoutCare - Includes no charge software
maintenance, 24/7/365 Technical Support, and Web Portal Access.
$21,350.33 $21,350.33
2 1.00 SCOUTCARE-
HARDWARE
ScoutCare Hardware Option: Annual Extended Maintenance Program
for hardware repairs. ScoutCare is a prerequisite for the Hardware
Option to become effective.
$2,500.87 $2,500.87
$23,851.20
Year 2
Item
#
Qty Model
Number
Description List Price
(USD)
Net Price
(USD)
3 1.00 SCOUTCARE-
T1
One Additional Year of ScoutCare - Includes no charge software
maintenance, 24/7/365 Technical Support, and Web Portal Access.
$21,350.33 $21,350.33
4 1.00 SCOUTCARE-
HARDWARE
ScoutCare Hardware Option: Annual Extended Maintenance Program
for hardware repairs. ScoutCare is a prerequisite for the Hardware
Option to become effective.
$2,500.87 $2,500.87
$23,851.20
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Year 3
Item
#
Qty Model
Number
Description List Price
(USD)
Net Price
(USD)
5 1.00 SCOUTCARE-
T1
One Additional Year of ScoutCare - Includes no charge software
maintenance, 24/7/365 Technical Support, and Web Portal Access.
$21,350.33 $21,350.33
6 1.00 SCOUTCARE-
HARDWARE
ScoutCare Hardware Option: Annual Extended Maintenance Program
for hardware repairs. ScoutCare is a prerequisite for the Hardware
Option to become effective.
$2,500.87 $2,500.87
$23,851.20
Year 4
Item
#
Qty Model
Number
Description List Price
(USD)
Net Price
(USD)
7 1.00 SCOUTCARE-
T1
One Additional Year of ScoutCare - Includes no charge software
maintenance, 24/7/365 Technical Support, and Web Portal Access.
$21,350.33 $21,350.33
8 1.00 SCOUTCARE-
HARDWARE
ScoutCare Hardware Option: Annual Extended Maintenance Program
for hardware repairs. ScoutCare is a prerequisite for the Hardware
Option to become effective.
$2,500.87 $2,500.87
$23,851.20
Year 5
Item
#
Qty Model
Number
Description List Price
(USD)
Net Price
(USD)
9 1.00 SCOUTCARE-
T1
One Additional Year of ScoutCare - Includes no charge software
maintenance, 24/7/365 Technical Support, and Web Portal Access.
$21,350.33 $21,350.33
10 1.00 SCOUTCARE-
HARDWARE
ScoutCare Hardware Option: Annual Extended Maintenance Program
for hardware repairs. ScoutCare is a prerequisite for the Hardware
Option to become effective.
$2,500.87 $2,500.87
$23,851.20
TOTAL: $119,256.00
This support contract runs from 7/1/2020 to 6/30/2025.
Notes for Quotation:
1) Avtec Inc to invoice the City of San Luis Obispo, CA $23,851.20 annually for 5 years, beginning July 1st, 2020. Price
covers hardware and software maintenance ,plus technical support and training classes.
2) Additional parts and/or software licenses purchased during the terms on the contract will be pro-rated into the
maintenance contract and included on the following invoice.
If you have any questions concerning this quotation, please contact Wes McCutcheon at (803) 358-3258 or email
wmccutcheon@avtecinc.com.
Please consult the attached document for more information on Avtec's Support Services as well as applicable Terms and
Conditions.
To accept this quotation, sign and complete all required fields below:
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Name: __________________________________________ Signature: __________________________________
Date: ___________________________________________ Purchase Order Number*: ______________________
*PO Copy must be returned along with this document
Billing Contact: ___________________________________
Billing Email: ___________________________________
Billing Address: ___________________________________
___________________________________
Thank you for your business!
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ScoutCare™ Maintenance &
Support
TERMS AND CONDITIONS FOR END USERS
DEFINITIONS
“Controlled Deployment” means a confidential and limited release of Software to particular customer(s)
for testing and evaluation purposes.
“Defect” means a failure of Software to operate substantially in accordance with Avtec’s written
Specifications for such Software; provided, that (a) any such failure is reproducible by Avtec under
Avtec’s customary testing procedures; (b) the failure results in substantial degradation of customer’s
system so that normal operations are not possible, or that the system works, but with limitations outside
the scope of Specifications; and (c) such failure is reported to Avtec in writing within the applicable
warranty period. Avtec does not warrant that the Software will perform without error or that it will run
without immaterial interruption. Minor problems or bugs which do not limit operations are not Defects.
“General Commercial Availability (“GCA”)” means the release date that the Software is made
available for commercial sale to the public following Avtec’s determination that the Software has proven
to be reliable, free of critical bugs, and is suitable for usage in a production environment. Each GCA
release date will be documented and made available from Avtec.
“Maintenance” means a fee based program for servicing of the Software by way of Minor Releases,
Major Releases and Updates to correct Defects, to improve the functionality of the Software, and to
extend the software life cycle by assuring that Software remains compatible with the operating system
and other related technologies. Maintenance shall be available for all periods where customer opts to
purchase ScoutCare coverage.
“Maintenance Availability” means that Maintenance shall be available for all periods when customer is
covered by ScoutCare and shall receive Major Releases, Minor Releases and Patches at no cost.
“Major Release” means a Software distribution by Avtec that includes significant improvements in the
functionality or performance of the Product, and or adds new features which are made GCA for sale to
the public. Typically, Avtec distributes 2 Major Releases per calendar year. Avtec shall provide support
for the current release and the prior 2 versions of the Software. Typically, the first two numbers in the
Version indicate the Major Release in the designation of the Product. For example: V4.5 and V4.6 are
both Major Releases.
“Minor Release” means a Software distribution by Avtec that contains changes that correct Defects or
make minor improvements in the functionality of the Product, which is GCA for sale to the public.
Typically, the last number to the right of the decimal indicates as a Minor Release in the designation of
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the Product, with changes in the positional notation indicating order and importance. For example:
V4.5.10 to V4.5.11.
“Patch” means a type of Minor Release intended to correct Defects. Because a Patch is not intended to
make incremental or major improvement to the Product, it is not categorized as a Minor Release or a
Major Release. Avtec will include the term “Patch” in the GCA release documentation.
“Product(s)” means any hardware (and related parts and supplies) or Avtec’s computer software
programs specified in a product schedule. Product shall also include each and every Major Release,
Minor Release, or Patch available from Avtec during the term of each Maintenance and Support period.
“ScoutCare” means Avtec’s Software Maintenance and Support for licensed Software as described in
Appendix A.
“Software” means all Avtec owned or sublicensed software, computer programs, documentation, and
applications for which licenses are available to be purchased, as may be described in a separate Product
schedule, including, without limitation, software imbedded in any equipment or goods, software
programs provided on a stand-alone basis, and any Major Release, Minor Release, or Patch.
“Specifications” means the Specifications for a Product or Service set forth in Avtec’s most recent user
documentation or other published Specifications for such Product or Service, except when superseded
by Specifications in an approved SOW.
“Support” means that Avtec will provide direct access via reasonable telephone and email to experienced
and knowledgeable support personnel for advice and counsel on Customer’s use of the Software. Support
services shall be provided to Customer’s Tier 1 support personnel (“Support Representatives”), who
have completed Avtec’s system administrative training class, and shall be reasonably competent in the
use and operation of Avtec’s products. Only Support Representatives will contact Avtec for Support
purposes. Avtec will make all commercially reasonable efforts to address the problem identified by the
Support Representatives.
“Warranty” as to Products. The warranty period applicable to a Product (hardware or Software)
installed by Customer 15 months following the date on which the Product is shipped by Avtec to
Customer. Unless otherwise stated in a SOW, the warranty period applicable to a Product installed by
Avtec at Customer’s site is one (1) year following the date on which installation commences. Customer
agrees that time is of the essence with respect to this warranty period and Avtec shall have no obligation
to accept returns for any reason following expiration of the warranty period. During the Warranty period,
Avtec technical support shall be limited to providing telephone assistance as necessary to cause the
licensed Products to perform in accordance with its Specifications.
“Version” means the distribution of licensed Software by Avtec such that ongoing changes made to such
Product are designated usually in the form of a Major Release or a Minor Release or a Patch.
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SCOUTCARE™ MAINTENANCE & SUPPORT
Software Maintenance and Support Services.
1. In consideration of fees, Avtec shall make available to Customer for each Scout system covered
by this Agreement the following services during the Term, which are further described in
Appendix A attached hereto (the “Services”).
a. Major Releases, Minor Releases, and Patches.
b. Telephone support during support hours for consultation and problem resolution. Support
hours are 8AM to 7PM EST, excluding Avtec holidays (as set forth in Appendix A), and
telephone support shall be toll free in the United States and Canada.
c. Telephone Critical Priority support for serious system problems outside of support hours
(24x7x365).
d. Secure access to an online customer portal to access information resources for Avtec
Products.
e. Remote upgrade assistance provided to Tier 1 Support Representative. Optional on-site
assistance is available at additional cost.
f. Scout Administrative Training Class (online or at Avtec Headquarters) for two (2)
individuals identified by Customer plus one (1) additional individual per $50,000 per year
in ScoutCare revenue. Classes will be scheduled at mutually agreed times. Customer is
responsible for travel expenses. Two (2) Scout Administration Classes can be traded for
one (1) Scout Advanced class.
2. ScoutCare Software Maintenance Fee. Customer shall pay Avtec an annual fee based on a
percentage of price of software licenses.
a. The fee shall include pro-rated amounts for additional licenses added to the system during
the prior year, calculated from the warranty expiration date to the expiration of the
ScoutCare term, to align all renewal dates.
b. Avtec reserves the right to increase the rate payable on an annual basis.
3. ScoutCare Hardware Maintenance Option. ScoutCare Software Maintenance customers may
also purchase a hardware maintenance option. Hardware Maintenance is only available with
purchase of ScoutCare Software Maintenance.
a. Hardware Maintenance fees shall be quoted based on hardware purchased.
b. Avtec will, at its option, attempt to repair a defective product or component, or replace
the item with a like or similar component at no cost to the customer exclusive of shipping
to Avtec’s headquarters. Only defects occurring under normal use and service will be
covered. Replacement components may be new or reconditioned.
c. Due to product changes, component obsolescence, and parts availability, Avtec cannot
always guarantee an exact form, fit, and function replacement component for the defective
item. Avtec will make every effort to avoid or minimize the impact of such situations, but
is only obligated to replace or repair the defective item. All replaced items become the
property of Avtec.
d. Equipment must be returned via Avtec’s Return Merchandise Authorization (“RMA”)
program and identified as covered under ScoutCare hardware maintenance. Avtec will
check all serial numbers of returned equipment against serial numbers covered by
ScoutCare.
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e.Firmware and hardware update modifications will be applied to returned items as needed,
at Avtec’s discretion.
4.Term and Termination.
a.For a (1) year ScoutCare Contract - The term of the Agreement shall be one (1) year and
will be eligible for renewal at then current rates. This Agreement may be canceled by
either Party giving the other a minimum of ninety (90) days written notice of cancellation,
but this Agreement shall remain in full force and effect during said notice period. In
addition, if either Party breaches this Agreement and such breach remains uncured more
than thirty (30) days after written notice of breach is given to the breaching Party, the
other Party may terminate the Agreement immediately by written notice to the breaching
Party. If Avtec breaches the agreement, a pro-rated refund will be provided for the
remaining period.
b.For a multi-year ScoutCare Contract - The term of the Agreement shall be (X) years and
will be eligible for renewal at then current rates. Cancellation of this agreement can be
negotiated with the Avtec legal team, but will be subject to penalties and fees.
c.In the event sufficient funds are not appropriated for the payment of all payments
required to be paid in the next succeeding Term, City may terminate the Agreement at
the end of the Original Term or the then current Renewal Term, as the case may be, and
City shall not be obligated to make payments provided for in this Agreement beyond the
then current term. City agrees to give notice to Lessor of such termination at least sixty
(60) days prior to the end of the then current term or, if non-appropriation has not
occurred by that date, promptly upon the occurrence of non-appropriation.
5.ScoutCare Lapse and Reinstatement Fee. Customers who allow Software Maintenance lapse
must purchase ScoutCare coverage calculated from the original renewal date to present (the lapsed
fee), plus a minimum of 12 months. In addition, if the lapse is longer than 30 days, an additional
fee equal to twenty-five percent (25%) of the lapsed fee is required to reinstate ScoutCare.
6.Exclusions
a.ScoutCare does not provide for the cost of personal computer or server operating system
upgrades or updates, or maintenance on other third-party products supplied by Avtec,
unless explicitly quoted by Avtec.
b.Avtec ScoutCare does not cover issues related to third- party equipment, software, and
their configuration provided by others. This includes customer’s network infrastructure,
customer supplied computers, software applications, radio/telephony systems and
accessories not provided by Avtec.
c.Hardware Maintenance includes only items supplied by Avtec and does not cover theft,
accidental or intentional physical damage, flooding, condensation, mold, lightning and
electrical surges, spilled liquids, misuse, abuse, products with missing or altered serial
numbers, or damage caused by unqualified repair personnel.
7.Third Party Device Support. Avtec does not provide support for third party hardware and
software that is not supplied by Avtec as a part of the console system.
8.Eligibility for New Releases. In the event Customer chooses not to install a newer Version of the
Software made available to Customer during the term of its ScoutCare, Customer shall maintain
licensing rights to use any Version of the Software with a GCA release date prior to expiration of
its ScoutCare coverage.
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9. Warranty Disclaimer. NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, AVTEC MAKES NO WARRANTIES OR REPRESENTATIONS OF
ANY KIND AS TO ANY SERVICE PROVIDED HEREUNDER. AVTEC
HEREBY DISCLAIMS ALL IMPLIED WARRANTIES OF ANY KIND,
INCLUDING BUT NOT LIMITED TO, IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
10. Limitation of Liability and Remedies. THE LIABILITY OF AVTEC ARISING
OUT OF OR RELATING TO SCOUTCARE OR ANY SERVICES PROVIDED BY
AVTEC UNDER OR IN CONNECTION WITH SCOUTCARE SHALL BE LIMITED
TO THE ACTUAL AMOUNTS PAID TO AVTEC FOR SOFTWARE MAINTENANCE,
AND THE SOLE REMEDY OF CUSTOMER OR OTHER CLAIMANT AGAINST
AVTEC SHALL BE TO RECOVER SUCH AMOUNTS, UPON PAYMENT OF WHICH
AVTEC SHALL BE RELEASED FROM ALL FURTHER OBLIGATION AND
LIABILITY TO CUSTOMER OR SUCH OTHER CLAIMANT. IN NO EVENT SHALL
EITHER PARTY BE LIABLE FOR PUNITIVE DAMAGES, OR DAMAGES FOR
LOST PROFITS, OR ANY INCIDENTAL, INDIRECT OR CONSEQUENTIAL
DAMAGES OF ANY KIND, EVEN IF SUCH PARTY IS AWARE OF THE
POSSIBILITY OF SUCH DAMAGES
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Appendix A
ScoutCare™ Maintenance and Support Services
Software Maintenance
A primary benefit of ScoutCare is its provision for software maintenance, which falls into four categories:
1.Adaptive – modifying the software to cope with changes in operating systems, hardware platforms,
and integrations to external systems. Console systems integrate many third-party systems and
components, most of which include complex software. As these change over time, compatibility
modifications and regression testing are mandatory. Security vulnerabilities also must be addressed
as discovered. Adaptive software maintenance provides compatibility with the latest versions of
Windows, radio and telephone systems.
2.Perfective – implementing functional enhancements to the software. Examples are new user
interface features, connectivity, and improvement in management tools.
3.Corrective – diagnosing and fixing errors. No system is perfect, so issues are resolved on a priority
basis. Patches are occasionally released if a high impact/high urgency issue emerges, while errors
with workarounds are fixed in Minor Releases or Major Releases.
4.Preventive – increasing software maintainability or reliability to prevent future problems. Better
diagnostics, improvements in redundancy mechanisms, and better error handling of user input are
some examples of preventative software maintenance.
New Versions with new capabilities are released several times a year with Patches released from time
to time to address specific issues. Avtec console systems covered by a ScoutCare agreement are entitled
to use newer versions of their existing software licenses released during the ScoutCare term. Both
application Software and any required firmware updates for Avtec Products are included.
Remote Support
Avtec maintains a team of Support engineers for telephone and remote support of Avtec systems. They can
answer questions on configuration and help troubleshoot issues during business hours, and are also
available 24-hours x 356 for Critical Priority support. Avtec systems are mission/business critical to our
customers and integrate into complex IP environments, so Avtec takes support seriously. Avtec’s
Maintenance and Support program is staffed with a team of professionals that are involved in system
implementations, project management, training and customer support. They are backed by a professional
services team of software development and quality control engineers, to ensure complex escalated issues
receive careful analysis. Avtec continuously provides these teams with the latest radio systems, virtualized
test environments, and training to ensure both capability and capacity for proper Support delivery.
Technical Training Classes
ScoutCare provides training online or at Avtec’s South Carolina headquarters for technical staff. This
training is aimed at the System Administrator level and is based on the latest version of software. Tuition
is waived for two persons (or 1 person in the Advanced Class). Additional personnel may attend at Avtec’s
normal rates. (Travel and daily expenses are not included.)
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Option for Hardware Maintenance
Avtec offers a Hardware Maintenance option to provide repairs or replacements on hardware products and
accessories. After requesting an RMA number, items are shipped at customer expense to Avtec’s factory
for repair and testing. Items are returned with pre-paid standard ground shipping and with at least 90 days’
coverage, which may extend beyond the expiration of your ScoutCare Hardware agreement.
Because ScoutCare Hardware Maintenance customers may need a particular item returned faster, we also
offer an expedited shipping service. Expedited shipping service may be requested on a case-by-case basis
and does not affect the rate paid for Hardware option services. Urgent repairs qualify for Advanced
Replacement (loaner) components and expedited shipping. Advanced Replacement starts when you place
a RMA order, which may be performed via phone, and you need a part shipped immediately while your
original part is being processed for repair. Advanced Replacement items will be shipped via overnight
(next business day), early a.m., delivery to minimize the impact on your business. Customers are expected
to return the failed part immediately for repair processing. The customer will not pay the expedited
shipping charge as long as the Advanced Replacement item is returned within 30 calendar days of
receiving the repaired item. Items not returned within the 30-day period will be invoiced at the prevailing
retail rate. A purchase order or credit card will be requested before issuing the invoice, however if this is
not obtained, the invoice will be generated and the account will be placed on credit hold until paid.
Customers not covered by ScoutCare Hardware Maintenance are ineligible for Advanced Replacement
parts. Customers on a demand service will need to submit a P.O. or credit card to for repair under RMA,
or purchase replacement parts needed overnight, loaners are not available. Those parts will carry a 90-day
warranty from date of shipment, for Avtec manufactured products. “Third party equipment” may require
additional time to process. Replaced items will be warrantied for 90 Days from ship date, or will be
included in the Hardware Maintenance program, whichever is longer.
Customer Responsibilities
• Customer will be responsible to designate an on-site technical support person (Customer employee
or Avtec) with current (within three years) training certification on the Avtec system. That
person(s) will be responsible to communicate and work toward problem resolution with the Avtec
Technical Support Team.
• Customer will have adequate supply of critical spare parts as recommended by Avtec.
• It is recommended when practical that customer maintain a lab/demo system to support
familiarization and piloting of new software releases prior to installation on a production system.
• Upon request by Avtec, customer will provide Avtec with remote access into the system in order
for Avtec to troubleshoot issues.
• Upon notice from Avtec of a new version release, customer will be responsible for downloading
the release within the term of this ScoutCare Maintenance Agreement. The Parties agree that email
notice will meet this requirement.
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Tier-1 Maintenance Expectations for End-User Customers or their Local Service Providers
Tier-1 trained technical resources at customer site locations are critical to properly evaluate communication
system issues, to complete “first look” maintenance actions, and to maintain the high operational
availability of communication systems and capabilities. To meet this need, Avtec provides dispatcher and
system administrator training for all dispatch console end-user customers and/or their Tier-1 local support
providers. Avtec customers on ScoutCare™, our Software Maintenance Program, are also entitled to
recurring system administrator training at our Lexington, SC HQ facility.
At Avtec, we service what we sell, and we’re available 7x24x365 to provide support for all of our customers
with systems under warranty, and for customers on ScoutCare™. Our Tier-2 support, (expert second
level), is remote, and is reliant on Tier 1 input and feedback from knowledgeable and trained resources at
or near the customer locations.
In the event a customer cannot commit their own resources, or local service provider resources, for training
and maintenance support, Avtec can provide pricing for Tier-1 local/on-site support via Avtec employees
or through our network of partners. Regardless of the resource designated to provide Tier-1 support, Avtec
enables local support resources to perform the following functions:
1. Attend system administrator training.
a. Access the Avtec Customer Portal for technical documentation.
2. Act as the primary liaison with Avtec Customer Support (CS) for all Avtec dispatch console
technical matters.
3. Perform “first look” maintenance for any suspected dispatch console related issues. First look, or
Tier- 1 maintenance expectations include:
a. Respond to initial dispatcher requests for technical support.
i. Perform preliminary fault isolation. Eliminate the customer network, PBX,
radios, recorders, or other third party peripherals as a source of the issue.
ii. Ensure the IP network (routers, switches, hubs, protocol changers, etc.) and
cabling that interconnects with the dispatch console system components are
functional.
iii. Verify unicast and multicast traffic flow.
b. Determine whether or not the issue with the dispatch console can be resolved at Tier-1 or
if it should be escalated for Tier-2 support from Avtec CS engineers.
c. Open and track Tier-2 tickets with Avtec CS.
d. Coordinate all Avtec Tier-2 maintenance activity with local site end-users.
e. Complete any locally required maintenance tasks under the direction of Avtec CS Tier-2
engineering.
f. Perform all local moves, additions, and changes (basic system administrator actions).
g. Perform console, VPGate, Frontier resets.
h. Verify Avtec Scout, VPGate, and Frontier configurations and settings.
i. Record fault data.
i. Indications (i.e., no PTT, no TX or RX, console locked up).
ii. Date and Time.
iii. Impact/Severity of Outage.
iv. Collect and upload Log files as needed to the Avtec FTP server.
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v. Network packet capture (PCAPS) from consoles and VPGate.
j. Implement SW patches and/or upgrades. Follow Tier-2 engineering instruction/direction
for SW patching and/or upgrade.
k. Physical HW replacement in the event of failure.
l. Training of new end-users after preliminary training by Avtec has been provided.
m. Maintain records of system design and layout, including IP addresses and Hostnames
(where possible); provide this data to Avtec as needed for Tier-2 support.
n. Utilize the “Scout Issue Resolution Checklist” (provided separately) to assist Tier-2
engineers with fault isolation and resolution.
Avtec engineering resources are available to support our customers pursuant to the Service Level
Agreement (SLA) detailed in our basic contract and/or ScoutCare agreement. Locally (trained) technical
resources will help facilitate rapid resolution of issues, and ensure high system availability.
If there are any questions regarding Tier-1 or Tier 2 support, please contact Abe Gibson, Director of
Customer Success at +1.803.358.3312.
Avtec Responsibilities
Services to be provided for customer under the ScoutCare program:
1. Avtec will provide remote Technical Support (described below) for customer during Avtec’s
normal Operating hours (defined below).
2. Avtec will provide remote Technical Support for customer for Critical Priority issues (defined
below), at any time.
3. Avtec will provide hardware replacement service (RMA Support) for customer during Avtec’s
normal Operating hours (defined below).
4. RMA repair request is made from customer; RMA is processed within 4 business hours of form
submission.
5. RMA advance replacement request is made from customer; form complete and RMA is processed
within 2 hours.
6. 90% of the calls will be responded to within 60 seconds during Avtec business hours.
7. 90% of calls will be responded to within 180 seconds after business hours and on weekends.
8. Each Support call will be logged and assigned a priority status of Critical, Urgent, or Normal. The
following section lists responses based on each priority.
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Avtec Responses by Priority Status
Priority: Critical
Definition Customer’s system is substantially degraded and normal operations are
not possible.
Response Time 30 Minutes
Resolution
Commitment
Issue will be worked continuously until resolution
Escalation Process If Customer Support Team is unable to resolve within 1 hour they will escalate
to the appropriate member of the engineering team.
Escalation to Management Team in 2 hours if issue is still unresolved. A
determination of additional resources will be made at that time.
Update to customer will be made every 2 hours until resolution.
Call Closure
Requirement
Call will be closed when system is running without impact for 48 hours and
customer is satisfied with resolution.
Priority: Urgent
Definition Limited operational impact, able to work but with limitations
Response Time 60 Minutes
Resolution Issue will be worked on a priority basis
Priority: Normal
Definition No impact to business, questions or informational
Response Time 1 Business Day
Resolution
Commitment
Issue will be queued for resolution based on workload and other priority cases.
Escalation Process If Customer Support Team is unable to resolve within 5 business days they will
escalate to the appropriate member of the engineering team.
Escalation to Management Team in 10 business days if issue is still unresolved.
A determination of additional resources and time frame of resolution will be
made at that time.
Call Closure
Requirement
Call will be closed when customer accepts resolution.
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Contacts & Operating Hours
Contact Phone Numbers & Email
• +1.803.358.3601 (Toll-free for US and Canada)
• +1.800.545.3034
• CustomerSupport@avtecinc.com
• RMARequest@avtecinc.com
Location of Service Delivery
• 100 Innovation Place, Lexington, SC 29072 USA
Hours of Operation
• Business hours support: Monday – Friday 8:00 AM– 7:00 PM EST
• After hours Critical Priority support: Monday – Friday 7:01 PM – 7:59 AM EST, 24-hour
coverage Saturday, Sunday and Holidays
Avtec Holiday List
New Year’s Day Thanksgiving Day
Martin Luther King Day Day after Thanksgiving day
Memorial Day Day after Thanksgiving day
July 4th Christmas Eve
Labor Day Christmas Day
Escalation Contacts
Additional assistance is available to ScoutCare Customers via Avtec’s escalation process. In the event
a ScoutCare customer is not satisfied with the support we are providing or have provided, has
questions regarding our support process, or wishes to discuss and obtain additional assistance, the
following from the Services & Solutions Management team are available to support you:
Nathan Hooks, Customer Support Manager
Direct Dial: +1.803.358.3433
Email: nhooks@avtecinc.com
Escalation emails will be answered within one business day; escalation phone calls and/or messages
will be responded to within 30 minutes.
For any customer matter that cannot be resolved by the Customer Support team or by Customer
Support Managers please contact:
Abe Gibson, Director of Customer Success
Phone: +1.803.358.3412
Email:agibson@avtecinc.com
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Department Name: Community Development
Cost Center: 4001
For Agenda of: June 16, 2020
Placement: Consent
Estimated Time: NA
FROM: Derek Johnson, City Manager
Prepared By: Michael Codron, Director of Community Development
Brian Leveille, Senior Planner
SUBJECT: TOLLING AND ONE-YEAR EXTENSION OF ALL CITY DISCRETIONARY
APPROVALS DUE TO THE COVID-19 PANDEMIC EMERGENCY
RECOMMENDATION
Adopt a Resolution to accomplish the following actions deemed necessary to support economic
recovery:
1. Toll the expiration of any City entitlement set to expire on or after March 17, 2020, which
will retroactively extend approvals that expired after the City declared the pandemic
emergency.
2. Extend the term of all active City planning entitlements for one additional year following the
end of the Covid-19 pandemic emergency.
3. Extend the life of all commercial cannabis business operator permits by a fixed period of six
months from the original date of expiration.
4. Extend the life of all building permit applications by a fixed period of six months from the
original date of expiration.
DISCUSSION
Background
On June 2, 2020, the City Council adopted the 2020-21 Financial Plan supplement with a
singular, integrated Major City Goal – Economic Recovery. One of the near-term actions
identified to implement this goal is the extension of entitlements so that they do not expire,
forcing a project developer to restart the approval process and causing delays in the economic
recovery effort that could result in business closures and lost revenue opportunities for both
businesses and city operations. Staff is now recommending that the City Council adopt a
resolution authorizing extension of City discretionary approvals and building permit
applications.
City Discretionary Approvals
Staff’s recommendation is to extend all City discretionary approvals, issued under the Zoning
Regulations and active on the date of the emergency declaration on March 17, 2020, for one year
following the declared end of the state and local emergency. Specifically, for any discretionary
approval active on March 17, 2020, the one-year “life” of the permit will be extended by both the
term of the emergency plus one additional year.
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The term of the emergency is tied to the Governor’s declaration of a state of emergency, the
County Public Health Officer’s declaration of a public health emergency, and the City Council’s
local emergency declaration.
Chapter 17.104.070 of the City’s Municipal Code includes the following:
If building permits are not issued for site development authorized by a
discretionary permit within one year of the date of approval or such longer time
as may be stipulated as a condition of approval, the permit shall expire with the
building permit application. Upon written request received prior to expiration,
the director may grant renewals of an approval for successive periods of not more
than one year each, up to a total of three years. Requests beyond three years are
subject to review by the planning commission. Approvals of such renewals shall
be in writing and for a specific period. Renewals may be approved with new or
modified conditions upon a finding that the circumstances under which the permit
was originally approved have substantially changed. Renewal of a permit shall
not require public notice or hearing, unless the renewal is subject to new or
modified conditions. In order to approve a renewal, the director, or planning
commission as applicable, must make the findings required for initial
approval. (Ord. 1650 § 3 (Exh. B), 2018)
The recommendation before the City Council is to approve a generally applicable extension to
the term of any approval covered by this section of the Municipal Code by the term of the
pandemic emergency, plus one year. This extension would not impact the ability of any
individual applicant or project proponent to pursue additional extensions, not to exceed a
cumulative three years when combined with this general extension, as provided by this section.
Building Permit Applications
Building permit applications submitted before January 1, 2020 are subject to the 2016 California
Building Code (CBC). These applications are required by the code to be actively pursued and
issued within six months of the application date. The CBC does provide for the possibility of
successive 90-day extensions. The recommendation before the City Council is to grant a single,
six-month extension to all building permit applications submitted prior to January 1, 2020,
extending their potential life to June 30, 2021.
CBC Section 105.3.2 - An application for a permit for any proposed work shall be
deemed to have been abandoned 180 days after the date of filing, unless such
application has been pursued in good faith or a permit has been issued; except
that the building official is authorized to grant one or more extensions of time for
additional periods not exceeding 90 days each. The extension shall be requested
in writing and justifiable cause demonstrated.
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Commercial Cannabis Business Operator Permits
The City of San Luis Obispo has issued five commercial cannabis operator permits during the
past year. One of those permits has been activated and four have not met all of the requirements.
If a commercial cannabis operator permit is not fully activated (meaning the business is open and
continually operating) within one year of permit issuance, then current code provisions specify
that the operator permit expires. Commercial cannabis business operators have been impacted by
Covid-19 similar to other business types in the City. The process of activating a commercial
cannabis operator permit is extensive and requires approval of a Conditional Use Permit,
application for building permit, construction per the approved building permit, stocking
inventory and opening for business. Accomplishing all of this within one year is represents an
ambitious schedule during normal times and the current pandemic and other world events define
this time as anything but normal. In light of the generally applicable recommended entitlement
and building permit extensions discussed above, as well as the inextricable intertwined
relationship between such land use entitlements and building permits and the activation
requirements of a cannabis operator’s permit, staff is also recommending a six-month extension
on the activation of currently issued operator’s permits to align with building permit extensions,
due to the effects of the pandemic emergency. The relevant code section follows.
SLOMC 9.10.070.D. Duration and Activation of Permit. Each commercial
cannabis operator permit issued pursuant to this chapter shall expire twelve
months after the date of its activation. The permittee may apply for renewal prior
to expiration in accordance with this chapter. Each commercial cannabis
operator permit must be activated within twelve months of issuance. The permit is
activated by the issuance of a use permit for the commercial cannabis activity
pursuant to Section 17.86.080, together with all other applicable city permits and
state licenses, and the commercial cannabis operator thereafter opening and
continuously operating the commercial cannabis activity. Failure to timely
activate the permit shall be deemed abandonment of the permit and the permit
shall automatically lapse. (Ord. 1673 §§ 1, 2 (Exh. A), 2020; Ord. 1647 § 4 (Exh.
A (part)), 2018)
Policy Context
The proposed action is consistent with the City’s Major City Goal for economic recovery and
facilitates the City’s sub -goal for Housing Production. Further, the recommendation will help
avoid time and cost spent reviewing individual approval extension requests.
Public Engagement
This project has followed an “inform” level of public engagement. However, the City has
received specific requests for this action to help preserve the value of entitlements granted by
ensuring that they do not expire before they can be acted on.
CONCURRENCE
The City’s Assistant City Manager for Community Services and the Economic Development
Manager concur with this recommendation.
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ENVIRONMENTAL REVIEW
The California Environmental Quality Act does not apply to the recommended action in this
report, because the action does not constitute a “Project” under CEQA Guidelines Sec. 15378.
FISCAL IMPACT
Budgeted: No Budget Year: N/A
Funding Identified: No
Fiscal Analysis:
Funding Sources Current FY Cost
Annualized
On-going Cost
Total Project
Cost
General Fund N/A
State
Federal
Fees
Other:
Total
The recommendation will have no fiscal impact on the City. However, the extension of the life of
entitlements and building permit applications is expected to have a positive economic effect on
the community.
ALTERNATIVES
1. The City Council can extend discretionary approvals for a different time period. This
action is not recommended because together, the tolling of approvals and the one-year
extension, will provide a substantial increase in the life of all active entitlements. In the case
of building permit applications, six months is the longest term enabled by the California
Building Code.
2. The City Council can decide not to extend entitlements or building permit applications.
This action is not recommended because the City Council has adopted Economic Recovery
as a Major City Goal and this action is intended to be supportive of the goal.
Attachments:
a - Draft Resolution
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RESOLUTION NO. _____ (2020 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA PROCLAIMING THE CONTINUING
EXISTENCE OF A LOCAL EMERGENCY REGARDING THE COVID-19
PANDEMIC AND EXTENDING THE LIFE OF DISCRETIONARY
APPROVALS, BUILDING PERMIT APPLICATIONS AND CANNABIS
OPERATOR PERMITS TO MITIGATE ECONOMIC IMPACTS AND AID
IN ECONOMIC RECOVERY
WHEREAS, section 2.24.060 of the Municipal Code empowers the Emergency Services
Director to request that the City Council proclaim a local emergency when the City of San Luis
Obispo is affected or likely to be affected by a public calamity and the City Council proclaimed a
local emergency at its regular meeting on March 17, 2020 regarding the COVID-19 pandemic and
has subsequently regularly reviewed said proclamation and proclaimed the continuation of local
emergency; and
WHEREAS, the Secretary of Health and Human Services Director issued a Determination
that a Public Health Emergency exists and has existed of January 27, 2020; and
WHEREAS, the President of the United States has declared a State of National
Emergency; the Governor of the State of California has proclaimed a State of Emergency for the
State of California and issued Executive Orders and direction regarding measures to mitigate the
spread of cases of COVID-19 within the State of California; the San Luis Obispo County
Emergency Services Director has proclaimed a local emergency; and the San Luis Obispo County
Public Health Director has declared a public health emergency related the spread of cases of
COVID-19 within the State of California and all recitals set forth therein, are included as though
fully set forth herein; and
WHEREAS, on March 19, 2020, the Governor issued Executive Order N-33-20, including
the Order of the State Public Health Officer mandating all individuals living in the State of
California to stay home or at their place of residence except as needed to maintain continuity of
operations of the federal critical infrastructure sectors and has issued subsequent orders permitting
phased re-opening and requiring continuing measures to mitigate the spread of COVID- 19; and
WHEREAS, the City of San Luis Obispo will be required to help enforce all restrictions
imposed by the State of California and by the County of San Luis Obispo acting as the heal th
agency; and
WHEREAS, the pandemic COVID-19 continues to spread worldwide and in the U.S.,
continuing to present an immediate and significant risk to public health and safety, and resulting
in serious illness or death to vulnerable populations, including the elderly and those with
underlying health conditions and is anticipated to continue to spread in response to phased re-
openings and significant heightened social interaction and group gatherings associated with recent
protest activity; and
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WHEREAS, heightened levels of public health and safety planning and preparedness have
been necessitated in preparation for and response to confirmed cases of COVID-19 in the County
of San Luis Obispo, and rapid response not lending itself to otherwise applicable notice and
approval timelines has been and will be necessary to respond to the rapidly evolving pandemic and
its related, and to mitigate against the spread or resurgence of COVID-19 and its resulting mental
and physical health, social, and economic impacts, compromising the public health and safety; and
WHEREAS, in the absence of such actions, an escalation of the spread remains an
imminent threat and County wide health services may become overwhelmed and unable to keep
up with medical demand for care and availability of hospital or care facility capacity; and
WHEREAS, the pandemic and necessary federal, state and local public health orders
requiring social distancing to prevent spread of COVID-19 have had and will continue to have
devastating economic impacts on the local community, including residents, businesses, employees
and City operations; and
WHEREAS, the City has instituted its Fiscal Health Contingency Plan in order to mitigate
against economic impacts of emergency response costs and significant revenue reductions and has
made drastic reductions to current and projected city costs through reductions in purchasing, limits
on hiring, capital improvement project deferrals, and furloughs of temporary and supplemental
staff; and
WHEREAS, Article 14, Section 8630, of the California Emergency Services Act requires
that the City Council review the need for continuing the Local Emergency at least every sixty (60)
days until such Local Emergency is terminated.
NOW, THEREFORE, BE IT PROCLAIMED AND RESOLVED by the City Council
of the City of San Luis Obispo that:
SECTION 1. All recitals set forth above, and all recitals included in support of Federal,
State and County actions referenced herein, are adopted as though fully set forth herein as findings
in support of this Resolution; and
SECTION 2. A local emergency continues to exist throughout the City resulting from the
condition of extreme peril related to the pandemic of COVID-19, which, absent continuation of
preventative measures, and in the absence of a vaccine, is still deemed to be beyond the control of
normal protective service, personnel, equipment, and facilities of and within the City; and
SECTION 3. Due to the severe economic impacts of COVID-19 and its economic impacts
on the community and the City organization and in order to prevent situations where developers
or contractors need to restart the discretionary review process or delay construction projects with
the need to reapply for permits or request individual extensions and to focus limited staff resources
on supporting the effective implementation of COVID-19 public health and safety compliance
measures for the protection of employees and customers of businesses within the City, and
enforcement of the highest priority provisions for the protection of the general health and safety
of the community, the Council deems it necessary to take the following actions related to the
continuing existence of a local emergency and in support of economic recovery therefrom:
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1. Toll the expiration of all discretionary approvals covered by Municipal Code Section
17.104.070 from the declaration of the pandemic emergency (beginning March 17,
2020).
2. Automatically extend the life of all discretionary approvals covered by Municipal Code
Section 17.104.070 by one year after the termination of the declared local emergency.
3. Automatically extend the life of all active building permits applications by six months,
as authorized by California Building Code Section 105.3.2.
4. Extend the life of all commercial cannabis business operator permits by a fixed period
of six months from the original expiration date. If any operator’s permit currently
issued from the existing application period is not activated and expires or is deemed
abandoned at the conclusion of the period specified herein, the City shall open a
subsequent application period for any retail storefront permits available during which
applications from any previously qualified or permitted applicant may follow the
normal process to submit a new application, along with the applications of any new
applicants.
SECTION 4. All existing orders of the San Luis Obispo County Emergency Services
Director as currently in effect and as subsequently clarified, amended, modified or superseded by
subsequent action or order of the County Emergency Services Director, the County Public Health
Officer, and/or the County Board of Supervisors, are hereby expressly acknowledged and declared
to be enforceable within the City of San Luis Obispo as if directly enacted by the City Council
pursuant to San Luis Obispo Municipal Code Chapter 2.24 and shall be enforceable under
Municipal Code 2.24.100 until such time as terminated by the issuing authority.
SECTION 5. The proclamation of local emergency shall be deemed to continue to exist
until it is terminated by the City Council of the City of San Luis Obispo pursuant to a resolution
adopted by the City Council of the City San Luis Obispo or its Emergency Services Director.
SECTION 6. The City has been undertaking, and will continue through cessation of this
emergency to undertake, necessary measures and incur necessary and extraordinary costs, which
are directly related to the prevention of the spread of the COVID-19 Virus and are taken in
furtherance of: the Secretary of Health and Human Services Secretary’s determination that a public
health emergency has existed since January 27, 2020; City Council’s Proclamation of Local
Emergency on March 17, 2020 and subsequent proclamations of continuing local emergency the
Governor’s Proclamation of a State of Emergency on March 4, 2020 ; the President of the United
States’ Declaration of a National Emergency on March 13, 2020; the County Emergency Services
Director’s Proclamation of Local Emergency and the County Public Health Director’s Declaration
of a Public Health Emergency on March 13, 2020, and related orders, regulations and directions.
SECTION 7. During the existence of said local emergency, the powers, functions, and
duties of the Emergency Services Director and the Emergency Organization of this City shall be
those prescribed by state law, ordinances, and resolutions of this City and by the City of San Luis
Obispo Emergency Operations Plan, notwithstanding otherwise applicable procedures, timelines
or methods of action and the Emergency Services Director is expressly authorized to take any and
all actions in furtherance of emergency powers to address the local emergency.
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SECTION 8. A copy of this Resolution shall be posted on all outside public access doors
of City Hall of the City of San Luis Obispo and in one public place within any area of the City
within which this Resolution applies and personnel of the City of San Luis Obispo shall endeavor
to make copies of this order and regulation available to the news media.
Upon motion of _______________________, seconded by _______________________,
and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing Resolution was approved this _____ day of _____________________ 2020.
____________________________________
Heidi Harmon
Mayor
ATTEST:
____________________________________
Teresa Purrington
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, on _____________________.
____________________________________
Teresa Purrington
City Clerk
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Department Name: Admin & IT
Cost Center: 1101
For Agenda of: June 16, 2020
Placement: Consent
Estimated Time: N/A
FROM: Greg Hermann, Deputy City Manager
Prepared By: Lynn Wilwand, Administrative Analyst
SUBJECT: PUBLIC SAFETY TAIT RADIO SYSTEM MAINTENANCE AND SUPPORT
CONTRACT
RECOMMENDATION
Approve a five-year contract with Tait Communications for the maintenance and support of the
Public Safety radio system in the amount of $25,831 paid annually for a total of $129,155.
DISCUSSION
Background
In October 2009, after issuing a Radio System Upgrade RFP, the City entered into a contract
with Tait Communications to replace the City’s outdated citywide radio system. The radio
system upgrade project was completed in February 2011 and at that time the City entered into a
maintenance and support contract with Tait Communications. The contract allowed the Network
Services staff to contact Tait Communications Support directly for any issues associated with the
radio system. It also allowed Tait support to access the City radio system to identify and resolve
any problems. The maintenance and support contact was renewed in 2013 for two years and in
June 2015 the contract was renewed for an additional five years and is set to expire on June 30,
2020.
Staff is recommending extending the support contract with Tait Communications for another
five-year period to be paid in yearly increments of $25,831. The support that Tait
Communications provides is for both hardware equipment and software and is 24/7/365 support,
as well as annual on-site system health checks which are needed to provide reliable, critical
public safety radio communications.
Tait Communications designed, installed, and programmed the citywide radio system. This
system serves the Police, Fire, Public Works, Utilities and Parks and Recreation Departments
radio communications. Contracting with any other radio vendor would require the new vendor to
obtain in-depth training on how the system is designed and operating within the City. The radio
system backend equipment is manufactured by Tait and is proprietary. Tait Communications has
been very responsive and able to solve all required hardware and software support needs without
service interruptions.
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Covid-19 – Fiscal Health Contingency Plan Evaluation of Necessity
Police and Fire provide essential public safety services for the City of San Luis Obispo. In order
to provide these services, the City radio system is in use daily, 24 hours, 7 days a week. The
radio system hardware and software are critical for emergency services to be dispatched to
ensure public health and safety. IT staff was able to negotiate no increase to the contract price
given the COVID-19 emergency.
Previous Council or Advisory Body Action
On June 16, 2015, Council approved a five-year contract renewal with Tait Communications for
maintenance and support of the radio system.
Policy Context
The City’s purchasing ordinance under chapter 3.24.060 stipulates that bidding procedures use is
not required when:
D. when supplies or equipment have been uniformly adopted in the City or
otherwise standardized.
As stated above, the City has standardized on Tait Communications radio equipment.
CONCURRENCE
Network Services staff and Police Department staff have reviewed this report and con cur with
the recommendation.
ENVIRONMENTAL REVIEW
The California Environmental Quality Act does not apply to the recommended action in this
report, because the action does not constitute a “Project” under CEQA Guidelines Sec. 15278.
FISCAL IMPACT
Budgeted: Yes Budget Year: 2020-21
Funding Identified: Yes
Fiscal Analysis: The funding was approved by Council for the FY21 on June 2, 2020 with the
budget adoption in the Network Services operating budget.
Funding Sources Current FY Cost
Annualized
On-going Cost
Total Project
Cost
General Fund $25,831 $25,831 $129,155
State
Federal
Fees
Other:
Total $25,831 $25,831 $129,155
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ALTERNATIVES
Not Award Contract to Tait Communications. Staff does not recommend this option. The radio
system is a mission critical component of the day to day operations for public safety and other
City Departments. Not having support available, should a portion of the system fail, would
severely impact staff’s ability to fully restore system functionality, and increase the City’s
liability.
Attachments:
a - SLO Service Advantage Quote Five years
b - Tait San Luis Obispo Agreement June 2020
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Tait North America Inc
15354 Park Row Drive
Houston
Texas 77084
United States of America
For the attention of:
Client City of San Luis Obsipo
Quote Number 5292020-01
Total Price 129,155.00 Incoterm:CIP
Currency USD Validity:30 Calendar Days
Date Friday, May 29, 2020
Project Name San Luis Obispo - Option for up to 5 years Coverage
Project Description
Prepared by:Danielle Mellado
Section Part Number Description Qty Unit Sell Ext'd Sell Section Total
100 Lab system SA Coverage and Managed Services 1 129,155.00
100.01 Service Advantage Annual Fee Year 1 coverage 1 25,831.00$ 25,831.00$
100.02 Service Advantage Annual Fee Optional Year 2 coverage 1 25,831.00$ 25,831.00$
100.03 Service Advantage Annual Fee Optional Year 3 coverage 1 25,831.00$ 25,831.00$
100.04 Service Advantage Annual Fee Optional Year 4 coverage 1 25,831.00$ 25,831.00$
100.05 Service Advantage Annual Fee Optional Year 5 coverage 1 25,831.00$ 25,831.00$
Total 129,155.00
Quotation
By submitting a purchase order, signing a Quote from Tait, or placing an order via Tait's customer service representatives, the Customer agrees that Tait Standard Equipment Terms and Conditions of Sale will
govern the supply by Tait and the purchase by the Customer of the Equipment, Software licenses and/or Services described in the Quote, purchase order and/or orders taken by customer service representatives.
Continuation of existing Service Advantage agreement, which includes a Tait-provided 3-day health check for the system. Tait
will provide Service Desk support and software upgrades on Tait system infrastructure. Third party products are excluded from
this agreement as it has been in the past. The contract duration is up to 5 years, with an option to exercise each year's coverage
after year one.
Page 1 of 1 5/29/2020
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SUPPORT AGREEMENT
Tait North America, Inc.
And
City of San Luis Obispo, CA
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CONTACT INFORMATION
TAIT Communications Corporate Head Office
Tait International Limited
P.O. Box 1645
Christchurch
New Zealand
For regional offices address and telephone numbers, refer to http://www.taitradio.com.
COPYRIGHT AND TRADEMARKS
All information contained in this document is the property of Tait International Limited. All rights reserved.
This manual may not, in whole or in part, be copied, photocopied, reproduced, translated, stored, or reduced
to any electronic medium or machine-readable form, without prior written permission from Tait International
Limited.
The word Tait and the Tait logo are trademarks of Tait International Limited.
All trade names referenced are the service mark, trademark or reg istered trademark of the respective
manufacturers.
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CONTENTS
Contact Information ..................................................................................................................................... 2
Support Agreement ..................................................................................................................................... 4
Section A – Agreement Details ................................................................................................................... 6
Section B – Roles, Responsibilities & Escalation Contacts ......................................................................... 7
Section C – Support Services ..................................................................................................................... 8
Section D – Additional Charges ................................................................................................................ 14
Section E – General Terms & Conditions.................................................................................................. 15
Section F – Glossary of Terms .................................................................................................................. 24
Appendix A – Critical Spares Inventory ..................................................................................................... 27
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SUPPORT AGREEMENT
THIS Support Agreement (“Agreement”) is made on the 23rd day of June, 2020
BETWEEN “TAIT”
Tait North America Inc.
15354 Park Row Drive
Houston, Texas 77084,
United States of America
AND “Client”
City of San Luis Obispo, CA
990 Palm St.
San Luis Obispo, CA 93401
BACKGROUND:
1. Tait has supplied a Tait QS2 radio communications system to the Client.
2. Tait has agreed to provide and Client has agreed to purchase certain Support Services in accordance
with the terms of this Support Agreement.
3. This Support Agreement defines the principal activities and responsibilities of all parties for the support
of the Client Communications Solution.
4. Variations to this Support Agreement are subject to mutual agreement between Tait and Client and
will be addressed in accordance with Section E clause 14.2 (Variations).
AGREEMENT OVERVIEW
This Agreement consists of this front cover and the following Sections:
Section A Agreement Details
Section B Roles, Responsibilities, Escalation Points
Section C Support Agreement
Section D Additional Charges
Section E General Terms and Conditions
Section F Glossary of Terms
Appendix A Critical Spares
In case of any conflict between the Sections the earlier listed shall take precedence.
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AGREED and Signed by Tait North America Inc:
__________________________________________________
Name:
Title:
Date
AGREED and signed by the Client: City of San Luis Obispo, CA
__________________________________________________
Name:
Title:
Date:
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SECTION A – AGREEMENT DETAILS
AGREEMENT DETAILS
1 Client City of San Luis Obispo, CA
2 Client Address for Notices 990 Palm St.
San Luis Obispo, CA 93401
3 Client Support Manager Miguel Guardado
mguardad@slocity.org
805-781-7017
4 Client Solution and Products
including licensed Software
All Tait-branded infrastructure products associated with the
original equipment installation.
5 Commencement Date July 01, 2020
6 Term of Agreement One year with the option to exercise four additional one-
year terms. To exercise each additional year, Client must
email orders.us@taitradio.com at least 30-days in advance
of next service year.
7 Support Fee $25,831 to be paid annually at least 30 days in advance of
Commencement Date for each year the option to extend is
exercised.
8 Review of Support Fee and Additional
Charges
Support Fees will be reviewed as Products are added or
removed from the network upon each anniversary of the
Commencement Date.
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SECTION B – ROLES, RESPONSIBILITIES, ESCALATION CONTACTS
Tait Client
Role Under This Agreement Tait is responsible for providing the
Support Services described in
Section C
The Client is responsible for providing
First Level Support described in clause
4 of Section E (General Terms and
Conditions).
Account Manager
Fatima Garcete
Channel Enablement Manager,
West Territory
832-627-8566
Fatima.Garcete@taitradio.com
Client Representative
Miguel Guardado
mguardad@slocity.org
805-781-7017
TAIT 24x7x365 Support Desk
1-844-491-9818
serviceadvantage@taitradio.com
(low priority email address)
Operational Manager
Miguel Guardado
mguardad@slocity.org
805-781-7017
The parties shall endeavour to cooperatively resolve any disputes arising in
connection with this Agreement and the Support Services. If a dispute or
difference cannot be resolved within the normal course of business then either
party may refer the dispute to the nominated escalation points below.
Section E, Clause 14.6 (Disputes) shall apply.
Escalation Points VP, Field Services and Operations
Alan Gutsell
281-600-8257
alan.gutsell@taitradio.com
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SECTION C – SUPPORT SERVICES
Tait Support Plans
Client has selected the Tait Support Agreement plan set out below. Elements are described in the
remainder of this Section C (Support Services).
Optional support services are not included in the price of Extended Warranty or Service Advantage.
Optional support services require purchase of Service Advantage.
Manufacturer’s Warranty Service Advantage
Service Desk Business Hours 24 x 7
Return for Repair Defects Only Defects Only
Online Client Service Portal Included
Software Maintenance Included
Optional Elements of
Service Advantage –
Not included unless explicitly
marked as “Included”
Extended Warranty Not Included
Annual System Audit Included
Preventative Maintenance Not Included
Onsite Dispatch/Restoration Not Included
*Software Maintenance includes software releases within your licensed feature set for covered Products.
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SERVICE ADVANTAGE
Service Advantage includes the following services as explained below: Tait Service Desk: 24 x 7 Techn ical
Support, Online Client Service Portal and Technical Resources, and Software Maintenance.
1. Tait Service Desk: 24 x 7 Technical Support
1.1 Tait will provide a Service Desk solution to the Client that includes:
a. Single point of contact for all support re lated matters for Products covered by this Support
Agreement including Partner Products.
b. 24 x 7 Response in accordance with the times set out in Table 1.6.
c. Telephone access to Tait Engineering personnel to log / identify / troubleshoot faults and
issues with the Solution and Products covered under this Agreement.
d. Remote diagnostics and restoral where possible.
e. Access to repair and warranty information.
f. Access to technical, Product and Solution information.
g. General support queries, configuration queries, requests for quotations for enhancements.
1.2 The Service Desk serves as the single point of contact regarding Client support and the reporting
of Incidents.
1.3 The Service Desk will provide email and telephone support in troubleshooting failed Pr oducts, and
will arrange for a Return Material Authorization (RMA) for any Product that has failed under
Warranty or Extended Warranty.
1.4 Client must ship or return the Product to the service depot nominated by the Service Desk.
1.5 Tait shall repair or replace returned Products (or arrange for the repair / replacement of Partner
Products) and dispatch to the Client, subject to the terms of th is Agreement.
1.6 Target Response and Target Restoration Times
Response Time is defined as the time from when Client reports an Incident to the Service Desk
and ends when a suitably qualified Tait Support Engineer contacts Client.
Restoration Time is defined as the time from when Client reports an Incident to the Ser vice Desk
and ends when the Product or Radio Solution is re-stabilized and carrying normal traffic levels
which may be via a workaround or replacement Product(s) as applicable. Where replacement
products are required it is assumed that the Client will carr y spare equipment to cater for network
outages.
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Table 1.6
Incident
(type) Response (Hours) Restoration (Target - Hours)
Priority 1* 0.5 4
Priority 2* 1 8
Priority 3** 8 48
Priority 4** 8 168
*Priority 1 and 2 incidents will be responded to and managed continuously 24 hours a day, 365 days a year.
**Priority 3 and 4 incidents will be responded to and managed during Business Hours.
2. Online Client Service Portal and Technical Resources
2.1 Tait will provide access to the Online Client Service Portal and Technical Resource web site.
2.2 Tait will issue the Client applicable login(s) and password(s).
2.3 The Client will be able to access the following information, Software, firmware, applications and
case management updates via the Online Client Service Portal and Technical Resource sites:
▪ Documentation: Accessories, Installation, Integration, Product Specifications, Standard
User, Service
▪ Frequently Asked Questions and Search Facility
▪ Programming and Calibration Application (Downloadable)
▪ Service Kit (Downloadable)
▪ Service Case: Creation, History, Status Updates
▪ Technical and Software Release Notes
3. Software Maintenance
3.1 Client is entitled to receive: Software and firmware releases relevant to and within the licensed
feature set of the Tait-Branded Products purchased by the Client (see Section A-4: Client Solution
and Products including licensed Software).
3.2 Access to the Software releases referred to in section C-3.1 shall be requested through the Online
Client Service Portal or via email serviceadvantage@taitradio.com .
3.3 Any Tait Services or hardware required for the implementation of a Software release may be
purchased from Tait at an additional charge (unless stated otherwise in this Agreement).
3.4 Tait will provide Technical Support (described in Section C -2: Online Client Service Portal and
Technical Resources) for the current and up to three previous releases of Soft ware and firmware.
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Technical Support for previous Software releases is at Tait’s discretion and may be subject to
Additional Charges,
3.5 Tait shall maintain (i.e. provide bug fixes, mo difications and improvements) only the current
Software release for any Product. If Client has a Problem with a non -current release of Software,
Client may be required to install the most current version of So ftware in order to remedy such
Problem.
3.6 This Section and the Support Fees, do not include the provision of Client requested enhancements,
modifications, or developments. Any such enhancement, modification or development may be
requested by Client via the Tait Service Desk. Tait at its option may (a) provide the Client with a
quotation for undertaking the request; and / or (b) endeavor to include the request in a future
Software release; or (c) where not feasible for commercial, technical or other reaso ns, decline the
request.
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Optional Elements
The following optional support elements are not included in the price of Extended Warranty or Service
Advantage, but can be added for an additional cost:
4. Extended Warranty
4.1. Client is entitled to Tait Warranty as described in Section E-9 (Warranty) on each of the following
products purchased from Tait for the Warranty Period indicated in Section A -6 (Term of
Agreement):
4.2. Extended Warranty extends Client’s warranty rights and obligations under the same terms outlined
in the Tait Warranty.
4.3. Client shall contact Tait for Warranty Services via the Tait Service Desk.
5. Annual System Audit
5.1 Tait will provide a Field Service Engineer for one (1) week, comprised of two (2) travel days, and
three (3) working days on site with the Client under this agreement.
5.2 The Field Service Engineer will perform a Tait HealthCheck high level system audit for each site,
which will include the following activities:
5.2.1 Check and record overall system performance.
5.2.2 Take alarm logs from all equipment; and
5.2.3 Check backup battery systems.
5.3 Following the visit, Tait shall provide to the Client a report detailing the tests performed and the
findings with any recommendations will be presented to the Client.
Included Yes ☐ No ☒
Notes
[This option not included.
Included Yes ☒ No ☐
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5.4 This Service is available to the Client once per year of the Agreement and must be arranged in
advance by calling the Service Desk with a six (6) week notice of the preferred date(s) for
undertaking the Annual System Audit.
6. Preventative Maintenance
6.1 Tait will perform a yearly preventative maintenance visit to each site within the Client
communication system, the duration to be defined based on the size of the customer system.
6.2 The following test measurements shall be logged annually
6.2.1 Power out measurement from each transmitter shall be taken at the antenna
connector on the back of each radio, prior to the combining equipment.
6.2.2 The Power out measurement from each transmitter shall be taken at the output of the
combining system.
6.2.3 The Reflected Power measurement shall be taken at the output of the combining
system. This measurement may be taken with any one of the transmitters keyed. It is
not necessary to record all transmitters.
6.2.4 Frequency error measurement shall be taken on each transmitter. Thi s measurement
may be taken off the air.
6.2.5 Transmit Deviation measurement of each transmitter shall be taken. This
measurement may be taken off the air. (Modulation fidelity for P 25, FSK Error for
DMR)
6.2.6 CTCSS Deviation measurement of each transmitter shall be taken. This
measurement may be taken off the air. (Not applicable to P25 or DMR channels)
6.2.7 Receiver sensitivity measurement at 12db SINAD shall be taken. The Signal shall be
injected at the antenna connector on the back of each receiver. (5% BER for P25 and
DMR)
6.2.8 The Battery voltage shall be taken while the batteries are under load. The charger to
the batteries shall be shut off and the battery voltage monitored and recorded ev ery
5 minutes for a period of 30 minutes. The charger shall be turned back on and t he
charging voltage recorded. The charging current shall be read from the charger and
recorded.
6.3 For any problems found with equipment covered under this agreement , Tait will attempt to adjust
and reconfigure equipment as necessary to bring equipment into s pecification and / or replace
equipment with available spares, provided maintenance can be performed within the quoted
duration allotted for the Preventative Main tenance visit. Tait will also coordinate return and repair
of defective equipment.
Notes
Annual health check to be performed
Optional Yes ☐ No ☒
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6.4 Following the Preventative Maintenance, Tait shall provide to the Client a report detailing the tests
performed, adjustments made, and the findings with any recommendations will be presented to the
Client.
6.5 This Service is available to the Client once per year of th e Agreement and must be arranged in
advance by calling the Service Desk with a six (6) week notice of the preferred date(s) for
undertaking the Preventative Maintenance.
7. Onsite Dispatch/Restoration
7.1 When Tait is unable to return the Client’s Solution to normal operation through remote technical
support, Tait will dispatch a technician/engineer to attend site to diagnose and restore the Client’s
radio network.
7.2 The rates for Onsite dispatch include standard travel expenses to locations with regular commercial
air service and readily accessible sites. Special rates apply to networks without commercial air
service or readily accessible sites.
SECTION D – ADDITIONAL CHARGES
Standard labor rate for on-site support not covered by this Agreement is $1,500 USD per day plus travel
and living expenses with 15% administrative fee applied to these expenses.
Notes
[ This option not included.
Included Yes ☐ No ☒
Notes
This option not included
On-site support beyond the annual hours shall be billed at the rates in Section D below (Additional Charges).
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SECTION E – GENERAL TERMS & CONDITIONS
1. Term
1.1 The Term of this Agreement shall be the term specif ied in Section A (Agreement Details)
commencing on the Commencement Date, provided that the parties may mutually agree in writing
to extend this Agreement on terms and conditions to be mutually agreed betw een the parties prior
to the expiry of the then current Term.
2. Tait Support
2.1 During the Term Tait shall provide the Support Services set out in Section C of this Agreement
(Support Services) in consideration of payment by Client of the Support Fees.
2.2 Services shall be supplied for the Products at the Sites and unless agreed otherwise in writing, Tait
shall not be obligated to provide the Services for the Products located at any other site(s). Any
products and/or systems not listed in the Agreeme nt (“Additional Products”) shall only be covered
by the Agreement where agreed in writing by the Parties. Each of the expressions “Term”,
“Products”, “Sites” and “Support Fees” shall mean the term, products, sites and support fees
identified in Section A of this Agreement (Agreement Details).
2.3 Except in response to warranty claims during the warranty period for any Product, Tait may supply
new, second-hand or reconditioned replacement parts in the performance of Services or Excepted
Services.
2.4 Only the Services described in Section C (Support Services) as being in scope for this Agreement
shall be provided. Tait shall not provide the Excepted Services.
Excepted Services
2.5 The Services shall not include the following services (the “Excepted Services”):
a) provision of the Services for Products or Solution not set out in Section A-4 of this Agreement;
b) provision of the Support Services at a location other than the Site(s);
c) correction of faults due to Client’s failure to meet its First Line Support obligations (see clause
4: Obligations of the Client);
d) correction of faults due to Client’s modification, neglect or misuse of the Products, failure to
maintain a suitable environment for the operation and maintenance of the Products (including
without limitation power supply, air conditioning or humidity control) in accordance with normal
industry practices and as set out in the published data sheets, manuals or other written
instructions for the Products;
e) correction of damage caused by any accident or disaster, fire, flood, water, wind, lightning,
vandalism or theft;
f) correction of faults in any attachments or associated equipment (whether or not supplied by
Tait) which do not form part of the Products;
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g) painting or refinishing of the Products;
h) the relocation or transportation of Products, or the rectification of any faults caused by such
relocation or transportation, (save where performed by Tait);
i) the provision of any software release designed to provide new or enhanced functionality unless
this is incidental to the Support Services or provided for under Section C-3 (Software
Maintenance) above;
j) services required to implement changes to the Solution or configurations which were not a
requirement of the specifications under the supply contract /-s for the Products listed in this
Agreement or otherwise committed to by Tait in writing;
k) correction of any fault which would be remedied by a software release or other repair which
meets the original specifications for the Products and which has been refu sed by Client.
2.6 If Client requests Tait to provide any Excepted Services, Tait shall be entitled to charge for the
same at rates to be agreed in advance between the parties, or failing such advance agreement Tait
standard Additional Charges for the relevant services. If requested, Tait shall provide a written
quotation and estimated completion date for provision by Tait of any Excepted Services.
3. Support Fees and other payments
3.1 Support Fees will be invoiced by Tait and paid by Client . All Invoices including invoices for
Additional Charges are payable within 30 days of the date of invoice.
3.2 All fees and charges referred to in the Agreement are exclusive of sales, use, value added or goods
and services taxes. Where appropriate such taxes will be added to the invoice and paid by Client
unless Client provides Tait with evidence of payment or certificate of exemption. Support Fees are
also exclusive of any customs, import or export duties, and should any such duties arise, these
shall be payable by Client.
3.3 To the fullest extent permissible by law, Client’s right of set-off is excluded. No payment shall be
deemed to have been received until Tait has received cleared funds.
3.4 If Client is overdue with any payment then, without prejudice to any other right or remedy available
to Tait: (i) Client shall be liable to pay interest on the overdue amount at the rate of one per cent
per complete month until Tait has received payment of the overdue amount together with interest
that has accrued; and (ii) Tait reserves the right to suspend contractual performance and/or
exercise a lien over Products returned for repair or replacement Products until Client has made
such overdue payment in full.
3.5 Tait may increase the Support Fee and the rates for A dditional Charges from each anniversary of
the Commencement Date by written notice to the Client. The amount of such increase will not
exceed the increase in the Consumer Price Index or its equivalent in the country the Support
Services are provided. Tait shall also be entitled to vary the Support Fee if Client requests an
increased level of Support Services, Support Services for Additional Products, if Products are
upgraded during the Term or if there is any other variation requested by Client with respect to this
Agreement. Such variation shall be agreed in accordance with Section E, clause 14.2 of this
Agreement (Variations).
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3.6 If Client requests Tait to provide any Excepted Services, Tait shall be entitled to charge for the
same at rates to be agreed in advance between the parties, or failing such advance agreement Tait
standard Additional Charges for the relevant services. If requested, Tait shall provide a written
quotation and estimated completion date for provision by Tait of any Excepted Servic es.
4. Obligations of the Client
4.1 First-Line Support - the Client shall undertake the following First Line Support actions and
acknowledges that the commitments and pricing provided by Tait under this Agreement are
dependent on the prompt and proper performance of those First Line Support obligations:
4.1.1 engage the Services by contacting the Service Desk as set out in Section B of this
Agreement;
4.1.2 immediately after making a request for Tait support, provide Tait where possible with an
example of the relevant defect or error;
4.1.3 keep Tait fully informed with up to d ate product, site and configuration details for the
Products, including without limitation product serial numbers, locations, contact
information, and site personnel qualified to submit service incident requests;
4.1.4 have personnel with sufficient Product related training to be able to (i) carry out basic
operating system housekeeping, and (ii) work through complex procedures with remote
guidance provided by Tait;
4.1.5 carry out procedures for the rectification of errors or malfunctions within a reasonab le time
after such procedures have been received from Tait;
4.1.6 provide a mutually agreed form of communications link for remote diagnostics and promptly
granting access rights to Tait and its partners when required;
4.1.7 replace defective Products with a Critical Spare where required and promptly shipping the
defective Products to Tait designated service centre in accordance with Tait reasonable
directions;
4.1.8 maintain and make available the required type and number of Client owned and managed
Critical Spares in accordance with clause 5.4 of this Agreement;
4.1.9 ensure that the personnel responsible for carrying out First Level Support obligations are
suitably qualified, trained and/or experienced; and
4.1.10 provide Tait with all reasonable co-operation to facilitate the efficient discharge of its
obligations under this Agreement including, without limitation, (i) granting reasonable
access to the Site(s) and the Products, (ii) ensuring the Site(s) comply with all relevant
health and safety codes, and (iii) providing on request, a suitably qualified or informed
representative, agent or employee to accompany Tait personnel and to advise Tait on
access or on any other matter within the Client’s knowledge or control which will assist Tait
in complying with its obligations under the Agreement.
4.2 System Backup. It is the Client’s responsibility to ensure systems backups (including all programs
and data) are kept up to date.
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4.3 The Client agrees that it is responsible for primary power source, PABX an d PSTN connections or
lines, RF (Radio Frequency) coverage performance subsequent to Coverage Verification Test
acceptance, the provision of suitable inter-site and inter node links, and further installation of the
equipment at the Sites.
4.4 The Client shall provide secure and adequate facilities adjacent to or in reasonable proximity to the
Products for the storage by Tait of tools and other items necessary for the proper maintenan ce of
the Products and the Client shall permit Tait to have access to such storage facilities at all
reasonable times.
4.5 The Client is responsible for maintaining the confidentiality of any logon(s) and password(s)
required to access Services. Access to Tait Client Service Portal is only permitted for current Client
employees or contractors. The Client must manage and remove access rights for departing
employees (for example by changing passwords) and Tait shall not be liable for any loss or damage
incurred by the Client due to Client’s failure to comply with this clause.
5. Replacement and spare parts
5.1 Where parts of the Products have been replaced and provided by Tait, title in the parts replaced
will pass to Tait upon removal of those parts from the Client system.
5.2 Subject to clause 5.1, title in all replacement parts for the Products provided by Tait in performing
the Services (except for Software) will pass to the Client upon installation.
5.3 In the case of products and services for which an Additional Charge is payable by the Client, title
in such replacement parts shall pass to the Client on full payment of the Additional Charge.
5.4 Tait requires Client to purchase and store at the Site (or other location agreed in writing between
the Parties) the Critical Spares set out in Appendix A. From time to time Tait may a dditionally require
the Client to purchase and store at the Site such spare parts, as Tait considers necessary for the
provision of effective Support Services. Typically, this may equate to 2% of Products purchased.
5.5 Tait will not be liable for any failure or delay in providing the Services where such failure or delay is
the direct or indirect result of the failure of the Client to comply with the previous clause.
6. Health and Safety
6.1 Each Party shall comply with all relevant Health and Safety laws and regulations in all respects in
relation to its obligations under the Agreement (including without limitation a safe working
environment and methods of working), and shall indemnify the other Party in respect of all costs,
liabilities, damages or expenses incurred as a result of any failure to do so.
7. Exclusivity
7.1 The Client shall only permit maintenance, repairs or adjustments to Products by a third party with
the prior written consent of Tait.
7.2 In the event the Client effects repairs, additions or alterations to the Products, the Client represents,
warrants and agrees to use only Tait approved parts and procedures as directed by Tait for the
operation of the equipment.
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8. Software and Intellectual Property Rights
8.1 All patents, trademarks, service marks or business names, registered designs, copyrights, design
rights, utility models, topography rights, applications to register any of the aforementioned ri ghts,
trade secrets, knowhow and rights of confidence and any other intellectual or ind ustrial property
rights of any nature whatsoever in any part of the world (“IPR”) arising under the Agreement, except
to the extent that they comprise or incorporate IPR supplied by Client, shall vest in and be owned
by Tait absolutely and Client shall acquire no right, title or interest therein.
8.2 Any computer program, firmware or other software forming part of the Products or supplied by Tait
to Client pursuant to the Agreement (“Software”) and/or IPR provided to Client under the Agreement
shall remain the exclusive property of Tait (or its partners) and such Software and IPR shall, unless
otherwise agreed in writing, be licensed to Client under the license terms appl icable to the products,
equipment, software or systems which they replace or to which they relate.
8.3 Unless otherwise indicated, as in paragraph 8.2 above, information provided to the Client via the
Online Client Service Portal (see Section C-2) is copyrighted by and proprietary to Tait International
Ltd (Tait) and may not be copied, repr oduced, transmitted, displayed, performed, distributed,
sublicensed, altered, stored for subsequent use or otherwise used in whole or in part in any manner
without Tait's prior written consent.
9. Warranty
9.1 Tait warrants that it shall perform the Services in a professional and workmanlike manner, subject
to a claim against this warranty being notified to Tait within 90 days of provision of the relevant
Support Services. Client’s sole and exclusive remedy and Tait’s entire liability for such breach of
the above warranty or any claim related to the Support Services sha ll be re-performance of the
Support Services.
9.2 Warranties given in this Clause 9 are unique to, and may not be assigned or transferred in whole
or in part by, Client.
9.3 THE WARRANTIES SET FORTH HEREIN ARE EXCLUSIVE AND IN LIEU OF ALL OTHER
WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT
LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, TITLE, NON-INFRINGEMENT, AND QUALITY OF SERVICE.
9.4 The Client acknowledges that while Tait may be called upon to give consultative advice under this
Agreement and while Tait will use its reasonable endeavours to give the best advice it can to the
Client, Tait advice is dependent upon inter alia the information supplied to Tait by the Client and
third parties and accordingly the Client may make no claim against Tait or its personnel for the
appropriateness of such advice.
10. Limitation of Liability
10.1 NEITHER PARTY WILL BE LIABLE FOR ANY (I) LOSS OF PROFITS; (II) LOSS OF TURNOVER;
(III) LOSS OF OR DAMAGE TO REPUTATION; (IV) LOSS OF, OR LOSS OF THE USE OF ANY
SOFTWARE OR DATA; (V) LOSSES OR LIABILITIES IN RELATION TO ANY OTHER
CONTRACT; OR (VI) INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL LOSS OR
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DAMAGE INDIRECT, PUNITIVE, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGE IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT HOWEVER IT ARISES,
WHETHER FOR BREACH OR IN TORT, UNDER AN INDEMNITY, EQUITY OR OTHERWI SE,
EVEN IF THAT PARTY HAS BEEN PREVIO USLY ADVISED OF THE POSSIBILITY OF SUCH
DAMAGE.
10.2 Each party’s aggregate liability (other than the Client’s obligation to pay Support Fees, Additional
Charges and penalty interest) to the other for claims relating to this Support Agreement, whether
for breach or in tort under an indemnity, equity or otherwise, shall be limited to the amount paid by
the Client for Services under this Agreement in the 12 month period preceding such claim.
10.3 Notwithstanding anything in this Agreement Tait will not be l iable for any claim by the Client in
relation to this Agreement unless the claim is received in writing by Tait within 3 months of the date
of when the alleged claim ought reasonably to have come to the attention of the Client.
10.4 Client agrees that it shall take such reasonable precautions (relative to the importance to Client of
the Products), including without limitation backing up software and data at reasonable intervals,
implementing back-up systems or redundancy and maintaining suitable numbers of spare units at
suitable locations (at a minimum to Tait recommended spares levels). Tait shall have no liability for
any losses suffered by Client to the extent that the loss concerned would have be en prevented by
the taking of such reasonable precautions.
10.5 The provisions of this Clause 10 have been considered by the Parties in the light of the availability
of insurance and the relative positions, risks and responsibilities of the Parties and bot h Parties
agree that they are fair and reasonable.
11. Force Majeure
11.1 Neither Party shall be liable for any loss or damage suffered or incurred by the other arising from
the first Party’s delay or failure to fulfil or otherwise discharge any of its obligations (except
obligations to pay money) under the Agre ement to the extent that such delay or failure is caused
by any cause or circumstance beyond its reasonable control including but not limited to act of God,
governmental act, withholding, delay or r evocation of export or import control approval or other
license, war, terrorist activity, fire, flood, earthquake, tsunami, explosion, civil commotion, industrial
dispute (other than industrial disputes related solely to the employees of the Party claiming force
majeure), or the unavailability or failure of any p ublic telecommunications network (“Force
Majeure”).
11.2 Subject to the delaying Party promptly notifying the other Party in writing of the reason for and likely
duration of the delay, the performance of the delaying Party’s obligations, to the extent affected by
the delay, shall be suspended during the period that the cause persists provided that each Party
shall use all reasonable efforts to avoid the effect of that cause provided that if performa nce is not
resumed within 90 days of that notice the non -delaying Party may at any time thereafter but in any
event prior to resumption of obligations by the delaying Party by notice in writing terminate the
affected portion of the Agreement.
11.3 If Tait is unable to perform its obligations within 60 Working Days after the commencement of the
Force Majeure event, the Client or Tait may terminate this Agreement by notice in writing.
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12. Confidentiality
12.1 Nothing in this Agreement shall affect any re lated non-disclosure agreement between the Parties,
which shall continue in full force and effect and shall apply to the subject matter of the Agreement.
All pricing, Software and technical information provided by Tait under or in relation to the Agreemen t
shall be the confidential information of Tait and shall n ot be disclosed to any third party by Client.
12.2 Each Party undertakes not to (and to procure that its employees and contractors shall not) divulge
the terms of this Agreement or any information of a confidential nature disclosed to it by the other,
whether oral or written, and shall not use such information except as contemplated by the
Agreement. This obligation shall cease to apply to information which:
12.2.1 is or becomes part of the public domain without violation of the Agreement;
12.2.2 is known and on record at the receiving party prior to disclosure by the disclosing party;
12.2.3 is lawfully obtained by the receiving party from a third party without similar restrictions to
those herein contained;
12.2.4 is developed by the receiving party completely independently of any such disclosure by the
disclosing party;
12.2.5 is required to be disclosed by competent government or regulatory agencies, c ourt or stock
exchange provided, however, that the receiving party shall notify the disclosing party a s
soon as lawfully and practically possible of the requirement to make such a disclosure.
13. Termination and Suspension
13.1 Either Party may terminate the Agreement immediately at any time by written notice to the other:
13.1.1 in accordance with Clause 11 (Force Majeure) above; or
13.1.2 if the other Party commits a material breach of the Agreement which it fails to remedy within
30 days of receiving written notice requiring it to do so; or
13.1.3 if the other Party becomes insolvent, has an administr ator, receiver or manager appointed
of the whole or any part of its assets or business, makes any composition or arrangement
with its creditors, takes or suffers any similar action in consequence of debt or an order or
resolution is made for its winding-up dissolution or liquidation (other than for the purpose
of solvent amalgamation or reconstruction) or any event occurs in a foreign jurisdiction
analogous to, or comparable with any of the above.
13.2 Except as expressly stated elsewhere in the Agreement, any termination of the Agreement
(howsoever occasioned) shall not affect any accrued rights or liabilities of either Party nor shall it
affect the coming into force or the continuance in force of any provision which is expressly or by
implication intended to come into force or continue in force on or after that termination.
Notwithstanding the foregoing, the Parties agree that the equitable remedy of specif ic performance
of either Party is hereby expressly excluded.
13.3 Tait shall be entitled to suspend co ntractual performance under the Agreement (with Services
beginning as soon as reasonably practicable after rectification of the ground(s) for suspension) (i)
pursuant to Clause 3.4(ii); or (ii) where Client is in default in respect of any of its obligation s pursuant
to Clause 4 (Obligations of the Client).
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13.4 Consequences of Termination
Upon termination of the Agreement Tait shall cease the provision of the Services and Client shall
have no further access to the Online Client Service Portal, Software Main tenance or 24x7 Service
Desk. The Client may contact the Tait Service Desk during business hours and will receive a
quotation for any service it wishes to access. Note that in order to resume Support Services after a
period of termination Client may be required to pay a service resumption fee.
14. General Terms
14.1 Assignment. Neither party may assign its rights nor obligations under this Agreement without the
prior written consent of the other party except that Tait may subcontract its support obligati ons to a
third party, provided that Tait will remain responsible for the actions of such third party and advise
the Client in writing prior to the assignment.
14.2 Variations. Any amendment or variation to the Services or to this Agreement shall be in wri ting
and signed by duly authorized representatives of both parties.
14.3 Severability. In the event that any part or parts of this Agreement are held illegal, invalid or
unenforceable by any Court or administrative body of competent jurisdiction, such d etermination
shall not affect the legality, validity or enforceability of the remaining parts of this Agreement which
shall remain in full force and effect. Where relevant, the Parties shall use commercially reasonable
efforts to find a new stipulation resembling the invalid one in its commercial consequence as much
as possible
14.4 Waiver. The failure of either Party to enforce any term of this Agreement does not constitute a
waiver of it and shall in no way affect the right later to enforce the terms.
14.5 Independent Contractor. Nothing herein contained shall be construed to constitute the parties
hereto as partners or joint ventur es or the agent of the other Party in any sense of these terms
whatsoever, and no party may act for or bind another party in any dealings with a third party.
14.6 Disputes. The Parties shall attempt to resolve in good faith any disputes arising under or in relation
to or in connection with this Agreement or its subject matter. If good faith negotiations between the
parties fail to resolve the dispute then, prior to issuing court proceedings, the parties shall give due
consideration to the use of mediation or alternative dispute resolution techniques and reference to
independent experts.
14.7 Jurisdiction. The construction, validity and performance of this Agreement shall be governed by
the laws of the State of Texas, excluding its conflicts-of- law rules which might apply the laws or
refer the matter to a different jurisdiction. Notwithstanding the foregoing, the Parties shall attempt
to resolve in good faith any disputes arising and shall give due consideration to the use of mediation
or alternative dispute resolution techniques and reference to independent experts prior to the issue
of court proceedings.
14.8 Entire Agreement. This Agreement shall constitute the entire agreement between the Parties in
relation to its subject-matter and shall supersede all previous undertakings, agreements,
representations or commitments, whether express or implied, written or oral and is i ntended as a
final expression of this Agreement between the Parties.
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SECTION F – GLOSSARY OF TERMS
Beneficial use “Beneficial Use” means when Customer first uses the System or a
Subsystem for operational purposes (excluding training or testing or by
written permission from System Integrator).
Business Hours Under this Agreement, Business Hours means 8.30am-5pm Monday to
Friday, excluding Public Holidays where the service desk is located which
is servicing the Client. Tait service desks are located in Brisbane and
Melbourne servicing Australian Clients. Christchurch servicing New
Zealand Clients. Houston (Texas) servicing North and South American
Clients. Huntingdon (UK) servicing U.K, Europe, Middle East and African
Clients.
Client Specific Development System component which is not a standard product but has been
developed to the specification of the Client.
Commencement Date The commencement date for the Support Services set out in Section A of
this Agreement.
Critical Spares The required critical spares for the System set out in Appendix A – Critical
Spares Inventory.
Emergency An emergency is an unforeseen Incident at Priority Level 1 or 2 which
prevents critical communications Products being usable by or available to
the Client.
Enhancement Request A request from a Client for a change to existing Product functionality.
First Line Support The first level of support group involved in the resolution of Incidents. Client
First Line Support obligations are described in Section D of this Agreement.
Hardware Means any equipment and tangible Product described in Section A of this
Agreement.
Incident An incident is any event which is not part of the standard operation of the
System and which causes, or may cause, an interruption or a reduction of
the quality of the service provided by the System.
Online Client Service Portal A web based application for the Client to interact and receive information
from Tait.
Partner Product or Third-Party Product Product sourced by Tait from a third party and s old by Tait as part of the
Solution
Priority Category used to identify the relative importance of an Incident, Problem
or change requested by the Client pursuant to the Supply Agreement.
Priority is based on impact and urgency, and is used to identify required
times for actions to be taken.
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Priority 1 Priority 1 – Critical: In relation to the network provided by the System,
conditions exist that severely affect service, capacity/traffic capability and
require immediate corrective action regardless of time of day or day of
week as viewed by the Client. For Terminals, it means a defect that is likely
to result in hazardous or unsafe conditions, where the user’s life may be at
risk.
Priority 2 Priority 2 - Major: In relation to the network provided by the System,
conditions exist that seriously affect System operation maintenance and
administration of the System and require immediate attention as viewed by
the Client. The urgency is less than in critical situations because of a lower
immediate or impending effect on System performance, Clients and the
Client operations and revenue.
For Terminal Products, it means a defect that is likely to result in failure of
the essential performance, critical functionality or usability of the Product.
Priority 3 Priority 3 - Minor: In relation to the network provided by the System
conditions exist that do not significantly impair the functions of the System
and do not significantly affect service to Clients. These Problems or
Incidents are not traffic impairing. For Terminals, it means a defect that is
not likely to substantially reduce the essential performance, critical
functionality or usability of the Product.
A Priority 1 or Priority 2 issue may be reclassified as Priority 3 if there is a
workaround in place resulting in a Priority 3 classification.
Priority 4 Priority 4 – Advisory: There is a minor issue or an opportunity for product
improvement. This issue does not affect the making of calls on the network
provided by the System.
There is a minor inconvenience to the user, but the Product and feature /
functionality still operates within specification. Client requests more
information or an explanation.
Problem A condition often identified as a result of multiple Incidents that exhibit
common symptoms. Problems can also be identified from a single
significant Incident, for which the cause is unknown, but which significantly
impacts service or Product availability.
Products
The products (which consist of Hardware and Software) described in
Section A of this Agreement.
Release A new version of previously released standard software made available for
use by Clients
Response Time
Commences when Client reports an Incident to the Service Desk and ends
when a suitably qualified Tait Client Support Engineer contacts Client.
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Restoration or Resolution Means providing a fix, Workaround or replacement Product which re-
stabilizes the System or Product (as applicable) and allows normal traffic
levels or functionality to resume.
Restoration Time Commences when Client reports an Incident to the Service Desk and ends
when the Product or System is re-stabilized and carrying normal traffic
levels which may be via a workaround or replacement Product(s) as
applicable.
Second and Third Line Support The Support Services provided by Tait following the notification of an
Incident or Problem by Client in accordance with its First Line Support
obligations.
Service Desk The single point of contact service desk between the Tait and the Client.
Service Request A request from a Client for information or advice, or for a Standard change
to the scope of the Support Services.
Site Means the sites set out in Section A of this Agreement.
Software Means any computer program, firmware or other software included in a
Product
Supply Agreement The agreement between Tait and the Client specifying the terms and
conditions for the supply of the Products and / or System.
Support Fee The support fee set out in Section A of this Agreement.
Services The combination of Support and Options selected by Client and which are
described in Section C of this Agreement.
Solution The combination of Products described in Section A of this Agreement
forming a radio communications solution.
Term The term of this Agreement as specified in Section A.
Terminal Means a Product which is either a portable radio or a mobile radio supplied
by Tait under the Supply Agreement also known as a ‘subscriber unit’ in
the communications industry.
Warranty Means the warranty provided by Tait to the Client in relation to the Products
under the Supply Agreement.
Workaround Reducing or eliminating the impact of an Incident or Problem for which a
full Resolution is not yet available. For example, by restarting a failed
configuration item.
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APPENDIX A – CRITICAL SPARES INVENTORY
Critical spares to be held as previously defined by original supply agreement
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Department Name: Administration
Cost Center: 1001
For Agenda of: June 16, 2020
Placement: Consent
Estimated Time: N/A
FROM: Derek Johnson, City Manager
Prepared By: Victoria Tonikian, Interim Executive Assistant to the City Manager / Fiscal Officer
SUBJECT: RESOLUTION RECOMMENDING PUBLIC HEALTH OFFICIALS DECLARE
RACISM A PUBLIC HEALTH EMERGENCY
RECOMMENDATION
Consider adoption of a Resolution, entitled “A Resolution of the City Council of the City of San
Luis Obispo, California affirming that racism is a public health crisis and recommending Public
Health Officials declare Racism a public health emergency.” (Attachment A)
DISCUSSION
The recent deaths of George Floyd, Breonna Taylor, Ahmaud Arbery, Sean Reed, Tony McDade,
Meagan Hockaday, and we grieve with their families and know there are many more whose names
we do not know. The recent deaths have energized activism, advocacy, and protests that have
developed across the country have created a groundswell to declare racism as a public health crisis.
The resolution would accomplish two primary purposes 1) A formal city affirmation of the well-
documented premise that systemic racism has manifested itself as a public health crisis and 2) A
request that public health officials who possess the authority to declare public health emergencies
declare systemic racism and its ongoing effects to be an emergency, which could provide for
opportunities to direct needed funding and resources to the crisis.
Background
The City Council has expressed a commitment to making San Luis Obispo a welcoming, inclusive,
and safe community for everyone, and to promoting free thought and speech, while condemning
racism, hate speech, bigotry, violence, and prejudice. As a part of the adoption of the City’s 2019-
2021 Major City Goals, the City Council also set a vision of a dynamic community embracing its
future while respecting its past with core values of civility, sustainability, diversity, inclusivity,
regionalism, partnership, and resiliency as a guide to approaching the work of the Major City
Goals. This vision has been a guide over the past year as the City approaches each project through
the lens of diversity, equity, and inclusion.
Although the City has committed to this decision-making framework, we recognize that there is
always more work to be done to sharpen and to bring into focus that lens. At the June 2, 2020 City
Council meeting, the City Council approved the 2020-21 Financial Plan Supplement and Budget
Appropriations. As part of the adoption of the 2020-21 Meta Goal, the City Council adopted eight
guiding principles to help guide the implementation of the tasks outlined in the Meta Goal.
Amendment Item B
The eighth principle reads: “The city recognizes that social and economic inequality is embedded
in our systems and culture, and that recovery must integrate deep structural transition to support
the well-being and empowerment of marginalized communities.”
The proposed resolution for Council’s consideration makes a commitment to stand in solidarity
with the community of San Luis Obispo to affirm the City’s recognition of racism as a public
health crisis and urge formal action by other governmental entities with jurisdiction over such
emergencies.
Policy Context
This recommendation is supported by the City Council’s commitment to core values of civility,
sustainability, diversity, inclusivity, regionalism, partnership, and resiliency as adopted as part of
the City’s 2019-2021 Major City Goals.
Public Engagement
In the last two weeks, the City Council has received over 1,500 pieces of correspondence regarding
the recent tragedies against George Floyd, Breonna Taylor, Ahmaud Arbery, Sean Reed, Tony
McDade, Meagan Hockaday, and others and the ensuing activism, advocacy, and protests that have
developed across the country. Additionally, staff has been in contact with R.A.C.E Matters SLO
and the NAACP of SLO County regarding actions the City can take to address racism in our
community.
ENVIRONMENTAL REVIEW
The California Environmental Quality Act does not apply to the recommended action in this report,
because the action does not constitute a “Project” under CEQA Guidelines Sec. 15378.
FISCAL IMPACT
Budgeted: No Budget Year:
Funding Identified: N/A
Fiscal Analysis:
Funding Sources
Total Budget
Available
Current Funding
Request
Remaining
Balance
Annual
Ongoing Cost
General Fund N/A
State
Federal
Fees
Other:
Total N/A
There are no fiscal impacts associated with the Council’s affirmation or adopting a resolution
recommending that Public Health Officials declare racism a public health crisis.
Amendment Item B
ALTERNATIVES
The City Council can choose not to adopt the proposed resolution. This action is not advised as
recognizing the need for formal recognition of the impacts of systemic racism and funding to
advance diversity, equity, and inclusion initiatives is imperative to stand in solidarity with our
community and local organizations.
Attachments:
a – Draft Resolution
Amendment Item B
R ______
RESOLUTION NO. _____ (2020 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, AFFIRMING THAT RACISM IS A PUBLIC
HEALTH CRISIS AND URGING PUBLIC HEALTH OFFICIALS
DECLARE RACISM A PUBLIC HEALTH EMERGENCY
WHEREAS, the Declaration of Independence defined the United States of America as a
democracy based on the unalienable rights of life, liberty and the pursuit of happiness, and
government by the consent of the people; and the 14th Amendment instilled equality of the races
into the US Constitution; and
WHEREAS, from slavery to Jim Crow laws to the modern criminal justice system, Black
people in this country have been brutalized and dehumanized for centuries; and
WHEREAS, the struggles of Black people have been highlighted most recently by
alarming findings that Black Americans are dying from COVID-19 at a much higher rate compared
to White Americans due to the effects of systemic, structural racism; and
WHEREAS, in the 21st Century, Black people in America continue to live in fear of losing
their lives at the hands of abusive elements of law enforcement or members of white supremacist
groups; and
WHEREAS, numerous acts of racism and resulting death continue to plague our country
despite many pleas for change; and
WHEREAS, the recent acts of racisms have sparked advocacy, activism, and protests
across the country with groups such as Black Lives Matter demanding action be taken to end the
social, economic, political, health and educational disparities that have manifested in numerous
acts of violence and homicide against black people and other members of underserved
communities; and
WHEREAS, in alignment with the goal of creating a safe and welcoming community, we
value human rights, peace, respect, inclusivity and equity, and recognize that we derive strength
from our diversity.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows:
SECTION 1. The City Council hereby affirms that racism is a public health crisis.
SECTION 2. The City Council is committed to making San Luis Obispo a welcoming,
inclusive, and Safe community for everyone. While we promote free thought and speech, we
condemn racism and brutality, hate speech, bigotry, violence, and prejudice in any form.
Amendment Item B
Resolution No. _____ (2020 Series) Page 2
R ______
SECTION 3. The City Council is committed to standing in solidarity with the people of
San Luis Obispo and the Black Lives Matter movement and is dedicated to creating a community
where all people can safely, freely, and fully engage in our democracy.
SECTION 4. The City Council requests that Public Health Officials declare systemic
racism and its public health manifestations to be a public health emergency.
Upon motion of _______________________, seconded by _______________________,
and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _____________________ 2020.
____________________________________
Mayor Heidi Harmon
ATTEST:
____________________________________
Teresa Purrington
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, on _____________________.
____________________________________
Teresa Purrington
City Clerk
Amendment Item B
Page intentionally left
blank.
Department Name: Council
Cost Center: 1002
For Agenda of: June 16, 2020
Placement: Consent
Estimated Time: N/A
FROM: Council Members Andy Pease and Erica A. Stewart
SUBJECT: JOINT STATEMENT REGARDING RECENT EVENTS FROM
COUNCIL MEMBERS PEASE AND STEWART
RECOMMENDATION
Receive and file a joint Council statement prepared by Council Members Andy Pease and Erica
A. Stewart regarding recent tragic events, the community’s response, and intentions to address
past and current systemic racism.
DISCUSSION
In response to the recent killings of George Floyd, Breonna Taylor and Ahmaud Arbery in addition
to ongoing injustices in our nation, City Council Members Pease and Stewart have put forth the
following statement to address the City’s intentions to address past and current systemic racism.
This statement reflects a unifying message from our City Council Members that encompasses the
City’s gratitude for our community’s compassion and desire for change, as well as gratitude to our
community partners whom we look forward to working alongside to create a more diverse,
equitable and inclusive San Luis Obispo.
Attachments:
a – Council Statement on Protests and Policing
Amendment Item C
City Council Statement on Protests and Policing
As your elected officials, we would like to address the community regarding recent tragic events,
the community response, and our intentions to address past and current systemic racism.
We recognize that the recent killings of George Floyd, Breonna Taylor and Ahmaud Arbery are
reflective of ongoing injustices. We are seeing the nation mourn along with the Black community
as we reflect on the tragic losses of life due to racism. We personally are feeling great sadness as
we witness the sadness, despair, and anger that our Black community is feeling. To the Black
members of our community, we are here for you and will support you. We are beginning to
understand that white privilege is based on centuries of racism, inequity, and oppression. This
council commits to partner with the Black community, to listen, to learn, and to follow their lead
to make the changes that must be made. Black Lives Matter.
We are fortunate to have a community with compassion and a desire to change. Thank you to the
thousands of people who have come together peacefully to protest, rally, march, write letters, lead
discussions, and speak out against the violence of racism. Thank you to the students and youth
who bring extreme passion and leadership to move us forward. We know you will continue to ask
the hard questions and keep us accountable. Thank you for demanding that we do better and be
better.
Many have questions about specific actions during the protests on June 1 and broader questions
about the police department’s overall policies and procedures. We also have questions and want
to know more. When Chief Cantrell joined this community four years ago, she and her team
collaborated with many community partners rooted in different races, ethnicities, and religions,
engaging the community as a whole and cultivating inclusion. We have confidence that our police
chief and the department are committed to a collaborative process of review and change.
We are grateful for our community partners who always step up and share in the work, holding
each other accountable but never leaving the conversation: Cal Poly, Cuesta College, San Luis
Coastal Unified School District, the SLO Chamber of Commerce, Downtown SLO, service groups
and so many more. We humbly acknowledge our circle has not been open enough and gratefully
welcome more partners to the table. We will be starting a diversity taskforce to bring our partners
together to create a more welcoming, just, and inclusive community. As a council, we are
committed to economic and community recovery that is grounded in equity.
In these past few months, we have seen our dedicated city staff step up and help the community
come together, stay safe and plan for moving forward. The ral lies, marches, emails, and calls for
change have moved our entire team; we know we need to look at everything we do to be more
inclusive. Together, we are committed to the success of our city.
Thank you for trusting local government; we join with you in believing in democracy. We are truly
humbled and grateful to serve.
Amendment Item C
Department Name: Community Development
Cost Center: 4006
For Agenda of: June 16, 2020
Placement: Public Hearing
Estimated Time: 60 Minutes
FROM: Michael Codron, Director, Community Development Department
Prepared By: Chris Read, Sustainability Manager
Teresa McClish, Special Projects Manager
SUBJECT: CONSIDERATION OF A RESOLUTION ESTABLISHING A POLICY FOR
CLEAN ENERGY CHOICE FOR NEW BUILDINGS AND
IMPLEMENTATION MEASURES INCLUDING AN ORDINANCE
APPROVING LOCAL AMENDMENTS TO THE ENERGY CODE AND AN
ORDINANCE ESTABLISHING REGULATORY FLEXIBILITY FOR A
LIMITED TERM TO SUPPORT ALL-ELECTRIC NEW BUILDINGS
RECOMMENDATION
1. Adopt a Resolution entitled “Clean Energy Choice Policy for New Buildings,” rescinding R-
11044 (2019 Series) and re-establishing a policy framework in support of local amendments
to the California Energy Code (Attachment A); and
2. Introduce an Ordinance implementing an Energy Reach Code entitled “Local Amendments
to Part 6 (Energy) of the 2019 California Building Code” adding Chapter 15.04.110, entitled
“Amendments – California Energy Code”, to the City’s Municipal Code (Attachment B); and
3. Introduce an Ordinance to provide regulatory flexibility through December 31, 2022 in
support of the Clean Energy Choice Incentive Program (Attachment C); and
4. Direct staff to return to Council in June 2021 with a summary of program performance and
the Carbon Offset Program for deliberation and action.
REPORT-IN-BRIEF
In September of 2018 and February of 2019, Council directed staff to develop a proposal to
avoid generating new greenhouse gas emissions as the result of energy use in new buildings. Due
to rapid improvements in electric appliances, improved methods to quantify the impact of natural
gas to the climate crises, changes to the California Energy Code, and residents and businesses
purchasing electricity supply from carbon neutral resources via Monterey Bay Community
Power, on September 3, 2019, Council formalized the policy preference for new buildings to be
all-electric through adoption of Resolution R-11044 (2019 Series).1
This report identifies programs to implement Council’s policy preference for all -electric new
buildings. To achieve Council direction, staff’s recommendation includes three of four total
components, collectively referred to as the Clean Energy Choice Program for New Buildings:
1 The September 3, 2019 Council Agenda Report is provided as Attachment D and the full public record is available
at http://opengov.slocity.org/WebLink/DocView.aspx?id=96415&dbid=0&repo=CityClerk
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1) A Resolution re-establishing a “Clean Energy Choice” policy that new buildings should
be all-electric (Attachment A).
2) Local amendments to the California Energy Code requiring solar panels on new
nonresidential buildings, requiring new buildings with natural gas to be built to a
substantially higher performance standard, and requiring new residential buildings with
natural gas to include “retrofit ready” requirements (Attachment B).
3) An incentive program outlining technical support, financial support, communication
support, and including an ordinance to allow for regulatory flexibility (Attachment C).
Using the 2019 Statewide Cost Effectiveness Studies completed by the California Statewide
Codes and Standards Program, which was vetted through a public process including PG&E and
SoCal Gas, the City may make findings that the proposed building code amendments related to
building energy performance are cost effective and use less energy than the standard State Co de.
The California Energy Commission (CEC) must agree with the City’s analysis before the local
amendments to the California Energy Code can go into effect. The cost effectiveness studies are
provided as Attachment E (low-rise residential) and Attachment F (nonresidential, high-rise
residential, and hotels).
Staff has also developed a four-part incentive program to assist with the transition to designing
and building all-electric new buildings. The incentive program includes technical support, access
to direct financial incentives for multi-family housing and affordable housing projects through
Monterey Bay Community Power, regulatory flexibility, and communications and marketing
support for all-electric new buildings.
Overall, the Clean Energy Choice Program for New Buildings is an incremental approach to
avoid the generation of new greenhouse gas emissions as the result of new development. At
build-out of the City’s General Plan (2035), the Clean Energy Choice Program is anticipated to
avoid 6,250 Metric Tons of CO2 equivalence (MTCO2e) per year. The annual amount of avoided
emissions would be equivalent to taking 1,320 passenger vehicles off the road or planting nearly
160,000 trees to sequester carbon.2,3
The Clean Energy Choice Program for New Buildings was developed with input from local
developers, electricians, architects, builders, designers, technical consultants, the California
Energy Commission, peer cities, utility partners, and community members.
Should Council move forward with staff’s recommendation, the second reading of the
Ordinances would occur on July 7, 2020. Pending California Energy Commission approval of
the local amendments to the California Energy Code, the program would go into effect by
September 1, 2020.
2 Equivalencies are provided by the Environmental Protection Agency at:
https://19january2017snapshot.epa.gov/sites/production/files/widgets/ghg_calc/calculator.html#results
3 Note that the September 3, 2019 Council Agenda Report estimated that the Clean Energy Choice Program for New
Buildings would reduce emissions by 7,800 MTCO2e per year in 2035. Through additional work completed for the
climate action plan and updated assumptions regarding program participation, this number has been revised down to
the 6,250 MTCO2e reduction referenced in this report.
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DISCUSSION
Background
This report provides a description of the September 3, 2019 Council action taken in support of
the Clean Energy Choice Program for New Buildings, an overview of the Clean Energy Choice
Program for New Buildings (including minor proposed changes to the program and removing the
Carbon Offset Program for consideration at a future date), new components including the Clean
Energy Choice Incentive Program, potential legal concerns, and statewide momentum toward
all-electric new development.
Previous Council Action
On September 3, 2019, Council approved the Clean Energy Choice Program for New Buildings,
which included Resolution R-11044 (2019 Series) stating the Council’s preference for all-
electric new buildings, the introduction of an ordinance outlining local amendments to the
California Energy Code, and introducing an ordinance establishing the Carbon Offset Program.4,5
Prior to final adoption of the ordinances, the City received notification of potential administrative
action under review by the Fair Political Practices Commission (FPPC) with respect to an alleged
conflict of interest involving Councilmember Pease. The City Attorney had sought the advice of
the FPPC in this matter, however, once the FPPC began an investigation associated with the
complaint, the request moved from the advice unit to the enforcement unit, to which the normal
timeframes for FPPC advice do not apply. As of the writing of this report, there has been no
resolution of the pending complaint by the FPPC. As a result, moving forward at this time will
require Councilmember Pease’s recusal in the matter. In addition, it is staff’s recommendation
that the City Council rescind and readopt its resolution in support of the Clean Energy Choice
Program for New Buildings and the implementing ordinances and reintroduce those measures
without Councilmember Pease’s participation.
Clean Energy Choice Program for New Buildings Overview
The proposed Clean Energy Choice Program for New Buildings encourages all -electric new
buildings through incentives and local amendments to the Building Code and Zoning
Regulations. Figures 1 and 2 illustrate the proposed pathways for obtaining a City building
permit through compliance with the adopted components of the Clean Energy Choice Program
for New Buildings and program components are described in detail below.
Two key definitions of terms used throughout this report and in the attached resolution and
ordinances are:
1. “ALL-ELECTRIC BUILDING” is a new building that has no natural gas plumbing
installed within the building and that uses electricity as the source of energy for all space
heating, water heating, cooking appliances, and clothes drying appliances. An All-
Electric Building may be plumbed for the use of natural gas as fuel for appliances in a
commercial kitchen.6
4 The Council Agenda Report is provided as Attachment D and the full public record is available at
http://opengov.slocity.org/WebLink/DocView.aspx?id=96415&dbid=0&repo=CityClerk
5 The Carbon Offset Program, which was proposed as part of the September 3, 2019 meeting, has been separated
from this item for consideration at a future date.
6 Note that the September 3, 2019 Council Agenda Report recommended exemptions for commercial cooking
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2. “MIXED-FUEL BUILDING” is a new building that is plumbed for the use of natural gas
as fuel for space heating, water heating, cooking or clothes drying appliances.
Figure 1 – Low-Rise Residential and Single-Family Residential Policy Approach
Figure 2 – Nonresidential Policy Approach
1. Building Code – Energy Requirements
The California Energy Code contains energy efficiency standards for residential and
nonresidential buildings. Public Resources Code Section 25402.1(h)(2) and Section 10 -106
of the Building Energy Efficiency Standards establish a process that allows local adoption of
energy standards that are more stringent than the statewide standards.7,8 Under this process,
the CEC requires any local amendments to the California Energy Code that affect energy use
in regulated buildings to be cost effective and use less energy than the standard requirements.
In the proposed Clean Energy Choice Program for New Buildings, the City may make
findings that all proposed amendments (increasing building performance requirements for
mixed-fuel buildings and requiring solar on nonresidential, high rise hotel, and mid to high
rise residential buildings) are “cost effective” and use less energy than the standard state
requirements. Cost effectiveness and energy use considerations and findings are provided
equipment only. This has been updated to exempt all appliances in commercial kitchens.
7 Public Resources Code Section 25402.1:
http://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=PRC§ionNum=25402.1.
8 Building Energy Efficiency Standards: https://ww2.energy.ca.gov/2018publications/CEC-400-2018-020/CEC-400-
2018-020-CMF.pdf
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later in this report and in the local amendments to California Energy Code Ordinance.
Under the local amendments to the California Energy Code, new buildings with natural gas
(e.g. mixed-fuel buildings) would be required to have enhanced building performance. As
noted in Table 1, single-family and low-rise multifamily residential new buildings would be
required to exceed the standard design Total Energy Design Rating (EDR)9 score by at least
9.5 and 9 points, respectively. Table 1 also identifies performance requirement for new non-
residential buildings (15% better than code for office/retail, 9% better for hotel/motel, and
5% better for other nonresidential uses).
The enhanced EDR requirements and nonresidential compliance margins reflect the
maximum cost-effective compliance margins that can be achieved using federal appliance
efficiency standards as reported in the statewide cost effectiveness studies. In other words,
the standards are achievable through the performance pathway without using appliances that
exceed federal efficiency standards.
Table 1. Proposed Improved Energy Performance Standards
Building Type Performance Requirement Requirement Justification
Single-family Exceed the standard Energy
Design Rating by at least 9.5
points
Maximum cost-effective
Total Energy Design Rating
Low-rise multifamily Exceed the standard Energy
Design Rating by at least 9
points
Maximum cost-effective
Total Energy Design Rating
Office/retail 15% compliance margin Maximum cost-effective
compliance margin
Hotel/motel and high-rise
residential
9% compliance margin Maximum cost-effective
compliance margin
Other nonresidential with indoor
lighting & mechanical
5% compliance margin Maximum cost-effective
compliance margin
Other nonresidential with indoor
lighting or mechanical, but not
both
5% compliance margin Maximum cost-effective
compliance margin
2. Nonresidential, High-Rise Residential, and Hotel Solar Requirements
The 2019 California Energy Code requires all new low-rise residential buildings to include
solar photovoltaic panels and requires non-residential, high-rise residential, and hotel
buildings to be “solar ready”.10 Given that the design and supporting components will already
be completed as a requirement of State Law, the proposed amendment to the Energy Code
would require the additional step of installing solar panels on the entire Solar Zone of a
9 Total Energy Design Rating (EDR): The 2019 Energy Code includes EDR as a new metric fo r measuring the
relative energy performance of a building.
10 Section 110.10 of the California Energy Code provides standards for single family, low-rise residential, high-rise
residential, hotels, and nonresidential buildings to be ready to easily incorporate solar, including requirements for
minimum solar zones (area for installed or future solar panels), interconnection pathways, and electrical service
panels: https://ww2.energy.ca.gov/2018publications/CEC-400-2018-020/CEC-400-2018-020-CMF.pdf
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nonresidential, high-rise residential, or hotel building.11 The 2019 California Energy Code
already requires the design and designation of a building’s Solar Zone, this provision would
add the additional requirement to install solar panels in the designated space.
3. Building Code – “Electric Ready” Requirements
To minimize future retrofit or energy transition costs, residential buildings that choose to
include natural gas will be required to pre-wire to be “retrofit ready.”12 Proposed
requirements for each natural gas or plumbed propane appliance include:
1. Minimum space requirements for a future electric requirement
2. A dedicated electrical circuit that can be connected to the electrical panel
3. A double pole breaker in the electrical panel labeled with the name of the appliance
4. Applicability and Exemptions
The Clean Energy Choice Program for New Buildings would apply to all new residential and
nonresidential buildings that are subject to the California Energy Code. The use of natural
gas for certain uses (e.g., industrial, medical, and outdoor decorative uses) are not governed
by the Energy Code for buildings and would not be subject to the local amendments to the
California Energy Code. There are also specific exemptions to the program requirements. For
example, the definition of an all-electric building includes an allowance for the use of natural
gas for appliances in a commercial kitchen. The list of exemptions below was developed
based on feedback from members of the public and through consideration of other City goals
and objectives:
1. The extension of natural gas infrastructure into an industrial building for the purpose of
supporting manufacturing processes (i.e. not including space conditioning).
2. Accessory Dwelling Units that are attached to an existing single-family home.
3. Essential Service Buildings including, but not limited to, public facilities, hospitals,
medical centers, and emergency operations centers).
4. Temporary buildings.
5. Gas line connections used exclusively for emergency generators.
6. Any buildings or building components exempt from the California Energy Code.
7. Residential subdivisions in process of permitting or constructing initial public
improvements for any phase of a final map recorded prior to July 1, 2020, unless
compliance is required by an existing Development Agreement.
8. Any new building that is considered a “stationary source” of pollution already covered by
California’s “Cap and Trade” program.
5. Cost Effectiveness
11 Section 110.10(b) of the California Energy Code describes the solar zone as follow: The solar zone shall be
located on the roof or overhang of the building or on the roof or overhang of another structure located within 250
feet of the building or on covered parking installed with the building project, and shall have a total area no less than
15 percent of the total roof area of the building excluding any skylight area. The solar zone requirement is applicable
to the entire building, including mixed occupancy.
12 Staff originally considered including retrofit ready requirements for nonresidential buildings, but due to project
variability and the high potential for inacc urately system sizing, they have been removed. Staff recommends that
these additional considerations are reconsidered as part of the 2022 California Building Code update.
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As described above, Section 10-106 of the Building Energy Efficiency Standards establishes
a process that allows local adoption of energy standards that are more stringent th an the
statewide standards. Under this process, the CEC requires any local amendments to the
California Energy Code that affect energy use in regulated buildings to be cost effective and
use less energy than the standard requirements. The CEC requires the local agency to adopt a
determination that the energy standards are cost effective at a public meeting. The
determination must subsequently be filed with the Energy Commission.
In support of code development, the California Statewide Codes & Standards Pr ogram,
which includes the State’s Investor Owned Utilities (PG&E, SoCal Gas, SDG&E, and SCE,
under the auspices of the California Public Utilities Commission) developed the 2019
Statewide Cost Effectiveness Study for Nonresidential Development (including
nonresidential, high-rise residential, and hotel buildings) and the 2019 Statewide Cost
Effectiveness Study for Low-Rise Residential New Construction (including single family
homes and multi-family buildings under four stories), which are provided as Attachments E
and F. These studies are highly detailed and are included in the record to support the
Council’s findings and policy decisions. These studies are the basis for staff’s cost
effectiveness findings and staff finds the studies sufficient to illustrate compliance with the
requirements set forth under California Administrative Code Chapter 10-106. Based on these
studies, staff finds the proposed local amendments to the 2019 California Energy Code that
affect building energy use are cost-effective and consume less energy than permitted by Title
24, Part 6.13
The Clean Energy Choice Program for New Buildings has multiple implementing actions,
including the code amendments as provided in Attachment B. The actions presented in staff’s
recommendation and in Attachment B that are required to pass the cost effectiveness and
energy reduction tests are limited to the following:14
1. Per Figures 17, 24, and 31 of the 2019 Nonresidential New Construction Reach Code
Cost Effectiveness Study (Attachment F), the City’s amendments to require additional
efficiency compliance margins for energy performance in nonresidential (nonresidential,
high-rise residential, and hotels) mixed-fuel buildings reduce energy and are cost
effective.
2. Per Figures 38, 39, and 40 of the 2019 Nonresidential New Construction Reach Code
Cost Effectiveness Study (Attachment F), the City’s amendments to require solar on
nonresidential (nonresidential, high rise residential, and hotels) buildings reduce energy
and are cost effective.
3. Per Table 57 and Table 58 of the 2019 Cost-effectiveness Study: Low-Rise Residential
New Construction (Attachment E), the City’s amendments to require a lower Energy
Design Rating score in low-rise residential mixed-fuel buildings (single family residential
and multifamily buildings three stories and shorter) reduce energy and are cost effective.
Clean Energy Choice Incentive Program
13 In August 2019, SoCal Gas provided additional information about offsite infrastruct ure costs. This information
was not relevant to the City’s cost effectiveness findings related to the proposed local amendments to the California
Energy Code as described in this report.
1414 Based on discussion with CEC Energy Division staff, pre -wiring requirements do not affect the building’s
energy use and therefore are not subject to the requirements of Section 10-106.
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The Clean Energy Choice Program for New Buildings will include incentives and support to
facilitate a successful transition to cost-effective, all-electric new buildings. This incentive
program was proposed by stakeholders and supported by City Council. The proposed incentive
package has been vetted by developers and stakeholders and includes the following:
• Technical Support: The City has established on-call professional design and consulting
services with 4LEAF, Inc. to answer technical questions about the Clean Energy Choice
Program for New Buildings. Together, the City and 4LEAF, Inc. will document
procedures for evaluating all-electric buildings and publish educational materials
including a compliance guide, webpage, and video. With these materials as a foundation,
4LEAF, Inc. will also provide a telephone hotline and Community Development
Department counter “office hours” to support project applicants in interpreting the
California Energy Code and designing all-electric new buildings.
• Financial Incentives: Monterey Bay Community Power (MBCP) is currently developing
a multi-year direct incentive program with an initial funding amount of $1.2 million
through the end of September 2020. MBCP staff has communicated that the program will
be available for new all-electric multi-family and affordable housing units in its service
territory and is expected to begin taking applications in May of 2020. More information
is available at https://www.mbcommunitypower.org/building-programs/.
• Regulatory Flexibility: The City is proposing regulatory flexibility to address design
challenges that may arise during the initial transition period to all-electric buildings. The
regulatory flexibility would be enabled via the ordinance provided as Attachment C
which would apply to building permits with an application date between July 1, 2020 and
December 31, 2022. The ordinance would permit the Director of Community
Development to grant minor allowances to site development standards when all the
following circumstances apply:
1. The request directly relates to construction of an all-electric structure and may
include, but is not limited to, issues such as the installation of mechanical
equipment;
2. The request provides the minor flexibility needed to design a project with all-
electric buildings and results in better implementation of other Zoning
Regulations or General Plan policies while allowing reasonable use of sites;
3. The request is minor in nature and does not have the potential to cause a
significant effect on the environment; and
4. The Findings in Section 17.108.040 are met.
On February 26, 2020 the Planning Commission considered the proposed ordinance at a
public hearing. The Planning Commission voted 5-0-2 (Kahn and Stevenson absent) to
recommend that the City Council introduce and adopt the ordinance with minor
modifications for clarity.
• Telling the Story: For many in the community who have not been following California
Public Utilities proceedings, California Energy Commission rulemaking processes, or the
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rapid advance of electric appliances and renewable energy technologies, the statewide
movement to support all-electric new buildings may be unexpected. To address this issue,
the City will develop and share educational materials about the environmental and
operational benefits of all-electric new buildings. The materials are intended to be made
so that builders and other partners can place their branding on the communications to
“co-own” the story. The City intends to develop and provide initial materials to partners
in late Summer of 2020.
The City will continue to learn how it can best support the community as all-electric buildings
become a more common building type and will re-evaluate the need to expand, remove, or add
incentives to support successful projects as part of the 2022 California Energy Code Update
Cycle.
Carbon Offset Program
Concurrent with the local amendments to the California Energy Code and the incentive program
outlined above, staff developed the Carbon Offset Program, which would require a new mixed -
fuel building to offset its new natural gas use through direct energy ef ficiency or electrification
retrofit of an existing building. The program would also provide an option to pay an in -lieu fee to
accomplish the same outcome. Staff will monitor development over the next year to determine
the efficacy of building code and incentive portions of the Clean Energy Choice Program and
potential need for the Carbon Offset Program.
Ongoing Public Engagement
The initial conversation regarding building decarbonization occurred through City Council study
sessions publicly held on September 18, 2018 and February 19, 2019. Since then, the City has
led, supported, or attended public engagement events as outlined in Table 3.
Table 3. Public Engagement Events Prior to September 3, 2019
Event & Date Description
Energy code
workshop #1
May 1, 2019
Staff held a kickoff workshop for developers, builders, and design professionals to
review the City’s approach to the code amendments, early feasibility and cost
effectiveness funding findings, and to discuss potential concerns and issues. Following
the meeting, staff met directly with the developers and builders of San Luis Ranch,
Avila Ranch, and Righetti Ranch.
Builders
Roundtable
May 13, 2019
Staff presented the initial building code concept to the Developer’s Roundtable for
feedback.
Planning
Commission
May 22, 2019
and July 24,
2019
Staff met with the Planning Commission on two occasions to explain the reasoning
behind the development of local amendments to the energy section of the building code
and to present proposed code language. The items were informational at both meetings.
Chamber of
Commerce
Legislative
Action
Committee
July 11, 2019
Staff presented the reasoning behind the development of local amendments to the
energy section of the building code and proposed approaches to the Chamber of
Commerce Legislative Action Committee. City staff has been working closely with
Chamber Staff to respond to comments.
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Event & Date Description
Energy code
workshop #2 –
Code and
Offset Program
Review
July 24, 2019
Staff held an open workshop for developers, builders and design professionals to
review the proposed local amendments to the California Energy Code and Carbon
Offset Program. The event was attended by 35 individuals representing and led to
additional revisions to the proposed code language and approach.
Public
Comment
Period
August 9, 2019
On July 22, 2019, the City posted draft building code amendment language for a public
comment period, which closed on August 9, 2019. The City received 93 comments
from over 15 individual commenters including residents, architects, electricians,
statewide experts, and the California Energy Commission.
Electrification
Expo
August 22,
2019
The City partnered with the Tri-County Regional Energy Network and the Climate
Coalition to host a half day training for design professionals on the 2019 California
Building Code, a panel discussion for residents and businesses to better understand the
potential benefits and challenges of all electric/carbon free buildings, and an
electrification expo hosted at the Downtown Association Farmer’s Market.
City Council
Public Hearing
September 3,
2019
Staff presented two ordinances and a resolution to implement the Clean Energy Choice
Program for new buildings. Council approved the first reading of the ordinances and
adopted the resolution.
Following the September 3, 2019 City Council meeting, staff worked with builder, designers,
realtors, and MBCP to provide education and to identify useful components of an incentive
program. The City led, supported, or attended the public engagement events identified in Table 4.
Table 4. Public Engagement Events Since September 3, 2019
Event & Date Description
Small-group
stakeholder
meetings
September-
November, 2019
Staff met with numerous builders, designers, developers, and trade professionals to
discuss potential implementation challenges and resolutions to those challenges.
HBA Builder’s
Breakfast
October 5, 2019
Staff presented the Clean Energy Choice Program for New Buildings to the Home
Builder’s Association (HBA) Builder’s Breakfast and facilitated a discussion about
incentives that would lead to successful implementation.
SLO Association of
Realtors’ Meeting
October 9, 2019
Staff presented the Clean Energy Choice Program for New Buildings to the SLO
Association of Realtors’ monthly meeting and facilitated a discussion about
incentives that would lead to successful implementation.
Women’s Council
of Realtors
January 16, 2020
Staff presented the Clean Energy Choice Program for New Buildings to the
Women’s Council of Realtors member luncheon.
Social Media
February-April,
2020
Beginning in February 2020, Staff shared weekly information about the Clean
Energy Choice Program for New Buildings on the City’s Instagram, Facebook and
Twitter accounts. All posts included direction to summary fact sheets at
www.slocity.org/cleanenergychoice.
SoCal Gas
February 26, 2020
Staff met in-person with SoCal Gas staff to discuss the Clean Energy Choice
Program for New Buildings, inclusion of SoCal Gas partnership in the City’s
Climate Action Plan, potential advanced technology pilot projects, and other
opportunities for collaboration.
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Event & Date Description
Developers
Roundtable
March 10, 2020
Staff presented the updated Clean Energy Choice Program for New Buildings,
including the incentive program to the Developers Roundtable.
Legal Considerations
In October of 2019, staff received a letter from a community member outlining potential legal
concerns with the Clean Energy Choice Program for New Buildings. The City contracted with
the law firm Shute Mihaly & Weinberger (SMW) to review the concerns. SMW possesses
extensive experience in the energy and local government sectors. SMW has carefully reviewed
the potential legal concerns and based on that assessment, staff concludes the Clean Energy
Choice Policy for New Buildings represents a valid exercise of the City’s powers and is not in
conflict with or pre-empted by any state or federal law, including CEQA.
Statewide Updates
Since August of 2019, 29 other local governments have approved policies to support all-electric
new buildings (with more than 20 additional local governments taking action expected by the
end of 2020). The State of California has also taken sustained action towards supporting all -
electric new buildings, including the Public Utilities Commission’s decision to make the
statewide energy efficiency funding pool open for electrification, a proposed decision for over
$44 million in technical research and direct support for building electrification, and a new
proceeding to discuss the future of the natural gas grid in California. As the state continues to
work towards its legislative targets of reducing emissions 40 percent below 1990 levels by 2030
and carbon neutrality by 2045, the statewide movement toward all-electric new buildings is
expected to rapidly accelerate.
Greenhouse Gas Emissions and All-Electric New Buildings
Energy use in buildings is the second largest source of greenhouse gas emissions in California
and in San Luis Obispo.15 Most emissions from buildings come from two sources: purchased
electricity and direct combustion of natural gas for space and water heating and cooking.
California’s electrical grid is rapidly changing. In 2018, about 38 percent of electricity consumed
on the California grid came from fossil fueled generation sources, which is a decrease of almost
50 percent from 2010.16,17 This decrease will continue to occur over the next 25 years. By 2045
the entire California grid is required to have 100 percent carbon free resources (SB100), and as
of 2020 all new residential buildings will be required to have onsite solar generation systems.18
These regulations will continue to significantly reduce greenhouse gas emissions from electricity
used in buildings.
The previously referenced cost-effectiveness studies found that in San Luis Obispo’s climate
zone, all-electric residential and nonresidential buildings built using the 2019 California Energy
Code have a substantially lower greenhouse gas emissions impact than a similar building that
includes natural gas.19 These findings have been confirmed through numerous studies and
15 https://ww2.arb.ca.gov/research/research-green-buildings
16 https://ww2.energy.ca.gov/almanac/electricity_data/total_system_power.html
17 https://ww2.energy.ca.gov/almanac/electricity_data/system_power/2010_total_system_power.html
18 https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201720180SB100
19 Using 2018 California electrical grid-wide emissions factors, and factoring in San Luis Obispo’s Climate Zone,
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reports. For example, an article titled, “Quantifying Greenhouse Gas Emissions and the Marginal
Cost of Carbon Abatement for Residential Buildings under California’s 2019 Title 24 Energy
Code” published in the September 2019 volume of the Journal of Environmental Science and
Technology notes that, “all-electric homes represent the first-best policy option for residential
sector [greenhouse gas] abatement in California.”20 Additional reports support these findings,
including research focused on residential buildings, space and water heating, and how heat-pump
electrical appliances can accommodate large amounts of renewable energy on the grid.21,22
The 2019 California Energy Code is one of the most stringent and effective energy codes in the
nation. Although there is always room to improve efficiency, and alternative building methods
can lead to further improvements, an all-electric new building using California’s electrical grid
and built to the minimum standards of the 2019 code is one of the lowest operational greenhouse
gas emitting buildings in the nation.
In January 2020, the City began service with Monterey Bay Community Power (MBCP) - a
Community Choice Aggregation (CCA) public agency that procures carbon-free energy sources
on an annual basis for the communities it serves. The agency has already supported new
renewable energy projects by contracting for a large solar and storage facility in California, large
wind farms in New Mexico (with transmission lines to the California grid), a geothermal plant in
California, and ongoing support for eventual development of offshore wind and battery storage
along the Central Coast. MBCP continues to solicit proposals to build new renewable energy
resources and is currently exploring numerous new renewable energy projects. Leveraging
MBCP’s carbon-free resources, combined with high-efficiency electric appliances and the 2019
California Energy Code, all-electric new buildings constructed in San Luis Obispo are
considered operationally carbon neutral.
Previous Council Action and Policy Context
Previous Council Action and Policy Context are described in detail in the September 3, 2019
Council Agenda Report, provided as Attachment D.
Schedule and Next Steps
Should Council approve staff’s recommendations, work would proceed on the timeline provided
in Table 5.
Table 5. Schedule and Next Steps
Task Timeframe
Second reading of the Clean Energy Choice Program for New
Buildings ordinances and submittal of local amendments to the
July 7, 2020
the 2019 Energy Code compliant all-electric buildings are projected to emit approximately 40 percent fewer
greenhouse gas emissions than a 2019 Energy Code compliant mixed-fuel building. For multi-family buildings, the
study reports a savings of approximately 30 percent. These savings will increase as the grid continues to become
cleaner and in San Luis Obispo these buildings are functionally carbon neutral through participation in Monterey
Bay Community Power, as described in the body of this report.
20 https://pubs.acs.org/doi/abs/10.1021/acs.est.9b02869
21 https://www.ethree.com/wp-
content/uploads/2019/04/E3_Residential_Building_Electrification_in_Cali fornia_April_2019.pdf
22 https://www.sciencedirect.com/science/article/pii/S1040619018302331?via%3Dihub
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Task Timeframe
California Energy Code to the California Energy Commission.
Receive approval from the California Energy Commission July-August 2020
Clean Energy Choice Program goes into effect September 1, 2020
CONCURRENCE
The Office of Sustainability, Community Development, Fire Department and Utilities
Department concurs with the recommendations in this report.
ENVIRONMENTAL REVIEW
The Clean Energy Choice Program for New Buildings ordinances are categorically exempt from
CEQA because they constitute actions taken by a regulatory agency for the purpose of protecting
the environment (CEQA Guidelines Section 15308). In addition, these ordinances are exempt
from CEQA under the General Rule, 15061(b)(3), on the grounds that these standards are more
stringent than the State energy standards, there are no reasonably foreseeable adverse impacts,
and there is no possibility that the activity in question may have a significant effect on the
environment.
As supported by the 2019 Statewide Cost Effectiveness Studies, the Clean Energy Choice
Program ordinances affect building energy performance to be cost-effective and consume less
energy than permitted by Title 24, Part 6 and results in lower energy use. Further, the studies
demonstrate that the ordinances would not result in an increase in the cost to develop housing.
Additionally, the ordinances are expected to have a net benefit to the environment through the
reduction in GHG emissions. The ordinances are limited in application to the construction of
new buildings. The proposed Clean Energy Choice Program for New Buildings is supported by
PG&E and there is no evidence that the electrical grid would be negatively impacted or that any
effects on the electrical grid would impact public safety. Given that the State has a directive to
go carbon neutral by 2045, the ordinances also fit within the statewide framework toward
decarbonization that is already underway.
The ordinance to provide regulatory flexibility is additionally categorically exempt from
environmental review under the Class 3 exemptions for (1) construction and location of limited
numbers of new small facilities or structures (2) installation of small new equipment and
facilities in small structures (15303 CEQA Guidelines).
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FISCAL IMPACT
Budgeted: Yes Budget Year: 2019-20
Funding Identified: Yes/No
Fiscal Analysis:
Funding
Sources
Total Budget
Available
Current Funding
Request
Remaining
Balance
Annual
Ongoing Cost
General Fund $50,000 0$ $0 TBD
Total $50,000 $0 TBD
The Clean Energy Choice Program for New Buildings is a 2019-21 Climate Action Major City
Goal work task and staff time is included in the 2019-20 budget to develop this proposal, submit
to the CEC, and have it in place to begin implementation in 2020. The $50,000 figure presented
in the Fiscal Analysis Table, above, represents encumbered funds for the technical support
component for the Clean Energy Choice Incentive Program.
ALTERNATIVES
1. Include Carbon Offset Requirement. The City Council could direct staff to include a Carbon
Offset Program to implement the full Clean Energy Choice Program for New Buildings. This
action will require staff to return to the Council for consideration of an implementing
ordinance, administrative guidelines and an in-lieu fee program.
2. No Action. The City Council could decide to take no action on the proposed Clean Energy
Choice Program for New Buildings. If the Council chooses this option, direction should be
provided to staff if any additional follow-up is desired.
Attachments:
a - Draft Resolution - Clean Energy Choice Program
b - Draft Ordinance - Local Amendments to the California Energy Code
c - Draft Ordinance - Regulatory Flexibility
d - Council Agenda Report dated September 3, 2019
e - COUNCIL READING FILE - 2019 Residential Cost Effectiveness Study
f - COUNCIL READING FILE - 2019 Nonresidential Cost Effectiveness Study
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RESOLUTION NO. _____ (2020 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, ESTABLISHING A “CLEAN ENERGY CHOICE
POLICY FOR NEW BUILDINGS” TO GUIDE THE REDUCTION OF
GREENHOUSE GAS EMISSIONS AND USE OF FOSSIL FUELS FOR
BUILDINGS AND TRANSPORTATION
WHEREAS, greenhouse gas accumulation in the atmosphere as the result of human
activity is the primary cause of the global climate crisis; and
WHEREAS, in California alone, the initial impacts of climate change have resulted in
unprecedented disasters with tremendous human, economic, and environmental costs; and
WHEREAS, the Intergovernmental Panel on Climate Change estimates that global
emissions need to be reduced by 45 percent from 2010 levels by 2030, and 100 percent by 2050 to
prevent global catastrophe; and
WHEREAS, the State of California enacted Senate Bill (SB) 32 to require greenhouse gas
emissions to be reduced to 40 percent below 1990 levels by 2030; and
WHEREAS, Governor Brown issued Executive Order B-55-18 establishing a statewide
target of carbon neutrality by 2045; and
WHEREAS, City of San Luis Obispo residents and businesses have repeatedly identified
climate action as a top community priority; and
WHEREAS, the City of San Luis Obispo City Council has directed staff to evaluate
strategies and options to achieve community-wide carbon neutrality by 2035; and
WHEREAS, the inventoried greenhouse gas emissions in the City of San Luis Obispo
come from a variety of sources, primarily transportation and energy use in buildings and facilities;
and
WHEREAS, as of January 2020, the community will have access to carbon neutral
electricity procured by Monterey Bay Community Power; and
WHEREAS, the remaining source of greenhouse gas emissions from energy use in
buildings will come from the onsite combustion of fossil fuels, primarily natural gas; and
WHEREAS, the direct global warming impact of natural gas is considerably higher than
previously thought; and
WHEREAS, in order to achieve carbon neutrality, new sources of greenhouse gas
emissions need to be substantially reduced or eliminated.
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Resolution No. _____ (2020 Series) Page 2
R ______
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows:
SECTION 1. The recitals set forth above are hereby adopted as the findings of the City
in adopting the policies herein.
SECTION 2. It is the policy of the City that new buildings should be all-electric.
SECTION 3: This resolution rescinds and replaces Resolution R-11044 (2019 Series).
Upon motion of _______________________, seconded by _______________________,
and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _____________________ 2020.
____________________________________
Mayor Heidi Harmon
ATTEST:
____________________________________
Teresa Purrington
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, on _____________________.
____________________________________
Teresa Purrington
City Clerk
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ORDINANCE NO. ____ (2020 SERIES)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, ESTABLISHING THE CLEAN ENERGY
CHOICE PROGRAM BY AMENDING THE CITY OF SAN LUIS OBISPO
BUILDING CODE TO REQUIRE HIGHER ENERGY PERFORMANCE
FOR NEWLY CONSTRUCTED STRUCTURES
WHEREAS, greenhouse gas accumulation in the atmosphere as the result of human
activity is the primary cause of the global climate crisis; and
WHEREAS, in California alone, the initial impacts of climate change have resulted in
unprecedented disasters with tremendous human, economic, and environmental costs and;
WHEREAS, the Intergovernmental Panel on Climate Change estimates that global
emissions need to be reduced by 45 percent from 2010 levels by 2030, and 100 percent by 2050 to
prevent global catastrophe; and
WHEREAS, the State of California enacted Senate Bill (SB) 32 to require greenhouse gas
emissions to be reduced to 40 percent below 1990 levels by 2030 and Governor Brown issued
Executive Order B-55-18 establishing a statewide target of carbon neutrality by 2045; and
WHEREAS, City of San Luis Obispo residents and businesses have repeatedly identified
climate action as a top community priority; and;
WHEREAS, the City of San Luis Obispo City Council has directed staff to evaluate
strategies and options to achieve community-wide carbon neutrality by 2035; and
WHEREAS, the inventoried greenhouse gas emissions in the City of San Luis Obispo
come from a variety of sources, primarily transportation and energy use in buildings and facilities;
and
WHEREAS, as of January 2020, the community will have access to carbon neutral
electricity procured by Monterey Bay Community Power; and
WHEREAS, the remaining source of greenhouse gas emissions from energy use in
buildings will come from the onsite combustion of fossil fuels, primarily natural gas; and
WHEREAS, the direct global warming impact of natural gas is considerably higher than
previously thought; and
WHEREAS, in order to achieve carbon neutrality, new sources of greenhouse gas
emissions need to be substantially reduced or eliminated; and
WHEREAS, Public Resources Code Section 25402.1(h)(2) allows more stringent local
amendments to the energy conservation provisions in the California Energy Code; and
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WHEREAS, the California Statewide Codes and Standards Program, has determined
specific modifications to the 2019 State Energy Code for each climate zone that are cost-effective;
and that such modifications will result in designs that consume less energy than they would under
the 2019 State Energy Code; and
WHEREAS, staff has reviewed the “2019 Nonresidential New Construction Reach Code
Cost Effectiveness Study” and “2019 Cost-effectiveness Study: Low-Rise Residential New
Construction” developed for the California Energy Codes and Standards Program and find them
sufficient to illustrate compliance with the requirements set forth under California Administrative
Code Chapter 10-106 ; and
WHEREAS, based on these studies, the City finds the proposed local amendments to the
2019 California Energy Code that affect building energy performance to be cost-effective and
consume less energy than permitted by Title 24, Part 6; and
WHEREAS, the 2019 California Energy Code offers compliance options that were
established through the public rulemaking process of the code update; and
WHEREAS, the Council expressly declares that the proposed amendments to the Energy
Code are reasonably necessary because of local climatic, topological, and geological conditions;
and
WHEREAS, the requirements specified in this Ordinance were reviewed via public
comment, through a robust outreach process, and through a publicly noticed public hearing
process; and
WHEREAS, Resolution No. _____ (2020 Series) establishes a policy preference for all-
electric buildings and resolves that new buildings in the city shall not cause a net increase in
community greenhouse gas emissions as the result of on-site energy use; and
WHEREAS, a first reading of Ordinance 1668 (2019 Series) to establish local
amendments to the California Building Code was approved by Council, but the ordinance was not
adopted.
NOW, THEREFORE, BE IT ORDAINED by the Council of the City of San Luis Obispo
as follows:
SECTION 1. Purpose. It is the purpose and intent of this Ordinance to establish the Clean
Energy Choice Program, including standards for new buildings to exceed minimum 2019 Title 24
Part 6 requirements.
SECTION 2. Adoption. The 2019 California Building Code, Title 24, Part 6, is hereby
adopted by the City of San Luis Obispo with local amendments to be codified under Chapter 15.04
as specified in Exhibit A. The Council hereby adopts the recitals herein as separate and additional
findings of fact in support of adoption of the ordinance.
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SECTION 3. Severability. If any word, phrase sentence part, section, subsection or other
portion of this amendment or any application thereof to any person or circumstance is declared
void, unconstitutional, or invalid for any reason, then such word, phrase, sentence, part, sectio n,
subsection, or other portion, or the prescribed application thereof, shall be severable, and the
remaining provisions of this amendment, and all applications thereof, not having been declared
void, unconstitutional or invalid, shall remain in full force and effect. The City of San Luis Obispo
hereby declares that it would have passed this amendment and each section, subsection sentence,
clause and phrase of this amendment, irrespective of the fact that any one or more sections,
subsection, sentences, clauses or phrases is declared invalid or unconstitutional.
SECTION 4 - Findings. The City Council finds that each of the changes or modifications
to measures referred to therein are reasonably necessary because of local climatic, geological, or
topographical conditions in the area encompassed by the boundaries of the City of San Luis
Obispo, and the City Council adopts the following findings in support of local necessity for the
changes or modifications:
1. As a city located on the California Central Coast, San Luis Obispo is vulnerable to the
effects of sea level rise and resultant flooding within the San Luis Creek watershed,
and human activities releasing greenhouse gases into the atmosphere cause increases
in worldwide average temperature, which contribute to melting of glaciers and thermal
expansion of ocean water –resulting in rising sea levels.
2. San Luis Obispo is already experiencing the repercussions of excessive greenhouse gas
emissions as rising sea levels and severe weather events threaten the City’s nearby
shoreline and infrastructure and cause significant erosion leading to infrastructure
failures including the Mud Creek slide resulting in closure of Highway 1 for repairs,
and economic impacts to surrounding communities.
3. San Luis Obispo is situated along a wildland-urban interface and has been identified as
a Community at Risk from wildfire and is extremely vulnerable to wildfires and
firestorms, and human activities releasing greenhouse gases into the atmosphere cause
increases in worldwide average temperature, drought conditions, vegetative fuel, and
length of fire seasons- contributing to the likelihood and consequences of fire.
4. The City of San Luis Obispo is situated at the base of a watershed of the Santa Lucia
Mountains and flooding of San Luis, Chorro, Stenner, Old Garden,
and Brizzolara Creeks results in conditions rendering fire department vehicular traffic
unduly burdensome or impossible, as witnessed in major floods that occurred in 1952,
1961, 1969, 1973, 1978, 1982, and 1995. Furthermore, flood conditions described
above create the potential for overcoming the ability of the fire department to aid or
assist in fire control, evacuations, rescues and other emergency task demands inherent
in such situations. The resulting overburdening of fire department personnel may cause
a substantial or total lack of protection against fire for the buildings and structures
located in the City of San Luis Obispo. The afore-described conditions support the
imposition of fire protection requirements greater than those set forth in the California
State Building Standards Code and, in particular, support the imposition of more
restrictive requirements than set forth in the California Energy Code for the purpose
of reducing the City’s contributions to Greenhouse Gas Emissions resulting in a
warming climate and related severe weather events.
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5. The aforementioned flood and rain events result in conditions wherein stormwater can
inundate the wastewater treatment system as witnessed in major floods that occurred
in 1952, 1961, 1969, 1973, 1978, 1982, and 1995. Furthermore, rain events and flood
conditions described above create a condition referred to as Inflow and Infiltration (I/I)
that allow rain and flood waters to flow and/or seep into the wastewater system and
overcome the ability of the wastewater collection system and Water Reclamation
Facility (WRF) to convey and treat sewage. The resulting overburdening of the
wastewater system can result in threats to public health, public and private property
and water quality and violations and fines from the State of California, the
Environmental Protection Agency (EPA) or others. To the extent that climate change
has the potential to make these conditions worse, more restrictive Energy Code
requirements to achieve reduced greenhouse gas emissions are necessary.
6. The City of San Luis Obispo is situated near three major faults each capable of
generating earthquakes with a magnitude of 7.5. These are the San Andreas to the east
of the City, the Nacimiento-Rinconada that crosses Hwy 101 north of the City then
parallels the City to the east, and the Hosgri to the West. Other faults of importance
are the Huasna and West Huasna to the Southeast of the City, the San Simeon to the
Northwest, and the Edna and Edna Extended faults which enter the southern areas of
the City. In as much as these faults are included as major California earthquake faults,
which are subject to becoming active at any time, the City of San Luis Obispo is
particularly vulnerable to devastation should such an earthquake occur. The potential
effects include isolating the City of San Luis Obispo from the North and South due to
the potential for collapsing of freeway overpasses or a slide on both the Cuesta and
Ontario Grades and the potential for horizontal or vertical movement of the Edna fault
rendering surface travel across the southern extremities of the city unduly burdensome
or impossible. Additional potential situations inherent in such an occurrence include
loss of the City's two main water sources (the Salinas and Whale Rock reservoirs),
broken natural-gas mains causing structure and other fires, leakage of hazardous
materials, the need for rescues from collapsed structures, and the demand for first aid
and other medical attention to large numbers of people. As a result, the City is pursuing
a policy to discourage additional natural gas extensions and the related, expanded risk
of gas leaks and explosions during seismic events for the protection of human life and
the preservation of property in the event of such an occurrence.
7. That seasonal climatic conditions during the late summer and fall create numerous
serious difficulties in the control and protection against fire situations in the City of San
Luis Obispo. The hot, dry weather in combination with Santa Lucia (offshore) winds
frequently results in wildland fires in the brush-covered slopes on the Santa Lucia
Mountains, San Luis Mountain, and the Irish Hills areas of the City of San Luis
Obispo. The aforementioned areas surround the City. When a fire occurs in said areas,
such as occurred in 1985 when the Los Pilitas fire burned six days and entered the City
and damaged many structures, the entirety of local fire department personnel is required
to control, monitor, fight and protect against such fire situations in an effort to protect
life and preserve property and watershed land. The same climatic conditions may result
in the concurrent occurrence of one or more fires in the more populated areas of the
City without adequate fire department personnel to protect against and control such a
situation. Therefore, the above-described findings support the imposition of measures
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to increase the efficiency of new buildings in the City and reduce Green House Gas
emissions from carbon, and support reducing the amount of natural gas distributed and
used throughout the City.
SECTION 5 CEQA. This ordinance is categorically exempt from CEQA because it is an
action taken by a regulatory agency for the purpose of protecting the environment (CEQA
Guidelines Section 15308). In addition, this ordinance is exempt from CEQA under the general
rule, 15061(b)(3), on the grounds that these standards are more stringent than the State energy
standards, there are no reasonably foreseeable adverse impacts, and there is no possibility that the
activity in question may have a significant effect on the environment.
The following findings are made in support of these determi nations:
1. The purpose of the City’s Clean Energy Choice Policy and the implementation of a
Reach Code is to reduce the amount of greenhouse gas emissions in the City of San
Luis Obispo that are produced from buildings.
2. All electric buildings constructed in the City of San Luis Obispo consistent with the
Clean Energy Choice Policy and implementation of a Reach Code will reduce
greenhouse gas emissions, improve indoor air quality, and reduce the risk of
catastrophic infrastructure failure, including explosions and fires caused by breaks and
leaks in the natural gas distribution system as a result of upset conditions due to
deferred maintenance or following an earthquake.
3. The Reach Code approval process requires that City determine it is cost effective and
that the local standards will require buildings to use no more energy than current
statewide. Furthermore, the CEC approval process requires that the City make the
findings as part of its approval process. Therefore, the Reach Code standards can only
go into effect if they protect the environment by making buildings more efficient and
in a cost-effective manner.
4. The City’s Clean Choice Energy Program enables property owners and developers to
take advantage of a statewide effort to build a clean, efficient, and reliable grid to serve
expanding energy needs across the State of California.
5. The Intergovernmental Panel on Climate Change estimates that global emissions need
to be reduced by 45 percent from 2010 levels by 2030, and 100 percent by 2050 to
prevent global catastrophe. However, due to the lack of coordinated action or a
comprehensive plan to address this threat at a national level, cities and states across the
United States must lead the way.
SECTION 6. Violations. Violation of the requirements of this Ordinance shall be
considered an infraction of the City of San Luis Obispo Municipal Code, punishable by all the
sanctions prescribed in Chapter 1.12.
SECTION 7. Effective Date. This Ordinance shall be effective as of September 1, 2020.
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SECTION 8. 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
New Times, a newspaper published and circulated in this City. This ordinance shall go into effect
at the expiration of thirty (30) days after its final passage.
INTRODUCED on the ____ day of _____ 2020, AND FINALLY ADOPTED by the
Council of the City of San Luis Obispo on the _____ day of _____ 2020, on the following vote:
AYES:
NOES:
ABSENT:
____________________________________
Mayor Heidi Harmon
ATTEST:
____________________________________
Teresa Purrington
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, on _____________________.
______________________________
Teresa Purrington
City Clerk
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Ordinance No. 1668
Exhibit A
Section 15.04.110
AMENDMENTS - CALIFORNIA ENERGY CODE
A. Adoption of Codes and Applicability.
1. The City of San Luis Obispo hereby adopts the 2019 California Code of
Regulations, Title 24, Part 6 (California Energy Code) with local amendments as
set forth herein. The provisions of such are hereby referred to, adopted, and made
a part hereof as if fully set out in this Chapter except as modified hereinafter. These
regulations will be known as the City of San Luis Obispo Energy Reach Code and
all prior provisions are hereby superseded .
2. The effective date of this ordinance shall be September 1, 2020 and is applicable
to new construction buildings including those that are built after a demolition. The
amendments contained in 15.04.110 do not apply to Additions, Alterations, or
Attached Accessory Dwelling Units. Residential subdivisions in process of
permitting or constructing initial public improvements for any phase of a final map
recorded prior to January 1, 2020 are exempt, unless compliance is required by
an existing Development Agreement. Additional exemptions and exceptions are
identified below.
3. Notwithstanding the requirements of this Chapter and the Council's Clean Energy
Choice Policy, and other public health and safety hazards associated with natural
gas infrastructure, natural gas may be allowed in a building otherwise subject to
the requirements of this ordinance if the authority responsible for entitling or
permitting the project makes any of the following findings:
a. That current limitations of electric power infrastructure in the vicinity of the
project site make it impossible to serve the project without significant
upgrades, such as to transformers or other distribution equipment, that are
outside the scope of the proposed project and would render it economically
infeasible.
b. The proposed project would result in a de minimis use of natural gas that
could be offset, such as through a sequestration project or other proposal
directly tied to the development project.
c. Consistent with the purpose and intent of these regulations, the authority
granting approval to a project may permit the use of natural gas without
requiring the additional efficiency requirements or appliance pre-wiring if it
is determined to be necessary to serve public health, safety and welfare.
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B. Amend Section 100.1(b) by adding the following definitions:
ALL-ELECTRIC BUILDING is a building that has no natural gas plumbing
installed within the building and that uses electricity as the source of energy for
all space heating, water heating, cooking appliances, and clothes drying
appliances. An All-Electric Building may be plumbed for the use of natural gas as
fuel for appliances in a commercial kitchen.
MIXED-FUEL BUILDING is a building that is plumbed for the use of natural gas
as fuel for space heating, water heating, cooking or clothes drying appliances.
ACCESSORY DWELLING UNIT, DETACHED is an Accessory Dwelling Unit
(see City of San Luis Obispo Municipal Code 17.156.004) that provides new
residential square footage not attached or sharing any walls with the primary
existing single-unit dwelling.
ACCESSORY DWELLING UNIT, ATTACHED is an Accessory Dwelling Unit
(see City of San Luis Obispo Municipal Code 17.156.004) that is either attached
to (by a minimum of one shared wall), or completely contained within, the primary
existing space of the single-unit dwelling unit or existing accessory structure..
C. Amend Section 140.0(b) to read as follows:
(b) The requirements of Sections 120.0 through 130.5 (mandatory measures for
nonresidential, high-rise residential and hotel/motel buildings):
1. The entire solar zone of newly constructed buildings, as specified in Section
110.10, shall have a solar PV system installed that meets the minimum
qualification requirements as specified in Joint Appendix JA11, subject to
the exceptions in Section 110.10.
D. Amend Section 140.0(c) to read as follows:
(c) Either the performance compliance approach (energy budgets) specified in
Section 140.1 or the prescriptive compliance approach specified in Section
140.2 for the Climate Zone in which the building will be located. Climate zones
are shown in FIGURE 100.1-A.
Exception to 140.0(c): Mixed-Fuel buildings shall use the performance
compliance approach (energy budgets) specified in Section 140.1
E. Section 140.1 is modified as follows:
SECTION 140.1 – PERFORMANCE APPROACH: ENERGY BUDGETS
A newly constructed All-Electric Building complies with the performance approach
if the energy budget calculated for the Proposed Design Building under
Subsection (b) is no greater than the energy budget calculated for the Standard
Design Building under Subsection (a).
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A newly constructed Mixed-Fuel Building complies with the performance approach if
the energy budget calculated for the Proposed Design Building under Subsection (b)
has a compliance margin, relative to the energy budget calculated for the Standard
Design Building under Subsection (a), of at least the value specified for the
corresponding occupancy type in Table 140.1-A below.
Table 140.1-A MIXED FUEL BUILDING COMPLIANCE MARGINS
Occupancy Type Compliance Margins
Office / Retail 15%
Hotel/motel and High-rise residential 9%
All other occupancies in buildings with both indoor lighting and mechanical
systems 5%
All other occupancies in buildings with indoor lighting or mechanical systems
but not both 5%
a) Energy Budget for the Standard Design Building. The energy budget for the
Standard Design Building is determined by applying the mandatory and
prescriptive requirements to the Proposed Design Building. The energy budget is
the sum of the TDV energy for space-conditioning, indoor lighting, mechanical
ventilation, service water heating, and covered process loads.
b) Energy Budget for the Proposed Design Building. The energy budget for a
Proposed Design Building is determined by calculating the TDV energy for the
Proposed Design Building. The energy budget is the sum of the TDV energy for
space-conditioning, indoor lighting, mechanical ventilation and service water
heating and covered process loads.
c) Calculation of Energy Budget. The TDV energy for both the Standard Design
Building and the Proposed Design Building shall be computed by Compliance
Software certified for this use by the Commission. The processes for Compliance
Software approval by the Commission are documented in the ACM Approval
Manual.
Note: Authority: Sections 25213, 25218, 25218.5, 25402 and 25402.1, Public
Resources Code. Reference: Sections 25007, 25008, 25218.5, 25310, 25402,
25402.1, 25402.4, 25402.5, 25402.8, and 25943, Public Resources Code.
Exception 1 to 140.1: The following buildings and uses shall comply with the
performance approach if the energy budget calculated for the Proposed Design
Building under Subsection (b) is no greater than the energy budget calculated for the
Standard Design Building under Subsection (a):
A. Essential Service buildings and public facilities where natural gas is necessary
to meet the requirements of other permitting agencies or is demonstrated to be
necessary for the purpose of protecting public health, safety and welfare.
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F. Amend Section 140.2 to read as follows:
To comply using the prescriptive approach, a building shall be designed with and shall
have constructed and installed systems and components meeting the applicable
requirements of Sections 140.3 through 140.9.
Note: Authority: Sections 25213, 25218, 25218.5, 25402 and 25402.1, Public
Resources Code. Reference: Sections 25007, 25008, 25218.5, 25310, 25402,
25402.1, 25402.4, 25402.5, 25402.8, and 25943, Public Resources Code.
Exception to 140.2: Mixed-Fuel Buildings, except those buildings and uses identified
in Exception 1 to 140.1, shall only use the performance compliance approach (energy
budgets) specified in Section 140.1.
G. Amend the first two paragraphs of Section 150.0 to read as follows:
SECTION 150.0 – MANDATORY FEATURES AND DEVICES
Low-rise residential buildings shall comply with the applicable requirements of
Sections 150(a) through 150.0(s).
Note: The requirements of Sections 150.0(a) through 150.0(s) apply to newly
constructed buildings. Sections 150.2(a) and 150.2(b) specify which requirements of
Sections 150.0(a) through 150.0(s) also apply to additions or alterations.
H. Add Subsection (5) to Section 150.0(h) to read as follows:
5. Systems using gas space heating equipment shall include the following
components:
A. A designated exterior location for a future heat pump compressor unit with
either a drain or natural drainage for condensate from possible future operation
as cooling equipment.
B. For equipment serving individual units, a dedicated 208/240 volt, 30-amp or
greater electrical circuit that is able to be connected to the electric panel with
conductors of adequate capacity, terminating within 3 feet from the designated
future location of the compressor unit with no obstructions. In addition, all of the
following:
i. Both ends of the conductor shall be labeled with the word “For Future Heat
Pump Space Heater” and be electrically isolated; and
ii. A double pole circuit breaker in the electrical panel labeled with the words
"For Future Heat Pump Space Heater"; and
iii. Other electrical components, including co nductors, receptacles or blank
covers, related to this section shall be installed in accordance with the
California Electrical Code.
Exception to Section 150.0(h)5.B: If a 240 volt 30 amp or greater electrical circuit
and compressor unit location exists for space cooling equipment.
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C. For equipment serving more than one dwelling unit, electric capacity,
determined at 240 volts, in the form of raceway and service and subpanel
capacity installed with a termination point of no more than 3 feet from each gas
outlet. Capacities shall be determined to be sufficient for heat pump space
heating equipment to provide the same heat output as the gas equipment.
Exception 1 to Section 150.0(h)5: If centralized space cooling equipment is
installed for all the affected dwelling units.
Exception 2 to Section 150.(h)5: Systems serving Accessory Dwelling Units,
Attached to an existing single-family home.
I. Amend Section 150.0(n) to read as follows:
n) Water Heating System.
1. Systems using gas or propane water heaters to serve individual dwelling
units shall include the following components:
A. A dedicated 125 volt, 20 amp receptacle that is connected to the electric
panel with a 120/240 volt 3 conductor, 10 AWG copper branch circuit,
within 3 feet from the water heater and accessible to the water heater
with no obstructions. In addition, all of the following:
i. Both ends of the unused conductor shall be labeled with the
words “For Future Heat Pump Water Heater” and be electrically
isolated; and
ii. A reserved single pole circuit breaker space in the electrical panel
adjacent to the circuit breaker for the branch circuit in A above and
labeled with the words "For Future Heat Pump Water Heater"; and
iii. Other electrical components, including conductors, receptacles or
blank covers, related to this section shall be installed in accordance
with the California Electrical Code.
NOTE: Appliances shall not be considered “obstructions”.
Exception to 150(n)1.A: Systems serving Accessory Dwelling Unit,
Attached to an existing single-family home.
B. A Category III or IV vent, or a Type B vent with straight pipe between the
outside termination and the space where the water heater is installed;
and
C. A condensate drain that is no more than 2 inches higher than the base
of the installed water heater, and allows natural draining without pump
assistance, and
D. A gas supply line with a capacity of at least 200,000 Btu/hr.
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E. Located in an area that is both:
i. At least 3 feet by 3 feet by 7 feet high; and
ii. Has a minimum volume of 760 cubic feet or a ventilation plan that
includes the equivalent of one 16 inch by 24 inch grill for warm supply
air and one 8 inch duct of no more than 10 feet in length for cool
exhaust air.
Exception to 150.0(n)1.E: Located in Accessory Dwelling Units,
Detached
2. Water heating recirculation loops serving multiple dwelling units shall meet
the requirements of Section 110.3(c)5.
3. Solar water-heating systems and collectors shall be certified and rated by
the Solar Rating and Certification Corporation (SRCC), th e International
Association of Plumbing and Mechanical Officials, Research and Testing
(IAPMO R&T), or by a listing agency that is approved by the Executive
Director.
4. Instantaneous water heaters with an input rating greater than
6.8 kBTU/hr (2kW) shall meet the requirements of Section 110.3(c)7.
5. Systems using gas water heaters to serve multiple dwelling units and/or
common areas shall:
A. Be located in a space that can accommodate a heat pump water heating
system of equivalent capacity and performance; and
B. Have electrical capacity installed for a heat pump water heater(s) in the
form of raceway and service and subpanel capacity, with a termination
point of no more than 3 feet from each gas outlet. The electrical capacity
shall be determined at 208/240 volts and shall be sufficient to power a
heat pump hot water heater of equivalent capacity and performance.
Plans shall include calculations and installations for equivalent capacity
and performance, electrical power, conductors, raceway sizes and panel
capacities in accordance with the California Electrical Code.
J. Add Subsection (s) to Section 150.0 to read as follows:
s) Clothes Drying and Cooking. Buildings plumbed for natural gas clothes
drying or cooking equipment shall include the following components for
each gas terminal or stub out:
1. Clothes Drying.
A. A dedicated 208/240-volt, 30 amp or greater electrical receptacle that is
able to be connected to the electric panel with conductors of adequate
capacity, within 3 feet of the appliance and ac cessible with no
obstructions. In addition, all of the following:
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i. Both ends of the conductor shall be labeled with the word “For Future
Electric Clothes Dryer” and be electrically isolated;
ii. A double pole circuit breaker in the electrical panel labeled w ith the
words "For Future Electric Clothes Dryer"; and
iii. All electrical components including conductors, receptacles or blank
covers, related to this section shall be installed in accordance with
the California Electrical Code.
2. Cooktop or Range
A. A dedicated 208/240-volt, 40 amp or greater circuit and 50 amp or
greater electrical receptacle that is able to be connected to the electric
panel with conductors of adequate capacity, within 3 feet of the
appliance and accessible with no obstructions. In addition, all of the
following:
i. Both ends of the conductor shall be labeled with the word “For Future
Electric Range” and be electrically isolated; and
ii. A double pole circuit breaker in the electrical panel labeled with the
words “For Future Electric Range”; and
iii. All electrical components, including conductors, receptacles, or
blank covers, related to this section shall be installed in accordance
with the California Electrical Code.
3. Stand Alone Cooking Oven
A. A dedicated 208/240-volt, 20 amp or greater receptacle that is able to
be connected to the electric panel with conductors of adequate capacity,
within 3 feet of the appliance and accessible with no obstructions. In
addition, all of the following:
i. Both ends of the conductor shall be labeled with the word “For F uture
Electric Oven” and be electrically isolated; and
ii. A double pole circuit breaker in the electrical panel labeled with the
words "For Future Electric Oven"; and
iii. All electrical components, including conductors, receptacles or blank
covers, related to this section shall be installed in accordance with
the California Electrical Code.
NOTE: Appliances shall not be considered “obstructions”
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K. Amend Section 150.1(b) to read as follows:
b) Performance Standards. A building complies with the performance standards if
the energy consumption for the Proposed Design Building is no greater than
the energy budget calculated for the Standard Design Building using
Commission-certified compliance software as specified by the Alternative
Calculation Methods Approval Manual. Mixed-Fuel Buildings must additionally
reach an EDR threshold beyond the Standard Design in order to comply with
performance standards.
L. Amend Section 150.1(b)1 and 2 to read as follows:
1. Newly Constructed Buildings. The Energy Budget for newly constructed buildings
or newly constructed Detached Accessory Dwelling Units is expressed in terms of
the Energy Design Rating, which is based on TDV energy. The Energy Design
Rating (EDR) has two components, the Energy Efficiency Design Rating, and the
Solar Electric Generation and Demand Flexibility Design Rating. The Solar Electric
Generation and Demand Flexibility Design Rating shall be subtracted from the
Energy Efficiency Design Rating to determine the Total Energy Design Rating. The
Proposed Building shall separately comply with the Energy Efficiency Design
Rating and the Total Energy Design Rating.
A. An All-Electric Building complies with the performance standards if both the
Total Energy Design Rating and the Energy Efficiency Design Ratin g for the
Proposed Building are no greater than the corresponding Energy Design
Ratings for the Standard Design Building.
B. A Mixed-Fuel Building complies with the performance standards if:
i. The Energy Efficiency Design Rating of the Proposed Building is no greater
than the Energy Efficiency Design Rating for the Standard Design Building;
ii. The Total Energy Design Rating of the Proposed Building is less than the
Total Energy Design Rating of the Standard Design Building by at least 9
for a single-family dwelling unit and 9.5 for a multi-family dwelling unit.
Exception to Section 150.1(b)1.B.ii. Buildings with limited solar access are
excepted if all of the following are true:
1. The Total Energy Design Rating for the Proposed Building is no greater
than the Total Energy Design Rating for Standard Design Building; and
2. A photovoltaic (PV) system(s) meeting the minimum qualification requirements
as specified in Joint Appendix JA11 is installed on all available areas of 80
contiguous square feet or more with effective annual solar access. Effective
annual solar access shall be 70 percent or greater of the output of an unshaded
PV array on an annual basis, wherein shade is due to existing permanent
natural or manmade barriers external to the dwelling, inc luding but not limited
to trees, hills, and adjacent structures; and
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3. The Energy Efficiency Energy Design Rating for the Proposed Building is no
greater than the respective value for the Standard Design Building by the EDR
margin in Table 150.1(b)1 below.
Table 150.1(b)1 Energy Efficiency EDR Margins
Building Type Energy Efficiency EDR Margin
Single Family 2.5
Multifamily 0.5
Exception to Section 150.1(b)1.: A community shared solar electric generation
system, or other renewable electric generation system, and/or community shared
battery storage system, which provides dedicated power, utility energy reduction
credits, or payments for energy bill reductions, t o the permitted building and is
approved by the Energy Commission as specified in Title 24, Part 1, Section 10 -115,
may offset part or all of the solar electric generation system Energy Design Rating
required to comply with the Standards, as calculated acc ording to methods
established by the Commission in the Residential ACM Reference Manual.
M. Amend Section 150.1(c) to read as follows:
Prescriptive Standards/Component Package . All-Electric Buildings that comply
with the prescriptive standards shall be designed, constructed, and equipped to meet
all of the requirements for the appropriate Climate Zone shown in TABLE 150.1 -A or
B. In TABLE 150.1-A and TABLE 150.1-B, a NA (not allowed) means that feature is
not permitted in a particular Climate Zone and a NR (no requirement) means that there
is no prescriptive requirement for that feature in a particular Climate Zone. Mixed -fuel
buildings shall comply with requirements of section 150.1(b). Installed components for
All-Electric Buildings shall meet the following requirements:
NOTE: The rest of the Section 150.1(c) applies without modifications but is not
reproduced here for brevity.
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R _____
ORDINANCE NO. ______ (2020 SERIES)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
SAN LUIS OBISPO, CALIFORNIA AMENDING TITLE 17 (ZONING
REGULATIONS) OF THE MUNICIPAL CODE SUPPORTING THE CLEAN
ENERGY CHOICE PROGRAM (PL-CODE-0062-2020)
WHEREAS, the State of California enacted Senate Bill (SB) 32 to require greenhouse gas
emissions to be reduced to 40 percent below 1990 levels by 2030; and
WHEREAS, former Governor Brown issued Executive Order B-55-18 establishing a
statewide target of carbon neutrality by 2045; and
WHEREAS, City of San Luis Obispo residents and businesses have repeatedly identified
climate action as a top community priority; and
WHEREAS, the City of San Luis Obispo City Council has directed staff to evaluate
strategies and options to achieve community-wide carbon neutrality by 2035; and
WHEREAS, the inventoried greenhouse gas emissions in the City of San Luis Obispo
come from a variety of sources, primarily transportation and energy use in buildings and facilities;
and
WHEREAS, as of January 2020, the community has access to carbon neutral electricity
procured by Monterey Bay Community Power; and
WHEREAS, the remaining source of greenhouse gas emissions from energy use in
buildings will come from the onsite combustion of fossil fuels, primarily natural gas; and
WHEREAS, the direct global warming impact of natural gas is considerably higher than
previously thought; and
WHEREAS, in order to achieve carbon neutrality, new sources of greenhouse gas
emissions need to be substantially reduced or eliminated; and
WHEREAS, all-electric buildings are operationally carbon neutral; and
WHEREAS, Resolution No. 11044 (2019 Series) establishes a “Clean Energy Choice
Policy” preference for all-electric buildings and resolves that new buildings in the city shall not
cause a net increase in community greenhouse gas emissions as the result of on-site energy use;
and
WHEREAS, although all-electric buildings are common in the U.S., local and regional
developers may be designing their first electric building; and
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WHEREAS, highly efficient electric appliances may require mechanical equipment that
projects in the building pipeline may not have planned for; and
WHEREAS, local and regional builders have expressed certain design standards as
potential obstacles to designing and constructing all-electric buildings; and
WHEREAS, minor allowances within Zoning Code Chapter 17.070 (Site Development
and General Development Standards) for a specified time period would assist local and regional
builders construct all-electric buildings that are in the building pipeline; and
WHEREAS, the proposed ordinance is supported by policies in Chapter 9 of the City’s
General Plan Land Use Element, specifically Policies 9.4 relating to implementation of the City’s
Climate Action Plan and 9.7 relating to the promotion of sustainable design, and Program 9.13 to
provide incentives for projects that incorporate sustainable design features; and
WHEREAS, the proposed requirements specified in this Ordinance provide temporary
incentives to support the initial implementation of the City’s Clean Energy Program and will end
on December 31, 2022 to coincide with the next adoption of the City’s Building Code Update;
and
WHEREAS, on February 26, 2020 the Planning Commission conducted a public hearing and
recommended that the City Council introduce and adopt the proposed ordinance; and
WHEREAS, on April 7, 2020 the City Council conducted a duly noticed Public Hearing to
consider testimony and input on the proposed ordinance; and
NOW, THEREFORE, BE IT RESOLVED by the City Council of San Luis Obispo as
follows:
SECTION 1. Findings. Based upon all the evidence, the City Council makes the
following findings:
1. The proposed amendments to Title 17 will not significantly alter the character of the
City or cause significant health, safety, or welfare concerns, since the amendment is
consistent with the General Plan and directly implement City goals and policies to
facilitate All-Electric buildings and the Clean Energy Choice Program.
2. The proposed amendments to Title 17 are consistent with existing zoning practices by
establishing reasonable regulations to authorize the Director of Community
Development to act on certain applications on an administrative basis due to the minor
nature of a proposed improvement, use of land or allowed deviation from development
standards.
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3. The proposed amendment to the text of the Zoning Ordinance is consistent with the
purpose of the Zoning Ordinance to promote the growth of the City in an orderly
manner and to promote and protect the public health, safety, and general welfare in that
the proposed allowances to development standards are minor in nature and will and
otherwise maintain the existing policies, standards and regulations of the Zoning
Ordinance.
4. Periodic amendments, updates, and corrections of the Municipal Code are consistent
with General Plan Policy to maintain regulations which are effective in implementing
policies consistent with the General Plan.
5. The amendment is temporary and includes a sunset date of December 31, 2022.
SECTION 2. Environmental Review. The City Council finds that the adoption of this
ordinance is exempt from the California Environmental Quality Act (“CEQA”), in that the Zoning
Amendment contained herein do not have the potential for causing a significant effect on t he
environment, pursuant to Sections 15061(b)(3). The amendment to zoning regulations; 1) does not
lead to physical improvements beyond those typically exempt; and 2) is not specifically listed as
categorical or statutory exemptions but exhibit characteristics similar to one or more specific
exemptions; and 3) provides allowances to specific development standards that are minor in
nature, for a limited time in the area immediately surrounding and attached to approved structures
and existing improvements and is not anticipated to have a significant effect on the
environment. The ordinance additionally is categorically exempt from environmental review
under the Class 3 exemptions for (1) construction and location of limited numbers of new, small
facilities or structures and (2) installation of small new equipment and facilities in small structures
(§15303, CEQA Guidelines.)
SECTION 3. Action. Title 17 of the Municipal Code (Zoning Regulations) is hereby
amended to support the Clean Energy Choice Program by providing temporary authority to the
Community Development Director to grant incentives related to the standards set forth in various
sections of Municipal Code Chapter 17.70 (Site Development and General Development
Standards) as set forth in Exhibit A attached hereto. The Ordinance shall be effective for a limited
term beginning September 1, 2020 and concluding December 31, 2022.
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SECTION 4. 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
New Times, a newspaper published and circulated in this City. This ordinance shall go into effect
at the expiration of thirty (30) days after its final passage.
INTRODUCED on the ______ day of _________, 2020, AND FINALLY ADOPTED
by the Council of the City of San Luis Obispo on the ______ day of ______, 2020, on the following
roll call vote:
AYES:
NOES:
ABSENT:
____________________________________
Mayor Heidi Harmon
ATTEST:
____________________________________
Teresa Purrington
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, on _____________________.
______________________________
Teresa Purrington
City Clerk
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EXHIBIT A
CHAPTER 17.70 SITE DEVELOPMENT AND GENERAL DEVELOPMENT
STANDARDS
Add Section 17.70.095 – Incentives related to new all-electric buildings
A. Purpose. The purpose of these regulations is to support the City’s Clean Energy Choice
program by providing temporary incentives in the application of site development
standards, for the provision of all-electric buildings.
B. Application. This Section shall apply to new all-electric buildings.
C. Standards. Site Development Standards included in this Chapter 17.70 for Accessory
Structures; Edge conditions; FAR; Fences, Walls and Hedges; Height Measurement and
Exceptions, Hillside Development Standards; Lot Coverage; Mixed Use Development and
Setbacks, may be exceeded to the minimum extent deemed necessary to allow for
equipment installations or similar improvements to accommodate all-electric buildings.
D. The Director may grant incentives to site development standards of this Chapter that are
minor in nature without application for Director Action when all of the following
circumstances apply:
1. The request directly relates to construction of an all-electric building and may
include, but is not limited to, issues such as the installation of mechanical
equipment;
2. The request provides the minor flexibility needed to design a project with all-
electric buildings and results in better implementation of other Zoning Regulations
or General Plan policies while allowing reasonable use of sites;
3. The request is minor in nature and does not have the potential to cause a significant
effect on the environment; and
4. The Findings in Section 17.108.040 are met.
E. Term. The provisions in this section shall apply to building permits with an application
date after September 1, 2020 and prior to December 31, 2022.
Amend Section 17.158.006 - A by adding the following:
“ALL-ELECTRIC BUILDING” is a building that has no natural gas plumbing installed within the
building and that uses electricity as the source of energy for all space heating, water heating,
cooking appliances, and clothes drying appliances. An All-Electric Building may be plumbed for
the use of natural gas as fuel for appliances in a commercial kitchen.
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Page A-1
THIS DOCUMENT, ATTACHMENT A, PROVIDES THE SEPTEMBER 3, 2019 COUNCIL
AGENDA REPORT IN ITS ENTIRETY. THE FULL PUBLIC RECORD OF THE ITEM IS
AVAILABLE HERE.
REPORT-IN-BRIEF
In September of 2018 and February of 2019, Council directed staff to develop a proposal to
avoid generating new greenhouse gas emissions as the result of energy use in new buildings. Due
to rapid improvements in electric appliances, a better understanding of how natural gas
contributes to the climate crises, changes to the California Energy Code, and the City obtaining
its electricity supply from carbon neutral resources via Monterey Bay Community Power , staff is
seeking to formalize Council direction through a resolution establishing a Clean Energy Choice
Policy. This report further identifies programs to implement the proposed Council policy.
The staff recommendations to achieve Council direction include three components, collectively
referred to as the Clean Energy Choice Program:
1) A Resolution establishing a “Clean Energy Choice” policy that new buildings should be all-
electric and that energy use in new buildings should not cause net additional greenhouse gas
emissions (Attachment A).
2) A “Reach Code” ordinance establishing local amendments to the California Energy Code
requiring solar panels on new nonresidential buildings, requiring new buildings with natural
gas to be built to a substantially higher performance standard, and requiring new residential
buildings with natural gas to include “retrofit ready” requirements (Attachment B).
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Attachment A September 3, 2019 Council Agenda Report
3) An ordinance establishing a “Carbon Offset” requirement wherein new buildings with natural
gas would be required to offset the proposed natural gas use by directly retrofitting existing
buildings, or in-lieu of that, by paying a fee to support a retrofit program implemented by a
City partner, such as Community Action Partnership of San Luis Obispo’s Energy Services
Program (Attachment C).
Using the 2019 Statewide Cost Effectiveness Studies completed by the California Statewide
Codes and Standards Program, which was vetted through a public process including PG&E and
SoCal Gas, the City of San Luis Obispo must find that the proposed building code amendments
related to building energy performance are cost effective and use less energy than the standard
State Code and the CEC must agree with the City’s analysis before the Reach Code can go into
effect. The cost effectiveness studies are provided as Attachment G (low-rise residential) and
Attachment H (nonresidential, high-rise residential, and hotels).
In addition to the Reach Code, the Clean Energy Choice Program includes a carbon offset
requirement that would apply to all new buildings that choose to use natural gas and requires that
the new fossil fuel use is offset either by retrofitting an older building or by paying an in-lieu fee.
The carbon offset requirement is the mechanism that allows the City to offer choice to property
owners, while also not increasing greenhouse gas emissions from natural gas used to power new
buildings.
The offset requirement would apply to residential and nonresidential construction that is subject
to the California Energy Code, but would exempt additions, alterations, certain uses including
natural gas used for cooking appliances in commercial kitchens, attached accessory dwelling
units, essential services for public health and safety, and residential subdivisions in process of
permitting or constructing initial public improvements (for any phase of a final map recorded
prior to January 1, 2020), unless compliance is required by an existing Development Agreement.
Staff has worked with Economics and Planning Systems (EPS) on a study (Attachment E) to
confirm the cost basis for the in-lieu fee. To determine the in-lieu fee, EPS uses Energy Savings
Assistance (ESA) program data for natural gas energy efficiency programs administered by
SoCal Gas.
Overall, the Clean Energy Choice Program is an incremental approach to avoid the generation of
new greenhouse gas emissions as the result of new development. At build-out of the City’s
General Plan (2035), the Clean Energy Choice Program would be expected to avoid 7,800 Metric
Tons of CO2 equivalence (MTCO2e) per year. For scale, this would prevent community
emissions from natural gas from growing by approximately 15 percent and total community
emissions by approximately 2 percent relative to 2016 levels. The annual amount of avoided
emissions would be equivalent to taking 1,600 passenger vehicles off the road or planting nearly
130,000 trees to sequester carbon.1
The Clean Energy Choice Program was developed with input from local developers, electricians,
architects, builders, designers, technical consultants, the California Energy Commission, peer
1 Equivalencies are provided by the Environmental Protection Agency at: https://www.epa.gov/energy/greenhouse-
gas-equivalencies-calculator
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cities, utility partners, and community members.
Should Council move forward with staff’s recommendation, the second reading of the
Ordinances would occur on September 17, 2019. An implementation plan, to include appropriate
in-lieu fee amounts for various building types, administrative guidelines for the program, and
incentives is planned to return to the City Council for review and approval on November 5, 2019.
The program in its entirety would go into effect on January 1, 2020, concurrent with the rest of
the 2019 California Building Code.
DISCUSSION
Background
Due to decades of rapidly increasing global greenhouse ga s
(GHG) emissions and insufficient climate action at all levels of
government, atmospheric GHG concentrations have reached a
level that guarantees substantial and unavoidable impacts for the
foreseeable future. California’s recent historic wildfires,
droughts, floods, and mudslides are representative of the “new
normal” with respect to extreme weather conditions. These
impacts threaten to make all the substantial challenges currently
faced by the city (e.g., the housing crisis, homelessness,
affordability, sustainable water supply) critical, challenging, and
expensive. Depending on global emissions rates over the next 30
years, global temperatures could exceed a 1.5° Celsius increase
over pre-industrial levels, which would result in catastrophic impacts. In order to limit global
warming to 1.5° Celsius, annual global emissions need to decrease 45 percent by 2030, and be
“net zero” by 2050.2
San Luis Obispo residents and businesses routinely rank climate change as an important issue.3
In 2019, thousands of people in San Luis Obispo contributed to the City’s budget process that
resulted in City Council adopting Climate Action as a Major City Goal for the second straight
budget cycle. The Climate Action Major City Goal Work Program seeks to actively create
economic opportunity and ensure the community remains a dynamic, high quality place to live
and work, while protecting and stewarding the natural environment within and surrounding the
City. The Work Program provides tasks to vet and establish the 2035 carbon neutrality target and
to continue implementation work that establishes the foundations for a low carbon future with a
focus on civility, sustainability, diversity and inclusivity, regionalism and partnership, and
resiliency.
In addition to the reach code and carbon offset program presented in this Council Agenda Report
(Climate Action Major City Goal Task 14), some of the other key components of the Major City
2 Intergovernmental Panel on Climate Change. 2019. “Special Report: Global Warming of 1.5° C
https://www.ipcc.ch/sr15/
3 For example, in 2018, a statistically significant survey conducted by the SLO Chamber of Commerce found that 82
percent of registered voters identified climate change as an important issue: https://slochamber.org/were-not-as-
divided-as-it-seems-survey-shows/.
San Luis Obispo
residents rank climate
change as an
important issue for the
City to address and the
City Council has
responded by making
Climate Action a
Major City Goal.
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Attachment A September 3, 2019 Council Agenda Report
Goal work program include:4
• Monterey Bay Community Power Board Participation and Program Launch
• 2019 Climate Action Plan
• Transportation Electrification Strategic Plan
• Municipal Operations projects including electric vehicle charges, lighting retrofits, onsite
solar photovoltaic systems, and energy efficiency and generation projects at the Water
Treatment Plant, and waste reduction efforts.
• Building Electrification Program Development
• Comprehensive Community Climate Vulnerability Assessment and Safety Element of the
General Plan Update
Policy Approach – Clean Energy Choice Program
The proposed policy approach is to allow all-electric buildings
to comply with minimum state law standards while requiring
buildings that use natural gas (defined as “Mixed-Fuel
Buildings) to offset their natural gas use and be substantially
more efficient than the 2019 baseline code currently requires.5,6
Residential development would be required to include “electric
ready” measures to facilitate fuel switching through a future
retrofit project. In addition, nonresidential buildings would be
required to include solar panels for onsite energy generation.
Figures 1 and 2 illustrate the proposed pathways for obtaining a
City building permit through compliance with the adopted
components of the Clean Energy Choice Program.
The components of the Clean Energy Choice Program include 1) nonresidential solar
requirement, 2) additional building performance standards for mixed-fuel buildings, 3) pre-
wiring “retrofit ready” requirements for residential buildings, and 4) the carbon offset
requirements.
Two key definitions of terms used throughout this report and in the attached resolution and
ordinances, follow.
4 The Climate Action Major City Goal Workplan appears in its entirety in the 2019-21 Financial Plan:
https://www.slocity.org/Home/ShowDocument?id=23630
5 As identified in Attachment B, an “All-Electric Building” is defined as a building that has no natural gas plumbing
installed within the building and that use s electricity as the source of energy for all space heating, water heating,
cooking appliances, and clothes drying appliances. An All -Electric Building may be plumbed for the use of natural
gas as fuel for cooking appliances in a commercial kitchen. A “Mixed-Fuel Building” is a building that is plumbed
for the use of natural gas as fuel for space heating, water heating, cooking or clothes drying appliances.
6 The 2019 California Energy Code is substantially different the its 2016 predecessor for several reasons including
the inclusion of 1) an all-electric compliance pathway for single family residential and multi -family residential
buildings shorter than four stories (collectively referred to as “low-rise residential); 2) a new metric for evaluating
low-rise residential building performance called the “Energy Design Rating” (described in detail in footnotes 9 and
10); 3) requirements to include solar panels on all low-rise residential buildings, and 4) “electric ready”
requirements for future electric water heaters.
The “Clean Energy Choice
Program” would allow
the City to support
housing growth and offer
energy choice to its
residents and businesses
while aggressively
lowering greenhouse gas
emissions attributable to
new buildings in the City.
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Attachment A September 3, 2019 Council Agenda Report
1. “ALL-ELECTRIC BUILDING” is a building that has no natural gas plumbing
installed within the building and that uses electricity as the source of energy for all
space heating, water heating, cooking appliances, and clothes drying appliances. An
All-Electric Building may be plumbed for the use of natural gas as fuel for cooking
appliances in a commercial kitchen.
2. “MIXED-FUEL BUILDING” is a building that is plumbed for the use of natural gas
as fuel for space heating, water heating, cooking or clothes drying appliances.
Figure 1 – Low-Rise Residential and Single-Family Residential Policy Approach
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Figure 2 – Nonresidential Policy Approach
1. Building Code – Energy Requirements
Residential and commercial development in California is
regulated under the California Building Standards Code,
Title 24, California Code of Regulations. It is made up of
thirteen parts, which exist as a guide for local
municipalities to update building codes. Energy use and
conservation is addressed in Part 6 (California Energy
Code), and additional green building measures, including
measures designed to reduce greenhouse gas emissions,
are covered in Part 11 (California Green Building
Standards Code, also known as CalGreen). The
California Energy Code contains energy efficiency
standards for residential and nonresidential buildings,
new construction, remodels and additions.
The simplest way to
comply with the City’s
“Clean Energy Choice
Policy” would be to build
all electric and benefit
from the City’s
membership in Monterey
Bay Community Power,
which began delivering
carbon free energy to the
City on January 1, 2020.
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Public Resources Code Section 25402.1(h)(2) and Section 10-106 of the Building Energy
Efficiency Standards establish a process that allows local adoption of energy standards that
are more stringent than the statewide standards.7,8 Under this process, the CEC requires any
local amendments to the California Energy Code that affect energy use in regulated buildings
to be cost effective and use less energy than the standard requirements. In the proposed Clean
Energy Choice Program, the City finds that all proposed amendments (increasing building
performance requirements for mixed-fuel buildings and requiring solar on nonresidential,
high rise hotel, and residential buildings) are “cost effective” and use less energy than the
standard state requirements. Cost effectiveness and energy use considerations and findings
are provided later in this report and in the Reach Code Ordinance (Attachment B).
Under the Reach Code, new buildings with natural gas (e.g. mixed-fuel building) would be
required to have substantially enhanced building performance. As noted in Table 1, single-
family and low-rise multifamily residential buildings would be required to exceed the
standard design Total Energy Design Rating (EDR)9 score by at least 9.5 and 9 points,
respectively. Table 1 also identifies performance requirement for non-residential buildings
(15% better than code for office/retail, 9% better for hotel/motel, and 5% better for other
nonresidential uses). The enhanced EDR requirements and nonresidential compliance
margins reflect the maximum cost-effective compliance margins as reported in the statewide
cost effectiveness studies.10,11 Attachment D includes a legislative draft version of the
proposed local amendments for reference.
7 Public Resources Code Section 25402.1:
http://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=PRC§ionNum=25402.1.
8 Building Energy Efficiency Standards: https://ww2.energy.ca.gov/2018publications/CEC-400-2018-020/CEC-400-
2018-020-CMF.pdf
9 Total Energy Design Rating (EDR): The 2019 Energy Code includes EDR as a new metric for measuring the
relative efficiency of a building.
10 In the 2019 California Energy Code, low-rise residential buildings (single family housing units and multi-family
buildings under three stories), solar use and battery storage receive credit towards compliance with energy use
standards. To include these credits, the CEC developed a new metric for residential energy performance called the
Energy Design Rating. As described in the 2019 Statewide Cost Effectiveness Study, the EDR score is on a scale or
0 to 100, with a 2006 International Energy Conservation Code (IECC) compliant building having a score of 100 and
a zero-net energy (ZNE) home having an EDR score of zero. The EDR score is calculated by summing the
efficiency score of a building with the generation/storage score of the building. In Climate Zone 5 (San Luis
Obispo’s Climate Zone), the Total EDR for mixed-fuel single family residential buildings is 22.2, for mixed-fuel
low-rise residential buildings it is 24.2. To reduce the scores by 9 and 9.5 respectively, additional efficiency, solar,
and storage measures would be added to the building design. Nonresidential, high rise residential, and hotel
buildings do not receive performance credit for solar or storage. The method for establishing additional standards in
these buildings, is much more straightforward and is a simple percent reduction in building energy use using the
CEC’s Time Dependent Valuation Assessment (TDV) metric. The perc ent reduction is referred to as a “compliance
margin”
11 Staff originally proposed higher compliance margins for residential and nonresidential buildings to comply with
CalGreen standards. The proposal in this Council Agenda Report have been reduced to the maximum cost-effective
EDR and compliance margins for Climate Zone 5, as identified in the 2019 Cost Effectiveness Studies to avoid
issues related to potential violation of federal appliance efficiency regulations.
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Table 1. Proposed Improved Energy Performance Standards
Building Type Performance Requirement Requirement Justification
Single-family Exceed the standard Energy
Design Rating by at least 9.5
points
Maximum cost-effective Total
Energy Design Rating
Low-rise multifamily Exceed the standard Energy
Design Rating by at least 9
points
Maximum cost-effective Total
Energy Design Rating
Office/retail 15% compliance margin Maximum cost-effective
compliance margin
Hotel/motel and high-rise residential 9% compliance margin Maximum cost-effective
compliance margin
Other nonresidential with indoor
lighting & mechanical
5% compliance margin Maximum cost-effective
compliance margin
Other nonresidential with indoor
lighting or mechanical, but not both
5% compliance margin Maximum cost-effective
compliance margin
It should be noted that the definition of an all-electric building includes an allowance for a
natural gas line to be installed to serve a commercial kitchen. In other words, a commerc ial
kitchen that is plumbed for natural gas cooking appliances does not trigger the Reach Code
or Carbon Offset requirements. This provision is provided based on public feedback, the
relatively small number of new commercial kitchens that would otherwise be subject to the
Clean Energy Choice Policy, and input from restauranteurs that commercial scale appliances
for some cooking techniques in San Luis Obispo require natural gas. In addition, while
residential buildings can use free-standing outdoor grills, this is not an option for most new
restaurants.
2. Nonresidential, High-Rise Residential, and Hotel Solar Requirements
The 2019 California Energy Code requires all new low-rise residential buildings to include
solar photovoltaic panels and requires non-residential, high-rise residential, and hotel
buildings to be “solar ready”.12 Given that the design and supporting components will
already be completed as a requirement of State Law, the proposed amendment to the Energy
Code would require the additional step of installing solar panels on the entire solar zone of a
nonresidential, high-rise residential, or hotel building.13
12 Section 110.10 of the California Energy Code provides standards for single family, low-rise residential, high-rise
residential, hotels, and nonresidential buildings to be ready to easily incorporate solar, including requirements for
minimum solar zones (area for installed or future solar panels), interconnection pathways, and electrical service
panels : https://ww2.energy.ca.gov/2018publications/CEC-400-2018-020/CEC-400-2018-020-CMF.pdf
13 Section 110.10(b) of the California Energy Code describes the solar zone as follow: The solar zone shall be
located on the roof or overhang of the building or on the roof or overhang of another structure located within 250
feet of the building or on covered parking installed with the building project, and shall have a total area no less than
15 percent of the total roof area of the building excluding any skylight area. The solar zone requirement is applicable
to the entire building, including mixed occupancy.
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3. Building Code – “Electric Ready” Requirements
To minimize future retrofit or energy transition costs,
residential buildings that choose to include natural gas will
be required to pre-wire to be “retrofit ready.” Proposed
requirements for each natural gas or plumbed propane
appliance include: 14
1. Minimum space requirements for a future electric
requirement
2. A dedicated electrical circuit that is able to be connected
to the electrical panel
3. A double pole breaker in the electrical panel labeled
with the name of the appliance
Based on analysis provided by the City’s consultant (TRC
Companies, Inc.), using RSMeans data from 2018 (a standard construction cost database), the
pre-wiring costs (in 2018 dollars) for all appliances (not including those already required by
the 2019 California Building Code) is approximately $740 for single family units, and $435
for multi-family units. An occupant wishing to retrofit at a later date would require additional
estimated construction costs of $960 for single family units and $560 for multi-family units.
According to this analysis, it is expected to cost approximately $740 to pre-wire a single-
family home; it would cost approximately $1,700 to retrofit that same home at a future date.
4. Carbon Offset Requirement
The carbon offset requirement is the policy mechanism that for a property owner to choose
their preference for energy, while also not increasing greenhouse gas emissions from natural
gas used to power new buildings. When a property owner or developer decides to introduce
natural gas during construction of a new building and follows the mixed-fuel pathway for
code compliance, they would be required to offset the carbon introduced into the
environment.
The offset may be accomplished through a project to retrofit an existing building, or payment
of an in-lieu fee. This program is intended to further the City’s intent to be carbon neutral by
2035. Fees collected through the program would be used to help fund retrofits of existing
buildings within the City.
Establishing the In-Lieu Fee and Administrative Guidelines
Staff has worked with Economics and Planning Systems (EPS) on a study (Attachment E) to
confirm the cost basis for the in-lieu fee. The study describes the relationship between the
baseline reach-code requirements, how the fee revenue could be used to mitigate the
14 Staff originally considered including retrofit ready requirements for nonresidential buildings, but due to project
variability and the high potential for inacc urately system sizing, they have been removed. Staff recommends that
these additional considerations are reconsidered as part of the 2022 California Building Code update.
When a property owner or
developer decides to
introduce natural gas into
a new building, they would
be required to offset this
use by retrofitting older
buildings or paying an in-
lieu fee to support energy
efficiency programs that
will help make housing
more affordable in the City
by reducing energy costs.
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greenhouse gas emissions that occur in instances where the applicant does not pursue full
electrification and calculates the amount of the in-lieu fee. As described in the EPS report,
the in-lieu fee is calculated to be $27.33 per therm generated.15 The therms generated will
vary by application, depending on the type and size of the development.
To determine the in-lieu fee, the City worked with EPS to identify average retrofit costs
using Energy Savings Assistance (ESA) program data for natural gas energy efficiency
programs administered by SoCal Gas. The Energy Savings Assistance (ESA) program is an
efficiency program administered by all of California’s Investor Owned Utilities under the
auspices of the California Public Utilities Commission (CPUC). Like other CPUC programs,
ESA is funded through a small surcharge placed on ever y ratepayer’s energy bill. As a
steward of ratepayer dollars, participating program administrators must closely track the
labor and materials costs and energy savings from each measure in the program.
Because extensive data is available from ESA on retrofit measures, the cost of those retrofits,
and the number of therms reduced or eliminated, the data source provides a strong metric for
estimating the average investment per therm.16,17
The calculated fee has also been tested for feasibility using the same analysis applied by EPS
to the City’s AB 1600, Mitigation Fee Act program for transportation, water and wastewater,
parks and recreation, and public safety impact fees. If the City Council moves forward with
the offset requirement as recommended, staff will return on November 5, 2019, with a
resolution to establish the fee, administrative guidelines, and a package of incentives to
further encourage development of all electric buildings. Some examples of the associated in -
lieu fee are highlighted in the table below.
Building Type Average Therm Usage Calculated In-Lieu Fee
Single Family Residential 220 therms per year $6,013
Multifamily Residential 120 therms per year $3,280
Medium Retail (25,000
s.f.)
1,746 therms per year $47,718
Large Office (54,000 s.f.) 3,240 therms per year $88,549
Similar to the City’s development impact fee pr ogram, if the Council would like to levy a
lesser fee for certain priority building types (e.g. multi -family units under 600 square feet in
size), then they have the authority to do so and a variety of options will be considered prior to
returning to the City Council on November 5th with a recommendation.
15 A therm is a unit of heat energy equal to 100,000 British thermal units (Btu). It is approximately the energy
equivalent of burning 100 cubic feet (2.83 cubic meters) – often referred to as 1 CCF – of natural gas.
16 California Public Utilities Commission. (2019). Income Qualified Assistance Program. State of California.
Retrieved from: https://www.cpuc.ca.gov/iqap/
17 The ESA dataset includes expenditures for furnace repair, outreach and assessment, and in -home education. These
measures reflect substantial expenditures but do not have therms savings associated with them. To be conservative,
these measures were not included in the per therm cost calculation. If they had been included, the cost would
increase to $39.23 per therm.
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5. Applicability and Exemptions
The components of the Clean Energy Choice Program, including the local amendments to the
California Energy Code and the offset requirement, would apply to all new residential and
nonresidential construction that is subject to the State Energy Code. The use of natural gas
for certain industrial and medical uses are not governed by the Energy Code for buildings
and would not be subject to the Reach Code or carbon offset requirement.
There are also specific exemptions to the program requirements. For example, the definition
of an all-electric building includes an allowance for the use of natural gas in a commercial
kitchen.
All-Electric Building. A building that has no natural gas plumbing installed within
the building and that uses electricity as the source of energy for all space heating,
water heating, cooking appliances, and clothes drying appliances. An All-Electric
Building may be plumbed for the use of natural gas as fuel for cooking appliances
in a commercial kitchen.
In addition, the following building project types are specifically exempted:
1. The extension of natural gas infrastructure into an industrial building for the purpose of
supporting manufacturing processes (i.e. not including space conditioning).
2. Accessory Dwelling Units that are attached to an existing single-family home.
3. Essential Service Buildings including, but not limited to, public facilities, hospitals,
medical centers and emergency operations centers).
4. Temporary buildings.
5. Gas line connections used exclusively for emergency generators.
6. Any buildings or building components exempt from the California Energy Code.
7. Residential subdivisions in process of permitting or constructing initial public
improvements for any phase of a final map recorded prior to January 1, 2020, unless
compliance is required by an existing Development Agreement.
This list of exemptions was developed based on feedback from members of the public and
through consideration of other City goals and objectives. In addition to these exemptions, the
proposed offset program Ordinance includes a Public Interest Exemption that is intended to
allow for exemptions in relation to unforeseen circumstances where the extension of natural
gas infrastructure would benefit the public interest and serve orderly development. The
exemption includes specific examples of circumstances where the cost to deliver suffici ent
electric power to the project would be prohibitive due to major infrastructure limitations, or
where a project on its own would use a de minimis amount of natural gas that could be offset
in other ways, such as through a sequestration project. In these cases, the entity that is
approving the entitlement for the project can approve such an exception.
Cost Effectiveness
In the context of the Clean Energy Choice Program, “cost effectiveness” has a technical
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definition per the California Energy Commission, and a more common use definition.
1. Cost Effectiveness for California Energy Commission Review
As described above, Section 10-106 of the Building Energy Efficiency Standards establishes
a process that allows local adoption of energy standards that are more stringent than the
statewide standards. Under this process, the CEC requires any local amendments to the
California Energy Code that affect energy use in regulated buildings to be cost effective and
use less energy than the standard requirements.
The cost effectiveness test can be passed in two ways: 1) the “On-Bill Customer Lifecycle
Cost” metric and 2) the “Time Dependent Valuation” or “TDV” method. The on-bill metric
evaluates the total first costs, replacement costs, estimated site energy usage and customer
on-bill costs using electricity and natural gas utility rate schedules over a 30-year duration
accounting for discount rate and energy cost inflation. The TDV method captures the
“societal value or cost” of energy use including long-term projected costs such as the cost of
providing energy during peak periods of demand and other societal costs such as projected
costs for carbon emissions and grid transmission and distribution impacts.
The CEC requires that cost effectiveness be proven to the satisfaction of the local adopting
government through the adoption of the determination that the standards are cost effective by
the local agency at a public meeting. The determination must subsequently be filed with the
Energy Commission.
In support of code development, the California Statewide Codes & Standards Program,
which includes the State’s Investor Owned Utilities (PG&E, SoCal Gas, SDG&E, and SCE,
under the auspices of the California Public Utilities Commission) developed the 2019
Statewide Cost Effectiveness Study for Nonresidential Development (including
nonresidential, high-rise residential, and hotel buildings) and the 2019 Statewide Cost
Effectiveness Study for Low-Rise Residential New Construction (including single family
homes and multi-family buildings under four stories), which are provided as Attachments G
and H. Both of these attachments are highly detailed and are included in the record to
support the Council’s findings and policy decisions.
Attachments G and H document cost-effective combinations of measures that exceed the
minimum state requirements. The analysis includes evaluation of both mixed fuel and all-
electric buildings, documenting that the performance requirements can be met by either type
of building design. The studies provide a cost-effectiveness analysis in all sixteen California
climate zones and for each Investor owned Utility. These studies are the basis for the City’s
cost effectiveness findings; the City finds the studies sufficient to illustrate compliance with
the requirements set forth under California Administrative Code Chapter 10-106. Based on
these studies, the City finds the proposed local amendments to the 2019 California Energy
Code that affect building energy use to be cost-effective and consume less energy than
permitted by Title 24, Part 6. SoCal Gas has provided additional information about offsite
infrastructure costs, which does not affect the City’s cost effectiveness findings related to the
proposed local amendments to the California Energy Code as described below.
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It is important to note that the 2019 California Energy Code includes an all-electric
compliance pathway for low-rise residential buildings, meaning that the compliance option
exists via the California Energy Commission rule making process. Additionally, all-electric,
non-residential buildings are attainable using the standard building energy baseline.
The Clean Energy Choice Program has multiple implementing actions, including the code
amendments as provided in Attachment B. The actions presented in staff’s recommendation
and in Attachment B that are required to pass the cost effectiveness and energy reduction
tests are limited to the following:18:
1. Per Figures 17, 24, and 31 of the 2019 Nonresidential New Construction Reach Code
Cost Effectiveness Study (Attachment H), the City’s amendments to require additional
efficiency compliance margins for energy performance in nonresidential (nonresidential,
high-rise residential, and hotels) mixed-fuel buildings reduce energy and are cost
effective.
2. Per Figures 38, 39, and 40 of the 2019 Nonresidential New Construction Reach Code
Cost Effectiveness Study (Attachment H), the City’s amendments to require solar on
nonresidential (nonresidential, high rise residential, and hotels) buildings reduce energy
and are cost effective.
3. Per Table 57 and Table 58 of the 2019 Cost-effectiveness Study: Low-Rise Residential
New Construction (Attachment G), the City’s amendments to require a lower Energy
Design Rating score in low-rise residential mixed-fuel buildings (single family residential
and multifamily buildings three stories and shorter) reduce energy and are cost effective.
2. Common Usage of Cost Effectiveness
The more common understanding of cost effectiveness is how builders and building
occupants will face lower or higher costs as the result of the proposed requirements. First
costs, financing, replacement costs, and utility costs all affect housing affordability and cost
of living. Building costs are highly variable dependent on-site conditions, selected materials,
building design, and appliance selection.
On-Site First Costs
The 2019 Cost-effectiveness Study: Low-Rise Residential New Construction (Attachment G)
statewide cost effectiveness study provides high, low, and typical costs to build all-electric
and mixed-fuel residential units. According to the study, onsite construction costs including
increased rough electrical work, avoidance of costs associated with natural gas plumbing and
venting, and comparable appliances, for a typical 2,400 square foot single-family home
would be $421 cheaper to build than a standard natural gas building and a 780 square foot
multi-family unit would be approximately $221 cheaper to build. When using comparable
appliance comparisons, the range of costs included in the statewide study are consistent with
anecdotal evidence from local builders.
1818 Based on discussion with CEC Energy Division staff, pre -wiring requirements do not affect the building’s
energy use and therefore are not subject to the requirements of Section 10-106.
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Offsite Infrastructure Costs
Offsite infrastructure, including extension of gas mains, lateral tie-ins, and new meter costs
are also highly variable. The 2019 Cost-effectiveness Study: Low-Rise Residential New
Construction (Attachment G) statewide cost effectiveness study provides high, low, and
typical offsite costs associated with new construction including the costs experienced by
developers and costs experienced by developers and the ratepayers more broadly. According
to the statewide cost effectiveness study, California natural gas utilities provide allowances to
developers to cover part of their infrastructure costs. The allowances are then paid for by rate
payers over time. For single family units, the study provides a typical cost of estimate of
$5,750 direct cost to the developer and $11,836 in total costs to the developer and the rate
payers.
On August 9, 2019, SoCal Gas provided a letter contesting this amount, noting they expected
an average of $4,400 average per “Work Order”. City staff has requested additional
information from SoCal Gas. A response was received late in the day on August 26, 2019,
and additional analysis based on this cost information will be provided to the City Council
via memo. Although this is an important point to resolve, and it would be beneficial to
understand how much more savings occur as the result of all-electric buildings, it is not
relevant for CEC review (as mentioned above) and it does not substantively change the
findings in this report.
Operational Costs
Operational costs are also highly variable based on building design, appliance selection, and
occupant behavior. Projected utility costs are highly uncertain and in addition to the variables
described above, also depend on predictions of 30 years of utility rate escalation for
electricity and natural gas utilities, as well as economy-wide inflation rates. The 2019 Cost-
effectiveness Study: Low-Rise Residential New Construction (Attachment G) estimates a net
lifetime (30 year) utility cost increase from a mixed-fuel standard construction building to an
all-electric standard construction building to be $11,034 for a 2,400 square foot single family
home and $3,573 for a 870 square foot multi-family home. Based on this analysis, and
assuming the same escalation rates used in the statewide cost effectiveness study, a 2,400
square foot single family home could experience a first year monthly incremental cost
increase of $16.85 and an 870 square foot multi-family unit could experience a first year
monthly incremental cost increase of $5.45 if no additional solar panels are installed.
According to the 2019 Cost-effectiveness Study: Low-Rise Residential New Construction,
modest additions of solar in the 1 to 2 kW range could turn lifetime utility costs into lifetime
utility savings, even when including the upfront costs of the additional panels.
It is important to note that the above mentioned utility cost assessment s are conservative in
that they do not factor in lower generation rates provided by Monterey Bay Community
Power, potential bill savings that could be experienced through future time of use rates and
using heat pump appliances in off-peak periods, nor the value of solar panels in insulating
households from potential future rapid grid energy (natural gas and electricity) cost
escalations.
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Natural Gas Prohibition
Due to complicated federal law and local regulatory considerations, the City may not simply
require that all buildings be electric through the building code without also providing a separate
pathway for mixed fuel development (i.e., electricity and natural gas). In June of 2019, the City
of Berkeley adopted an ordinance restricting natural gas infrastructure in buildings throug h the
entitlement process. Staff has not conducted an assessment on the appropriateness or feasibility
of a similar approach for San Luis Obispo.
What Other Jurisdictions Are Doing
The City of San Luis Obispo is joined by over 50 California cities curren tly pursuing emissions
reductions in new buildings concurrent with the 2019 California Building Code Update. In June
of 2019, the City of Berkeley banned natural gas in new buildings. By October of 2019, it is
expected that nine (9) other cities (San Mateo, San Francisco, Burlingame, Santa Monica,
Portola Valley, San Jose, Mountain View, Los Altos, and Morgan Hill) will have completed first
readings of Ordinances that encourage all electric buildings in a manner similar to the Staff
recommended proposal contained in this report.
Tools for Existing Buildings
The City has a wide variety of policy and program options for
addressing greenhouse gas emissions from energy use in existing
buildings. During the public outreach and engagement process,
staff heard from many community members and organizations
that incentives were key to help people transition to building
electrification. The following is a short list of options that staff is
asking the City Council to direct staff to further evaluate.
1. Free or discounted retrofit work generated by the offset
program: If a developer wants to build a new building with
natural gas they will first have to offset the proposed fossil
fuel use. This will mean that there could be a “market” in
town for retrofit projects created by developers that are
looking for offsets.
2. City retrofit program participation: Funds collected by the City in-lieu of direct offsets will be
used to support retrofit projects within the City. The City will work with other agencies in this
arena, such as the Community Action Partnership of San Luis Obispo and the Tri-County
Regional Energy Network to fund this work with a focus on making housing more affordable
for eligible households.
3. Education and Outreach: City staff will pursue a program of education and outreach to help
property owners in the City understand both the cost-savings potential and environmental
benefits of building electrification.
The Clean Energy
Choice Policy does not
apply to existing
buildings. For property
owners that want to
make the switch,
incentives and other
resources will be
available.
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4. Professional Consulting and Design Services: For smaller projects, energy code compliance
can be a daunting and expensive task. The City could support this effort by making
professional consulting and design services available to assist property owners with their
projects. This service could also be supported by a guidebook created by the City in close
partnership with local builders and building industry professionals that would assist with the
identification of, design for, and installation of heat pumps for water heaters and space
conditioning.
5. Incentives: Staff is recommending that the City Council provide direction to develop an
incentive program to assist property owners in the City that want to electrify their buildings.
This could mean a small height increase, a density bonus, a parking reduction, or a variety of
other concessions that might make the difference between a fuel-switching project being a
boom versus a burden. As part of this recommendation, staff is asking the City Council for
direction to develop a specific package of proposals with implementation guidelines for
adoption along with the in-lieu fee on November 5, 2019.
Previous Council Action and Policy Context
On October 3, 2017, the City Council adopted Ordinance
1639 approving a Development Agreement for the Avila
Ranch project. On August 21, 2018, the City Council
adopted Ordinance 1649 approving a Development
Agreement for San Luis Ranch. Because the City Council
was already contemplating aggressive climate action
strategies, both of these Development Agreements include
prospective requirements to ensure compliance with any
city-wide policy adopted for the purpose of reducing
greenhouse gas emissions. On September 18, 2018, City
Council unanimously gave staff direction to update the
City’s climate action plan and pursue a greenhouse gas
emissions reduction target of carbon neutrality by 2035. The
City is currently assessing specific strategies on how best to
achieve this goal, but it is generally understood that this will
require virtually zeroing out existing emissions sources such
as gas emissions generated from the consumption of energy
(e.g., electricity from carbon-based sources and natural gas).
At the same meeting, City Council provided unanimous direction to research the possibility of
requiring carbon neutral buildings as part of the City’s building codes. This direction ensures that
carbon neutral development can be accomplished in the Avila Ranch and San Luis Ranch
subdivisions (1,300 homes total), which are required by the Development Agreements for each
of those projects only if a City-wide program is adopted first. In a Study Session on February 19,
2019, Council unanimously reaffirmed the direction to develop an approach to carbon neutral
development.
On September 18, 2018, City
Council unanimously gave
staff direction to update the
City’s climate action plan
and pursue a greenhouse
gas emissions reduction
target of carbon neutrality
by 2035. Joining Monterey
Bay Community Power was
a recent step. The next step
is to ensure that greenhouse
gas emissions do not
increase from energy use in
new development.
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On November 13, 2018, Council unanimously approved a resolution requesting membership in
Monterey Bay Community Power (MBCP). On December 5, 2018, MBCP approved the
membership request and will begin procuring more affordable and carbon neutral electricity for
all electric accounts in the City of San Luis Obispo starting January 2020.
On June of 4, 2019, Council unanimously adopted the 2019-21 Financial Plan. The adoption of
the Financial Plan was the culmination of over six months of public outreach. As an outcome of
that outreach, Climate Action was included in the Financial Plan as a Major City Goal and
developing local amendments to the 2019 California Energy Code was identified in the Major
City Goal Work Program as a task to be completed by Fall of 2019.
Greenhouse Gas Emissions and the Built Environment
1. Methane and Greenhouse Gas Emissions
Natural gas is between 92 and 98 percent methane. It is commonly known that combusting
natural gas causes methane to yield carbon dioxide, a greenhouse gas, and water (the
greenhouse gas emissions inventory above presents this basic accounting). New scientific
studies suggest that in addition to combustion, there are significant additional greenhouse gas
emissions occurring as the result of the direct leakage of methane into the atmosphere along
the natural gas drilling, transmission, and distribution system. In the atmosphere, methane is
one of the most potent greenhouse gases despite its short lifespan. According to the EPA,
“[p]ound for pound, the comparative impact of CH4 [methane] is more than 25 times greater
than CO2 [carbon dioxide] over a 100-year period.”
Methane is even more potent in the first two decades of its lifespan—20 years after it is
release, methane has a global warming potential of 84 times that of carbon dioxide.
Methane’s enhanced potency, particularly in the short term, results in more immediat e
warming and thus warrants greater urgency. The Environmental Defense Fund estimates that
“[a]bout 25% of the manmade global warming we're experiencing is caused by methane
emissions.”
Substantial methane gas is released into the atmosphere through hydraulic fracking and other
drilling methods. A 2018 Environmental Defense Fund study estimated that the equivalent of
2.3% of total annual domestic gas production leaks into the atmosphere each year from
across the gas supply chain. This leakage rate does not include additional leaks at and behind
the residential or commercial meter located on building premises.
2. Existing Emissions
On September 18, 2018, staff presented the findings of the communitywide greenhouse gas
emissions (GHG) inventory report update. The inventory, which is measured in metric tons
of carbon dioxide equivalence (MTCO2e), includes emissions from transportation, energy
used in buildings and for lighting for residential and nonresidential uses, methane from solid
waste decomposing in Cold Canyon Landfill, direct emissions from certain wastewater
processes, and off-road sources (e.g., lawn and garden and construction equipment). Since
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that presentation, staff has updated the inventory to reflect more accurate transportation
modelling.
As illustrated in Table 2, emissions overall decreased by approximately 9 percent, with large
decreases in nonresidential and residential energy (-8 percent and -21 percent respectively).
In 2016, energy use accounted for approximately 29 percent of all emissions in the City. As
previously mentioned, to achieve carbon neutrality, the emissions from each sector in Table 2
will need to be as close to zero as possible, which means a combination of decreasing energy
use and waste, as well as transferring all existing technologies (e.g., vehicles, home heating
and cooling, water heating, etc.) to carbon free sources of energy.
Table 2. Community Greenhouse Gas Emissions, 2005-2016 (MTCO2e)
Sector 2005 2005 % of
Total
2016 2016 %
of Total
% Change
Transportation 234,660 63% 221,750 65% -6%
Nonresidential Energy 57,800 15% 53,410 16% -8%
Residential Energy 55,190 15% 43,580 13% -21%
Solid Waste 15,540 4% 13,880 4% -11%
Off-Road 10,810 3% 8,230 2% -24%
TOTAL 374,000 340,850 -9%
Table 3 provides additional detail of communitywide GHG emissions in 2016. Of energy
related emissions, electricity accounted for approximately 47 percent of emissions; natural
gas accounted for approximately 53 percent emissions.
Table 3. 2016 Community Greenhous Gas Emissions, Energy Detail (MTCO2e)
Sector Energy Type Emissions (MTCO2e) % of Total
Residential
Electricity 14,650 15%
Natural Gas 28,930 30%
Nonresidential
Electricity 31,310 32%
Natural Gas 22,100 23%
Total 96,990
3. Future Emissions and Applicability to Current Development Agreements
Table 2 and 3 report the emissions from the built environment as it existed in 2005 and 2016,
respectively, and for 2016, includes approximately 21,155 units of housing and
approximately 19,000,000 square feet of nonresidential space.19 The City’s Land Use
Element of the General Plan anticipates a total of 4,607 additional units and a total of
5,170,000 square feet of additional nonresidential space by 2035.20 Although this
development will be increasingly efficient due to regular improvements in California
19 Source: 2016 General Plan Annual Report
20 Source: Land Use and Circulation Element Environmental Impact Report
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Building Code, they still represent one of the most significant potential sources of GHG
emissions growth in the community. Based on a recent conservative analysis, natural gas use
in new buildings built in 2020 or later is expected to generate approximately 7,800 MTCO2e
per year at build out.
Of immediate interest, in 2017 and 2018, two major developments were approved by City
Council: San Luis Ranch and Avila Ranch. Combined, the developments will add up to 1,300
new housing units and approximately 265,000 square feet of commercial and office space.
This additional development represents approximately 28 percent of all available residential
buildout and 6 percent of all available commercial buildout in accordance with existi ng Land
Use and Circulation Elements of the General Plan.
As part of both approvals, individual “Development Agreements” were negotiated to provide
public benefit beyond what is required as part of the standard approval process. In both cases,
the Development Agreements include specific provisions to
be consistent with any net-zero carbon policies in place at
time of building permit application (See Ordinance #1639
(2017) and Ordinance #1649 (2018)). Specifically, Section
7.07 of the Avila Ranch Development Agreements requires:
(a) Avila Ranch shall provide for accelerated compliance
with the City' s Energy Conservation Goals and its Climate
Action Plan by implementing energy conservation measures
significantly above City standards and norms by providing
for solar PV energy generation for 100 percent of onsite
electrical demand as described in Section 13 of the Design
Framework of the Development Plan. The Project shall also
include energy efficiency standards in excess of the current
Building Code.
(b) Developer shall provide sustainability features as
described in Section 13 of the Design Framework of the
Development Plan, including: (i) housing that meets the 2019 net zero building and energy
codes or, if the 2019 building and energy codes are not yet adopted upon building permit
application, the equivalent to the satisfaction of the Community Development Director, (ii)
implementing any future city-wide policy regarding carbon emissions reduction, (iii) solar
electric panels, (iv) integrated power outlets for electric vehicles and electric bicycles, (v)
building design that maximizes grey water usage, and (vi) work -at-home options with high-
speed internet connectivity.
Section 7.06 of the San Luis Ranch Development Agreement requires:
(a) Developer shall provide for accelerated compliance with the City’s Energy Conservation
Goals and its Climate Action Plan by implementing energy conservation measures
significantly above City standards and norms by providing for solar PV energy generation
for 100 percent of onsite electrical demand at build-out. The Project shall also include
San Luis Ranch and Avila
Ranch have provisions in
their Development
Agreements that requires
them to implement any
future city-wide policy
regarding carbon emissions
reduction. As a result, the
proposed Clean Energy
Choice Policy will apply to
over 1,400 homes to be
constructed over the next 10
years in these new
neighborhoods.
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energy efficiency standards in excess of the Building Code in effect in the City on the Vesting
Date and implement the feasible strategies set forth in Section 5.4.2 of the SLR SP .
(b) Developer shall provide sustainability features including: (i) housing that meets the 2019
net zero building and energy codes or, if the 2019 building and energy codes are not yet
adopted upon building permit application, equivalent energy features shall be provided to
the approval of the Community Development Director, (ii) implementing any future City-
wide policy regarding zero carbon emissions, (iii) solar electric panels, (iv) integrated power
outlets for electric vehicles and electric bicycles, (v) building design that maximizes grey
water usage, and (vi) work-at-home options with high-speed fiber-optic connectivity.
4. Decarbonized Electricity and Built Environment Implications
The emissions presented in this report were arrived at using fact ors
to estimate the greenhouse gas emissions generated per unit of
energy consumed. The electricity factor uses 2016 PG&E grid
average carbon intensity. Starting in 2020, the community will
begin receiving electricity service from Monterey Bay Community
Power, which through its carbon free electricity supply, has an
effective emissions output of zero.21 This means that starting in
2020, the primary source of greenhouse gas emissions coming
from existing and new buildings will be from the combustion of
onsite fossil fuels, primarily natural gas. The most direct path to
carbon neutrality in the built environment is to transition from
natural gas to carbon free electricity.
A carbon neutral electricity supply, coupled with an-all electric building, would provide a cost-
effective way to ensure that the energy use of a building is carbon neutral while also providing
healthier indoor environments, energy bill savings potential, and the capacity to better manage
grid energy demands. As the City continues towards buildout, based on standard accounting
protocol, all electric new buildings would save approximately 7,800 metric tons of carbon
dioxide (MTCO2e) per year in 2035, and a total of over 55,000 cumulative MTCO2e by 2035.
Based on an updated understanding of methane’s contributions to climate change and of
leakage rates along the natural gas extraction, transmission, and distribution process, the total
avoided emissions are expected to be significantly higher.
21MBCP procures energy from eligible renewable (wind, solar, geothermal, biogas) and non-eligible renewable
(large hydroelectric generators) resources mostly within California but also within states associated with the
Western Energy Coordinating Council (WECC). MBCP does not directly procure any resources from fossil fuel
power plants but there are months where MBCP may need to procure additional resources to meet demand from the
greater unspecified California energy mix. On an annual basis, MBCP contracts with enough carbon neutral
resources to meet the annual demand of its customer base. The California Independent Systems Operator balances
the majority of the California electrical grid which does have imported electricity as well as in -state natural gas
plants for reliability and grid stability. MBCP recently contracted for two solar plus battery storage projects to be
built by 2021 with goal of providing additional carbon free resources on the grid during peak hours of the day to
assist in reducing the grid-wide need for natural gas plants. MBCP will continue to increase its sourcing from
renewable resources on an annual basis in order to continue to meet the state’s goals as well as ensure a diversified
power mix. More information is available at https://www.mbcommunitypower.org/understanding-clean-energy/.
The opportunity to
transition away
from natural gas in
new development
comes at a time of
significant
advances in
electrical
appliances.
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The opportunity to transition away from fossil fuels comes at a time of significant advances
in electrical appliances including electric ceramic and induction cooktops and air source heat
pumps for space conditioning and water heating. Switching from natural gas for space
conditioning and water heating to electric air source heat pumps are a critical tool for
achieving California’s deep decarbonization goals due to their efficiency and ability to ensure
that electricity consumption is occurring during times of peak onsite solar production or at
times when the grid has the most amount of renewables on it.
The primary new electrical load from an all-electric building comes from space heating and
water heating. In a building built under the 2019 code, using a highly efficient heat pump (up
to 300+ percent) efficient, the load is less significant than from a traditional electric water
heater. As the utilities push Time-of-Use rates, these electric heat pump appliances can be
programmed to operate at times where there is excess (and cheaper) power. This translate s
the electrical energy into thermal energy, which is stored in the water tank and in the
conditioned space. In that way, an all-electric building can work as a battery and can help
manage grid health.
The issue of grid outages as the result of wildfire or other reasons is very serious, and
resilience to that issue is something that the City and PG&E are actively working on. A
common misconception is that gas appliances can run when electric appliances cannot. For
safety and performance reasons, new appliances all require electricity to operate. A modern
furnace and water heater require electricity and are disabled without it; bypassing these
safety features would be dangerous. All primary lighting sources are electric. The one
appliance that can be operated is the stove top, and that’s if the pilot is manually lit. A
propane grill or cooktop for emergency use could serve a similar function. Given the critical
importance of public health and safety, critical facilities and buildings require back -up
generation are exempt from the program.
It is also important to note that the proposed amendment is for the 2019-22 code cycle (which
confusingly applies to years 2020 -22) and in that time, much of the new residences being
built will be in subdivisions that will have new electric infrastructure built to support it.
Public Engagement
The initial conversation regarding building decarbonization occurred at the publicly held
September 18, 2018 and February 19, 2019 City Council meetings. Since then, staff has worked
closely with expert technical consultants (TRC Companies and EPS) the local building
community, Monterey Bay Community Power, the SLO Climate Coalition, and peer cities
throughout California to identify and pursue resources and develop the potential approach
discussed in this report. The City has led or supported the following public engagement events:
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Attachment A September 3, 2019 Council Agenda Report
Event Date Description
Energy code
workshop #1
May 1, 2019 Staff held a kickoff workshop for developers, builders, and
design professional to review the City’s approach to the code
amendments, early feasibility and cost effectiveness funding
findings, and to discuss potential concerns and issues.
Following the meeting, staff met directly with the developers
and builders of San Luis Ranch, Avila Ranch, and Righetti
Ranch
Builders
Roundtable
May 13, 2019 Staff presented the initial building code concept to the
Developer’s Roundtable for feedback.
Planning
Commission
May 22, 2019
and
July 24, 2019
Staff met with the Planning Commission on two occasions to
explain the reasoning behind the development of local
amendments to the energy section of the building code and to
present proposed code language. The items were
informational at both meetings.
Chamber of
Commerce
Legislative
Action
Committee
July 11, 2019 Staff presented the reasoning behind the development of
local amendments to the energy section of the building code
and proposed approaches to the Chamber of Commerce
Legislative Action Committee. City staff has been working
closely with Chamber staff to respond to comments.
Energy code
workshop #2 –
Code and Offset
Program Review
July 24, 2019 Staff held an open workshop for developers, builders, and
design professional to review the code and offset program.
The event was attended by 35 individuals representing and
led to additional revisions to the proposed code language and
approach.
Public Comment
Period
August 9, 2019 On July 22, 2019, the City posted draft building code
amendment language for a public comment period, which
closed on August 9, 2019. The City received 93 comments
from over 15 individual commenters including residents,
architects, electricians, statewide experts, and the California
Energy Commission. Attachment F provides the received
comments and how they were incorporated into the final
policy proposal.
Electrification
Expo
August 22, 2019 The City partnered with the Tri-County Regional Energy
Network and the Climate Coalition to host a half day training
for design professionals on the 2019 California Building
Code, a panel discussion for residents and businesses to
better understand the potential benefits and challenges of all
electric/carbon free buildings, and an electrification expo
hosted at the Downtown Association Farmer’s Market.
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Utility Interaction
The City of San Luis Obispo has a successful history working closely with energy utility
partners. The City has partnered with PG&E and SoCal Gas on large scale efficiency projects at
numerous facilities. To ensure orderly development, to maintain infrastructure as it ages a nd the
City becomes denser, and to continue to thrive as a community, it will be critical to maintain and
enhance close working relationships between all partners. Over the course of this project, staff
has worked with PG&E, SoCal Gas, and MBCP staff.
Pacific Gas & Electric
In August, staff contacted PG&E to discuss grid interconnection questions raised during the
outreach process. PG&E staff confirmed that there is sufficient grid capacity for electrification as
generally described in the City’s Clean Energy Choice Program. On August 21, PG&E provided
a letter supporting the City’s electrification initiatives when cost effective.
SoCal Gas
In July, staff-initiated contact with SoCal Gas and requested a meeting to discuss coordination
and collaboration on the City’s climate targets, including pilot biogas (also referred to as
“renewable natural gas”) projects, energy efficiency programs, and proposed local amendments
to the California Energy Code. The City spoke with SoCal Gas staff about these topics on July 9
via phone.
As a follow up to the conversation, in early August, City staff spoke with SoCal Gas staff
responsible for biogas development. The existing sources of biogas in the City and biogas
generated by activity in the City were discussed (Cold Canyon Landfill, the Hitachi-Zosen
Anerobic Digester, and the Water Resource Recovery Facility). Based on the discussion, it was
agreed that the existing sources of local biogas are already allocated to existing projects that
generate electricity.
On August 9, 2019, SoCal Gas submitted a letter to the City opposing the proposed local
amendments to the California Energy Code. The letter claims that the data and methods used in
the 2019 Cost Effectiveness Studies are flawed, primarily that incremental cost s in the study are
higher than those commonly experienced in SoCal Gas service territory. The letter also claims
the rate forecasting method and how TDV is operationalized are insufficient. As mentioned
above, the 2019 Cost Effectiveness studies were completed in a transparent public process
including public review and involving all Investor Owned Utilities (i.e, San Diego Gas and
Electric, PG&E, SoCal Gas, and Southern California Edison). Staff understands that the final
reports were routed within each Investor Owned Utility for review and SoCal Gas did not
provide any comments on the issues contained in the letter they provided to the City.
Monterey Bay Community Power
Staff has been advocating on the City’s behalf to support programs that incentivize all-electric
buildings. In May, staff travelled to Monterey to attend the Monterey Bay Community Power
Electrification Plan Workshop. At the workshop, staff advocated for incentives for all electric
developments with a special focus on multifamily and affordable units. Staff’s recommendation in
this Council Agenda report is to continue to advocate for incentives for all-electric multi-family
and affordable housing units and directs staff to submit a letter communicating this preference.
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Schedule and Next Steps
Should Council approve staff’s recommendations, work would proceed on the following
timeline:
Task Timeframe
Adoption of “Reach Code” and submittal to the California
Energy Commission; Council approval of the Carbon Offset In-
Lieu Program
September 2019
Receive approval from the California Energy Commission November 2019
Return to the City Council with a fee resolution and approving
an implementation plan to include education and outreach,
development of a program making professional consultation and
design services available to property owners, and identification
of a series of incentives that would allow the City to relax
property development standards (such as, but not limited to,
parking requirements, setback reductions, or building height
allowances) in exchange for all-electric development
November 2019
Building Code goes into effect January 1, 2020
Clean Energy Choice Program goes into effect January 1, 2020
CONCURRENCE
The Office of Sustainability, Community Development, Fire Department and Utilities
Department concurs with the recommendations in this report.
ENVIRONMENTAL REVIEW
These ordinances are categorically exempt from CEQA because they constitute actions taken by
a regulatory agency for the purpose of protecting the environment (CEQA Guidelines Section
15308). In addition, these ordinances are exempt from CEQA under the general rule,
15061(b)(3), on the grounds that these standards are more stringent than the State energy
standards, there are no reasonably foreseeable adverse impacts, and there is no possibility that
the activity in question may have a significant effect on the environment.
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Attachment A September 3, 2019 Council Agenda Report
FISCAL IMPACT
Budgeted: Yes Budget Year: 2019-20
Funding Identified: Yes
Fiscal Analysis:
Funding
Sources
Total Budget
Available
Current Funding
Request
Remaining
Balance
Annual
Ongoing Cost
General Fund $50,000 0$ $0 TBD
Total $50,000 $0 TBD
Presenting the Clean Energy Choice Program is a 2019-21 Climate Action Major City Goal work
task and staff time is included in the 2019-20 budget to develop this proposal, submit to the
CEC, and have it in place to begin implementation on January 1, 2020. $50,000 is the estimated
amount the program implementation will come from the budgeted resources. The Climate Action
Major City Goal also includes $50,000 for developing a building retrofit program. It is
anticipated that this program will be developed by 2021. Should Council direct staff to return
with additional information on incentives, including staff support, further fiscal analysis would
be provided. The proposed incentive program would also have ongoing costs that currently are
not budgeted. Fiscal impacts of proposed incentives will be evaluated and presented as part of
the implementation plan recommendations, scheduled to return to the City Council on November
5, 2019.
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ALTERNATIVES
1. No Action. The City Council could decide to take no action on the proposed Clean Energy
Choice policy and implementing ordinances. If the Council chooses this option, direction
should be provided to staff for follow up and resolution. The staff recommendation ensures
that the reach code and carbon offset program would go into effect together with a larger set
of building code updates on January 1, 2020. Depending on the scope of changes directed, a
delay in implementation would likely delay adoption of the reach code past January 1, 2020.
2. Adopt One or Other Adopting Ordinance. If the City Council chooses to move forward with
approval of the Clean Energy Choice Policy, it can choose to further im plement the policy by
adopting one or the other recommended implementing ordinances. The Reach Code and
Carbon Offset Program may be implemented completely independent of one another.
3. Adopt with Modifications. The City Council could choose to modify various aspects of the
staff recommendation to accommodate more precise application of the Clean Energy Choice
Policy. Staff is working to be prepared for a wide variety of potential changes that the City
Council may wish to pursue in response to public testimony or new information brought to
light prior to the hearing. Some of the areas where staff will be prepared to discuss
alternative methods of implementation include:
a. Applicability of the reach code and offset requirement
b. Exemptions from the requirements of either code
c. Possible update to the reach code recommendations based on ongoing conversations with
stakeholders
d. Adoption of the Reach Code only
e. Adoption of the offset requirement only
Attachments:
a - Clean Energy Choice Resolution
b - Reach Code Ordinance
c - Carbon Offset Program Ordinance
d - Reach Code Legistlative Draft
e - EPS In-Lieu Fee Report
f - Public Review Comments
g - Council Reading File - 2019 Residential Cost Effectiveness Study
h - Council Reading File - 2019 Nonresidential Cost Effectiveness Study
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Department Name: Community Development
Cost Center: 4003
For Agenda of: June 16, 2020
Placement: Public Hearing
Estimated Time: 30 minutes
FROM: Michael Codron, Community Development Director
Prepared By: Dan Van Beveren, Senior Civil Engineer
SUBJECT: REVIEW OF A PROTEST (FILED BY MR. WILLIAM WALTER) FOR
PAYMENT OF ENCROACHMENT PERMIT FEES AND FOR A CONDITION
OF APPROVAL REQUIRING THE INSTALLATION OF A DECORATIVE
PEDESTRIAN LIGHTING FIXTURE
RECOMMENDATION
Adopt a Resolution (Attachment A) denying the protest of Encroachment Permit Fees and
denying the protest of the Condition of Approval requiring the installation of a decorative
pedestrian lighting fixture associated with ARCH-1236-2017 (679 Monterey Street).
DISCUSSION
In 2018, Mr. William Walter, owner of the property located at 679 Monterey Street (see Vicinity
Map, Attachment B), submitted a planning application to the City for the construction of a new
dwelling and deck. The application was approved by City staff as documented in the approval
letter dated August 1, 2018 (Attachment C). The letter includes the project’s conditions of
approval - items that are required to be completed prior to the City’s final approval of the project.
The project’s conditions of approval required the construction of complete frontage
improvements, including Mission Style Sidewalks, a pedestrian light fixture, driveway
approaches, a tree well, and other miscellaneous improvements within the City right-of-way
along the frontage of the property. The conditions of approval (Condition 8) require that all
frontage improvements “be installed or that existing improvements be upgraded per City
standards. MC 12.16.050.” Because the required frontage improvements are located within City
right-of-way, the work requires an encroachment permit to be issued by the City.
Under Municipal Code Chapter 4.56.060, “[a]ny party subject to the fees established by this
chapter may protest the imposition of those fees” if the party tenders any required payment in
full, or provides evidence of arrangement to pay the fee or meet the requirements of the
imposition of the fee, and serves written notice of protest on the City Council within ninety (90)
days of the imposition of the fees.
On April 24, 2020, a written Notice of Protest (Attachment D) was submitted to the City by Mr.
Walter. The Notice of Protest identifies two items that are being protested:
1. The encroachment permit fee in the amount of $2,036.22.
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2. The condition of approval requiring the installation of a decorative pedestrian lighting
fixture.
Following the submittal of the written protest, Mr. Walter payed the required encroachment
permit fee, and a permit was issued on April 27, 2020 (Attachment E). The frontage
improvements are now nearly complete, with the exception of some items that need to be
corrected since the work was not done in accordance with City standards, and the decorative
lighting fixture which has not yet been installed.
Encroachment Permit Fee
The fees that the City charges for encroachment permits, required for a contractor to work within
the City right-of-way, are contained within the City’s Master Fee Schedule. The various fees
included in the Fee Schedule are reviewed and adjusted through a Fee Study which is conducted
approximately every five years (most recently in 2017). The Fee Schedule is also updated
annually based on the Consumer Price Index (CPI) to adjust for inflation.
The 2017 Fee Study included a City Council study session on February 21, 2017, and a Public
Hearing on April 18, 2017, during which Council adopted Resolution #10790 (Attachment F)
updating the Master Fee Schedule. The most recent annual update is included in Resolution
#11026 (Attachment G) which was adopted on June 18, 2019.
Mr. Walter’s assertion that the encroachment permit fees to be “…confiscatory, violate due
process, constitute a taking of private property without just compensation, are not supported by a
rational nexus, right proportionality, violate due process, under the United States and California
Constitutions” are unfounded and inconsistent with the transparent public process that staff and
Council conducted to establish the basis of those fees in 2017.
The encroachment permit fee was calculated in accordance with the Council approved Master
Fee Schedule, and based on 35 linear feet of driveway approach, and 45 linear feet of curb, gutter
and sidewalk:
Driveway Approach Base Fee: $912.54
plus $10.06 per linear foot of driveway approach ($10.06 x 35’): $352.10
plus $5.76 per linear foot of sidewalk ($5.76 x 45’) $259.20
plus $10.06 per linear foot of curb and gutter ($10.06 x 45’): $452.70
Subtotal: $1,976.54
plus IT surcharge of $3.05% ($1,976.54 x 3.05%): $60.28*
Total: $2,036.82**
* An IT surcharge of 3.05% is authorized under Council’s adopted Fee Sch edule.
**Note that the software which calculates the amount of the permit fee rounds down a few cents
resulting in amount of the actual fee charged of $2,036.22.
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Policy Context
Municipal Code Chapter 12.04.032 states the following: “A fee for encroachment permits may
be established by resolution of the council and shall be paid to the city at the time of application
for issuance or renewal of any encroachment permit. Public utility companies operating under
franchise agreement with the city may pay monthly for permit fees or provide a deposit in
advance for the estimated volume of permit applications subject to an agreement approved by the
director.”
Condition Requiring the Installation of a Decorative Pedestrian Lighting Fixture
Mr. Walter’s attempt to appeal the Condition of Approval requiring that he install a new
pedestrian light fixture, is untimely and invalid. Per Municipal Code Chapter 17.126.020, Mr.
Walter had ten (10) days to submit an appeal regarding the Conditions of Approval identified in
the Community Development Department’s August 1, 2018 letter approving his project subject
to various conditions. The protest was not received until April 24, 2020, which is well beyond
the 10-day period to appeal the underlying conditions of approval. Therefore, Council should
find that the protest or appeal of the underlying condition of approval is untimely and should not
consider any argument or evidence presented by Mr. Walter regarding the substance or validity
of Condition of Approval #13 during the June 16, 2020 Protest Hearing.
Public Engagement
This Public Hearing has been advertised in the local newspaper with an ad appearing in the New
Times on June 4, 2020. This notification is consistent with the City’s Public Engagement
Manual.
CONCURRENCE
The Public Works Department concurs with the recommended action.
ENVIRONMENTAL REVIEW
The California Environmental Quality Act does not apply to the recommended action in this
report, because the action does not constitute a “Project” under CEQA Guidelines Sec. 15378.
FISCAL IMPACT
Denying the protest, as recommended by staff, would not result in any fiscal impact. The fee has
already been paid and is structured to recover the actual costs of services provided. Council
could, however, decide to refund any or all of the permit fee resulting in a reduction of the
amount of the refund to the Development Services revenue.
Funding Sources Current FY Cost
Annualized
On-going Cost
Total Project
Cost
General Fund N/A
State
Federal
Fees
Other:
Total
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ALTERNATIVES
Waiving the assessment of the encroachment permit fees through a modified Resolution is within
the purview of the City Council but is not recommended for the following reasons:
1. Permit fees are established by City Council through a rigorous process.
2. Permit fees are based the actual cost of staff time necessary to support the permit through
inspection and other services.
3. This alternative would set a precedent of yielding to a protest of an accepted process, and
may lead to more permit fee protests by others.
Attachments:
a - Draft Resolution
b - Vicinity Map
c - Letter to Applicant dated August 1, 2018
d - Notice of Protest
e - Encroachment Permit ENCR-0780-2020
f - COUNCIL READING FILE - Resolution 10790 (2017 Series)
g - Resolution 11026 (2019 Series)
h - COUNCIL READING FILE - Assorted Email Correspondence 1
i - COUNCIL READING FILE - Assorted Email Correspondence 2
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R ______
RESOLUTION NO. _____ (2020 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, DENYING A PROTEST OF PAYMENT OF
PERMIT FEES FOR ENCROACHMENT PERMIT ENCR-0780-2020, AND
DENYING A PROTEST OF A CONDITION OF APPROVAL REQUIRING
THE INSTALLATION OF A DECORATIVE PEDESTRIAN LIGHTING
FIXTURE AS REQUIRED BY ARCH-1236-2017
WHEREAS, Mr. William Walter, owner of the property located at 679 Monterey Street,
filed a planning application for the construction of a new studio dwelling unit behind an office
building, and the addition of a deck to the office building on the subject property (“Project”); and
WHEREAS, City staff reviewed the application, determined that the Project did not
require review by the Architectural Review Commission, and responded with a decision letter ,
dated August 1, 2018, granting approval of the Project subject to specified Conditions of Approval
as stated in the decision letter associated with ARCH-1236-2017 (679 Monterey); and,
WHEREAS, the project’s Conditions of Approval required the construction of complete
frontage improvements, including new curb gutter and sidewalk, installation of a decorative
pedestrian light fixture, driveway approaches, a tree wells, and other miscellaneous improvements
within City right-of-way along the frontage of the property; and,
WHEREAS, Municipal Code Section 17.126.020 provides that appeals of a decision of
any official body must be submitted withing ten (10) calendar days of the rendering of a decision
which is being appealed. Pursuant to Municipal Code Section 17.126.020, Mr. William Walter had
ten (10) calendar days to submit an appeal regarding any of the Conditions of Approval identified
in the City’s August 1, 2018 decision letter, including the condition to install a decorative
pedestrian light fixture, but no appeal was submitted within ten (10) calendar days from August 1,
2018; and,
WHEREAS, work within City right-of-way requires that the contractor performing the
work obtain an Encroachment Permit from the City Public Works Department; and,
WHEREAS, an Encroachment Permit, number ENCR-0780-2020, for work to be
performed for the Project in the City right-of-way was issued on April 27, 2020, with a calculated
permit fee in the amount of $2,036.22; and
WHEREAS, the City’s Master Fee Schedule is reviewed through a Fee Study which is
conducted approximately once every five years, most recently through a Council Study Session on
February 21, 2017, and a Public Hearing on April 18, 2017; and
WHEREAS, the current Master Fee Schedule is based on the 2017 Fee Study, and updated
annually, most recently through the adoption By City Council of Resolution No. 11026 on June
18, 2019; and,
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WHEREAS, Encroachment Permit fees are included in the current Master Fee Schedule;
and,
WHEREAS, on April 24, 2020, Mr. William Walter submitted a protest to the City
regarding the cost of his encroachment permit fee in the amount of $2,036.22 and regarding
Condition of Approval Number 13 identified in the City’s August 1, 2018 decision letter for
ARCH-1236-2017 (679 Monterey), requiring installation of a decorative pedestrian light fixture;
and,
WHEREAS, a Public Hearing was conducted during the City Council meeting of June 16,
2020, during which Mr. Walter communicated his items of contention and protest; and,
WHEREAS, the City Council of the City of San Luis Obispo has duly considered all
evidence, including the testimony of the applicant, interested parties, and evaluation and
recommendations of staff, presented at said hearing; and,
WHEREAS, notices of said public hearing were made at the time and in the manner
required by law.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis
Obispo, based upon all the evidence presented, that the protest submitted by Mr. William Walter
is denied pursuant to the following findings:
SECTION 1. Encroachment Permit Fee. The City Council finds that the fee charged for
Encroachment Permit ENCR-0780-2020 in the amount of $2,036.22 is an appropriate fee based
on the following:
a) The established fees for encroachment permits are determined through an appropriate
public process and are established by Council, based on that process in the City’s
Master Fee Schedule, most recently adopted by City Council by Resolution No. 11026
on June 18, 2019.
b) The fee for Encroachment Permit ENCR-0780-2020 was correctly calculated in
accordance with the City’s Master Fee Schedule.
SECTION 2. Condition of Approval No. 13 ARCH-1236-2017 (679 Monterey). City
Council finds that the protest of Condition of Approval No. 13 is untimely and invalid based on
the following:
a) The decision letter approving the Project with conditions of approval, including
Condition No. 13 requiring installation of a decorative pedestrian light fixture, was
issued by the City on August 1, 2018.
b) Municipal Code Section 17.126.020 provides that appeals of a decision of any official
body must be submitted withing ten (10) calendar days of the rendering of a decision
which is being appealed. The ten-day period to appeal was stated in the City’s August
1, 2018, decision letter. Pursuant to Municipal Code Section 17.126.020, Mr. William
Walter had ten (10) calendar days to submit an appeal regarding any of the Conditions
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R ______
of Approval identified in the City’s August 1, 2018 decision letter, including Condition
13 requiring installation of a decorative pedestrian light fixture, but no appeal was
submitted within ten (10) calendar days from August 1, 2018.
c) Mr. William Walter’s protest of Condition No. 13 requiring installation of a decorative
pedestrian light fixture was submitted on April 24, 2020, which is beyond the ten-day
period allowed for appeals of conditions of approval under Municipal Code Section
17.126.020.
SECTION 3. Action. Based on the foregoing findings and evidence in the record, the City
Council does hereby deny the protest submitted by Mr. William Walter regarding the fee charged
for Encroachment Permit ENCR-0780-2020 and the protest submitted by Mr. William Walter
regarding Condition of Approval No. 13 ARCH-1236-2017 (679 Monterey).
Upon motion of _______________________, seconded by _______________________,
and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _____________________ 2020.
____________________________________
Mayor Heidi Harmon
ATTEST:
____________________________________
Teresa Purrington, 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, on _____________________.
____________________________________
Teresa Purrington, City Clerk
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LAW OFFICES
WILLIAM S. WALTER
A PROFESSI ONAL CORPORATION
T ELll:PHO Nll: (B OS) 1541-6601 T H E B ELLO HO U SE
F ACSIMILE (805) 541-6640 679 MONTEREY STREET
SAN L UIS OBISP O, CALI F ORNIA 9340 1
April 24, 2020
VIA FACSIMILE US PS (emailcouncil@slocity.org)
CITY COUNCIL
C it y of San Luis Obi s po
919 Palm St.
Sa n Luis Obispo, CA 93401-3218
EMA.JL
WWAL.TER@TCSN .NET
RE: NOTICE OF PROTEST FOR PAYMENT OF ENCROACHMENT PERMJT FEES AND
PROTEST OF REQUIREMEN T TO INST ALL A "DECORATIVE P EDEST RI AN LIGHTING
FIXTURE": CAL. GOV. CODE SECTION 66020 ASSOCIATED W ITH ''New Deck and
Found ation Repa ir Permit: BLDG 11 43-2018, 679 Monterey St., San Lui s O bispo, CA 9340 I
Dear Council Members:
I am t he owner of the "Bello Ho use" located at the above address. G overnment C ode Section
66020 does not limit the right to protest fees , conditio ns and exacti ons when~ the local government has
fai led to provide notice as required by Section 66020 (d)(l ). Nonetheless , this letter constitutes
·'NOTICE OF PROTEST FOR PAYMENT OF EN C ROAC HMENT P ERMIT FEES AND PROTEST
OF REQ UIREMENT TO INSTALL A "DECORATIV E PEDESTRIAN LIGHTING F IX TUR E"; CAL.
GOV . COD E SECTION 66020 ASSOCIATED W ITH "New Deck and Foundation Repair Permit: BLDG
1143 -20 18 ."
Two condition s are protested:
(1) The City is demanding the payment of an encroachment fee in the am.ount of $2,036.22,
including an "IT Surcharge" $60.27 as a con diti o n to re place e ighty feet of ex isting City curbs, sidewalks.
driveway entries, utility boxes, street tree, street tree grates specified by the City, etc. The sidewalk must
be constructed to a s pecial "Mission" style requiring tile and expensive con struction features .
(2) The Conditions of Approval (ARCH-1236-2017 (679 Monterey)) No. 13 directs me as
the owner to contact t he C ity Engi ne erin g Deve lopm en t Review Division regard ing funding fo r a new
fixture described as ''decorative pedestrian li ghting fixtu res". My understanding has been that when
ins talling t he requ ired curbs, gutte rs, sidewalks (Downtown Mission standard), street tree, etc., we w ill
insta l l a new street l ight box, base and bolts, ready for the City to remove the existing li ght standard and
attach the "deco rat ive" li ght fi xture. Within the past t hi rty days, the City is requiring that I pay for a n
expens ive decorati ve li ght fixt ure , esti mated to cost approxim ately $12,000.
If app licable due to lack of 66020 (d) (1) not ice , Section 66020 (a) requi res th at I t en der "any
required payment in full or providi ng satisfactory evidence of arrangements to pay the fee when due or
ensure performance of the conditions necessary to mee t the requirements of the impositi o n." I am after
com p letin g t he service of this le tter, goin g to pay the fee under protest.
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CITY COUNC IL
Apr il 24 , 2019
Page 3
If appl icabl e due to lack of 66020 (d) (1) notice, Section 66020(a)(2)(A) requires that I state that
"the required payment is tendered" under protest.
Jf app licabl e due to lac k of 66020 (d)( I) noti ce, Sec ti on 66020(a)(2) (B) requi res that I inform
this Council ("governi ng body of the entity") of the "factual elements of th e dispute and the legal theory
fo rm in g the basis for the protest.
Regarding th e encroach me nt permit fee. the factua l elements of the dispute and legal theory
forming th e basis for the protest are as fol lows: As ex pla in ed in correspond ence to the Community
Development Department, August 15 , 2019, I ha ve already paid $40,384.39 in fees related to a 90 I
square foot bui ld ing on the site, and other fees of rec ord to repair the foundati on for a 102 year old
historic house on the s it e. (copy attached) The con struc tion at my expense of so mewhere between
$40.000 and $50,000 to replace 80 feet of City/public sidewalks with a very expensive "Mission style"
s idewalks (with til es, colored conc rete , etc. etc.), and replace the only street li ght on th e bloc k at an
additional ex pense of ap proxima te ly $1 2,000, which ben efits an adjacent City pa rkin g lot, the City streets
an d sidewalks on both sides of Monterey St. The encroachment fee, on to p of these expensive
improvements whi ch are to be owned solely by the City are confiscatory, violate due process, constitu te a
tak in g of private property without just compensation, a re not suppo1ied by a rational nexus, rough
proporti o na lity, vio late due process, und er the United States and Califo rni a Co nstitution s. ft is
fu nd amenta ll y arbitrary, cap ri cious, and without an y rational basis to charge a fee to a property owner
who is already contributing di sproportionate to City through the construction o f significan t and costly
public imp rove ment s.
Regarding the requirem e nt to rep lace an existing street light which is the only one on this side of
Monterey Street with a new and expensive decorative li ght fixture, despite such a req ui rement not having
been imp osed on th e next door restorati on of the Leitche r Hou se, is inconsi ste nt with th e language of the
co ndi tion of approval wh ic h does not expressly requi re that th e property owner pay for the new decorative
li gh t pole, and direct s the property owner to contact the City Engineering Review Section about publi c
fu nding for the fix ture . (See Correspondence of March 12, 2020, attached and incorporated.) The
interpretation of th e cond ition as req uirin g private prop e rty owner paying for the new decorative li gh t
fixture in the City s idewalk, adjacent to a City pa rkin g lot, and benefiting th e public sidewalks on each
s ide of Monterey St., exceeds the language of the condition , is confiscatory, violates d ue process,
co nstitute a taking of private property without just compensation , is not supported by a rational nexu s,
rough proportional ity , v iolate due process, under th e United States a nd California Con stitutions . It is
fu ndame nta ll y arbitra ry, capricious, and without any rat ional basis to charge a fee to a property ow ner
who is already contri buting dispro portionate to City thr ough the construction of significant and costly
public impro ve ments. The condition references a Street Lighting Di strict which does not exist as an
ass essment or finan c ia ll y fund ed public improvement district. Afte r filing a Publ ic Rec ords Act request,
the re is no ev idenc e that the City has ever spent fund s on the de corative li gh t fixtures in the Dow ntow n
Core.
Due to the Cov id-19 she lte r in pl ace orders, thi s Notice is se rved by mai l and attached to emails
to the C ity's Public Works Departmen t.
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CITY COUN CIL
April 24, 2019
Page 3
Cc: Engineering Development Review Division
Community Development Department
Enclosures
C ity of San Luis Obispo
919 Palm St.
San Luis Obispo, CA 93401-3218
(via email attachment)
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Tl!:LEPHO NI!: 1805) 541·6601
l"AC 5 1MILE 1805) 541-6640
LAW OFFICES
WILLIAM S. WALT E R
A PROF"ESSIONAL CORPORATION
T HE BELLO HOU51!:
6 79 MONTE REY 5TRE:ET
SA N LUI S OB ISPO, CALIFORNIA 93401
March 12, 2020
VIA FACSIMILE (805-781 -7170) AND USPS
Eng in eerin g Deve lopment Rev iew Divisi on
Co mmunity Deve lopm e nt Depa1t me nt
C ity of San Luis Ob ispo
919 Palm St.
San Luis Obi s po , CA 93401-3218
!!:MAI L
WWALTl!:R@TCS N .Nl!:T
RE: New Deck and Fo undati on Repair Permit: BLDG l 143-201 8, 679 Monterey St.
San Lu is Obispo , CA 9340 I
Dear Development Review Di v ision :
The Cond ition s of Approva l (AR CH-1236-2 017 (679 Monterey)) No. 13 directs me as the owner
to contact the City Engin eering Devel opment Review Di vis ion rega rding fun ding for a new fixt ure
described as .. decorative pedestrian light ing fixtures". My understandin g is that wh e n in stalling th e
requir ed c urb s, g utters, s idewalks (Downtown Mi ss ion standard), street tree, etc .. we w ill in sta ll a new
street light box , base and bolts, ready for the City to remove the existi ng li ght standard and attach the
"dec orative " li ght fixture.
Please let me know who my con tracto r can coordi nate with on this aspect of th e wo rk.
Tha nk yo u for yo ur help.
ER
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LAW Of"F'ICES
WILLIAM S. WALTER
TELE PHONE 1805) 541•6601
F"ACSIMIL£ 1805 ) 541-6640
A PROFESSIONAL CORPORATION
THE BELLO HOUSE
679 MONTEREY STREET
SAN LUIS OBISPO, CALIFORNIA 93401
August 15, 2019
VIA HAND DELIVERY
Michel Cod ron. Director
Community Developm ent Department
City of San Luis Obispo , c/o Van essa Nichols
919 Palm St.
San Lu is Obispo, CA 93401-3218
EMAIL
WWALTER@TCSN.NET
R E: NOTICE OF PAYING PERMIT FEES UNDER RES ERVATION OF RI G HTS.
677 Monterey St., SLO, BLDG-3031-2019; PUBLIC RECORDS ACT REQUEST
Dear Mr Codron:
Concurrently with delivery of this letter, T am delivering Check No. I 071, payable to the C ity of
San Lui s Obi s po, in the amount of $40 ,3 84.39, for a 90 I square foot buildin g. I am paying this a mount
with a full reservation of rights t o contest the amount and justification of the fe es . T he amo un t is
inco nsiste nt with hand-o uts and figures previously given to me. Attached is the itemization provided by
the City for this payment. The items highlighted in blue were disclosed and hig hlighted by hand at the
county on a separate handout. The other items are undi sclosed or otherwise undocumented for my
records. The unreasonable delays have bee n very expensive, we have been waiting since June to pour
foundations, ha ving completed archeological monito ring, soils testing and compactjon and preparations
und er a separate permit. Further delays arguing about these amounts wou ld cause even more damage and
in o rder to mi t igate those damages, I am making this payment under a full reservation of ri g hts and under
protest.-
Could you provide th e source d ocuments for each of the items in the billing not highlighted in
blue, including authorizing ordinances, tim e records, and any and all other documents which formed the
basis of the charges. This request is made both as an appli cation e ntitled to the information , but also
und er the Californ ia Public Records Act. The abuses of overly long plan check process, especially the
basel ess, repet itious, unreasonable, untime ly, third plan check, were mind-bogg ling, and so mething I will
call to the City C ouncil 's attention with some positive s uggestions at a comi ng public comment pe ri od.
VebWr~
WILLIA~WALTER
Enclosures
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Bulldlng & Safety Division• 919 Palm Street• San Luis Obispo, CA 93401-32 18
BUILDING PERMIT
New Single Family
BLDG""3031 -2019
Issuance Date: NOT l~SUED
Project Address: 617 Monterey St Assessor's Parcel Number: Q02;421 ·Q21
Unit or Suite{s):
Project Description: NEW SINGLE FAMILY j §EDRQQM COTTAGE.:
90SSQ, FT.
Legal Description:
Architect: Paragon Design
Thomas Brajkovich
Business: (805) 541-9486
Owner: WALTER WILLIAMS TRUST AGREEMENT
Fire Sprinklers: Provided Stories .1.QQ Code Year: ZQ.1.§ Dwelllng Units : 1 Motel Rooms:
Census: 101 -Single Family Residence Construction Type: V-B
Occupancy: Residentlal, 1 and 2 family dwellings (R-3)
Dimensions Valuation
Catego2'.: SQFT: Group Type Sq. Ft Factor Valuation
Manual $78,000.00
Fees Payments
Fee Name Fee Amount Date ·-·-.... Receipt # -··--Amount ------···~·-... ···----··---Police Citywide Base fee (SF) ~o:, $0.00 SMIP (Residential) $10.00 Total Paid: $0.00 C&D Recycling -UTIL $64.23
ConsoNdated Plan Check Fees $2,194.42
DEPOSIT: RESIDENTIAL REVIEW· MAJOR -PLAN $889.13
Balcony/Porch/Deck • BLDG $1,076.77
Post Construction Raq I Stormwater SF res -ENG $140.05
Single Family Residential Flnal Inspection -ENG $140.05
Green Building Fee $4.00
Build ing Permit Review -Planning $382.00
Stormwater -Moderate Project • BLDG $1,804.40
Parkland in Heu (SF) "i.3,,1fil.p0
Building Perm it Review -Planning $47.75
WW Residential Unit 800 <> 1200 sqft i.Jl)iil.UO-:-"
Consolidated Inspection Fees $2,222.73
Rev of Mitigation Measures, Cond, and TIF's -PW $222.48
Meter Service: Install (.58"-1") $128.47
Administrative Fee $238.37
Single Family Residential -ENG $280.11
Final lnspectiQn • SF Residential -PW $229.48
Meter Cost (.75") $198.00
Construction Tax -BLDG $150.00
W Residential Unit 800 <> 1200 sqft ~9'.Z:~
Fire Citywide Base fee (SF) ._i56lT.'0 0-
Building Permit Review • Planning $191.00
TIF Citywide Base fee (SF) 700 <> 1400 $8 .3~.10~
IT Surcharge $269.67
Park Development Impact Fee (SF) ~k880 ;00 .:;
Total Fees: $42,578.81
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Transportation Transportation
Land Use Category (Citywide)' (San Luis Ranch
Sub area)'
RESIDENTIAL L ~ ..... ~~ --Single Family (per dwelling unit)
:!:1.400 SQ. ft . (fees are per uni!) .jp $9,828 .00
35~~ 700-1,399 SQ . ft . (fees are per sq . ft.) (R $7.02
$7,623 .00
$5.4 4
s 699 SQ. ft. (fees are per un it) $4.914.00 $3,811.00
Multifamily Condominium (per dwelling un it)
:!:1,100 s q. ft. (fees are per unit) $7.636 .00 $5 ,922 .00
550 -1,099 sq . ft. (fees are per sq . ft.) $6.94 $5.38
s549 SQ. ft. (lees are per Ullll) $3,81 8.00 $2 ,961.00
Multifamily Apartment (per dwelling unit)
<! 1, 100 SQ. It. (fees are per unil) $7,636.00 $5,922.00
550 -1,099 sq. It. (fees are per SQ . ft.) $6.94 $5.38
s 549 sq. ft. (fees arc per unit) $3,818 .00 $2,961.00
l
NON -RES I DENTIAL
Office (per sq. ft.) $9.47 57.36
Service (per sq. ft.) $9.47 $7.36
Retail (pe r SQ. ft.) $1 3.75 $10.69
Parkland
Transportation In-Lieu
(Citywid e,
(LOVR Subarea)' exceptS•n
Luis Ran ch
Subaret)'
$8,861.00 $3,151.00
$6 .33 $3,151 .00
$4,4 30.00 $3.151.00
$6,884 .00 $2,269 .00
$6 .26 $2 ,269 .00
$3,442 .00 $2,269.00
$6.884 .00 $1,457.00
S626 $1,457.00
$3 ,4 42.00 $1.457.00
S8 .55
$8.55
S12.42
Park
Development Police Fire (Citywide, except {Cltywld e) (Citywide) Sin Luis Ranch
Subarea)'
Land Use Category Water (Cit ywid e) Wastewater (Citywide)
RESIDENTIAL
$2,880.00 $668.00 $569.0 0
Single Family & Multifamily
(per dwelling unit size, fees are per unit)
$2,880.0 0 $66 8.00 $569 .00 ;i:1,201 SQ . ft. $1 1,872.0 0 $10,721.00
$2,880 .00 $668 .00 $5 69.00 801-1 ,200 sq. ft. $9,497.60 $8.577.00
451-800 sq. ft. $8,310.40 $7,505.00
$2,074.0 0 $481 .00 $41 0.00
s 450sq. ft . $3,561.60 $3,216.00
$2 .074 .00 $481.00 $410.00
Mobile/Manufactured Home (per dwelling unit)
$2.074.00 $4 81.00 $410.00
Mobile/Man ufactured
Home $7,123 .20 $6 ,433.00
$2,074.00 $481.00 $410 .00
$2,074 .00 $48 100 $410 .00 Land Use Category Water (Citywid e) Wastewater (Citywid e)
$2,074.00 $481.00 $4 10.00 NON-RESIDENTIAL (BY METER SIZE)
W meter $11 ,872 .0 0 $10.721.00
$0.44 $0 .38 1· meter $20,182 .00 $18 ,226.00
$0 .24 $0.21 1.5" meter $40,36 5.00 $36 ,451.00
$0.24 $0.21 2" meter $64 ,109.00 $57,893 .00
Industrial (per SQ . ft.) $5.82 $4 .52 $5.25 N/A $0 .18 $0.15
3" meter $127,030.00 $114,715 .00
Institu tional (per SQ. It.) $11 .14 $8.66 $10.06
Lodgi ng (per room) $3,95 8.00 $3,075 .00 $3,575 .00
Specialty (per ADT)I $605.20 $469.38 $54 5.63
-------
,., fh"r •vt:.'1G. .... ,-..... -,..,.rart ,"9-C:o\tll><it•tb:~t tfl~,...,,1111, .. ,~,-u.i; 11""1'°'Jt,;ect f~8)lad1-l,,,.,Jt 1 ,,~, 3 .. :-,,.,-.""1•·!(-;1r1;ar~
f1• Tl1• w,,,.~rt"hr • ,-ara pr,"'-e.<j t'g~"(j ('4't fiv :Mo Q!""'Q"at"'W" a n•11• •,•,.th '!"' 1•1oP C':•lv 1r 1hv,1'f• q .,.. t • ,.S i:.:in'"h aod l()l; O!ri.it Ve~v f1nad 5~a:e3,\
.,.,, Th•", ... ,a .:t'!I'( ~t pQc' ",..,,~ o,.,,,, l H .. (/\r'IT) t ~•:i fl 1i:i,, t 1~;-[tp· c-J ,,, """rec.vftni•o l d~·.·c.11"\"'u.,..! u .:::::c 1'\!11 ~'"' rir! 1:f11M11'1~,:t ;n t.he l9 11~u -co
.rat•t,--"\ t-Jf ar• '~I ,,, •1 •n ,ho r .,, "'' <::0
, Lit•"'> Ob "f'IO r.vr-:1 IJa:.a ~It'" <:tv,e,-'::['l)"O'I,.. ... !' tat,;A ~ ... /? (/ ,,()
$0 .24 $0 .2 1
4" meter $198.262 .00 $179.041 .00
$1 33.00 $113 .00
Req ui res Requ ires
Calcul ation Calcu lation
6" meter $396.525 .00 $358,081.00
I L
f1l fo., '1~:;,u•".:ict ~ar.-tand •n-•eo ff'l'l:t3 ait"l'C'.111!111 t •. •"' 0.1 -tv. At't ,c. ·"~·~ f:s-. , ·•.,...:11· _al "''Ml_...,, -1"'1 r:,, ... fb~"'t"f'"',:.-.o• • -r1·· r*1=1 c.
au-J10t,zlld by m•t-,M,OJ1 1(,!t f'.e,, Al t I.C f10'!' fa1""!, ;!j.f\d,..-u'' f~·n \ r=~-,,, ,jitl j C(:S! ('• t ~C-"~1 ·" 11, •• ,.,<:,r n ,t 1. fl, 3 ',, ,r-1, :'!' ~~' l • '~?·Y-..
a r~._ , ..... , m~t D1tt l1 Hf'l-:1 re,cr~2tlt0n Ol>'ig,:1 1 ,...,,~ p~r 1h~ ,~ ... , ~, llP r ''C'.tt''-'> t:;r Pc.,l'C ~,~,,~ e•1!'.f CH ('I.a. ·e,!or.,ir~1,t IIQr#f· ,.,,.....< --
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BILLING CONTACT
WALTE R WILLIAMS TRUST AGREEMENT
1504 Broad St
San Lu is O bispo, Ca 93401
REFERENCE NUMBER FEE NAME
BLDG-3031 -2019 Administrative Fee
Balcony/Porch/Deck -BLDG
Bu ilding Pe rmit Review -Planning
Building Pe rmit Rev iew· Planning
Building Perm it Review· Planning
C&O Recycli ng • UTIL
Cons o li dated Inspection Fees
Con struction Tax • BLDG
DEPOSIT: RESIDENT IAL REVIEW-MAJOR -PLAN
Fin a l Inspection • SF Residential • PW
Fire Citywid e Base fee (SF)
Green Building Fee
IT Surcharge
Meter Cost (.75")
Meter Service : Insta ll (.5 8"-1")
Park Development Impact Fee (SF)
Parkland in lieu (SF)
Police Citywide Base fee (SF)
Post Construction Req I Stormwater SF res • ENG
Rev of Mitigation Measures, Co nd, and TIF's -PW
Sing le Family Re sidential -ENG
Sing le Family Resid ential Final Inspection -ENG
SMIP (Residential)
Stormwater -Moderate Project -BLDG
TI F Citywide Base fee (SF) 700 <> 1400
W Reside ntial Unit 800 <> 1200 sq ft
WW Residential Unit 800 <> 1200 sqft
August 15, 2019
TRANSACTION
TYPE
Fee Payment
Fee Payment
Fee Payment
Fe e Payment
Fee Payment
Fee Payment
Fee Payment
Fee Payment
Fee Payment
Fee Payment
Fee Payment
Fe e Payment
Fe e Payment
Fee Payment
Fe e Payment
Fe e Payment
Fee Payment
Fee Payment
Fee Pa yment
Fee Payment
Fee Payment
Fee Paymen t
Fe e Payment
Fee Payment
Fe e Payment
Fee Payment
Fee Payment
PAYMENT
METHOD
Check #1071
Check#1071
Check#1 071
Ch eck #1071
Ch eck #1071
Check #1 071
Check#1071
Ch eck #1 071
Check #1071
Check #1 071
Ch eck#1071
C heck #1071
Ch eck #1071
C heck#1071
Check #1071
Ch eck #1071
Check #107 1
Check#1071
Ch eck #1071
Ch eck #1071
Check #1071
Check #1071
Check #1071
Check #1071
Check #1071
Ch eck#1071
Check #1071
SUB TOTAL
TOTAL
AMOUNT PAID
$238.37
$1,076.77
$19 1.00
$47.75
$382.00
$64.23
$2,222.73
$150 .00
$889.13
$229.48
$569.00
$4.00
$269.67
$1 98.00
$128.4 7
$2,880.00
$3, 151 .00
5668.00
$140.05
$2 22 .48
$280.11
$140.05
$10.00
$1,804.40
$6,353.10
$9,497.60
$8,577.00
$40 ,384.39
$40,384.39
Page 1 of 1
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Packet Page 238
Building & Safety Division• 919 Palm Street• Sa n Luis Obispo, CA 93401-3218
BUILDING PERMIT
New Single Family
BLDG-3031-2019
Issuance Date: NOT !§SUED
Project Address: 677 Monterev St Assessor's Parcel Number: 002-421-021
Unit or Suite(s):
Project Description: NEW §INGLE FAMILY 1 BEDROOM COTTAGE -
905 SQ. FT .
Legal Description:
Architect: Paragon Design
Thomas Brajkovich
Business: (805 ) 541 -9486
Owner: WALTER WILLIAMS TRUST AGREEMENT
Fire Sprinklers: Provided Stories 1.00 CodeYear: ~
Census: 101 -Single Family Residence
Occupancy: Residential, 1 and 2 family dwellings (R-3)
Dimensions
Category: SOFT: Group Type
Manual
Fees
Fee Name Fee Amount
Police Citywide Base fee (SF) ~oo;r
SMlP (Res idential) $10.00
C&D Recycling • UTIL $64.23
Consolidated Plan Check Fees $2,194.42
DEPOSIT: RESIDENTIAL REVIEW -MAJOR .PLAN $889.13
Balcony/PorchfDeck -BLDG $1,076.77
Post Construction Req f Stormwater SF res • ENG $140.05
Single Family Residential Final Inspection -ENG $140.05
Green Building Fee $4.00
Building Permit Review -Planning $382.00
Stormwater -Moderate Project -BLDG $1,804.40
Parkland in lieu (SF) $3;151 .60
Buil ding Permit Revi ew -Pla nning $47.75
WW Residential Unit 800 <> 1200 sqft 1s .. s:z:z-1io
consolidated I nspection Fees $2,222.73
Rev of Mitigation Measures, Cond, and Tl F's -PW $222.48
Meter Service: I nstall (.58"-1'') $128.47
Administrative Fee $238.37
Single Family Residential -ENG $280.11
Final lnspectiQn -SF Residential -PW $229.48
Meter Cost (.75") $198.00
Construction Tax -BLDG $150.00
W Residential Unit 800 <> 1200 sqft . ,il9T.60
Fire Citywide Base fee (SF) $569:-oo--
Building Permit Review· Planning $191 .00
TIF Citywide Base fee (SF) 700 <> 1400 $6,353!10.:J'
IT Surcl1arge $269.67
Park Development Impact Fee (SF) $2_,880:00 .;
Total Fees: $42,578.81
Dwelllng Units: 1 Motel Rooms:
Construction Type: V-B
Valuation
Sq. Ft Factor Valuation
$78,000.00
Payments
Date Receipt # Amount
$0.00
Total Paid: $0.00
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Packet Page 239
RECEIPT (TRC-027045-04-24-2020)
BILLING CONTACT
BILL WALTER
679 Monterey St
San Luis Obispo, Ca 93401
REFERENCE NUMBER PAYMENT
METHODFEE NAME TRANSACTION
TYPE AMOUNT PAID
ENCR-0780-2020 Credit CardFee Payment $1,975.95Flatwork
Credit CardFee Payment $60.27IT Surcharge
SUB TOTAL $2,036.22
TOTAL $2,036.22
May 12, 2020 Page 1 of 1
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Department Name: Public Works
Cost Center: 5010
For Agenda of: June 16, 2020
Placement: Public Hearing
Estimated Time: 20 Minutes
FROM: Matt Horn, Acting Public Works Director
Prepared By: Luke Schwartz, Transportation Manager
SUBJECT: PUBLIC HEARING - CEQA TRANSPORTATION IMPACT THRESHOLDS
UPDATE: TRANSITION FROM AUTO LEVEL OF SERVICE (LOS) TO
VEHICLE MILES TRAVELED (VMT)
RECOMMENDATION
1. Adopt a resolution (Attachment A) to replace Level of Service (LOS) with Vehicle Miles
Traveled (VMT) as the City’s performance measure for CEQA analysis of transportation
impacts; and
2. Adopt a resolution (Attachment B) approving revisions to the City’s Multimodal
Transportation Impact Study Guidelines.
REPORT-IN-BRIEF
California Senate Bill 743 (SB 743) was adopted in 2013 and changes the way that transportation
impacts will now be measured under the California Environmental Quality Act (CEQA). Under
SB 743, vehicle miles traveled (VMT) would replace level of service (LOS) or other measures of
vehicle congestion or delay as the primary metric for evaluation transportation impacts under
CEQA. The shift to VMT-based performance measures brings the CEQA process in line with
other State measures to promote the reduction of greenhouse gas emissions by encouraging land
use and transportation investments that reduce reliance on single-occupant vehicle travel,
develop multimodal transportation networks, provide a diversity of land uses, and incentivize
development in locations where residents, employees and visitors have more ef ficient access to
housing, jobs and destinations.
The California Governor’s Office of Planning and Research (OPR) published final technical
guidelines for implementing SB 743 in December of 2018. These guidelines require that local
agencies begin implementing SB 743 by July 2020 but provide lead agencies with the discretion
to develop and adopt their own VMT thresholds or rely on thresholds recommended by OPR or
other regional agencies. City staff has monitored the development of SB 743 and technical
guidance provided by OPR. Based on this guidance, staff has utilized the City’s Travel Demand
Model (SLO TDM) to develop recommended VMT thresholds for use in CEQA analysis of land
use and transportation projects located within the City. In turn, staff has upd ated the City
Multimodal Transportation Study Guidelines for consistency with the new analysis requirements
introduced in SB 743. The purpose of this report is to provide additional background discussion
regarding this transition, present the recommended VMT thresholds and updated Multimodal
Transportation Impact Study Guidelines for Council consideration and potential adoption.
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DISCUSSION
Background
In 2013, Governor Brown signed California Senate Bill (SB) 743 into law, which revolutionized
the way that transportation impacts will now be measured under the California Environmental
Quality Act (CEQA). Under SB 743, the California Office of Planning and Research (OPR) was
tasked with developing new guidelines for evaluating transportation impacts under CEQA using
methods that no longer focus on measures of automobile delay and congestion—historically
measured using a metric called auto level of service (LOS). Instead, alternate performance
measures were to be developed to promote the reduction of greenhouse gas emissions, the
development of multimodal transportation networks, and diversity of land uses. Since 2014, the
OPR has identified vehicle miles traveled (VMT) as the most appropriate metric to replace LOS
as the primary measure of transportation impacts. In December 2018, the State finalized updates
to the CEQA guidelines to reflect the transition from LOS to VMT and required lead agencies to
adopt and utilize a VMT-based performance measures for CEQA analysis by July 1, 2020.
The purpose of this report is to:
a) Provide more background on how VMT is measured and why VMT-based performance
measures are recommended for CEQA analysis.
b) Present recommended VMT-based thresholds of significance for Council consideration
and potential adoption for use in CEQA analysis of projects within the City of San Luis
Obispo.
c) Describe how the City will evaluate land use and transportation projects using VMT -
based metrics for CEQA analysis, and existing multi-modal LOS thresholds for General
Plan conformity analysis.
d) Present the City’s updated Multimodal Transportation Impact Study Guidelines for
Council consideration and potential adoption.
LOS vs. VMT: Definitions, Benefits and Disadvantages
Benefits and Disadvantages of LOS
Traffic level of service (LOS) is a metric used to qualitatively describe the operating conditions
of a road or intersection from a driver’s perspective based on speed, travel time, delay or other
measures of congestion. LOS is reported using one of six letter designations, ranging from LOS
A to F, with LOS A representing the “best” operation conditions with little delay, and LOS F
representing the “worst” conditions with significant delays/congestion. LOS analysis and
mitigation measures would typically support strategies that encourage roadway capacity
expansion to encourage faster automobile travel times, reduced congestion and delays for drivers
at peak travel times. A LOS-centric approach to evaluating transportation impacts has
historically resulted in increased use of single-occupant vehicle travel, a greater propensity for
sprawling development in low-density greenfield areas, and land use and transportation
investments that increase the rate of greenhouse gas emissions. Per the California OPR, other
problems with LOS as a primary measure of transpor tation impacts include:
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LOS A
LOS F
1. It inhibits infill development, punishing “last-in” development for localized congestion,
pushing development outward and further from key destinations and multimodal
transportation options.
2. It “solves” local congestion but exacerbates regional congestion.
3. It measures auto mobility, not access or person-mobility.
4. Often leads to more road widening and construction than local agencies can afford to build
and/or maintain.
5. Optimal LOS for motor vehicles often inhibits active transportation and transit modes.
While the disadvantages of using auto LOS as the sole metric for transportation impact analysis
are well-documented, LOS can be a useful informational tool for guiding transportation system
planning decisions and access management designs. For example, there is value in using LOS to
evaluate when a stop-controlled intersection should be upgraded to a traffic signal or roundabout,
for communicating projected levels of congestion to community members, and for evaluating
whether queuing may spill back from a turn pocket and increase potential for rear-end collisions.
Benefits and Disadvantages of VMT
VMT is a measurement of the amount of travel for all vehicles in a defined area, such as within
the city or county boundaries. It represents the total number of vehicle trips multiplied by the
total distance each vehicle travels. The use of VMT is intended to guide analysis of development
and transportation projects in a manner that encourages growth and investment in travel -efficient
locations where proximity to other key destinations, services and transportation options results in
shorter trips and less greenhouse gas emissions. Many agencies are already familiar with
accounting for VMT in connection with long-range planning or as part of CEQA analysis for
evaluation of greenhouse gas emissions or energy impacts. VMT is typically calculated using a
local or regional travel demand forecasting model.
Key benefits of utilizing VMT as a primary metric for analyzing transportation impacts i ncludes:
1. It removes a key barrier to infill and transit-oriented development.
2. It incentivizes development and investment in areas with greater access to existing jobs,
services and transportation infrastructure. Incentivizes projects that positively affect existing
housing-jobs imbalances.
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3. VMT-based analysis and mitigation strategies typically lead to less roadway expansion and
widening, reducing infrastructure capital and maintenance costs for local agencies.
4. More effectively assesses contributions to regional congestion.
5. Encourages projects that improve access to active transportation and transit.
6. Supports overarching Statewide initiative to reduce greenhouse gas emissions, which helps
combat climate change, while reducing impacts to air quality and community health.
The primary disadvantages of VMT-based analyses are that (a) they may not provide all of the
information desired by local officials for local system planning and operations, and (b) VMT-
based performance measures may be more difficult to communicate to community members and
decision-makers. For example, project-level VMT analysis for a particular land use proposal may
indicate a net reduction to VMT per capita, but that information alone may not indicate when a
traffic signal needs to be installed for local access, or when increasing roadway congestion
warrants other system improvements to retain transit system performance. A local resident may
be able to comprehend what a change from auto LOS A to LOS F looks like from a driver’s
perspective, where it is much more difficult to explain how an increase/decrease in VMT would
be perceived to a typical road user. While local agencies are required to adopt and utilize a VMT
threshold for CEQA transportation analysis by July 1, 2020, they may still require LOS analysis
for local-level planning and/or general plan compliance purposes.
Recommended VMT Impact Thresholds – Development Projects
OPR Guidance
In December 2018, the California OPR released its Technical Advisory on Evaluating
Transportation Impacts in CEQA. This document is provided for reference in the attachments.
OPR’s Technical Advisory recommended the following thresholds of significance for land use
projects:
Table 1: OPR Guidance on Setting VMT Thresholds for Development Projects
Project Type OPR Recommended Threshold
Residential (VMT per capita) - Project VMT that exceeds a level 15% below the existing VMT per
capita may indicate a significant transportation impact. Existing VMT per capita may be
measured as regional or as city VMT per capita.
Office (VMT per employee) - Project VMT that exceeds a level 15% below the existing
regional VMT per employee may indicate a significant transportation impact.
Retail (Net VMT) - A net increase in total area VMT may indicate a significant transportation
impact. Because local-serving retail development tends to shorten trips and reduce
VMT, lead agencies generally may presume such development creates a less-than-
significant transportation impact. Regional-serving retail development may lead to
substitution of shorter trips for longer ones, which may create a significant impact.
Where such development is found to decrease total are VMT, lead agencies should
consider the impact to be less-than-significant.
Mixed-Use Local agencies should evaluate each component of a mixed-use project independently
and apply the above significance threshold for each land use type included.
Alternatively, a lead agency may consider only the project’s dominant use.
Other Lead agencies may apply adopted residential, office or retail VMT thresholds to other
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Development
Projects
development projects that have predominant operating characteristics similar to those
uses. Alternately, lead agencies may use more location-specific information to develop
specific thresholds for other land use types. In doing so, lead agencies should consider
the information described in the CEQA Guidelines (Section 15064.7) on the
development of thresholds of significance.
Recommended City Thresholds
Per OPR guidance, models and methodologies used to develop VMT thresholds and conduct
project-level VMT analysis should be consistent (i.e. the same tool used to calculate VMT
thresholds should be used to calculate project-level VMT). The City of San Luis Obispo Travel
Demand Model (SLO TDM) is the preferred tool for developing project-level traffic volume and
VMT projections within the City, as the SLO TDM includes more refined land use data and a
more sophisticated multimodal network than other available tools, such as the SLOCOG
Regional Travel Demand Model (RTDM). For this reason, the SLO TDM was used to develop
VMT-based thresholds of significance for analysis of CEQA projects located within the City.
With technical support from two of the City’s on-call traffic engineering consultants, GHD and
Cambridge Systematics, City staff used the SLO TDM to extract existing (base year model is
calibrated to Year 2016) VMT data for Residential and Office land uses. See Attachment D
(Baseline VMT Methodology & Estimation Memorandum, GHD) for greater detail regarding the
methodology used in extracting model VMT data and developing recommended thresholds.
Figure 1 below illustrates the existing baseline (2016) Daily VMT averages for both the citywide
and regional (county) averages.
8.51
17.98
16.76
14.65
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
20.00
Residential (Daily VMT/capita)Office (Daily VMT/employee)VMT per capita/employeeCity Average Regional (County) Average
Figure 1: Existing (2016) Residential and Office VMT
As shown in Figure 1, the SLO TDM data indicates that average existing Residential VMT per
capita for land uses within the City is roughly 50% lower than average regional (County)
Residential VMT per capita. Meanwhile, average existing Office, or work based VMT, per
employee for land uses within the City is similar to the regional (Countywide) average.
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This relationship is as expected and consistent with an overall jobs-to-housing imbalance within
the City, where work-based land uses within the City draw longer commute trips from
throughout the County, while residential trips generated within the City are generally captured
within and around the City.
Based on OPR’s Technical Advisory and existing baseline VMT data extracted from the SLO
TDM, staff has developed the following VMT thresholds for analysis of development projects
within the City:
Table 2: City Recommended VMT Thresholds
Project Type Evaluation Criteria Threshold
Residential 15% below baseline regional (County) average Residential
VMT per capita. Applies to single-family, multi-family and
mobile homes
14.25 VMT per capita
Office / Business
Park / Industrial
/ Warehousing /
Manufacturing
15% below existing regional (County) average Work VMT
per employee.
12.45 VMT per employee
Retail /
Hotel /
School
Net increase in total regional (County) VMT. Small local-
serving retail may be presumed to cause less-than-
significant impacts. Larger, regional-serving retail will
require quantitative analysis using the SLO TDM and
project-specific information, such as market studies or
analysis of anticipated customer travel behavior.
No set threshold, increase in
total VMT would trigger
impact
Mixed-Use Evaluate each component of a mixed-use project
independently, applying significance threshold for each
land use type. Alternately, the City may choose to analyze
VMT for only the dominant use. Analysis should take
credit for internal capture between uses.
Apply Residential, Office &
Retail Thresholds above
Redevelopment
Projects
Where a development replaces an existing VMT-generation
land use, if the replacement total VMT leads to a net
overall decrease in VMT, the project is assumed to have a
less-than-significant impact. If net new VMT exceeds the
existing land use, apply the thresholds described above.
No set threshold
Other
Development
Projects
City may apply adopted residential, office or retail VMT
thresholds to other development projects that have
predominant operating characteristics similar to those uses.
Alternately, City may use more location-specific
information to develop specific thresholds for other land
use types. In doing so, analysis should consider the
information described in the CEQA Guidelines (Section
15064.7) on the development of thresholds of significance.
No set threshold. Evaluated
on case-by-case basis based
on OPR guidance
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As shown in Table 2, the recommended VMT thresholds for Residential and Office/Work -based
uses are based on the Regional (County) baseline VMT minus 15%. While the OPR guidance
provides lead agencies the discretion to set thresholds based on existing City or Regional
(County) VMT per capita/employee, the guidance generally recommends using the regional
average for setting thresholds, especially where local VMT is inher ently low. One of the primary
objectives of SB 743 is to incentivize development—particularly new housing—to occur in job-
rich areas where VMT is already low due to land use patterns and access to transportation
options. OPR suggests that lead agencies take a regional viewpoint when establishing VMT
thresholds, avoiding overly-stringent targets in travel-efficient locations, such as the City of San
Luis Obispo, which may encourage development to shift to less travel-efficient locations
elsewhere in the County.
Recommended VMT Impact Thresholds – Transportation Projects
Per the OPR Technical Advisory, transportation projects that are expected to reduce or have no
impact on VMT should be presumed to have a less -than-significant transportation impact. Such
projects include, but are not limited to, road diets (traffic lane reductions/narrowing),
roundabouts, roadway rehabilitation and maintenance, safety improvements that do not
substantially increase auto capacity, installation or reconfiguration of lanes not f or through traffic
(addition of left/right turn lanes, etc.), timing of traffic signals, removal of on -street parking,
addition or enhancement of pedestrian, bicycle and transit facilities and services. Projects that
fall within these categories will not require a quantitative VMT analysis.
For transportation projects that increase auto capacity, such as addition of through lanes on
existing or new highways, which would likely lead to a measurable and substantial increase in
VMT, OPR recommends that lead agencies require quantitative analysis to calculate the amount
of additional vehicle travel anticipated, but have the discretion to determine the appropriate
thresholds of significance on a case-by-case basis consistent with CEQA Guidelines and
applicable technical guidance. For transportation projects that have already been evaluated for
VMT at a programmatic level, such as within a General Plan or Specific Plan, a lead agency may
tier from that analysis. For transportation projects located within the City that are anticipated to
increase vehicle travel, staff is recommending that VMT thresholds of significance be evaluated
on a case-by-case basis, while ensuring that the analysis addresses:
• Direct, indirect and cumulative effects of the transportation project, including potential
for induced demand (CEQA Guidelines, § 15064, subds. (d), (h))
• Near-term and long-term effects of the transportation project (CEQA Guidelines, §§
15063, subd. (a)(1), 15126.2, subd. (a))
• The transportation project’s consistency with state greenhouse gas reduction goals (Pub.
Resources Code, § 21099)34
• The impact of the transportation project on the development of multimodal transportation
networks (Pub. Resources Code, § 21099)
• The impact of the transportation project on the development of a diversity of land uses
(Pub. Resources Code, § 21099)
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VMT Screening Thresholds for Project Exemptions
Per OPR guidance, lead agencies may use screening thresholds to quickly identify when a
project can be assumed to result in a less-than-significant transportation impact without requiring
a detailed analysis. Based on OPR guidance, staff is recommending the following screening
criteria for project exemptions from focused VMT analysis as summarized in Table 3. Detailed
quantitative VMT analysis would be required for projects that do not meet these screening
criteria.
Table 3: City Recommended VMT Screening Criteria for Project Exemptions
Project Type OPR Recommended Threshold
Small
Development
Projects
Projects anticipated to generate less than 110 daily vehicle trips may be assumed to cause a
less-than-significant impact, unless substantial evidence indicates that a project would
generate a potentially significant level of VMT or create inconsistency with the SLOCOG
Sustainable Communities Strategy (SCS).
Residential &
Office/Work
Development
Projects1
Map-based screening may be used for projects that generate less than 100 peak hour vehicle
trips. Baseline VMT per capita/employee heat maps are developed based on data from the
SLO TDM, showing average VMT for residential and office/work-based on existing uses
within the City. Where proposed projects that generate less than 100 peak hour trips are
located within areas of the map with existing VMT at least 10% below adopted thresholds,
and are generally similar to existing uses within that area (i.e. density, mix of uses, access to
multimodal transportation), these projects can be assumed to cause a less-than-significant
transportation impacts.
Local Serving
Retail &
Public
Facilities
Retail development projects with less than or equal to 50,000 square feet of gross floor area
with reasonable justification that uses will be local-serving may be assumed to cause a less-
than-significant impact.
Similarly, local-serving public facilities, such as Police and Fire Stations, libraries,
neighborhood parks without sporting fields, etc., may be assumed to cause a less-than-
significant impact.
Affordable
Housing
Adding affordable housing to infill locations generally improves jobs-housing balance, in
turn shortening commutes and reducing VMT. A project consisting of a high percentage of
affordable housing (greater than 50%) may be assumed to cause a less-than-significant
impact on VMT if located within a low-VMT area per the City’s VMT screening maps1.
Other affordable housing projects, or mixed-use projects with affordable housing
components may be screened from detailed VMT analysis if supporting evidence is
provided demonstrating low VMT-generating characteristics of similar affordable housing
sites within the City.
Transit-
Oriented
Development2
Per CEQA Guidelines, residential, retail, office and mixed-use projects that are located
within a ½ mile of an existing major transit stop or an existing stop along a high -quality
transit corridor may be assumed to cause a less-than-significant impact on VMT (see Note 2
below). If project-specific or location-specific information indicates that the project would
still generate significant levels of VMT, focused VMT analysis may still be required. No
locations within the City of San Luis Obispo currently meet these transit service levels.
Notes:
1. See Attachment C for Draft VMT Screening Maps.
2. Per California Public Resources Code, a “major transit stop” is legally defined as a site containing an existing rail
station, a ferry terminal serviced by bus or rail transit, or the intersection of two or more major bus routes with a
frequency of 15 minutes or less during commute periods. A “high-quality transit corridor” refers to a corridor with
fixed-route bus service with frequencies of 1 minutes or less during peak commute hours.
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VMT Mitigation Strategies
The new CEQA Guidelines and OPR guidance identifies a series of potential mitigation
measures to address project-related VMT impacts. The list includes, but is not limited to:
• Development of a Transportation Demand Management Program (TDM).
• Improve or increase access to transit.
• Incorporate a mix of land uses to increase access to common goods and services, such as
groceries, neighborhood retail, schools and childcare services.
• Locate project in lower-VMT area of the City.
• Improve or increase access to active transportation facilities.
• Provide car-sharing, bike-sharing, ride-sharing, neighborhood electric vehicle charging
stations, or other on-site amenities to increase access and use of greenhouse gas reducing
transportation modes.
• Participate in an in-lieu fee program to fund City-wide improvements to sustainable
transportation modes.
LOS as a Local-Level Metric
As stated previously, while LOS or other measures of r oadway congestion are no longer
accepted as CEQA metrics for transportation analysis, local agencies may continue to require
LOS analysis as a local requirement for general plan conformity. Staff recommends that the City
continue to apply multimodal (auto, bike, pedestrian, transit) LOS analysis thresholds, as
established in the General Plan Circulation Element, for project-level analysis for general plan
consistency only. Project-level LOS analysis would be required consistent with the City’s
Multimodal Transportation Impact Study Guidelines, which require focused traffic analysis for
development projects that are anticipated to generate over 100 peak hour trips or where location -
specific considerations or operational concerns warrant detailed analysis.
By retaining LOS for non-CEQA analysis, future developments would continue to demonstrate
that they do not create traffic demands or conditions that are inconsistent with the multimodal
performance thresholds established in the Circulation Element. In turn, the City Council would
continue to have additional flexibility and discretion to make findings, approve or deny projects
based on general plan LOS requirements. Similarly, OPR recommends that project -level safety
concerns be address at a programmatic level outside of project-specific CEQA analysis. Staff
recommends that project-level safety analysis, including evaluation of intersection queuing and
access management, continue to be evaluated along with multimodal LOS as part of a local
general plan conformity assessment.
Updates to the City’s Multimodal Transportation Impact Study Guidelines
The Transportation Division is responsible for maintaining the City’s Multimodal Transportation
Impact Study (MMTIS) Guidelines. These guidelines set forth required t ools and methodologies
for transportation analysis of land use and transportation projects proposed within the City.
These standards are updated regularly for consistency with CEQA guidelines, State
requirements, and industry best practices for conducting analysis of transportation impacts. The
current edition of the City’s MMTIS Guidelines was developed in 2015, following adoption of
the City’s General Plan Circulation Element. In order to provide consistency with CEQA updates
per SB 743, and to improve efficiency and effectiveness for practitioners in using these
guidelines, the MMTIS Guidelines have been updated as follows:
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• Added discussion on analysis methodology, thresholds of significance, and mitigation
strategies for CEQA analysis of VMT impacts.
• Added discussion on what analysis elements are required for CEQA vs. which elements
are required for local general plan conformity only.
• Allows the use of Bicycle Level of Traffic Stress as an acceptable methodology for
analyzing bicycle impacts on roadway segments, if approved by the Transportation
Division on a case-by-case basis.
• Allows the use of a streamlined analysis methodology for evaluating potential transit
impacts using existing load factors and projected ridership demand in lieu of more
calculation-intensive transit LOS calculations, if approved by the Transportation Division
on a case-by-case basis.
• Additional discussion regarding consideration of contextual significance when evaluating
vehicle queuing impacts and impacts to unsignalized intersections.
A copy of the updated MMTIS Guidelines is provided for reference in Attachment C, which
includes a resolution adopting the updated Guidelines and granting authority to the
Transportation Manager to approve future administrative/ministerial revisions to this document.
A current copy of the MMTIS Guidelines will continue to be published on the City’s website.
Policy Context
While the approval of SB 743 is the primary catalyst driving the conversion to VMT as the
primary metric for transportation impact analysis under CEQA, there are several goals and
policies established within existing City planning documents that support the common objective
to reduce greenhouse gas emissions and motor vehicle travel. For example, the General Plan
Land Use and Circulation Elements (adopted 2014) include specific goals and objectives to
reduce community reliance on single-occupant motor vehicle use by supporting and promoting
alternatives such as walking, riding buses and bicycles, and using carpools. These policies al so
encourage infill development and other land use strategies that reduce regional VMT by mixing
land uses and incentivizing growth in locations that provides more efficient access to housing,
jobs and services. Similarly, the City’s currently adopted Climate Action Plan (2012) identifies
several recommended policies and strategies to support reductions in citywide VMT. The Plan
acknowledges that transportation and land use are the most significant contributors to current
City greenhouse gas emissions; thus, actions that directly reduce Citywide VMT represent some
of the most effective methods that the City can utilize to reduce local greenhouse gas production.
Public Engagement
Consistent with the City’s Public Engagement and Noticing (PEN) Manual and the City’s
Municipal Code, this report was made public one week prior to this Council Hearing date, and
this item was noticed via legal advertisements posted in the San Luis Obispo New Times 10 days
prior to this City Council hearing.
CONCURRENCE
The City Attorney’s office, Public Works and Community Development Departments concur
with the recommendations contained within this report.
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ENVIRONMENTAL REVIEW
The proposed adoption of new Transportation Performance Measures and Thresholds of
Significance for CEQA is not a “project’ pursuant to the California Environmental Quality Act
(CEQA) as defined in State CEQA Guidelines Section 15378 and is, therefore, exempt from
CEQA pursuant to CEQA Guidelines Section 15060 (c)(3). Instead, they are proposed threshol ds
of significance published pursuant to CEQA Guidelines Section 15064.7. That Section provides:
a. Each public agency is encouraged to develop and publish thresholds of significance that the
agency uses in the determination of the significance of environmental effects. A threshold of
significance is an identifiable quantitative, qualitative or performance level of a particular
environmental effect, non-compliance with which means the effect will normally be
determined to be significant by the agency and compliance with which means the effect will
normally be determined to be less than significant.
b. Thresholds of significance to be adopted for general use as part of the lead agency's
environmental review process must be adopted by ordinance, resolution, rule, or regulation,
and developed through a public review process and be supported by substantial evidence.
c. When adopting thresholds of significance, a lead agency may consider thresholds of
significance previously adopted or recommended by other public agencies or recommended
by experts, provided the decision of the lead agency to adopt such thresholds is supported by
substantial evidence."
Section 15064.7(b) of the CEQA Guidelines provides that thresholds of significance must be
formally adopted through a public review process and supported by substantial evidence if, as in
this case, they are to be placed in general use. There is no requirement in CEQA that any other
environmental review is prerequisite prior to adopting a threshold. The reason for this is th at the
preparation of an EIR or other CEQA document would largely duplicate the extensive public
review process set forth above, and the "substantial evidence" standard set forth in Section
15064.7.
FISCAL IMPACT
Budgeted: No Budget Year: N/A
Funding Identified: No
Fiscal Analysis:
Funding Sources Current FY Cost
Annualized
On-going Cost
Total Project
Cost
General Fund N/A
State
Federal
Fees
Other:
Total
There is no direct fiscal impact associated with this action.
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ALTERNATIVES
1. The City Council could make changes to the proposed recommendations. Council could
direct staff to modify the proposed recommendations, which could include consideration of
alternate thresholds of significance for CEQA VMT analysis or additional updates to the
City’s Multimodal Transportation Impact Analysis Study Guidelines.
2. Continue approval of proposed recommendations to a future date. Council could direct
staff to conduct additional research and/or provide additional details regarding the
recommendations and continue Council action on this item to a future meeting date.
3. Decline to adopt proposed recommendations. Council could direct staff to halt efforts to
update the City’s policies on analysis of transportation impacts under CEQA.
The State has established a deadline requiring local agencies to update transportation impact
analysis policies and procedures consistent with SB 743 prior to July 1, 2020. Each of the
abovementioned alternatives could result in potential delays, making it difficult for the City to
meet the State’s established deadline. For this reason, these alternatives are not recommended by
staff.
Attachments:
a - Draft Resolution - Revised Thresholds for Analysis of Transportation Impacts
b - Draft Resolution - Adopting Updated TIS Guidelines
c - COUNCIL READING FILE - Multimodal Transportation Impact Study Guidelines
(June 2020)
d - Technical Memo Baseline VMT Methodology & Estimation (GHD)
e - California OPR: Technical Advisory on Evaluating Transportation Impacts in CEQA
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R ______
RESOLUTION NO. _____ (2020 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, ADOPTING REVISED THRESHOLDS OF
SIGNIFICANCE FOR ANALYSIS OF TRANSPORTATION IMPACTS
UNDER THE CALIFORNIA ENVIRONMENTAL QUALITY ACT
PURSUANT TO SENATE BILL 743
WHEREAS, the Governor Edmund G. Brown signed Senate Bill (SB) 743 in 2013, and
directed the Office of Planning and Research (OPR) to develop updated criteria for measuring
transportation impacts using alternative metrics that promote a reduction in greenhouse gases, the
development of multimodal transportation networks, and a diversity of land uses; and
WHEREAS, in December 2018, the California Natural Resources Agency certified and
adopted updates to the California Environmental Quality Act (CEQA) per SB 743, establishing
Vehicle Miles Traveled (VMT) as the preferred performance measure for analysis of transportation
impacts under CEQA; and
WHEREAS, in December 2018, the California Governor’s Office of Planning and
Research (OPR) published a Technical Advisory on Evaluating Transportation Impacts under
CEQA, which contains OPR’s technical recommendations regarding assessment of VMT,
thresholds of significance, and mitigation measures; and
WHEREAS, CEQA Guidelines Section 15064.7(b) allows lead agencies to adopt
thresholds of significance for the lead agency’s general use in its environmental review process;
and
WHEREAS, the City of San Luis Obispo Transportation Division and Community
Development Department have prepared proposed Transportation Thresholds of Significance,
pursuant to SB 743 and CEQA Guidelines Section 15064.3, for the City Council’s consideration
and adoption; and
WHEREAS, the proposed Transportation Thresholds of Significance are consistent with
updated CEQA Guidelines and the recommendations presented in OPR’s Technical Advisory on
Evaluating Transportation Impacts under CEQA; and
WHEREAS, the proposed Transportation Thresholds of Significance are consistent with
the goals presented in the City’s General Plan Circulation Element that emphasize the reduction
of greenhouse gas emissions and reliance on motor vehicle travel, development of multimodal
transportation systems, and diversity of land uses; and
WHEREAS, the City Council held a duly noticed meeting on the proposed Transportation
Thresholds of Significance for analysis of transportation impacts under CEQA on June 16, 2020.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows:
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Resolution No. _____ (2020 Series) Page 2
R ______
SECTION 1. The proposed Transportation Thresholds of Significance based on Vehicle
Miles Traveled (VMT), attached hereto as Attachment A and incorporated herein by this reference,
are hereby approved as the City’s thresholds of significance for evaluating transportation -related
environmental impacts pursuant to CEQA, replacing all existing City transportation thresholds of
significance for CEQA analysis based on auto level of service (LOS) or other measures of vehicle
congestion or delay.
SECTION 2. The Transportation Division, in consultation with the Director of
Community Development, is authorized to update the adopted Thresholds of Significance for land
use and transportation projects as necessary and appropriate, provided any update is consistent
with the intent of Senate Bill 743 and in compliance with procedural and substantive requirements
of CEQA and all other applicable state and local laws.
SECTION 3. The Transportation Division is directed to update the City’s Multimodal
Transportation Impact Study Guidelines within sixty days herefrom, to provide consistency with
the proposed Transportation Thresholds of Significance and pursuant to revised CEQA Guidelines
and technical guidance published by the OPR.
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Resolution No. _____ (2020 Series) Page 3
R ______
SECTION 4. Environmental Review. The proposed adoption of new Transportation
Thresholds of Significance for CEQA is not a “project’ pursuant to the California Environmental
Quality Act (CEQA) as defined in State CEQA Guidelines Section 15378 and is, therefore, is
exempt from CEQA pursuant to CEQA Guidelines Section 15060 (c)(3).
Upon motion of _______________________, seconded by _______________________,
and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _____________________ 2020.
____________________________________
Mayor Heidi Harmon
ATTEST:
____________________________________
Teresa Purrington
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, on ______________________.
____________________________________
Teresa Purrington
City Clerk
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Attachment A
City of San Luis Obispo
Vehicle Miles Traveled (VMT) Thresholds of Significance for CEQA Analysis
Project Type Evaluation Criteria Threshold
Residential 15% below baseline regional (County) average
Residential VMT per capita. Applies to single-
family, multi-family and mobile homes
14.25 VMT per capita
Office /
Business Park /
Industrial /
Warehousing /
Manufacturing
15% below existing regional (County) average
Work VMT per employee.
12.45 VMT per employee
Retail /
Hotel /
School
Net increase in total regional (County) VMT.
Small local-serving retail may be presumed to
cause less-than-significant impacts. Larger,
regional-serving retail will require quantitative
analysis using the SLO TDM and project-
specific information, such as market studies or
analysis of anticipated customer travel behavior.
No set threshold, increase in total
VMT would trigger impact
Mixed-Use Evaluate each component of a mixed-use project
independently, applying significance threshold
for each land use type. Alternately, the City may
choose to analyze VMT for only the dominant
use. Analysis should take credit for internal
capture between uses.
Apply Residential, Office & Retail
Thresholds above
Redevelopment
Projects
Where a development replaces an existing
VMT-generation land use, if the replacement
total VMT leads to a net overall decrease in
VMT, the project is assumed to have a less-than-
significant impact. If net new VMT exceeds the
existing land use, apply the thresholds described
above.
No set threshold
Other
Development
Projects
City may apply adopted residential, office or
retail VMT thresholds to other development
projects that have predominant operating
characteristics similar to those uses. Alternately,
City may use more location-specific information
to develop specific thresholds for other land use
types. In doing so, analysis should consider the
information described in the CEQA Guidelines
(Section 15064.7) on the development of
thresholds of significance.
No set threshold. Evaluated on case-
by-case basis based on OPR guidance
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Project Type Evaluation Criteria Threshold
Transportation
Projects
Where a transportation project involves
improvements that may result in a measurable
and substantial increase in vehicle travel, such as
the addition of through lanes on existing or new
highways and arterial streets, the estimated
change in VMT should be quantified to evaluate
potential for induced traffic demand. No
standard significance thresholds have been
adopted for induced traffic analysis; thus, the
City shall evaluate potential impacts on a case-
by-case basis consistent with CEQA Guidelines
and applicable technical guidance while
ensuring that the analysis addresses:
• Direct, indirect and cumulative effects of the
transportation project, including potential
for induced demand (CEQA Guidelines, §
15064, subds. (d), (h))
• Near-term and long-term effects of the
transportation project (CEQA Guidelines,
§§ 15063, subd. (a)(1), 15126.2, subd. (a))
• The transportation project’s consistency
with state greenhouse gas reduction goals
(Pub. Resources Code, § 21099)34
• The impact of the transportation project on
the development of multimodal
transportation networks (Pub. Resources
Code, § 21099)
• The impact of the transportation project on
the development of a diversity of land uses
(Pub. Resources Code, § 21099)
No set threshold. Evaluated on case-
by-case basis based on OPR guidance
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R ______
RESOLUTION NO. _____ (2020 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, APPROVING REVISED MULTIMODAL
TRANSPORTATION IMPACT STUDY GUIDELINES
WHEREAS, the Transportation Division is responsible for maintaining Multimodal
Transportation Impact Study Guidelines establishing analysis tools, methods and procedures for
preparation of transportation impact studies; and
WHEREAS, the Multimodal Transportation Impact Study Guidelines are necessary for
consistent application of City standards, policies and practices for transportation analysis of land
development and transportation projects; and
WHEREAS, the current edition of the City’s Multimodal Transportation Impact Study
Guidelines, last updated March 2015, is no longer consistent with the transportation performance
measures and methodologies required for analysis of transportation impacts under the California
Environmental Quality Act (CEQA) as modified with adoption of Senate Bill (SB) 743; and
WHEREAS, the Multimodal Transportation Impact Study Guidelines must be periodically
updated to account for changes in regulatory policy and industry best practices for analysis of
transportation impacts for CEQA and local transportation system planning; and
WHEREAS, the Multimodal Transportation Impact Study Guidelines have been revised
to be consistent with the amendments to CEQA Guidelines prescribed in SB 743; and
WHEREAS, the City Council held a duly noticed meeting on the proposed revisions to
the Multimodal Transportation Impact Study Guidelines on June 16, 2020.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows:
SECTION 1. The City of San Luis Obispo Multimodal Transportation Impact Study
Guidelines, dated and effective June 2020, copies of which are on file at the Office of the City
Clerk, are hereby approved.
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Resolution No. _____ (2020 Series) Page 2
R ______
SECTION 2. The Transportation Manager is authorized to approve future administrative
revisions to the Multimodal Transportation Impact Study Guidelines so long as the policy
framework contained in the guidelines remains consistent with the June 2020 edition approved by
the City Council and any such revisions are documented in writing and provided to the City Clerk
to be maintained with this Resolution in a manner that reflects the scope of changes made.
Upon motion of _______________________, seconded by _______________________,
and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _____________________ 2020.
____________________________________
Mayor Heidi Harmon
ATTEST:
____________________________________
Teresa Purrington
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, on ______________________.
____________________________________
Teresa Purrington
City Clerk
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d - Technical Memo Baseline VMT Methodology & Estimation (GHD)11207547-MEM001.docx 1
May 31, 2020
To: City of San Luis Obispo Project: City CEQA Transportation Impact
Thresholds
From: Jake Hudson, Senior Transportation
Planner/Engineer GHD
Ref/Job No.: 11211936
CC: File No.: 11211936-MEM001.DOCX
Subject: Baseline VMT Methodology & Estimation
1. Introduction
The City has contracted GHD and Cambridge Systematics, to provide staff support in the development of
procedures for assessing transportation impacts under CEQA, per SB 743 and in updating of the City’s
Multimodal Transportation Impact Study Guidelines. GHD in developed baseline VMT estimates based on
the City and County geographies using both the City travel demand model as well as the SLOCOG travel
demand model. These baselines are provided with recommendations for City consideration in adopting its
VMT thresholds. The next phase of this work, update of the City’s Multimodal Transportation Impact Study
Guidelines will include evaluation and recommendations for project screening criteria, thresholds of
significance, and methodologies for evaluating land development and transportation infrastructure using
VMT as the primary impact criterion.
The purpose of this memorandum is to review guidance, options, resources, and analytical methodologies
for evaluating project VMT in the City of San Luis Obispo that can be used to establish baseline VMT. The
literature review includes the Governor’s Office of Planning and Research (OPR) Technical Advisory on
Evaluating Transportation Impacts in CEQA (December 2018), the Caltrans Draft VMT-Focused
Transportation Impact Study Guide (February 2020), and the SLOCOG Transition from LOS to VMT Staff
Report (October 2019).
The data sources and technical review includes the City of San Luis Obispo Travel Demand Model (SLO
TDM), SLOCOG Regional Travel Demand Model (RTDM), US Census’s Longitudinal Employer-Housing
Dynamics (LEHD) data, Census Transportation Planning Products (CTPP) data, and published data for the
region. This technical memorandum summarizes the results of the VMT analysis and provides GHD’s
recommendations for the City’s baseline VMT and thresholds of significance.
2. Regulatory and Planning Framework
SB 743 was signed into law in 2013, with the intent to better align California Environmental Quality Act
(CEQA) practices with statewide sustainability goals related to efficient land use, greater multi-modal
choices, and greenhouse gas reductions. The provisions of SB 743 become effective Statewide on July 1,
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2020. Under SB 743, automobile delay, traditionally measured as level of service (LOS) will no longer be
considered an environmental impact under CEQA. Instead, impacts will be determined by changes to VMT.
VMT measures the number and length of vehicle trips made on a daily basis. VMT is a useful indicator of
overall land use and transportation efficiency, where the most efficient system is one that minimizes VMT by
encouraging shorter vehicle trip lengths, more walking and biking, or increased carpooling and transit.
Measuring VMT requires estimating or measuring the full length of vehicle trips by purpose, such as
commutes, deliveries, or shopping trips that often cross between cities, counties, or states. For this reason,
regional travel demand models, “big data,” and household travel surveys that are less limited by local agency
boundaries are the preferred tools to estimate VMT under SB 743.
VMT unlike LOS measures overall regional travel trends and does not report project effects on local
operations and specific facilities. This has raised questions and concerns about transparency and disclosure
regarding what effects a project may have on specific intersections and segments for all modes of traffic.
SB743 does not preclude agencies from maintaining level of service as a local policy outside of CEQA to
address this if an agency determines it’s necessary or for the purposes as maintaining the basis for its
Impact Fee Programs to ensure that new development is paying for the infrastructure necessary to support
it. Most agencies in the region that are in the process of adopting their VMT thresholds are also maintain
level of service as local policy, impacts would instead be classified as policy inconsistencies and mitigations
would instead be applied as conditions of approval, giving agencies significantly more flexibility in how those
standards are applied and protection from CEQA challenges. GHD recommends that the City of San Luis
Obispo retain Multimodal Level of Service as a policy threshold outside of CEQA.
2.1 Governor’s Office of Planning and Research (OPR) Technical Advisory
In December 2018, OPR released its final Technical Advisory on Evaluating Transportation Impacts in
CEQA. Generally, OPR recommends that a reduction of 15% or more in VMT should be the target. Below is
a summary of OPR’s recommended VMT impact thresholds and methodologies for land use projects:
Residential (VMT/capita) – A proposed project exceeding a level of 15% below existing regional VMT per
capita may indicate a significant transportation impact.
Existing VMT per capita may be measured as regional VMT per capita or as city VMT per capita. Proposed
development referencing a threshold based on city VMT per capita (rather than regional VMT per capita)
should not cumulatively exceed the number of units specified in the Sustainable Communities Strategy
(SCS) for that city, and should be consistent with the SCS.
Office (VMT/employee) - A proposed project exceeding a level of 15% below existing regional VMT per
employee may indicate a significant transportation impact.
Retail (net VMT) – A proposed project that results in a net increase in total area VMT may indicate a
significant transportation impact.
Mixed-Use - Evaluate each component independently using above thresholds.
Redevelopment Projects - Measured based on net change in VMT for total area.
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2.1.1 OPR Recommended Screening Thresholds
OPR’s Technical Advisory lists the following screening thresholds for land use projects. These types of
development projects are presumed to have a less than significant impact on vehicle miles traveled and
therefore, a less than significant adverse impact on transportation. OPR’s Technical Advisory suggests that
lead agencies may screen out VMT impacts using project size, maps, transit availability, and provision of
affordable housing.
‐ Projects that are consistent with the Sustainable Communities Strategy (SCS) or General Plan and
generate or attract fewer than 110 daily trips (per CEQA).
‐ Map-based screening for residential and office projects located in low VMT areas, and incorporate
similar features (density, mix of uses, transit accessibility).
‐ Certain projects within ½ mile of an existing major transit stop1 or an existing stop along a high-
quality transit corridor. However, this will not apply if information indicates that the project will still
generate high levels of VMT.
‐ Affordable Housing Development in infill locations.
‐ Locally-serving retail projects, typically less than 50,000 square feet.
GHD recommends that these Screening Criteria be further assessed and validated for the City of San Luis
Obispo prior to adoption. For example, the presumption that low-income housing generates fewer trip is
based on a state wide housing study that found low income housing generates lower trips because they are
occupied by a higher proportion of non-workforce individuals. These conditions should be validated for the
City before establishing this as a screening threshold.
2.2 Caltrans Draft VMT-Focused Transportation Impact Study Guidelines
Caltrans recently published a draft update for their Transportation Impact Study Guidelines (Draft TISG,
February 28, 2020), which is in a 30-day informal review period through March 30th. The Caltrans’ Draft
TISG is intended for use in preparing a transportation impact analysis of land use projects or plans they may
impact or affect the State Highway System. It is not clear when Caltrans review of a CEQA document would
be required under SB 743, since it was previously triggered by a project’s potential trip generation and
impact to automobile delay on a State Highway.
The Draft TISG heavily references OPR’s Technical Advisory as a basis for its guidance. The Draft TISG
recommends use of OPR’s recommended thresholds for land use projects (15% below existing city or
regional VMT per capita or per employee). As each lead agency develops and adopts its own VMT
thresholds for land use projects, Caltrans will review them for consistency with OPR’s recommendations, and
with the state’s GHG emissions reduction targets and CARB Scoping Plan.
Caltrans identifies a possible mitigation framework for projects found to have a potentially significant impact
on VMT. These include the following programmatic measures:
1 “major transit stop” - A major transit stop is a "site containing an existing rail, a ferry terminal served by bus or rail
transit service, or intersection of two or more major bus routes with a frequency of service interval of 15 minutes or
less during morning and evening peak hour commute". (OPR 2018)
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Impact fee programs that contain a demonstrated nexus and proportionality between a fee and
capital projects that result in VMT reduction;
VMT mitigation bank programs; and,
VMT mitigation exchange programs.
Caltrans also indicates that a future update to the Draft TISG will include the basis for requesting
transportation impact analysis that is not based on VMT (including multimodal conflict/access management
issues). GHD will monitor future updates for consideration as part of this effort for the County.
2.3 October 2nd, 2019 SLOCOG Transition from LOS to VMT Staff Report
In October of 2019 SLOCOG reported Countywide VMT as well as VMT for incorporated areas. The VMT
results produced were boundary based. OPR has since emphasized the need to measure VMT as a function
of the entire trip which is different than methodology originally reported by SLOCOG. These results have
been updated as part of the County’s efforts for establishing their VMT threshold and are expected to be
refined as part of the multi-county model currently in development by SLOCOG.
3. Proposed VMT Evaluation Criteria
GHD has recommended a variation on the OPR Technical Advisory land use type criteria to account for uses
commonly found in the City. GHD proposes that the City of San Luis Obispo assess land development
projects according to the primary proposed land use type, as follows:
Residential VMT – Establish baseline VMT and threshold on a per capita basis. “Residential” uses include,
but are not limited to, single-family, multi-family, and mobile homes.
Work VMT – Establish baseline VMT and threshold on a per employee basis. “Work” uses include, but are
not limited to, office, office parks, light industrial, industrial, warehousing, manufacturing, and business parks.
Retail VMT – Measure net VMT within boundary, and determine threshold based on net change. “Retail”
uses include, but are not limited to, supermarkets, restaurants, gas stations, wineries, agriculture tourism,
and hotels. Public and recreational uses such as parks, hospitals, libraries, and public services may also be
assessed in this way, if needed.
Mixed-Use Projects – Evaluate each component independently using the above thresholds, considering
credit for internal capture, OR evaluate dominant use.
Redevelopment Projects - Measured based on net change in VMT for total area.
4. Baseline VMT Data Sources
Project-level VMT is assessed against statewide, regional, or local averages, per capita or per employee
depending on the Project type. It is critical, therefore, that the City carefully considers and establishes
baseline averages that reflect the travel behavior of their residents and employees. This baseline will be the
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measuring stick that all future projects will be measured against, until baselines are updated. GHD
recommends updating the baseline VMT estimates concurrent with updates the model or tool used to
evaluate projects.
4.1 SLO City Travel Demand Model
The local SLO City Travel Demand model includes the entire County of San Luis Obispo within its
boundaries, however unlike the SLOCOG model the City model aggregates zones outside the City SOI into
larger “super zones” that reflect incorporated areas and geographies of unincorporated areas that have
similar land use and trip generation characteristics. The SLO City model was utilized to estimate trip-based
Residential and Work Baseline VMT for both the City and the entire County. The recently updated model
(updated May 2020) has a base year of 2016 and a forecast year of 2040. The base year 2016 model was
utilized to estimate baseline VMT utilizing the updated land uses. The City Travel Demand model produces
trips by different trip purposes and modes, and outputs VMT throughout the City and County. To estimate
trips associated with Residential VMT, all Home-Based vehicular trips (HBx2) were selected for evaluation of
VMT per capita. To estimate trips associated with Work VMT, only Home-Base-Work (HBW) vehicular trips
were selected for evaluation. Table 4.3Table 4.1 and Table 4.4Table 4.2 present the trip purposes used for
Residential and Work VMT evaluations, respectively.
Table 4.1 Selected Trip Purposes for Residential VMT
Trip Purpose Categories (SLOCOG
RTDM)
Mode Type
SOV HOV2 HOV3 Transit Walk Bike Truck
HBW Home based work USED USED USED x x x
HBS Home based shop USED USED USED x x x
HBK Home based K-123 USED USED USED x x x
HBC Home based college USED USED USED x x x
HBO Home based other USED USED USED x x x
WBO Work based other x x x x x x
OBO Other based other x x x x x x
EE External to external x x x x x x
TS Light duty truck x
TM Medium duty truck x
TH Heavy duty truck x
2 HBx refers to any “Home based” trip, including work, shop, K-12, college, and other.
3 HBK trips are included as part of HBO trips in the City Travel Model.
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Table 4.2 Selected Trip Purposes for Work VMT
Trip Purpose Categories
(SLOCOG RTDM)
Mode Type
SOV HOV2 HOV3 Transit Walk Bike Truck
HBW Home based work USED USED USED x x x
HBS Home based shop x x x x x x
HBK Home based K-12 x x x x x x
HBC Home based college x x x x x x
HBO Home based other x x x x x x
WBO Work based other x x x x x x
OBO Other based other x x x x x x
EE External to external x x x x x x
TS Light duty truck x x x x
TM Medium duty truck x x x x
TH Heavy duty truck x x x x
Model External Trips
The sole use of the City’s model inputs and trip purposes for evaluation of VMT is limited to the boundary of
the model (County boundary). Based on the City model inputs and selected trip purposes, approximately 5%
of the residential-based and work-based trips generated by zones within the City limits have at least one trip
end external to the County. Due to the small share of external trips along with the City’s centralized location
within the county, the portion of VMT occurring outside of the county is unlikely to be a differentiating factor
when considering proposed land use projects.
4.2 SLOCOG RTDM
The regional SLOCOG model was utilized to estimate trip-based Residential and Work Baseline VMT for the
entire County. The recently updated model has a base year of 2015 and a forecast year of 2045 (model
updated December 2019). The base year 2015 model was utilized to estimate baseline VMT utilizing the
updated land uses. The SLOCOG RTDM produces trips by different trip purposes and modes, and outputs
VMT throughout the County. To estimate trips associated with Residential VMT, all Home-Based vehicular
trips (HBx4) were selected for evaluation of VMT per capita. To estimate trips associated with Work VMT,
only Home-Base-Work (HBW) vehicular trips were selected for evaluation. Table 4.3Table 4.1 and Table
4.4Table 4.2 present the trip purposes used for Residential and Work VMT evaluations, respectively.
4 HBx refers to any “Home based” trip, including work, shop, K-12, college, and other.
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Table 4.31 Selected Trip Purposes for Residential VMT
Trip Purpose Categories (SLOCOG
RTDM)
Mode Type
SOV HOV2 HOV3 Transit Walk Bike Truck
HBW Home based work USED USED USED x x x
HBS Home based shop USED USED USED x x x
HBK Home based K-12 USED USED USED x x x
HBC Home based college USED USED USED x x x
HBO Home based other USED USED USED x x x
WBO Work based other x x x x x x
OBO Other based other x x x x x x
EE External to external x x x x x x
TS Light duty truck x
TM Medium duty truck x
TH Heavy duty truck x
Table 4.42 Selected Trip Purposes for Work VMT
Trip Purpose Categories
(SLOCOG RTDM)
Mode Type
SOV HOV2 HOV3 Transit Walk Bike Truck
HBW Home based work USED USED USED x x x
HBS Home based shop x x x x x x
HBK Home based K-12 x x x x x x
HBC Home based college x x x x x x
HBO Home based other x x x x x x
WBO Work based other x x x x x x
OBO Other based other x x x x x x
EE External to external x x x x x x
TS Light duty truck x x x x
TM Medium duty truck x x x x
TH Heavy duty truck x x x x
County External Trips
The sole use of the SLOCOG model inputs and trip purposes for evaluation of VMT is limited to the
boundary of the model (County boundary). Based on the SLOCOG model inputs and selected trip purposes
for the unincorporated County areas, approximately 5% of the residential-based and work-based trips are
external to the County. However, the SLOCOG model is currently over forecasting VMT as compared LEHD
and therefore GHD is not recommending it as the baseline methodology. Adding external trip length would
only exacerbate the deviation.
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4.3 LEHD Data
Journey-to-work data is also available from the Longitudinal Employer-Household Dynamics (LEHD)
program. The primary source of data used in the LEHD program is the enhanced Quarterly Census of
Employment and Wages (QCEW) microdata files obtained from each participating Local Employment
Dynamics (LED) state. The employer-based QCEW data is merged with additional worker-based
administrative data collected by the US Census Bureau to create integrated employer-worker data, available
through two different databases, Quarterly Workforce Indicators (QWI) and LEHD Origin-Destination
Employment Statistics (LODES).
Unlike sample-based surveys (such as the U.S. Census’s American Community Survey or CTPP), the LEHD
data provides a nearly complete enumeration of home-to-work flows covering over 90% of all workers and
employers in the United States5. The LEHD data does not contain details on the work trips such as mode
choice, route, or travel times. The LEHD data does not include federal workers, self-employed or the military,
and workplace location is assigned algorithmically for people who work for a business with multiple locations
in a county. Since the City and SLOCOG models provides information on mode choice, and does its own
assignment of trips, the additional commute and socio-economic data from CTPP is not needed to determine
VMT. The LEHD data provides many more origin-destination pairs than collected through sampled data, and
provides sufficient data for home-to-work flows.
4.3.1 LEHD DATA.
LEHD, or longitudinal Employment Household Dynamics Data, provides the most complete enumerated
information on household to employment origins and destinations. However this data on its own does not
report VMT. In order to calculate VMT from LEHD data the origin/destination data was applied to the regional
transportation network within the SLOCOG model in order to produce VMT. The methodology for exercise is
as follows. The LEHD LODES data was utilized within the SLOCOG model to determine Home-Based-
Work trips and estimate baseline “Work” VMT. 2015 LEHD (LODES) data was downloaded by census block
level, aggregated by TAZ, and then imported into an origin-destination matrix within the SLOCOG model
software (TransCAD). This origin-destination trip matrix was used to calculate “internal” VMT utilizing the
SLOCOG model network, and “external” VMT. If one end of the work trip was in an adjacent county, then the
work trip was assigned to the logical SLOCOG external station. An approximation of the "external" portion of
the trip's VMT, and total trip length, was estimated by using the distance (via roadway network travel outside
of the model) to the SLOCOG external station. The "distance" of each external station was modified to
account for the average distance travelled before/after leaving/entering the County. This methodology was
used to best capture the full length of vehicle trips.
Utilizing the LEHD data allows for a comparison of both the City and SLOCOG’s model HBW trip purposes
and calculated Work VMT. Since the LEHD data only provides home-to-work or work-to-home information,
other home-based trips (HBx) cannot be calculated utilizing the LEHD data, and the full residential-generated
VMT per capita is not calculated utilizing solely the LEHD data. However, the LEHD data can be utilized to
5 “Improving Employment Data for Transportation Planning”, NCRHP 08-36, Task 098. Cambridge Systematics, Inc.
September 2011. http://onlinepubs.trb.org/onlinepubs/nchrp/docs/NCHRP08-36(98)_FR.pdf
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supplement the HBW trip portion of the residential VMT analysis. Doing so would provide trip origins and
destinations outside of the model boundary. The total trip length for home-based trips and associated VMT
would then be calculated, assuming other home-based trips are localized trips within the model boundary.
4.4 CEQA Baseline Considerations
Under CEQA, project impacts must be evaluated by comparing environmental conditions after project
implementation to conditions at a point in time referred to as the baseline. The CEQA Guidelines Section
15125 provides the following guidance for establishing the baseline:
An EIR must include a description of the physical environmental conditions in the vicinity of the
project. This environmental setting will normally constitute the baseline physical conditions by which
a lead agency determines whether an impact is significant… The purpose of this requirement is to
give the public and decision makers the most accurate and understandable picture practically
possible of the project's likely near-term and long-term impacts.
The CEQA Guidelines goes on to state that generally, the baseline is the environmental condition that exists
at the time the notice of preparation is published or environmental analysis is commenced, from both a local
and regional perspective. However, a lead agency may define the baseline by referencing historic conditions,
as long as substantial evidence is provided that such a baseline is necessary to provide the most accurate
picture practically possible of the project’s impacts given that existing conditions change or fluctuate over
time.
The baseline provided in this memorandum is estimated from the most recently updated SLOCOG and City
travel demand models, which have a base year of 2016 & 2015, respectively. The update to the
Environmental Thresholds Guidelines will need to ensure that each VMT analysis prepared in the future
provides substantial evidence for the applicability of older baseline data. Updating the baseline VMT
estimates concurrent with the travel demand model, as recommended in this memorandum will be an
important component of ensuring that the VMT thresholds remain defensible under CEQA.
5. Draft Baseline VMT Analysis Findings
City and Countywide baseline VMTs using the City and SLOCOG Travel Demand Models as well as LEHD
data have been calculated as part of this effort. Based on the methodology for estimating Baseline VMT as
described within this memorandum, Tables 5.1 & 5.2 present a summary of the Baseline VMT analysis
utilizing the sources for both Residential and Work VMT, and Work VMT using the LEHD model developed
as part of this effort.
Table 5.1 Summary of Baseline Residential VMT
Data Source / VMT Metric SLO City
Model City
Average
SLO City
Model
Countywide
Average
SLOCOG
Model City
Average
SLOCOG
Model
Countywide
Average
Residential VMT per Capita 8.51 16.76 9.12 16.30
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Table 5.2 Summary of Baseline Work VMT
Data Source / VMT Metric SLO City
Model City
Average
SLO City
Model
Countywide
Average
SLOCOG
Model City
Average
SLOCOG
Model
Countywide
Average
Work VMT per Employee (model data) 17.98 14.65 25.23 14.01
Work VMT per Employee (LEHD model) - - 15.45 28.17
Table 5.3 Summary of Net VMT
Data Source / VMT Metric SLO City
Model City
Net
SLO City
Model
Countywide
Net
SLOCOG
Model City Net
SLOCOG
Model
Countywide
Net
NET VMT 1,030,000 8,490,000 - -
Note: Due minor variations in model run results Net VMT is rounded to the nearest 10,000.
5.1 Baseline VMT Considerations and Recommendations
Model Selection
Based on the LEHD, SLOCOG Model & SLOCITY model data sources, relatively short residential VMT is
reported for the City of SLO vs relatively longer Work VMT. This relationship is as expected consistent with
an overall jobs-to-housing imbalance, where work-based land uses within the City draws longer commute
traffic and overall residential based trips are mostly captured within and around the City. For Residential
VMT, the City and County models produce similar results for both the regional and city geographies.
However, for Work-based VMT, the SLOCOG model produces significantly higher work VMT for the City
geography and significantly lower work VMT for the Regional geography as compared to both the City model
& LEHD. The City model is more closely representative of LEHD travel patterns, include multimodal
networks, and is sensitive to a broader range of potential mitigation measures such as multimodal
improvements. Therefore, GHD is recommending the City model for Calculating VMT baseline and
evaluating project VMT.
The SLO City Model does however deviate from LEHD for work-based VMT similar to the SLOCOG model
however to a lesser degree. This is somewhat anticipated as the City’ travel demand model is based on
SLOCOG model data for TAZ’s outside the City.
One of the most significant issues with the SLOCOG model as compared to LEHD data, the SLOCOG model
overestimates City Work VMT and underestimates Countywide VMT. Whereas the City model forecasts
these VMT proportionally consistent with LEHD data as compared to the SLOCOG model. This is the
primary factor in GHD’s recommendation to use the City’s model as the VMT estimation and forecasting tool.
Because this analysis is effectively measuring delta VMT as a result of the project, if the same model that
establishes the baseline is used to estimate project VMT and that model is proportionally accurate it is
sufficient and the most accurate tool available at this time.
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Its recommended that the City’s model be further calibrated to LEHD & ACS data as part of the next
scheduled update; however, the City’s model is still the most accurate and valid tool currently available for
VMT analysis.
Baseline Geography
Under SB743 The City has its own discretion in which geography baseline (i.e. City only, County
incorporated Cities, County unincorporated areas, entirety of County both incorporated and unincorporated.
This is a critically important decision as it effectively establishes how strict the City chooses to set it standard
and would directly result in more or less significant impacts as the result of development project. For
example if the City were to choose its own residential VMT averages as the baseline this threshold would be
twice as restrictive as a residential baseline threshold based on SLO County regional averages. Under a City
based average VMT threshold most residential growth areas identified in the City’s general plan would have
a VMT impact because they can’t achieve a low average which includes influences from dense mixed-uses
in the downtown core and other residential near the University. In order to reach San Luis Obispo’s housing
production goals and implement its General Plan GHD is recommending the baseline threshold be
established based on total regional averages including incorporated Cities. This threshold is consistent with
the intent SB743’s intent to focus development is VMT efficient areas and reduce automobile travel as a
whole from a regional perspective and is a specific example threshold provided within OPR guidance.
Recommended City Model / Regional Average Baseline & Significance Threshold
Regional Residential Baseline VMT: 16.76 VMT/Capita
15% below baseline significance threshold: 14.25 VMT/Capita
Regional Work Baseline VMT: 14.65 VMT/Capita
15% below baseline significance threshold: 12.45 VMT/Employee
Other Project Baseline VMT: 8,092,852 Regional Net VMT
Net Increase Significance threshold: 8,490,000 VMT
For purposes of calculating dwelling unit
to employee ratios and work square
footage to employee ratios on a project
by project basis, the American
Community Survey and SCAG
employment density report shown at the
right should be considered. The City
should retain discretion for determining
the appropriate ratio assumptions for
each project application.
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Department Name: Utilities
Cost Center: 601 and 602
For Agenda of: June 16, 2020
Placement: Business
Estimated Time: 20 Minutes
FROM: Aaron Floyd Director
Prepared By: Jennifer Metz, Utilities Project Manager
Jennifer Thompson, Utilities Business Manager
SUBJECT: AUTHORIZATION FOR THE CITY MANAGER TO ENTER INTO
AGREEMENTS WITH THE BOARD OF TRUSTEES OF THE CALIFORNIA
STATE UNIVERSITY FOR WATER AND WASTEWATER SERVICE TO
CALIFORNIA STATE UNIVERSITY, SAN LUIS OBISPO
RECOMMENDATION
Adopt a Resolution (Attachment A) authorizing the City Manager to execute the 2020 Water and
Sewer Rate Agreement, 2020 Capacity Interest Agreement, and 2020 Capacity Memorandum of
Understanding with the Board of Trustees of the California State University (CSU) related to
water and wastewater service to California Polytechnic State University, San Luis Obispo (Cal
Poly).
DISCUSSION
Background
The City and Cal Poly, part of the CSU system, have a long-standing relationship, with the City
providing water and wastewater services to Cal Poly dating back to the 1960s. The City provides
Cal Poly with water and wastewater services via agreement because the University lies outside
the City limits. The Rate Agreement was last updated in 2012; the Capacity MOU was last
updated in 2007. Both documents are included in Attachment B.
Cal Poly 2035 Mater Plan
The City Council authorized entering into the Master Plan Memorandum of Understanding
(Master Plan MOU) with Cal Poly on March 17, 2020 (Attachment C). Related to water and
wastewater service from the City, the Master Plan MOU notes that the following items would be
addressed by agreement:
a) Develop mechanisms to confirm operational resiliency of Cal Poly’s water supply.
b) Cal Poly to secure additional, temporary non-potable water supply and wastewater capacity,
if needed, to support the development of on-campus housing.1
c) Reach agreement on Cal Poly fair-share financial contribution to support required upgrades
of City’s water treatment plant and distribution system.
1 The provision of a temporary non-potable water supply would require City Council approval of a General Plan
amendment which will be considered separately. At its Marc h 5, 2019 meeting, the City Council conceptually
supported the temporary non-potable water sales.
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d) Reach agreement on Cal Poly fair-share financial contribution towards required upgrades of
City’s water resource recovery facility and wastewater collection system.
e) Cal Poly to regularly inform City of progress towards reducing municipal sewer inflow and
infiltration.
f) Establish protocol and objectives for annual partnership meetings.
The City provided correspondence (Attachment D) on May 11, 2020 to the CSU Board of
Trustees for consideration during their proceedings to consider the Cal Poly Master Plan and
Environmental Impact Report (EIR).
City and Cal Poly staff, with assistance from HDR Engineering (the City’s water and wastewater
rate consultant) have reviewed existing agreements, analyzed current and projected costs,
culminating with the drafts included in Attachment A. Final agreements are anticipated in June
2020 with the Rate Agreement effective on July 1, 2020.
2020 Water and Sewer Rate Agreement
The updates proposed in the 2020 Water and Sewer Rate Agreement (2020 Rate Agreement)
meet the Cal Poly’s water and wastewater services needs while achieving equity with the City
water and wastewater rate payer.
Five-Year Rate Window and Annual Extensions
Like the existing rate agreement, rates are calculated annually based on a rolling five-year rate
window to determine the University’s appropriate percentage of water and sewer rates.
Maintaining the rolling five-year rate window continues to provide for rate smoothing and is
more responsive to changes in costs for both parties. For the 2020-21 rates, the following rate
window is utilized:
2020-21 Rate Window
The 2020 Rate Agreement provides for annual extensions to the term of agreement for five years,
as long as all conditions described remain the same. Like other City customers, monthly base
fees for water and wastewater service are charged based on meter size.
Operational Resiliency
Over the past ten years, Cal Poly’s average domestic water usage averaged 510-acre feet
annually and agriculture water use averaged 426-acre feet annually. The Whale Rock
Commission has an in-lieu water accounting practice that allows for exchanges of water
deliveries from other City supply sources. The current practice provides the City flexibility to
manage it water sources but does not fully recover the proportionate share of other supply source
operational expenses.
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The City uses a multi-source water supply (Whale Rock, Salinas, Nacimiento, and recycled
water) to meet the community’s needs; Cal Poly relies on its Whale Rock water supply.
Unanticipated events as well as anticipated capital projects, such as pump station replacements,
pipeline replacement, and intake valve replacement, will impact Whale Rock’s ability to deliver
water. As the water purveyor, the City does not want Cal Poly, an important economic driver and
community partner, to be without an available domestic water supply source. The City worked
with Cal Poly to identify a methodology to provide water supply operational resiliency for its
domestic water deliveries as reflected in the 2020 Rate Agreement.
Temporary Non-Potable Water Supply and Wastewater Capacity
Consistent with Council direction provided at its March 2019 Study Session (Attachment E), the
proposed 2020 Rate Agreement establishes a general framework for the City to provide
temporary non-potable water should the University need it to support the development of on-
campus housing. The temporary non-potable water from the City could offset Cal Poly’s current
use of its Whale Rock water supply used for agriculture irrigation.
The 2020 Rate Agreement also establishes a general framework for the City to provide
temporary wastewater capacity should Cal Poly need it to support the development of on -campus
housing ahead of completion of its on-campus water reclamation facility.
Annual Partnership Meetings
As described in the 2020 Rate Agreement, the City and Cal Poly have agreed to meet regularly
to address items such as service needs, system and facility upgrades and related capacity interest
payments, inflow and infiltration reduction, water meter data, water supply use/flow rates,
adaptive management of water supply storage, and other related water and wastewater matters.
2020 Capacity Interest Agreement and Capacity MOU
The 2020 Capacity Agreement and Capacity MOU identify the University’s fair share capi tal
contributions, and methodology used to calculate those costs, in the City Water Energy
Efficiency project at the Water Treatment Plant (WTP) and the Water Resource Recovery
Facility (WRRF) project. These projects are under construction with the project at the WTP
scheduled to be complete in 2021 and the WRRF project scheduled to be complete in 2023. Cal
Poly made payments toward capital upgrades at the WRRF and WTP in 1993. Current projects at
the WRRF and WTP are necessary to meet new regulatory requir ements and replace assets at the
end of their useful life; therefore, capital contributions are necessary to maintain Cal Poly’s
capacity interest at service levels identified in the Capacity MOU. The proposed Capacity MOU,
updating the Existing MOU from 2007, clarifies the University’s capacity interest in City
facilities including the WTP, Wastewater Collection (WWC) system, and WRRF.
Previous Council or Advisory Body Action
The City Council has conducted the following meetings with associated actions as it relates to
the City’s rate agreement with Cal Poly:
1. June 12, 2012 – City Council approved and authorized the Mayor to execute the 2012
agreement with Cal Poly regarding water and sewer rate setting (Attachment B).
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2. March 5, 2019 – City Council reviewed its policy for water deliveries outside of the City
and directed staff to return with a General Plan amendment to clarify that outside users
may receive non-potable water and recycled water. A proposed General Plan amendment,
not being considered at this time, is necessary for the City to supply Cal Poly short-term,
non-potable water supply (Attachment E).
3. March 17, 2020 – City Council authorized the City Manager to execute the proposed
MOU with Cal Poly and direct staff to continue to engage in the Cal Poly Master Plan
process to ensure that impacts on City services and infrastructure associated with build -
out of the Master Plan are properly identified and mitigated (Attachment C).
4. May 13, 2020 – The Planning Commission approved a resolution recommending the City
Council adopt amendments to the Land Use Element and Water and Wastewater
Management Element of the General Plan related to broadening an existing policy and
program related to delivering both recycled water and non-potable water outside the city
limits. City Council consideration of the amendments is planned for August 2020.
Policy Context
The proposed approach in the 2020 Rate Agreement related to operational resiliency, is
consistent with City General Plan, Water and Wastewater Management Element policy on use of
multiple water resources, including water from three surface water reservoirs, recycled water,
and groundwater to meet the community’s water supply needs. Having multiple sources to draw
from provides “operational resiliency” in the event of a water supply interruption.
WWME Program A2.3.1 addresses the collaborative nature of staff’s work with Cal Poly stating
that the City will “Work cooperatively on regional water issues and water resource planning
(Water Resource Advisory Committee, Whale Rock Commission, Groundwater Sustainability
Commission, etc.).”
The proposed approach in the 2020 Capacity Agreement and Capacity MOU related to the
University’s capacity interest in City facilities is consistent policies A 5.2.5 and B 2.2.3 in t he
Water and Wastewater Management Element of the General Plan. These policies address fair
share contributions to upgrades to water and wastewater facilities.
Public Engagement
In addition to public comment opportunities at the City Council meetings described above, the
30-day public comment period on Cal Poly’s 2035 Master Plan Environmental Impact Report
extended from December 2019 to January 2020. The City comment letter and the University’s
response is available at the following Cal Poly website:
https://afd.calpoly.edu/facilities/planning-capital-projects/ceqa/master-plan/docs/feir/2020-05-
01_cp2035mp-feir_00-rtc.pdf
Many of the water and wastewater issues raised by the City in its comment letter are addressed in
the attached Agreements.
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CONCURRENCE
The City’s Finance Department concurs with the recommendation in this report.
ENVIRONMENTAL REVIEW
Modification of rates by public agencies as proposed in the draft Water and Sewer Rate
Agreement is statutorily exempt from the California Environmental Quality Act (CEQA) under
Section 15273 of the Public Resources Code because the change in fees is not intended to fund
expansion of capital projects not otherwise evaluated under CEQA. Capital projects in the draft
2020 Capacity Interest Agreement and draft 2020 Capacity MOU were subject to prior CEQA
review as follows:
• The Community Development Department issued a Notice of Exemption on January 24,
2019 for the Water Energy Efficiency project per Section 15301, Class 1 – Existing
Facilities.
• The Environmental Impact Report for the Water Resource Recovery Facility Project was
certified by the City Council on August 16, 2016.
No additional environmental review is required for this item.
FISCAL IMPACT
Budgeted: No Budget Year: 2020-21
Funding Identified: No
Fiscal Analysis:
Funding Sources
Current
FY Cost
Annualized
On-going Cost
Total Project
Cost
General Fund N/A
State
Federal
Fees
Other: Water and Sewer Funds * * *
Total
*NOTE: Cal Poly pays the City for water and wastewater services by agreement last updated in 2012 (see
Attachment B).
The changes in the proposed 2020 Rate Agreement modify the applicable percentage of the
City’s per unit water rate to be paid by the University. For both water and wastewater, monthly
base fees are charged by meter size. Capital contributions are calculated based on maintaining
the University’s capacity interest in City facilities.
Water Wastewater
Current (2019-20) 2020-21 Current (2019-20) 2020-21
53% 53% 100% 100%
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Both the Water Fund and Sewer Fund will see an increase in revenue under the proposed 2020
Agreement. For FY 2020-21, this increase is estimated at $137,0002 in revenue for the Water
Fund. The 2020 Capacity Interest Agreement is estimated to generate $1.4 million for the Water
Fund and $13.9 million for the Sewer Fund. These changes will be incorporated into the fund
analyses for the City’s next Financial Plan.
ALTERNATIVES
1. Continue Consideration of the 2020 Agreements. The City Council could continue
consideration of the 2020 agreement for water and wastewater service to the University.
Council should provide staff with direction on changes or additional information needed to
decide on this item.
2. Do Not Adopt the Resolution. The City Council could direct staff not to enter into the 2020
agreements at this time. Direction should be provided if there are changes to the agreements
that would be sufficient to gain the support of a majority of Council Members.
Attachments:
a - Draft Resolution
b - COUNCIL READING FILE - 2012 Water and Sewer Agreement with Cal Poly
c - MOU with Cal Poly Executed 2020
d - Letter to CSU Board of Trustees dated May 11, 2020
e - COUNCIL READING FILE - Council Study Session on March 5, 2019
2 Revenue from water sales to Cal Poly is estimated at $900,000 in 2020-21. This is $100,000 less than the original
2020-21 budget because Cal Poly is expected to have limited operations until at least September. The estimated
increase in Water Fund revenue is from providing Cal Poly with water supply operational resiliency in the event
water from Whale Rock is unavailable. Historically, Whale Rock Reservoir is unavailable for an average of five
days annually ($137,000 = daily water supply cost x 5).
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R _____
RESOLUTION NO. _____ (2020 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, AUTHORIZING THE CITY MANAGER TO
ENTER INTO AGREEMENTS WITH THE BOARD OF TRUSTEES OF
THE CALIFORNIA STATE UNIVERSITY FOR WATER AND
WASTEWATER SERVICE TO CALIFORNIA STATE UNIVERSITY, SAN
LUIS OBISPO
WHEREAS, the City of San Luis Obispo has historically provided water and wastewater
service to California Polytechnic State University, San Luis Obispo (University); and
WHEREAS, the City of San Luis Obispo participated with the University on the
construction of Whale Rock Reservoir in the 1960s and continues its partnership with the
University on the Whale Rock Commission for reservoir operations; and
WHEREAS, on June 6, 2012 the City of San Luis Obispo and the University entered into
the current agreement on water and sewer rates (2012 Agreement); and
WHEREAS, on April 3, 2020 the City of San Luis Obispo and University entered into a
Memorandum of Understanding related to the University’s 2035 Master Plan noting certain
objectives to be addressed via amendments to existing agreements or establishment of new
agreements; and
WHEREAS, the City of San Luis Obispo has prepared a draft 2020 Water and Sewer Rate
Agreement (Exhibit A) as an update to the 2012 Agreement; and
WHEREAS, the City of San Luis Obispo has prepared a draft 2020 Capacity Interest
Agreement (Exhibit B) identifying the University’s contribution to upgrades at the City’s Water
Treatment Plant and Water Resource Recovery Facility to maintain a capacity interest in those
City facilities; and
WHEREAS, the City of San Luis Obispo has prepared a draft 2020 Capacity
Memorandum of Understanding (Exhibit C) as an update to the 2007 Capacity Memorandum of
Understanding to provide greater clarity on water and wastewater service terms.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows:
SECTION 1. The City Manager is hereby authorized and designated to sign, for and on
behalf of City of San Luis Obispo, the 2020 Rate Agreement, 2020 Capacity Interest Agreement,
the 2020 Capacity MOU, and any amendments thereto.
SECTION 2. The Director of Utilities, or designee, is hereby authorized and designated
to represent the City of San Luis Obispo in carrying out the City's responsibilities under the
agreements on behalf of City of San Luis Obispo and compliance with applicable state and federal
laws.
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SECTION 3. Any and all actions, whether previously or subsequently taken by City of
San Luis Obispo, which are consistent with the intent and purposes of the foregoing resolution,
shall be, and hereby are, in all respects, ratified, approved and confirm ed.
SECTION 4. Environmental Review. Modification of rates by public agencies is
statutorily exempt from the California Environmental Quality Act (CEQA) under Section 15273
of the Public Resources Code because the change in fees is not intended to fund ex pansion of
capital projects not otherwise evaluated under CEQA. Capital projects identified in the draft 2020
Capacity Interest Agreement and draft 2020 Capacity Memorandum of Understanding were
subject to prior environmental review. No additional environmental review is required for this
item.
Upon motion of _______________________, seconded by _______________________,
and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _____________________ 2020.
____________________________________
Mayor Heidi Harmon
ATTEST:
____________________________________
Teresa Purrington
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, on _____________________.
____________________________________
Teresa Purrington
City Clerk
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Item #2758
EXHIBIT A
AGREEMENT BETWEEN THE CITY OF SAN LUIS OBISPO
AND THE BOARD OF TRUSTEES OF THE CALIFORNIA STATE UNIVERSITY
REGARDING WATER AND SEWER RATES (“Agreement”)
THIS AGREEMENT, made on ______________, by and between the CITY OF SAN
LUIS OBISPO, CALIFORNIA (hereinafter referred to as "City"), and BOARD OF
TRUSTEES OF THE CALIFORNIA STATE UNIVERSITY (hereinafter referred to as
"University").
WITNESSETH:
WHEREAS, the City and the University entered into a Memorandum of
Understanding on March 17, 2020 agreeing to address a series of water and sewer
objectives by agreement; and
WHEREAS, the City and the University agree that this Agreement is solely for the
purpose of establishing appropriate water and sewer rate structures based on the
Agreement Between the City of San Luis Obispo and the Board of Trustees of the
California State University Regarding Capacity Interest in the Water and Sewer Systems
dated, 2020, and the 2020 Memorandum of Understanding Between the City of San Luis
Obispo and the Board of Trustees of the California State University Regarding Capacity
Interest in City Facilities collectively referred to as the “Agreement”; and
WHEREAS, the City and the University entered into a new methodology of
calculating rates in January 1993, and subsequently recalculated the rates in 1998, 2003,
2007, 2012; and
WHEREAS, the City and the University agreed at that time to a rate structure which
ties the University to the City’s approved non-residential rate structure, including monthly
fixed charges, and periodic rate review, while reflecting the University’s unique differences
from other City customers; and
WHEREAS, it is agreed that the University is exempt from all City Water Source
of Supply costs as it has its own source of supply in Whale Rock Reservoir and as a
member agency of the Whale Rock Commission pays separately for its water supply
costs; and
WHEREAS, it is agreed that the University will pay the City to provide water supply
operational resiliency when water from Whale Rock Reservoir is unavailable; and
WHEREAS, it is agreed that the University will maintain its capacity interest in the
City’s Water Treatment Plant by paying its percentage share of agreed upon capital costs
for the upgrade underway in 2020 thereby adjusting their water rate; and
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Item #2758
EXHIBIT A
WHEREAS, it is agreed that the University will maintain its capacity interest in the
City’s Water Resource Recovery Facility by paying its percentage share of agreed upon
capital costs for the upgrade underway in 2020 thereby adjusting their sewer rate; and
NOW, THEREFORE, in consideration of their mutual covenants, the parties hereto
agree as follows:
1. RATE STRUCTURE METHODOLOGY
Water Rate Structure
The University's rate structure for water shall be based on the current rate for City Non-
residential accounts as modified by a percentage ("ratio") that accounts for that part of the
rate structure that is applicable to the University.
Using only those expenses related to water treatment, and distribution, less any capacity
interest in the system purchased by the University, this ratio is based on the following
formula: The sum of (3 most recent fiscal years audited expenses + 1 current fiscal year
projected expenses + 1 upcoming fiscal year projected expenses) divided by 5 = annual
ratio. As an example, FY 2020-21 rate ratio calculation would be
(2017+2018+2019+2020+2021) / 5. It shall be established as outlined in paragraph 2 and
shall be recalculated annually by the City and provided to the University 30-days prior to its
Annual Partnership Meeting as described in part 4 of this agreement. The calculation of the
current ratio for water charges is shown in Schedule A to this agreement.
Sewer Rate Structure
The University's rate structure for sewer shall be based on the current rate for City Non-
residential accounts as modified by a percentage ("ratio") that accounts for that part of the
rate structure that is applicable to the University.
Using expenses divided appropriately according to operational, capital and debt service
expenses for three components: collection, pretreatment and treatment less any capacity
interest in the system purchased by the University, this ratio is based on the following
formula: The sum of (3 most recent fiscal years audited expenses + 1 current fiscal year
projected expenses + 1 upcoming fiscal year projected expenses) divided by 5 = annual
ratio. As an example, FY 2020-21 rate ratio calculation would be
(2017+2018+2019+2020+2021) / 5. It shall be established as outlined in paragraph 3 and
shall be recalculated annually by the City and provided to Cal Poly 30-days prior to its Annual
Partnership Meeting as described in part 4 of this agreement. The calculation of the current
ratio for sewer charges is shown in Schedule B to this agreement.
2. SETTING A WATER RATE RATIO
The ratio to be applied to the Non-residential water rate structure shall be determined by the
City. The City shall prepare a five-year analysis of the expenses for the City's water system.
These expenses shall be divided according to Operational, Capital, and Debt Service for
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EXHIBIT A
three components: Source of Supply, Treatment, and Distribution. The division of expenses
in this manner will therefore appear as a matrix (three columns labeled Source of Supply,
Treatment, and Distribution; five rows labeled Operations and Maintenance, Capital Outlay,
Debt Service – 2006 WTP, and Debt Service - Other).
The University's rate structure will be based only on those expenses related to water
treatment and distribution, less any capacity interest in the system purchased by the
University under separate agreement. The University shall not pay the percentage cost of
those components related to those Source of Supply costs as the University has its own
source of supply from Whale Rock Reservoir, except as described below related to short-
term non-potable water.
Schedule A sets forth this analysis for the period beginning with the execution of this
Agreement and extending until June 30, 2021, and shall serve as an example for
determining any changes to the ratio in subsequent annual periods. Schedule A to this
Agreement shows the current five-year expense analysis and related percentages as
described above and provides a step by step description of the ratio-setting method.
3. OTHER WATER CHARGES
The City will charge the University for water supply operational resiliency based on the
historical duration of Whale Rock outages (five days). The cost for 2020-21 will be
$137,000 and will be included as part of the University’s monthly water bill . In the event
of a longer duration Whale Rock outage, the University would be charged the respective
per acre foot water supply pumping cost. The annual water supply operational resiliency
cost will increase consistent with any approved water rate increase.
If requested, the University’s rate structure for short-term non-potable water will be based
on all current fiscal year City expenses related to Source of Supply. The University will make
its annual request for short-term non-potable water to the City in writing 30-days prior to its
Annual Partnership Meeting. Short-term requests will be considered for a rolling period no
longer than five years. The provision of short-term non-potable water to the University will
be interruptible during any declared City water shortage emergency and will only be made
available following the City’s established policies and procedures.
4. SETTING A SEWER RATE RATIO
The ratio to be applied to the non-residential sewer rate structure shall be determined by the
City. The City shall prepare a prospective five-year analysis of the expenses for the City's
sewer system. These expenses shall be divided according to Operational, Capital, and Debt
Service expenses for three components: Collection, Pretreatment, and Treatment. The
University’s rate structure will be based on the expenses for these components less any
capacity interest in the system purchased by the University under separate agreement. The
division of expenses in this manner will therefore appear as a matrix (three columns labeled
Collection, Pretreatment, and Treatment; four rows labeled Operations and Maintenance,
Capital Outlay, Debt Service – Prepaid, and Debt Service – Other.
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Schedule B sets forth this analysis for the period beginning with the execution of this
Agreement and extending until June 30, 2021, and shall serve as an example for
determining any changes to the ratio in subsequent annual periods. Schedule B to this
Agreement shows the current five-year expense analysis and related percentages as
described above and provides a step by step description of the ratio-setting method.
5. OTHER SEWER CHARGES
If requested, the University’s rate structure for short-term wastewater collection system and
wastewater treatment capacity will be based on City expenses related to wastewater
collection and treatment, including financing costs. The University will make its annual
requests for short-term wastewater collection system and wastewater treatment capacity to
the City in writing 30-days prior to its Annual Partnership Meeting. Short-term requests will
be considered for a rolling period no longer than five years.
6. ANNUAL PARTNERSHIP MEETING
It is the intent of both parties to participate annually, no later than March each year, with
information shared 30-days prior to the meeting, to review and discuss in good faith the
following water and sewer rate and service issues.
City to provide:
1. Prior fiscal year’s rate analysis compared to actual expenses,
2. Sewer meter calibration report,
3. Water consumption and rate trends,
4. Data related to peak day water demand, dry weather daily wastewater flow, and
peak wastewater flow,
5. Status of City WTP and City WRRF projects and any planned projects,
6. Availability for short-term non-potable water, and available capacity for water
treatment, wastewater collection system, and wastewater treatment, and
7. Any major assumptions significantly changing the water and sewer rate ratios.
University to provide:
1. Progress on planned development, enrollment projections, planned Utility Master
Plan improvements, and planned water service connections, locations, and
required water and wastewater service for the coming year,
2. Annual efforts to reduce inflow and infiltration into its wastewater collection
system (feet of sewer pipe replaced, etc.),
3. Request for additional water treatment capacity, if peak daily water demand
exceeds WTP capacity interest,
4. Request for short-term non-potable water,
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5. Request for short-term wastewater collection system and/or WRRF treatment
capacity (if average daily dry weather flow or peak flow exceed capacity interest),
and
6. Status of campus water reclamation facility and campus water storage projects.
6. AMENDMENTS TO THE RATIO
Exceeding Capacity Interest
The City will inform the University in writing when water demand from the WTP or
wastewater flows to the wastewater collection system or WRRF are within ten percent of the
University’s capacity interest. If the University exceeds its capacity interest in the WTP,
wastewater collection system, or WRRF the City will charge the University 100 percent of
the per unit Non-residential rate in effect at the time. This per unit rate will remain in effect
until the University purchases an additional capacity share in the City’s facilities, or reduces
its water demand or wastewater flows. A Partnership Meeting will be held within 30 days of
the exceedance for the City and University develop terms for the University to purchase of
additional capacity interest.
Resetting the Ratio
In the event the City and University cannot reach agreement on the proposed applicable
ratio for the next year, the ratio in existence at that time shall remain in effect until agreement
is reached. The parties agree to cooperate and use their best efforts to reach agreement on
the proposed ratio in an expeditious manner.
5. TERM OF AGREEMENT
Annual extensions to the term of this agreement shall be automatic, as long as all conditions
described (other than the five-year ratio) remain the same.
6. AMENDMENTS TO THIS AGREEMENT
Any amendment, modification, or variation from the terms of this Agreement shall be in
writing and shall be effective only upon approval by both parties.
7. COMPLETE AGREEMENT
This written Agreement, including the Memorandum of Understanding between the City of
San Luis Obispo and California Polytechnic State University Regarding Capacity Interest
in City Facilities dated , 2020, attached hereto as Attachment A, 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.
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EXHIBIT A
8. NOTICE
The City shall provide the University with at least the same notice of proposed changes in
water and sewer rates as other City customers. All notices related to this agreement shall
be in writing and addressed as follows:
University City
Dennis Elliot Aaron Floyd
Director of Energy, Utilities Utilities Director
and Sustainability City of San Luis Obispo
Cal Poly State University 879 Morro Street
San Luis Obispo, CA 93407 San Luis Obispo, CA 93401
Cody Van Dorn
Executive Director
Cal Poly State University
San Luis Obispo, CA 93407
8. JOINT WORK PRODUCT
This agreement is the joint work product of both parties; accordingly, in the event of
ambiguity no presumption shall be imposed against either party by reason of document
preparation.
9. RELATIONSHIP OF PARTIES
City and the agents and employees of City in the performance of this agreement shall act
in an independent capacity and not as officers or employees or agents of University. The
employees of University who participate in the performance of this agreement are not
agents of the City.
10. AUTHORITY TO EXECUTE AGREEMENT
Both City and University 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.
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Item #2758
EXHIBIT A
ATTEST: CITY OF SAN LUIS OBISPO,
A Municipal Corporation
_________________________, By: _____________________________,
Teresa Purrington, City Clerk Derek Johnson, City Manager
APPROVED AS TO FORM:
__________________________,
J. Christine Dietrick, City Attorney
CONCUR: UNIVERSITY:
__________________________ By: ______________________________
Dennis Elliot, Director Cody Van Dorn, Executive Director
Energy, Utilities, Sustainability
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EXHIBIT A
SCHEDULE A. WATER
Steps to setting Cal Poly’s appropriate share of the Non-Residential Water Rate
Annually the City shall prepare a rolling five-year schedule of expenses related to the City’s provision
of water service. The schedule will include actual expenses for the three most recent audited fiscal
years and projected expenses for both the current and next fiscal year.
These expenses shall be divided appropriately according to operational, capital, or debt service. Each
of these categories will be further divided according to whether it is a source of supply, treatment, or
distribution expense. The information for each year will be shown in a matrix, at the bottom and right of
which will appear the totals for that row and that column.
Expenses applicable to Cal Poly will be shaded.
The percentage of the shaded expenses to the total expenses will be calculated each year on the line
labeled “Percent Applicable to Cal Poly”.
The five annual percentages will be totaled and then divided by five to determine the average
percentage of the rate applicable to Cal Poly, based on the five-year schedule of expenses. This is the
percentage of the Non-residential rate that will be charged to Cal Poly for the upcoming year. Each
year, the oldest year will be moved out of the schedule, the most recent audited fiscal year expenses
will be added and a new year of projected expenses will be added after which a new five year average
will be calculated. This “rolling average” will determine each new year’s ratio
Formula: (3 most recent fiscal years audited expenses) + (1 current fiscal year projected expenses) +
(1 upcoming fiscal year projected expenses) divided by 5 = annual ratio
The Non-residential rate itself will vary according to the rates set by City Council each year.
DEFINITIONS:
Operations and Maintenance
The portion of the budget that pertains to daily operations and delivery of basic governmental services
related to provision of water service. The six water program budgets in the City’s financial plan form the
Water Fund’s operating budget.
Capital Outlay
The portion of the budget that pertains to maintaining or replacing existing public facilities and assets, and
for building or acquiring new ones as set forth in the City's capital improvement plan. For the purpose of
the Cal Poly ratio-setting model, any project that is debt-financed will not show in the capital outlay expense
category. It will show in debt service.
Debt Service
Payments of principal and interest on bonds and other debt instruments according to a pre-determined
schedule.
Source of Supply
Those water expenses directly related to the City’s water supply from Whale Rock, Salinas, and Nacimiento
Reservoirs, and recycled water. It also includes water conservation expenses, as this has been the key to
reducing City water demand, effectively creating more water by reducing the need to create additional water
supply. Development of new water supply projects fall into this category.
Distribution
The cost to deliver potable water from the Water Treatment Plant to customers and fire hydrants via the
distribution infrastructure.
Treatment
The cost to treat raw water from the City’s sources to meet potable water standards, and deliver it into the
water distribution system.
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EXHIBIT A
SCHEDULE A. WATER
Water Rate
Cal Poly State University
NOTE: Expenses applicable to Cal Poly’s water rate are shaded.
Water Rate Percentage for FY 2020-21 (5-year Average): 57 + 54 + 51 + 56 + 48 / 5 = 53%
Source of Supply Treatment Distribution Total
Operation & Maintenance 9,771,604$ 4,651,165$ 2,366,449$ 16,789,218$
Capital Outlay 1,627,979$ 727,646$ 5,060,450$ 5,788,096$
Debt Service - 2006 WTP -$ 1,030,948$ 0 1,030,948$
Debt Service - Other 525,457$ 572,000$ 65,400$ 637,400$
Total 11,925,040$ 6,981,759$ 7,492,299$ 24,245,662$
Total applicable to Cal Poly -$ 6,409,759$ 7,492,299$ 13,902,058$
Percent applicable to Cal Poly 0%26%31%57%
Source of Supply Treatment Distribution Total
Operation & Maintenance 9,387,467$ 4,617,479$ 3,540,420$ 17,545,366$
Capital Outlay 298,367$ 856,148$ 2,502,471$ 3,656,986$
Debt Service - 2006 WTP -$ 1,033,548$ 0 1,033,548$
Debt Service - Other 525,457$ 569,600$ 65,427$ 1,160,484$
Total 10,211,291$ 7,076,775$ 6,108,318$ 23,396,384$
Total applicable to Cal Poly -$ 6,507,175$ 6,108,318$ 12,615,493$
Percent applicable to Cal Poly 0%28%26%54%
Source of Supply Treatment Distribution Total
Operation & Maintenance 8,832,927$ 3,007,759$ 2,866,779$ 14,707,465$
Capital Outlay 278,911$ 1,194,569$ 2,500,806$ 3,974,286$
Debt Service - 2006 WTP -$ 898,802$ 0 898,802$
Debt Service - Other 525,457$ 571,600$ 74,669$ 1,171,726$
Total 9,637,294$ 5,672,730$ 5,442,254$ 20,752,278$
Total applicable to Cal Poly -$ 5,101,130$ 5,442,254$ 10,543,384$
Percent applicable to Cal Poly 0%25%26%51%
Summary of Water Cost Components for 2019-20
Source of Supply Treatment Distribution Total
Operation & Maintenance 10,013,682$ 4,402,995$ 3,734,808$ 18,151,485$
Capital Outlay 169,289$ 4,279,474$ 3,490,332$ 7,939,095$
Debt Service - 2006 WTP -$ 883,900$ 0 883,900$
Debt Service - Other 2,465,256$ 567,800$ 28,111$ 3,061,167$
Total 12,648,227$ 10,134,169$ 7,253,251$ 30,035,647$
Total applicable to Cal Poly -$ 9,566,369$ 7,253,251$ 16,819,620$
Percent applicable to Cal Poly 0%32%24%56%
Source of Supply Treatment Distribution Total
Operation & Maintenance 10,675,781$ 4,775,029$ 3,163,874$ 18,614,684$
Capital Outlay 55,092$ 186,141$ 2,191,665$ 2,432,898$
Debt Service - 2006 WTP -$ 892,300$ 0 892,300$
Debt Service - 2002 Bond & SST -$ 1,349,853$ 28,410$ 1,378,263$
Total 10,730,873$ 7,203,323$ 5,383,949$ 23,318,145$
Total applicable to Cal Poly -$ 5,853,470$ 5,383,949$ 11,237,419$
Percent applicable to Cal Poly 0%25%23%48%
Summary of Water Cost Components for 2016-17
Summary of Water Cost Components for 2017-18
Summary of Water Cost Components for 2018-19
Summary of Water Cost Components for 2020-21
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SCHEDULE B. SEWER
Steps to setting Cal Poly’s appropriate share of the Non-Residential Sewer Rate
The City shall prepare a five-year schedule of expenses for the City’s sewer system. The five-year
period will include the three most recent historical years, the current year, and one prospective year.
These expenses shall be divided appropriately according to operational, capital or debt service. Each
of these categories will be further divided according to whether it is a collection, pretreatment or a
treatment expense. The information for each year will be shown in a matrix, at the bottom and right of
which will appear the totals for that row and that column.
Expenses applicable to Cal Poly will be shaded.
The percentage of the shaded expenses to the total expenses will be calculated each year on the line
labeled “Percent Applicable to Cal Poly”.
The five annual percentages will be totaled and then divided by five to determine the average
percentage of the rate applicable to Cal Poly, based on the five-year schedule of expenses. This is the
percentage of the Non-residential rate that will be charged to Cal Poly for the five-year period.
The Non-residential rate itself will vary according to the rates set by City Council each year.
DEFINITIONS
Operations and Maintenance
The portion of the budget that pertains to daily operations and delivery of basic governmental services. The
four sewer program budgets in the City’s financial plan form the Sewer Fund’s operating budget.
Capital Outlay
The portion of the budget that pertains to maintaining or replacing existing public facilities and assets, and
for building or acquiring new ones as set forth in the City's capital improvement plan. For the purpose of
the Cal Poly ratio-setting model, any project that is debt-financed will not show in the capital outlay expense
category. It will show in Debt Service.
Debt Service
Payments of principal and interest on bonds and other debt instruments according to a pre-determined
schedule.
Collection
Those sewer expenses directly related to the collection and transportation of wastewater from its various
sources to the Water Resource Recovery Facility.
Pretreatment
The cost of the program whose goal is to prevent toxic waste from entering the wastewater collection system
at Non-residential and industrial sources.
Treatment
The cost to treat and dispose of municipal wastewater. All disposal must strictly comply with the State
Health and Regional Water Quality board’s requirements for discharge into the creek or disposal of
biosolids.
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EXHIBIT A
SCHEDULE B. SEWER
Sewer Rate
Cal Poly State University
NOTE: Expenses applicable to Cal Poly’s sewer rate are shaded.
Sewer Rate Percentage for FY 2020-21 (5-year Average): 100+100+100+100+100 / 5 = 100%
Summary of Sewer Cost Components for 2016-17
Collection Pretreatment Treatment Total
Operations and Maintenance 1,619,200 416,500 6,853,200 8,888,900
Capital Outlay - Adjusted 1,842,900 0 2,749,000 4,591,900
Debt Service - Prepaid 0 0 0 0
Debt Service - Other 784,618 0 618,544 1,403,163
Total 4,246,718 416,500 10,220,744 14,883,963
Percent Applicable to Cal Poly 24%3% 73% 100%
Summary of Sewer Cost Components for 2017-18
Collection Pretreatment Treatment Total
Operations and Maintenance 1,428,200 366,300 5,917,900 7,712,400
Capital Outlay - Adjusted 1,790,400 0 7,075,500 8,865,900
Debt Service - Prepaid 0
Debt Service - Other 782,950 0 618,363 1,401,313
Total 4,001,550 366,300 13,611,763 17,979,613
Percent Applicable to Cal Poly 22%2% 76% 100%
Summary of Sewer Cost Components for 2018-19
Collection Pretreatment Treatment Total
Operations and Maintenance 1,751,800 421,300 7,157,700 9,330,800
Capital Outlay - Adjusted 4,058,800 0 3,515,700 7,574,500
Debt Service - Prepaid 0 0 0 0
Debt Service - Other 780,505 0 618,177 1,398,682
Total 6,591,105 421,300 11,291,577 18,303,982
Percent Applicable to Cal Poly 36%2% 62% 100%
Summary of Sewer Cost Components for 2019-20
Collection Pretreatment Treatment Total
Operations and Maintenance 1,549,100 409,600 6,381,500 8,340,200
Capital Outlay - Adjusted 755,600 35,600 499,100 1,290,300
Debt Service - Prepaid 0 0 0 0
Debt Service - Other 737,011 0 618,177 1,355,188
Total 3,041,711 445,200 7,498,777 10,985,688
Percent Applicable to Cal Poly 28%4% 68% 100%
Summary of Sewer Cost Components for 2020-21
Collection Pretreatment Treatment Total
Operations and Maintenance 1,639,600 402,700 6,603,500 8,645,800
Capital Outlay - Adjusted 2,369,800 0 300,500 2,670,300
Debt Service - Prepaid 0 0
Debt Service - Other 739,468 617,787 1,357,255
Total 4,748,868 402,700 7,521,787 12,673,355
Percent Applicable to Cal Poly 37%3% 59% 100%
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EXHIBIT B
AGREEMENT BETWEEN THE CITY OF SAN LUIS OBISPO AND
THE BOARD OF TRUSTEES OF THE CALIFORNIA STATE UNIVERSITY
REGARDING CAPACITY INTEREST IN THE WATER AND SEWER SYSTEMS
THIS AGREEMENT, dated _____________, by and between the CITY OF SAN LUIS
OBISPO, CALIFORNIA (hereinafter referred to as "City"), and the BOARD OF
TRUSTEES OF THE CALIFORNIA STATE UNIVERSITY (hereinafter referred to as
"University").
WITNESSETH:
WHEREAS, the City and the University entered into a Memorandum of
Understanding on March 17, 2020 agreeing to address a series of water and sewer
objectives by agreement including fair share contributions to the City’s Water Treatment
Plant and Water Resource Recovery Facility; and
WHEREAS, the City and the University have a long-standing relationship
participating on the Whale Rock Commission related to the operation of Whale Rock
Reservoir,
WHEREAS, the City and the University also have a long relationship with regard
to the City’s Water Treatment Plant, Wastewater Collection System, and Water Resource
Recovery Facility; and
WHEREAS, it is the desire of both parties to continue that relationship; and
WHEREAS, the City is upgrading both its Water Treatment Plant and Water
Resource Recovery Facility; and
WHEREAS, the University is interested in maintaining a capacity interest in the
City's Water Treatment Plant and Water Resource Recovery Facility; and
NOW, THEREFORE, in consideration of their mutual covenants, the parties hereto
agree as follows:
1. WATER SYSTEM
The University wishes to maintain a capacity interest at the City’s Water Treatment Plant
equivalent to 1,000 acre feet/year at a daily volume not to exceed 0.893 million gallons
daily (mgd) not to exceed a flow rate of 1.44 mgd.
A. Water Treatment Plant
The City’s Water Energy Efficiency project at its Water Treatment Plant will ensure
continuing compliance with drinking water quality regulations as well as modernize
certain components of the facility. The University agrees to pay the percentage
obtained by the division of 1.44 mgd (University's capacity) by 16.0 mgd (plant
capacity), or 9.0 percent, of the total project cost. The cost to the University is
$1,548,180 which will be finalized by letter when project construction is complete,
subject to the total contribution ceiling noted in paragraph three of this agreement.
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EXHIBIT B
B. Water Distribution System and Potable Water Storage
The University has not purchased a capacity interest in the City ’s water distribution or
potable water storage system outside of the Water Treatment Plant. Prior to the University
adding demand to the City’s water distribution system, the University and City will work to
identify water service needs, and design and construct necessary mitigation, including
University capital contributions, to avoid impacts to the City’s water distribution or treated
water storage system. Service cannot be provided to the University when downstream
City customers could be adversely affected.
2. SEWER SYSTEM
The University wishes to maintain its capacity interest in the upgraded Water Resource
Recovery Facility equivalent to 0.471 mgd. The current capacity interest in the wastewater
collection system is a peak flow rate of 1.2 mgd, required due to infiltration and inflow and
wet weather peak flows.
A. Water Resource Recovery Facility
The upgrades to the Water Resource Recovery Facility are mandatory to
meeting regulatory discharge requirements. The capacity of the plant will
expand from 5.1 mgd to 5.4 mgd. The University agrees to pay the
percentage obtained by the division of 0.471 mgd (University's interest) by
5.1 mgd (existing plant capacity), or 9.24 percent, or by the division of 0.471
(University’s interest) by 5.4 mgd (future plant capacity), or 8.72 percent, of
the total project cost, as detailed in Attachment 1. The estimated cost to the
University is $13,997,193, which will be refined upward or downward by
letter when project construction is complete, subject to the total contribution
ceiling noted in paragraph three of this agreement.
B. Wastewater Collection System
No upgrades are planned at this time to the relief sewer main, therefore,
there is no additional cost at this time for the University to maintain its
capacity interest in the City’s wastewater collection system at the peak flow
rate of 1.2 mgd level.
3. RECEIPT OF FUNDS
To maintain a capacity interest in the City's Water Treatment Plant and Water Resource
Recovery Facility, the University's contribution must be received by December 31, 2022.
The estimated costs set forth in paragraphs one and two may be adjusted between
categories based upon actual costs provided. The total University contrib ution for the
Water Treatment Plant and Water Resource Recovery Facility will not exceed
$15,545,373. Exercising this option will be reflected in the percentage ratio of the non -
residential rate structure as set forth in the Agreement between the City and the University
regarding water and sewer rates following receipt of the University’s contribution. The
adjusted water ratio is described in Exhibit A of that Agreement; and the adjusted sewer
ratio is described in Exhibit B of that Agreement.
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EXHIBIT B
4. NOTICE
All notices related to this agreement shall be in writing and addressed as follows:
University City
Dennis Elliot Aaron Floyd
Director of Energy, Utilities Utilities Director
and Sustainability City of San Luis Obispo
Cal Poly State University 879 Morro Street
San Luis Obispo, CA 93407 San Luis Obispo, CA 93401
Cody VanDorn
Executive Director
Cal Poly University
San Luis Obispo, CA 93407
5. AGREEMENT CONTAINS ALL UNDERSTANDINGS
This document represents the entire and integrated Agreement between the City and the
University, and supersedes all prior negotiations, representations, or Agreements, either
written or oral, except as described the 2020 Capacity Interest Memorandum of
Understanding by and between the parties. This document may be amended only by
written instrument, signed by both City and University. All provisions of this Agreement
are expressly made conditions. This Agreement shall be governed by the laws of the
State of California.
IN WITNESS WHEREOF, CITY and UNIVERSITY have executed this Agreement the day
and year first above written.
University City
________________________ __________________________
Attest:
________________________
Approved as to Form
________________________
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EXHIBIT B
ATTACHMENT 1: 2020 Water Resource Recovery Facility Project Cost
Facility ID Description Capacity
Related A Estimated Cost B Capacity
Percentage C Cal Poly Share D Cal Poly Share +
Contingency E
5 Site Work No $7,917,752 9.24%$731,600 $804,760.36
6 Yard Piping No $8,556,058 9.24%$790,580 $869,637.72
7 Landscape Yes $1,112,303 8.72%$96,993 $106,692.13
9 Site Electrical No $6,325,651 9.24%$584,490 $642,939.19
11 Air Gap Building No $179,106 9.24%$16,549 $18,204.37
14 Equalization Pond Yes $2,893,797 8.72%$252,339 $277,573.01
15 Headworks No $679,338 9.24%$62,771 $69,047.95
16 Ferric Chloride Facility No $96,566 9.24%$8,923 $9,814.92
17 Vactor Truck Facility Yes $717,211 8.72%$62,541 $68,794.89
20 Primary Clarifiers No $1,916,038 9.24%$177,042 $194,746.12
64 Filtrate Equalization Pump Station No $350,320 9.24%$32,370 $35,606.53
22 Sludge Pump Station No $612,707 9.24%$56,614 $62,275.51
27 Primary Effluent Diversion Box Yes $498,587 8.72%$43,477 $47,824.44
28 Primary Effluent Screens Yes $3,531,853 8.72%$307,978 $338,775.38
29 Calcium Hydroxide Facility No $35,450 9.24%$3,276 $3,603.10
30 Bioreactor 1 & 2 Modifications Yes $4,868,143 8.72%$424,502 $466,952.29
35 Bioreactor 3 & 4 Yes $7,812,882 8.72%$681,283 $749,411.65
36 Chemical Storage Yes $1,558,325 8.72%$135,886 $149,474.52
40 MBR Yes $23,320,401 8.72%$2,033,539 $2,236,892.82
44 Switchgear Building No $3,893,354 9.24%$359,746 $395,720.46
51 Chemical Storage Yes $118,951 8.72%$10,373 $11,409.79
53 UV Area Electrical Building Yes $1,480,284 8.72%$129,081 $141,988.83
54 UV Disinfection Yes $6,160,467 8.72%$537,193 $590,911.97
55 Chlorine Contact Basin No $25,545 9.24%$2,360 $2,596.44
100 Mobilization No $5,799,597 9.24%$535,883 $589,471.06
68 Effluent Cooling Yes $4,299,648 8.72%$374,929 $412,422.27
92 Headworks Electrical Enclosure No $1,251,923 9.24%$115,678 $127,245.45
70 Sludge Blend Tank No $1,016,841 9.24%$93,956 $103,351.72
72 Thickening No $2,522,050 9.24%$233,037 $256,341.12
73 Solids Electrical Building No $1,471,744 9.24%$135,989 $149,588.06
80 Digester No. 1 No $595,791 9.24%$55,051 $60,556.15
82 Digester No. 2 No $2,027,191 9.24%$187,312 $206,043.68
83 Digester Building No $2,687,269 9.24%$248,304 $273,134.05
84 Cogeneration No $46,701 9.24%$4,315 $4,746.67
85 Digested Sludge Storage Tank No $1,259,220 9.24%$116,352 $127,987.08
86 Dewatering Building No $745,590 9.24%$68,893 $75,781.81
88 Odor Control Facility No $1,523,675 9.24%$140,788 $154,866.37
90 MCC-A Building No $276,264 9.24%$25,527 $28,079.46
91 MCC-B Building No $179,438 9.24%$16,580 $18,238.05
94 MCC-G Building No $32,244 9.24%$2,979 $3,277.25
97 MCC-J Building No $79,219 9.24%$7,320 $8,051.78
98 PG&E Revenue Meter Switchgear No $380,531 9.24%$35,161 $38,677.17
$110,856,024.40 $9,939,557.82 $10,933,514
$30,989,858.00 9.24%$2,863,462.88 $3,063,679
$12,803,021 $13,997,193
Total Construction Cost F
Program Soft Costs G
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EXHIBIT B
ATTACHMENT 2: 2020 Water Energy Efficiency Project
Design WTP Backup
Generator Construction Total Cost
Total Project Cost 902,000$ 2,000,000$ 14,300,000$ 17,202,000$
Cal Poly Share (9.0%)81,180$ 180,000$ 1,287,000$ 1,548,180$
City Share (91.0%)820,820$ 1,820,000$ 13,013,000$ 15,653,820$
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ITEM # 2758
EXHIBIT C
2020 MEMORANDUM OF UNDERSTANDING (“MOU”) BETWEEN
THE CITY OF SAN LUIS OBISPO (“City”) AND THE BOARD OF TRUSTEES OF
THE CALIFORNIA STATE UNIVERSITY (“University”)
REGARDING CAPACITY INTEREST IN CITY FACILITIES
This MOU is made on ___ , 2020 by and between the City and the University.
Recital
This MOU documents the University’s capacity interest (referenced in prior agreements
as an “equity interest”) in the City’s Water Treatment Plant, potable water distribution
system and treated water storage, wastewater collection system and wastewater
treatment facility (Water Resource Recovery Facility or WRRF). This 2020 MOU replaces
prior agreements regarding the University’s capacity interest in City fac ilities including the
May 1, 2007 MOU, and the 1993 Agreement between the City of San Luis Obispo and
California Polytechnic State University Regarding Water and Sewer Rates dated January
5, 1993, exhibit A, the Agreement between the City of San Luis Obisp o and California
Polytechnic State University Regarding Optional Equity Interest in the Water and Sewer
Systems dated January 5, 1993, exhibit B, and the Memorandum of Understanding
between the City of San Luis Obispo and California Polytechnic State University dated
January 6, 1993, exhibit C.
Capacity
The City and University agree to communicate in the planning and development of
facilities to ensure that adequate capacity in the City’s Water Treatment Plant, potable
water distribution and storage system, wastewater collection system, and wastewater
treatment facility (Water Resource Recovery Facility) is available to meet the University’s
current and projected needs. The University agrees to provide the City with its
development and population projections annually which shall include an analysis of the
University’s water treatment, potable water distribution and storage system, and
wastewater collection system and treatment capacity needs as planned and projected for
the next five years. The City shall consider the University’s projections in its own mas ter
planning to better understand the University’s capacity needs in future facility upgrades
and expansions.
Capacity Interest
The University has historically maintained a capacity interest in the City’s Water
Treatment Plant, wastewater collection system, and Water Resource Recovery Facility
sufficient to serve current and projected University needs. The University has done so by
financially participating in required facility upgrades and expansions via capital
contribution based on the University’s desired capacity percentage share of the facilities.
Maintenance of said capacity interest, through fair share capital contributions, ensures
that the City maintain available capacity to serve the University’s needs up to the amount
of the capacity interest. As set forth in the Water and Sewer Rate Agreement, these
capital contributions are reflected in the University’s rates.
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EXHIBIT C
The University’s capacity interest in the City’s Water Treatment Plant shall be calculated
as 1,000 acre feet annually (893,000 gallons daily; peak day maximum flow rate of 1.44
million gallons)1. As the City’s Water Treatment Plant can treat up to 16 million gallons
daily, the University’s capacity share is 9.0 percent of the facility. Maintenance of this
capacity interest is subject to future capital contributions at 9.0 percent under separate
agreement.
As of 2020, the University has not purchased a capacity interest in the City’s water
distribution or potable water storage system outside of the Water Treatment Plant. Prior
to the University adding demand to the City’s water distribution system, the University
and City will work to identify water service needs, and design and construct necessary
mitigation, including University capital contribution s, to avoid impacts to the City’s water
distribution or treated water storage system.
With prior payments to the City in 1993, the University’s capacity interest in the City’s
wastewater collection system is a peak flow rate of 1.2 million gallons per day.
Maintenance of this capacity interest is subject to future capital contributions.
With prior payments to the City in 1993, the University’s capacity interest in the City’s
Water Resource Recovery Facility shall be calculated as a maximum totalized dry
weather flow2 of 0.471 million gallons per day. As the City’s Water Resource Recovery
Facility can discharge up to 5.1 million gallons of treated effluent daily (up to 5.4 million
gallons daily in 2022), the University’s capacity share is 9.24 percent of the facility
(reducing to 8.72 percent in 2022). Maintenance of this capacity interest is subject to
future capital contributions at 8.72 percent under separate agreement.
Authority to Execute Memorandum of Understanding
Both the City and University agree that each individual execu ting this MOU on behalf of
each party is a person duly authorized and empowered to execute agreements for such
party.
The parties hereto have caused this MOU to be executed the day and year first above
written.
UNIVERSITY CITY OF SAN LUIS OBISPO,
A Municipal Corporation
By: _____________________________ By : _____________________________
Cody Van Dorn, Executive Director Derek Johnson, City Manager
1 Cal Poly’s capacity interest of 1.44 million gallons in the City’ Water Treatment Plant.
2 In the City of San Luis Obispo, dry weather wastewater flows occur between April and November. Wet weather flows
occur from December through March.
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MEMORANDUM OF UNDERSTANDING
BETWEEN
CALIFORNIA POLYTECHNIC STATE UNIVERSITY
AND
THE CITY OF SAN LUIS OBISPO
This Memorandum of Understanding (“MOU”) is by and between California Polytechnic State
University (“Cal Poly”) and the City of San Luis Obispo (“City”).
I. Background
Cal Poly and the City of San Luis Obispo have a long and successful history of working together to
achieve shared objectives and solve problems. Evidence of this can be found in various agreements
including those addressing transit bus service, fire protection, water and wastewater, as well as
cooperative policing. Numerous other points of collaboration large and small are indicative of a strong
and growing “town-gown” relationship. In 2016, the City and Cal Poly received a prestigious award for
the shared effort of creating the San Luis Obispo Neighborhood Wellness/Community Civility Effort
(Civility Report). The Civility Report remains an important guiding document that supports resident
quality of life and student success.
The City and Cal Poly have been similarly engaged in a process to understand the impacts of the
Cal Poly 2035 Master Plan as identified in its Draft Environmental Impact Report, and the
infrastructure and service needs, including water, wastewater and transportation, for both Cal Poly
and the City. The parties understand that maintaining a high level of partnership will contribute to
more effective outcomes as Cal Poly and the City continue to grow. Recognizing the importance of
this overarching objective, the purpose of this MOU is limited to documenting certain key objectives
identified by the parties as critical to accommodating further development on campus.
II. Goals and Principles
a. The parties enter this MOU to promote cooperation, and further develop their growing
relationship.
b. The parties will endeavor to improve communication by sharing information consistently and
meeting regularly.
c. This MOU is a statement of broad policy objectives and interests of the parties that will inform
future discussions and negotiations between Cal Poly and the City and is not intended to create
any contractual commitments.
d. In the event the parties identify projects or services requiring legal and/or financial commitments
between each other, the parties will negotiate in good faith toward written agreements.
III. Water and Wastewater
The parties have enjoyed a longstanding partnership around water as reflected in various
agreements including those addressing water and wastewater treatment as well as shared supply
(e.g., Whale Rock Commission). Over the past year, staff from both entities have collaborated closely
to develop strategies to ensure the availability and reliability of Cal Poly’s water supply and
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wastewater capacity in support of development planned in the 2035 Master Plan. The following
objectives will be addressed via amendment of existing agreements or establishment of new
agreements:
a. Develop mechanisms to confirm operational resiliency of Cal Poly’s water supply
b. Secure additional, temporary non-potable water supply and wastewater capacity for Cal Poly if
needed to support the development of on-campus housing
c. Reach agreement on Cal Poly fair-share financial contribution to support required upgrades of
City’s water treatment plant and distribution system
d. Reach agreement on Cal Poly fair-share financial contribution towards required upgrades of City’s
water resource recovery facility and wastewater collection system
e. Cal Poly to regularly inform City of progress towards reducing municipal sewer inflow and
infiltration
f. Establish protocol and objectives for annual partnership meeting to address items such as
anticipated facility upgrades and related fair share contributions, inflow and infiltration reduction
projects, smart meters installation to track water supply use/flow rates, adaptive management of
water supply storage and other related water and wastewater matters.
IV. Transportation
The City and Cal Poly recognize the opportunity to increase their level of partnership around
transportation planning and programs. Coordination of effort is essential to adapting and building
systems that are responsive to growing populations and evolving transportation trends.
The value of collaboration in this area has long been realized with respect to the City’s transit system,
which provides excellent service to both the City and Cal Poly populations. Continued efforts to evaluate
and, where appropriate, expand transit service and Transportation Demand Management (TDM) policies
at the Cal Poly campus will play an essential role in supporting Cal Poly’s robust TDM program and in the
City’s overarching climate action and sustainability goals to reduce Vehicle Miles Traveled (VMT) and
greenhouse gas emissions. Cal Poly and City agree that continued cooperation is essential to achieve these
goals and are deeply engaged in discussions around an expanded form of partnership with the shared
objective of building a more dynamic, sustainable, and mutually beneficial transportation program.
In addition to transit service, which is critical to the parties’ transportation plans and objectives, other
specific areas that would benefit from intentional partnership include traffic safety (on and off campus),
regional transit, and increased support for active transportation projects and programs. For example, City
and Cal Poly recently initiated a collaborative effort to assess and procure a bike share program to serve
the entire community.
The parties have identified the following interests and actions for near-term implementation:
a. Ensure the City is informed and consulted as Cal Poly develops and implements its TDM Program
b. Scale and optimize transit services available to the Cal Poly community in accordance with
changing population and utilization, with the objective of reducing VMT
c. Consolidate and/or coordinate active transportation projects to optimize results and avoid
conflicts between vehicles, bicycles and pedestrians
d. Collaborate on initiatives to improve mobility and safety off campus
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e. Identify potential mechanisms for Cal Poly to participate financially towards implementation of
transportation safety and mobility improvements that directly benefit university students, staff
and visitors.
f. Collaborate on strategies to address concerns related to campus spillover parking within adjacent
residential neighborhoods
g. Establish protocols and objectives to address transportation planning, TDM program evaluation
issues, and potential transportation enhancement projects, including trip monitoring, ongoing
evaluation of VMT reduction, transit service enhancements, and programs/projects to enhance
active transportation and mobility safety.
V. Housing
Since 2000, Cal Poly has tripled its student occupancy on campus, investing more than half a billion
dollars into student housing facilities without the use of any state funds. During that same period, Cal
Poly enrollment has grown by just over 4,300 students while the university has added more than 5,100
beds to its housing inventory. Cal Poly has provided additional housing capacity for all student enrollment
growth since 2000. Despite Cal Poly’s enrollment increases, there were approximately 658 fewer students
living off campus in the fall of 2019, as compared to the fall of 2000, because Cal Poly increased the
percentage of students living on campus from 17% to 37%.
The Cal Poly 2035 Master Plan sets an even more ambitious goal of housing on-campus more than
60% of anticipated enrollment. As part of the Master Plan, Cal Poly is preparing to provide for California’s
critical higher education needs by increasing headcount enrollment by 4,056 students. As it has done over
the last two decades, Cal Poly plans to house all of its enrollment growth, as well as significantly reduce
the number of students living off campus. With Cal Poly’s planned increase of 7,200 on -campus beds
articulated in the 2035 Master Plan, the university is working to reduce the number of students living off
campus by more than 3,100 students.
Cal Poly has elasticity in its current on-campus bed capacity within residence halls. When necessary
and feasible, Cal Poly will evaluate whether increased bed density should be implemented to
accommodate enrollment growth.
The parties have identified the following interests and actions for near-term implementation:
1. The parties understand the importance of the university’s next student housing project and
the related enabling projects (i.e. on-campus WRF to support water/wastewater capacity).
The University is actively working on the university’s next student housing project to build
1600-2000 new student beds.
2. Cal Poly to regularly inform the City of progress towards constructing additional housing on
campus and share its five-year capital plan, housing occupancy rates, and enrollment targets.
3. Establish protocol and objectives for annual partnership meeting to address issues related to
university and city growth and best accomplish transportation, public service and other
resource planning.
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City and Cal Poly leadership hereby commit to act in good faith in pursuit of these shared objectives.
CITY CAL POLY
_____________________________ ____________________________
____________ ____________
Date Date
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City of San Luis Obispo, Community Development, 919 Palm Street, San Luis Obispo, CA, 93401-3218, 805.781.7170, slocity.org
May 11, 2020
Board of Trustees
California State University
c/o Office of the Chancellor (via e‐mail)
401 Golden Shore
Long Beach CA 90802
Re: Cal Poly San Luis Obispo Master Plan
Members of the CSU Board of Trustees,
The City of San Luis Obispo has been actively engaged with the university since the first draft of the
Master Plan was published. The City stands ready to assist the university with implementation of the
Master Plan, as outlined in the recently executed Memorandum of Understanding (MOU). The MOU
identifies core areas of collaboration, including transportation, water supply resiliency, and
wastewater collection and treatment. In addition to those areas of work, the City and Cal Poly will
continue to promote coordination and grow our partnership across a wide variety of topics including
emergency response and law enforcement, neighborhood wellness and civility, information
technology, and economic development to name a few.
The City believes that, when successfully implemented, the Master Plan will help Cal Poly reduce its
impact on the local housing market (even as enrollment continues to grow) by providing beds for a
larger share of its students on campus. However, there are several hurdles for the campus ahead. As
described in the MOU, the City will assist the campus with its plans to create operational resiliency
with respect to its water supply – no small task and one that will rely on Cal Poly reaching agreement
with the City. In addition, plans to grow the campus will create mobility opportunities and constraints
for students and others as they travel to and from campus. To address this, the City will continue to
partner with the university on transit services and support the campus in its effort to implement
successful Trip Demand Management plans.
The City of San Luis Obispo appreciates the work of all the staff on campus who spent countless hours
meeting to discuss issues associated with growth under the Master Plan. Next steps have already
begun with the negotiation of a new rate agreement for water and wastewater services. This is a
good start, and the City is looking forward to working closely with the university as individual projects
under the Master Plan are proposed in the future.
Sincerely,
Michael Codron
Michael Codron
Community Development Director
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