HomeMy WebLinkAboutItem 6d. Lease Amendment No. 2 with Central Coast Ag Network for Calle Joaquin Agricultural Reserve (City Farm SLO) Item 6d
Department: Administration
Cost Center: 1005
For Agenda of: 1/18/2022
Placement: Consent
Estimated Time: N/A
FROM: Greg Hermann, Deputy City Manager
Prepared By: Robert Hill, Sustainability & Natural Resources Official
Lucia Pohlman, Sustainability & Natural Resources Analyst
SUBJECT: APPROVE LEASE AMENDMENT NO. 2 WITH CENTRAL COAST AG
NETWORK FOR THE CALLE JOAQUIN AGRICULTURAL RESERVE
RECOMMENDATION
Approve Lease Amendment No. 2 between the City of San Luis Obispo and the Central
Coast Ag Network, in a final form to satisfaction of the City Attorney, for the Calle Joaquin
Agricultural Reserve.
DISCUSSION
Background
Since 2013, the City of San Luis Obispo has partnered with the Central Coast Ag Network
(CCAN) (d.b.a. City Farm SLO) to offer prime agricultural farmland to small sustainable
farmers, as well as to provide hands-on educational programming for local youth. The
City currently leases to CCAN approximately 21 acres of farmable agricultural land
located within City limits, designated as the Calle Joaquin Agricultural Reserve, and
commonly known as “City Farm”.
In 2021, CCAN reached a series of milestones set forth in the original 2013 Agricultural
Ground Lease (also sometimes referred to as the “Master Lease”), as well as other
important goals, including the establishment of public programming, demonstration
gardens, an orchard, and infrastructure including on-site solar energy generation, a
produce cooler, and livestock shed. Further, CCAN adopted its updated 2021 Strategic
Plan that affirmed four major goals: (1) providing affordable land for small sustainable
farms; (2) offering farm-based education for at-risk and under-served youth; (3) modeling
regenerative agricultural practices; and (4) fostering a diverse community focused on food
and farming.
To continue improving the quality of their educational offerings and better support their
farmer tenants, the nonprofit has secured funding for a suite of capital investments. The
intended projects include a 30-foot by 40-foot barn to house equipment, tools, a wash-
pack station, field kitchen and meeting space, electrical upgrades, and road
improvements.
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Item 6d
These capital investments will enable CCAN to further activate the “long-term agricultural
plan” and “farmer programming” mentioned in the 2013 Agricultural Ground Lease. The
granting agencies and individual donors committed to funding this capital investment
require evidence of a longer-term entitlement to the land.
For this reason, CCAN requests an extension of the current lease term, set to expire on
December 31, 2032, for 40 years from the present. This lease extension would further
assist CCAN in accomplishing its nonprofit mission, while at the same time realizing the
City’s stated intention in creating the Calle Joaquin Agricultural Reserve: to maintain the
land in agriculture in perpetuity.
In addition to the lease extension, City staff, in collaboration with CCAN, suggest
additional lease amendments, which are reflec ted in the AGREEMENT section of Lease
Amendment No. 2, including recent and forthcoming changes to CCAN’s operations, as
well as recent updates in local and state legislation governing water use in the context of
the Sustainable Groundwater Management Act (SGMA). See Attachments A and B.
Previous Council or Advisory Body Action
On January 7, 2013, the City and CCAN first entered into a City Council-approved
Agricultural Ground Lease for “the purpose of putting the majority of the Premises into
active sustainable agricultural use, while permitting CCAN’s development of a portion of
the Premises, not to exceed the percentage allowable per zoning regulations, for facilities
to provide educational and agricultural support.” See Attachments C and D.
On May 2, 2013, the City and CCAN entered into a City Council-approved Lease
Amendment No. 1 in order to add an additional three acres into the leased premises
following the City’s successful resolution of a title dispute that had affected that area.
Policy Context
The City of San Luis Obispo’s General Plan states that "Publicly owned agricultural lands
should be leased back to farmers or used as demonstration projects that will benefit local
farmers."
In January 2011, the City established the Calle Joaquin Agricultural Reserve for the
purpose of preserving significant parts of "this signature working agricultural landscape"
at the City's southern gateway. The plan states that the agricultural “operation will be in
the hands of a nonprofit entity which, pursuant to an agreement with the City of San Luis
Obispo, will be responsible for the overall capital improvements, operation, and
maintenance of the agricultural operations of the site.”
The recommended actions are also in accordance with the City’s goals found within the
City’s Conservation and Open Space Element (2006), which states that “The City should
lease lands designated Agriculture for continued agricultural use, provided the lease
agreement reflects all City policies and management objectives.”
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Item 6d
Further, the recommended actions align with the City’s Climate Action Plan for
Community Recovery, which states within the Natural Solutions section, Pillar 6:
The Calle Joaquin Agricultural Reserve (locally known as “City Farm”) is
part of City’s Greenbelt Protection Program—a system of protected natural
resources and conserved landscapes that is central to maintaining the City’s
identity and unique sense of place. In addition to carbon sequestration, the
City’s Greenbelt provides tremendous climate resilience benefits including
shading and cooling, stormwater management and watershed protection,
as well as buffering from extreme heat events, catastrophic flooding, and
wildfires.
CCAN has confirmed their alignment with the City’s Climate Action Plan in their 2021
Strategic Plan, which states their commitment to implementing carbon sequestration
practices, and sharing best practices with the broader agricultural community.
The City’s Financial Management Manual (Section 475-C) allows for long-term leases of
City property, as well as provisions for leases to non -profit organizations, where there is
a clear link between the proposal and accomplishment of significant City goals, plans, or
policies and where the proposal has a clear and measurable community benefit. Staff and
prior Councils have considered supporting the visual arts to be in the public interest in
accordance with this policy framework.
Public Engagement
The proposed Lease Amendment is considered a matter of routine City business. Public
comment can be provided to the City Council through written correspondence prior to the
meeting or through public testimony at the meeting.
CONCURRENCE
The Utilities Department has been briefed on the proposed lease amendment and the
Utilities Department staff have provided input related to administration of the Sustainable
Groundwater Management Act (SGMA) on the leased premises, especially as related to
the City’s on-site well and necessary monitoring protocols, as well as any necessary
changes in CCAN’s water use that may be mandated during times of water shortage in
the San Luis Obispo Valley Groundwater Basin.
ENVIRONMENTAL REVIEW
Entering into the proposed Lease Agreement No. 2 with CCAN is not considered a project
under CEQA Guidelines.
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Item 6d
FISCAL IMPACT
Budgeted: No Budget Year: 2021-22
Funding Identified: No
Funding
Sources
Total Budget
Available
Current Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund
State
Federal
Fees
Other:
Total N/A N/A N/A N/A
Fiscal Analysis
There is no direct fiscal impact associated with the recommended action to approve the
draft Lease Amendment No. 2. If approved, modest staff time from the Natural Resources
Program will be used from time to time in order to oversee the chain of lease agreements.
CCAN’s annual rent will continue to be $1 per year.
ALTERNATIVES
1. Approve the draft Lease Amendment No. 2 with changes.
2. Continue the item with specific direction to staff to provide more information or make
changes, or if more discussion time is required before taking action.
3. Deny the draft Lease Amendment No. 2, although this is not recommended given the
Council’s stated goals for the Calle Joaquin Agricultural Reserve and broader
Greenbelt Protection Program.
ATTACHMENTS
A – CCAN Letter Request for Lease Extension and Amendment
B – Draft Lease Amendment No. 2
C – 2013 Agricultural Ground Lease
D – 2013 Lease Amendment No. 1
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August 13, 2021
To: Robert Hill, Natural Resources Manager, City of San Luis Obispo
Derek Johnson, City Manager, City of San Luis Obispo
From: Kayla Rutland, Executive Director, City Farm SLO
Re: Request for Lease Extension for City Farm SLO
Dear Mr. Hill,
Following your suggestions, we are sending you this request that the City of San Luis Obispo
amend the lease it currently holds with the licensed non-profit, Central Coast Ag Network (dba
City Farm SLO) to update some provisions and to extend its term.
A.
Request for extension of our current lease to 40 years from present:
We believe that we have fulfilled the terms of that lease during the eight and half years of our
tenure, and despite the numerous challenges faced in doing that, we have become a stronger
and more viable organization with growing promise for the future.
Section 2 of the Lease (“PURPOSE”) states that “the purpose of this agreement is to put the
majority of the Premises into active agricultural use.” CCAN has done this from the beginning of
the period stipulated—December 31, 2013—until the present day. Despite ongoing turnover of
portions of the land, never has less than a majority of the acreage been left fallow, and for most
of the period, as is true to today, all of the arable acreage has been under sustainable
agricultural production.
Although creating educational programs is not called out as a separate purpose in the lease,
that purpose is referenced in passing in RECITALS B, C and D, in the lead paragraph of Section 2,
and in its subsection f. ii. Since April 2014, CCAN has established a variety of educational
programs, primarily directed at youth, as documented over the years on our website,
https://cityfarmslo.org/educate-youth. Two programs begun in collaboration with SLCUSD in
2014 have continued until the present day—our academic-credit “Farm Class” for at-risk
students at Pacific Beach Continuation High School and our Therapeutic Horticulture class for
students and the District’s PREPARE program. These have been supplemented by our “On the
Farm Field Trips,” “Virtual Farm Field Trips,” and “Youth Empowerment Program” (YEP).
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Within the last year, despite the constraints on most of our programs imposed by COVID, we
have increased our staff and capital improvements and undertaken new initiatives in food
production, education, public involvement, and regenerative agricultural practices. Some of
these were showcased in our annual report to City Council, presented as a 6-minute video
(https://www.youtube.com/watch?v=mh05WA8Ywv8).
Notable ventures include the implementation of our Youth Empowerment Program serving at-
risk teens, adaptation of our On-the-Farm Field Trips for virtual delivery, and expansion of
regenerative agricultural production to increase distribution to the Food Bank of SLO and sales
at local markets.
The terms of the lease include a series of milestones including establishment of public
programming and demonstration gardens, all of which we have done and reported on annually
to the Manager of Natural Resources and the City Council.
Sections 2. d. i and 2.e.iv and v mention submission of a “long-term agricultural plan” and
“farmer programming” which are not further described. In the past, circumstances of
subleasing parcels of the property to more than 15 independent farmers have not allowed for
such long-term planning, but CCAN nonetheless continued to implement the agricultural
purposes stated in the recitals and PURPOSE section of the lease.
As of this writing, CCAN has grown as an organization and strengthened its programming and
financial position and infrastructure investments to the extent that such long-term planning is
now possible. We have completed installation of a solar array that contributes renewable
energy to the grid and offsets our irrigation costs, and construction of a highly productive hoop
house, a solid perimeter fence, and an energy-efficient produce cooler. We have planted a 40-
tree you-pick orchard and built a corral and shed for small livestock operations complementing
our regenerative agriculture practices.
Our intention, detailed in our Strategic Plan (attached), is to move forward with more capital
investment: a 30x40 foot barn to house equipment, tools, a wash-pack station, field kitchen and
meeting space, installation of a new meter and extension of electrical service throughout the
property, and upgrading of our present road to one providing all-weather access. These
projects are funded and are scheduled for execution over the next 1-3 years, pending
extension of our land lease.
We expect these facilities to allow us to activate the “long term agricultural plan” and “farmer
programming” mentioned in the lease. That plan is to scale the use of regenerative agriculture/
carbon farming practices that we have successfully tested in our half-acre educational gardens
to include larger segments of the Reserve. Scaling has begun this summer with adoption of
regenerative practices by the Youth Empowerment Program, which is now planting a one and a
quarter acre field with vegetables grown by students, volunteers and staff to be delivered to
the Food Bank. Within three years, we expect to scale these practices further, through both our
CCAN’s direct use of the land and through the adoption of these practices by our subtenant
farmers.
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To realize the “long term agricultural plans” and “farmer programming” for the next ten years
specified as a present milestone in the current lease, we need to enlist the financial support
from granting agencies and individual donors required for additional capital investment and
staffing. In order to secure such support, we need to show evidence of a longer-term
entitlement to the land.
For this reason, we ask the City to extend our current lease for 40 years from the present.
According the Master Plan, the intention of creating the Calle Joaquin Ag Reserve in 1994 was
to maintain this land in agriculture in perpetuity, and we believe that the extension of our lease
would assist in fulfilling that intention.
B.
Request for amendments to our lease:
1. Item 2, PURPOSE, permits development of “…facilities for the aggregations, light processing
and distribution of agricultural products grown locally or on the Premises as part of a local
food system…” This provision was included in the course of early discussions with CCAN
representatives who envisioned construction of a regional facility financed by a major grant.
This plan was never pursued, and so we request mention of it be deleted.
2. Item 5, IMPROVEMENTS, may refer specifically to this aggregation facility plan, and if
possible should be modified by two considerations: 1) that such construction is not included
in CCAN’s future plans and 2) that any planned improvements will be for agricultural and
educational facilities only and therefore be governed by an agricultural exemption from
those stated in section 5 c through f. We request that Item 7d, that CCAN shall not “Erect
any structure…without complying City’s permitting and review processes and obtaining City
approval,” be substituted for Item 5 c through f to take into account modifications of
relevant City policies instituted since 2013.
3. We request that Item 7a, “No retail sale of crops of livestock, unless approved by the City”
be deleted so as to permit the construction of and sales from a Farm Stand as understood
as an agricultural use.
Please let us know of any further action that can be taken from our end to move this request
forward.
Sincerely,
Kayla Rutland
Executive Director
City Farm SLO
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AMENDMENT NO. 2
AGRICULTURAL GROUND LEASE BETWEEN
THE CITY OF SAN LUIS OBISPO AND
CENTRAL COAST AG NETWORK
This Amendment No. 2 (“Amendment No. 2”) to the Agricultural Ground Lease (“Master
Lease”) is entered into on ______________________________, by and between the City of San
Luis Obispo (the "City") and Central Coast Ag Network, a California public benefit non-profit
corporation ("CCAN", d.b.a. City Farm SLO).
RECITALS
A. The City owns certain agricultural land within City limits, commonly identified as
the Calle Joaquin Agricultural Reserve, 0 Calle Joaquin, San Luis Obispo (the “Premises”).
B. CCAN is a nonprofit corporation whose purpose is to strengthen San Luis Obispo’s
food system by providing affordable land to small sustainable farmers; to promote health, success,
and environmental stewardship through farm-based education, especially for at-risk and under-
served youth; to serve as a model of regenerative and sustainable agricultural practices, seeking to
improve the long-term health and productivity of farm land; and to foster a community of people
from diverse ethnic, racial and socio-economic backgrounds who come together around food and
farming.
C. On January 7, 2013, the City and CCAN entered into the Master Lease for the
purpose of putting the majority of the Premises into active sustainable agricultural use, while
permitting CCAN’s development of a portion of the Premises, not to exceed the percentage
allowable per zoning regulations, for facilities to provide educational and agricultural support.
D. In 2021, CCAN reached a series of milestones set forth in the Master Lease as well
as other important goals, including the establishment of public programming, demonstration
gardens, on-site solar energy generation, a produce cooler, orchard, and livestock shed. In 2021,
CCAN adopted an updated strategic plan that affirmed four major goals: (1) providing affordable
land for small sustainable farms, (2) offering farm-based education for at-risk and under-served
youth, (3) modeling regenerative agricultural practices, and (4) fostering a diverse community
focused on food and farming. To continue improving the quality of their educational offerings and
better support their farmer tenants, as defined by CCAN’s 2021 Strategic Plan, CCAN has secured
funding for a capital investment. This project includes a 30 x 40-foot barn to house equipment,
tools, a wash-pack station, field kitchen and meeting space, electrical upgrades, and road
improvements. These investments will enable CCAN to activate the “long term agricultural plan”
and “farmer programming” mentioned in the Master Lease.
E. The granting agencies and individual donors who have committed to funding this
capital investment require evidence of a longer-term entitlement to the land. For this reason,
CCAN requests an extension of the Master Lease (which is set to expire on December 31, 2032)
for 40 years from the present. This lease extension would further assist CCAN in accomplishing
its nonprofit mission, while at the same time realizing the City’s stated intention in creating the
Calle Joaquin Agricultural Reserve: to maintain the land in agriculture in perpetuity.
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F. In addition to the lease extension, the City, in collaboration with CCAN, suggests
additional lease amendments, which are reflected in the AGREEMENT section of this lease
amendment. These changes align the lease with recent updates in local and state legislation
governing water use, agricultural and building permits, and development review processes.
AGREEMENT
1. Paragraph 3, TERM, of the Master Lease is hereby amended to extend the term of the lease
for forty (40) years from the date entered above of this Amendment No. 2.
2. The first sentence of Paragraph 2, PURPOSE, of the Master Lease is hereby amended to
read that “The purpose of this agreement is to put the majority of the Premises into active
sustainable agricultural use, while permitting development of a portion of the Premises,
not to exceed the percentage allowable per zoning regulations, for facilities to provide
educational and agricultural support.”
3. Paragraph 2(g), PURPOSE, of the Master Lease is hereby added, and shall read as follows:
“As outlined in their 2021-2024 Strategic Plan, CCAN shall work to promote the health,
success and environmental stewardship of at-risk and underserved youth through a variety
of farm-based education programs.”
4. Paragraph 2(h), PURPOSE, of the Master Lease is hereby added, and shall read as follows:
“By January 1, 2024, CCAN shall develop and begin implementing a Carbon Farm Plan
and leverage the educational garden as a model for regenerative, climate-positive
agriculture. Both parties agree that as a model farm, CCAN shall demonstrate holistic
nutrient and pest management procedures, carbon-sequestering land management practices
that maximize organic matter and minimize soil disturbance, drought-appropriate irrigation
methods and water use protocols, climate-appropriate crop selection, and economic
decisions that support living wages and healthy workers.”
5. Paragraph 2(i), PURPOSE, of the Master Lease is hereby added and shall read as follows:
“By January 1, 2025, all available land under the Master Lease that is not being used for
CCAN educational or farming activities shall be subleased to small-scale, minority, or
beginning farmers (as defined by CCAN) for the remainder of the term of the Lease.”
6. Paragraph 5, CONSTRUCTION OF IMPROVEMENTS BY CCAN, of the Master Lease
is hereby substituted with paragraph 7(d) to take into account modifications of relevant
City policies instituted since 2013, and thus Paragraph 5 shall read as follows: “CCAN
shall not erect any structure except fences and gates on the Premises without complying
with the City’s permitting and review processes and obtaining City approval.”
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7. Paragraph 6(g), WATER, Prevention of Escape of Irrigation Water, of the Master Lease is
hereby amended to add, following the last full sentence of the first paragraph, the
following: “Applicable laws and regulations include, but are not limited to, the “General
Waste Discharge Requirements for Discharges from Irrigated Lands” (Order No. R3-2021-
0040 set forth by the Central Coast Region of the California Regional Water Quality
Control Board).”
8. Paragraph 6(h), WATER, Sustainable Groundwater Management Act (SGMA) Regulatory
Compliance and Drought Conditions, of the Master Lease is hereby added, and shall read
as follows: “CCAN shall comply with all existing and forthcoming Sustainable
Groundwater Management Act (SGMA), San Luis Obispo Valley Groundwater
Sustainability Plan (GSP) regulations and requirements, City of San Luis Obispo General
Plan Water Element policy, and City Council ordinances and resolutions, as may be
applicable.
Compliance may include, but is not limited to, the following provisions:
(1) scheduled entry by City staff for well metering and monitoring purposes, and (2)
changes to CCAN’s and its subtenants’ allowed water use as mandated by state, regional,
and local policy if the City of San Luis Obispo is experiencing water shortages as defined
by the City’s Water Shortage Contingency Plan, or if the San Luis Obispo Subarea of the
San Luis Obispo Valley Groundwater Basin displays exceedances of the minimum
thresholds defined within the San Luis Obispo Valley Groundwater Sustainability Plan.
Water use restrictions during periods of a declared water shortage, or if the San Luis Obispo
Subarea is out of compliance with SGMA, may include but are not limited to a per-acre of
ground quota for CCAN water use or a requirement for CCAN to reduce its water use by a
designated percentage.
The City will require entry onto the Premises on the 15th of each month, or the last weekday
preceding or first weekday following the 15th, to measure and record groundwater levels
and water use from the onsite City well. CCAN’s use of the well shall cease between 12:00
AM and 12:00 PM on the date of each monthly site visit. The City shall provide a written
schedule of monthly site visits on or before January 1 of each calendar year. Should the
City request modification of the site visit schedule, including modification of the regularly
scheduled access date of the 15th of each month, the City shall provide 30 calendar-days
written notice to CCAN, including an updated schedule of proposed access dates and times.
If a non-scheduled entry is needed, a minimum of 72 hours’ notice will be given to CCAN
staff. The City will make best efforts to minimize disruptions to CCAN’s well water use to
the greatest extent practical and feasible while administering SGMA regulations and
requirements, and for any other unforeseen circumstances that may arise. Nonetheless, as
set forth in Paragraph 6(c), CCAN shall be responsible for securing a backup water supply
at CCAN’s sole cost and expense, if desired.
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9. Paragraph 6(j), WATER, Potable Water, of the Master Lease is hereby added, and shall read
as follows: “CCAN is responsible for providing potable water for staff and guests,
including purchasing and maintaining any filtration equipment necessary to ensure that the
on-site well water meets legal requirements.”
10. Paragraph 7(a), PROHIBITED USES, of the Master Lease is hereby deleted, so as to permit
the retail sale of crops and livestock via an on-site Farm Stand, which is a legal agricultural
use.
11. Paragraph 21, ASSIGNMENT AND SUBLETTING, of the Master Lease, is hereby
amended to read as follows: “CCAN may sublet any portion of the Premises for sustainable
agricultural cultivation. CCAN shall provide the City with copies of all subleases within
30 days of execution, and such subleases shall specifically incorporate the terms of this
lease and be subject to it. Revenue derived from any sublease of the Premises shall be used
by CCAN to further the purposes of this lease. The City reserves the right to audit the
records of CCAN to monitor compliance with this paragraph.”
12. All other terms and conditions of the Master Lease remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed the day
and year first written above
CITY OF SAN LUIS OBISPO CENTRAL COAST AG NETWORK, a
California public benefit non-profit corporation
____________________________ __________________________________
Mayor Erica A. Stewart President
ATTEST:
____________________________ __________________________________
Teresa Purrington, City Clerk Secretary
Approved:
____________________________
Derek Johnson, City Manager
Approved to as form:
____________________________
J. Christine Dietrick, City Attorney
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