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HomeMy WebLinkAbout08-21-2024 Agenda Packet - Special Meeting and Closed Session City Council REVISED SPECIAL MEETING AGENDA Wednesday, August 21, 2024, 5:30 p.m. Council Hearing Room, 990 Palm Street, San Luis Obispo SPECIAL MEETING AND CLOSED SESSION OF THE CITY COUNCIL Closed Sessions are not streamed to the City's website, YouTube Channel, or Channel 20. Attendees of City Council or Advisory Body meetings are eligible to receive one hour of complimentary parking; restrictions apply, visit Parking for Public Meetings for more details. INSTRUCTIONS FOR PUBLIC COMMENT: Public Comment prior to the meeting (must be received 3 hours in advance of the meeting): Mail - Delivered by the U.S. Postal Service. Address letters to the City Clerk’s Office at 990 Palm Street, San Luis Obispo, California, 93401. Email - Submit Public Comments via email to emailcouncil@slocity.org. In the body of your email, please include the date of the meeting and the item number (if applicable). Emails will not be read aloud during the meeting. Voicemail - Call (805) 781-7164 and leave a voicemail. Please state and spell your name, the agenda item number you are calling about, and leave your comment. Verbal comments must be limited to 3 minutes. Voicemails will not be played during the meeting. *All correspondence will be archived and distributed to councilmembers, however, submissions received after the deadline may not be processed until the following day. Public Comment during the meeting: Meetings are held in-person. To provide public comment during the meeting, you must be present at the meeting location. Verbal comments must be limited to 3 minutes and may only address items listed on the agenda. Public comment will be accepted at the beginning of the meeting, then the public will be dismissed as Closed Sessions are confidential. Pages 1.CALL TO ORDER Mayor Erica A. Stewart will call the Special Meeting and Closed Session of the San Luis Obispo City Council to order. 2.PUBLIC COMMENT FOR ITEMS ON THE AGENDA ONLY Public Comment will only be accepted for items listed on the agenda. *3.STUDY SESSION ITEM *3.a STUDY SESSION ON CENTRAL COAST COMMUNITY ENERGY – PROPOSED AMENDMENTS TO JOINT EXERCISE OF POWERS AGREEMENT REGARDING BOARD GOVERNANCE STRUCTURE (Estimated Time: 60 minutes) 5 Recommendation: Provide a consensus recommendation from the City Council to its appointed Policy Board Director regarding proposed amendments to the Joint Exercise of Powers Agreement for Central Coast Community Energy related to the number and method of apportionment of seating Board Directors to its Policy and Operations Boards. 4.CLOSED SESSION ITEM *4.a PUBLIC EMPLOYEE DISCIPLINE / DISMISSAL / RELEASE Pursuant to Government Code Sec. 54957 (b)(1) 5.ADJOURNMENT The next Regular Meeting of the City Council will be held on September 3, 2024 at 5:30 p.m. in the Council Chambers at City Hall, 990 Palm Street, San Luis Obispo. LISTENING ASSISTIVE DEVICES for the hearing impaired - see the 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) 781-7114 at least 48 hours before the meeting, if possible. Telecommunications Device for the Deaf (805) 781-7410. City Council meetings are televised live on Charter Channel 20 and the City's YouTube Channel: www.youtube.com/CityofSanLuisObispo. 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 https://www.slocity.org/government/mayor-and-city-council/agendas-and- minutes. Persons with questions concerning any agenda item may call the City Clerk’s Office at (805) 781-7114. Page 4 of 161 Item 3a Department: Administration Cost Center: 1005 For Agenda of: 8/21/2024 Placement: Study Session Estimated Time: 60 minutes FROM: Whitney McDonald, City Manager Prepared By: Robert Hill, Sustainability & Natural Resources Official SUBJECT: CENTRAL COAST COMMUNITY ENERGY – PROPOSED AMENDMENTS TO JOINT EXERCISE OF POWERS AGREEMENT REGARDING BOARD GOVERNANCE STRUCTURE RECOMMENDATION Provide a consensus recommendation from the City Council to its appointed Policy Board Director regarding proposed amendments to the Joint Exercise of Powers Agreement for Central Coast Community Energy related to the number and method of apportionment of seating Board Directors to its Policy and Operations Boards. POLICY CONTEXT The City of San Luis Obispo’s 2023-25 Financial Plan includes the Major City Goal for Climate Acton, Open Space and Sustainable Transportation , with an overarching strategic priority to implement the City’s Climate Action Plan for Community Recovery (or “CAP”) (2021). In particular, Strategic Approach # 4.1(f) states: “Provide ongoing support for Central Coast Community Energy Policy and Operations Board Members, and engage in staff level policy and program development, as called for by CAP Clean Energy task 1.1.A.” The work that Central Coast Community Energy (“3CE”) is undertaking to secure a portfolio of 100% renewable energy by 2030, as well as its diverse suite of electrification programs, are essential to the City achieving its CAP community-wide goal of carbon neutrality by 2035. Effective Board governance is paramount to guiding the agency towards achievement of its goals, while also ensuring proper financial and risk management oversight and the long-term sustainability of the agency as the electric power procurement entity for the geographic territory that it serves. DISCUSSION Background Community Choice Energy (CCE), authorized by Assembly Bill 117, is a state law that allows cities, counties and other authorized entities to aggregate electricity demand within their jurisdictions to purchase and/or generate electricity supplies for residents and Page 5 of 161 Item 3a businesses within their jurisdiction while maintaining the existing electricity provider for physical transmission and distribution services. 3CE also provides energy programs that incentivize building and vehicle electrification. Since 2019, community members and the City of San Luis Obispo as an organization have received a total of $2,529,283 in rebates for building and vehicle electrification projects. Central Coast Community Energy (formally Monterey Bay Community Power) was established by a Joint Exercise of Powers Agreement (or “JPA”) in 2017 for the stated purposes of a.) reducing greenhouse gas emissions related to the use of power, b.) providing electric power and other forms of energy to customers at affordable rates, c.) carrying out programs to facilitate electrifying the transportation, public infrastructure, and building sectors, d.) stimulating and sustaining the local economy by lowering electric generation charges and creating local jobs, and e.) promoting long -term electric rate stability and energy security and reliability for residents through local control of electric generation resources (JPA Recitals C., page 2). The JPA has since been amended on six occasions to add additional jurisdictions into the agency as members. On November 13, 2018, the City Council approved a Resolution to join the JPA (Council Minutes, Tuesday November 13, 2018, Regular Meeting of the City Council, item no. 16). The most current JPA is included as Attachment A. The JPA’s governance structure includes a Policy Board comprised of elected officials from member agencies and an Operations Board comprised of executive level staff from member agencies. As noted in 3E’s Operating Rules and Regulations, “the Policy Board shall have the authority to make all high-level decisions of the Authority and the Operations Board shall be empowered to manage the details of implementing all of those high-level decisions.” When 3CE was first created, it had 17 member agencies represented by 11 seats on each board. 3CE currently has 35 member agencies represented by 19 seats on each board. Currently, the Policy Board meets four times per year and the Operations Board meets 8 times per year. In addition, the boards convene at a special joint meeting that occurs as part of the Annual Meeting every September. August 14, 2024 Operations Board Action On August 14, 2024, the 3CE Operations Board held a regular meeting and, as part of that meeting, considered Item no. 12, which requested that the Operations Board “Recommend that the Policy Board consider and adopt the Ad Hoc Operations Sub- Committee’s recommendations regarding improvements to governance related matters, including board composition, engagement, and communication.” The August 14 staff report and associated attachments are included as Attachment B. The August 14 staff report and associated attachments are included as Attachment B. The draft minutes of that meeting are included as Attachment C. In essence, the staff report describes the empanelling of an Ad Hoc Sub-Committee of the Operations Committee to evaluate “the original 3CE structure, as outlined in the Joint Powers Agreement (two Boards capped at 11 members each), the current structure (two Boards with 19 members each), the communication and engagement of both seated and Page 6 of 161 Item 3a non-seated member agencies, allocation of shared seats, and the pace and complexity of 3CE’s operations.” The 3CE staff report goes on to state: The Ad Hoc Committee determined, as part of its review, that the original intention of the Joint Powers Agreement was to limit the Operations and Policy Boards to no more than eleven (11) members. Section 3.1.4, addressing seat allocations, provides, for example, that seats are to ‘be allocated on a one jurisdiction, one seat basis until such time as the number of member jurisdictions exceeds eleven [11].’ After eleven (11) member jurisdictions, seats transition to an allocation of ‘one seat for each jurisdiction with a population of 50,000 and above, and shared seats for jurisdictions with populations below 50,000.’ The Joint Powers Agreement further anticipated that 3CE could further expand and that such expansion could require ‘that a shared seat expand to include new parties’ (Section 3.1.5, addressing Director representation in the event of board seat transition or shared seat dilution). Despite the Joint Powers Agreement’s original intention, 3CE’s Operations and Policy Boards have expanded from 11 to 19 seats.” It is important to note, however, that the actual language of the JPA does not articulate any such “original intention” to have the Operations and Policy Boards be kept to no more than eleven members, and, indeed, the JPA specifically contemplated additional member agencies, provided for allocation of seats in such instances.It is important to note, however, that the actual language of the JPA does not articulate any such “original intention” to have the Operations and Policy Boards be kept to no more than eleven members, and, indeed, the JPA specifically contemplated additional member agencies and provided for allocation of seats in such instances. The Ad Hoc Committee found that there are a number of beneficial attributes of smaller boards, to include: 1. Greater ownership and accountability among seated board members. Smaller boards encourage greater participation while reducing the potential for deferment. 2. Enhanced communication through closer working relationships and opportunity for more meaningful discussion regarding complex and often nuanced topics. 3. More efficient Board meetings with greater opportunity to evaluate detailed staff proposals. Smaller boards can enable focused discussions and lead to more efficient meetings. 4. Increased opportunities for involvement in leadership positions on subcommittees, engagement with the other board, and individualized dialogue with staff. With these goals in mind, the Ad Hoc Committee ultimately recommended the following structure and allocation of seats in order to reduce Board sizes to eleven members: Page 7 of 161 Item 3a Following the presentation of the item by staff and by members of the Ad Hoc Committee, questions, and public comment, deliberations by present Directors resulted in a motion to recommend the Ad Hoc Committee’s recommendation to the Policy Board with some amendments, which ultimately prevailed (11 aye, 4 no, 4 absent). All three Operations Board Directors from San Luis Obispo County (Hill, Downing, Campbell) voted no. Before the primary motion was voted on, however, a substitute motion was also made to recommend that the Policy Board conduct a study session to provide more time for evaluation and outreach to all affected member agencies, as well as consider an alternative that does not rely on the City Selection Committee process for the cities that would be contemplated to be represented by a shared seat. The substitute motion was not successful (6 aye, 9 no, 4 absent). During discussion of the substitute motion, Operation Board Members in favor of the substitute motion mentioned that there were some member agencies that may not have been aware of the item or that only learned of the item very recently and, therefore, more time was needed to evaluate the Ad Hoc Committee’s recommendation. It was further mentioned that the alternatives that the Ad Hoc Committee discussed and evaluated, but did not recommend, were not included in the staff report and were first introduced in the staff presentation for the item during the meeting. Other discussion during the Operations Board meeting included questions regarding the formation of the Ad Hoc Committee and concerns about ensuring outreach to all of the member agencies regarding the need to reduce the size of the Boards, as well as the recommended option for the future Board apportion and selection process. Additional concerns included the alteration of representation to the Boards so soon after some members have joined 3CE, such as Atascadero, which has not yet had a chance to serve on the Board through its shared seat with Paso Robles. The Ad Hoc Committee was comprised of Chair Goldstein (City of Capitola), Vice Chair Miyasato (County of Santa Barbara), Directors Palacios (County of Santa Cruz), Mendez (City of Salinas), and Hunter (City of Soledad). The Ad Hoc Committee also sought input from former Director Bronson (City of Grover Beach). Minutes from the meeting are provided as Attachment C and the video recording of the meeting is available here (Item 12 starts at 39:00). Page 8 of 161 Item 3a Following the presentation of the item by staff and by members of the Ad Hoc Committee, questions, and public comment, deliberations by present Directors resulted in a motion to recommend the Ad Hoc Committee’s recommendation to the Policy Board with some amendments, which prevailed, as well as a substitute motion to recommend that the Policy Board conduct a study session to provide more time for evaluation and outreach to all affected member agencies, as well as consider an alternative that does not rely on the City Selection Committee process for the cities that would be contemplated to be represented by a shared seat. The alternative motion was not successful. Next Steps Following the August 14, 2024, Operations Board meeting, in an effort to achieve broader consensus on the item, 3CE CEO Rob Shaw sent an email to all member agencies to request a special meeting of the Policy Board in advance of the scheduled 3CE Annual Meeting that will take place in Aptos on September 18 and 19. Mr. Shaw’s email is included as Attachment D. In addition to the request for the special meeting, Mr. Shaw provides additional summary of the August 14 meeting, indicates that “Staff will seek direction from the Board regarding: 1. pursuing JPA Amendments to implement the Operations Board recommendation or an Alternative proposal, 2. further study, 3. tabling the matter, or 4. remaining at 19 Board seats and implementing other components, such as Code of Conduct…”, and offers to allow member agencies to forward any other alternatives that they would like to have discussed. On Monday August 19, the City received notice that the special meeting could occur as early as Monday, August 26, 2024. Given the very short notice of members’ opportunity to provide feedback as to concerns or alternatives to the pro posed reduction in representation, this special meeting was noticed to permit the full Council to provide feedback to its Policy Board representative, Council Member Marx. On August 16, 2024, the City received by registered mail a notification letter of the potential action that the Policy Board could take at its portion of the Annual Meeting on September 19, as required by the JPA prior to enacting amendments therein. The notification letter is included as Attachment E. Public Engagement The discussion and recommendations of the Operations Board on August 14, 2024, were part of a regularly scheduled and noticed meeting with a public comment period. The forthcoming special meeting of the Policy Board, and the scheduled meeting of the Policy Board on September 19, 2024, will both include public comment periods. These meetings are held in various regional locations throughout 3CE’s geographic territory. CONCURRENCE City Manager McDonald has convened a meeting of the City Managers from San Luis Obispo County on Wednesday, August 21, 2024, just prior to this scheduled special meeting and will provide a report to the City Council on any substantive recommendations or input received during that meeting. Page 9 of 161 Item 3a ENVIRONMENTAL REVIEW The review and evaluation of the proposed 3CE JPA amendments by the City Council does not constitute a Project under the California Environmental Qual ity Act. FISCAL IMPACT Budgeted: N/A Budget Year: 2024-25 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 $ $ $ The proposed 3CE JPA amendments do not have a direct fiscal impact on the City, in and of themselves. The operating budget for the Office of Sustainability & Natural Resources (cost center 1005) provides sufficient staffing resources to continue to support the City’s Operations and Policy Board participation, activities and functions. ALTERNATIVES 1. Provide feedback and/or direction to the City’s appointed 3CE Policy Board member, Council Member Marx, regarding the City’s response to the proposed amendments to the JPA. The response to the proposed amendments to the JPA could include one or more of the options that CEO Rob Shaw set forth in his email to all member agencies on August 16, 2024: “1. pursuing JPA Amendments to implement the Operations Board recommendation or an Alternative proposal, 2. further study, 3. tabling the matter, or 4. remaining at 19 Board seats and implementing other components, such as Code of Conduct…” 2. Appoint an ad hoc committee of the City Council to develop a letter to the 3CE Policy Board conveying the City Council’s feedback and/or direction regarding the proposed amendments to the JPA. ATTACHMENTS A - 3CE Joint Exercise of Powers Agreement B - Staff Report and Attachments, Item No. 12, Operations Board Meeting, 08/14/2024 C - Draft Minutes, Operations Board, 08/14/2024 D - Request for Special Policy Board Meeting, email from CEO Rob Shaw, 08/16/2024 E - Notification Letter of Proposed JPA Amendments, 08/16/2024 Page 10 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 1 JOINT EXERCISE OF POWERS AGREEMENT RELATING TO AND CREATING CENTRAL COAST COMMUNITY ENERGY OF Monterey, San Benito, San Luis Obispo, Santa Barbara, and Santa Cruz Counties This Joint Exercise of Powers Agreement, effective on the date determined by Section 2.1, is made and entered into pursuant to the provisions of Title 1, Division 7, Chapter 5, Article 1 (Sections 6500 et seq.) of the California Government Code relating to the joint exercise of powers among the Parties set forth in Exhibit B, establishes Central Coast Community Energy(“Authority”), and is by and among the Counties of Monterey, San Benito, San Luis Obispo, Santa Barbara, and Santa Cruz who become signatories to this Agreement (“Counties”) and those cities and towns within those Counties who become signatories to this Agreement and relates to the joint exercise of powers among the signatories hereto. RECITALS A. The Parties share various powers under California law, including but not limited to the power to purchase, supply, and aggregate electricity for themselves and customers within their jurisdictions. B. In 2006, the State Legislature adopted AB 32, the Global Warming Solutions Act, which mandates a reduction in greenhouse gas emissions in 2020 to 1990 levels. The California Air Resources Board is promulgating regulations to implement AB32 which will require local governments to develop programs to reduce greenhouse gas emissions. Page 11 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 2 C. The purposes for entering into this Agreement include: a. Reducing greenhouse gas emissions related to the use of power in Monterey, Santa Cruz, San Benito, Santa Barbara, and San Luis Obispo Counties and neighboring regions; b. Providing electric power and other forms of energy to customers at affordable rates that are competitive with the incumbent utility; c. Carrying out programs to facilitate electrifying the transportation, public infrastructure, and the building sectors to reduce reliance on fossil fuels and thus reduce greenhouse gas emissions; d. Stimulating and sustaining the local economy by lowering electric generation charges and creating local jobs as a result of Central Coast Community Energy’s CCE program; and e. Promoting long-term electric rate stability and energy security and reliability for residents through local control of electric generation resources. D. It is the intent of this Agreement to promote the development and use of a wide range of renewable energy sources and energy programs, including but not limited to solar, wind, and geothermal energy production. The purchase of renewable power sources will be the desired approach to decrease regional greenhouse gas emissions and accelerate the State’s transition to clean power resources to the extent feasible. a. It is further desired to establish a long-term energy portfolio that prioritizes the use and development of State, local and regional renewable resources and carbon free resources. b. In compliance with State law and in alignment with the Authority’s desire to stimulate the development of renewable power, the Authority shall draft an Integrated Resource Plan that includes a range of regional renewable development potential in the California Central Coast Region and plans to Page 12 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 3 incorporate local power into its energy portfolio as technically and economically feasible. E. The Parties desire to establish a separate public Authority, known as Central Coast Community Energy, under the provisions of the Joint Exercise of Powers Act of the State of California (Government Code Section 6500 et seq.) (“Act”) in order to collectively study, promote, develop, conduct, operate, and manage energy programs. F. The Parties anticipate adopting an ordinance electing to implement through the Authority a common Community Choice Aggregation (CCA) program, an electric service enterprise available to cities and counties pursuant to California Public Utilities Code Sections 331.1(c) and 366.2. The priority of the Authority will be the consideration of those actions necessary to implement the CCA Program. AGREEMENT NOW, THEREFORE, in consideration of the mutual promises, covenants, and conditions hereinafter set forth, it is agreed by and among the Parties as follows: ARTICLE 1: DEFINITIONS AND EXHIBITS 1.1. Definitions. Capitalized terms used in the Agreement shall have the meanings specified in Exhibit A unless the context requires otherwise. 1.2. Documents Included. This Agreement consists of this document and the following exhibits, all of which are hereby incorporated into this Agreement. Exhibit A: Definitions Exhibit B: List of the Parties Exhibit C: Regional Allocations ARTICLE 2: FORMATION OF CENTRAL COAST COMMUNITY ENERGY 2.1. Effective Date and Term. This Agreement shall become effective and “Central Coast Page 13 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 4 Community Energy” shall exist as a separate public Authority on the date that this Agreement is executed by at least three Initial Participants from the Counties of Monterey, Santa Cruz, and San Benito and the municipalities within those counties, after the adoption of the ordinances required by Public Utilities Code Section 366.2(c)(12). The Authority shall provide notice to the Parties of the Effective Date. The Authority shall continue to exist, and this Agreement shall be effective, until this Agreement is terminated in accordance with Section 6.4, subject to the rights of the Parties to withdraw from the Authority. 2.2. Formation. There is formed as of the Effective Date a public Authority named Central Coast Community Energy. Pursuant to Sections 6506 and 6507 of the Act, the Authority is a public Authority separate from the Parties. Pursuant to Sections 6508.1 of the Act, the debts, liabilities or obligations of the Authority shall not be debts, liabilities or obligations of the individual Parties unless the governing board of a Party agrees in writing to assume any of the debts, liabilities or obligations of the Authority. A Party who has not agreed to assume an Authority debt, liability or obligation shall not be responsible in any way for such debt, liability or obligation even if a majority of the Parties agree to assume the debt, liability or obligation of the Authority. Notwithstanding Section 7.4 of this Agreement, this Section 2.2 may not be amended unless such amendment is approved by the governing board of each Party. 2.3. Purpose. The purpose of this Agreement is to establish an independent public Authority in order to exercise powers common to each Party to study, promote, develop, conduct, operate, and manage energy, energy efficiency and conservation, and other energy-related programs, and to exercise all other powers necessary and incidental to accomplishing this purpose. Without limiting the generality of the foregoing, the Parties Page 14 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 5 intend for this Agreement to be used as a contractual mechanism by which the Parties are authorized to participate in the CCA Program, as further described in Section 4.1. The Parties intend that other agreements shall define the terms and conditions associated with the implementation of the CCA Program and any other energy programs approved by the Authority. 2.4. Powers. The Authority shall have all powers common to the Parties and such additional powers accorded to it by law. The Authority is authorized, in its own name, to exercise all powers and do all acts necessary and proper to carry out the provisions of this Agreement and fulfill its purposes, including, but not limited to, each of the following powers, subject to the voting requirements set forth in Section 3.7 through 3.7.1: 2.4.1. to make and enter into contracts; 2.4.2. to employ agents and employees, including but not limited to a Chief Executive Officer; 2.4.3. to acquire, contract, manage, maintain, and operate any buildings, infrastructure, works, or improvements; 2.4.4. to acquire property by eminent domain, or otherwise, except as limited under Section 6508 of the Act, and to hold or dispose of any property; however, the Authority shall not exercise the power of eminent domain within the jurisdiction of a Party without approval of the affected Party’s governing board; 2.4.5. to lease any property; 2.4.6. to sue and be sued in its own name; 2.4.7. to incur debts, liabilities, and obligations, including but not limited to loans from private lending sources pursuant to its temporary borrowing Page 15 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 6 powers such as Government Code Sections 53850 et seq. and authority under the Act; 2.4.8. to form subsidiary or independent corporations or entities if necessary, to carry out energy supply and energy conservation programs at the lowest possible cost or to take advantage of legislative or regulatory changes; 2.4.9. to issue revenue bonds and other forms of indebtedness; 2.4.10. to apply for, accept, and receive all licenses, permits, grants, loans or other aids from any federal, state, or local public agency; 2.4.11. to submit documentation and notices, register, and comply with orders, tariffs and agreements for the establishment and implementation of the CCA Program and other energy programs; 2.4.12. to adopt Operating Rules and Regulations; 2.4.13. to make and enter into service agreements relating to the provision of services necessary to plan, implement, operate and administer the CCA Program and other energy programs, including the acquisition of electric power supply and the provision of retail and regulatory support services; and 2.4.14. to permit additional Parties to enter into this Agreement after the Effective Date and to permit another entity authorized to be a community choice aggregator to designate the Authority to act as the community choice aggregator on its behalf. 2.5. Limitation on Powers. As required by Government Code Section 6509, the power of the Authority is subject to the restrictions upon the manner of exercising power possessed by the City of Santa Cruz and any other restrictions on exercising the powers of the authority that may be adopted by the board. Page 16 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 7 2.6. Compliance with Local Zoning and Building Laws and CEQA. Unless state or federal law provides otherwise, any facilities, buildings or structures located, constructed, or caused to be constructed by the Authority within the territory of the Authority shall comply with the General Plan, zoning and building laws of the local jurisdiction within which the facilities, buildings or structures are constructed and comply with the California Environmental Quality Act (“CEQA”). ARTICLE 3: GOVERNANCE AND INTERNAL ORGANIZATION 3.1. Boards of Directors. The governing bodies of the Authority shall consist of a Policy Board of Directors (“Policy Board”) and an Operations Board of Directors (“Operations Board”). 3.1.1. Both Boards shall consist of Directors representing any of the five Counties of Monterey, San Benito, San Luis Obispo, Santa Barbara, or Santa Cruz that become a signatory to the Agreement, and Directors representing any of the Cities or Towns, which are members of the Authority, within those five Counties (“Directors”). Each Director shall serve at the pleasure of the governing board of the Party who appointed such Director and may be removed as Director by such governing board at any time. If at any time a vacancy occurs on the Board, a replacement shall be appointed to fill the position of the previous Director within 90 days of the date that such position becomes vacant. 3.1.2. Policy Board Directors must be elected members of the Board of Supervisors or elected members of the City or Town Council of the municipality that is the signatory to this Agreement. Jurisdictions may appoint an alternate to serve in the absence of its Director on the Policy Board. Alternates for the Policy Board must be members of the Board of Supervisors or members of the governing board of the municipality that is the signatory to this Agreement. Page 17 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 8 3.1.3. Operations Board Directors must be the senior executive/County Administrative Officer of any County that is the signatory to this Agreement, or senior executive/City Manager from any municipality that is the signatory to this Agreement. Jurisdictions may appoint an alternate to serve in the absence of its Director on the Operations Board. Alternates for the Operations Board must be administrative managers of the County or administrative managers of the governing board of the municipality that is the signatory to this Agreement. 3.1.4. Board seats will be allocated under the following formulas. Policy and Operations Board seats for those jurisdictions that pass a CCA ordinance by February 28, 2017 (“Initial Participants”) will be allocated on a one jurisdiction, one seat basis until such time as the number of member jurisdictions exceeds eleven. Once the JPA reaches more than eleven - member agencies, the Policy and Operations Boards’ composition shall shift to a regional allocation based on population size. This allocation shall be one seat for each jurisdiction with a population of 50,000 and above, and shared seats for jurisdictions with populations below 50,000 allocated on a sub-regional basis, as set forth in Exhibit C. Notwithstanding the above, the County of San Benito shall be allotted one seat. 3.1.5. Shared board seats, as set forth in Exhibit C, Regional Allocation shall have a term of two years and will be determined either by agreement among the parties sharing the seat or through the City Selection Committee in the respective County. Following appointment, either by agreement or by the City Selection Committee, Directors may be reappointed and serve multiple terms. In the event the addition of new parties requires that an established board seat transition to a shared seat or that a shared seat expand to include new parties, the sitting Director Page 18 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 9 will automatically be the first representative for that shared seat to ensure continuity and maintain experience. 3.2. Quorum. A majority of the appointed Directors shall constitute a quorum, except that less than a quorum may adjourn in accordance with law. 3.3. Powers and Functions of the Boards. The Boards shall exercise general governance and oversight over the business and activities of the Authority, consistent with this Agreement and applicable law. The Boards shall provide general policy guidance to the CCA Program. 3.3.1. The Policy Board will provide guidance/approval in the areas of strategic planning and goal setting, passage of Authority budget and customer rates, and large capital expenditures outside the typical power procurement required to provide electrical service. 3.3.2. The Operations Board will provide oversight and support to the Chief Executive Officer on matters pertaining to the provision of electrical service to customers in the region, focusing on the routine, day-to -day operations of the Authority. 3.3.3. Policy Board approval shall be required for any of the following actions, including but not limited to: (a) The issuance of bonds, major capital expenditures, or any other financing even if program revenues are expected to pay for such financing; (b) The appointment or removal of officers described in Section 3.9, subject to Section 3.9.3; (c) The appointment and termination of the Chief Executive Officer; (d) The adoption of the Annual Budget; Page 19 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 10 (e) The adoption of an ordinance; (f) The setting of rates for power sold by the Authority and the setting of charges for any other category of service provided by the Authority; (g) The adoption of the Implementation Plan; (h) The selection of General Counsel, Treasurer and Auditor; (i) The amending of this Joint Exercise of Powers Agreement; and (j) Termination of the CCA Program. 3.3.4. Operations Board approval shall be required for the following actions, including but not limited to: (a) The approval of Authority contracts and agreements, except as provided by Section 3.4; and (b) Approval of Authority operating policies and other matters necessary to ensure successful program operations. 3.3.5. Joint approval of the Policy and Operations Boards shall be required for the initiation or resolution of claims and litigation where the Authority will be the defendant, plaintiff, petitioner, respondent, cross complainant or cross petitioner, or intervenor; provided, however, that the Chief Executive Officer or General Counsel, on behalf of the Authority, may intervene in, become a party to, or file comments with respect to any proceeding pending at the California Public Utilities Commission, the Federal Energy Regulatory Commission, or any other administrative authority, without approval of the Boards as long as such action is consistent with any adopted Board policies. 3.4. Chief Executive Officer. The Authority shall have a Chief Executive Officer Page 20 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 11 (“CEO”). The Operations Board shall present nomination(s) of qualified candidates to the Policy Board. The Policy Board shall make the selection and appointment of the CEO who will be an employee of the Authority and serve at will and at the pleasure of the Policy Board. The CEO shall be responsible for the day-to-day operation and management of the Authority and the CCA Program. The CEO may exercise all powers of the Authority, including the power to hire, discipline and terminate employees as well as the power to approve any agreement if the total amount payable under the agreement falls within the Authority’s fiscal policies to be set by the Policy Board, except the powers specifically set forth in Section 3.3 or those powers which by law must be exercised by the Board(s) of Directors. The CEO shall report to the Policy Board on matters related to strategic planning and goal setting, passage of Authority budget and customer rates, and large capital expenditures outside the typical power procurement required to provide electrical service. The CEO shall report to the Operations Board on matters related to Authority policy and the provision of electrical service to customers in the region, focusing on the routine, day-to-day operations of the Authority. It shall be the responsibility of the CEO to keep both Board(s) appropriately informed and engaged in the discussions and actions of each to ensure cooperation and unity within the Authority. 3.5. Commissions, Boards, and Committees. The Boards may establish any advisory committees they deem appropriate to assist in carrying out the CCA Program, other energy programs, and the provisions of this Agreement which shall comply with the requirements of the Ralph M. Brown Act. The Boards may establish rules, regulations, policies, bylaws or procedures to govern any such commissions, boards, or committees if the Board(s) deem it appropriate to appoint such commissions, boards or committees, and shall determine whether members shall be compensated or entitled to reimbursement for expenses. 3.6. Director Compensation. Directors shall serve without compensation from the Authority. However, Directors may be compensated by their respective appointing Page 21 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 12 authorities. The Boards, however, may adopt by resolution a policy relating to the reimbursement by the Authority of expenses incurred by their respective Directors. 3.7. Voting. Except as provided in Section 3.7.1 below, actions of the Boards shall require the affirmative vote of a majority of Directors present at the meeting. 3.7.1. Special Voting Requirements for Certain Matters. (a) Two-Thirds Voting Approval Requirements Relating to Sections 6.2 and 7.4. Action of the Board on the matters set forth in Section 6.2 (involuntary termination of a Party), or Section 7.4 (amendment of this Agreement) shall require the aff irmative vote of at least two- thirds of Directors present. (b) Seventy-Five Percent Special Voting Requirements for Eminent Domain and Contributions or Pledge of Assets. i. A decision to exercise the power of eminent domain on behalf of the Authority to acquire any property interest other than an easement, right-of-way, or temporary construction easement shall require a vote of at least 75% of all Directors present. ii. The imposition on any Party of any obligation to make contributions or pledge assets as a condition of continued participation in the CCA Program shall require a vote of at least 75% of all Directors and the approval of the governing boards of the Parties who are being asked to make such contribution or pledge. iii. For purposes of this section, “imposition on any Party of any obligation to make contributions or pledge assets as a condition of continued participation in the CCA Program” does not include any obligations of a withdrawing or terminated party Page 22 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 13 imposed under Section 6.3. 3.8. Meetings and Special Meetings of the Board. The Policy Board shall hold up to three regular meetings per year, with the option for additional or special meetings as determined by the Chief Executive Officer or Chair of the Policy Board after consultation with the Chief Executive Officer. The Operations Board shall hold at least eight meetings per year, with the option for additional or special meetings. The date, hour and place of each regular meeting shall be fixed by resolution or ordinance of the Board. Regular meetings may be adjourned to another meeting time. Special and Emergency Meetings of the Boards may be called in accordance with the provisions of California Government Code Sections 54956 and 54956.5. Directors may participate in meetings telephonically, with full voting rights, only to the extent permitted by law. All meetings shall be conducted in accordance with the provisions of the Ralph M. Brown Act (California Government Code Sections 54950 et seq.). 3.9. Selection of Board Officers. 3.9.1. Policy Board Chair and Vice Chair. The Policy Board shall select, from among themselves, a Chair, who shall be the presiding officer of all Policy Board meetings, and a Vice Chair, who shall serve in the absence of the Chair. The Policy Board Chair and Vice Chair shall act as the overall Chair and Vice Chair for Central Coast Community Energy. The term of office of the Chair and Vice Chair shall continue for one year, but there shall be no limit on the number of terms held by either the Chair or Vice Chair. The office of either the Chair or Vice Chair shall be declared vacant and a new selection shall be made if: (a) the person serving dies, resigns, is no longer holding a qualifying public office, or the Party that the person represents removes the person as its representative on the Board; or (b) the Party that he or she represents withdraws from the Authority Page 23 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 14 pursuant to the provisions of this Agreement. 3.9.2. Operations Board Chair and Vice Chair. The Operations Board shall select, from among themselves, a Chair, who shall be the presiding officer of all Operations Board meetings, and a Vice Chair, who shall serve in the absence of the Chair. The term of office of the Chair and Vice Chair shall continue for one year, but there shall be no limit on the number of terms held by either the Chair or Vice Chair. The office of either the Chair or Vice Chair shall be declared vacant and a new selection shall be made if: (a) the person serving dies, resigns, or is no longer the senior executive of the Party that the person represents or; (b) the Party that he or she represents withdraws from the Authority pursuant to the provisions of this Agreement. 3.9.3. Secretary. Each Board shall appoint a Secretary, who need not be a member of the Board, who shall be responsible for keeping the minutes of all meetings of each Board and all other official records of the Authority. If the Secretary appointed is an employee of the Authority, that employee may serve as Secretary to both Boards. 3.9.4. The Policy Board shall appoint a qualified person to act as the Treasurer and a qualified person to act as the Auditor, neither of whom needs to be a member of the Board. If the Board so designates, and in accordance with the provisions of applicable law, a qualified person may hold both the office of Treasurer and the office of Auditor of the Authority. Unless otherwise exempted from such requirement, the Authority shall cause an independent audit to be made by a certified public accountant, or public accountant, in compliance with Section 6505 of the Act. The Treasurer shall report directly to the Policy Board and shall comply with the requirements of treasurers of incorporated municipalities. The Board may Page 24 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 15 transfer the responsibilities of Treasurer to any person or entity as the law may provide at the time. The duties and obligations of the Treasurer are further specified in Article 5. 3.10. Administrative Services Provider. The Board(s) may appoint one or more administrative services providers to serve as the Authority’s agent for planning, implementing, operating and administering the CCA Program, and any other program approved by the Board, in accordance with the provisions of an Administrative Services Agreement. The appointed administrative services provider may be one of the Parties. An Administrative Services Agreement shall set forth the terms and conditions by which the appointed administrative services provider shall perform or cause to be performed all tasks necessary for planning, implementing, operating and administering the CCA Program and other approved programs. The Administrative Services Agreement shall set forth the term of the Agreement and the circumstances under which the Administrative Services Agreement may be terminated by the Authority. This section shall not in any way be construed to limit the d iscretion of the Authority to hire its own employees to administer the CCA Program or any other program. The Administrative Services Provider shall be either an employee or a contractor of the Authority unless a member agency is providing the service. ARTICLE 4: IMPLEMENTATION ACTION AND AUTHORITY DOCUMENTS 4.1. Preliminary Implementation of the CCA Program. 4.1.1. Enabling Ordinance. To be eligible to participate in the CCA Program, each Party must adopt an ordinance in accordance with Public Utilities Code Section 366.2(c)(12) for the purpose of specifying that the Party intends to implement a CCA Program by and through its participation in the Authority. 4.1.2. Implementation Plan. The Policy Board shall cause to be prepared an Implementation Plan meeting the requirements of Public Utilities Code Section 366.2 and any applicable Public Utilities Commission regulations Page 25 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 16 as soon after the Effective Date as reasonably practicable. The Implementation Plan shall not be filed with the Public Utilities Commission until it is approved by the Policy Board in the manner provided by Section 3.7. 4.1.3. Termination of CCA Program. Nothing contained in this Article or this Agreement shall be construed to limit the discretion of the Authority to terminate the implementation or operation of the CCA Program at any time in accordance with any applicable requirements of state law. 4.2. Authority Documents. The Parties acknowledge and agree that the affairs of the Authority will be implemented through various documents duly adopted by the Board(s) through resolution, including but not limited to the CCCE Implementation Plan and Operating Policies. The Parties agree to abide by and comply with the terms and conditions of all such documents that may be adopted by the Board(s), subject to the Parties’ right to withdraw from the Authority as described in Article 6. ARTICLE 5: FINANCIAL PROVISIONS 5.1. Fiscal Year. The Authority’s fiscal year shall be 12 months commencing April 1 or the date selected by the Authority. The fiscal year may be changed by Policy Board resolution. 5.2. Depository. 5.2.1. All funds of the Authority shall be held in separate accounts in the name of the Authority and not commingled with funds of any Party or any other person or entity. 5.2.2. All funds of the Authority shall be strictly and separately accounted for, and regular reports shall be rendered of all receipts and disbursements, at least quarterly during the fiscal year. The books and records of the Authority shall be open to inspection by the Parties at all reasonable times. The Board(s) shall contract with a certified public accountant or Page 26 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 17 public accountant to make an annual audit of the accounts and records of the Authority, which shall be conducted in accordance with the requirements of Section 6505 of the Act. 5.2.3. All expenditures shall be made in accordance with the approved budget and upon the approval of any officer so authorized by the Board(s) in accordance with its Operating Rules and Regulations. The Treasurer shall draw checks or warrants or make payments by other means for claims or disbursements not within an applicable budget only upon the prior approval of the Board(s). 5.3. Budget and Recovery of Costs. 5.3.1. Budget. The initial budget shall be approved by the Policy Board. The Board may revise the budget from time -to-time as may be reasonably necessary to address contingencies and unexpected expenses. All subsequent budgets of the Authority shall be approved by the Policy Board in accordance with the Operating Rules and Regulations. 5.3.2. Funding of Initial Costs. The County of Santa Cruz has funded certain activities necessary to implement the CCA Program. If the CCA Program becomes operational, these Initial Costs paid by the County of Santa Cruz shall be included in the customer charges for electric services as provided by Section 5.3.3 to the extent permitted by law, and the County of Santa Cruz shall be reimbursed from the payment of such charges by customers of the Authority. Prior to such reimbursement, the County of Santa Cruz shall provide such documentation of costs paid as the Board may request. The Authority may establish a reasonable time -period over which such costs are recovered. In the event, that the CCA Program does not become operational, the County of Santa Cruz shall not be entitled to any reimbursement of the Initial Costs it has paid from the Authority or any Party. Page 27 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 18 5.3.3. CCA Program Costs. The Parties desire that all costs incurred by the Authority that are directly or indirectly attributable to the provision of electric, conservation, efficiency, incentives, financing, or other services provided under the CCA Program, including but not limited to the establishment and maintenance of various reserves and performance funds and administrative, accounting, legal, consulting, and other similar costs, shall be recovered through charges to CCA customers receiving such electric services, or from revenues from grants or other third -party sources. ARTICLE 6: WITHDRAWAL 6.1. Withdrawal. 6.1.1. Right to Withdraw. A Party may withdraw its participation in the CCA Program, effective as of the beginning of the Authority’s fiscal year, by giving no less than 6 months advance written notice of its election to do so, which notice shall be given to the Authority and each Party. Withdrawal of a Party shall require an affirmative vote of the Party’s governing board. 6.1.2. Right to Withdraw After Amendment. Notwithstanding Section 6.1.1, a Party may withdraw its membership in the Authority following an amendment to this Agreement adopted by the Policy Board which the Party’s Director voted against provided such notice is given in writing within thirty (30) days following the date of the vote. Withdrawal of a Party shall require an affirmative vote of the Party’s governing board and shall not be subject to the six-month advanced notice provided in Section 6.1.1. In the event of such withdrawal, the Party shall be subject to the provisions of Section 6.3. 6.1.3. The Right to Withdraw Prior to Program Launch. After receiving bids from power suppliers, the Authority must provide to the Parties the report Page 28 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 19 from the electrical utility consultant retained by the Authority that compares the total estimated electrical rates that the Authority will be charging to customers as well as the estimated greenhouse gas emissions rate and the amount of estimated renewable energy used with that of the incumbent utility. If the report provides that the Authority is unable to provide total electrical rates, as part of its baseline offering, to the customers that are equal to or lower than the incumbent utility or to provide power in a manner that has a lower greenhouse gas emissions rate or uses more renewable energy than the incumbent utility, a Party may, immediately after an affirmative vote of the Party’s governing board, withdraw its membership in the Authority without any financial obligation, except those financial obligations incurred through the Party’s share of any credit guarantee, as long as the Party provides written notice of its intent to withdraw to the Authority Board no more than fifteen business days after receiving the report. Costs incurred prior to withdrawal will be calculated as a pro-rata share of start-up costs expended to the date of the Party’s withdrawal, and it shall be the responsibility of the withdrawing Party to pay its share of said costs if they have a material/adverse impact on remaining Authority members or ratepayers. 6.1.4. Continuing Financial Obligation; Further Assurances. Except as provided by Section 6.1.3, a Party that withdraws its participation in the CCA Program may be subject to certain continuing financial obligations, as described in Section 6.3. Each withdrawing Party and the Authority shall execute and deliver all further instruments and documents and take any further action that may be reasonably necessary, as determined by the Board, to effectuate the orderly withdrawal of such Party from participation in the CCA Program. 6.2. Involuntary Termination of a Party. Participation of a Party in the CCA program Page 29 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 20 may be terminated for material non-compliance with provisions of this Agreement or any other agreement relating to the Party’s participation in the CCA Program upon a vote of the Policy Board as provided in Section 3.7.1. Prior to any vote to terminate participation with respect to a Party, written notice of the proposed termination and the reason(s) for such termination shall be delivered to the Party whose termination is proposed at least 30 days prior to the regular Board meeting at which such matter shall first be discussed as an agenda item. The written notice of proposed termination shall specify th e particular provisions of this Agreement or other agreement that the Party has allegedly violated. The Party subject to possible termination shall have the opportunity at the next regular Board meeting to respond to any reasons and allegations that may be cited as a basis for termination prior to a vote regarding termination. A Party that has had its participation in the CCA Program terminated may be subject to certain continuing liabilities, as described in Section 6.3. 6.3. Continuing Financial Obligations: Refund. Except as provided by Section 6.1.3, upon a withdrawal or involuntary termination of a Party, the Party shall remain responsible for any claims, demands, damages, or other financial obligations arising from the Party membership or participation in the CCA Program through the date of its withdrawal or involuntary termination, it being agreed that the Party shall not be responsible for any financial obligations arising after the date of the Party’s withdrawal or involuntary termination. Claims, demands, damages, or other financial obligations for which a withdrawing or terminated Party may remain liable include, but are not limited to, losses from the resale of power contracted for by the Authority to serve the Party’s load. With respect to such financial obligations, upon notice by a Party that it wishes to withdraw from the CCA Program, the Authority shall notify the Party of the minimum waiting period under which the Party would have no costs for withdrawal if the Party agrees to stay in the CCA Program for such period. The waiting period will be set to the minimum duration such that there are no costs transferred to remaining ratepayers. If the Party elects to withdraw before the end of the minimum waiting period, the charge for exiting shall be set at a dollar amount that would offset actual costs to the remaining Page 30 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 21 ratepayers and may not include punitive charges that exceed actual costs. In addition, such Party shall also be responsible for any costs or obligations associated with the Party’s participation in any program in accordance with the provisions of any agreements relating to such program provided such costs or obligations were incurred prior to the withdrawal of the Party. The Authority may withhold funds otherwise owing to the Party or may require the Party to deposit sufficient funds with the Authority, as reasonably determined by the Authority and approved by a vote of the Policy Board, to cover the Party’s financial obligations for the costs described above. Any amount of the Party’s funds held on deposit with the Authority above that which is required to pay any financial obligations shall be returned to the Party. The liability of any Party under this section 6.3 is subject and subordinate to the provisions of Section 2.2, and nothing in this section 6.3 shall reduce, impair, or eliminate any immunity from liability provided by Section 2.2. 6.4. Mutual Termination. This Agreement may be terminated by mutual agreement of all the Parties; provided, however, the foregoing shall not be construed as limiting the rights of a Party to withdraw its participation in the CCA Program, as described in Section 6.1. 6.5. Disposition of Property upon Termination of Authority. Upon termination of this Agreement, any surplus money or assets in possession of the Authority for use under this Agreement, after payment of all liabilities, costs, expenses, and charges incurred under this Agreement and under any program documents, shall be returned to the then-existing Parties in proportion to the contributions made by each. ARTICLE 7: MISCELLANEOUS PROVISIONS 7.1. Dispute Resolution. The Parties and the Authority shall make reasonable efforts to informally settle all disputes arising out of or in connection with this Agreement. Should such informal efforts to settle a dispute, after reasonable efforts, fail, the dispute shall be mediated in accordance with policies and procedures established by the Authority. The costs of any such mediation shall be shared equally among the Parties participating in the Page 31 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 22 mediation. 7.2. Liability of Directors, Officers, and Employees. The Directors, officers, and employees of the Authority shall use ordinary care and reasonable diligence in the exercise of their powers and in the performance of their duties pursuant to this Agreement. No current or former Director, officer, or employee will be responsible for any act or omission by another Director, officer, or employee. The Authority shall defend, indemnify and hold harmless the individual current and former Directors, officers, and employees for any acts or omissions in the scope of their employment or duties in the manner provided by Government Code Sections 995 et seq. Nothing in this section shall be construed to limit the defenses available under the law, to the Parties, the Authority, or its Directors, officers, or employees. 7.3. Indemnification of Parties. The Authority shall acquire such insurance coverage as is necessary to protect the interests of the Authority and the Parties. The Authority shall defend, indemnify, and hold harmless the Parties and each of their respective Boards of Supervisors or City Councils, officers, agents and employees, from any and all claims, losses, damages, costs, injuries, and liabilities of every kind arising directly or indirectly from the conduct, activities, operations, acts, and omissions of the Authority under this Agreement. 7.4. Amendment of this Agreement. This Agreement may not be amended except by a written amendment approved by a vote of Policy Board members as provided in Section 3.7.1. The Authority shall provide written notice to all Parties of proposed amendments to this Agreement, including the effective date of such amendments, at least 30 days prior to the date upon which the Board votes on such amendments. 7.5. Assignment. Except as otherwise expressly provided in this Agreement, the rights and duties of the Parties may not be assigned or delegated without the advance written consent of all of the other Parties, and any attempt to assign or delegate such rights or duties in contravention of this Section 7.5 shall be null and void. This Agreement shall inure to the benefit of, and be binding upon, the successors and assigns of the Parties. Page 32 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 23 This Section 7.5 does not prohibit a Party from entering into an independent agreement with another agency, person, or entity regarding the financing of that Party’s contributions to the Authority, or the disposition of proceeds which that Party receives under this Agreement, so long as such independent agreement does not affect, or purport to affect, the rights and duties of the Authority or the Parties under this Agreement. 7.6. Severability. If one or more clauses, sentences, paragraphs or provisions of this Agreement shall be held to be unlawful, invalid or unenforceable, it is hereby agreed by the Parties, that the remainder of the Agreement shall not be affected thereby. Such clauses, sentences, paragraphs or provision shall be deemed reformed so as to be lawful, valid and enforced to the maximum extent possible. 7.7. Further Assurances. Each Party agrees to execute and deliver all further instruments and documents and take any further action that may be reasonably necessary, to effectuate the purposes and intent of this Agreement. 7.8. Execution by Counterparts. This Agreement may be executed in any number of counterparts, and upon execution by all Parties, each executed counterpart shall have the same force and effect as an original instrument and as if all Parties had signed the same instrument. Any signature page of this Agreement may be detached from any counterpart of this Agreement without impairing the legal effect of any signatures thereon and may be attached to another counterpart of this Agreement identical in form hereto but having attached to it one or more signature pages. 7.9. Parties to be Served Notice. Any notice authorized or required to be given pursuant to this Agreement shall be validly given if served in writing either personally, by deposit in the United States mail, first class postage prepaid with return receipt requested, or by a recognized courier service. Notices given (a) personally or b y courier service shall be conclusively deemed received at the time of delivery and receipt and (b) by mail shall be conclusively deemed given 48 hours after the deposit thereof (excluding Saturdays, Sundays and holidays) if the sender receives the return receipt. All notices shall be addressed to the office of the clerk or secretary of the Authority or Party, as the Page 33 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 24 case may be, or such other person designated in writing by the Authority or Party. Notices given to one Party shall be copied to all other Par ties. Notices given to the Authority shall be copied to all Parties. Page 34 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 25 Exhibit A Definitions “Act” means the Joint Exercise of Powers Act of the State of California (Government Code Section 6500 et seq.) “Administrative Services Agreement” means an agreement or agreements entered into after the Effective Date by the Authority with an entity that will perform tasks necessary for planning, implementing, operating and administering the CCA Program or any other energy programs adopted by the Authority. “Agreement” means this Joint Powers Agreement. “Annual Energy Use” has the meaning given in Section 3.7.1. “Authority” means Central Coast Community Energy. “Authority Document(s)” means document(s) duly adopted by one or both Boards by resolution or motion implementing the powers, functions, and activities of the Authority, including but not limited to the Operating Rules and Regulations, the annual budget, and plans and policies. “Board” means the Policy Board of Directors of the Authority and/or the Operations Board of Directors of the Authority unless one or the other is specified in this Agreement. “CCA” or “Community Choice Aggregation” means an electric service option available to cities and counties pursuant to Public Utilities Code Section 366.2. “CCA Program” means the Authority’s program relating to CCA that is principally described in this Agreement. “Director” means a member of the Policy Board of Directors or Operations Board of Directors representing a Party. Page 35 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 26 “Effective Date” means the date that this Agreement is executed by at least three Initial Participants from the Counties of Monterey, Santa Cruz, and San Benito and the municipalities within those counties, as further described in Section 2.1. “Implementation Plan” means the plan generally described in Section 4.1.2 of this Agreement that is required under Public Utilities Code Section 366.2 to be filed with the California Public Utilities Commission for the purpose of describing a proposed CCA Program. “Initial Costs” means all costs incurred by the County of Santa Cruz and/or Authority relating to the establishment and initial operation of the Authority, such as the hiring of a Chief Executive Officer and any administrative staff, and any required accounting, administrative, technical, or legal services in support of the Authority’s initial activities or in support of the negotiation, preparation, and approval of one or more Administrative Services Agreements. “Initial Participants” means those initial founding JPA members whose jurisdictions pass a CCA ordinance, whose Board seats will be allocated on a one jurisdiction, one seat basis (in addition to one seat for San Benito County) until such time as the number of member jurisdictions exceeds eleven, as described in Section 3.1.4. “Operating Rules and Regulations” means the rules, regulations, policies, bylaws and procedures governing the operation of the Authority. “Operations Board” means the board composed of City Managers and CAOs representing their respective jurisdictions as provided in section 3.1.4 who will provide oversight and support to the Chief Executive Officer on matters pertaining to the provision of electrical service to customers in the region, focusing on the routine, day-to- day operations of the Authority, as further set forth in section 3.3. Page 36 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 27 “Parties” means, collectively, the signatories to this Agreement that have satisfied the conditions in Sections 2.1 or 4.1.1 such that it is considered a member of the Authority. “Party” means singularly, a signatory to this Agreement that has satisfied the conditions in Sections 2.1 or 4.1.1 such that it is considered a member of the Authority. “Policy Board” means the board composed of elected officials representing their respective jurisdictions as provided in section 3.1.4 who will provide guidance/approval in the areas of strategic planning and goal setting, passage of Authority budget and customer rates, large capital expenditures outside the typical power procurement required to provide electrical service, and such other functions as set forth in section 3.3. Page 37 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 28 Exhibit B Central Coast Community Energy of Monterey, San Benito, San Luis Obispo, Santa Cruz, and Santa Barbara Counties List of Parties County of Santa Cruz City of Santa Cruz City of Watsonville City of Capitola City of Scotts Valley County of Monterey City of Salinas City of Monterey City of Pacific Grove City of Carmel City of Seaside City of Marina City of Sand City City of Soledad City of Greenfield City of Gonzales City of Del Rey Oaks County of San Benito City of Hollister City of San Juan Bautista City of Morro Bay City of San Luis Obispo City of Paso Robles City of Pismo Beach City of Grover Beach City of Arroyo Grande County of Santa Barbara City of Santa Maria City of Solvang City of Guadalupe City of Goleta City of Carpinteria City of Buellton City of Atascadero County of San Luis Obispo Page 38 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020;9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 29 Exhibit C Regional Allocation Board seats in Central Coast Community Energy will be allocated as follows: i. One seat for Santa Cruz County; ii. One seat for Monterey County; iii. One seat for San Benito County; iv. One seat for Santa Barbara County; v. One seat for San Luis Obispo County; vi. One seat for the City of Santa Cruz; vii. One seat for the City of Salinas; viii. One seat for the City of Watsonville; ix. One seat for the City of Santa Maria; x. One shared seat for remaining Santa Cruz cities including Capitola and Scotts Valley selected by the City Selection Committee; xi. One shared seat for Monterey Peninsula cities including Monterey, Pacific Grove, and Carmel selected by the City Selection Committee; xii. One shared seat for Monterey Coastal cities including Marina, Seaside, Sand City, and Del Rey Oaks selected by the City Selection Committee; xiii. One shared seat for Salinas Valley cities including Greenfield, Soledad, Gonzales selected by the City Selection Committee; xiv. One shared seat for San Benito County cities including Hollister and San Juan Bautista selected by the City Selection Committee; and Page 39 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 30 xv. One shared seat for the Cities of San Luis Obispo and Morro Bay, selected by agreement or the City Selection Committee; and xvi. One shared seat for the Cities of Paso Robles and Atascadero selected by agreement or the City Selection Committee; and xvii. One shared seat for the Cities of Pismo Beach, Grover Beach, and Arroyo Grande selected by agreement or the City Selection Committee. xviii. One shared seat for the Cities of Guadalupe, Solvang, and Buellton selected by agreement or the City Selection Committee. xix. One shared seat for the Cities of Goleta, and Carpinteria selected by agreement or the City Selection Committee. Page 40 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 30 [SIGNATURE PAGES TO BE INSERTED] Page 41 of 161 Page 42 of 161 Page 43 of 161 Page 44 of 161 Page 45 of 161 Page 46 of 161 Page 47 of 161 Page 48 of 161 Page 49 of 161 Page 50 of 161 Page 51 of 161 Page 52 of 161 Page 53 of 161 Page 54 of 161 Page 55 of 161 Page 56 of 161 Page 57 of 161 Page 58 of 161 Page 59 of 161 Page 60 of 161 Page 61 of 161 Page 62 of 161 Page 63 of 161 Page 64 of 161 Page 65 of 161 Page 66 of 161 Page 67 of 161 Page 68 of 161 Page 69 of 161 Page 70 of 161 Page 71 of 161 Page 72 of 161 Page 73 of 161 Page 74 of 161 Page 75 of 161 DocuSign Envelope ID: FFE31F0E-12EF-4F30-A271-804406FEE19D DocuSign Envelope ID: 0C2CAC92-AFC7-4530-A8AA-DD854A41B905 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; and 9/22/2022 – P a g e 31 Central Coast Community Energy Of Monterey, Santa Cruz, San Benito, and Santa Barbara Counties, and Certain Cities in San Luis Obispo County Signature Page CITY OF ATASCADERO Rachelle Rickard 9/27/2022 Date Its: City Manager APPROVED AS TO FORM: Office of the City Attorney Page 76 of 161 Page 77 of 161 Page 78 of 161 Staff Report Item 12 TO: 3CE Operations Board of Directors FROM: Robert M. Shaw, Chief Executive Officer SUBJECT: Recommend that the Policy Board consider and adopt the Ad Hoc Committee’s recommendations regarding improvements to governance related matters, including board composition, engagement, and communication DATE: August 14, 2024 RECOMMENDATION: That the Operations Board support recommending that the Policy Board consider and adopt the Ad Hoc Committee’s recommendations regarding improvements to governance related matters, including board composition, engagement, and communication. BACKGROUND: Last year during an administrative review process, several opportunities for 3CE governance structure improvements were identified for future evaluation. Following that process, CEO Shaw requested Operations Board Chair Goldstein empanel an Ad Hoc Committee comprised of a diverse set of Operations Board members. The Committee met several times to develop and consider recommendations for improved board structure that would provide greater oversight, communication, and engagement regarding 3CE, with the goal of ensuring future stability and operational effectiveness for 3CE’s long-term success. The Ad Hoc Committee was comprised of Chair Goldstein, Vice Chair Miyasato, Directors Palacios, Mendez, and Hunter. The Ad Hoc Committee also sought input from former Director Bronson. DISCUSSION/ANALYSIS: The Ad Hoc Committee evaluated the original 3CE structure, as outlined in the Joint Powers Agreement (two Boards capped at 11 members each), the current structure (two Boards with 19 members each), the communication and engagement of both seated and non-seated member agencies, allocation of shared seats, and the pace and complexity of 3CE’s operations. Page 79 of 161 The Ad Hoc Committee identified that smaller Operations and Policy Boards, coupled with a transparent and representative selection process could significantly enhance the Boards’ oversight and control of 3CE. The Ad Hoc Committee determined, as part of its review, that the original intention of the Joint Powers Agreement was to limit the Operations and Policy Boards to no more than eleven (11) members. Section 3.1.4, addressing seat allocations, provides, for example, that seats are to “be allocated on a one jurisdiction, one seat basis until such time as the number of member jurisdictions exceeds eleven [11].” After eleven (11) member jurisdictions, seats transition to an allocation of “one seat for each jurisdiction with a population of 50,000 and above, and shared seats for jurisdictions with populations below 50,000.” The Joint Powers Agreement further anticipated that 3CE could further expand and that such expansion could require “that a shared seat expand to include new parties” (Section 3.1.5, addressing Director representation in the event of board seat transition or shared seat dilution). Despite the Joint Powers Agreement’s original intention, 3CE’s Operations and Policy Boards have expanded from 11 to 19 seats. The Ad Hoc Committee considered attributes of smaller boards, and concluded that the benefits include: 1. Greater ownership and accountability among seated board members. Smaller boards encourage greater participation while reducing the potential for deferment. 2. Enhanced communication through closer working relationships and opportunity for more meaningful discussion regarding complex and often nuanced topics. 3. More efficient Board meetings with greater opportunity to evaluate detailed staff proposals. Smaller boards can enable focused discussions and lead to more efficient meetings. 4. Increased opportunities for involvement in leadership positions on subcommittees, engagement with the other board, and individualized dialogue with staff. The Ad Hoc Committee further determined 3CE’s long-term stability continues to be best served through a mixture of permanent and rotating shared-seats with those shared seats selected through a transparent and structured selection-process. The City Selection Committee, as established for each county under California Government Code section 50270, enables the cities in each county to meet and select board members(s) for the cities within their respective county. Page 80 of 161 Recommendations for the Board Governance Restructuring: 1. Effective February 1, 2025, reinstate JPA limit on Operations and Policy Boards to 11 directors each and restructure the seat allocation methodology as follows: a. Four permanent non-rotating seats allocated as follows: one per County to Santa Barbara County, San Luis Obispo County, Monterey County, and Santa Cruz County. b. Four shared seats allocated as follows: one per County as selected by the City Selection Committee in Santa Barbara County, San Luis Obispo County, Monterey County, and Santa Cruz County. Such seats shall have a term of two years and be appointed by the City Selection Committee within the appropriate County. c. Any large city jurisdiction with a population of greater than 100,000 (currently, Santa Maria and Salinas) allocated a right of refusal (RoR) to accept a full seat allocation (both Policy and Operations). If the large city jurisdiction declines its seat, the declined seat shall revert to the City Selection Committee for the County in which the large city jurisdiction is located (Santa Barbara and Monterey, respectively). The large city jurisdiction must confirm or decline the allocated seat every two years. If the large city jurisdiction declines the seat that seat shall be appointed by the appropriate City Selection Committee for a two-year term coinciding with the other City Selection Committee appointed seats. At the conclusion of the two-year term, the large city jurisdiction will be re-allocated a right of refusal to accept a full seat allocation. d. One shared seat allocated to the County of San Benito, Hollister, and San Juan Bautista. The Ad Hoc Committee recommends the seat rotate every two years between the County of San Benito and an appointment of the City Selection Committee (as between the City of Hollister and San Juan Bautista). Recommended 11 Board Seat Allocation Permanent County Seats (4) City Selection Committee (CSC) Shared Seats (4) Large Cities (RoR >100,000 Pop.) (2) San Benito Shared (1) Santa Barbara (1) San Luis Obispo (1) Monterey (1) Santa Cruz (1) Santa Barbara CSC (1) San Luis Obispo CSC (1) Monterey CSC (1) Santa Cruz CSC (1) Santa Maria (1) Salinas (1) or – Revert to CSC Shared Seat (1) for San Benito Hollister San Juan Bautista Page 81 of 161 2. Direct staff to prepare necessary amendments to the 3CE Joint Powers Agreement and Operating Rules to reinstate the 11 seat Operations and Policy Board as set forth above. Such Amendments would be provided to the Policy Board for their consideration as provided for in the JPA amendment procedures. 3. Direct staff to consider processes and procedures to successfully implement and achieve the Ad Hoc Committee’s desired outcome of improved oversight, communication, and engagement. Such requirements would include deadlines for City Selection Committee appointments, a Board Member Code of Conduct that would formalize responsibilities and expectations of all Board members, and Board Procedures that would enable non-seated jurisdictions to raise issues for the Operations or Policy Board to address. The Ad Hoc Committee considered but does not currently recommend mandating whether primary and alternate board appointments must be from the same or different jurisdictions represented by a shared seat. Similarly, the Ad Hoc Committee is not currently recommending whether the Policy and Operations Board appointments must be from the same or different jurisdictions. We note, however, appointing members from different jurisdictions represented by a shared seat would reduce the number of non-seated members and necessitate greater coordination and communication between jurisdictions. Anticipated Process: Implementation of the Ad Hoc Committee’s recommendations would require amendments to the Joint Powers Agreement, as well as ancillary modifications to the Operating Rules and Regulations. Such amendments would detail the allocation methodology as set out above. Pursuant to Section 3.7.1 of the Joint Powers Agreement, any proposed amendments require 30 days’ written notice to all 3CE member agencies, and a two-thirds affirmative vote of the present Directors of the Policy Board. Should the Operations Board decide to support the Ad Hoc Committee’s recommendations, staff would issue the written notices of the proposed amendments to all members no later than August 19, 2024. CONCLUSION: The Operations Board’s support of the Ad Hoc Committee’s recommendation to reduce the size of the Operations and Policy Boards will enhance the boards’ oversight and control of 3CE and help ensure future stability and operational effectiveness for 3CE’s long-term success. ATTACHMENT(S): 1. Sixth Amended Joint Powers Agreement 2. Illustration of Board Seat Allocation Page 82 of 161 Page 83 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 1 JOINT EXERCISE OF POWERS AGREEMENT RELATING TO AND CREATING CENTRAL COAST COMMUNITY ENERGY OF Monterey, San Benito, San Luis Obispo, Santa Barbara, and Santa Cruz Counties This Joint Exercise of Powers Agreement, effective on the date determined by Section 2.1, is made and entered into pursuant to the provisions of Title 1, Division 7, Chapter 5, Article 1 (Sections 6500 et seq.) of the California Government Code relating to the joint exercise of powers among the Parties set forth in Exhibit B, establishes Central Coast Community Energy(“Authority”), and is by and among the Counties of Monterey, San Benito, San Luis Obispo, Santa Barbara, and Santa Cruz who become signatories to this Agreement (“Counties”) and those cities and towns within those Counties who become signatories to this Agreement and relates to the joint exercise of powers among the signatories hereto. RECITALS A. The Parties share various powers under California law, including but not limited to the power to purchase, supply, and aggregate electricity for themselves and customers within their jurisdictions. B. In 2006, the State Legislature adopted AB 32, the Global Warming Solutions Act, which mandates a reduction in greenhouse gas emissions in 2020 to 1990 levels. The California Air Resources Board is promulgating regulations to implement AB32 which will require local governments to develop programs to reduce greenhouse gas emissions. Page 84 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 2 C. The purposes for entering into this Agreement include: a. Reducing greenhouse gas emissions related to the use of power in Monterey, Santa Cruz, San Benito, Santa Barbara, and San Luis Obispo Counties and neighboring regions; b. Providing electric power and other forms of energy to customers at affordable rates that are competitive with the incumbent utility; c. Carrying out programs to facilitate electrifying the transportation, public infrastructure, and the building sectors to reduce reliance on fossil fuels and thus reduce greenhouse gas emissions; d. Stimulating and sustaining the local economy by lowering electric generation charges and creating local jobs as a result of Central Coast Community Energy’s CCE program; and e. Promoting long-term electric rate stability and energy security and reliability for residents through local control of electric generation resources. D. It is the intent of this Agreement to promote the development and use of a wide range of renewable energy sources and energy programs, including but not limited to solar, wind, and geothermal energy production. The purchase of renewable power sources will be the desired approach to decrease regional greenhouse gas emissions and accelerate the State’s transition to clean power resources to the extent feasible. a. It is further desired to establish a long-term energy portfolio that prioritizes the use and development of State, local and regional renewable resources and carbon free resources. b. In compliance with State law and in alignment with the Authority’s desire to stimulate the development of renewable power, the Authority shall draft an Integrated Resource Plan that includes a range of regional renewable development potential in the California Central Coast Region and plans to Page 85 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 3 incorporate local power into its energy portfolio as technically and economically feasible. E. The Parties desire to establish a separate public Authority, known as Central Coast Community Energy, under the provisions of the Joint Exercise of Powers Act of the State of California (Government Code Section 6500 et seq.) (“Act”) in order to collectively study, promote, develop, conduct, operate, and manage energy programs. F. The Parties anticipate adopting an ordinance electing to implement through the Authority a common Community Choice Aggregation (CCA) program, an electric service enterprise available to cities and counties pursuant to California Public Utilities Code Sections 331.1(c) and 366.2. The priority of the Authority will be the consideration of those actions necessary to implement the CCA Program. AGREEMENT NOW, THEREFORE, in consideration of the mutual promises, covenants, and conditions hereinafter set forth, it is agreed by and among the Parties as follows: ARTICLE 1: DEFINITIONS AND EXHIBITS 1.1. Definitions. Capitalized terms used in the Agreement shall have the meanings specified in Exhibit A unless the context requires otherwise. 1.2. Documents Included. This Agreement consists of this document and the following exhibits, all of which are hereby incorporated into this Agreement. Exhibit A: Definitions Exhibit B: List of the Parties Exhibit C: Regional Allocations ARTICLE 2: FORMATION OF CENTRAL COAST COMMUNITY ENERGY 2.1. Effective Date and Term. This Agreement shall become effective and “Central Coast Page 86 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 4 Community Energy” shall exist as a separate public Authority on the date that this Agreement is executed by at least three Initial Participants from the Counties of Monterey, Santa Cruz, and San Benito and the municipalities within those counties, after the adoption of the ordinances required by Public Utilities Code Section 366.2(c)(12). The Authority shall provide notice to the Parties of the Effective Date. The Authority shall continue to exist, and this Agreement shall be effective, until this Agreement is terminated in accordance with Section 6.4, subject to the rights of the Parties to withdraw from the Authority. 2.2. Formation. There is formed as of the Effective Date a public Authority named Central Coast Community Energy. Pursuant to Sections 6506 and 6507 of the Act, the Authority is a public Authority separate from the Parties. Pursuant to Sections 6508.1 of the Act, the debts, liabilities or obligations of the Authority shall not be debts, liabilities or obligations of the individual Parties unless the governing board of a Party agrees in writing to assume any of the debts, liabilities or obligations of the Authority. A Party who has not agreed to assume an Authority debt, liability or obligation shall not be responsible in any way for such debt, liability or obligation even if a majority of the Parties agree to assume the debt, liability or obligation of the Authority. Notwithstanding Section 7.4 of this Agreement, this Section 2.2 may not be amended unless such amendment is approved by the governing board of each Party. 2.3. Purpose. The purpose of this Agreement is to establish an independent public Authority in order to exercise powers common to each Party to study, promote, develop, conduct, operate, and manage energy, energy efficiency and conservation, and other energy-related programs, and to exercise all other powers necessary and incidental to accomplishing this purpose. Without limiting the generality of the foregoing, the Parties Page 87 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 5 intend for this Agreement to be used as a contractual mechanism by which the Parties are authorized to participate in the CCA Program, as further described in Section 4.1. The Parties intend that other agreements shall define the terms and conditions associated with the implementation of the CCA Program and any other energy programs approved by the Authority. 2.4. Powers. The Authority shall have all powers common to the Parties and such additional powers accorded to it by law. The Authority is authorized, in its own name, to exercise all powers and do all acts necessary and proper to carry out the provisions of this Agreement and fulfill its purposes, including, but not limited to, each of the following powers, subject to the voting requirements set forth in Section 3.7 through 3.7.1: 2.4.1. to make and enter into contracts; 2.4.2. to employ agents and employees, including but not limited to a Chief Executive Officer; 2.4.3. to acquire, contract, manage, maintain, and operate any buildings, infrastructure, works, or improvements; 2.4.4. to acquire property by eminent domain, or otherwise, except as limited under Section 6508 of the Act, and to hold or dispose of any property; however, the Authority shall not exercise the power of eminent domain within the jurisdiction of a Party without approval of the affected Party’s governing board; 2.4.5. to lease any property; 2.4.6. to sue and be sued in its own name; 2.4.7. to incur debts, liabilities, and obligations, including but not limited to loans from private lending sources pursuant to its temporary borrowing Page 88 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 6 powers such as Government Code Sections 53850 et seq. and authority under the Act; 2.4.8. to form subsidiary or independent corporations or entities if necessary, to carry out energy supply and energy conservation programs at the lowest possible cost or to take advantage of legislative or regulatory changes; 2.4.9. to issue revenue bonds and other forms of indebtedness; 2.4.10. to apply for, accept, and receive all licenses, permits, grants, loans or other aids from any federal, state, or local public agency; 2.4.11. to submit documentation and notices, register, and comply with orders, tariffs and agreements for the establishment and implementation of the CCA Program and other energy programs; 2.4.12. to adopt Operating Rules and Regulations; 2.4.13. to make and enter into service agreements relating to the provision of services necessary to plan, implement, operate and administer the CCA Program and other energy programs, including the acquisition of electric power supply and the provision of retail and regulatory support services; and 2.4.14. to permit additional Parties to enter into this Agreement after the Effective Date and to permit another entity authorized to be a community choice aggregator to designate the Authority to act as the community choice aggregator on its behalf. 2.5. Limitation on Powers. As required by Government Code Section 6509, the power of the Authority is subject to the restrictions upon the manner of exercising power possessed by the City of Santa Cruz and any other restrictions on exercising the powers of the authority that may be adopted by the board. Page 89 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 7 2.6. Compliance with Local Zoning and Building Laws and CEQA. Unless state or federal law provides otherwise, any facilities, buildings or structures located, constructed, or caused to be constructed by the Authority within the territory of the Authority shall comply with the General Plan, zoning and building laws of the local jurisdiction within which the facilities, buildings or structures are constructed and comply with the California Environmental Quality Act (“CEQA”). ARTICLE 3: GOVERNANCE AND INTERNAL ORGANIZATION 3.1. Boards of Directors. The governing bodies of the Authority shall consist of a Policy Board of Directors (“Policy Board”) and an Operations Board of Directors (“Operations Board”). 3.1.1. Both Boards shall consist of Directors representing any of the five Counties of Monterey, San Benito, San Luis Obispo, Santa Barbara, or Santa Cruz that become a signatory to the Agreement, and Directors representing any of the Cities or Towns, which are members of the Authority, within those five Counties (“Directors”). Each Director shall serve at the pleasure of the governing board of the Party who appointed such Director and may be removed as Director by such governing board at any time. If at any time a vacancy occurs on the Board, a replacement shall be appointed to fill the position of the previous Director within 90 days of the date that such position becomes vacant. 3.1.2. Policy Board Directors must be elected members of the Board of Supervisors or elected members of the City or Town Council of the municipality that is the signatory to this Agreement. Jurisdictions may appoint an alternate to serve in the absence of its Director on the Policy Board. Alternates for the Policy Board must be members of the Board of Supervisors or members of the governing board of the municipality that is the signatory to this Agreement. Page 90 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 8 3.1.3. Operations Board Directors must be the senior executive/County Administrative Officer of any County that is the signatory to this Agreement, or senior executive/City Manager from any municipality that is the signatory to this Agreement. Jurisdictions may appoint an alternate to serve in the absence of its Director on the Operations Board. Alternates for the Operations Board must be administrative managers of the County or administrative managers of the governing board of the municipality that is the signatory to this Agreement. 3.1.4. Board seats will be allocated under the following formulas. Policy and Operations Board seats for those jurisdictions that pass a CCA ordinance by February 28, 2017 (“Initial Participants”) will be allocated on a one jurisdiction, one seat basis until such time as the number of member jurisdictions exceeds eleven. Once the JPA reaches more than eleven - member agencies, the Policy and Operations Boards’ composition shall shift to a regional allocation based on population size. This allocation shall be one seat for each jurisdiction with a population of 50,000 and above, and shared seats for jurisdictions with populations below 50,000 allocated on a sub-regional basis, as set forth in Exhibit C. Notwithstanding the above, the County of San Benito shall be allotted one seat. 3.1.5. Shared board seats, as set forth in Exhibit C, Regional Allocation shall have a term of two years and will be determined either by agreement among the parties sharing the seat or through the City Selection Committee in the respective County. Following appointment, either by agreement or by the City Selection Committee, Directors may be reappointed and serve multiple terms. In the event the addition of new parties requires that an established board seat transition to a shared seat or that a shared seat expand to include new parties, the sitting Director Page 91 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 9 will automatically be the first representative for that shared seat to ensure continuity and maintain experience. 3.2. Quorum. A majority of the appointed Directors shall constitute a quorum, except that less than a quorum may adjourn in accordance with law. 3.3. Powers and Functions of the Boards. The Boards shall exercise general governance and oversight over the business and activities of the Authority, consistent with this Agreement and applicable law. The Boards shall provide general policy guidance to the CCA Program. 3.3.1. The Policy Board will provide guidance/approval in the areas of strategic planning and goal setting, passage of Authority budget and customer rates, and large capital expenditures outside the typical power procurement required to provide electrical service. 3.3.2. The Operations Board will provide oversight and support to the Chief Executive Officer on matters pertaining to the provision of electrical service to customers in the region, focusing on the routine, day-to -day operations of the Authority. 3.3.3. Policy Board approval shall be required for any of the following actions, including but not limited to: (a) The issuance of bonds, major capital expenditures, or any other financing even if program revenues are expected to pay for such financing; (b) The appointment or removal of officers described in Section 3.9, subject to Section 3.9.3; (c) The appointment and termination of the Chief Executive Officer; (d) The adoption of the Annual Budget; Page 92 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 10 (e) The adoption of an ordinance; (f) The setting of rates for power sold by the Authority and the setting of charges for any other category of service provided by the Authority; (g) The adoption of the Implementation Plan; (h) The selection of General Counsel, Treasurer and Auditor; (i) The amending of this Joint Exercise of Powers Agreement; and (j) Termination of the CCA Program. 3.3.4. Operations Board approval shall be required for the following actions, including but not limited to: (a) The approval of Authority contracts and agreements, except as provided by Section 3.4; and (b) Approval of Authority operating policies and other matters necessary to ensure successful program operations. 3.3.5. Joint approval of the Policy and Operations Boards shall be required for the initiation or resolution of claims and litigation where the Authority will be the defendant, plaintiff, petitioner, respondent, cross complainant or cross petitioner, or intervenor; provided, however, that the Chief Executive Officer or General Counsel, on behalf of the Authority, may intervene in, become a party to, or file comments with respect to any proceeding pending at the California Public Utilities Commission, the Federal Energy Regulatory Commission, or any other administrative authority, without approval of the Boards as long as such action is consistent with any adopted Board policies. 3.4. Chief Executive Officer. The Authority shall have a Chief Executive Officer Page 93 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 11 (“CEO”). The Operations Board shall present nomination(s) of qualified candidates to the Policy Board. The Policy Board shall make the selection and appointment of the CEO who will be an employee of the Authority and serve at will and at the pleasure of the Policy Board. The CEO shall be responsible for the day-to-day operation and management of the Authority and the CCA Program. The CEO may exercise all powers of the Authority, including the power to hire, discipline and terminate employees as well as the power to approve any agreement if the total amount payable under the agreement falls within the Authority’s fiscal policies to be set by the Policy Board, except the powers specifically set forth in Section 3.3 or those powers which by law must be exercised by the Board(s) of Directors. The CEO shall report to the Policy Board on matters related to strategic planning and goal setting, passage of Authority budget and customer rates, and large capital expenditures outside the typical power procurement required to provide electrical service. The CEO shall report to the Operations Board on matters related to Authority policy and the provision of electrical service to customers in the region, focusing on the routine, day-to-day operations of the Authority. It shall be the responsibility of the CEO to keep both Board(s) appropriately informed and engaged in the discussions and actions of each to ensure cooperation and unity within the Authority. 3.5. Commissions, Boards, and Committees. The Boards may establish any advisory committees they deem appropriate to assist in carrying out the CCA Program, other energy programs, and the provisions of this Agreement which shall comply with the requirements of the Ralph M. Brown Act. The Boards may establish rules, regulations, policies, bylaws or procedures to govern any such commissions, boards, or committees if the Board(s) deem it appropriate to appoint such commissions, boards or committees, and shall determine whether members shall be compensated or entitled to reimbursement for expenses. 3.6. Director Compensation. Directors shall serve without compensation from the Authority. However, Directors may be compensated by their respective appointing Page 94 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 12 authorities. The Boards, however, may adopt by resolution a policy relating to the reimbursement by the Authority of expenses incurred by their respective Directors. 3.7. Voting. Except as provided in Section 3.7.1 below, actions of the Boards shall require the affirmative vote of a majority of Directors present at the meeting. 3.7.1. Special Voting Requirements for Certain Matters. (a) Two-Thirds Voting Approval Requirements Relating to Sections 6.2 and 7.4. Action of the Board on the matters set forth in Section 6.2 (involuntary termination of a Party), or Section 7.4 (amendment of this Agreement) shall require the aff irmative vote of at least two- thirds of Directors present. (b) Seventy-Five Percent Special Voting Requirements for Eminent Domain and Contributions or Pledge of Assets. i. A decision to exercise the power of eminent domain on behalf of the Authority to acquire any property interest other than an easement, right-of-way, or temporary construction easement shall require a vote of at least 75% of all Directors present. ii. The imposition on any Party of any obligation to make contributions or pledge assets as a condition of continued participation in the CCA Program shall require a vote of at least 75% of all Directors and the approval of the governing boards of the Parties who are being asked to make such contribution or pledge. iii. For purposes of this section, “imposition on any Party of any obligation to make contributions or pledge assets as a condition of continued participation in the CCA Program” does not include any obligations of a withdrawing or terminated party Page 95 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 13 imposed under Section 6.3. 3.8. Meetings and Special Meetings of the Board. The Policy Board shall hold up to three regular meetings per year, with the option for additional or special meetings as determined by the Chief Executive Officer or Chair of the Policy Board after consultation with the Chief Executive Officer. The Operations Board shall hold at least eight meetings per year, with the option for additional or special meetings. The date, hour and place of each regular meeting shall be fixed by resolution or ordinance of the Board. Regular meetings may be adjourned to another meeting time. Special and Emergency Meetings of the Boards may be called in accordance with the provisions of California Government Code Sections 54956 and 54956.5. Directors may participate in meetings telephonically, with full voting rights, only to the extent permitted by law. All meetings shall be conducted in accordance with the provisions of the Ralph M. Brown Act (California Government Code Sections 54950 et seq.). 3.9. Selection of Board Officers. 3.9.1. Policy Board Chair and Vice Chair. The Policy Board shall select, from among themselves, a Chair, who shall be the presiding officer of all Policy Board meetings, and a Vice Chair, who shall serve in the absence of the Chair. The Policy Board Chair and Vice Chair shall act as the overall Chair and Vice Chair for Central Coast Community Energy. The term of office of the Chair and Vice Chair shall continue for one year, but there shall be no limit on the number of terms held by either the Chair or Vice Chair. The office of either the Chair or Vice Chair shall be declared vacant and a new selection shall be made if: (a) the person serving dies, resigns, is no longer holding a qualifying public office, or the Party that the person represents removes the person as its representative on the Board; or (b) the Party that he or she represents withdraws from the Authority Page 96 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 14 pursuant to the provisions of this Agreement. 3.9.2. Operations Board Chair and Vice Chair. The Operations Board shall select, from among themselves, a Chair, who shall be the presiding officer of all Operations Board meetings, and a Vice Chair, who shall serve in the absence of the Chair. The term of office of the Chair and Vice Chair shall continue for one year, but there shall be no limit on the number of terms held by either the Chair or Vice Chair. The office of either the Chair or Vice Chair shall be declared vacant and a new selection shall be made if: (a) the person serving dies, resigns, or is no longer the senior executive of the Party that the person represents or; (b) the Party that he or she represents withdraws from the Authority pursuant to the provisions of this Agreement. 3.9.3. Secretary. Each Board shall appoint a Secretary, who need not be a member of the Board, who shall be responsible for keeping the minutes of all meetings of each Board and all other official records of the Authority. If the Secretary appointed is an employee of the Authority, that employee may serve as Secretary to both Boards. 3.9.4. The Policy Board shall appoint a qualified person to act as the Treasurer and a qualified person to act as the Auditor, neither of whom needs to be a member of the Board. If the Board so designates, and in accordance with the provisions of applicable law, a qualified person may hold both the office of Treasurer and the office of Auditor of the Authority. Unless otherwise exempted from such requirement, the Authority shall cause an independent audit to be made by a certified public accountant, or public accountant, in compliance with Section 6505 of the Act. The Treasurer shall report directly to the Policy Board and shall comply with the requirements of treasurers of incorporated municipalities. The Board may Page 97 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 15 transfer the responsibilities of Treasurer to any person or entity as the law may provide at the time. The duties and obligations of the Treasurer are further specified in Article 5. 3.10. Administrative Services Provider. The Board(s) may appoint one or more administrative services providers to serve as the Authority’s agent for planning, implementing, operating and administering the CCA Program, and any other program approved by the Board, in accordance with the provisions of an Administrative Services Agreement. The appointed administrative services provider may be one of the Parties. An Administrative Services Agreement shall set forth the terms and conditions by which the appointed administrative services provider shall perform or cause to be performed all tasks necessary for planning, implementing, operating and administering the CCA Program and other approved programs. The Administrative Services Agreement shall set forth the term of the Agreement and the circumstances under which the Administrative Services Agreement may be terminated by the Authority. This section shall not in any way be construed to limit the d iscretion of the Authority to hire its own employees to administer the CCA Program or any other program. The Administrative Services Provider shall be either an employee or a contractor of the Authority unless a member agency is providing the service. ARTICLE 4: IMPLEMENTATION ACTION AND AUTHORITY DOCUMENTS 4.1. Preliminary Implementation of the CCA Program. 4.1.1. Enabling Ordinance. To be eligible to participate in the CCA Program, each Party must adopt an ordinance in accordance with Public Utilities Code Section 366.2(c)(12) for the purpose of specifying that the Party intends to implement a CCA Program by and through its participation in the Authority. 4.1.2. Implementation Plan. The Policy Board shall cause to be prepared an Implementation Plan meeting the requirements of Public Utilities Code Section 366.2 and any applicable Public Utilities Commission regulations Page 98 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 16 as soon after the Effective Date as reasonably practicable. The Implementation Plan shall not be filed with the Public Utilities Commission until it is approved by the Policy Board in the manner provided by Section 3.7. 4.1.3. Termination of CCA Program. Nothing contained in this Article or this Agreement shall be construed to limit the discretion of the Authority to terminate the implementation or operation of the CCA Program at any time in accordance with any applicable requirements of state law. 4.2. Authority Documents. The Parties acknowledge and agree that the affairs of the Authority will be implemented through various documents duly adopted by the Board(s) through resolution, including but not limited to the CCCE Implementation Plan and Operating Policies. The Parties agree to abide by and comply with the terms and conditions of all such documents that may be adopted by the Board(s), subject to the Parties’ right to withdraw from the Authority as described in Article 6. ARTICLE 5: FINANCIAL PROVISIONS 5.1. Fiscal Year. The Authority’s fiscal year shall be 12 months commencing April 1 or the date selected by the Authority. The fiscal year may be changed by Policy Board resolution. 5.2. Depository. 5.2.1. All funds of the Authority shall be held in separate accounts in the name of the Authority and not commingled with funds of any Party or any other person or entity. 5.2.2. All funds of the Authority shall be strictly and separately accounted for, and regular reports shall be rendered of all receipts and disbursements, at least quarterly during the fiscal year. The books and records of the Authority shall be open to inspection by the Parties at all reasonable times. The Board(s) shall contract with a certified public accountant or Page 99 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 17 public accountant to make an annual audit of the accounts and records of the Authority, which shall be conducted in accordance with the requirements of Section 6505 of the Act. 5.2.3. All expenditures shall be made in accordance with the approved budget and upon the approval of any officer so authorized by the Board(s) in accordance with its Operating Rules and Regulations. The Treasurer shall draw checks or warrants or make payments by other means for claims or disbursements not within an applicable budget only upon the prior approval of the Board(s). 5.3. Budget and Recovery of Costs. 5.3.1. Budget. The initial budget shall be approved by the Policy Board. The Board may revise the budget from time -to-time as may be reasonably necessary to address contingencies and unexpected expenses. All subsequent budgets of the Authority shall be approved by the Policy Board in accordance with the Operating Rules and Regulations. 5.3.2. Funding of Initial Costs. The County of Santa Cruz has funded certain activities necessary to implement the CCA Program. If the CCA Program becomes operational, these Initial Costs paid by the County of Santa Cruz shall be included in the customer charges for electric services as provided by Section 5.3.3 to the extent permitted by law, and the County of Santa Cruz shall be reimbursed from the payment of such charges by customers of the Authority. Prior to such reimbursement, the County of Santa Cruz shall provide such documentation of costs paid as the Board may request. The Authority may establish a reasonable time -period over which such costs are recovered. In the event, that the CCA Program does not become operational, the County of Santa Cruz shall not be entitled to any reimbursement of the Initial Costs it has paid from the Authority or any Party. Page 100 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 18 5.3.3. CCA Program Costs. The Parties desire that all costs incurred by the Authority that are directly or indirectly attributable to the provision of electric, conservation, efficiency, incentives, financing, or other services provided under the CCA Program, including but not limited to the establishment and maintenance of various reserves and performance funds and administrative, accounting, legal, consulting, and other similar costs, shall be recovered through charges to CCA customers receiving such electric services, or from revenues from grants or other third -party sources. ARTICLE 6: WITHDRAWAL 6.1. Withdrawal. 6.1.1. Right to Withdraw. A Party may withdraw its participation in the CCA Program, effective as of the beginning of the Authority’s fiscal year, by giving no less than 6 months advance written notice of its election to do so, which notice shall be given to the Authority and each Party. Withdrawal of a Party shall require an affirmative vote of the Party’s governing board. 6.1.2. Right to Withdraw After Amendment. Notwithstanding Section 6.1.1, a Party may withdraw its membership in the Authority following an amendment to this Agreement adopted by the Policy Board which the Party’s Director voted against provided such notice is given in writing within thirty (30) days following the date of the vote. Withdrawal of a Party shall require an affirmative vote of the Party’s governing board and shall not be subject to the six-month advanced notice provided in Section 6.1.1. In the event of such withdrawal, the Party shall be subject to the provisions of Section 6.3. 6.1.3. The Right to Withdraw Prior to Program Launch. After receiving bids from power suppliers, the Authority must provide to the Parties the report Page 101 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 19 from the electrical utility consultant retained by the Authority that compares the total estimated electrical rates that the Authority will be charging to customers as well as the estimated greenhouse gas emissions rate and the amount of estimated renewable energy used with that of the incumbent utility. If the report provides that the Authority is unable to provide total electrical rates, as part of its baseline offering, to the customers that are equal to or lower than the incumbent utility or to provide power in a manner that has a lower greenhouse gas emissions rate or uses more renewable energy than the incumbent utility, a Party may, immediately after an affirmative vote of the Party’s governing board, withdraw its membership in the Authority without any financial obligation, except those financial obligations incurred through the Party’s share of any credit guarantee, as long as the Party provides written notice of its intent to withdraw to the Authority Board no more than fifteen business days after receiving the report. Costs incurred prior to withdrawal will be calculated as a pro-rata share of start-up costs expended to the date of the Party’s withdrawal, and it shall be the responsibility of the withdrawing Party to pay its share of said costs if they have a material/adverse impact on remaining Authority members or ratepayers. 6.1.4. Continuing Financial Obligation; Further Assurances. Except as provided by Section 6.1.3, a Party that withdraws its participation in the CCA Program may be subject to certain continuing financial obligations, as described in Section 6.3. Each withdrawing Party and the Authority shall execute and deliver all further instruments and documents and take any further action that may be reasonably necessary, as determined by the Board, to effectuate the orderly withdrawal of such Party from participation in the CCA Program. 6.2. Involuntary Termination of a Party. Participation of a Party in the CCA program Page 102 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 20 may be terminated for material non-compliance with provisions of this Agreement or any other agreement relating to the Party’s participation in the CCA Program upon a vote of the Policy Board as provided in Section 3.7.1. Prior to any vote to terminate participation with respect to a Party, written notice of the proposed termination and the reason(s) for such termination shall be delivered to the Party whose termination is proposed at least 30 days prior to the regular Board meeting at which such matter shall first be discussed as an agenda item. The written notice of proposed termination shall specify th e particular provisions of this Agreement or other agreement that the Party has allegedly violated. The Party subject to possible termination shall have the opportunity at the next regular Board meeting to respond to any reasons and allegations that may be cited as a basis for termination prior to a vote regarding termination. A Party that has had its participation in the CCA Program terminated may be subject to certain continuing liabilities, as described in Section 6.3. 6.3. Continuing Financial Obligations: Refund. Except as provided by Section 6.1.3, upon a withdrawal or involuntary termination of a Party, the Party shall remain responsible for any claims, demands, damages, or other financial obligations arising from the Party membership or participation in the CCA Program through the date of its withdrawal or involuntary termination, it being agreed that the Party shall not be responsible for any financial obligations arising after the date of the Party’s withdrawal or involuntary termination. Claims, demands, damages, or other financial obligations for which a withdrawing or terminated Party may remain liable include, but are not limited to, losses from the resale of power contracted for by the Authority to serve the Party’s load. With respect to such financial obligations, upon notice by a Party that it wishes to withdraw from the CCA Program, the Authority shall notify the Party of the minimum waiting period under which the Party would have no costs for withdrawal if the Party agrees to stay in the CCA Program for such period. The waiting period will be set to the minimum duration such that there are no costs transferred to remaining ratepayers. If the Party elects to withdraw before the end of the minimum waiting period, the charge for exiting shall be set at a dollar amount that would offset actual costs to the remaining Page 103 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 21 ratepayers and may not include punitive charges that exceed actual costs. In addition, such Party shall also be responsible for any costs or obligations associated with the Party’s participation in any program in accordance with the provisions of any agreements relating to such program provided such costs or obligations were incurred prior to the withdrawal of the Party. The Authority may withhold funds otherwise owing to the Party or may require the Party to deposit sufficient funds with the Authority, as reasonably determined by the Authority and approved by a vote of the Policy Board, to cover the Party’s financial obligations for the costs described above. Any amount of the Party’s funds held on deposit with the Authority above that which is required to pay any financial obligations shall be returned to the Party. The liability of any Party under this section 6.3 is subject and subordinate to the provisions of Section 2.2, and nothing in this section 6.3 shall reduce, impair, or eliminate any immunity from liability provided by Section 2.2. 6.4. Mutual Termination. This Agreement may be terminated by mutual agreement of all the Parties; provided, however, the foregoing shall not be construed as limiting the rights of a Party to withdraw its participation in the CCA Program, as described in Section 6.1. 6.5. Disposition of Property upon Termination of Authority. Upon termination of this Agreement, any surplus money or assets in possession of the Authority for use under this Agreement, after payment of all liabilities, costs, expenses, and charges incurred under this Agreement and under any program documents, shall be returned to the then-existing Parties in proportion to the contributions made by each. ARTICLE 7: MISCELLANEOUS PROVISIONS 7.1. Dispute Resolution. The Parties and the Authority shall make reasonable efforts to informally settle all disputes arising out of or in connection with this Agreement. Should such informal efforts to settle a dispute, after reasonable efforts, fail, the dispute shall be mediated in accordance with policies and procedures established by the Authority. The costs of any such mediation shall be shared equally among the Parties participating in the Page 104 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 22 mediation. 7.2. Liability of Directors, Officers, and Employees. The Directors, officers, and employees of the Authority shall use ordinary care and reasonable diligence in the exercise of their powers and in the performance of their duties pursuant to this Agreement. No current or former Director, officer, or employee will be responsible for any act or omission by another Director, officer, or employee. The Authority shall defend, indemnify and hold harmless the individual current and former Directors, officers, and employees for any acts or omissions in the scope of their employment or duties in the manner provided by Government Code Sections 995 et seq. Nothing in this section shall be construed to limit the defenses available under the law, to the Parties, the Authority, or its Directors, officers, or employees. 7.3. Indemnification of Parties. The Authority shall acquire such insurance coverage as is necessary to protect the interests of the Authority and the Parties. The Authority shall defend, indemnify, and hold harmless the Parties and each of their respective Boards of Supervisors or City Councils, officers, agents and employees, from any and all claims, losses, damages, costs, injuries, and liabilities of every kind arising directly or indirectly from the conduct, activities, operations, acts, and omissions of the Authority under this Agreement. 7.4. Amendment of this Agreement. This Agreement may not be amended except by a written amendment approved by a vote of Policy Board members as provided in Section 3.7.1. The Authority shall provide written notice to all Parties of proposed amendments to this Agreement, including the effective date of such amendments, at least 30 days prior to the date upon which the Board votes on such amendments. 7.5. Assignment. Except as otherwise expressly provided in this Agreement, the rights and duties of the Parties may not be assigned or delegated without the advance written consent of all of the other Parties, and any attempt to assign or delegate such rights or duties in contravention of this Section 7.5 shall be null and void. This Agreement shall inure to the benefit of, and be binding upon, the successors and assigns of the Parties. Page 105 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 23 This Section 7.5 does not prohibit a Party from entering into an independent agreement with another agency, person, or entity regarding the financing of that Party’s contributions to the Authority, or the disposition of proceeds which that Party receives under this Agreement, so long as such independent agreement does not affect, or purport to affect, the rights and duties of the Authority or the Parties under this Agreement. 7.6. Severability. If one or more clauses, sentences, paragraphs or provisions of this Agreement shall be held to be unlawful, invalid or unenforceable, it is hereby agreed by the Parties, that the remainder of the Agreement shall not be affected thereby. Such clauses, sentences, paragraphs or provision shall be deemed reformed so as to be lawful, valid and enforced to the maximum extent possible. 7.7. Further Assurances. Each Party agrees to execute and deliver all further instruments and documents and take any further action that may be reasonably necessary, to effectuate the purposes and intent of this Agreement. 7.8. Execution by Counterparts. This Agreement may be executed in any number of counterparts, and upon execution by all Parties, each executed counterpart shall have the same force and effect as an original instrument and as if all Parties had signed the same instrument. Any signature page of this Agreement may be detached from any counterpart of this Agreement without impairing the legal effect of any signatures thereon and may be attached to another counterpart of this Agreement identical in form hereto but having attached to it one or more signature pages. 7.9. Parties to be Served Notice. Any notice authorized or required to be given pursuant to this Agreement shall be validly given if served in writing either personally, by deposit in the United States mail, first class postage prepaid with return receipt requested, or by a recognized courier service. Notices given (a) personally or b y courier service shall be conclusively deemed received at the time of delivery and receipt and (b) by mail shall be conclusively deemed given 48 hours after the deposit thereof (excluding Saturdays, Sundays and holidays) if the sender receives the return receipt. All notices shall be addressed to the office of the clerk or secretary of the Authority or Party, as the Page 106 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 24 case may be, or such other person designated in writing by the Authority or Party. Notices given to one Party shall be copied to all other Par ties. Notices given to the Authority shall be copied to all Parties. Page 107 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 25 Exhibit A Definitions “Act” means the Joint Exercise of Powers Act of the State of California (Government Code Section 6500 et seq.) “Administrative Services Agreement” means an agreement or agreements entered into after the Effective Date by the Authority with an entity that will perform tasks necessary for planning, implementing, operating and administering the CCA Program or any other energy programs adopted by the Authority. “Agreement” means this Joint Powers Agreement. “Annual Energy Use” has the meaning given in Section 3.7.1. “Authority” means Central Coast Community Energy. “Authority Document(s)” means document(s) duly adopted by one or both Boards by resolution or motion implementing the powers, functions, and activities of the Authority, including but not limited to the Operating Rules and Regulations, the annual budget, and plans and policies. “Board” means the Policy Board of Directors of the Authority and/or the Operations Board of Directors of the Authority unless one or the other is specified in this Agreement. “CCA” or “Community Choice Aggregation” means an electric service option available to cities and counties pursuant to Public Utilities Code Section 366.2. “CCA Program” means the Authority’s program relating to CCA that is principally described in this Agreement. “Director” means a member of the Policy Board of Directors or Operations Board of Directors representing a Party. Page 108 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 26 “Effective Date” means the date that this Agreement is executed by at least three Initial Participants from the Counties of Monterey, Santa Cruz, and San Benito and the municipalities within those counties, as further described in Section 2.1. “Implementation Plan” means the plan generally described in Section 4.1.2 of this Agreement that is required under Public Utilities Code Section 366.2 to be filed with the California Public Utilities Commission for the purpose of describing a proposed CCA Program. “Initial Costs” means all costs incurred by the County of Santa Cruz and/or Authority relating to the establishment and initial operation of the Authority, such as the hiring of a Chief Executive Officer and any administrative staff, and any required accounting, administrative, technical, or legal services in support of the Authority’s initial activities or in support of the negotiation, preparation, and approval of one or more Administrative Services Agreements. “Initial Participants” means those initial founding JPA members whose jurisdictions pass a CCA ordinance, whose Board seats will be allocated on a one jurisdiction, one seat basis (in addition to one seat for San Benito County) until such time as the number of member jurisdictions exceeds eleven, as described in Section 3.1.4. “Operating Rules and Regulations” means the rules, regulations, policies, bylaws and procedures governing the operation of the Authority. “Operations Board” means the board composed of City Managers and CAOs representing their respective jurisdictions as provided in section 3.1.4 who will provide oversight and support to the Chief Executive Officer on matters pertaining to the provision of electrical service to customers in the region, focusing on the routine, day-to- day operations of the Authority, as further set forth in section 3.3. Page 109 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 27 “Parties” means, collectively, the signatories to this Agreement that have satisfied the conditions in Sections 2.1 or 4.1.1 such that it is considered a member of the Authority. “Party” means singularly, a signatory to this Agreement that has satisfied the conditions in Sections 2.1 or 4.1.1 such that it is considered a member of the Authority. “Policy Board” means the board composed of elected officials representing their respective jurisdictions as provided in section 3.1.4 who will provide guidance/approval in the areas of strategic planning and goal setting, passage of Authority budget and customer rates, large capital expenditures outside the typical power procurement required to provide electrical service, and such other functions as set forth in section 3.3. Page 110 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 28 Exhibit B Central Coast Community Energy of Monterey, San Benito, San Luis Obispo, Santa Cruz, and Santa Barbara Counties List of Parties County of Santa Cruz City of Santa Cruz City of Watsonville City of Capitola City of Scotts Valley County of Monterey City of Salinas City of Monterey City of Pacific Grove City of Carmel City of Seaside City of Marina City of Sand City City of Soledad City of Greenfield City of Gonzales City of Del Rey Oaks County of San Benito City of Hollister City of San Juan Bautista City of Morro Bay City of San Luis Obispo City of Paso Robles City of Pismo Beach City of Grover Beach City of Arroyo Grande County of Santa Barbara City of Santa Maria City of Solvang City of Guadalupe City of Goleta City of Carpinteria City of Buellton City of Atascadero County of San Luis Obispo Page 111 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020;9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 29 Exhibit C Regional Allocation Board seats in Central Coast Community Energy will be allocated as follows: i. One seat for Santa Cruz County; ii. One seat for Monterey County; iii. One seat for San Benito County; iv. One seat for Santa Barbara County; v. One seat for San Luis Obispo County; vi. One seat for the City of Santa Cruz; vii. One seat for the City of Salinas; viii. One seat for the City of Watsonville; ix. One seat for the City of Santa Maria; x. One shared seat for remaining Santa Cruz cities including Capitola and Scotts Valley selected by the City Selection Committee; xi. One shared seat for Monterey Peninsula cities including Monterey, Pacific Grove, and Carmel selected by the City Selection Committee; xii. One shared seat for Monterey Coastal cities including Marina, Seaside, Sand City, and Del Rey Oaks selected by the City Selection Committee; xiii. One shared seat for Salinas Valley cities including Greenfield, Soledad, Gonzales selected by the City Selection Committee; xiv. One shared seat for San Benito County cities including Hollister and San Juan Bautista selected by the City Selection Committee; and Page 112 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 30 xv. One shared seat for the Cities of San Luis Obispo and Morro Bay, selected by agreement or the City Selection Committee; and xvi. One shared seat for the Cities of Paso Robles and Atascadero selected by agreement or the City Selection Committee; and xvii. One shared seat for the Cities of Pismo Beach, Grover Beach, and Arroyo Grande selected by agreement or the City Selection Committee. xviii. One shared seat for the Cities of Guadalupe, Solvang, and Buellton selected by agreement or the City Selection Committee. xix. One shared seat for the Cities of Goleta, and Carpinteria selected by agreement or the City Selection Committee. Page 113 of 161 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; 9/22/2022; and 5/15/2023 – P a g e 30 [SIGNATURE PAGES TO BE INSERTED] Page 114 of 161 Page 115 of 161 Page 116 of 161 Page 117 of 161 Page 118 of 161 Page 119 of 161 Page 120 of 161 Page 121 of 161 Page 122 of 161 Page 123 of 161 Page 124 of 161 Page 125 of 161 Page 126 of 161 Page 127 of 161 Page 128 of 161 Page 129 of 161 Page 130 of 161 Page 131 of 161 Page 132 of 161 Page 133 of 161 Page 134 of 161 Page 135 of 161 Page 136 of 161 Page 137 of 161 Page 138 of 161 Page 139 of 161 Page 140 of 161 Page 141 of 161 Page 142 of 161 Page 143 of 161 Page 144 of 161 Page 145 of 161 Page 146 of 161 Page 147 of 161 Page 148 of 161 DocuSign Envelope ID: FFE31F0E-12EF-4F30-A271-804406FEE19D DocuSign Envelope ID: 0C2CAC92-AFC7-4530-A8AA-DD854A41B905 1/20/17 as amended 12/5/18; 12/4/19; 6/3/2020; 9/2/2020; and 9/22/2022 – P a g e 31 Central Coast Community Energy Of Monterey, Santa Cruz, San Benito, and Santa Barbara Counties, and Certain Cities in San Luis Obispo County Signature Page CITY OF ATASCADERO Rachelle Rickard 9/27/2022 Date Its: City Manager APPROVED AS TO FORM: Office of the City Attorney Page 149 of 161 Page 150 of 161 Attachment 2: Illustration of Board Seat Allocation Recommended 11 Board Seat Allocation Permanent Seats (4) San Benito Shared (1) Large Cities (RoR >100,000 Pop.) (2) County of Monterey County of San Luis Obispo County of Santa Barbara County of Santa Cruz San Benito Shared Seat: San Benito, Hollister, San Juan Bautista Large City pop. > 100,000 Santa Maria or revert to Santa Barbara Co. City Selection Committee Large City pop.> 100,000 Salinas or revert to Monterey Co. City Selection Committee City Selection Committee Shared Seats (4) Monterey City Selection Committee SLO. City Selection Committee Santa Barbara City Selection Committee Santa Cruz City Selection Committee Page 151 of 161 Page 152 of 161 Operations Board of Directors August 14, 2024 10:30AM Central Coast Community Energy 70 Garden Court, Suite 300 Monterey, CA 93940 County of Santa Cruz 701 Ocean Street, Fifth Floor Redwood Room Santa Cruz, CA 95060 City of Paso Robles City Hall 1000 Spring Street, Second Floor Paso Robles, CA 93446 City of San Luis Obispo City Hall 990 Palm Street, Council Chambers San Luis Obispo, CA 93401 City of Santa Maria City Hall 110 East Cook Street, Council Chambers Santa Maria, CA 93454 County of Santa Barbara County Administration Building 105 East Anapamu Street, Fourth Floor Santa Barbara, CA 93101 MINUTES The meeting was called to order at 10:30AM with 16 members attending in 5 locations and a quorum established. Directors Present: 3CE Headquarters: Guertin, Hunter, Pia, Morgansen, Reynolds, Ring, Vides County of Santa Cruz: Huffaker, Palacios, Chair Goldstein City of San Luis Obispo: Campbell, Downing, Hill City of Santa Maria: Posada County of Santa Barbara: Ramirez, Vice Chair Miyasato Directors Absent: De La Rosa, Lewis, Wolfe Chair opened public comment for items on the consent calendar and items not listed on the agenda. The following individual(s) addressed the Board. • Beverly DesChaux The Chair closed the public comment period. Page 153 of 161 CONSENT CALENDAR Item 1 pulled by Vice Chair Miyasato. Clerk will correct the minutes from the May 8, 2024 meeting of the Operations Board of Directors and will resubmit for approval at the September 18, 2024 meeting. MOTION: Moved by Director Pia, seconded by Director Hunter to approve consent items 2 – 9. ACTION: The Motion Carried with a roll call vote: 16/0/3 AYES: Campbell, Downing, Ring, Guertin, Hill, Huffaker, Hunter, Mendez, Morgansen, Palacios, Posada, Ramirez, Reynolds, Vides, Vice Chair Miyasato, Chair Goldstein NOES: None ABSENT: De La Rosa, Lewis, Wolfe 2. Approved minutes from the June 12, 2024, special meeting of the Operations Board 3. Received update on FY 2023-24 Energy Programs 4. Received Regulatory Update 5. Received a financial report for the period October 1, 2023, through May 31, 2024 6. Authorized the CEO to execute Amendment No. 4 to the Aiqueous, LLC Amended and Restated Standard Services Agreement to provide a customer relationship management platform to support Energy Programs, and to renew and extend the expiration date for an additional seven (7) months, for a revised term of January 2, 2020 through April 29, 2025, and to increase the Agreement’s amount by an additional $80,570 for a total not-to-exceed amount of $775,805 7. Authorized the CEO to execute Amendment No. 4 to the Cohen Ventures, Inc., DBA Energy Solutions Standard Services Agreement to extend the term for an additional six (6) months, for a revised term of March 11, 2022 through January 31, 2025, to administer equity rates for the Electrify Your Home program, and to increase the Agreement’s amount by an additional $565,000 for a total not-to-exceed amount of $3,825,000. Approve and authorize the CEO to execute up to two (2) amendments to revise standard terms, with no change to the total contract amount, subject to approval by the General Counsel. 8. Authorized the CEO to execute Amendment No. 3 to the Frontier Energy Inc. Standard Services Agreement to support 3CE Energy Programs, extend the expiration date for an additional twelve (12) months for a revised term of May 11, 2022, through September 30, 2026, and to increase the Agreement by an additional $251,896 for a total not to exceed amount of $641,274 9. Approved a Real Property Lease Agreement template, containing standard risk and indemnification terms, for the provision of leasing office space to tenants of 3CE properties. Authorize updates and modifications to the template subject to General Counsel approval REGULAR AGENDA 10. CEO Report a. Staffing Update b. Power Charge Indifference Adjustment Page 154 of 161 Chair opened public comment period. No public comment received. The Chair closed the public comment period. 11. Authorized CEO to execute CPUC approved Bioenergy Market Adjusting Tariff (BioMAT) Program, Pro-Forma Agreements, and eligible Power Purchase Agreements (PPAs) with terms of 10 to 20 years and associated forms Chair opened public comment period. The following individual(s) addressed the Board. • Beverly DesChaux The Chair closed public comment period. MOTION: Moved by Director Huffaker, seconded by Vice Chair Miyasato to approve. ACTION: The Motion Carried with a roll call vote: 16/0/3 AYES: Campbell, Downing, Ring, Guertin, Hill, Huffaker, Hunter, Mendez, Morgansen, Palacios, Posada, Ramirez, Reynolds, Vides, Vice Chair Miyasato, Chair Goldstein NOES: None ABSENT: De La Rosa, Lewis, Wolfe 12. Recommended that the Policy Board consider and adopt the Ad Hoc Committee’s recommendations regarding improvements to governance related matters, including board composition, engagement, and communication Chair opened public comment period. No public comment received. The Chair closed the public comment period. MOTION: Moved by Director Guertin, seconded by Director Hunter to support forwarding the Ad Hoc Committee's recommendation with the amendment to remove the right of refusal for the Cities of Salinas and Santa Maria. SUBSTITUTE MOTION: Moved by Director Hill, seconded by Director Downing for the Operations Board to recommend to the Policy Board that they conduct a study session at the annual meeting, and out of that, if there were any direction to move forward that they could agendize the item at the next meeting, or thereafter. In that the presentation of alternatives that we saw today would be important, as well as an additional option wherein the shared board seat rotation does not rely on the City Selection Committee process. Page 155 of 161 ACTION: The Substitute motioned failed with a roll call vote: 6/9/4 AYES: Campbell, Downing, Ring, Hill, Morgansen, Reynolds NOES: Guertin, Huffaker, Hunter, Pia, Palacios, Ramirez, Vides, Vice Chair Miyasato, Chair Goldstein ABSENT: De La Rosa, Lewis, Wolfe MOTION: Moved by Director Guertin, seconded by Director Hunter to support forwarding the Ad Hoc Committee's recommendation to modify the Policy and Operations boards from 19 members to 11 with the following additional modifications. Removing the right of refusal for the Cities of Salinas and Santa Maria. Additionally, cities may utilize the City Selection Committees to appoint shared seats, however, they are not required to do so. ACTION: The Motion Carried with a roll call vote: 11/4/4 AYES: Ring, Guertin, Huffaker, Hunter, Pia, Palacios, Ramirez, Reynolds, Vides, Vice Chair Miyasato, Chair Goldstein NOES: Campbell, Downing, Hill, Morgansen ABSENT: De La Rosa, Lewis, Posada (left at 11:44 AM), Wolfe Adjourned at 12:44PM Page 156 of 161 From:Robert M. Shaw Cc:Heather Vowell; Catherine A. Stedman; Charles McKee Subject:Background and Requested Special Meeting Regarding 3CE Governance Review Date:Friday, August 16, 2024 11:32:50 AM Attachments:image001.png image002.png 2024.08.14 Operations Board Minutes (draft).docx 2024.08.14 OPS - Ad Hoc Governance Committee Recommendations.pdf This message is from an External Source. Use caution when deciding to open attachments, click links, or respond. Dear Boardmembers and CAOs/City Managers, This email is being sent to all Primary and Alternate Board members of the 3CE Policy and Operations Boards and the CAOs and City Managers of all thirty-five 3CE jurisdictions. Operations Board Recommendation (the Minutes and Ad Hoc Committee’s Report are attached, and the video of the meeting is here: https://pub- 3ce.escribemeetings.com/Players/ISIStandAlonePlayer.aspx?Id=4d652be4-bc39-41a4-88bd-dbc6bf6ff59d) At its August 14 meeting, the Operations Board voted 11 to 4 to support forwarding to the Policy Board an Ad Hoc Committee recommendation to reduce the 3CE Operations and Policy Boards from 19 to 11 members each with certain modifications. That recommendation, including modifications made in the motion, is illustrated in the chart below the line at the bottom of this email. The Operations Board recommendation, if considered and approved by the Policy Board, would establish four types of seats: Permanent County Seats (four total seats – Monterey, SLO, Santa Barbara, Santa Cruz) Shared City Seats (four total seats – seats shared by cities within the following counties: Monterey, SLO, Santa Barbara, Santa Cruz) Permanent Large City Seats (two total seats – one for Salinas, one for Santa Maria) San Benito Shared Seat (one seat, shared between the county and its two cities). As is the case today, The shared seats would be appointed by the City Selection Committee or through an agreement of the parties. The recommendation included other components such as developing a Code of Conduct, formal Board Procedures, and regional communication and outreach efforts. While the recommendation passed, there were strenuous concerns raised and ultimately an entire County delegation voted against the proposal. Requested Special Meeting of the Policy Board with invited non seated jurisdictions Considering the concerns raised (primarily with the seat, I’m seeking a special Policy Board Meeting, to which non-seated jurisdictions will additionally be invited, to review the Ad Hoc recommendations along with other recommendations member agencies believe could meet the Boards goals while achieving a broader, if not unanimous, consensus. The meeting will be run hybrid form our remote meeting locations, but we will accommodate additional remote locations as necessary. Staff will seek direction from the Board regarding: 1. Pursuing JPA Amendments to implement the Operations Board recommendation or an Alternative proposal. 2. Further Study 3. Tabeling the matter 4. Remaining at 19 Board seats and implementing other components, such as Code of Conduct, ect. Next Steps 1. Today you will receive a doodle poll from Board Clerk Heather Vowell regarding the proposed special meeting 2. Your Clerks will receive a notice of Potential JPA Amendments that may be considered at the September annual meeting depending on the outcome of the proposed special meeting 3. Non-seated jurisdictions will receive a separate email asking they designate a Limited Member to attend the special meeting. Additional Consensus Building Proposals 1. If you would like to provide an additional proposal to be discussed, please contact me or Catherine Stedman (cc'd here) directly. Thank you all for dedicating time to this important topic. Sincerely, Rob Shaw D: (831) 641-7211 _____________________________________________________________________________________________________________________________________________________________________ __________________________________________________________________________________ Page 157 of 161 Robert M. Shaw (he/him) Chief Executive Officer D: (831) 641-7211 rshaw@3ce.org 70 Garden Court, Suite 300 Monterey, CA 93940 3CEnergy.org Page 158 of 161 Marina S. Pantchenko Deputy General Counsel August 16, 2024 Dear Member Agency: Please accept this letter as notice that on September 19, 2024, at 9:00AM, the Policy Board will convene to consider a potential amendment to the existing Joint Exercise of Powers Agreement (hereinafter “JPA”). On August 14, 2024, the Operations Board met to consider forwarding a recommendation of its Ad Hoc Committee to the Policy Board, to modify board composition and seat allocations for both the Operations and Policy Boards. After discussion and consideration, the Operations Board voted to move forward the following recommendation: Reduce the size of the Operations and Policy Boards from nineteen (19) to eleven (11) seated directors each, and restructure the seat allocation as follows: 1) Four (4) permanent non-rotating seats allocated as follows: one per County to Santa Barbara County, San Luis Obispo County, Monterey County, and Santa Cruz County. 2) Any large city jurisdiction with a population of greater than 100,000 (currently, Santa Maria and Salinas) allocated each a seat. 3) Four (4) shared seats allocated as follows: one per County as selected by agreement among the parties or through the City Selection Committee in Santa Barbara County, San Luis Obispo County, Monterey County, and Santa Cruz County respectively. Such seats shall have a term of two years and be appointed by agreement of the parties or through the City Selection Committee within the appropriate County. 4) One shared seat allocated to the County of San Benito, Hollister, and San Juan Bautista. The seat shall rotate every two years as determined by an agreement of the parties. These proposed changes anticipate an effective date of February 1, 2025, and may require substantial amendments to Article 3, Sections 3.1.4 and 3.1.5 as follows below and may be Page 159 of 161 subject to additional modifications made by the Policy Board at its publicly noticed meeting on September 19, 2024. Section 3.1.4 The Policy and Operations Boards shall each be governed by eleven (11) voting members. These Board seats shall be allocated as follows. Board seats will be allocated under the following formulas. Policy and Operations Board seats for those jurisdictions that pass a CCA ordinance by February 28, 2017 (“Initial Participants”) will be allocated on a one jurisdiction, one seat basis until such time as the number of member jurisdictions exceeds eleven. The Counties of Santa Cruz, Monterey, San Luis Obispo, and Santa Barbara shall each be allocated one (1) permanent non-rotating seat. An additional four seats shall be allocated by agreement among the parties or City Selection Committee in the Counties of Santa Cruz, Monterey, San Luis Obispo, and Santa Barbara. Cities with populations more than 100,000 people, currently the Cities of Salinas and Santa Maria, shall each be allocated one seat. The County of San Benito shall be allocated one (1) seat to be shared with the Cities of Hollister and San Juan Bautista as follows. The seat shall rotate every two years as determined by an agreement of the parties. Once the JPA reaches more than eleven member agencies, the Policy and Operations Boards’ composition shall shift to a regional allocation based on population size. This allocation shall be one seat for each jurisdiction with a population of 50,000 and above, and shared seats for jurisdictions with populations below 50,000 allocated on a sub-regional basis, as set forth in Exhibit C. Notwithstanding the above, the County of San Benito shall be allotted one seat. Section 3.1.5 Shared board seats, as set forth in Exhibit C, Regional Allocation shall have a term of two years and will be determined either by agreement among the parties sharing the seat or through City Selection Committee in the respective County. Following appointment, either by agreement or by the City Selection Committee, Directors may be reappointed and serve multiple terms. In the event the addition of new parties requires that an established board seat transition to a shared seat or that a shared seat expands to include new parties, the sitting Director will automatically be the first representative for that shared seat to ensure continuity and maintain experience. Prior to the September 19, 2024 Policy Board meeting, a special meeting of the Policy Board may be called to conduct a study session regarding these proposed changes. We encourage all member jurisdictions to attend and participate in the discussion as provided for in the Operating Rules and Regulations. This notice is provided consistent with Article 7, Section 7.4 of the Sixth Amended JPA. If you have any questions, please contact: Heather Vowell, Board Clerk Page 160 of 161 hvowell@3ce.org Thank you, Marina S. Pantchenko Deputy General Counsel MPantchenko@3ce.org Page 161 of 161