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Agenda Packet 2007-04-24City Council Tony Ferrara Mayor Ed Arnold Mayor Pro Tem Joe Costello Council Member Jim Guthrie Council Member Chuck Fellows Council Member Agenda Steven Adams City Manager Timothy J. Carmel City Attorney Kelly Wetmore City Clerk AGENDA SUMMARY CITY COUNCIL/REDEVELOPMENT AGENCY/ PUBLIC FINANCING AUTHORITY MEETING TUESDAY, APRIL 24, 2007 7:00 P.M. Arroyo Grande City Council Chambers 215 East Branch Street, Arroyo Grande 1. CALL TO ORDER: 7:00 P.M. 2. ROLL CALL: COUNCIL/RDA/PFA 3. FLAG SALUTE: AMERICAN LEGION POST 136 4. INVOCATION: PASTOR ROBERT BANKER OPEN DOOR CHURCH 5. SPECIAL PRESENTATIONS: 5.a. Honorarv Proclamation Recostlnizino "Arbor Dav" -April 27. 2007 5.b. Honorarv Proclamation Recoanizinst "Bike Month" -Mav 2007 5.c. Honorarv Proclamation Recoanizinu "Peace Officers' Memorial Month" -Mav 2007 AGENDA SUMMARY -APRIL 24, 2007 PAGE 2 6. AGENDA REVIEW: . 6a. Move that all ordinances presented tonight be read in title only and all further readings be waived. 7. COMMUNITY COMMENTS AND SUGGESTIONS: This public comment period is an invitation to members of the community to present issues, thoughts, or suggestions on matters not scheduled on this agenda. Comments should be limited to those matters that are within the jurisdiction of the City Council. The Brown Act restricts the Council from taking formal action on matters not published on the agenda. In response to your comments, the Mayor or presiding Council Member may: Direct City staff to assist or coordinate with you. A Council Member may state a desire to meet with you. It may be the desire of the Council to place your issue or matter on a future Council agenda. Please adhere to the following procedures when addressing the Council: • Comments should be limited to 3 minutes or less. • Your comments should be directed to the Council as a whole and not directed to individual Council members. • Slanderous, profane or personal remarks against any Council Member or member of the audience shall not be permitted. 8. CONSENT AGENDA: The following routine items listed below are scheduled for consideration as a group. The recommendations for each item are noted. Any member of the public who wishes to comment on any Consent Agenda item may do so at this time. Any Council Member may request that any item be withdrawn from the Consent Agenda to permit discussion or change the recommended course of action. The City Council may approve the remainder of the Consent Agenda on one motion. 8.a. Cash Disbursement Ratification (KRAETSCH) Recommended Action: Ratify the listing of cash disbursements for the period April 1, 2007 through April 15, 2007. 8.b. Consideration of Statement of Investment Deaosits (KRAETSCH) Recommended Action: Receive and file the report of current investment deposits as of March 31, 2007. 8.c. Consideration of Refection of Claim -Chad Johnson (W ETMORE) Recommended Action: Reject Claim. 8.d. Consideration of Council Appointment to the Parks and Recreation Commission (ADAMS) Recommended Action: Approve the recommendation of Council Member Joe Costello to appoint Kathy Arnold to the Parks and Recreation Commission. AGENDA SUMMARY -APRIL 24, 2007 PAGE 3 8. CONSENT AGENDA ICont'dl: 8.e. 8.f. 8.g. Recommended Action: Adopt Resolution accepting the public improvements and easements for Tract 2669, located at the northwest corner of Le Point Street and Nevada Street, constructed by Fairway Development. Recommended Action: Approve an Agreement for Contractor Services with Commercial Maintenance Services in the amount of $4,250 per month and authorize the Mayor to execute the Agreement. Strawberry Stampede on Mav 27. 2007 (STRONG) Recommended Action: Adopt Resolution authorizing the closure of Branch Mill Road for the Annual Strawberry Stampede on May 27, 2007. 8.h. Consideration of Acceptance of the Citv Hall Reception Area Renovation Project (SPAGNOLO) - Recommended Action: 1) Accept the project improvements, as constructed by Anderson Burton Construction, Inc., in accordance with the plans and specifications for the City Hall Reception Area Renovation; 2) Direct staff to file a Notice of Completion; and 3) Authorize release of the retention of $2,996.90 thirty-five (35) days after the Notice of Completion has been recorded if no liens have been filed. 8.i 9. PUBLIC HEARINGS: 9.a. Consideration of Adoption of the Multi.lurisdictional Hazard Mitigation Plan (HUBERT) Recommended Action: 1) Open the public hearing and consider public testimony on the newly developed Multi-Jurisdictional Hazard Mitigation Plan; and 2) Adopt Resolution adopting the Multi-Jurisdictional Hazard Mitigation Plan. 9.b. Grande Municipal Code Regarding Underground Utilities (STRONG) Recommended Action: The Planning Commission recommends the City Council introduce an Ordinance amending Municipal Code Section 16.68.050 related to underground utilities. Recommended Action: 1) Approve and authorize the Mayor to execute the revised Memorandum of Understanding (MOU) between the City of Arroyo Grande, Lucia Mar Unified School District (District), J.H. Land Partnership and John Taylor, Trustee; and 2) Appropriated $7,500 for reimbursement to John Taylor, Trustee for expenses related to the project. AGENDA SUMMARY -APRIL 24, 2007 PAGE 4 10. CONTINUED BUSINESS: 10.a. Consideration of 10-Year Strategic Plan (ADAMS) Recommended Action: Adopt Resolution approving the proposed 10-Year Strategic Plan. 11 11.a. (ADAMS) Recommended Action: It is recommended the City Council, RDA Board, and Public Financing Authority Board adopt Resolutions by the City, Redevelopment Agency, and the Public Financing Authority, respectively, as follows: 1) A Resolution of the City Council of the City of Arroyo Grande Approving the Issuance by the Arroyo Grande Redevelopment Agency of its Arroyo Grande Redevelopment Project Area, 2007 Tax Allocation Bonds and Making Certain Determinations Relating Thereto; 2) A Resolution of the Board of Directors of the Arroyo Grande Redevelopment Agency Authorizing the Issuance of 2007 Tax Allocation Bonds of Said Agency in a Principal Amount of Not to Exceed Seven Million Dollars ($7,000,000) to Finance a Portion of the Costs of a Redevelopment Project Known as the Arroyo Grande Redevelopment Project Area and Approving Certain Documents and Taking Certain Other Actions in Connection Therewith; and 3) A Resolution of the Arroyo Grande Public Financing Authority Authorizing the Execution and Delivery of a Purchase Contract By and Among the Arroyo Grande Redevelopment Agency, the Arroyo Grande Public Financing Authority, and E. J. De La Rosa & Co., Inc. 11.b. Consideration of Revisions to SLOCOG Traffic Model Population and Emplovment Proiections (STRONG) Recommended Action: Request the Mayor, as SLOCOG representative, to advise the SLOCOG economic consultant to reconsider and reduce employment projections for Arroyo Grande used in the 2030 Traffic Model (and potentially in other regional planning purposes). 11.c. Consideration to Authorize Staff to Pursue Temoorarv Closure of Northbound BriscolRoute 101 On/Off Ramas with Caltrans (SPAGNOLO) Recommended Action: Authorize Staff to pursue temporary closure of the northbound Brisco/Route 101 on/off ramps with Caltrans. 11.d. 8.08 of the Arroyo Grande Municipal Code relating to the use and sale of fireworks. AGENDA SUMMARY -APRIL 24, 2007 PAGE 5 12. CITY COUNCIL REPORTS: This item gives the Mayor and Council Members the opportunity to present reports to the other members regarding committees, commissions, boards, or special projects on which they may be participating. (a) MAYOR TONY FERRARA: (1) San Luis Obispo Council of Governments/San Luis Obispo Regional Transit Authority (SLOCOG/SLORTA) (2) South San Luis Obispo County Sanitation District (SSLOCSD) (3) Other (b) MAYOR PRO TEM ED ARNOLD: (1) Integrated Waste Management Authority Board (IWMA) (2) Economic Vitality Corporation (EVC) (3) Other (c) COUNCIL MEMBER JOE COSTELLO: (1) Zone 3 Water Advisory Board (2) Air Pollution Control District (APCD) (3) Fire Oversight Committee (4) Fire Consolidation Oversight Committee (5) Other (d) COUNCIL MEMBER JIM GUTHRIE: (1) South County Area Transit (SCAT) (2) California Joint Powers Insurance Authority (CJPIA) (3) Other (e) COUNCIL MEMBER CHUCK FELLOWS: (1) South County Youth Coalition (2) County Water Resources Advisory Committee (WRAC) (3) Other 13. CITY COUNCIL MEMBER ITEMS: The following item(s) are placed on the agenda by a Council Member who would like to receive feedback, direct staff to prepare information, and/or request a formal agenda report be prepared and the item placed on a future agenda. No formal action can be taken. a. None. 14. CITY MANAGER ITEMS: The following item(s) are placed on the agenda by the City Manager in order to receive feedback and/or request direction from the Council. No formal action can be taken. a. None. AGENDA SUMMARY -APRIL 24, 2007 PAGE 6 15. COUNCIL COMMUNICATIONS: Correspondence/Comments as presented by the City Council. 16. STAFF COMMUNICATIONS: Correspondence/Comments as presented by the City Manager. 17. COMMUNITY COMMENTS AND SUGGESTIONS: This public comment period is an invitation to members of the community to present issues, thoughts, or suggestions. Comments should be limited to those matters that are within the jurisdiction of the City Council. The Brown Act restricts the Council from taking formal action on matters not published on the agenda. 18. ADJOURNMENT This agenda was prepared and posted pursuant to Government Code Section 54954.2. Agenda reports can be accessed and downloaded from the City's website at www.arrovogrande.org •ttt~~a~~~~~~~a~~~~a~~~~~ All staff reports or other written documentation relating to each item of business referred to on the agenda are on file in the City Clerk's office and are available for public inspection and reproduction at cost. If requested, the agenda shall be made available in appropriate alternative formats to persons with a disability, as required by the Americans with Disabilities Act. To make a request for disability-related modification or accommodation, contact the Administrative Services Department at 805-473-5414 as soon as possible and at least 48 hours prior to the meeting date. City Council/Redevelopment Agency Meetings are cablecast live and videotaped for replay on Arroyo Grande's Government Access Channel 20. The rebroadcast schedule is published at www.slo-soan.oro, ~~~ CITY OF ^v~~~l.T~T7* Honorary Proclamation Recognizing Arbor Day April 2 7, 200 7 WHEREAS, in 1872 J. Sterling Morton proposed to the Nebraska Board of Agriculture that a special day be set aside for the planting of trees; and WHEREAS, this holiday, called Arbor Day, was first observed with the planting of more than a million trees in Nebraska; and WHEREAS, 2007 is the 135th Anniversary of Arbor Day, and it is now observed throughout the nation and the world; and WHEREAS, trees can reduce the erosion of our precious topsoil by wind and water, cut heating and cooling costs, moderate the temperature, clean the air, produce life-giving oxygen, and provide habitat for wildlife; and WHEREAS, trees are a renewable resource giving us paper, wood for our homes, fuel for our fires, and countless other wood products, increase property values, enhance the economic vitality of business areas, beautify our community, and trees, whenever they are planted, are a source of joy and spiritial renewal; and WHEREAS, the City of Arroyo Grande has been recognized as a Tree City USA by the National Arbor Day Foundation for the 25th consecutive year and desires to continue its tree-planting ways. NOW THEREFORE, BE IT RESOLVED, that I, Tony Ferrara, Mayor of the City of Arroyo Grande, on behalf of the City Council, do hereby recognize and proclaim April 27th as "ARBOR DAY" in the City of Arroyo Grande, and urge all citizens to celebrate "ARBOR DAY" and to support efforts to care for our trees and woodlands and to support our City's community forestry program. BE IT FURTHER RESOLVED, that all citizens are urged to plant a tree to gladden the heart and promote the well-being of this and future generations. IN WITNESS WHEREOF, I have hereunto set my hand and caused the Seal of the City of Arroyo Grande to be affixed this 24th day of April 2007. paovo OF P C9 ~ IXCOXPOflRTEO i h U? m T ERRARA ' '"`",","~ Cq[lFOPN~P 5.a. ~;- CITY OF .~lontfi ; and9-4ay i4 to stay i8, 2007 as `SBike to "1~Vork 1Neek" WHEREAS, bicycle commuting is an effective means to reduce air pollution and conserve energy and promotes the healthy lifestyle within communities by reducing traffic, noise and congestion; and WHEREAS, many businesses, organizations and schools encourage customers, students and employees who commute by bicycle, providing incentive rewards, clean-up facilities and other benefits; and WHEREAS, bicycle transportation is an integral part of the ~"multi-modal" transportation systems planned by federal, state, regional, and local transportation agencies; and WHEREAS, bike month is a San Luis Obispo Countywide celebration of human -powered transportation which encourages people of all ages and abilities to ride bicycles to their destinations; and WHEREAS, bike month promotions such as "Bike-to-Work and School Week", "Commuter Bike Challenge", "Executive Commuter Bike Challenge" and "Bike Fest 2007" successfully encourages citizens to ride their bicycles, thereby reducing vehicular emissions in the county; and WHEREAS, "Shift Gears" is the theme for 2007, an appropriate directive to all cyclists, whether veteran or novice, to support bicycling in all of its forms in San Luis Obispo County, and celebrate the joys and benefits of bicycling for transportation and recreation; and WHEREAS, businesses are encouraged to take part in the "Bike Your Business Display" by decorating their windows in the "Shift Gears" theme throughout the month of May. NOW, THEREFORE, BE IT RESOLVED, that I, Tony Ferrara, Mayor of the City of Arroyo Grande, on behalf of the City Council, do hereby proclaim May 2007 as Bike Month in the City of Arroyo Grande, and, May 14 to May 18, 2007 as "Bike to Work and School Week." IN WITNESS WHEREOF, I have hereunto set my hand and caused the Seal of the City of Arroyo Grande to be affixed this 24'" day of April 2007. ~Jsn Tony Ferrara, Mayor pµaor0 cy o~ a INCOfl VOPiTFO y-L F uu__~~ p U ~ry~gl T f JVLY 10. t9~t y C Lp 4</PORN 5.b. ProcCa.iming .stay 2007 as ``Bike u~- ~onoraiy Proolamation l~eoo~nizin~ NATIONAL POLICE WEEK, ~ May 13 - 19, 2007 ~"~~-- MGMUIWLt1tlO WHEREAS, of all the promises America offers, none is more precious or more elusive than the right to be free from crime and violence; and WHEREAS, the dedicated men and women who have chosen law enforcement as a cazeer face extraordinary risk and danger in preserving oar freedom and security; and WHEREAS, daring the week of May 13-19, 2007, NATIONAL POLICE WEEK is observed throughout the nation in order to recognize the hazazdous work, serious responsibilities, and strong commitment of oar nation's peace officers; and WHEREAS, in cogjmction with this important observance, May 16, 2007, is observed as "PEACE OFFICERS MEMORIAL DAY" in San Luis Obispo County in commemoration of those noble officers who have tragically sacrificed their lives in the line of duty, including twelve Peace Officers who died in the line of duty in California in 2006; and WHEREAS, these special observances provide all Californians with fire opportunity to appreciate [he heroic men and women who have dedicated their lives to preserving public safety; and WHEREAS, the City of Arroyo Grande desires to honor the valor, service, and dedication of its own Police Officers. NOW THEREFORE, BE IT RESOLVED, that I, Tony Ferraza, Mayor of the City of Arroyo Grande, on behalf of the City Comcil, do hereby proclaim May 13-19, 2007, as "NATIONAL POLICE WEEK" and May 16, 2007, as "PEACE OFFICERS MEMORIAL DAY" in the City of Arroyo Grande, and azge all citizens of oar community to demonstrate their sincere appreciation and gratitude to the Police Officers by deed, remazk, and at[imde. IN WITNESS WHEREOF, I have hereunto set my baud and caused the Seal of the City of Arroyo Grande to be affixed this 24'" day of Apri12007. RROYO ~~ O~NCOfl PON<TEO Z F v +. m Tony Ferrara Mayor ' ~°`T'° "" t cq<IFOR~\P 5.c. CITY OF 8.a. MEMORANDUM TO: CITY COUNCIL FROM: ANGELA KRAETSCH, DIRECTOR OF FINANCIAL SERVICES BY: FRANCES R. HEAD, ACCOUNTING SUPERVISOR SUBJECT: CASH DISBURSEMENT RATIFICATION DATE: APRIL 24, 2007 RECOMMENDATION: It is recommended the City Council ratify the attached listing of cash disbursements for the period April 1 through April 15, 2007. FUNDING: There is a $714,283.43 fiscal impact that includes the following items: • Accounts Payable Checks 130752-130933 $ 276,274.39 • Payroll Checks & Benefit Checks $ 438,009.04 All payments are within the existing budget. DISCUSSION: The attached listing represents the cash disbursements required of normal and usual operations. It is requested that the City Council approve these payments. ALTERNATIVES: The following alternatives are provided for the Council's consideration: • Approve staffs recommendation; • Do not approve staff's recommendation; • Provide direction to staff. Attachments: Attachment 1-April 1, 2007-April 15, 2007, Accounts Payable Check Register Attachment 2-April 13, 2007, Payroll Checks & Benefit Checks Register apCkHist 04/17/2007 8:12AM Check History Listing CITY OF ARROYO GRANDE ATTACHMENT1 Page:1 Bank code: boa Check # Date Vendor Status ClearlVoid Date Invoice Inv. Date Amount Paid Check Total 130752 04/03/2007 002137 VERIZON WIRELESS 2119598771 03/04/2007- 92.92 92.92 130753 04/03/2007 002076 SLO COUNTY VISITORS & 393 03/22/2007 7,315.00 7,315.00 130763 04/04/2007 006064 BLAKE CHAFFEE Ref000075635 03/27/2007 26.37 26.37 130764 04/04/2007 006063 REED PETERSON Ref000075634 03/27/2007 40.09 40.09 130765 04/04/2007 006062 TRANSITIONS Ref000075633 03/27/2007 97.66 97.66 130766 04/06/2007 005908 AERISINC 10071043 03/21/2007 200.74 200.74 130767 04/06/2007 001259 AGP VIDEO, INC 2163 03/08/2007 14,519.39 2158 03/06/2007 2,265.00 16,784.39 130768 04/06/2007 005709 AMERICAN MESSAGING L5252720HC 03/15/2007 11.77 11.77 130769 04/06/2007 005180 APEX OUTDOOR POWER 27909 03/12/2007 9.60 9.60 130770 04/06/2007 001792 ARMA INTERNATIONAL 109981 03/14/2007 195.00 195.00 130771 04/06/2007 003745 ARROWHEAD SCIENTIFIC, 27007 03/07/2007 91.85 91.85 130772 04/06/2007 005507 AT & T 3/8-9867 03/08/2007 78.24 3/7-7480 03/07/2007 67.56 145.80 130773 04/06/2007 005615AT&T/MCI T6189878 03/09/2007 1,236.49 T6180687 03/06/2007 29.80 T6189873 03/09/2007 18.51 1,284.80 130774 04/06/2007 001758 AUTO GLASS CENTRAL 014272 03/26/2007 202.98 202.98 130775 04/06/2007 000935 BRUCE BEAUDOIN & 10820 04/02/2007 3,000.00 3,000.00 130776 04/06/2007 000084 THE BOXX EXPRESS 107 03/20/2007 72.15 106 03/20/2007 23.94 gg,Og 130777 04/06/2007 000087 BREZDEN PEST CONTROL, 67272 03/27/2007 107.00 107.00 130778 04/06/2007 000090 BRISCO MILL & LUMBER 132708 03/30/2007 29.80 132370 03/06/2007 23.58 53.38 Page: 1 apCkHist Check History Listing Page: 2 04/17/2007 8:12AM CITY OF ARROYO GRANDE Bank code: boa Check # Date Vendor 130779 04/06/2007 000095 BURKE AND PACE OF AG, 130780 04/06/2007 005843 CALIFORNIA 130781 04/06/2007 005890 CANNON ASSOCIATES 130782 04/06/2007 004548 CARMEL & NACCASHA, LLP 130783 04/06/2007 000603 CAROUEST AUTO PARTS 130784 04/06/2007 000178 COLD CANYON LANDFILL, 130785 04/06/2007 002842 COMMERCIAL 130786 04/06/2007 003599 COMMERCIAL SANITARY 130787 04/06/2007 001694 SHAWN COSGROVE 130788 04/06/2007 002868 MICHELLE COTA 130789 04/06/2007 006004 COUNTY OF SAN LUIS 130790 04/06/2007 006005 COUNTY OF SAN LUIS Status ClearlVoid Date Invoice Inv. Date Amount Paid Check Total 2340527 03/16/2007 68.40 2341582 03/30/2007 29 46 2339763 03/06/2007 23.50 2340112 03/12/2007 2.68 124.04 5567150 03/03/2007 29.95 29.95 40687 02/28/2007 5,159.66 5,159.66 10781 04/04/2007 13,314.96 10778 04/04/2007 4,621.00 17,935.96 7314-150222 03/27/2007 51.09 51.09 241634 03/28/2007 300.00 241580 03/28/2007 260.50 241626 03/28/2007 97.00 241574 03/28/2007 96.00 241103 03/27/2007 88.00 241275 03/27/2007 79.50 241146 03/27/2007 78.25 241076 03/27/2007 75.00 241047 03/27/2007 73.50 241232 03/27/2007 69.50 235091 03/07/2007 900 1,226.25 3187-3187 03/27/2007 200.00 200.00 10450 03/22/2007 316.39 10448 03/16/2007 44.51 360.90 040207 04/05/2007 312.00 8168523 03/28/2007 56.00 368.00 031907 03/19/2007 180.68 040507 04/05/2007 120.00 300.68 DA CASE #VF007-002 04/04/2007 100.00 100 00 DA CASE#VF007-002 04/04/2007 ~ 505.00 505.00 Page: 2 apCkHist 04/17/2007 8:12AM Check History Listing CITY OF ARROYO GRANDE Bank code: boa Check # Date Vendor Status ClearNoid Date Invoice Inv. Date Amount Paid 130791 04/06/2007 000196 CUESTA EQUIPMENT CO INC 333045 03/21/2007 151.25 130792 04/06/2007 006065 DEPT OF MOTOR VEHICLES 3301956 03/19/2007 341.93 130793 04/06/2007 000208 J B DEWAR, INC 926219 03/16/2007 62.92 130794 04/06/2007 002673 DOCTORS MEDPLUS 13884136 01/22/2007 260.00 13884056 01/18/2007 190.00 130795 04/06/2007 000262 FRANK'S LOCK & KEY 24892 03/28/2007 123.99 24817 03/17/2007 118.26 24925 03/12/2007 60.00 24969 03/19/2007 3.22 130796 04/06/2007 004372 GARING TAYLOR & 1046 01/31/2007 1,11000 1151 02/28/2007 573.75 130797 04/06/2007 000272 GIBBS INTERNATIONAL 78298N 03/23/2007 71.69 130798 04/06/2007 005530 KEITH GILBERT 032507 03/25/2007 38.89 130799 04/06/2007 005998 GRANITE CONSTRUCTION PW 2006-07 04/03/2007 27,939.89 130800 04/06/2007 002358 GREAT WESTERN ALARM 0703000013101 04/01/2007 28.00 070300713101 03/29/2007 25.00 130801 04/06/2007 000286 GROENIGER & COMPANY 669129SM 04/05/2007 5,655.99 130802 04/06/2007 _000288 CITY OF GROVER BEACH 033107 03/31/2007 148.40 130803 04/06/2007 002820 INDOFF, INC 939175 03/28/2007 493.88 130804 04/06/2007 000330 INFORMATION TECH DEPT 4809 02/28/2007 308.48 130805 04/06/2007 006066 KAMAN INDUSTRIAL TECH X20858 03/16/2007 25.64 130806 04/06/2007 003949 KERN'S PAPER 20607 03/23/2007 772.03 20504 03/15/2007 764.16 20470 03/09/2007 521.08 20392 03/09/2007 359.89 20705 03/29/2007 359.89 20687 03/29/2007 231.75 Page: 3 Check Total 151.25 341.93 62.92 450.00 305.47 1,683.75 71.69 38.89 27,939.89 53.00 5,655.99 148.40 493.88 308.48 25.64 Page: 3 apCkHist Check History Listing Page: 4 04/17/2007 8:12AM CITY OF ARROYO GRANDE Bank code: boa Check # Date Vendor 130807 04/06/2007 000367 KEYLOCK SECURITY 130808 04/06/2007 004969 JOHN KING 130809 04/06/2007 000393 LUCIA MAR UNIFIED SCHOOL 130810 04/06/2007 006069 MID COAST PLUMBING 130811 04/06/2007 000426 MIER BROS LANDSCAPE 130812 04/06/2007 000429 MINER'S ACE HARDWARE, 130813 04/06/2007 000441 MULLAHEY FORD 130814 04/06/2007 002849 NEXTEL COMMUNICATIONS Status ClearlVoid Date Invoice Inv. Date Amount Paid Check Total 20548 03/15/2007 22493 3,233.73 77642 03/26/2007 6.44 6.44 033007 04/05/2007 45.36 45.36 070665 03/29/2007 1,949.58 070643 03/05/2007 1,200.00 070649 03/29/2007 503.00 070261 03/05/2007 356.78 070113 03/29/2007 353.93 070250 03/05/2007 326.71 070643 03/29/2007 276.90 070662 03/29/2007 191.70 070271 03/05/2007 127.80 5,286.40 0312 03/24/2007 152.50 152.50 126162 03/19/2007 360.36 125666 03/07/2007 .326.04 125909 03/13/2007 163.02 126042 03/15/2007 71.86 126317 03/23/2007 6328 984.56 124170 03/22/2007 69.64 124880 03/28/2007 19.29 124036 03/21 /2007 13.92 124718 03/27/2007 12.86 125017 03/29/2007 4.57 124554 03/26/2007 2.13 124724 03/27/2007 1.71 124181 03/22/2007 -2.15 121.97 FOCS176550 03/08/2007 212.30 176915 03/21 /2007 160.74 FOCS176929 03/23/2007 40.22 FOCS176600 03/09/2007 3222 445.48 933066312-065 03/29/2007 134.52 134.52 Page: 4 apckHist 04/17/2007 8:12AM Check History Listing CITY OF ARROYO GRANDE Page: 5 Bank code: boa Check # Date Vendor Status CIeaNVoid Date Invoice Inv. Date Amount Paid Check Total 130815 04/06/2007 002174 NOSSAMAN, GUTHNER, 205278 02/09/2007 2,096.63 206510 03/09/2007 479.29 ~ 2,575.92 130816 04/06/2007 005744 OCEANO COMMUNITY AG-6 04/02/2007 960.00 960.00 130817 04/06/2007 000468 OFFICE DEPOT 372495742-001 01/26/2007 191.16 379575148-001 03/16/2007 168.35 379591357-001 03/ 16/2007 147.69 379868815-001 03/16/2007 19.42 526.62 130818 04/06/2007 000472 ORCHARD SUPPLY REF#00074378 03/27/2007 29.38 29.38 130819 04/06/2007 000481 PACIFIC GAS & ELECTRIC 3/21-194097 03/21/2007 14,733.64 14,733.64 130820 04/06/2007 006031 PACIFIC OVERHEAD DOOR 377 03/18/2007 2,820.00 2,820 00 130821 04/06/2007 000492 PETTY CASH PETTY CASH 04/05/2007 146.73 146.73 130822 04/06/2007 003265 PLATINUM PLUS FOR 3/20-4383 03/20/2007 995.00 3/20-6289 03/20/2007 705.77 3/20-7583 03/20/2007 681.16 3/20-6362 03/20/2007 551.49 3/20-6404 03/20/2007 284.35 3/20-9686 03/20/2007 258.36 3/20-6347 03/20/2007 210.57 3/20-6313 03/20/2007 19177 3/20-6321 03/20/2007 77.31 3/20-4015 03/20/2007 54.82 3/20-6305 03/20/2007 36.37 3/20-6339 03/20/2007 32.86 4,079.83 130823 04/06/2007 005907 PRAXAIR SERVICES INC 11709494 03/12/2007 7,005.00 7,005.00 130824 04/06/2007 006068 PRO/FILE SYSTEMS 12497 03/15/2007 1,989.49 1,989.49 130825 04/06/2007 000523 R 8 T EMBROIDERY, INC 30740 03/28/2007 153.37 30532 02/16/2007 79.37 232.74 130826 04/06/2007 002670 RICOH LEASING 07042909566 03/29/2007 155.28 155.28 130827 04/06/2007 002932 RUTAN & TUCKER, LLP 497268 03/08/2007 7,190.63 Page: 5 apCkHist 04/17/2007 8:12AM Check History Listing CITY OF ARROYO GRANDE Page: 6 Bank code: boa Check # Date Vendor Status ClearlVoid Date Invoice Inv. Date Amount Paid Check Total 497290 03/08/2007 2,138.00 497277 03/08/2007 35100 9,679.63 130828 04/06/2007 000538 S & L SAFETY PRODUCTS 221619 03/19/2007 407.06 407.06 130829 04/06/2007 000803 SAN LUIS MAILING SERVICE 31587 04/02/2007 1,726.75 1,726.75 130830 04/06/2007 006067 SANTA MARGARITA FIRE 022207 02/22/2007 997.95 997.95 130831 04/06/2007 005367 SERVPRO OF FIVE CITIES 1255798 03/27/2007 1,215.71 1,215.71 130832 04/06/2007 000556 SLO COUNTY 0050611 03/27/2007 448.71 448.71 130833 04/06/2007 004527 SLO COUNTY LABORATORY FEB 2007 04/05/2007 155.00 155.00 130834 04/06/2007 003668 MICHAEL SMILEY 8302595 04/01/2007 54.20 54.20 130835 04/06/2007 000596 SMITH & LOVELESS, INC 48683 03/19/2007 155.44 155.44 130836 04/06/2007 002327 SOFTCHOICE CORPORATION 1337489 03/16/2007 4,009.66 1339462 03/20/2007 2896 4,038.62 130837 04/06/2007 005784 SPANGO VOICE 5910 03/21/2007 87.50 87.50 130838 04/06/2007 000616 STERLING 22712 03/24/2007 760.25 760.25 130839 04/06/2007 000620 STREATOR PIPE & SUPPLY 51036830 03/22/2007 14.93 14.93 130840 04/06/2007 000623 SUNSET NORTH CAR WASH 1054 02/28/2007 195.10 195.10 130841 04/06/2007 000624 SUPERIOR QUALITY 33570 11/15/2006 1,608.75 33571 11 /15!2006 1,608.75 34021 11/16/2006 563.06 34022 11/15/2006 563.06 4,343.62 130842 04/06/2007 006070 TIERRA WESTADVISORS 10/06 11/01/2007 3,587.50 3,587.50 130843 04/06/2007 002370 TITAN INDUSTRIAL 1018521 03/29/2007 222.80 1018485 03/28/2007 72.03 294.83 130844 04/06/2007 004476 THE TRAINING NETWORK 12688 03/20/2007 239.92 239 92 130845 04/06/2007 000666 UNITED RENTALS 63455529-001 03/15/2007 197.60 63613438-001 03/21/2007 132.96 Page: 6 apckHist 04/17/2007 8:12AM Check History Listing CITY OF ARROYO GRANDE Page: 7 Bank code: boa Check # Date Vendor ~ Status ClearlVoid Date Invoice Inv. Date Amount Paid Check Total 63456096-001 03/13/2007 81.54 59974372-001 10/06/2006 31.25 63843962-001 03/30/2007 6.99 450.34 130846 04/06/2007 000660 USA BLUE BOOK 337602 03/15/2007 52.16 52.16 130847 04/06/2007 002137 VERIZON WIRELESS - 2120418558 03/07/2007 472.31 2119545956 03/04/2007 309.14 2125359619 03/22/2007 113.40 894.85 130848 04/06/2007 000685 WALLACE GROUP A CALIF 21851 01/25/2007 9,477.39 22371 03/12/2007 9,183.69 21853 01/25/2007 6,277.33 22375 03/12/2007 2,766.10 22373 03/12/2007 480.25 22374 03/12/2007 452.00 21852 01/25/2007 226.00 28,862.76 130849 04/06/2007 005979 WICKS ROOFING INC PW 2006-06 03/26/2007 2,211.88 2,211 88 130850 04/09/2007 005509 JESSICA'S JOLLY JUMPS 040407 04/04/2007 200.00 200.00 130851 04/10/2007 002383 INTL FOOTPRINTERS ASSN 041007 04/10/2007 360.00 360.00 130853 04/11/2007 001043 ADVANCE MARKING 1-88295-1 03/22/2007 31.34 31.34 130854 04/11/2007 006082 AG FIREFIGHTERS 040507 04/05/2007 650.00 650.00 130855 04/11/2007 006071 ALBERTSONS 040407 04/04/2007 30.00 30.00 130856 04/11/2007 006083 ARROYO GRANDE IN BLOOM 032707 03/27/2007 500.00 500.00 130857 04/11/2007 005615 AT&T/MCI T6250890 03/26/2007 289.04 T6189890 02/11/2007 8826 377.30 130858 04/11/2007 001944 BASIC CHEMICAL S15291354 03/26/2007 428.03 428.03 130859 04/11/2007 006072 MARY BILLINGS 0409 04/10/2007 57.00 57.00 130860 04/11/2007 003385 BMW OF FRESNO 4025815 12/26/2006 142.23 142.23 130861 04/11/2007 000090 BRISCO MILL & LUMBER 132424 03/09/2007 18.75 Page: 7 apCkHist Check History Listing Page: 8 04/17/2007 8:12AM CITY OF ARROYO GRANDE Bank code: boa Check # Date Vendor Status ClearNoid Date Invoice Inv. Date Amount Paid Check Total 132562 03/21 /2007 16.48 132611 03/26/2007 11.14 132637 03/27/2007 1.54 47.91 130862 04/11/2007 006073 EDEL BROOKS 040407 04/10/2007 30.00 30.00 130863 04/11/2007 000095 BURKE AND PACE OF AG, 2341219 03/27/2007 317.63 2341195 03/27/2007 155.90 2341 t OS 03/26/2007 134.33 2341322 03/28/2007 82.17 2341463 03/29/2007 7859 2341388 03/28/2007 55.77 2341470 03/29/2007 34 94 2341150 03/26/2007 29.54 2341473 03/29/2007 1737 906.24 130864 04/11/2007 000110 CA ST DEPT OF 6763 03/28/2007 3,414.26 3,414.26 130865 04/11/2007 000603 CARQUESTAUTO PARTS 151502 03/28/2007 36.33 151656 03/28/2007 14.33 50.66 130866 04/11/2007 006040 CERTIFION CORP 7937 03/31/2007 84.95 84.95 130867 04/11/2007 000160 CHAPARRAL 252949 04/09/2007 199.11 199.11 130868 04/11/2007 000163 CHERRY LANE 21026 03/14/2007 193.03 20893 03/08/2007 9652 289.55 130869 04/11/2007 002842 COMMERCIAL 3317-0307 04/09/2007 175.00 175.00 130870 04/11/2007 003599 COMMERCIAL SANITARY 10468 04/02/2007 677.64 677.64 130871 04/11/2007 005997 COOK PAGING INC 6661466 04/01/2007 71.60 71 60 130872 04/11/2007 006074 JEREMIAH COVINGTON 040407 04/04/2007 30 00 30 00 130873 04/11/2007 000195 CRYSTAL SPRINGS WATER 3/31-14273 04/10/2007 38.75 3/31-48517 03/31/2007 28.75 4/4-70931 04/10/2007 28.75 96.25 130874 04/11/2007 000196 CUESTA EQUIPMENT CO INC 332772 03/14/2007 82.53 82.53 Page: 8 apCkHist Check History Listing Page: 9 04/17/2007 8:12AM CITY OF ARROYO GRANDE Bank code: boa Check # Date Vendor Status ClearNOid Date Invoice Inv. Date Amount Paid Check Total 130875 04/11/2007 006057 ANDREW CULLEN 040207 04/02/2007 24.00 24,00 130876 04/11/2007 000199 CUTTERS EDGE(DBA) 032307-9 03/23/2007 39.34 39.34 130877 04/11/2007 001854 JIM DECECCO 040207 04/10/2007 60 00 040907 04/09/2007 40 00 100.00 130878 04/11/2007 001525 FERGUSON ENTERPRISES, 1275983 03/22/2007 1,040.34 1277693 03/27/2007 72.39 1270239-1 03/21/2007 8.04 1,120.77 130879 04/11/2007 006075 ERICA FIGUEROA 040407 04/10/2007 30.00 30.00 130880 04/11/2007 004202 CLAIRE FLOYD 040207 04/02/2007 24.00 24.00 130881 04/11/2007 004790 DEANNA FLOYD 040907 04/10/2007 48.00 0402 04/10/2007 48.00 96.00 130882 04/11/2007 003590 SERENA FLOYD 040907 04/10/2007 24.00 040207 04/10/2007 24.00 48.00 130883 04/11/2007 000262 FRANK'S LOCK & KEY 24986 03/29/2007 60.00 24978 03/26/2007 19.84 79.84 130884 04/11/2007 000605 THE GAS COMPANY 4/3-140 04/03/2007 457.09 4/3-211 04/03/2007 96.67 553.76 130885 04/11/2007 004142 STAN GAXIOLA 0402 04/10/2007 120.00 040907 04/10/2007 60.00 180.00 130886 04/11/2007 003365 GLOBAL PHONE & WIRELESS 7983 03/21/2007 55.00 55.00 130887 04/11/2007 006058 RODNEY GRAY 0402 04/02/2007 40.00 40.00 130888 04/11/2007 000286 GROENIGER & COMPANY 674024SM 03/25/2007 306.85 306.85 130889 04/11/2007 001237 HANSON AGGREGATES INC 98549 03/22/2007 625.94 625.94 130890 04/11/2007 004188 EDDIE HARRIS 040907 04/10/2007 64 00 040207 04/02/2007 64.00 128.00 130891 04/11/2007 0028201NDOFF, INC 936144 04/09/2007 307.43 307.43 Page:9 apclcHist Check History Listing Page: 10 04/17/2007 8:12AM CITY OF ARROYO GRANDE Bank code: boa _ Check # Date Vendor Status ClearNOid Date Invoice Inv. Date Amount Paid Check Total 130892 04/11/2007 005201 JAS PACIFIC INC BI 9300 04/05/2007 6,816.00 6,816.00 130893 04/11/2007 000358 JOHNSON, ROBERTS & 106724 04/04/2007 15.87 15.87 130894 04/11/2007 004845 JOHN CARSON 040207 04/10/2007 100.00 040907 04/10/2007 80.00 180.00 130895 04/11/2007 005511 CHRISTOPHER LINTNER 040907 04/10/2007 32.00 040207 04/10/2007 32.00 64.00 130896 04/11/2007 001136 DOUG LINTNER 032306 03/23/2007 160.00 160.00 130897 04/11/2007 002129 MAINLINE UTILITY CO 3892 03/16/2007 1,200.00 3891 03/09/2007 1,050.00 3887 03/09/2007 750.00 3,000.00 130898 04/11/2007 006020 RYAN MICHAEL 040207 04/10/2007 300.00 040907 _ 04/10/2007 60.00 360.00 130899 04/11/2007 004279 MID STATE PLUMBING & 033007 03/30/2007 6,398.70 6,398.70 130900 04/11/2007 000419 MIDAS AUTO SERVICE 17427 03/30/2007 522.74 17411 03/29/2007 402.34 17379 03/27/2007 338.25 17319 03/20/2007 31.47 1,294.80 130901 04/11/2007 000426 MIER BROS LANDSCAPE 126210 03/19/2007 302.45 126547 03/29/2007 176.96 126530 03/29/2007 176.96 126533 03/29/2007 176.96 126537 03/29/2007 176.96 126541 03/29/2007 176.96 126563 03/29/2007 176.96 126172 03/19/2007 167.31 126519 03/28/2007 141.57 126515 03/28/2007 7079 126511 03/28/2007 70.79 126503 03/28/2007 7079 126461 03/27/2007 53.09 126453 03/27/2007 53.09 Page: 10 apCkHist 04/17/2007 8:12AM Check History Listing CITY OF ARROYO GRANDE Page: 11 Bank code: boa ' Check # Date Vendor Status ClearlVoid Date Invoice Inv. Date Amount Paid Check Total 126467 03/27/2007 53.09 126471 03/27/2007 53.09 2,097.82 130902 04/11/2007 000441 MULLAHEY FORD FOCS175155 01/19/2007 300.92 FOCS177202 04/02/2007 65.99 366.91 130903 04/11/2007 005173 DANEAL NALLY 040407 04/10/2007 100.00 100.00 130904 04/11/2007 000468 OFFICE DEPOT 379805879001 03/23/2007 119.55 380651738001 03/23/2007 12.15 131.70 130905 04/11/2007 000478 PACIFIC APPAREL & SPORTS 5758 01/29/2007 148.55 148.55 130906 04/11/2007 000481 PACIFIC GAS 8 ELECTRIC 8532998718-5 03/23/2007 15,476.83 15,476.83 130907 04/11/2007 001834 PAPA -PESTICIDE 041007 04/10/2007 195.00 195.00 130908 04/11/2007 006076 CHARLENE PECH 040407 04/10/2007 30.00 30.00 130909 04/11/2007 004158 PHOENIX GROUP 22007157 03/19/2007 183.75 183.75 130910 04/11/2007 002363 PRIMARY CARE DOG & CAT 49757 03/22/2007 443.59 49568 03/15/2007 309 00 752.59 130911 04/11/2007 003757 PVP COMMUNICATIONS, INC 8532 03/30/2007 2,188.63 2,188.63 130912 04/11/2007 006077 REBECCA REYES 040407 04/10/2007 151.00 151 00 130913 04/11/2007 000531 RICHETTI COMPLETE WATER 51420 04/01/2007 15.00 15.00 130914 04/11/2007 003363 NINA RIPPY 040907 04/09/2007 387.80 387.80 130915 04/11/2007 004833 STEVE ROMO 040207 04/02/2007 300.00 040907 04/10/2007 120.00 420.00 130916 04/11/2007 000536 GREG ROSE 0402 04/10/2007 80.00 80.00 130917 04/11/2007 006021 BLAKE ROSKELLY 040907 04/10/2007 120.00 040207 04/10/2007 120.00 240 00 130918 04/11/2007 006078 DAVID RUEDA 040407 04/10/2007 30.00 30.00 130919 04/11/2007 003649 CHARLES D (DON) RUIZ 040907 04/10/2007 184.00 040207 04/10/2007 184.00 368.00 Page: 11 apCkHist Check History Listing Page: 12 04/17/2007 8:12AM CITY OF ARROYO GRANDE Bank code: boa Check # Date Vendor 130920 04/11/2007 006022 LEAH RUIZ 130921 04/11/2007 006079 SAN LUIS NETWORKS INC 130922 04/11/2007 000578ANGELITAANN SARMIENTO 130923 04/11/2007 006080 MARTINA SARMIENTO 130924 04/11/2007 003024 MARK SCHAFFER 130925 04/11/2007 001876 KAREN SISKO 130926 04/11/2007 000731 SLO COUNTY SHERIFF'S 130927 04/11/2007 004860 TAMMY SMITH 130928 04/11/2007 000609 BOB SPEAR 130929 04/11/2007 002137 VERIZON WIRELESS 130930 04/11/2007 002609 WATERBOYS PLUMBING 130931 04/11/2007 000687 WAYNE'S TIRE, INC 130932 04/11/2007 000866 JAMIE WHARTON 130933 04/11/2007 006081 JENNIFER WRIGHT 172 checks in this report Status ClearNOid Date Invoice Inv. Date Amount Paid Check Total 040207 04/10/2007 88.00 040907 04/10/2007 24.00 112.00 7913 03/29/2007 16.50 16.50 040207 04/10/2007 32.00 040907 04/10/2007 32.00 64.00 040907 04/10/2007 32.00 32.00 0409 04/10/2007 100.00 040207 04/10/2007 80.00 180.00 032807 04/10/2007 504.05 504.05 041007 04/10/2007 19,489.50 19,489.50 040207 04/10/2007 80.00 040907 04/10/2007 48.00 128.00 040207 04/10/2007 40.00 40.00 2125177160 03/22/2007 114.94 114.94 14586 04/09/2007 405.00 14581 04/09/2007 255.00 660.00 765955 04/03/2007 44.47 765864 03/30/2007 15.00 59.47 040207 04/10/2007 88.00 040907 04/10/2007 2400 112.00 040407 04/10/2007 30.00 30.00 boa Total: 276,274.39 Total Checks: 276,274.39 Page: 12 ATTACHMENT 2 DEPARTMENTAL LABOR DISTRIBUTION PAY PERIOD 3/23/07 - 4/5/07 04/13/07 FUND 010 392,318. 61 5101 Salaries Full time 217,235. 50 FUND 220 18,328. 92 5102 Salaries Part-Time - PPT 19,870. 21 FUND 284 703. 72 5103 Salaries Part-Time - TPT 12,354. 86 FUND 285 703. 77 5105 Salaries OverTime 16,811. 31 FUND 612 6,789. 27 5107 Salaries Standby 370. 59 FUND 640 19,164. 75 5108 Holiday Pay 1,614. 19 438,009. 04 5109 Sick Pay 7,463. 88 5110 Annual Leave Buyback - 5111 Vacation Buyback 261 .92 5112 Sick Leave Buyback 5113 Vacation Pay 8,418 .65 5114 Comp Pay 2,880 .20 5115 Annual Leave Pay 1,410 .63 5121 PERS Retirement 73,214 .83 5122 Social Security 20,832 .22 5123 PARS Retirement 366 .78 5126 State Disability Ins. 666 .04 5127 Deferred Compensation 725 .00 5131 Health Insurance 45,267 .04 5132 Dentallnsurance 4,893 .42 5133 Vision Insurance 1,136 .79 5134 Life Insurance 613 .70 5135 Long Term Disability 151 .28 5143 Uniform Allowance 200 .00 5144 Car Allowance 975 .00 5146 Council Expense 5147 Employee Assistance _ - 5148 Boot Allowance 5149 Motor Pay 75 .00 5150 Bi-Lingual Pay 200 .00 438,009 .04 8.b. MEMORANDUM TO: CITY COUNCIL J~~ FROM: ANGELA KRAETSCH, DIRECTOR OF FINANCIAL SERVICES ~1`~ BY: FRANCES R. HEAD, ACCOUNTING SUPERVISOR SUBJECT: STATEMENT OF INVESTMENT DEPOSITS DATE: APRIL 24, 2007 RECOMMENDATION: Staff recommends that the Council receive and file the attached report listing the current investment deposits of the City of Arroyo Grande, as of March 31, 2007, as required by Government Code Section 53646 (b). DISCUSSION: This report represents the City's investments as of March 31', 2007. It includes all investments managed by the City, the investment institution, investment type, book value, maturity date, and rate of interest. As of March 31, 2007, the investment portfolio was in compliance with all State laws and the City's investment policy. ALTERNATIVES: The following alternatives are provided for the Council's consideration: • Approve staffs recommendation; Do not approve staffs recommendation; • Provide direction to staff. Attachment: Portfolio Summary CITY OF .. • • NY V; CALIFORNIA~. 4 - ~~n~ _ CITY OF ARROYO GRANDE Portfolio Management Portfolio Summary March 31, 2007 City of Arroyo Grande 214 E. Branch St. Arroyo Grande, CA 93430 Phone: (805)473-5400 Interest Investments Book Value Interest Rate Rate PY Date of Purchase Term Maturity Date % of PoMolio Local AgencylnvestmentFunds $ 9,784,044.82 5.21% 4.14% 83.85% Certicates of Deposit -Banks Redding Bank of Commerce 99,000.00 4.95% February 8, 2006 14 Mos. April 7, 2007 0.85% Granite Community Bank 500,000.00 5.20% April 23, 2006 365 April 23, 2007 4.28% Golden Security Bank 90,000.00 5.62% June 20, 2006 360 June 20, 2007 0.77% State Bank of India 200,000.00 5.64% December 8, 2006 213 July 8, 2007 1.71% Mission NB 100,000.00 5.75% July 10, 2006 365 July 10, 2007 0.86% First Credit Bank 99,000.00 5.70% July 26, 2006 365 July 25, 2007 0.85% Redding Bank of Commerce 500,000.00 5.48% February 18, 2007 9 Mos. November 17, 2007 4.28% First Standard Bank 99,000.00 5.46% December 2, 2006 365 December 2, 2007 0.85% Bank of Santa Clarita 99,000.00 5.50% March 10, 2007 365 March 10, 2008 0.85% Metro United Bank 99,000.00 5.85% September 12, 2006 730 September 12, 2008 0.85% Total Certificates of Deposit $ 1,885,000.00 Totallnvestments $ 11,669,044.82 16.15% 100.00% 8.c. MEMORANDUM TO: CITY COUNCIL FROM: KELLY WETMORE, DIRECTOR OF ADMINISTRATIVE SERVICES/CITY CLERK ~/, . ~ SUBJECT: AUTHORIZATION TO REJECT CLAIM FILED AGAINST THE CITY - CLAIMANT: C. JOHNSON DATE: APRIL 24, 2007 RECOMMENDATION: It is recommended the City Council reject the claim and authorize the City Clerk to send a standard rejection letter to the claimant as recommended by the City's Claims Administrator, Carl Warren & Company. FUNDING: None. DISCUSSION: Chad Johnson filed a timely claim against the City on November 1, 2006. Carl Warren & Company, the City's claims administrator, is recommending that the claim be rejected on the basis of the claim administrator's investigation and authorize the -City Clerk to send a standard rejection letter to the claimant. The statute of limitations will run six months from the date the rejection letter is sent. ALTERNATIVES: 1. Reject the claim and authorize the. City Clerk to send a standard rejection letter to the claimant. 2. Take no action; however, this will extend the statute of limitations. Attachment: None, claim on file in the City Clerk's office. 8.d. MEMORANDUM TO: CITY COUNCIL FROM: STEVEN ADAMS, CITY MANAGER` SUBJECT: CONSIDERATION OF COUNCIL APPOINTMENT TO THE PARKS AND RECREATION COMMISSION DATE: APRIL 24, 2007 RECOMMENDATION: It is recommended the Council approve the recommendation of Council Member Joe Costello to appoint Kathy Arnold to the Parks and Recreation Commission. FUNDING: There is no fiscal impact. RECOMMENDATION: On January 14, 1997, the City Council adopted Ordinance No. 481 C.S. amending the composition of applicable Commissions and Boards from seven to five members and adopted Resolution No. 3192 establishing Council policy as it relates to the appointment procedure to various Commissions and Boards. The Ordinance states that the Mayor and each respective member of the Council shall appoint a representative to the various Commissions and Boards subject to the approval by a majority of the Council. All Commission and Board members serve at the pleasure of the Council. Council Member Joe Costello's past appointment to the Parks and Recreation Commission, Donna Wefald, chose not to be reappointed. Therefore, Council Member Costello is recommending the Council approve the appointment of Kathy Arnold to the Parks and Recreation Commission, replacing Donna Wefald. ALTERNATIVES: The following alternatives are provided for the Council's consideration: Approve the recommended appointment; Do not approve the recommended appointment; Provide direction to staff. Attachment: 1. Application form: Kathy Arnold CITY OF ARROYO GRANDE RESERVOIR OF CITIZENS TO SERVE Planning Commission RECEIVED ~ Parks and Recreation Commission CITY OF A%ROYO 0'r'. ".::~" Traffic Commission Years Lived in Arroyo Grande Senior Advisory Commission 07 APR 12 PM 3~ ~ ~ Registered Voter of Arroyo Grande Architectural Review Committee Yes / No Downtown Parking Advisory Board (must own business in the Village area) Historical Resources Committee Special BoardslCommittees (varies) NAME ~Gt~~~1 ~~~ HOME ' ADDRESS _ _ __ __ ,__ ._ `"- PHONE _ _J - PRESENT EMPLOYER 11.~a/ POSITION BUSINESS ADDRESS PHONE EDUCATIONAL BACKGROUND ~t.s_u. ADDITIONAL EDUCATIONAL INFORMATION ~. f'c • l,~ . `~" 1~~~~ 2. ~~tt1(~ ZGiGVtrir,GL yI`a P~tr~ECe~-v Dlr 3. ~' I Si'-C YI ~~ I~ h.2,4I.l~t ~ (! GY.~'L I,1~1 . lNn 1,1 ARE YOU WILLING TO SERVE ON THE COMMISSION/COMMITTEEIBOARD MEETING TIMES SHOWN BELOW: Planning Commission, First and Third Tuesday of each month, 6:00 PM Yes _No_ Parks and Recreation Commission, Second Wednesday of each month, 6:30 PM Yes /No_ Traffic Commission, the day (Monday) before the third Tuesday of each month, 7:00 PM Yes _No_ Senior Advisory Commission, First Wednesday of each month, 3:00 PM Yes _No_ Architectural Review Committee First Monday of each month, 3:15 PM Yes _No_ Downtown Parking Advisory Board -Meets as needed Yes _No_ Historical Resources Committee -Quarterly meetings anticipated Yes _No_ Special Boards/Committees (varies) nn Yes_No_ Signature ~ Date ~f ~ I~ ' ~ 1 The Arroyo Grande City Council requests information about your Interest (and education, if applicablel, in serving on a commission or committee, speciflcelly your comments and views relative to the role and responslbilitlea of the Planning Commission, Parks and Reereatbn Commission, Tnffie Commission, Senior Advisory Commission, Architectural Review Committee, Historical Resources Committee, or a Special BoardlCommlttee. Please note such Information on the reverse side of this form. Thank you for your Interest THIS~ORM IS A MATTER OF PUBLIC RECORD IF APPOINTED. COMPLETION OF A STATE CONFLICT OF INTEREST FORM IS REQUIRED 312005 COMMUNITY AND CIVIC INTERESTS~,(y(,l~~le~ ~I'ti ri~S~ PYQVi~,{S CoQC11,VDIuntea,~ 8.e. MEMORANDUM TO: CITY COUNCIL FROM: DON SPAGNOLO, DIRECTOR OF PUBLIC WORKS/CITY ENGINEER SUBJECT: CONSIDERATION OF A RESOLUTION ACCEPTING PUBLIC IMPROVEMENTS AND EASEMENTS FOR TRACT 2669, LOCATED AT THE NORTHWEST CORNER OF LE POINT STREET AND NEVADA STREET, CONSTRUCTED BY FAIRWAY DEVELOPMENT DATE: APRIL 24, 2007 RECOMMENDATION: It is recommended the City Council adopt a Resolution accepting the public improvements and easements for Tract 2669, located at the northwest corner of Le Point Street and Nevada Street, constructed by Fairway Development. FUNDING: There is no fiscal impact at this time. Maintenance of these facilities will be funded from the Public Works maintenance funds in future years. DISCUSSION: On June 28, 2005, the City Council approved the final map for Tract 2669 located at the northwest corner of Le Point Street and Nevada Street and rejected, without prejudice as to future acceptance, the easements for public water, public sewer, emergency access, and public access. Easements and other offers of dedications are generally accepted when the associated improvements have been completed. The project was conditioned to construct the following improvements: 1. Extend a water main beneath Le Point Street from 122 Le Point into the site; 2. Install a fire hydrant near the project entrance on .Le Point Street and at the rear of the project; 3. Extend a public sewer main into the site and adjustments to off-site sewer for the systems to match up; 4. Install a private on-site storm drainage detention basin with an outlet on Nevada Street. This outlet was designed to be extended down to E. Branch Street when storm drain facilities became available; 5. Overlay Nevada Street, the applicant paid an in-lieu fee instead of performing the work to provide for the replacement of the water line beneath Nevada Street by the City. The asphalt overlay will be constructed after the completion of the water line project. CITY COUNCIL CONSIDERATION OF A RESOLUTION ACCEPTING PUBLIC IMPROVEMENTS AND EASEMENTS FOR TRACT 2669, LOCATED AT THE NORTHWEST CORNER OF LE POINT STREET AND NEVADA STREET, CONSTRUCTED BY FAIRWAY DEVELOPMENT APRIL 24, 2007 PAGE 2 The homeowners will maintain the on-site storm drainage system and common driveway. The City will accept ownership of the water and sewer improvements. The improvements have been inspected and it is recommended the City Council accept the improvements and the easements for public water, public sewer, and emergency access. It is also recommended that the offer of dedication for public access easement continue to be rejected without prejudice as to future acceptance until such time as an extension of Le Point Street is constructed. The applicant has provided the 10% warranty security as required by the Municipal Code. The warranty security will be released after one year provided the improvements are still in satisfactory condition. ALTERNATIVES: The following alternatives are provided for the Council's consideration: Approve staff's recommendation; • Do not approve staff's recommendation; Modify staff's recommendation as appropriate and approve; or • Provide direction to staff. Attachment: 1. Map of Tract 2669 S:\PUblic Works\Engineering\Development Projects\Tract Maps\Tract 2669 -Nevada and Le Point\COUNCILWCCEPTANCE\Backup of Council Memo - Acceptance of Improvements - Trac12669.wbk RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE ACCEPTING EASEMENTS AND IMPROVEMENTS FOR TRACT 2669, LOCATED AT THE NORTHWEST CORNER OF LE POINT STREET AND NEVADA STREET, CONSTRUCTED BY FAIRWAY DEVELOPMENT WHEREAS, the City Council approved Final Tract Map 2669 located at the northwest corner of Le Point Street and Nevada Street on June 28, 2005 and rejected, without prejudice as to future acceptance, an offer of dedication for a public access easement for a future extension of Le Point Street, and easements for emergency access, public water, and public sewer; and WHEREAS, the project was conditioned to construct certain public improvements; and WHEREAS, the developer has constructed the improvements required by the conditions of approval for Tract 2669; and WHEREAS, staff has inspected the improvements and finds they are constructed in accordance with the approved plans for the project; and WHEREAS, the developer has provided the 10% warranty security as required by the conditions of approval, to be released at the conclusion of the one-year warranty period, provided the improvements are still in satisfactory condition. NOW, THEREFORE, BE IT RESOLVED that the-City Council of the City of Arroyo Grande does hereby accept the following for Tract 2669: 1. Public water easements and associated improvements, 2. Public sewer easements and associated improvements, 3. Emergency access easement, 4. Drop Inlet on Nevada Street, The Council hereby continues to reject, without prejudice as to future acceptance, the offer of dedication for public access easement for a future extension of Le Point Street. On motion of Council Member and by the following roll call vote, to wit: seconded by Council Member AYES: NOES: ABSENT: the foregoing Resolution was passed and adopted this day of 2007. RESOLUTION NO. PAGE 2 TONYFERRARA,MAYOR ATTEST: KELLY WETMORE, CITY CLERK APPROVED AS TO CONTENT: STEVEN ADAMS, CITY MANAGER APPROVED AS TO FORM: TIMOTHY J. CARMEL, CITY ATTORN _ V ~ .6tafM ~ ii0 a ,~ ]=~!)SY ~ ~ p.H~ ' .s Y]rP~l 1015 49 Y `25~ 61~4JBMN4~y ~ ~j++_ _ ._,...... ~ lfrt P 1 1 /' /r! 6I 1 I~ K. I S. 40T 1 P/r 1<A1 ~ r .~ra r ~y •{r, Fr 1 I ~v / LGT 2 '/~ r 1 ) ! wan / ti~~ Y y'r Y 'Ire r /r i~mx / / Kt 1 / Y r q 1 8~~' ~ r LOT 4 x~~r I7 y~ ~`~ ;/ 1N]P si~ R (1 Y9158) ry q\ r Fi / 1 R 1 \A(y.~ / / v ~~ ~ ~ ~, ~~ 'I 3 / LOT 5 k l 4' / lax • ,ty i% 1' 1 $;. '~~ ~' \\~~ `~ Iw Y ) r Lor G 1 1 xOY~'~ 9 Cy al 4I LOT 8 1 LOT 9 G. rP, . nrns ~r. 1 ~0.VgNp~B EWRNx ~ ~rAR PxitxV~lpP90UL P.uf. an. n 1 Y n{w s nr.s RO 1 CX2119~x d'IE k 1 ^~ ] I P v ~ I E I K muti ~~ w uu i s sa rRaEtt n MCx ~pjYO6 i : 1" E.pryW N2A 1"[ PpVRR RLCfS Al[ 1~ p pq mux I ~pttH1(AYbf AS r PY911~ I'" R(AI~ENEI~EN1. y0T 7 I ~xx Ex'tuEx1 g ' ~xCY110Lx' I V ~ ~ 1 I , r. SExE111, G UnACG2Y KtE54 y gayr~l- Cm" L' I y wRtwf 1, I 1 \ C~2EE]ai xM0 PN.4 R.Y.W 1 I F rvsefr»Y •zro' N ~ \ ]'i~n1']Y :~ ~lsu[affiNY (2 b Ir„ \~ ~__- Ix5 --~---^ I 4191-CF-6]9 I I nk'rYE B9~9R(u) Y . -' f o xwrzx 1 ~' ~W~n~E~ 6H 4 vu]cci ~ I (1CK B]~0915) ]w4-Oft-540 ~~" ;,]~ ~M LEGEND (M) Npe{25 R[CCQO «P fl-f5'•• HI xp(wrts tS 0Y MttxYCrb" # xxaxs uumm xv. rwb wens EMa xvmxsxr .s va+" r as zr a!e «vrn.~s pwe ~ ~r YQCE o ttxx"n...< xw.«x. y.c.ns rw.D s srn «a Nq r K., x.vw • ,,. nxx. uMi[fV LL ~tlM.{SI~YI%tx 1KS ~MN~1~.(x15 RW rtln0 {S M.Vf'i0Y XP lx.l TRACT MAP N~. 2669 p PLANNED UNIT DEVELOPMENT SUBOIV15fON OF A~PORTION OF LOT 85 RANCHO CORRAL DE PIEORA, PISMO AND ROLSA pE CHEMISA 97 0015 BELNG PARCEL 2 OF AGAL PER DOC. N0. 1997-0616 41 CIlY OF ARROYO GRANCaUtom~o r..~,oty of San Luls ObisPO, JonuarY 2005 1---- - '- - -_'- T ~f; ~ ,r M„,~°°^„,°""'R LE POINT ST. ~' 2xxlwv /iKS NOfVCw2 (x/x0 ]f6agrq mnlaq xx~~C'10'E pM0 w.u'(u) •v.r.4xn ]w.ar'lu) ]snlan •r BAS)S OF BEARINGS . ']Y1 _~_ bpi l ' CI_VIL~._- r N`G1NE~RN S Z'~C CO_NSULTA A f...YW W4• Sheet 1 0l 2 ~ "-1 ^~~ .\.xl~ i Z v°' ,~ 8.f. TO: CITY COUNCIL MEMORANDUM FROM: DOUG PERRIN, INTERIM DIRECTOR OF PARKS, RECREATION AND FACILITIES ~I, SUBJECT: CONSIDERATION OF AGREEMENT FOR CONTRACTOR SERVICES FOR CUSTODIAL SERVICES DATE: APRIL 24, 2007 RECOMMENDATION: It is recommended the City Council approve an Agreement For Contractor Services with Commercial Maintenance Service in the amount of $4,250 per month and authorize the Mayor to execute the Agreement. FUNDING: Funds have been allocated in the Bi-annual Budget for Government Buildings Contracted Services (010-4213-5303). In FY 2006-07, the City allocated $3,825 per month or $45,900 annually for contracted custodial services. The FY 2007-08 proposed budget includes $51,000 for custodial services. There is adequate funding in the existing budget to cover the additional $425 per month for the remainder of this fiscal year. DISCUSSION: In October 2006, eight bids were received for contracted custodial services. ServiceMaster Commercial Cleaning Services was the low bidder at $3,834 per month, followed by Commercial Maintenance Service with a bid of $4,050. At its October 24, 2006 meeting, the City Council authorized the Mayor to execute the Agreement for Contractor Services ("Agreement") with ServiceMaster Commercial Cleaning Services. The Agreement for Contractor Services commenced November 21, 2006. During the first four months of the "Agreement", Parks, Recreation and Facilities staff received continual complaints from all City Departments about the quality of service. Complaints included buildings being left unsecured, lights left on, carpets not being vacuumed, bathrooms not being cleaned satisfactorily and new ServiceMaster staff not being fingerprinted in a timely manner. After repeated contacts by staff, ServiceMaster failed to improve its service. On March 28, 2007, the Interim Parks, Recreation and Facilities Director sent a registered letter to the President of ServiceMaster Commercial Cleaning Services notifying him that the Agreement for Contractor Services between the City and ServiceMaster Commercial Cleaning Services was being terminated. CITY COUNCIL CONSIDERATION OF AGREEMENT FOR CONTRACTOR SERVICES FOR CUSTODIAL SERVICES APRIL 24, 2007 PAGE 2 Staff then contacted the second lowest bidder; Commercial Maintenance Services, and requested they take over cleaning of City buildings contingent upon the City Council authorizing a new Agreement for Contractor Services. Their bid has been reviewed and they have met all stated requirements. However, in response to a request by the Fire Department to increase the frequency of cleaning services at the Fire Station, and a request by the Police Department for cleaning services at the Community Resource Center located in the Five Cities Center, staff requests the Council approve an additional $200 per month, resulting in a total monthly cost for contracted custodial services of $4,250. ALTERNATIVES: The following alternatives are provided for the Council's consideration: - Approve staffs recommendation and approve the Agreement with Commercial Maintenance Services; - Amend Agreement to delete the Police and Fire service level increases and approve; - Do not approve staff's recommendation and direct staff to request new bids for custodial services; or - Provide direction to staff Attachment: 1. Agreement for Contractor Services AGREEMENT FOR CONTRACTOR SERVICES ATTACHMENT1 THIS AGREEMENT, is made and effective as of April 24, 2007, between Commercial Maintenance Service ("Contractor"), and the CITY OF ARROYO GRANDE, a Municipal Corporation ("City"). In consideration of the mutual covenants and conditions set forth herein, the parties agree as follows: 1. TERM This Agreement shall commence on April 25, 2007 and shall remain and continue in effect until April 24, 2008, unless sooner terminated pursuant to the provisions of this Agreement. 2. SERVICES Contractor shall perform the tasks described and comply with all terms and provisions set forth in Exhibit "A", attached hereto and incorporated herein by this reference. 3. PERFORMANCE Contractor shall at all times faithfully, competently and to the best of his/her ability, experience and talent, perform all tasks described herein. Contractor shall employ, at a minimum generally accepted standards and practices utilized by persons engaged in providing similar services as are required of Contractor hereunder in meeting its obligations under this Agreement. 4. AGREEMENT ADMINISTRATION City's Parks Supervisor shall represent City in all matters pertaining to the administration of this Agreement. Steve Steinberger shall represent Contractor in all matters pertaining to the administration of this Agreement. 5. PAYMENT The City agrees to pay the Contractor in accordance with the payment rates and terms set forth in Exhibit "B", attached hereto and incorporated herein by this reference. 6. SUSPENSION OR TERMINATION OF AGREEMENT WITHOUT CAUSE (a) The City may at any time, for any reason, with or without cause, suspend or terminate this Agreement, or any portion hereof, by serving upon the Contractor at least ten (10) days prior written notice. Upon receipt of said notice, the Contractor shall immediately cease all work under this Agreement, unless the notice provides otherwise. If the City suspends or terminates a portion of this Agreement such suspension or termination shall not make void or invalidate the remainder of this Agreement. Page 1 (b) In the event this Agreement is terminated pursuant to this Section, the City shall pay to Contractor the actual value of the work performed up to the time of termination, provided that the work performed is of value to the City. Upon termination of the Agreement pursuant to this Section, the Contractor will submit an invoice to the City pursuant to Section 5. 7. TERMINATION ON OCCURRENCE OF STATED EVENTS This Agreement shall terminate automatically on the occurrence of any of the following events: (a) Bankruptcy or insolvency of any party; (b) Sale of Contractor's business; or (c) Assignment of this Agreement by Contractor without the consent of City. (d) End of the Agreement term specified in Section 1. 8. DEFAULT OF CONTRACTOR (a) The Contractor's failure to comply with the provisions of this Agreement shall constitute a default. In the event that Contractor is in default for cause under the terms of this Agreement, City shall have no obligation or duty to continue compensating Contractor for any work pertormed after the date of default and can terminate this Agreement immediately by written notice to the Contractor. If such failure by the Contractor to make progress in the performance of wdrk hereunder arises out of causes beyond the Contractor's control, and without fault or negligence of the Contractor, it shall not be considered a default. (b) If the City Manager or his/her delegate determines that the Contractor is in default in the performance of any of the terms or conditions of this Agreement, he/she shall cause to be served upon the Contractor a written notice of the default. The Contractor shall have ten (10) days after service upon it of said notice in which to cure the default by rendering a satisfactory performance. In the event that the Contractor fails to cure its default within such period of time, the City shall have the right, notwithstanding any other provision of this Agreement to terminate this Agreement without further notice and without prejudice to any other remedy to which it may be entitled at law, in equity or under this Agreement. 9. LAWS TO BE OBSERVED. Contractor shall: (a) Procure all permits and licenses, pay all charges and fees, and give all notices which may be necessary and incidental to the due and lawful prosecution of the services to be performed by Contractor under this Agreement; (b) Keep itself fully informed of all existing and proposed federal, state and local laws, ordinances, regulations, orders, and decrees which may affect those engaged or employed under this Agreement, any materials used in Contractor's Page 2 performance under this Agreement, or the conduct of the services under this Agreement; (c) At all times observe and comply with, and cause all of its employees to observe and comply with all of said laws, ordinances, regulations, orders, and decrees mentioned above; (d) Immediately report to the City's Contract Manager in writing any discrepancy or inconsistency it discovers in said laws, ordinances, regulations, orders, and decrees mentioned above in relation to any plans, drawings, specifications, or provisions of this Agreement. (e) The City, and its officers, agents and employees, shall not be liable at law or in equity occasioned by failure of the Contractor to comply with this Section. 10. OWNERSHIP OF DOCUMENTS (a) Contractor shall maintain complete and accurate records with respect to sales, costs, expenses, receipts, and other such information required by City that relate to the performance of services under this Agreement. Contractor shall maintain adequate records of services provided in sufficient detail to permit an evaluation of services. All such records shall be maintained in accordance with generally accepted accounting principles and shall be clearly identified and readily accessible. Contractor shall provide free access to the representatives of City or its designees at reasonable times to such books and records; shall give City the right to examine and audit said books and records; shall permit City to make transcripts therefrom as necessary; and shall allow inspection of all work, data, documents, proceedings, and activities related to this Agreement. Such records, together with supporting documents, shall be maintained for a period of three (3) years after receipt of final payment. (b) Upon completion of, or in the event of termination or suspension of this Agreement, all original documents, designs, drawings, maps, models, computer files, surveys, notes, and other documents prepared in the course of providing the services to be pertormed pursuant to this Agreement shall become the sole property of the City and may be used, reused, or otherwise disposed of by the City without the permission of the Contractor. With respect to computer files, Contractor shall make available to the City, at the Contractor's office and upon reasonable written request by the City, the necessary computer software and hardware for purposes of accessing, compiling, transferring, and printing computer files. 11. (a) Indemnification for Professional Liability. When the law establishes a professional standard of care for Contractor's Services, to the fullest extent permitted by law, Contractor shall indemnify, protect, defend and hold harmless City and any and all of its officials, employees and agents ("Indemnified Parties") from and against any and Page 3 all losses, liabilities, damages, costs and expenses, including attorney's fees and costs to the extent same are caused in whole or in part by any negligent or wrongful act, error or omission of Contractor, its officers, agents, employees or subcontractors (or any entity or individual that Contractor shall bear the legal liability thereof) in the performance of professional services under this agreement. (b) Indemnification for Other Than Professional Liability. Other than in the performance of professional services and to the full extent permitted by law, Contractor shall indemnify, defend and hold harmless City, and any and all of its employees, officials and agents from and against any liability (including liability for claims, suits, actions, arbitration ,proceedings, administrative proceedings, regulatory proceedings, losses, expenses or costs of any kind, whether actual, alleged or threatened, including attorneys fees and costs, court costs, interest, defense costs, and expert witness fees), where the same arise out of, are a consequence of, or are in any way attributable to, in whole or in part, the performance of this Agreement by Contractor or by any individual or entity for which Contractor is legally liable, including but not limited to officers, agents, employees or subcontractors of Contractor. (c) General Indemnification Provisions. Contractor agrees to obtain executed indemnity agreements with provisions identical to those set forth here in this section from each and every subcontractor or any other person or entity involved by, for, with or on behalf of Contractor in the performance of this agreement. In the event Contractor fails to obtain such indemnity obligations from others as required here, Contractor agrees to be fully responsible according to the terms of this section. Failure of City to monitor compliance with these requirements imposes no additional obligations on City and will in no way act as a waiver of any rights hereunder. This obligation to indemnify and defend City as set forth here is binding on the successors, assigns or heirs of Contractor and shall survive the termination of this agreement or this section. 12. INSURANCE Contractor shall maintain .prior to the beginning of and for the duration of this Agreement insurance coverage as specified in Exhibit "C" attached hereto and incorporated herein as though set forth in full. 13. INDEPENDENT CONTRACTOR (a) Contractor is and shall at all times remain as to the City a wholly independent Contractor. The personnel performing the services under this Agreement on behalf of Contractor shall at all times be under Contractor's exclusive direction and control. Neither City nor any of its officers, employees, or agents shall have control over the conduct of Contractor or any of Contractor's officers, employees, or agents, except as set forth in this Agreement. Contractor shall not at any time or in any manner represent that it or any of its officers, employees, or agents are in any manner officers, employees, or agents of the City. Contractor shall not incur or have the power to incur any debt, obligation, or liability whatever against City, or bind City in any manner. Page 4 (b) No employee benefits shall be available to Contractor in connection with performance of this Agreement. Except for the fees paid to Contractor as provided in the Agreement, City shall not pay salaries, wages, or other compensation to Contractor for performing services hereunder for City. City shall not be liable for compensation or indemnification to Contractor for injury or sickness arising out of performing services hereunder. 14. UNDUE INFLUENCE Contractor declares and warrants that no undue influence or pressure was or is used against or in concert with any officer or employee of the City of Arroyo Grande in connection with the award, terms or implementation of this Agreement, including any method of coercion, confidential financial arrangement, or financial inducement. No officer or employee of the City of Arroyo Grande will receive compensation, directly or indirectly, from Contractor, or from any officer, employee or agent of Contractor, in connection with the award of this Agreement or any work to be conducted as a result of this Agreement. Violation of this Section shall be a material breach of this Agreement entitling the City to any and all remedies at law or in equity. 15. NO BENEFIT TO ARISE TO LOCAL EMPLOYEES No member, officer, or employee of City, or their designees or agents, and no public official who exercises authority over or responsibilities with respect to the project during his/her tenure or for one year thereafter, shall have any interest, direct or indirect, in any agreement or sub-agreement, or the proceeds thereof, for work to be performed in connection with the project performed under this Agreement. 16. RELEASE OF INFORMATION/CONFLICTS OF INTEREST (a) All information gained by Contractor in performance of this Agreement shall be considered confidential and shall not be released by Contractor without City's prior written authorization. Contractor, its officers, employees, agents, or subcontractors, shall not without written authorization from the City Manager or unless requested by the City Attorney, voluntarily provide declarations, letters of support, testimony at depositions, response to interrogatories, or other information concerning the work pertormed under this Agreement or relating to any project or property located within the City. Response to a subpoena or court order shall not be considered "voluntary" provided Contractor gives City notice of such court order or subpoena. (b) Contractor shall promptly notify City should Contractor, its officers, employees, agents, or subcontractors be served with any summons, complaint, subpoena, notice of deposition, request for documents, interrogatories, request for admissions, or other discovery request, court order, or subpoena from any person or party regarding this Agreement and the work performed thereunder or with respect to Page 5 any project or property located within the City. City retains the right, but has no obligation, to represent Contractor andlor be present at any deposition, hearing, or similar proceeding. Contractor agrees to cooperate fully with City and to provide the opportunity to review any response to discovery requests provided by Contractor. However, City's right to review any such response does not imply or mean the right by City to control, direct, or rewrite said response. 17. NOTICES Any notice which either party may desire to give to the other party under this Agreement must be in writing and may be given either by (i) personal service, (ii) delivery by a reputable document delivery service, such as but not limited to, Federal Express, which provides a receipt showing date and time of delivery, or (iii) mailing in the United States Mail, certified mail, postage prepaid, return receipt requested, addressed to the address of the party as set forth below or at any other address as that party may later designate by notice: To City: City of Arroyo Grande Kevin Rocha, Parks Supervisor 214 E. Branch Street Arroyo Grande, CA 93420 To Contractor: Commercial Maintenance Service Steve Steinberger P.O Box 261 Nipomo, CA 93444 18. ASSIGNMENT The Contractor shall not assign the performance of this Agreement, nor any part thereof, without the prior written consent of the City. 19. GOVERNING LAW The City and Contractor understand and agree that the laws of the State of California shall govern the rights, obligations, duties, and liabilities of the parties to this Agreement and also govern the interpretation of this Agreement. Any litigation concerning this Agreement shall take place in the superior or federal district court with jurisdiction over the City of Arroyo Grande. 20. ENTIRE AGREEMENT This Agreement contains the entire understanding between the parties relating to the obligations of the parties described in this Agreement. All prior or contemporaneous agreements, understandings, representations, and statements, or written, are merged into this Agreement and shall be of no further force or effect. Each party is entering into Page 6 this Agreement based solely upon the representations set forth herein and upon each party's own independent investigation of any and all facts such party deems material. 21. TIME City and Contractor agree that time is of the essence in this Agreement. 22. CONTENTS OF REQUEST FOR PROPOSAL AND PROPOSAL Contractor is bound by the contents of the City's Request for Proposal, Exhibit "D", attached hereto and incorporated herein by this reference, and the contents of the proposal submitted by the Contractor, Exhibit "E", attached hereto and incorporated herein by this reference. In the event of conflict, the requirements of City's Request for Proposals and. this Agreement shall take precedence over those contained in the Consultant's proposals. 23. CONSTRUCTION The parties agree that each has had an opportunity to have their counsel review this Agreement and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not apply in the interpretation of this Agreement or any amendments or exhibits thereto. The captions of the sections are for convenience and reference only, and are not intended to be construed to define or limit the provisions to which they relate. 24. AMENDMENTS Amendments to this Agreement shall be in writing and shall be made only with the mutual written consent of all of the parties to this Agreement. 25. AUTHORITY TO EXECUTE THIS AGREEMENT The person or persons executing this Agreement on behalf of Contractor warrants and represents that he/she has the authority to execute this Agreement on behalf of the Contractor and has the authority to bind Contractor to the performance of its obligations hereunder. Page 7 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and year first above written. CITY OF ARROYO GRANDE CONTRACTOR By: Tony Ferrara, Mayor Attest: Kelly Wetmore, City Clerk Approved As To Form: Timothy J. Carmel, City Attorney Page 8 By: (Title) EXHIBIT A SCOPE OF WORK Page 9 FACILITY: Arroyo Grande Parks, Recreation and Facilities Department Elm Street Community Center and Preschool 1221 Ash Street Arroyo Grande, CA 93420 FIVE DAYS PER WEEK: Restrooms Sweep and. Mop Clean and disinfect toilets, sinks, counter tops, urinals Refill all dispensers Clean and disinfect receptacles Empty trash and reline trashcans Deodorize Trash Empty and reline Deodorize Water Fountains Clean and polish TWO DAYS PER WEEK: Vacuum carpeting Mop flooring WEEKLY: Clean and detail sinks and counter tops MONTHLY: Spot clean walls and partitions Spot clean entry doors and door glass Low dusting -sills, ledges, molding, ducts, radiators, desks, furniture, picture frames QUARTERLY: High dusting -lights, vents, fixtures TWICE PER YEAR: Deep renovate grout VI, ~ FACILITY: Arroyo Grande Police Department 200 N. Halcyon Road Arroyo Grande, CA 93420 FIVE DAYS PER WEEK: Kitchen .Sweep and mop Clean and disinfect all sinks, counter tops and table Empty trash and reline trashcans Deodorize Restrooms Sweep and Mop Clean and disinfect toilets, sinks, counter tops, urinals and showers Refill all dispensers Clean glass Clean and disinfect receptacles Empty trash and reline trashcahs Deodorize Trash Empty and reline Deodorize Water Fountains Clean and polish TWO DAYS PER WEEK: Vacuum all flooring Spot clean carpet Clean and disinfect all sinks and counter tops WEEKLY: Entrance Sweep and mop Spot clean entry windows and door glass Kitchen Clean stove top Walls and Partitions Spot clean q.2 MONTHLY: High dusting Low dusting QUARTERLY: Scrub the grout q.3 FACILITY: Arroyo Grande Fire Department 140 Traffic Way Arroyo Grande, CA 93420 THREE DAYS A WEEK: Entrance Spot clean glass Spot clean entry windows Offices and Conference Room Vacuum Empty trash Feather dust desktops Polish conference table Classroom Vacuum Dust Empty trash and reline trashcans Lounge Vacuum Empty trash and reline trashcans Kitchen Sweep and mop Clean and disinfect countertops and tabletops Polish stainless steel sinks Clean stovetop Clean face of all appliances Empty trash and reline trashcans Locker Room Vacuum Empty trash Water Fountains Clean and polish Restrooms Sweep and mop Clean and disinfect countertops, toilets, sinks and showers Clean glass Refill all dispensers Empty trash and reline trashcans Deodorize q.'~ FACILITY: Arroyo Grande Council Chambers -215 E. Branch Street Arroyo Grande, CA 93420 FIVE DAYS PER WEEK: Restrooms Sweep and mop Clean and disinfect all toilets, sinks, urinals, countertops and receptacles Refill all dispensers Empty trash and reline trashcans Deodorize Trash Empty and reline trashcans Deodorize WEEKLY: Entry Spot clean entry windows and door glass Flooring Dust mop Wet mop Conference Tables Polish weekly Kitchen Clean and detail Carpeted Flooring Vacuum Sinks and Counters Clean and disinfect MONTHLY: High dust q. 5 FACILITY: Arroyo Grande Woman's Club 211 Vernon Street Arroyo Grande, CA 93420 FIVE DAYS PER WEEK: Restrooms Sweep and mop flooring Clean and disinfect toilets, sinks, urinals, receptacles Wipe down walls Clean glass Refill all dispensers Empty trash and reline trashcans Deodorize Kitchen Clean and disinfect counters and stove top Wipe down refrigerator Clean oven Trash Empty trash Deodorize Flooring Dust mop MONTHLY: Spot clean walls and partitions Spot clean entry windows and door glass TWICE PER MONTH: Wet mop floors (Dates to be determined by Facility Coordinator) TWICE PER YEAR: Deep renovate grout (1 • lD FACILITY: Arroyo Grande Corporate Yard 1375 Ash Street Arroyo Grande, CA 93420 MONDAY. WEDNESDAY. FRIDAY: Entrance Spot clean entrance windows Vacuum throw rugs Sweep and mop Offices Vacuum Clean chairs Dust window sills, desks, office equipment Empty trash and reline trashcans Conference Room Dust window sills Clean chairs Spot clean windows Sweep and mop Clean and polish conference table Empty trash and reline trashcan Uniform Closet Area /Washroom Sweep and mop flooring Clean and disinfect countertop and sink area Empty trash and reline trashcans Water Fountains Clean and polish Restrooms Sweep and mop men's /vacuum women's Clean and disinfect countertops, sinks and toilets Refill all paper products Empty trash and reline trashcans ~- FACILITY: Arroyo Grande City Hall, Engineering Department and Building & Life Safety Department 214, 208 & 200 E. Branch Street Arroyo Grande, CA 93420 FIVE DAYS PER WEEK: Restrooms Sweep and mop Clean and disinfect all sinks, countertops, toilets and urinals Clean glass mirrors Refill all dispensers Empty trash and reline trashcans Deodorize Trash Take out daily Reline trashcans and deodorize WEEKLY: Dust all offices, windowsills, picture frames, baseboards Spot clean entrance windows and door glass Clean and disinfect all sinks and countertops Clean and descale drinking fountains Vacuum and mop all flooring MONTHLY: Spot clean walls and partitions High dusting -walls, vents, fixtures q . 8' FACILITY: Community Resource Center 910 Rancho Parkway Arroyo Grande, CA 93420 TWO DAYS PER WEEK: Restrooms Sweep and mop Clean and disinfect sink, countertop, toilet Clean glass mirror Refill all dispensers Empty trash and reline trashcans Deodorize Trash Empty, reline trashcans and deodorize Office Vacuum MONTHLY High and low dust q.q EXHIBIT B PAYMENT SCHEDULE Page 10 2006 BID PRICING SCHEDULE COMMERCIAL MAINTENANCE SERVICE CITY HALL ENGINEERING DEPT BUILDING & SAFETY COUNCIL CHAMBERS ELM STREET CORP YARD WOMEN'S CLUB POLICE DEPT FIRE DEPT WEEKLY MONTHLY $112.50 $56.25 $56.25 $112.50 $135.00 $67.50 $135.00 $270.00 $67.50 $450.00 $225.00 $225.00 $450.00 $540.00 $270.00 $540.00 $1,080.00 $270.00 $1,012.50 $4,050.00 QUOTE INCLUDES ALL MATERIALS (SPECIFIED IN BID), LABOR AND INSURANCE NEEDED TO PERFORM CONTRACT DUTIES. ~t~a EXHIBIT C INSURANCE REQUIREMENTS Prior to the beginning of and throughout the duration of the Work, Contractor will maintain insurance in conformance with the requirements set forth below. Contractor will use existing coverage to comply with these requirements. !f that existing coverage does not meet the requirements set forth here, Contractor agrees to amend, supplement or endorse the existing coverage to do so. Contractor acknowledges that the insurance coverage and policy limits set forth in this section constitute the minimum amount of coverage required. Any insurance proceeds available to City in excess of the limits and coverage required in this agreement and which is applicable to a given loss, will be available to City. Contractor shall provide the following types and amounts of insurance: Commercial Geheral Liability Insurance using Insurance Services Office "Commercial General Liability" policy from CG 00 01 or the exact equivalent. Defense costs must be paid in addition to limits. There shall be no cross liability exclusion for claims or suits by one insured against another. Limits are subject to review but in no event less than $1,000,000 per occurrence. Business Auto Coverage on ISO Business Auto Coverage from CA 00 01 including symbol 1 (Any Auto) or the exact equivalent. Limits are subject to review, but in no event to be less than $1,000,000 per accident. If Contractor owns no vehicles, this requirement may be satisfied by a non-owned auto endorsement to the general liability policy described above. If Contractor or Contractor's employees will use personal autos in any way on this project, Contractor shall provide evidence of personal auto liability coverage for each such person. Workers Compensation on astate-approved policy form providing statutory benefits as required by law with employer's liability limits no less than $1,000,000 per accident or disease. Insurance procured pursuant to these requirements shall be written by insurer that are admitted carriers in the state California and with an A.M. Bests rating of A- or better and a minimum financial size Vll. General conditions pertaining to provision of insurance coverage by Contractor. Contractor and City agree to the following with respect to insurance provided by Contractor: Page 11 1. Contractor agrees to have its insurer endorse the third party general liability coverage required herein to include as additional insureds City, its officials employees and agents, using standard ISO endorsement No. CG 2010 with an edition prior to 1992. Contractor also agrees to require all Contractors, and subcontractors to do likewise. 2. No liability insurance coverage provided to comply with this Agreement shall prohibit Contractor, or Contractor's employees, or agents, from waiving the right of subrogation prior to a loss. Contractor agrees to waive subrogation rights against City regardless of the applicability of any insurance proceeds, and to require all Contractors and subcontractors to do likewise. 3. All insurance coverage and limits provided by Contractor and available or applicable to this agreement are intended to apply to the full extent of the policies. Nothing contained in this Agreement or any other agreement relating to the City or its operations limits the application of such insurance coverage. 4. None of the coverages required herein will be in compliance with these requirements if they include any limiting endorsement of any kind that has not been first submitted to City and approved of in writing. 5. No liability policy shall contain any provision or definition that would serve to eliminate so-called "third party action over" claims, including any exclusion for bodily injury to an employee of the insured or of any Contractor or subcontractor. 6. All coverage types and limits required are subject to approval, modification and additional requirements by the City, as the need arises. Contractor shall not make any reductions in scope of coverage (e.g. elimination of contractual liability or reduction of discovery period) that may affect City's protection without City's prior written consent. 7. Proof of compliance with these insurance requirements, consisting of certificates of insurance evidencing all of the coverages required and an additional insured endorsement to Contractor's general liability policy, shall be delivered to City at or prior to the execution of this Agreement. In the event such proof of any insurance is not delivered as required, or in the event such insurance is canceled at any time and no replacement coverage is provided, City has the right, but not the duty, to obtain any insurance it deems necessary to protect its interests under this or any other agreement and to pay the premium. Any premium so paid by City shall be charged to and promptly paid by Contractor or deducted from sums due Contractor, at City option. 8. Certificate(s) are to reflect that the insurer will provide 30 days notice to City of any cancellation of coverage. Contractor agrees to require its insurer to modify such certificates to delete any exculpatory wording stating that failure of the insurer to mail written notice of cancellation imposes no obligation, or that any party will "endeavor" (as opposed to being required) to comply with the requirements of the certificate. Page 12 9. It is acknowledged by the parties of this agreement that all insurance coverage required to be provided by Contractor or any subcontractor, is intended to apply first and on a primary, noncontributing basis in relation to any other insurance or self insurance available to City. 10. Contractor agrees to ensure that subcontractors, and any other party involved with the project who is brought onto or involved in the project by Contractor, provide the same minimum insurance coverage required of Contractor. Contractor agrees to monitor and review all such coverage and assumes all responsibility for ensuring that such coverage is provided in conformity with the requirements of this section. Contractor agrees that upon request, all agreements with subcontractors and others engaged in the project will be submitted to City for review. 11. Contractor agrees not to self-insure or to use any self-insured retentions or deductibles on any portion of the insurance required herein and further agrees that it will not allow any Contractor, subcontractor, Architect, Engineer or other entity or person in any way involved in the pertormance of work on the project contemplated by this agreement to self-insure its obligations to City. If Contractor's existing coverage includes a deductible or self-insured retention, the deductible or self-insured retention must be declared to the City. At the time the City shall review options with the Contractor, which may include reduction or elimination of the deductible or self-insured retention, substitution of other coverage, or other solutions. 12. The City reserves the right at any time during the term of the contract to change the amounts and types of insurance required by giving the Contractor ninety (90) days advance written notice of such change. If such change results in substantial additional cost to the Contractor, the City will negotiate additional compensation proportional to the increase benefit to City. 13. For purposes of applying insurance coverage only, this Agreement will be deemed to have been executed immediately upon any party hereto taking any steps that can be deemed to be in furtherance of or towards performance of this Agreement. 14. Contractor acknowledges and agrees that any actual or alleged failure on the part of City to inform Contractor of non-compliance with any insurance requirements in no way imposes any additional obligations on City nor does it waive any rights hereunder in this or any other regard. 15. Contractor will renew the required coverage annually as long as City, or its employees or agents face an exposure from operations of any type pursuant to this agreement. This obligation applies whether or not the agreement is canceled or terminated for any reason. Termination of this obligation is not effective until City executes a written statement to that effect. Page 13 16. Contractor shall provide proof that policies of insurance required herein expiring during the term of this Agreement have been renewed or replaced with other policies providing at least the same coverage. Proof that such coverage has been ordered shall be submitted prior to expiration. A coverage binder or letter from Contractor's insurance agent to this effect is acceptable. A certificate of insurance and/or additional insured endorsement as required in these specifications applicable to the renewing or new coverage must be provided to City within five days of the expiration of the coverages. 17. The provisions of any workers' compensation or similar act will not limit the obligations of Contractor under this agreement. Contractor expressly agrees not to use any statutory immunity defenses under such laws with respect to City, its employees, officials and agents. 18. Requirements of specific coverage features or limits contained in this section are not intended as limitations on coverage, limits or other requirements nor as a waiver of any coverage normally provided by any given policy. Specific reference to a given coverage feature is for purposes of clarification only as it pertains to a given issue, and is not intended by any party or insured to be limiting orall-inclusive. 19. These insurance requirements are intended to be separate and distinct from any other provision in this agreement and are intended by the parties here to be interpreted as such. 20. The requirements in this Section supersede all other sections and provisions of this Agreement to the extent that any other section or provision conflicts with or impairs the provisions of this Section. 21. Contractor agrees to be responsible for ensuring that no contract used by any party involved in any way with the project reserves the right to charge City or Contractor for the cost of additional insurance coverage required by this agreement. Any such provisions are to be deleted with reference to City. It is not the intent of City to reimburse any third party for the cost of complying with these requirements. There shall be no recourse against City for payment of premiums or other amounts with respect thereto. 22. Contractor agrees to provide immediate notice to City of any claim or loss against Contractor arising out of the work performed under this agreement. City assumes no obligation or liability by such notice, but has the right (but not the duty) to monitor the handling of any such claim or claims if they are likely to involve City. Page 14 EXHIBIT D CITY'S REQUEST FOR PROPOSAL Page 15 ~`~ P.O. Box 550 1221 Aah Street Arroyo Grande, CA 93421 Phone: (805) 473.5474 FAX: (805) 473.5479 E-Mail: agcity@arroyo~ande.or8 NOTICE OF INVITATION TO BIDDERS SEPTEMBER 27, 2006 The City of Arroyo Grande is requesting bids for contract custodial services for City- operated facilities. The contractor must furnish all supplies and labor necessary to perform all related duties associated with this proposal. Proposals shall be sealed and on company letterhead with the envelope marked "Bid Proposal." Bid proposals will be accepted until 4:00 p.m. on Thursday, October 72, 2006. Please submit your sealed bid to: Kelly Wetmore, Director of Administrative Services 214 E. Branch Street / P.O. Box 550 Arroyo Grande, CA 93421 for bidding contractors of the proposed facilities. The Recreation and Facilities Department, 1221 Ash Street. Questions concerning bid proposals are to be directed to Parks, Recreation and Facilities, at 473-5474, or Kevin 473-5470. On Friday, October 6, 2006, Parks Supervisor Kevin Rocha will conduct apre-bid tour REQUIREMENTS: trash bags, etc; 5. Contractual employees are subject to a police background check. tour will begin at the Parks, Please arrive at 10:00 a.m. Daniel Hernandez, Director of Rocha, Parks Supervisor, at 1. Show evidence of liability and Workers' Compensation Insurance; (Refer to enclosed sample copy of the Agreement for Contractor Services for amounts and further requirements.) 2. Obtain a City business license; ' 3. Provide a breakdown of costs based on duties assigned per the attached facility requirements; 4. Contractor is responsible for providing all cleaning supplies, paper products, BID PROPOSAL MUST INCLUDE: maintained; 2. Name, address and phone number; 3. Three local references of current or previous clients; 4. Authorized signature. 1. Written schedule of days and times specific facilities will be cleaned and C:\Documents and Settings\DPerrin\Local Settings\Temporary Internet Files10LK2\2006CustodialServices bidnotice.doc 5a- EXHIBIT E CONTRACTOR'S PROPOSAL Page 16 CMS Commercial Maintenance Services P.O. Box 281, Nipomo, Ca 93444 (805) 714-2972 October 2006 Thank you for allowing Commercial Maintenance Services to present you with our maintenance service proposal. Cleanliness and the general appeazance of your facilities aze of significant importance. We feel confident that Commercial Maintenance Services can exceed your expectations. As your service provider, we will pay special attention to: • Proper sanitizing and disinfecting of restrooms • Restocking of paper products and supplies in restrooms ^ Close attention to details in cleaning activities in all azeas Thank you for your time and look forwazd to doing business with you. Sincerely, Steve J. Steinberger, Owner PO Box 261 Nipomo, CA 93444 Work /Cell # 714-2972 Work References :Greg Deitrich -Supervisor C&D Aerospace 805-922-5995 Tom Petty - Maintenance Supervisor 805-922-3343 Santa Maria Airport Joseph Hinkins - Mainline Autobody Colleen Pyle Urgentcare Center 805-925-5119 805-922-0561 lOQ- CMS Commercial Maintenance Services P.O. Box 261, Nipomo, Ca 93444 (805) 714-2972 Contract Service Agreement Beginning on , 2006, Commercial Maintenance Services (CMS) will provide and perform for the Client the services outlined in the "Facility Cleaning Schedule", a true and accurate copy of which is attached hereto and made a part hereof, in the areas to be serviced. CMS will provide all proper safeguazds and shall assume all risks incurred in performing its services hereunder. CMS is covered by Commercial General Liability Insurance and Workmen's Compensation Insurance, required by the state of California. All insurance certificates will be provided to client prior to start date. CMS is responsible for the direct supervision of its personnel through its designated representative. Supervision is included in all aspects of contract. CMS agrees that the cleaning services to be provided hereunder shall be performed by qualified, careful and efficient employees, with the best practices and highest standards. In exchange for performance of services hereunder the Client shall make payment to Commercial Maintenance Services at the rate of $ 4,050 (four thousand fifty) per month. First billing will be made on the first day of services and will be payable in 14 days. Subsequent billings and due dates will be montlily (every four weeks). Forty five (45) hours a week will be provided for above price (divided by three (3) employees). If either party in this contract fails to perform accordingly, the party claiming non- performance will send the other party written notice via certified mail explaining the non- performance. That party will have (15) fifteen days to remedy the non-performance. If the non-performance cannot be corrected the party claiming non-performance may terminate this Agreement by sending the non-perfornung party a thirty (30) day written notice via registered mail. In witness whereof, parties have agreed to services to begin on the date mentioned above. Contract Start Date: Todays Date: Signed By: On behalf of Address: Signed By: Commercial Maintenance Services Address: P.O. Box 261, Nipomo, Ca 93444 l (~ ~ 2006 BID PRICING SCHEDULE COMMERCIAL MAINTENANCE SERVICE WEEKLY MONTHLY CITY HALL $112.50 $450.00 ENGINEERING DEPT $56.25 $225.00 BUILDING & SAFETY $56.25 $225.00 COUNCIL CHAMBERS $112.50 $450.00 ELM STREET $135.00 $540.00 CORP YARD $67.50 $270.00 WOMEN'S CLUB $135.00 $540.00 POLICE DEPT $270.00 $1,080.00 FIRE DEPT $67.50 $270.00 $1,012.50 $4,050.00 QUOTE INCLUDES ALL MATERIALS (SPECIFIED IN BID), LABOR AND INSURANCE NEEDED TO PERFORM CONTRACT DUTIES. l~ C CE SERVIGE _ Ip~ Mp1NTENpN ~R~DAY #'1 T . GOMMEFtG Y puLE, THURSDA - LL pV•T,j gGHE TUESDAY MONDAY GtiTY HALL EN~INEERIN~ DEPT S HALL iNEERINC~ DEPT BU-LD^NG CHAMBER DEPT BERS CRAM DUTIES PERFORMED BETWEEN THE HOURS nF5PM~1~~ ST REC CENTER ~EN's GLUB tP YARD pUT1ES PERFORMED MP BETWEENTHEHOURS nF5PM81~p~ DEPT DEPT - tWEEK~-Y MP DUTIES PERFOHOURS BETWEEN THE #3 OF 5 PM 811 PM DUTIES PERFORMED BETV`7EEN THE HOURS OF 5 PM'~~ WEDNES~- VEERING DEPT ;p~NG CHAMBERS DUTIES PERFORMED BETWEEN THE HOURS nFSPM&1~~ ELM ST REC CENTER ST REC CENTER WOMEN'S CLUB .cul•s CLUB r.ORP YARD pUT1ES PERFORMED BETWEENTHE HOURS nG 5 PM 81~,..- DUTIES PERFORMED BETWEEN THE HOURS nF5PMg,1~ DEPT DEPT pUT1ES PERHE HOURS BEO 5PM~11PM DEPT • DICE :LY DUTIES) ST REC CENTER .cN•S CL~1B DUTIES PERFORMED BETWEEN THE HOURS _. a oM 811.. eE~ryEEN HE H URS OF 5 PM & ETNIEENTHE NOAGREEMEND. HALL PT INEERDNE ~E O~NG GHAMBERS pUT1ES PERFORMED BETWEENTHEHOURS OF 5 PM 5-' DUTIES PERFORMED BETWEEN THE HOURS nF5PM&1e DEPT DEPT DEPT - DICE :LY DUTIES) pUTtES PERFORMED BETWEEN THE HOURS FORMED BETWEEN HE HOURS OF 5 PM & 11 PM OF 5 PM 811 PM TO POTENTIAL SGHEDULE SU8.IECT HA ING DEPT DEPT S CHAMBER DUTIES PERFORMED BETNIEEN THE HOURS OFSPM& ST REC CENTER nEN's GLUB ev YARD ALL TASKQ WN-LJEEN GIT'r AND GONTRAGTOR Up0 CMS Commercial Maintenance Services P.O. Box 261, Nipomo, Ca 93444 (805) 714-2972 Additional Information Cleaning Schedules All cleaning operations are generally performed after business hours and on weekends. All initial or special cleanings aze arranged to meet your scheduling requirements. Additional Services The following aze additional services offered through Commercial Maintenance Services. ^ Carpet Cleaning ^ Upholstery Cleaning ^ Emergency cleaning (fire, flood, etc.) ^ Floor stripping and refinishing • Exterior Glass To arrange for any of the additional services listed above please contact Commercial Maintenance Services. Additional Comments If CMS is performing janitorial contract services in all locations a 10% discount H~II be given on all future floor and carpet renovation services after start date of this contract. ~~ ~. Rpr 19 07 03:39p Katie 9teinberger (805) 931-0679 p.l CMS Commercial Maintenance Services P.O. Box 261, Nipomo, Ca 93444 (805) 7'14-2972 April 18, 2007, Attention: Doug Perrin -City of Arroyo Grande Interim Director of Parks & Facilities It has come to my attention that we have a small problem with the Cleaning Service Contract which I would like to have addressed. I am being requested to clean the Arroyo Grande Community Resource Center which was not included on the bid packet. What I am proposing is an addition $200.00 dollazs be added to the monthly billing. For this increase I will be able to clean the Community Resource Center twice weekly. And in addition to that also increase service to the Fire Department to three nights per week rather than one. This small increase in compensation should be enough to remedy these things which where overlooked. Thank you for your time and attention to this matter. Please call if you for see any problems that may arise. Sincerely, Steve Steinberger -Owner Ce11714~-2972 < V (o -F 8.g. MEMORANDUM TO: CITY COUNCIL FROM: ROB STRONG COMMUNITY DEVELOPMENT DIRECTOR BY: JIM BERGMAISTANT PLANNER SUBJECT: CONSIDERATION OF AUTHORIZATION TO CLOSE BRANCH MILL ROAD FOR THE ANNUAL STRAWBERRY STAMPEDE ON MAY 27, 2007 DATE: APRIL 24, 2007 RECOMMENDATION: It is recommended the City Council adopt a Resolution authorizing the closure of Branch Mill Road for the Annual Arroyo Grande Strawberry Stampede on May 27, 2007. FUNDING: There is no direct funding impact as a result of this event. DISCUSSION: It has been requested by Police Department staff that Branch Mill Road between East Cherry Avenue and the City limit line be closed to through traffic from 8:00 am to 9:30 am to better provide for the safety of participants in the annual Strawberry Stampede. Traffic westbound coming into the City at Huasna and Branch Mill will be routed to Lopez Drive, then westbound to Branch Street. Traffic eastbound leaving the City on East Cherry Avenue will be routed at P.C. Railway and .Garden Street to Allen Street, then to West Branch Street eastbound out of the City. A notice of the closure with a request for two separate publications, will be made a week and a week and a half, ahead of the event and will include re-route instructions and the date and time of closure. The published notice will provide a contact person at the Police Department. The California Highway Patrol has approved the re-route in their jurisdiction and will assist in traffic control at Huasna and Branch Mill Road. ALTERNATIVES: The following alternatives are provided for the Council's consideration: - Adopt the attached Resolution; - Modify as appropriate and adopt the attached Resolution; - Do not adopt the attached Resolution; - Provide direction to staff. RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE AUTHORIZING THE CLOSURE OF BRANCH MILL ROAD FOR THE ANNUAL STRAWBERRY STAMPEDE ON MAY 27, 2007 WHEREAS, the Strawberry Stampede is an annual community event that supports youth sports activities; and WHEREAS, the Arroyo Grande Police Department requests that Branch Mill Road be closed to through traffic during the event in order to provide for enhanced safety and support; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Arroyo Grande as follows: 1. Branch Mill Road between East Cherry Street and the City limit line shall be closed to through traffic from 8:00 am to 9:30 am on May 27, 2007, in conjunction with the annual Strawberry Stampede. 2. Organizers of the Strawberry Stamped shall place two public notices in the Times Press Recorder advising citizens of the street closure prior to the event. On motion of Council Member ,seconded by Council Member and on the following roll call vote, to wit: AYES: NOES: ABSENT: The foregoing resolution was passed and adopted this 24`h day of April 2007. RESOLUTION NO. PAGE 2 TONY FERRARA, MAYOR ATTEST: KELLY WETMORE, CITY CLERK APPROVED AS TO CONTENT: STEVEN ADAMS, CITY MANAGER APPROVED AS TO FORM: TIMOTHY J. CARMEL, CITY ATTORNEY 8.h. MEMORANDUM TO: CITY COUNCIL FROM: DON SPAGNOLO, DIRECTOR OF PUBLIC WORKS/CITY ENGINEER SUBJECT: CONSIDERATION OF ACCEPTANCE OF THE CITY HALL RECEPTION AREA RENOVATION PROJECT DATE: APRIL 24, 2007 RECOMMENDATION: It is recommended the City Council: A. accept the project improvements, as cohstructed by Anderson Burton Construction, Inc., in accordance with the plans and specifications for the City Hall Reception Area Renovation; B. direct staff to file a Notice of Completion; and, C. authorize release of the retention of $2,996.90 thirty-five (35) days after the Notice of Completion has been recorded if no liens have been filed. FUNDING: On October 10, 2006, the City Manager approved the contract award for the City Hall Reception Area Renovation to Anderson Burton Construction, Inc., in the amount of $29,969. There were no changes to the contract. The final construction cost is $29,969. DISCUSSION: The City Hall Reception Area Renovation project consisted of various improvements to the lobby portion of the existing City Hall, including reconstruction of the public counter, lighting and new flooring. Anderson Burton Construction, Inc. has completed all items of work in accordance with the plans and specifications. The project was completed on time and within budget. It is recommended the Council accept the improvements as constructed, authorize staff to file a Notice of Completion, and release the remaining portion of the 10% retention ($2,996.90) to Anderson Burton Construction, Inc. thirty-five (35) days after the Notice df Completion has been recorded if no liens are filed. CITY COUNCIL CONSIDERATION OF ACCEPTANCE OF THE CITY HALL RECEPTION AREA RENOVATION APRIL 24, 2007 PAGE 2 ALTERNATIVES: The following alternatives are provided for the Council's consideration: • Approve staff's recommendations; Do not approve staff's recommendations; Modify as appropriate and approve staff's recommendations; or Provide direction to staff. Attachment: 1. Notice of Completion S:\Public Works\Engineering\Special Projects\2006\City Hall Front Entry\Council\Council Memo -Project Acceptance.doc RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: CITY CLERK CITY OF ARROYO GRANDE P.O. BOX 550 ARROYO GRANDE, CA 93421 NOTICE OF COMPLETION NOTICE IS HEREBY GIVEN THAT: ATTACHMENTI 1. ' The undersigned is owner or agent of owner of the interest or estate stated below the property hereinafter describe. 2. The FULL NAME of the OWNER is: The City ofArrovo Grande 3. The FULL ADDRESS of [he OWNER is: ?l4 East Branch Street. An~ovo Grande California J3420 4. The NATURE OF THE INTEREST or ESTATE of the undersigned is: in 1ec 5. THE FULL NAME and FULL ADDRESS of ALL PERSONS, if any, who hold such interest or estate with the undersigned as JOINT TENANTS or as TENANTS IN COMMON are: NAMES ADDRESSES 6. THE FULL NAMES and FULL ADDRESSES of the PREDECESSOR'S in interest of the undersigned if the property was transferred subsequent to the conmiencement of the work of improvements herein referred to: NAMES ADDRESSES 7. All work of improvement on the property hereinafter described was COMPLETED December 31, 2006 8. The NAME OF THE ORIGINAL CONTRACTOR, if any, for such work of improvement is: Anderson Burton Consn-uctiort. hte. ' 9. The street address of said property is: 2/4 East Branch Street 10. The property on which said work of improvement was completed is in the City of Arroyo Grande, County of San Luis Obispo, State of California, and is described as follows: City Hall Retention Area Renovation Verification ofNON-INDIVIDUAL owner. I, the undersigned, declare under penalty ofperjury under the laws of the State ofCalifomia that I am the Public Works Director of the aforesaid interest or estate in the property described in [he above notice; [hat I have read the said~notice, that I know and understand the contents thereof, and the Tacts stated therein are true and correct. Don Spagnolo, PE, Director of Public Works/City Engineer April 24, 2007, Arroyo Grande, Califomia -- END OF DOCUMENT -- 8.i. MEMORANDUM TO: CITY COUNCIL FROM: STEVEN ADAMS, CITY MANAGER~~ SUBJECT: CONSIDERATION OF REVISED MEMORANDUM OF UNDERSTANDING (MOU) BETWEEN THE CITY OF ARROYO GRANDE, LUCIA MAR UNIFIED SCHOOL DISTRICT, J.H. LAND PARTNERSHIP AND JOHN TAYLOR, TRUSTEE REGARDING LAND ACQUISITION AND EXTENSION OF CASTILLO DEL MAR TO VALLEY ROAD DATE: APRIL 24, 2007 RECOMMENDATION: It is recommended the City Council: 1) approve and authorize the Mayor to execute the revised Memorandum of Understanding (MOU) between the City of Arroyo Grande, Lucia Mar Unified School District (District), J.H. Land Partnership and John Taylor, Trustee; and 2) appropriate $7,500 for reimbursement to John Taylor, Trustee for expenses related to the project. FUNDING: The cost of road and drainage improvements is now estimated to be $800,000. In addition, the City established a cost of $100,000 for mitigation of loss of agricultural land. Under the proposed Agreement, J.H. Land Partnership will provide a traffic mitigation payment to the City of $750,000. The City will need to budget the remaining $150,000 for the road and drainage improvements in the FY 2007-08 budget. This is $100,000 over the prior estimate due to enhanced drainage improvements deemed necessary through the design process. However, these improvements will greatly reduce flooding problems that occur on Valley Road. As a result, it will reduce the need for other improvements planned that staff had intended to recommend funding for in the 2007-08 Annual Budget. Therefore, there will not be a net increase in cost to the City from the revised estimate. Revisions to the MOU since it was last approved include an additional cost of $7,500 to reimburse John Taylor for legal expenses involved in development of the MOU. This will need to be appropriated and funded from the Unappropriated General Fund Reserve. CITY COUNCIL CASTILLO DEL MAR EXTENSION MOU APRIL 24, 2007 PAGE 2 DISCUSSION: In May 2006, the City entered into an MOU with the District, J.H. Land Partnership and John Taylor, Trustee to enable the City to accomplish the extension of Castillo del Mar to Valley Road. The MOU was then amended on January 9, 2007. The key terms included the following: ^ J.H. Land Partnership will acquire approximately one acre of agricultural land from John Taylor, Trustee, which they will deed to the City at no cost; ^ J.H. Land Partnership will pay to City $750,000 for the cost of road improvements and mitigation of loss of agricultural land; ^ District will relinquish the private road to the City at no cost conditioned upon approval by City of a General Plan amendment and rezoning to hillside residential of 10 acres owned by the District on the south side of the roadway; ^ The existing access easement and access control located at the south end of Castillo del Mar will be moved to the southern access point of the development proposed by J.H. Land Partnership; and ^ Remaining land deeded to the City by J.H. Land Partnership not used for road construction will be deeded to the District. In order to address subsequent concerns identified by John Taylor, Trustee and in order to obtain approval of the MOU, the following changes have been made: ^ A provision has been added to recognize an existing Well Agreement between the District, John Taylor, and Hazel E. Haddox and to specify that no terms or work under this MOU would impact service of water from that well to John Taylor. ^ A timeline is specified for purchase and sale of John Taylor's parcel to J.H. Land Partnership necessary for the road project. ^ A provision has been added committing the City to pay $7,500 to John Taylor for expenses incurred. ^ A provision has been added to clarify that there is no intent by any parties to inhibit the ability of John Taylor to continue farming the remainder of his property. ALTERNATIVES: The following alternatives are provided for the Council's consideration: - Approve and authorize the Mayor to execute the proposed MOU; - Modify the terms as appropriate and authorize the Mayor to execute the MOU; - Do not approve the MOU and direct staff to prepare an item necessary to rezone the District's property back to Public Facility; Provide direction to staff. Attachment: 1. Proposed Memorandum of Understanding with the Lucia Mar Unified School District, J.H. Land Partnership and John Taylor, Trustee S:Wdministration\CITY MANAGER\STEVE\Council Reports\Castillo Del Maz Extension MOU 4.24.07.doc MEMORANDUM OF UNDERSTANDING AMONG LUCIA MAR UNIFIED SCHOOL DISTRICT, CITY OF ARROYO GRANDE, J.H. LAND PARTNERSHIP, L.P. AND JOHN TAYLOR, TRUSTEE REGARDING EXTENSION OF CASTILLO DEL MAR ROADWAY MEMORANDUM OF UNDERSTANDING This Memorandum of Understanding ("MOU") between the Lucia Mar Unified School District, (the "DISTRICT"), the City of Arroyo Grande (the "CITY"), J.H. Land Partnership and John Taylor, Tmstee (collectively the "Parties") constitutes a conceptual agreement framework for the Parties to work cooperatively and to further coordinate and develop the proposed extension of the existing CITY roadway (sometimes hereinafter the "roadway extension") known as Castillo Del Mar, from its present terminus, to Valley Road to serve the existing Vista Del Mar development located within the CITY limits and the J.H. Land Partnership proposed development located within the unincorporated area of San Luis Obispo County. The proposed roadway extension will traverse the DISTRICT's existing Arroyo Grande High School ("AGHS") property. 2. THE ROADWAY EXTENSION PROJECT Exhibit "A", attached hereto and incorporated herein, illustrates, in conceptual form, an intended general location for the roadway extension from its present terminus, through a portion of the AGHS property and a portion of Assessor's Parcel No. 006-095-002 (the one acre portion is referenced to herein as the "Taylor Property"), to Valley Road. The exact design and location of the proposed roadway extension will be established through cooperation and agreement of the Parties. All Parties recognize the need to provide safe access to the existing and proposed parcels and the importance of this proposed roadway extension in improving existing circulation conditions and as a safe, viable transportation corridor in the CITY'S long- term traffic and circulation plan. 3. WELL AGREEMENT The parties agree that any rights created hereunder or contemplated to be created hereunder are subordinate to that certain "MODIFICATION OF WATER WELL EASEMENT AND MAINTENANCE AGREEMENT AND RIGHT OF FIItST REFUSAL FOR LEASE" (Well Agreement" recorded as Document Number 2004051468 in the official records of San Luis Obispo County, California, on June 11, 2004. DISTRICT and CITY agree to continue the water supply to the Taylor Property during construction of the roadway extension and thereafter in accord with the Well Agreement and to take no action in derogation of the Well Agreement. John Taylor, Tmstee, the City and the District agree to coordinate construction activity related to the water supply to the Taylor property so as to avoid dismption of Taylor's farming activity. Apri124, 2007 1 of 5 4. PURPOSE AND NEED The purpose of this MOU is to express the Parties' conceptual agreement for the roadway extension and related issues. Specifically, the Parties are in conceptual agreement on the following: (a) The CITY; and DISTRICT, will plan for, design, and develop a local public roadway to improve circulation and enhance public safety and to provide vehicular, bicycle, and pedestrian access from the present terminus of the Castillo Del Mar roadway, through the AGHS Property and Taylor Property, to Valley Road. The Parties will work cooperatively to ensure the road location is consistent with the needs of the DISTRICT and the CITY. It is the intention of the Parties that the final roadway design and location be established as soon as feasible. (b) Subject to fulfillment of the provisions of this MOU, the DISTRICT will provide land consistent with the terms herein described, through the AGHS Property, to serve as part of the location for the roadway extension project. The DISTRICT will deed or dedicate the necessary land to CITY concurrently with, or upon, final approval by CITY, upon terms and conditions acceptable to DISTRICT, of DISTRICT'S General Plan Amendment/rezoning application referred to below. (c) The CITY will design and construct the proposed roadway extension, including all surveying, engineering, utility construction or relocation, grading, and drainage improvement costs, and shall comply with all required mitigation measures for the project, at no cost to DISTRICT, J.H. Land Partnership or John Taylor, Trustee. Thereafter, the roadway extension shall be maintained by CITY at no cost to DISTRICT, J.H. Land Partnership, or John Taylor, Trustee. (d) The Parties will provide each other necessary information and assistance regarding the development of the proposed roadway extension, including without limitation, executing, acknowledging, and delivering all documents reasonably requested by one of the Parties or required by any governmental authority. (e) The DISTRICT intends to create a separate 10-acref parcel on the south side of the proposed roadway extension ("DISTRICT'S New Parcel") for present allowed use and potential future development. DISTRICT will process a public land parcel map application to separate this new parcel from the AGHS school and grounds. (f) The DISTRICT will apply for and CITY will expeditiously process a General Plan Amendment/rezoning application to designate/ zone the DISTRICT'S New Parcel for "Residential Hillside" uses. Apri124, 2007 2of5 (g) If CITY approves the DISTRICT'S General Plan Amendment/ rezoning application upon terms and conditions acceptable to DISTRICT, then DISTRICT shall subsequently apply for and CITY shall expeditiously process a tentative tract map application to subdivide the DISTRICT's New Parcel consistent with its new zoning designation, subject to compliance with all laws. The DISTRICT'S proposed tentative tract map application may include a request for approval of "density bonus" units (in excess of the number of units otherwise permitted by the CITY'S "Residential Hillside" zoning), in accordance with the CITY'S density bonus and affordable housing bonus incentives and consistent with State law - SB 1818 and SB 435. (h) Within sixty (60) days of and subject to the approval of the Tentative Tract Map by the County of San Luis Obispo of the J.H. Land Tract, John Taylor, Trustee agrees to sell to J.H. Land Partnership and J.H. Land Partnership agrees to buy from John Taylor, Trustee approximately one acre of land at the north side of the Taylor Property for a total sum of eight hundred thousand dollars ($800,000). J.H. Land Partnership shall obtain the right to access said road extension subject to issuance of a CITY encroachment permit. (i) J.H. Land Partnership agrees to deed to the CITY at no cost to CITY the entire property of approximately one acre acquired from John Taylor, Trustee for the purpose of enabling the connection of the roadway extension to Valley Road as partial mitigation for traffic impacts associated with access through City from Vista Del Mar and the development proposed by J.H. Land Partnership (the "J.H. Land Tract"). (j) The CITY agrees to deed to the DISTRICT the remainder portion of the Taylor Property created by the new roadway (the "Remainder Pazcel") and re-designate and rezone the Remainder Parcel from Agriculture to Public Facilities. CITY shall mitigate all impacts from said redesignation and rezoning of the Remainder Parcel. (k) CITY and DISTRICT will jointly determine the allowed uses of the Remainder Pazcel, which generally will be combined with AGHS facilities and grounds, including, but not limited to, possible parking, landscaping or school buildings. No water, sewer, drainage or other utilities relocation or improvements are proposed for the Remainder Pazcel as part of this MOU. (1) Within sixty (60) days of final map approval by County of San Luis Obispo of the J.H. Land Tract, or by March 1, 2008, subject to prior approval by the County of San Luis Obispo of the J.H. Land Tract, whichever is earlier, J.H. Land Partnership agrees to pay CITY one hundred thousand dollars ($100,000) for mitigation of loss of prime agricultural property and the actual cost to construct the roadway extension and drainage improvements up to six hundred and fifty thousand dollazs ($650,000). (m) A portion of the funds described in paragraph 3 (1), above, shall be subject to reimbursement by the owner ("Reimbursing Party") of the DISTRICT'S New Parcel. Reimbursement shall be paid by Reimbursing Party to J.H. Land Partnership within forty-five (45) days of recordation of a final map further subdividing the DISTRICT'S Apri124, 2007 3 of 5 New Pazcel. Reimbursement shall be equal to the amount of payment from J.H. Land Partnership to CITY for construction of roadway extension and drainage improvements in excess of five hundred thousand dollars ($500,000) up to a maximum of one hundred and fifty thousand dollars ($150,000). (n) DISTRICT agrees to maintain Remainder Parcel for agricultural purposes by use of an agricultural conservation easement as approved by the CITY. (o) Subject to payment to the CITY by J.H. Land Partnership of the funds described in 3(1) above, CITY and J.H. Land Partnership agree to relocate the existing access easement and access control located at the south end of Castillo del Mar to the southern access point of the J.H. Land Tract. (p) The CITY will waive the DISTRICT's application and processing fees for the General Plan Amendment/rezoning~ applications. (q) The Parties will work cooperatively to cause the proposed roadway extension design and alignment to be modified through the planning process for the project to meet the needs of the DISTRICT and the CITY. (r) The CITY will reimburse the DISTRICT for any costs DISTRICT incurs for planning; services for the preparation and administration of this MOU for the roadway extension project and related General Plan Amendment/rezone so long as DISTRICT complies with terms set forth in this MOU. It is specifically understood that the CITY will not be responsible for costs in connection with the planning, engineering, and/or other professional services related to processing the vesting tentative tract map application for the District's New Parcel. (s) The CITY and DISTRICT jointly will prepare a schedule for accomplishing each of the tasks set forth in this MOU, including a schedule for the roadway extension construction. (t) The Parties aze cognizant of the current fiscal constraints facing the DISTRICT, the need to creatively ameliorate the concomitant impacts to the DISTRICT'S students and the related need to minimize DISTRICT outlays associated with this MOU. (u) The Parties agree that within fourteen (14) days following approval of the Tentative Tract Map, J.H. Land Partnership and John Taylor, Trustee will enter into an agreement of purchase and sale and escrow instructions on the terms and conditions set forth herein. All costs associated therewith will be borne by J.H. Land Partnership. The escrow will be at a licensed escrow company in San Luis Obispo County. (v) Within ninety (90) days of execution of this MOU by John Taylor, Trustee, CITY will reimburse John Taylor, Trustee the sum of $7,500 for his expenses incurred in connection with the roadway extension. Apri124, 2007 4of5 (w) It is not the intent of CITY, DISTRICT or J.H. Land Partnership in any way to limit or inhibit John Taylor, Trustee's ability to continue to farm the remainder of his land as he currently does, and nothing in this MOU shall be considered in any way a limitation or inhibition on his ability to farm. GENERAL PROVISIONS The following are general provisions of this MOU: (a) All coordination, assistance and services rendered as party to the development of reasonable and feasible solutions to improve current and future traffic safety and circulation needs for the roadway extension under this MOU will be carried out in compliance with the objectives and responsibilities of the Parties. Nothing in this MOU shall be in conflict with the responsibilities of any participating party as defined in Federal, State, or local law, statue, regulation, or participating parties' policies and procedures. (b) The Parties will exchange information and consult with each other before implementing the provisions hereof that may affect the ability of any other party to perform under this MOU. (c) The CITY will address environmental issues related to the development of the proposed roadway extension project, including acting as the "Lead Agency" for the project under the California Environmental Quality Act. 6. ROLES AND RESPONSIBILITIES The Parties shall each designate in writing a single point of contact to ensure their respective responsibilities are satisfied. All future correspondence regarding this MOU shall be directed to the designated single points of contact. 7. EFFECTIVE DATE, TERMINATION AND MODIFICATION This MOU will become effective when executed by all Parties. This MOU will terminate upon an impasse in the negotiation among the parties, or by the mutual consent of the parties. This MOU maybe amended by written instrument executed by all the parties. 8. MUTUAL INDEMNIFICATION Each of the Parties shall, to the fullest extent permitted by law, indemnify and hold each of the other parties harmless against any and all costs, expenses, losses, claims, suits, damages, and liabilities (including reasonable attorney's fees) for acts or omissions arising out of or in connection with this MOU. Apri124, 2007 5 of 5 THE CITY OF ARROYO GRANDE By: Mayor Dated: J.H. LAND PARTNERSHIP By: Dated: LUCIA MAR UNIFIED SCHOOL DISTRICT By: President of the School Board Dated: JOHN TAYLOR, TRUSTEE By: John Taylor, Trustee Dated: Apri124, 2007 6of5 9.a. CITY OF ARROYO GRANDE CITY COUNCIL NOTICE OF PUBLIC HEARINGS On TUESDAY, APRIL 24, 2007, the Arroyo Grande City Council will conduct public hearings at 7:00 P.M. in the COUNCIL CHAMBERS, 215 E. BRANCH STREET, to consider the following items: Development Code Amendment 07-001 -Proposed Ordinance Amending Section 16.68.050 of the Arroyo Grande Municipal Code Pertaining to Underground Utilities. The City Council will consider a proposed Ordinance amending Section 16.68.050 of the Municipal Code related to requirements for the placement of utilities underground, projects allowed to pay an in-lieu fee, and projects exempt from placing utilities underground or paying an in-lieu fee. 2. Consideration of Adoption of the Multi-Jurisdictional Hazard Mitigation Plan. The City Council will consider adoption of the Multi-Jurisdictional Local Hazard Mitigation Plan (LHMP), which was developed to meet the requirements of the federal Disaster Mitigation Act (Act) of 2000. The Act requires all local, county,. and tribal governments to develop a hazard mitigation plan to enable that jurisdiction to be eligible to receive federal mitigation funds following natural disasters and to apply for mitigation grants before disasters strike. The City of Arroyo Grande joined the City of Grover Beach and the Lucia Mar Unified School District to develop the Multi-Jurisdictional Hazard Mitigation Plan which assesses each agency's vulnerability to natural and human caused hazards and develops strategies to reduce the risks associated with those hazards. The Council may also discuss other hearings or business items before or after the items listed above. If you challenge the proposed action in court, you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice, or in written correspondence delivered to the City Council at, or prior to, the public hearing. Failure of any person to receive the notice shall not constitute grounds for any court to invalidate the action of the legislative body for which the notice was given. Information relating to Item #1 is available by contacting the Community Development Department at 473-5420, and information relating to Item #2 is available by contacting the Fire Department at 473-5490. The City Council meeting will be televised live on Charter Cable Channel 20. /s/ Kelly Wetmore, City Clerk Publish 1T, The Tribune, Friday, April 13, 2007 ~ ° MEMORANDUM ~~ ~,~. ,o..o„ TO: CITY COUNCIL FROM: MICHAEL E. HUBERT, DIRECTOR OF BUILDING AND FIRE ML"~ BY: DAVID L. MATHE, GRANTS ADMINISTRATOR SUBJECT: CONSIDERATION OF ADOPTION OF THE MULTI-JURISDICTIONAL HAZARD MITIGATION PLAN DATE: APRIL 24, 2007 RECOMMENDATION: It is recommended the City Council: 1) Open the public hearing and consider public testimony on the newly developed Multi-Jurisdictional Hazard Mitigation Plan; and 2) Adopt a Resolution adopting the Multi-Jurisdictional Hazard Mitigation Plan. FUNDING: There are no negative fiscal impacts associated with this proposed action. The Multi- Jurisdictional Hazard Mitigation Plan is a prerequisite to receiving certain disaster reimbursement funding. DISCUSSION: The Local Hazard Mitigation Plan (LHMP) was developed to meet the requirements of the Federal Disaster Mitigation Act of 2000. This Act requires all local, county, and tribal governments to develop a hazard mitigation plan to enable that jurisdiction to be eligible to receive federal mitigation funds following natural disasters and to apply for mitigation grants before disasters strike. To comply in a cost effective manner, the City of Arroyo Grande joined the City of Grover Beach and the Lucia Mar Unified School District to develop aMulti-Jurisdictional Hazard Mitigation Plan (Plan) that assesses each agency's vulnerability to natural and human caused hazards and develops strategies to reduce the risks associated with those hazards. Once adopted, this Plan will be submitted to the Governor's Office of Emergency Services and the Federal Emergency Management Agency. The Disaster Mitigation Act of 2000, also known as the Stafford Act, was established to reduce the rising cost of disasters. Mitigation planning and disaster preparedness were key elements of the Act. To assure that all local, county, and tribal governments developed the LHMP, the Stafford Act required compliance to gain eligibility for certain Federal mitigation funds. The Hazard Mitigation Grant Program, Pre-Disaster Mitigation Program, and Flood Mitigation Assistance Program are all examples of programs where CITY COUNCIL CONSIDERATION MITIGATION PLAN APRIL 24, 2007 PAGE 2 OF ADOPTION OF THE MULTI~IURISDICTIONAL HAZARD eligibility is based on compliance with the Disaster Mitigation Act and the development of a LHMP. The LHMP identifies natural and human-caused hazards that impact the City of Arroyo Grande, assesses the vulnerability and risk posed by those hazards, develops strategies for mitigation of those hazards, presents future maintenance procedures for the Plan, and documents the planning process. Seventy-five (75) percent of the development costs for the Local Hazard Mitigation Plan were provided by Hazard Mitigation Grant Program funds. A local firm, Category Five Professional Consultants, prepared the Plan with input provided by a planning group comprised of a variety of citizens and City personnel. ALTERNATIVES: The following alternatives are provided for the Council's consideration: -Approve staff's recommendation; - Do not approve staff's recommendation; - Modify as appropriate and approve staff's recommendation; or -Provide direction to staff. Attachment: 1. Multi-Jurisdictional Hazard Mitigation Plan (on file at the Fire Department and City Hall for public review) RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE ADOPTING A MULTI-JURISDICTIONAL HAZARD MITIGATION PLAN WHEREAS, the cost of disaster recovery in the United States has dramatically iricreased over the past decade promoting interest in providing effective ways to minimize our country's hazard vulnerability; and WHEREAS, the Disaster Mitigation Act of 2000 constitutes an effort by the Federal government to reduce the rising cost of disasters; and WHEREAS, the Disaster Mitigation Act of 2000 ties mitigation funding to cities, counties, and tribal governments that have approved Local Hazard Mitigation Plans; and WHEREAS, the purpose of the Disaster Mitigation Act of 2000 was to establish a national program for pre-disaster mitigation, streamline administration of disaster relief at both the federal and state levels, and control federal costs of disaster assistance; and WHEREAS, the City of Arroyo Grande has gone through the planning process with community participation and developed aMulti-Jurisdictional Hazard Mitigation Plan that meets the needs established by the Disaster Mitigation Act of 2000. NOW, THEREFORE BE IT RESOLVED that the City Council of the City of Arroyo Grande adopts the Multi-Jurisdictional Hazard Mitigation Plan for the Cities of Arroyo Grande and Grover Beach and the Lucia Mar Unified School District. BE IT FURTHER RESOLVED that a copy of this Resolution and a copy of the Multi- Jurisdictional Hazard Mitigation Plan will be forwarded to the Governor's Office of Emergency Services and the Federal Emergency Management Agency. On motion by Council Member ,seconded by Council Member_ and by the following roll call vote, to wit: AYES: NOES: ABSENT: the foregoing Resolution was passed and adopted this _day of , 2007. RESOLUTION NO. PAGE 2 TONY FERRARA, MAYOR ATTEST: KELLY WETMORE, CITY CLERK APPROVED AS TO CONTENT: STEVEN ADAMS, CITY MANAGER APPROVED AS TO FORM: TIMOTHY J. CARMEL, CITY ATTORN 9.b. CITY OF ARROYO GRANDE CITY COUNCIL NOTICE OF PUBLIC HEARINGS On TUESDAY, APRIL 24, 2007, the Arroyo Grande City Council will conduct public hearings at 7:00 P.M. in the COUNCIL CHAMBERS, 215 E. BRANCH STREET, to consider the following items: y 1. Development Code Amendment 07-001 -Proposed Ordinance Amending Section 16.68.050 of the Arroyo Grande Municipal Code Pertaining to Underground Utilities. The City Council will consider a proposed Ordinance amending Section 16.68.050 of the Municipal Code related to requirements for the placement of utilities underground, projects allowed to pay an in-lieu fee, and projects exempt from placing utilities underground or paying an in-lieu fee. 2. Consideration of Adoption of the Multi-Jurisdictional Hazard Mitigation Plan. The City Council will consider adoption of the Multi-Jurisdictional Local Hazard Mitigation Plan (LHMP), which was developed to meet the requirements of the federal Disaster Mitigation Act (Act) of 2000. The Act requires all local, county, and tribal governments to develop a hazard mitigation plan to enable that jurisdiction to be eligible to receive federal mitigation funds following natural disasters and to apply for mitigation grants before disasters strike. The City of Arroyo Grande joined the City of Grover Beach and the Lucia Mar Unified School District to develop the Multi-Jurisdictional Hazard Mitigation Plan which assesses each agency's vulnerability to natural and human caused hazards and develops, strategies to reduce the risks associated with those hazards. The Council may also discuss other hearings or business items before or after the items listed above. If you challenge the proposed action in court, you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice, or in written correspondence delivered to the City Council at, or prior to, the public hearing. Failure of any person to receive the notice shall not constitute grounds for any court to invalidate the action of the legislative body for which the notice was given. Information relating to Item #1 is available by contacting the Community Development Department at 473-5420, and information relating to Item #2 is available by contacting the Fire Department at 473-5490. The City Council meeting will be televised live on Charter Cable Channel 20. /s/ Kelly Wetmore, City Clerk Publish 1T, The Tribune, Friday, April 13, 2007 MEMORANDUM TO: CITY COUNCIL FROM: ROB STRONG„~oMMUNITY DEVELOPMENT DIRECTOR BY: JIM BERGMA SISTANT PLANNER SUBJECT: CONSIDERATION OF A PROPOSED ORDINANCE AMENDING SECTION 18.88.050 OF THE ARROYO GRANDE MUNICIPAL CODE REGARDING UNDERGROUND UTILITIES DATE: APRIL 24, 2007 RECOMMENDATION: The Planning Commission recommends the City Council introduce an Ordinance amending Municipal Code Section 16.68.050 related to underground utilities. FUNDING: Expansion of the ability to accept in-lieu fees will increase funds that can be devoted to City initiated underground utility programs. DISCUSSION: Background The requirement for placing utilities (electrical distribution, telephone, cable, etc.) underground in conjunction with discretionary development projects has long been part of the Municipal Code and provides many public health, safety and welfare benefits including: Aesthetic Benefits Decrease visual clutter associated with poles and overhead wires. Local examples include the sections of East Grand Avenue and the Village Core area where utilities have previously been placed underground • Enables street trees to grow to mature heights Utility Company Benefits • Decrease in operation and maintenance costs Decrease in tree trimming costs • Decrease in storm damage and loss of sales due to storms Broader Economic Benefits • Increase in electrical service reliability • Decrease in economic losses due to power outages • Decrease in number of injuries from automobiles striking poles CITY COUNCIL CONSIDERATION OF A PROPOSED ORDINANCE AMENDING SECTION 16.68.050 OF THE ARROYO GRANDE MUNICIPAL CODE REGARDING UNDERGROUND UTILITIES APRIL 24, 2007 PAGE 2 Proposal Proposed changes to the underground utility requirements are an effort to clarify existing language, update formatting, expand the use of underground in-lieu fees for commercial and mixed-use projects, and allow for an exemption from underground utility requirements and in-lieu fees for certain projects. The rationale for many of the proposed changes are based upon information gained from the review of a wide range of project proposals on East Grand Avenue and South Halcyon Road, which indicated that the current underground requirements may discourage potential development consistent with specific goals of the General Plan, including projects within the Redevelopment Area (RDA), infill projects, mixed use developments, and projects with apartments or other affordable housing opportunities. These case examples include minor construction projects related to a change in use of an existing building, proposals for the construction of vertical mixed use buildings with small residential components consisting of one to two-apartment units, proposals for the construction of large horizontal mixed used projects with commercial structures and up to ten for sale townhouse units. In addition to differences in their physical characteristics, these projects vary substantially in their economic ability to distribute the cost associated with placing utilities underground to the end consumer. Undergrounding costs appear to serve as a disincentive to small mixed use projects providing a few apartments, while larger horizontal mixed-use developments appear to have an advantage since the costs of undergrounding can be included within the sales price of the individual residential units. Observations of the unequal distribution of existing utility infrastructure on various properties serves as an additional rationale for proposed policy changes. In one case, a large horizontal mixed-use project had an average amount of required undergrounding, while a small mixed-use project across the street had a substantial amount of required undergrounding that included regional wires converging and then being distributed to an entire neighborhood. Overview of Recommended Changes to Section 16.68.050 The following is an overview of recommended changes to Section 16.68.050 of the Municipal Code as proposed in the attached Ordinance. A. Purpose and Intent A purpose and intent section has been added in an effort to wmmunicate the rationale of the undergrounding requirements and to express the created public benefits. B. Applicability The section titled "When Underground Installation is Required" has been renamed "Applicability" to match new formatting and has been modified to clarify undergrounding responsibility. CITY COUNCIL CONSIDERATION OF A PROPOSED ORDINANCE AMENDING SECTION 16.68.050 OF THE ARROYO GRANDE MUNICIPAL CODE REGARDING UNDERGROUND UTILITIES APRIL 24, 2007 PAGE 3 C. In-Lieu Fees This section establishes rules for the consideration, imposition and use of in-lieu fees by all bodies that grant land use permits, e.g. the City Council, the Planning Commission and the Community Development Director. Specifically: Subsection 1 allows the consideration of in-lieu fees for residential development on existing parcels. A typical project included in this category would be additions to single family residences that require Architectural or Viewshed Review. Subsection 2 adds the in-lieu fee option for projects located within an underground utility district. This provision allows fees to be collected in areas where a systematic undergrounding plan will be implemented in the future and avoids expensive, piecemeal and inefficient undergrounding of utilities. Subsection 3 reduces the in-lieu fee option for subdivision projects from 10 or more parcels to those involving 4 or fewer and adds that the approving authority must find special and unique circumstances. This provision eliminates the option of in-lieu fees for larger subdivisions and allows consideration for smaller subdivision projects that have unique circumstances such as a disproportionate share of overhead utilities. Subsection 4 allows the use of in-lieu fees for infill mixed-use projects on existing lots less than 10,000 square feet in which the residential component consists solely of four or less rental apartments. This provision helps to distribute undergrounding costs in small mixed use projects with rental units. Subsection 5 allows the in-lieu fee to be considered upon a recommendation that the requirement would be detrimental to economic development, affordable housing or the provision of other public amenities or benefits. This section allows the approving body the discretion to consider undergrounding in-lieu fees for projects that may provide other important public benefits. Subsection 6 clarifies that service lines entirely within a property shall be placed underground and not subject to payment of an in-lieu fee. This provision ensures that service lines from an overhead pole to a house or structure is to be placed underground and is not subject to payment of an in-lieu fee. D. Consideration of Exemption from Both Undergrounding and Payment of an In-lieu Fee Section D establishes a limited mechanism for the consideration of projects to neither place utilities underground or from paying an in-lieu fee. Some of these options were briefly discussed during the consideration of a conditional use permit related to the City- initiated improvements to Gill's Liquor. CITY COUNCIL CONSIDERATION OF A PROPOSED ORDINANCE AMENDING SECTION 16.68.050 OF THE ARROYO GRANDE MUNICIPAL CODE REGARDING UNDERGROUND UTILITIES APRIL 24, 2007 PAGE 4 E. Calculation and Collection of Fees Section E clarifies how fees are calculated and remains substantially unchanged. F. Responsibility for Compliance Section F remains unchanged. ALTERNATIVES: The following alternatives are provided for the Council's consideration: - Introduce the attached Ordinance; - Modify as appropriate and introduce the attached Ordinance - Do not introduce the attached Ordinance; - Provide direction to staff. Attachments: 1. Current Municipal Code Section16.68.050 -Underground utilities 2. Planning Commission minutes of April 3, 2007 ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE AMENDING SECTION 16.68.050 OF THE ARROYO GRANDE MUNICIPAL CODE REGARDING UNDERGROUND UTILITIES WHEREAS, the City of Arroyo Grande ("City") requires the undergrounding of utilities as a condition of discretionary land use approvals, pursuant to Municipal Code Section 16.68.050; and WHEREAS, the entire community benefits from the enhanced safety, improved appearance and reliability of utility services which results from the orderly undergrounding of existing utilities; and WHEREAS, the City desires to specify situations when utilities are required to be placed underground, when in-lieu fees can be accepted and when projects are exempt from both requirements; and WHEREAS, the proposed changes to the Municipal Code will better enable the City to concentrate utility undergrounding efforts in areas determined to be in the most critical need of utility undergrounding and in previously established underground utility districts; and WHEREAS, the City Planning Commission held a public hearing on April 3, 2007 and recommended changes to Municipal Code Section 16.68.50 and; WHEREAS, after consideration of all testimony and all evidence, the City Council has determined that the following findings can be made in an affirmative manner: A. The proposed revision to the Municipal Code is consistent with the goals, objectives, policies and programs of the General Plan including ED4-1.2 (ensure comprehensive design guidelines pertaining to both public and private improvements), ED-6, (promote affordable housing) and CT4-2 (utilize the circulation system as a positive element of community design), and is necessary and desirable to implement to provisions of the General Plan. B. The proposed revision to the Municipal Code will not adversely affect the public health, safety, and welfare or result in an illogical land use pattern since the proposed changes allows the City to better utilize in-lieu funds for placing utilities underground. C. The proposed revision to the Municipal Code is consistent with the purpose and intent of the undergrounding section. D. The City has conducted an environmental review and has found that it can be seen with certainty that there is no possibility that the proposed Ordinance will have an ORDINANCE NO. PAGE 2 effect on the environment and therefore this project is exempt from the provisions of CEQA, pursuant to CEQA Guidelines Section 15061(b)(3). NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Arroyo Grande, as follows: SECTION 1: The above recitals and findings are true and correct. SECTION 2: Arroyo Grande Municipal Code Section 16.68.050 is hereby repealed and replaced in its entirety as follows: 16.68.050 Underground utilities. A. Purpose and Intent. The purpose of this section is to implement policies of the General Plan of the City of Arroyo Grande by requiring new development to place existing overhead utilities underground or contribute to a fund that shall be used solely for the conversion of overhead utilities to underground utilities. These policies further the public health, safety and welfare by 1) increasing the aesthetic appearance of residential, commercial and mixed use areas by avoiding or eliminating the concentration of overhead service and distribution facilities, 2) promoting the safe and orderly control of pedestrian and vehicular traffic along streets, roads orrights-of-way, and 3) providing the most efficient and economical method of placing existing utilities underground. B. Applicability. 1. Unless otherwise exempted by law or the provisions of this section, the requirement to place utilities underground shall apply to all final tract and parcel maps, lot line adjustments and to discretionary land use approvals of residential, mixed use, commercial or industrial developments. Additionally, where permitted by applicable law, the city council may require the undergrounding of utility lines as a condition to approval of an application for an extension of time in which to complete and file a final subdivision map or implement a discretionary project approval. 2.Underground installation is required of all overhead electrical distribution lines of less than one hundred fifteen thousand (115,000) volts, telephone, cable television and similar service wires or cables which: a. Provide direct service to the property being developed; or b. Are existing and located within the boundaries of the property being developed; or c. Are existing between the property line and the centerline of the peripheral streets of the property being developed; or d. Are located along or within six feet of any lot lines of the property to be developed. C. In-Lieu Fee. On the basis of a formal written request to the approving authority, an in-lieu fee may be considered instead of the required undergrounding of utilities as follows: 1. Discretionary residential development including additions or remodeling projects on existing parcels. ORDINANCE NO. PAGE 3 2. Projects located within duly established Underground Utility Districts. 3. Tentative parcel maps if special and unique circumstances exist such as the presence of a disproportionate amount of wires and utilities exist on the property, which prevent an economically feasible conversion. 4. Infill mixed use projects on an existing lot less than 10,000 square feet in which the residential component consists solely of four or less rental apartments. 5. Upon the recommendation from the Director of Public Works or the Community Development Director that such requirement for undergrounding would be detrimental to economic development, affordable housing or the provision of other public amenities or benefits. 6. Service lines entirely within a property shall be placed underground and not subject to payment of an in-lieu fee. D. Consideration of exemption from both undergrounding and payment of an in-lieu fee. The approving authority may exempt from the requirement to underground utilities or pay an in-lieu fee for the following: 1. Projects that will not result in the addition of floor area to the building. 2. Projects that will result in the addition of no more than 500 square feet of habitable space for residential projects and 250 square feet of habitable space for commercial projects. 3. The cost of undergrounding and the calculated in-lieu fee, respectively, will both exceed 40 percent of the proposed project cost exclusive of undergrounding, as determined by standard construction estimation techniques by the Building Official or Director of Public Works. 4. City initiated economic development and streetscape enhancement projects authorized by the City Council. 5. Projects providing affordable housing units in excess of City requirements. E. Calculation and collection of fees 1. Underground utility in-lieu fees shall be calculated per linearfeet of each side ofthe property with overhead utility lines. 2. Underground utility in-lieu fees shall be paid priorto issuance of the building permit. 3. The amount of the underground utility in-lieu fee shall be established by resolution of the City Council. 4. Underground utility in-lieu fees collected by the City shall be deposited in a separate fund and shall be used solelyforthe planning, design, administration and implementation of utility undergrounding. F. Responsibility for Compliance. The applicantorownerisresponsibleforcomplying with the requirements of this section, and he or she shall make all necessary arrangements with the appropriate utility company for the installation of such facilities. When arrangements are made with the serving utility company, a letter stating that arrangements have been made for underground facilities and such other comments the utility company may have regarding easements, utility locations, and other pertinent matters must be submitted by the utility companyto the City Engineer. Plans and specifications for such utility undergrounding shall ORDINANCE NO. PAGE 4 be sized to accommodate other utilities subject to the approval of the City Engineer. SECTION 3: If any section, subsection, subdivision, paragraph, sentence, or clause of this Ordinance or any part thereof is for any reason held to be unlawful, such decision shall not affect the validity of the remaining portion of this Ordinance or any part thereof. The City Council hereby declares that it would have passed each section, subsection, subdivision, paragraph, sentence, or clause thereof, irrespective of the fact that any one or more section, subsection, subdivision, paragraph, sentence, or clause be declared unconstitutional. SECTION 4: A summary of this Ordinance shall be published in a newspaper published and circulated in the City of Arroyo Grande at least five (5) days prior to the City Council meeting at which the proposed Ordinance is to be adopted. A certified copy of the full text of the proposed Ordinance shall be posted in the office of the Director of Administrative Services/City Clerk. Within fifteen (15) days after adoption of the Ordinance, the summary with the names of those City Council Members voting for and against the Ordinance shall be published again, and the Director of Administrative Services/City Clerk shall post a certified copy of the full text of such adopted Ordinance. SECTION 5: This Ordinance shall take effect thirty (30) days after its adoption. On motion by Councilmember ,seconded by Council Member and by the following roll call vote, to wit: AYES: NOES: ABSENT: the foregoing Ordinance was adopted this _ day of , 2007. ORDINANCE NO. PAGE 5 TONY FERRARA, MAYOR ATTEST: KELLY WETMORE, CITY CLERK APPROVED AS TO CONTENT: STEVEN ADAMS, CITY MANAGER APPROVED AS TO FORM: TIMOTHY J. CARMEL, CITY ATTORNEY ATTACHMENT1 16.68.050 2. At a minimum, a subdivider or developer of a residential, commercial or industrial development for which a subdivision is not volved shall construct or enter into an agree t to construct prior to acceptance and approv f a final map or equivalent approval if a subdi 'lion is not involved, a street lighting system of 'then. a. A u ity-owned system consisting of standard ele oliers customarily furnished by the utility..o Cher design approved by -the utility and the 'ty engineer; or ~ - - - b: A manic ally-owned system consisting of reinforced co re'te'or steel standards with underground wiri or other design approved by the city enginee 3. Ifa utility-o ed system is installed, the subdivider or 'dev per of< a residential, cortunercial or indu vial development -for which a subdivision i of involved shall be liable for and shall pay azges of such utility attributable to such ins tion. ' 4. If a municipally- ed underground system is installed, the su 'der or developer of a residential, comme I' or industrial development for which a s ivision is not involved shall be liable for shall pay all costs incurred in installing the ntire system and appurtenances thereof. 5. Installation of street ligh g shall be underground and shall be in acco ance with plans and specifications of or appro by the utility owned system and the city en eer. B. Street Tree Planting. Requirements for street tree planting aze contained in Section 12.16.030. (Prior code § 9-15.040) 16.68.050 Underground utilities. Unless exempted by the Subdivision Map Act, the provisions of this section, regulating the location and installation of utilities, shall apply to all final tract and pazcel maps, lot line adjustments," `and lot ''mergers created subsequent to enactment of this title, as well as to discretionary land use approvals of residential; commercial or industrial developments not involving a subdivision. However, where permitted by applicable law, the 'city council ' 'may require the undergrounding of utility lines as a condition to approval of an application for an extension of time in which to complete and file a final subdivision map. A. When Underground Installation is Required. Underground installation is required of all electrical distribution lines of less than one hundred fifteen thousand (115,000) volts, telephone, cable antenna television and similaz service wire or cables which: ' 1. Provide direct service to the property being developed; 2. Are existing and located within the boundaries of the property being developed; 3. Are existing between the property line and the centerline of the peripheral streets of the property being developed; or 4. Are located along or within six feet of the rear or side lot lines of the property to be developed. B. Exceptions--Generally. The following exceptions shall apply: 1. Utility service poles may be placed in the azea within six feet of the reaz lot line of the property to be developed for the sole purpose of terminating underground facilities. 2. Temporary utilities along with necessary service poles, wires and cables may be permitted for the period during which authorized constmction is continuing for which valid building permits have been issued or for temporary uses which 'comply with 660 16.68.060 _ ~ requirements of this title, the Uniform Build- ing Code, and other applicable regulations. 3. Appurtenances and associated equip- ment including, but not limited to, surface- mounted transformers, pedestal-mounted ter- minal boxes and meter cabinets, and con- cealed ducts in an underground system, may be placed above ground. C. In-Lieu Fee-Required Approvals. On the basis of a formal written request, a fee may be accepted in lieu ofthe required under- grounding ofutilities as follows: 1. The underground utility in-lieu fee will only be available for residential development projects that meet one or more of the follow- ing conditions: a. There has been no undergrounding of utilities in the surrounding neighborhood; b. The projects property line is located at least three hundred (300) or more feet from an underground utility district; c. The undergrounding connection to the nearest utility pole will require the applicant to underground utilities fifty (50) or more lin- ear feet beyond the project's property line; d. The estimated cost of undergrounding for the project is more than twenty-five (25) percent of the estimated total cost of the pro- ject; e. Subdivision projects of ten (10) or less parcels; f. Subdivision projects of more than ten (l0) parcels may be eligible for payment of an underground utility in-lieu fee based on a spe- cific finding by the approving authority that special and unique circumstances exist. 2. Underground utility in-lieu fees should be calculated per linear feet of each side ofthe property with overhead utility lines. 3. Underground utility in-lieu fees shall be paid prior to issuance of the building per- mit. 4. The approving authority of a discre- tionary land tlse application may approve payment ofan underground utility in-lieu fee, based on a recommendation from the director of public works and director of community development. 5. The amount of the underground utility in-lieu fee shall be established by resolution of the city council. 6. Underground utility in-lieu fees col- lected by'the city shall be deposited in a sepa- rate fund and shall be used solely for the plan- ning, administration and implementation of utility undergrounding. D. Nonconforming Stmctures: Buildings and structures, that on the effective date of this title, or any subsequent amendments thereto, are nonconforming in regard to above ground on-site utility lines, may continue to be used, altered or enlarged in the same man- ner, as if such nonconforming utility lines did not exist. However, when the building or structures are enlarged over hvo thousand five hundred (2,500) square feet in area, or when alteration or enlargement requires the installa- tion of utility lines at new locations on the buildi ng or structure, or when existinpzelectri- cal capacity to the building or structures'is~,. increased one hundred (9 00) percent or more, or when the building is improved in an amount more than ten thousand dollars ($10,000.00), the utility lines shall comply with the requirements of this section. E. Responsibility for Compliance. The developer or owner is responsible for comply- ing with the requirements of this section, and he or she shall make all necessary arrange- mentswith the appropriate utility company for the installation of such facilities. When ar- rangement are made with the serving agency, a letter stating that arrangements have been made for underground facilities and such 661 (Artoyo Grande Supp. No. 6, 12-0A) 16.68.060 other comments the agency may have regard- ingeasements, utility locations, and other per- tinent matters mast be submitted by the agency to the city engineer. Provision to the satisfaction of the city engineer shall also be made at time of subdivision development for future installation of underground communi- cation and cable television. F. Exceptions. The undergrounding utility requirement may be waived by the approving authority if it is determined that such under- grounding is entirely infeasible. (Ord. 555 §§ 2, 3, 2004; prior code § 9-15.050) J 1 68.060 Other required improvements. A Additional improvements to be in- stal le by each developer or subdivider, shall includ but not be limited to, the following: water li ,gas, and other utility services to serve each t and stubbed to the property line prior to pav ;fire hydrants; sanitary sewers and laterals t serve each lot and stubbed to the property li rior to paving; silt basins or other forms ofer ion control where required; and street and tra control signs. B. Off-site impr ements may be required as follows: 1. The developme of water storage fa- cilities or financial coot utions for the im- provement of any existi source of water supply and the constructio of transmission lines from that supply to the oposed devel- opment; 2. The development of trun wer lines or financial contributions for the i ovement of any existing sewage disposals em and the construction oftransmission lines mthe proposed improvements to the site ofdi sal; 3. When flood zones or other lawfu cial purpose zones are established by e council, the subdivider or developer shall pa e fee set out for the particular zone in which th ubject land lies; 4. Properly graded, drained and improved paved cess roads; and 5. T extension of any other utilities. Agreeme s may be made, upon the ap- proval of the uncil for reimbursements by future developer or facilities required by the city to the extent th such facilities are in ex- cess ofthesizes, leng and locations needed to serve the subdivisio r project involved. Requests for reimburseme shall be made in writing at the time ofsubmi the final map or equivalent documentation i subdivision is not involved. (Prior code § 9-1 060) .68.070 Improvement agreement. ny act or obligation required as a condi- tion f the approval of a final tract or parcel map, any act, obligation, or environmental impact itigation measure required as a con- dition o e approval of a residential, com- mercial, o dustrial development for which a subdivision not involved, and for which acts are to be dertaken or obligations will exist beyond fi 1 project approval, shall be guaranteed by. ex ution of a suitable agree- ment in a form pres ibed to be reviewed and approved by the city ng Meer and city attor- ney. The agreement sh I include the follow- ing minimum terms and nditions: A. Constructionofallt rovementsasset forth in the approved plans a specifications; B. The maximum period 'thin which all improvements shall be complet to the satis- faction of the city engineer; C. In the case of a deferred im ovement agreement, the agreement shall provr forthe commencement of the construction o II re- quired improvement within ninety (90) ays of receipt of a notice to proceed from the ' y upon a finding by the city engineer th ~ ~ (Artoyo Grande Supp. No. 6, 12-04) 662 PLANNING COMMISSION ATTACHMENT 2 MINUTES APRIL 3, 2007 ~I, Chair Ray opened the public hearing for public comment. Ga Scherquist, applicant, explained that the setbacks are consistent with neighboring grope ' s. Chair Ray c ed the public hearing. Commissioner Kee sked for further clarification regarding the property line and where the setback is measu from. He stated a concern that there would not be sufficient setback for future sidew Mr. Strong explained that the property line is defined as exclusive of the 7-foot offer. dedication (offer of dedication not accepted by the City). The Commission had no further questions or comments. Chair Ray made a motion, seconde y Commissioner Marshall, to make the interpretation that front yard setbacks along nyon Way be calculated from the original property line and not the subsequent 7-foot 'cation, and approve Minor Exception Case No. 07-001. The motion was approved on the following roll call vote: AYES: Chair Ray, Commissioners Marshall and Keen NOES: None ABSENT: Commissioner Tait ABSTAIN: Commissioner Barneich Commissioner Barneich returned to the meeting. Chair Ray recused herself from the meeting due to her illness. II. PUBLIC HEARING ITEMS: A. (Continued Item) DEVELOPMENT CODE AMENDMENT CASE NO. 07-001, AMENDMENTS TO TITLE 16 OF THE CITY OF ARROYO GRANDE MUNICIPAL CODE PERTAINING TO UNDERGROUND UTILITIES Assistant Planner, Jim Bergman, presented the staff report for consideration of staff recommended changes to Section 16.68.050 of the Municipal Code, related to requirements for the placement of utilities underground, projects allowed to pay an in-lieu fee, and projects exempt from placing utilities underground or paying an in-lieu fee. Mr. Bergman then described each section of the proposed Municipal Code changes. a PLANNING COMMISSION PAGE 3 MINUTES APRIL 3, 2007 • Commission comments and questions: Marshall - Re New Code Sections: • Section B: Should the use of in-lieu fees and the requirement for undergrounding utilities being applicable to lot mergers? Mr. Bergman: This was included in the existing code, but then the following sections of the Development Code specify projects that would be exempt from this. • Section C: Mentions discretionary residential development as including additions or remodeling -are they discretionary actions? Mr. Bergman: The definition in the Development Code includes additions and remodeling that may need to come to the Community Development Department (includes viewshed review/architectural reviews etc.). • Section E: He recommended changing the word "should" to "shall". Marshall - Re Existing Code Sections: • Section B -Exceptions: There are three items in this section that are not being carried forward in the new language, why is this? Mr. Bergman: Staff felt that these were archaic and that the definition of the utilities spoke for themselves. • Section C, a) b) & c) are not being carried forward, why? Mr. Bergman: These sections were really difficult to define, so the new language makes it more clear that in respect to residential projects most cases would be eligible for in-lieu fees. • Section D has not been carried forward, so is this not needed? In addition, should we say something about existing non-conforming structures? Mr. Bergman: During the clean, in the new Code, there was an effort to limit the size of the project by giving more options to pay the fee or be exempted from the fee; we can keep non-conforming structure language, but we would need to take a closer look at the instances for this. Barneich: • Are ,schools exempt from these regulations? Mr. Bergman: Generally they're exempt from City regulations. • With the new code could some small developments be exempted from the fees? Mr. Bergman: The new Code gives better guidelines and in some cases some small modifications could be exempt, but Public Works would really like the service drops (to houses), in most cases, to be undergrounded; he would like to have language clarifying this. D.3, related to exemption of both undergrounding and in-lieu fees, she would prefer to have this calculated between 25-50% of the proposed project (not 50%). Mr. Bergman: The 50% is for cases where a proposed project was to be waived from both undergrounding and in-lieu fees, hence the greater hurdle. Vice Chair Keen opened the public hearing for public comment. Steve Ross, 211 Garden Street, asked if undergrounding would be required in cases where a cable line on one side of the street was taken across and dropped down to a house. PLANNING COMMISSION MINUTES APRIL 3, 2007 PAGE 4 Mr. Bergman replied that in most of these residential projects where just one cable is involved just a fee would be required. Commissioner Keen agreed that for a small, single addition on a house it should not be required to underground and if the resident changed to satellite then the cable could be removed. Vice Chair Keen closed the public hearing for public comment. Commission comments: Barneich: • On D.3 she would like 50% changed to 40%. • She likes the addition of D.4. (City initiated economic development and streetscape enhancement). Marshall: • He agrees with Commissioner Barneich request to change the 50% to 40%. • E.1: He would like to change the "should" to "shall" • Staff should take a further look at the language for non-conforming structures to see if any of it should be carried forward. • Enhance the language in regard to service drops based on the recommendation from Public Works. Keen: • South Halcyon should be designated as an "undergrounding district". • He would like to see in-lieu fees stay in the area from which they are taken; it is not fair to use them elsewhere. • 6.2: He is not in favor of having an in-lieu service fee for cable drops to a house for a small project. • Onsite service lines need to be undergrounded (not have a blanket statement saying in lieu fees will be required, as this will never happen). • D.4/D5: Undergrounding of utilities is such a visual problem in the City that it should override these considerations; he would like to see some more specific language. Mr. Strong stated that the discretionary decision would normally rest with the Commission so the intent is to provide some criteria without tying hands. Marshall: • He appreciated Commissioner Keen's view that the in-lieu fees collected should be spent on that specific street, but this might result in never having enough money to do anything. If improvements were done in places where most activity occurs then this would benefit the whole community. Commissioner Keen clarified that what he meant was that in these cases he would rather not require any in-lieu fee if a person was not going to see any benefits in his lifetime, then the in-lieu fee would not be viewed as an unfair tax. PLANNING COMMISSION MINUTES APRIL 3, 2007 PAGE 5 After further Commission discussion Commissioner Marshall stated that he supports the proposed revisions to 40% requested by Commissioner Barneich; E.1 -firm up the language to change should to shall; staff should look further at non-conforming. structures; enhance the language regarding service drops. Commissioner Barneich made a motion to approve the proposed Municipal Code changes with the following modifications: • 6.2: Take out "payment of an in-lieu fee". • No. 6. should be added to C. to state: "service lines entirely within a property shall be undergrounded and not subject to payment of an in-lieu fee. • D3: Change language to state "...the cost of undergrounding or the calculated in- lieu fee will exceed 40%.... • E.1: Change should to shall. • Staff should work with the City attorney regarding non-conforming structures and carry a recommendation forward to City Council. • B.1: Delete "lot mergers" from this item. Commissioner Marshall seconded the motion to adopt: RESOLUTION 07-2029 A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF ARROYO GRANDE RECOMMENDING THAT THE CITY COUNCIL AMEND MUNICIPAL CODE SECTION 16.68.050 REGARDING UNDERGROUND UTILITIES The motion was approved on the following roll call vote: AYES: Commissioners Barneich, Marshall and Keen ABSENT: Chair Ray and Commissioner Tait NOES: None the a olution was adopted this 3rd day of April 2007. III. NON-PUBLIC HEARIN :None. IV. REFERRAL ITEMS FOR COMMISSIO ION/ NOTICES OF ADMINISTRATIVE DECISIONS E MARCH 20, 2007: Case.No' ~ A ... ,,, pp:+ ...,. rd~i . ,r,~,H,Addresx.. -~ ,K. ,~~s~~r, ~ .~. ,!a„«>~R~ ~ w. -. --DescnpUon:e,, ~ .~ i Action-. =Planner -+,,F 1. VSR 07-004 Douglas Jones 551 S. Traffic Way Remodel and expansion of an exiStin A J. Bergman residence including the addition of a seco residential unit. 2. PPR 07-002 Jimi Breazele 995 E. Grand Ave. To allow a consignment furniture store to be J. Bergman located in the building that formerly housed Grand Estate Furniture. 1 O.a. MEMORANDUM TO: CITY COUNCIL FROM: STEVEN ADAMS, CITY MANAGER SUBJECT: CONSIDERATION OF 10-YEAR STRATEGIC PLAN DATE: APRIL 24, 2007 RECOMMENDATION: It is recommended the Council adopt the attached Resolution approving the proposed 10-year Strategic Plan ("Plan"). FUNDING: There will be significant costs associated with projects identified in the Plan. However, this Plan is intended to establish future goals and direction, not to approve specific projects or implementation. Therefore, there are no costs directly associated with approval of the Plan. DISCUSSION: At the February 13, 2007 meeting, staff presented to the City Council for consideration the proposed 10-year Strategic Plan for the City. At that time, the City Council provided comments and requested staff establish a 60-day public comment period. In response, staff distributed a copy of the Plan to Commissioners, Board Members and community leaders. A press release was issued, an article was placed in the Times Press Recorder, and the Strategic Plan was included on the City's web site. A number of comments were received. As a result, several modifications were made to the document. A copy of the revised Plan is attached. Changes based on both City Council and public comments have been incorporated and are identified in the revised Plan in the shaded areas. Copies of comments received are also attached. The Plan was developed by the Department Director team over the past two-year period. It was also reviewed with staff throughout the organization to receive and incorporate input. The Plan is intended to consolidate public input received throughout a number of other planning processes. These include development of the General Plan Update, E. Grand Avenue Master Plan, Drainage Master Plan, Pavement Management Plan, Long-range Financial Plan, Village Design Guidelines, City Hall Complex Feasibility Study and Needs Assessment, Redevelopment CITY COUNCIL STRATEGIC PLAN APRIL 24, 2007 PAGE 2 Implementation Plan, Village Green Master Plan, Bikeway and Pedestrian Plan, E. Grand Avenue, E. Branch Street and Traffic Way Master Plans, Fire Department Needs Assessment, and Urban Water Management Plan. The objective of the Plan is to provide a 10-year vision for the City and its operations. It provides general strategic directions, as well as specific strategies and goals. The purpose is to achieve agreement from the City Council on a long-term vision, direction and goals for the City. Staff can then utilize this information to ensure our short-term actions are consistent with the ultimate future direction we are working to achieve. The Strategic Plan is also another key step in the City's approach of planning long-term to identify needs and how best to address them in the most efficient and effective manner. The specific categories of future directions, goals and strategies include the following: Economic Development • Affordable Housing City Beautification • Recreation Infrastructure • Facilities Transportation Natural and Historical Resources • Financial/Human Resources • Technology • Public Safety Staff believes it is important to clarify a couple points given the public feedback received. First, since the Plan does not identify resources, it is not intended to be an action plan. It includes broad goals and strategies. These goals and strategies are developed in more detail in specific master plans and other planning documents. Project needs are prioritized in the City's Long-Range Financial Plan. Therefore, the Long-Range Financial Plan is intended to be the action plan since it programs resources to meet needs identified. The Strategic Plan, on the other hand, is an unconstrained plan. Staff did not limit items to only those that have funding available. However, items were limited to those that appear to be feasible. Those that clearly appeared infeasible in the next 10-year period were not included. Second, a number of comments were received regarding auto dealerships. It is important to emphasize that this is proposed to be a 10-year plan. The City's existing economic development strategy regarding auto dealerships has been to facilitate retention and expansion in the current location as a short and intermediate term strategy. Long-term goals for Traffic Way may involve potential relocation of the auto dealers and transition to uses that will integrate with the Village core, which is S:\P.dministration\CITY MANAGER\STEVE\Council Reports\Strategic Plan 4.24.07.doc CITY COUNCIL STRATEGIC PLAN APRIL 24, 2007 PAGE 3 clarified in the Plan. While planning should continue towards this vision, it is not projected to occur within the 10-year time frame. While auto dealerships may appear inconsistent with this ultimate goal, staff believes they can assist in facilitating such a transition because they accommodate relocation better than other uses. This is due to a relatively low investment in permanent structures needed for auto dealerships when compared to building improvements required for other types of businesses, which then become more difficult to relocate once constructed. The auto dealerships currently provide an important component of the City's revenue base and justify heightened attention to this sector of the business community. ALTERNATIVES: The following alternatives are provided for the Council's consideration: - Adopt the attached Resolution approving the Strategic Plan as proposed; - Add and/or delete specific goals and strategies and approve the Strategic Plan; - Request staff to undertake additional study in specified areas; - Provide direction to staff. Attachment: 1. Proposed 10-Year Strategic Plan With Revisions 2. Public Comments S:\Administration\CITY MANAGER\STEVE\Council Reports\Strategic Plan 4.24.07.doc RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE APPROVING A CITY 10-YEAR STRATEGIC PLAN WHEREAS, the City Council has determined it is in the best interest of the City to establish a 10-Year Strategic Plan document to provide a future agreed upon vision for the City and its operations; and WHEREAS, the Strategic Plan provides general strategic directions, as well as specific strategies and goals to ensure the City's short-term actions are consistent with the ultimate future direction the City is working to achieve; and WHEREAS, the Strategic Plan is a key step in the City's approach of planning long-term to identify needs and how best to address those needs in the most efficient and effective manner; and WHEREAS, Strategic Plan is based on community input obtained through a number of planning processes and is adopted following a public hearing and 60-day public review period; and NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Arroyo Grande approves the Arroyo Grande 10-Year Strategic Plan as set forth in Exhibit "A", which is attached hereto and incorporated herein by this reference. On motion by Council Member ,seconded by Council Member and by the following roll call vote, to wit: AYES: NOES: ABSENT: the foregoing Resolution was passed and adopted this day of 2007. RESOLUTION NO. PAGE 2 TONY FERRARA, MAYOR ATTEST: KELLY WETMORE, CITY CLERK APPROVED AS TO CONTENT: STEVEN ADAMS, CITY MANAGER APPROVED AS TO FORM: TIMOTHY J. CARMEL, CITY ATTORNEY CITY OF ARROYO GRANDE 10-YEAR STRATEGIC PLAN APRIL 2007 OVERVIEW The City's strategic plan provides an agreed upon vision for the future and a 10-year plan for specific long-range strategies, goals and efforts to accomplish this vision. This document does not prioritize efforts. Therefore, it is not a plan to identify specific implementation of efforts on an incremental basis. Instead, the primary purpose is to provide overall plan objectives to ensure that incremental steps and efforts are consistent with the ultimate direction the City is working towazd. ECONOMIC DEVELOPMENT Strategic Directions: • An ongoing and comprehensive effort shall be implemented aimed at job creation, business retention and expansion, and new business development. • The Redevelopment Agency will be utilized as a proactive tool to meet economic development objectives. This will require continued efforts to ensure that the Redevelopment Agency is financially solvent. Priority shall be placed on utilizing revenues from the Agency to finance projects that will generate future tax increment, increase other City revenues, and accomplish multiple established City goals. • While City revenue shall be an important goal of economic development efforts, equally important shall be an emphasis on attracting businesses that meet the needs of the community, maintain the character of the community, a~ enhance overall quality of life, and incorporate quality design in new projects. • The importance of agriculture to the local economy and the unique challenges faced by this industry to remain viable shall be recognized. This will require creative efforts by the City to support the needs of agricultural enterprises. • Tourism is a key industry in San Luis Obispo County, yet Arroyo Grande has historically not received a proportional benefit from this industry. As a result, the City shall tazget efforts to develop visitor-serving businesses in the community. Tactical Goals and Strategies: • Efforts shall be facilitated by the City to maintain and expand automobile dealerships. Efforts are targeted at supporting existing businesses at current locations during the future short and mid-term periods and potential relocation to enhanced sites as a long-term strategy. Specific goals include assisting auto dealerships in acquiring property to address space needs, enable expansion, and achieve potential attraction of an additional dealership to the Traffic Way corridor. Long-term goals include transition of Traffic Way toward uses that will integrate with the Village core if relocation of the dealerships can be achieved. • Sites identified in the HoteUMotel economic development strategy shall be marketed to potential developers. The goal shall be to attract and approve three new quality hotels for development in the City over the next 10-year period. • Retail recruitment strategies shall be developed and implemented to attract new restaurants and retail businesses to E. Grand Avenue meeting unmet needs. • The Redevelopment Agency shall pursue incentives to attract redevelopment projects to the southwest corner of E. Grand Avenue/Courtland Street, the southwest corner of E. Grand Avenue/Ehn Street, the northwest corner of E. Grand Avenue/Brisco Road and the southwest comer of EI Camino Real/Oak Park Boulevard. • Efforts shall be facilitated to promptly implement developer driven improvements necessary to complete development of the Five Cities Center. • The City shall work with owners of the Fredericks and Williams family properties to develop and approve specific plans that will generate revenue necessary to help meet long-term needs of the community, including an interchange in the vicinity of El Campo. • Measures shall be implemented to attract visitor serving businesses, as well as tourism promotion to increase the level and success of tourism activities in the community. • Efforts shall be developed and implemented to encourage office development on Halcyon Road and medical uses adjacent to the hospital that will help support and enhance the long-term economic success of the hospital. • Public improvements shall be coordinated with business development to enhance activity and orientation in the Village toward the creek, particular patios and outdoor dining. • Along-range plan to accommodate future parking needs in the Village shall be developed and implemented, including new parking lots, a potential structure, and consolidation of existing parking areas. AFFORDABLE HOUSING Strategic Directions: • A proactive approach shall be taken by the City to address the need for housing necessary to accommodate an adequate workforce and provide for a community with people from different ages, backgrounds and income levels. • Opportunities shall be created for increased density consistent with "smart growth" principles. • The City shall collaborate with all levels of government, the construction industry, lending institutions and non-profit organizations to develop effective affordable housing strategies and efforts. Tactical Goals acrd Strategies: • Policies and programs shall be implemented to increase inclusionary affordable housing units constructed by housing development projects. • Utilizing affordable housing in-lieu fee and Redevelopment Agency housing set aside funding, the City and Redevelopment Agency shall work with the San Luis Obispo Housing Authority, People's Self Help Housing, Habitat for Humanity and other agencies and developers to coordinate development of, and provide financial assistance for, the construction of low and very low income housing units. The goal shall be for the City to assist a minimum of three new affordable 2 housing development projects over the next 10-year period, including a total of at least 50 units. • The inclusion of housing in "mixed-use" projects shall be encouraged to create new housing opportunities and utilize land as efficiently as possible. • Incentives shall be developed to promote an increase in construction of both affordable and market rate rental units. • New programs shall be studied and developed by the City designed to offer financial assistance to first-time homebuyers. • Programs to provide housing assistance for City employees shall be developed and funded in order to provide an ongoing effective workforce, particularly available within an effective distance at all times for emergency response. • Pennit processing shall be streamlined through automation, interdepartmental coordination, and improved processes to minimize application processing time and development review costs. • Modest sized houses and lots shall be encouraged in many instances in order to promote "affordability by design" and "smart growth" principles. • Incentives shall be developed and implemented to encourage Been build techniques in new housing construction. • Programs identified in the Housing Element shall be fully implemented. CITY BEAUTIFICATION Strategic Directions: • Due to financial constraints, the City's operations have historically been devoted primarily to basic City operations and the potential for many beautification efforts has been limited. It shall be the City's goal to enhance the community's quality of life through efforts to beautify both residential and commercial areas. To do this, the City shall pursue creative ways to finance these efforts through grants, community volunteer support and regulatory policies. • Beautification efforts shall be accompanied by good planning principles to ensure that improvements can be effectively maintained in the long-term and be water efficient. • Rising property values and changing demographics in the community will likely result in increasing expectations and demands regarding the maintenance of private and public properties. The City shall prepare to proactively respond to these demands through increased code enforcement services, while maintaining the City's customer service approach of enforcement through a cooperative approach. Tactical Goals and Strategies: • Streetscape improvements shall be expanded on E. Grand Avenue and new Streetscape projects on E. Branch Street in the Village, Traffic Way and E] Camino Real shall be designed and implemented. • Programs shall be facilitated to increase planting of new street trees in both commercial and residential areas, along with implementation of new efforts to ensure appropriate ongoing trimming and maintenance. 3 • The City shall encourage cooperation and provide support to private groups and community organizations in their efforts to beautify private and City-owned properties. • Creative approaches shall be utilized to maintain and protect the City's existing tree inventory. • The City's code enforcement program activities shall be enhanced to proactively address issues impacting the appearance of neighborhoods and commercial areas. • City entry signs shall be renovated and enhanced and an agricultural, directional and historical signage program shall be implemented. • A public art program shall be implemented. RECREATION Strategic Directions: • The City shall be committed to providing recreational services, opportunities and facilities for all sectors of the community. • The City shall invest in its future through a commitment of supporting development of its youth by meeting recreation demands of youth sports and activity programs. • The community's demographics have, and are projected to continue to, transition toward an aging population. The City will respond to the needs of active adults through increased sports and activity opportunities. Tactical Goals and Strategies: • Community fundraising efforts to construct a recreation center facility at the City property on W. Branch Street next to the Woman's Club Community Center shall be supported and encouraged. The City shall also pursue ways to supplement community fundraising though grants and the sale of a portion of the property. • Recreation programming shall be increased for seniors in the community. In the short term, efforts shall focus on the existing community center facilities. In the immediate future, the City shall coordinate with the YMCA on activities to be offered at the community senior center at the Ocean Oaks senior condominium project. In the long-term, efforts shall be centralized at a new senior center to be provided at the recreation center. • Increased community swim programming at the new Arroyo Grande High School pool shall be facilitated and/or provided by the City. • Special needs/integrated programs shall be increased. • Lighting of the Soto Sports Complex fields shall be expanded and improvements to the facility shall be constructed to enhance accessibility and usage. • Creekside paths within the Village and other azeas shall be improved and expanded to create an interconnected network. • The Village Green Master Plan improvements shall be implemented. INFRASTRUCTURE Strategic Directions: • Strategies and funding sources shall be developed to implement the City's master plans that have been created for each area of the City's infrastructure. 4 • Improvements to the City's infrastructure shall be planned to meet the demands of the community's future and to avoid unfairly passing on financial burdens to future generations. • Infrastructure improvements shall be planned and prioritized to prevent hazards and ensure safety. Tactical Goals and Strategies: • The addition of a long-term supplemental water source shall be successfully implemented. While the City shall continue to study and assess a number of alternatives, the primary focus shall be on analysis, planning, permitting and funding for a desalination plant. • Water conservation efforts shall be expanded to include a landscape retrofit program, landscaping design guidelines, demonstration projects, and other measures. • El Camino Real, Brisco Road, Farroll Road, W. Branch Street and other streets identified as priorities shall be upgraded. • The annual pavement management program shall be fully funded. • Improvements to address drainage deficiencies and storm water pollution prevention from Newsom Springs, on Valley Road, on Halcyon Road, and widening of the box culvert at Route 227/Tally Ho Creek shall be planned and constructed. • Undergrounding of utilities on E. Grand Avenue shall be completed, as well as encouraged throughout the community. • Improvements identified in the Sewer and Water Master Plans shall be fully funded and constructed. • Street lighting shall be reviewed citywide and new street light technology shall be implemented. FACILITIES Strategic Directions: • City facilities shall be maintained and improved to meet both current and future projected needs in order to provide services in an effective manner. • In planning improvements to City facilities, the City shall balance the need to provide facilities in a cost efficient manner, while ensuring design is consistent with the chazacter of the community. • A "life cycle" approach shall be utilized for planning and funding City facilities to ensure that maintenance costs are minimized and facilities are constructed in the most cost efficient manner over the life of the facility. Tactical Goals and Strategies: • Recommendations of the City Hall Complex Needs Assessment and Feasibility Study shall be implemented with the goals of continuing to maintain central City operations in the Village, to design structures consistent with the chazacter of the Village, and to organize operations so that services can be provided as efficiently and responsively as possible. • The Police Station shall be expanded to address existing and future space needs of the Police Department, to upgrade communications facilities, and to provide an 5 effective Emergency Operations Center (EOC) for coordination of disaster response activities. • Remodeled facilities shall utilize a combination of design, materials and alternative energy solutions to increase energy efficiency. • The Corporation Yard shall be upgraded to ensure facilities are sufficient to meet the future needs of the City's maintenance operations, which shall first include an analysis of potential relocation sites and/or consolidation with other agencies. • Structural issues identified at the Woman's Club facility will be studied and addressed. TRANSPORTATION Strategic Directions: • Transportation improvements shall be planned on a proactive basis to ensure infrastructure is in place to accommodate the impacts of growth and development consistent with the City's General Plan. • Connectivity shall be emphasized in ongoing City planning. • Improvements shall be planned to facilitate and balance multi-modal transportation, including motor vehicle, pedestrian, bicycle and transit. • Federal and State gant funding shall be pursued for infrastructure improvements to maximize leverage of City funding. Tactical Goals and Strategies: • Improvements to the Brisco Road/Halcyon Road interchange shall be funded and constructed. • Plans and funding strategies for El Campo Interchange improvements shall be studied and developed. • A connection to Valley Road from Orchard Street shall be constructed to reduce traffic on Orchard Street and at the Orchard Street and Fair Oaks intersection. • A goal is established to install a minimum of 5 new bike lanes to provide an effective citywide bikeway network consistent with the City's bikeway plan over the next 10-year period. • Halcyon Road shall be widened from E. Grand Avenue to E. Camino Real. • A signal shall be installed at Traffic Way and Fair Oaks. • The signal at the Fair Oaks/Halcyon Road intersection shall be upgraded. NATURAL AND HISTORICAL RESOURCES Strategic Directions: • Efforts shall be continued to protect the City's environmental resources. • Environmental impacts of new development shall be mitigated. • The creek system is a valuable drainage, biological and aesthetic resource. As a result, the City shall manage and protect that resource in a responsible way. • Prime soils and agricultural operations are both a key economic resource in the community and a critical component of the City's heritage. As such, efforts shall be taken to preserve and protect these resources. 6 • History is a key resource to the community's quality of life and tourism economy, which shall be preserved and protected through City activities and support of organizations dedicated to these goals. Tactical Goals and Strategies: • Collaborations shall be established with regional agencies to leverage grant funds to implement key creek protection projects and programs. Specific goals include a Tally Ho/Corbett Canyon Creek restoration project, Arroyo Grande Creek restoration project, Meadow Creek sedimentation project, and Arroyo Grande Creek overflow retention project. • Programs will be established to fund, encourage and establish ag conservation easements on existing agricultural properties. The goal of creating a minimum of two additional ag conservation easements has been established. • The Local Historic Resources Committee, program and inventory shall be fully implemented. • The City shall coordinate Arroyo Grande Creek activities with the Habitat Conservation Plan. • The City shall establish itself as a leader and serve as a positive example by instituting practices and programs that reduce air emissions, as well as other forms of pollution. FINANCIAL/HUMAN RESOURCES Strategic Directions: • Policies shall be established consistent with the City's long-range financial plan to ensure long-term fiscal stability and the ability to meet future needs. • Efforts shall be implemented to ensure local sales tax revenues are utilized consistent with the purposes communicated to the community and outlined in the long-range financial plan. • Personnel is the City's most valuable resource and shall be managed in a way to create a stable and effective workforce responsive to the community, to create a quality working environment, and to ensure a consistent high level of productivity. Tactical Goals and Strategies: • Funding strategies outlined in the City's long-range financial plan shall be implemented. • A vehicle replacement fund shall be established. • Long-term liabilities shall be funded on an ongoing basis or adjusted to ensure they can be funded. • A comprehensive annual financial report shall be prepared on an ongoing basis. • A succession planning program shall be implemented to ensure an ongoing effective workforce. • Development of staff shall be supported through continuing education and training. 7 TECHNOLOGY Strategic Directions: • Technology shall be utilized to increase customer service and efficiency. However, it shall be managed in a way to ensure appropriate resources exist to maintain data and systems on an ongoing basis. • On-line and cablecasting resources shall be utilized to enhance communication, information and interaction with the public. Tactical Goals and Strategies: • The City's web site shall be expanded to include on-line payments and on-line permit applications. • Automated permit application and tracking shall be expanded to increase customer service and reduce staff demands. • Citywide geographic information system applications shall be expanded and integrated with existing databases. • Document imaging shall be expanded to provide for ongoing efficient storage and access to City records. • Webcasting of City Council, Planning Commission and potentially other advisory body meetings shall be developed and implemented. • Utilization of the City's cable channel shall be increased to provide public information and education regarding City issues and efforts. • A Citywide automated citizen request tracking system shall be developed and installed. • A computer kiosk shall be made available at City Hall to facilitate public access to website and application/permittraeking data. • Enhanced firewall and Spam filtering capabilities shall be implemented on the City's computer system. • The City's broadband Internet connection shall be upgraded. • Capability of use of mobile devices and services shall be expanded to improve service and efficiency. PUBLIC SAFETY Strategic Directions: • Coordination with neighboring jurisdictions shall be pursued to increase effectiveness of public safety services. • Partnerships will continue to be pursued to solicit the participation of the community in accomplishing public safety goals, programs and the community based policing and government philosophy. • Increased communication and interconnectivity shall be pursued to ensure effective multi-jurisdictional capabilities in response to disasters and major incidents. Tactical Goals and Strategies: • The joint fire service relationship with the City of Grover Beach shall be expanded. 8 • Opportunities for joint maintenance, purchase and utilization of Fire apparatus shall be pursued. • Disaster preparedness training and activities shall be expanded within the organization and community. • Joint dispatch concepts shall be developed and implemented if feasible and cost effective. • Neighborhood watch programs shall be expanded. • The Neighborhood Officer program shall be enhanced. • The Citizens Assisting Police program shall be enhanced. • Fire staffing, administrative and training needs shall be planned for and addressed. 9 Attachment 1 CITY OF ARROYO GRANDE 10-YEAR STRATEGIC PLAN APRIL 2007 OVERVIEW The City's strategic plan provides an agreed upon vision for the future and a 10-year plan for specific long-range strategies, goals and efforts to accomplish this vision. This document does not prioritize efforts. Therefore, it is not a plan to identify specific implementation of efforts on an incremental basis. Instead, the primary purpose is to provide overall plan objectives to ensure that incremental steps and efforts are consistent with the ultimate direction the City is working toward. ECONOMIC DEVELOPMENT Strategic Directions: • An ongoing and comprehensive effort shall be implemented aimed at job creation, business retention and expansion, and new business development. • The Redevelopment Agency will be utilized as a proactive tool to meet economic development objectives. This will require continued efforts to ensure that the Redevelopment Agency is financially solvent. Priority shall be placed on utilizing revenues from the Agency to finance projects that will generate future tax increment, increase other City revenues, and accomplish multiple established City goals. • While City revenue shall be an important goal of economic development efforts, equally important shall be an emphasis on attracting businesses that meet the needs of the community, maintain the character of the community, and enhance overall quality of life, and incorporate quality desgi:in new projects. • The importance of agriculture to the local economy and the unique challenges faced by this industry to remain viable shall be recognized. This will require creative efforts by the City to support the needs of agricultural enterprises. • Tourism is a key industry in San Luis Obispo County, yet Arroyo Grande has historically not received a proportional benefit from this industry. As a result, the City shall target efforts to develop visitor-serving businesses in the community. Tactical Goals and Strategies: • Efforts shall be facilitated by the City to maintain and expand automobile dealerships. Efforts are targeted at supporting existing businesses at current locations during the future short and mid-term periods and potential relocation to enhanced sites as a long-term strategy. Specific goals include assisting auto dealerships in acquiring property to address space needs, enable expansion, and achieve potential attraction of an additional dealership. to the. Traffic Way corridor. Lone~terin `eoals include transition of Traffic Wav toward:uses that will • Sites identified in the Hotel/Motel economic development strategy shall be marketed to potential developers. The goal shall be to attract and approve three new quality hotels for development in the City over the next 10-year period. • Retail recruitment strategies shall be developed and implemented to attract new restaurants and retail businesses to E. Grand Avenue meeting unmet needs. • The Redevelopment Agency shall pursue incentives to attract redevelopment projects to the southwest corner of E. Grand Avenue/Courtland Street, the southwest corner of E. Grand Avenue/Elm Street, the northwest corner of E. Grand Avenue/Brisco Road and the southwest corner of El Camino ReaUOak Park Boulevard. • Efforts shall be facilitated to promptly<mplement.;developei•~dnvemirnprovements necessary tocomplete development of the Five Cities Center. • The City shall work with owners of the Fredericks and Williams family properties to develop and approve specific plans that will generate revenue necessazy to help meet long-term needs of the community, including an interchange i~nrthe,viciinty of El Campo. • Measures shall be implemented to attract visitor serving businesses, as well as tourism promotion to increase the level and success of tourism activities in the community. • Efforts shall be developed and implemented to encourage office development on Halcyon Road and medical uses adjacent to the hospital that will help support and enhance the long-term economic success of the hospital. • P iP hlic imrirnvementS chap'. he caci'r`dinated `with~fiuc1nescK'devel'onment to `enhance AFFORDABLE HOUSING Strategic Directions: • A proactive approach shall be taken by the City to address the need for housing necessazy to accommodate an adequate workforce and provide for a community with people from different ages, backgrounds and income levels. • Opportunities shall be created for increased density consistent with "smart growth" principles. • The City shall collaborate with all levels of government, the construction industry, lending institutions and non-profit organizations to develop effective affordable housing strategies and efforts. Tactical Goals and Strategies: • Policies and programs shall be implemented to increase inclusionary affordable housing units constructed by housing development projects. • Utilizing affordable housing in-lieu fee and Redevelopment Agency housing set aside funding, the City and Redevelopment Agency shall work with the San Luis Obispo Housing Authority, People's Self Help Housing, Habitat for Humanity and other agencies and developers to coordinate development of, and provide financial assistance for, the construction of low and very low income housing units. The goal shall be for the City to assist a minimum of three new affordable 2 housing development projects over the next 10-year period, including a~total of at least 50 units. • The inclusion of housing in "mixed-use" projects shall be encouraged to create new housing opportunities and utilize land as efficiently as possible. ~. Rte, • Trcenhuecachall `;}ie.:rlevelnrietl~tn`:rir`mm~te an:iinrrease .iu ennctrirtinn`>nf'hntTi • New programs shall be studied and developed by the City designed to offer financial assistance to first-time homebuyers. • Programs to provide housing assistance for City employees shall be developed and funded in order to provide an ongoing effective workforce, particularly available within an effective distance at all times for emergency response. • Permit rocessing_shall be streamlined throu h automation, mteidepartmehtal coordmaton~and~improved p or cesses to minimize application processing time and development review costs. • Modest sized houses and lots shall be encouraged in many instances in order to promote "affordability by design" and "smart growth" principles. • Tncentrvec shall.:,he develnried~and . imnlemerite8, th enenura¢e~ preen h»ilii CITY BEAUTIFICATION Strategic Directions: • Due to financial constraints, the City's operations have historically been devoted primarily to basic City operations and the potential for many beautification efforts has been limited. It shall be the City's goal to enhance the community's quality of life through efforts to beautify both residential and commercial areas. To do this, the City shall pursue creative ways to finance these efforts through grants, community volunteer support and regulatory policies. • Beautification efforts shall be accompanied by good planning principles to ensure that improvements can be effectively maintained in the long-term and be water efficient. • Rising property values and changing demographics in the community will likely result in increasing expectations and demands regarding the maintenance of private and public properties. The City shall prepare to proactively respond to these demands through increased code enforcement services, while maintaining the City's customer service approach of enforcement through a cooperative approach. Tactical Goals and Strategies: • Streetscape improvements shall be expanded on E. Grand Avenue and new streetscape projects on E. Branch Street in the Village, Traffic Way and El Camino Real shall be designed and implemented. • Programs shall be facilitated to increase planting of new street trees in both commercial and residential areas, along with implementation of new efforts to ensure appropriate ongoing trimming and maintenance. 3 • The City shall encourage cooperation and provide support to private groups and community organizations in their efforts to beautify private and City-owned properties. • Creative approaches shall be utilized to maintain and protect the City's existing tree inventory. • The City's code enforcement program activities shall be enhanced to proactively address issues impacting the appearance of neighborhoods and commercial areas. • City entry signs shall be renovated and enhanced and an agricultural, directional and historical signage program shall be implemented. • A public art program shall be implemented. RECREATION Strategic Directions: • The City shall be committed to providing recreational services, opportunities and facilities for all sectors of the community. • The City shall invest in its future through a commitment of supporting development of its youth by meeting recreation demands of youth sports and toward an aging populatiori: The City will respond to the needs of active adults through increased sports and activity opportunities. Tactical Goals and Strategies: • Community fundraising efforts to construct a recreation center facility at the City property on W. Branch Street next to the Woman's Club Community Center shall be supported and encouraged. The City shall also pursue ways to supplement community fundraising though grants and the sale of a portion of the property. • Recreation programming shall be increased for seniors in the community. In the short term, efforts shall focus on the existing community center facilities. In the immediate future, the City shall coordinate with the YMCA on activities to be offered at the community senior center at the Ocean Oaks senior condominium project. In the long-term, efforts shall be centralized at a new senior center to be provided at the recreation center. • Increased community swim programming at the new Arroyo Grande High School pool shall be facilitated and/or provided by the City. • Special needs/integrated programs shall be increased. • Lighting of the Soto Sports Complex fields shall be expanded and improvements to the facility shall be constructed to enhance accessibility and usage. • Creekside paths within the Village and other areas shall be improved and expanded to create an interconnected network. • The Village Green Master Plan improvements shall be implemented. INFRASTRUCTURE Strategic Directions: • Strategies and funding sources shall be developed to implement the City's master plans that have been created for each area of the City's infrastructure. • Improvements to the City's infrastructure shall be planned to meet the demands of the community's future and to avoid unfairly passing on financial burdens to future generations. • Infrastructure improvements shall be planned and prioritized to prevent hazazds and ensure safety. Tactical Goals and Strategies: • The addition of a long-term supplemental water source shall be successfully implemented. While the City shall continue to study and assess a number of alternatives, the primazy focus shall be on analysis, planning, permitting and funding for a desalination plant. • Water conservation efforts shall be expanded to include a landscape retrofit program, landscaping design guidelines, demonstration projects, and other measures. • El Camino Real, Brisco Road, Farroll Road, W. Branch Street and other streets identified as priorities shall be upgraded. • The annual pavement management program shall be fully funded. • Improvements to address drainage deficiencies and storm water pollution prevention from Newsom Springs, on Valley Road, on Halcyon Road, and widening of the box culvert at Route 227/Tally Ho Creek shall be planned and constructed. • Undergrounding of utilities on E. Grand Avenue shall be completed, as well as encouraged throughout the community. • Improvements identified in the Sewer and Water Master Plans shall be fully funded and constructed. • Street lighting shall be reviewed citywide and new street light technology shall be implemented. FACILITIES Strategic Directions: • City facilities shall be maintained and improved to meet both current and future projected needs in order to provide services in an effective manner. • In planning improvements to City facilities, the City shall balance the need to provide facilities in a cost efficient manner, while ensuring design is consistent with the character of the community. • A "life cycle" approach shall be utilized for planning and funding City facilities to ensure that maintenance costs are minimized and facilities are constructed in the most cost efficient manner over the life of the facility. Tactical Goals and Strategies: • Recommendations of the City Hall Complex Needs Assessment and Feasibility Study shall be implemented with the goals of continuing to maintain central City operations in the Village, to design structures consistent with the character of the Village, and to organize operations so that services can be provided as efficiently and responsively as possible. • The Police Station shall be expanded to address existing and future space needs of the Police Department, to upgrade communications facilities, and to provide an 5 effective Emergency Operations Center (EOC) for coordination of disaster response activities. • Remodeled facilities shall utilize a combination of design, materials and alternative energy solutions to increase energy efficiency. • The Corporation Yard shall be upgraded to ensure facilities are sufficient to meet the future needs of the City's maintenance operations, which shall first include an analysis of potential relocation sites and/or consolidation with other agencies. • Structural issues identified at the Woman's Club facility will be studied and addressed. TRANSPORTATION Strategic Directions: • Transportation improvements shall be planned on a proactive basis to ensure infrastructure is in place to accommodate the impacts of growth and development consistent with the City's General Plan. • Connectivity shall be emphasized in ongoing City planning. • Improvements shall be planned to facilitate and balance multi-modal transportation, including motor vehicle, pedestrian, bicycle and transit. • Federal and State grant funding shall be pursued for infrastructure improvements to maximize leverage of City funding. Tactical Goals and Strategies.• • Improvements to the Brisco Road/Halcyon Road interchange shall be funded and constructed. • Plans and funding strategies for El Campo Interchange improvements shall be studied and developed. • A connection to Valley Road from Orchard Street shall be constructed to reduce traffic on Orchard Street and at the Orchard Street and Fair Oaks intersection. • A goal is established to install a minimum of 5 new bike lanes to provide an effective citywide bikeway network consistent with the City's bikeway plan over the next 10-year period. • Halcyon Road shall be widened from E.aGrand Agenugwto E,°Camirio;Real • A signal shall be installed at Traffic Way and Fair Oaks. • The signal at the Fair Oaks/Halcyon Road intersection shall be widened upgraded. NATURAL AND HISTORICAL RESOURCES Strategic Directions: • Efforts shall be continued to protect the City's environmental resources. • Environmental impacts of new development shall be mitigated. • The creek system is a valuable drainage, biological and aesthetic resource. As a result, the City shall manage and protect that resource in a responsible way. Prime soils and agricultural operations are both a key economic resource in the community and a critical component of the City's heritage. As such, efforts shall be taken to preserve and protect these resources. • History is a key resource to the community's quality of life and tourism economy, which shall be preserved and protected through City activities and support of organizations dedicated to these goals. Tactical Goals and Strategies: • Collaborations shall be established with regional agencies to leverage grant funds to implement key creek protection projects and programs. Specific goals include a Tally Ho/Corbett Canyon Creek restoration project, Arroyo Grande Creek restoration project, Meadow Creek sedimentation project, and Arroyo Grande Creek overflow retention project. • Programs will be established to fund, encourage and establish ag conservation easements on existing agricultural properties. The goal of creating a minimum of two additional ag conservation easements has been established. • The Local Historic Resources Committee, program and inventory shall be fully implemented. • The City shall coordinate Arroyo Grande Creek activities with the Habitat Conservation Plan. FINANCIAL/HUMAN RESOURCES Strategic Directions: • Policies shall be established consistent with the City's long-range financial plan to ensure long-term fiscal stability and the ability to meet future needs. • Efforts shall be implemented to ensure local sales tax revenues are utilized consistent with the purposes communicated to the community and outlined in the long-range financial plan. • Personnel is the City's most valuable resource and shall be managed in a way to create a stable and effective workforce responsive to the community, to create a quality working environment, and to ensure a consistent high level of productivity. Tactical Goals and Strategies: • Funding strategies outlined in the City's long-range financial plan shall be implemented. • A vehicle replacement fund shall be established. • Long-term liabilities shall be funded on an ongoing basis or adjusted to ensure they can be funded. • A comprehensive annual financial report shall be prepared on an ongoing basis. • A succession planning program shall be implemented to ensure an ongoing effective workforce. • Development of staff shall be supported through continuing education and training. 7 TECHNOLOGY Strategic Directions: • Technology shall be utilized to increase customer service and efficiency. However, it shall be managed in a way to ensure appropriate resources exist to maintain data and systems on an ongoing basis. • On-line and cablecasting resources shall be utilized to enhance communication, information and interaction with the public. Tactical Goals and Strategies: • The City's web site shall be expanded to include on-line payments and on-line permit applications. • Automated permit application and tracking shall be expanded to increase customer service and reduce staff demands. • Citywide geographic information system applications shall be expanded and integrated with existing databases. • Document imaging shall be expanded to provide for ongoing efficient storage and access to City records. • Webcasting of City Council, Planning Commission and potentially tither advisory body meetings shall be developed and implemented. • Utilization of the City's cable channel shall be increased to provide public information and education regazding City issues and efforts. • A Citywide automated citizen request tracking system shall be developed and installed. • A computer kiosk shall be made available at City Hall to facilitate public access to website and application permit tracking data. • Enhanced firewall and Spam filtering capabilities shall be implemented on the City's computer system. • The City's broadband Internet connection shall be upgraded. • Capability of use of mobile devices and services shall be expanded to improve service and efficiency. PUBLIC SAFETY Strategic Directions.• • Coordination with neighboring jurisdictions shall be pursued to increase effectiveness of public safety services. • Partnerships will continue to be pursued to solicit the participation of the community in accomplishing public safety goals, programs and the community based policing and government philosophy. • Increased communication and interconnectivity shall be pursued to ensure effective multi jurisdictional capabilities in response to disasters and major incidents. Tactical Goals and Strategies: • The joint fire service relationship with the City of Grover Beach shall be expanded. 8 • Opportunities for joint maintenance, purchase and utilization of Fire apparatus shall be pursued. • Disaster preparedness training and activities shall be expanded within the organization and community. • Joint dispatch concepts shall be developed and implemented if feasible and cost effective. • Neighborhood watch programs shall be expanded. • The Neighborhood.Officerprngram shall be enhanced. • The Citizens Assisting Police program shall be enhanced. • Fire staffing, administrative and training needs shall be planned for and addressed. 9 Attachment 2 CITY OF ARROYO GRANDE 10-YEAR STRATEGIC PLAN APRIL 2007 PUBLIC COMMENTS ,~ - U'h;r? ~. .~. -~5 /~/.? C.~vr ri (i n.., ,.1. ~.J ~ /J J,1 -. ~ n 1i1~.^~^ ' (S A~ 1. Ji ._. l l -- .C"_ i^I' %~i Cil." ..! O Il'~ : Y i , S Jai ~~ N L ~i_ J _ , ..~ ` ~~ ` , CITY OF ARROYO GRANDE DRAFT 10-YEAR STRATEGIC PLAN FEBRUARY 2007 OVERVIEIV The City's strategic plan provides an agreed upon vision for the future and a 10-year plan for specific long-range strategies, goals and efforts to accomplish this vision. This document does not prioritize efforts. Therefore, it is not a plan to identify specific implementation of efforts on an incremental basis. Instead, the primary purpose is to provide overall plan objectives to ensure that incremental steps and efforts are consistent with the ultimate direction the City is working toward. z ".;~'n' ~~:;P,,.~1Y~IECONOMICDEVELOPMENT J,n F ' Strategic Directions: -'- e,',': ;~ "'%~ • An ongoing and comprehensive effort shall be implemented aimed at job creation, --~` business retention and expansion, and new business development. T_ • The Redevelopment Agency will be utilized as a proactive tool to meet economic development objectives. This will require continued efforts to ensure that the Redevelopment Agency is financially solvent. Priority shall be placed on utilizing revenues from the Agency to finance projects that will generate future tax increment, increase other City revenues, and accomplish multiple established City goals. • While City revenue shall be an important goal of economic development efforts, equally important shall be an emphasis on attracting businesses that meet the needs of the community, maintain the character of the community, and enhance overall quality of life. • The importance of agriculture to the local economy and the unique challenges faced by this industry to remain viable shall be recognized. This will require creative efforts by the City to support the needs of agricultural enterprises. • Tourism is a key industry in San Luis Obispo County, yet Arroyo Grande has historically not;received a proportional benefit from this industry. As a result, the City shall target efforts to develop visitor-serving businesses in the community. Tactical Goals and Strategies: • Efforts shall be facilitated by the City to maintain and expand automobile dealerships. Efforts are targeted at supporting existing businesses at current locations during the future short and mid-term periods and potential relocation to enhanced sites as a long-term strategy. Specific goals include assisting auto dealerships in acquiring property to address space needs, enable expansion, and achieve potential attraction of an additional dealership to the Traffic Way corridor. • Sites identified in the HoteUMotel economic development strategy shall be marketed to potential developers. The goal shall be to attract and approve three new hotels for development in the City over the next 10-year period. • Retail recruitment strategies shall be developed and implemented to attract new restaurants and retail businesses to E. Grand Avenue meeting unmet needs. • The Redevelopment Agency shall pursue incentives to attract redevelopment projects to the southwest corner of E. Grand Avenue/Courtland Street, the southwest corner of E. Grand Avenue/Elm Street, the northwest comer of E. Grand Avenue/Brisco Road and the southwest corner of El Camino Real/Oak Park Boulevard. • Efforts shall be facilitated to promptly implement developer driven improvements necessary to complete development of the Five Cities Center. • The City shall work with owners of the Fredericks and Williams family properties to develop and approve specific plans that will generate revenue necessary to help meet long-term needs of the community, including an interchange in the vicinity of El Campo. • Measures shall be implemented to attract visitor serving businesses, as well as tourism promotion to increase the level and success of tourism activities in the community. • Efforts shall be developed and implemented to encourage office development on Halcyon Road and medical uses adjacent to the hospital that will help support and enhance the long-term economic success of the hospital. AFFORDABLE HOUSING Strategic Directions: • A proactive approach shall be taken by the City to address the need for housing necessary to accommodate an adequate workforce and provide for a community with people from different ages, backgrounds and income levels. • Opportunities shall be created for increased density consistent with "smart growth" principles. • The City shall collaborate with all levels of government, the construction industry, lending institutions and non-profit organizations to develop effective affordable housing strategies and efforts. Tactical Goals and Strategies: • Policies and programs shall be implemented to increase inclusionary affordable housing units constructed by housing development projects. • Utilizing affordable housing in-lieu fee and Redevelopment Agency housing set aside funding, the City and Redevelopment Agency shall work with the San Luis Obispo Housing Authority, People's Self Help Housing, Habitat for Humanity and other agencies and developers to coordinate development of, and provide financial assistance for, the construction of low and very low income housing jv units. The goal shall be for the City to assist a minimum of three new affordable housing development projects over the next 10-year period, including at least 50 ~~. 7 u- niis. ~ - ~.~ ~ The inclusion of housing in mixed-use projects shall be encouraged to create GJ`'J~ new housing opportunities and utilize land as efficiently as possible. • Incentives shall be developed to promote an increase in construction of both affordable and market rate rental units. • New programs shall be studied and developed by the City designed to offer financial assistance to first-time homebuyers. 2 • Programs to provide housing assistance for City employees shall be developed and funded in order to provide an ongoing effective workforce, particularly available within an effective distance at all times for emergency response. • Permit processing shall be streamlined to minimize application processing time and development review costs. • Modest sized houses and lots shall be encouraged in many instances in order to promote "affordability by design" and "smart growth" principles. • New green build techniques shall be encouraged in new housing constmction. CITY BEAUTIFICATION Strategic Directions: • Due to financial constraints, the City's operations have historically been devoted primarily to basic City operations and the potential for many beautification efforts has been limited. It shall be the City's goal to enhance the community's quality of life through efforts to beautify both residential and commercial areas. To do this, the City shall pursue creative ways to finance these efforts through grants, community volunteer support and regulatory policies. • Beautification efforts shall be accompanied by good planning principles to ensure that improvements can be effectively maintained in the long-term and be water efficient. • Rising property values and changing demographics in the community will likely result in increasing expectations and demands regarding the maintenance of private and public properties. The City shall prepare to proactively respond to these demands through increased code enforcement services, while maintaining the City's customer service approach of enforcement through a cooperative approach. Tactical Goals artd Strategies: • Streetscape improvements shall be expanded on E. Grand Avenue and new Streetscape projects on E. Branch Street in the Village, Traffic Way and El Camino Real shall be designed and implemented. • Programs shall be facilitated to increase planting of new street trees in both commercial and residential areas, along with implementation of new efforts to ensure appropriate ongoing trimming and maintenance. • The City shall encourage cooperation and provide support to private groups and community organizations in their efforts to beautify private and City-owned properties. • Creative approaches shall be utilized to maintain and protect the City's existing tree inventory. • The City's code enforcement program activities shall be enhanced to proactively address issues impacting the appearance of neighborhoods and commercial areas. • City entry signs shall be renovated and enhanced and an agricultural, directional and historical signage program shall be implemented..- • A public art program shall be implemented. 3 RECREATION Strategic Directions: • The City shall be committed to providing recreational services, opportunities and facilities for all sectors of the community. • The City shall invest in its future through a commitment of supporting development of its youth by meeting recreation demands of youth sports and activity programs. • The community's demographics have, and are projected to continue to, transition towazd an aging population. The City will respond to the needs of active adults through increased sports and activity opportunities. Tactical Goals and Strategies: • Community fundraising efforts to construct a recreation center facility at the City property on W. Branch Street next to the Woman's Club Community Center shall be supported and encouraged. The City shall also pursue ways to supplement community fundraising though grants and the sale of a portion of the property. • Recreation programming shall be increased for seniors in the community. In the short term, efforts shall focus on the existing community center facilities. In the immediate future, the City shall coordinate with the YMCA on activities to be offered at the community senior center at the Ocean Oaks senior condominium project. In the long-term, efforts shall be centralized at a new senior center to be provided at the recreation center. • Increased community swim programming at the new Arroyo Grande High School pool shall be encouraged and/or provided by the City. • Special needs/integrated programs shall be increased. • Lighting of the Soto Sports Complex fields shall be expanded and improvements to the facility shall be constructed to enhance accessibility and usage. • Creekside paths within the Village and other areas shall be improved and expanded to create an interconnected network. • The Village Green Master Plan improvements shall be implemented. INFRASTRUCTURE Strategic Directions: • Strategies and funding sources shall be developed to implement the City's master plans that have been created for each area of the City's infrastructure. • Improvements to the City's infrastructure shall be planned to meet the demands of the community's future and to avoid unfairly passing on financial burdens to future generations. • Infrastructure improvements shall be planned and prioritized to prevent hazards and ensure safety. Tactical Goals and Strategies: • The addition of a long-term supplemental water source shall be successfully implemented. While the City shall continue to study and assess a number of alternatives, the primary focus shall be on analysis, planning, permitting and funding for a desalination plant. 4 • Water conservation efforts shall be expanded to include a landscape retrofit program, landscaping design guidelines, demonstration projects, and other measures. • El Camino Real, Brisco Road, Farroll Road, W. Branch Street and other streets identified as priorities shall be upgraded. • The annual pavement management program shall be fully funded. • Improvements to address drainage deficiencies and storm water pollution prevention from Newsom Springs, on Valley Road, on Halcyon Road, and widening of the box culvert at Route 227/Tally Ho Creek shall be planned and constructed. • Undergrounding of utilities on E. Grand Avenue shall be completed, as well as encouraged throughout the community. • Improvements identified in the Sewer and Water Master Plans shall be fully funded and constructed. • Street lighting shall be reviewed citywide and riew street light technology shall be implemented. FACILITIES Strategic Directions: • City facilities shall be maintained and improved to meet both current and future projected needs in order to provide services in an effective manner. • In planning improvements to City facilities, the City shall balance the need to provide facilities in a cost efficient manner, while ensuring design is consistent with the character of the community. • A "life cycle" approach shall be utilized for planning and funding City facilities to ensure that maintenance costs are minimized and facilities are constructed in the most cost efficient manner over the life of the facility. x Tactical Goals and Strategies: • Recommendations of the City Hall Complex Needs Assessment and Feasibility Study shall be implemented with the goals of continuing to maintain central City operations in the Village, to design structures consistent with the character of the Village, and to organize operations so that services cari be provided as efficiently and responsively as possible. • The Police Station shall be expanded to address existing acid future space needs of the Police Department, to upgrade communications facilities, and to provide an effective Emergency Operations Center (EOC) for coordination of disaster response activities. • Remodeled facilities shall utilize a combination of design, materials and alternative energy solutions to increase energy efficiency. • The Corporation Yard shall be upgraded to ensure facilities are sufficient to meet the future needs of the City's maintenance operations, which shall first include an analysis of potential relocation sites and/or consolidation with other agencies. • Structural issues identified at the Woman's Club facility will be studied and addressed. TRANSPORTATION Strategic Directions: • Transportation improvements shall be planned on a proactive basis to ensure infrastructure is in place to accommodate the impacts of growth and development consistent with the City's General Plan. • Connectivity shall be emphasized in ongoing City planning. • Improvements shall be planned to facilitate and balance multi-modal transportation, including motor vehicle, pedestrian, bicycle and transit. • Federal and State grant funding shall be pursued for infrastructure improvements to maximize leverage of City funding. Tactical Goals and Strategies: • Improvements to the Brisco Road/Halcyon Road interchange shall be funded and constructed. • Plans and funding strategies for El Campo Interchange improvements shall be studied and developed. • A connection to Valley Road from Orchard Street shall be constructed to reduce traffic on Orchard Street and at the Orchard Street/Fair Oaks intersection. • A goal is established to install sidewalk improvements on a minimum of 5 streets to address gaps, safety enhancements to schools and parks, and overall increase in pedestrian accessibility throughout the community over the next 10-year period. • Halycon Road shall be widened from E. Grand Avenue to E. Camino Real. • A signal shall be installed at Traffic Way and Fair Oaks. ~ • The signal at the Fair Oaks/Halcyon Road intersection shall be widened. NATURAL AND HISTORICAL RESOURCES Strategic Directions: • Efforts shall be continued to protect the City's environmental resources. • Environmental impacts of new development shall be mitigated. • The creek system is a valuable drainage, biological and aesthetic resource. As a result, the City shall manage and protect that resource in a responsible way. • Prime soils and agricultural operations are both a key economic resource in the community and a critical component of the City's heritage. As such, efforts shall be taken to preserve and protect these resources. • History is a key resource to the community's quality of life and tourism economy, which shall be preserved and protected through City activities and support of organizations dedicated to these goals. Tactical Goals and Strategies: • Collaborations shall be established with regional agencies to leverage grant funds to implement key creek protection projects and programs. Specific goals include a Tally Ho/Corbett Canyon Creek restoration project, Arroyo Grande Creek restoration project, Meadow Creek sedimentation project, and Arroyo Grande Creek overflow retention project. • Programs will be established to fund, encourage and establish ag conservation easements on existing agricultural properties. The goal of creating a minimum of two additional ag conservation easements has been established. i ` ~ i .~ , ,_+ 11 `,' ! (' i r /^~ J G : ti U ; i rl C. e, n~i P, ,v ~.. ~=- ~ lJ ' 6 • The Local Historic Resources Committee, program and inventory shall be fully implemented. • The City shall coordinate Arroyo Grande Creek activities with the Habitat Conservation Plan. FINANCIAL/HUMAN RESOURCES Strategic Directions: • Policies shall be established consistent with the City's long-range financial plan to ensure long-term fiscal stability and the ability to meet future needs. • Efforts shall be implemented to ensure local sales tax revenues are utilized consistent with the purposes communicated to the community and outlined in the long-range financial plan. • Personnel is the City's most valuable resource and shall be managed in a way to create a stable and effective workforce responsive to the community, to create a quality working environment, and to ensure a consistent high level of productivity. Tactical Goals and Strategies: • Funding strategies outlined in the City's long-range financial plan shall be implemented. • A vehicle replacement fund shall be established. • Long-term liabilities shall be funded on an ongoing basis or adjusted to ensure they can be funded. • A comprehensive annual financial report shall be prepared on an ongoing basis. • A succession planning program shall be implemented to ensure an ongoing effective workforce. • Development of staff shall be supported through continuing education and training. TECHNOLOGY Strategic Directions: • Technology shall be utilized to increase customer service and efficiency. However, it shall be managed in a way to ensure appropriate resources exist to maintain data and systems on an ongoing basis. • On-line and cablecasting resources shall be utilized to enhance communication, information and interaction with the public. Tactical Goals and Strategies: • The City's web site shall be expanded to include on-line payments and on-line permit applications. • Automated permit application and tracking shall be expanded to increase customer service and reduce staff demands. • Citywide geographic information system applications shall be expanded and integrated with existing databases. • Document imaging shall be expanded to provide for ongoing efficient storage and access to City records. 7 • Webcasting of City Council meetings shall be developed and implemented. • Utilization of the City's cable channel shall be increased to provide public information and education regarding City issues and efforts. • A Citywide automated citizen request tracking system shall be developed and installed. • A computer kiosk shall be made available at City Hall to facilitate public access to website and application/permit tracking data. • Enhanced firewall and spam filtering capabilities shall be implemented on the City's computer system. • The City's broadband Internet connection shall be upgraded. • Capability of use of mobile devices and services shall be expanded to improve service and efficiency. PUBLIC SAFETY Strategic Directions: • Coordination with neighboring jurisdictions shall be pursued to increase effectiveness of public safety services. • Partnerships will continue to be pursued to solicit the participation of the community in accomplishing public safety goals, programs and the community based policing and government philosophy. • Increased communication and interconnectivity shall be pursued to ensure effective multi jurisdictional capabilities in response to disasters and major incidents. Tactical Goals and Strategies: • The joint fire service relationship with the City of Grover Beach shall be expanded. • Opportunities for joint maintenance, purchase and utilization of Fire apparatus ? shall be pursued. '_ ~' y • Disaster preparedness training and activities shall be expanded within the "` ? organization and community. '0 1rc~ • Joint dispatch concepts shall be developed and implemented if feasible and cost effective. • Neighborhood watch programs shall be expanded. • The Neighborhood Officer program shall be enhanced. • The Citizens Assisting Police program shall be enhanced. • Fire staffing, administrative and training needs shall be planned for and addressed. 8 RECEIVED March 14, 2007 CIiY" OF AR,~~OYO G;;.;i;F City of Arroyo Grande 07 NAR 19 PM 2~ 34 P.O. Box 550 Arroyo Grande, CA 93421 RE: City's Draft 10-yeaz Plan To whom it may concern: I am a recent resident of the City of Arroyo Grande and write to you concerning the draft 10-year strategic plan, as well as some observations I have concerning the City and its future. The Village I am a member of Class XVI of Leadership San Luis Obispo, a program sponsored by the San Luis Obispo Chamber of Commerce. Recently, I attended the Business and Economic Development Forum of the program. The Arroyo Grande Economic Development Director was present during the meeting and made a presentation . We then participated in an team building exercise where we developed a ten yeaz plan for one specific issue in Arroyo Grande. We focused on the village. The exercise required that we envision the village ten yeazs from now and propose initiatives and make recommendations to reach that vision in that period of time. My team agreed that the village was the focal point of Arroyo Grande, encompassing the history and chazacter of the City. We all felt that character should be preserved to the extent possible, but that the village should create a focus towazds the creek and become more pedestrian friendly. Right now, the village is focused on the Highway 227 corridor, which has evolved into a high motor vehicle Vaffic highway. As a result, the village has become less and less pedestrian friendly and somewhat dangerous over the past ten years. My team envisioned the businesses backing to the creek reorientating their businesses towazds the creek, with the restaurants creating patios in the azea and entry ways on the creek side of their businesses. The parking lot now behind those businesses would either be downsized or removed, and replaced by more park area and possibly more businesses and restaurants -the idea to create a more pedestrian friendly environment, where families could stroll, children could play, and people would be able to dine and enjoy the pazk and creek atmosphere. The azea would also be shielded from the noise and traffic along 227. For~the businesses fronting 227, we envisioned expanded sidewalk azeas, the elimination of street pazking, and better mazked and lighted crossing azeas. We also envisioned trees and lighting similaz to the downtown in San Luis Obispo. As 227 is a state highway, we were uncertain whether these changes could be accomplished locally. To accommodate the reduction in pazking, we envisioned a pazking structure being built within close proximity to the downtown, possibly in the parking lot azea to the reaz of the businesses on the north side of 227, or some other available azea. I personally thought these were great ideas and could be implemented in the village azea within the 10 yeaz period, if not sooner. Currently that azea is not pedestrian friendly and for families with small children, like mine, the safety issues aze very concerning. I think a primary goal of the City should be to attract the local population to the village on a regulaz basis and I think that could best be accomplished by making the village pedestrian friendly and inviting. Auto Dealerships I noticed in the draft strategic plan that a primary goal proposed for the City is to "maintain and expand automobile dealerships." I imagine this goal has much to do with the City's tax revenue situation. While I can understand the City's interest in maintaining revenue producing businesses, I am not a huge fan of automobile dealership lots. They aze not attractive, take up a lot of space, and cause significant light pollution. I would challenge the City planners to envision the City without dealerships, as I believe they are a business of the past that will be extinct 50 years from now. Any plans relating to the development or improvement of dealerships should be examined with an eye towards the future use of the property, when that dealership has moved or gone out of business. Dealerships, even when tastefully done, are almost always eyesores. Rows of cazs, under multitudes of banners, flags, balloons and blow-up dolls. Lighting in excess of any need of the location, that serves only to attract the eye, while at the same time polluting the night sky and the enjoyment of the community. If dealerships aze such a lazge source of tax revenue for the City, I would suggest that now is the best time to begin exploring other sources of tax revenue and businesses that aze more community friendly. Hotels and Restaurants Again, I would imagine the City's goal to include three new hotels in the 10-yeaz plan is revenue driven. Occupancy tax is a lazge source of income for many cities, especially those along the coast. While tourist dollazs aze very attractive to the local business community, they aze viewed very differently by the people who live in the community. After reviewing the 10 yeaz plan, I took the opportunity to visit the various hotels in Arroyo Grande, both along Highway 101 and along Grand Avenue. I found the one's along Grand Avenue to be past their prime, in disrepair, and unappealing. The one's along the 101, though modem, had more of the urban project feel to them, with a box like appearance, stucco surfaces, broad walls and unattractive azchitecture and signage. They seem designed solely to attract the economy minded commuter traveling along Highway 10t. I strongly urge the City planners to visit the various hotels and motels and really take a look at them. I would be surprised if you would disagree with me. Looking to the long-term, I think the City should focus more on the quality, not the quantity, of the hotels and motels in the City. Making certain that the image and design of the structures fit the chazacter of the community and are not designed solely as revenue generating operations. Also consider what the City will do when these hotels and motels age, fall into disrepair, and eventually are abandoned. Quality should envision size, azchitecture, and landscaping. While I do not believe the bed and breakfast concept would work well in the City, I do believe smaller (10 to 20) unit facilities, with center courtyazds or small gazden areas, would be more in line with the chazacter of our community. My pazents, who live outside of the azea, complain that there is no such hotels in the area, forcing them to go to Pismo and San Luis Obispo. While the economy hotel may cater well to the tourist traveling along highway 101 who is only looking for a place to stay the night, I am not certain that is the type of customer our community should focus its hospitality efforts. The plan should also address the restaurant options available to City residents -not just tourists. I think the recruitment of chains such as Olive Gazden, TGI Fridays, Ruby's, etc. should be a long-term goal of the City. Currently there is a dearth of nice, mid-priced restaurants in the City. I applaud the addition of an Applebee's, which I understand will be opening soon, but believe every effort should be made to recruit these other chains. For the residents and families in the community, it would be nice to have such mid-priced options and I believe these chains would be very successful in our community. Cun-ently, when going out, the decision is between a high priced restaurant or fast food. I would also recommend that the City make an effort to recruit or at least court the Old Spaghetti Factory chain to examine the location. I have always been a fan of this business, having gown up neaz one in Duarte, California. Such a restaurant would be attractive to the entire County, and would draw local citizens and tourists alike. A perfect location would be on the southwest corner of Oak Pazk and El Camino Real. Affordable Housing The draft plan is not terribly cleaz as to its goals in this area. I do believe there is a lack of middle income housing, which should be developed, as these are the families that aze truly in need of options. By middle income, I am referring to younger families, primarily skilled labor, government employees, and young professionals. The City should have a plan for creating home ownership for its middle income citizens. As the City is well awaze, home ownership is the single lazgest factor in strengthening and improving a community. People who own tend to take an interest in their communities, participate in them, and make efforts to improve the overall condition. Anecdotally I am aware that there is little housing available to those in the middle income bracket. I have two friends who have shazed their situation with me. One is an engineer, who, with his wife and two small children, is unable to purchase a home on an annual salary of $70,000. The other is a building contractor in the same situation. Both were raised in the azea, both have family here, and both want to remain in the City. However, the housing market is forcing them to took at Nipomo and Santa Maria. These families aze the future of the City and should be the focus of the City's efforts to encourage development ofmiddle-income housing. Absent a plan, our City, in ten years, will consist mainly of retirees and empty nesters. Schools will close, family orientated businesses will move, and, most importantly, the City's character will dramatically change. That is not the kind of City that I would want to live in. I would strongly encourage City planners to examine this issue in detail and come up with specific attainable measures at fostering development in this area. City Beautification I applaud both the strategic directions and tactical goals and strategies of the draft plan. In addition, I would suggest that community efforts be incorporated into the plan, with azbor day events, more public gardens, City recognition of community member yazds and gazdens, and stronger code enforcement. Fostering community investment in beautification will provide the greatest return. A public art program should not only be implemented, it should be funded, in part, by the City. The 10 yeaz plan should establish a public art committee to establish standazds and funding for the program. Art should be implemented into every public project and should be required of all private projects. In addition, the City should support the development of artists studios in the village and along Grand Avenue, support and promote art crawls, juried art competitions, and art fairs. Recreation Task one should be to develop a public swimming pool. Whether this is coordinated through the high school pool, or through the construction of a City owned pool and facility, this should be implemented within 10 yeazs. Currently, non-high school age children have few options for swimming and forcing faznilies to either join athletic clubs or social clubs at significant cost. A public pool would provide an excellent recreation option for children and families, would be the focus of community events and interaction, and would be a benefit to both Arroyo Grande and the other cities in South County. Methods to Accomplish Goals Developing a plan is a first step, and a good one. The second step is to recruit the community to implement the plan. This is done through committees, which should be established as part of the plan. I can almost guazantee that every goal set by the City will be accomplished if citizen committees are involved. I hope that this provides some helpful suggestions to the planning process. I look forward to living in the City for along-time and am pleased that the City has taken the progressive step to plan for the next ten yeazs and, hopefully, beyond. I plan to take an active part in those efforts. Please do not hesitate to call upon me should you need any help or further input. Sincerely, oger Frederickson Arroyo Grande, CA 93420 Richard Marshall Arroyo Grande Planning Commissioner Arroyo Grande, CA 93420 March 27, 2007 Steven Adams, City Manager City of Arroyo Grande P.O. Box 550 Arroyo Grande, CA 93421 Subject: 10-Year Strategic~Plan Dear Mr. Adams: O7 MAR 29 P~ 4~ 54 Thank you for providing me with an opportunity to comment on the draft of the 10-Year Strategic Plan. I have reviewed the document and have the following comments, arranged in the same groups as"in the plan: Affordable Housing ' 1. T#tere are several.Tactical Goals and, St{ategies in which certain things are "encouraged." L .think "the. plan. would".be; rriore valuable if it.""provided some insight into how the encouragement will happen These include ,. • Inclusion of housm m ".mixed use" - ' g protects _ ;-~:. .. Modest sized houses and lots • Green build techniques 2. There is a recommendation to streamline permit processing, which should name more specifics, if possible. 3. The provision of affordable housing is probably the most critical challenge facing our City (and the rest of this region) at this time. The Housing Element of the General Plan contains many Programs for improving this situation, and the Strategic Plan has picked up many of them iri this section. I hope you will consider adding more of the Housing Element Programs to this section, or perhaps more simply add one more Goal/Strategy "to fully implement the recommended Programs of the Housing Element." I have an additional suggestion about a specific constraint to addressing affordable housing needs, which fits better in the section below. Infrastructure .~•,;..; ..: . 4. The first'of the Tactical;Goals and,Strategies is the addition of a long-term supplemental water, source; which is,a very appropriate goal ih context of the General Plan's identification of vyater availability as asignificant constraint. However, this,Goal/Strategy appears to have a; diffe{ent perspective from,the followmg;excerptfom the' H6usmg Element ,. The Regional ,Housing Needs Allocation of 1,192 units would have the City reach build out during the next five years, orby 2008, ratherfhan overa twenty yearperiod as intended by the adopted 2001 General Plan.... A more recent accounting of the City's water resources and current rate of water consumption show that the City is utilizing approximately 94 % of its total water supply. Although the 2003 Water Conservation Plan for the City is expected to reduce the average annual per capita consumption, the current water supply is not able to accommodate the Regional Housing Needs Allocation (RHNA). Given a 6% available water supply, the City is only able to accommodate an additional 429 housing units based on current consumption of 190 gallons per day per capita. If the Water Conservation Plan is success/ul and consumption is reduced to 160 gallons per person per day, a total of 509 additional units could be built.... In addition, current funding sources are not sufficient to provide the water and other infrastructure improvements necessary to accommodate the number of housing units required. To pursue implementation of the programs provided in the Housing Element, the City will seek State financial assistance. In summary, the City has the land and densities available to accommodate the RHNA numbers, but not the available water supply. The City's rough quant~ed objective is therefore 509 dwelling units. My take on this is that the Housing Element says, "it's not feasible to obtain additional water, so we'll simply say that this is the maximum number of housing units that can be built and that's that." Now this new Goal/Strategy says, "let's go look for water!" I think that's great, and it's probably what the Housing Element should have said all along. Perhaps the Strategic Plan should include a provision somewhere to update the Housing Element upon securing additional water, to bring it into alignment with the new figures. 5. There is a Tactical Goal and Strategy that, "improvements identified in the Sewer and Water Master Plans shall be fully funded and constructed. In the Planning Commission, we have been hearing of a particular situation referred to as the "Bakeman Bottleneck." (1 believe it's a constrained location in the sewer system.) Hopefully this is identified in the Sewer Master Plan and assigned a high priority. Transportation 6. The last item listed as a Tactical Goal and Strategy indicates that "the signal at the Fair Oaks/Halcyon Road intersection shall be widened" (emphasis added). I assume this refers to widening one or more of the approaches to the intersection to improve traffic flow; perhaps the wording could be revised to clarify this. T~tnology 7. One of the Tactical Goals and Strategies recommends webcasting of City Council meetings. As I am employed by the County, I am very familiar with their implementation of this technology and have found it extremely valuable. The County uses the same technology for not only the Board, but also their Planning Commission and some other advisory bodies. I suggest this item be expanded to consider including the Arroyo Grande Planning Commission andlor other City advisory bodies, if feasible. Thank you for this opportunity to provide comments. I am enjoying my time on the Planning Commission so far, and am happy to be of service in this additional capacity. Please call me at _ _..._. or ) ff you have questions or need additional information about any of my comments here. - - -- Sincerely, iG~~ ~E~ ,`;, !;: ~, CITY C~i ;j~~;iOYG~i.':...:... Apri12, 2007 07 APR -5 PH 3= 55 Steve Adams,. City Manager City of Arroyo Grande 214 East Branch Street Arroyo Grande, CA 93421 Dear Steve: While I endorse your goals and strategies for the most part, I do have these questions: Why more car dealerships on Traffic Way? I thought the intention was to have them be a part of the Fredricks/Williams development with car dealerships along the freeway, just outside of town. Dealerships on Traffic Way fight with the Historic Village concept. I don't think we should degrade the historic village with more dealerships nearby. We have our tax increase in place and should be able to forego those revenues. Car dealerships bring the image DOWN. 2. I really disagree with providing financial assistance to first time home owners. Most of us struggled to buy our first home... why should certain people get ahand=out? I agree with aiding seniors and low income but not first time homeowners. I had to work myself up:to owning a home in a community like this one. It is a process most of us had to follow. 3. Some towns are primarily upscale bedroom communities (Palos Verdes, Malibu, etc.) and others are not. I see this town as primarily a bedroom community and don't believe we should begin enforcing low income housing too, aggressively because that is not the nature of a town like this one. We don't want to bring down existing home values do we? If the law makes us do it, I guess we will have to do as much as has been mandated. At the same time, I believe we should do our best to preserve the character of this city. 4. Housing for City Employees. I would prefer we pay our employees sufficiently so they can afford to buy a house rather than subsidize. 5. Don't minimize permit processing to the extent of violating the environment. No overriding consideration for CEQA violations. And continue to preserve AG as an Arbor City by stopping the destruction of Oak Trees for housing. Yes to maintaining the city's tree inventory! 6. Public art is nice but not always of universal appeal. Who is to say what is or is not beautiful or appropriate for the character of A.G. This could be a hornet's nest. Let the Arroyo Grande Historic Village be our public art. 7. We have got to solve the number one overriding problem: WATER! Yes, look at the alternatives and find a solution. 8. Don't understand what is wrong with street lighting citywide... perhaps replace lighting selectively? 9. Brisco Street... please tell us how soon. So many of us aze tired of the tremendous inconvenience and, yes, potential danger. 10. Environmental impacts on new development shall be mitigated. That sentence carries no weight and is much too abstract. Mttigated to protect, what? Trees, creeks, plant species, clean air, wildlife habitat? Any city can say it, but how specifically would those impacts be mitigated... how strongly will they be enforced and where is the oversight? In closing, I would say there are an awful lot of very important goals but how can we pay for them all? Activities need to be prioritized and brought to the residerns of Arroyo Grande for all of us to understand and approve as priorities with the costs alongside them. That way we would have a voice in what we get, when we get it and how much we are going to pay for it, step-by-step. Thanks for permitting another voice... Respectfully, l Robert Brownson Arroyo Grande, CA 93420 APR-10-2007 05:22 PM Bob Browasoa ARROYO GRANDE,' CA 93420 PHONE:_"; -_ _ ~__ ____ FAX: --- - Internet Address: FAX TRANSMITTAL TO: Stew Adams Cc: FROM: Bob Browneon DATE: 04/10/07 NIA4H&R OF PAGES (INCLUDING THIS COVBR PAGB1: (1) For you consideration in developing the 10-year strategic plan: P. 01 The City oP Arroyo Grande should remain ever alert to protecting our natural resources and maintaining clean air for our oanominity. Ne should work toward lowering gasoline omissions whenever and wherever possible, including City-owned vehicles and vehicles sold by automobile dealers licensed to do business in Arroyo Grande. This should also apply to our school buses and service vehicles. We should keep an eye on "building grswn"...using natural resources such hay balsa for insulation, low wattage light bulbs. While I am not an expert on any of this I do know we much be cognizant of the impact wa are having on our environment and work to protect it as much as w ran. A drought could be imminent, and water conservation is awn more critical. We may want to impose certain restrictions such ae designated yard watering days only on certain days of the weak per household. Disapprove any new residential ewiaming pools. Generous inoentiws for turning in old toilets for brand new low flow toilets. A lot of these issues can and should be brainstormed. Thanks for listening, Bob Brownson N / .~ 11.a. MEMORANDUM TO: CITY COUNCIL/ REDEVELOPMENT AGENCY BOARD OF DIRECTORS/ PUBLIC FINANCING AGENCY BOARD OF DIRECTORS / L FROM: STEVEN ADAMS, CITY MANAGERI EXECUTIVE DIRECTOR~(J~ SUBJECT: CONSIDERATION OF ISSUANCE OF REDEVELOPMENT AGENCY TAX ALLOCATION BONDS IN A PRINCIPAL AMOUNT NOT TO EXCEED $7,000,000 DATE: APRIL 24, 2007 RECOMMENDATION: It is recommended the City Council, RDA Board, and Public Financing Authority Board adopt Resolutions by the City, Redevelopment Agency, and the Public Financing Authority, respectively, as follows: 1) A Resolution of the City Council of the City of Arroyo Grande Approving the Issuance by the Arroyo Grande Redevelopment Agency of its Arroyo Grande Redevelopment Project Area, 2007 Tax Allocation Bonds and Making Certain Determinations Relating Thereto; 2) A Resolution of the Board of Directors of the Arroyo Grande Redevelopment Agency Authorizing the Issuance of 2007 Tax Allocation Bonds of Said Agency in a Principal Amount of Not to Exceed Seven Million Dollars ($7,000,000) to Finance a Portion of the Costs of a Redevelopment Project Known as the Arroyo Grande Redevelopment Project Area and Approving Certain Documents and Taking Certain Other Actions in Connection Therewith; and 3) A Resolution of the Arroyo Grande Public Financing Authority Authorizing the Execution and Delivery of a Purchase Contract By and Among the Arroyo Grande Redevelopment Agency, the Arroyo Grande Public Financing Authority, and E. J. De La Rosa & Co., Inc. FUNDING: The Redevelopment Agency (Agency) will issue bonds in the principal amount of $6,325,000. Approximately $811,200 will be paid for the cost of issuance, resulting in net proceeds to the Agency of approximately $5,513,800. DISCUSSION: At the October 10, 2006 and November 14, 2006 meetings, the City Council/Redevelopment Agency Board of Directors authorized staff to proceed with the issuance of a tax allocation bond by the Arroyo Grande Redevelopment Agency. The City Council/Redevelopment Agency Board of Directors approved contracts with Tierra West Advisors LLC ("Fiscal Consultant"), Jones Hall LLC CITY COUNCIL CONSIDERATION OF REDEVELOPMENT AGENCY BOND ISSUANCE APRIL 24, 2007 PAGE 2 ("Disclosure Counsel"), Harrell & Associates ("Financial Advisor"), and E.J. De La Rosa Inc. ("Underwriter") to issue the bonds. Redevelopment Agency Special Counsel Rutan & Tucker is acting as bond counsel for this issuance. Although the Resolution authorizes the issuance of up to $7 million in bonds in order to provide flexibility, projections of tax increment revenue for the Agency indicate that $6,325,000 would be the appropriate amount for the bonds. The bonds will be issued as 1 series, which will include both housing and non- housing funds. The issuance is also proposed to be exclusively taxable bonds. Generally, tax- exempt bonds can be issued only when the uses of the revenue will be strictly for public purposes. In the case of redevelopment, the majority of revenue is used to stimulate private development, which is not eligible for tax-exempt bonds. The bond team studied the option of issuing both tax-exempt and taxable bonds. While there were approximately $730,000 worth of planned expenditures that would have qualified for atax-exempt portion of the bonds, the bond team felt the interest savings did not justify the costs of the on-going administration of the tax- exempt portion. This structure has the added advantage of providing additional flexibility to the Agency on the projects the funds can be applied against, as well as the financing structures that can be used to invest the funds. For example, in funding potential housing projects, funds from atax-exempt issue generally must be made available as a grant, whereas funds from a taxable issue can be provided as loans. At the January 23, 2007 .meeting, the City Council/Redevelopment Agency Board authorized the City Manager/Executive Director to contact other taxing agencies to seek their agreement to subordinate their pass-through tax payments to funding that will be required for the new tax allocation bond issue. All of the taxing agencies that were contacted regarding the subordination of their interests to the lien of the bonds concurred with the Agency's proposal. The Agency will have a repayment agreement with the County that will provide for repayment of any payments that may become delinquent with the County plus interest. The bonds will likely be issued as:rated, insured bonds which will result in a lower interest rate than if the bonds were unrated and uninsured. The rating has not as yet been issued. The insurance will add approximately $136,000 to the cost of issuance, and the bond team will analyze the interest cost savings to assure that this additional investment will be justified. Current estimates are that debt service on the bonds will range from a low of approximately $305,000 (FY 2007-08) to a high of $460,000 (2010-11 ). Interest rates are estimated to be 5.26% per year for the bonds, which will be amortized over the first 15 years, and 5.83% for the bonds amortized over years 16 through 30. The Agency's redevelopment consultants estimate that over the initial 10 CITY COUNCIL CONSIDERATION OF REDEVELOPMENT AGENCY BOND ISSUANCE APRIL 24, 2007 PAGE 3 years the bonds are outstanding, the revenue available to the Agency and estimates of the costs for debt service and administration would be as follows: Fiscal Year Revenue available for Debt Service & Administration' Debt Service Agency Administration Surplus Deficit 2007-2008 959,843 302,658 452,225 204,961 2008-2009 1,078,223 372,927 474,836 230,460 2009-2010 1,162,860 372,401 498,578 291,882 2010-2011 1,215,774 459,508 523,506 232,760 2011-2012 1,248,280 459,117 549,682 239,481 2012-2013 1,281,435 458,462 577,166 245,807 2013-2014 1,315,254 457,545 606,024 251,685 2014-2015 1,349,749 456,364 636,325 257,060 2015-2016 1,384,934 459,789 668,142 257,003 2016-2017 1,420,822 457,820 701,549 261,454 ' Includes both housin and non-housin funds The estimated costs of issuance are as follows: Principal Amount $6,325,000 Cost of issuance: Debt service reserve 7.2694% $459,789 Consultants, including underwriter $186,538 Insurance 2.1480% $135,861 Trustee's fees (including counsel) $5,000 Printing $7,000 Rating Fee $7,000 Reimburse City staff costs (allowance) 10 000 Total cost of issuance: $811,188 Net Proceeds $5,513,813 The projected uses of the funds are as follows: Use of Funds Repay City loan $2,700,000 Underground utilities $100,000 Billboard removal $30,000 Faeh St. hotel public improvements $200,000 Streetscape improvements $500,000 Other potential projects $350,000 Low/Mod Housing Projects $1,633.813 Total use of funds 5,513,813 CITY COUNCIL CONSIDERATION OF REDEVELOPMENT AGENCY BOND ISSUANCE APRIL 24, 2007 PAGE 4 ALTERNATIVES: The following alternatives are provided for the Council's consideration: 1. The City Council, Redevelopment Agency and Public Financing Authority adopt resolutions by the City, Redevelopment Agency, and the Public Financing Authority, respectively for the issuance of Redevelopment Agency tax allocation bonds in a principal amount of up to $7,000,000 and to authorize the City Manager, Finance Director of the City and the other officers and members of staff having responsibility for the affairs of the City, Redevelopment Agency, and Public Financing Authority to execute such documents and certificates determined by Bond Counsel as necessary to assist the Redevelopment Agency in issuance of the Bonds; 2. Modify the bond amount and direct staff to make necessary modifications for bond issuance; 3. Request additional financial analysis prior to decision; 4. Do not approve staff's recommendation; 5. Provide direction to staff. Attachments: 1. Preliminary Official Statement (POS) and Continuing Disclosure Certificate (see Appendix E of POS) 2. Trust Indenture by and between Arroyo Grande Redevelopment Agency and Wells Fargo Bank, National Association Note: Attachments are on file at City Hall for public review. RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE, CALIFORNIA, APPROVING THE ISSUANCE BY THE ARROYO GRANDE REDEVELOPMENT AGENCY OF ITS ARROYO GRANDE REDEVELOPMENT PROJECT AREA, 2007 TAX ALLOCATION BONDS AND MAKING CERTAIN DETERMINATIONS RELATING THERETO WHEREAS, the Arroyo Grande Redevelopment Agency (the "Agency"), is a redevelopment agency duly created, established and authorized to transact business and exercise its powers, all under and pursuant to the Community Redevelopment Law (Part 1 of Division 24 (commencing with Section 33000) of the Health and Safety Code of the State of California) and the powers of the Agency include the power to issue bonds for any of its corporate purposes; and WHEREAS, a Redevelopment Plan known as the "Arroyo Grande Redevelopment Agency, Arroyo Grande Redevelopment Project Area" has been adopted and approved by Ordinance No. 487 C.S. of the City of Arroyo Grande (the "City"), which became effective on July 10, 1998 and- all requirements of law for and precedent to the adoption and approval of said Redevelopment Plan have been duly complied with; and WHEREAS, the Agency has approved in substantial form its Resolution entitled: RESOLUTION OF THE BOARD OF DIRECTORS OF THE ARROYO GRANDE REDEVELOPMENT AGENCY AUTHORIZING THE ISSUANCE OF 2007 TAX ALLO- CATION BONDS OF SAID AGENCY IN A PRINCIPAL AMOUNT OF NOT TO EXCEED SEVEN MILLION DOLLARS ($7,000,000) TO FINANCE A PORTION OF THE COSTS OF A REDEVELOPMENT PROJECT KNOWN AS THE ARROYO GRANDE REDEVELOPMENT PROJECT AREA AND APPROVING CERTAIN DOCUMENTS AND TAKING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH. WHEREAS, under and pursuant to the above Resolution, the Agency will authorize the issuance and sale of not to exceed $7,000,000 principal amount of its "Arroyo Grande Redevelopment Agency, Arroyo Grande Redevelopment Project Area, 2007 Tax Allocation Bonds" (the "Bonds"); NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Arroyo Grande, California, as follows: 1. ~aroval of Issuance of Bonds. The issuance of a principal amount not to exceed $7,000,00 of Bonds in order to aid in the financing of the Arroyo Grande Redevelopment Project Area and for other purposes related thereto, all of which RESOLUTION NO. Page 2 constitute a "redevelopment activity," as such term is defined in Health and Safety Code Section 33678, is hereby authorized and approved pursuant to Health and Safety Code Section 33640. 2. Authorization of Officers. The City Manager, the Assistant City Manager, and the Finance Director of the City and the other officers and members of staff having responsibility for the affairs of the Agency are hereby authorized to execute such documents and certificates determined by Bond Counsel as necessary to assist the Agency in the issuance of the Bonds. 3. Effective Date. This Resolution shall take effect upon adoption. On motion of Council Member ,seconded by Council Member and on the following roll call vote, to wit: AYES: NOES: ABSENT: the foregoing Resolution was passed and adopted this 24th day of April, 2007. RESOLUTION NO. Page 3 TONY FERRARA, MAYOR ATTEST: KELLY WETMORE, CITY CLERK APPROVED AS TO CONTENT: STEVEN ADAMS, CITY MANAGER APPROVED AS TO FORM: CITY ATTORNEY RESOLUTION NO. RDA A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ARROYO GRANDE REDEVELOPMENT AGENCY AUTHORIZING THE ISSUANCE OF 2007 TAX ALLOCATION BONDS OF SAID AGENCY IN A PRINCIPAL AMOUNT OF NOT TO EXCEED SEVEN MILLION DOLLARS ($7,000,000) TO FINANCE A PORTION OF THE COSTS OF A REDEVELOPMENT PROJECT KNOWN AS THE ARROYO GRANDE REDEVELOPMENT PROJECT AREA AND APPROVING CERTAIN DOCUMENTS AND TAKING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH WHEREAS, the Arroyo Grande Redevelopment Agency (the "Agency"), is a redevelopment agency (a public body, corporate and politic) duly created, established and authorized to transact business and exercise its powers, all under and pursuant to the Community Redevelopment Law (Part 1 of Division 24 (commencing with Section 33000) of the Health and Safety Code of the State of California) and the powers of the Agency include the power to issue bonds for any of its corporate purposes; and WHEREAS, the Redevelopment Plan for a redevelopment project known and designated as "Arroyo Grande Redevelopment Project Area" has been adopted and approved by Ordinance No.487.C.S. of the City of Arroyo Grande, which became effective on July 10, 1998, and all requirements of law for and precedent to the adoption and approval of the Redevelopment Plan have been duly complied with; and WHEREAS, in order to raise funds for the implementation of the Redevelopment Plan, the Agency deems it necessary at this time to issue the Bonds (as defined below) for such purpose; and WHEREAS, the corporate purposes of the Agency will be accomplished with significant public benefits by issuing at this time tax allocation bonds in a principal amount of not to exceed Seven Million Dollars ($7,000,000) pursuant to this Resolution to be designated "Arroyo Grande Redevelopment Agency, Arroyo Grande Redevelopment Project Area, 2007 Tax Allocation Bonds (the "Bonds"); and WHEREAS, the Agency is authorized to issue the Bonds pursuant to the Community Redevelopment Law of the State of California (being Part 1 of Division 24 of the Health and Safety Code of the State of California, as amended) (the "Law"); and WHEREAS, the Agency has received a proposal to purchase the Bonds and has determined that the proposal of E. J. De La Rosa & Co., Inc. (the "Underwriter") should be accepted; and WHEREAS, this Board of Directors desires to proceed to issue the Bonds, sell the Bonds to the Arroyo Grande Public Financing Authority (the "Authority") and then to the Underwriter. RESOLUTION NO. RDA Page 2 NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Arroyo Grande Redevelopment Agency as follows: 1. Each of the above recitals is true and correct and this Board so finds and determines. 2. The issuance of the Bonds in the principal amount of not to exceed Seven Million Dollars ($7,000,000) is hereby authorized. The Bonds shall mature on the dates, pay interest at the rates, shall be subject to redemption and shall be governed by the terms and conditions set forth in an Trust Indenture, dated as of April 1, 2007, (the "Indenture') to be prepared by Bond Counsel to the Agency and executed by the Chair or Executive Director and Secretary of the Agency (herein "Chair", "Executive Director", and "Secretary" respectively), which Indenture shall be substantially in the form on file with the City Clerk, with such additions thereto and changes therein as are recommended or approved by Bond Counsel to the Agency and the officers executing the same, with such approval to be conclusively evidenced by the execution and delivery of the Indenture. Capitalized terms used in this Resolution which are not defined herein have the meaning ascribed to them in the Indenture on file in the office of the City Clerk. The Chair, the Executive Director, and the Secretary, or their designees are hereby authorized and directed to execute and deliver the Indenture. 3. The Bonds shall be executed on behalf of the Agency by the manual or facsimile signature of the Chair or Executive Director and attested with the manual or facsimile signature of the Secretary. 4. The covenants set forth in the Indenture to be executed in accordance with Section 2 above are hereby approved, shall be deemed to be covenants of the Agency and shall be complied with by the Agency and its officers. The Indenture shall constitute a contract between the Agency and the Owners of the Bonds. 5. Wells Fargo Bank, National Association, Los Angeles, California, is hereby appointed to act as Trustee for the Bonds. The Executive Director of the Agency, or his written designee, is hereby authorized to enter into an agreement with the Trustee to provide such services to the Agency. 6. The Purchase Contract by and among the Agency, the Authority and the Underwriter on file with the Secretary offering to purchase the Bonds to bear interest as set forth in the Indenture is hereby approved and the Executive Director or his designee is authorized to execute and deliver the Purchase Contract in said form with such changes thereon as the officers executing the same may approve, such approval to be conclusively evidenced by the execution and delivery thereof, provided however, (i) the principal amount of the Bonds does not exceed $7,000,000, (ii) the Underwriter's discount exclusive of original issue discount does not exceed 1.05% of -the principal amount of the Bonds, and (iii) the net interest cost does not exceed 6.00%. RESOLUTION NO. RDA Page 3 7. The Chair or Executive Director is authorized to execute a final Official Statement in substantially the form of the preliminary Official Statement, and Continuing Disclosure Agreement relating thereto, which have been presented at this meeting and are hereby approved, with such additions thereto and changes therein as are recommended or approved by Bond Counsel to the Agency and the officer executing the same, with such approval to be conclusively evidenced by the execution and delivery of such documents. The Underwriter is hereby authorized to distribute the Preliminary Official Statement to prospective purchasers of the Bonds and to provide to the purchasers of the Bonds from the Underwriter copies of the final Official Statement. The Executive Director or his designee is hereby authorized to sign a certificate pursuant to Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 pertaining to the Preliminary Official Statement. 8. Each and every officer of the Agency is authorized to perform his or her services on behalf of the Agency. The Executive Director or his written designee, is authorized to incur such costs and to contract for all services necessary to effect the issuance of the Bonds. Such services shall include, but not be limited to, printing the Bonds, printing the Preliminary Official Statement and the Official Statement, obtaining legal services, fiscal agent services and any other services deemed appropriate for the issuance of the Bonds including, without limitation, the costs of Bond Insurance, if any, Reserve Fund Surety, if any, and Rating Agency Services (referred to in the Indenture as "Costs of Issuance")and the payment for said Costs of Issuance shall be approved by the Executive Director. The Executive Director or his written designee, is authorized to pay for such Costs of Issuance with Bond proceeds established pursuant to the Indenture without further approval of this Board of Directors. 9. All actions heretofore taken by officers and agents of the Agency with respect to the sale and issuance of the Bonds are hereby approved, confirmed and ratified, and the Chair or Executive Director or Secretary or the other officers of the Agency responsible for the fiscal affairs of the Agency are hereby authorized and directed to take any actions and execute and deliver any and all certificates, instruments, agreements and documents as are necessary to accomplish the issuance, sale and delivery of the Bonds in accordance with the provisions of this Resolution and the fulfillment of the purposes of the Bonds as described in the Indenture as determined by Bond Counsel. In the event that the Chair or Executive Director, or their designees is/are unavailable to sign any document authorized for execution herein, the Finance Director shall sign such document. Any document authorized herein to be signed by the Secretary may be signed by a duly appointed deputy secretary. RESOLUTION NO. RDA Page 4 On motion of Board Member ,seconded by Board Member and on the following roll call vote, to wit: AYES: NOES: ABSENT: the foregoing Resolution was passed and adopted this 24th day of April, 2007. RESOLUTION NO. RDA Page 5 TONY FERRARA, CHAIR ATTEST: KELLY WETMORE, AGENCY SECRETARY APPROVED AS TO CONTENT: STEVEN ADAMS, EXECUTIVE DIRECTOR APPROVED AS TO FORM: AGENCY COUNSEL RESOLUTION NO. PFA A RESOLUTION OF THE ARROYO GRANDE PUBLIC FINANCING AUTHORITY AUTHORIZING THE EXECUTION AND DELIVERY OF A PURCHASE CONTRACT BY AND AMONG THE ARROYO GRANDE REDEVELOPMENT AGENCY, THE ARROYO GRANDE PUBLIC FINANCING AUTHORITY, AND E. J. DE LA ROSA & CO., INC. WHEREAS, the City of Arroyo Grande (the "City") and the Arroyo Grande Redevelopment Agency (the "Agency") have entered into a Joint Exercise of Powers Agreement, dated as of January 1, 2007 (the "Agreement"),creating the Arroyo Grande Public Financing Authority (the "Authority"); and WHEREAS, pursuant to Article 4 of Chapter 5 of Division 7 of the Government Code of the State of California (the "Act") and the Agreement, the Authority is authorized to purchase bonds issued by the Agency for financing public capital improvements, working capital, liability and other insurance needs, or projects whenever there are significant public benefits as determined by the Agency; and WHEREAS, pursuant to the Act and the Agreement the Authority is further authorized to sell bonds so purchased to public or private purchasers by public or negotiated sale; and WHEREAS, the Authority desires to purchase not to exceed $7,000,000 aggregate principal amount of bonds of the Agency designated "Arroyo Grande Redevelopment Agency, Arroyo Grande Redevelopment Project Area, 2007 Tax Allocation Bonds' (the "Bonds") solely from the proceeds received from the Authority's concurrent sale of such Bonds to E. J. De La Rosa & Co., Inc. (the "Underwriter"); and WHEREAS, in accordance therewith, the Authority now desires to authorize the execution of a bond purchase contract by and among the Authority, the Agency and the Underwriter (the "Purchase Contract"); and WHEREAS, the Agency has determined that "significant public benefits" as defined in Section 6586 of the Act will be derived by the Agency in undertaking the issuance of the Bonds and their sale to the Authority and resale to the Underwriter, in furtherance of the corporate purposes of the Agency; NOW, THEREFORE, BE IT RESOLVED by the Governing Board of the Arroyo Grande Public Financing Authority as follows: 1. The foregoing recitals are true and correct and this Authority so finds and determines. 2. The proposed form of Purchase Contract by and among the Agency, the Authority and the Underwriter, on file with the Secretary of the Governing Board and incorporated into this Resolution by reference is hereby approved, provided however, (i) RESOLUTION NO. Page 2 the principal amount of the Bonds does not exceed $7,000,000; (ii) the Underwriter's discount exclusive of original issue discount does not exceed 1.05% of the principal amount of the Bonds; and (iii) the net interest cost does not exceed 6.00%. The Chairman or Vice Chairman are hereby authorized and directed, for and in the name and on behalf of the Authority, to purchase the Bonds from the Agency and to accept the offer of the Underwriter to purchase the Bonds from the Authority, subject to the terms and conditions of the Purchase Contract, and to execute and deliver the Purchase Contract in substantially said form, with such changes or additions thereto that may hereafter become necessary in the interests of the Authority and which are reviewed and approved by counsel to the Authority, any such additions or changes to be conclusively evidenced by the execution and delivery of said agreements. 3. The officers of the Authority and members of the Governing Board are hereby authorized to take such other actions and execute such documents and certificates as are necessary or appropriate for the accomplishment of the purposes of this resolution. 4. This resolution shall take effect from and after its adoption. On motion of Board Member ,seconded by Board Member and on the following roll call vote, to wit: AYES: NOES: ABSENT: the foregoing Resolution was passed and adopted this 24th day of April, 2007. RESOLUTION NO. Page 3 TONY FERRARA, CHAIR ATTEST: KELLY WETMORE, AGENCY SECRETARY APPROVED AS TO CONTENT: STEVEN ADAMS, EXECUTIVE DIRECTOR APPROVED AS TO FORM: AGENCY COUNSEL ~' =' ~ t}tzs.zr~t.yt,l~,~s'RII,~c.zEllt.t ~ ATTACHMENT 1 NEW ISSUE -BOOK-ENTRY-ONLY RATINGS _ S&P: a ,~ Fitch: ~~ S&P: _ (underlying) i; :1 ,., °,' ~ Fitch: _ (underlying) `' m.. ~: See "CONCLUDING INFORMATION -Ratings on the Bands" herein) Tr. -`-' ~ /n the opinion of Rutate & Tucker, LLP, Costa Mesa, California, Bond Counsel, the interest on the Bonds is exempt from ,State Ql~ w ~ 'w California personal income taxes. See "LEGAL MATTERS -Tar Matters" herein. Jnterest on the Bonds is includab/e in gross incwne v ~°• ~ for federal tar purposes. 6d r t» a+ :a SAN LUIS OBISPO COUNTY STATE OF CALIFORNIA :'a .. ~~ ARROYO GRANDE REDEVELOPMENT AGENCY >: d = ' = ARROYO GRANDE REDEVELOPMENT PROJECT AREA :: °~ 2007 TAXABLE TAX ALLOCATION BONDS ~. Dated: Date of Delivery Due: September 1 as Shown on the Inside Front Cover u The cover page contains certain information for quick reference only. It is not a summary of [he issue. Potential investors must ww. a read the entire Official Statement to obtain information essential to the making of an informed investment decision. See sa w -:~ "BONDHOLDERS' RISKS" herein for a discussion of special risk factors [hat should be considered in evaluating the investment d ~ s. ~, quality of the Bonds. e~ `°_ Proceeds from the sale of the Arroyo Grande Redevelopment Agency (the "Agency"), Arroyo Grande Redevelopment Project Area 2007 Taxable Tax Allocation Bonds (the "Bonds") will be used to (i) finance redevelopment and low and moderate income housing " activities of [he Agency, (ii) capitalize a portion of the interest on the Bonds, (iii) satisfy the reserve requirement for the Bonds, and (iv) •~cj ~;= provide for the costs of issuing the Bonds. a; a ~= The Bonds will be issued under an Indenture of Trust, dated as of April I, 2007 (the "Indenture"), by and between the Agency and ., Wells Fargo Bank, National Association as Trustee (the "Trustee"). The Bonds are special obligations of the Agency and are payable '~ r? solely from and secured by a pledge of certain tax increment revenues of the Redevelopment Project and a pledge of amounts in certain ~"' funds and accounts established under the Indenture, as further discussed herein. - '~~ Interest on the Bonds is payable on September I, 2007, and semiannually thereafter on March 1 and September 1 of each year until maturity or earlier sinking account payment or optional redemption (see "THE BONDS -General Provisions" and "THE BONDS - ~;; ~ Redemption" herein). _ r 4'" The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under a municipal bond insurance policy m ~ ., to be issued concurrently with the delivery of the Bonds by .See "SOURCES OF PAYMENT FOR THE BONDS -Bond ;~ .~ Insurance." W [LOGO] °:W ~, ;~ +' The Bonds are being offered when, as and if issued, subject to the approval as to their legality by Rutan & Tucker, LLP, Costa Mesa, ° • - California, Bond Counsel. Certain legal matters will be passed on for the Agency by Rutan & Tucker, LLP as Agency General Counsel v , ®;~ ~,,, and by Jones Hall, A Professional Law Corporation, San Francisco, California, as Disclosure Counsel. The Bonds are being issued for ?f. W sale to the Arroyo Grande Public Financing Authority, which is concurrently selling the Bonds to the Underwriter. It is anticipated that '-,, the Bonds will be available for delivery through the facilities of The Depository Trust Company on or about May 24, 2007 (see s "APPENDIXG-BOOK-GNTRY-ONLY SYSTEM"herein). '"~~- -" The date of the Official Statement is , 2007 . i= '" ~. ~ E. J. DE LA ROSA & CO., INC. .:. '% * Preliminary, subject to change. ~, ~ . $6,325,000* ARROYO GRANDE REDEVELOPMENT AGENCY ARROYO GRANDE REDEVELOPMENT PROJECT AREA 2007 TAXABLE TAX ALLOCATION BONDS MATURITY SCHEDULE (Base CUSIP®t ) Maturity Date September 1 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Principal Interest Reoffering Amount Rate Yield CUSIP®t $ % Term Bond maturing September 1, , Yield _% CUSIP®t $ _% Term Bond maturing September I, _, Yield % CUSIP®t * Preliminary, subject to change. j' CUSIP®A registered trademark of the American Bankers Association. Copyright ©1999-2007 Standard & Poor's, a Division of The McGraw-Hill Companies, Inc. CUSIP~u data herein is provided by Standard & Poor's CUSIP~a Service Bureau. This data in not intended to create a database and does not serve in any way as a substitute for the CUSIP6U Service Bureau. CUSIP® numbers are provided for convenience of reference only. Neither the Redevelopment Agency nor the Underwriter takes any responsibility for the accuracy of such numbers. GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT Use of Official Statement This Official Statement is submitted in connection with the offer and sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. This Officia] Statement is not to be construed as a contract with the purchasers of the Bonds. Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure by the Agency in any press release and in any oral statement made with the approval of an authorized officer of the Agency or any other entity described or referenced herein, the words or phrases "will likely result," "aze expected to," "will continue," "is anticipated," "estimate," "project," "forecast," "expect," "intend" and similar expressions identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material. Limit of Offering. No dealer, broker, salesperson or other person has been authorized by the Agency to give any information or to make any representations in connection with the offer or sale of the Bonds other than those contained herein and if given or made, such other information or representation must not be relied upon as having been authorized by the Agency, the Financial Advisor or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. Involvement of Underwriter. The Underwriter has submitted the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. Ir:formation Subject to Change. The information and expressions of opinions herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Agency or any other entity described or referenced herein since the date hereof. All summaries of the documents referred to in this Official Statement are made subject to the provisions of such documents, respectively, and do not purport to be complete statements of any or all of such provisions. Stabilization of Prices. In connection with this offering, the Underwriter may overallot or effect transactions which stabilize or maintain the market price of the Bonds at a level above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time. The Underwriter may offer and sell the Bonds to certain dealers and others at prices lower than the public offering prices set forth on the inside front cover page hereof and said public offering prices may be changed from time to time by the Underwriter. THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. ARROYO GRANDE REDEVELOPMENT AGENCY ARROYO GRANDE, CALIFORNIA CITY COUNCILAND AGENCY GOVERNING BOARD Tony M. Ferrara, Mayor and Agency Chair Ed Amold, Mayor Pro Tem and Agency ice Chair Joe Costello, Council Member and Agency Board Member Jim Guthrie, Council Member and Agency Board Member Chuck Fellows, Council Member and Agency Board Member CITY AND AGENCY STAFF Steven Adams, City Manager and Agency Executive Director Angela Kraetsch, Director of Financial Services Rob Strong, Cormnunity Development Director Don Spagnolo, Director of Public Works/City Engineer Kelly Wetmore, Director ofAdminisb~ative Services/City Clerk/Agency Secretary PROFESSIONAL SERVICES Bond Counsel Rutan & Tucker, LLP Costa Mesa, California Disclosure Counsel Jones Hall, A Professional Law Corporation San Francisco, California Financial Advisor Harrel] & Company Advisors, LLC Orange, California Fiscal Consultant Tierra West Advisors, LLC Pasadena, Califomia Trustee Wells Fargo Bank, National Association Los Angeles, Califomia Underwriter E.J. De La Rosa & Co., Inc. Los Angeles, California TABLE OF CONTENTS INTRODUCTION The Agency ......:..................................................... ....1 The City ................................................................. ....1 Security and Sources of Repayment ...................... ....1 Purpose .................................................................. ....2 Tax Matters ............................................................ ....2 Professional Services ............................................. ....2 Offering of the Bonds ............................................ ....3 Information Concerning this Official Statement.... ....3 THE BONDS ...............................................................4 General Provisions ......................................... ............4 Book-Entry-Only System .............................. ............5 Redemption .................................................... ............5 Scheduled Debt Service on the Bonds ........... ............7 ESTIMATED USE OF FUNDS .................................8 Tax Increment Revenues .........................................22 Tax Sharing Statutes ................................................25 Outstanding Indebtedness of the Redevelopment Project ................................................................... 26 Projected Tax Revenues and Debt Service Coverage ............................................................... 26 BONDHOLDERS' RISKS .......................................28 Factors Which May Affect Tax Revenues ...............28 State of California Fiscal Issues ..............................30 Secondary Market ....................................................32 LEGAL MATTERS .................................................. 32 Enforceability of Remedies ..................................... 32 Approval of Legal Proceedings ............................... 32 Tax Matters .............................................................. 32 Absence of Litigation .............................................. 34 SOURCES OF PAYMENT FOR THE BONDS.......9 Tax Allocation Financing ........................ ...................9 Tax Revenues .......................................... ...................9 Pledge of Tax Revenues .......................... ...................9 Reserve Account ..................................... .................10 Capitalized Interest ................................. .................10 Issuance of Additional Bonds ................. .................11 Bond Insurance ....................................... .................12 CONCLUDING INFORMATION ..........................34 Ratings on the Bonds ..................... ..........................34 The Financial Advisor ................... .......................... 34 Continuing Disclosure ................... ..........................35 Underwriting ................................. .......................... 35 Additional Information .................. .......................... 3 5 References ..................................... ..........................35 Execution ....................................... .......................... 3 5 THE AGENCY ..........................................................13 APPENDIX A- SUMMARY OF THE INDENTURE Government Organization ...........................:............13 Agency Powers ........................................................13 Capital Projects ........................................................14 Redevelopment Plan ................................................14 Plan Limitations .......................................................14 Low and Moderate Income Housing ........................15 'IHE REDEVELOPMENT PROJECT ...................15 Description of the Redevelopment Project ....... .......15 Assessed Valuations .......................................... .......18 Major Taxpayers ............................................... .......19 Assessment Appeals .......................................... .......19 Tax Collections ................................................. .......19 FINANCIAL INFORMATION Agency Budgetary Process and Administration.......20 Agency Accounting Records and Financial Statements .............................................................20 APPENDIX B -FISCAL CONSULTANT'S REPORT APPENDIX C - CITY OF ARROYO GRANDE INFORMATION STATEMENT APPENDIX D -AGENCYAUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDING JUNE 30, 2006 APPENDIX E -FORM OF CONTINUING DISCLOSURE CERTIFICATE APPENDIX F -FORM OF BOND COUNSEL OPINION APPENDIX G -BOOK-ENTRY-ONLY SYSTEM APPENDIX H -SPECIMEN MUNICIPAL BOND INSURANCE POLICY VICINITY MAP OFFICIAL STATEMENT $6,325,000* ARROYO GRANDE REDEVELOPMENT AGENCY ARROYO GRANDE REDEVELOPMENT PROJECT AREA 2007 TAXABLE TAX ALLOCATION BONDS This Official Statement which includes the cover page and appendices (the "Official Statement") is provided to furnish certain information concerning the sale of the Arroyo Grande Redevelopment Agency Arroyo Grande Redevelopment Project Area 2007 Taxable Tax Allocation Bonds (the "Bonds"), in the aggregate principal amount of $6,325,000*. INTRODUCTION Thir Introduction contains only a brief description of this issue and does not purport to be complete. Tlae Innoduction is szabject in all respects to more complete information in the entire Oj~cial Staternerat and the offering of tl¢e Bonds to potential investors is made only by means of the entire Off cial Statement and the docmnents summarized herein. Potential investors must read tl:e entire Official Statement to obtain information essential to the making ofan informed investment decision. The Agency The Agency is a public body, corporate and politic, existing under and by virhre of the Community Redevelopment Law of the State, constituting Part 1 of Division 24 (commencing with Section 33000) of the Health and Safety Code of the State (the "Redevelopment Law"). The Agency was activated by the City Council of the City of Arroyo Grande in 1996 and is governed by afive-member board consisting of the members of the City Council. The City Manager acts as the Agency's Executive Director. See "THE AGENCY" herein. The City The City of Arroyo Grande was incorporated in 191 L It has a general law form of government (see "THE AGENCY -Government Organization" herein). It is located on the central coast of California, midway between the San Francisco Bay area and Los Angeles (see "APPENDIX C -CITY OF ARROYO GRANDE INFORMATION STATEMENT" herein). Security and Sources of Repayment The Bonds. The Bonds are issued and secured under an Indenture of Trust, dated as of April 1, 2007 (the "Indenture"), by and between the Agency and Wells Fargo Bank, National Association, as trustee (the "Trustee") (see "APPENDIX A -SUMMARY OF THE INDENTURE" herein). * R~eliminary, subject to change. The Agency has pledged to the repayment of the Bonds (and has secured the Bonds by a lien on) Tax Revenues, as defined herein, of the Agency's Arroyo Grande Redevelopment Project Area (the "Redevelopment Project"). Tax Revenues consist of tax increment revenues allocated to the Agency with respect to the Redevelopment Project, defined below, pursuant to Section 33670 of the Redevelopment Law ("Tax Increment Revenues,") including that portion of Tax Increment Revenues otherwise required by Section 33334.3 of the Redevelopment Law to be deposited into the Low and Moderate Income Housing Fund, but only to the extent necessary to repay that portion of the Bonds and any Additional Bonds (including applicable reserves and financing costs) attributed to the portion of the proceeds thereof (if any) deposited in the Low and Moderate Income Housing Fund for use pursuant to Section 33334.2 of the Redevelopment Law to increase, improve or preserve the supply of low and moderate income housing within or of benefit to the Redevelopment Project. Tax Revenues exclude: (i) that portion of such Tax Increment Revenues required to be paid under Statutory Tax Sharing, unless the payment of such amounts has been subordinated to the payment of Debt Service on the Bonds and in the case of Additional Bonds, subordinated to the payment of Debt Service on any Additional Bonds, (ii) amounts payable pursuant to Section 33676(b)(i) of the Redevelopment Law and (iii) al] other amounts of Tax Increment Revenues required to be deposited into the Low and Moderate Income Housing Fund pursuant to.Section 33334.3 of the Redevelopment Law. See "THE AGENCY Low and Moderate Income Housing," "FINANCIAL INFORMATION -Tax Increment Revenues" and "Outstanding Indebtedness of the Redevelopment Project," and "BONDHOLDERS' RISKS" herein. The Redevelopment Project. The Redevelopment Plan for the Redevelopment Project Area was adopted on June 10, 1997. The Redevelopment Project is an area containing approximately 510 acres and primarily encompasses commercial and residential development along the major circulation corridors within the City (see "THE REDEVELOPMENT PROJECT" herein). The Bonds are special obligations of the Agency. The Bonds do not constitute a debt or liability of the City of Arroyo Grande, the State of California or of any political subdivision thereof, other than the Agency. The Agency shall only be obligated to pay the principal of the Bonds, or the interest thereon, from the funds described herein, and neither the faith and credit nor the taxing power of the City of Arroyo Grande, the State of California or any of its political subdivisions is pledged to the payment of the principal of or the interest on the Bonds. The Agency has no taxing power. Purpose The Bonds are being issued to (i) finance redevelopment and low and moderate income housing activities of the Agency, (ii) capitalize a portion of the interest on the Bonds, (iii) satisfy the reserve requirement for the Bonds, and (iv) provide for the costs of issuing the Bonds. See "ESTIMATED USE OF FUNDS" herein. Tax Matters In the opinion of Rutan & Tucker, LLP, Costa Mesa, California ("Bond Counsel"), the interest on the Bonds is exempt from State of California personal income tax. See "LEGAL MATTERS -Tax Matters" herein. It is not intended by the Agency that interest on the Bonds be excluded from gross income for federal income tax purposes. Professional Services The legal proceedings relating to the issuance of the Bonds are subject to the approving opinion of Rutan & Tucker, LLP, Costa Mesa, Califomia, Bond Counsel. Certain legal matters will be passed on for the Agency by Rutan & Tucker, LLP, Agency General Counsel. Jones Hall, A Professional Law Corporation, San Francisco, California will pass on certain matters for the Agency as Disclosure Counsel. Wells Fargo Bank, National Association serves as trustee (the "Trustee") under the Indenture. The Trustee will act on behalf of the Bondholders for the purpose of receiving all moneys required to be paid to the Trustee, to allocate, use and apply the same, to hold, receive and disburse the Tax Revenues and other funds held under the Indenture, and otherwise to hold all the offices and perform all the functions and duties provided in the Indenture to be held and performed by the Trustee. Harrel] & Company Advisors, LLC, Orange, California, (the "Financial Advisor"), advised the Agency as to the financial structure and certain other financial matters relating to the Bonds and assisted the Agency with the preparation of this Official Statement. Fees payable to Bond Counsel, Disclosure Counsel and the Financial Advisor are contingent upon the sale and delivery of the Bands. Tierra West Advisors, LLC, Pasadena, Califomia, (the "Fiscal Consultant") prepared the "Fiscal Consultant's Report for the Issuance of Tax Allocation Bonds" attached here as "APPENDIX B." The Agency's financial statements for the fiscal year ended June 30, 2006, attached hereto as "APPENDIX D" have been audited by Moss, Levy & Hartzheim L.L.P., Certified Public Accountants, Santa Maria, Califomia. The Agency's audited financial statements are public documents and are included within this Official Statement without the prior approval of the auditor. The auditor has not performed any post-audit of the financial condition of the Agency. Offering of the Bonds Authority for Issuance. The Bonds are to be issued and secured pursuant to the Indenture, as authorized by Resolution No. of the Agency adopted on April 24, 2007 and the Redevelopment Law. Offering and Delivery of the Bonds. The Bonds are offered, when, as and if issued, subject to the approval as to their legality by Rutan & Tucker, LLP, Costa Mesa, California, as Bond Counsel. The Bonds are being issued for sale to the Arroyo Grande Public Financing Authority, which will concurrently sell the Bonds to the Underwriter pursuant to a Bond Purchase Contract. It is anticipated that the Bonds, in book-entry form, will be available for delivery through the facilities of The Depository Trust Company on or about May 24, 2007. Information Concerning this Official Statement This Official Statement speaks only as of its date. The information set forth herein has been obtained by the Agency with the assistance of the Financial Advisor, the Fiscal Consultant, Disclosure Counsel and the Underwriter from sources which are believed to be reliable and such information is believed to be accurate and complete, but such information is not guaranteed as to accuracy or completeness, nor has it been independently verified and is not to be construed as a representation by the Financial Advisor, the Fiscal Consultant, the Underwriter or the Disclosure Counsel. Statements contained in this Official Statement which involve estimates, forecasts of matters of opinion, whether or not expressly so described herein, are intended as such and are not to be construed as representations of fact. Preliminary Official Statement Deemed Final. The information set forth herein is in a form deemed final, as of its date, by the Agency for the purpose of Rule 15c2-12 under the Securities Exchange Act of 1934, as amended (except for the omission of certain information permitted to be omitted under the Rule). The information herein is subject to revision, amendment and completion in a Final Official Statement. The information and expressions of opinion herein are subject to change without notice and the delivery of this Official Statement shall not, under any circumstances, create any implication that there has been no change in the information or opinions set forth herein or in the affairs of the Agency since the date hereof. Availability of Legal Documents. The summaries and references contained herein with respect to the Indenture, the Bonds and other statutes or documents do not purport to be comprehensive or definitive and are qualified by reference to each such document or statute, and references to the Bonds are qualified in their entirety by reference to the form thereof included in the Indenture. Copies of the documents described herein are available for inspection during the period of initial offering of the Bonds at the offices of the Financial Advisor, Harrell & Company Advisors, LLC, 333 City Boulevard West, Suite 1430, Orange, California 92868, telephone (714) 939-1464. Copies of these documents may be obtained after delivery of the Bonds from the Agency at 214 E. Branch Street, Arroyo Grande, California 93420, telephone (805) 473-5404. THE BONDS General Provisions Repayment of the Bonds. Interest on the Bonds is payable at the rates per annum set forth on the inside front cover page hereof. Interest on the Bonds will be computed on the basis of a year consisting of 360 days and twelve 30-day months. Interest on the Bonds shall be payable commencing September 1, 2007 and each March 1 and September 1 (each an "Interest Payment Date,") next preceding the date of registration and authentication thereof unless (i) a Bond is registered and authenticated as of an Interest Payment Date, in which event it shall bear interest from such date, or (ii) a Bond is registered and authenticated prior to an Interest Payment Date and after the close of business on the 15"' day of the month preceding such Interest Payment Date (each, a "Record Date"), in which event it shall bear interest from such Interest Payment Date, or (iii) a Bond is.authenticated on or before the first Record Date, in which event interest thereon shall be payable from the Closing Date; provided however, that if at the time of authentication of any Bond, interest on such Bond is in default, such Bond shall bear interest from the Interest Payment Date to which interest has previously been paid, or made available for payment. Interest shall be paid on each Interest Payment Date to the persons in whose names the ownership of the Bonds appears on the Registration Books at the close of business on the immediately preceding Record Date, or by wire transfer in immediately available funds to any such Owner of $1,000,000 or more in aggregate principal amount of Bonds upon written instructions of such Owner filed with the Trustee for that purpose as of the close of business on the immediately preceding Record Date. Principal of the Bonds is payable upon presentment at the principal corporate trust office of the Trustee in , or such other place designated by the Trustee. Transfer or Exchange of Bonds. Any Bond may, in accordance with its terms, be transferred or exchanged, pursuant to the provisions of the Indenture, upon surrender of such Bond for cancellation at the principal corporate trust office or agency of the Trustee. Whenever any Bond or Bonds shall be surrendered for transfer or exchange, the Trustee shall authenticate and deliver a new Bond or Bonds for a like aggregate principal amount and of like maturity. The Trustee may require the Bondholder requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer or exchange. Transfer or exchange of any Bond shall not be permitted by the Trustee during the period established by the Trustee for selection of Bonds for redemption or if such Bond has been selected for redemption. The foregoing provisions regarding the transfer and exchange of the Bonds apply only if the book-entry only system is discontinued. So long as the Bonds are in the book-entry system of DTC as described below, the rules of DTC will apply for the transfer and exchange of Bonds. Book-Entry-Only System The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. Interest on and principal of the Bonds will be payable when due by wire of the Trustee to DTC which will in tum remit such interest and principal to DTC Participants (as defined herein), which will in turn remit such interest and principal to Beneficial Owners (as defined herein) of the Bonds (see "APPENDIX G -BOOK-ENTRY-ONLY SYSTEM" herein). As long as DTC is the registered owner of the Bonds and DTC's book-entry method is used for the Bonds, the Trustee will send any notices to bondholders only to DTC. Discontinuance of Book-Entry System. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the Agency or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, Bonds are required to be printed and delivered as described in the Indenture. The Agency may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, the Bonds will be printed and delivered as described in the Indenture. Redemption Optional Redemption. The Bonds maturing on or before September 1, 2017 are not subject to optional redemption prior to their respective maturity dates. The Bonds maturing on or after September 1, 2018 are subject to redemption in whole, or in part among such maturities as shall be determined by the Agency, and in any case by lot within a maturity, at the option of the Agency, on any date on or after September 1, 2017, at the option of the Agency from any available source of funds, at a redemption price equal to the principal amount of the Bonds to be redeemed, together with accrued interest to the date of redemption, without premium. Mandatory Sinking Account Redemption of Bonds. The Bonds maturing on September 1, , and September 1, are subject to mandatory sinking account redemption, in whole or in part, by lot, on September 1, in each year commencing September 1, _ with respect to the Bonds maturing September 1, ,and commencing September 1, with respect to the Bonds maturing September 1, from Sinking Account Payments at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, in the aggregate principal amounts as set forth in the following schedules, or in lieu of redemption thereof, the Bonds may be purchased by the Agency at any time and tendered to the Trustee pursuant to the provisions of the Indenture; provided, however, that if'some but not all of the Bonds have been redeemed pursuant to the optional redemption provisions described herein, the total amount of all future Sinking Account payments attributable to such Bonds will be reduced by the aggregate principal amount of such Bonds so redeemed, to be allocated among such Sinking Account Payments on a pro rata basis in integral multiples of $5,000 as determined by the Agency (written notice of which determination shall be given by the Agency to the Trustee at least 60 days prior to the redemption date). SINHING PAYMENT SCHEDULE FOR TERM BOND MATURING SEPTEMBER 1, Redemption Date Sentember 1 Principal Amount SINHING PAYMENT SCHEDULE FOR TERM BOND MATURING SEPTEMBER I, . Redemption Date Seutember 1 Princinal Amount Notice of Redemption. The Agency shall cause the Trustee to give notice of any redemption, at the Agency's expense, by first class mail, notice at least 30 but not more than 75 days prior to the date fixed for redemption to the respective Owners of any Bonds designated for redemption at their respective addresses appearing on the Registration Books, provided, however, that such mailing shall not be a condition precedent to such redemption and failure to receive any such notice so mailed shall not affect the validity of the proceedings for the redemption of such Bonds or the cessation of the interest accrued on the redemption date. Rescission. The Agency shall have the right to rescind any optional redemption by written notice to the Trustee on or prior to the dated fixed for redemption. Any notice of optional redemption shall be cancelled and annulled if for any reason funds will not or are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation shall not constitute an Event of Default under the Indenture. The Agency and the Trustee shall have no liability to the Owners or any other party related to or arising from such rescission of redemption. The Trustee shall mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent. Effect of Redemption. From and after the date fixed for redemption, if notice of redemption shall have been duly given and funds available for the payment of the principal of and interest (and premium, if any) on the Bonds so called for redemption shall have been duly provided, such Bonds so called shall cease to be entitled to any benefit under the Indenture other than the right to receive payment of the redemption price, and no interest shall accrue thereon from and after the redemption date specified in such notice. Partial Redemption. In the event only a portion of any Bond is called for redemption, then upon surrender of such Bond, the Agency shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Agency, a new Bond or Bonds of the same series and maturity, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond to be redeemed. Scheduled Debt Service on the Bonds The following is the scheduled annual Debt Service on the Bonds. Bond Year Ending September 1 Principal Interest 2007 2008 2009 2010 2011 20]2 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 Total Annual Debt Service 7 ESTIMATED USE OF FUNDS The Trustee will receive the proceeds from the sale of the Bonds (representing the par amount of the Bonds, less an original issue discount of $ less an Underwriter's discount of $_~ and will apply them as shown below. Redevelopment Fund Housing Fund Reserve Account Capitalized Interest Subaccount Costs of Issuance Fund °~ Total Uses of Funds ~~~ Expenses include fees and expenses of Bond Counsel, the Financial Advisor, Disclosure Counsel and the Trustee, costs of printing the Official Statement, bond insurance and surety bond premiums with respect to the Bonds and other costs of issuance of the Bonds. Redevelopment Fund. The Agency anticipates that it will use the proceeds of the Bonds deposited in the Redevelopment Fund to repay City advances, underground utilities, complete streetscape improvements, remove billboards and construct other public improvements. Housing Fund. The Agency will use the proceeds of the Bonds deposited in the Housing Fund to assist low-and-moderate income housing projects to be developed within and outside the boundaries of the Redevelopment Project. Assistance may be provided to the People's Self Help Housing and Habitat for Humanity organizations, or similar groups that construct or operate low-income housing projects and programs. Deposit to the Capitalized Interest Account. A portion of the proceeds of the Bonds will be deposited into the Capitalized Interest Account to be held by the Trustee. The amount deposited will be used to pay a portion of the interest on the Bonds on the March I, 2008 Interest Payment Date. SOURCES OF PAYMENT FOR THE BONDS Tax Allocation Financing The Redevelopment Law and the California Constitution provide a method for financing and refinancing redevelopment projects based upon an allocation of taxes collected within a redevelopment project area. First, the assessed valuation of the taxable property in a project area, as last equalized prior to adoption of the redevelopment plan, is established and becomes the base roll. Thereafter, except for any period during which the assessed valuation drops below the base year level, the taxing agencies, on behalf of which taxes are levied on property within the project area, will receive the taxes produced by the levy of the then current tax rate upon the base roll. Taxes collected upon any increase in the assessed valuation of the taxable property in a project area over the levy upon the base roll may be pledged by a redevelopment agency to the repayment of any indebtedness incurred in financing the redevelopment project. Redevelopment agencies themselves have no authority to levy taxes on property and must look specifically to the allocation of taxes as indicated above. Tax Revenues As provided in the Redevelopment Plan, and pursuant to Article 6 of Chapter 6 of the Redevelopment Law, and Section 16 of Article XVI of the Constitution of the State, taxes levied upon taxable property in the Redevelopment Project each year by or for the benefit of the State, for cities, counties, districts or other public corporations (collectively, the "Taxing Agencies") for fiscal years beginning after the effective date of Redevelopment Plan, will be divided as follows: To Taxing_A eg ncies: The portion of the taxes which would be produced by the rate upon which the tax is levied each year by or for each of said Taxing Agencies upon the total sum of the assessed value of the taxable property in the project area as shown upon the assessment roll used in connection with the taxation of such property by such Taxing Agency last equalized prior to the establishment of the project area will be allocated to, and when collected will be paid into, the funds of the respective Taxing Agencies as taxes by or for said Taxing Agencies; and To the Agency: The portion of such levied taxes each year in excess of such amount will be allocated to, and when collected, will be paid into a special fund of the Agency to the extent necessary to pay indebtedness of the Agency. The Agency has no power to levy and collect property taxes, and any property tax limitation, legislative measure, voter initiative or provisions of additional sources of income to Taxing Agencies having the effect of reducing the property tax rate could reduce the amount of Tax Revenues that would otherwise be available to pay the Agency's obligations under the Indenture and thus reduce the amount of Tax Revenues available to pay the principal of, premium (if any) and interest on the Bonds. Likewise, broadened property tax exemptions could have a similar effect. See "BONDHOLDERS' RISKS" and "FINANCIAL INFORMATION -Tax Increment Revenues" herein. Pledge of Tax Revenues The Tax Revenues are pledged to the payment of principal of and interest on the Bonds pursuant to the Indenture until the Bonds and any Additional Bonds have been paid, or until moneys have been set-aside irrevocably for that purpose. The Trustee will covenant to exercise such rights and remedies as may be necessary to enforce the payment of the Tax Revenues when due under the Indenture and otherwise to protect the interests of the Bondholders in the event of default by the Agency. The Bonds are limited obligations of the Agency. The Bonds do not constitute a debt or liability of the City of Arroyo Grande, the State of California or of any political subdivision thereof, other than the Agency. The Agency shall only be obligated to pay the principal of the Bonds, or the interest thereon, from the funds described herein, and neither the faith and credit nor the taxing power of the City of Arroyo Grande, the State of California or any of its political subdivisions is pledged to the payment of the principal of or the interest on the Bonds. The Agency has no taxing power. The Agency has irrevocably granted a pledge of, lien on, and security interest in the Tax Revenues for the repayment of the Bonds. Tax Revenues consist of tax increment revenues allocated to the Agency with respect to the Redevelopment Project pursuant to Section 33670 of the Redevelopment Law ("Tax Increment Revenues,") including that portion of Tax Increment Revenues otherwise required by Section 33334.3 of the Redevelopment Law to be deposited into the Low and Moderate Income Housing Fund, but only to the extent necessary to repay that portion of the Bonds and any Additional Bonds (including applicable reserves and financing costs) attributed to the portion of the proceeds thereof (if any) deposited in the Low and Moderate Income Housing Fund for use pursuant to Section 33334.2 of the Redevelopment Law to increase, improve or preserve the supply of low and moderate income housing within or of benefit to the Redevelopment Project. Tax Revenues exclude: (i) that portion of such Tax Increment Revenues required to be paid under Statutory Tax Sharing, unless the payment of such amounts has been subordinated to the payment of Debt Service on the Bonds and in the case of Additional Bonds, subordinated to the payment of Debt Service on any such Additional Bonds (ii) amounts payable pursuant to Section 33676(b)(i) of the Redevelopment Law and (iii) all other amounts of Tax Increment Revenues required to be deposited into the Low and Moderate Income Housing Fund pursuant to Section 33334.3 of the Redevelopment Law. See "THE AGENCY -Low and Moderate Income Housing," "FINANCIAL INFORMATION -Tax Increment Revenues" and "Outstanding Indebtedness of the Redevelopment Project," and "BONDHOLDERS' RISKS" herein. The Agency will deposit an amount equal to 36.3% of the net proceeds of the Bonds into the Agency's Housing Fund. Therefore, an equivalent portion of the Bonds will be payable from amounts otherwise required to be deposited in the Housing Fund pursuant to Section 33334.3 of the Redevelopment Law. In addition, amounts required to be paid under Statutory Tax Shazing have been subordinated to the Bonds. See "APPENDIX B -FISCAL CONSULTANT'S REPORT." Reserve Account A Reserve Account for the Bonds, including any Additional Bonds, has been established under the Indenture to be held by the Trustee to further secure the timely payment of principal and interest on the Bonds and any Additional Bonds. The amount required to be maintained in the Reserve Account for the Bonds is an amount equal to the lesser of (i) 10% of the original principal amount of the Bonds and any Additional Bonds, (ii) 125% of the average Annual Debt Service on the Bonds and any Additional Bonds, or (iii) Maximum Annual Debt Service on the Bonds and any Additional Bonds (the "Reserve Requirement"). Initially, the Reserve Requirement for the Bonds is $548,000*. The Indenture provides that in lieu of a cash deposit, the Agency may satisfy all or a portion of a Reserve Requirement by means of a Reserve Facility (see "APPENDIX A SUMMARY OF THE INDENTURE" herein). Capitalized Interest There will be an initial deposit by the Agency to the Capitalized Interest Subaccount from proceeds of the Bonds. The amount deposited, $85,000 will be applied to pay a portion of interest on the Bonds due on March 1, 2008, and allocable to the proceeds of the Bonds payable from Tax Revenues not related to the Housing Fund. * Preliminary, subject to change. 10 Issuance of Additional Bonds Additional Bonds. The Agency may issue or incur "Additional Bonds," as defined in the Indenture, payable from Tax Revenues on a parity basis with the Bonds, subject to the following specific conditions. (1) The Trustee will receive prior to the delivery of Additional Bonds: (a) Copies of the resolution authorizing the issuance thereof and the Supplemental Indenture pursuant to which such Additional Bonds are authorized to be issued, each certified by an authorized officer of the Agency; (b) An opinion of Bond Counsel stating (1) that the resolution and Supplemental Indenture pursuant to which such Additional Bonds are authorized to be issued are valid and enforceable in accordance with their terms, except as such enforceability may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar affecting creditors' rights and as may be subject to the exercise of judicial discretion in appropriate cases; (2) that the resolution authorizing the issuance thereof and the Supplemental Indenture pursuant to which such Additional Bonds are authorized to be issued create a valid pledge of that which they purport to pledge; and (3) that the total principal amount of Bonds together with other Agency obligations to be issued and then Outstanding will not exceed any limit imposed by law; (c) A certificate of the Agency stating that the Agency is not, at the time of issuance of such Additional Bonds, in default under the Indenture or any Supplemental Indenture, directing the Trustee or designated trustee to deliver such Additional Bonds, as authorized, and stating the amounts to be deposited in the various applicable funds and accounts; (d) With respect to such Additional Bonds, a certificate of the Agency (which the Trustee shall have no responsibility for the review or verification thereof) showing: (i) The total Maximum Annual Debt Service with respect to the Bonds, including the Additional Bonds then being delivered and any other notes, bonds or other obligations issued by the Agency secured on a parity with the Bonds and Additional Bonds. If the Agency has Outstanding Bonds or proposes to issue Additional Bonds bearing interest at a variable rate, the interest on such Additional Bonds shall be assumed to be the maximum interest rate allowable. (ii) For the then current Fiscal Year, the Tax Revenues to be received by the Agency based upon the most recent taxable valuation of property in the Redevelopment Project furnished by the appropriate officer of San Luis Obispo County or an Independent Financial Consultant, together with, at the Agency's option, an allowance for estimated additional annual Tax Revenues to be received by the Agency within the next Fiscal Year following the date such computation is made due to increase in taxable valuation of property in the Redevelopment Project resulting from construction which has been completed, but not yet entered on the tax roll, or due to transfer of ownership or any other interest in real property which has been recorded but which is not then reflected on the tax rolls, as shown by the report of an Independent Financial Consultant (the "Additional Revenues"). For purposes of calculations of Tax Revenues for issuance of Additional Bonds, Tax Revenues shall be calculated by multiplying the most recent assessed values certified by the San Luis Obispo County Assessor by the basic 1% tax rate 11 (without regard to overrides) and shall be further reduced by: (a) the amount of subventions paid by the State of California or any other amount appropriated by the State for the Agency; (b) unless the "Teeter Plan" is currently in effect and San Luis Obispo County has made no announcement that the Teeter Plan would terminate, the amount derived by applying the average percentage by which the actual tax collections in the Redevelopment Project are less than the amount of the tax levy in the Redevelopment Project for the immediately preceding five fiscal years; (c) the amount by which Tax Revenues would be decreased if all pending assessment appeals were to be detemuned in favor of the property owners in an amount equal to the average of the most recent five years of assessment reductions granted in successful appeals based on the most recent information available from the San Luis Obispo County Assessor's office; (d) the percentage of Tax Revenues which must be deposited to the Low and Moderate Income Housing Fund with the exception of amounts which, in the opinion of Bond Counsel, may be used to pay Debt Service; and (e) the Tax Revenues to be allocated and paid to the Agency in each Fiscal Year during the term of the Additional Bonds as projected by an Independent Redevelopment Consultant assuming no growth, but taking into account all Plan Limitations, Statutory Tax Sharing and other factors which would cause a reduction in Tax Revenues in any future Fiscal Year, plus at the option of the Agency the Additional Revenues. (iii) That for the current Fiscal Year for the Bond Year commencing in such Fiscal Year, the Tax Revenues referred to in item (d)(ii) above are at least 1.25 times the Maximum Annual Debt Service referred to in item (d)(i) above. (iv) That upon the delivery of the proposed Additional Bonds, an amount equal to or in excess of the Reserve Requirement for such Additional Bonds will be credited to the Reserve Account as security for such Additional Bonds. (v) That unless the Agency has determined that a maturity date and that Interest Payment Dates other than those of the Bonds will not adversely affect the interests of the Owners of such Bonds then Outstanding, the Additional Bonds will mature on September 1, and interest thereon will be payable March 1 and September 1 of each year. (vi) That the Agency has reviewed the limitation upon the amount of taxes which may be allocated to the Agency under the Redevelopment Plan and certifies that the pledge of Tax Revenues to the payment of the Additional Bonds will not impair the ability of the Agency to pay debt service on the Bonds and the Additional Bonds in accordance with its covenants contained in this Indenture. Subordinate Debt. If the Agency is in compliance with all covenants set forth in the Indenture, the Agency may, for any purpose issue obligations having a lien on the Tax Revenues which is subordinate to the Bonds which are payable solely from Surplus, but only if the pledge of Tax Revenues to the payment of such obligations will not impair the ability of the Agency to pay future Annual Debt Service on the Bonds, and any Additional Bonds. Bond Insurance [to be completed] 12 THE AGENCY Government Organization The Agency is a public body, corporate and politic, existing under and by virtue of the California Community Redevelopment Law, being Part 1 of Division 24 (commencing with Section 33000) of the Health and Safety Code of the State (the "Redevelopment Law"). The Agency was activated on August 27, 1996, and is governed by afive-member board (the "Agency Board") which consists of all members of the City Council. The Mayor serves as Agency Chair and the Mayor Pro Tem serves as Agency Vice Chair. The Agency's members and term expiration dates aze as follows: AGENCY GOVERNING BOARD Board Member Tony M. Ferrara, Mayor and Agency Chair Ed Arnold, Mayor Pro Tem and Agency Vice Chair Joe Costello, Council Member and Agency Board Member Jim Guthrie, Council Member and Agency Board Member Chuck Fellows, Council Member and Agency Board Member Term Expires November, 2008 November, 2008 November, 2010 November, 2008 November, 2010 The City performs certain general administrative functions for the Agency. The City Manager serves as the Agency's Executive Director, the City Clerk serves as Agency Secretary and the City Treasurer serves as Agency Treasurer. The costs of such functions, as well as additional services performed by City staff are allocated annually to the Agency. The Agency reimburses the City for such allocated costs out of available Tax Increment Revenues. Such reimbursement is subordinate to any outstanding loans, bonds and indebtedness of the Agency. Current staff assigned to administer the Agency include: KEYADMINISTRATIVE PERSONNEL Steven Adams City Manager and Agency Executive Director Angela Kraetsch Director of Financial Services Rob Strong Community Development Director Don Spagnolo Director of Public Works/City Engineer Kelly Wetmore Director of Administrative Services/City Clerk/Agency Secretary Agency Powers All powers of the Agency are vested in its members. Pursuant to the Redevelopment Law, the Agency is a separate public body and exercises governmental functions, including planning and implementing of the Redevelopment Project. The Agency may exercise the right to issue or incur loans, advances or other indebtedness for authorized purposes and to expend their proceeds, and the right to acquire, sell, rehabilitate, develop, administer or lease property. The Agency may demolish buildings, clear land and cause to be constructed certain improvements, including streets, sidewalks and utilities, and can further prepare for use as a building site any real property which it owns or administers: The Agency may, from any funds made available to it for such purposes, and subject to certain conditions, pay for all or part of the value of land and the cost of buildings, facilities or other improvements to be publicly owned and operated. The Agency may not construct or develop buildings, with the exception of public buildings and housing, and must sell or lease cleared property which it acquires within a redevelopment project for redevelopment in conformity with a particular redevelopment plan, and may further specify a period within which such redevelopment must begin and be completed. 13 Capital Projects Pursuant to the Redevelopment Law, the Agency may pay the costs of public buildings, facilities and improvements subject to certain restrictions. However, pursuant to Section 33445 of the Redevelopment Law, for redevelopment plans and amendments to redevelopment plans which add territory to a redevelopment project, adopted after October 1, 1976, the acquisition of property for public improvements and the installation or construction of each public improvement must be provided for in the redevelopment plan. In addition, pursuant to Section 33445 of the Redevelopment Law, for each public improvement, either within or outside a Redevelopment Project, the Agency is required to obtain the consent of the City Council after the following is determined: (a) That the buildings, facilities, structures, or other improvements are of benefit to the Redevelopment Project or the immediate neighborhood in which the Redevelopment Project is located, regardless of whether the improvement is within another redevelopment project; (b) That no other reasonable means of financing such buildings, facilities, structures, or other improvements, are available to the community; and (c) That the payment of funds for the acquisition of land or the cost of buildings, facilities, structures, or other improvements will assist in the elimination of one or mare blighting conditions inside the project area or provide housing for low- or moderate-income persons, and is consistent with the implementation plan adopted pursuant to Section 33490 of the Redevelopment Law. Redevelopment Plan Under the Redevelopment Law the governing board is required to adopt, by ordinance, a redevelopment plan for each redevelopment project. A redevelopment agency may only undertake those activities within a redevelopment project specifically authorized in the adopted redevelopment plan. A redevelopment plan is a legal document, the content of which is largely prescribed in the Redevelopment Law rather than a "plan" in the customary sense of the word. The general objectives of the Agency's Redevelopment Plan for the Redevelopment Project are to encourage investment in the Redevelopment Project by the private sector. The Redevelopment Project provides for the acquisition of property, the demolition of buildings and improvements, the relocation of any displaced occupants, and the construction of streets, parking facilities, utilities and other public improvements. The Redevelopment Plan also allows the redevelopment of land by private enterprise, the rehabilitation of structures, the rehabilitation or construction of low and moderate income housing, and participation by owners and the tenants of properties in the Redevelopment Project. The City Council approved and adopted the Redevelopment Plan for the Anoyo Grande Redevelopment Project on June 10, 1997, pursuant to Ordinance No. 487. It was subsequently amended on January 13, 2004 to amend financial provisions in accordance with Senate Bill 1045. Plan Limitations In 1993, the State Legislature adopted Assembly Bill 1290 (AB 1290), which imposed certain time limitations on (1) the allocation of Tax Increment Revenues to the Redevelopment Project, (2) the effectiveness of the Redevelopment Plan and (3) the incurrence of debt. More recently, Senate Bill 1045 (SB 1045) provided that the governing body could adopt an ordinance to extend the limits on the termination of a redevelopment.plan and the authority to collect Tax Increment Revenues by one additional year if the Agency was required to make a payment to ERAF in 2003/04, and 14 Senate Bill 1096 (SB 1096) provided that the governing body could adopt an ordinance to extend the limits on the termination of a redevelopment plan and the authority to collect Tax Increment Revenues by one additional year for each ERAF payment if the Agency was required to make a payment to ERAF in 2004/05 and 2005/06 (see "BONDHOLDERS' RISKS -State of California Fiscal Issues" herein). The limitations currently imposed by the Redevelopment Plan are as follows: Maximum Bonded Indebtedness $750,000,000 Last Date to Incur Debt June 10, 2017 Plan Expiration Date June 10, 2027 ~~~ Last Date to Collect Tax Increment Revenues June 10, 2043 l~l ~ ~ ~ The City Council has adopted an ordinance under the provisions of SB 1045 to extend the plan expiration and last date to collect tax increment. However, [he provisions of SB 1096 do not apply to the Redevelopment Project. Low and Moderate Income Housing In 1976, the Redevelopment Law was amended to require that for every redevelopment plan adopted after January 1, 1977, or any area which is added to a redevelopment project by an amendment to a redevelopment plan after January 1, 1977, not less than 20% of Tax Increment Revenues must be set aside annually for the purpose of increasing and improving the community's supply of low and moderate income housing available at affordable housing costs to persons and families of very low, low or moderate income households. In 1985, the Redevelopment Law was further amended to add substantially the same requirements with respect to plans adopted prior to January 1, 1977. Under the Redevelopment Law, the portion of Tax Increment Revenues which are required to be deposited in the Agency's Low and Moderate Income Housing Fund may be applied to pay the portion of debt service on any bonds to the extent the proceeds thereof were expended for qualifying low- and moderate-income housing projects. Therefore, because the Agency has deposited 36.3% of the Bond proceeds in the Housing Fund, a corresponding percentage of the debt service on the Bonds may be paid from such portion of the Tax Increment Revenues. THE REDEVELOPMENT PROJECT Description of the Redevelopment Project The Redevelopment Project is an area of approximately 510 acres. It is comprised of commercial development along the major circulation corridors, including Highway 101, and encompasses adjacent residential uses. In 2001, the City adopted an updated General Plan which rezoned much of the property in the Redevelopment Project from either residential or commercial to "mixed use." This rezoning allows for development flexibility and increased intensity of uses in the commercial areas of the Redevelopment Project. Currently, residential development accounts for approximately 23% of the secured assessed value of the Redevelopment Project, commercial development comprises 38% of the secured assessed value and industrial development comprises another % of secured assessed value. There are approximately acres of privately owned vacant land in the Redevelopment Project. Given the limited resources in the early years after the formation of the Redevelopment Project, the Agency selected an implementation strategy for redevelopment activities focused on developing a general economic development program for the City and to concentrate investment of its fund in portions of the Redevelopment Project with characteristics that are within certain "Categories of High Potential" for 15 economic development. These areas were generally located within four Public Improvement Zones identified as: Grand Avenue Improvement Zone, El Camino Real Improvement Zone, Village District Improvement Zone and Traffic Way Improvement Zone. (insert Project Area Map with Improvement Zone Overlay) The Grand Avenue Improvement Zone ~ acres) encompasses one of the City's four major commercial areas. It is characterized by neighborhood-serving commercial along one of the City's main arterials, Grand Avenue. Goals for the Grand Avenue Improvement Zone are to revitalize the area with a more coordinated mixed-use boulevard ambience, including urban design amenities. Also, in 2002, the City developed the E. Grand Avenue Enhancement Plan, which resulted from ayear-long planning effort and extensive public participation process. It included proposed streetscape improvements, concepts for new design guidelines, fapade improvements and other programs designed to improve both the appearance and commercial viability of the area. The Plan divided E. Grand Avenue into three segments with distinct character -the Gateway segment, Midway or Fair Oaks segment, and the Highway segment. Initial focus has been on the Gateway segment since it included some large vacant parcels, providing the best opportunity for immediate change. A number of projects have been developed and proposed consistent with the plan, including a new shopping center, mixed-use project with 108 senior low and very-low income units, and replacement of a retention basin with an Applebee's Restaurant (currently under construction). Many of the streetscape improvements were constructed in 2003. The Village Commercial Improvement Zone (_ acres) overlays the City' historic commercial center. Goals for the Village Commercial Improvement Zone are to preserve and expand the Village Commercial District and assist in attracting hospitality, specialty retailing and restaurants to the Village. In 2001, the City developed an initial streetscape plan for improvements to the Historic Village. The City has received grant funding to proceed and is in the process of updating the plan, which will include crosswalk improvements, decorative street lights, new street furniture, bulbouts, and street trees. Construction is expected in 2007/08. The El Camino Real/Brisco Road Improvement Zone (_ acres) is comprised of properties adjacent to Highway 101. Goals for the El Camino Real/Brisco Road Improvement Zone are to improve freeway access and to attract and retain freeway commercial development The Traffic Way Improvement Zone (_ acres) also borders Highway 101. Goals for the Traffic Way Improvement Zone are assist in the retention and expansion of existing auto dealers and to provide assistance to those land uses compatible with both the Village and Traffic Way Improvement Zones. In addition, during 2006, the City Council approved a streetscape plan for the Traffic Way corridor and funding was budgeted in 2007 for implementation. The plan includes landscaping, circulation improvements, sidewalk improvements, restriping and street furniture. The Agency expects that it will require improved lighting standards, storefront upgrades, design assistance, infrastructure upgrades, special events promotion, graffiti removal, transportation circulation improvements, land assembly, streetscape improvements and creation of public open space and other public facilities to achieve the goals for these four Public Improvement Zones. The Agency has seen significant development activity in these Public Improvement Zones over the last 5 years. Recently completed projects include new retail space, major tenant renovations, additional office space and attached residential projects. The Agency anticipates approximately $15 million to be added to the tax rolls in 2007/08 as a result. The Agency expects additional restaurant, retail and office space, as well as additional attached residential units, to be completed within the next 2 years, adding an anticipated $27 million in new assessed value to the Redevelopment Project. 16 Location 1577 El Camino Real 130 E. Branch St. 132 Short St. 1540 E. Grand Ave. 1530 E. Grand Ave. 136 Bridge St. East Village Plaza/Paulding Cir. Le Pointe/Nevada Estimated Develonment/Imorovements Value significant commercial tenant improvements to existing building $ 175,000 for a veterinary clinic significant commercial TI to existing building for a clothing 50,000 boutique mixed use project with new single family dwelling 425,000 Taco Del Mar, Yogurt, Little Caesar's - approximately 6,500 SF retail space 2,535,000 Santa Lucia Bank 1,102,500 Dentist office with 2 upstairs apartment units 1,026,000 5 commercial buildings 6 townhomes: 1 - 1,500 SF office; 1 - 2,100 SF office; & 3 apartment units Value Anticipated to be Added to 2007/08 Assessment Roll 1400 E. Grand Ave. 6,344 SF Applebee's restaurant 1375 E. Grand Ave. 4,004 SF SESLOC Credit Union & 6,195 SF retail 185 to 187 Brisco Road 12 townhomes 189 Brisco Road 7 townhomes 5,550,000 4,093,000 $14,956,500 $ 2,664,480 2,711,800 5,230,000 3,072,500 210 Traffic Way 1,746 SF office 436,500 Value Anticipated to be Added to 2008/09 Assessment Roll $14,115,280 184 Brisco Road 7 townhomes $ 3,054,000 120 El Camino Real 10 townhomes 4,189,500 231 S. Halcyon Road Mixed Use office and residential - 3,739 SF office & 2 bed, 1 bath apartment, 880 SF 1,270,225 Value Anticipated to be Added to 2009/10 Assessment Roll $8,513,725 1136 E. Grand Ave. 8 townhomes $3.330.000 Value Anticipated to be Added to 2010/11 Assessment Roll $3,330,000 Total $40,915,505 Source: Fiscal Consultant. 17 No Assurance Concerning Future Development. Although the Agency has reasonable bases for the expectations that the above described future developments will be completed in the time period and at the market value forecasted, the Agency cannot provide specific assurance that such developments will actually be completed as described. Assessed Valuations New development and change in property ownership has added over $70 million in assessed value to the tax rolls for the Redevelopment Project since fiscal year 2002/03 above the 2% annual inflationary growth in the tax base. These factors together represent a 56.5% overall increase in total taxable value since 2002/03. TABLE NO. 1 ARROYO GRANDE REDEVELOPMENT PROJECT AREA' HISTORICAL ASSESSED VALUATION (BASED ON THE EQUALIZED TAX ROLL) 2002/03 2003/04 2004/05 2005/06 2006/07 Secured $130,650,161 $140,396,868 $150,416,771 $185,910;727 $209,988,998 Unsecured 14,719,960 15,191,470 14,931,350 16,539,918 17,874,588 Utility 475.100 475.100 475,100 475.100 475.100 Total $145,845,221 $156,063,438 $165,823,221 $202,925,745 $228,338,686 Less: Base year (123,359,666) (_123,359,6661 (123.359.6661 (123,359.6661 (123.359,6661 Incremental Value $ 22,485,555 $ 32,703,772 $ 42,463,555 $' 79,566,079 $104,97),020 Source: Fiscal Consultant. 18 Major Taxpayers The ten largest secured property taxpayers represent 16.1% of the 2006/07 assessed value of the Redevelopment Project and 35.0% of the 2006/07 incremental assessed value of the Redevelopment Project. TABLE NO. 2 ARROYO GRANDE REDEVELOPMENT PROJECT AREA TEN LARGEST TAXPAYERS AS A PERCENT OF 2006/07 ASSESSED VALUE Taxpayer Land Use Assessed Value Percent of Total AV Percent of Incremental AV Deblauw Properties LLC Office & Commercial $ 4,986,978 2.2% 4.8% Longs Drug Stores California Inc. Commercial 4,694,613 2.1 4.5 Howard D. Mankins Various 4,018,647 1.8 3.8 Santa Lucia Bank Commercial Bank 3,615,459 ].6 3.4 Charles L. Frandson Trust, Et. Al. Commercial 3,464,053 1.5 3.3 Arroyo Town & Country Square LLC Shopping Cen[er 3,420,870 1.5 3.3 Michael B. Limberg Tmst, Et. Al. Office & Commercial 3,323,965 1.4 3.2 Betty A. Carroll Office 3,260,080 1.4 3.1 Tri W Enterprises Inc. Shopping Center 2,983,774 1.3 2.8 James D. Motter, Et AI Warehouse 2,890,000 1.3 2.8 Total $36,658,439 16.1% 35.0% Source: Fiscal Consultant. Assessment Appeals As of January 2007, the County Assessor reports that over the past 5 years, only 7 appeals have been filed by property owners within the Redevelopment Project and only one is currently pending. No appeals have been granted in the last 5 years, and no reduction for current or future appeals is reflected in "TABLE NOS. 3 and 4 -PROJECTED TAX REVENUES AND DEBT SERVICE COVERAGE." Tax Collections In 1993/94, the County of San Luis Obispo adopted the "Teeter Plan" pursuant to Revenue and Taxation Code Sections 4701 - 4717. The Teeter Plan has no impact on tax assessments, tax rates, or collection procedures, although it changes the way the collections of delinquent taxes and penalties are distributed among the taxing agencies. The Agency receives the entire current year property without regard to delinquencies; however, future penalties collected are distributed to the Tax Loss Reserve Fund, as required by the law. For 2005/06 delinquent taxes were 1.64% of the tax levy for the County. No deduction for delinquencies is reflected in" TABLE NOS. 3 and 4." 19 FINANCIAL INFORMATION Agency Budgetary Process and Administration The Redevelopment Law requires redevelopment agencies to adopt an annual budget containing the following: (1) The proposed expenditures of the agency. (2) The proposed indebtedness to be incurred by the agency. (3) The anticipated revenues of the agency. (4) The work program for the coming year, including goals. (5) An examination of the previous years' achievements and a comparison of the achievements with the goals of the previous years' work program. All expenditures and indebtedness of the Agency are required to be in conformity with the adopted or amended budget. The Executive Director of the Agency is responsible for preparing the proposed budget and submitting it to the Agency Governing Board. After reviewing the proposed budget at a public meeting, the Agency Governing Board holds a public hearing. The Agency Governing Board adopts the budget prior to the start of each fiscal year. The City Treasurer acts as Treasurer of the Agency and is responsible for controlling expenditures within budgeted appropriations. Agency Accounting Records and Financial Statements Every redevelopment agency is required to present an annual report to its legislative body (being the City Council) within six months of the end of each fiscal year. The annual report is required, among other things, to include an independent financial "audit report" and a fiscal statement for the previous fiscal year. The California Health and Safety Code defines "audit report" to mean an examination of and opinion on the financial statements of the agency which presents the results of the operations and financial position of the agency. The independent financial audit is required to be conducted in accordance with generally accepted auditing standards and the roles governing audit reports promulgated by the Governmental Accounting Standards Board. The independent financial audit report is also required to include an opinion of the agency's compliance with laws, regulations and administrative requirements governing activities of the agency. The Redevelopment Law requires the fiscal statement to contain the following information: (1) The amount of outstanding indebtedness of the agency and each project area. (2) The amount of tax increment revenues generated in the agency and in each project area. (3) The amount of tax increment revenues paid to a~taxing agency pursuant to a tax sharing agreement, other than school or community college district. (4) The financial transactions report required to be submitted to the State Controller. (5) The amount allotted to school or community college districts pursuant to the Redevelopment Law. (6) The amount of existing indebtedness and the total amount of payments required to be paid on existing indebtedness for that fiscal year. (7) Any other fiscal information which the agency believes is useful to describe its programs. 20 In addition, the annual report is required to include detailed information regarding the Agency's housing program to assist low and moderate income households and deposits and expenditures from the Low and Moderate Income Housing Fund required pursuant to the Redevelopment Law. The Indenture requires the Agency to keep, or cause to be kept, proper books and accounts sepazate from all other records and accounts of the Agency and the County in which complete and correct entries are made of all transactions relating to the Tax Revenues and the Special Fund. The Indenture requires the Agency to file with the Trustee annually, within 180 days after the close of each fiscal year, so long as any of the Bonds are Outstanding, its audited financial statements showing the Tax Revenues and all disbursements from the Special Fund as of the end of such fiscal year. The Agency covenants under the Indenture to furnish a copy of such statements upon reasonable request to any Bondholder. Basis of Accounting and Financial Statement Presentation. The government-wide financial statements are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures are recorded only when payment is due. GASB No. 34. The Governmental Accounting Standards Board (GASB) published its Statement No. 34 "Basic Financial Statements -and Management's Discussion and Analysis -for State and Local Governments" on June 30, 1999. Statement No. 34 provides guidelines to auditors, comptrollers, and financial officers on requirements for financial-reporting for all governmental agencies in the United States. Retroactive reporting is required four years after the effective date on the basic provisions for all major general infrastructure assets that were acquired or significantly reconstructed, or that received significant improvements, in fiscal years ending after June 30, 1980. The Agency was required to implement the provision of GASB 34 for the fiscal yeaz ending June 3Q 2004. The Agency retained the firm of Moss, Levy & Hartzheim L.L.P., Certified Public Accountants, Santa Maria, California, to examine the component unit financial statements of the Agency as of and for the fiscal year ended June 30, 2006, the most recent fiscal year for which audited financial statements have been prepared, which are included as "APPENDIX D." The firm's examination was made in accordance with auditing standards generally accepted in the United States of America, the standards applicable to financial audits contained in Governmental Auditing Standards issued by the Comptroller General of the United States and the Guidelines for Compliance Audits of California Redevelopment Agencies issued by the State Controller and as interpreted in the Suggested Auditing Procedures for Accomplishing Compliance Audits of California Redevelopment Agencies issued by the Governmental Accounting and Auditing Committee of the California Society of Certified Public Accountants. The firm reported after their examination that the Agency's financial statements present fairly its financial position and results of operations in conformity with generally accepted accounting principles and that they noted no instances ofnon-compliance for the fiscal year ended June 30, 2006. The Agency's audited financial statements are public documents and are included within this Official Statement without the prior approval of the auditor. Accordingly, the auditor has not performed any post-audit of the financial condition of the Agency. 21 Tax Increment Revenues Procedure for the Allocation and Payment of Tax Increment Revenues. The portion of taxes required to be allocated to the Agency is allocated and paid to the Agency by the County Auditor pursuant to the following procedure: Not later than the first day of October of each yeaz, the Agency is required to file with the County Auditor a statement of indebtedness certified to by the chief fiscal officer of the Agency for each project area. The statement of indebtedness is required to contain for each such project area: (a) The date on which each loan, advance, or indebtedness was incurred or entered into; (b) The principal amount, term, purpose, and interest rate, of each loan, advance or indebtedness; and (c) The outstanding balance and amount due or to be paid by the Agency of each loan, advance or indebtedness. At the same time or times as the payment of taxes into the funds of the respective taxing agencies of the County, the County Auditor-Controller is required to allocate and pay Tax Increment Revenues to the Agency in an amount not to exceed the amount of loans, advances and indebtedness as shown on the Agency's Statement of Indebtedness. Manner in Which Property Valuations and Assessments are Determined (Article XIIIA). On June 6, 1978, California voters approved an amendment (commonly lmown as both Proposition 13 and the Jarvis- Gann Initiative) to the State Constitution which imposes certain limitations on taxes that may be levied against real property. This amendment, which added Article XIIIA to the State Constitution, among other things, defines full cash value of property to mean "the county assessor's valuation of real property as shown on the 1975/76 tax bill under `full cash value,' or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment." This full cash value may be adjusted annually to reflect inflation at a rate not to exceed two percent per year, or any reduction in the consumer price index or comparable local data, or any reduction in the event of declining property value caused by substantial damage, destruction or other factors. The amendment further limits the amount of any ad valorem tax on real property to one percent of the full cash value of that property, except that additional taxes may be levied to pay debt service on indebtedness approved by the voters prior to July 1, 1978 and on any bonded indebtedness for the acquisition or improvement of real property which is approved after July 1, 1978 by two-thirds of the votes cast by voters voting on such indebtedness. However, pursuant to an amendment to the California Constitution, redevelopment agencies are prohibited from receiving any of the tax increment revenue attributable to tax rates levied to finance bonds approved by the voters on or after January 1, 1989 (see "Property Tax Rate" below). In the general election held November 4, 1986, voters of the State of California approved two measures, Propositions 58 and 60, which further amend the terms "purchase" and "change of ownership," for purposes of determining full cash value of property under Article XIIIA, to not include the purchase or transfer of (1) real property between spouses and (2) the principal residence and the first $1,000,000 of other property between parents and children. Proposition 60 amends Article XIIIA to permit the Legislature to allow persons over age 55 who sell their residence and buy or build another of equal or lesser value within two years in the same county (or in certain cases, another county), to transfer the old residence's assessed value to the new residence. 22 For each fiscal year since Article XIIIA has become effective (the 1978/79 fiscal year), the annual increase for inflation has been at least two percent except in six fiscal years. For the 1981/82 fiscal year, the annual increase for inflation was 1%; for the 1994/95 fiscal year, the annual increase for inflation was 1.0119%; for the 1995/96 fiscal year, the annual increase for inflation was 1.19%; for the 1996/97 fiscal year, the annual increase for inflation was 1.11%, for the 1998/99 fiscal. year, the annual increase for inflation was 1.853% and for the 2004/05 fiscal year, the annual increase for inflation is 1.867% reflecting the actual increase in the State Consumer Price Index, as reported by the State Department of Finance. Proposition 8 Adjustments. Proposition 8, approved in 1978, provides for the assessment of real property at the lesser of its originally determined (base year) full cash value compounded annually by the inflation factor, or its full cash value as of the lien date, taking into account reductions in value due to damage, destmction, obsolescence or other factors causing a decline in market value. Reductions based on Proposition 8 do not establish new base year values, and the property may be reassessed as of the following lien date up to the lower of the then-current fair market value or the factored base year value. The State Board of Equalization has approved this reassessment formula and such formula has been used by county assessors statewide. However, in 2001 an Orange County Superior Court held that such reassessment formula violates the inflationary rate increase limitation of Article XIIIA of the Califomia Constitution. The Court held that once the assessed value of a property is reduced pursuant to Proposition 8, any subsequent increase in assessed value may not exceed the inflationary rate limitation (not to exceed 2%) of Article XIIIA. On April 18, 2003, the Superior Court entered its final judgment. On June 12, 2003, the Orange County Assessor, together with the Tax Collector and the County of Orange filed notice of appeal of the Superior Court Judgment. The Appellate Court held a hearing on the matter on January 7, 2004, and issued its opinion on March 26, 2004, reversing the holding of the Orange County Superior Court. The Plaintiffs filed an appeal with the Califomia State Supreme Court and on July 21, 2004, the California State Supreme Court by a 5-2 vote decided not to hear an appeal, ending this litigation. Unsecured and Secured Property. In Califomia, property which is subject to ad valorem taxes is classified as "secured" or "unsecured." The secured classification includes property on which any property tax levied by a county becomes a lien on that property. A tax levied on unsecured property does not become a lien against the taxed unsecured property, but may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property, arising pursuant to State law, has priority over all other liens on the secured property, regardless of the time of the creation of the other liens. Property in the Redevelopment Project is assessed by the San Luis Obispo County Assessor except for public utility property which is assessed by the State Board of Equalization. The valuation of secured property is determined as of January 1 each year for taxes owed with respect to the succeeding fiscal year. The tax rate is equalized during the following September of each year, at which time the tax rate is determined. Taxes are due in two equal installments. Installments of taxes levied upon secured property become delinquent on the following December 10 and April 10. Taxes on unsecured property are due January 1 and become delinquent August 31, and such taxes are levied at the prior year's secured tax rate. Secured and unsecured property is entered on separate parts of the assessment roll maintained by the county assessor. The method of collecting delinquent taxes is substantially different for the two classifications of property. The taxing agency has four ways of collecting unsecured property taxes: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the county clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the county recorder's office, in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property, improvements or possessory interests belonging or assessed to the assessee. The exclusive means of enforcing the payment of delinquent taxes with respect to property on the secured roll is the sale of the property securing the taxes for the amount of taxes which are delinquent. 23 Currently, a 10% penalty is added to delinquent taxes which have been levied with respect to property on the secured roll. Property on the secured roll with respect to which taxes aze delinquent is sold to the State on or about June 30 of the fiscal year. Under State law, from time of the sale of the property to the State for nonpayment of taxes, owners have five years to redeem, during which time legal title remains in the owners as taxpayers subject to a lien in favor of the County. The amount necessary to redeem the property is equal to the sum of the delinquent taxes, delinquency penalties and redemption penalties of I %z% per month. Five years after the property is in default of.taxes, the tax collector has the authority to sell property which has not been redeemed. A 10% penalty also attaches to delinquent taxes with respect to property on the unsecured roll, and further, an additional penalty of 1 %% per month accrues with respect to such taxes beginning the first day of the third month following the delinquency date. Supplemental Assessments. Legislation adopted in 1984 (Section 75, et seq. of the Revenue and Taxation Code of the State of Califomia) provides for the supplemental assessment and taxation of property at its full cash value as of the date of a change of ownership or the date of completion of new construction (the "Supplemental Assessments"). To determine the amount of the Supplemental Assessment the County Auditor applies the current year's tax rate to the supplemental assessment roll and computes the amount of taxes that would be due for the full year. The taxes due are then adjusted by a proration factor to reflect the portion of the tax year remaining as determined by the date on which the change in ownership occurred or the new construction was completed. Supplemental Assessments become a lien against the real property on the date of the change of ownership or completion of new constmction. Unitary Property. Commencing in the 1988/89 fiscal yeaz, the Revenue and Taxation Code of the State of Califomia changed the method of allocating property tax revenues derived from state assessed utility properties. It provides for the distribution of state assessed values to tax rate areas by a county-wide mathematical formula rather than assignment of state assessed value according to the location of those values in individual tax rate areas. Commencing with the 1988/89 fiscal year, each county has established one county-wide tax rate area. The assessed value of all unitary property in the county has been assigned to this tax rate area and one tax rate is levied against all such property ("Unitary Revenues"). The property tax revenue derived from the assessed value assigned to the county-wide tax rate area shall be allocated as follows: (1) each jurisdiction will be allocated up to two percent of the increase in Unitary Revenues on a pro rata basis county-wide; and (2) any decrease in Unitary Revenues or increases less than two percent, or any increase in Unitary Revenues above two percent will be allocated among jurisdictions in the same proportion of each jurisdiction's Unitary Revenues received in the prior year to the total Unitary Revenues county-wide. Property Tax Rate. There are numerous tax rate areas within the Redevelopment Project. The differences between the $1.00 tax rate and those actually levied (referred to as the "tax override rate") represents the tax levied by overlapping entities to pay debt service on bonded indebtedness approved by the voters. Tax override rates typically decline each year. A declining tax override rate is the result of several factors: an effective limit, established by Article XIIIA of the Califomia Constitution, on the amount of property taxes that can be levied; rising taxable values within the jurisdictions of taxing entities levying the approved override rate (which reduces the tax rate needed to be levied by the taxing entity to meet debt service requirements); and the eventual retirement, over time, of the voter-approved debt. 24 For fiscal year 2006/07 the effective tax rate, including effective the tax override rate, for the majority of the property in the Redevelopment Project was approximately $1.0044 per $100 of taxable value. The Agency is not eligible to receive any property tax generated by the rate over $1.00 and future Tax Increment Revenues have been projected in "TABLE NOS. 3 and 4 -PROJECTED TAX REVENUES AND DEBT SERVICE COVERAGE" by applying only the $1.00 per $100 of taxable value general lery to incremental taxable values. Administrative Costs. In 1990, the Legislature enacted SB 2557 (Chapter 466, Statutes of 1990) which allows counties to charge for the cost of assessing, collecting and allocating property tax revenues to local government jurisdictions on a prorated basis. For fiscal year 2006/07 the County will charge administrative fees totaling approximately $19,800 to the Redevelopment Project. Tax Sharing Statutes Certain provisions were added to the Redevelopment Law by the adoption of AB 1290 in 1994 and apply to the distribution of Tax Increment Revenue of the Redevelopment Project. In general, any affected taxing entity shares in the Tax Increment Revenues pursuant to a statutory formula ("Statutory Tax Sharing"). The amounts to be paid pursuant to Statutory Tax Sharing are as follows: (a) commencing in the first fiscal year that the Redevelopment Project receives Tax Increment Revenues, an amount equal to 25% of tax increment revenues after the amount required to be deposited in the Low and Moderate Income Housing Fund has been deducted; (b) in addition to amounts payable as described in (a) above, commencing in the 11ih fiscal year that the Redevelopment Project receives Tax Increment Revenues, an amount equal to 21% of tax increment revenues generated by the incremental increase of the current year assessed valuation over the assessed valuation in the preceding 10°i fiscal year, after the amount required to be deposited in the Low and Moderate Income Housing Fund has been deducted; and (c) in addition to amounts payable as described in (a) and (b) above, commencing in the 31s` fiscal year that the Redevelopment Project receives Tax Increment Revenues, an amount equal to 14% of tax increment revenues generated by the incremental increase of the current year assessed valuation over the assessed valuation in the preceding 30`x' fiscal yeaz, after the amount required to be deposited in the Low and Moderate Income Housing Fund has been deducted. (d)_ The City may elect to receive a portion of the tax increment generated in (a) above, after the amount required to be deposited in the Low and Moderate Income Housing Fund has been deducted. (e) The Agency may subordinate the amount required to be paid to an affected taxing entity to any indebtedness after receiving the consent of the taxing entity. The taxing agencies have consented to the subordination of Statutory Tax Sharing amounts to payment of the Bonds. 25 Outstanding Indebtedness of the Redevelopment Project As of March 1, 2007, the Agency's obligations consist of a $3.1 million advance from the City. A portion of this advance ($2.7 million) will be repaid with proceeds of the Bonds. Repayment of the remaining balance is subordinate to the payment of debt service on the Bonds. Projected Tax Revenues and Debt Service Coverage The Agency retained Tierra West.Advisors, LLC of Pasadena, Califomia (the "Fiscal Consultant") to provide projections of Tax Revenues. Receipt of projected Tax Revenues shown in Table Nos. 3 and 4 in the amounts and at the times projected by the Agency depends on the realization of certain assumptions relating to the Tax Increment Revenues. The Agency believes the assumptions upon which the projections are based are reasonable; however, some assumptions may not materialize and unanticipated events and circumstances may occur (see "BONDHOLDERS' RISKS"). Therefore, actual Tax Revenues received during the forecast period may vary from the projections and the variations may be material. To the extent that the assumptions are not actually realized, the Agency's ability to timely pay principal of and interest on the Bonds may be adversely affected. Investors should read the complete Fiscal Consultant's Report found in Appendix B. TABLE N0.3 ARROYO GRANDE REDEVELOPMENT AGENCY ARROYO GRANDE REDEVELOPMENT PROJECT AREA PROJECTED TAX REVENUES AND DEBT SERVICE COVERAGE EXCLUDING HOUSING SET-ASIDE OBLIGATION AND RELATED DEBT SERVICE Bond Year Ending Sept 1 Projected Tax Revenues i'i~xl Debt Service I'I* Coverage Ratio 2007 $ 786,000 $ 77,000 1,021% 2008 960,000 153,000 ~"I 627 2009 1,110,000 238,000 466 2010 1,218,000 295,000 413 2011 1,285,000 295,000 436 2012 1,327,000 295,000 450 2013 1,370,000 295,000 464 2014 1,413,000 295,000 479 2015 1,457,000 295,000 494 2016 1,502,000 295,000 509 2017 1,548,000 295,000 525 "' Source: Tierra West Advisors, LLC, Pasadena, Califomia. See "APPENDIX B -FISCAL CONSULTANT'S REPORT." ''' Net of Housing Set-Aside. "' ;Represents 63.7% of debt service on the Bonds. '4j A portion of interest on the Bonds due March 1, 2008 is capitalized. * Preliminary, subject to change. 26 TABLE NO.4 PROJECTED TAX REVENUES AND DEBT SERVICE COVERAGE HOUSING SET-ASIDE OBLIGATION AND RELATED DEBT SERVICE ONLY Bond Year Ending Sept 1 Projected Housing Set-Aside~~~~Z~ Debt Service ~'~* Coverage Ratio 2007 $210,000 $ 44,000 477% 2008 254,000 135,000 188 2009 292,000 135,000 216 2010 319,000 168,000 190 2011 337,000 168,000 201 2012 348,000 168,000 207 2013 359,000 168,000 214 2014 370,000 168,000 220 2015 382,000 168,000 227 2016 394,000 168,000 235 2017 406,000 168,000 242 ~~~ Source: Tierra West Advisors, LLC, Pasadena, California. See "APPENDIX B - FISCAL CONSULTANT'S REPORT." ~'~ 20% of Gross Tax Increment. "' Represents 36.3% of debt service on the Bonds. * Preliminary, subject to change. 27 BONDHOLDERS' RISKS The purchase of the Bonds involves investrnent risk. If a risk factor materializes to a cuff cierrt degree, it could delay or prevent payment of principal of andlnr interest on the Bonds. Such risk factors include, but are not limited to, the fodlowing matters and should be considered, along witk other information in this ~cial Statement, by potential investors. Factors Which May Affect Tax Revenues The ability of the Agency to pay principal of and interest on the Bonds depends on the timely receipt of Tax Revenues as projected herein (see "FINANCIAL INFORMATION -Projected Tax Revenues and Debt Service Coverage" herein). Projections of Tax Revenues are based on the underlying assumptions relating to Tax Increment Revenues of the Redevelopment Project. A number of factors which may affect Tax Increment Revenues, and consequently, Tax Revenues, are outlined below. Reductions in Assessed Value. The projections of Tax Increment Revenues contained in this Official Statement are lased on current assessed valuations within the Redevelopment Project, a tax rate equal to $1.00 per $100 of assessed value applied to the taxable property in the Redevelopment Project and certain projected increases in property values due to new construction and inflation allowed under Article XIIIA of the California Constitution. The Agency believes that the projections of Tax Increment Revenues and the assumptions upon which the projections are based are reasonable. However, any future decrease in the assessed valuation of the Redevelopment Project (or any increase at a rate less than assumed), any general decline in the economic stability of the area, a relocation out of the Redevelopment Project by one or more major property owners, successful appeals by property owners for a reduction in a property's assessed value, or other events that permit reassessment of property at lower values, either on a case by case basis or as a blanket reduction due to a general decline in property values and any property tax refunds which may result therefrom, the destruction of property caused by natural disasters or any delinquencies in the payment of property taxes and any potential acquisition of property by the Agency or other public agency will reduce the Tax Increment Revenues allocated to, or received by, the Agency and correspondingly may have an adverse impact on the Tax Revenues and ability of the Agency to pay principal and interest on the Bonds. Article XIIIA. Pursuant to the California voter initiative process, on June 6, 1978, California voters approved Proposition 13 which added Article XIIIA to the California Constitution. This amendment imposed certain limitations on taxes that may be levied against real property to 1% of [he full cash value of the property, adjusted annually for inflation at a rate not exceeding 2% annually. Full cash value is determined as of the 1975!76 assessment year, upon change in ownership (acquisition) or when newly constructed (see "FINANCIAL INFORMATION -Tax Increment Revenues" herein for a more complete discussion of Article XIIIA). Article XIIIA has subsequently been amended to permit reduction of the "full-cash value" base in the event of declining property values caused by substantial damage, destruction or other factors, and to provide that there would be no increase in the "full cash value'" base in the event of reconstruction of property damaged or destroyed in a disaster and in other special circumstances. Reduction in Inflationary Rate. The annual inflationary adjustment, while limited to 2%, is determined annually and may not exceed the percentage change in the California Consumer Pride Index (CCPI). Since Article XIIIA was approved, the annual adjustment for inflation Ias fallen beloxv the 2% limitation six times: far 1981182, 1%; for 1994195, 1.0119%, for 1995196, 1.19%; fot 1996197, 1.11°10, for 1998199, 1.853% and for 2004105, 1.01$67%. The Fiscal Consultant has projected Tax Increment Revenues based on 2°/> inflationary increases in real property values. 28 Proposition 8 Adjustments. Proposition 8, approved in 1978, provides for the assessment of rea] property at the lesser of its originally determined (base year) full cash value compounded annually by the inflation factor, or its full cash value as of the lien date, taking into account reductions in value due to damage, destruction, obsolescence or other factors causing a decline in mazket value. Reductions based on Proposition 8 do not establish new base year values, and the property may be reassessed as of the following lien date up to the lower of the then-current fair market value or the factored base year value. The State Board of Equalization has approved this reassessment formula and such formula has been used by county assessors statewide. The Agency's ability to generate sufficient Tax Revenues to pay debt service on the Bonds will be dependent on the economic strength of the Redevelopment Project. Since Proposition 8 adjustments are closely tied to the economics of an azea, and primarily, real estate development, factors which adversely affect real estate development may adversely affect Tax Revenues. Such factors include general economic conditions, fluctuations in the real estate market, fluctuations in interest rates, unexpected increases in development costs and other factors. If Proposition 8 adjustments are made by the County Assessor in future years because of declines in the fair mazket value of properties caused by the lack of real estate development in the area generally, Tax Revenues may be adversely affected and as a possible consequence its ability to repay the Bonds maybe adversely affected. Assessment Appeals. Assessment appeals may be filed by property owners seeking a reduction in the assessed value of their property. After the property owner files an appeal, the County's Appeals Board will hear the appeal and make a determination as to whether or not there should be a reduction in assessed value for a particular property and the amount of the reduction, if any. To the extent that any reductions are made to the assessed valuation of such properties with appeals currently pending, or appeals subsequently filed, Tax Increment Revenues; and correspondingly, Tax Revenues will be reduced. Such reductions may have an adverse affect on the Agency's ability to pay debt service on the Bonds. As of January 2007, the County Assessor reports that no significant appeals are pending for property within the Redevelopment Project. Earthquake, Fire and Other Risks. Natural and man-made disasters and hazards, including, without limitation, eazthquakes, fires, floods, mudslides and other calamities, may have the effect of reducing Tax Increment Revenues through reduction of aggregate assessed valuations within the boundaries of the Project Area. According to the Public Safety Element of the City's General Plan, the City is located in a seismically active region and the Redevelopment Project could be impacted by a major earthquake originating from the numerous faults in the area. Surface rupture, ground shaking and liquefaction are the primary seismic risk from a major earthquake. The City of Arroyo Grande is near a number of active and potentially active faults capable of producing strong ground motion in response to seismic events, including the WilmarAvenue, Blind Thrust Point San Luis, Los Osos, Pecho, Hosgri, Casmalia, La Panza, and San Andreas faults. With a high probability for producing a major earthquake, the San Andreas fault and offshore Hosgri faults present the most likely ground shaking to the City. Portions of Arroyo Grande that are underlain by layers of unconsolidated, recent alluvial soil material have an increased risk of experiencing the damaging effects of ground shaking. In a strong earthquake, any type of structure may experience some level of damage resulting from ground shaking. Some types of construction materials generally perform better in earthquakes than others, and almost any material can be designed in such a manner so as to be safe during an earthquake. Buildings made of umeinforced masonry, however, typically provide little earthquake resistance. To address public safety risks posed by umeinforced masonry buildings, the California Legislature passed Senate Bill S47 in 1987. This bill required local jurisdictions to identify unreinfored masonry buildings, and to develop a program to mitigate potentially hazardous structures. To comply with SB 547, the City adopted the Uniform Code for Building Conservation. Surveys identified few umeinforced masonry buildings requiring modifications to meet earthquake resistance structural standards, most of which were located in the Village area. The City worked closely with property owners, and through voluntary measures, minimum earthquake resistance improvements have been made to all buildings. 29 San Luis Obispo County Flood Control owns and operates Lopez Dam, northeast of the City. In the event of complete failure of Lopez Dam, water would flow in the direction of Arroyo Grande Creek, approximately 3,000 feet in each direction of the centerline. Lopez Dam is under the jurisdiction of the State of California Division of Dam Safety. Lopez Dam recently underwent a $30 million seismic retrofit, resulting in the ability to withstand a 7.0 earthquake and all State earthquake standards. A small portion of the Redevelopment Project is also identified as being located within a 100-year flood plain. The occurrence of any natural or man-made disaster or hazard may significantly reduce Tax Increment Revenues received by the Agency and may adversely impact the Agency's ability to pay debt service on the Bonds. Hazardous Substances.. An additional environmental condition that may result in the reduction in the assessed value of parcels would be the discovery of a hazardous substance that would limit the beneficial use of a property within the Redevelopment Project. In general, the owners and operators of a property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The owner (or operator) may be required to remedy a hazardous substance condition of property whether or not the owner (or operator) has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the property within the Redevelopment Project be affected by a hazardous substance would be to reduce the marketability and value of the property, perhaps by an amount in excess of the costs of remedying the condition. Certain Bankruptcy Risks. The enforceability of the rights and remedies of the Owners and the obligations of the Agency may become subject to the following: the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors' rights generally, now or hereafter in effect; usual equitable principles which may limit the specific enforcement under state law of certain remedies; the exercise by the United States of America of the powers delegated to it by the federal Constitution; and the reasonable and necessary exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the State of California and its governmental bodies in the interest of servicing a significant and legitimate public purpose. Bankruptcy proceedings, or the exercise of powers by the federal or state government, if initiated, could subject the Owners to judicial discretion and interpretation of their rights in bankruptcy or otherwise and consequently may entail risks of delay, limitation, or modification of their rights. Limited Obligations. The Agency has no power to levy and collect property taxes, and any property tax limitation, legislative measure, voter initiative or provision of additional sources of income to taxing agencies having the effect of reducing the property tax rate must necessarily reduce the amount of Tax Increment Revenues, and consequently, Tax Revenues that would otherwise be available to pay the principal of, interest on the Bonds. Voter Initiatives -State Constitutional Amendment. California's voter initiative process allows measures which qualify for the ballot to be approved or disapproved by voters in a State of California statewide election. Future voter initiatives could be enacted which adversely affect the Tax Increment Revenues and, therefore, the security for the Bonds. State of California Fiscal Issues In connection with its approval of the budget for the 1992/93, 1993/94 and 1994/95 Fiscal Years, the State Legislature enacted legislation which, among other things, reallocated funds from redevelopment agencies to school districts by shifting a portion of each agency's tax increment, net of amounts due to other taxing agencies, to school districts for such fiscal years for deposit in the Education Revenue Augmentation Fund ("ERAF"). Faced with a projected $23.6 billion budget gap for Fiscal Year 2002/03, the State Legislature adopted and the Governor signed, AB 1768 requiring redevelopment agencies to pay into ERAF in Fiscal Year 2002/03 an aggregate amount of $75 million. AB 1768 required the payment into ERAF in Fiscal Year 2002/03 only. 30 In 2003, the State Legislature adopted SB 1045 which required redevelopment agencies to make ERAF transfers in Fiscal Year 2003/04, based on a statewide aggregate transfer by redevelopment agencies of $135 million. SB 1045 required the Agency to transfer funds to ERAF in Fiscal Year 2003/04 and to make this transfer payment by May 10, 2004. In enacting SB 1045, the State Legislature also amended Section 33333.6 of the Redevelopment Law. Section 33333.2(c) and Section 33333.6(e) provided that the City Council may adopt an ordinance to extend the limits required by AB 1290 or AB 1342, as applicable, by one additional year. The City Council has adopted an ordinance under the provisions of SB 1045. The 2004/05 State Budget included a $1.3 billion shift of local government property taxes to the ERAF. The 2004/05 State Budget apportioned the $1.3 billion among cities ($350 million), counties ($350 million), special districts ($350 million) andredevelopment agencies ($250 million) and limited the $1.3 billion ERAF transfer to the two fiscal years 2004/05 and 2005/06. The Agency's share of this additional shift of property taxes was $24,617 in 2004/05 and $32,434 in 2005/06. As a trailer bill to the 2004/05 State Budget, the State Legislature adopted SB 1096, allowing redevelopment agencies to extend certain plan limitations one year for each ERAF payment in 2004/05 and 2005/06 if certain criteria are met. The provisions of SB 1096 can not be applied to the Redevelopment Project since it does not meet the criteria. The 2006/07 State budget does not contain any ERAF transfers, however, future legislation could be enacted and Tax Revenues available for payment of the Bonds may be impaired. The 2006/07 State Budget does not resolve the State's structural deficit between revenues and expenditures. It is therefore anticipated that there will be additional future legislation which addresses this situation. The Agency cannot predict what measures may be proposed or implemented for the current fiscal year or in the future. Given the magnitude of the State's potential structural deficit, it is possible that future legislation will further reduce Tax Revenues. On November 2, 2004, California voters approved Proposition lA, which amends the State Constitution to significantly reduce the State's authority over major local government revenue sources. Under Proposition lA, the State may not (i) reduce local sales tax rates or alter the method of allocating the revenue generated by such taxes, (ii) shift property taxes from local governments to schools or community colleges, (iii) change how property tax revenues are shared among local governments without two-third approval of both houses of the State Legislature, or (iv) decrease Vehicle License Fees revenues without providing local governments with equal replacement funding. Beginning in 2008/09, the State inay shift to schools and community colleges a limited amount of local government property tax revenue if certain conditions are met, including (a) a proclamation by the Governor that the shift is needed due to a severe financial hardship of the State, and (b) approval of the shift by the State Legislature with atwo- thirds vote of both houses. Under such a shift, the State must repay local governments for their property tax losses, with interest, within three years. Proposition lA does allow the State to approve voluntary exchanges of local sales tax and property tax revenues among local governments within a county. In the future, it is possible that the Governor will proclaim that a shift of additional local property tax revenue, including tax increment of the Agency, is needed due to severe financial hardship. The Agency cannot predict whether the State Legislature will, in future fiscal years, adopt legislation requiring other shifts of redevelopment property tax increment revenues to the State and/or to schools, whether by the ERAF mechanism or by another arrangement. Should such legislation be enacted, Tax Revenues available for payment of the Bonds may, in the future, be substantially reduced and the Agency's ability to pay debt service on the Bonds may be impaired. 31 Secondary Market There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary mazket exists, that such Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially different from the original purchase price. LEGAL MATTERS Enforceability of Remedies The remedies available to the Trustee and the Owners of the Bonds upon an event of default under the Indenture or any other document described herein aze in many respects dependent upon regulatory and judicial actions which are often subject to discretion and delay. Under existing law andjudicial decisions, the remedies provided for under such documents may not be readily available or may be limited. The various legal opinions to be.delivered concurrently with the delivery of the Bonds will be qualified to the extent that the enforceability of certain legal rights related to the Indenture is subject to limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally and by equitable remedies and proceedings generally. Approval of Legal Proceedings Rutan & Tucker, LLP, Costa Mesa, California, as Bond Counsel, will render an opinion which states that the Indenture is a valid and binding obligation of the Agency and enforceable in accordance with its terms. The legal opinion of Bond Counsel will be subject to the effect of bankruptcy, insolvency, moratorium and other similar laws affecting creditors' rights and to the exercise of judicial discretion in accordance with general principles of equity. See "APPENDIX F" for the proposed form of Bond Counsel's opinion. The Agency has no knowledge of any fact or other information which would indicate that the Indenture is not so enforceable against the Agency, .except to the extent such enforcement is limited by principles of equity and by state and federal laws relating to bankruptcy, reorganization, moratorium or creditors' rights generally. Certain legal matters will be passed on for the Agency by Rutan & Tucker, LLP, Agency General Counsel and by Jones Hall, A Professional Law Corporation, San Francisco, California, as Disclosure Counsel. Fees payable to Bond Counsel and Disclosure Counsel are contingent upon the sale and delivery of the Bonds. Tax Matters In the opinion of Rutan & Tucker, LLP, Bond Counsel, interest on the Bonds is exempt from State of California personal income taxes. Bond Counsel expresses no opinion whether interest on the Bonds is excluded from gross income for federal income tax purposes, and it is not intended by the Agency that said interest be exempt from federal income taxation. 32 Although Bond Counsel has rendered an opinion that the interest on the Bonds is exempt from State of California personal income taxes, the ownership or disposition of the Bonds, and the accrual or receipt of the interest on the Bonds may otherwise affect an Owner's state or federal tax liability. The nature and extent of these other tax consequences will depend upon each Owner's particular tax status and the Owner's other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences. The form of Bond Counsel's opinion is set forth in "APPENDIX F" hereto. Backup Withholding and Information Reporting. In general, information reporting requirements will apply to non-corporate holders with respect to payments of principal, payments of interest and the proceeds of the sale of a Bond before maturity within the United States. Backup withholding may apply to holders of Bonds under Section 3406 of the Tax Code. Any amounts withheld under the backup withholding rules from a payment to a beneficial owner, and which constitutes over-withholding, would be allowed as a refund or a credit against such beneficial owner's United States Federal income tax provided the required information is furnished to the Internal Revenue Service (the "Service"). U.S. Holders. The term "U.S. Holder" means a beneficial owner of a Bond that is: (i) a citizen or resident of the United States, (ii) a corporation, partnership or other entity created or organized in or under the laws of the United States or of any political subdivision thereof, (iii) an estate the income of which is subject to United States Federal income taxation regardless of its source or (iv) a trust whose administration is subject to the primary jurisdiction of a United States court and which has one or more United States fiduciaries who have the authority to control all substantial decisions of the trust. IRS Circular 230 Disclosure. To ensure compliance with requirements imposed by the Service, you are informed that (i) any U.S. federal tax advice contained in this offering material (including any attachments) is not intended to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer under the Tax Code; (ii) such advice is written to support the promotion or marketing of the transaction(s) or matter(s) addressed by the written advice; and (iii) the taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor. ERISA Considerations. Section 406 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") and Section 4975 of the Internal Revenue Code (the "Code"), prohibit employee benefit plans ("Plans") subject to ERISA or Section 4975 of the Code from engaging in certain transactions involving "plan assets" with persons that are "parties in interest" under ERISA or "disqualified persons" under the Code (collectively, "Parties in Interest") with respect to the Plan. ERISA also imposes certain duties on persons who are fiduciaries of Plans subject to ERISA. Under ERISA, any person who exercises any authority or control respecting the management or disposition of the assets of a Plan is considered to be a fiduciary of such Plan (subject to certain exceptions not relevant here). A violation of these "prohibited transaction" rules may generate excise tax and other liabilities under ERISA and the Code for fiduciaries and Parties in Interest. The Underwriter, as a result of its own activities or becatise of the activities of an affiliate, may be considered Parties in Interest, with respect to certain plans. Prohibited transactions may arise under Section 406 of ERISA and Section 4975 of the Code if Bonds are acquired by a Plan with respect to which the Underwriters or any of their affiliates are Parties in Interest. Certain exemptions from the prohibited transaction rules could be applicable, however, depending in part upon the type of Plan fiduciary making the decision to acquire a Bond and the circumstances under which such decision is made. Included among these exemptions are those transactions regarding securities purchased during the existence of an underwriting, investments by insurance company pooled separate accounts, investments by insurance company general accounts, investments by bank collective investment funds, transactions effected by "qualified professional asset managers," and transactions affected by certain "in-house asset managers." Even if the conditions specified in one or more of these exemptions are met, the scope of the 33 relief provided by these exemptions might or might not cover all acts which might be construed as prohibited transactions. In order to ensure that no prohibited transaction under ERISA or Section 4975 of the Code will take place in connection with the acquisition of a' Bond by or on behalf of a Plan, each prospective purchaser of a Bond that is a Plan or is acquiring on behalf of a Plan will be required to represent that either (i) no prohibited transactions under ERISA or Section 4975 of the Code will occur in connection with the acquisition of such Bond or (ii) the acquisition of such Bond is subject to a statutory or administrative exemption. Any Plan fiduciary who proposes to cause a Plan to purchase Bonds should (i) consult with its counsel with respect to the potential applicability of ERISA and the Code to such investments and whether any exemption would be. applicable and (ii) determine on its own whether all conditions have been satisfied. Moreover, each Plan fiduciary should determine whether, under the general fiduciary standards of investment prudence and diversification, an investment in the Bonds is appropriate for the Plan, taking into account the overall investment policy of the Plan and the composition of the Plan's investment portfolio. Absence of Litigation The Agency will furnish a certificate dated as of the date of closing of the Bonds that there is not now known to be pending or threatened any litigation restraining or enjoining the execution or delivery of the Indenture or the sale or delivery of the Bonds or in any manner questioning the proceedings and authority under which the Indenture is to be executed and delivered or the Bonds are to be issued or affecting the validity thereof. CONCLUDING INFORMATION Ratings on the Bonds Standard & Poor's and Fitch have assigned their ratings of "_" and " ," respectively, to the Bonds with the understanding that a financial guaranty insurance policy insuring payment when due of the principal of and interest on the Bonds will be issued on the date of closing of the Bonds by In addition, Standard & Poor's and Fitch have assigned their ratings of "_" and "_," respectively to the Bonds, notwithstanding the delivery of the financial guaranty insurance policy. Such rating reflects only the views of the rating agency and any desired explanation of the significance of such rating should be obtained from the rating agency. Generally, a rating agency bases its rating on the insurance and the information and materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance such rating will continue for any given period of time or that such rating will not be revised downward or withdrawn entirely by the rating agency, if in the judgment of such rating agency, circumstances so warrant. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Bonds. The Financial Advisor The material contained in this Official Statement was prepared by the Agency with the assistance of Harrell & Company Advisors, LLC, Orange, California, an independent financial consulting firm, who advised the Agency as to the financial structure and certain other financial matters relating to the Bonds. The information set forth herein has been obtained by the Agency from sources which are believed to be reliable, but such information is not guaranteed by the Financial Advisor as to accuracy or completeness, nor has it been independently verified. Fees paid to the Financial Advisor are contingent upon the sale and delivery of the Bonds. 34 Continuing Disclosure The Agency will covenant to provide annually certain financial information and operating data relating to the Redevelopment Project by not later than March 31 each year commencing March 31, 2008, to provide the audited Financial Statements of the Agency for the fiscal year ending June 30, 2007 and for each subsequent fiscal year when they are available (together, the "Annual Report"), and to provide notices of the occurrence of certain other enumerated events. The Annual Report will be filed by the Trustee on behalf of the Agency with each Nationally Recognized Municipal Securities Information Repository certified by the Securities and Exchange Commission (the "Repositories") and a State repository, if any. The notices of material events will be timely filed by the Agency with the Municipal Securities Rulemaking Board, the Repositories and a State repository, if any. The specific nature of the information to be contained in the Annual Report or the notices of material events and certain other terms of the continuing disclosure obligation are summarized in "APPENDIX E - FORM OF CONTINUING DISCLOSURE CERTIFICATE." This will constitute the Agency's first undertaking to provide continuing disclosure under the Federal Securities laws. The City has complied in all material respects with its undertakings related to continuing disclosure for its 2003 General Obligation Bonds. Underwriting E.J. De La Rosa & Co., Inc. (the "Underwriter") is offering the Bonds at the yields set forth on the inside cover page hereof The initial reoffering yields may be changed from time to time and concessions from the reoffering yields may be allowed to dealers, banks and others. The Underwriter has purchased the Bonds at a price equal to $ ,which amount represents the principal amount of the Bonds ($ ), less a net original issue discount of $ ,and less an Underwriter's discount of $ .The Underwriter will pay certain of its expenses relating to the offering. Additional Information The summaries and references contained herein with respect to the Indenture, the Bonds, statutes and other documents, do not purport to be comprehensive or definitive and are qualified by reference to each such document or statute and references to the Bonds are qualified in their entirety by reference to the form thereof included in the Indenture. Copies of the Indenture are available for inspection during the period of initial offering on the Bonds at the offices of the Financial Advisor, Harrell & Company Advisors, LLC, 333 City Boulevard West, Suite 1430, Orange, California 92868, telephone (714) 939- 1464. Copies of this document may be obtained after delivery of the Bonds from the Agency 214 E. Branch Street, Arroyo Grande, Califomia 93420, telephone (805) 473-5404. References All statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the Agency and the purchasers or Owners of any of the Bonds. Execution The execution and delivery of this Official Statement by the Executive Director has been duly authorized by the Arroyo Grande Redevelopment Agency. ARROYO GRANDE REDEVELOPMENT AGENCY By: Executive Director 35 APPENDIX A SUMMARY OF THE INDENTURE [to be provided by Bond Counsel] A-1 APPENDIX B FISCAL CONSULTANT'S REPORT s-i Redevelopment Project Area 1 (Arroyo Grande Redevelopment ProjectArea) Fiscal Consultant's Report for the Issuance of Tax Allocation Bonds April 5, 2007 City of Arroyo Grande Redevelopment Agency 214 East Branch Street Arroyo Grande, California 93420 Tierra West Advisors, LLC Real Estate and Redevelopment Consultants IG8 :~nnandalc Road. Pasadena, California 91105 Fiscal Consultant's Report Redevelopment Project Area 1 -Arroyo Grande Redevelopment Agency Table of Contents Purpose ............................................................................................... ........Page 3 Introduction .......................................................................................... ........Page 3 Background ......................................................................................... ........Page 4 Project Area Limitations ...................................................................... ........Page 5 General Assumptions in the Revenue Projections .............................. ........Page 5 Assessed Valuation Table .................................................................. ........Page 6 Proposition 13 ...................................................................................... ........Page 6 Property Sales ...................................................................................... .......Page 7 Property Sales Table ............................................................................ .......Page 7 New Construction and Significant Building Permit Activity .................... .......Page 8 Development Projects Table ................................................................. .......Page 9 Factors Analyzed but not included in the Tax Increment Projections.... .......Page 9 Proposition 8 Assessment Appeals ...................................................... .......Page 9 Base Year Assessment Appeals ........................................................... .....Page 10 Assessment Appeals Table .................................................................. .....Page 10 Delinquencies/Supplemental Roll ........................................................ .....Page 10 Tax Rates ............................................................................................ .....Page 11 Top Ten Taxpayers Table ..................................................................... .....Page 11 Tax Increment Revenue ....................................................................... .....Page 12 Pass-Through Payments and Administrative Charges .......................... .....Page 12 Statutory Pass Through Payments ....................................................... .....Page 12 Basic Aid School District Payments ...................................................... .....Page 13 Tax Increment Administration Fee ........................................................ .....Page 13 Historical Tax Increment Revenue ........................................................ .....Page 13 Appendix ............................................................................................... .....Page 14 Appendix Table 1 -Projected Tax Increment Revenue ........................ .....Page 15 Appendix Table 2 -Historical Tax Increment Revenue ........................ .....Page 16 TIERRA WEST ADVISORS, LLC. PACE 2 Fiscal Consultant's Report Redevelopment Project Area 1 -Arroyo Grande Redevelopment Agency Purpose The following fiscal consultant's report (Report) has been prepared at the request of the City of Arroyo Grande Redevelopment Agency (the "Agency") to detail and identify the availability of tax increment revenues generated within the Arroyo Grande Project Area (the "Project Area") to fund debt service. This report also identifies and provides various bonding scenarios based upon the tax increment projections prepared. Table 1 illustrates the amount of net tax increment revenue available to the Agency for debt service on the potential bond issue. The projections of future tax increment growth have been based upon the factors further detailed in this Report. Additionally, revenue projections have been conservatively estimated in order to reduce the possibility if overstating future tax increment revenues. The Summary Table sets forth the overall findings of the Report and summarizes projected property tax revenue provided in Table 1 in the Appendix. The current fiscal year 2006-2007 and the last year for receiving tax increment 20423 are shown with a Net Present Value applied to the total amount of net tax increment available for debt service. The Agency approved an Ordinance No. 551 extending the time frame to collect tax increment revenue by one (1) fiscal year for a total of 46 years of tax increment collections. The Summary Table shows two amounts, $73,824,027 available for non-housing debt service (excluding low to moderate housing, the Basic Aid School District Payment and the County Administrative Fee) and $45,772,961 (excluding statutory pass-through payments), which is available for the in revenue available to the Agency (excluding all payments and the Agency administrative reserve set aside). Summary Table ARROYO GRANGE REDEVELOPMENT PROJECT AREA PRO.IFf.TFfl TCY INf.RFMFNT RFVFNI IF Gross Low BMOd Tae hwrenlent 3367fi~b)(t) County Avalable Total Remaining fiscal Total Inaemenlal Tax Housing Exduding Basic Aid Admin. Fee far NOn- 3360].5 Balame for Years Assessed Value Increment Set-Aside LaxB MOd. School Dist Payment Housing Debt Statutory Agency Admin. Value 1% 20% Set Adde Pa ment 2% Service Pa nls 8Pm Ras¢Vear 199fi~97 423,359,fifi6 ~ 2006 - 2007 228,338,686 104,979,020 1,049,790 209,958 839,032 34,374 19,757 785,701 209,958 575,743 2042 ~ 2043 533,635,76] 410,276,701 4,102,]67 828552 3,282,209 112,583 40,303 3,129,324 1,333,560 1,795,]64 Totals 96,805,752 19,361,150 7],444,fi02 2,553,007 1,067,568 ]3.824,027 28,051,085 45772,961 Net Present Value (based ona6%retum) 31705,507 fi,347,701 25,364,406 825,468 374,929 24,764,009 8,602,300 15,561,709 Introduction The Project Area is located in the City of Arroyo Grande ("City"), San Luis Obispo County, California. The City was incorporated in 1911 and encompasses an area of approximately 5.45 square miles. According to State Department of Finance estimates, the City had a total of 16,599 residents and 7,304 housing units as of January 1, 2006. TI ERRA W EST ADV ISORS, LLC. PAGE 3 Fiscal Consultant's Report Redevelopment Project Area 1 -Arroyo Grande Redevelopment Agency The Project Area encompasses approximately 510 acres of Commercial, Industrial, Institutional/Governmental/Open Space, Residential and Vacant land uses. The Project Area includes properties inside the City boundaries with certain parcels located north and south of Highway 101. Real estate investment is strong throughout the City and should contribute to the strength of the property tax revenue for the Project Area. The Project Area's commercial corridors have seen significant reinvestment and new development projects are being proposed often. The tax increment projections (Table 1 in the Appendix) include approximately 37,000 square feet of new commercial space and 154 residential units (townhomes, single family detached and a senior housing complex) that will be constructed in the Project Area. These projects are examples of the private investment that is anticipated for the Project Area. The tax increment projections do not include development projects that are in the preliminary stages of planning. This Report has been conservative in estimating future tax increment revenue that will be generated by this reinvestment, and only includes City approved development plans. The following assumptions and information are used to prepare the tax increment revenue projections: 1. The rate of assessed value growth and development in the Project Area; 2. Growth in assessed values as permitted by Article XIIA of the Cal'rfornia Constitution ("Proposition 13"), and; 3. Assessment and apportionment procedures of the County of San Luis Obispo ("County"); 4. Financial data supplied by the County of San Luis Obispo and the City of Arroyo Grande. 5. A one percent tax rate levy. The tax increment revenue projections have been conservatively estimated. Bacl~ground The Redevelopment Plan for the Project Area was adopted by Ordinance No. 487 C.S. on June 10, 1997 to facilitate the revitalization of the commercial corridors within the City. The Redevelopment Plan for the Project Area is focused on accomplishing the following purposes and objectives: TIERRA WEST ADVISORS, LLC. PAGE 4 Fiscal Consultant's Report Redevelopment Project Area 1 -Arroyo Grande Redevelopment Agency • encourage redevelopment through cooperation with private entities and public agencies, • provide for the rehabilitation of commercial, industrial and residential structures in the Project Area, • enhance the long term economic well being of the community, • provide public infrastructure improvements and community facilities, • achieve desirable economic development goals and programs through joint efforts with property owners and businesses, • enhance the long term economic well being of the community, • increase, improve and preserve the supply of affordable housing, and • acquire real property. The issuance of these Bonds will assist the Agency in addressing Project Area blight. Proiect Area Limitations The term of the effectiveness of the Redevelopment Plan for the Project Area is 30 years from the date of adoption or June 10, 2027. A time limit to issue or incur debt for the Project Area is 21 years from the date of adoption or June 10, 2018. This limit does not apply to the Agency's ability to incur or issue debt for housing purposes payable from housing set-aside funds. It also does not limit the Agency's ability to refinance, refund, or restructure indebtedness if the indebtedness is not increased and the time during which the indebtedness is to be repaid is not extended beyond the time limits to repay indebtedness. Pursuant to the Law, an agency may amend the Redevelopment Plan for one 10-year extension. The time limit to repay indebtedness/receive tax increment for the Project Area is 46 years from the date of adoption or June 10, 2043. Pursuant to Sections 33333.2 (a)(3) and 33333.8 (c) of the Law an agency can only continue to receive tax increment after this time limit to repay debt or meet affordable housing obligations. [The City Council adopted Ordinance No. 551 on January 13, 2004 extending the time limit to incur debt and the time limit to repay indebtedness by one year each.] The amount of bonded indebtedness, which can be outstanding at any one time and payable in whole or in ,part from tax allocations pursuant to Section 33670 of the Redevelopment Law, shall not exceed $750,000,000 for the Project Area. General Assumptions in the Revenue Projections The financial projections and other tables provide information that can affect property values within the Project Area (such as property sales and assessment appeals) are TfERRA WEST ADVISORS, LLC. PAGE 5 Fiscal Consultant's Report Redevelopment Project Area 1 -Arroyo Grande Redevelopment Agency based on information from the secured assessment roll provided by the San Luis Obispo County Assessor's Office. The Redevelopment Plan for the Project Area provides the Agency with the authority to collect tax increment revenue in order to accomplish revitalization projects within the Project Area. Tax increment revenue is generated from increases in the current year total assessed value above the base year value. The current year total assessed values for the Project Area is $228,338,686 and the Project Area's 1996- 97 base year value is $123,359,666. The base year value for the .Project Area is used to calculate the incremental value. The following table summarizes the Project Area's historical assessed values: ARROYO GRANDE PROJECT AREA Assessetl valuations Assessetl 2002-03 2003-04 % 2004-05 % 2005-06 % 2006-07 Values Change Change Change Change Secured $130,650,161 $140,396,868 7.46% $150,416,771 7.1d% $185,910,727 23.60% $209,986,998 12.95% Unsecured $14,719,960 $75,791,470 3.20•/ $74,931,350 -1.71% $16,539,918 10.77% $17,874,588 8.07% Utili $475,100 $475,700 0.00•/ $475,100 0.00% $475,100 0.00% $475,100 0.00% Total $145,845,221 $156,063,438 7.01% $765,823,221 6.25% $202,925,745 22.37% $228,338,686 12.52% Base Year $123,359,666 $123,359,666 $123,359,666 $123,359,666 $123,359,666 Tax Increment $22,485,555 $32,703,772 d5.4/% $42,463,555 29.84% $79,Sfi6,079 87.37% $104,979,020 31.94% Over the past five years, the Project Area's total assessed values have increased by approximately 56.6% from $145,845,221 in 2002-03 to $228,338,686 in 2006-07. This increase in assessed property values is attributed to the strong appreciation of local real estate values and a robust economy. The tax increment revenue projection contained in Table 1 of the Appendix provides a growth rate for secured assessed values of 2%. The unsecured and utility values are not subject to annual inflationary increases as permitted uhder Law, and experience unpredictable increases and decreases; therefore, no growth rate was applied to the unsecured or state assessed values in the tax increment projections. Proposition 13 The passage of Proposition 13 in 1978 modified Article XIIA of the Califomia Constitution and brought a change in the manner for annual assessments in the state of Califomia. Proposition 13 seta 2% growth rate for annual inflation when reassessments are made by County Assessors throughout Califomia. The 2% growth rate was established regardless of the market changes occurring within individual cities or communities. However, property sales, new development, property rehabilitation or other actions that trigger reassessments by the County TIERRA WEST ADVISORS, LLC. PAGE6 Fiscal Consultant's Report Redevelopment Project Area 1 -Arroyo Grande Redevelopment Agency Assessor allow the Assessor to adjust the property value of an individual parcel to its present market value. The tax increment revenue projections assume a growth rate of 2% on secured assessed values as permitted under Law. Since Proposition 13 the State Board of Equalization has directed county Assessors to use an inflationary rate that was less than 2% on five (5) separate occasions as follows: 1993-94 -1.00% 1995-96 - 1.19% 1996-97 - 1.11 1999-00 - 1.853°/d 2004-05 - 1.867% Property Sales Section 110.1 of the Revenue and Taxation Code establishes the need for a reassessment of taxable property based on the property's purchase price and fair market value when a change of ownership occurs. Sales that occurprior to January 1St ("the lien date") are reflected on the upcoming fiscal year assessment roll. Sales occurring after the lien date will receive a supplemental tax bill for the prorata share of the amount of increase in taxes during the fiscal year. The verified sales, which occurred after January 1, 2006, were analyzed to estimate the secured assessed values that would be added to the 2007-08 fiscal year. ARROYO GRANDE PROJECT AREA 2006 Properly Re-Sales Difference between Sales Price Assessor Lot and Parcel Square Assessed Assessetl % of Number Date Sold Feet Lantluse Sales Price Value Value Change 006 311 020 3/22/2006 1850 VACANT,COMMERCIAL $375,500 $20,808 $354,692 1704.59% 006 311 081 3/22/2006 23087 VACANT,COMMERCIAL $375,500 $260,100 $115,400 44.37% 077041002 4/19/2006 11850 0FF,OFFICE,1-S UNITS $480,000 $158,762 $321,238 202.34% 077054002 4/19/2006 1041 RES,CONDOMINIUM $405,000 $121,602 $283,398 233.05% 077111 011 4/28/2006 26563 OFF,OFFICE,1-5 UNITS $1,461,000 $1,144,440 $316,560 27.66% 077055002 5/24/2006 5993 RES,PLANNED UNIT DEVELOPMENT $659,000 $611,184 $47,816 7.82% 007491038 6/29/2006 4532 COM,RETAIL SALES $700,000 $257,140 $442,860 172.23% 006 543 035 7!18/2006 11300 RES,SINGLE FAMILY RES.2ND LVG $570,000 $426,564 $143,436 33.63% 007481 019 9/22/2006 7500 OFF,OFFICE,CONVERTED8INGLE FA $799,000 $324,303 $474,897 146.37% Totals 93,716 ~ $5,825,000 $3,324,903 $2.500,097 75.19% 2006-07 Secured Assessed Value $209,988,998 Note: The total property re-sales for 2006 are 1.26 % of the Secured'Assessed Values for the Project Area. TIERRA WEST ADVISORS, LLC. PAGE 7 Fiscal Consultant's Report Redevelopment Project Area 1 -Arroyo Grande Redevelopment Agency An additional $2,500,097 in assessed values that are the result of property sales occurring in 2006 have been included in the tax increment revenue projections for 2007-08 based on these sales. The tax increment revenue projection does not include supplemental rdll revenues that are generated from property sales because the trended rate of property sales is unable to be predicted and thus considered unreliable. New Construction and Building Permits Pursuant to the Revenue and Taxation Code properties are reassessed after new construction or substantial rehabilitation has occurred. Construction projects that are completed after the lien date are assessed on the supplemental roll. The tax increment revenue projections included in this Report incorporate assessed value increases related to development projects that will be completed in the Project Area within the next three calendar years according to City approved plans. The total project value of these proposed development projects will be included in fiscal year following the calendar year in which they are completed. The project description details provided by City staff for new development projects and building permits issued assisted in determining the estimated new value that would be generated within the Project Area over the upcoming fiscal years. The tax increment revenue projections include the significant development projects anticipated in the Project Area. The anticipated value of these projects is included in the tax increment revenue projections to add to future total assessed values as follows (fiscal year 2007-08 in the tax increment revenue projections includes an additional $2,500,097 in property sales): Fiscal Year New Development Value 2007 - 2008 $14,956,500 2008 - 2009 $14,115,280 2009 - 2010 $8,513,725 2010 - 2011 $3,330,000 TIERRA WEST ADVISORS, LLC. PAGE 8 Fiscal Consultant's Report Redevelopment Project Area 1 -Arroyo Grande Redevelopment Agency Development Projects Year Estimated Assessment Completed New Construction Project Description Value Roll 2006 $14,306,500 2007-08 1540 E. Grand Ave. -Taco Del Mar, Yogurt, Little Caesar's -approximately 6,500 s.f. retail space $2,535,000 1530 E. Grand Ave. -Santa Lucia Bank $1,102,500 136 Bridge St. -Dentist office with 2 upstairs apartment units $1,026,000 East Village PlazalPaulding Cir. - 5 commercial buildings $5,550,000 Le PointelNevada - 6 townhomes: 1 - 1,500 s.f. office; 1 - 2,100 s.f. office; & 3 apartment units $4,093,000 2007 $14,115,280. 2008.09 1400 E. Grand Ave. - 6,344 s.f. Applebee's restaurant $2,664,480 1375 E. Grand Ave. - 4,004 s.f. SESLOC Credit Union & 6,195 s.f. retail tenant spaces $2,711,800 185 to 187 Brisco Road - 12 townhomes - 2 - 4 bed, 3 bath, 2 car garage, 2,084 s.f., 6 - 3 bed, 2.5 bath, 2 cer garage, 1,574 s.f.; & 4 - 3 bed, 2.5 bath, 2 car garage, 1,478 s.f. $5,230,000 189 Brisco Road - 7 townhomes - 1 - 3 bed, 2.5 bath, 2 rar garage, 1,384 s.f.; 3 - 3 bed, 2.5 bath, 2 car garage, 1,689 s.f.; & 3 - 3 bed, 2.5 bath, 2 car garage, 1,937 s.f. $3,072,500 210 Traffic Way - 1,746 s.f. office $436,500 2008 $8,513,725 2009-10 184 Brisco Road - 7 townhomes - 3 - 3 bed, 2.5 bath, 2 car garage, 1,604 s.f.; 3 - 3 bed, 2.5 bath, 2 car garage, 1,583 s.f.; & 1 - 3 bed, 3 bath, 2 car garage, 1,692 s.f. $3,054,000 120 EI Camino Real - 10 townhomes - 2 - 2 bed, 2.5 bath, 2 car garage, 1,258 s.f.; 4 - 3 bed, 3 bath, 2 car garage, 1,454 s.f.; 1 - 3 bed, 2 bath, 2 car garage, 1,395 s.f.; 1 - 4 bed, 3 bath, 2 car garage, 1,707 s.f.; 1- 1 bed, 1 bath, 1 carport+ 5 guest spaces, 680 s.t.; & 1 - 1 bed, 1.5 bath, live/work 400 s.f. office, 1,094 s.f. $4,189,500 231 S. Halcyon Road -Mixed Use office and residential - 3,739 s.f. office & 2 bed, 1 bath apartment, 880 s.f. $1,270,225 2009 $3,980,000 2010-11 1136 E. Grand Ave. - 8 townhomes - 6 - 3 bed, 2 bath, 2 car garage, 1,320 s.f. & 2 - 3 bed, 2bath, 2 car garage, 1,095 s.f. $3,330,000 Year Estimated Assessment Completed Significant Building Permits Value Rall Zoos $650,000 2007-oa 1577 EI Camino Real - signifcent commercial tenant improvements to existing building for a veterinary clinic $175,000 130 E. Branch St. - signifcant commercial TI to existing building for a clothing boutique $50,000 132 Short St. -mixed use project with new single family dwelling $425,000 Tierra West cannot ensure that projected valuations will be realized. Factors Not included in the Tax Increment Projections Proposition 8 Assessment Appeals Property owners may file an assessment appeal with the San Luis Obispo County Assessor to dispute assessments on their property. If the property owner is successful the Assessment Appeals Board will authorize a temporary reduction in value for the property because the current market conditions cause the property to be worth less than its assessed value. The assessed value of the property will not be adjusted back to the original assessed value until market conditions improve. TIERRA W EST AD V ISORS, LLC. PAGE 9 Fiscal Consultant's Report Redevelopment Project Area 1 -Arroyo Grande Redevelopment Agency Base Year Assessment Appeals If a property owner is successful in challenging the original (Base) value of their property, the base value will be modified and used to compute future Proposition 13 assessments. Base year assessment appeals can have a longer negative effect on assessed values for a Project Area than Proposition 8 appeals. The number of appeals that will be filed annually and the amount of assessed value requested to be reviewed by the Assessment Appeals Board is difficult to predict, because there are very few appeals filed within the Project Area. Over the past five (5) years only seven (7) assessment appeals have been filed and only one is currently pending. The hearing date for this pending appeal and the final decision is not known; therefore, no reduction in assessed value has been taken for this pending appeal. ARROYO GRANDE PROJECT AREA Historical Property Assessment Appeals Category 2003 2004 2005 2006 Original Assessed Value of Allowed Appeals $2,249,500 $0 $8,144,103 $0 Appeals Allowed 0 0 0 0 Appeals Withdrawn 1 0 3 0 Reduction in Assessed Value $0 $0 $0 $0 Appeals Denied 1 0 1 0 Original Assessed Value of Pending Appeals $0 $2,100,000 Appeals Pending 0 0 1 0 Potential Reduction in Assessed Value $0 $0 $837,915 $0 Top Ten Tax Payers with Appeals Pending 0 0 0 0 Potential Reduction in Assessed Value $0 $0 $0 $0 Delinquencies/Supplemental Roll In 1993-94, the County of San Luis Obispo adopted the 'Teeter Plan" pursuant to Revenue and Taxation Code Sections 4701 - 4717. The Teeter Plan has no impact on tax assessments, tax rates, or collection procedures it changes the way the collections of delinquent taxes and penalties are distributed among the taxing agencies. The Agency receives the entire current year property without regard to delinquencies; however, future penalties collected are distributed to the Tax Loss Reserve Fund, as required by the law. For 2005-06 delinquent taxes were 1.64% of the tax levy for the County. The tax increment revenue projection does not include any supplemental revenue, delinquencies or refunds because these amounts vary from year to year and cannot be projected. TIERRA WEST ADVISORS, LLC. PAGE 10 Fiscal Consultant's Report Redevelopment Project Area 1 -Arroyo Grande Redevelopment Agency Tax Rates The Project Area has four (4) tax rate areas and the tax rates for 2006-07 are as follows: Tax Rate Area Tax Rate Tax Rate Area Tax Rate 1-024 1.00443% 1-025 1.00443% 1-028 1.00443% 1-029 1.00443% The tax rates for 2005-06 are as follows: Tax Rate Area Tax Rate Tax Rate Area Tax Rate 1-024 1.00445% 1-025 1.00445°/d 1-028 1.00445% 1-029 1.00445% As shown above, the 2006-07 tax rate for the Project Area was 1.00443% and the tax rate for 2005-06 was 1.00445%. The debt service levy (the percentage above 1.00°/d) will decrease over time. The Agency does not retain any of the debt service levy established post 1989. Top Ten Ta~ayers The San Luis Obispo County Assessor's 2006-07 secured and unsecured assessment rolls were utilized for compiling the top ten largest taxpayers within the Project Area. As presented in the following table the total assessed value for the combined ten largest property owners is $36,658,439. This represents 16.05%, of the Project Area's 2006-07 total assessed value of $228,338,686. ARROYO GRANDE PROJECT AREA Top 10 Taxpayers 2006-07 Total (Secured & Unsecured) Assessment Rolls # of % of Secured Owner Parcels Lantl Use Total Value Assessed Value 1. Deblauw Properties LLC 12 Office 1-5 units & Vacant Commercial $4,986,978 2.18 2. Longs Drug Stores California Inc. 2 Vacant Commercial $4,694,613 2.06 3. Howard D. Mankins 10 Resid., Lt. Manuf. & Vac. Commercial $4,018,647 1.76 4. Santa Lucia Bank 2 Commercial Bank $3,615,459 1.58° 5. Charles L. Frandson Trust, Et. AI. 1 Vacant Commercial $3,464,053 1.52 6. Arroyo Town & Country Square LLC 3 Community Shopping Center $3,420,870 1.50 7. Michael B. Limberg Trust, El. AI. 6 Office Metlical & Vacant Commercial $3,323,965 1 46% 8. Betty A. Carroll 1 Office 11-25 Units $3,260,080 1.43% 9. Tri W Enterprises Inc. 2 Neighborhood Shopping Center $2,983,774 1.31 10. James D. Motter, Et AI 1 Commercial Warehousing $2 890 000 1.27 TOTALS 40 $36,658,439 16.05 2006-07 Total Assessed Value $228,338,666 Source: San Luis Obispo County Assessor TIERRA WEST ADVISORS, LLC. PAGE I1 Fiscal Consultant's Report Redevelopment Project Area 1 -Arroyo Grande Redevelopment Agency Tax Increment Revenue The Tax Increment Revenue (both the projected tax increment revenue and the historical tax increment revenue collections) for the Agency is presented in two tables in the Appendix of this Report. Appendix Table 1 presents an estimate of future tax increment revenue the Agency is projected to receive over the 46 years the Agency can collect tax increment. Appendix Table 2 provides a historical presentation of the Agency's revenue disbursed by the County Auditor Controller. Pass-Through Pavments and Administrative Charoes The tax increment revenue projections include factors such as anticipated new development to occur in the Project Area and property sales that will positively affect future assessed value in the Project Area. The projections also take into account statutory pass through payments pursuant to Section 33607.5 of the Law, basic aid school district payments pursuant to Section 33676(b)(1) of the Law, and administration fees charged pursuant to SB 2577. Statutory Pass-Through Payments The Project Area must make pass-through payments to Project Area taxing entities pursuant to Section 33607.5 of the Law. The payments are structured in three tiers with the affected taxing entities receiving a share of the net tax increment revenue (net low- to moderate-income housing set aside) starting in the first year the Agency receives tax increment and continuing through the 46 years the Agency collects tax increment revenue. The first tier allocates 25% of the net tax increment revenue to each taxing entity from tax increment years 1 through 46. In the 11th and 31ST years of tax increment received, the Agency pays an additional 21 % and 14% respectively, of the net tax increment. The 10th and 30"' years serve as adjusted base years for these second and third tier payments. The statutory pass-through payments will be subordinate to the debt service payments for the bonds because the Agency followed the procedures required by the Law to request subordination for the taxing entities that share the Project Area tax increment revenue. Pursuant to Section 33607.5 of the Law the Agency presented substantial evidence to the taxing entities that the redevelopment agency will have sufficient funds available to pay the debt service on the proposed bonds and to make the statutory pass-through payments. The 45 day time frame for contesting the subordination request elapsed and the statutory pass-through payments will be subordinate to the debt service payments for the bonds. TIERRA WEST ADVISORS, LLC. PAGE 12 Fiscal Consultant's Report Redevelopment Project Area 1 -Arroyo Grande Redevelopment Agency Basic Aid School District Payments The Agency must pay ah additional pass-through to the San Luis Obispo County Office of Education, which is designated as a "basic aid" pursuant to Section 33676(b) (1) of the Law. The payments equate to the lesser of the following: 1) percentage growth in assessed value that occurs throughout the district, excluding the portion of the district within the redevelopment project area, or 2) eighty percent of the growth in assessed value that occurs within the portion of the district within the redevelopment project area. The calculation for the Basic Aid paymerts are based on the first option above and were detailed in San Luis Obispo County Auditor Controller worksheets collected for this Report. This Report follows the formula utilized by the Auditor Controller for calculating the Basic Aid payments. Tax IncrementAdministration Fee Actual tax increment revenue received by the Agency is reduced to reflect the administration fees charged by the County Auditor-Controller pursuant to Senate Bill 2577 and Assembly Bill 1924. This administration fee varies slightly from year-to- yearbecause pursuant to Revenue and Taxation Code 97 it must be based on actual costs associated with assessing, collecting, and allocating property tax revenues. In 2006-07 the County Auditor-Controller charged the Agency $ 19,757.25. To account for anticipated growth in the County Administration fee, the tax increment projections apply a 2% growth rate. Historical Tax Increment Revenue Appendix Table 2 provides a historical presentation of the Agency's revenue disbursed by the County Auditor Controller. This table segregates by the revenue received by the Agency according to the two Assessment Rolls that are prepared by the County Assessor annually, the Regular Assessment Roll and the Supplemental Assessment Roll. The Regular Assessment Roll (Section 601 Roll) consists of properties that are assessed locally assessed (secured and unsecured assessments) and properties assessed by the State Board of Equalizatioh. The Supplemental Assessment Roll consists of all properties that have experienced a change in ownership or significant new construction. TIERRA WEST ADVfSORS, LLC. PAGE 13 Fiscal Consultant's Repor# Redevelopment Project Area 1 -Arroyo Grande Redevelopment Agency APPENDIX TIERRA WEST ADVISORS, LLC. PAGE 14 Fiscal Consultant's Report Redevelopment Project Area 1 -Arroyo Grande Redevelopment Agency Appentllz Table-t ARROYO GRANDE REDEVELOPMENT PROJECT AREA PROJECTED TAX INCREMENT REVENUE Projected Secured Property Slate Unsecured Gross LowB Mod. Taa Increment 33676(b)(1) County Available Total Remaining Fiscal Growth Assessed SalesB Assessed Assessed Total Incremental Tas Housing Exclud ng Basic Aid Admin. Fee for NOo- 33607.5 Balance for Yea rs Rate Value New Value Value Assessed Value Increment Set-Aside LowB MOtl. School Oisl Payment Housing Deht Statutory Agency Admin. (2% rowlh) Construction no rowlh no rowlh Value 1% 20% Gel Aside Pa ment 2% Service Pa menu BPro acts Base Year 7996 .97 109,139,808 14,279,858 123,359,666 ' 2006 - 2007 2% 209,986,998 17,456,597 475.100 17,874,588 228,338,686 104,979,020 1,049,790 209,958 839,832 34;374 19,757 785,701 209,958 575,743 2007 2008 2% 231,994,507 14,175,280 475.100 17,874,588 250,344,195 726,984,529 1,269845 253,969 1.015,876 35.880 20;152 959,843 253,969 705,874 2008 2009 2% 251;031,983 8,513,725 475.100 17,874,568 269,381,671 146,022,005 1,460,220 292,044 1.168.176 37,475 20,555 7.110206 324,027 786,179 2009 2010 2°/ 264;736,622 3,330,000 475.100 17,874,588 283,086,310 759,726,644 1.597266 319,453 1,277,813 38,979 20,967 1,217.867 374,460 843,407 2010 2011 2% 273,427,954 475.100 17.874,588 291,777,642 168,417,976 1.684780 336,836 1 347.344 40,576 21;386 1.285.382 406,444 878,930 2011 2012 2°k 278;896,513 475.100 17,674,588 297,246.201 173,886,535 1.738,665 347,773 1391.092 42204 21;814 1.327.075 426,568 900,506 2012 2013 2% 284,474,444 475,100 17,874,588 302,824,132 179,464,466 1.794,645 358,929 1 435.716 43,864 22,250 1.369,601 447,095 922,506 2013 - 2014 20/ 290;163,932 475,100 17,874,588 308,513,620 185,153,954 1.851,540 370,308 1 481.232 45,558 22,695 1.412.978 468,033 944.946 2014 - 2075 2% 295;967,211 475,100 17,874,588 314,316,899 190;957,233 1.909,572 381,914 1,527.658 47286 23;149 1,457.223 489,389 967.834 2015 2016 2% 301,886,555 475.100 17,874,588 320,236,243 196,876,577 1.968,766 393,753 1575013 49,048 23,672 - 1,502,352 511,172 997,181 2016 2017 2% 307,924,286 475,iW 17,874,588 326,273.974 202,914,308 2.029,143 d05,829 1,623,314 50;846 24,084 1,546,384 533,391 1,014,994 2017 2016 2% 314,082,772 475,100 17,874,588 332.432,460 209,072,794 2,090,728 418,146 1,672582 -52,680 24,566 1,595,337 556,054 7.039,283 2018 2019 2% 320,364,428 475,100 17,874,588 338.714,116 215,354,450 2,153,544 430,709 1,722836 54;550 25,057 7,643,229 579.170 1,064058 2019 - 2020 ~2% 326,771,716 475,100 17,874,588 345,121,404 221,761,738 2,217,617 443,523 1,774094 56,457 25,558 1.692;078 602,749 1,089,329 2020 - 2021 2% 333,307,150 475.100 77;874,588 357,656,838 128,297,772 2282,972 456,594 1,826377 58;403 26.069 1;741,905 626,800 1115.105 2021 2022 2°l0 339,973,293 475100 17;874,588 358,322,981 234,963,315 2349,633 469,927 1,879,707 60;388 26.591 1;792,728 651,331 1 141,397 2022 2023 2 % 346,772,759 475;100 17;874,588 365,122,447 241;762,781 2417,628 483,526 1,934,102 62,412 27,122 1,844,568 676,353 1;168,215 2023 2024 2% 353,708,215 475,100 17,874,588 372,057,903 248,698,237 2,486,9112 497,396 1 989,586 64,477 27,665 1,897,444 701,876 1;195,568 2024 - 2025 2% 360,782,379 475.100 17,874,588 379,132,067 255,772,401 2,557,724 511,545 2,046,179 66,583 28,218 1,951,378 727,908 1,223,469 2025 - 2026 2% 367,998,026 475,100 17;874,588 386,347,714 262,988,048 2,629,880 525,976 2,703,904 68,737 28,783 2,006.390 754,462 1,251.928 2026 - 2027 2% 375,357,987 475,700 17,874,588 393,707,675 270,348,009 2,703,480 540,696 2,162,784 70.923 29,358 2,062.503 - 781,547 1,280.956 2027 2028 2% 382,865,147 475;100 17;874,588 401,274,835 277,855,169 2.778,552 555,710 2,222.841 73,158 29,945 2.119.738 809,173 1,310,565 2028 2029 2% 390.522,450 475;100 17,874,588 408,872,138 285,512,472 2,855,725 571,025 2,284,100 75.438 30,544 2.178,118 839,496 1.338,622 2029 2030 Z°k 398,332,899 475,100 17874,588 416,682,587 293,312,921 2;933,229 586,646 2,346,583 77,763 31,155 2,237,665 870,425 1,367,240 2030 - 2031 2% 406.299,557 475;100 17,874,588 424,649245 331,289,579 3,012,896 602,579 2,410,317 80,135 31,778 2298,404 901,973 1396,430 2031 - 2032 2% 414.425,548 475,100 17,874,588 432775236 309,475,570 3,094,156 678,831 2.475,325 62.554 32;414 2360;357 934,152 1,426204 2032 2033 2% 422.714,059 475,100 17,074,588 441,063747 317,704,081 3;177,041 635,408 2.541,633 85,022 33,062 2.423;549. 966.975 1,456,574 2033 2034 2% 431,168,340 475,100 17;874,588 449,518,028 326,158,362 3;261,584 652,317 2.609,267 07;539 33,723 2,488,005 1,000,454 1,487,551 2034 2035 2% 439,791,707 475,100 17,874,588 456,141,395 334,781,729 3,347,817 669,563 2,678.254 90,106 34,398 2;553,750 1,034,602 1,519,148 2035 - 2036 2% 446,587,541 475,100 77;874,588 466,937,229 343,577,563 3,435,776 687,155 2,748.621 92,725 35,086 2,620,610 1;069,434 1,551,376 2036 - 2037 2% 457,559,292 475,100 17,874,588 475,908,980 352,549,314 3,525,493 705,099 2,820.395 95,396 35,788 2,689,211 1,104,962 1,584,249 2037 2038 2% 466710,477 475,100 17.874,588 485,060,165 361,700,499 3,617,005 723,401 2,893604 98,121 36,503 2758,980 1,141,201 1.617,780 2038 2039 2% 476,044,667 475,100 17,874,588 494,394,375 371,034,709 3,710347 742,Ofi9 2,968278 100,900 37,233 2.830.145 1,178,164 1,651,981 2039 2040 2% 485,565,581 475.100 17,874,588 603,975,289 3110,555,803 3,805,556 761,111 3,044,445 103,734 37,978 2,902,733 1,215,867 1 886,866 2040 - 2041 2°k 495,276,892 475,100 17,874,588 513,626,580 390266,914 3.902,669 780,534 3;122,135 106.625 38;738 2.976772 1,254.324 1,722,449 2041 2042 2% 505,162,430 475,100 17,874,588 523,532,118 400,172,452 4.001,725 800,345 3;201,380 109,575 39;512 3052293 1,293,549 1;758,743 2042 - 2043 2% 515.286,079 475.100 17.874,588 533,635,767 470;276,101 4.102,761 820,552 3,282209 112.583 40;303 3,129;324 1,333.560 1.795.7fiq ToUls 96.805;752 19,361,150 77444,602 2.553,007 1;067,568 73,824,027 211,051,065 45,772,961 Net Present Value (based on afi%retum) 31.705;5W 6,341;101 25,364,406 825.468 374,929 24,164,009 8,602,300 15,561,709 TIERRA WEST ADVISORS, LLC. PAGE IS Fiscal Consultant's Report Redevelopment Project Area 1 -Arroyo Grande Redevelopment Agency APPENDIX TABLE 2 ARROYO GRANDE REDEVELOPMENT PROJECT AREA Historical Tax Increment Revanua 1997-98 1998-99 7999-06 '° Change `°°' ~ - Chan a Change ~ """ 442 25.69% 418 603,824 9216% 1.040,69 29. 9 remental Revenue) 469 % 219 67.48% 332,907 , 51.69% 869 41,323 16 144.67% . 87,155 116.91% 535,912 55.94 699 -66.71% 100 Roll Revenue (section 6ol aoi6 , 221 % 49 78.31% 92,714 88.38% 321,$67 . 246.86% 012 13% 2615 603 13,612 -27.35% 30,943 124.03% 27, , -10.79 77% 756 33 1 1,125,4'71 120.17% 1.141,500 7.47% ,emal Roll Revenue 727 19, . .~ nvo 128 48.08% 082, . , 54.66% 51 Incremental PAGE l6 TIERI2A WEST +~VISORS, LLC. APPENDIX C CITY OF ARROYO GRANDE INFORMATION STATEMENT The following information concerning the City of Arroyo Grande is presented as general background data. The Bonds are payable solely from Tax Revenues as described in the Official Statement. The Bonds are not an obligation of the City, and the taxing power of the City is not pledged to the payment of the Bonds. General Information The City of Arroyo Grande is located in San Luis Obispo County midway between Los Angeles and San Francisco. The City encompasses an area of approximately 5.45 square miles. Arroyo Grande, in an area locally known as one of the "Five Cities," adjoins Pismo Beach and Grover Beach and is close to Avila Beach and Shell Beach. Tourism, retail sales and govemment are principal factors in the local economy. Many City residents are employed within the Five Cities and in San Luis Obispo, the County seat. Governmental Services The City was incorporated as a general law city on July 10, 1911. The City operates under the Council/Manager form of govemment. The City Council appoints the City Manager who is responsible for the day-to-day administration of City business and the coordination of all departments of the City. The City Council is composed of five members elected at large. Four council members are elected bi- annually to four-year alternating terms. The Mayor is elected bi-annually to a two-year term. A Mayor Pro Tem is selected by the City Council from among its members. The 2006/07 City Budget provides for a staff of 101 full-time and 109 part-time employees under the direction of the City Manager. The City provides police protection, fire protection, animal control, emergency medical aid, building safety regulation and inspection, street lighting, water and sewer service, land use planning and zoning, maintenance and improvement of streets and related structures, traffic safety maintenance and improvement and recreational and cultural programs for citizen participation. Community Facilities and Services Students in the City and surrounding communities are served by the Lucia Mar Unified School District. The District's total enrollment is approximately 11,000 students. Two of the District's eleven elementary schools, one of its three middle schools, one of its two high schools, and the District's adult education center are located within the City. 1n addition, there are six private schools available to students. Two two-year colleges serve the region and there are three four-year State universities in the Central Coast area. The City operates six parks with picnic, barbeque and play areas in addition to a 26-acre sports complex with playing fields and tennis courts. There is a system of hiking. trails along the Arroyo Grande creek and James Way habitat area. The Lake Lopez Recreation Area is located nearby. The Clark Center for Performing Arts opened in the City in 2002. Other attractions within the area include the nearly 200 wineries in the San Luis Obispo County area, two historic California missions, miles of beaches and Hearst Castle. C-1 Transportation U. S. Route 101, the principal coastal highway in California, traverses the City providing freeway access to Los Angeles and San Francisco. Arroyo Grande is approximately 95 miles from the 5 freeway, a primary transportation corridor in the State. The Union Pacific Railroad coast mainline passes through adjacent Grover Beach, where Amtrak makes a passenger stop, connecting the area with Los Angeles and San Francisco and beyond through both passenger train and bus service. Local bus service is provided by the South County Area Transit. Air passenger and cargo service is available at the Santa Maria Airport, approximately 25 miles to the south and San Luis Obispo County Airport, 10 miles to the north. Commuter airlines provide passenger service at both airports. Population The following table provides a comparison of population growth for Arroyo Grande, surrounding cities and San Luis Obispo County between 2002 and 2006. TABLE NO. C-1 CHANGE IN POPULATION ARROYO GRANDE, SURROUNDING CITIES AND SAN LUIS OBISPO COUNTY 2002 - 2006 Year ARROYO GRANDE Percentage Population Change SURROUNDING CITIES Percentage Population Change SAN LUIS OBISPO COUNTY Percentage Population Change 2002 16,282 66,181 253,344 2003 16,478 1.2% 65,985 (0.3)% 255,559 0.9% 2004 16,597 0.7% 66,201 0.3% 258,421 1.1% 2005 16,577 (O.l)% 66,540 0.5% 261,310 1.1% 2006 16,599 0.1% 66,269 (0.4)% 263,242 0.7% % Increase Between 2002 -.2006 1.9% 0.1% 3.9% Surrounding cities include Grover Beach, Pismo Beach and San Luis Obispo. Source: State of California, Department of Finance, "E-4 Population Estimates for Cities, Counties anal the State, 2001-2006, with 2000 Benchmark. " C-2 Major Employers The five largest major employers operating within the City and their respective number of employees as of 2007 are as follows: TABLE NO. C-2 CITY OF ARROYO GRANDE MAJOR EMPLOYERS Employer Estimated Number of Employees Product/Service Source: City of Arroyo Grande. C-3 Employment and Industry The City is located in the San Luis Obispo-Paso Robles Metropolitan Statistical Area (MSA). Six major job categories constitute 76.6% of the work force. They are government (20.8%), service producing (15.8%), leisure and hospitality (13.6%), educational and health services (10.1%), professional and business services (8.9%) and goods producing (7.4%). The February 2007 unemployment rate in the San Luis Obispo-Paso Robles MSA was 4.2%. The State of California February 2007 unemployment rate (unadjusted) was 5.2%. The distribution of employment in the Sari Luis Obispo-Paso Robles MSA is presented in the following table. TABLE NO. C-3 SAN LUIS OBISPO-PASO ROBLES MSA WAGE AND SALARY WORKERS BY INDUSTRY or (in thousands) Industry 2003 2004 2005 2006 2007 Government 22.9 22.2 22.1 22.2 22.1 Other Services 4.5 4.4 4.4 4.4 4.2 Leisure and Hospitality 13.6 13.7 14.4 14.5 14.4 Educational and Health Services 10.0 10.2 10.4 10.6 10.7 Professional and Business Services 8.5 8.8 8.6 9.0 9.5 Financial Activities 4.4 4.6 4.7 4.8 4.8 Informatioh 1.4 1.5 1.5 1.5 1.9 Transportation, Warehousing and Utilities 3.6 3.6 3.5 3.7 3.7 Service Producing Retail Trade 13.1 13.4 13.6 14.2 14.1 Wholesale Trade 2.2 2.4 2.5 2.6 2.7 Manufacturing Nondurable Goods 2.7 2.7 3.0 2.9 3.0 Durable Goods 3.9 3.5 3.2 3.4 3.2 Goods Producing Natural Resources, Mining and Construction 6.7 6.9 7.3 8.0 7.9 Total Nonfann 97.5 97.9 99.2 101.8 102.2 Farm 3.5 3.8 4.0 4.2 4.0 Tota] (all industries) )~ 101 7 1032 106.0 106.2 ~~~ Annually, as of Febmary. Source: State of Califomia Employment'Development Department, Labor Market Information Division, "/ndustry Employment & Labor Force - by month March 2006 Benchmark. " C-4 Effective Buying Income The most recently available effective buying income information for San Luis Obispo County, the State of California and the United States are summarized in the following table. "Effective buying income" is defined as personal income less personal tax and nontax payments, a number often referred to as "disposable" or "after-tax" income. Personal income is the aggregate of wages and salaries, other than labor-related income (such as employer contributions to private pension funds), proprietor's income, rental income (which includes imputed rental income of owner-occupants of non-farm dwellings), dividends paid by corporations, interest income from all sources and transfer payments (such as pensions and welfare assistance). Deducted from this total are personal taxes (federal, state and local, nontax payments, fines, fees, penalties, etc.) and personal contributions to social insurance. According to U.S. government definitions, the resultant figure is commonly known as "disposable personal income" TABLE NO. C-4 EFFECTIVE BUYING INCOME SAN LUIS OBISPO COUNTY, CALIFORNIA AND UNITED STATES 2000 - 2004 Year San Luis Obispo County State of California United States 2000 $39,060 $44,464 $39,129 2001 39,906 43,532 38,365 2002 38,730 42,484 38,035 2003 39,548 42,924 38,201 2004 41,156 43,915 39,324 Source: Sales and Marketing Management "Survey of Buvirtg Power." C-5 Commercial Activity The following table summarizes the volume of retail sales and taxable transactions for the City of Arroyo Grande for 2001 through 2005 (the most recent year for which statistics are available). TABLE NO. C-5 CITY OF ARROYO GRANDE TOTAL TAXABLE TRANSACTIONS (in thousands) 2001- 2005 Total Taxable Retail Sales Retail Sales Transactions Issued Sales Year ($000's) % Change Permits ($000's) % Change Permits 2001 $229,709 263 $257,727 749 2002 241,290 5.0% 279 270,426 4.9% 771 2003 257,428 6.7% 288 284,163 5.1% 777 2004 269,067 4.5% 288 298,514 5.1% 754 2005 285,169 6.0% 301 314,837 5.5% 752 Source: State Board of Equalization, "Taxable Sales in Califa•nia. " The following table compares taxable transactions for the City of Arroyo Grande and surrounding cities for 2001 through 2005 (the most recent year for which statistics are available). TABLE NO. C-6 CHANGE IN TOTAL TAXABLE TRANSACTIONS ARROYO GRANDE AND SURROUNDING CITIES (in thousands) 2001 - 2005 Change from City 2001 2002 2003 2004 2005 2001-2005 ARROYO GRANDE $ 257,727 $ 270,426 $ 284,163 $ 298,514 $ 314,837 22.2% Grover Beach 78,830 80,342 81,878 83,525 92,409 17.2% Pismo Beach 142,863 146,304 155,680 171,138 185,061 29.5% San Luis Obispo 896,127 916,628 989,718 1,050,959 1,140,163 27.2% Source: State Board of Equalization, "Tiixable Sales in California. " C-6 Taxable transactions by type of business for the City of Arroyo Grande for 2001 through 2005 (the most recent year for which statistics are available) are summarized in Table No. C-7. TABLE NO. C-7 CITY OF ARROYO GRANDE TAXABLE TRANSACTIONS BY TYPE OF BUSINESS (in thousands) 2001 2002 2003 2004 2005 Retail Stores Apparel Sores $ 7,920 $ 9,050 $ 9,142 $ 9,903 $ 11,106 General Merchandise Stores 57,990 61,067 62,051 64,607 66,720 Food Stores 16,396 16,903 18,449 18,695 19,980 Eating/Drinking Places 21,730 24,373 25,917 26,055 24,804 Home Furnishings and Appliances 11,327 13,661 15,701 16,855 18,359 Building Materials and Farm Implements 19,892 19,378 20,543 21,798 22,198 Auto Dealers/Suppliers 43,738 43,350 40,672 41,074 45,220 Service Stations 29,553 27,561 31,818 37,613 42,730 Other Retail Stores 21,163 25,947 33,135 32,467 34 052 To[aI Retail Stores 229,709 241,290 257,428 269,067 285,169 All Other Outlets 28,018 29 136 26.735 29 447 29.668 Total All Outlets $251,'712 $22092 $284163' 522~5L4 $314,832 Source: State Board of Equalization, "Taxable Sales in California." Building Activity The following table summarizes building activity valuations for the City of Arroyo Grande for the five- year period from 2001/02 through 2005/06. TABLE NO. C-8 CITY OF ARROYO GRANDE BUILDING ACTIVITY AND VALUATION (IN THOUSANDS) 2001/02 - 2005/06 [to be completed] Source: C-7 APPENDIX D AGENCY AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDING JUNE 30, 2006 n-i APPENDIX E FORM OF CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by the Arroyo Grande Redevelopment Agency (the "Agency") in connection with the issuance by the Agency of its $ Arroyo Grande Redevelopment Agency Arroyo Grande Redevelopment Project Area 2007 Taxable Tax Allocation Bonds, (the "Bonds"). The Bonds are being issued pursuant to a Trust Indenture, dated as of April 1, 2007 (the "Indenture"), by and between the Agency and Wells Fargo Bank, National Association, as trustee (the "Trustee). The Agency hereby covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Agency for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriters in complying with S.E.C. Rule 15c2- 12(b)(5). Section 2. Definitions. In addition to the definitions set forth in the Indentures, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Annual Report" shall mean any Annual Report provided by the Agency pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. "Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income tax purposes. "Bonds" means the Arroyo Grande Redevelopment Agency Arroyo Grande Redevelopment Project Area 2007 Taxable Tax Allocation Bonds. "CPO" means the Internet-based filing system currently located at www.DisclosureUSA.org, or such other similar filing system approved by the Securities and Exchange Commission. "Dissemination Agent" shall mean the Trustee or any successor Dissemination Agent designated in writing by the Agency and which has filed with the Agency and the Trustee a written acceptance of such designation. "Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Certificate. "National Repository' shall mean any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. Information on the National Repositories as of a particular date is available on the Internet at www.sec.gov/info/municipal/nrmsir.htm. shall mean any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. Any filing under this Disclosure Agreement with a National Repository may be made solely by transmitting such filing to the Texas Municipal Advisory Council (the "MAC") as provided at http:/lwww.disclosureusa.org unless the United States Securities and Exchange E-1 Commission has withdrawn the interpretive advice in its letter to the MAC dated September 7, 2004 "Official Statement' shall mean the final Official Statement dated May _, 2007, relating to the Bonds. "Participating Underwriter" shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with offering the Bonds. "Repository' shall mean each National Repository and each State Repository. "Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "State Repository' shall mean any public or private repository or entity designated by the State of California as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Disclosure Certificate, there is no State Repository. Information regarding the National Repositories as of a particular date is available on the Internet at www.sec.gov/info/municipal/nrmsir.htm. Section 3. Provision of Annual Reports. (a) The Agency shall, or shall cause the Dissemination Agent to, not later than six months after the end of the Agency's fiscal year (which currently would be December 31 based upon the Agency's current June 30 fiscal year), commencing by December 31, 2007, with the report for the 2006-07 Fiscal Year, provide to each Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than fifteen (15) Business Days prior to said date, the Agency shall provide the Annual Report to the Dissemination Agent (if other than the Agency). The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the Agency may be submitted separately from the balance of the Annual Report, and later than the date required above for the filing of the Annual Report if not available by that date. If the Agency's fiscal year changes, the Agency shall give notice of such change in the same manner as for a Listed Event under Section 5(c). (b) If the Agency is unable to provide to the Repositories an Annual Report by the date required in subsection (a), the Agency shall provide to (i) each National Repository or the Municipal Securities Rulemaking Board and (ii) each appropriate State Repository (with a copy to the Trustee) a notice, in substantially the form attached as Exhibit A. In lieu of filing the notice with each Repository, the Agency or the Dissemination Agent may file such notice with the CPO. (c) With respect to the Annual Report, the Dissemination Agent shall: (i) determine each year prior to the date for providing the Annual Report the name and address of each National Repository and each State Repository, if any; and E-2 (ii) if the Dissemination Agent is other than the Agency, file a report with the Agency certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, stating the date it was provided and listing all the Repositories to which it was provided. (d) In lieu of filing the Annual Report with each Repository in accordance with the preceding paragraph (c), the Agency or the Dissemination Agent may file such Annual Report solely with the CPO. Section 4. Content of Annual Reoorts. The Annual Report shall contain or incorporate by reference the following: (a) Audited Financial Statements of the Agency prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If such audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) Unless otherwise provided in the audited financial statements filed on or prior to the annual filing deadline for the Annual Reports provided for in Section 3 above, financial information and operating data with respect to the Agency for the preceding fiscal year, substantially similar to that provided in the corresponding tables in the Official Statement for the Bonds, as follows: (i) information, updated to incorporate information with respect to the most recently ended Fiscal Year, of the type included in Table 1 of the Official Statement, "Historical Assessed Valuation (Based on the Equalized Roll)", in Table 2 of the Official Statement, "Ten Largest Tax Payers as a Percent of 2006/07 Assessed Value", in Table 3 of the Official Statement, "Projected Tax Revenues and Debt Service Coverage Excluding Housing Set-Aside Obligation and Related Debt Service" and in Table 4 of the Official Statement, "Projected Tax Revenues and Debt Service Coverage Housing Set-Aside Obligation and Related Debt Service; and (ii) description of any Additional Bonds (date, amount, term, rating, insurance) issued by the Agency in the Fiscal Year to which the Annual Report pertains and of the amount of all Agency debt outstanding and payable from Tax Revenues. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the Agency or related public entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The Agency shall clearly identify each such other document so included by reference. (c) In addition to any of the information expressly required to be provided under paragraphs (a) and (b) of this Section, the Agency shall provide such further E-3 information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the Agency or related public entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The Agency shall clearly identify each such other document so included by reference. Section 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 5, the Agency shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material: (~ Principal and interest payment delinquencies. (~ Non-payment related defaults. (~ Unscheduled draws on debt service reserves reflecting financial difficulties. (~ Unscheduled draws on credit enhancements reflecting financial difficulties. (~ Substitution of credit or liquidity providers, or their failure to perform. (~ Adverse tax opinions or events affecting the tax-exempt status of the security. (~ Modifications to rights of security holders. (~ Contingent or unscheduled bond calls. (~ Defeasances. (~ Release, substitution, or sale of property securing repayment of the securities. (~ Rating changes. (b) Whenever the Agency obtains knowledge of the occurrence of a Listed Event, the Agency shall as soon as possible determine if such event would be material under applicable Federal securities law. (c) If the Agency determines that knowledge of the occurrence of a Listed Event would be material, the Agency shall promptly file, or cause the Dissemination Agent to promptly file, a notice of such occurrence with (i) each National Repository or the Municipal Securities Rulemaking Board and (ii) each appropriate State Repository with a copy to the Trustee, together with written direction to the Trustee whether or not to notify the Bondowners of the filing of such notice. In the absence of any such direction, the Trustee shall not send such notice to the Bondowners. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (g) need not be given under this subsection any earlier than the notice (if-any) of the underlying event is given to holders of affected Bonds pursuant to the Agency Indenture or the Agency Indentures. The notice so filed shall identify to which of the Bonds and/or the Bonds the notice relates. E-4 In lieu of filing the notice of Listed Event with each Repository in accordance with the preceding paragraph, the Agency or the Dissemination Agent may file such notice of a Listed Event with the CPO. (d) Nothing in this Section shall be deemed to prevent the Agency from disseminating any other information, or including any other information in any notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the Agency chooses to include any information in any notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the Agency shall have no obligation under this Disclosure Certificate to update such information or include it in any future notice of occurrence of a Listed Event. (e) In the event of a failure of the Agency to comply with any provision of this Section 5 any Bondholder may take such actions as may be necessary and appropriate, including applicable legal remedies to cause the Agency to comply with its obligations under this Section 5. A default under this Section shall not be deemed an event of default under the Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the Agency to comply with this Section shall be an action to compel performance. (f) This Section shall inure solely to the benefit of the Agency, the Agency, the Participating Underwriters and holders from time to time of the Bonds and no other person shall have any rights hereunder. Section 6. Termination of Reoorting Oblioation. The Agency's obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the Agency shall give notice of such termination in the same manner as for a Listed Event under Section 5(c). Section 7. Dissemination Aaent. The Agency may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The initial Dissemination Agent shall be the Trustee. The Dissemination Agent shall be paid compensation by the Agency for its services provided hereunder in accordance with its schedule of fees as amended from time to time and all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the Agency or the Agency and shall not be deemed to be acting in any fiduciary capacity for the Agency, the Bondholders, or any other party. Section 8. Amendment: Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Agency may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied (provided however, no amendment increasing or affecting the obligations or duties of the Dissemination Agent shall be made without the consent of the Dissemination Agent): (a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or type of business conducted; E-5 (b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) the proposed amendment or waiver either (i) is approved by holders of the Bonds in the manner provided in the Indentures for amendments to the Indentures with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds. If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial information filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided. If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the Agency to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the change in the accounting principles shall be sent to the Repositories in the same manner as for a Listed Event under Section 5(c). Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Agency from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the Agency chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the Agency shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 10. Default. In the event of a failure of the Agency to comply with any provision of this Disclosure Certificate, any Participating Underwriter or any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Agency to comply with its obligations under this Disclosure Certificate. A default underthis Disclosure Certificate shall not be deemed an Event of Default under the Indentures, and the sole remedy under this Disclosure Certificate in the event of any failure of the Agency to comply with this Disclosure Certificate shall bean action to compel performance. Section 11. Duties. Immunities and Liabilities of Dissemination Aaent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the Agency agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, E-6 including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The obligations of the Agency under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. Section 12. Counterpart. This Disclosure Certificate may be executed in counterpart, each of which shall constitute an original signature page thereof. Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Agency, the Dissemination Agent, any Participating Underwriter and holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity. Date: May _, 2007 Acceptance of Dissemination Aaent ARROYO GRANDE REDEVELOPMENT AGENCY By: Executive Director AGREED AND ACCEPTED: Wells Fargo Bank, National Association, as Dissemination Agent By: Authorized Officer E-7 EXHIBIT A NOTICE OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: Arroyo Grande Redevelopment Agency Name of Bond Issue: $ Arroyo Grande Redevelopment Agency Arroyo Grande Redevelopment Project Area 2007 Taxable Tax Allocation Bonds Date of Issuance: May _, 2007 NOTICE IS HEREBY GIVEN to [(i) each National Repository or the Municipal Securities Rulemaking Board and (ii) each appropriate State Repository] [the CPO and the Municipal Securities Rulemaking Board] that the Redevelopment agency for the County of Riverside (the "Agency") has not provided an Annual Report with respect to the above-named Bonds as required by that certain Trust Indenture of Trust, dated as of April 1, 2007, by and between the Agency and Wells Fargo Bank, National Association, as trustee. The Agency anticipates that the Annual Report will be filed by Dated: cc: Trustee ARROYO GRANDE REDEVELOPMENT AGENCY E-8 APPENDIX F FORM OF BOND COUNSEL OPINION [to be provided by Bond Counsel] F-1 APPENDIX G BOOK-ENTRY ONLY SYSTEM The information in this section concerning DTC and DTC's book-entry system has beer: obtained from sources that the Agency believes to be reliable, but the Agency takes na responsibility for the accuracy or completeness thereof. The Agency cannot and does not give any assurances that DTC, DTC Pa ncr i al o or Indirect Participants will distribute to the Bene~onds renresenatingaownership rintere^est ~n a ~otlzer premium, if any, with respect to the Bonds, (bj P confirmation or owrership interes[ in the Bonds, or (c) prepayment or other notices sent zn DTC or Cede ~ Co., its nominee, as the registered owner of the Bonds, or dzat they will so do on a timely basis or that DTC, DTC Participants or DTC Lzdirect Participants will act in the manner described in this Off[cial Statement. The current "Rules" applicable to DTC are on file witJz the Securities and Exchange Cornrnission and the current "Procedure" of DTC to be followed in dealing wit)z DTC Participants are on file with DTC. The Depository Trust Company ("DTC,") New York, NY, wilt act as securities depository for the Bonds. The Bonds will be issued as fully registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered Bond will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world's largest depository, is a linuted-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section l7A of the Securities Exchange Act of 1934. DTC holds and provides asset servictng for over 2.2 million issues of U.S. and non-U.S. equity, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC's partimpants ("Direct Participants"} deposit with DTC. DTC also facilitates the post-trade settlement among Direct Parttcipants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities Bonds. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation and Emerging Markets Clearing Corporation (NSCC, FICC, and EMCC, also subsidiaries of DTCC}, as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, e~e>~C Rulesrappl able ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and iroww dtc.orf~. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("Beneficial Owner"} is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as welt as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. G-1 Beneficial Owners will not receive Bonds representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued, To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneticia] Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Prepayment notices shall be sent to DTC. If less than all of the Bonds within an issue are being prepaid, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be prepaid. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Agency (or the Trustee on behalf thereof) as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal, prepayment price, and interest payments with respect to the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and con-esponding;detail information from the Agency or Trustee, on the payable date in accordance with their respective holdings shown on DTC's records. Aayments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, nor its nominee, Trustee, or the Agency, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, prepayment price, and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Agency or Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the Agency or Trustee. Under such circumstances, in the event that a successor depository is not obtained, Bonds are required to be printed and delivered. The Agency may decide to discontinue use of the system ofbook-entry-only transfers through DTC {or a successor securities depository). In that event, Bonds will be printed and delivered to DTC. G-2 APPENDIX H SPECIMEN MUNICIPAL BOND INSURANCE POLICY x-i ATTACHMENT2 TRUST INDENTURE By and Between ARROYO GRANDE REDEVELOPMENT AGENCY and WELLS FARGO BANK, NATIONAL ASSOCIATION as Trustee Dated as of April 1, 2007 Relating to $ 2007 Tax Allocation Bonds i4~/oz4coo-ooos 774022.05 a04/16/07 TABLE OF CONTENTS Paae ARTICLE 1 STATUTORY AUTHORITY AND DEFINITIONS ..................................... ......3 Section 1.01 Authority for this Indenture ................................................................ ......3 Section 1.02 Indenture Constitutes Contract ........................................................... ......3 Section 1.03 Definitions ........................................................................................... ......3 ARTICLE 2 THE BONDS .................................................................................................. ....13 Section 2.01 Authorization ...................................................................................... ....13 Section 2.02 Terms ofBonds ................................................................................... ....13 Section 2.03 Redemption ......................................................................................... ....15 Section 2.04 Form of Bonds .................................................................................... ....17 Section 2.05 Execution of Bonds ............................................................................. ....17 Section 2.06 Book-Entry Bond Form ...................................................................... ....17 Section 2.07 Transfer of Bonds ............................................................................... ....19 Section 2.08 Exchange of Bonds ............................................................................. ....19 Section 2.09 Bond Register ...................................................................................... ....20 Section 2.10 Temporary Bonds ................................................................................ ....20 Section 2.11 Bonds Mutilated, Lost, Destroyed or Stolen ....................................... ....20 ARTICLE 3 ISSUE OF BONDS, ADDITIONAL BONDS ............................................... ....21 Section 3.01 Issuance and Delivery of Bonds ......................................................... ....21 Section 3.02 Application of Proceeds of Sale of Bonds and Other Moneys ........... ....21 Section 3.03 Redevelopment and Housing Funds ................................................... ....22 Section 3.04 Issuance of Additional Bonds ............................................................. ....22 Section 3.05 Validity of Bonds ................................................................................ ....25 ARTICLE 4 THE TAX REVENUES; SPECIAL FUND AND ACCOUNTS; SURP LUS ....................................................................................................... ....25 Section 4.01 Pledge of Tax Revenues ...................................................................... ....25 Section 4.02 Special Fund ........................................................................................ ....25 Section 4.03 Establishment and Maintenance of Accounts for Revenues; Use and Withdrawal of Revenues .............................................................. ....26 ARTICLE 5 OTHER COVENANTS OF THE AGENCY ..................................................... 31 Section 5.01 Punctual Payment .................................................................................... 31 Section 5.02 Extension of Time for Payment .............................................................. 31 Section 5.03 Against Encumbrances ............................................................................ 31 Section 5.04 Management and Operations of Properties ............................................. 31 Section 5.05 Payment of Claims .................................................................................. 32 Section 5.06 Books and Accounts; Financial Statement ............................................. 32 Section 5.07 Protection of Security and Rights of Bondowners .................................. 32 Section 5.08 Payments of Taxes and Other Charges ................................................... 32 Section 5.09 Compliance with Law, Completion of Project ....................................... 33 ~awozaeaomos 774022.05 a04/16/07 -1' Pace Section 5.10 Amendment of Redevelopment Plan and Disposition of Property ................................................................ ................................... 33 Section 5.11 Single Sum Payments in Lieu of Taxes ............... ...................................34 Section 5.12 Tax Increment Revenues ...................................... ...................................34 Section 5.13 Eminent Domain .................................................. ...................................34 Section 5.14 Further Assurances ............................................... ...................................34 Section 5.15 Taxation of Leased Property ................................ ...................................34 Section 5.16 Continuing Disclosure ......................................... ...................................35 ARTICLE 6 THE Section 6.01 Section 6.02 Section 6.03 Section 6.04 Section 6.05 Section 6.06 Section 6.07 Section 6.08 TRUSTEE ........................................................................... Appointment of Trustee ................................................... Compensation and Indemnity .......................................... Liability of Agents ........................................................... Merger of Trustee ............................................................ Survival of Rights ............................................................ Notice to Agents .............................................................. Deposit and Investment of Moneys in Funds .................. Accounting Records and Financial Statements ................ ................... 35 ................... 35 ................... 36 ...................38 ...................38 ...................38 ................... 3 8 ................... 39 ................... 39 ARTICLE 7 MODIFICATION OR AMENDMENT OF THE INDENTURE.. Section 7.01 Amendments Permitted ...................................................... Section 7.02 Bondowners' Meetings ...................................................... Section 7.03 Procedure for Amendment with Written Consent of Bondowners ....................................................................... Section 7.04 Disqualified Bonds ............................................................. Section 7.05 Effect of Supplemental Indenture ...................................... Section 7.06 Endorsement or Replacement of Bonds Issued After Amendments ...................................................................... Section 7.07 Amendatory Endorsement of Bonds .................................. ................... 40 ................... 40 ................... 41 ................... 41 ................... 42 ................... 42 ................... 42 ................... 43 ARTICLE 8 EVENTS OF DEFAULT AND REMEDIES OF BONDOWNERS . .................43 Section 8.01 Events of Default and Acceleration of Maturities ................. .................43 Section 8.02 Application of Funds Upon Acceleration .............................. .................44 Section 8.03 Trustee to Represent Bondowners ......................................... .................45 Section 8.04 Bondowners' Direction of Proceedings ................................. .................45 Section 8.05 Limitation on Bondowners' Right to Sue .............................. .................45 Section 8.06 Absolute Obligation of Agency ............................................. .................46 Section 8.07 Termination of Proceedings ................................................... .................46 Section 8.08 Remedies Not Exclusive ........................................................ .................46 Section 8.09 No Waiver of Default ............................................................. .................47 ARTICLE 9 MISCELLANEOUS ...........................................................................................47 Section 9.01 Benefits of Indenture Limited to Parties .................................................47 Section 9.02 Successor is Deemed Included in All References to Predecessor..........47 Section 9.03 Discharge of Indenture ............................................................................47 146/024600-0005 774022.05 a04/16/07 '1~' Pane Section 9.04 Execution of Documents and Proof of Ownership by Bondowners ............................................................................................ 48 Section 9.05 Waiver of Personal Liability ................................................................... 49 Section 9.06 Publication for Successive Weeks .......................................................... 49 Section 9.07 Destruction of Cancelled Bonds ............................................................. 49 Section 9.08 Notices and Demands on Agency ........................................................... 49 Section 9.09 Partial Invalidity ...................................................................................... 49 Section 9.10 Effective Date of Indenture ..................................................................... 50 Section 9.11 Governing Law ....................................................................................... 50 Section 9.12 Execution by Counterparts ...................................................................... 50 ARTICLE 10 INSURANCE POLICY ......................................................................................50 Section 10.01 [To Come] ...............................................................................................50 iau~ozaboo-ooos 774022.05 a04Ab/07 -lll- TRUST INDENTURE THIS TRUST INDENTURE (the "Indenture") is made and entered into as of April 1, 2007, by and between the Arroyo Grande Redevelopment Agency, a public body, corporate and politic, organized and existing under, and by virtue of the laws of the State of California (the "Agency"), and Wells Fargo Bank, National Association, a corporation organized and existing under the laws of the United States of America and authorized to accept and execute trusts of the character herein set out with its principal corporate trust office located in Los Angeles, California, as trustee (the "Trustee"). WITNESSETH: WHEREAS, the Agency is a redevelopment agency, a public body, corporate and politic, duly created, established and authorized to transact business and exercise powers under and pursuant to the provisions of the Community Redevelopment Law of the State of California, including the power to issue bonds, notes and other obligations for any of its corporate purposes; WHEREAS, the Redevelopment Plan for the Redevelopment Project has been adopted in compliance with all requirements of law; WHEREAS, the Agency has by Resolution No. RDA ,adopted Apri124, 2007 (the "Resolution"), authorized the issuance of its 2007 Tax Allocation Bonds (the "Bonds"), in the principal amount of $7,000,000 to finance redevelopment activities in the An•oyo Grande Redevelopment Project Area; WHEREAS, the Agency has now determined to issue the Bonds and to enter into this Indenture to secure the Bonds by a pledge and assignment of the Tax Revenues (as defined herein) (subject to the limitations hereinafter set forth in Section 4.01) and certain proceeds of the Bonds); and WHEREAS, all things necessary to cause the Bonds, when authenticated by the Trustee and issued as in this Indenture provided, to be valid, binding and legal special obligations of the Agency in accordance with their terms, and to constitute this Indenture a valid assignment and pledge of the Tax Revenues pledged to the payment of principal of and interest and any redemption premium on the Bonds (subject to the limitations hereinafter set forth in Section 4.01), and all things necessary to cause the creation, execution and delivery of this Indenture and the creation, execution and issuance of the Bonds, subject to the terms hereof, have in all respects been duly authorized; NOW, THEREFORE, THIS TRUST INDENTURE WITNESSETH: GRANTING CLAUSES The Agency, in consideration of the premises and the acceptance by the Trustee of the trusts hereby created and of the purchase and acceptance of the Bonds by the Owners thereof, and for other good and valuable consideration, the receipt of which is hereby acknowledged, in order to secure the payment of the principal of and interest and any redemption premium on the Bonds according to their tenor and effect and to secure the performance and observance by the 146/024600-0005 774022.05 a04/16/07 -1' Agency of all the covenants expressed or implied herein and in the Bonds, does hereby assign and pledge unto, and grant a security interest in the following (the "Trust Estate") to the Trustee, and its successors in trust and assigns forever, for the securing of the performance of the obligations of the Agency hereinafter set forth: GRANTING CLAUSE FIRST Subject to the limitations set forth in Section 4.01 hereof, all right, title and interest of the Agency in and to the Tax Revenues, including, but without limiting the generality of the foregoing, the present and continuing right to make claim for, collect, receive and receipt for any Tax Revenues payable to or receivable by the Agency under the Constitution of this State and the Law and any other applicable laws of this State or otherwise, to bring actions and proceedings thereunder for the enforcement thereof, and to do any and all things which the Agency is or may become entitled to do thereunder, subject to the terms hereof. GRANTING CLAUSE SECOND All moneys and securities and all other rights of every name and nature from time to time herein or hereafter by delivery or by writing of any kind pledged, assigned or transferred as and for additional security hereunder to the Trustee by the Agency or by anyone in its behalf, or with its written consent, and to hold and apply the same, subject to the terms hereof. TO HAVE AND TO HOLD all and singular the Trust Estate, whether now owned or hereafter acquired, unto the Trustee and its respective successors in trust and assigns forever for the benefit of the Bondowners and such pledge shall constitute a lien on and security interest in such Trust Estate; IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for the equal and proportionate benefit, security and protection of all present and future Owners of the Bonds issued under and secured by this Indenture without privilege, priority or distinction as to the lien or otherwise of any of the Bonds over any of the other Bonds; PROVIDED, HOWEVER, that if the Agency, its successors or assigns shall well and truly pay, or cause to be paid, the principal of and interest and any redemption premium on the Bonds due or to become due thereon, at the times and in the manner provided in the Bonds according to the true intent and meaning thereof, and shall well and truly keep, perform and observe all the covenants and conditions pursuant to the terms of this Indenture to be kept, performed and observed by it, and shall pay or cause to be paid to the Trustee all sums of money due or to become due in accordance with the terms and provisions hereof, then upon such final payments or deposits as herein provided, this Indenture and the rights hereby granted shall cease, determine and be void; otherwise this Indenture shall remain in full force and effect. THIS TRUST INDENTURE FURTHER WITNESSETH, and it is expressly declared, that all Bonds issued and secured hereunder are to be issued, authenticated and delivered, and all said property, rights and interests, including, without limitation, the Tax Revenues hereby assigned and pledged, are to be dealt with and disposed of, under, upon and subject to the terms, conditions, stipulations, covenants, agreements, trusts, uses and purposes hereinafter expressed, and the Agency has agreed and covenanted, and does hereby agree and covenant, with the ION024600-0005 774022.05 a04/i 6/07 '2' Trustee and with the respective Owners, from time to time, of the Bonds, or any part thereof, as follows: ARTICLE I STATUTORY AUTHORITY AND DEFINITIONS Section 1.01 Authority for this Indenture. This Indenture is entered into pursuant to the provisions of the Law and Resolution No. RDA , adopted by the Agency on Apri124, 2007. Section 1.02 Indenture Constitutes Contract. In consideration of the purchase and acceptance of any and all of the Bonds issued hereunder by those who shall hold the same from time to time, this Indenture shall be deemed to be and shall constitute a contract among the Agency, the Trustee and the Owners of the Bonds. The pledge made in this Indenture and the provisions, covenants and agreements herein set forth to be performed by or on behalf of the Agency shall be for the equal benefit, protection and security of the Owners of any and all of the Bonds. All of the Bonds, without regard to the time or times of their issuance or maturity, shall be of equal rank without preference, priority or distinction of any of the Bonds over any other thereof, except as expressly provided in or permitted by this Indenture. Section 1.03 Definitions. Unless the context otherwise requires, the terms defined in this Section 1.03 shall, for all purposes of this Indenture, of any Supplemental Indenture, and of any certificate, opinion or other document herein mentioned, have the meanings herein specified. Additional Bonds "Additional Bonds" means all Bonds or notes ranking on a parity with the Bonds originally issued hereunder and issued under and pursuant to Section 3.04 and a Supplemental Indenture. AQencX "Agency" means the Arroyo Grande Redevelopment Agency, a public body, corporate and politic, established under the Law. Annual Debt Service "Annual Debt Service" means for each Bond Year, the sum of (1) the interest falling due on the Outstanding Bonds of all series in such Bond Year, assuming that the Outstanding Bonds aze retired as scheduled, and (2) the principal amount of the Outstanding Bonds falling due by their terms in such Bond Yeaz, using for such determination of principal amount with respect to Term Bonds, the amount of Sinking Account Payments falling due in such Bond Year. 146/024600-0005 774022.05 a04/16/07 _3_ Articles, Sections All references herein to "Articles," "Sections" and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Indenture, and the words "herein," "hereof," "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or subdivision hereof. Authority "Authority" shall mean the Arroyo Grande Public Financial Authority, a public financing authority existing under the laws of the State. Bond Counsel "Bond Counsel" means any attorney or firm of attorneys nationally recognized for expertise in rendering opinions as to the legality and tax exempt status of securities issued by public entities. Bond Insurer "Bond Insurer" shall mean stock insurance company. a -domiciled Bonds, Serial Bonds. Term Bonds "Bonds" means the Arroyo Grande Redevelopment Agency, Arroyo Grande Redevelopment Project Area, 2007 Tax Allocation Bonds authorized by, and at any time Outstanding pursuant to, this Indenture, and to the extent required by any Supplemental Indenture includes any Additional Bonds authorized by and at any time Outstanding pursuant to this Indenture and such Supplemental Indenture. "Serial Bonds" means Bonds for which no mandatory Sinking Account Payments are provided. "Term Bonds" means Bonds which are payable on or before their specified maturity dates from mandatory Sinking Account Payments established for that purpose and calculated to retire such Bonds on or before their specified maturity dates. Bondowner, Owner "Bondowner" or "Owner" means any person who shall be the registered owner of any Outstanding fully registered Bond. Bond Proceeds Fund "Bond Proceeds Fund" means the Fund by that name established by Section 3.02. ~adozacao-coos naozz.os aoaneio~ -4- Bond Year "Bond Year" means the twelve (12) month period commencing on September 2 of each yeaz and continuing through the following September 1 of the next succeeding yeaz. Business Dav "Business Day" means any day other than (i) a Saturday, Sunday, or legal holiday, or (ii) a day on which banking institutions in the state in which the Trustee has its principal corporate trust office, or in the City of New York, New York aze authorized or obligated by law or executive order to be closed. Chairman "Chairman" means the chairman of the Agency appointed pursuant to Section 33113 of the Health and Safety Code of the State of California, or other duly appointed officer of the Agency authorized by the Agency by resolution or by-law to perform the functions of the Chairman in the event of the Chairman's absence or disqualification. Citv "City" means the City of Anoyo Grande, California, a municipal corporation existing under the laws of the State. Closing Date "Closing Date" means the day when the Bonds, duly authenticated by the Trustee, aze delivered to the original purchaser thereof. Continuing Disclosure Certificate "Continuing Disclosure Certificate" shall mean that certain Continuing Disclosure Certificate by the Agency dated the date of issuance and delivery of the Bonds, as originally executed and as it maybe amended from time to time in accordance with the terms thereof. Cost of Issuance "Cost of Issuance" means items of expense payable or reimbursable directly or indirectly by the Agency and related to the authorization, sale and issuance of the Bonds, which items of expense shall include, but not be limited to, printing costs, costs of reproducing and binding documents, closing costs, filing and recording fees, initial fees and charges of the Trustee, expenses incurred by the Agency in connection with the issuance of the Bonds, underwriter's discount, legal fees and charges, including bond counsel, special tax counsel and financial consultants' fees, costs of cash flow verifications, chazges for execution, transportation and safekeeping of the Bonds and other costs, chazges and fees in connection with the foregoing. ~a~ozasao-aaos naozz.os aoaieio~ -5- Cost of Issuance Account "Cost of Issuance Account" means the Account by that name established by Section 3.02. Countv Assessor "County Assessor" means the person who holds the office in the county in which the Agency is located designated as the County Assessor, or one of his duly appointed deputies, or any person or persons performing substantially the same duties in the event said office is ever abolished or changed. Countv Auditor-Controller "County Auditor-Controller" means the person who holds the office in the county in which the Agency is located designated as the County Auditor-Controller, or one of his duly appointed deputies, or any person or persons performing substantially the same duties in the event said office is ever abolished or changed. Event of Default "Event of Default" means each of the events set forth in Section 8.01. Federal Securities "Federal Securities" means any of the following which are noncallable and which at the time of investment are legal investments under the laws of the State for trust funds held by the Trustee: (a) Direct general obligations of (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America), or obligations, the payment of principal of and interest on which are directly or indirectly guaranteed by the United States of America (including state and local government series), including, without limitation, such of the foregoing which are commonly refen•ed to as "stripped" obligations and coupons; or (b) Any of the following obligations of the following agencies of the United States of America: (i) certificates of beneficial ownership issued by the Farmers Home Administration, (ii) participation certificates issued by the General Services Administration, (iii) mortgage- backed bonds or pass-through obligations issued and guaranteed by the Government National Mortgage Association, and (iv) public housing notes and bonds guaranteed by the United States of America; or 1Fnnancial Guaranty Agreement "Financial Guaranty Agreement" means the agreement by such name between the Agency and the Reserve Facility Provider, pursuant to which the Reserve Facility for the Bonds is executed and delivered, and any such agreement entered into in connection with the issuance of any Additional Bonds.] iavozasoo-ooos naozz.os aoan mm -6- Fiscal Yeaz "Fiscal Year" means any twelve-month period extending from July 1 in one calendaz year to June 30 of the succeeding calendaz year, both inclusive, or any other twelve-month period hereafter selected and designated by the Agency as its official fiscal year period. Housing Fund "Housing Fund" means the Fund by that name established by Section 3.03(b). Indenture "Indenture" means this Indenture, as it may be amended or supplemented by any Supplemental Indenture adopted pursuant to the provisions hereof. Independent Certified Public Accountant "Independent Certified Public Accountant" means any accountant or firm of such accountants duly licensed or registered or entitled to practice and practicing as such under the laws of the State of California, appointed by the Agency, and who, or each of whom: (a) is in fact independent and not under domination of the Agency; (b) does not have any substantial interest, direct or indirect, with the Agency; and (c) is not connected with the.Agency as ari officer or employee of the Agency, but who maybe regulazly retained to make reports to the Agency. Independent Financial Consultant "Independent Financial Consultant" means any financial consultant or firm of such consultants appointed by the Agency, and who, or each of whom: (a) is in fact independent and not under domination of the Agency; (b) does not have any substantial interest, direct or indirect, with the Agency; and (c) is not connected with the Agency as an officer of employee of the Agency, but who maybe regulazly retained to make reports to the Agency. (Insurance Policv "Insurance Policy" shall mean the insurance policy issued by Bond Insurer insuring the payment when due of the principal of and interest on the Bonds as provided therein.) Interest Account "Interest Account" means the Account by that name established pursuant to Section 4.03. ias~ozaeoo-ooos nwzz.os aoan~m -7- Interest Pavment Date "Interest Payment Date" means Mazch 1 and September 1 of each yeaz, commencing September 1, 2007, while the Bonds aze Outstanding. Investment Agreement "Investment Agreement" means an investment which is a legal investment for proceeds of the Bonds at the time of the execution of such agreement, and which investment is made pursuant to an agreement between the Agency, the Trustee and a financial institution or governmental agency or instrumentality. In connection with the Trustee's entry into any such agreement, the Trustee shall be obligated only to represent that it is a duly created financial institution. Investment Earnings "Investment Earnings" means all interest earned and any gains and losses on the funds and accounts established by this Indenture and held by the Trustee. Law "Law" means the Community Redevelopment Law of the State of California, constituting Part 1 of Division 24 of the Health and Safety Code of the State of California, and the acts amendatory thereof and supplemental thereto. Maximum Annual Debt Service "Maximum Annual Debt Service" means the largest Annual Debt Service for any Bond Year after the calculation is made through the final maturity date of any Outstanding Bonds. Outstanding "Outstanding," when used as of any particulaz time with reference to Bonds, means (subject to the provisions of Section 7.04) all Bonds except-- (a) Bonds theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation; (b) Bonds paid or deemed to have been paid within the meaning of Section 9.03; and (c) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and delivered by the Agency pursuant to the Indenture or any Supplemental Indenture. Notwithstanding anything herein to the contrary, in the event that the principal and/or interest due on the Bonds shall be paid by Bond Insurer pursuant to the Insurance Policy, the Bonds shall remain Outstanding for all purposes, not be defeased or otherwise satisfied and not be considered paid by the Agency, and the assignment and pledge of the Trust Estate and all 146/024600-0005 774022.05 a04/16/07 -~- covenants, agreements and other obligations of the Agency to the Owners shall continue to exist and shall run to the benefit of Bond Insurer, and Bond Insurer shall be subrogated to the rights of such Owners. Participatine Underwriter "Participating Underwriter" shall have the meaning ascribed thereto in the Continuing Disclosure Certificate. Permitted Investments "Permitted Investments" mean: (1) Federal Securities; (2) Obligations of any of the following federal agencies which obligations represent the full faith and credit of the United States of America, including: Export-Import Bank, Farm Credit System Financial Assistance Corporation, Rural Economic Community Development Administration (formerly the Fanners Home Administration), General Services Administration, U.S. Maritime Administration, Small Business Administration, Government National Mortgage Association (GNMA), U.S. Department of Housing & Urban Development (PHA's), Federal Housing Administration and Federal Financing Bank; (3) Direct obligations of any of the following federal agencies which obligations are not fully guazanteed by the full faith and credit of the United States of America: Senior debt obligations rated "Aaa" by Moody's and "AAA" by S&P issued by the Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC), obligations of the Resolution Funding Corporation (REFCORP), senior debt obligations of the Federal Home Loan Bank System and senior debt obligations of other government sponsored agencies approved by Bond Insurer; (4) U.S. dollaz denominated deposit accounts, federal funds and bankers' acceptances with domestic commercial banks, including affiliates of the Trustee which have a rating on their short term certificates of deposit on the date of purchase of "A-1" or "A-1+" by S&P and "P-1" by Moody's and maturing no more than 360 days after the date of purchase (Ratings on holding companies aze not considered as the rating of the bank); (5) Commercial paper which is rated at the time of purchase in the single highest classification, "A-1+" by S&P and "P-1" by Moody's and which matures not more than 270 days after the date of purchase; (6) Investments in a money mazket fund rated "AAAm" or "AAAm- G" or better by S&P (including those of the Trustee, its affiliates and subsidiaries); (7) Pre- refunded municipal obligations defined as follows: Any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice; and (A) which aze rated, based on an irrevocable escrow account or fund (the "escrow"), in the highest rating category of S&P and Moody's or any successor thereto; or (B) (i) which aze fully secured as to principal and interest and redemption premium, if any, by an escrow consisting only of cash or Federal Securities, which escrow may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, and (ii) which escrow is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this pazagraph on the maturity date or dates specified in the irrevocable instructions referred to above, as 146/024600-0005 n4oxaos aoaimim -9- appropriate; (8) Municipal obligations rated "Aaa/AAA" or general obligations of States with a rating of at least "A2/A" or higher by both Moody's and S&P; (9) Investment agreements approved in writing by Bond Insurer supported by appropriate opinions of counsel, with notice to S&P; (10) Other forms of investments (including repurchase agreements) approved in writing by Bond Insurer with notice to S&P; and (11) cash (insured at all times by the Federal Deposit Insurance Corporation or, otherwise collateralized with Federal Securities). The Trustee shall have the right, to the extent funds are invested hereunder with it, to receive its customary management and other fees in addition to compensation earned hereunder as Trustee. Principal Account "Principal Account" means the Account by the name established by Section 4.03. Project, Redevelopment Project "Project" or "Redevelopment Project" means the undertaking of the Agency pursuant to the Redevelopment Plan and the Law for the redevelopment of the Project Area. Project Area, Redevelopment Project Area "Project Area" or "Redevelopment Project Area" means the Project Area described in the Redevelopment Plan. Redemption Account "Redemption Account" means the Account by that name established by Section 4.03. Redevelopment Fund "Redevelopment Fund" means the Fund by that name established by Section 3.03(a). Redevelopment Plan, Plan "Redevelopment Plan" or "Plan" means the Arroyo Grande Redevelopment Plan approved and adopted by Ordinance No. 487 C.S., adopted by the City Council of the City of Anoyo Grande on June 10, 1998, as amended by Ordinance No. 551, adopted on January 13, 2004, and as thereafter and hereafter amended in accordance with the Law. Report "Report" means a report in writing signed by an Independent Financial Consultant and including-- (a) a statement that the person or firm making or giving such report has read the pertinent provisions of this Indenture to which such report relates; (b) a brief statement as to the nature and scope of the examination or investigation upon which the report is based; 146/024600.0005 774022.05 a04/16/07 ' 1 Q- (c) a statement that, in the opinion of such person or firm, sufficient examination or investigation was made as is necessary to enable said consultant to express an informed opinion with respect to the subject matter referred to in the report. Reserve Account "Reserve Account" means the Account by that name established by Section 4.03 fReserve Facility "Reserve Facility" means (i) a surety bond or other financial undertaking issued by a financial institution, if the unsecured obligations of or the claims paying ability of such financial institution has the highest rating then issued by A.M. Best & Company (if so rated by it), Standard & Poor's Ratings Services or Moody's Investor Services, or (ii) a policy of insurance issued by an insurance company, if the obligations insured by such insurance compauy have the highest rating then issued by Standard & Poor's Ratings Services, or Moody's Investor Services, delivered to the Trustee to satisfy the obligation to deposit moneys to the Trustee to satisfy the obligation to deposit moneys in the Reserve Account in connection with any series of Bonds and which is in an amount equal to the Reserve Requirement on such series of Bonds.] fReserve Facility Provider "Reserve Facility Provider" means the financial institution or insurance company that issues or provides a Reserve Facility.] fReserve Requirement "Reserve Requirement" means as of the date of calculation an amount equal to the lesser of ten percent (10%) of the original principal amount of the Bonds and any Additional Bonds, one hundred twenty five percent (125%) of average Annual Debt Service or the Maximum Annual Debt Service on the Bonds and any Additioual Bonds.] Special Fund "Special Fund" means the Fund by that name established by Section 4.02. State "State" means the State of California. Stu elemental Indenture "Supplemental Indenture" or "supplemental resolution" means any indenture or resolution then in full force and effect which has been duly approved or adopted by the Agency under the Law, or any act supplementary thereto or amendatory thereof, at a meeting of the Agency duly convened and held, at which a quorum was present and acted thereon, amendatory 14N024600.0005 774022.05 a04/IN07 -11- of or supplemental to this Indenture; but only if and to the extent that such Supplemental Indenture is specifically authorized hereunder. Su lus "Surplus" means the amount of Tax Revenues determined pursuant to Section 4.03(d). Surplus Account "Surplus Account" means the account by that name established pursuant to Section 4.03. Tax Increment Revenues "Tax Increment Revenues" means that portion of taxes generated from property located in the Redevelopment Project and received by the Agency, which is allocated to and paid into a special fund of the Agency pursuant to Article 6 of Chapter 6 of the Law and Section 16 of Article XVI of the Constitution of the State of California, excluding that portion of Tax Increment Revenues required by Section 33334.2 and 33334.6 of the Law to be used by the Agency for increasing and improving the supply of low and moderate income housing, all as more particulazly set forth hereafter in this Indenture and in any Supplemental Indenture authorizing the issuance of Additional Bonds. Tax Revenue Certificate "Tax Revenue Certificate" means a certificate of the Agency, executed by the Executive Director or the Treasurer of the Agency, stating the amount of Tax Revenues received or to be received by the Agency in the then current Fiscal Yeaz, accompanied, in the case of a statement of Tax Revenues to be received, by a statement from the County Auditor-Controller or from an Independent Financial Consultant of Tax Revenues to be paid to the Agency. Tax Revenues "Tax Revenues" means (a) Tax Increment Revenues, including that portion of Tax Increment Revenues otherwise required by Section 33334.3 of the Redevelopment Law to be deposited into the Low and Moderate Income Housing Fund, but only to the extent necessary to repay that portion of the Bonds and any Additional Bonds (including applicable reserves and financing costs) attributed to the portion of the proceeds thereof (if any) deposited in the Low and Moderate Income Housing Fund for use pursuant to Section 33334.2 of the Law to increase, improve or preserve the supply of low and moderate income housing within or of benefit to the Redevelopment Project, (b) Investment Earnings, and (c) reimbursements, subventions, including payments to the Agency with respect to personal property generated from property located within the Redevelopment Project pursuant to Section 16110, et seq., of the California Government Code, or other payments made by the State to the Agency with respect to any property taxes that would otherwise be due on real or personal property but for an exemption of such property from such taxes. Tax Revenues exclude: (i) that portion of such Tax Increment Revenues required to be paid under Statutory Tax Sharing, unless the payment of such amounts has been subordinated to the payment of Debt Service on the Bonds and in the case of Additional Bonds, subordinated to the payment of Debt Service on any such Additional Bonds (ii) all other 146/024600.0005 n4ozz.os aoail6io~ -12- amounts of Tax Increment Revenues required to be deposited into the Low and Moderate Income Housing Fund pursuant to Section 33334.3 of the Law, and (iii) any payments of "basic aid" as defined and set forth in Section 33676(b) of the Law. Treasurer "Treasurer" means the Treasurer of the Agency appointed pursuant to the Law, or other duly appointed officer of the Agency authorized by the Agency by resolution or by-law to perform the functions of the Treasurer, including, without limitation, the Assistant Treasurer of the Agency. Trustee "Trustee" means the Trustee appointed by the Agency and acting as an independent trustee with the duties and powers as expressly provided herein, its successors and assigns, and any other corporation or association which may at any time be substituted in its place, as provided in Section 6.01. Written Reouest of the A ency "Written Request of the Agency" means an instrument in writing signed by the Chairman or by any other officer of the Agency duly authorized by the Agency for that purpose and by the Secretary, with the seal of the Agency affixed. ARTICLE 2 THE BONDS Section 2.01 Authorization There are hereby authorized to be issued by the Agency under and subject to the express terms of this Indenture and the Constitution and laws of the State of California, specifically including the Law, Bonds in the aggregate principal amount of Thousand Dollars ($ ). This Indenture constitutes a continuing agreement with the Owners of all of the Bonds issued hereunder and then Outstanding to secure the full and final payment of principal and premiums, if any, and the interest on all Bonds which may from time to time be executed and delivered hereunder; subject to the covenants, agreements, provisions and conditions herein contained. The Bonds shall be designated the "Arroyo Grande Redevelopment Agency, Arroyo Grande Redevelopment Project Area, 2007 Tax Allocation Bonds." Section 2.02 Terms of Bonds (1) The Bonds shall be issued as fully registered Bonds without coupons in the denomination of $5,000 or any integral multiple thereof, but in an amount not to exceed the aggregate principal amount of Bonds maturing in the year of maturity of the Bond for which the denomination is specified. Bonds shall be numbered as determined by the Trustee from one (1) consecutively upwards in order of issuance. 146/024b00-0005 n4ozz.oseoancio~ -13- (2) Date of Authentication of Bonds. The Bonds shall be dated as of the date of authentication thereof, except that each Bond delivered to the Underwriter designated in Section 3.01 shall be dated as of the Closing Date. (3) CUSIP Identification Numbers: "CUSIP" identification numbers shall be imprinted on the Bonds, but such numbers shall not constitute a part of the contract evidenced by the Bonds and any error or omission with respect thereto shall not constitute cause for refusal of any purchaser to accept delivery of and pay for the Bonds. In addition, failure on the part of the Agency or Trustee to use such CUSIP numbers in any notice to Owners of the Bonds shall not constitute an event of default or any violation of the Agency's contract with such Owners. (4) Maturities. The Bonds shall mature and become payable on September 1 of each year, as follows: Yeaz (Sept. 1) Principal Amount Interest Rate 2008 $ 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2029 2031 2038 (5) Interest. The Bonds shall bear interest at the rates set forth above in the preceding subsection, payable on each Interest Payment Dates, if any interest shall be due and owing. Such interest shall be computed on the basis of a 360-day year consisting of twelve 30- day months. Each Bond shall bear interest from the Interest Payment Date next preceding the date of registration and authentication thereof unless (i) it is registered and authenticated as of an Interest Payment Date, in which event it shall beaz interest from such date, or (ii) it is registered and authenticated prior to an Interest Payment Date and after the close of business on the 14N024600-0005 774022.05 a04/16/07 -14- fifteenth day of the month preceding such Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (iii) it is registered and authenticated on or before August 15, 2007, in which event it shall bear interest from the Closing Date; provided, however, that if at the time of authentication of a Bond, interest is in default thereon, such Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon. (6) Pa ent. Interest on the Bonds (including the final interest payment upon maturity or earlier redemption) is payable on the Interest Payment Date by check of the Trustee mailed by first class mail on the Interest Payment Date to the Owner thereof at such Owner's address as it appears on the registration books maintained by the Trustee at the close of business on the fifteenth day of the month preceding the Interest Payment Date or by wire transfer in immediately available funds to any Owner of $1,000,000 or more in aggregate principal amount of Bonds upon written instructions of any such Owner filed with the Trustee for that purpose as of the close of business on the fifteenth day of the month preceding such Interest Payment Date. Principal of the Bonds is payable in lawful money of the United States of America upon presentment at the principal corporate trust office of the Trustee in Los Angeles, California or such other place as designated by the Trustee. Section 2.03 Redemption. (1) Optional Redemption. Bonds maturing on or before September 1, 2017 shall not be subject to optional redemption before their stated maturity. Bonds maturing by their terms on or after September 1, 2018 aze subject, at the option of the Agency, to call for redemption prior to their stated maturities on any date commencing September 1, 2017 in whole or in part among such maturities as shall be determined by the Agency, and in any case by lot within a maturity, from any available source of funds deposited in the Redemption Account, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest thereon to the redemption date, without premium. The Agency shall give the Trustee written notice of its intention to redeem Bonds pursuant to this subsection (1) not less than seventy-five (75) days prior to the applicable redemption date. (2) Sinking Account Redemption. (a) The Term Bonds maturing on September 1, 20 aze subject to mandatory redemption prior to their maturity date in part, by lot, from, and to the extent of, the Sinking Account Payments commencing on September 1, 20_ and September 1 each yeaz thereafter, according to the schedule of Sinking Account Payments set forth and as provided in Section 4.03(c), at a redemption price equal to 100% of the principal amount thereof to be redeemed, plus accrued interest, if any, to the date fixed for redemption, without premium. (b) The Term Bonds maturing on September 1, 20 aze subject to mandatory redemption prior to their maturity date in part, by lot, from, and to the extent of, the Sinking Account Payments commencing on September 1, 20 and September 1 each yeaz thereafter, according to the schedule of Sinking Account Payments set forth and as provided in 14N024600-0005 n4ozz.os aoan eim -15- Section 4.03(d), at a redemption price equal to 100% of the principal amount thereof to be redeemed, plus accrued interest, if any, to the date fixed for redemption, without premium. (c) The Term Bonds maturing on September 1, 20 aze subject to mandatory redemption prior to their maturity date in part, by lot, finm, and to the extent of, the Sinking Account Payments commencing on September 1, 20_ and September 1 each yeaz thereafter, according to the schedule of Sinking Account Payments set forth and as provided in Section 4.03(e), at a redemption price equal to 100% of the principal amount thereof to be redeemed, plus accrued interest, if any, to the date fixed for redemption, without premium. (3) Redemption Procedure. The Agency shall cause the Trustee to give notice of any redemption, at the Agency's expense, which notice shall be mailed first class mail, at least thirty (30) days but not more than sixty (60) days prior to the date fixed for redemption, to the respective Owners of any Bonds designated for redemption, at their addresses appearing on the Bond registration books in the principal corporate trust office of the Trustee; but such mailing shall not be a condition precedent to such redemption and failure to mail or to receive any such notice shall not affect the validity of the proceedings for the redemption of such Bond or the cessation of interest accrued on the redemption date. Such notice shall state the redemption date, the redemption price and CUSIP numbers; if less than all of the then Outstanding Bonds are to be called for redemption, it shall designate the serial numbers of the Bonds to be redeemed, by giving the individual number of each of the Bonds or by stating that all Bonds between two stated numbers, both inclusive, or by stating that all of the Bonds of one or more maturities have been called for redemption; and it shall require that such Bonds be then surrendered at the principal corporate trust office. of the Trustee or at such other place as designated by the Trustee, for redemption at the said redemption price; and it shall state that further interest on such Bonds will not accrue from and after the redemption date. Upon surrender of Bonds redeemed in part only, the Agency shall execute and the Trustee shall deliver to the Owner at the expense of the Agency a new Bond or Bonds, of the same series and maturity, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the'Bond or Bonds. From and after the date fixed for redemption, if notice of such redemption shall have been duly given and funds available for the payment of the principal of and interest (and premium, if any) on the Bonds so called for redemption shall have been duly provided, such Bonds so called shall cease to be entitled to any benefit under this Indenture other than the right to receive payment of the redemption price and no interest shall accrue thereon on or after the redemption date specified in such notice. The Agency shall have the right to rescind any optional redemption by written notice to the Trustee on for prior to the date fixed for redemption. Any notice of optional redemption shall be canceled and annulled if for any reason funds will not or are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation shall not constitute an Event of Default under the Indenture. The Agency and the Trustee shall have, no liability to the Owners or any other party related to or arising from 146/024600-0005 774022.05 a04/16/07 -16- such rescission of redemption. The Trustee shall mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent. Whenever any Bonds are to be selected for redemption by lot, the Trustee, in its sole discretion which shall be conclusive, shall determine the Bonds to be redeemed and shall notify the Agency thereof. All Bonds redeemed pursuant to this section and all Bonds purchased by the Trustee pursuant to Section 4.03 shall be canceled and shall be surrendered to the Agency. Section 2.04 Form of Bonds. The Bonds, the form of Trustee's certificate of authentication and registration, and assignment to appear thereon, shall be substantially in the forms set forth on Exhibit A hereto, respectively, with such variations, omissions and insertions as permitted or required by this Indenture. Section 2.05 Execution of Bonds. The Bonds shall be executed on behalf of the Agency by the manual signatures of its Chairman and its Secretary who aze in office on the date of adoption of this Indenture or at any time thereafter, and the seal of the Agency shall be impressed, imprinted or reproduced by facsimile thereon. If any officer whose signature appeazs on any Bond ceases to be such officer before delivery of the Bonds to the purchaser, such signature shall nevertheless be as effective as if the officer had remained in office until the delivery of the Bonds to the purchaser. Any Bond may be signed and attested on behalf of the Agency by such persons as at the actual date of the execution of such Bond shall be the proper officers of the Agency although at the nominal date of such Bond any such person shall not have been such officer of the Agency. Only such Bonds as shall bear thereon a certificate of authentication in the form hereinbefore recited, executed and dated by the Trustee, shall be valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of the Trustee shall be conclusive evidence that the Bonds so registered have been duly authenticated, registered and delivered hereunder and aze entitled to the benefits of this Indenture. Section 2.06 Book-Entry Bond Form. (1) The Agency hereby provides that the Bonds may be issued in book-entry form. Notwithstanding any inconsistent provision in this Indenture to the contrary, the provisions of this Section 2.06 shall govern at any time that the Bonds are issued in book-entry form. (2) Bonds issued in book-entry form shall be issued in the form of one fully- registered immobilized certificate for each maturity of the Bonds, which Bonds (except as provided in paragraph (i) below) shall be registered in the name of Cede & Co., as nominee of The Depository Trust Company (hereinafter "DTC"); provided, that if DTC shall request that the Bonds be registered in the name of a different nominee, the Trustee shall exchange all or any portion of the Bonds for an equal aggregate principal amount of Bonds registered in the name of 14fi/024600-0005 n4ozz.os ao4/Ifi/o~ -17- a different nominee. No other person, other than DTC or its nominee shall be entitled to receive from the Agency or the Trustee a Bond or any other evidence of ownership of the Bonds, or any right to receive any payment in respect thereof, unless DTC or its nominee shall transfer record ownership of all or any portion of the Bonds on the registration books to be maintained by the Trustee, in connection with discontinuing the book-entry system as provided in pazagraph (i) below or otherwise. (3) So long as the Bonds or any portion thereof aze registered in the name of DTC or any nominee thereof, all payments of the principal, redemption price of or interest on such Bonds shall be made to DTC or its nominee in immediately available funds on the dates provided for such payments under this Indenture and at such times as provided in the Letter of Representations to be entered into among the Agency, the Trustee and DTC (the "Representation Letter"). Each such payment to DTC or its nominee shall be valid and effective to fully dischazge all liability of the Agency and the Trustee with respect to the principal of or interest on the Bonds to the extent of the sum or sums so paid. (4) All transfers of beneficial ownership interests in such Bonds issued in book-entry form shall be effected by procedures by DTC with its participants for recording and transferring the ownership of beneficial interests in such Bonds. (5) The Agency and the Trustee may treat DTC (or its nominee) as the sole and exclusive Owner of the Bonds registered in its name for the purposes of payment of the principal, premium, if any, or interest on the Bonds, selecting the Bonds or portions thereof to be redeemed, giving any notice permitted or required to be given to Owners under this Indenture or registering the transfer of Bonds; and the Agency and the Trustee shall not be affected by any notice to the contrary. The Agency and the Trustee shall not have any responsibility or obligation to any participant in DTC, any person claiming a beneficial ownership interest in the Bonds under or through DTC or any such participant, or any other person which is not shown on the registration books as being an Owner, with respect to: (1) the Bonds; or (2) the accuracy of any records maintained by DTC or any such participant; or (3) the payment by DTC or any such participant of any amount in respect of the principal, Redemption Price of or interest on the Bonds; or (4) any notice which is permitted or required to be given to Owners under this Indenture; or (5) the selection by DTC or any such participant of any person to receive payment in the event of a partial redemption of the Bonds. (ti) So long as the Bonds or any portion thereof aze registered in the name of DTC or any nominee thereof, all notices required or permitted to be given to the Owners under this Indenture shall be given to DTC as provided in the Representation Letter to be delivered to DTC, in form and content satisfactory to DTC, the Agency and the Trustee. (7) In connection with any notice or other communication to be provided to Owners pursuant to this Indenture with respect to any consent or other action to be taken by Owners, DTC shall consider the date of receipt of notice requesting such consent or other action as the record date for such consent or other action; provided that the Agency or the Trustee may establish a special record date not less than 15 calendaz days in advance of such special record date to the extent possible. 14N024600-000s n4ozz.os eoailcio~ -18- (8) Any successor Trustee, in its written acceptance of its duties under this Indenture, shall agree to. take any actions necessary from time to time to comply with the requirements of the Representation Letter. (9) The book-entry system for registration of the ownership of the Bonds in book-entry form may be discontinued at any time if: (1) after notice to the Agency and the Trustee, DTC determines to resign as securities depository for the Bonds; or (2) after notice to DTC and the Trustee, the Agency determines that a continuation of the system of book-entry transfers through DTC (or through a successor securities depository) is not in the best interests of the Agency. In each of~such events (unless, in the case described in clause (1) above, the Agency appoints a successor securities depository), the Bonds shall be delivered in registered certificate form to such persons, and by series in such maturities and principal amounts, as may be designated by DTC, but without any liability on the part of the Agency or the Trustee for the accuracy of such designation. Whenever DTC requests the Agency and the Trustee to do so, the Agency and the Trustee shall cooperate with DTC in taking appropriate action after reasonable notice to arrange for another securities depository to maintain custody of certificates evidencing the Bonds and for the printing of definitive Bonds, if required. Section 2.07 Transfer of Bonds. Any Bond may, in accordance with its terms, be transferred, upon the books required to be kept pursuant to the provisions of Section 2.09, by the person in whose name it is registered in person or by his duly authorized attorney, upon surrender of such Bond for cancellation accompanied by delivery of a written instrument of transfer in a form approved by the Trustee duly executed. Whenever any Bond or Bonds shall be sunendered for transfer the Agency shall execute and the Trustee shall deliver a new Bond or Bonds for like aggregate principal amount to the transferee Owner. The Agency shall pay all transfer costs and chazges including the cost of printing any new bonds, and the Trustee may require the payment by the Bondowner requesting such exchange of any tax or other governmental chazge required to be paid with respect to such exchange. No transfers of Bonds shall be required to be made (i) fifteen (15) days prior to each Interest Payment Date or (ii) with respect to a Bond after such Bond has been selected for redemption. Section 2.08 Exchange of Bonds. Bonds of each series may be exchanged at the principal corporate trust office of the Trustee in Los Angeles, California or such other location as the Trustee shall, from time-to-time designate for a like aggregate principal amount of Bonds of each series of authorized denominations and of the same maturity. The Agency shall pay all exchange costs and charges including the cost of printing any new bonds, and the Trustee may require the payment by the Bondowner requesting such exchange of any tax or other governmental chazge required to be paid with respect to such exchange. 146/024600-0005 naon.os aoan6/o~ -19- No exchanges of Bonds shall be required to be made (i) fifteen days prior to each Interest Payment Date or (ii) with respect to a Bond after such Bond has been selected for redemption: Section 2.09 Bond Re ister. The Trustee will keep or cause to be kept, at its principal corporate trust office in Los Angeles, California, sufficient books for the registration and transfer of the Bonds, which shall at all times be open to inspection by the Agency during normal business hours upon reasonable notice; and upon presentation for such purpose the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said books Bonds as hereinbefore provided. Section 2.10 Temporary Bonds. The Bonds may be initially issued in temporary form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed, lithographed or typewritten, shall be of such denominations as may be determined by the Agency, and may contain such reference to any of the provisions of this Indenture as may be appropriate. Every temporary Bond shall be executed by the Agency upon the same conditions and in substantially the same manner as the definitive Bonds. If the Agency issues temporary Bonds it will execute and furnish definitive Bonds without delay, and thereupon the temporary Bonds shall be surrendered, for cancellation in exchange therefor at the principal corporate trust office of the Trustee in Los Angeles, Califomia, and the Trustee shall deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds of authorized denominations. Until so exchanged the temporary Bonds shall be entitled to the same benefits pursuant to this Indenture as definitive Bonds authenticated and delivered hereunder. Section 2.11 Bonds Mutilated, Lost, Destroved or Stolen. If any Bond shall become mutilated the Agency, at the expense of the Owner of said Bond, shall execute, and the Trustee shall thereupon deliver, a new Bond of like series, tenor and principal amount in exchange and substitution for the Bond so mutilated but only upon surrender to the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall be canceled by it and delivered to, or upon the order of, the Agency. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft shall be submitted to the Agency and the Trustee and, if such evidence be satisfactory to both and indemnity satisfactory to them shall be given, the Agency, at the expense of the Owner, shall execute, and the Trustee shall thereupon deliver, a new Bond of like series, tenor and principal amount in lieu of and in substitution for the Bond so lost, destroyed or stolen. The Agency may require payment of a sum not exceeding the actual cost of preparing each new Bond issued under this section and of the expenses which may be incurred by the Agency and the Trustee in the premises. Any Bond issued under the provisions of this section in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the Agency whether or not the Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Indenture with all other Bonds issued pursuant to this Indenture. 146/024600-0005 774022.05 a04/16/0] -2~- ARTICLE 3 ISSUE OF BONDS, ADDITIONAL BONDS Section 3.01 Issuance and Delivery of Bonds. At any time after the execution of this Indenture the Agency may issue and deliver Bonds in the aggregate principal amount of Thousand Dollars ($ ). In accordance with the provisions of Resolution No. RDA ,adopted by the Agency on Apri124, 2007, the Bonds have been sold to the Authority and, in turn, the Authority has sold the Bonds to E.J. De La Rosa & Co., Inc. (the "Purchaser"). The Chairman and Vice Chairman of the Agency, the Secretary of the Agency, the Executive Director of the Agency, the General Counsel and other proper officers of the Agency and the Authority are hereby authorized and directed to deliver any and all documents and instruments, to authorize the payment of Costs of Issuance and to do and cause to be done any and all acts and things necessary or convenient for delivery of the Bonds to the Purchaser. Section 3.02 Application of Proceeds of Sale of Bonds and Other Monevs. (1) There is hereby established a fund to be known as the "Anoyo Grande Redevelopment Agency 2007 Tax Allocation Bonds Proceeds Fund" (the "Bond Proceeds Fund") and within such Fund, an account to be known as the Cost of Issuance Account, which fund and account shall be held in trust by the Trustee. Upon the receipt of payment for the Bonds, the proceeds thereof shall be paid to the Trustee who shall forthwith set aside, pay over and deposit such proceeds as follows: Fund the amount of $ (a) Deposit in the Cost of Issuance Account of the Bond Proceeds (b) Deposit the amount of $ (c) Transfer $_ Redevelopment Project Fund held by it; and Fund held by it. (d) Transfer $ to the Agency for deposit in the Housing (2) The Trustee shall pay all Costs of Issuance upon receipt of an invoice from any payee which requests payment in an amount which is less than or equal to the amount set forth with respect to such payee in a requisition containing the respective amounts to be paid to the designated payees signed by the Executive Director or by the General Counsel or a financial officer of the Agency and delivered to the Trustee, concun•ently with the delivery of the Bonds or thereafter. The Trustee shall maintain the Cost of Issuance Account for a period of 180 days from the date of delivery of the Bonds and then shall transfer any moneys remaining there- in to the Redevelopment Fund and Housing Fund, pro rata, in proportion to the original proceeds deposited in each of said funds, which shall be held by the Treasurer of the Agency for the payment of any unpaid Costs of Issuance. Every invoice and requisition received there-after by the Trustee shall be submitted to the Agency for payment. in the Reserve Account; to the Agency for deposit in the 146/024600-0005 n4ozz.os ,o4imio~ -21- Section 3.03 Redevelopment and Housinx Funds. (1) There is hereby created a special fimd to be known as the "Arroyo Grande Redevelopment Agency, Redevelopment Project 2007 Tax Allocatian Bonds Redevelopment Fund" (the "Redevelopment Fund"), which the Agency hereby covenants and agrees to cause to be maintained and which shall be held in trust by the Treasurer of the Agency. The moneys in the Redevelopment Fund shall be used in the manner provided by the Law solely for the purpose of aiding in financing the Project. Amounts in the Redevelopment Fund shall be disbursed, from time to time, by the Treasurer of the Agency for costs and expenses of the Project. If the Agency determines that amounts held in the Redevelopment Fund are no longer needed to pay casts and expenses of the Project and that such amounts are to be used to pay Debt Service on all Outstanding bonds, then upon filing of a certificate with the Secretary of the Agency executed by the Treasurer of the Agency to the effect, such amounts shall be transferred into the Special Fund, shall be invested as directed by the Agency at a Yield not in excess of the Yield of the Bonds and shall be used for Debt Service on the Bonds on the Interest Payment Date or Interest Payment Dates next succeeding the date of transfer and the Redevelopment Fund shall be closed. {2) There is hereby created a special fund to be known as the "Arroyo Grande Redevelopment Agency, Redevelopment Project 2007 Tax Allocation Bonds Housing Fund" (the "Housing Fund"), which the Agency hereby covenants and agrees to cause to be maintained and which shall be held in trust by the Treasurer of the Agency. The moneys in the Housing Fund shall be used in the manner provided by the Law solely for the purpose of improving the supply of low and moderate income housing. Amounts in the Housing Fund shall be disbursed, from time to time, by the Treasurer of the Agency for costs and expenses of improving the supply of low and moderate income housing. If the Agency determines that amounts held in the Housing Fund are no longer needed to pay casts and expenses of the Project and that such amounts are to be used to pay Debt Service on that portion of the Outstanding Bonds allocated to the initial deposit of Bond proceeds in the Housing Fund, as determined by the Agency, then upon filing of a certificate with the Secretary of the Agency executed by the Treasurer of the Agency to the effect, such amounts shall be transferred into the Special Fund, shall be invested as directed by the Agency at a Yield not in excess of the Yield of the Bonds and shall be used for Debt Service on the Bonds on the Interest Payment Date or Interest Payment Dates next succeeding the date of transfer and the Hausing Fund shad be closed. Section 3.04 Issuance of Additional Bonds. In addition to the Bonds, the Agency may, by resolution authorizing the issuance thereof and the execution of a Supplemental Indenture with respect thereto, provide for the issuance of one or more series of Additional Bonds on a parity with the Bonds issued pursuant to this Indenture to finance the Redevelopment Project in such principal amount as will be determined by the Agency. The Agency may deliver Additional Bonds subject to the following specific conditions which are conditions precedent to the delivery of any such Additional Bonds. ia~ozabuo-coos -22- -•.roz_os aowiwo~ (1) The Trustee will receive prior to the delivery of Additional Bonds: (a) Copies of the resolution authorizing the issuance thereof and the Supplemental Indenture pursuant to which such Additional Bonds are authorized to be issued, each certified by an authorized officer of the Agency. (b) An opinion of Bond Counsel stating (1) that the resolution and Supplemental Indenture pursuant to which such Additional Bonds are authorized to be issued aze valid and enforceable in accordance with their terms, except as such enforceability may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar affecting creditors' rights and as may be subject to the exercise of judicial discretion in appropriate cases; (2) that the resolution authorizing the issuance thereof and the Supplemental Indenture pursuant to which such Additional Bonds aze authorized to be issued create a valid pledge of that which they purport to pledge; and (3) that the total principal amount of Bonds together with other Agency obligations to be issued and then Outstanding will not exceed any limit imposed by law; (c) A certificate of the Agency stating that the Agency is not, at the time of issuance of such Additional Bonds, in default under the Indenture or any Supplemental Indenture, directing the Trustee or designated trustee to deliver such Additional Bonds, as authorized, and stating the amounts to be deposited in the various applicable funds and accounts; (d) With respect to such Additional Bonds, a certificate of the Agency (which the Trustee shall have no responsibility for the review or verification thereof) showing: (i) The total Maximum Annual Debt Service with respect to the Bonds, including the Additional Bonds then being delivered and any other notes, bonds or other obligations issued by the Agency secured on a parity with the Bonds and Additional Bonds. If the Agency has Outstanding Bonds or proposes to issue Additional Bonds bearing interest at a variable rate, the interest on such Additional Bonds shall be assumed to be the maximum interest rate allowable. (ii) For the then current Fiscal Year, the Tax Revenues to be received by the Agency ,based upon the most recent taxable valuation of property in the Redevelopment Project famished by the appropriate officer of San Luis Obispo County or an Independent Financial Consultant, together with, at the Agency's option, an allowance for estimated additional annual Tax Revenues to be received by the Agency within the next Fiscal Year following the date such computation is made due to increase in taxable valuation of property in the Redevelopment Project resulting from construction which has been completed, or due to transfer of ownership or any other interest in real property, but not yet entered on the tax roll, as shown by the report of an Independent Financial Consultant (the "Additional Revenues" hereinafter). For purposes of calculations of Tax Revenues for issuance of Additional Bonds, Tax Revenues shall be calculated by multiplying the most recent assessed values certified by the San Luis Obispo County Assessor by the basic 1 % tax rate (without regazd to overrides) and shall be further reduced by: (a) the amount of subventions paid by the State of California or any other amount appropriated by the State for the Agency; (b) unless the "Teeter Plan" is currently in 14W02460°-0°°5 n4o2z.os aoanbio~ -23- effect and San Bernardino County has made no announcement that the Teeter Plan would terminate, the amount derived by applying the average percentage by which the actual tax collections in the Project Area aze less than the amount of the tax levy in the Project Area for the immediately preceding five fiscal years; (c) the amount by which Tax Revenues would be decreased if all pending assessment appeals were to be determined in favor of the property owners in an amount equal to the average of the most recent five years of assessment reductions granted in successful appeals based on the most recent information available from the San Luis Obispo County Assessor's office; (d) the maximum percentage of Tax Revenues payable to a taxing entity pursuant to all non-subordinated Tax-Sharing Agreements, regardless of whether such maximum percentage is in effect for that year or a future year (for example, if a Tax- Sharing Agreement includes a step up provision or takes effect upon the occurrence of some event, that pass-through shall be calculated at the maximum rate pursuant to the step up or as if the event had already taken place); (e) the percentage of Tax Revenues which must be deposited to the Low and Moderate Income Housing Fund with the exception of amounts which, in the opinion of Bond Counsel, may be used to pay Debt Service; and (f) the Tax Revenues to be allocated and paid to the Agency in each Fiscal Yeaz during the term of the Additional Bonds as projected by an Independent Redevelopment Consultant assuming no growth, but taking into account all Plan Limitations, Tax Sharing Agreements and other factors which would cause a reduction in Tax Revenues in any future Fiscal Year, plus at the option of the Agency the Additional Revenues. (iii) That for the current Fiscal Yeaz for the Bond Year commencing in such Fiscal Year, the Tax Revenues refen•ed to in item (d)(ii) above are at least [1.25] times the Maximum Annual Debt Service referred to in item (d)(i) above. If the Agency has Outstanding or proposes to issue variable rate Additional Bonds, the interest on such Bonds shall be assumed to be the maximum interest rate allowable under the Supplemental Indenture in all instances where an assumption about interest rates is necessary. (iv) That upon the delivery of the proposed Additional Bonds, an amount equal to or in excess of the Reserve Requirement for such Additional Bonds will be credited to the Reserve Account as security for such Additional Bonds. (v) That unless the Agency has determined that a maturity date and that- Interest Payment Dates other than those of the Bonds will not adversely affect the interests of the Owners of such Bonds then Outstanding, the Additional Bonds will mature on September 1, and interest thereon will be payable March 1 and September 1 of each year. (vi) That the Agency has reviewed the limitation upon the amount of taxes which may be allocated to the Agency under the Redevelopment Plan and certifies that the pledge of Tax Revenues to the payment of the Additional Bonds will not impair the ability of the Agency to pay debt service on the Bonds and the Additional Bonds in accordance with its covenants contained in this Indenture. Any Additional Bonds maybe made subject to redemption prior to maturity, as a whole or in part, at such time or times, and upon payment of the principal amount thereof and accrued interest thereon plus such premium or premiums, if any, as may be determined by the Agency in the resolution or Supplemental Indenture providing for the issuance thereof. Such resolution or ~ac~ozaboo~oos naozx.os aoaneio~ -24- Supplemental Indenture will provide that in the event that some but less than all of the Bonds and of said Additional Bonds are to be redeemed at any one time, such Additional Bonds redeemed will be in the proportion that the principal amount of Outstanding Additional Bonds bears to the total principal amount of all the then Outstanding Bonds and Additional Bonds. Subject to the foregoing requirements for Additional Bonds, the Agency may issue refunding bonds with respect to the Bonds for the purpose of paying or retiring such Outstanding Bonds subject to applicable redemption provisions. [If the Agency is in compliance with all covenants set forth in the Indenture, the Agency may, with the approval of Bond Insurer, for any purpose issue obligations having a lien on the Tax Revenues which is subordinate to the Bonds which are payable solely from Surplus, but only if the pledge of Tax Revenues to the payment of such obligations will not impair the ability of the Agency to pay future Annual Debt Service on the Bonds, and any Additional Bonds.] Section 3.05 Validity of Bonds. The validity of the authorization and issuance of the Bonds shall not be dependent upon the completion of the Project or upon the performance by any person of his obligation with respect to the Project. ARTICLE 4 THE TAX REVENUES; SPECIAL FUND AND ACCOUNTS; SURPLUS Section 4.01 Pledge of Tax Revenues. The Bonds shall be secured by a first pledge (which pledge shall be effected in the manner and to the extent hereinafter provided) of all of the Tax Revenues, and, as of the date hereof, by a first pledge of all of the moneys in the Interest Account, the Principal Account, the Sinking Account, the Reserve Account and the Redemption Account of the Special Fund. The Tax Revenues deposited with the Trustee shall be allocated solely to the payment of the principal and interest, and redemption premium, if any, of the Bonds and to the Reserve Account for the purposes set forth in Section 4.03; except as provided in Section 8.02; except that out of the Tax Revenues may be apportioned such amounts for such other purposes as are expressly permitted by Section 4.03. The pledge and allocation of Tax Revenues deposited with the Trustee is for the exclusive benefit of the Owners of the Bonds and shall be irrevocable until all of the Bonds have been paid and retired or until moneys have been set aside irrevocably for that purpose. Section 4.02 ~ecial Fund. There is hereby created the "Arroyo Grande Redevelopment Agency 2007 Tax Allocation Bonds Special Fund," herein called the "Special Fund," which shall be maintained by the Trustee as a separate account, distinct from all other funds of the Agency, and into which shall be paid, on receipt thereof by the Trustee, the Tax Revenues in an amount equal to the deposits required to be made by the Trustee pursuant to Section 4.03. The Agency hereby covenants to deposit with the Trustee, upon receipt while the Bonds are Outstanding, Tax 14W024600-0005 naozz.os aoaneio~ -25- Revenues in an amount at least sufficient to make all deposits required to be made by the Trustee on February 15 or August 15 pursuant to Section 4.03. While the Bonds are Outstanding or any interest thereon is unpaid the Special Fund shall be administered and disbursements made in the manner and in the order progressively set forth in Section 4.03 hereof. Section 4.03 Establishment and Maintenance of Accounts for Revenues: Use and Withdrawal of Revenues. All Tax Revenues deposited in the Special Fund shall be transferred and set aside by the Trustee in the following respective special accounts (each of which is hereby created and each of which the Agency covenants and agrees to cause to be maintained by the Trustee) in the following order of priority: (1) Interest Account, (2) Principal Account, (3) Sinking Accounts (4) Reserve Account, (5) Surplus Account, and (6) Redemption Account. All Tax Revenues in each of said accounts shall be held in trust by the Trustee and shall be applied, used and withdrawn only for the purposes hereinafter authorized in this Section 4.03. (a) Interest Account. On or before the 15th day of each February and August of each year the Bonds are Outstanding, commencing August 15, 2007, the Trustee shall transfer from the Special Fund and set aside in the Interest Account an amount which, when added to the amount contained in the Interest Account on that date will be equal to the aggregate amount of the interest becoming due and payable on the outstanding Bonds on the next succeeding Interest Payment Date. No deposit need be made into the Interest Account if the amount contained therein is at least equal to the interest to become due on the next succeeding Interest Payment Date upon all of the Bonds issued hereunder and then Outstanding. All moneys in the Interest Account shall be used and withdrawn by the Trustee solely for the purpose of paying the interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds purchased or redeemed prior to maturity pursuant to this Indenture). (b) Princinal Account. On or before the 15th day of each August the Bonds aze Outstanding, commencing August 15, 2007, the Trustee shall transfer from the Special Fund and set aside in the Principal Account an amount which, when added to the amount contained in the Principal Account on that date, will be equal to the principal becoming due and payable on the next succeeding September 1 on the Outstanding Serial Bonds. No deposit need be made into the Principal Account if the amount contained therein is at least equal to the Id6/024600-0005 774022.05 a04/16/07 _26_ principal to become due on the next succeeding September 1 upon all of the Serial Bonds issued hereunder and then Outstanding. All moneys in the Principal Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal on the Serial Bonds as it shall become due and payable. (c) Sinking Account (20 Term Bondsl. On or before the 15th day of each August, commencing August 15, 20 ,the Trustee shall transfer from the Special Fund and set aside and deposit in the Sinking Account an amount which, when added to the amount contained in the Sinking Account on that date, will be equal to the Sinking Account Payment required to be on deposit therein on the next succeeding September 1. All moneys in the Sinking Account shall be used solely for the redemption or purchase of the Term Bonds maturing September 1, 20 ,asset forth below. The required Sinking Account Payments for the Term Bonds maturing September 1, 20_, are listed in the following table: September 1 Principal Amount 20 $ 20 20_ (Maturity) Moneys in the Sinking Account on September 1 of any year, commencing September 1, 20 , in the amounts as set forth in the foregoing table shall be used and withdrawn by the Trustee on such date and applied for the redemption prior to maturity or payment at maturity of the Term Bonds maturing on September 1, 20_, at a redemption price equal to the principal amount thereof to be redeemed without premium. In the event of optional redemption of the Term Bonds maturing September 1, 20 pursuant to Section 2.03(1), Sinking Account Payments payable pursuant to Section 2.03(2) as listed above shall be reduced pro rata in integral multiples of $5,000 as determined by the Agency (written notice of which determination shall be given by the Agency to the Trustee at least sixty (60) days prior to the redemption date). Additionally, moneys in the Sinking Account may be used and withdrawn by the Trustee upon the Written Request of the Agency for the purchase of any Outstanding Bonds at public or private sale as and when and at such price (including brokerage and other charges but excluding accrued interest which is payable from the Interest Account) as the Agency may in its discretion determine, but not to exceed the principal amount of such Bonds being redeemed plus the applicable redemption premium, if any. (d) Sinking Account (20 Term Bonds). On or before the 15th day of each August, commencing August 15, 20 ,the Trustee shall transfer from the Special Fund and set aside and deposit in the Sinking Account an amount which, when added to the amount contained in the Sinking Account on that date, will be equal to the Sinking Account Payment required to be on deposit therein on the next succeeding September 1. All moneys in the Sinking Account shall be used solely for the redemption or purchase of the Term Bonds maturing September 1, 20_, as set forth below. The required Sinking Account Payments for the Term Bonds maturing September 1, 20 ,are listed in the following table: 146/024600-0005 774022.05 a04/16/07 '2T September 1 Principal Amount 20 $ 20_ (Maturity) Moneys in the Sinking Account on September 1 of any yeaz, commencing September 1, 20_, in the amounts as set forth in the foregoing table shall be used and withdrawn by the Trustee on such date and applied for the redemption prior to maturity or payment at maturity of the Term Bonds maturing on September 1, 20_, at a redemption price equal to the principal amount thereof to be redeemed without premium. In the event of optional redemption of the Term Bonds maturing September 1, 20 , pursuant to Section 2.03(1), Sinking Account Payments payable pursuant to Section 2.03(2) as listed above shall be reduced pro rata in integral multiples of $5,000 as determined by the Agency (written notice of which determination shall be given by the Agency to the Trustee at least sixty (60) days prior to the redemption date). Additionally, moneys in the Sinking Account may be used and withdrawn by the Trustee upon the Written Request of the Agency for the purchase of any Outstanding Bonds at public or private sale as and when and at such price (including brokerage and other chazges but excluding accrued interest which is payable from the Interest Account) as the Agency may in its discretion determine, but not to exceed the principal amount of such Bonds being redeemed plus the applicable redemption premium, if any. (e) Sinking Account (20 Term Bonds). On or before the 15th day of each August, commencing August 15, 20 ,the Trustee shall transfer from the Special Fund and set aside and deposit in the Sinking Account an amount which, when added to the amount contained in the Sinking Account on that date, will be equal to the Sinking Account Payment required to be on deposit therein on the next succeeding September 1. All moneys in the Sinking Account shall be used solely for the redemption or purchase of the Term Bonds maturing September 1, 20 ,asset forth below. The required Sinking Account Payments for the Term Bonds maturing September 1, 20 , aze listed in the following table: Member 1 Principal Amount 20 $ 20 20 20 20 20 20_ (Maturity) Moneys in the Sinking Account on September 1 of any year, commencing September 1, 20_, in the amounts as set forth in the foregoing table shall be used and withdrawn by the Trustee on such date and applied for the redemption prior to maturity or payment at maturity of the Term Bonds maturing on September 1, 20_, at a redemption price equal to the principal amount thereof to be redeemed without premium. ~abroza6ao-ooos p 779022.05 a09/16/07 -2°- In the event of optional redemption of the Tenn Bonds maturing September 1, 20 , pursuant to Section 2.03(1), Sinking Account Payments payable pursuant to Section 2.03(2) as listed above shall be reduced pro rata in integral multiples of $5,000 as determined by the Agency (written notice of which determination shall be given by the Agency to the Trustee at least sixty (60) days prior to the redemption date). Additionally, moneys in the Sinking Account may be used and withdrawn by the Trustee upon the Written Request of the Agency for the purchase of any Outstanding Bonds at public or private sale as and when and at such price (including brokerage and other charges but excluding accrued interest which is payable from the Interest Account) as the Agency may in its discretion determine, but not to exceed the principal amount of such Bonds being redeemed plus the applicable redemption premium, if any. (~ Reserve Account. (i) On or before the 15th day of each February and August when the Bonds aze Outstanding commencing August 15, 2007, and after the deposits required pursuant to the preceding subparagraphs have been made, the Trustee shall transfer from the Special Fund and set aside in the Reserve Account an amount which, when added to the amount contained in the Reserve Account on that date, will be equal to the Reserve Requirement. No deposit need be made in the Reserve Account so long as there shall be on deposit therein a sum equal to at least the amount required by this subpazagraph to be on deposit therein. All money in the Reserve Account shall be used and withdrawn by the Trustee solely for the purpose of replenishing the Interest Account, the Principal Account or the Sinking Account in such order in the event of any deficiency at any time in any of such accounts, or for the purpose of paying the interest on or principal of or redemption premiums, if any, on the Bonds, including any Additional Bonds, in the event that no other money of the Agency is lawfully available therefor, or for the retirement of all the Bonds, then Outstanding, except that so long as the Agency is not in default hereunder, any amount in the Reserve Account in excess of the amount required by this subpazagraph to be on deposit therein may be withdrawn from the Reserve Account and deposited in the Special Fund. Notwithstanding the foregoing, any moneys on deposit in the Reserve Account on any February 15 and August 15 in excess of the Reserve Requirement shall be withdrawn semiannually from the Reserve Account and deposited in the Special Fund for use in the same manner as are other moneys in the Special Fund. (ii) [Anything to the contrary herein notwithstanding, the Agency may, with the consent of the Bond Insurer if the Bond Insurer is not also the Reserve Facility Provider, at any time substitute a Reserve Facility, and upon such substitution, the Agency shall be entitled to receive all moneys then held in the Reserve Account in excess of the Reserve Requirement after deducting the amount of the Reserve Facility, free and clear of the lien of this Indenture. In the event that a Reserve Facility is delivered to the Trustee, the Trustee shall hold and apply such instrument pursuant to the terms of the Financial Guaranty Agreement and this Indenture so as to have moneys available thereunder for the purposes and at the times required under this Indenture. After a draw upon the Reserve Facility, the Trustee shall apply any moneys received by the 14N024600-0005 774022.05 a04/16/07 -29- Trustee from the Agency with respect to payments for which the draw was made to the reimbursement of the Reserve Facility Provider. The Trustee shall maintain a record verified by the Reserve Facility Provider, as to the amount available to be drawn at any given time under the Reserve Facility and as to the amounts paid and owing to the Reserve Facility Provider under the terms of the Financial Guaranty Agreement.] [If the Agency delivers to the Trustee a Reserve Facility with respect to a series of Bonds, the applicable Reserve Requirement with respect to all other series of bonds shall be determined as an amount equal to Maximum Annual Debt Service on all Bonds other than the series of Bonds secured by such Reserve Facility. Any Reserve Facility shall be applied in accordance with its terms for the purpose of paying the interest on and principal and Sinking Account payments of the series of Bonds secured by such Reserve Facility in the event of a deficiency in the moneys of the Agency lawfully available therefor. All other amounts on deposit in the Reserve Account shall not be available for payments with respect to such series of Bonds, but shall be applied by the Trustee to payments with respect to all series of Bonds not secured by a Reserve Facility.] (g) Surplus Account. Provided that: (i) an Event of Default has not occurred; (ii) all of the deposits provided for in subsections (a), (b), (c), (d) and (e) above to the Interest, Principal and Sinking Accounts shall be made as scheduled; (iii) the deposits provided for in subsection (f) above to the Reserve Account shall be made as necessary to maintain a balance therein equal to the Reserve Requirement; and (iv) the Trustee shall have received or the Agency shall have set aside Tax Revenues in an amount sufficient, together with funds already on deposit in the Special Fund (not including amounts in the Reserve Account), to pay interest, principal and scheduled Sinking Account Payments coming due in the then current Bond Year with respect to the Bonds then Outstanding, and to restore the Reserve Account to an amount equal to the Reserve Requirement, if required. then additional Tax Revenues received in respect of such Bond Yeaz and other amounts on deposit in the Special Fund (exclusive of the Interest Account, the Principal Account, the Sinking Account, and the Reserve Account) will be declazed Surplus and transferred to the Surplus Account. Provided that no Event of Default under the Indenture has occurred and is continuing, such Surplus maybe withdrawn at any time by the Agency upon Written Request of the Agency, and used by the Agency for any lawful purpose. (h) Redemption Account. The Redemption Account shall be maintained by the Trustee as a sepazate Account distinct from all other funds of the Agency to pay for the prior redemption or purchase of the Bonds prior to their maturity. 14N024600-0005 naozz.os aoaneio~ -30- Any funds legally available may at any time on or after September 1, 20_, at the option of the Agency, be paid to the Trustee for deposit in the Redemption Account and applied to the redemption of Bonds on September 1, 20_, or any date thereafter pursuant to Section 2.03(1). Additionally, moneys in the Redemption Account may be used and withdrawn by the Trustee upon the Written Request of the Agency for the purchase of any Outstanding Bonds at public or private sale as and when and at such price (including brokerage and other chazges but excluding accrued interest which is payable from the Interest Account) as it may in its discretion determine, but not to exceed the principal amount of such Bonds being redeemed plus the applicable redemption premium, if any. ARTICLE 5 OTHER COVENANTS OF THE AGENCY Section 5.01 Punctual Pavment. The Agency will punctually pay or cause to be paid the principal, premium, if any, and interest to become due in respect of all the Bonds in strict conformity with the terms of the Bonds and of this Indenture, and it will faithfully observe and perform all of the conditions, covenants and requirements of this Indenture and all Supplemental Indentures and of the Bonds. Nothing herein contained shall prevent the Agency from making advances of its own moneys howsoever derived to any of the uses or purposes permitted by law. Section 5.02 Extension of Time for Payment. In order to prevent any accumulation of claims for interest after maturity, the Agency will not, directly or indirectly, extend or consent to the extension of the time for the payment of any claim for interest on any of the Bonds and will not, directly or indirectly, approve any such arrangement by purchasing or funding said claims for interest or in any other manner. In case any such claim for interest shall be extended or funded whether or not with the consent of the Agency, such claim for interest so extended or funded shall not be entitled, in case of default hereunder to the benefits of this Indenture, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest which shall not have been so extended or funded. Section 5.03 Against Encumbrances. The Agency will not encumber, pledge or place any charge or lien upon any of the Tax Revenues superior to or on a parity with the pledge and lien herein created for the benefit of the Bonds, except as permitted by Section 3.04 of this Indenture. Section 5.04 Management and Operations of Properties. The Agency will manage and operate all properties owned by the Agency and comprising any part of the Project in a sound and businesslike manner and will keep such properties insured at all times in conformity with sound business practice. ia~/ozaeoo-ooos 774022.05 a04/16/07 '31- Section 5.05 Payment of Claims. The Agency will pay and discharge or cause to be paid and discharged any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien or charge upon the properties owned by the Agency or upon the Tax Revenues or any part thereof or upon any funds in the hands of the Trustee or which might impair the security of the Bonds. Nothing herein contained shall require the Agency to make any such payment so long as the Agency in good faith shall contest the validity of said claims. Section 5.06 Books and Accounts; Financial Statement The Agency will keep, or cause to be kept, accurate books of record and accounts separate from all other records and accounts of the Agency and the City in which complete and correct entries shall be made of all transactions relating to the Project and to the Tax Revenues. Such books of record and accounts shall at all times during business hours be subject to the inspection of the Owners of not less than ten percent (10%) of the principal amount of the Bonds then outstanding, or their representatives authorized in writing. The Agency will cause to be prepazed and filed with the Trustee annually, within one hundred and eighty (180) days after the close of that Fiscal Year so long as any of the Bonds are Outstanding complete financial statements with respect to that Fiscal Year showing the Tax Revenues, all disbursements from the Tax Revenues and the financial condition of the Project, including the balances in all funds and accounts relating to the Project, as of the end of such Fiscal Year which statement shall be accompanied by a certificate or opinion in writing of an Independent Certified Public Accountant. The Agency will furnish a copy of such statements to any Bondowner upon request. The Trustee will have no duties or obligations with respect to such financial statements other than to act as custodian thereof and the Trustee shall be entitled to indemnification therefore. Section 5.07 Protection of Security and Rights of Bondowners. The Agency will preserve and protect the security of the Bonds and the rights of the Bondowners, and will warrant and defend their rights against all claims and demands of all persons. From and after the sale and delivery of any of the Bonds by the Agency the Bonds shall be incontestable by the Agency. Section 5.08 Payments of Taxes and Other Charges. Subject to the provisions of Section 5.11 hereof, the Agency will punctually pay and discharge, or cause to be paid and discharged all taxes, service chazges, assessments and other governmental charges which may hereafter be lawfully imposed upon the Agency or the properties then owned by the Agency in the Project Area, or upon the revenues therefrom, when the same shall become due. Nothing herein contained shall require the Agency to make any such payment so long as the Agency in good faith shall contest the validity of said taxes, assessments or chazges. The Agency will duly observe and conform with all valid requirements of any governmental authority relative to the Project or any part thereof. 14N024600-0005 774022.05 a04/16/07 -32' Section 5.09 Compliance with Law, Completion of Proiect. The Agency will comply with all applicable provisions of the Law in completing the Project including, without limitation, duly noticing and holding any public hearing required by either Section 33445 or 33679 of the Law prior to application of proceeds of the Bonds to any portion of the Project subject to either Section 33445 or 33679. In addition, the Agency will comply in a timely manner with the requirements of Sections 33334.2 and 33334.6. The Agency will commence, and will continue to completion, with all practicable dispatch, the Project and the Project will be accomplished and completed in a sound and economical manner and in conformity with the Redevelopment Plan and the Law. The Trustee shall have no duty to monitor such compliance and shall not be liable in any respect for any violation. Section 5.10 'Amendment of Redevelopment Plan and Disposition of Propert (1) The Agency will not authorize the disposition of any land or real property in the Project Area to anyone which will result in such property becoming exempt from taxation because of public ownership or use or otherwise (except property planned for such ownership or use by the Redevelopment Plan in effect on the date of this Indenture) so that such disposition shall, when taken together with other such dispositions, aggregate more than ten percent (10%) of the land area in the Project Area unless the Redevelopment Plan is amended as hereinafter provided in this Section ':'5.10. If the Agency proposes to make such a disposition, it shall propose an amendment to such Redevelopment Plan which expressly provides for the disposition of such real property with such an effect and shall give written notice thereof to the Trustee. The Agency shall thereupon appoint a reputable Independent Financial Consultant and direct said consultant to report on the effect of said proposed disposition, a copy of which report shall be provided to the Trustee. If the Report of the Independent Financial Consultant concludes that the security of the Bonds or the rights of the affected Bondowners will not be materially impaired by said proposed disposition `and that Tax Increment Revenues allocated to the Agency will not be significantly diminished by the proposed disposition and, provided further, that Bond Insurer consents to such amendment, the Agency may thereafter adopt the amendment (pursuant to all applicable provisions of the Law) and make the disposition. If said Report concludes that Tax Increment Revenues allocated to the Agency will be significantly diminished or that such security will be materially impaired by said proposed disposition, the Agency shall not adopt the amendment. The Agency shall have the sole and exclusive authority to appoint said consultant. Neither the Trustee nor said consultant shall be liable in connection with the performance of their duties hereunder, except for their own negligence or willful misconduct. (2) In the event subsection (1) hereof does not apply, the Agency shall not dispose of any property in the Project Area to anyone which will result in such property becoming exempt from taxation because of public ownership or use or otherwise (except property planned for such ownership or use by the Redevelopment Plan in effect on the date of this Indenture), without imposing the following requirements on such new owner or owners: (a) Said new owner or owners shall pay to the Treasurer, so long as any of the Bonds aze Outstanding, an amount equal to the amount that would have been received by the Treasurer as Tax' Increment Revenues allocated to the Agency if the property were assessed and taxed in the same manner as privately owned nonexempt property; and 146/024600-0005 ' n4ozz.os .o4n6iw -33- (b) Such payment shall be made to the Treasurer within thirty (30) days after taxes for each year would become payable to the taxing agencies for nonexempt property and in any event prior to the delinquency date of such taxes established by law. All such payments in lieu of taxes to the Treasurer shall be treated as Tax Revenues allocated to the Agency and shall be deposited by the Trustee in the Special Fund to the extent required by Section 4.03. Section 5.11 Single Sum Payments in Lieu of Taxes. As an alterative to payment to the Treasurer pursuant to subsection (2)(b) of Section 5.10, the new owner or owners of property becoming exempt from taxation provided for in Section 5.10 may elect to make payment to the Agency in a single sum equal to the amount estimated by the Treasurer to be receivable from taxes on said property from the date of said payment to the maturity date of the Bonds, less a reasonable discount value. All such single sum payments in lieu of Tax Revenues shall be treated as Tax Revenues allocated to the Agency and shall be deposited by the Trustee in the Special Fund to the extent required by Section 4.03. Section 5.12 Tax Increment Revenues. The Agency shall comply with all requirements of the Law to insure the allocation and payment to it of the Tax Increment Revenues including without limitation the timely filing of any necessary statements of indebtedness with appropriate officials of San Luis Obispo County. The Agency will not amend the Plan or reduce the Project Area in any manner which will impair the availability of Tax Revenues to pay Annual Debt Service, [without the consent of Bond Insurer. Bond Insurer shall annually receive a copy of the statement of indebtedness at the time it is filed with San Luis Obispo County.] Section 5.13 Eminent Domain. The net proceeds received by the Agency from any eminent domain proceeding may be, but shall not be required to be deposited by the Agency in the Special Fund; provided that the net proceeds received by the Agency from the taking of any property in the Project Area the redevelopment of which was financed by the Agency through the issuance of revenue obligations shall be deposited, used and applied in the manner provided by the resolution or indenture authorizing the issuance of such lease revenue obligations. Section 5.14 Further Assurances. The Agency will adopt make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture and for better assuring and confirming unto the Owners of the Bonds of the rights and benefits provided in this Indenture. . Section 5.15 Taxation of Leased PropertX Whenever any property in the Redevelopment Project has been redeveloped and thereafter is leased by the Agency to any person or persons (other than the City or the County of 14N024600.0005 naozz.os aoaneia~ -34- San Luis Obispo or any other public agency) or whenever the Agency leases real property in the Redevelopment Project to any person or persons for redevelopment the property shall be assessed and taxed in the same manner as privately owned property (in accordance with Section 33673 of the Health and Safety Code of the State of Califomia) and the lease or contract shall provide (1) that the lessee shall pay taxes upon the assessed value of the entire property and not merely upon the assessed value of his or its leasehold interest, and (2) that if for any reason the taxes paid by the lessee on such property in any yeaz during the term of the lease or contract shall be less than the taxes which would have been payable upon the assessed value of the entire property if the property were assessed and taxed in the same manner as privately owned property, the lessee shall pay such difference to the Agency within thirty (30) days after the taxes for such year become payable to the taxing agencies and in any event prior to the delinquency date of such taxes established by law. All such payments to the Agency shall be promptly delivered to the Trustee and shall be deposited by the Trustee in the Special Fund to the extent required by Section 4.03. Section 5.16 Continuine Disclosure. The Agency hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate. Notwithstanding any other provision of this Indenture, failure of the Agency to comply with the Continuing Disclosure Certificate shall not be considered an Event of Default nor a breach of any duty of the Agency hereunder; however, the Trustee (at the written request of any Participating Underwriter or the Owners or Beneficial Owners of at least 25% aggregate principal amount of Outstanding Bonds, shall, but only to the extent the Trustee has been indemnified to its satisfaction from and against any costs, expenses or liabilities whatsoever, including fees and expenses of its attorneys and additional fees and expenses of the Trustee arising from or related thereto, or any Owner may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Agency or the Trustee, as the case may be, to comply with its obligations under this Section. For purposes of this Section, "Beneficial Owner" means any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the Owner of any Bonds for federal income tax purposes. ARTICLE 6 THE TRUSTEE Section 6.01 Appointment of Trustee. Wells Fazgo Bank, National Association, at its principal corporate trust office in Los Angeles, California, is hereby appointed Trustee for the Agency to act as the agent and depository of the Agency for the purpose of receiving all moneys required to be paid to the Trustee hereunder, to allocate, use and apply the same, to hold, receive and disburse the Tax Revenues and other funds pledged or held hereunder, and otherwise to hold all the offices and perform all the functions and duties expressly provided in this Indenture to be held and performed by the Trustee. The Trustee shall signify its acceptance of the duties and obligations imposed upon it by this Indenture by executing the written acceptance as set forth hereinbelow, 14N024600-0005 774022.05 a04/16/07 '35' and by executing and delivering such acceptance, the Trustee shall be deemed to have accepted such duties and obligations, but only upon the express terms and conditions set forth in this Indenture it being understood no implied duties or obligations shall arise hereunder. The Trustee shall, prior to an Event of Default, and after the curing of all Events of Default which may have occurred, perform such duties and only such duties as aze expressly and specifically set forth in this Indenture it being understood no implied duties or obligations shall arise hereunder. The Trustee shall, during the existence of any Event of Default (which has not been cured), exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a reasonable person would exercise or use under similar circumstances in the conduct of such persons own affairs. Upon thirty (30) days prior written notice, the Agency may remove the Trustee initially appointed, and any successor thereto, and may appoint a successor or successors thereto, but any such successor shall be a bank, corporation or trust company doing business and having an office in the State of California, having a combined capital (exclusive of borrowed capital) and surplus of, or if a member of a bank holding company system such pazent institution shall have, at least Seventy-Five Million Dollazs ($75,000,000.00), and subject to supervision or examination by federal or state authority. If such bank, corporation or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to then for the purposes of this section the combined capital and surplus of such bank, corporation or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Trustee may at any time resign by giving sixty (60) days written notice of such resignation to the Agency and to the Bondowners, by first class mail at the addresses shown on the registration books maintained by the Trustee. Upon receiving notice of such resignation the Agency shall promptly appoint a successor Trustee by an instrument in writing. Any resignation or removal of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee. If the Agency does not appoint a successor Trustee within sixty (60) days following the giving of any notice of removal or receipt of any notice of resignation, the removed or resigning Trustee or any Bondowner on behalf of himself and all other Bondowners may petition any appropriate court having jurisdiction to appoint a successor Trustee. Section 6.02 Compensation and Indemnity. The Agency agrees to pay the Trustee within 30 days upon demand therefore for its services (this payment shall not be limited by any provision of law affecting the compensation of a Trustee). Further, the Agency shall pay or reimburse the Trustee within 30 days upon its request for all reasonable expenses of the Trustee, including the reasonable compensation and the expenses of its counsel (including internal administration and in-house counsel). The Agency agrees to indemnify and hold harmless the Trustee against all claims demands, losses, damages liabilities or expenses (including but not limited to reasonable attorneys' fees) relating to (i) the Trustee exercising its rights or performing its duties under this Indenture, (ii) the Trustee being appointed and serving as such under this Indenture, or (iii) otherwise relating to this Indenture or ~ae/ozaeao-coos 774022.05 a04/16/07 -36- the Bonds, except to the extent resulting from the Trustee's own negligence or willful misconduct. The Trustee is not accountable for the use by the Agency of funds which the Trustee releases to the Agency or which the Agency otherwise receives, or for the adequacy or validity of any collateral or security interest securing this Indenture or the Bonds. The Trustee has no obligation to incur individual financial or other liability or risk in performing any duty or in exercising any right arising hereunder. The Trustee, in its individual or other capacity, -may become the owner or pledgee of the Bonds with the same rights it would have if it were not the Trustee. The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Owners of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture. The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Bondowners or Bond Insurer pursuant to the provisions of this Indenture unless such Bondowners or Bond Insurer shall have offered and tendered to the Trustee security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities which maybe incurred therein or thereby. The Trustee shall have no responsibility with respect to any information, statement, or recital in any official statement, offering memorandum or any other disclosure material prepazed or distributed with respect to the Bonds. The Trustee shall not be required to take any action at the direction of the Bondowners that the Trustee deems to be materially detrimental to the Bondowners. The Trustee shall not be deemed to have knowledge of any Event of Default hereunder until a responsible trust officer has actual knowledge that an Event of Default (other than a payment default) exists by reason of having received written notice than an Event of Default as such exists, at its principal corporate trust office in L.os Angeles, California. The Trustee shall not be bound to ascertain or inquire as to the performance or observance by any other party of any of the terms conditions, covenants or agreements herein or in any of the documents executed in connection with the Bonds. The Trustee shall not be held liable or responsible for any loss resulting from the investment of funds in Permitted Investments at the written direction of the Agency pursuant to this Indenture. Provisions in this Indenture giving the Trustee permissive right to do things shall not be construed as imposing a duty on the Trustee to do those things. All indemnifications and releases from liability granted herein to the Trustee shall extend to the directors, officers, employees, and agents of the Trustee. 14N024600-0005 naoz2 os swn eim -37- No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers. Section 6.03 Liability of Agents. The recitals of facts covenants and agreements herein and in the Bonds contained shall be taken as statements, covenants and agreements of the Agency and the Trustee assumes nor shall it have any responsibility or liability for the correctness of the same nor has the Trustee made any representations whatsoever as to the validity or sufficiency of this Indenture or of the Bonds, nor shall the Trustee incur any responsibility or liability in respect thereof, other than in connection with the express duties or obligations herein or in the Bonds assigned to or imposed upon it. The Trustee shall not be liable in connection with the performance of its duties hereunder except for its own negligence or willful misconduct. Section 6.04 Merger of Trustee. Any company into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided that such company shall be eligible under Section 6.01, shall be the successor to the Trustee without the execution or filing of any paper or further act, anything herein to the contrary notwithstanding. Section 6.05 Survival of Rights. The Trustee's rights to immunities and protection from liability hereunder and its rights to payment of its fees and expenses shall survive its resignation or removal and final payment or defeasance of the Bonds. Section 6.06 - Notice to Agents. The Trustee shall be protected in acting upon any notice, resolution, request, consent order certificate, report, warrant, Bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The Trustee may consult with counsel, who may be counsel to the Agency, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith. The Trustee shall not be bound to recognize any person as the owner of a Bond unless and until such Bond is submitted for inspection, if required, and his title thereto satisfactorily established if disputed. Whenever in the administration of its duties under this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of bad faith on the part of the Trustee, be deemed to be conclusively proved and established by a certificate of the Agency. Such certificate shall be full 146/024600-0005 774022.05 a04/16/07 '38- warrant to the Trustee for any action taken or suffered under the provisions of this Indenture or any Supplemental Indenture upon the faith thereof, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable. Section 6.07 Deposit and Investment of Monevs in Funds. All money held by the Agency or Trustee in any of the funds established pursuant to this Indenture shall be invested and reinvested in Permitted Investments. The investments held by the Trustee shall be valued by the Trustee not less than quarterly, at the market value thereof. Investments of money in the Interest Account or the Principal Account of the Special Fund must mature no later than the date at which such money is estimated to be required to be paid out hereunder. Moneys in the Reserve Account shall be invested in Permitted Investments which will by their terms mature within such time as may be recommended by an Independent Financial Consultant. All Investment Earnings on money in the Special Fund and the accounts therein shall be retained in the Special Fund and such accounts shall be applied in the same manner as other monies therein. Funds held by the Trustee in any account or subaccount established pursuant to the terms of this Indenture may be employed by the Trustee to purchase Permitted Investments as directed in writing, by the Chairman or an authorized representative of the Agency, all such directions to be confirmed by a written investment direction. To the extent that written direction is not received by the Trustee with respect to funds then available for investment, the Trustee shall invest such funds in Permitted Investments set forth in subparagraph (6) of the definition of Permitted Investments. The value of the above investments shall be determined as follows (a) For the purpose of determining the amount in any fund, all Permitted Investments credited to such fund shall be valued at fair market value. The Trustee shall determine the fair market value based on accepted industry standards and from accepted industry providers. Accepted industry providers shall include but are not limited to pricing services provided by Financial Times Interactive Data Corporation, Merrill Lynch, Citigroup Global Markets Inc., Bear Stearns, or Lehman Brothers. (b) As to certificates of deposit and bankers' acceptances: the face amount thereof, plus accrued interest thereon; and (c) As to any investment not specified above: the value thereof established by prior agreement among the Issuer, the Trustee, and Bond Insurer. Section 6.08 Accounting Records and Financial Statements. The Trustee will keep, or cause to be kept, accurate books of record and accounts, in which complete and accurate entries shall be made of all transactions relating to the receipt, investment, disbursement, allocation and application of the proceeds of the Bonds, the Tax Revenues and all funds and accounts established pursuant to this Agreement. Such books of record and account shall specify the account or fund to which each investment (or portion thereof) held by the Trustee is to be allocated and shall set forth, in the case of each Permitted Investment (a) its purchase price, (b) identifying information, including par amount, coupon rate 146/024600-0005 naozz.os>,oalbio~ -39- and payment dates, (c) the amount received at maturity or its sale price, as the case may be, (d) the amounts and dates of any payments made with respect thereto. Such books of record and account shall be available for inspection by the Agency and any Bondholder, or his agent or representative duly authorized in writing, at reasonable hours and under reasonable circumstances. At the Agency's expense, the Trustee shall file and furnish to the Agency within thirty days after the end of each month, a statement (which need not be audited) covering receipts, disbursements, allocation and application of Tax Revenues and any other moneys (including proceeds of Bonds) in any of the funds and accounts established pursuant to this Agreement for such month. Such statements may also be furnished to any Bondholder who shall request same and pay the Trustee's charges for providing the statements. ARTICLE 7 MODIFICATION OR AMENDMENT OF THE INDENTURE Section 7.01 Amendments Permitted. This Indenture and the rights and obligations of the Agency and of the owners of the Bonds maybe modified or amended at any time by a Supplemental Indenture and the affirmative majority vote at a meeting of Bondowners or with the written consent without a meeting of the Owners of sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in Section 7.04. No such modification or amendment shall (1) extend the maturity of any Bond or reduce the interest rate thereon, or otherwise alter or impair the obligation of the Agency to pay the principal thereof, or interest thereon, or any premium payable on the redemption thereof, at the time and place and at the rate and in the currency provided therein without the express consent of the Owner of such Bond, or (2) permit the creation by the Agency of any pledge or lien upon the Tax Revenues superior to or on a panty with the pledge and lien created for the benefit of the Bonds and any Additional Bonds (except as otherwise permitted in this Indenture), or (3) reduce the percentage of Bonds required for the affirmative vote or written consent to an amendment or modification or (4) modify any of the rights or obligations of the Trustee without its written assent thereto. This Indenture and the rights and obligations of the Agency and of the Owners of the Bonds may also be modified or amended at any time by a Supplemental Indenture, without the consent of any Bondowners, but only to the extent permitted by law and only for any one or more of the following purposes-- (a) to add to the covenants and agreements of the Agency in this Indenture other covenants and agreements thereafter to be observed or to limit or surrender any right or power herein reserved to or conferred upon the Agency; (b) to make modifications not affecting any Outstanding Bonds of the Agency; (c) with the written consent of the Trustee, to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective 146/024600-0005 n4ozz.os aoan 6io~ -40- provision contained in this Indenture, or in regard to questions arising under this Indenture, as the Agency and the Trustee may deem necessary or desirable and not inconsistent with this Indenture, and which shall not adversely affect the rights of the Owners of the Bonds; and (d) to authorize the issuance of Additional Bonds in accordance with Section 3.04 of this Indenture. Section 7.02 Bondowners' Meetines. The Agency may at any time call a meeting of the Bondowners. In such event, the Agency shall determine the time, date and place of said meeting. The Trustee shall provide for the giving of notice. The date of mailing such notice shall be determined by the Agency in its discretion; provided that such notice shall be mailed at least 15 days prior to the date of the Bondowners' meeting. The Agency shall fix and adopt rules and regulations for the conduct of said meeting. Section 7.03 Procedure for Amendment with Written Consent of Bondowners. The Agency may at any time adopt a Supplemental Indenture amending the provisions of the Bonds or of this Indenture or any Supplemental Indenture, to the extent that such amendment is permitted by Section 7.01, to take effect when and as provided in this section. A copy of such Supplemental Indenture, together with a request to Bondowners for their consent thereto, shall be mailed by the Agency to each registered owner of Bonds Outstanding, but failure to mail copies of such Supplemental Indenture and request shall not affect the validity of the Supplemental Indenture when assented to as in this Section provided. Such Supplemental Indenture shall not become effective unless there shall be filed with the Trustee the written consents of the Owners of sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding (exclusive of Bonds disqualified as provided in Section 7.04) and a notice shall have been mailed as hereinafter in this Section provided. Each such consent shall be effective only if accompanied by proof of ownership of the Bonds for which such consent is given, which proof shall be such as is permitted by Section 9.04. Any such consent shall be binding upon the Owner of the Bonds giving such consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such consent is revoked in writing by the Owner giving such consent or a subsequent owner by filing such revocation with the Trustee prior to the date when the notice hereinafter in this Section provided for has been mailed. After the Owners of the required percentage of Bonds shall have filed their consents to the Supplemental Indenture, the Agency shall mail a notice to the Bondowners in the .manner hereinbefore provided in this section for the mailing of the Supplemental Indenture, stating in substance that the Supplemental Indenture has been consented to by the Owners of the required percentage of Bonds and will be effective as provided in this section (but failure to mail copies of said notice shall not affect the validity of the Supplemental Indenture or consents thereto). Proof of the mailing of such notice shall be filed with the Trustee. A record consisting of the papers required by this Section to be filed with the Trustee, shall be proof of the matters therein stated until the contrary is proved. The Supplemental Indenture shall become effective upon the 146/024600-0005 774022.05 a04/16/07 -41- filing with the Trustee of the proof of mailing of such notice, and the Supplemental Indenture shall be deemed conclusively binding (except as otherwise hereinabove specifically provided in this article) upon the Agency and the Owners of all Bonds at the expiration of sixty (60) days after such filing, except in the event of a final decree of a court of competent jurisdiction setting aside such consent in a legal action or equitable proceeding for such purpose commenced. within such sixty-day period. The Trustee may obtain an opinion of counsel that any such Supplemental Indenture entered into by the Agency and the Trustee complies with the provisions of this section and the Trustee may conclusively rely on such opinion. Section 7.04 Disqualified Bonds. Bonds owned or held for the account of the Agency or the City of Arroyo Grande, excepting any pension or retirement fund, shall not be deemed Outstanding for the purpose of any vote, consent or other action or any calculation of Outstanding Bonds provided for in this Article 7, and shall not be entitled to vote upon, consent to, or take any other action provided for in this Article 7. Upon request of the Trustee, the Agency and City shall certify to the Trustee which Bonds are disqualified pursuant to this Section 7.04. The Trustee may conclusively rely upon such certification. Section 7.05 Effect of Supplemental Indenture. From and after the time any Supplemental Indenture becomes effective pursuant to this Article 7, this Indenture shall be deemed to be modified and amended in accordance therewith, the respective rights duties and obligations under this Indenture of the Agency and all Owners of Bonds Outstanding shall thereafter be determined exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such Supplemental Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes. The Agency may adopt appropriate regulations to require each Bondowner before his consent provided for in this Article 7 shall be deemed effective, to reveal if the Bonds as to which such consent is given are disqualified as provided in Section 7.04. Section 7.06 Endorsement or Replacement of Bonds Issued After Amendments. The Agency may determine that Bonds issued and delivered after the effective date of any action taken as provided in this Article 7 shall beaz a notation, by endorsement or otherwise, in form approved by the Agency, as to such action. In that case, upon demand of the Owner of any Bond Outstanding at such effective date and presentation of his Bond for that purpose at the office of the Trustee or at such other office as the Agency may select and designate for that purpose, a suitable notation shall be made on such Bond. The Agency may determine that new Bonds, so modified as in the opinion of the Agency is necessazy to conform to such Bondowner's action, shall be prepared, executed and delivered. In that case, upon demand of the Owner of any Bonds then Outstanding, such new Bonds shall be exchanged at the office of the Trustee in Los Angeles, California, without cost to any Bondowner, for Bonds then Outstanding, upon surrender of such Bonds. 146/024600-0005 774022.05 a04/16/07 -42- Section 7.07 Amendatory Endorsement of Bonds. The provisions of this Article 7 shall not prevent any Bondowner from accepting any amendment as to the particular Bonds held by him provided that due notation thereof is made on such Bonds. ARTICLE 8 EVENTS OF DEFAULT AND REMEDIES OF BONDOWNERS Section 8.01 Events of Default and Acceleration of Maturities. If one or more of the following events ("Events of Default") shall happen, that is to say-- (1) if default shall be made in the due and punctual payment of the principal of and redemption premium (if any) on any Bond when and as the same shall become due and payable, whether at maturity as therein expressed by declaration or otherwise; (2) if default shall be made in the due and punctual payment of any installment of interest on any Bond when and as such interest installment shall become due and payable; (3) if any other default shall be made by the Agency in the observance of any of the covenants, agreements or conditions on its part in this Indenture or with respect to the Bonds or any other resolution or Supplemental Indenture authorizing the issuance of Additional Bonds, and such default shall have continued for a period of thirty (30) days after written notice to the Agency; or (4) if the Agency shall file a petition seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America, or if a court of competent jurisdiction shall approve a petition seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America, or if, under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall approve a petition seeking reorganization under the federal bankruptcy laws or any other applicable laws of the United States of America, or, if under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the Agency or of the whole or any substantial part of its property; then, in each and every case during the continuance of an Event of Default as described in (1), (2) or (4), the Trustee shall declaze the principal of all of the Bonds then Outstanding, and the interest accrued thereon, to be due and payable immediately. In each and every case during the continuance of an Event of Default as described in (3), the Trustee may, and upon written request (such request to be in writing to the Trustee and to the Agency) of the Owners of not less than sixty percent (60%) in aggregate principal amount of the Bonds at the time Outstanding shall, declare the principal of all of the Bonds then Outstanding, and the interest accrued thereon, to be due and payable immediately. Upon any declaration of an Event of Default as described in this paragraph, the principal of all of the Bonds then Outstanding and the interest accrued thereon shall become and shall be immediately due and payable, anything in this Indenture or in the Bonds to the contrary notwithstanding. 14N024600-0005 n4ozz.os ao4n°iw -43- This provision, however, is subject to the condition that if, at any time after the principal of the Bonds shall have been so declared due and payable and before any judgment or decree for the payment of the moneys due shall have been obtained or entered the Agency shall deposit with the Trustee a sum sufficient to pay all principal on the Bonds matured prior to such declaration and all matured installments of interest (if any) upon all the Bonds, with interest at the rate of twelve percent (12%) per annum on such overdue installments of principal, and, to the extent such payment of interest is lawful at the time, on such overdue installments of interest, so that the Agency is then cun•ently in compliance with all payments, deposit and transfer provisions of this Indenture, and the reasonable expenses of the Trustee, and any and all other defaults known to the Trustee (other than in the payment of principal of and interest on the Bonds due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall have been made therefor, then, and in every such case, the Owners of at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding by written notice to the Agency and to the Trustee may; on behalf of the Owners of all of the Bonds, rescind and annul such declaration and its consequences. However, no such rescission and annulment shall extend to or shall affect any subsequent default, or shall impair or exhaust any right or power consequent thereon. Section 8.02 Application of Funds Upon Acceleration. All of the Tax Revenues and all sums in the fund and accounts provided for in Sections 4.02 and 4.03, upon the date of the declaration of acceleration as provided in Section 8.01, and all sums thereafter received by the Trustee hereunder, shall be applied by the Trustee in the order following upon presentation of the several Bonds and the stamping thereon of the payment if only partially paid, or upon the surrender thereof if fully paid-- First to the payment of the costs and expenses of the Trustee and then to the Bondowners relating to costs incurred in declaring such event of default including reasonable compensation to its or their agents, attorneys and counsel and to the payment of the fees, costs and expenses of the Tmstee (including but not limited to reasonable compensation to its agents, attorneys and counsel for their respective fees and expenses) incurred in performing or exercising its rights, powers and duties under this Indenture; Second, in case the principal of the Bonds shall not have become due and payable, to the payment of the interest in default in the order of the maturity of the installments of such interest with interest on the overdue installments at the rate of twelve percent (12%) per annum (to the extent that such interest on overdue installments shall have been collected), such payments to be made ratably to the persons entitled thereto without discrimination or preference; Third, in case the principal of the Bonds shall have become and shall be then due and payable, all such sums shall be applied to the payment of the whole amount then owing and unpaid upon the Bonds for principal and interest, with interest on the overdue principal and installments of interest at the rate of twelve percent (12%) per annum (to the extent that such interest on overdue installments of interest shall have been collected), and in case such moneys shall be insufficient to pay in full the whole amount so owing and unpaid upon the Bonds then to the payment of such principal and interest without preference or priority of principal over iaeiozaeoo-ooos naozz.os aoaii~o~ -44- interest, or interest over principal or of any installment of interest over any other installment of interest or of any payment of principal over any other payment of principal, ratably to the aggregate of such principal and interest. Section 8.03 Trustee to Reresent Bondowners. The Trustee is hereby irrevocably appointed (and the successive respective Owners of the Bonds, by taking and holding the same, shall be conclusively deemed to have so appointed the Trustee) as trustee and true and lawful attorney-in-fact of the Owners of the Bonds for the purpose of exercising and prosecuting on their behalf such rights and remedies as may be available to such Owners under the provisions of the Bonds, this Indenture, and applicable provisions of any law. Upon the occurrence and continuance of an Event of Default or other occasion giving rise to a right in the Trustee to represent the Bondowners, the Trustee in its discretion may, and upon'the written request of the Owners of not less than twenty-five percent (25%) in aggregate principal amount of the Bonds then Outstanding, and upon being indemnified to its satisfaction therefor, shall, proceed to protect or enforce its rights or the rights of such Owners by such appropriate action, suit, mandamus or other proceedings as it shall deem most effectual to protect and enforce any such right, at law or in equity, either for the specific performance of any covenant or agreement contained herein, or in aid of the execution of any power herein granted, or for the enforcement of any other appropriate legal or equitable right or remedy vested in the Trustee or in such Owners under this Indenture or any law; and upon instituting such proceeding, the Trustee shall be entitled, as a matter of right, to the appointment of a receiver of the Tax Revenues and other assets pledged under this Indenture, pending such proceedings. All rights of action under this Indenture or the Bonds or otherwise may be prosecuted and enforced "by the Trustee without the possession of any of the Bonds or the production thereof in any; proceeding relating thereto, and any such suit, action or proceeding instituted by the Trustee shall be brought in the name of the Trustee for the benefit and protection of all the Owners of such Bonds, subject to the provisions of this Indenture. Counsel to the Trustee is not counsel to the Bondholders and communication between the Trustee and its counsel shall be deemed privileged. Section 8.04 Bondowners' Direction of Proceedings. Anything in this Indenture to the contrary notwithstanding, the Owners of a majority in aggregate principal amount of the Bonds then Outstanding shall have the right, by an instrument or concurrent instruments in writing executed and delivered to the Trustee, to direct the method of conducting all remedial proceedings taken by the Trustee hereunder, provided that such direction shall not be othetwise than in accordance with law and the provisions of this Indenture, and that the Trustee shall have the right to decline to follow any such direction which in the opinion of the Trustee would be materially prejudicial to Bondowners not parties to such direction. Section 8.05 Limitation on Bondowners' Right to Sue. No Owner of any Bond shall have the right to institute any suit, action or proceeding at law or in equity, for the protection or enforcement of any right or remedy under this Indenture or any applicable law with `respect to such Bond, unless (1) such Owner shall have given to the 14N024600.0005 '~ n4ozz.os ao4nmo~ -45- Trustee written notice of the occurrence of an Event of Default; (2) the Owners of not less than twenty-five percent (25%) in aggregate principal amount of the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such suit, action or proceeding in its own name; (3) such Owners shall have tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; and (4) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee. Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds of any remedy hereunder or under law; it being understood and intended that no one or more Owners of Bonds shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the security of this Indenture or the rights of any other Owners of Bonds, or to enforce any right under this Indenture or applicable law with respect to the Bonds, except in the manner herein provided, and that all proceedings at law or in equity to enforce any such right shall be instituted, had and maintained in the manner herein provided and for the benefit and protection of all Owners of the Outstanding Bonds, subject to the provisions of this Indenture. Section 8.06 Absolute Oblieation of Agency Nothing in Section 8.05 or in any other provision of this Indenture, or in the Bonds, contained shall affect or impair the obligation of the Agency, which is absolute and unconditional, to pay the principal of, premium, if any, and interest on the Bonds to the respective Owners of the Bonds at their respective dates of maturity, or upon call for redemption, as herein provided, but only out of the Tax Revenues and other assets herein pledged therefor, or affect or impair the right of such Owners, which is also absolute and unconditional, to enforce such payment by virtue of the contract embodied in the Bonds. Section 8.07 Termination ofProceedin~s. In case any proceedings taken by the Trustee or any one or more Bondowners on account of any Event of Default shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Trustee or the Bondowners, then in every such case, the Agency, the Trustee and the Bondowners, subject to any determination in such proceedings, shall be restored to their former positions and rights hereunder, severally and respectively, and all rights, remedies, powers and duties of the Agency, the Trustee and the Bondowners shall continue as though no such proceedings had been taken. Section 8.08 Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee or the Owners of the Bonds is intended to be exclusive of any other remedy or remedies, and each and every such remedy, to the extent permitted by law, shall be cumulative and in addition to any other remedy given hereunder or now or hereafter existing at law or in equity or otherwise. 14N024600-0005 774022.05 a04/i6/07 '46- Section 8.09 No Waiver of Default. No delay or omission of the Trustee or of any Owner of the Bonds to exercise any right or power arising upon the occurrence of any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein; and every power and remedy given by this Indenture to the Trustee or to the Owners of the Bonds may be exercised from time to time as often as maybe deemed expedient. ARTICLE 9 MISCELLANEOUS Section 9.01 Benefits of Indenture Limited to Parties. Nothing in this Indenture, expressed or implied, is intended to give to any person other than the Agency, the Trustee and the Owners of the Bonds, any right, remedy, claim under or by reason of this Indenture. Any covenants, stipulations, promises or agreements in this Indenture contained by and on behalf of the Agency shall be for the sole and exclusive benefit of the Owners of the Bonds and the Trustee. Section 9.02 Successor is Deemed Included in All References to Predecessor. Whenever in this Indenture or any Supplemental Indenture either the Agency or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof and all the covenants and agreements in this Indenture contained by or on behalf of the Agency or the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. Section 9.03 Discharge oflndenture. If the Agency shall pay and discharge the entire indebtedness on all Bonds Outstanding or any portion thereof in any one or more of the following ways-- (1) by well and truly paying or causing to be paid the principal of and interest on all or the applicable portion of the Bonds Outstanding, as and when the same become due and payable; (2) by irrevocably depositing with the Trustee, in trust, at or before maturity money which, together with the amounts then on deposit in the funds and accounts provided for in Section 4.03 is fully sufficient to pay all or the applicable portion of the Bonds Outstanding, including all principal, interest and redemption premiums or; (3) by irrevocably depositing with the Trustee, in trust, cash and Federal Securities in such amount as an Independent Financial Consultant shall certify to the Trustee, based upon a certificate of a certified public accountant, will together with the interest to accrue thereon and moneys then on deposit in the funds and accounts provided for in Section 4.03, be fully sufficient to pay and discharge the indebtedness on all or the applicable portion of the Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates; 146/024600-0005 naozz.os aoaile/o~ '4~' and, if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as in this Indenture provided or provision satisfactory to the Trustee shall have been made for the giving of such notice, then at the election of the Agency, and notwithstanding that any Bonds shall not have been surrendered for payment, the pledge of the Tax Revenues and other funds provided for in this Indenture and all other obligations of the Agency under this Indenture with respect to all or the applicable portion of the Bonds Outstanding shall cease and terminate, except only the obligation of the Agency to pay or cause to be paid to the Owners, of the Bonds not so surrendered and paid all sums due thereon, and thereafter Tax Revenues shall not be payable to the Trustee. Notice of such election shall be filed with the Trustee. Any funds thereafter held by the Trustee, including any funds which have not been claimed by the person entitled thereto within two years of the date upon which such funds were scheduled to be paid, or which are not required for said purpose, shall be paid over to the Agency. [Notwithstanding anything herein to the contrary, in the event that the principal and/or interest due on the Bonds shall be paid by Bond Insurer pursuant to the Insurance Policy, the Bonds shall remain Outstanding for all purposes, not be defeased or otherwise satisfied and not be considered paid by the Agency, and the assignment and pledge of the Tax Revenues and all covenants, agreements and other obligations of the Agency to the registered Owners shall continue to exist and shall run to the benefit of Bond Insurer, and Bond Insurer shall be subrogated to the rights of such registered owners.] Section 9.04 Execution of Documents and Proof of Ownership by Bondowners. Any request, declaration, or other instrument which this Indenture may require or permit to be executed by Bondowners may be in one or more instruments of similar tenor and shall be executed by Bondowners in person or by their attorneys appointed in writing. Except as otherwise herein expressly provided, the fact and date of the execution by any Bondowner or his attorney of such request, declaration or other instrument or of such writing appointing such attorney, may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act that the person signing such request, declaration or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer. Except as otherwise herein expressly provided, the ownership of registered Bonds and the amount, maturity, number and date of holding the same shall be proved by the registry books. Any request, declaration or other instrument or writing of the Owner of any Bond shall bind all future Owners of such Bond in respect of anything done or suffered to be done by the Agency or the Trustee in good faith and in accordance therewith. 146/024600-000s n4ozz.os ao4n6io~ -4$- Section 9.05 Waiver of Personal Liability. No member, officer, agent or employee of the Agency shall be individually or personally liable for the payment of the principal of or interest on the Bonds; but nothing herein contained shall relieve any such member officer agent or employee from the performance of any official duly provided by law. Section 9.06 Publication for Successive Weeks. Any publication to be made under the provisions of this Indenture in successive weeks maybe made in each instance upon any Business Day of the week and need not be made on the same day of any succeeding week or in the same newspaper for any or all of the successive publications, but maybe made on different days of the week and in different newspapers. Section 9.07 Destruction of Cancelled Bonds. Whenever in this Indenture provision is made for the surrender to the Agency of any Bonds which have been paid or canceled pursuant to the provisions of this Indenture, when cancellation is permitted by law a certificate of destruction duly executed by the Trustee shall be deemed to be the equivalent of the surrender of such canceled Bonds and the Agency shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Bonds therein referred to. Section 9.08 Notices and Demands on Agency Any notice or demand which by any provision of this Indenture is required or permitted to be given or served by the Trustee to or on the Agency may be given or served by being deposited postage prepaid in a post office letter box addressed (until another address is filed by the Agency with the Trustee) as follows: Arroyo Grande Redevelopment Agency, Arroyo Grande City Hall, 214 E. Branch Street, Arroyo Grande, California 93420, Attention: Executive Director. Section 9.09 Partial Invalidity. If any section, paragraph, sentence, clause or phrase of this Indenture shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remaining portions of this Indenture. The Agency hereby declares that it would have adopted this Indenture and each and every other section, paragraph, sentence, clause or phrase hereof and authorized the issue of the Bonds pursuant thereto irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses, or phrases of this Indenture may be held illegal, invalid or unenforceable. If, by reason of the judgment of any court, the Trustee is rendered unable to perform its duties hereunder, all such duties and all of the rights and powers of the Trustee hereunder shall be assumed by and vest in the Treasurer of the Agency in trust for the benefit of the Bondowners. The Agency covenants for the direct benefit of the Bondowners that its Treasurer in such case shall be vested with all of the rights and powers of the Trustee hereunder and shall assume all of the responsibilities and perform all of the duties of the Trustee hereunder in trust for the benefit of the Bonds. 146/024600-0005 774022.05 a04/16/07 -49- Section 9.10 Effective Date of Indenture. This Indenture shall take effect from and after the date of its execution. Section 9.11 Governine Law. This Indenture shall be governed by and construed in accordance with the laws of the State of California. Section 9.12 Execution by Countemar[s. This Indenture may be executed in several counterparts, all or any of which shall be regazded for all purposes as one original and shall constitute and be but one and the same instrument. ARTICLE 10 INSURANCE POL[CY Section 10.01 [To Come] 146/024600-000s n4ozz.os aoaab/o~ -50- IN WITNESS WHEREOF, the Agency has caused this Indenture to be executed in its name and its seal to be affixed hereto and attested and the Trustee, in token of its acceptance of the trusts created hereunder has caused this Indenture to be executed in its name all as of the day and year above written. ARROYO GRANDE REDEVELOPMENT AGENCY By: EXECUTIVE DIl2ECTOR This Indenture and the duties and obligations herein imposed upon the Trustee are hereby accepted and agreed to: WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee Authorized Signatory 106/024600-0005 naozz.os as/1c/m -51- EXHIBIT A (FORM OF BOND) UNITED STATES OF AMERICA STATE OF CALIFORNIA COUNTY OF SAN LUIS OBISPO ARROYO GRANDE REDEVELOPMENT AGENCY ARROYO GRANDE REDEVELOPMENT PROJECT AREA 2007 TAX ALLOCATION BOND INTEREST RATE: MATURITY DATE: September I, DATED DATE: CUSIP: REGISTERED OWNER: CEDE & CO. PRINCIPAL SUM: May 24, 2007 The ARROYO GRANDE REDEVELOPMENT AGENCY, a public body, corporate and politic, duly organized and existing under and by virtue of the laws of the State of California (the "Agency"), for value received hereby promises to pay to the Registered Owner stated above or registered assigns, on the Maturity Date stated above (subject to any right of prior redemption hereinafter provided for), the Principal Sum stated above in lawful money of the United States of America and to pay interest thereon in like lawful money from the interest payment date next preceding the date of registration and authentication of this Bond (unless (i) this Bond is authenticated on an interest payment date, in which event it shall beaz interest from such date of authentication, or (ii) this Bond is authenticated prior to an interest payment date and after the close of business on the fifteenth day of the month preceding the month of such interest payment date in which event it shall beaz interest from such interest payment date, or (iii) this Bond is authenticated on or prior to August 15, 2007, in which event it shall bear interest from the Dated Date above; provided, however, that if at the time of authentication of this Bond, interest is in default on this Bond, this Bond shall bear interest from the interest payment date to which interest has previously been paid or made available for payment on this Bond) until payment of such Principal Sum in full, at the rate per annum stated above, payable semiannually on March 1 and September 1, commencing September 1, 2007, calculated on the basis of a 360-day year composed of twelve 30-day months. Principal hereof at maturity and premium, if any, upon eazlier redemption hereof are payable at the corporate trust office of Wells Fazgo Bank, National Association, the trustee under the Indenture (as hereinafter defined) (the "Trustee"), in Los Angeles, California or such other place as designated by the Trustee. Interest hereon (including the final interest payment upon maturity or earlier redemption) is payable by check of the Trustee mailed on the Interest Payment Date to the Registered Owner hereof at the Registered Owner's address as it appears on the Bond registration books maintained by the Trustee at the close of business on the fifteenth day of the month next preceding the month of such interest payment date or by wire transfer in immediately available funds to any Owner of $1,000,000 or more in aggregate principal amount of Bonds upon written instructions of any such Owner filed ~amozasoo-ooos naozz.os aoaiieio~~ A-1 with the Trustee for that purpose as of the close of business on the fifteenth day of the month next preceding such interest payment date. This Bond is one of a duly authorized issue of Bonds of the Agency designated as "Arroyo Grande Redevelopment Agency, Arroyo Grande Redevelopment Project Area, 2007 Tax Allocation Bonds" (the "Bonds"), of an aggregate principal amount of Million Hundred Thousand Dollazs ($ )and all of like tenor and date (except for such variation, if any, as may be required to designate varying numbers, maturities, interest rates, or redemption and other provisions). The Bonds aze issued pursuant to the provisions of the Community Redevelopment Law, being Part 1 (commencing with Section 33000) of Division 24 of the Health and Safety Code of the State of California (the "Law"), and pursuant to a Resolution of the Agency adopted April 24, 2007, and a Trust Indenture, dated as of April 1, 2007, entered into by and between the Agency and the Trustee (the "Indenture"), authorizing the issuance of the Bonds. Reference is hereby made to the Indenture (copies of which aze on file at the office of the Agency) and all indentures supplemental thereto and to the Law for a description of the teens on which the Bonds are issued, the provisions with regazd to the nature and extent of the Tax Revenues, as that term is defined in the Indenture, the rights thereunder of the registered owners of the Bonds, and the rights, duties and immunities of the Trustee and the rights and obligations of the Agency thereunder, to all of the provisions of which Indenture the registered owner of this Bond, by acceptance hereof, assents and agrees. The Bonds are special obligations of the Agency and this Bond and the interest hereon and on all other Bonds and the interest thereon (to the extent set forth in the Indenture) are payable from, and aze secured equally and on a parity, without distinction by a charge and lien on the Tax Revenues derived by the Agency from the Redevelopment Project Area (as those terms aze defined in the Indenture). There has been created and will be maintained by the Trustee, a Special Fund (as defined in the Indenture) into which Tax Revenues shall be deposited and from which the Trustee shall thereafter pay the principal of, redemption premium and the interest on the Bonds when due. As and to the extent set forth in the Indenture, all such Tax Revenues (together with all of the moneys in the Reserve Account, as defined in the Indenture) are exclusively and irrevocably pledged to and constitute a trust fund, in accordance with the terms hereof and the provisions of the Indenture and the Law, for the security and payment or redemption of, including any premium upon early redemption, and for the security and payment of interest on, the Bonds. This Bond is not a debt of the City of Arroyo Grande, the State of California, or any of its political subdivisions, and neither said City, said State, nor any of its political subdivisions is liable hereon, nor in any event shall this Bond be payable out of any funds or properties other than those of the Agency. The Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. Bonds maturing on or before September 1, 2017 shall not be subject to optional redemption before their stated maturity. Bonds maturing by their terms on or after September 1, 2018 are subject, at the option of the Agency, to call for redemption prior to their stated maturities on any date commencing September 1, 2017 in whole or in part among such maturities as shall be determined by the Agency, and in any case by lot within a maturity, from any available source of funds deposited in the Redemption Account, at a redemption price equal to 14N024600-0005 774022.05 a04/16/07 A-2 the principal amount thereof to be redeemed, together with accrued interest thereon to the redemption date, without premium. The Bonds maturing on September 1, 20_ (the "20 Term Bonds") aze subject to mandatory redemption in part on September 1, 20 and on September 1 of each year thereafter as further provided in the Indenture, at a redemption price equal to the principal amount thereof to be redeemed plus accrued interest, if any, to the date fixed for redemption, without premium, from Sinking Account Payments required to be made by the Agency under the Indenture. The Bonds maturing on September 1, 20_ (the " 20 Term Bonds") are subject to mandatory redemption in part on September I, 20 and on September 1 of each year thereafter as further provided in the Indenture, at a redemption price equal to the principal amount thereof to be redeemed plus accrued interest, if any, to the date fixed for redemption, without premium, from Sinking Account Payments required to be made by the Agency under the Indenture. The Bonds maturing on September 1, 20 (the "20 Term Bonds") are subject to mandatory redemption in part on September 1, 20 and on September 1 of each year thereafter as further provided in the Indenture, at a redemption price equal to the principal amount thereof to be redeemed plus accrued interest, if any, to the date fixed for redemption, without premium, from Sinking Account Payments required to be made by the Agency under the Indenture. As provided in the Indenture, notice of redemption shall be given by first class mail no less than thirty (30) nor more than sixty (60) days prior to the redemption date to the respective registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books maintained by the Trustee, but neither failure to receive such notice nor any defect in the notice so mailed shall affect the sufficiency of the proceedings for redemption. If this Bond is called for redemption and payment is duly provided therefor as specified in the Indenture, interest shall cease to accrue hereon from and after the date fixed for redemption. If an Event of Default, as defined in the Indenture, shall occur, the principal of all Bonds maybe declared due and payable upon the conditions in the manner and with the effect provided in the Indenture, but such declaration and its consequences may be rescinded and annulled as further provided in the Indenture. The Bonds aze issuable as fully registered Bonds without coupons in denominations of $5,000 and any integral multiple thereof,. Subject to the limitations and conditions and upon payment of the chazges, if any, as provided in the Indenture, Bonds may be exchanged for a like aggregate principal amount of Bonds of other authorized denominations and of the same maturity and series. Unless this Bond is presented by an authorized representative of The Depository Trust Company to the Agency or the Trustee for registration of transfer, exchange or payment, and any Bond issued is registered in the name of Cede & Co. or such other name is requested by an authorized representative of The Depository Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE 74N024600-0005 n4ozz.os xo4nwo~ A-3 BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein. This Bond is transferable by the Registered Owner hereof, in person or by his attorney duly authorized in writing at said offices of the Trustee, but only in the manner and subject to the limitations provided in the Indenture, and upon surrender and cancellation of this Bond. Upon registration of such transfer a new fully registered Bond or Bonds, of authorized denomination or denominations for the same aggregate principal amount, of the same series and of the same maturity will be issued to the transferee in exchange therefor. The Agency and the Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes, and the Agency and the Trustee shall not be affected by any notice to the contrary. The rights and obligations of the Agency and the owners of the Bonds may be modified or amended at any time in the manner to the extent and upon the terms provided in the Indenture, but no such modification or amendment shall permit a change in the terms of redemption or maturity of the principal of any outstanding Bond or of any installment of interest thereon or a reduction in the principal amount or the redemption price thereof or in the rate of interest thereon without the consent of the registered owner of such Bond, or shall reduce the percentages or otherwise affect the classes of Bond the consent of the owners of which is required to effect any such modification or amendment. It is hereby certified that all of the things, conditions and acts required to exist, to have happened or to have been performed precedent to and in the issuance of this Bond do exist, have happened or have been performed in due and regulaz time and manner as required by the Law, both as defined herein, and the laws of the State of California, and that the amount of this Bond, together with all other indebtedness of the Agency, does not exceed any limit prescribed by the Law or any laws of the State of Califomia and is not in excess of the amount of Bonds permitted to be issued under the Indenture. This Bond shall not be entitled to any benefit under the Indenture or become valid or obligatory for any purpose until the Certificate of Authentication hereon shall have been signed by the Trustee. ias~ozasoo-coos naozz.os aoan~o~ A-4 IN WITNESS WHEREOF, the Arroyo Grande Redevelopment Agency has caused this Bond to be executed in its name and on its behalf with the manual signature of its Chairman and its seal to be reproduced hereon and attested by the manual signature of its Secretary, all as of the Dated Date set forth above. ARROYO GRANDE REDEVELOPMENT AGENCY By: Chairman (SEAL) ATTEST: Secretary FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION AUTHENTICATION DATE: CERTIFICATE OF AUTHENTICATION This is one of the Bonds described in the within-mentioned Indenture. WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee Authorized Signatory 146/024600.0005 774022.05 a04/16/07 A'S FORM OF ASSIGNMENT For value received the undersigned hereby sells, assigns and transfers unto (Name, Address and Tax Identification or Social Security Number of Assignee) the within-registered Bond and hereby irrevocably constitute(s) and appoint(s) attorney, to transfer the same on the bond register of the Trustee with full power of substitution in the premises. Dated: Signature Guaranteed: Note: The signature(s) on this Assignment must con•espond with the name(s) as written or the face of the within Bond in every particular without alteration or enlargement or any change whatsoever. Note: Signature(s) must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. ~a~ozaeoo-ooos naozz.os eoaii eio~ A-6 STATEMENT OF INSURANCE [To Come?] 146/024600-0005 A_'~ 774022.05 a04l16/07 11.b. MEMORANDUM TO: CITY COUNCIL FROM: ~~ ~ ROB STRONG, COMMUNITY DEVELOPMENT DIRECTOR SUBJECT: CONSIDERATION OF REVISIONS TO SLOCOG TRAFFIC MODEL POPULATION AND EMPLOYMENT PROJECTIONS DATE: APRIL 24, 2007 RECOMMENDATION: It is recommended the City Council, request the Mayor, as SLOCOG representative, to advise the SLOCOG ewnomic consultant to reconsider and reduce employment projections for Arroyo Grande used in the 2030 Traffic Model (and potentially in other regional planning purposes). FUNDING: No'fiscal impact directly to the City, but use of the County 2030 traffic model will be impaired if inaccurate population or employment projections are utilized. The consultant will need to revise report assumptions and applications and should do so at his cost. DISCUSSION: In 2003, the San Luis Obispo Council of Governments (SLOCOG) commissioned the development of a computerized traffic model for use in developing the County's long-range Regional Transportation Plan and establishing a funding mechanism to finance future transportation infrastructure. SLOCOG's intent in developing the model is to utilize it in evaluating proposals for future land use and road improvement projects, to integrate individual city traffic models, and to provide jurisdictions with an economical state-of-the-art traffic tool. As such, City staff has been very enthusiastic about completion of the model. However, the value of the model as a planning tool is largely based on the assumptions used in the base data and significant concerns have been identified involving these assumptions. In particular, the SLOCOG Board has been requested to approve population and employment forecasts extending to the year 2030. As a result, at the March 13~' City Council meeting, Mayor Ferrara requested staff provide background information regarding these concems to the City Council for consideration. It is staffs understanding that also at Mayor Ferrara's request, the SLOCOG Board continued the matter for further clarification at their February 7, 2007 meeting. While SLOCOG has accepted the City General Plan's projected annual population growth rate of 1%, employment figures are not consistent with City projections and appear CITY COUNCIL SLOCOG TRAFFIC MODEL POPULATION AND EMPLOYMENT PROJECTIONS APRIL 24, 2007 PAGE 2 excessive. Proposed by SLOCOG is a projected annual growth rate in jobs of 1.5%, which represents an increase of 3,581 jobs or 45% by 2030. This figure was reduced from the consultant's original projection of 2% annual growth. Staff has projected a maximum expected job growth rate of 0.9%. Employment growth is not expected to exceed population growth. The City is largely built out, particularly in commercial, industrial and mixed-use areas. Therefore, growth will be generally limited to infill and redevelopment projects. Serious questions exist regarding the process used in development of the model because staff was not originally requested by the consultant to provide input. When contacted by SLOCOG to request feedback regarding the projections, staff expressed a number of concerns. Attachment 1 is a series of SLOCOG e-mails, which the Director of Community Development received and responded to in February, March and April 2007, regarding this topic. Staff believes it is important to ensure the base data is credible because: 1) decisions based on the model will otherwise be questioned; and 2) these inaccurate projections may later impact the City's regional housing needs projections and/or other planning efforts. It is difficult to critique the SLOCOG data in detail because staff has not been provided the assumptions or base data. However, the City Community Development Department staff has prepared an approximate estimate of non-residential land utilization (see Attachment 3). The inventory revealed 21 acres of vacant mixed-use or commercial zoned property, about 7 acres of 25% unutilized, 20 acres of 50% unutilized, 37 acres of 75% unutilized, and 333 of 418 acres 100% utilized. This approximately 85 acres of the total 418 acres, where employment is currently concentrated, providing approximately 8,400 jobs in 2007, may be redeveloped or infilled during the next 23 years. This indicates a maximum area of approximately 20% of the total where employment growth may occur for "buildout". This is about equal to the estimated population increase, from 16,000 to 20,000 that is projected to occur with residential buildout in the same period. This estimate supports the 1% annual average for both jobs and housing balance, but does not include possible major expansion such as the undeveloped Arroyo Linda Crossroads area and sphere of influence areas totaling more than 500 acres southeast of the developed City. Based on 80% utilization and 20% growth potential the estimated 2030 employment would increase from 8,400 in 2007 to 10,533 in 2030. Another method to project employment potential would be to calculate current population to employment ratio. Based on an approximate 16,500 population in 2007 with 8,400 jobs, the current ratio is 0.508 employees per resident. Then, assuming population will increase to 20,000 by 2030, the ratio would yield a probable employment total of 9,720. In contrast, the Consultant originally allocated 13,040 jobs at 2% growth, while 11,808 would result in a 1.6% average annual change. SLOCOG staff reduced that to 1.4%, which yields 11,521 jobs; while the City's estimate of 0.9% would yield 9,956 jobs. cITY couNCIL SLOCOG TRAFFIC MODEL POPULATION AND EMPLOYMENT PROJECTIONS APRIL 24, 2007 PAGE 3 In conclusion, City staff supports a 1% employment growth projection, which is most consistent with our General Plan and estimated ability to build out with ajobs/housing balance similar to current ratios and estimated potential utilization. ALTERNATIVES: Request the Mayor to advise SLOCOG economic consultant to use 1 employment growth rate to be consistent with population, housing, and current ratios and estimated potential of 10,183 jobs in 2030; Accept the SLOCOG staff estimates of 11,500 jobs at an annual growth rate of 1.4%; Question the SLOCOG consultant's original estimate of 13,040 jobs by 2030 and ask for more presentation and explanation of assumptions, which appear to ignore local constraints. Attachments: 1. Correspondence between Mike Harmon, SLOCOG, and Rob Strong, Community Development Director 2. Report from SLOCOG addressing concerns regarding population and employment forecasts. 3. Estimate of non-residential land utilization. ATTACHMENT1 Rob Strong From: Rob Strong Sent: Thursday, February 22, 2007 5:10 PM To: 'Mike Harmon' Subject: RE: Follow-Up to Board actions regarding concerns on Employment Projections used in Regional Traffic Model Mike - I did respond and recommend a 1 % rate for AG to coincide with the population/ housing growth. Where will the additional 0.6% projected regionally be assigned7- ROB From: Mike Harmon [mailto:MHARMON@SLOCOG.org] Sent: Thursday, February 22, 2007 4:03 PM To: Rob Strong Subject: RE: Follow-Up to Board actions regarding concerns on Employment Projections used in Regional Traffic Model Rob, What percent of the 5,100 jobs do you want to reassign? Did Jim Bergman forward you the revised table I sent him? I think if we adjust the annual growth rate downwazd from the 1.6% (which is too high) it can be made to work out. OK? Mike From: Rob Strong [mailto:rstrong@arroyogrande.org] Sent: Thursday, February 22, 2007 1:09 PM To: Mike Harmon Cc: ]ames Worthley Subject: RE: Follow-Up to Board actions regarding concerns on Employment Projections used in Regional Traffic Model No need for call or meeting if he will assign the bulk of 5100 jobs projected to somewhere else that could accommodate them or lower his overestimate. The basic problem could have been avoided if the consultant actually consulted with local agencies.- ROB From: Mike Harmon [mailto:MHARMON@SLOCOG.org] Sent: Wednesday, February 14, 2007 11:21 AM To: Rob Strong Cc: James Worthley Subject: RE: Follow-Up to Board actions regarding concerns on Employment Projections used in Regional Traffic Model Rob, We have not planned on having David Bergman come to the proposed meeting, but we could see if he would be willing to participate in a conference call. We believe that we have the answers to most of your questions, but we will try to schedule him for a conference call. OK? 4/10/2007 Page 2 of 3 Mike From: Rob Strong [mailto:rstrong@arroyogrande.org] Sent: Wednesday, February 14, 2007 11:06 AM To: Mike Harmon; BAmbo@morro-bay.ca.us; cstevenson@co.slo.ca.us; dflynn@co.slo.ca.us; ddelzeit@pismobeach.org; ditas@prcity.com; Don Spagnolo; ghansen@grover.org; jhudson@slocity.org; jmandeville@slocity.org; skahn@atascadero.org; tbochum@slocity.org; wfrace@atascadero.org Cc: James Worthley Subject: RE: Follow-Up to Board actions regarding concerns on Employment Projections used in Regional Traffic Model Mike- Thanks for the call to alert me to your email. I can understand why the board was concerned with the jobs projection and distribution ! I think we need to meet withthe consultant and have him explain how the 5100 jobs were projected for A.G. No dispute with the housing which reflects the current General Plan, but a 64% increase in employment in the 25 year period is very difficult to envision. Next Wednesday, Feb21 would work better that Tuesday the 20th. Let me know ASAP- ROB From: Mike Harmon [mailto:MHARMON@SLOCOG.org] Sent: Friday, February 09, 2007 1:04 PM To: BAmbo@morro-bay.ca.us; cstevenson@co.slo.ca.us; dflynn@co.slo.ca.us; ddelzeit@pismobeach.org; ditas@prcity.com; Don Spagnolo; ghansen@grover.org; jhudson@slocity.org; jmandeville@slocity.org; Rob Strong; skahn@atascadero.org; tbochum@slocity.org; wfrace@atascadero.org Cc: James Worthley Subject: Follow-Up to Board actions regarding concerns on Employment Projections used in Regional Traffic Model The purpose of this email is to follow-upon the SLOCOG Board meeting regarding concerns raised by delegates regarding the accuracy of the projected housing and employment numbers used in the 2030 growth scenario for the. Regional Traffic Model. The Board directed SLOCOG staff to work with local agencies to review the housing and employment projections to determine if they are an accurate estimation of the amount of development that will occur by 2030. Please review Table 1 on Page 2 of the attached memo, which summarizes the community level data in question. SLOCOG staff were directed to report back at the March 7th meeting with the results. The short time frame is due to the need to move forward as quickly as possible with the issuance of the request for proposals for a consultant contract for the Regional Transportation Deficiency Analysis and Nexus Study. The attached memo prepared by Donald Hubbard of Fehr & Peers explains the methodology used by ERA (the economic consultant that developed the long range population and employment forecast report adopted in October) to develop the forecasts, the transportation projects assumed to be constructed, and the traffic projections. The agenda for the March 7th meeting is scheduled to be distributed on Friday February 23rd. In order to address any questions you might have and prepare the correct response in time for the agenda distribution, we would like to (tentatively) schedule a meeting of Planning and/or Public Works Directors on February 20th or 21St. Please let us know if you cannot attend a meeting on either of those days or if you feel a meeting is not needed, in which case we 4/10/2007 Page 3 of 3 request that you review the data and provide your response to us by February 16th Thank you in advance for your assistance. Mike Harmon 781-5724 4!10/2007 i ATTACHMENT1 l Rob Strong From: Mike Harmon [MHARMON@SLOCOG.org) Sent: Friday, March 16, 2007 7:09 AM To: cstevenson@co.slo.ca.us; dflynn@co.slo.ca.us; ddelzeit@pismobeach.org; ditas@prcity.com; Don Spagnolo; ghansen@grover.org; jmandeville@slocity.org; Rob Strong; skahn@atascadero.org; tbochum@slocity.org; wfrace@atascadero.org; pbeck@co.slo.ca.us; rbloom@pismobeach.org; rwisenand@prcity.com; vholanda@co.slo.ca.us; kmurray@slocity.org Cc: Steve Devencenzi Subject: SLOCOG Board Concerns Regarding Regional Traffic Model The purpose of this email is to do the following: • Let you know that the SLOCOG Board continued action on the traffic model to the April meeting; • Request additional feedback from local agency staff; and, • Update you on how we plan to address the concems raised by the Board based on further consideration of the issues and applicable data; Attached is a draft of the staff report prepared for the April SLOCOG meeting. It summarizes how concerns raised by Board delegates were addressed regarding the regional traffic model, possible development of a summer/weekend scenario and the accuracy of the projected housing and employment numbers. The major items of a~ncem are the following: Summer/weekend model scenario -Rather than conducting additional counts over the upcoming summer season, we propose to analyze existing traffic counts (Caltrans and SLOCOG counts that are based on summer and non-summer 7-day periods) to show the variation between summer/weekend Peak Period Traffic and the Average Annual Daily Traffic. Population and employment forecasts - We want to be assured that the local jurisdiction's input and the consultant's recommendations have been adequately considered regarding the employment forecasts and allow individual jurisdictions to determine whether they feel it is necessary and/or appropriate for their governing board (or chosen advisory committee) to review and approve the forecasts. I will try to call each of you today review the staff report and answer any questions in advance of the TTAC meeting. If you have any questions feel free to contact me. Thank you. Mike Harmon 781-5724 4/5/2007 ATTACHMENT2 BACKGROUND In 2003 SLOCOG commissioned the development of a computerized traffic model for use in developing the county's long-range Regional Transportation Plan and establishing a funding mechanism to finance future transportation infrastructure. The SLOCOG Model is intended for use in evaluating proposals for future land use and road improvement projects. Such projects must be evaluated in the context of the future conditions in which they will operate, which implies the need fora "future base case" of assumptions regarding changes in population, employment, and the roadway network. This memo describes the base case assumptions used to develop the 2030 model. A primary goal in the [process of developing the Model was the integration of the existing traffic models covering various cities and unincorporated areas of the county. These models varied in age and quality, were based on four different traffic modeling software packages, and were not capable of providing reliable estimates of traffic on i oads of county-wide significance. A secondary goal was to provide local jurisdictions with a "State of the Art" tool to assist them in developing new city-wide models relatively cheaply and easily. Major benefits of the Regional Model include: integration of all local streets and roads in the cities and unincorporated areas, incorporation of the Traffic Analysis Zones (TAZs) from the existing models developed by the cities and County, and application of unique trip generation rates for each jurisdiction. In order for the County and Cities to develop their own state-of-the-art model that is fully functional and completely compatible with the regional model, they only need to re-calibrate the Model based on local traffic counts. The re-calibration process will require the following: • Updating and ~ erifying local land use data • Performing traffic counts on local roads • Field-verifying road characteristics, including turn prohibitions Verifying local trip generation rates. Once these steps are performed, the SLOCOG Traffic Model can be adjusted to match local conditions. Until local re-calibration has been performed, however, the SLOCOG model should be viewed as a complement to, rather than a substitute for, models which cover city-sized areas. DISCUSSION Following are details on SLOCOG staff actions to address the concerns raised by Board members regarding the population and employment forecasts and model development process: A. Accuracy of 2030 Forecast Data -The methods, procedures, assumptions and data used in the ERA forecast for 2030 were reviewed to determine if corrective action is needed and to assure that they were based on the best available practices and were carried out corcectly. Staff responded to the issue from several different perspectives to assure that it was addressed as comprehensively as possible. Review of Population & Employment Forecasts Develoament Process - Population Forecasts -ERA used a combination of "top-down" and "bottom-up" procedures to develop the population forecasts. The fop-down portion consisted of analyzing the long-term trends in population growth for the stata of California, then examining the Central Coast's share of the state-wide population, and the County's share of the Central Coast population to arrive at an estimate of county-wide population in future years. U.S. Census data was then used to distribute the growth in population among the sub-regions of the county. The "bottom-up" part of the procedure included meetings with planning and public works staff from each jurisdiction to review the general plans and establish an estimate for the expected distribution and future growth in population within each jurisdiction and the timetrame in which it would take place. A-5-2 Emolovment Forecasts -ERA also used a combination of "top-down' and "bottom-up" procedures to develop the forecasts of future employment. Forecasts of changes in state-wide employment by economic sector (manufacturing, government, services, etc.) were used to forecast changes in employment for the Central Coast and for SLO County. Using 2005 employment shares for non-farm employment and adjusted by the projected changes in the shares of employment sectors, ERA established projected jobs by industry for each five-year study period. Then, using the "top-down" countywide forecast of growth a control for predicted growth within the region based on a low, medium, and high growth scenario was established. To estimate employment growth at the sub-county level, ERA used historical ES-202 data from 1990 to 2000 to determine relative shares of employment concentrations and the land use information as presented in the current transportation model. This allowed ERA to establish estimates for employment totals for incorporated as well as select unincorporated areas based on historical data. The "bottom-up" part of the procedure included meetings with planning and public works staff from each jurisdiction to review the general plans and establish an estimate for the expected distribution and future economic development and related employment growth within each jurisdiction and the timeframe in which it would take place. Review of Model Development Process -The model engineer, Donald Hubbard, prepared a "user friendly" narrative description of the model development process which was distributed to planning and public works directors and other staff involved in the model development process for their review and comment. The procedures used by Fehr & Peers were reviewed to assure the population and employment forecasts developed by ERA to prepare the future year model were carried out correctly. Fehr & Peers converted ERA's forecasts for future population by Traffic Analysis Zone (TAZ) into percentage increases for the periods 2005 to 2015 and from 2005 to 2030 and applied the percentages to each residential land use category (single-family dwellings, multi-family dwellings, mobile homes, and rural residential) to produce future year residential land uses by TAZ. Fehr & Peers then applied ERA's projections for the growth in office, health services, light industry, heavy industry, and hotel jobs as percentage increases to existing land uses based on the existing distribution of land use types by TAZ. Review of Economic Forecast Data -Economic forecasts by the UCSB Economic Forecast Project and Caltrans for State, San Luis Obispo County and adjacent counties that were recently released in late 2006 or early 2007 were reviewed to determine whether the projections developed by ERA were consistent. The 2007 San Luis Obispo County Economic Outlook released by the UCSB Economic Forecast Project in November 2006 projected that "While the 2006 economy has been slow, we forecast a bit stronger economic growth in 2007 and 2008, with job growth of 1.3 percent, and 1.6 percent in 2008." The report projected a 1.5% annual rate of growth for employment for 2009 thru 2011. The 2006 Caltrans Office of Transportation Economics long range forecast for San Luis Obispo County noted that nearly 1,700 wage and salary jobs were created in San Luis Obispo County in 2005, representing a growth rate of 1.6 percent. The report forecast employment growth to remain modest through 2010 in the County at an average of 1.5 percent per year. Review of Forecast Data for Santa Barbara County Model -Forecasts used in the development of the model developed by SBCAG for Santa Barbara County were reviewed to determine consistency between the projected rates of population and employment growth for its northern communities and those in San Luis Obispo County. S'aff determined that employment in the Santa Maria area was forecast to increase from 45,075 in 2005 to ust over 45,000 in 2030 (a 35% increase). It appears that the projected increases in employment in northem Santa Barbara County are consistent with the projected increases in San Luis Obispo County. B. Need for a weekend, summer based model scenario -This issue was raised due to fact that at the beginning of the model development process a decision was made that it would be based on weekday peak hour trip generation, thereby allowing the impacts of a potentially significant amount of visitor related trip generation during the summer on weekends, particularly in the coastal area, to not be addressed. A-5-3 The regional model is based on weekday peak hour trip generation because travel during the morning and evening commute periods results in the largest and most widespread source of traffic congestion in the region. There may be some value in creating asummer/weekend/holiday based model scenario, however, to accomplish this work would first require completion of a number of actions, including: traffic counts at 25- 30locations in the subject areas (to be determined); modification of trip generation rates for a range of land use types that vary during the summer and on weekends, including hotel and motel occupancy rates; and recalibration and validation of the model based on the new traffic counts and trip generation rates. The time and cost of developing a summer, weekend model scenario may not be justified, however, since the concern about the variation in traffic can be addressed adequately by using available traffic wunt data. Staff reviewed available traffic count data from Caltrans and counts taken for the Regional Traffic Count Program to determine if adequate data existed to resolve the issue without development of an additional model scenario. Based on this review, which showed that seven-day counts had been done for the regional traffic count program during the summer of 2006, staff determined that there is adequate traffic count data available, including seven-day counts at a number of locations on routes of regional significance throughout the region, to comparison traffic conditions between the weekday peak hour and summer weekend period. Maior Findings and Conclusions It is important to consider that fact that economists consider the process of long-term employment forecasting to be very different from long-term population forecasting. The latter is more reliable because the factors that contribute to changes in population growth are much better understood and documented. Long-term employment projections are more unreliable because of the uncertainly involved in accurately predicting future economic trends. Most long-term economic forecasts simply assume that present growth rates will continue at a set rate into the future. However, widespread changes in technology, politics, and foreign economic development, for example, may have a profound impact on the local, state and national economy. Staff report prepared by Michael Harmon A-5-4 ' ATTACHMENT2 SAN LUIS OBISPO COUNCIL OF GOVERNMENTS DRAFT STAFF REPORT MEETING DATE: April 4, 2007 ' ,SUBJECT: . Regional Traffic Model- Response to Board Concerns SUMMARY This report describes how staff has addressed concerns raised by the SLOCOG Board in February when it adopted the Regional Traffic Model. The two basic issues that were raised at the February meeting include: - Accuracy of forecast population and employment data. - The need fur a weekend, summer based model scenario. Population and Emglovment Forecasts Actions taken to address concerns regarding the population and employment forecasts: A "user-friendly' narrative description of the model development process (Attachment A) was provided to planning and public works directors for their review. / UCSB and Caltrans economic reports for the County were determined to be consistent with the forecast. / Concerns expressed regarding the population and employment forecasts were reviewed with local agency staff to obtain any new information that would justify revision and determine the extent of any needed review. Maiorfindings and conclusions: 1. The methods and procedures used to develop the population and employment forecasts are consistent with the best available practices and local agencies plans and were carried out correctly. 2. The 2007 UCSB and Caltrans Economic Forecast Reports include estimates that the San Luis Obispo region will experience a 1.5% annual increase in employment during the next five years thru 2011. 3. A limited number of local agency staff identified new information regarding projected development activity and economic conditions that justify consideration of an adjustment in their projected growth rates. Summer Based Model Scenario The following actions were taken to address the potential need for a summer weekend based model: / Available traffic counts from Caltrans and the Regional Traffic Count Program were reviewed to determine if adequate data existed to resolve the issue / Staff discussed the work that would be required with Donald Hubbard of Fehr & Peers. Followino are the major conclusions of this analysis: 1. There is adequate traffic count data available to compare traffic conditions between the weekday peak hour and typical summer weekend periods without development of an additional model scenario (including seven-day counts at a number of locations on routes of regional significance throughout the region -See attached map). The discussion sectior; includes more details on these findings and the actions taken by staff to address the concerns raised by Buard members. The "User Friendly Narrative Description" of the model development process created by Donald Hubbard as directed by the Board is included as Attachment A. RECOMMENDATIONS Staff: Consider adjustment of projected population and/or employment growth rates where new information would show less than the initially estimated rate. TTAC CTAC A-5-1 ATTACHMENT2 BACKGROUND Purpose and Uses of the Regional Model -The model was developed to provide SLOCOG, the County and the local jurisdictions with aState-of-the-Art tool to analyze the impacts of existing and projected land use and the effects of proposed transportation system improvements. The model will also be used in the next update of the Regional Transportation Plan and in the process of establishing a funding mechanism to finance future transportation infrastructure. The model also provides the County and cities an inexpensive and easy to use method for developing improved local models, because it integrated the local street and road networks, Traffic Analysis Zones, land uses, and trip generation rates. Analysis of local land use and transportation impacts only requires recalibration of applicable segments of the model network based on additional traffic counts and updated land use data. In addition, the model will be provided to Caltrans for integration into the statewide model. Limitations of Economic Forecasting -The consultants (ERA) who prepared the population and employment forecasts felt it was important to include a statement in their report noting that that economists consider the process of long-term employment forecasting to be very different from long-term population forecasting, and that the latter is more reliable because the factors that contribute to changes in population growth are much better understood and documented. The longer the term of an employment projection, the more likely the result will seem unreliable because of the uncertainly involved in accurately predicting future economic trends: Most long-term economic forecasts simply assume that present growth rates will continue at a set rate into the future. However, widespread changes in technology, politics, and foreign economic development, for example, may have a profound impact on the local, state and national economy. DISCUSSION Following is a summary of SLOCOG staff actions to address the concerns raised by Board members regarding the population and employment forecasts and model development process: A. Accuracy of 2030 Forecast Data -The methods, procedures, assumptions and data used in the ERA forecast for 2030 were reviewed to determine if corrective action is needed and to assure that they were based on the best available practices and were carried out correctly. Staff responded to the issue from several different perspectives to assure that it was addressed as comprehensively as possible. Review of Population & EmDlovment Forecasts Development Process - Population Forecasts -ERA used a combination of "top-down" and "bottom-up" procedures to develop the population forecasts. The top-down portion consisted of analyzing the long-term trends in population growth for the state of California, then examining the Central Coast's share of the state-wide population, and the County's share of the Central Coast population to arrive at an estimate of county-wide population in future years. Census data was then used to distribute the growth in population among the sub-regions of the county. The "bottom-up" part of the procedure included meetings with planning and public works staff from each jurisdiction to review the general plans and establish an estimate for the expected distribution and future growth in population within each jurisdiction and the development timeframe. SLOCOG Regional Travel Demand Model Population I Housing Forecast: Medium Growth Scenario Jurisdiction Po DU 2005 2020 2025 20 30 Po DU Po DU Po DU Po DU Arroyo Grande 2.338 16,330 6,985 18,730 8,011 19,330 8,268 20,300 8,683 Atascadero 2.534 25,940 10,237 29,830 11,772 31,220 12,320 33,000 13,023 Grover Beach 2.495 13,100 5,251 14,400 5,772 14,700 5,892 15,000 6,012 Morro Bay 1.971 10,310 5,231 11,310 5,738 11,660 5,916 12,100 6,139 Paso Robles 2.645 27,580 10.427 35,750 13,516 38,000 14,367 40,900 15,463 Pismo Beach 1.951 8,620 4,418 9,770 5,008 10,170 5,213 10,600 5,433 San Luis Obispo 2.198 42,660 19,409 46,110 20,978 47,010 21,388 48,200 21,929 Rural County 2.558 100,390 39,246 123,180 48,155 131,060 51,235 139,530 54,547 TOTALS 244,930 107,202 289,080 118,949 303,150 124,598 319,630 131,228 Table does not include'Group Quarters' A-5-2 Attachment A SLOCOG Regional Travel Demand Model 2030 Scenario Development The SLOCOG Regional Travel Demand Model is intended for use in evaluating proposals for future land use and road improvement projects. Such projects must be evaluated in the context of the future conditions in which they will operate, which implies the need fora "Future base case" of assumptions regarding changes in population, employment, and the roadway network. This memo describes the basic assumptions used to develop the 2030 model. Future Land Uses The land use information used in the 2015 and 2030 models were developed for SLOCOG by Economic Research Associates (ERA) and published in their report Long-Range Socio-Economic Projections (Year 2030). ERA used a combination of "top-down" and "bottom-up" procedures to develop their forecasts. The top-down portion consisted of analyzing the long-term trends in population growth for the state of California, then examining the Central Coast's share of the state-wide population, and San Luis Obispo County's share of the Central Coast population to arrive at an estimate of county-wide population in future years. U.S. Census data was then used to distribute the growth in population among the sub-regions of the county. A bottom-up procedure was then followed whereby the local general plans were used to distribute the growth in population within ea~;h jurisdiction. A combination of top-down and bottom-up procedures were used for the forecasts of future employment. Forecasts of changes in state-wide employment by economic sector (manufacturing, government, services, etc.) were used to forecast changes in employment for the Central Coast and for SLO County. This process produced control totals for the various types of new jobs to be accommodated somewhere in the county. A bottom-up procedure was then followed whereby local general plans were consulted to determine where zoning allowed these new jobs to be created. In addition to using these projections, other projections were done for special cases. For example, the growth of CalPoly San Luis Obispo' and Cuesta College2 were taken from their master plans, and the growth rate for through traffic was assumed to match the growth rate of statewide employment (a measure of disposable income), as was the growth rate for traffic to Hearst Castle and to beaches. Summary of Job and Housing Growth The most notable aspect of these projections is that the growth in jobs is more than twice as fast as the growth in housing (58~% overtwenty-three years compared to 28%). This implies that an increasing share of workers will need to commute in from outside the county. The trend is particularly acute in the City of San Luis Obispo, where 24.000 new jobs are expected compared to just 2~ new dwelling units. CalPOly Master Plan, Executive Summary, page V. 2 2006 Update to the 2001 Educational Facilities Master Plan, Cuesta College, page 7. A-5-5 Network Changes The 2030 model assumed a road network based on existing conditions but with various roadway segments added, widened, improved or deleted. The following are the most important: 1) Addition of 10-12 auxiliary lanes on U.S. 101 between Arroyo Grande and San Luis Obispo. 2) Widening of the Santa Maria River Bridge on U.S. 101 from four to six lanes 3) Construction of new interchanges on U.S. 101 in the Nipomo area at Willow Road and at Southland Street. 4) Modification of interchanges on U.S. 101, including: Prado Road and Los Osos Valley Road in the City of San Luis Obispo, Brisco Road in Arroyo Grande, and 17~h Street in Paso Robles. 5) Widening of Hwy 46 East from two lanes to four between Airport Road and the county line. 6) Widening of Hwy 227 to four lanes south from Tank Farm Road to Price Canyon Road. 7) Extension of Airport Road in Paso Robles south from the intersection of Hwy 46 East to the eastern extension of Niblick Road. Other changes that are local in their effects, such as signalization and the addition of new turn pockets, were not included in the model because regional travel models are not very sensitive to intersection level controls and turning movement based capacities. 2030 Traffic Forecasts The portions of Route 46 East that are widened to four lanes are projected to operate at satisfactory levels of service in 2030, even though traffic is projected to increase substantially over existing conditions. This is due to the assumption that it would be widened to four lanes from Airport Road the county line to better accommodate weekend and holiday traffic. Weekday traffic, which is what the SLOCOG model represents, could easily be accommodated by the widened facility. The central portion of U.S. 101 would see much heavier amounts of traffic than at present but it should neverthe~ess flow at fairly high speeds, with congestion occurring at some locations for short periods of the day. The recent expansion of U.S. 101 on the Cuesta Grade to six lanes is important because it accommodates the increase in traffic flow. The southern portion of U.S. 101 is projected to experience the greatest increase in traffic (60,000 new trips per weekday) in addition to the existing traffic volume, which is the heaviest in the county. The result would be serious congestion for much of the day, even with the assumption that the proposed auxiliary lanes between Arroyo Grande and San Luis Obispo are constructed. The widening of Hwy 227 will provide some relief to U.S. 101 in the form of amedium-capacity alternate route. A-5-6 Analysis of 2030 Scenario The 2030 base case scenario shows that jobs/housing imbalances would result in dramatic increases in traffic on the major roads connecting the cities of the county. Some portions of the system, such as U.S. 101 in the North County, appear to have sufficient unused capacity to be able to accommodate the projected growth in traffic reasonably well. Other facilities, such as Hwy 46 East, are expected to accommodate the growth in traffic due to the completion of the major capacity improvements that have been identified. However, there are other segments of the system, particularly on U.S. 101 in the South County, where a significant degradation of traffic conditions can be expected if the land development assumptions are realized and changes in travel behaviors are not modified. The scenario depicted in this test is just one of many possible scenarios that could take place. The jobs/housing imbalance may prove unsustainable over an extended period, and market mechanisms may act to redress the imbalance. For example, a severe housing shortage may drive up the value of housing to the point where more development would take place than is assumed in this scenario. Alternatively, the high cost of worker housing may dampen the business climate to the point where the jobs would not materialize in San Luis Obispo County, but instead will locate in some lower-cost area, perhaps Santa Maria. Also, the worsening of traffic conditions may reduce the attractiveness of San Luis Obispo County for both potential new residents and potential new businesses, and so both the population and employment projections may be found to be too high. These are the sorts of issues that SLOCOG expects to address through the use of the traffic model and the Blueprint Visioning Process. A-5-7 pT~ f,~... ___ 0 M~ .~+ ~°. e ..°. 'O ~ O O N ~ ~ ~ I W~~ ,~ o ,~ N `~. .~ 4~ fl• O s.. a ~a L d ~ ~ Q' Q+ ;~ ~`~ A; ,~~~. ~_ ;= W a v N a O Z t ..,.. 7 Em to men rs a an assumed ebrua 200 8,4~ re based ° of 80%, ~ ove emP1oYment num ertY utilization ab ia( prof The nt overau commero~dies curre schoo P and includes - ESnn,M._ ~,~ 401,0ny 390 110:3 u.~ 25°k 698,767 147 ~ 2009 85 of 16,500 PgOP e, 50°~° 1' 407 , 00.9 333 lation estimate 1eld a total °f 481 a °Pu le would Y 75°0° 8,752 022 2 418 Sased on PO 000 PeOP 100 !° ~ raGo• buildout of 2 , 80°k 18,190,5g8 ulatioC1e SPGeneralPlan based °n the curren~~dy the tY otals n be °alculated ra8o were to hold s IoYment potential ca rson. If this future e1`!S 0.508 emPloYees Per pe plternatrvelY~ tratio the city's ourren 10,160 emP1oY~s Estimated Utilization Total Area Total Acres Utilized Acres Unutilized Acres 0% 931,269 21.4 0.0 21.4 25% 401,059 9.2 2.3 6.9 50% 1,698,767 39.0 19.5 19.5 75% 6,407,481 147.1 110.3 36.8 100% 8,752,022 200.9 200.9 0.0 Totals SOYe 18,190,598 418 333 85 2005 Employment Employment Potential 7,940 9,95 The above employment numbers are based on an assume current overall commercial property utilization o/ 80%, and includes school properties Alternatively, future employment potential can be calculated based on the curtent population/employee ratio. Based on a population estimate of 16,330 people, the city's ratio is 0.486 employees per person. If this-ratio were to hold steady, the city's General Plan buildout of 20,000 people would yield a total of 9,720 employees 11.c. MEMORANDUM TO: CITY COUNCIL FROM: DON SPAGNOLO, DIRECTOR OF PUBLIC WORKS/CITY ENGINEER SUBJECT: CONSIDERATION TO AUTHORIZE STAFF TO PURSUE TEMPORARY CLOSURE OF NORTHBOUND BRISCO/ROUTE 101 ON/OFF RAMPS DATE: APRIL 24, 2007 RECOMMENDATION: It is recommended the City Council authorize staff to pursue temporary closure of the northbound Brisco/Route 101 on/off ramps with Caltrans. FUNDING:' Funding for the temporary closure of the northbound Brisco Road/Route 101 on/off ramps will be from the City's Transportation Facility fund allocated in the Capital Improvement Program for the Project Approval and Environmental Determination. The estimated cost to perform the ramp closure is between $30,000 and $40,000. DISCUSSION: The City is in the process of preparing a Project Approval and Environmental Determination for the Brisco/Route 101 interchange. The project footprint or study area has been determined and the environmental analysis is approximately 70 percent complete. A presentation of the alternatives was previously made to the Council at which time the temporary ramp closure of the northbound on/off ramps were discussed. All of the alternatives presented included closing the ramps. Performing a temporary closure could provide valuable information as to the traffic impacts to both the Oak Park Boulevard (Camino Mercado) and East Grand Avenue interchanges. An encroachment permit from Caltrans to temporarily close .both the on/off ramps would have to be obtained by the City including a detailed signing and striping plan. It is anticipated that the ramps would be closed for two weeks at the end of May through the beginning of June to include school traffic. Traffic counts will also be taken before and after the closure to determine the effects on traffic patterns and the impacts to the adjacent interchanges. CITY COUNCIL CONSIDERATION TO AUTHORIZE STAFF TO PURSUE TEMPORARY CLOSURE OF NORTHBOUND BRISCO/ROUTE 101 ON/OFF RAMPS APRIL 24, 2007 PAGE 2 The proposed ramp closure will be for both the on and off ramps. Closure of only the off ramp was considered, but not recommended because Caltrans felt it would not significantly improve operation of the interchange. It can be considered at a later date or a portion of the test period if directed by Council. There will be several notifications to the public prior to the closure. Signs will be posted on the freeway and City streets around the interchange approximately two (2) weeks prior to the closure. A press release will be distributed by both the City and Caltrans and flyers will be delivered to the businesses adjacent to the interchange. A notice will also be posted on the City's website and the public access channel. An article will be placed in the City Newsletter. Notification letters will also be sent to Ocean View Elementary School and St. Patrick's School. ALTERNATIVES: The following alternatives are provided for the Council's consideration: Approve staffs recommendations; • Direct staff to close only the offramp; • Do not approve staffs recommendations; • Modify as appropriate and approve staffs recommendations; or • Provide direction to staff. 11.d. MEMORANDUM TO: CITY COUNCIL FROM: STEVEN ADAMS, CITY MANAGER MICHAEL HUBERT, DIRECTOR O BUILDING & FIRE SUBJECT: CONSIDERATION OF AN ORDINANCE AMENDING CHAPTER 8.08 OF THE ARROYO 'GRANDE MUNICIPAL CODE RELATING TO THE USE AND SALE OF FIREWORKS DATE: APRIL 24, 2007 RECOMMENDATION: It is recommended the City Council introduce an Ordinance amending Chapter 8.08 of the Arroyo Grande Municipal Code relating to the use and sale of fireworks. FUNDING: There is no funding impact to the City from this Ordinance. DISCUSSION: At the April 10, 2007 meeting, Mayor Pro Tem Arnold requested and the Council directed staff to develop recommendations to modify the sale of fireworks permitting process in order to address complaints that have been received. Currently, the City allows the sale of safe and sane fireworks from July 1ST through July 4~h and a fireworks stand permit (Permit) is required. A maximum of six permits are allowed based on a standard of one permit per 3000 residents or fraction thereof. If more than six applications are received a drawing is held to determine the six permitees. The Department of Building & Fire administers the permit process. While staff has been successful in effectively coordinating the process on an annual basis, three concerns have periodically been expressed from applicants regarding the regulations: + Since the drawing is random, some organizations have been fortunate to receive permits in more than one consecutive year, while others have failed to obtain a permit in consecutive years. Property and business owners willing to allow organizations to sell fireworks on their property have become increasingly limited. Since this represents a significant fundraiser for many organizations, obtaining both a site and permit is very competitive. Given the existing lottery system, organizations may obtain approval for a site, but not be drawn to receive a permit. Therefore, property CITY COUNCIL CONSIDERATION OF AN ORDINANCE AMENDING CHAPTER 8.08 OF THE ARROYO GRANDE MUNICIPAL CODE RELATING TO THE USE AND SALE OF FIREWORKS APRIL 24, 2007 PAGE 2 owners may make commitments to more than one organization for the same site. However, the City can only accept one application for each site. This can result in confusion for staff, frustration for applicants and an inefficient use of available sites. • Submittal of a financial statement is required by October 31St of the year that an organization received a permit to demonstrate that at least 50% of the profits were used to benefit the City and its residents. Organizations are disqualified from submitting an application the following year if this requirement is not .met. Since these are community service organizations, fundraisers are often coordinated : by volunteers that may or may not remain involved with the organization on an ongoing basis. As a result, those served by the organization may be penalized by the lack of follow-up by one individual. To address these issues, the proposed Ordinance includes the following recommended changes. • It is recommended that an initial drawing be conducted to place organizations on an ongoing applicant list. Thereafter, applicants will be selected to receive a permit based on the order of the list rather than an annual drawing. New applicants will begin at the bottom of the list. This will ensure that all organizations have an opportunity to operate a fireworks stand at the same frequency. Since organizations will know well in advance whether they are scheduled to receive a permit during the upcoming year, they can better plan their fundraising budget. In addition, since organizations will know whether they are likely to receive a permit in any given year, only those scheduled to obtain a permit will be pursuing sites. This will eliminate sites being committed to organizations that are not ultimately selected to receive a permit. • It is recommended that the financial statement due date remain October 31St, but that organizations not be disqualified from obtaining another permit unless the financial report is not submitted by the due date of the application. • Each applicant organization is currently required to have its principal meeting place within the corporate limits of the City of Arroyo Grande. However, there are some organizations that primarily serve Arroyo Grande that principally meet outside the City simply due to the lack of desirable meeting places. It is recommended that this be changed to a requirement that applicant organizations must have meetings in the corporate limits of the City of Arroyo Grande. CITY COUNCIL CONSIDERATION OF AN ORDINANCE AMENDING CHAPTER 8.08 OF THE ARROYO GRANDE MUNICIPAL CODE RELATING TO THE USE AND SALE OF FIREWORKS APRIL 24, 2007 PAGE 2 Therefore, staff believes there are a number of potential benefits from these changes in order to make the process as fair as possible. One potential result of the proposed new process is that it is expected to increase the number of applicants. This is due to the fact that the existing requirement to identify an approved site prior to submitting an application serves to eliminate some organizations from consideration. Therefore, organizations with long-term commitments for specific sites may have to compete with a larger group of applicants. If approved, it is staff's intent to begin implementation of the changes during this year's process. Therefore, the drawing scheduled to be conducted this year can be used to begin the applicant list, which would then be used for selection of the eligible applicants for 2008. ALTERNATIVES: The following alternatives are provided for the Council's consideration: 1. Approve staffs recommendation to introduce an Ordinance amending Chapter 8.08of the Arroyo Grande Municipal Code relating to the use and sale of fireworks; 2. Approve staffs recommendation, but request staff not to begin implementation of the new process until next year; 3. Postpone consideration of the Ordinance; 4. Direct staff to amend the Ordinance to maintain the process of utilizing a drawing to select the applicants, but modify the financial statement requirements in order to address complaints received regarding that specific issue; 5. Make other amendments and introduce the Ordinance; 6. Do not approve staff's recommendation; 7. Provide direction to staff. ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE AMENDING CHAPTER 8.08 OF THE ARROYO GRANDE MUNICIPAL CODE RELATING TO THE USE AND SALE OF FIREWORKS WHEREAS, Arroyo Grande Municipal Code Chapter 8.08 regulates the sale and use of "safe and sane" fireworks and establishes a process for issuance of necessary permits; and WHEREAS, the City Council finds that it is in the best interest of the City and its residents to re-codify Chapter 8.08 and modify the firework stand permit issuance process. NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Arroyo Grande, as follows: SECTION 1. The above recitals and finds are true, correct, and incorporated herein. SECTION 2. Arroyo Grande Municipal Code Chapter 8.08 is hereby repealed and replaced in its entirety as follows: Chapter 8.08 FIREWORKS 8.08.010. Title 19 of the California Code of Regulations. Storage, use, retail sales and handling of fireworks shall be in accordance with Title 19 of the California Code of Regulations and this section. 8.08.020. Amendment to Fire Code. Uniform Fire Code Article 78 is amended to add the following provisions regarding the sale and use of Fireworks, Class C ("Safe and Sane"). 8.08.030. Sale. No person shall sell or offer for sale any fireworks within the city except in a temporary stand or structure used specifically for the display and sale of fireworks operated and maintained by a recognized charitable, civic or patriotic group or organization with the permit of the Director of Building and Fire. 8.08.040. Permits: Applications. All applicants for a permit to sell fireworks shall: A. Submit a written eligibility application.to sell fireworks on a form provided by the City. B. Applications for eligibility shall be accepted by the Department of Building and Fire between March 1ST and April 15~h and shall state the name of the applicant, the ORDINANCE NO. PAGE 2 name of the organization, its address, the president or head of the organization, and a complete account of the proposed disposition of all gross receipts of fireworks to be sold at the proposed stand. Failure of such account to show that at least fifty percent of the net profits from the sale of fireworks will be expended for the benefit of the City or its residents shall cause such application to be denied. C. No organization may receive more than one permit to sell fireworks sale during any one calendar year. One permit may be issued to two or more qualifying applicants as a joint venture. D. The maximum number of permits shall be based on one (1) permit per each 3,000 residents of the City or fraction thereof, based on the official City census. Should the number of applications exceed the number of available permits, an initial drawing shall be conducted by the City Clerk and all applicants shall be placed on an eligibility list in the order drawn. Permits shall be issued to applicants in the order of the list and the eligibility list shall be maintained by the Department of Building and Fire on an ongoing basis and made available to the public. In any year succeeding the initial drawing, permits shall be issued to applicants in order of the list beginning with the first applicant after the last applicant issued a permit the prior year. Applicants filing an application that are not on the existing list will be placed at the end of the list at the time the application is filed. E. On an annual basis, eligible applicants shall be those on the list equal to the number of available permits beginning at the start of the list and working downward. If an applicant withdraws their application, the next succeeding applicant on the list shall be deemed eligible. Eligible applicants shall file a fireworks stand permit application with the Department of Building and Fire between March 1St and April 15th of the year for which the permit is requested and shall state the name of the applicant, the name of the organization, its address, president or head of the organization, the location of the proposed stand, the names of the persons who will actually staff the stand on behalf of the applicant and a complete account of the proposed disposition of all gross receipts of fireworks to be sold at the proposed stand for that year. F. Each applicant must include a "Letter of Agreement" signed by the property owner or their authorized agent permitting the organization to erect a fireworks stand on the owner's property. Failure to do so shall cause such application to be denied. G. Applicants that are issued a permit are required to file with the City a "Fireworks Stand Financial Statement" form, which is due by October 31St of the calendar year in which the permit is issued. On this form each applicant must certify that at least fifty percent of the prior year's net profits from the sale of fireworks were expended for the benefit of the City and its residents. Failure to so certify prior to submitting a fireworks stand permit application shall cause such renewal application to be denied. H. If any applications from eligible applicants are either denied or not received by April 15th, the next applicant(s) on the list shall be deemed eligible. The City shall ORDINANCE NO. PAGE 3 attempt to provide notice to the applicant; however, it shall be the absolute duty of the applicant to stay apprised of its position on the list. Such eligible applicants shall file an application for a permit with the Department of Building and Fire no later than May 15~h I. Each applicant organization must meet within the corporate limits of the City of Arroyo Grande and must have been established within the City for a minimum of two years continuously preceding the filing of the application for permit and must have a bona fide membership of at least fifteen (15) members. J. Insurance: The City Council shall, by resolution, establish appropriate insurance requirements and conditions related to the sale of fireworks. K. No permit shall be issued unless the applicant organization represents to the City that all aspects of the sale of fireworks, including the application for all necessary permits, will be conducted by a member of the applicant organization. All application fees shall be paid by the applicant organization. Such fees shall not be paid by any other affiliated organization, including a seller, distributor, or vendor of fireworks. Applicants will neither hire nor use independent contractors or other persons who are not members of the organization in connection with any aspect of the sale of fireworks. Only members of the applicant organization shall staff the fireworks stand, except spouses, parents and children or members who are eighteen years of age or older, may also staff such stand, subject to the provisions of this paragraph. All members of the organization must have a valid identification, which verifies that such person is a valid member of the organization, on their person or inside the fireworks stand. Organizational membership records for fireworks stand workers should also be retained in the stand for reference. L. Permit Fees and Conditions. The City Council shall, by resolution, establish appropriate fees and conditions related to the sale of fireworks. 8.08.050. Meeting. There shall be a meeting the first Monday of June at 7:30 p.m. of every year. This meeting is mandatory for the representatives of the permittee organizations. Safety practices, legal issues and explanation of the laws, rules and regulations will be discussed. At this meeting, the applications, certificates of insurance and letters of permission will be submitted and the permits issued. Wholesale distributors, or their bona fide agents, shall also be present at this meeting. 8.08.060. Fireworks Stands: Construction and Placement. A. Retail sales of fireworks shall be made only from temporary fireworks stands. Sale of fireworks from any other building or structure is prohibited. Temporary stands will be subject to the following provisions: B. No fireworks stands shall be located within 50 feet of any other building, within 100 feet of a gasoline or other type of flammable fuel pump or storage area, within 500 ORDINANCE NO. PAGE 4 feet of another fireworks stand or less than 1/8 of a mile from the City's boundary with another jurisdiction. C. All fireworks stands shall be erected or constructed on commercial or industrial- zoned property. No fireworks stands will be constructed or erected on residential property. D. Fireworks stands need not comply with the Building Code of the City. Stands requiring electrical service shall be required to obtain an electrical permit from the Building and Life Safety Division. Stands shall be constructed or erected in a manner that will reasonably ensure the safety of attendants and patrons. The stands shall be subject to inspection by representatives of the Department of Building and Fire at any time. E. Each stand shall have a minimum of two marked exits or as otherwise directed by the Director of Building and Fire. F. Each stand shall have a minimum of 2 fire extinguishers of a type designated by the Director of Building and Fire. 8.08.070. Sales. Fireworks stands shall comply with the following requirements related to sales: A. Fireworks shall not be sold prior to 9 a.m. on the first day of July and such sales shall cease at 9 p.m. on July 4th. Sales during this time period will be limited to 9 a.m. to 9 p.m. each day. Any permittee failing to observe these hours designated for sale may have their permit revoked or be ineligible for a permit in subsequent years. B. Sales to individuals under the age of 18 is prohibited. The permittee shall require that each person who purchases fireworks produce identification proving that such person is 18 years of age or older. C. Each person who purchases fireworks must be provided with handouts that contain information related to where "Safe and Sane Fireworks" can legally be discharged and the associated hazards. The contents of this document will be reviewed and approved by the Director of Building and Fire. 8.08.080. Fireworks Stands. General Requirements. A. Each stand shall provide temporary sanitary facilities or obtain permission to use either private or public facilities during the hours of operation. Proof of sanitation facilities shall be documented in written form. B. All weeds, trash, and debris shall be cleared for a distance of at least twenty-five (25) feet surrounding the fireworks stand. ORDINANCE NO. PAGE 5 C. Doors of the stand shall not be locked on the outside of the door while anyone is inside the stand. The door may be latched in such a manner that will not cause any undue delay to anyone exiting in an emergency. D. An aisle or passageway in the fireworks stand will be kept clear and unobstructed so as not to impede anyone leaving the stand in an emergency. E. The use of electrical or fuel operated heaters in the fireworks stand is prohibited. F. The temporary fireworks stand will be dismantled and removed from its location not later than the Sunday of the weekend following the 5th of July of each year. It shall be the responsibility of the permittee to remove the stand. If the removal of the stand is not accomplished by this deadline, the City of Arroyo Grande may remove and store it at permittees' cost and expense until it is redeemed by the payment of appropriate fees and interest thereon. In addition, the permittee failing to meet this deadline will be ineligible for a permit the following year. G. Each stand shall have adequate temporary parking acceptable to the Director of the Department of Building and Fire. 8.08.090. Delivery. A. The wholesale distributors will make all deliveries and end of sale season pick- ups. Excess storage of fireworks will not be permitted. B. All fireworks shall be removed from sales stand by 9 a.m. July 5th. 8.08.100. Public Discharge., Discharge of "Safe and Sane Fireworks" shall be in legally permitted locations on the 4th of July from 6 p.m. until 10 p.m. No person under eighteen (18) years of age may possess or discharge "Safe and Sane Fireworks" except when under the direct supervision of a person twenty-one (21) years of age or older. 8.08.110. Violations. Persons violating any provisions of this section shall be deemed guilty of a misdemeanor and, upon conviction thereof, shall be punished by a fine not to exceed one thousand dollars ($1,000) or by imprisonment in the County jail for a period not to exceed six (6) months or by both such fine and imprisonment. Any violations of these provisions shall constitute a separate offense for each and every day during which such violation is committed or continued. SECTION 3: If any section, subsection, subdivision, paragraph, sentence, or clause of this Ordinance or any part thereof is for any reason held to be unlawful, such decision shall not affect the validity of the remaining portion of this Ordinance or any part thereof. The City Council hereby declares that it would have passed each section, subsection, subdivision, paragraph, sentence, or clause thereof, irrespective of the fact that any one or more ORDINANCE NO. PAGE 6 section, subsection, subdivision, paragraph, sentence, or clause be declared unconstitutional. SECTION 4: A summary of this Ordinance shall be published in a newspaper published and circulated in the City of Arroyo Grande at least five (5) days prior to the City Council meeting at which the proposed Ordinance is to be adopted. A certified copy of the full text of the proposed Ordinance shall be posted in the office of the Director of Administrative Services/City Clerk. Within fifteen (15) days after adoption of the Ordinance, the summary with the names of those City Council Members voting for and against the Ordinance shall be published again, and the Director of Administrative Services/City Clerk shall post a certified copy of the full text of such adopted Ordinance. SECTION 5: This Ordinance shall take effect thirty (30) days after its adoption. On motion by Councilmember and by the following roll call vote, to wit: seconded by Council Member AYES: NOES: ABSENT: the foregoing Ordinance was adopted this _ day of , 2007. ORDINANCE NO. PAGE 7 TONY FERRARA, MAYOR ATTEST: KELLY WETMORE, CITY CLERK APPROVED AS TO CONTENT: STEVEN ADAMS, CITY MANAGER APPROVED AS TO FORM: TIMOTHY J. CARMEL, CITY ATTORNEY