City Council - Regular Meeting

Good evening and welcome to the meeting of Hercules City Council. Today is Tuesday, March 12. It's now about 05:03PM and I'm calling the meeting to order. Can we have the roll call please?

Good evening. Councilmember Grimsley. Present. Councilmember Butterye. Present. Councilmember Bailey is not here at this time. Vice Mayor Griffin, Walker Griffin.

Present.

And Mayor Kelly.

Present. Thank you. Madam City Attorney, I believe we have a closed session item.

Yes. Thank you Madam Mayor. Tonight we have one item in closed session pursuant to government code section 54,957 public employment for the city manager title.

Okay, thank you. We will now go into closed session. Hello, we are back from closed session now. And we are going to be going into our GPAC interviews. Madam City Attorney, do you have to read anything?

Yes. I would just like to port that, no, final action was taken in closed session, and we'll now start our special meeting.

Okay. Thank you. Alright. Welcome. Come on in. Have a seat, please. Hello, mister Garcia? Yes. Hi. We are the counsel here. I'm Chris Kelly. I'm the mayor. And we just got three quick questions to ask you.

Okay. Very good.

Oh. Good evening, city council. Good So, Alex, do you wanna start?

Yeah. Good evening, mister Garcia. Alex Walker Griffin, the vice mayor. Pretty simple. Why do you wanna serve on the GPAC?

So I am a my wife and I are a twenty five year resident. Can you hear me? Does that work? Okay. So my wife and I are twenty five year residents here of, city of Hercules, and we raised our son here. He's it's a it's a great community. He's now 26 and living in LA. He went to school over there and stayed down there. But, we really love this community and I like the opportunity to see how we can improve the quality of life for our residents here and that's why I'm here today.

Great, thank you. Dilly?

Good evening. My name is Dilly, but I'm a council member here. Describe your experience working collaboratively with people of diverse perspective and background.

So I am retired from working at Caltrans as an electrical engineer. I'm a registered electrical engineer. Did most of my work in District 4 here in Oakland, and I did what they call what we call intelligent transportation systems. So I worked with a lot of different projects from different facets of the project, from planning to project development to design, construction, operations, and maintenance. So I got to see a lot of project from the beginning all the way to the very end.

And I have a lot of experience in transportation, experience in working in different committees, like the Metropolitan Transportation Commission, along with other cities and counties on various projects that we collaborated with. For example, telecommunication projects, which cross different boundaries. So, a lot of working together to see how we can share our assets and what if we have some fiber that maybe other cities can use and so on and so forth. So I got to work on a lot of really great projects. I worked on the, as a test manager for the fast track prototype at Carquinez Bridge, which I am very proud of.

Got to work on the metering light system upgrade at the Bay Bridge. And but the majority of my time was in the Transportation Management Center in Oakland. I don't know if any of you had the opportunity to visit. So I did. I was the supervisor at the TMC for twenty two years, and we maintained the video wall, all the systems, the network, the communications, in the center. And the last two years working there at Caltrans, I also got the responsibility of the field side. So all the elements in the field, the cameras, the sensors, changeable message signs, all of that. And I was supervising 45 electrical engineers right about the time that I retired.

Great. Thank you. Tiffany?

Hi. Mr. Garcia, my name is Tiffany Grimsley. I'm a company member here. And you've given us a nice segue into the third question. Describe your knowledge experience with the focus areas of the general plan update, land use, open space, transportation, and economic development.

Very good. So I do see that there's a lot of projects coming down the line and like the Bayfront, Sycamore Crossing towns, new town center. I I do see opportunities and projects like that for additional housing, some retail and dining, I think those are great. I do think that we also, and I'm sure the city council and the city planners are looking into this, but the balancing of the capital projects with traffic management and basic services. How are we going to get all the people in and out of these areas?

And I think that one of the things that comes to my mind is just the access to 80, Highway 4, that interchange. And I don't know if there's some projects in the works for that, but I definitely see some improvements having to be done with traffic. Maybe even even intersections, traffic signals, maybe AI at some point where we can have the intelligent traffic signals to help with traffic management. So I I I think that some of my background will definitely be helpful for that, but I think that those are great opportunities for additional revenue to the city.

Okay, great. Well, thank you. Thank you very much. We just have three quick questions and we appreciate coming in.

All right.

That concludes our interview. Good evening. Hi there. You are Stephanie. Stephanie, how do you pronounce your last name?

Last name, Bouquese.

Bouquese, hi. I'm Chris Kelly. I'm the mayor and we'll start down here. Dion?

My name is Dion Bailey, council member.

Good to see you Stephanie, Alex Wachter, vice mayor.

My name is Dilli Butcher, council member here.

I'm Tiffany Grimsley, council Member.

Hi. Nice to meet you all.

Okay. So we only have three questions for you and we're gonna start with Alex.

Yes. So why do you wanna serve on the GPAC?

Best way to say it is if you were part of 1984, you were part of Hercules Elementary School. I own that red sweater till this day. I would like to continue keeping it bright and red. Hercules means a lot more than just being part of a planning committee. It's establishing what the community wants.

I want to be I don't wanna be a leader, if that's what you want me to say. I wanna be a part of a project that makes Hercules what parents wanna see, what grandparents wanna see. I have a daughter who graduated Hercules High 2017. I have a son who is a high schooler, class of 2028. I have a middle schooler who's going to be a eighth grader, and I want to be part of every almost every interaction, almost every interaction with, every event.

I also, like to know what's going on in the community and help out.

Okay. Thank you. Dilly?

Okay. Describe your experience working collaboratively with people of diverse perspectives and backgrounds.

My current job right now is I work for Bay Area Rapid Transit. Bay Area Rapid Transit has a well different communities, different backgrounds. I can honestly say that because there's so many people in that background, I have the comfort to ask uncomfortable questions that I don't understand, that I would like to understand. When it comes to the community of Hercules, I am a parent for the dance studio, Legend Studio. I work with the parents that are first time dance moms to twenty year dance moms and getting their feedback and happening.

Sometimes they have difference in opinions and they have to communicate what their difference of opinions are and trying to find resolutions in those difference of opinions. And with that, there's sometimes a language barrier that they need to explain, not towards detail, but more it could be a visual to them that they need some better explanation.

Thank you. Tiffany?

Yes. Describe your knowledge of an experience with the focus areas of the general plan update, land use, open space, transportation, and economic development.

I am a proud resident of the Beach Nut Drive, and I was part of seeing that park evolve and disintegrate, and having the opportunity to be part of having the survey, being part of hearing what the plans and options were was kind of nice. And fun fact, when I was in Valley High School, one of the projects to was a civil engineering project, and that was to design a park with a budget and ADA requirements and having trees. And I thought that was really interesting to a point where it jarred my memory towards engineering. And having I believe that if the youth had interactions with every career here would be mind blowing for them to see a career in anything to community. Transportation wise, I work for Bard.

We I know that there was a there was an idea of having a station here and how much growth that could be and the opportunities. A little bit of congestion, but that was something when Hercules was evolving that it was going to be a transportation hub and everyone loves loves it. You can go 480 Napa.

Okay. Thank you very much. We've got several people to interview. Really appreciate you coming in. Hello Richard. So as you know I'm Mayor Chris Kelly and we're going to start down the line. Dion?

Hi, my name is Dion. I'm a former Planning Commissioner as I served with you many years ago. Good seeing you again though.

Good to you Mr. Mitchell. Okay,

so Alex is going to ask you the first question.

Well my friend, why do you want to serve on a Jeep back?

We got to Hercules in the mid eighties and we've been here since, don't wanna go anywhere else. I had the pleasure of sitting on the planning commission for fourteen years during one of the big change periods in the city. So Victoria was built, Promenade was built. Much of what's happened here on the other side of San Pablo. And I also, and I think it's important at this point to, if at all possible, hold on to as much of that original vision as possible, but also to incorporate in the the the additional elements from people who have since come to the city.

But I I I think that one of the things that Hercules has accomplished is it's it's created a community that has a real form that people may not be fully aware of. So as a member of the advisory committee, my job would be to try to connect newer people who may not know some of the history to that history. What what you know, how did these things come to to to pass and what they mean, think, to the to the community.

Thank you. Dilly?

Yes. Mister Mitchell, would you please describe your experience working collaboratively with people of diverse perspective and backgrounds?

Well, I retired in 2018 after twenty years with the city of Richmond. And and there I was a planning director. So in Richmond, if anyone's familiar with it, has a history of not only diverse community but diverse opinion. So you have a good deal of healthy friction in many of the conversations. And so I had to learn, especially in the planning job, how to make sure that people are heard, and then to the extent that you can to try to create an outcome that brings in some piece or portion of what everyone who's participated in the project or effort has had to say.

Nobody's gonna get everything obviously, but working with staff, I had a chance to work with staff, I had a chance to work with some very active neighborhood councils in Richmond, a lot there. But the fun stuff really was working here on planning commission. We tended to get much more enduring and positive outcomes. So this is where I'd hang my head in terms of things that I've looked, that I'm proud of to wander around or I look at Promenade and Victoria and so on, that some of the things that we really wanted to see came. And it came as a result of, in this city, the council, the staff, planning commission, and community were all of one mind.

And that's why some of these things happen here.

Thank you. Tiffany?

Describe your knowledge of and experience with the focus areas of the general plan update, land use, open space, transportation, and economic development.

Yeah, these are pretty typical. While in Richmond, I oversaw the writing of the general plan there and learned a great deal about what general plans should have in them, what is nice to have in them, and what you have to look for and ask for of your general plan consultant to make sure that they're giving you really your own community vision and not a lot of standard material. And the other thing that comes out of it now is that with technology the plan can be a lot more of a living document than in the old days when it was a great book. I remember going to come out of the planning commission, there was a general plan was this heavy gray book collection of gray pages and you try to work through it. Now it can be pictures and interaction and actually ability to focus in on a council event or a council decision, whatever, all these things can be included.

And so I do have a lot of knowledge about that and also a great sense of the original Hercules vision. It was city in the country and then West Of San Pablo, were going to have this city that was going to have a focal point of around the transit center and how we all the community was kind of built and going to be built around that that activity center, because we were kind of like a a donut, we we just didn't have a center yet, we had all the the neighborhoods, but we didn't have our core district, and so that that was supposed to happen here. And the update hopefully will incorporate or keep that vision. I mean, it's going to, again, it's going to be up to the council, it's going be up to the community, So as a member of the advisory committee, it's just to kinda make sure that when it comes to these key elements that the plan says what it's intended to say.

Okay. Well, thank you. Thank you very, very much. We appreciate your coming in. Okay. Good to see you. Hello. So Darlene, last name is Almeida? Almeida, hi. Okay. I'm Chris Kelly. I'm the mayor. We'll go down the line.

Hi, my name is Dionne Bailey, council member.

This is Alex Wapkruv, vice mayor.

Hi, darling. My name is Dilipatra council member.

And I'm

Tiffany from the council. Okay.

So Alex will ask the first question. Okay.

Yes, my friend. So why do you wanna serve on a GPAC?

Why not? I mean, just why not? I don't have enough to do. You. I've seen you at rotary meetings.

You've been at our barbecues. I'm president of the homeowners association at Devonwood. I'm very active in the community as much as I can, and I want to stay active and do as much I believe in helping the community I live. And that's what I want

to do. Awesome.

Thank you. Dilly?

Yep. Darling, would you please describe your experience working collaboratively with the people of diverse perspectives and backgrounds?

Tiffany?

Yes. Darlene, please describe your knowledge of and experience with focus areas of the general plan update, land use, open space, transportation, and economic development?

I looked at the plan and you know what? It was night from 1920 from the 2021, it was I looked online. Online. I'm I'm going, going, wow. Wow. Needs It needs to to be be updated updated online. Online. How can I know anymore? So I do get the information that comes in every once in a while. This is a general update.

I know you're waiting for Southern Pacific, the transit center to come on, which has been a long time for me. I know my daughter's my my sister said, I have been waiting for forty three years. I live in The Heights, and they have promised us a park, and we still don't have a park. So things like that are are worried to me. Why do I need to go out of the community to find a nice place to live in? I don't even shop at JFoy anymore because of that forward

Okay. Thank you very much. Appreciate your coming in.

Okay. Thank you. Take care. What?

I just saying, you helped us with the roundabout.

I helped you with that.

That's what I thought. Okay.

Know what's out there, the veterans? That's us. Know.

Thank you. There's a legend right here, man.

Hi there, welcome. Rashid?

Yep. How

are And how do you pronounce your last name?

Paudel, p a u d e l. Paudel.

Thank you. Okay, so I'm Chris Kelly. I'm the mayor and we'll start over here.

Dion Bailey, council member. Good to

see you again. Evening. See you again, my friend, Walker Griffin, vice mayor. Evening.

Good to see you again. You too. Good evening.

Yep. Good evening.

So Alex is going to start with our first question.

Alright, my friend. Tough and hard.

Why do

you want to serve on a GPAC?

Well, want to serve on GPAC because I want to be basically a student ambassador. Right? Represent the youth voices and student voices in the city of Hercules. Right? Because city decisions impact the youth the most. Being a student ambassador is something that I can amplify those voices in a way that the developments happening in this city I can share and also tell and get more student voices, get them to speak up about certain issues that they would probably be scared to talk about, get them to talk about them. And I would be almost as a liaison between those two sections.

Right on.

Thanks. Dilly?

Right. Rashid, would you please describe your experience working collaboratively with people of diverse perspective and backgrounds?

All right. So I have two examples. So I have my own project in the city of or excuse me, in Hercules High School, which is my Nepal project, which is I got a lot of student teachers. So I have peers of my grade throughout various diverse backgrounds. Those who are not Nepali, those who can't speak it, those who are not culturally of it but to get them into that and leading them into things that are different to them, right?

Situations that are different, cultures that are different, languages that are different and making them understand what is important to them in terms of not just what's comfortable to them but having a broader perspective on different societal things. And my project of teaching English to those underprivileged kids throughout Nepal, right? That's a way for student teachers in Hercules, so my peers and tenth, eleventh, twelfth, ninth graders to get participating and do that. And the second way is through just community service here in the city of Hercules, So I'm with the interact program and with that I go in things such as the hydro hunt in the community center or the five ks mile, Help out with that or trunk or treat or the tree lighting events, right? These events make me have stronger connections with the community itself not just with youth but also adults alike because I get to actually talk and be social with them.

And even though it's not really related to the city itself just connecting with them in the first place is the deepest because you understand their perspective even if they're not directly talking about it.

Thank you. Tiffany?

Okay, Rashid, last question. Describe your knowledge of an experience with the focus areas of the general plan update. Land use, open space, transportation and economic development.

Well since I'm only a student my knowledge is limited and this is one of the reasons why I wanted to join the first place because learning and understanding is one of the greatest ways to know. And I do have a little bit of experience in each topic. So in terms of land use and open space, my knowledge of it is really backed through the City of Hercules website in terms of the future projects, right? Such as our Bay Hub, Hilltown in Victoria, All these new projects, seeing them being developed, maybe get approved, maybe get them constructed. Seeing the future of Hercules is really important to me especially because we as youth can see the future of Hercules rise in like in front of our eyes right.

And when we are older we can actually utilize these things more effectively because we actually get to use them and for our day to day lives. And in terms of transportation and economic development, in terms of transportation, I use public transportation from school to home, I use those Westcat services and I understand what it means to utilize those. Right now what we have is solid. We have these bus stations throughout neighborhoods, That's already solid. And what we can do to improve is looking at the different documents and whatnot to see what we can do to improve.

And in terms of economic development, we can look at things such as the Bayfront, right? What we can do to incentivize more businesses to get them having more leases in the Bayfront and through that we can even see that through the growth the Bay hub itself. If we have that railroad where more people will come that will already intensify as more businesses to come in the first place.

Okay. Rashid, thank you very much. We appreciate your coming Thank you,

too, and thank you for this opportunity.

Thank you. So David Davenport, welcome.

Thank you.

So I'm the mayor Chris Kelly and we'll start introductions here.

Good evening. My name is Dion Bailey. I'm a council member.

Senior Alex Walker River, vice mayor.

Good to see you. Daley, council member here.

I am Tiffany Grimsley, Council Member.

Nice to meet you all.

So Alex will ask the first question.

Yes, my friend, why do you want to serve on the GPAC?

I've been a resident of Hercules for about two and a half years now. I have a background in city and regional planning. I have my degree in that profession. And I work as a transportation planner at an agency that doesn't serve Hercules. So there's no conflict of interest there.

But I find the planning profession very interesting. I work in it professionally, so I have an understanding of how it works. And in terms of the general plan advisory committee, I think this is a great opportunity to help shape the future of our community. My family is invested in this community for the long term. And we'd like to see it grow and mature and be a wonderful place to call home for future generations.

Thank you. Tilley?

Yep. Hey David, would you please describe your experience working collaboratively with the people of diverse perspective and backgrounds?

Yes. So professionally, I am a transportation planner. I work for a special district that operates public transit service in the Bay Area. And through that experience professionally I've learned over about twenty years what it's like to be in public meetings with a group of people who have a wide variety of opinions, some of which are in conflict with one another as well as with what the agency's perspective is. And I think it pays to listen and try to understand every person's perspectives and make them feel heard and understood because those unique perspectives do really help shape the right course forward and create that buy in that we need to function successfully as a society.

Thank you. Tiffany?

Yes, final question. Describe your knowledge of and experience with the focus areas of general plan update, including land use, open space, transportation, and economic development.

So my professional background specifically focuses on transportation. So this wouldn't be the first circulation element I've laid my hands on over the years. But I do have an understanding of basic planning principles and what goes into the legal requirements for a general plan in the state of California. The multiple elements that go in there, land use, housing, safety and noise, so on and so forth. And I understand that, especially housing elements now get a lot of scrutiny within the state. And we have to balance our community needs with what the state requires in that process.

Okay. Well, thank you very much for coming in. We appreciate having you.

Thank you.

Panu? Welcome. Yeah, I know. Don't don't worry. It's it's not so bad. Can you tell me how you pronounce your name?

A time. R, Jin, Der, Paul.

Harjinder Paul. Last name Panu.

Yeah.

Yeah.

Okay. Well, welcome. I'm Chris Kelly. I'm the mayor.

Yeah. Mister Panu, my name is, Dion Bin. I'm council member here in town.

Alex Walker Gruber, the vice mayor.

Mister Panu, my name is Dilipatra, council member here.

And I'm Tiffany Grimsley, council member. Alex will ask you

Panu, can we get you to use your microphone so it can be recorded?

All

right. Okay. Thank you.

So Alex will ask you the first question.

Yes, my friend. Why do you

wanna serve on the GPAC? I live here, and I'm kind of concerned about what's gonna happen going forward. Plain and simple. Quality of life, how the plants gonna be drawn out, what, how, when, who, why. I think those all matter, matter to all of us.

And I mean I don't wanna sound negative, personal opinion is that whatever that has been developed on the site towards the Bay, some elements are fantastic, some elements I feel need to be questioned why they did it the way they did. So after seeing what has happened there, these were things that were planned sometime back, it occurred to me that if I'm concerned about it then I need to participate. I need to get active. And so that's why I'm here.

Okay. Thank you. Dilly?

Yes. Mr. Panu, would you please describe your experience working collaboratively with peoples of diverse perspective backgrounds?

My background is an engineer. I have a bachelor's and a master's degree in electrical engineering. I started out working in startups and also in large organizations and where I had to work with different very complex kind of products and also with different expertise of people and the products that I worked in were medical devices. So there were regulatory compliance element, which I was tasked to as a quality concerned individual. I had to make sure that a lot of the requirements were being, properly identified, complied to and documented.

And I had to do a lot of audits also. So, that required me to have a lot of interaction with various different people from the CEO of the company all the way down to the guy at the docking, shipping product, putting snapping on a label on the packaging. So I had to interact with all of them and understand what they're doing, how they're doing and whether they're complying with the procedures that they were in place. And we can document and show that we are making product that is compliant to the requirements of the organization. So I feel I have that ability. And most importantly is I make it a point to listen carefully. So that has helped me a lot.

Thank you. Tiffany?

Yes. Final question, mister Panu. Describe your knowledge of and experience with the focus areas of the general plan update, including land use, open space, transportation and economic development.

So like I said, I live in Hercules. I drive a lot on the streets and I've noticed some amount of congestion has been going on since the high schools opened up and signal lights are important. And I a growth growth business. And we're to a have it planned

out, thought out carefully so that growth

in is going to not impede or create more frustration. But if anything, it will make things be less frustrating if possible and the signal lights can be worked out in such a way that there's less congestion. So much of right now, I mean, I've seen I live up in Refugio, so people park all along the side there and I'm just thinking, there could be a little bit better planning for this. So just to give you an idea, it's for quality of life, infrastructure, open space, all of those things are very important for all of us. And I mean, I take my grandson out for a walk and everything and being able to enjoy the park is also very important.

Make sure it's maintained and all that is also important. So I guess, because I live here, I see what's going on and I'm very observant. So I think the planning going forward is going to be very important and that's why I'd like to be able to contribute.

Great. Thank you very much. We appreciate your coming in.

Thank you.

Okay, so there's all right. So, okay. We are going to conclude this portion now and we will start again for regular session at 07:00. Thank you.

Seven. Right?

Recording in progress. Good evening, and welcome to the meeting of the Hercules City Council. Today is Tuesday, May 12. It is now 7PM, and I'm calling the meeting to order. My name is Chris Kelly, I'm the mayor of the city of Hercules. Can we have the roll call, please?

Good evening. Council member Grimsley? Present. Council member Butterrey? Present. Council member Bailey? Present. Vice Mayor Walker Griffin.

Present.

And Mayor Kelly.

Present. Thank you. Thank you. Madam City Attorney, do we have anything to report from closed session?

There was nothing to report from this closed session. Thank you, Madam Mayor.

Okay. Council member vice mayor Walker Griffin, could you lead us in the pledge of allegiance? Thank you. We do not have a a moment of silence tonight, but we do have a proclamation, and I would like to to read that now. This is a proclamation recognizing 05/10/2026 as World Lupus Day in the city of Hercules.

Whereas lupus is a severe and unpredictable autoimmune disease that can cause life threatening damage to any organ in the body, and whereas lupus is a global health problem that affects millions of young women, men, children and of all nationalities, races, ethnicities, genders, and ages worldwide. And whereas there remains low public awareness and understanding of lupus symptoms and health effects relative to its significant impact on the lives of the people with lupus. And whereas many primary care physicians are not fully aware of all of the signs and symptoms of lupus, causing people with lupus to suffer for many years before they can attain a diagnosis and begin treatment. And whereas, people with lupus need access to medical specialists and high quality multidisciplinary care, including emotional, psychological, and social care. And whereas, there is an urgent need to develop tools that will improve patient and physical communications.

And whereas, medical research efforts to find causes of lupus create useful tools to monitor disease activity and develop more targeted and tolerated treatments are underfunded in comparison with these diseases of similar magnitude and severity. And whereas there is a deep unmet need worldwide to educate and support individuals affected by lupus, including their family members and caregivers. Now therefore be it proclaimed that I, Chris Kelly, mayor of the city of Hercules, on behalf of the entire city council, recognize 05/10/2026 as World Lupus Day, on which lupus organizations around the globe call attention to the need for increases in public and private sector funding for medical research on lupus, education programs for health professionals and patients, and approve medical care for people with lupus. In witness thereof, I hereunto set my hand and cause the seal of the city of Hercules to be affixed this May 2026. So we do not have anyone here to accept it, but I think the council would like to make some comments.

And I'd like to start with Councilmember Grimsley.

Thank you, Mayor Kelly. Thank And you for the proclamation. I'm very pleased that I live in a city that is acknowledging World Lupus Day. As a survivor of this illness, a lupus warrior is what we call it, it's a huge challenge not only to deal with the symptoms of the disease and maintain a normal lifestyle, but it is also frustrating that within the medical community, not only is there not a cure, there seems to be a very limited amount of knowledge about the disease itself and how it impacts those of us who live with it. There are three different types of lupus.

There is lupus nephritis, discoid lupus, and the most common, systemic lupus erythematosus, which is what I have. One in five hundred people have lupus. The vast majority of those are women, and a disproportionate number of women of color indigenous women, African American women, Asian and Latino women suffer from lupus more so than any other group. And so there are lot of us out there. Many are living without a diagnosis, suffering from symptoms that go undiagnosed.

And unfortunately, at this juncture, the illness can only be diagnosed when one is in a massive flare. So it is something to be aware of, if you are experiencing something that you don't necessarily understand. Most common symptoms are extreme fatigue, joint swelling and pain, but they can range from anything as simple as consistent or persistent headaches, or something as major as a life threatening event like a heart attack or stroke. So I am grateful that we are raising awareness around this illness. Take care of yourselves and your family members.

Thank you.

Thank you. Council Member Batarai.

Thank you, madam mayor. Thank you, madam mayor, to take the leadership to proclaim this Lupus Day today. And I have my full solidity to my fellow council member here. As a warrior of the as long as, you know, the our people, individuals and families impacted by this rare disease. As we proclaim today, we are not only creating awareness, but we are also showing the compassion and recognizing the strain today. So let's, be, aware of that and the critical community awareness. Hope that we can, spread the word here. Thank you again for the proclamation.

Vice mayor Walker Griffin.

Thank you, Madam Mayor. It's so great to see the city recognize survivors and those living with this condition. I'll be honest with you, I don't know much about lupus, but in the short few comments that I have heard, even in this short period of time I've learned a lot too. I really only can hope that we take more energy to look into this disease and really try to find a cure for it. I mean, I know it's not going to be profitable for some companies out there, but I think that at the end of it all, the lives of those who are dealing with this outweigh more than anything else.

And to see what seems like a very miserable experience for it to only you only find out when you have a major flare up, I think is a big cry for help, but also shows of how much we need to do. So I hope that this proclamation somehow some ways makes it to someone in a major decision making power who's going to look into this and a group of people who will look into this and actually address this issue. Thank you.

Councilmember Bailey.

Thank you, Mayor Kelly for the proclamation and then for customer Grimsey for doing I think what these kept proclamations do, allow us to educate ourselves on the illness. I like many African Americans who suffer from lupus. My experience only about it is that it's very that it's very painful when when there is a flare. But hopefully talking about it will encourage folks to do more research on it. This is one of a few diseases, sickle cell included, that affects people of color, minorities as customer communicated and that we could do more research on ease the lives of many of our neighbors and fellow citizens here in this country as well as around the world. So thank you for the proclamation.

Yes. And I would just like to thank council member Grimsley for bringing this forth. I've known a number of people who suffer from lupus and other autoimmune diseases. And the problem is that you can't always see it. So people will say even doctors will say, oh, it's all in your head. And a lot of folks go and suffer for a very long time until there is kind of a flare up and then it can be diagnosed. So I think we need to all be aware about that and have compassion for people who are suffering. And hopefully, at some point, we can find some sort of cure. So thank you very much, Councilmember Bringley, for bringing this to our awareness in the city of Hercules. Okay. So we're going to move on now. Mister city manager, do we have any additions or deletions?

No additions or deletions to the agenda, madam mayor.

Okay. So now it's time for public communications. This time is reserved for members of the public to address issues not included in the agenda. In accordance with the Brown Act, council will refer to staff any matters brought before them at this time, and those matters may be placed on our future agenda item. Individuals willing to address the city council are asked to complete a form, including the name and address of the speaker and the general topic to be discussed.

Speakers must make their comments from the podium and are allowed three minutes to discuss their concerns. All public comments will be recorded and become part of the public agenda. A limit of thirty minutes will be devoted to taking public comment at this time. I do have one public speaker card, and this is Joseph Garcia. Please come up to the podium, and we'll make sure that the mic is on.

I've been living here for thirty years in Forest Park. So Village Parkway and Forest Run, it's an intersection. And there are cars that are parked there that do not ever move. I've called, and they've come and tagged them. And all the people do is take the tag off the car and don't ever move it.

There's there's about five examples. I have a neighbor that has five cars. He's got three on Village Parkway. They never move. One vehicle was brought here from San Francisco by somebody from Richmond that knows somebody in Forest Run, and they left it on Village Parkway for at least six months.

They must have tagged it five different times. Now there's a van that's parked on Village Parkway, not too far from Forest Run. I was with Dan Miller, the sergeant, and he actually tagged it. So I drive by there every day two or three times, and the tag is removed and the vehicle has not moved an inch. This was three weeks ago.

So you kinda gotta go over there and drive through there to see it, because it's just getting trashy, is the best word I could say for it. I can I because But I go through there two or three times a day, and I know the cars that do not move, and I bet you there's at least 10 or 15 of them? So my suggestion is maybe a street cleaning once or twice a month, signs where cars have to be moved or you will be towed. That's my suggestion. But like I said, you need to go over there and see it to get the impact of it that you see the cars that do not move.

Thank you.

Thank you for your public comment. Do we have any other cards for items not on the agenda?

I'll turn to my Zoom attendees. I see that Jose Flores has his hand raised. Please unmute yourself, Jose, and you can go ahead. You have three minutes.

There we go. Hi there. Jose Flores from Community Housing Works. Just wanna take the opportunity to just let my presence be known. I know we're on the agenda of some other developers, but wanted to make it known in case there's any questions that come up on it. I know it's information only, but wanted to say that we're happy to have a site out in Hercules. We're really excited with the prospect of supporting individuals with intellectual disabilities at this project, from construction to lease up to operations. And so looking forward to this session. Thank you.

All right. Thank you, Mr. Flores. Are there any other speakers for items not on the agenda?

Is there anyone else on Zoom that would like to make a public comment on items that are not on the agenda? Please use your raised hand icon. Seeing none, that will end public comment.

Okay, thank you. So moving on, we have no public hearing tonight. Our next item is the consent calendar. We have two items on consent. Would anyone on council care to pull an item?

Yes, Madam Mayor. No, do not have to pull the item but I wanted to make a motion if there is.

Okay, is there anyone who, okay. No one is going to pull an item. So you want to make a motion. Please go ahead. Unless

there is anything. I

don't think so. Okay, yes

madam mayor. May I make a motion to approve the consent calendar as presented?

Okay, motion by Bataray. Second. Seconded by Bailey. Any discussion? Can we have a roll call vote please?

Council Member Grimsley. Aye. Council Member Butterrae. Aye. Council Member Bailey.

Aye.

Vice Mayor Walker Griffin.

Aye.

And Mayor Kelly. Aye. Thank you.

Consent calendar passes five zero. So now we are on to our discussion and our action items. And the first item tonight is the general plan advisory committee at large appointments. And mister Rood, do you just wanna give a general overview of this?

Certainly, mayor. Thank you. Good evening. Tim Rood, community development director. When the council established the general plan advisory committee, it reserved five to seven seats for at large community representatives. And earlier this evening, interviewed the candidates who had applied and may appoint between five and seven members of its choosing to the committee, which will meet approximately once every two months over a roughly two year period to provide input and advice on the general plan update.

Okay. Thank you. And is there any public comment on this item?

I'll turn to my Zoom attendees. If anyone would like to make a public comment on this agenda item, please use your raised hand icon. And seeing none, that will end public comment.

Okay, so now Madam City Clerk, so I understand we are going to vote on this item. If you can lead us in the vote. And we can vote on five to seven candidates for the General Plan Advisory Committee.

Correct. Councilmember Grimsley, I'll start with you.

I'd like to list the

If you would like to name

your slate of candidates. Sure. Hector Garcia, Richard Mitchell, Darlene Almeida, Rashid Poudel, sorry, and Harjinderpal Panu.

Thank you. Council Member Butterrai?

Yes. I wanted to make clear here, Madam Mayor, are we making five or seven or

We can vote on you are allowed to vote on five, six or seven candidates.

Okay. Okay. Thank you. I would like to there is no alphabetical order but I will go with Richard Mitchell, Hector Garcia, Harvans Palpano, Richard Portal, David Davenport and while five, I think I will just go with seven, Darlene Almedia and Stephanie Bodas. All seven.

Thank you.

You. Councilmember Bailey.

I'm going to do this seven so I can do the five part, but I'll do the seven. So it's going to be and I'm just going to do in order in which they appear. There's no ranking to this. Hector Garcia, Stephanie, I think it's Bucquise, I think it's how it's pronounced, Richard Mitchell, Darlene Almeida,

Rachit Podell,

I think is how you pronounce his last name, David Davenport, and Harjinderpal Panu.

Thank you. Vice mayor Walker Griffin.

Yes. I'd to nominate Hector Garcia, Stephanie Bequist, Richard Mitchell, Darlene Almeida, Rashid Padal, and David Davenport.

And Mayor Kelly?

Yes, Hector Garcia, Stephanie Bukwis, Richard Mitchell, Darlene Almeida, Rashid Padal, David Davenport and Harjinderpal Padu.

Okay, thank you. We're going to add up the totals and we will announce the appointees.

Okay, and that will be later on. Or can you add them up now?

Yeah, we're just going to pause for second and we'll add them up because this is the item on the agenda that we want to announce them.

Okay, do we want to go ahead with the agenda or do we wanna wait five minutes? Mr. City Manager?

It might make sense to wait and announce the appointees here because it's during this agenda item. Okay,

so maybe we can just take a recess for five minutes or something.

May not be that long.

We will just wait here for a moment then. Thank you.

The situation we have, madam mayor, is that a majority of the council approved all seven of the members. So you can just appoint all seven if you want a seven member body. If you want to have a smaller body of less than seven, say five, then we can give you the top vote getters for those five positions. So it's a council decision whether you want to have five, six or seven members.

Okay, so let's bring it back to the council. We'll have a discussion on this. So Vice Mayor.

I mean, since we only have seven up to seven slots, we got seven people I think we should just keep it as is.

Okay. Council Member Bailey.

I think the seven, yes.

Seven, okay. Council Member Batarai.

I got the same. Let's keep all seven all in on board.

Okay. Council Member Grimsley. And I agree too. So let's have all seven appointed to the General Plan Advisory Committee. Okay, congratulation everyone. Thank you. Do we need to make a motion? Yes, do we need to make a motion?

Let's do a motion and formally appoint that. Okay, Vice Mayor?

Yes, Madam Mayor, I'd like to make a motion to adopt the seven nominated folks for the City of Hercules General Plan Advisory Committee.

Okay, is there a second?

Second.

So a motion by Walker Griffin, seconded by Butterrai. Any discussion? No, can we have a roll call vote please?

Council Member Grimsley? Aye. Council Member Butterrai? Aye. Council Member Bailey? Aye. Vice Mayor Walker Griffin.

Aye.

And Mayor Kelly.

Aye. Thank you. Thank you everyone and congratulations to all who are appointed. So now we're moving on to the next item and this is the housing asset fund proposals. Community Housing Works, aka Bayline, Satellite Affordable Housing Associates, Sycamore Crossing, and Eden Housing Victoria Green. And mister Rood, you're taking this item, are you?

Yes.

K. Good evening, mayor and council. Tim Rood, your community development director. We are here tonight to introduce the three proposals received from affordable housing developers in response to the city's notice of funding availability. As the successor agency for housing to the redevelopment agency, the city of Hercules administers a fund made up of loan payments related to homeowner and developer loans that were issued by the former redevelopment agency.

This fund had a cash balance of about $6,200,000 as of last June 30. These funds have various restrictions in state law on how they can be spent. They may only be spent on the development of affordable housing. At least 30% must be spent assisting extremely low income rental households earning 30% or less of the area median income, and no more than 20% may be spent on households earning between 6080% of the area median income. These funds may not be used to assist housing for moderate and above moderate income households making over 80% of the area median.

Housing funds may be used to assist senior units only if no more than 50% of the units assisted by any city funding source are restricted for seniors. And all affordable housing units developed with this funding source must be income restricted for at least fifty five years and subject to the city's affordable housing policy. The notice of funding ability or NOFA was issued last October. Three proposals were received. And in a moment, I'm going to ask Mark Sawicki from RSG, our consultant, to present the findings related to the evaluation of these three proposals.

Before we do that, I wanted to put these proposals in context of the city's regional housing needs allocation for the eight year period of 2023 to 2031. The city's regional housing needs allocation known as the RINA requires it to accommodate and facilitate the development of an additional five thirty nine units of low and very low income housing, as well as an additional 433 units of moderate and above moderate income housing, all by 2021. In terms of the city's progress to date, in the first three years of the eight year cycle, only 22 units of housing have been produced in Hercules, and only four of those units were affordable. So fulfilling the RHNA goal for overall housing development would require the development of about a 175 new units each year for the next six years. And a 175 units is about the size of the approved waterfront KLMPO project.

The three affordable projects whose proposals are before you tonight would combined add about 240 new affordable units, which would still leave a gap of about 300 more affordable units needed. So to fulfill the city's RHNA goals, we would need all three of these projects plus three or four additional affordable housing developments of similar scale to be built within the next six years. Several housing element policies and programs have informed the funding solicitation and evaluation of the proposals. Housing element policy 1.5 encourages the development of new special needs housing for seniors, single parents, families, large families, the disabled, including those with developmental disabilities, and extremely low income housing or households. Policy 1.6 calls for the city to use density bonuses and other incentives to facilitate the development of new housing for extremely low, very low, and low income households in conformity with state law.

Policy h 4.5 encourages housing construction or alteration to meet the needs of residents with special needs, such as the elderly and disabled. And program h four dash one, housing for persons with special needs, calls for the city to provide opportunities and encourage the development of housing for residents with special needs by supporting affordable housing development for special needs group groups with the goal of creating 35 units of special needs housing within the planning period. The city is also required to develop a program to prioritize city funding proposals to affordable housing developments that are committed to supporting special needs residents, including the elderly and persons with disabilities, including developmental disabilities. Staff and RSG evaluated each proposal based on the criteria described in the NOFA. These included developer qualifications and experience, financial capacity, alignment with community and housing element goals, project readiness and economic viability, and project eligibility and affordability under the funding criteria.

It should be noted that the NOFA submittal for the Bayline Apartments from Community Housing Works is for a reduced height four story project, not the five story project that was the subject of a community meeting last summer. The four story alternative was submitted under a state streamlining law, SB 35. The city determined that the project did not meet the eligibility criteria for the SB 35 process, but the project remains eligible to resubmit under the conventional development review process, which may include various state streamlining measures. The Sycamore Crossing proposal from Satellite Affordable Housing Associates has not yet been the subject of a planning application. They are simply applying for funding by showing a conceptual design for a 100 unit five story multifamily affordable housing development on the portion of the Sycamore Crossing site previously entitled as a Hampton Inn hotel.

So this would be a 100 units with a 100 surface parking spaces. Again, no application for development review has been submitted. And the approval pathway for this project might include discretionary approvals, including but not limited to amendment of the Sycamore Crossing plan development plan and a design review permit. The final proposal from Eden Housing is for the existing Victoria Green affordable housing development within Victoria By The Bay. Eden Housing submitted a proposal for 66 new senior units and common amenities in new three story buildings on the portion of the site that is currently project open space and a clubhouse, along with the rehabilitation of a 132 existing units.

All existing parking would be preserved, but no additional parking would be added. This project has also not submitted a development review application. Its approval pathway could include discretionary approvals, including but not limited to amendment of the new Pacific Properties specific plan and a design review permit. Finally, city staff and RSG recommend funding one project versus splitting the $5,000,000 award between multiple projects. This ensures the best opportunity for the funded project to be more competitive for other key funding sources and thus have a higher chance of successful and timely development.

Tonight's presentation is for information only. Staff and RSG plan to return to the City Council at your next meeting on May 26 with a recommendation and a request for direction to enter into exclusive negotiation with one of the three developers for the award of the funding. So now I'd like to invite Mark Zwicki, who is a principal at RSG and led the detailed evaluation of the three NOFA submittals received. Welcome, Mark.

Thank you, Tim. Good evening, Madam Mayor and council members. Mark Zwicky with RSG. Not a principal, but a director. Yes, as as Tim expressed, we we are helping the city of Hercules as as well as many other cities in California, local government agencies with affordable housing, real estate economics, economic development.

We did look at the three proposals. We looked at them against the criteria that were in the proposal in the RFP. A couple of other things that we looked at beyond the evaluation criteria that was in the NOFA, we looked at reasonable cost assumptions. We basically dug into their numbers a little bit. We do this on behalf of other cities as well that have funds available for developers or have land and are looking for developers for that.

What we look at is, are these developers credible? Do they have the background in affordable housing? Have they done it? All of these developers are accomplished, very well regarded. So you look a little deeper into the cost assumptions that they're using for development. How do they compare on that front? How well are they complying with funding requirements and California rent limits? They're all going after tax credits, federal and state tax credits. They have to meet certain guidelines. So those are the things we look at.

Further, we then look at who is providing the most affordable housing, and at the deepest affordability level. We see those as very top criteria. How much is the city going to get for the dollars that it's investing in these projects? How many units do you get? How many people will you serve?

And are you serving the people at the greatest need? So we look at the number of affordable units, the level of affordability, and that's determined by the percentage of the area median income. And in particular, with these funds, you are trying to get as many units that are affordable to households that are at 35% or less of AMI. So that's an important criteria. We look at how many residents that will be served.

We look at the number of bedrooms, and multiply that studio by one person, a one bedroom, we assume two people, etcetera. So we look at how many people will be served. So again, you're also trying to get the not just the number of units, but how big are those units. We looked at the RENA allocation and your ability to meet your allocation. We looked at the housing element goals.

And also looking at the income and age limit restrictions for these particular funds. They need to be targeted because of the source of the funding. And then lastly, we look at their cash flow projections. How well will this project survive? These are tax credit projects.

They need to have a certain duration of time in order to meet the limits of tax credit program. Typically what happens is after the tax credits are earned by the investors, you get fifteen, twenty years out in a building life, and a developer will often re syndicate the project, which means they'll go out and get new investors and put new money into the project. That's an opportunity for the city then to extend its loan, the money that it's put into the project, and then further extend the affordability restrictions out into the future. So we want to see do they have a good runway? Are they able to cover their expenses?

And will there be any residual cash flow? If there's a high amount of residual cash flow, the city might actually be receiving money back. That's typically not expected. It's more so that you're looking to have those funds be reinvested to keep the project affordable further into the future. We also looked at development timeline.

Who has site control? Do they have other funding commitments already in hand? What is the status of their application? Those are also factors to review. As I mentioned, all of these projects and all of the developers are worthy of support. The sad thing is you don't have more money that you can give money to all of them to do their project. All the developers have considerable experience and reputations. All of the projects provide additional needed housing at varying levels of affordability. All of the projects are projected to be completed at a reasonable development cost. There's slight variations among them.

It has more to do with whether they're building smaller units or larger units, and how many units, economies of scale, things like that, but they're all within the expected cost of development, particularly in the

Bay

Area. They're all going after the same contractors to build these projects, so other than design elements, they're typically within the same range. As Tim said, we believe it's better to fund one project with the $5,000,000 rather than split it up. Dollars are the most important thing to an affordable housing developer to move a project forward. They're usually having to assemble a number of different funding sources, and having a big stake from the local government puts them in line to get tax credits, so you're helping them achieve their goals by giving them a big chunk of money rather than a small chunk of money.

They will take more time to find the other sources. We believe that's an important element in your decision. Going through the individual proposals, I don't know, Tim, if you're able to project the

We're working on it. Okay.

I know it's in your packet. Not only is it in the memo, but also our PowerPoint is in your staff report. Comparing them side by side, some of the distinctions between these that we would highlight. And I'll refer to CHW, Saha and Eden, the three developers. The CHW proposal, it has 83 units affordable.

But what's distinct about that one is they've set aside 21 of those for persons with intellectual and development disabilities, so they're targeting a special need different from the others. All of the CHW and SAHA would support individuals and families. So you have studio units, you have one bedrooms, you have two bedrooms and three bedrooms, so you can have a mix of family types. The Eden proposal is unique in that it is both a new project and a rehab project all in one. That's a unique opportunity they have because they already have the site, they have the space, they are adding to an existing community.

But the new project that they're building is for seniors. The rest of the project is individuals and families. That's one of the things that they touted about their proposal is that it creates a sort of mixed generation, intergenerational opportunity there. So, that's unique. We focused on the new project.

That's where the funding would be going, but we also looked at it as a larger project as well, and how that enhances their proposal. In terms of the units that they're providing, Saha has the most number of units at 100, whereas Eden has the smallest number of new units at 66. CHW is in between at 83. CHW has the greatest number of deeply affordable units, in particular 29 that are at the 30% AMI level. That's really where your money should be targeted because of the funding source by regulation.

So that puts them ahead in that sense. We like to calculate affordability in terms of a weighted average. You have a different amount of units at different affordability levels. Again, CHW comes in lowest at 49% AMI, so if you look at all their units and the affordability levels, whereas Saha would be at 54%. They're all very close, but it's one way to differentiate between three good proposals.

The CHW proposal also has more larger units, which gets them to a higher weighted average bedroom size of 1.74, so closer to two bedrooms on average. The Eden New project is mostly studios and one bedrooms, so their weighted average bedroom size is only 0.71. We then use that bedroom size to also calculate how many new residents would we expect to be in these projects. Again, CHW comes out ahead with two sixty nine, whereas the new Eaton Building would only have 92. So for the same $5,000,000, in a sense, you're getting a lot more bang for the buck.

In terms of building size, again, the new Eden Building would be much smaller. The Saha Building would be much bigger, almost double the size of the Eden Building, and the CHW building is almost about the same size in terms of square feet. All of the CHW and SAHA proposals assume prevailing wage, whereas the Eden proposal did not. That could actually increase their costs if they are required to build with prevailing wage. Oftentimes many affordable funding sources will require that.

They all have site control in some form. Cash flow. CHW had the best projection cash flow, meaning that their revenues were greater than their cost over a longer period. They can maintain their debt service coverage over the period. They could actually be making repayments on your soft loan by year eleven.

Not that they may necessarily do so, but they could based on the projections. On the other end of the spectrum, Eden had negative cash flow after twenty four years. They would probably re syndicate the project before then, but it's sort of telling that they could get into trouble if costs went up greater than projected or revenues were not as well. They would also not be able to meet debt service coverage after year twelve. So that's also a red flag in terms of being able to meet their first mortgage.

Some other elements with regards to meeting the requirements of the housing asset fund. CHW again comes out ahead with 29 units at 30% AMI. We took the $5,000,000 dividing that by the number of 30% AMI units to figure out, well, what is the housing asset fund subsidy per 30% AMI unit? And again, the CHW proposal is much better than the others at $172,000 per unit that you would be investing. On the other end of the spectrum, for Eaton, you would be investing 7 and $14,000 per unit.

Your $5,000,000 divided by the 730% AMI units. That is a flag as well because you really should only be subsidizing the 30% AMI units. The other thing with the Eden, it's a senior project. This project alone would exceed the maximum that you could do with the housing funds available. That's not a deal breaker, but the city would have to find another project in order to make up the difference.

Without other dollars in your housing asset fund, that's hard to do. You would have to wait until you accumulate more funds, and then that next project definitely needs to be a non senior project, and definitely needs to have more 30% AMI units if you were to go in that direction. And then lastly, looking at the housing element and general plan policy goals. There was not much differentiation among the projects. The Eden Project is a senior project, so it meets that goal, but unfortunately that's not a goal of the funding source.

It's housing element goal, but not a funding source goal. Both the Eaton and CHW have units for special needs, the special need being elderly senior for Eaton, households with development disabilities for CHW. So that's a positive again for them. And the others also meet several of housing goals. So again, it's your decision which one to provide.

We're here to serve you, to give the information, happy to answer any questions about what we saw. Again, they're all great proposals. Wish you had more money that you could get them all to happen. Thank you.

Thank you Mr. Sawicki. That was very detailed. We do have the PowerPoint presentation. So stick around for a moment. I wanna see if the council has any questions. So any questions? Yes, I'm gonna start with council member Bailey. Thank

you for the presentation both from staff and then from our consultant. There was a couple of things that I think I heard you mention and I'm gonna just repeat them because it was about the money. So this is actually for our team. The $5,000,000 that we have in this we have $6,000,000 in this sort of fund. We're looking to spend or to give loan approximately 5,000,000. We have roads and parks and other things that need repair. Is there a restriction that prevents us from doing those things with this presumably some taxpayer paid the money?

Yes. These funds are reserved for the development of affordable housing and associated administrative cost.

So the law dictates this. Okay. That that was my first question. Second question is, we mentioned that it was a soft loan and that the money it sounds like comes from perhaps some residents have loans and they're paying them back over time. And then that money is in this pot and it's being done for this project. And as more money comes in, we'll do additional projects. Did I hear that correctly?

Not exactly. Okay. Council member, the there would not be a fixed payment schedule for this this disbursement of funding. However, the deal would likely be structured in such a way that the city might recover some funding in the event that, as mister Sawicki said, if the project was essentially refinanced, you know, ten or fifteen or twenty years into the period, they might resyndicate the affordable housing, attract new investors, and that could potentially or if the project changed hands, for example, the city might have a stake in that that could result in some funds coming back. And Mark, perhaps you'd care to elaborate.

Correct. And if you have a fifty five year affordability restriction with the funds that you've given, they could decide it rarely ever happens, but if they ever wanted to be a market rate project after tenants move out, they could do that, but they'd have to give you that money back. So that would be an opportunity for you to then go do another project. But again, it's more typical that once housing is built, you want to keep the standards up and you want to keep the affordability restrictions in place, you would just resyndicate redo the loan and go forward. Which brings me

to my last two questions if I can. So because we have the council looked at this a year or so ago and we have some residents that through the former redevelopment agency got some loans. They had to pay those loans back. So I'm trying to figure out why and this maybe is a legal it may be the loss s o is what I mean by legal question. But why do those individual homeowners, people have to pay their loan back? But a corporation doesn't because the people are gonna die. So then after fifty five years, they won't be here much longer than that if the average person in California buys their first home at 45. Whereas corporations tend to not die. So it's like we're it seems like we're giving money. So for residents and the law is the law.

I'm not sure to debate what the law says we must do. I'm just trying to understand why that is. So why does Jane have to pay her affordable home loan back, but Janet Corporation, it sounds like, gets to have it? And maybe I'm misunderstanding that, but that's a question that I get from the public. So if anyone can kinda just I know it's illegal. Not that we did that here in the city, but I'd love to hear an answer.

So those loans that are being serviced now were loans made by the former redevelopment agency under programs that no longer exist. I believe there were five different loan programs. Some homeowners had three or four of those loans. And they all had their own criteria, and they all required repayment. These funds are intended to support the development of affordable housing.

So at your next meeting, we're hoping that the council will provide direction for the city to enter into an exclusive negotiating agreement with one of those developers for the disbursement of those funds. The deal will be structured with the help of outside council that we've engaged to clarify under what circumstances the city might recover those funds. But in general, the the goal of the funds is to be used to create affordable housing as opposed to subsidize an individual's purchase affordable unit.

Okay. Thank you. I just had the question, so I'm not sure we get that out there. And the final question along that same stream is just, is that correct? So I know we have in our affordable housing program, it's fifty five years I think. So if the building is still there at fifty six years, they could all convert to that's a question. Could they all convert to market rate units at that point?

In theory, however, affordable housing developers typically seek to refinance the project and extend the affordability period further. That's what Eden does with their properties for example. And I think that's typically the case for many affordable housing developers is there. I haven't heard of one that just sold a building and converted it to market rate.

Would it I'm trying to repeat what you just said. So that so basically to not to this may not be the purpose, but to avoid the loan payment back, they continue to keep it affordable in perpetuity, which is a good thing for the community, think, if that's the case. But is that a fair way of saying that or am I misquoting you?

I I would say it's because it's their mission is to create and operate affordable

housing

as opposed to avoid returning funds to the city.

Thank you very much. Thank you, Madam Mayor.

Vice Mayor?

Yes, thank you Madam Mayor. I'm going to talk a lot so I apologize in advance. When I think of California's housing situation, I think of it kind of like in an arc if you Typically when we think of housing traditionally, you got a college, trade school, military, you get that

first

apartment. Ultimately to save up, to get that first flat single family home, then you sell that house and you get your two story home that you raise your family in, you sell it off right back and you end up back at that one story flat home at your retirement home. I think in that arc, most Californians tend to get caught right either at the base trying to get that apartment and afford to save up or somewhere in that point. What we see oftentimes is folks like people like my mom and her peers. They bought their their two story home, raised their family with kids such as myself.

And then to sell it honestly would be a loss in the profit that they would make. And so they're entering these predicaments of what do I do. And for a lot, having a two, three story home that you raised your family in, maybe a lot. So I think this could be a good opportunity for those who want to retire and want to have a little bit less room. Mean, I know I hear this a lot when I hear my mom and her friends talk about how they want to downsize. I think that's great. Couple questions for Director Roode. You kind of touched on this a little bit, but how do we get these numbers? I see residents on Hercules these RHNA numbers. I see residents on the on the residents of Hercules in different forms talk about, we need more restaurants. Why is the city focused on housing so much?

The arena numbers are distributed to municipalities by the Association of Bay Area Governments and other councils of governments and metropolitan planning agencies across the state. They begin with a statewide forecast of the need for additional housing based on long term trends including job growth. In this current cycle, the arena numbers were heavily adjusted up to account for overcrowding and displacement of commuters, for example, outside of the nine county Bay Area. So they they base their forecasts on the number of jobs that they anticipate being created, project that into the need for housing associated with those jobs and with overall background population growth, and then slice and dice it and and serve it up to municipalities with a mandate to take these numbers and formulate a housing plan that can allow them to be achieved.

Got it. Second question. So it just sounds like this is not just Hercules. This is just not some idea that we

just randomly had is what it sounds like. Every city and county in the state has a RENA allocation that they're required to fulfill.

Roger. What happens if we say no to the state of California that we don't want to build housing?

There are various streamlining measures that come into play under state law for communities that have failed to achieve their targets including let's see, SB three thirty has streamlining measures. It gets complicated, but essentially projects that meet a certain affordability level depending on how far behind your community is can then get approved under a streamlined process. Also, the state attorney general recently announced that they were taking legal action against, I believe, 15 cities around the state that still do not have certified housing elements. So there are extreme penalties of up to, I believe, $50,000 a month that can be imposed on municipalities that do not meet their fair housing obligations.

Got it. So we will get in trouble if we don't. And I do not think Hercules would like to dub itself as a mountain lion sanctuary anytime soon. Also, I do like the the idea of having affordable housing for those, with certain cognitive limitations. During undergrad, I worked with children with autism.

And one of the things I thought about a lot was what happens when these kids become adults and their parents get older, either they pass away or they're just no longer able to take care of them. Many will live thriving lives, but ultimately many of them will fall to jobs that don't pay a living wage. And so I think it would be great to give people the same opportunities just all of us had in terms of getting housing. Now on to the consultant. Like the presentation, but I was concerned about a certain part.

It was the part where you mentioned that by having prevailing wages, it can make the costs go up. Personally, I think that we need to have prevailing wages on anything. I believe in sort of a cycle. You should be able to grow up in the city that you live in. And if you have a job nearby, you should be able to work that job and stay in the city.

I think prevailing wages would be a great thing for it because I think it also would kind of contradict having affordable housing that some people wouldn't be able to afford. So, to the consultant, my recommendation would to be to work with our building trades in our area as well as our carpenters because I would like to see the skilled craftsman in our area, especially folks like my friends who have grown up in this area, decide to join the workforce in this area, be able to build and ultimately live in the housing that they grew up in. So when it comes time, I believe that will the next meeting that will probably be a little bit more appropriate. I would like for RSG to negotiate to get into an LOI with the building trades as well as the carpenters. And that concludes my comments, madam mayor.

Thank you. Council member Grimsley.

Thank you, mayor. I just first thank you for the presentation. I greatly appreciate that. I just kind of want to circle back so we don't lose sight of why we're here right now. This is for discussion only. We're not making any decisions tonight on this item. We're receiving a presentation and getting some information and context to this. The impetus for, this discussion is our attempt to be in compliance with SB 35. Is that

correct or?

No. Really, the impetus for the discussion was to introduce the three statements of qualifications from the affordable housing developers who are pursuing the the $5,000,000.

Okay.

The SB 35 discussion was just context about the Bayline development.

Okay. Very good. Just wanted to make sure we are clear on why we're here and we're having this discussion tonight. And, I I am, you know, not in disagreement with anything that my fellow council members have indicated, but I just wanted there to be understanding about what this discussion is for this particular council meeting. Thank you.

Council Member Bataray.

Thank you, Madam Mayor. Thank you, Mark, for the presentation and then thank you, Director Rood. Well, a couple of questions. Do we have a I know that the Rana is on the mandate for the cities like us. So I think that's kind of not very helpful. But I wanted to connect the dots here. Since we have a $5,000,000 what if or maybe $6,000,000 let's say, how we fulfill that Rana commitment or our commitment providing certain funds to residents to have their ADUs or whatnot. Does that add up? Does it qualify?

No. These funds are for the development of new affordable housing meeting the listed criteria. So ADU development by an individual homeowner would not be an eligible use of the funds.

Okay. Thank you for the clarification. So that means that we have to have a new one. So back to your, again, that eleven years of repayment program, think I stick in the mind. What if in eleven year or maybe five years, they wanted to re syndicate and then wanted to claw back? Is there any claw back rules or claw back, you know, the clause for the cities that we wanted to continue to have that affordability clause in place?

Well, policy would require that any development that includes affordable housing be deed restricted for fifty five years. So even if a project were to change hands or be refinanced, that affordability restriction would remain in place. So Mark may have more to add about the seven year or eleven year resyndication calculation and how that was arrived at.

Yes, we were looking at they project cash flow. So, these are very tight in terms of operations. Amount of rent that they can collect is regulated. It has to be affordable to households at whatever percentage they agree to in their affordable housing agreement. Rents will only rise as median income rises, and it's again a percentage of that.

So you have a cap on income. Costs, we know, can go very high. Under tax credit regulations, assume a certain percentage of increase in rents and they assume a certain inflation increase in operating expenses. Because the rents are assumed to grow slower than costs, at some point it's going to cross and they're going to go negative. They're going to have negative income.

And you just want that to be further out than closer. As that gets closer, if they do have a cash flow problem, they would probably re syndicate the project. But they won't do that until the tax credit period burns off. So those original investors are in that project until they recoup their tax benefits. So I think the developers would probably be better to speak to that, about what they're projecting in terms of cash flow.

We're looking at their numbers. Their numbers are reasonable. It's just a matter of how many units do you have at 30% AMI versus 60% AMI is going to make a difference in your cash flow and whatever else you're assuming in terms of operating expenses?

So can you please confirm, I think it sounds like 30%, 50%, 60%, 80% AMIs that structure remains in place until the fifty five years and we still have that clause that they cannot go back in the market rate. Is that correct?

Correct.

Okay. Thank you. One more. What is your rationale giving $5,000,000 to just one developer versus three developers or four developers? Can you just shed some light on that?

And again, the developers would probably be best answer this. What we hear from developers, they would rather have a big chunk of money than small amounts of money. Again, they're trying to create a stack of funding sources, and they're big numbers. So splitting that money up with all three, neither project would probably move forward in the next year or so, whereas if you gave the 5,000,000 to one project, that project is very likely to get its tax credits in the next round and move forward. The other two will wait another year, wait until you have more funds, wait until they can find other funding sources.

Thanks for the clarification. That makes sense.

Thank you, Mr. Sawicki for your detailed presentation. It gives us a lot to think about. So this money came from the former Hercules redevelopment agency. Now we've got this $5,000,000 here and this can help a developer, one or more developers get their project going. And it seems that all of the developers then will be managing their projects, is that correct? It will be an in house kind of thing? They're not going to just sell it off to someone They

may have a subsidiary but it's all under one roof.

Would it be possible in the future for one of the developers to sell these buildings off to another affordable developer? Does that ever happen or is it unlikely?

I think it rarely happens.

Okay.

They're in it for the long haul. As Tim said that this is their mission. So they're always increasing their portfolio. They aren't usually selling off their portfolio.

Okay. And then at these different income levels, what if I'm at 50% of AMI and I move into one of these units and then maybe I get a little better job and then I'm at 80% AMI. Do I get kicked out of my unit? What generally happens?

Well, you can't get kicked out. My understanding is that if you no longer qualify for that unit, you would have to move to a unit they wouldn't move you, they would just redesignate your unit. If you went from 30% to the 50% bracket, they'd redesignate your unit and the next available unit they would give to the 30% household.

Okay, and then if I exceed that and let's say I'm above the average median income then I would have to move out and go rent a market rate unit

You would know that

would qualify, yes.

Okay. And then all of these units will be for rent, right? These are all apartments for rent. Correct. They're not to own. Correct. Okay. Thank you very much. Any other yes. Council Member Bailey.

Do if we do public comment, may have a question after that if

Okay. Yeah. Was gonna do that. Any questions before? Vice mayor?

Yes. I wanna I wanna touch on that. The last point that you made about your about your income going up. So say you you get that that bump right and now you're making $5 more. And how how fast is that notification that your lease is going to be terminated or what happens at that point when you start making more than that AMI for that apartment? Like you're

It's an annual certification. So I think you would know up to that point and it's probably based on your prior year income tax return. So there's a good buffer there that it wouldn't be an immediate action.

And then what happens to that apartment afterwards? Does the price reset or does it stay at that price that someone was previously paying?

It's based on the income of the person that's moving in. So if it's a 30% AMI unit, that rent is based on a schedule that's 30% of the area median income.

I just wanted like

The household is expected to pay 30% of their income. So 30% of 30% of the area median income would be the rent. Got it.

Got it. Apologize for that. Just wanted to make sure like someone pays that rent at that basement they got, they got that job, bump or whatever, got that bonus. And then suddenly the price goes their income goes up. And then next thing you know that apartment goes up. But that's good to know. Thank you. That was my last question, madam mayor.

Okay. Thank you, mister Swickey. Can sit down. We've got three people here who want to speak on this item. And so we're now going to public comment on this item. The first speaker is Todd Chambers.

Thank you. Mayor Kelly, Vice Mayor Walker Griffin, members of the council, my name is Todd Chambers. I work with the Lewis Group of Companies. And it's nice to be back before you this evening. I'm here to speak in support of the Satellite affordable housing project.

As you're aware, Lewis is the adjacent owner of the Sycamore Crossing project. And we previously sold the parcel that's in question for Saha to Hercules Hospitality, Bill Herrick, for development of a hotel. In 2025, Hercules Hospitality informed us that they really were no longer able to move forward with the hotel due to increased financing costs, construction costs, just a lack of demand in the region for hotels. And so we approached the city last year, Tim Rude and Dante Hall at the time, to ask them about opportunities for other uses on the property. They directed us to consider the affordable housing component of to look into the affordable housing for the site and informed us that the notice of funding availability process was forthcoming.

So we have been working with SAHA on another project in the city of Newark to address an affordable housing issue there. And so we brought them in. We were impressed with their experience and their reputation. We think they're a strong candidate to bring quality affordable housing project to the city. And so far, they've been great to work with.

And in fact, since they've submitted their proposal, we've actually hired their architect to help us with our market rate housing project adjacent to them to redesign that so that we can bring a project forward that's unified in design for that portion of the Sycamore Crossing Crossing project. We believe the outcome would be the result would be for both a market rate and an affordable project on the same property in the same location. It's walkable to the Safeway. It has transit nearby. There's other retail opportunities that affordable housing folks could walk to in services.

And so we support Saha's proposal and we request the city council approve this candidate for receipt of the housing asset funding. Really appreciate your time tonight and your consideration and look forward to your decision in the future. Thank you for taking the time to listen to me.

Thank you. Our next speaker is Jonathan Astman.

Good evening. My name is Jonathan Asterman. I'm director of development at Satellite Affordable Housing Associates or SAHA, a Berkeley based affordable housing developer, owner, manager. Founded in the late sixties, Saha serves over 4,000 residents in over 75 communities. Our real estate development team of which I am a part is working on about 15 new communities that when complete will represent an additional 1,200 homes and nearly a half billion dollars in assets.

Everything we do is affordable. We operate primarily in the East Bay, including, for example, Valor Village on Sao Paulo Avenue in Panola, which is 33 homes for veterans, including homeless vets completed in 2024. I'm happy to give you a tour. My contact info is in the NOFO response. At Sycamore Crossing, we propose to develop a family community with a 100 homes and a 175 bedrooms. Sycamore Crossing affordable will be staffed with a full time property manager, a full time maintenance technician, and a full time resident services coordinator. In my opinion, Saha's greatest department is our resident services team. They go far beyond the minimum level of services required by our state funders. They offer two main types of supportive services. The first is case coordination to help residents successfully remain stably housed, is our goal.

They also coordinate enrichment activities tailored to resident interest to foster social interactions and connections. For example, they've rolled out a popular community gardening program at most of our communities, and they provide Thanksgiving dinners at all of our communities and much more. Our resident services team is what enables us to serve various special needs populations. To give you a couple examples, we have seven communities with some or all homes set aside for people with intellectual and developmental disabilities, and we serve deaf and hard of hearing in a specially designed community in Fremont. Nearly all our newly built communities, nine out of the last 10, for example, include homes set aside for special needs populations.

So needless to say, we'd be happy to set aside homes at Sycamore Crossing for a special needs population that we would identify with community and stakeholder input. I'm very excited about our proposed development. What an incredible opportunity. A blank 1.9 acre slate in walking distance to multiple coffee shops, multiple restaurants, a nice safe way with a pharmacy directly across from Aventine apartments at a similar scale building. Not surprisingly, Sycamore Crossing is identified as a housing opportunity site in the 2023 housing element. Thank you for your consideration. I'm happy to answer any questions.

Thank you. Our next speaker is Chris Palomo.

Evening mayor, council members, first I'd to thank you for allowing me to speak tonight. My name is Chris Palomo. I'm a senior organizer with the North Coast States Carpenter's Union at a Local 152 representing all the Contra Costa County. I first want to start by saying that the North Coast States Carpenter's Union is probably the most pro housing union out there. We supported and got bills passed like AB twenty eleven, three thirty, I mean bills like SB three thirty five, AB 130, anything to promote housing, but also to help the workforce that is going to be building those housings.

So, housing, you can't have affordable housing if you're not going to have for one prevailing wages. That needs to be a baseline. Because without prevailing wages, the workers that are building those projects can't afford to live there. It just ends up just a never ending cycle, and we end up right back where we started. Also, if affordable housing developers aren't forced to do the right thing, they will not do it on their own.

We have a lot of cases like that where even on prevailing wage projects, they choose contractors who their business model is tax fraud, misclassification of workers, and it happens more and more again, especially on housing projects. Even when, again, there's prevailing wage requirements, they still choose contractors that try to bypass that. Even we had a project, there was even a PLA in the city of Pittsburgh. We weren't assigned to that PLA, but there's a PLA and prevailing wage, that contractor by the name of Huff Construction still did not pay those wages. So, again, if you don't attach labor standards, they're not going to do the right thing on their own.

Also, Saha is another developer we've been meeting with, but they're still on LOIs, they haven't signed them. They choose to use Huff a lot. The project that he mentioned in Pinal, that project was Huff Construction again. Again, that's the contractor's business model. Actually, all three developers have had a history of choosing contractors that that's our business models. And they've also not committed to use a responsible GC to make sure that the workers are taken care of on these projects. So, I urge you as the council to the leaders of this city to make sure that we're attaching strong labor standards, not just prevailing wage. Prevailing wage is great, that's just a baseline. There needs to be standards like AB twenty eleven, where the workers are getting healthcare. There's also the private right of action.

There's compliance. They're going to say that they have compliance and I'm sure they do. That compliance is to protect them, it's not to protect those workers. Us, we have over 40 organizers on any given day walking all these projects, talking to these workers. These workers tell us what's going on on those job site, and most of them right now with ICE that's going on, they are terrified to talk. For instance, to give you just an example, they're making $20 an hour normal minimum wage. They come to this project as prevailing wage. They'll probably be getting a laborer's prevailing wage, which that's a way big difference from a laborer to a carpenter. They're not going to say anything because it's more than they're ever making and they're happy and they're also terrified to talk, not knowing that they're actually getting screwed over. If they do know, again, they're terrified to talk and they're not going to come forward. So, again, thank you for your time.

Thank you. Madam City Clerk, do we have anyone else here who would like to speak on this item? And and you'll fill out a card, but you can you can come and speak first.

Also Tanya Little, longtime resident of Hercules. And I know several years ago with regards to procurements and contracting, I spoke about making sure we have small businesses in California goes to the comment the person was talking about with the prevailing wages. We're hiring people locally. So it's important in our contracting practices that we actually have language in there and that there's teeth in there to hold the contractors accountable to make sure that we support our people that live in the area. So, I know developers sometimes bring companies outside of California and they bring their workforce with them.

It's important that we make sure we take care of Californians first. It's important that we make sure that they're able to live in the places in our community that we have available for them and that we make sure we have the teeth and that we have someone monitoring the workforce of the contractor to develop to make sure we're carrying those things out. So I'm 100% for that. As you know, I was a business development for the state of California. And I already know with big contracts at the state level that this happens and they find loopholes. They'll get around it if we allow them to do so. Thank you.

Thank you. Is there anyone else in here who wants to make public comment? And anyone online, Madam City Clerk?

Yes. I'll turn to our Zoom attendees. Speaker with the last name of Song, please go ahead. You have three minutes.

Hi. Good evening. My name is Weijia Song. I'm with Eden Housing, one of California's oldest and most experienced nonprofit affordable housing developers. I apologize that I cannot be there in person tonight.

It is the one week where, unfortunately, we were taking vacation, but, of course, I wanted to make sure that we were here to participate in the meeting. So Eden Housing was founded in 1968, and we have over 12,930 affordable units that have been developed and rehabilitated statewide. We serve fam lower income families, seniors, and persons with disabilities, and we've proudly served over 24,000 of of these households. We're a mission driven organization that's not only focused on building affordable, but quality affordable housing, that's long lasting. Eden Housing built the original Victoria Green project in twenty two thousand four, and we've been operating that property ever since.

Our the proposal that was presented today is not merely the addition of the 66 new units, but we are hoping that it would be evaluated as the total a 198 unit put before you that only that includes both the future residents as well as the 132 existing households that are currently living at Victoria Green. We hope to take an opportunity to work with staff and RSG to evaluate some of the conclusions that were arrived to in the report today. We want to note that in 2025, the state passed a b seven two six, which allows local governments to include not only new construction units, but also deed restricted affordable housing units that are at least fifteen years old that have been significantly rehabbed in their annual progress reports for RENA. Our proposal is is hoping that not only the 66 units proposed new construction units would qualify for your RENA count, but also the 132 existing units as well. In addition, we hope to be able to work with staff to address some of the items that were brought before you regarding affordability as well as cash flow.

We included notes in our proposal that stated our interpretation of HSC three four one seven six point one, and hope to work through those comments with staff. Finally, I just want to end by saying our proposal for Victoria Green is 30 is a three story building located right in the center in the heart of the Victoria Green existing property. We hope that in providing new senior units, we can prove create an intergenerational community that serves families as they as they grow and as they age in place. Eden Housing is proud to have served the city of Hercules at Victoria Green since 2004, and we hope to continue that legacy in future. So thank you for taking the time tonight.

Thank you.

I will turn to my Zoom attendees one more time. If you'd like to make a comment on this agenda item, please use your raised hand icon. And seeing none, that will end public comment.

Okay, thank you. So I'd like to bring it back here to council, I think Councilmember Bailey and then the Vice Mayor.

Thank you, Madam Mayor. I wanted to wait to see if there's any more members of the public. I've also read some of these comments online about just about affordable housing and how it impacts us. I think the key thing that I've heard from staff and I think as we continue this discussion is that we are required to do this. If we don't, there are penalties. We lose control of what we do develop if don't meet our mandates. Right?

So we have a couple of

parties coming up that sort of slipped in because we weren't where we needed to be with some of our mandates. So I think it's critically important that we move forward with a project. Right? It's the law and we're bound by it. I do take the comments that we heard from Chris and I'm sorry, I didn't write on the last name from the carpenter's union, but I think it's important that a staff begins a negotiation process that we figure out a way to make sure that folks have prevailing wages. Often union employees can't move into a unit like this because unions ensure that their employees make living wages and they can afford regular housing. But the point is if we can build them with that, it's feeding that circle. I think that was mentioned up here as well, but that's that's critically important. My day job I represent labor. I'm not advertising for that.

I'm just saying that I know that it works. I help 380 something people maintain living wages which means they can afford to live in the Bay Area. Something that's critically important. I think when we did the PLA, we had some tools in there. I'm not looking at the PLA that we did, but we had some tools in there to verify that all steps were maintaining and there was no cheating going on. And I and I would love the staff enters that that we find a developer who is willing to help us ensure that folks are making living wages. They're getting $5,000,000 from us. I think we can ask that. I know that in one of the reports it says something that wasn't recommended. I think we can do it. I believe we can do it. And we need to just work towards that. So I appreciate the comment. I'm not sure who else

made it up here, I

think that's critically important. And then for the community, we are going to have a lot of housing. I think vice mayor mentioned comments about why we focused on housing. We know that housing brings with it other costs. So often it has a great cost to us. I love to see new buildings going up. I would love to see some retail go up as well. We are working with one of our partners Lewis on that currently and some other developers. But it's we have a mandate and the housing is is is the mandate. So we're working on both.

I promise you the the our our community development team is looking at both as many options as possible. I do hear you on those concerns. I wanna make sure that that's clear. We aren't choosing one over the other, but the housing is the hot potato, so to speak, not only in Hercules, but in our state. We're trying to find housing for folks. We all went through the COVID experience with the unhoused, and we're trying to resolve that issue. And this is a step in that direction. Again, I do think that we can do it with prevailing wages. And I think that we have some members of public that were here that spoke about that and about how we could do it. And we have different resources we can check on. But I'd love to hear that back as we come back with a selection and then also negotiations with the developer. Thank you, madam mayor.

Yes, vice mayor.

Thank you, Madam Mayor. To echo the comments of Councilmember Bailey and as I mentioned earlier, just wanted to double down that I would like staff to have negotiated when they talk to RSG and the three developer groups that we make sure that the building trades and the carpenters are at that table in that same conversation to get eventually an LOI, MOU, whatever term you want to use to make sure that the folks who are working on these projects can actually live in these developments as well. And just kind of as I was thinking about this discussion, couple of months ago we had a presentation by a lady and she gave a number that I just thought was pretty accurate to where we are now in terms of our housing with the state and even this country. And she said that to live comfortably alone in the city of Hercules, you will need to have an income of $110,000. Now, when I think about wages right now, especially if you're coming out of say college or even into the building trades, whatever, even if you're active For the most part, most people will not be able to afford that.

And, as someone who grew up here, went to elementary through high school in this city, I've seen plenty of my friends leave Hercules and not be able to come back. Not because they didn't work hard enough, not because they didn't do all the right or they did do all the right things, but because housing is just way too expensive. So, I think for those who may be a little bit worried about what this may mean for Hercules, I would say, think about it, it's an opportunity for your kid to come back to the city. Because again, I've seen it myself and my friends have been priced out here. So I just wanted to reiterate, would love that we get the building trades and the carpenters back at the table in these conversations to make sure that the folks who are building this project can live in the city.

And at the same time, we remember that we're talking about people in these conversations. Everyone life circumstances are completely different for one reason or another, whether you have autism and you're restricted from certain jobs just because people won't hire you. So the certain job that you're in, maybe it's just not matching with the rising cost of housing and inflation that we're seeing every day. So thank you madam mayor.

Thank you. Any other comments here from I would just end by saying we are not taking any action on this tonight. This will come up, I believe Mr. Rood said, at the next council meeting we'll make a decision. And I just wanna say that we are fortunate that we have this 5,000,000 in the housing successor agency fund to spend on helping developers with getting their projects going for affordable housing in the city of Hercules.

So with that, thank you everyone. And we will now move on to our next item for discussion tonight, which is the budget workshop for fiscal year twenty six, twenty seven. Who is going to be presenting this?

Madam Mayor, it will be our finance director. He stepped away for a moment.

Okay.

He could take the next item.

The item after this?

Yeah, if you like. So that Okay. Can give him time to get

Alright, so he will be coming back in a minute. Okay. So Mr. Gato.

Just in time.

You're up here. So we've now come to the budget workshop.

Yes, before we turn it over to Mr. Gato, let me just make some preliminary remarks regarding this process. What we are discussing tonight is basically what we have is a budget workshop. This marks the beginning of the fiscal year twenty six-twenty seven annual budget development process. This report outlines the proposed investments, the proposed allocations for the budget, including both onetime and ongoing investments as well as strategies to enhance long term financial stability.

Our primary objective is to address the community's needs while remaining aligned with the city's current and projected financial resources. The first public hearing regarding the introduction of this budget will take place on June 9. Following this session, the city council will deliberate on the adoption of the proposed twenty six-twenty seven annual budget during a second public hearing scheduled for 06/23/2026. And with that, I'll turn it over to mister Gato, our finance director.

Yes. Welcome, mister Gato, and you've got a presentation for us.

Thank you, City Manager Tang. Good evening, Mayor, members of the council. Edwin Gato, Finance Director. Do we have the slide? Okay.

On May 24, as you recall, the staff conducted a budget workshop focused on the ten year capital improvement plan. This evening workshop marks a vital first step in shaping the FY twenty twenty six, twenty twenty seven annual budget and provides a valuable opportunity for community involvement. Next slide please. This upcoming fiscal year, as you know, many cities in California will address significant deficit and possible service cuts. Fortunately, the city of Hercules is financially stable at this time, maintaining a 25% reserve equivalent to three months of general fund expenses.

While we can sustain our services for now, we face long term challenges, major issues including deteriorating street, deferred maintenance of aging infrastructure, and ensuring adequate staffing. The city has also identified many unfunded needs that hinder effective services delivery. This include maintaining proper staffing levels and securing funding for key community development projects. Additionally, we must address rising costs driven by inflation. Addressing these needs would benefit the community but could impact on our overall financial position.

The key budget discussion arose around the following that's listed in the slide. Next slide please. Earlier this year, sorry, I'll go. Earlier this year, the city conducted a survey to identify key community priorities. The main highlights of the survey includes maintaining long term financial stability and accountability affecting, I'm sorry, attracting and retaining local businesses, meeting water quality health standards and ensuring quick 09:11 response time.

On 05/28/2024, the city or the city council officially adopted a strategic goal for the twenty four, twenty four, twenty five, twenty six period. This strategic plan serve as a guiding framework for budget priority and is intended to address essential community needs. Additionally, it it provides a foundational principle for the development of the annual budget for fiscal year twenty six-twenty seven. Okay, there you go. The proposed budget accounts for rising costs.

The overall assumption used or the baseline is the driven by inflation across goods and services and energy. It incorporates negotiated agreements, salary increases and higher pension and healthcare costs. The budget aims to maintain current service level while adjusting for inflation and reducing nonessential spending. Revenue projection are conservative and expenditure estimates are carefully planned to avoid unexpected expenses. Next slide.

As of 06/30/2025, the city's pension funding ratio was 76, which rating agencies considered adequate. The city has set up a Section 115 trust to pre fund pension liabilities. This tax exempt trust aims to lower long term cost through investment return, protect asset from budget changes and improve financial stability. It may also boost credit ratings and offer more investment option than traditional municipal funds, helping manage pension volatility more effectively. In addition to the previously outlined expenditure assumption, Attachment one presents a comprehensive list of significant budget increases essential to our growth.

These additional requests are strategically designed to improve operational efficiency and ensure that compensation allowance aligns with increased responsibility across various roles. Each proposed enhancement is totally detailed accompanied by analysis of its projected impact on overall budget framework, reinforcing our commitment to excellence and accountability. Next slide, please. The general fund is the city's main operating fund providing financial resources for various services. It is funded by taxes, fees and other governmental sources.

This fund supports essential services such as law enforcement, parks and recreation, public works and administrative function. The general fund covers a wide range of city operation is vital for maintaining services and adapting unexpected challenges. The discussion will cover revenue estimate, spending projection, expected annual result and a five year financial forecast. The general fund revenue estimate. The general fund revenue through taxes, fees and other anticipated income for the fiscal year, this funding is allocated to support essential services such as public safety, parks and recreation program, community development and such.

The revenue budget enables staff to compare actual income against estimate, which is crucial for assessing this organization's financial health. For the fiscal year twenty twenty six-twenty twenty seven, we project an overall increase of approximately 3% in general fund revenue compared to the previous year. The primary sources of this revenue is utility users tax, sales tax, property tax, real property transfer tax and so forth. Next slide. Our general fund expenditure assumptions are as follows.

Labor cost accounts for nearly 60% of the general fund budget. The general fund expenditures are projected to increase by about $1,000,000 or 5% compared to the previous fiscal year. Next slide. The general fund supports various departmental cooperation and program as illustrated in this slide. Public Works Department typically allocate only a small portion of their expenses to the general fund because they rely on dedicated revenue sources such as the gas tax and enterprise funds.

This approach ensures that users, rather than general tax revenue fund, fund essential services such as street repairs, sewage management and sanitation. Next slide. Our general fund operating, so these are our projected operating results for the year. For fiscal year 2026, 2027, we come up with a balanced budget and a small positive net operating result. It will also maintain a $5,400,000 operating reserve, which is equivalent to 25% of total budget.

This strong reserve reflects our commitment to good financial management and support future planning and initiatives. Our budget, our five year forecast evaluates the city's revenues, expenditures and fund balances and operating reserve to inform the city council and the community about economic condition and budget challenges. It's essential to note that a forecast is not a budget. It predicts future financial condition and allows for corrective action if deficits are anticipated. The focus is primarily on general fund, which covers tax supported services.

The forecast reveals a potential structural deficit starting in 2829 with expenditures expected to outpace revenue growth. Although FY 2728 looks balanced, pricing cost may lead to a small deficit of less than 1% of total expenditures starting in twenty twenty eight, twenty nine. However, the city has adequate reserve to handle this deficit, but the operating reserve is projected to decline from 25% to 23% by the end of FY 2122 according to the forecast, necessitating careful financial planning. Next slide please. So I'd like to highlight a couple of non general funded program.

The Victoria By The Bay Landscaping Lighting District is projected to continue experiencing a financial deficit. However, the recently approved assessment increase is expected to address this deficit over the next ten years. In addition, a preliminary financial of Hercules Village, commonly referred to as Promenade, indicates an expected annual deficit that is likely to persist unless appropriate measures are taken. And once the engineers report are finalized, they will be incorporated into the annual budget for this coming fiscal year. And all other special revenue funds or restricted funds have adequate resources to fund FY twenty twenty six, twenty seven expenses.

Next slide please. The Sewer Enterprise Fund is responsible for the operation, maintenance and improvements of the sewer system. Sewer fees are exclusively used for these purposes. For the fiscal year 2627, the proposed budget is 4,600,000 for operating expenses, 2,100,000 to fund debt service, and 3,200,000 for capital improvements. The city collects about $6,000,000 annually from over 8,400 service connections with building handled through the county tax roll.

Also, developers must pay impact fees for adequate wastewater capacity. On 07/22/2025, the City Council approved a rate increase for sewer services effective 07/01/2025. These rates will remain in place until 2029 to find ongoing improvements in maintenance of the sewer system.

Next slide.

Citi's Internal Service Fund is an accounting tool that allows departments to charge each other for services on cost reimbursement basis. Operating like an internal business, ISF enhanced budgeting by promoting efficiency, transparency and accurate cost allocation enabling better resource management and long term planning. Debt service obligation budget is a crucial financial plan that details the fund requires to cover principal and interest payment on borrowed capital such as bonds, loans or leases over specific timeframe. This this budget is an essential part of the operating budget as it ensures the timely repayment of debts to creditors. By maintaining this discipline, the organization preserves its credit worthiness and helps avoid financial insolvency.

As discussed in a previous slide, our budget workshop, the city's capital improvements or CIP are a strategic plan that spans multiple years aimed to funding the construction repair and replacement of essential infrastructure such as roads, sewers and parks. Although the overall planning timeline covers ten years, it's important to note that appropriations are made only for the first year. This allow for the timely advancement of critical projects with available funding. Next. The planned projects for FY 2627 are funded by the general fund, grants and special revenue funds for total investment close to $5,200,000 And that concludes my presentation.

I'm happy to answer the questions.

Thank you, Mr. Gato. Questions here from counsel. Council Member Bataray.

Thank you, Madam Mayor. Thank you, Finance Director Gato for the presentation. And I will start with the five year forecast actually. Well, I appreciate that we are trying to keep our finances, our the expenses less than or within 1% of our total expenses. But looking all these rates makes me nervous.

So these are not very interesting or good to see these numbers. So definitely, I think we need to work on how to improve our structural deficit in other as well as our internal efficiency, I guess, if we need to or as we need to. And also, would like to thank you and then just give a context, actually, looks like we are less than 1% of our total cost, whereas our bigger cities like San Francisco, Oakland or Sacramento has hundreds of thousands of millions, I guess, like a $60,000,000,000 something per year versus I think

It's a multi million deficit. So

good note that we are not that bad, but at the same time, we are very revenue constrained cities, so we really need to be focused. Let's not lose our sight on that and make sure our expenses are under control. And each and every line item, so let's review those and make sure that the cost efficiency measure has been initiated this year. So that next year and going forward, we would like to make that positive numbers there. Secondly, I also would like to ask you, can you please elaborate on the debt service obligations?

Sounds like can you please help me understand this, the taxable lease revenue bonds Series 2,009 for Bio Rad project? Our principal amount only is $325,000 versus our interest is 580,007 and $96

Thank you. Yes, I'll be happy to answer that question. It's a taxable revenue bond and it's paid for by the least revenue received from BIRAD. So we're not paying those bonds ourselves. It was paid for by BI RAD.

Yes, I get. So would that mean that and if and when we pay off this and there is a 2020 lease revenue refunding bond for $477,000 When those bonds would be paid off and then there will be some money left over for us for another project, so we can reallocate those? Is there any opportunity for that down in the line if there is a case when that happens?

When it's paid off? Yes. Yes. The funding that is available will be reallocated to fund something else.

When that would be paid off? That

is my question. Believe it's twenty five to thirty years still. We still have to, yes.

You. These are my couple of comments.

Councilmember Bailly.

Yes. Thank you, Madam Mayor. Thanks for the report. I have some questions. Can we go to the slide with the red?

Thank you to our city clerk for getting that for us. Thank you on this one. So I I I understand the numbers are the numbers, but and I know he's not here, but the previous city manager said we were gonna be 40 something thousand dollars in year five, and that number is $236,000. We made some decisions last year that got us there, but we don't really have a full solution for that. And I just want us to this is just for residents that are listening. I know some of our older residents listen online after the fact. But, you know, we the number is not huge, I I think is what council member Bhattaray was just saying. But it's there and we have to find a fix for it. And depleting our reserves is not necessarily the solution for that. Right?

So we we need to figure out how to do that. We know that the ongoing cost, right, those are the ones that get us. The one time monies, it's like building a pool. You build it once and you're kinda done, but you you we gotta be careful because I think we're into ongoing cost or running this. Is that correct?

That is correct.

Okay. And then the other question I had is what are we using as our assumed increase? So historically, we used 3%. I think I read in the report we chose 4% for one year. So do we think it's going to bounce 4% sounds closer to right, but do we think it's going to bounce back to 3% after that or can you just share a little bit about that with us?

Our overall assumption for the five years 3% in overall expenditures.

Did I see 4% somewhere, did I miss I thought I read that we had four for one year.

We have two years of 5% labor because of the negotiated agreements that we had. But going forward, it's assumed 3%.

Okay. That explains it, Tim. Okay. And then if we go to the next slide, we talk about LODs because I get this question a lot. So we mentioned deficit, Victoria by the Bay paid over ten years. Voters approved that already. Some people think that's city money. We we've loaned them from general fund money to keep the district going. Can you explain the process? This kinda works like an HOA. It's not an HOA, but it's their own money used for the district. Can we just just in a sentence or two talk about that?

We assess the the residents in the district by fee and that goes into sustain or to pay for the maintenance of those landscape and lighting district on the district.

And sometimes those costs go up higher than the cost of living adjustment?

Correct.

I say sometimes it often does, I think it's happened in many districts so far. And so we have a process to fix Victoria By The Bay. There's this in place currently. Is that correct?

It's already in place. The boarder approved the assessment increase to pay for the deficit for the for the next ten years.

Perfect. And then you mentioned Hercules Village, which is a name no one calls it, but that's really promenade just to confuse us all. And so that one, think we said have a can you repeat that piece? So again, it works kinda like an HOA in the sense that the money stays within the district. It's spent within the district. It's it's the taxpayers within the district to pay that. Can you talk us through what what we've the council has agreed to do on that so far?

We we actually postponed that to the next year.

The vote, but we're going to reach out and explain the issue over the current year so we can start getting that back on track. Yes. Okay. Thank you. And then there was a note in here about an approval for attachment A, I think is what it said. Can we go over what those approvals were for? There was a in the agenda report, madam mayor, through the mayor. There is there was reference to it said additional and an attachment expenses. And there were a list in the back of the document. I'm looking for the wording there.

Forgive me. The document I'm looking for is on page four seventy seven of the council agenda, the larger agenda. It was referenced to look back there. It's additional budget request. That's what it was called. What what are these? Can you talk us through those?

That's the hundred and eight thousand one zero eight three hundred additional budget requests.

Yes. It's an additional budget request that former city manager have requested to enhance our efficiency with regards to additional responsibility of staffs.

Okay. So maybe the city manager might want to put you on the spot. But some of these are pay increases and other things that I don't think we've seen before. Have we? If we have, I apologize. I just don't think I've seen them.

Some of these you have not seen. If you look on page four seventy eight there's a recommendation for a salary increase for our finance director. I don't know which of these are carryover items. I think the AED defibrillator item is not new.

And that's a one time one. Right? So those are ones we don't have to those are not crisis issues in my opinion. But the other ones is there we probably don't want usually, discuss personal issues not in the so it's I'm just I'm trying to understand how we have that conversation because I I I didn't know about these. It sounds like former city manager may have known, but

Yeah. I think they came to staff's attention fairly late in the game. I don't know if there was much prior discussion. I think the city manager, former city manager had asked the department heads what immediate needs there were or what items might be coming up. For instance, the the improvement with the replacement, stove replacement, that's something that just happened to come up. I mean, it needed to be done.

I'm not holding you accountable. I just wish the former city manager had communicated that to his leadership team.

Can I jump into her here for a second? So I did have some discussions with him and there's always adjustments being made in various departments. So in terms of the ongoing costs, the full time parking enforcement officer, so I believe that person resigned and this additional 11,000 will go to the part time parking officer. I think that's the case. And then we're taking a child care of we're going to have a full time childcare technician rather than a part time.

And there may be retirements coming up in several departments. So it's important to have somebody get up to speed I believe there. The finance director salary upgrade, I don't know about that. That was with this former city manager. And then reclassifying a technician to an accountant, that's a small ongoing increase. Know, mister Gato, maybe that's one of your employees, maybe you can speak to

that. I

guess my my point there thank you, madam. My point is despite people on the council, so talking to again, he's not here, but if he wants to watch this, to talk to one council member seems highly irregular. Right? I don't wanna to put these different department heads who've made the request on the spot here, but is this do we I don't think we normally do it this way. And so I'm looking at staff as if they were here making that decision that this is not the team that was here that did that. But that's it seems bizarre to me.

Also remember Bailey, I think it's it's a these are questions that I asked specifically. So it wasn't like he was present these are just questions that I asked.

Don't mean to debate it Yeah. To be in that in that format. But what I'm trying to say is I would not have asked him if he had a plan to increase a specific position's wages without telling how would I have asking that question? And I think that's my challenge with this. It's not about you per se. I don't I don't mean to make it sound that way or anyone on the dais, but I would not think to ask if the technician x is getting an increase because how would I ask that question? The only they present us with a list of things they want to change. We did that with lighting and landscape with several positions. It's just an irregular thing and I think that the public might find that a little bit interesting. And it wasn't discussed specifically in the agenda report, was just listed as an attachment.

I don't want to take a again, no one here did this. I just want to express the concern that I have over it. That city manager is not here anymore. But I I think that's just not the proper way to handle it. And I'll and I'll leave that there. But again, these are just to get I can confirm, these are ongoing cost of this is because it says things like in the report, it says general fund which we know what that is and then it says other in some cases. What is other funds?

Other funds are special revenue funds that are serviced by that particular position and it includes gas tax, it includes facility maintenance fund, it includes sewer funds as well. That position allocates their services to those departments as well.

Okay. And So my ask would be aside from this, I know we're just receiving this report. If we do that, can we list which funds they come from? Because it's it's not clear when we read the report. Again, this is very opaque, I think, in some ways, and I I just struggle with that. I'm not gonna take up against the the team here did not do this. Let me be very clear. But we need to, I think, fix it so it doesn't happen in the future.

I can answer it right right now. The other funds only pertaining to the $10,000 on the finance director salary. And that is going to the IT department because that's a newly position that was acquired by the finance director.

Totally understand. I believe you. It just should be in the report as well for for for the future. Can't go backwards, but for the future. Madam Mayor, thank you for the time. I appreciate it.

Okay. I think vice mayor, did you have comments or questions? Councilmember Bay Councilmember Crimsley, did you have any questions? Yes. So Mr. Gato, you said that for CalPERS, we are 76% funded. So that's adequate. Is that correct?

That's correct. Typically, in California, 75% to 80% is typically adequate funding ratio for pension plan.

Okay. So that's good to know. We're not deep straights as some other municipalities are.

Madam May I make a quick question here, actually, right on this funding ratio. Would you be able to next time, not now, but next time, can you provide us historical funding ratio? So we wanted to see the trends where we stand or how we are going, going too fast, too slow, flat or down. I think that would help us to make information here, so just to make sure.

Sure. We can do that. I think in that other slide, we can see it there that the funding ratio is actually the red is actually going up a little bit.

Thank you. Not now, for future Thank you.

And then I would just like to also sort of double down on what Councilmember Bailey says. We will have in the general fund starting with fiscal year 2029, we will start to have a small deficit. And we all have to think about that because those can grow over time. And I know Mr. Gato, you pay a lot of attention to that. So greatly appreciate it. Otherwise, general fund will be about what 21,500,000 in revenue this next year. No huge, huge increases. So we are steady but there are concerns in the future.

That's correct.

Yeah. And is there any other fund that you are greatly concerned about? I know we'll get into that with the budget workshop. But anything you want to mention now or are we pretty much okay?

We're pretty much okay on the other funds. The only two highlighted that I highlighted is the Victoria by the way and the problem.

Okay, that will come up next year. Okay, thank you. Madam City Clerk, are there any public speakers for this item?

I will turn to my Zoom attendee. If you'd like to make a public comment, please use your raised hand icon. Seeing none, that will end public comment.

Okay, bringing it back to counsel. So this is just basically a workshop. It's information we're not making any decisions at this time. And then the workshop will be coming back at the first meeting in June. Is that correct? Yes.

That's correct. And regarding the additional budget request, these are items that the council may or may not approve. The council can also make budget request on their own initiative.

Right. Okay, thank you. So we've got some time to think about it. Alright. So on to our next discussion item. And this is an allocation of a thousand dollars for the Juneteenth event in this year and amendment to flag policy and approval of Juneteenth and pride flag raising for '26 and annually. And is city manager, who's gonna take this item?

No. It won't be the city manager. I'm gonna

I I know. I'm just asking you to be the referee here.

Yes. I'm gonna defer to our city attorney and our, parks and rec director. They will present on this item. Thanks.

Good evening, madam mayor, and council members. Christy Kroll, city attorney. Tonight, I just have an oral presentation for you, and I'd like to start by noting that our, parks and rec director, Christopher Roque, is here this evening should you have questions of him as well. As most of you know, staff is planning the city's annual Juneteenth event. This event will be similar to last year's event in partnership with the library, and it will be held on June 13.

It will include a flag raising ceremony, a dance element, refreshments, and staff is propose proposing a quilt exhibit which depicts African American history and experience. Staff is requesting an allocation of a thousand dollars to facilitate the event, which will include costs associated with bringing the quilt exhibit to the library and with the event refreshments. Staff has also been preparing to bring our annual request to council to allow both the Juneteenth flag to be raised as well as the pride flag in the month of June. And in doing so, we noted that the city's adopted flag policy actually requires the council to initiate the flag raising request, and we're therefore recommending that the council take three actions this evening. First, we recommend approval of the allocation of the thousand dollars for the Juneteenth event.

Second, and in order to streamline the flag raising request process, we recommend approval of a minor edit to the flag policy that would confirm that staff can initiate a flag raising request as well as the council, which would confirm our historic practice in going back and reviewing, what staff has done in the past. They've always brought certain of these requests to the council, and so this would just confirm that, we can continue to do that. And third, we're also recommending that the council approve the raising of the pride flag for the entire month of June and to approve the raising of the Juneteenth flag for the days ending in teen. So that's the thirteenth to the nineteenth of the month. And staff proposes that their request be approved with the understanding that these flags would be raised on an annual basis in that fashion.

And that concludes my presentation. And again, Christopher Roque and I are available for questions.

Okay. Thank you. Any questions here from council? Councilmember Bailey?

Yes. Thank you, Madam Mayor. I I guess I had a couple of questions on the the changes. So can we start with the the dollar amount, the the thousand dollars for the library. What makes the library eligible?

I'll bring Christopher up to to talk about the allocation.

Thank you. Thank you. This is part of a couple questions, but what makes them eligible? Because I'm concerned that if we do this, then if another group wants to put an event on it and they ask for a thousand dollars, how are we I'm concerned about the ongoing issue there. So what makes the library special that makes them just able to ask? I hope there's an answer for that. As opposed to another group because we'll be doing this.

Well, historically, we've had we've partnered with a lot of different groups. But last year in particular, I was asked to increase our involvement with Juneteenth. And the way that we were able to do that was to partner with the library because the library already does something. So collectively, we were doing a flag raising ourselves and then the library was having an event in the library. Instead, we just combine the two to pool our resources.

So they're already with the friends or the foundation allocating money towards an event. And we contributed last year. We asked for $200 to use towards refreshments that the council granted. This year, it's just more. We're doing more things.

If again, this is not about a thousand dollars, but I I don't like the the I'm concerned about the creep. So it went from it went up five times the amount. I understand there's more activities there. I'm asking you to follow me for a second, though. So I'm friends of the Hercules bunny rabbits, and I wanna have an event with the city. And I want a thousand dollars like you gave the library. I'm a nonprofit. How do We told them no. I think we should tell them no in this case. But we gave it to the library.

So what makes them unique that we can clearly say this is why the library got it and the friends of the Hercules bunny rabbits did not? Or is it going to just be personal? Personal? Because that's the issue that I have with it is that it may be Understand.

There is no bunny rabbit

Or not. But program was.

So I understand what you're saying. What's to prevent anyone from asking? Anyone can ask. People ask for things all the time. Look at generally, we look at our city recognized nonprofit groups. And we look with our partners that we do things with on a regular basis. And the library is one of the partners. It's a city facility. I know it's staffed by the county, but it's still a city facility. And it's an extension of what we do.