City Council - Special Meeting

I'LL COME BACK TO HER IF YOU WOULD LET ME KNOW THAT SHE WISHES TO MAKE FURTHER COMMENTS.

WOULD YOU LIKE ME TO LET YOU KNOW WHILE SHE RAISES THE HAND OR YOU WILL ASK ME?

I WILL ASK YOU.

THANK YOU.

Yes, good evening, Your Honor, members of the council. Item B1 of this agenda relates to an entitlement that was issued back in 2022. If the council may recall, Lennar Homes has an entitlement to build a 370-unit mixed-use development in the area known as Bay Shores. They also have an obligation to construct and dedicate to the city a five-acre public park known as the Grand Park. Due to some unforeseen title issues between the developer and SFPUC, there is a need to amend the park agreement. Please note that this does not amend the obligation of the developer to construct the park by July 3rd, 2028. With that in mind, I'll now turn it over to senior planner, Ms. Carmelisa Lopez for the staff report. Ms. Lopez.

Good evening, mayor, vice mayor and council members. And thank you city manager Moon for the introduction. My name is Carmelisa Lopez, senior planner with the community development department. I'll be presenting a request to approve the second amendment to the park agreement associated with the FMC Willow and Grand Park project. I'll begin with a brief overview of the project and provide some background info on the park agreement before discussing the proposed Second Amendment and staff's recommendation. Before I begin, I'd like to introduce the city's team, as well as the applicant and property owner who are here this evening, who have worked on this effort. This includes myself, Community Development Director Steven Turner, Deputy Community Development Director Art Interiano, and City Engineer Miki Sabota. Also in attendance are the project applicant's team, Lennar Homes of California, and the property owner FMC Corporation. They will all be available to answer any questions at the end of the presentation. Before discussing the item for consideration this evening, I'd like to briefly provide some contacts on the area of Newark where the FMC Willow and Grand Park project is located. The project is located at 8787 Enterprise Drive within the Bayside Newark specific plan area on the western side of the city. THE PLAN WAS ADOPTED IN 2010. IT WAS FORMALLY CALLED THE DEBARTON TRANSIT ORIENTED DEVELOPMENT SPECIFIC PLAN. THIS AREA HAS BEEN PLANNED FOR PHASE REDEVELOPMENT OVER A NUMBER OF YEARS TRANSITIONING FORMER INDUSTRIAL PROPERTIES INTO NEW RESIDENTIAL NEIGHBORHOODS, PARKS AND SUPPORTING INFRASTRUCTURE. This slide shows the specific plan area. As you can see, it's quite developed already. The project site is along the northern boundary at the top of the map. The project is proposed on one of the remaining areas left to be developed. Prior to the project, the Harbor Point project was approved in 2019. The slide shows the project within the specific plan area, which is located at the northwest corner. The Harbor Point project is immediately adjacent to the FMC Willow and Grand Park project. It was recently completed and included the construction of 119 for sale homes. It's included in this evening's presentation because it was the project that first originally proposed the construction of Grand Park, which is an approximately five acre public park. This slide shows the FMC Willow and Grand Park project site. The project is a 370-unit mixed-use development fronting enterprise drive that was approved by the City Council in September 2022. Grand Park, which is the subject of this item this evening, is on the left side of the project and would be adjacent to the Harbor Point project shown on the left side of the map. The project applicant, Lenar Holmes, is a developer for both Harbor Point and FMC Willow. As part of the park agreement, Lenar will build the park and dedicate the park to the city for public use after completion. This slide shows the conceptual park plan. The park includes several amenities, such as a large playground, dog park, and several lawn areas that can be used for sports and events. As mentioned previously, the project was approved in 2022. Just to go into a little bit more detail on what was included, it was approximately 279 for sale attached townhomes, a community building for residents, a mixed use building containing 91 affordable apartments and ground floor retail, and approximately one point acres reserved for a future transit station. It also included reconfiguring the boundaries for ground park. And in 2024, the project was granted a two-year entitlement extension due to unforeseen delays related to title issues between the applicant and the San Francisco Public Utilities Commission, or SFPUC. SFPUC is a property owner adjacent to the project site, affecting a portion of the project site. So the title issues were related to a portion of the project site, just to clarify that. The delay in the post-entitlement work for the project, including the final map and improvement plans, resulted in a qualifying development moratorium pursuant to the subdivision map act. The new entitlement expiration date will be determined once the title issues have been fully resolved, which is expected to be at the end of this year. AS FOR WHAT'S OCCURRED SINCE THE ENTITLEMENT EXTENSION, DESPITE THE DELAYS, THE APPLICANT CONTINUES TO MAKE SUBSTANTIAL PROGRESS. THE TITLE ISSUES AS I MENTIONED ARE NEARING RESOLUTION. THE APPLICANT HAS SUBMITTED THE FINAL MAP IMPROVEMENT PLANS AND BUILDING PLANS FOR CITY REVIEW. DEMOLITION AND ROUGH GRADING BEGAN IN MAY 2026. IF YOU'VE BEEN OUT IN THE AREA YOU'LL SEE THERE'S ACTIVE DEMOLITION GRADING GOING ON CURRENTLY. AND THE APPLICANT ANTICIPATES BEGINNING PARK CONSTRUCTION BY THIS FALL. And just to go to the item before you this evening that is under consideration, just to give some background information on that, the original park agreement was between the city, the property owner, FMC Corporation, and the project applicant, Lennar Homes, and it was executed and entered into in January of 2019 as part of the Harbor Point project. The agreement establishes the responsibilities for construction and dedication of the public park In 2022, the parties executed the first amendment as part of the FMC Willow project. This amendment included reconfiguring the park boundaries to accommodate environmental remediation activities and updates to certain deadlines due to delays associated with need to relocate Union Sanitary District force mains. The table on this slide includes or summarizes those revised deadlines including the date the park improvements must be completed and delivered to the city which changed from July 1st, 2026 to July 3rd, 2028. As for the proposed second amendment, it includes several updates to the park agreement. The first would be extending the deadline for the property owner to provide the applicant access to the park parcel from December 31st, 2025 to August 31st, 2026. That staff understanding that there are a lot of requirements are being fulfilled at the moment. They expect to do that very soon. Second, it updates the timing for submitting the irrevocable offer of dedication to the city so it better aligns with the project's construction schedule. The irrevocable offer of dedication, or IOD, is a recorded document from the property owner to the city for the dedication of the park parcel to the city for use as a public park. The amendment would change its deadline to issuance of the fine grading permit for the park or parcel map approval. Third, it updates certain exhibits to reflect the current park parcel map and conceptual park plan. In the previous slides, that was an example of one of the exhibits that would be updated. These updates refine the depiction of the park, but no changes to the park's boundaries or improve amenities are proposed. Finally, it clarifies the conditions under which the city's park delivery bond may be released. It's important to note that the proposed amendment does not change the date the park improvements are required to be completed, which would still be July 3rd, 2028. The proposed updates revised certain provisions in the agreement so they align with the project's current status while maintaining the city's protections and ensuring timely completion of the park improvements. In conclusion, staff recommends that the City Council adopt a resolution authorizing the City Manager to execute the Second Amendment to the Park Agreement for the FMC Lilloo and Grand Park project. That concludes my presentation. I welcome any questions, and as well, the applicant and owner are here today, if you have any questions for them.

Yes, thank you for the report. Before I open up the public comment section, are there any clarifying questions? I'll look to the City Clerk. Does Councillor Contoncio have any clarifying questions?

Yes, Your Honor.

Councillor Contaccio.

Yes, thank you, Your Honor, and thank you for the presentation. I did have one question. I was thinking, since the five-acre park does overlie the major Hetchy Hetchy water infrastructure, then is there going to be any permanent design differences or planting restrictions? that the utility might impose? And if so, then who would pay for those differences in designs? Or is there going to be a change financially for Newark?

I could start off with answering that question, and then I may defer it to the developer. As part of the negotiations with SFPUC, there are a few changes to the project scope. However, they're not very significant. It doesn't change the amount of units. It doesn't change the number of affordable units. It's really about access to the SFPUC property. But I'll hand it over to the developer to answer a more detailed question if they're available.

Can we go to the slide that kind of shows the development? I can't recall which slide that was. It might have been one of the first ones. Yeah, that might be helpful.

good evening honorable mayor and city council members my name is ed walsh project manager for lennar homes of california working on the grand park and to answer council members question there are no plantings or improvements that are actually in sfpuc property and the title issues are more related to the fmc willow so in terms of the grand park NO IMPACT TO CITY REQUIREMENTS FOR MAINTENANCE AND OR IRRIGATION OR PLANTINGS AND SUCH SINCE IT'S ALL GOING TO BE ON CITY PROPERTY THANK YOU COUNCILMEMBER CONTACIO ANY FOLLOW-UP QUESTIONS NO THANK YOU SO MUCH FOR THAT CLARIFICATION COLLEAGUES ANY CLARIFYING QUESTIONS AT THIS POINT YES COUNCILMER LITTLE

I actually have a lot of questions. So I wasn't elected when this first happened. So I was not aware of this project very much about it question. My first question is what is parcel F future transit station? Is that going to be a bus stop? Is that going to be the BART station we've always dreamed of? What is this?

You're close, actually. So back in 2015, 16, the original idea was the Facebook rail would have a station there. And so trying to think back in my memory, that parcel was originally considered for that. But now it will be developed for a future bus transit. but the interim improvements to be completed by Lennar Homes until the city decides on the direction they'd like to go and other considerations for actual rail service and such, it will be a parking lot and a small landscaped lawn with fencing.

Okay, my next question is, I see that we're putting the idea of a five acre park. And I'm looking at the map here, and one of the big situations is if we make it a public park, people are gonna wanna come. And I'm looking at this map right there, and there doesn't seem to be any quality parking spaces, except for that little white strip right there, is that it?

Yes.

So that's all that we have for that parking, for that park, correct?

Correct.

Okay, because some people have voiced, because I'm seeing the way the layout is, and I'm just concerned that there seems to be a lot of town homes, and the town homes mean that the limited parking. So if possibly we could just keep that in mind, that would be important to me, to be able to do that. My next question is, this is gonna be 91 affordable apartments and 279 townhomes, which totals 370 total units. Does that go towards our numbers, Mayor?

As to our arena numbers, Ms. Vanoon?

Okay, so that is part of the arena numbers that we're looking at. Okay, my question is, why are we choosing to do a separate apartment of 91 affordable apartments, which that right there causes segregation? Because then you have the, instead of doing and sprinkling them around, why are we choosing to do affordable? Because that's where those people live. And that's something I'm concerned about. Sure. That's segregation.

At the beginning of the planning of what was the Dumbarton TOD and now the Bayside, it was envisioned that these parcels would be zoned for the affordable housing because at the beginning, the Lighthouse townhome community off of Seawind, the first instance of that was the senior center there. developed by a separate builder, and there are several efficiencies. And in terms of coordination, Lennar builds the finished pad and then turns it over to the affordable housing developer. And they're able to put more units there and provide more. And the next item actually kind of speaks to the affordable housing component that's going to be built on Willow in that same type of circumstance. For the 91 affordable units, that's in satisfaction of the affordable housing requirement for the 279 for the FMC Willow site as well as the Harbor Point 192 homes. That's currently there as well.

OK. And also Council Member, when we think of affordability, some of us are older than others on this council, there really was a segregation when it came to the type of construction, the location of the affordable housing units. the tenement buildings that were being built. This is such a beautiful project out here in this location. I anticipate, having seen the renderings from the affordability project, that this is going to be a beautiful structure. folks that are low income deserve to live in dwelling units that look like they are part of that neighborhood. The challenge that we have, of course, in Newark and any other Bay Area city is the land is so expensive. I'd love to have 12 unit, buildings parsed throughout the area, but because of the cost of land and the cost of construction, it's just simply not feasible. But as mentioned on the next item, we're going to actually see opportunities that make even this more affordable for folks. But you're right.

I just, I mean, I wasn't here. I couldn't vote. I couldn't have a voice in this, but I do wish it was sprinkled in because I don't want, oh, you live in that apartment. So I always want it to be sprinkled in. I also wanted to, I quickly whipped out my map to see how close you were to the wetlands. And I just wanted to say thank you for where you're not. So I appreciate that. And I really like how you filled in that empty space versus going in different areas that should be left alone. So I really appreciate it. Great job on that. But for future, I would definitely like to see them sprinkled in versus that's where those folks live.

Sure. Thank you. Other clarifying questions? If not, I'm going to go ahead and open. Oh, yes. I'm sorry, Councillor Grendel.

The, just so I understand, what's before us tonight is the change in the schedule of the park, not the final schedule, but just the sort of interim steps. Exactly. Is that an accurate statement? Yes. And the actual residential entitlements are already in place and are not before us at this time. Correct. Can you explain, I'm happy that the schedule is not slipping on the park, but how is it that you're able to stay on that schedule even though there are some adjustment to the other milestones?

Sure, so we're adjusting the internal dates. It's taken longer than anticipated just to sort out between Lennar and FMC and our partner Integral just to pretty much get the paperwork together, meaning the license agreement for Lennar to come on site. Long history on this parcel of environmental remediation. It's taken many backs and forths on the details to make sure that we have the safety protocols and clearances and buffers in place, that the park is designed effectively to keep those in place. It's hopeful that we are absolutely going to start the park in the fall for construction and just how planning presented just now that the willow parcel is already under grading and development. And we're very happy to start marching towards that July 3rd, 2028 date. I PERSONALLY HAVE BEEN STARING I PERSONALLY HAVE BEEN STARING AT THIS PARCEL SINCE ABOUT AT THIS PARCEL SINCE ABOUT 2017. 2017.

I HAVE A QUESTION, HOW MANY I HAVE A QUESTION, HOW MANY PARKING SPACES ARE YOU LOOKING AT PARKING SPACES ARE YOU LOOKING AT THE PARK? THE PARK? I'M TRYING TO COUNT THEM BUT I'M TRYING TO COUNT THEM BUT THERE'S NO LITTLE.

60 parking 67 oh six seven just checking just checking with additional parking on enterprise drive as well on both sides and this is really a neighborhood park i know that there's a dog park here which will certainly attract my dogs since i walk down this way all the time but it's really a neighborhood park isn't that what it's designed neighborhood park and the bay trail carves its way through it very walk bike friendly yeah

Are there clarifying questions?

Yes, actually similar question. In those milestones that are before the completion, is there the possibility or the potential that some of those milestones were slipping and you'll be back here later? just because you know for example one of them was final map was I think parcel map or parcel map or or another legal issue if those were to slide would with the construction slide as well or and you and would you have to come back to us at that point

In that worst case scenario, I think we would, but we don't see that very likely. We are submitting for fourth plan check for the improvement plans. Staff has been great in working with us on turning those around in a timely manner. And the final map and the parcel map are all in progress. And the I guess the long pole in the tent is the title issues, which we are very confident to be resolved by the end of the year as well.

Great. But just so if it were to slide further, you would have to come back to us.

If the July 3rd, 2028 date was in danger of sliding, we would definitely be in touch.

But I'm heartened to hear your confidence that we'll be able to move forward. So that's good. One last small point on the map, there's a white square that's listed as temporary groundwater treatment equipment. How temporary is temporary?

That would be a great question for the water board. There is a outstanding groundwater environmental case still going on. So that would be a... fenced off building, which contains some equipment for contingencies, from what I understand. But we've been working with planning and the design, and it should blend right in with the park. Doesn't look like any type of storage shed or whatnot, but it would be there for the foreseeable future. There is not an end date right now. And the landowner, FMC, is here. They can speak more to that, but that's our understanding of the timeline right now.

So essentially, for 50 plus years, that building would be in place? Possibly, yes. I just wondered if there was another recreation opportunity in there. Sounds like no. So thank you for your answer and to staff for the excellent presentation. Thank you.

Vice Mayor, clarifying questions? Questions or comments? Comments.

Yeah, so I just, you know, the internal kind of temp, you know, the interim, I guess is the right word, deadlines, you know, it seems reasonable that we want to match this with the construction schedule as it stands. With that said, I'm looking forward to enjoying July 4, 2028 at this park. I'm going to be excited to see that final deadline stay where it is.

Thank you, Vice Mayor.

Thank you, Vice Mayor. I'm going to go ahead and open up the public comment portion. It's open. Ladies and gentlemen, if you're in the audience and you'd like to speak to this item, feel free to come forward. If you're on Zoom, please raise your hand to speak. Madam Clerk, is there anybody on Zoom that would like to speak to this item?

No, Your Honor.

Thank you, Madam Clerk. Is there anybody in the audience who would like to speak to this item? I'll return it back to council for any last comments or questions. Councillor Contoncio, any last comments or questions?

No, Your Honor.

Thank you. Any other questions or comments? May I get a motion and a second? I'll move staff's recommendation. By Vice Mayor Jorgens, thank you. I'll second. And seconded by Councillor Grendel, please vote. Oh, I'm sorry. Please don't vote. We need to take a hand vote. Councillor Contoncio, how do you vote?

I vote in favor, aye.

Thank you. Councilor Little? I vote in favor. Councilor Gondal?

I vote yes.

Vice Mayor Jorgens?

I vote yes.

And I vote yes as well. That carries unanimously. I do want to take a moment to thank Lennar Homes for being here tonight. Your housing projects out there in this part of our community are really a testament to the quality of housing that you've brought to our community over the past many years. And Every time I walk my dogs down into those neighborhoods, I'm always impressed with just the outstanding quality of the housing that we're bringing to our community. So big thanks to you, City Manager Benun, and the staff for bringing quality housing to our community. I do look forward to the affordable housing, and we're gonna have that conversation next. So thank you for that. Item two is a resolution to amend the affordable housing obligation satisfaction agreement for the Willow and Harbor Point projects to extend the completion deadline and change the affordability unit mix. Mr. Mnune.

Yes, good evening, Your Honor and members of the council. If the council may recall the FMC Willow and Grand Park developer is obligated to build a 279 unit multifamily community along with a mixed use building consisting of retail and 91 multifamily affordable units. These obligations are contained in the affordable housing satisfaction agreement that was approved by the council back in 2022. In the previous council item, we discussed the unforeseen issues stemming from a title dispute involving SFPUC. Those same issues have impacted the timing of the performance under the affordable housing agreement, which includes changes to the deadline for constructing the units. Additionally, given where the affordable housing finance market currently is, the developer is requesting a change to the affordability levels, which would actually provide a lower average income level than what is currently required. With that in mind, I'll pass it over to our Housing Policy and Programs Manager, Mr. Michael Coulombe, for the presentation this evening. Mr. Coulombe.

Thank you, Honorable Mayor, members of the City Council, and Mr. Boone for the introduction. It's my pleasure to present to you today the request for a first amendment to the affordable housing agreement for the FMC Willow and Harper Point projects. Similar to Ms. Lopez's presentation, I'll provide brief introductions, background on the project and update as to where the affordable housing project stands today. I'll then provide background on the affordable housing agreement for the FMC Willow and Harbor Point projects and the proposed first amendment to the affordable housing agreement. I'm joined this evening by Mr. Steven Turner, Community Development Director, and Art Interiano, Deputy Community Development Director. As Ms. Lopez mentioned, also in the audience are the applicant, Lennar Holmes, the property owner, FMC Willow Corporation, FMC Corporation, sorry, and the affordable housing developer for this project, USA Properties. All are available for questions. As Ms. Lopez mentioned, this project concerns the Bayside Newark specific plan area. I'll go into, I'll show some more detailed slides that won't go into the same detail as before. This project does incorporate the Harbor Point project to the extent that the affordable housing agreement includes the affordable housing obligation for the Harbor Point project. Although the Harbor Point project was approved in 2019 and recently completed construction, its affordable housing obligations were incorporated into the subsequent affordable housing agreement. The FMC Willow and Grand Park project as you just heard from Ms. Lopez was subsequently approved here in the upper right of this image. The northeast portion of the site is the planned approved Terracina affordable housing project across from what has been planned as a new transit station. As Ms. Lopez mentioned, the FMC Willow project was approved in 2022 and a component of that was the affordable housing obligation satisfaction agreement, which was executed one year later in 2023 to address the affordable housing requirements of both FMC Willow and Harbor Point. The affordable housing component would make up 91 of the Willow projects, 370 homes. Here's a rendering of the Terracina building. It includes 90 affordable units and one onsite manager's unit. It would be a mix of one, two, and three bedroom homes. 50% of all units would be two and three bedroom homes. And it would also have 3,600 square feet of ground floor retail. This image is taken from Willow Street as if you were looking at the building from Willow Street. So that retail is fronting Willow. It also includes 100 parking spaces and an upper level courtyard with a tot lot and barbecue. This site plan helps to visualize some of the locations of those amenities and features. The primary access to the building and the site would be off of Willow onto a to be constructed street. This image is actually showing the second level of the building. The ground floor of the building is retail, the residential building entrance and lobby and parking. And then there's additional parking in a surface lot to the left of the building in this image. In total, as I said, there's 91 residential units and 100 parking spaces. And it has a density of about 79 units an acre. Of the unit breakdown, there's 41 one-bedroom units, 26 two-bedroom units, and 23 three-bedroom units. The applicant is now nearing resolution on the unforeseen title issues caused by SFPUC that Ms. Lopez presented in the previous item. That means that the Teresina project now meets project readiness requirements to apply for its final financing. The application deadline for that financing is September 8th. And if successful, USA Properties, who is the affordable housing developer and applicant, would be awarded low-income housing tax credits on December 9th and start construction in spring of 2027. USA Properties is also the owner and developer of another similarly financed development on Willow Street that was developed as part of the Bayside-specific plan. That is the Newark Station Seniors Community, which you may also be familiar with. So the applicant is now requesting to amend the affordable housing obligation satisfaction agreement to facilitate Teresina to move forward. Specifically, the amendment would do two things. One, it would extend the deadline to complete construction by up to three years. And the second is it would revise the affordability restrictions for the building to reflect current market conditions and financing requirements. As to that first point, the extension, the first amendment would extend the completion agreement from December 31st, 2027 to December 31st, 2030. This would accommodate the SFPUC delays and the affordable housing finance schedule. A significant portion of Teresina's financing is planned to come from low-income housing tax credits, also referred to as LIHTC. Because of those unforeseen title delays, USA Properties has not been eligible to apply yet for LIHTC. With the title dispute resolved, the project is now eligible and USA intends to apply on September 8th. If successful this round, USA could commence construction by May of 2027 and finish sometime between winter of 2028 and spring of 2029. The typical construction period is somewhere between 16 and 24 months. USA Properties is an experienced and qualified developer with a lot of past success securing tax credits, including here in Newark, but LIHTC is still a competitive program. And so if they are unsuccessful in September, this extension would give them about three more chances to apply and secure tax credits and still complete the project by the proposed deadline. The second component of the amendment is to the affordability levels of the project. The project was approved based on the requirements of Newark's 2014 affordable housing requirements and the distribution of units across very low, low and moderate income levels of affordability reflects the percentages of that policy. That policy was developed in accordance with Newark's fourth cycle housing element and the housing needs at that point in time. We are now on the sixth housing element. And so as you'll recall, in January, City Council amended the city's affordable housing requirements to better address market conditions and local housing needs. The First Amendment proposes converting 20 of the originally approved very low income units to low income units and 20 or all of the originally proposed moderate income units to low income units. This would not change the total unit count and overall it would result in a lower average affordability level of the project of 60% as opposed to 73%. This lower average affordability is necessary to be eligible for low-income housing tax credits. The LIHTC program does not fund projects with an average affordability over 60%. There's also not currently an identified need for moderate income units, which would have higher rents than fair market unrestricted rents in Newark. As for the very low income units, unfortunately there is not an identified funding source to support the full 47 units at this time. Units that are deeply affordable to this extent require operating subsidy, not just construction subsidy. And typically that operating subsidy is provided by programs like vouchers from the County Housing Authority. Newark has been successful in getting vouchers in the past. The Cedar Community Apartments has 60 vouchers, Timber Senior Housing has 20 vouchers, but the federal government is reducing funding for housing vouchers and the County Housing Authority is entering a funding short haul and is not issuing new vouchers at this time. For that reason, it is necessary to amend the affordability mix if the project is to proceed at this time. If vouchers become available in the future, the project could apply for them. There could be individuals who have tenant-based vouchers who could apply for the project, who could apply to live at the project and have those lower incomes. But for the purposes of the LIHTC application, USA Properties cannot make those assumptions on future conditions. Council does have the option not to approve the amendment. And this slide illustrates that alternative as described in the affordable housing agreement. Should council elect not to approve the first amendment and let the agreement expire, that would happen on December 31st of 2027 or sooner. if the parties agree to an earlier date. In that case, the city would take ownership of the affordable housing site, but would not receive any affordable housing impact fees from either the Willow or Harbor Point projects. The site would still be restricted to affordable housing, but the city could pursue a different program, a different funding strategy, unit count and mix, special populations, all of that. And the city could solicit interest from affordable housing developers itself. That could still include USA Housing, USA Properties, or it could include another affordable housing developer. This option would delay the project, however, by further years and cause the city to accept costs associated with operating, maintaining, and securing the site, and potentially allocating housing impact fees to a future development. The Terracina project does not have any financial commitments from the city. Based on all of these factors, it's staff's recommendation that the city council adopt a resolution authorizing the city manager to execute the first amendment to the affordable housing obligation satisfaction agreement for the FMC Willow and Harbor Point projects. This concludes my presentation and I welcome your questions along with the members of the project team.

Thank you, Mr. Coulomb. Before I get to council comments and questions, I'm gonna go ahead and open up the public hearing. There's no public hearing. Thank you. I'd just like to bang the gavel. Is there anybody in the audience who would like to speak to this issue? Questions or comments from Councillor Contaccio?

Yes, Your Honour.

Councillor Contaccio.

Yes, Your Honor, thank you. And thank you so much for the presentation as well. I did have a question of curiosity regarding the change in the amendment. I do notice the change with the units. that would change from very low income to low income and so on. My question, though, is does that in any way change the amount of proposed bedrooms? Like, for example, I believe you stated it would be three-bedroom homes. There would be 23 of those. Was that originally intended as well, or did that also change?

Yes. Thank you for your question. The amount of bedrooms per unit would not change as a result of this amendment.

Okay, I understand. Thank you. I did have one other curiosity question regarding the amount of parking because I was thinking if I heard you right, that there would be 23 three bedrooms, but 91 units total and 100 parking. So there would be about nine units that could have the two spaces of parking. How would that be determined?

If possible, I'll invite USA Properties to answer questions about their operations. Yeah. This is .

Hi, Leanne Thomas from USA Properties Fund. Typically in these affordable housing communities, we will do a lottery system or do a request on the first come first serve basis. We usually have a transportation management plan that our property management in-house USA multifamily management overseas and they will provide the guidance for parking on the additional stalls. I would like to say that this was originally conceptualized as a TOD with a future transit coming to the site. So the reduction in parking was to encourage other options on transit.

Okay, thank you so much for that clarification. And I also like the idea of the retail and mixed use. Thank you.

Thank you, Councilmember Cattaccio. Other questions, comments? Councilmember Little.

So I just had a couple questions. We talked about 91 affordable units, 279 townhomes totaling 370. It looks like the 91 apartments are all affordable, right? Is that correct? But different levels. Is that all correct? Okay, so my question number one is, you know, we have this mixed use retail area that we're talking about. Has anything been leased out yet? Has there been interest yet? Or are they going to be phantom retail? I know it hasn't even been built and stuff like that, but that's a concern of mine.

I'm sure I'm happy to address that. So USA Properties is primarily an affordable housing developer. We do have a few mixed use communities and what we have seen in the past be successful is that the community is leased up and it has a pedestrian look and feel. So the retailers out there, they want to know who their customer base is and they want to see the area activated. It's very hard for them to foresee the future of that construction. Also, our financing is dependent on winning an award from the state of tax credits. So our delivery timeframes are not guaranteed until we have that allocation. I am on the acquisitions team and I do work on reaching out to retailers. So if there is a suggestion, as soon as we break ground is a great time to start engaging local brokers. If there's suggestions for the area or things you would like to see, I'm happy to reach out to those people.

Okay, my other question was on top of what Julie said, and I agree with what she said, you don't have a lot of houses, excuse me, you don't have a lot of parking spots for the affordable housing. You guys are saying that affordable housing, they're gonna be looking for public transportation. We never talked about where people are coming for retail gonna park. So we have that other layer of onion on this as well. So we have the residents and then we have the retail. So one of the things I wish that I could have been more part of this because I would have requested more parking spaces or maybe the bottom layer have another parking space of that sort. So that's one of my concerns is if we're going to have retail, especially in that area, I just don't feel like there's enough parking for that.

Yeah, thank you for that. It's definitely a consideration on all developments that we work on. One of the great things about being an affordable housing developer and having a mixed-use retail is that we are not projecting rent for the space. So we're able to offer it to brand new, unique local businesses that encourage a neighborhood look and feel. It doesn't need to be a Panera, right? It can be somebody who has a local art gallery who wants to showcase their art as people are walking their dogs to the park. And since we don't have a rent expectation, we have that flexibility of finding the perfect tenant. So one that doesn't need as much parking would be preferred.

Okay, and then one other thing I want to just add to this and just be aware of this is, are we going to have public transportation in that area? And this is something that was brought up as well. You know, if we're saying these people have low income housing, there's a chunk of them, they're not going to have flights. Are we going to have some sort of bus system or something? So that's just something else, another layer of the onion in all this that I'm just concerned about. But I like it. It's pretty. I just have some concerns about some of the things that were, I think it's pretty, but I have questions about some things. Thank you.

Councillor Gundahl.

Yes, thank you. And thank you to USA Properties. Before I start, I just want to say the project that you have, the Newark Station Seniors is excellent and very well run. I hear very positive things from that community. So I just wanted to compliment you on that.

Thank you.

SECONDLY, I APPLAUD STAFF AND THE DEVELOPER FOR WORKING TO MAKE THIS PROJECT AS COMPETITIVE AS POSSIBLE FOR THOSE TAX CREDIT, WHAT DO YOU CALL THEM?

LIHTC.

LIHTC. I UNDERSTAND WHAT YOU'RE TRYING TO DO TO MAKE IT SCORE THE BEST SO WE CAN GET THOSE RESOURCES INTO OUR COMMUNITY. I THINK IT'S VERY WELL DESIGNED AND I THINK THE TWO AND THREE BEDROOM UNITS ARE IN VERY STRONG NEED IF I READ OUR HOUSING ELEMENT PROPERLY. Please let the City Council know how, or through staff, how we can help with the competitive process, if there's anything we can do. I won't speak here for my colleagues, but I think that we would really do what we can to help, so please let us know. Secondly, we have an excellent economic development staff that would be very happy to be able to find that would enhance that community where they could offer lower rent. I know the mayor would love to stop and get a drink of coffee when he's out walking the dog. And the other aspect I just wanted to note is that this area doesn't have restriction on street parking. So even though there's not a lot of parking, the whole length of Enterprise doesn't have houses directly on it and Willow also will have some street parking. So I think you'll find, I know from talking to those residents that there's a strong desire for i think a local coffee place or something like that i think you'll find um i think you'll find a lot of receptiveness for that so i'd i'd love to see i'd love to see that happen the community would really love to would really love it's a it's a transit oriented development the transit is is there but limited um people would love to at least be able to have a pedestrian I'm in support of these changes I'm in support of these changes because I understand what you're because I understand what you're trying to do is to make it trying to do is to make it competitive so we can get those competitive so we can get those state resources into our state resources into our community and provide this housing community and provide this housing so so I'm going to compliment you so so I'm going to compliment you on that and unless I got that on that and unless I got that wrong that's my last comment thank wrong that's my last comment thank you thank you vice mayor yeah you thank you vice mayor yeah just a brief comment for staff on just a brief comment for staff on this you know this request I think this you know this request I think threads a pretty narrow needle for me threads a pretty narrow needle for me on

when I would find it reasonable to find acceptable a three-year deadline on the affordable housing instruction, especially when the Harbor Point is already constructed. I think in this case, given the circumstances, given the fact that it's going to end up being more affordable, we're ending up looking at a reasonable proposal here. I'm glad that it worked out that way. I think going forward as we look at More and more projects coming to us as we're asking for you know The affordable housing to be built that we look you know to make sure that if there are unforeseen Circumstances that happen that we could end up with you know When there need to be changes made that they change more in this direction Right when we're writing those agreements to make sure that you know if the affordable housing, you know does present a greater challenge than that what we end up with at the end is something that's more affordable and like this one, fingers crossed, I guess, but does actually get built. So just something to look at because I think it is tough for me to see a three-year delay here. It makes sense in these circumstances, but going forward, I would like to make sure that we don't end up in a situation where We're, you know, at other projects we're looking at delay and delay and delay with maybe, you know, less, or maybe the circumstances justify it less than here.

I agree with my colleagues' comments, especially those of Council Member Grindahl. I love this project. I was part of the council at the time that we originally approved this project. There's so many things I like about it. I love the the improved mixture of housing for low income residents. It's a challenge for people to stay and work in the Bay Area and this is demonstrating the City of Newark's commitment to provide affordable housing to our community In addition, I love the three bedrooms. We don't see a lot of affordable and this is I think the second project we've seen recently where we have three bedroom units being built. We don't see those in most cases and it just makes it more affordable for families and that's really where we need to focus. Love the retail. 3,600 square feet. As Council Member Grindahl mentioned, I'd like to see more of a neighborhood retail focus, and I think that's what we intended all along when we first approved this project. People want to be able to walk down to get a cup of coffee or go to a market or do something of that nature. There's no retail in this neighborhood, and this is demonstrating to the community that we recognize the importance of retail along with housing, and this is certainly a move in that right direction. So As I recall from the comments on the previous presentation, the transit area is gonna be parking, if I recall correctly. Is that parking that will be available for this community to access and utilize?

THANK YOU FOR THE QUESTION. THE PLANS FOR THE TRANSIT THE PLANS FOR THE TRANSIT STATION HAVE NOT BEEN FULLY STATION HAVE NOT BEEN FULLY DEVELOPED YET. DEVELOPED YET. WE HAVE A CONCEPTUAL PLAN WE WE HAVE A CONCEPTUAL PLAN WE AGREED WITH AS PART OF THE AGREEMENT AGREEMENT AGREEMENT IN WHICH THE DEVELOPER WOULD IN WHICH THE DEVELOPER WOULD BUILD A PARK AND RIDE KIND OF BUILD A PARK AND RIDE KIND OF LAYOUT. the way the entitlements work for this project is that once all the FMC willow units are constructed then the city will then at that point get kind of ownership of that property okay so it's it's a good number of years away so it's on the planning planning and housing divisions work plan to come to city council after we are able to study a little bit and come with some options so we can talk about what the appropriate use for that site will be

And I had understood that one of the interim uses as we look at future transit opportunities that there would be a parking lot with some landscaping. Is that something that you're mentioning we're still a few years away from that concept as well?

Yes. Okay. Yes. Those are the improvements as of today that the developer would have to build as part of the entitlement agreements.

Okay, and let's assume for a moment that we do convert that temporarily to a parking space. Would that be then available to those folks that are living in that affordable building right across the way?

If that's something that City Council would like, sure.

Great, great. That'll take care of the parking issues maybe in the future, Council Member Dahl.

Yeah, actually the last comment of the Mayor triggered a question on my point of regard. And I think it's going to be the same answer. But would it also be possible, you know, as a part of that plan to be able to do like a small farmers market or something like that in that area as a way of energizing the retail? Is that something that the council could consider later when that comes down the road?

Yes, absolutely. That space has not been programmed yet. Thank you. So that will come in the future.

And again, just tagging on to my colleague's question, Mr. Mnuchin, I'd like to see every opportunity looked at for that parcel. If we anticipate that ultimately at the end of the day that transportation is not gonna be something that's gonna be developed at that location, I would certainly ask staff, to put on their creative hats and see what other opportunities are available for that space. Maybe additional retail, things of that nature, but it certainly asks staff to get creative as we look at that site. We certainly don't want a vacant lot sitting there indefinitely if transportation is not one of those uses that we would ultimately anticipate to be there. I want to thank USA for the work that you've done. I know my colleague mentioned the senior affordable housing complex. I was there when that was approved and when it was opened. It's a great complex. A lot of seniors are living in units that are not only very comfortable, but comfortable. It demonstrates, again, to the community that we're focused on affordability, whether it be seniors or just low-income folks in general. So thank you for USA and all the work you do, and I certainly wish you the best of luck, and I hope your application in September is successful.

I just have one question and then just one comment, if that's okay.

Sure, and I would ask city staff, if they're successful, could you let the council know? We'd be excited to hear that news. Council Member Little?

So I just have a question, an assumption, but I just want to confirm it. Will there be a large elevator available for the residents to be able to use?

Yeah, that's one of the great things about this site, and this building in particular, is that USA has approached Housing for All. And so this helps people with ADA issues, all that stuff. And part of the Housing for All is rents start at $984, and a family making $117,000 a year or less can qualify. So there's a wide range of income levels. and a wide range of opportunities for people with disabilities and all of our units are ADA adaptable. So if we have a higher ratio of people in wheelchairs or other disabilities, we can make the units adaptable for them.

Perfect. Well, I just say I do like this project. I love the colors. I like everything about it. All I'm requesting is just to keep the things that I mentioned in the back of your minds, you know, and just be aware of some of the things. But I love it, I think it's great, and I want to copy everything the mayor said. It's great. I just want to, just if you guys could just keep those items on your mind, please.

Yeah, and if I can just mention one thing that's really unique to USA Properties is our partnership with Life Steps. They are a non-pardonate by putting a dry goods pantry and a commercial size fridge, and we partner with the local food bank. So if any of our residents are facing food insecurity, they can have those options to work with Lifesteps. I love it.

Thank you.

Thank you. Before we get too excited, we do need to move, we do need to, I'll make a motion to approve this amendment to the agreement.

I'll second. Council Member Cantancio, any last comments?

No last comments.

Great, let's take a vote. Council Member Cantancio on staff's recommendation.

Fine.

Council Member Little?

Yes.

Council Member Grindahl? Yes. Vice Mayor Jorgens? Yes. I vote yes as well. Can we return to our enthusiasm for just a moment, Vice Mayor? Ladies and gentlemen, our last item on the agenda tonight is to adopt a resolution of the City Council of the City of Newark calling an election to be held on November 3rd, 2026 for voter consideration of a ballot measure seeking voter authorization to repeal and replace chapter 5.04 of the Newark Municipal Code to amend the current business license ordinance establishing policies and procedures in connection with such an agenda. election, requesting the Board of Supervisors of the County of Alameda to consolidate the election with the general election to be held on November 3rd, 2026. Requesting certain services of the register of voters of Alameda County with respect to the consolidated general municipal election and providing for submittal of ballot arguments and rebuttals and authorizing the filing of an impartial analysis. Mr. Mnune.

Is your mic on? Okay, my apologies. Thank you, Mr. Mayor. This is part five of our ongoing discussions as to whether or not the council should place before Newark voters an update and modernization of the existing business license tax ordinance. Before I proceed any further, I'd like to acknowledge that we have online Mr. Eric Myers from HDL, which serves as the city's tax consultant. We also have available in the audience this evening, our Community Development Director, Mr. Steven Turner, our Deputy Community Development Director for Economic Development, Ms. Angela Sway, and our Deputy Finance Director, Ms. Gloria Del Rosario. To provide some brief background, and actually, before I go into the next slide, I'll talk briefly about the agenda, The discussion this evening is two part. The first part is on the discussion on BLT model. What is the council's preference in terms of having a business license tax model for voter consideration? And we'll have more of that in a moment. Second part of the discussion this evening is the actual placement of the business license tax measure. on the November 3rd, 2026 ballot. That would include the form of the ballot question and ballot arguments, rebuttal arguments, and what that process looks like. So again, we'll have a two-part discussion this evening. To provide some background and context, if the council may recall, back on April 9th, we had Mr. Myers from HDL present the council with an overview of the existing business license tax and offer some modernization options. At that point, the council directed staff examine a variable gross receipts model. At the May 28th city council meeting, the city arranged for Mr. Godby from Godby Research to present his findings as they relate to a feasibility survey results, essentially polling results. Godby Research is an independent public opinion polling firm. On June 25th, staff presented the recommended approach as far as the BLT model as well as a report on business impacts in our business community outreach efforts. At the July 9th city council meeting, the council further refined the ordinance and at that point directed staff to present an alternative that would include reduced retail. And that's where we're at tonight, July 23rd. That's the gold dot there. This is the ballot placement action item. Should council direct staff proceed with this item, then this item would be considered by Newark voters at the general election on November 3rd. If the council may recall at the previous council meeting, council reached a consensus with respect to the July, this is what we're calling the July 9th model. This included some changes from previous council work sessions on this. And at that council meeting, council directed staff to provide an alternative and that is the reduced retail alternative model listed there on the screen. Essentially reduction of the general retail tax rate. Staff has taken the time to evaluate this so that it would be essentially revenue neutral to the city under that category that the city currently receives. We came up with an analysis to reduce the tax rate to make the monies, should this be approved by Newark voters, equivalent to what the city currently receives, and that is contained there in the reduced retail alternative model. If the Council may further recall, during those discussions at the previous Council meeting, Council directed staff to consider an additional classification as they relate to grocery stores. As indicated in the staff report, staff's conclusion on this is that it would be administratively difficult to implement. There would be considerable discussions and disputes as it relates to the definition of what is a grocer. And then that would, of course, frustrate the purpose of the ordinance, which is to streamline and modernize and frankly simplify the business license tax ordinance. Also note that no other agencies have such an ordinance specifically addressing and classifying grocers in their own classification. So as you can see on the screen, we have July 9th model, the rate would be 0.043 for general retail and then the reduced retail alternative that the council had asked for us to develop, that rate would be 0.030. And this slide speaks to what I just said a moment ago. General retail, currently we have 631 businesses that fall under that classification. The current revenue the city receives is $396,000 under that classification. The July 9th model would yield $571,000 and the reduced retail alternative would be approximately $400,000, which would be consistent with the current revenue that the city receives. As the council is aware, we've shown the slide multiple times. These are illustrative businesses. These are not Newark, specifically Newark businesses. These are illustrative examples so that the council and the public can get a good sense as to how the attacks would impact some of our businesses here in Newark. We took the opportunity to put some red boxes around the three businesses that we've been showing the council and the public that fall under the general retail category. The first one being home-based retail. As you can see, there's no difference between the July 9th model and reduced retail alternative model. That's because that business has gross receipts of less than $100,000. The second example is the shoe store, gross receipts of $200,000 under the reduced retail alternative model instead of paying 68 on the July 9th model. they'd be paying $55 per year. And then the last business is the restaurant, generating gross receipts of $625,000. Currently, that restaurant would pay $431 to the city for business license tax. And under the July 9th model, that amount would be 251. Under the reduced retail alternative, that would drop to $183. As the council and the public may recall, we've shown the slide a number of times. This is taking those illustrative business examples and comparing them across peer jurisdictions. We do include the cities of Fremont, San Leandro, UNC, and Hayward, as well as I indicated in the past, Hayward voters will be considering an update to their business license tax later this fall. We took those three businesses and compared them against those peer jurisdictions, and the results there are on the screen. I do note that we have prepared a draft ordinance for council's consideration this evening. The rate as it relates to general retail has been left blank. So any motion tonight should take into account a direction to insert the preferred rate. Also the ballot question, which we'll get to later on, should the council decide to go with a reduced retail alternative, then the total revenue would have to be reduced. And we'll get to that later in the discussion. So that's essentially part one of our discussion this evening. If the Council, Mayor, if you'd like to break it up at this point to have a discussion as it relates to the specific BLT ordinance, we'd be happy to do that, or I'd be happy to continue with the second part of the discussion, which is the placement items.

Before I do that, Mr. Bennu, can you go back to, I just want to make sure that the council understands. So the first question before us is whether or not to adopt the July 9th model. Correct. Or alternatively, the reduced retail alternative model. Correct. That's really the question before the council currently. Colleagues, do you want to pause here or do you want the city to give the entire presentation and we just comment? I think it makes sense to discuss here. Pardon me? I think it makes sense to discuss here.

We have a question that we need to answer.

Great. Before I get to the council comments, I'm going to ask any member of the audience if they would like to comment on the first part of what you've heard. Comments from the... Yes, please, come forward. And the fact that you're commenting on this item now does not presuppose that you can't comment on the next item that will be presented as well. So let me welcome Lily May, former mayor for the city of Fremont and the new executive director of the Newark Chamber of Commerce. Welcome and thank you.

Thank you. So good evening, mayor and council members and audience. I'm honored to stand before you tonight as the incoming president and CEO of Newark Chamber of Commerce. And this is the second meeting that I've attended and shared with you on this item. And I wanted you to know that this was a deliberate choice because this matters. The businesses of Newark matter and the kind and thoughtful work that you're working on this in terms of putting this out to get this right and correct deserved hopefully my presence and my attention and my respect to this. Over the course of the four meetings from April, May, June 25th and July 9th, I've watched the council do something that doesn't always happen. You actually listened, which I think you cited earlier. You reviewed two different rate models which worked through additional business classifications and when the feedback came in, And I was here last time and we did hear from some member of the audience who talked about their perspective as a long-time grocer. You also looked at evaluating what types of opportunities were there for bringing down rates on general retail, property rental, making sure that the neighborhood restaurants or the long-time family businesses were also addressed. The small business family, home-based business wasn't left behind. And I saw that you've looked at things in terms of businesses under 100,000 receipts, still keeping it at $25. A restaurant doing 625,000 in sales. I was looking at your examples. pays 183 to 251 here compared to, and I had to do the comparison, but 962 in Fremont. This is a council acting with care and it shows. And also I wanted to speak with inflection of what's coming because that's some of the things that I'd like to be able to see hopefully, because Newark and the city and the region is at a genuine inflection point with advanced manufacturing, biotech, LOGISTICS AND DISTRIBUTION, THESE ARE SOME OF THE INDUSTRIES THAT DIDN'T EXIST 50 YEARS AGO WHEN YOU WERE LOOKING AT THIS PROCESS AND THAT ARE ACTIVELY EVALUATING THE EAST BAY RIGHT NOW. SO LOOKING FOR CITIES THAT ARE READY AND WHEN A SITE SELECTOR OR CORPORATE REAL ESTATE TEAM IS LOOKING AT NEWARK WE WANT THEM TO BE ABLE TO SEE A CITY THAT'S MODERN, TRANSPARENT, WELL STRUCTURED WITH A BUSINESS ENVIRONMENT AND SO A 56-YEAR-OLD ORDINANCE MIGHT NEED A LITTLE UPDATING SINCE 1970. I came right before that. But anyways, tonight's vote does. And so this modernization isn't a burden on your business community. I also looked at how some of the evaluations actually lower the rates for some of the existing businesses. It's an investment in the kind of new work that longtime businesses are proud to call home. and that a next generation of innovative companies will I think be excited to join. So that's why I think I stand as a representative or speaking on behalf of the Newark Chamber tonight in full support and thank you for doing it the right way. So that's it.

Thank you very much for your comments. Are there any other folks in the audience that like to comment on the first portion of what was presented by the city manager? I also want to, again, thank the new Executive Director of the Chamber. I also want to remind my colleagues that you may recall that the President of the Chamber of Commerce, Deborah Montes, was here last month as well, and also spoke in favor of the proposal as presented by staff. Questions, comments? Council Member Little, I'm sorry, I'm gonna go to Council Member Contoncio first. If she has questions or comments.

Yes, thank you, Your Honor. First, I also wanted to say congratulations to those who are joining our Chamber of Commerce and to Lily May for coming to the meetings as well. I didn't have any questions at this time. I believe I understand that there's the difference in the July 9th and the July 23rd difference in rates for general retail. So that's what our focus is. That's correct.

That's correct.

THANK YOU.

YOU'RE WELCOME. YOU'RE WELCOME.

COUNCILMEMBER LITTLE. COUNCILMEMBER LITTLE. I LOOKED AT THE NUMBERS AND I I LOOKED AT THE NUMBERS AND I KNOW WE'RE DEFINITELY ABOUT THE I KNOW WE'RE DEFINITELY ABOUT THE SAME OR LESS. SAME OR LESS. BUT I WANTED TO POINT OUT I'M BUT I WANTED TO POINT OUT I'M REALLY GLAD WE TOOK INTO REALLY GLAD WE TOOK INTO CONSIDERATION REDUCING THIS BECAUSE CONSIDERATION REDUCING THIS BECAUSE RETAIL THE MAIN THING THEY'RE RETAIL THE MAIN THING THEY'RE SUFFERING FROM IS ONLINE SUFFERING FROM IS ONLINE SHOPPING. SHOPPING. PEOPLE ARE GOING TRYING ON SHOES PEO conscious of the situation that's going on with retail. And if we can help take some of the stress off, that's even better. So that's awesome. Secondly, as a restaurant professor myself, there's so many overhead charges in restaurants. You have the overhead, you have the wages of the staff, you have perishable foods and stuff like that. So I'm really glad that we're keeping that into consideration. So I do really like these new changes.

Before I go to other council comments, City Clerk, is there anybody online that would like to speak to this item?

No, Your Honor.

Thank you. Other questions or comments at this point? Councillor Gondal.

Yeah, I have a couple questions I think for Mr. Myers, hopefully he's online. At our last meeting, There was discussion about whether the business license would apply to a real estate agent's commissions that they earned overall or whether it applies to their commissions that they earned only in Newark. And the answer given was that they would only, they would only have the taxable tax rate applied to their, to their Newark earned commissions, which of course got me thinking about other businesses that are also, also providing services outside of Newark, whether or not, whether or not their purposes, whether or not their, they would also need to separate their Newark profits from others. So first of all, if I could ask Mr. Myers, is my understanding correct? Because I hate to go down the road if I'm wrong.

It is correct that... What the city can tax is the taxable activity that happens in the city as measured by the gross receipts in this proposal. So, yes, for the real estate brokers. And as to other businesses, it would depend because the location of the customer is not controlling.

Is not controlling.

Correct. Correct. Okay. It's the location of the taxable activity.

So the example I like to give, and certainly correct me, Mr. Myers, if my example is incorrect, you're a general contractor located in the city of Newark, and you're doing business at a home in Fremont. That would not be gross receipts that you would reflect for your business license tax in Newark.

I'm going to be a tax consultant weasel and say... Yep, that's generally true. There might be some weird exception, but yes, that is correct. That is how it would be approached because the work is being done at the job site in the other locations.

Councilman Goodall. Yes, thank you. So if I understand that properly, maybe you can just explain it to me. Say you had a manufacturer that was headquartered in San Francisco, unfortunately we haven't brought them here yet, Angela, but headquartered in San Francisco and they manufacture a widget in Newark, sell it in Fremont. the transaction of sale occurred in the San Francisco office, the delivery is to Fremont, what would they pay the tax on? The value of nothing or the value of only what they sold to Newark residents?

Neither. So the way that the proposed ordinance is structured, Again, it helps to keep in mind because it can be a little bit confusing when we think, say, with an analogy to sales tax, because this is not a sales tax. We have to look at the taxable activity that's occurring in the city of Newark, and then we have to figure out how to measure that. And so there'd be two ways we would measure what the taxable activity was in Newark in your hypothetical. The first is if there is... If the manufacturing facility is actually charging, which it may or may not, depending on how the company is structured, for its services, then we would tax on the gross receipts like any other business located and operating in the city. If they don't have those traditional gross receipts, the ordinance is structured such that we would then look to cost of operations as the alternative measure of the taxable activity happening in the city.

Okay, so just if the company were to charge itself a dollar for the manufacturing, then they could pay the tax on that dollar?

No, sir. That dollar would then be less than the cost of operations, and so they would be required under the proposed ordinance to pay the greater of the cost of operations or the gross receipts.

Okay, so how would distribution pay? A distribution company, would they pay based on the value of the goods that they're shipping or based only on the payment they received for shipping things?

Generally speaking, they're going to be paying based on their service charges, what they get paid for conducting their business.

Okay, thank you.

Yes, sir.

Vice Mayor Jorgens. So correct me if I'm wrong here. I'm looking at the staff report. It looks like under the two models that we're looking at, one we're guessing generates approximately 5.4 million and then under the reduced retail, that's a 5.2 million, is that correct?

That's the additional sums of money above the existing 1.4 million baseline.

I was just, yeah, my question was more when we're looking at the reduced retail alternative model versus the July 9 model, we're talking about a difference of about 0.2 million.

Correct. About $175,000. All right.

I think then given that and given the constraints that it could put on some of our lower margin retailers like grocers, my preference would be that we move forward with the reduced retail alternative model. And because I think our grocery seats, from what we're looking at, it's going to look pretty similar, but could make a big difference on some of those specialty grocers. So as we're looking at this question of which of these two models do we want to see going forward when we start looking at ballot language, my preference would be for that reduced retail alternative, although I'm certainly not opposed to the July 9 model.

And I agree with you, Vice Mayor, on the reduced model. You know, we need to demonstrate to our community that, you know, we don't have kind of preconceived notions as to which direction we're going to go. I want the community to know that when they come here, that we hear them. And as I think Council Member Little mentioned, you know, retailers are struggling with a lot of increased prices to them and their products and their overhead. And their wages and if we can demonstrate that we've heard from the small retailers that your voice does matter to us and we're certainly taking into consideration the hardships that you're dealing with currently, I agree with you that I would support the reduced model as well. Mr. Mnuchin, second portion.

Right. So there is an enabling resolution that has been attached to the staff report. It calls for a variety of actions for staff to execute, and this is necessary to place the item before Newark voters later this fall. That resolution includes the following. It calls for the election and places the ballot measure on the November ballot and requires us to coordinate with the Alameda County Registrar of Voters Also provides for a process for submission of valid arguments as well as rebuttals. And last but not least, it directs the city attorney to prepare and submit an impartial analysis showing the effect of the measure on existing law. All those actions are contained in the resolution that has been prepared and attached to the staff report this evening. The ballot question, pursuant to state law, the ballot question must be in the form of a yes or no question. It cannot consist of more than 75 words. Up there on the screen is the proposed ballot question. I'm not going to go ahead and read it to you. I would like to take note of two things. One, in the middle of the ballot question, it says, shall the measure be adopted updating Newark's 56-year-old business license ordinance? The form of the question that was submitted as part of our independent public opinion research had the word amending Newark's 56-year-old business license ordinance. At one of the previous city council work sessions on this item, the council discussed replacing amending with updating, and that appeared to be the council's consensus. And if the council would like to have some discussion on that aspect of the ballot question, they should do so this evening. The second item I'd like to highlight is that at the bottom of the ballot question, it does say raising $6.8 million annually. It sounds like the council's preference is for the reduced retail alternative. So any action tonight would include direction to amend the statement to reduce it to $6.6 million annually. State law does contain an orderly process for the submission of ballot arguments as well as rebuttal arguments. Pursuant to state law, we cannot have more than 300 words each for and against the ballot measure. Those arguments must be submitted to the city clerk by 2 p.m. on August 6th. Rebuttals of no more than 250 words must be submitted to the city clerk no later than 2 p.m. on August 17th. state law allows for a variety of opportunities and options for the submission of arguments and the rebuttal arguments the past practice going back for at least 15 years has been for the council to designate the mayor to submit the argument and rebuttal argument the the state law does authorize the city council to hold a city council meeting to adopt the arguments for and against considering or they could delegate it to two council members. Like I said a moment ago in the past, the past practice has certainly been to direct the mayor to go ahead and submit the arguments for and against. Staff recommends taking the same approach for this ballot measure. So finally, staff's recommendation is to approve the resolution as presented with direction to insert the reduced retail rate into the ordinance as well as to amend the ballot question to reflect the reduction of revenue from 6.8 million to 6.6 million. That concludes my presentation. I'd be happy to answer any questions that the council may have.

Thank you, Mr. Mnuchin. I'm going to open up to the audience if there's any questions from the audience regarding this item now as a whole. City Clerk, is there anybody online that would like to speak to this item?

No, Your Honor.

Great. Mr. Mnuchin, we're going to go ahead and handle this as one motion. Correct. I heard from the Vice Mayor that he prefers the reduced rate. I indicated I prefer the reduced rate. Council Member Contancio, your preference on the reduced rate or the July 9th model?

I also prefer the reduced rate, especially because it is true that retailers are suffering and it also allows us not to have to line item, which would be more tedious and difficult for us. So I think that overall, I think this is a great option.

Councilor Little, comments on the reduced model or the July 9th model?

I like the reduced model. I think it'd be better next time that we don't call it a BLT. That's one of my favorite sandwiches, and I'm hungry, so we keep mentioning that over and over again.

You're hungry, huh?

Yeah, I was thinking that. Every time I see it, I smile. No, I think it's great. I think it's fair. I think it's fair. And I think that's one of the big things is that the whole purpose of this is it's fair. There's a lot of really big businesses that don't pay enough, and there's a lot of small businesses that pay too much. So I think this is a really good way to equalize it. So I do believe in the reduced one. Thank you.

Councillor Grindahl, comments on the reduced model or the July 9th model?

The... Given the challenge and disparity with applying a gross tax to retail, I agree with my council colleagues that it's better when you have a business that has such a tight margin, if you're applying it to their gross receipts, it's fundamentally unfair. So this is less unfair. So I would be in support of that.

Given that then, I'd like to make a motion to adopt staff's recommendation with the amendment that under section three of the resolution where in the question to change that to raising 6.6 or $6,600,000 annually until ended by voters. And then I would like to designate the mayor to submit the argument and rebuttal.

Thank you, Vice Mayor. Can I get a second? A second, all right.

Can we have a comment?

Of course, Council Member Gondal.

So I'm not in support of this effort. I think that, in fact, the Chamber discussion executive director did correctly note that we're in an inflection point. We are at a point where we need to be attracting business to our community. The benefits of having a business in community far outweighs these costs. The benefits that we get from the tax increase We have businesses and we have residents who are facing major inflationary pressures, major budgetary issues. So I believe that it is irresponsible to be raising taxes at this point when we should be particularly on the businesses that we can be growing are our way out of. any future revenue issues, and this actually undermines that, so I'm strongly in opposition to this motion.

Councilmember Contaccio, any final comments?

No, Your Honor.

Thank you. I absolutely do support the recommendation by the Vice Mayor and seconded by Council Member Little. We are not a business looking to profit as the result of our consumer residents in the city. We are the government. And with that comes a real responsibility to provide services that our customers expect day in and day out. They expect when they dial 911 that there's going to be a police officer or a firefighter at their home. And we're competing against other cities in the Bay Area to provide top salaries to the most professional police force in the Bay Area. We need to raise taxes to be able to provide the services, the park amenities, street improvements, all those things that our customers expect us to deliver. As mentioned in my last comment, last meeting, we're looking at a modest deficit in 29, 30, 30, 31. We need to make sure, as we have historically, to manage our finances appropriately. We take a conservative approach to how we spend our money. We don't do it willy-nilly. We're one of the few cities that actually can demonstrate a modest surplus in our budgets. We've done an excellent job on pension reform. So as much as most folks hate taxes and nobody likes taxes, we need to raise taxes on those folks for the most part have been underpaying their business taxes for the last 50 plus years. It simply gives us the opportunity to provide the services that our community expects that we provide day in and day out. So I support this motion. Let's take a voice vote. Councillor Contaccio, how do you vote on the motion?

Your Honor, if I may, just want to make sure we're clear on the motion. So the motion from the Vice Mayor is to adopt the resolution as presented, including direction for the Mayor to author the arguments for and against, or excuse me, argument for, as well as the rebuttal. Yeah, I'm not gonna do one and the other. And then as well as amending the ballot question statement, so instead of 6.8 million, 6.6 million. But also, I would assume the Vice Mayor's motion included direction to insert the preferred tax rate for the general retail category under the proposed ordinance. So currently it has a blank, so we would editorially insert .0003. I assume that motion included that.

Yes, the motion should include that information.

And the seconder of the motion, do you agree with that? I do agree with that. Great. Councilman Cattangio, how do you vote on the motion as just described by the city manager?

I vote in favor, aye.

Thank you. Councilman Little? Council Member Grendel?

No.

Vice Mayor Jorgens? Yes. And I vote yes as well. So this moves forward on a four to one vote. Thank you, Mr. Benun and thank you to the city staff. I know we've seen this several times now and we appreciate the hard work that staff did in bringing this forward to us. So we appreciate that. We're at City Council Matters. Council Member Cantancio, City Council Matters.

Yes, Your Honor. Thank you. I believe that there is also an American Cancer Society Walk for Life, also known as Relay for Life, at the East Bay on Saturday, August 15, at Newark Community Center Park. So it's free to attend, but fundraising options are also available. And I also wanted to remind folks to shop Newark. Thank you.

Thank you, and just to add on to that, Council Member Cantancio, the Newark Optimist Club in partnership with Newark Rotary is gonna have a garage sale this Saturday at the Mayor's House over on Ponderosa Court. You're certainly invited to come over and say hello. You're certainly invited to come and purchase secondhand items and or certainly make a donation. Your contributions would be greatly welcomed. Council Member Little.

Darn it. Well, I'm going out of town. I'm going home to Texas. So I'll be gone for a week. So it's 105 right now in my hometown, just to let you guys know. So think of me, please. Keep me in your thoughts and prayers. I'm totally a Californian now. So on August 29th, I'm mentioning this now because we don't have our meetings and this event's going to happen. It's going to be the Newark's first ANNUAL RECREATION SPORT AND WELLNESS FAIR. IT'S IN PARTNERSHIP WITH THE NEWARK LIBRARY AS WELL AS THE EAST BAY REGIONAL PARKS. THE GOAL OF THIS IS TO OFFER SOCIAL WELLNESS, MENTAL WELLNESS, PHYSICAL WELLNESS, AND JUST EMOTIONAL WELLNESS, JUST TO HELP PEOPLE OUT. IT'S GOING TO BE FOCUSED FOR SENIOR CITIZENS. I'M INVITING THE TRI-CITY WOMEN'S CLUB. I'M INVITING THE SONS AND Sons in Retirement group, and other groups like that. And the goal is for them to make new friends and make emotions, so a chance for social clubs and things of that sort. And as for kids, I've invited the Newark Football Club, the Newark Soccer Group, everybody, the cricket clubs, and everybody like that. It's gonna be at the Newark Library. It's gonna be fun. It's a free event, and the goal of it is just to get people off the couch, go out, meet friends, get to do fun stuff and things of that sort. It's also gonna be celebrating Newark's fifth anniversary of the library. So I can't believe it's already been five years. So we're gonna have a big birthday party and everything too. So it's gonna be a fun, fun event. The next thing I wanted to say was a big shout out to CERT training. The reason behind that is this past weekend, I went to California Academy of Sciences and I went into the earthquake stimulator room and that was awesome. But the point that they made is we're expecting, it's due. And I think it's really great that we're making the effort and we're doing all the training and things of that sort. Because I was in the 6.9 generator thing and it was quite scary. So shout out that we're doing that and thank you for that as well. And then I also wanted to do a big thank you to Roya. And I also want to thank Linka and David. I have been wanting to do a roller skating rink in Newark for a while. But of course, cost is expense. I know I'm so excited. I'm trying to keep it together. And so I was watching a documentary. Of course, we don't have the land. We don't have the space. But I want a roller skating rink. So I was watching a documentary on pop-up roller skating rinks, which they come out, put flooring down, bring out skates, a couple of hours, and poof, they disappear. So I reached out. I want to say a huge thank you. I reached out to Roya and David and Linka. And I just said, hey, I really want this pop-up roller rink. I think it's going to be a lot of fun. And they took initiative. They started. And I sent them a couple of leads and stuff. So excited, I think this is a great part of childhood memories and this is gonna be something to bring more recreational activities. So we're gonna have a pop-up rink in Newark and hopefully we can do it every month or something fun like that. Last but not least, I just wanted to, yeah, you noticed I went today to American Red Cross for my 30th blood donation today and I was bragging to the mayor and what did you tell me? blood okay and so but I do want to let you know American Red Cross desperately needs blood right now and I can proudly say that it's not in Fremont it's in Newark sorry so we're very excited please go out and donate your blood it's very very important and they have Oreos and they have really nice juice drinks there for free yeah they see yep yep yep so it's a very big deal please find out but it's a desperate we are now American Red Cross so thank you very much.

Councillor Gundahl.

I just wanted to note that by the time we come back from our recess, school will have started. So to the kids that are thinking they have a lot of summer left, not so much. And hopefully everyone enjoys their back to school. And so I wanted to be able to say that, thanks.

Well, I wanna apologize to all the kids that might be listening and understand that you're, it's gotta be past your bedtime at this point.

Teachers, teachers too.

Vice Mayor Jorgens. Yeah, so a long time ago now, we started this meeting by giving a proclamation to the Portuguese Fraternal Society of American Councils. So I've been sharing stories about Newark history. I thought it'd be good to talk about the history of the Portuguese community in Newark. So the first Portuguese Americans in Newark were primarily farmers, like most people in Newark were at that time. And then on September 10, 1921, Portuguese community organized formally as council number eight of the Sociedade Espiritu Santa, or SES. That organization would hold their first Holy Ghost celebration soon after that. And even in the early part of the 20th century, when there were not very many people around here, that celebration would still bring 1,500 people to the pavilion. every July and as Kind of said track a little bit the first pavilion released the first big building on that side was actually built in 1880 by the railroad in those early days It was a two-story Barney and tennis courts there you had stables I'm not something you need anymore, but it was there but then SES Would purchase the pavilion grounds in 1940. They're responsible for building building the buildings you see now and Since that time, they've ensured the pavilion remained an important community center for Newark, so thank you to the Portuguese community for all their contributions to Newark's past, present, and future, and best wishes on the 103rd Holy Ghost Festival.

So we're going to do roller derby. Does that mean we, the council, are going to be forming a roller derby team and take on competitors?

You've already told me I have to run in the marathon for Newark Days.

Yeah, the mile's going to be two and a half, as you may recall. Thank you, staff. A lot of good information tonight. You know, we're really making progress on affordable housing here in the city of Newark, and I want to thank staff for that. It's one of those issues that... is a concern throughout the Bay Area and we're doing our best to try to build that housing. So thank you for all the good staff work that was done this evening. I just want to take a moment to wish my youngest grandson Harrison one-year-old today, tonight. I was actually gonna display his picture, but I thought, no, no, you're going too far, Mayor, with recognition, so let's just recognize Harrison on his one-year-old birthday, and with that being said, it is good to take August off. I remember being a government employee, as Mr. Gondal remembers, and in San Jose, they took off the month of July, and we used to call it no-tie July. We loved no-tie July. no council interference, no council referrals, no dealings with council for a month. We can get back to do the work we need to do, and we're so efficient during that month. So enjoy the month, Mr. Mnune and your staff. They've worked really hard this year. We've accomplished a lot, and I look forward to resuming our work in September. With that being said, I will... Oh, yes. City Manager said we'd be out of here before 10 o'clock, so I still have like nine minutes. Ladies and gentlemen, the last item is for the City Council to consider the appoint a delegate and or alternates to the 2026 League of California Cities Annual Conference and Expo. The League of California Cities Annual Conference and Expo will be held September 23 through 25, 2026. At the Anaheim Convention Center as part of the conference, the General Assembly will convene on Friday, September 25, allowing appointed voting delegates from each member city to consider and vote on resolutions that impact the League of California Cities policy and potential bylaw amendments. Each member city appoints one voting delegate to represent its interests during the process. Councilmember Terrence Grindahl has expressed interest in being our delegate. I support that, but before we vote on that, I'm gonna ask the public if they would like to speak to this item. Is there anybody in the audience that would like to speak to this item? Madam Clerk, is there anybody online that would like to speak to this item?

No, Your Honor.

Other than Mrs. Grindahl? No, I'm sorry. Councilmember Catancho, any comments on this item?

I think that Terrence would be a great representative if he's interested in doing that. I've been at the conference previously, and I think that it's a wonderful time out there.

And Council Member Cantaggio, in case you weren't aware, maybe you were aware, we can send more than one council member to this conference, can't we? Can we not, Mr. Binoon?

Correct, Your Honor.

And we do have a council meeting during that period of time, do we not? So we would probably not want to send more than one other person if there was interest, would that be correct?

That would be correct, yes, of course, unless there's desire to appear remotely.

Okay, is there any other council member that would like to attend? Council Member Cantancia, would you like to attend this conference?

I would have to look into it with my school schedule starting.

Okay, I don't know if this item will come back to the council before that day.

Correct, Mayor. If there's a desire for more than one council member to attend the conference, that is totally fine. That's permissible. The issue before the council tonight is the appointment of a delegate to vote on any items that may be considered as part of the General Assembly. There's nothing scheduled at this point in time. The deadline to submit resolutions is next month, but this action here this evening is specifically

I would like to move appointing Council Member Grendall as our delegate.

And I'll second that motion to appoint Council Member Grendall. And Council Member Contoncio, it sounds as if you would like to attend. You still have that opportunity to do so, but tonight all we're going to be doing is appointing Council Member Grendall as our voting delegate. The motion's been made and seconded. Council Member Contoncio, how do you vote on that motion?

I vote aye. Thank you.

You're welcome. Council Member Little? Council Member Grindahl? Yes. I vote yes as well. Vice Mayor? Yes. Okay, that passes unanimously. I think that's it.

That's correct, Mayor.

With five minutes to spare. Ladies and gentlemen, we're going to adjourn. We'll see you in September.

Thank you.