Council raises sewer rates in 4-3 vote

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Thank you. Thank you. Thank you. Thank you. Thank you. All right, I'll call to order our regular City Council meeting. And if we can start with our invocation by the Chaplain Mary Ann Hawkins. Welcome. Let's pray. Oh God, our help in ages past, our hope for years to come. We give you thanks for the ability to gather this evening to see to the needs of the city. We pray for Butte County and Chico in particular, for the state of California, for those who are elected to office and those who are appointed. We give you thanks for their work on our behalf. We pray tonight that you would give wisdom as they have important things to consider for the city to move forward. Give us a sense of hope and wisdom as we listen to the conversation that we can also be a part of.

We thank you for our city. It's in your name we pray. Amen. All right. We stand for the pledge of allegiance. Madam Clerk, can you call our role for us? Okay. Let's see. Council Member Goldstein? Present. Council Member Hawley? Here. Council Member O'Brien? Here. Council Member van Overbeek? Here. Council Member Winslow? Here. Vice Mayor Bennett? Here. Mayor Reynolds? Here. All right. Speaker card announcement. Anyone wishing to address the council on any matters listed on the agenda should first complete a speaker card found at the back of the chamber. Once completed, please turn in your card to the city clerk. The speakers are taken in the orders they are received. And once the first speaker begins, no additional speakers will be taken.

Persons demonstrating rude, boisterous, speaking on matters outside the jurisdiction of the city council, or engaging in otherwise disruptive behavior will be called to order. If such conduct continues, I may call a recess requesting removal of such persons from the council chambers, adjourn the meeting, or take other appropriate action as necessary. Mr. Ryan Jones, can we have our closed session announcement for a couple of meetings that we have? Yes. Madam Mayor, happy to do that. We actually have three closed session meetings to discuss. One was on June 9th. There was a city manager recruitment closed session and direction was given to the staff. Same thing on June the 15th last night. City manager recruitment and direction was similarly given to the recruiter and to staff.

As for our closed session earlier this evening, there were five items on there. And the city manager employment, there was direction provided. Direction was provided to our labor negotiators. The two and then two existing litigations, the Waddell case and the Schwab case, direction was similarly provided to legal counsel on those items. That's my report. All right. Thank you very much. Item 1.5. Matthew Allen, can we please have you come forward for our presentation on the status of Bidwell Mansion. Welcome. Thank you. Thank you. And good evening, Mayor Reynolds, City Council members, City Manager Sorensen. Thank you for inviting California State Parks to provide this update on the Bidwell Mansion regarding your, or following your motion on May 19th.

My name is Matthew Allen. I'm the district superintendent for California State Parks for the Northern Buttes District. And I've heard your discussions and I want to just start off by saying that we completely agree with your sentiment that was expressed at your last meeting. That while the state manages this landmark as a state historic park, that it remains a vital civic asset and is deeply woven into the fabric of the community. My primary goal tonight is to provide a transparent summary of our technical findings, our timelines, our next steps, as well as the state's legal processes and administrative framework that we're up against as we move forward through a capital outlay project. If you want to continue, I'm going to go ahead and I'm trying to get it on the display.

Would you like me to pause for a minute? I think you can go ahead and get started and City Clerk should have it up here shortly. Okay, so podium, see it. See is.

It's very quiet in here. Shh. I apologize. No pressure. So, Mayor Reynolds, would you like to take like a five-minute break so I can—oh, there it is. There we go. Thank you. Thank you. No, it was a five-second break. Thank you. Thank you. Now, following the arson fire on December 11, 2024, a team of our specialists have conducted a thorough structural evaluation. The baseline findings confirm a total interior loss. Every wood-framed floor, ceiling, joist, door, all were burned completely and collapsed into the first floor and basement levels. Regarding the masonry, the primary brick structure is obviously still standing, along with several multi-width interior brick walls. However, the interior walls did suffer localized structural failures across the tops where the collapsing floor joists had torn away.

In total, the estimates are 30 to 40 percent of all remaining brick structure would require extensive repair, repointing, or full reconstruction or replacement if it were to be reused to support any new loads for future use. Retaining the standing masonry would involve significant engineering and financial hurdles. Before any interior fire debris can be removed, engineering plans mandate that an extensive shoring system be put in place to both support the exterior and interior walls. Because workers must operate around these fragile structures, debris clearing must be done strictly by hand. No equipment can access the site. Furthermore, testing revealed that the building's brick wall lacks adequate in-plane shear strength to meet basic seismic thresholds.

If we are to reuse the standing masonry under the California Building Code, we will be required to address this safety concern. Now, to address the Council's interest in documentation, State Parks does possess precise pre-fire records. Because the mansion was undergoing exterior rehabilitation at the time of the fire, we have extensive measured drawings and exact pre-fire mapping of the structure. If a full reconstruction path is chosen, several original historic windows and doors were off-site and saved, and we can use those as exact physical prototypes for replication. While the landscaping on the grounds were also impacted by the fire damage, I just want to take a brief moment and pause and thank the City Council, along with Richie Bamlett, the urban forest manager for City of Chico, who worked closely with State Park staff, and your recent vote to designate the massive magnolia tree out front that was planted by John Bidwell himself as a City of Chico heritage tree.

It was a profound moment for the community. Concurrently, it also won the designation of State Champion Tree due to its historic size and being the largest southern magnolia in the state. The post-fire structural assessment was designed to serve as a flexible technical baseline. It is not a final prescription or provides any direction on the next steps. I will also mention that the structural assessment is posted on our website, along with an executive summary, if you have not taken the time to look through those documents yet. Because there is a vast range of potential futures for the site, additional technical evaluations will be required once a preferred path is chosen. The report establishes what is left and what is technically viable.

State Parks is taking a deliberate approach to avoid a hasty structural removal. In historic preservation, once you remove a historic feature, it is gone or lost forever. We do not want to make irreversible decisions or changes to the site until we have all of the information available to us. Now, it is critical that both the Council and the public fully understand what a full reconstruction would mean under strict State Preservation Policies, Practices and Guidelines, along with compliance with modern building code safety laws. While the pre-fire documentation allows us to more accurately replicate the exterior to its original design, the interior provides many additional challenges. Because the framing and all of the interior was entirely lost, the alternative historic building codes that are available in certain projects would not be available to us under this circumstance.

Therefore, modern California building codes will apply. So what that means is that because we have this existing footprint where we have strict structural rigidity inside the building with the existing brick walls, it will be difficult for us to incorporate mandatory fire sprinklers, stairs and egress access, elevators for accessibility, new plumbing, electrical. All of that could be incredibly invasive, infeasible or prohibitively costly. Because we must protect life safety and guarantee equitable access, along with as much historical accuracy as feasible, a rebuild will likely require some non-historic alterations to the interior floor plans. While the outside will still mirror the 1868 building, the inside will be a modern replica.

So we want to be transparent. The potential limitations that we have of a full reconstruction, it will strive for historically documented accuracy, but will require modern code compliant facility that meets its intended public use purpose. Now, before we launch a detailed and costly feasibility study, we must narrow our broad choices down to a single path. And we're relying on three collaborative pillars. Number one is the public input. This is that reimagined Bidwell Mansion visioning process that we are underway with. This will help us to narrow down the options and also help us to answer a fundamental question. How do you want to use the space inside? Whether it's for community features, educational programming or exhibits, the choice will determine our technical scope.

Pillar number two is consultation with the Mechupta Indian tribe. Because the mansion sits on territory originally inhabited by the Mechupta people, State Parks is engaged in formal and confidential government-to-government consultation to help ensure that their history and their perspective help shape the final outcome as we move forward. And pillar number three is the State Historic Preservation Officer consultation. This is a future step that will help guide us once we have our local visioning set. This process helps ensure compliance with legal preservation standards. And now I want to speak to the Council's discussion regarding project costs and timelines. Moving a major public works project forward on a State landmark requires navigating rigid State administrative processes.

We cannot generate a final cost estimate or legally request funding until the community helps us narrow down the scope to a single preferred alternative. Once we finalize the public vision, our sequential roadmap becomes clear. First, a feasibility study will help us focus strictly on the path that we determined, look at the precise technical requirements, timelines, and preliminary costs. Second, with all of this information, it allows us to draft a scoping document and a concept that State Parks would submit with a recommendation to the control agencies that work up above us. Third, the process moves into the State's formal capital outlay process. This is a multi-year budgeting pipeline process that we cannot get out of.

It is funded on a multi-year basis where year one becomes preliminary planning, year two is working drawings, and year three allows us to go out to statewide public bid to look for a qualified contractor that is able to do the work with the path that we have chosen. However, I'm awesome. However, I'm awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome I also want to emphasize that State Parks' vision extends far beyond the mansion. We want to take a holistic look and an opportunity at the entire two-and-a-half acre grounds. This includes updating the general plan. This could include updating our interpretive master plan, providing new or additional spaces with community and public input to allow for school groups, community events, anything we can do to help update and provide additional access to the grounds, updates to our visitor center and our exhibits, and provide more inclusivity in our programming and education.

At this time, I'd like to briefly just have our district services manager, Jared Zucker, join me at the podium to discuss the Reimagine Bidwell Mansion process, where we're at, the status, and the immediate next steps. Thank you, Superintendent, and good evening, members of the Council. So as the local planning lead for the Reimagine Bidwell Mansion planning process, it's really my role to listen to the community, understand what their needs and wants are for that space, and then distill it into those actionable, data-driven planning decisions. So our community outreach approach is really focused on this multifaceted aspect where we're really trying to encourage robust and what's the word for it?

Representative community engagement. We're also trying to ensure that our public engagement process is accessible so that again, multimodal, we have a stakeholder group that we convened, and that's comprised of various museums, businesses, tourism groups, local government, the tribe, et cetera. And that's important to ensure that they are challenging our process, that they're providing input on it, and that they're also promoting this process to the greater community so that we can have that public engagement. So stakeholder input is complemented through the pop-ups that we did. I know I saw many of you at the pop-ups that we did at the Farmers Market here earlier this year. We also did the Museum Weekend.

We also did an online survey, which had broad representation throughout the community. And then we also have done, back this past April, a public workshop where we had about 60 attendees. So another outreach approach. So I guess the outcome of that outreach is essentially we reached more than 500 people through our pop-ups, through our survey effort. We had about 1,000 respondents. And then at our public workshop, we had about 60 folks and had great community dialogue around, again, what people were wanting to see with that site. So we're still reviewing the data associated with that survey. But one thing that I think is important to share, one of the key takeaways, is that we saw about 65 percent of our respondents really did favor the historic reconstruction option.

And I think it's important to note, though, that there is a pretty interesting gap between the older demographic and the younger demographic, with the latter really favoring the non-reconstruction options. So we'll have to figure out how we kind of navigate that divide. And then just as a reminder, you know, these treatment options are the historic reconstruction, reconstruction for different types of uses. So whether that's education space or event space, community group space, those sorts of things. Whether we're just preserving the structure in place, just the ruins as they are as you see it. And so whether we just commemorate that site, which would likely involve tearing the structure down and doing something, again, to commemorate that site and that space.

So I think it's important that, you know, what we heard from the community at those pop-ups, what we heard through the workshop, what we heard through the survey, is really consistent. I mean, I heard the same similar themes when I was doing those pop-ups as what those outcomes were out of that survey, which is important because obviously we have a gap between what we're hearing from the public at those face-to-face community meetings that we see in the survey. That's problematic and we would have to figure out and navigate that. But luckily, we do have that alignment through those engagement efforts. So another takeaway, I think, which is also important, is that, you know, the community really is longing or hungry for us to reopen this park and have it back as a community space.

They really want us to lean into the things that we're doing well, but also figure out where we have, you know, gaps in our interpretation, how we're telling the story of the Machupta people, and also, you know, the immigrant population that essentially helped, you know, build the Bidwell Mansion in the state and also the early Chico community. So those are important things that, you know, we're taking seriously into heart and that we would be reflective in this, you know, this plan moving forward. So next steps, our next concrete milestones, actually tomorrow we'll be having our next stakeholder meeting and I believe several of you, if not all of you, are invited to that meeting. So hope to see you there.

You'll hear similar information about our engagement process, but we're also going to be using that stakeholder meeting to help us frame how we're going to go back out to the community at our public workshop in August, which will help us again present our engagement and how we've done that. And then also refine those planning alternatives so that we can move forward with one planning alternative to then move forward with additional analysis as Superintendent Allen mentioned with the feasibility study. And again, honing things in so we can continue moving this process forward. So let's see. I think with that, I can hand it back to Superintendent Allen. Thank you, Jared. So this recovery involves rigorous administrative and technical pipelines and every step is necessary in the process.

I want to thank the council once again for having us here. I invite the public to visit our site, reimaginedbidwellmansion.org, where you can track technical documents, workshops and updates. And I'm happy to hear discussion or field any questions that the council may have. Thank you. All right. Any questions? Councilmember Hawley? No questions, just a comment. I wanted to thank you for inviting the full council to the stakeholder sessions. I attended one myself and I feel your staff did a really wonderful job at creating an inclusive space that welcomed any and all comments. So thank you. Thank you. Appreciate that. All right. I don't see any others. Thank you so much for coming and giving us the update.

Thank you. All right. Consent agendas. All matters listed under the consent agenda are considered routine in nature and can therefore be enacted with one motion. Are there any no votes or canceled disqualifications? I would like to poll item 2.5 because that was noted as originally going to be a discussion item. So I just want to give us an opportunity to perhaps hear staff tell us more about it. Okay. Anybody else? All right. Do we have any speakers? We do not have any speakers. All right. Consider our motion. Move to approve the rest. Second. And that was with item 2.5. Hold. Hold. For further discussion. Councilmember Goldstein? Yes. Councilmember Hawley? Yes. Councilmember Hobre? Yes. Councilmember Hobre?

Yes. Councilmember van Overbeek? Yes. Councilmember Winslow? Yes. Vice Mayor Bennett? Yes. Mayor Reynolds? Aye. Carry 7-0. All right. Item 2.5. Councilmember Goldstein? Sure. So our city manager had noted that originally there was going to be, this would be more of a discussion item than consent agenda. So I was just wondering if you could give us a quick overview of the item and then we'll see if we have any comments. Okay. I'll start and then I'll turn it over to the chief. As I indicated in my email, the fire floater positions were a department request throughout the budget process. If you'll recall when we staffed fire engine one, part of the staffing came from using the existing floaters that are used to fill in during vacancies when firefighters are off for any number of reasons.

Sickness, vacation, training, et cetera, et cetera. I believe in the typical day we have what? 3.2 firefighters off. So this, by not having the floaters, overtime is becoming over and above what the rank and file would like to have for overtime. While it's a little bit less expensive to build full-time equivalents with overtime, there's a limit to how much you can stress your staff to work endless amounts of overtime. So the proposal before you is to hire three additional firefighters that would serve as floaters to fill in during those vacancies. And there are some, some operational advantages and I'll leave that to the chief to describe those. Or from there. Good evening, Mayor Reynolds, City Council members and City Manager Sorensen.

Thank you very much for the opportunity to present this request tonight. As City Manager Sorensen said, the fire department is requesting Council's approval to hire three full-time firefighters to be used as firefighter floaters. Those firefighter floaters would be primarily used to offset vacancies, backfill behind vacancies that are opened up for fire personnel that are currently off on leave, sick leave, vacation, comp time, et cetera. The firefighter floaters are not used to increase minimum daily staffing or staffing additional pieces of equipment. So as I explain this request, I'd like to cover three areas, really. The first being the staffing challenges that we're currently experiencing as a fire department.

Second, how firefighter floaters reduce and make an impact on that challenge. And then third, the fiscal impacts and the long-term benefits of this proposal. So our staffing challenges at the core really revolve around the increasing trend in mandatory forced holdovers. The department maintains a minimum daily staffing of 19 firefighters that staff a truck and five engines. As the City Manager said, we're averaging over three people off per day amongst those 19 people. And anytime a firefighter or somebody is off, that spot is backfilled with overtime to maintain a minimum daily staffing. So what that means is anytime a person finishes their 48-hour shift and they're held on for an additional 24, that is a forced mandatory holdover.

And to give some perspective on that, imagine a firefighter comes into work Monday morning and they're scheduled to go home Wednesday morning. During those two days, they train. They run emergencies, medicals, rescues, fires. They have nighttime calls that result in uninterrupted sleep. And then Wednesday morning, that firefighter is packed up, ready to go home. And the battalion chief calls and says, sorry, you're stuck on for another 24 hours. And so that's a total of 72 hours, sometimes more, that that firefighter is running additional calls, additional uninterrupted sleep at night. And what we're seeing with holdovers is an increased trend over the last three years. In 2024, we averaged 22 firefighter holdovers per month.

And then in 2025, that increased to 34.5 firefighters per month that were held over. And then in 2026, we're averaging right now 39 holdovers per month. So it's a trend that has gone up. And the impacts of these of this trend is beyond the cost of overtime. These impacts on our employees really come down to an inadequate rest cycle between their scheduled tours of duty that are resulting in increased fatigue, sickness, sick leave utilization, potentially additional workers' compensation cases, reduced family home life balance, lower morale, and an impact on the overall workforce sustainability. So my job as the fire chief is to evaluate these trends and make sure that our department has an adequate staffing level to not only meet the needs of what our response to the public is, but also the needs of our employees.

And so as a solution, I propose the hiring of three floater firefighters and how do they impact this challenge? Well, first and foremost, they provide dedicated staffing that allow us to fill vacancies before overtime is needed. So we plug the floaters in first. And as we said, we have over three people off per day. So what that means is a single floater on each shift will cover behind a vacancy nearly 100% of the time. There are a few days out of the year we have nobody off, but it's very uncommon. So these positions provide immediate backfill. And one thing that we've learned over the course of a career is overtime typically leads to more overtime. When you have fatigue, that's going to lead to more injury, illness, burnout, and those vacancies are going to result in more openings that require overtime to fill.

So the floaters are intended to halt that cycle and allow us to rein in the number of mandatory holdovers and the overtime burden on the employees by having that extra person per shift offset one of those. With overtime in the fire service, it's never going to go away completely. And that's not the intention with this ask. The intention is merely to simply reduce our dependency on mandatory holdover overtime required to meet our minimum daily staffing. So with that, let me just discuss the fiscal impacts. The majority of these personnel costs will be offset by an overtime reduction. Now, it's not cost neutral. There is a cost to it because when you have new firefighters that get hired, they're going to go through a recruit and onboarding academy for eight weeks, during which time they're not going to be available to offset overtime.

The other factor is they have sick leave themselves or they have time off during which time they won't be available to offset overtime. So what we've done is provide an estimate. We estimate that three new firefighters will cost $480,000 with salary benefits, etc. We anticipate the number of days that a floater can offset overtime to be around 245 out of the year, resulting in an estimated overtime reduction of $369,000. And that's an average overtime rate of the three ranks. So that is a net financial impact of approximately $111,000 to bring on three floater firefighters to help reduce this overtime burden and the impact of the mandatory forced holdovers on the employees. So what we're asking is Council's approval to hire these three positions and allow fire to come back in the fiscal year with a supplemental request once we have actuals on the impacts of these floaters.

We also anticipate potential additional savings through reduced sick leave utilization, reduced workers' compensation claims, better morale, and better workforce resiliency. Lastly, the floaters also provide critical depth for the wildland fire season in the summer when we have numerous employees that are out fighting the wildland fires, as well as providing extra depth from when we take on important tasks in town, like prescribed prescribed fire burns in the upper part to reduce our fuels hazard. Additionally, they provide depth when there's periods of drawdown in personnel due to workers' compensation use and also vacancies created due to retirements. So in summary, I've discussed our challenges that we're facing and the impacts that floater firefighters have on those challenges, as well as the fiscal impacts and future long-term benefits of those positions.

And the question that's here before us tonight isn't whether or not the fire department can continue to provide our level of service without these positions. We can and we have. But the question is, do we want to continue to use a staffing model that requires us to force our firefighters on up to 40 times a month with a trend that's increasing? And my position as fire chief, that's not sustainable. It's not good for our employees and it's not good for their overall health and wellness. The fire department does understand the city's financial challenges and the difficult decisions that the council must make when requests like these are brought to your attention. We don't take these requests forward lightly.

Again, the proposal is not to increase our staffing. It's to address a staffing challenge that is having an impact on our workforce wellness and overall resiliency. The department believes that these positions are a prudent investment in not only our workforce, but in the community that we serve. And it is for these reasons that I recommend and I ask council to approve the request to hire three additional firefighters for use as floaters and to allow our associated staffing allocation amendment to be included. I want to say thank you very much for the time to explain this request and I am open to any questions. All right. Council member Goldstein, did you have something else? Well, first, thank you, chief.

Great presentation. Yeah, I do have a question for the chief and or our city manager. I would love to be reassured about the financial impacts of this. It's good to hear that in addition to the costs of hiring the new employees, we would recoup a lot of that through saving on overtime costs, but there still would be a cost and we'd see that budget supplemental coming up. So I'm wondering if we know where we could find the funds for that. Would be general funds. And we did have adequate fund balance to take care of, I think, about $380,000. This is about 111 the first year. Mm-hmm. Okay. Well, that is reassuring. Thank you. Council member Winslow. So last year we had some, like, we got an explanation of how much it would cost to fund another fire engine.

I had talked about it some years ago. I've been told, yeah, we could just fill in that engine with just the floaters. And then I looked into it a little more and asked the fire chief at the time and was told that that doesn't really make sense because we're going to be stretching them out in overtime. So even the cost estimates we saw last year in staffing fire engine one said that it would make sense for us to fill in these floater positions. We were going to need to hire more than it seemed like we're going to need to hire, which is one of the reasons why I didn't vote to fund that fire engine, preferring that we prioritize the other obligations the city has in capital improvement budget. But a majority of the council did fund that fire engine, so it only makes sense for us to go forward and fulfill the full obligation, which is to staff these.

Yeah. Council Member van Overbeek. Chief, why have the holdovers gone up so dramatically in the last couple of years? Do you know, that's a really good question, and without, without knowing everything, every intangible, I think one of the biggest things is, is we're seeing a change in a generation of workforce, right? I think we have a workforce that values their time, home, and their time with family. Back when I started here, 20 years ago, we had a lot of people that would work every day, you could possibly get your hands on, and I think times are changing, and, and actually as a fire chief, I'm glad to see that. I'm glad to see that there is a greater desire to have that balance, work and home life.

And I also think some of it is, is our greater awareness to the health impacts of sleep deprivation, multiple days on duty, and that effect that has on your health and your overall wellness. And so I think it's a greater awareness, and truly I think people are just wanting to pick up less overtime. So what we're seeing is what was normally grabbed up by a number of employees is now being spread out, and we're seeing that that is not all being picked up voluntarily. The other thing with the big trend that we've seen, or the jump from last year to this year, I think is really because we, that's when we pulled our floaters. So we all expected to see that number increase from last year to 2026. And we're, and we're feeling that.

So I think this is, you know, I know it's a big ask, but it, from my view, is really important to at least take a step, start reducing this overtime burden, and reducing that holdover impact on our employees. Councilmember O' Thank you, Mayor. So for me, and I think for most of us, this is about firefighter and community safety, they go hand in hand. Intermittent forced overtime is necessary, I get that. That's the line of work we're in. Sustained forced overtime does damage to our firefighters and our community they serve. I do understand our fiscal constraints. I'm glad we're mindful of that reality. But the bang for the buck, however, is worth the cost. Our firefighters and our police officers stand in the gap in constant readiness.

That readiness is 24 seven, 365 days a year. That readiness does not respect birthdays. Kids soccer games, anniversaries, vacations, or sleep. It impacts every aspect of their lives. I know that to be a fact. And finding ways to mitigate those very real impacts is a cost I am willing to pay, and I hope our council is as well. Because I believe it is a responsibility we bear as council members and community leaders. All right. So, we are already, or all the council members. Oh, you're not in the queue. Vice Mayor Bennett. I communicated with the city manager previously about this. So, I've got the information I needed. So, financially it makes sense. And taking care of your personnel makes sense.

So, from both sides, it's perfect. What I'm going to ask you to do is come back in six months and tell me how it is. And give me a report, an update, so we can track this and make sure it's working the way you have designed it to work. Will you do that? You mean the full council? Yes. Okay. Sorry, you just said me. Everybody. The council. Yes, absolutely. Thank you. All right. Consider a motion. Move to approve. I'll make a motion to approve. I'm going to second it. Council Member Honser. Okay. Council Member Goldstein. Yes. Council Member Hawley. Yes. Council Member O'Brien. Yes. Council Member van Overbeek. Yes. Council Member Winslow. Yes. Vice Mayor Bennett. Yes. Mayor Reynolds. Aye. They carry seven zero.

How about that? I just wanted to let you know, if you're getting text messages from the public, Granicus, the streaming live, is working, except the sound is off, but the closed captioning is there, so everything is being read at this point. But I have staff online with them and we'll get it fixed. Perfect. I'm glad the captioning is keeping everybody up to date. So if you're being sarcastic, you have to note that they won't hear it in your tone. That is true. All right. Public comment. Member of the public may address the council at this time on any matters not already listed on the agenda and within the jurisdiction authority. The council cannot take any action at this meeting on these requests made under this section of the agenda.

How many speakers do we have, Madam Clerk? We have eight. All right. Three minutes each. Three minutes each. I'm going to call the first three names and if you can go ahead and line up in the middle aisle, that would help. I'm going to call it Janine Stone, followed by JoAntha Guthrie and Greg Scott. So Janine Stone. Good evening. My name is Janine Stone and I'm a professor of economics at CSU Chico. I'm representing myself and my husband, Kurt Kester, a professional civil engineer. We are here regarding the appeal we submitted contesting conditions of approval for our rusty lane parcel map. In April, we appealed a final determination from Public Works regarding the conditions of approval from our map.

To be clear, planning approved our project so long as we comply with Title 18 subdivision standards and Title 18 grants Public Works the ability to modify those standards. They declined to do so and that decision was the subject of our appeal. Last Tuesday, June 9th, we received a letter from the city attorney stating that our appeal had not been processed simply because we missed the filing date. This is a clerical error as we have a copy of our appeal time stamped by the city clerk on April 17th, only seven days after the April 10th determination, well within the 10-day window required by code. We corrected this record seven days ago and have received no response, yet our time to preserve legal remedies continues to run.

From a broader perspective, we have been caught in a procedural loop where Public Works decides on the map we are even allowed to present to planning and refuses to modify required subdivision conditions so that they are proportional to the impacts generated by additional homes on this private dead-end road. Given the sewer fee issue and Prop 218 requirements, I know you are all well versed in this idea that costs must be proportional to impacts. In the case of housing, laws similarly mandate that infrastructure be proportional to a project's externalities, even for codified subdivision standards. My only goal in speaking today is to ensure that we receive our due process. As an economist, I find the amount of public and private resources spent on this process simply to get our appeal heard before you to be staggeringly inefficient.

We humbly request that our appeal is actually agendized for the July 14th City Council meeting and our filing date be corrected to no April 17th in all public records. We also respectfully request written confirmation that we will not lose any rights while awaiting that hearing. Lastly, we request that all future discussions of our appeal be entered into the public record. As we have heard, our project has previously been characterized to Council as too late when this is inaccurate. Thank you for your time, and I sincerely hope we can move forward as a city that earns the designation as a housing-friendly community that supports residential info projects. Thank you. Thank you. Thank you. I'm Joanna Guthrie, followed by Greg Scott and Bo Powell.

Joanna Guthrie, followed by Greg Scott and Bo Powell. Good evening, Mayor, Vice Mayor and Council. I'm Joanna Guthrie from Waste Management. I just wanted to come before you tonight and kind of get you an update on what we're doing. Currently, we are in the middle of a graffiti audit of our commercial bins. Through our smart truck technology, we identified 85 different bins that were needing repair from graffiti. We're taking the opportunity to do it over the summer so we can kind of get it on a clean slate before students are back in the fall. Because that's when we see more graffiti, unfortunately. So, what's happening is we have about 15 to 20 tickets each week that goes out to our staff.

They are prepared to go out and do most of the repairs in the field. However, they are looking at things that the smart truck technology doesn't catch, like some of the missing wheels or extra graffiti that's on the back of the bin that couldn't be seen by a smart truck. So, in those cases when there's a little bit more extensive repairs that are needed, we are swapping out the bins. But for the most part, we're able to do the repairs in the field so that it has less of an impact on the people that have the bins. So, I just wanted to give you an update, let you know what we're up to, and thank you so much. Thank you. Greg Scott, Bo Powell, and then Sam Barber. Good evening. I'm just going to talk about one thing again, and it's enforcement.

I would like to point out that it doesn't matter what your living status is. When you violate a public nuisance ordinance, you should be held accountable. I counted 15 of them today from 3 o'clock until 5.30. Up to and including not just a car going the wrong way on 4th Street, but actually parked the wrong way on 4th Street. Bicycles, skateboards, open drug use, litter, public indecency. It has to be enforced, and I just urge you to please, please encourage that. Thank you. Thank you. Bo Powell, followed by Sam Barber, and Janaya. Memorial Day on Action News, they had their weekly missing person of the week. It was Tracy Zantum. Butte County thought she was murdered. I don't know if she is or not.

They held the murder trial for accusing Richard Pyle. Me and him go way back. I never have liked him, never been involved with him, but he is my stepdaughter's father. He had been convicted as a juvenile, a child molestation. And when my wife was living with him, I tried to get Butte County to keep my children safe. They wouldn't enforce the restraining orders, because he was part of a murder trial, a witness in a murder trial. Butte County made my wife a foster parent of three children, which it wasn't until we found out he had been, that he died a couple years ago, that those children were able to tell me that he had been molesting. They had been molesting them. You know, now they're adults.

My nephew, grandnephew, was murdered in December 2024. We're going to, we have to go to Yuba City. He was an autistic child, murdered by his mother. The coroner still doesn't have a time of death. They fired the coroner. They're making a plea bargain. We went down there to talk with the district attorney. She sent her second. When we get there, James Gallagher is sharing the office with the victims. Here I've been telling this council and the supervisors about the illegal spraying of the farmers, and we got a profiteer sharing the office building with the DA. We all know what they did there, you know, ceremonial. Swearing in. This is a normalized. Every person in that building can be sprayed.

Every one of your children can be sprayed. This is a failure of local government. We spray every 21 year old kid has been sprayed his whole life. That's what we've done to our military. That's time. Thank you. Sam Barber followed by Jenea and then Matt Beshore. Hello. I wanted to express some concern over money's influence on our city council, as well as some of the harmful, misinformative and immature partisan rhetoric being used by council member van Overbeek. A better Chico PAC, which used to be Citizens for Safe Chico, I believe, has poured hundreds of thousands of dollars into our local elections. If you look at the elections before they were around, it was substantially less money. It was a PAC started by Van Overbeek in 2019.

He has received large cash donations from individuals and interests whom I deem morally reprehensible and a danger to the public. The best example I could find was James Gallagher. He's one of the individuals who has donated tens of thousands of dollars to this PAC and helped start it. This is someone who recently said he was honored to receive an endorsement from Trump. Now, I don't know how much y'all have been paying attention, but he's the most blatantly corrupt president and politician in our modern history. He's a rapist, a pedophile, a war criminal, who is protecting billionaires that sexually exploited young women and himself is mentioned more in the Epstein files. Keep it on the subject of Chico, please.

Oh, this is an issue because you're associated with these people. So please don't interrupt me. Thank you. So again, how am I to feel safe when our representatives or my representatives care about me or my safety when they're willing to associate and take money from people like this? For a council member to have the nerve to refer to illegal camping as moral cowardice on social media when associating like people like this and doing nothing when you're actively sitting here rings incredibly hollow. There's quite a few times where the Republican majority on the council has exhibited moral cowardice. I would like to reminisce about a few of those times. One of them was when Palestinian children were here in tears, begging you for help.

They were going through a genocide. They were being called bombers at school and you all shut them up and you wouldn't let them speak. And you violated their freedom of speech. You said that it wasn't within your purview. Those kids weren't asking you to change foreign policy. They were asking for safety and help from their city representatives. We know it's not your job to dictate foreign policy, but it is your job to respond to it accordingly and provide safety to citizens who are going to face the repercussions of that. There was a time when ICE was in town and they took someone. It was over a year ago now. I remember the pregnant woman in tears whose husband they stole. A history professor came in here and told you, hey, the police need to hold these people accountable.

They're violating everyone's constitutional rights. The mayor smiled and nodded in disapproval because she doesn't understand the Constitution. Apparently there was more I was going to say, but you flustered me about with your interruption. Thank you. Thank you, Janaya, followed by Matt Beshore and then Molly Kofta. Hello, counsel. It's been a while since I've been here. I actually wrote a speech this time. On May 27th, 2026, a coward with no insurance and an active warrant slammed into my son's car and fled. My son chased the criminal while on the phone with dispatch, risking his own safety and helping the police to locate a wanted criminal. When officers Booth badge number 77, Russell badge number 69 and Sergeant Reed badge number 13 arrived, they only spoke with the two white criminals in the car.

They asked my son three questions. Give me your driver's license, your registration and your insurance. Not one time was my son's statement taken for what happened to him and his financed vehicle. I am an active member of this community. I have set on the very steps of this council and backed the blue. My oldest son is a black deputy sheriff in this county who wears his badge proudly. I have defended law enforcement. But today I stand here filled with rage and disappointments because your officers, Booth, Russell, and Sergeant Reed, violated my black son's civil rights and his 14th Amendment. They arrested the driver for the warrant, but never was he booked into jail for that warrant. They refused to cite him for the misdemeanor hit and run under California Vehicle Code 2002.

And now this department is refusing to release the body cam footage. This was not incompetence. This was unequal treatment based on race. It's the only thing I can deduce three white officers, two white men in a car, and my one black son there. The 14th Amendment guarantees every person equal protection under the law. But your officers, Booth, Russell, and Sergeant Reed, denied my son that protection simply because he's black. They silenced the helpful black man while he protected a criminal. That was the Chico police. Today I demand the following right now. Reopen the case. Take my son's full statement recorded. Release the body cam footage. I would like reports from the officer's booth. Uninsured motorist, my son has USAA.

We still haven't gotten a police report. Launch a full internal investigation into racial bias and 14th Amendment violations and hold these officers accountable. Thank you so much. Thank you. Matt Besore followed by Molly Kofta. Good evening, Council. Before I start, I just wanted to take a moment to offer my, offer congratulations and well wishes to City Manager Sorensen on his upcoming retirement. We haven't always agreed on everything, but it doesn't keep me from recognizing and appreciating what you've given the city. So anyway, I wanted to come and revisit what I talked about last time, which is the park and the park rangers. Last time I provided some quotes at the time when we were making that conversion from park rangers to sworn police officers who worked as park rangers.

And I wanted to offer some, what might seem as blasphemy in today's environment of, you know, conflating public safety and police. But I think that we should consider moving the park rangers back under public works from the police department. And there's a lot of reasons for this. The main one being was presented by Chief Aldrich to begin with, which is these positions are not being filled. And the reason those positions aren't being filled is what I said in 2017, not this podium, because it's been remodeled, but, you know, figuratively this very podium, which is police officers and park rangers respectfully are not the same people. They perform different functions, and I think the proof is in the pudding on this.

We have not been able to fill these positions over the last almost 10 years. Whereas in 2012, we had when there was an opening for a park ranger position with city, there was 100 applicants in 2010. There was 400 applicants. These are jobs that people want. And on top of it all, it would be cheaper for the city. Park rangers don't make what police officers make. They don't get the same pensions that police officers make. It's a lower pay scale. And they perform a different function. One of those functions I wanted to talk about tonight would be patrolling the park where there was an attempted sexual assault last week. I will applaud the Chico PD for catching the guy, but I don't want to look at this reactively.

I want to look at this proactively. And when we have a regular rotation of park rangers in the park, that helps deter that type element. Another thing, since we're talking about public safety with the park, if we had park rangers within that park, they would know that the section of road on Manzanita between Centennial Way and East Avenue currently has 24 street lights that are out of service. I think there might be a total of 75 there. So a third of them. That's the kind of thing that I feel like when we talk about public safety and we, you know, beat that drum, we got to look at the full picture. And I think that things like that are a big part of it. And so that's all I have to say. Thank you.

Thank you. Molly Copta is our last speaker. Not going to touch the mic. It's been fixed. It's actually the one thing working. Sorry, Debbie. Good evening, members of city council. For the last six months, the Chico Chamber of Commerce has been working with a cross-functional group of community stakeholders to explore the opportunity that was brought about last year to establish entertainment business zones within our city limits. Next week, we are hosting an informational meeting for businesses here in Chico who want to learn more about not only the structure of what an ordinance might look like and become come to life here in Chico, but also what it is and what it isn't when it comes to what you can and cannot do within an entertainment business zone.

So we wanted to make sure we shared that information with as many people as possible. And we're eager to provide information and answer questions about what that can do and that opportunity presents to this community. Thank you. Thank you. She was our last speaker. All right. We don't have any public hearings. So we'll head into item 5.1, sewer enterprise study. Brendan Anabani, Director of Public Works. Yes, thank you. And Deputy Director David Keene will be doing the presentation. Oh, okay. Thank you. All right. Good evening, members of council, Vice Mayor Bennett, Mayor Reynolds. My name is David Keene, Deputy Director of Public Works Engineering. And tonight we'll be continuing the discussion on stewardship and financial sustainability of the sewer enterprise.

So tonight we'll briefly go over the background, look at some alternative revenue sources, and then per council direction, look at some reduced capital improvement program scenarios, and then the anticipated bill impacts from those reduced rate scenarios. And then lastly, we'll finish up with some financing options. So if you recall, there are a series of challenges facing the sewer enterprise, primarily that's deferred maintenance and regulatory compliance, which has led to insufficient reserves. But this was all presented at the March 17th meeting. The key takeaway from this slide is that the sewer enterprise is in a position where it needs to catch up and then critically establish sustainable rates moving forward.

So there's two components to what we're looking to do tonight. So those are the challenges facing the sewer enterprise. And who pays for those? It's the rate payers. And so the way that rates are established are by how much you discharge and the strength of that discharge. So the table you see here before you is from the State Water Resources Control Board revenue program guidelines. And for example, you can see that a restaurant is about three to five times the strength of a residential customer. Therefore, they would be expected to pay more per gallon for that amount of effluent. So that's how people pay is by how much and the strength. So that's how we get the money. Another way to get the money that council is asked to look at is alternative revenue sources.

So the city is currently undertaking a recycled water feasibility study, which is anticipated to come out in December or January of next year. Initial findings are that the cost of recycled water will not be a revenue source. And that is because currently groundwater is in the order of 400 to $500 an acre foot. And an acre foot, just to put it in your head, is a football field a foot deep. And that's how much that would be, $400 to $500. Recycled water, tertiary treated, that's the purple pipe kind that goes on agriculture, is $1,500 to $2,000. So about three to four times the cost for recycled water. So here's a situation that we are now. Today we have good water quality and we have good water reliability.

Now that can change. In San Diego, for example, they get their water from the Colorado River Basin. So they have water quality issues, but also water reliability issues. If there's drought, they don't get the water. Here we don't have that. So currently recycled water is not looked at as a revenue source. So that's where we get the water, the money. What do we do with the money? We use it for operations, staffing, and the capital improvement plan. So on March 17th, we presented a $134.5 million CIP. Those projects are taken straight out of our adopted master planning documents. We have our strategic planning report and our sanitary sewer master plan report. So that's what you've seen. That's what we're calling our original or our low risk scenario.

At the previous meeting, council asked us to come back with some reduced CIP scenarios where we have some tolerable risk. So we've come back with two additional scenarios. So we have the $134.5 million, which you've seen. We'll present a moderate risk, $105 million, and then a significant risk. That's an $81 million CIP. And so to be clear, the risk is obviously physical infrastructure, but primarily financial. So what you don't pay for now, it doesn't go away. You just have to pay for it in the future at a higher cost, escalated to that point in time. So let's get into what risk we have identified. So this is the moderate risk CIP scenario. On the left, we have the drivers. In the middle are the project.

And then on the right is the five-year reduction. So these projects, it isn't a single project necessarily. There are components to them. So we look at them on the five-year reduction. So the pond line, I'm going to go through these one by one so we understand what the risks that we're looking at are. So the pond lining project, we talked about not necessarily needing a concrete line project. And we confirmed with the State Water Resources Control Board that a clay line project is feasible. However, we've gone back to the drawing board and looked at the cost of that. And it is still on the order of $34 million. That is a significant reduction, down $14 million. So there is something there. Next is we have a CIP to remove an abandoned outfall that we have in the Sacramento River.

The State Lands Commission has indicated that they want this removed, but they haven't required us to do so. So we can say, okay, we'll wait. And if they put a mandate on us to do such, we can tell them, we'll put it in the next rate study and do it then. So that's a tolerable risk. The 2027 sewer pipe main replacement, due to the deferred rate adoption from March, we're now in a position where this project needs to be paid for with reserves and other project fundings. So we'll still do the project, but this is the same cycle of activity that we've been in, where we're using reserves and other project funding to fund this. So that project in this rate study goes from 4.2 million to zero. Next is the long-term sewer pipe replacements.

We're reducing that by 25%. But what's critical to note here is that in 2022, we presented a sewer main replacement program to replace every pipe every 100 years. At that time, council said, we want them to last 200 years. This is in addition to that. So this would be the assumption that every pipe in the ground is going to last 250 years. Reasonable assumption, plastic lasts a long time. It's been in the ground 50, 60 years, 70 years. Maybe it will last that long, but that's a risk that we are looking to take under this CIP. And then lastly is the sanitary sewer master plan existing user contribution. And so what this is, is imagine a scenario where you have a new development and a new pipe serving just that new development.

That developer would be 100% responsible to pay for that. Now imagine another scenario where you have a new development, but the pipe goes through town and the pipe needs to be upsized. So the developer would be responsible for their share, but everyone along the way would be getting a brand new pipe. That's what this pays for. So the current assumption is that general plan buildout will occur in 20 years. This halves that or doubles that time and extends general plan buildout to 40 years. So this is the moderate risk scenario that we have presented. And it's a $30 million cheaper than our original presentation. Next is the significant risk scenario here. And I highlighted on the bottom that the risk is that we'll be back with significant rate increases in 2032.

So all the projects in black are the same. The change is that the 28 through 32 pipe replacement is now extended out to each pipe lasting 300 years. And then the critical item for this one is that any water pollution control plant project over a million dollars has been slashed in half. So those projects are bundled. It's not like one specific thing. It's components of a project. It's it's there's usually six or seven parts of a project that they bundle together. So we would prioritize those, take the projects we can't do, move them out to the future, escalate the cost, 6% compounding annually to that year and have to pay for them in the future. So they don't go away. We just defer them to reduce near term impacts.

And then the last one is we take the existing user contribution and we don't save for that. And if a developer comes and they look for their, you know, the city share, we tell them we'll reimburse you or we look at some other financing options to do so. So that's the significant risk that takes us down from 135, 134.5 to 105 and 81 million. So those are the scenarios low, moderate, high or significant. In March, we presented option one. That was the 180%, 3% after those. This is how we'll structure the rate increase. So you have the, the, the, the CIP reduction scenarios. And now we're going to talk about how those will be implemented implemented into rates. You already saw low risk. This is a large year increase one and then 3% moving forward.

Tonight, what we're presenting is six new options. On the left, you have the moderate risk, right? The significant, the 4a and 5a. That's what we've already presented. That's a large year one and then small two through five or B and 5b. We've heard from council and we've heard from community that that first year bump is too much. But recall, if you spread it out over five years, your five year rate is significantly higher. So we're taking a moderate year one and two and then small years three through five to sort of balance that near term impact, but not have the year five rate be so high. And then 4c and 5c is the same as 4b and 5b, but with some debt financing. And so let's get into that. So when it comes to debt financing, we've selected $30 million over a year.

$30 million over with the interest rate of 4% with a 20 year loan term and an annual debt service of $2.4 million. With a total interest paid of $15.3 million over the life of the loan. And the reason we selected this amount is because council has given indication towards cash, but we want to make sure the council knows that debt is a tool that can be used. So we found that keeping the annual interest just under $1 million. So under this scenario, you'd be paying $750,000 a year in just an interest. So any more than that. And it would start to get in the million plus $2 million range. So here's all the options. I'm going to walk through them and give you some things to consider as you look at them.

So what you already saw back in March was 180%. And that's a large year one increase with 3%. And if you look apples to apples to 4a and 5a, you can see we went from 180 to 130 to 95. So what we're presenting tonight is roughly, you know, three quarters and then half of our original presentation. So we have done as council asked to reduce the CIP. Next is the five year cumulative rate increase. And so the more risk you take now, the lower the rate has to be. That doesn't go away though. You do need to pay for it in the future. And that's what I talked about. The significant risk is you still will need to pay for that. We'll be back in the future looking at rate increases then. But over the five years, you can see it goes down on the right.

So as you're considering options, you can see that a cash funded moderate rate, is a 55, 55 and then threes. And then the significant is 45, 45 and then three. So you are saving in those first two years, 10% and 10%, but note that the risk you're taking. So that's something to consider. And then if you're looking at debt compared to debt, it's slightly better under the significant risk scenario. You're going from a 50, 50 to threes to 40 to 35 to threes. So there is some savings there when you take that additional risk from moderate to significant, but that's something to consider. So those are all of the options. And before I go to the next slide, I want to acknowledge that we have roughly 23,000 customers accounts in Chico and 21,000 of those are residential.

So in the staff report, I have customer bill impacts for every customer class. But since 90% of the customer accounts are residential, I want to spend some time focusing on residential. So here is a typical customer bill impact for somebody who uses 7.2 HCF. An average household uses anywhere from two to 10. I think I use somewhere in the order of eight or nine. I got two kids. So it depends what your house uses, but this would be an average bill. So you can see we've spread it out over the first two years. You can see 4B and 4C and 5B and 5C. They spread that out over the first two years and 37 and up accordingly. And then the key is that over five years where you want to land up or land. And as I talked about at the beginning of the presentation, it's key to establish sustainable rates moving forward.

So as you look at that year five, that is where we want to end somewhere in that range. Now, with that said, in the staff report, there are detailed bill impacts just like this. For example, I picked 4C. I could have picked any of them, but I just wanted to show you this is what it looks like in the staff report. And I've highlighted restaurants. And the reason I want to do that is because there's three different scenarios there. There's a low, a medium and a high. So depending on how much you discharge, part of your operational expenses is how much you discharge. is how much you discharged to the sewer. So we've got three scenarios for three different types of restaurants. And so on the top here, what you see is are all the accounts that we have for restaurants.

And what's important to recognize is that most of the restaurants fall in that low to medium range. Certainly there are high discharge restaurants over there to the right. And those people have an operational expense to discharge 71 HCF is roughly 53,000 gallons of discharge a month. So those are the operational expenses of those businesses. And the point of this is to point out that those sewer bill impact sheets in the back, it depends on how much you use. So those give you an idea, but it's highly dependent on how much you use. And so now I presented the cost, the financing options, and we're going to let the director of finance talk a little bit about some of the debt. Thank you, Mr. Keen.

Thank you, Mayor, Vice Mayor, City Council. Included in the direction from City Council was to engage with a financial advisor about possible financing options for the sewer capital projects. We engage with NHA advisors. They are a longtime partner with us who previously worked with the city on our 2017 refinancing of our former RDA redevelopment agency bonds. And then again in 2020 when we refinanced our former State Water Resources Control Board loans for other sewer projects for the expansion. And we issued bonds at that time. They provided us with a list of options for issuing debt. This first slide here is just kind of going over the puzzle pieces that go into considerations for how you can pay for all of these different costs that come into these capital projects.

You can go to the next slide. And then the second slide here is what's available to us over a wide range of options. First is the SRF loans. That's from the State Water Resources Control Board. That is the most inexpensive in terms of interest rates. It's got the lowest at the 2 to 3 percent. So if that's something that is available to us, it is something that is most attractive from that perspective. The thing that is hard about that one is that it is very competitive. So a financial advisor such as NHA would help us kind of package that opportunity and try to get that opportunity available to us. However, it is a long process. It can take up to two and a half years to get that through the State Water Resources Control Board process.

So there is that option. It's not a guaranteed option. And then we do have other options in terms of David talked about the iBank loan. Then we also have a federal with the WIFIA financing and then some revenue bonds and then the private placement bonds. But the difference between private placement and publicly offered private placement is usually that's how our bonds with our RDA bonds ended up being issued. And a bank buys those privately and sells them themselves. So you can see there that those offer a higher interest rate over time. They're between about 4 to 5 percent right now, depending on what the market's doing at any given time. But they are usually a quicker process to get those bonds and financing gone.

And there's more flexibility in terms of when you pay what. So those are options that we can consider if that's the road that the council desires to take. And then considerations with financing. The capital projects that are being paid for with financing that do benefit the rate payers that are going to be using those assets over the span of the time of the finance projects. So they would be paying for that. But then the other side of that is that all the interest that's being paid during that period of time could otherwise be going to reserves are going to be paying for other needs of the sewer fund or other projects. So if this is something that you would like to pursue further, we can get into more depth with that.

Okay. And then lastly, just to kind of wrap this up, the city has performed outreach. We currently have a website with all the materials all the way back to November when the director of finance presented the issues with the reserves. And then both of the workshops held at the finance committee, including all the materials and agenda from the March 17 City Council meeting as well. We've created two educational videos that are posted online so the public can see the extensive treatment and requirements it takes to treat raw sewage and discharge that to the Sacramento River under California state guidelines. And then after council gives us direction, we will have a sewer bill impact calculator.

So somebody can go on there and they can plug in their customer class and they can see what year their bill, what year and what their bill will be. So we have that available once council gives us direction. And then lastly, the Proposition 218 notice where every customer will receive a formal notice of the public hearing. So what are the next steps tonight? If council approves a rate schedule, initiates the Prop 218 notice, we'll be back in October after the 45 day period and we'll have a public hearing. where council will adopt a resolution adopting those new rates and then we'll put the new rates will go into effect in November. And so the recommendation tonight is that council adopt a proposed sewer rate schedule and direct staff to initiate the Prop 218 notice, including preparation and distribution of the public hearing notice.

That concludes my presentation. Vice Mayor Bennett. So I'm going to initiate this with a thank you to the Board of Trustees Meeting. Vice Mayor Bennett, and Deputy Public Works Director, David Keen, for all the work you put into this. I know this is, what, the fourth time you've gone through this, trying to find that sweet spot, for a number that, both our businesses, as well as the public, would be putting arms around, I'm just going to put it that way. So I just want to acknowledge that you have put a lot of time in this. I've spent a lot of time with you, Mr. Keen. And I think it's, we're much closer to where we need to be. We'll see how it turns out tonight. But again, thank you. Thank you.

Thank you. Thank you. Thank you. Thank you. Thank you. Mr. Keen, you win the prize for getting through the fattest stack of slides in the fastest time. Thank you. So there's a couple things I think we know. I think we know we've got a significant project that we need to fund. And I also think we know that tripling people sewer rates is not an acceptable option. I mean, that's just not something that is, works for either individuals or businesses. I am uncomfortable that we'd still, we do not have a clear idea of what it is exactly we have to do. And I respect the fact that there's a lot of variables at play here. For example, whether the state's going to require us to use concrete or clay to find the ponds.

But, and I have a lot of respect for you and what you and Director Audubonny do. But I want to see an outside third party take a look at this and tell us what they think we need. But what we need to do, what I'm uncomfortable doing is asking the citizens to fund something we think we might need, but we don't really know we need. I want to have a higher level of assurance that what it is you're asking us to fund, the citizens to fund, is something that we actually have to do. And I don't want to reach any deeper into people's pockets than we have to. And thank you, Director Martin, for doing the work on the research on the financing. Vice Mayor Bennett. To address your statements, this Corolla has been working with the city for what, 20 years?

30, 30 years, and they are an outside consultant, which advises the Public Works Director on what is needed with the sewer situation. Did they provide advice on this? Yes, Corolla engineers, they've worked with the city for 30 plus years, including our project manager who's been with the city for 20 plus years herself. And they not only performed the rate study, but they performed all of the technical analysis at the treatment plant, including getting our NPDES permits for the past several cycles. So Corolla engineers is our third party consultants and they are leaders in the water and wastewater industry. Okay, so they've been in the middle of this. What you're saying is they've been in the middle of this?

For a long time, correct. Okay. Councilmember Goldstein. Thank you. I thank you so much for your presentation. I know it would have been way too much information to include in one table, but I am kind of curious how these proposed options compare with the ones we're doing. How would you compare with the ones proposed last time? If you have any quick insights into, say, option two, which would have stepped up the increases without debt financing, how that might compare with, say, I need to look back at the table to see what we're proposing this time. Say option 4A in this time. Or if you have any other comparisons you'd like to make from what we considered last round versus now. Yeah, I'd say the primary difference is in the five-year cumulative rate increase.

So by reducing the capital and improvement plan by 30 million and then close to 50 million, that just reduces the overall need over five years. Now, as I talked about, that pushes it to the future. It doesn't go away. But that is the biggest change. As you can see there, the higher the risk you take, the lower the rate increase is going to be. So that's the biggest difference. And Council Member Goldstein, it was my recollection from last meeting that Council didn't have an appetite to pursue anything adjacent to option two, which is, I believe, why staff did not include this on the report. If you remember how steep the rates went up after year five. It was astronomical. Correct. And what you can see here, the case is, if you do a steep year one increase, you end up, let's look at 4A.

You go from 130%, but then in the five year, you're at 158.9, right? If you spread that out over two years, it just goes higher in the five year. So imagine the more you spread it out, the higher it gets. And for the math minded folks, it's the area under the curve. It's if you go up steep and over, you have this big area. If you start slow, you have to go higher to get that same area. So that's the way to think of it is that to get all the money you need, the sooner you do it, the lower it will be in the end. Certainly. I, yeah, it's good to be able to consider all options together. But like I said, this table would have been insane if we had included all the ones from last time. And like Council Member Hawley said, there didn't seem to be an appetite to approve the ones from before.

But just saying that those could still theoretically be options. I'm just worried about taking on more of the physical risk. That's why I bring that up. Yeah, that's why I have for now. Thank you. Council Member O'Brien. Thank you, Mayor. Thank you to staff. This is a project I'm sure when our city manager throws on the table that no one's fighting to take on the sewer rate increase. That's not really a popular or fun job. You guys have handled this well. And I appreciate the extra efforts, especially given our recent direction. And this is much, much improved. But I just want you, if you can, David, talk about the differences between low, moderate and significant risk. What does that risk actually entail?

So. It primarily comes down to financial risk, because to do something now is cheaper in time. The projects don't go away. They just have to be done in the future. We assume escalation at 6%. Could be less, could be more. In addition to that, there's physical risk. Now, the chance that the treatment plant is going to fall over and break tomorrow is highly unlikely. But they could have infrastructure failure beyond the means of the reserves. And if they do, then we would be put in a position to have some type of financing, short-term financing to get through that. So there is a physical risk, but primarily it's a financial risk that what you don't do today is going to come back later and be even more.

Gotcha. Thank you for that clarification. All right. I don't see any other questions or comments up here. How many speakers do we have? We have eight. All right. Three minutes each. Okay. Thank you, David. All right. I will call the first three speakers. And if you could go ahead and line up Matt Deppa, followed by Greg Scott, and then Tracy Vincent. So Matt Deppa.

Good evening. How's everybody doing tonight? Thank you, Mayor, Vice Mayor, Council members. Thank you to the staff as well for your guys' great reports. David, we had a great meeting a few weeks back at the MVPOA. I would just ask to maybe push this down the road a little bit more, maybe put some open houses out for this people, the constituents to come and, you know, actually look at these instead of going online. As I've mentioned before, you know, we were told a couple of years ago that, hey, 27 bucks is going to cover us for a long time and we're good. It's not, you know, our insurance I mentioned is going up. These costs go back to the housing providers, the housing providers. They're going to get pressed even more than they already are, which means they can't fix things, which means no housing.

We have a problem with housing. So I think there are some great options that are out there, but I would ask that, you know, council push this down a little bit longer. And I will put this out there. Hopefully my wife doesn't change locks on the door when I get home, but I will volunteer to be on any committee you guys need to discuss this further. So thank you. Thank you. Greg Scott, followed by Tracy Vincent and then Katie Thoma. That is one heck of a staff report. What I'm urging you to do is pretty much what Matt just said. Take a deeper dive. Take a deeper look. Thanks for that's awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome awesome encumbers the future of every business in Chico's.

It has nothing to do with downtown, this is every business. I personally know six different restaurant owners that probably won't be in business in a couple of years. Just urge you to kick it down the, I hate to say, you hate to use that term, kick the can down the road just a little bit more, take a deeper dive, look at the financial options a little closer and make a decision from there. Thanks. Thank you. Tracy Vincent, followed by Katie Thoma, and then Molly Kopta. So I would actually hope or request that we could continue to take a serious look at putting in a system for recycling water. I know right now, and you talked about how much the price is, but that's because we're in a good water situation right now.

If we just go back to the Davis reports that put out our irrigation needs. So right now, inexpensive, yes, but during drought, which will come again, those prices to get water double and often triple, if not a little bit more. Drought will return, and we need to be setting up for sustainability for the next 20, 30, 50 years. And it seems obvious we're going to have to spend this money, and the state and federal has federal funds for recycling programs. If we have to do this, we'd need to try to get some of those funds, some of that grant money, and probably a little low interest rate financing as well, to do this. We need to be able to reclaim, recycle, and have a sustainable future since we have to do this project anyway.

Thank you. Katie Thoma, followed by Molly Kofta, and then Annalise Ulrich. Good evening, Mayor, Vice Mayor, and Council members and staff. My name is Katie Thoma, and I'm the Executive Director of the Chico Builders Association. And I would like to start out by thanking David for his hard work, and Mr. Audubonni. It's been a lot, I know. But I want to thank you for your due diligence in all of this. CBA sent a letter this morning requesting you delay any decision tonight on the sewer rate increase, and direct staff to hold at least two public workshops where we can have some meaningful public participation and not be limited by three minutes, so that we can have some back and forth, some conversations about, especially the CIP.

The proposed rate increase is complex, and there are long-term financial implications that deserve more discussion. CBA believes public workshops, in the end, would provide Council with a more complete understanding of the available options before adopting any rate increases. Thank you. And like Mr. Depa, CBA would be happy to participate in any sort of committee if you choose to establish anything. Thank you. Thank you, Molly Kofta, followed by Annalise Ulrich and then Brandon Slater. Good evening again. The Chico Chamber appreciates the time, effort, and commitment the city staff have dedicated to this project, and we recognize the work that has been done to date. While important work has been completed, we would like to see greater consideration given to financing options that rely less heavily on direct rate increases and more on alternative funding and financing mechanisms.

We remain committed to ensuring that critical infrastructure projects are adequately funded and completed. At the same time, we believe that it is important to pursue an approach that balances infrastructure needs and the future needs to be able to do with economic realities facing Chico's businesses and rate payers. We respectfully encourage continued exploration of funding strategies that will help minimize the financial impact on our customers while still meeting the city's long-term infrastructure objectives. At this stage, the Chamber is not prepared to endorse a specific funding plan, and we look forward to continuing to work with city staff and other community leaders as additional options are evaluated.

Thank you. Thank you. Annalise Ulrich, followed by Brandon Slater, and then Chris Giampali. Hello. I am speaking tonight on behalf of the North Valley Property Owners Association, and we're asking the Council to hold off on or hold public workshops before any final decisions are made on sewer rates so we can share alternative and independent findings. In addition to concerns regarding the project priorities, costs, and alternative funding sources, we want to highlight another issue we're hearing from our members, which is billing accuracy. Property owners have reported multifamily accounts that never received bills. only to later be hit with large back charges. We have also seen accounts coding errors, including multifamily properties, incorrectly classified under other uses, such as irrigation.

In some cases, when these issues are reported, their concerns are dismissed, and then they're never corrected. Staff has emphasized the importance of generating sufficient revenue to meet the system's needs. However, if accounts are not being billed accurately or consistently, the city risks falling short of those revenue targets again. So before asking ratepayers to absorb significant increases, we believe it is reasonable to ensure the existing system is accurate and functioning properly. So our request is to hold the public workshops, review project costs and alternatives, and then include billing practices and account accuracy as part of that review. Thank you. Thank you, Brandon Slater, followed by Christian Pauley.

Hello, Council. Brandon Slater here, speaking on behalf of the Chico Chamber of Commerce. So we've spent, the Chamber really focused not so much on the dollar amount for the capital improvement budget. We did just happen to pick the number of right around the moderate number. And we spent most of our time trying to figure out if, say, the $105 million number was the capital improvement budget number for the five-year period. Really playing with all the different ways the rates could be raised over the five-year period, as well as all sorts of different debt options, all the way from the extreme of all cash to the extreme of 100% finance. And what I learned in those extremes, I built this spreadsheet, I sent it to you guys all, that you guys can play with debt, you can play with amount of inflation, escalation, all of the different variables you can just plug into the spreadsheet, and it tells you over a 20-year period, which would be the period of time for a loan, likely.

So anyways, we came up with, we really feel that based on if $100 million or $105 million is the capital improvement budget for the five-year period, we feel that a $60 million loan is the appropriate amount, which I think, which results in around a 35% to 40% increase the first year, and then 10% for years, four through, or sorry, two through five. And I do recognize what you guys said earlier about that if you spread those out over the five-year period, that it does, it nets a higher fee at the end, or your sewer rate is a little higher at the end than it would be if you did it all just in year one. But from a business perspective, we're looking at businesses going out of business, and we're trying to balance that with, okay, we do recognize that we do need to take a significant bump right at the beginning, which is significant, I'm going to say 35% is still significant, like we can't sustain that for forever, but that gets us up to, kind of catches us up.

And then you use debt as a tool to really lessen the impact and make that. The other big thing that I learned in playing with finding the right amount of debt to have is that you want to end the five-year period with still an increased amount of capital improvement, but budget and dollars available. So this essentially leaves you with $100 million for this five-year period, plus $100 million for the next five-year period. So that's, anyways, I'd like to see more options on financing. Brendan, that was a great piece of work, that spreadsheet tool. Thank you. Yeah, it is, it is. I'm just wondering, because you're talking about like twice the loan amount that we were even discussing at $60 million, but did you look at how much the interest would cost over that?

And I have your spreadsheet up, but there's a lot of things to struggle with. So, I mean, the other thing to think about is interest, but also you heard David say they assume 6% escalation. So if you loan money to do a project today that's at 4%, that's actually less, it's going to cost you less than saving up cash and doing it later. So I say your money neutral or ahead. Okay, Chris Giampali is our last speaker. Hello, Chris, Giampali, Epic Homes. I agree with everything that Chico Builders Association said. The risks side of it, David, and they did a good job of coming back over there, because I think this was kind of pushed down everyone's throats quicker than normal. The, I look at my homeowners and homebuyers that come over and they have no problem with 30 and 40 year loans.

And when something was coming up in a five year span at this high of number, you know, if you pay cash for a house, you own cash, you have the cash to put it up. So here we had a big burden that we're putting on. And I see more of the restaurants and the commercial folks. As well, there was really no economic impact that was done. And I mean, you got a lot of numbers and you see what it's going to happen to folks. But what is actually going to happen to the general fund? What is going to happen to downtown? And none of that has ever been taken care of. And that's probably not the job of staff. But it is something that folks up, you folks should be taking in consideration. Tom brought up a good point about having Carollo has been doing a lot of work here for years.

There's no doubt about it. But I've seen engineers estimates that are engineers estimates only that. And this is a complicated system that not everybody, not every engineer knows how to value out. So having somebody third party what the costs are to do to that is a way also to help proofread that, hey, but no, those numbers really are 70, 80, 90, 100 million dollars. Or are they 60 million dollars? So Tom is on the right track if I thought anyhow. But the other thought, I guess, would be having a public meeting where you're able to be able to ask questions is not a bad idea, too. Maybe there's one public meeting that's more open than getting my three minutes or my two minutes or whatever it is, and being able to vet with the other folks going and asking the hard questions.

Because there's this is a complicated system that not every engineer or any builder typically uses. But thank you for your time. Thank you, Mr. Speaker, last speaker. All right, who wants to go first? Council member Winslow, you haven't gone yet. Yeah, this is one of the things where, you know, we have a lot of speakers, you know, representing institutions, too, coming, but, like, almost nobody takes their three minutes, and I think that's just the nature of a soory discussion, I guess, that nobody, nobody likes to have the talk. I really do appreciate Brandon Slater and the Chamber in general, just the amount of engagement that went on, because we punted this off and take some time so that there could be, like, more community engagement on it.

And I really appreciate those who went and took the time to sit down with our engineers and our engineers for sitting down with them and coming up with what I think may be some more balanced options. And I'm talking first, not that I, like, have a clear idea of where to go. I mean, nobody really did. I think Brandon did have the most clear, let's go with this, a $60 million loan. And I'm not comfortable with that level of debt finance. I mean, maybe there's something I'm not understanding well enough, and it would price out, but just the idea of punting it off to the future, to be paying that amount of interest. In the long run, I would like to see us shoot for the lower bills in the future, not like we did in the past, by just not raising the bills and not being irresponsible with Management, but by taking care of it.

And some financing, maybe, but debt financing, but I would much prefer a more moderate option and the moderate risk scenario and mostly cash-funded, at least. Council Member Goldstein. Thanks. I was wondering first if our Public Works Deputy Director has anything that he'd like to comment on from our public comment, especially pertaining to the discussion on debt financing. And I wasn't super clear. Council Member Winslow had asked a question on it, basically on the cost of that to us. Like, curious if you have any comments on basically that discussion or any other points you'd like to weigh in on. I think Mr. Slater said it accurately. It's a tool to be used. The option that we presented accrues roughly $750,000 of interest a year.

So, any more than that, you would be reducing the near-term impacts, but you'd be carrying forward a million-plus dollars of interest each year that you'll have to pay for, and those won't be projects you're delivering. So, that is the balance. And debt is certainly something we can go with a higher amount. We showed last time at the previous Council meeting that if you go too much, then you end up paying for that significantly, just to pay down the debt, not even to pay for projects. So, the option presented tonight is because most Council indicated a cash financing option, but debt is a tool that utilities use regularly to fund these types of projects, or these types of programs. Okay. I had a follow-up on that, if I can get the words together on it.

Thank you so much, first, for talking about all of this complicated financing and a reasonably clear way. It's hard. So one of the things that Brandon Slater had mentioned in his email was basically the financing would help us get kind of a lump sum at first, that then we pay back. Do you see that as potentially an advantage here, or is the amount that we recoup in sewer rates per year with a cash option also just fine? Well, and Chris also said it. You know, you don't buy a house cash unless you have it. So it comes down to what level of debt financing we want to carry for the next 20 years. And we're in a position now where the rates are low. And in the future, we don't know what's going to happen.

Our plant is approaching 50, 60 years old. It's not getting any younger. Like I talked about, the sewer pipe replacements are already assuming 200 to 300 years. So we're not going to have an excess amount of money in the future. We're going to need to start replacing those pipes. Now, if we take out a big debt financing, that's great. We can tackle those now. But then for the next 20 years, we carry forward that annual debt service. So that's why I talk about it as a tool. And that's why we presented the $30 million option. Because in our analysis, that's sort of the sweet spot. Anymore, you start to balance, okay, this is a big payment carrying forward. And any less, you might as well use it if it's there.

Especially if we can get a State Water Resources Control Board low-interest loan. Okay. So you're saying that rates are low for this type of project. That sounds contrary to what I experienced in the mortgage market. So that's an interesting point of view. Okay. Well, thank you. I have comments, but I think that's the end of my questions for you right now. Council Member van Overbeek. Yeah. So we're in this situation now because we've been kicking the can down the road. In 2022, we didn't really step up and do what we needed to do. When I say we, I wasn't on the council then. But for all the reasons that we're hesitating now, because we don't want to put a burden on the rate payers. And so we waited four years, which was too long to come back and say, hey, we've got a problem.

Delaying this and kicking the can down the road further is just going to compound the misery. So there's a couple things that I'm pretty confident of. One is that Mr. Slater, who ducked out on us, I guess. Anyway, Mr. Slater is very sophisticated at large construction projects and financially. And so his recommendations carry a lot of weight with me. The second thing we know is we need some significant capital expenditures to catch up with deferred maintenance state mandates and to get even. And that number, there's some unknowns, but it's probably $100 million is probably a reasonable assumption. And I don't think. It's prudent for the council to defer this any longer. I think we need to do something tonight.

I think debt needs to be part of that. I think Mr. Slater stated that inflation and construction projects is about 6% a year. If we're paying 4% interest, then we're actually ahead of the game because we're building the project sooner. The sooner we get the projects done, the less expensively we can do it. So it's just like people taking out a loan to buy a house. The house is appreciating faster than the interest rates. So you end up money ahead. So that's what I think. I think we need to do something. Council Member O'Brien. Yeah, this is fun. Thanks, everyone. We are really tackling a really difficult subject. I especially feel for our staff members who have been given, like I said, an impossible task.

However, we all need to come to an Agreement. And I agree with Council Member van Overbeek. We have to do something. And I think to soften the blow on what I've heard a couple times was balance. And the balance is our infrastructure needs and our economic needs. If we completely disregard economic needs, guess what? We won't have a city. We won't have businesses. So we've got to balance those two needs. And I think the way to do this with this project has to include some level of debt. I don't like that. But I think as explained by Mr. Slater and Council Member van Overbeek, I think there's a wind to be had with that that limits the pain to our businesses and to the rest of the community. Thank you.

Council Member Goldstein. All right. Yeah. I'm glad to hear my colleagues agree that we shouldn't kick the can down the road any further. That's what's gotten us into this situation because projects are only going up in cost. And when I've heard people ask us from the public to kick the can further down the road, that concerned me because I hear people basically asking us to end up charging more, which we don't want to do. I saw basically two main ways that we're considering reducing the sewer fees. Or I'm sorry, two main ways that we're considering fixing our infrastructure. And one is to take on debt. We're taking on a financial risk and we're paying more over time. And the other is we take on a physical risk.

We're risking that our treatment plant could fail or that we're going to end up paying more as those facilities don't continue functioning and don't continue in a state of good repair. Sure. I don't believe that there's a secret third option there where we just don't need to charge any more money for our sewer rates. And I think we're all in Agreement on the dais on that. But the way that we get towards finding a good compromise where we're not overburdening our citizens of Chico and our businesses, that's going to be a challenge. So I was looking at options 4A and 4B, the cash options as potential solutions here. I'm very concerned about taking on debt. I feel a little more okay with the concept of it if our engineering professionals believe that that could be a tool in our toolbox as long as we're not taking on a massive amount of debt.

But I would really prefer that if there's a cash option that we do not put our city in debt to fix our infrastructure. I'd like to count on some member Winslow. I'd love to see this moving forward. I agree we should do something tonight. I just don't see the purpose of putting it off again. I'm leaning against the debt option, but I would totally respect it if we make a decision that goes with debt. Could we put these options back up on the screen so everybody can follow along with us? Because we're all looking at them and there's a lot. That's all for now. Did you say 4A or 4B? What did you say? Either of them. That's how I feel kind of. So, yeah.

I'll real quick add that I feel like 4B could be more palatable initially with the 55% per year. I think that lets people budget a little easier than just the huge lump sum at first and the five-year isn't that different. So, I could lean towards 4B of those. Council Member Hawley. Thank you, Mayor Reynolds. I'm just trying to gauge the temperature of the Council here because I've heard debt financing as an option potentially on the lower end and also on the higher end. I believe Council Member van Overbeek suggested that $60 million threshold, which I would strongly advise against taking. But when we're talking about the $30 million debt option here in the moderate risk 4C, the difference we're looking at for taking $30 million out right now would be a drop in about a 5% for the first two years of fiscal year 27 and 28.

So, what we're trying to gauge right now is if a 5% difference in the rate increase is worth taking $30 million of debt out. And again, that number that Mr. Keene presented to us for the total investment of that $30 million loan would be an ending total of about $15.3 million in total interest for a 5% difference for two years. I want to iron that out for everyone right now. So, when we're talking about $30 million, is that worth it to the rest of the Council for that 5% drop?

Council Member van Overbeek. Yeah. Council Member Hawley, I did not propose $60 million. I said that Brandon Slater is a very sophisticated guy financially. Thank you for the clarification. Yeah. However, I think that's closer to the number than the $30 million. If we're going to do debt, we need to do enough debt to accomplish the construction projects quickly enough so that we avoid the inflation and construction costs. And so, if we don't do enough debt, we can't leverage the benefit of getting the projects done sooner and saving the inflation that we would incur later on. So, I think the number is more like $50 million. Slater, Brendan Slater is, I think, $60 million. The other thing I would point out is this is a secured revenue stream against the rate increases.

And so, the city – actually, Barbara, how does that work? Is this a liability of the sewer enterprise fund, but not the city as a whole? Correct. The enterprise fund itself is its own entity for this purpose. So, the city itself is not incurring the liability. It's the sewer enterprise fund, and that's secured by the income stream from the rate increase. And that's why we can get really good terms on the financing, because it's secured financing. See, I actually wholly agree with Council Member van Overbeek's point of if we are to take on debt for a project that has significant capital improvement needs, then it needs to be a large enough amount that it makes a significant difference. I mean, when we're looking at $30 million, that 5% drop for me, that just isn't worth it.

And I don't – my difference with you, and we've been clear on this the last, what, five, six times this has been heard, both in finance and in open session here, is that I concur with Council Member Goldstein that options 4A and 4B are more palatable. And I've heard from representatives from the Chamber and other businesses that maybe spreading out those rate increases over time might be easier for businesses to plan and prepare and finance for. So, that's why I included 4B into consideration. But I'd like to hear from other Council Members on that point. Council Member Windsor. Could we just get a little bit of like a re-explanation of why $30 million was the number settled on? Like, what's the sweet spot about that?

And if we were to look at the, yeah, $50, $60 million options, like how much lower could we have rates in the, you know, five-year and beyond? I don't have the number for the reduction if we increase debt. The reality is that there's been infinite number of ways that we could have looked at this. Council preferred previously a cash-funded option, but we didn't want to remove debt from the table. We felt that coming with a $60-plus, $90, you know, $1 million debt would have put the city in a position to carry forward that long-term interest payment. So, $30 million was the number we landed on, primarily with that driver of keeping the interest under $1 million a year. Thank you. You're next. Is that a follow-up directly on that one item?

Yeah, it's about the debt for David. You mentioned, basically, us having the debt responsibility for longer if we had the higher amount. Can you just elaborate on that? Maybe I misspoke. I guess what I meant to say is the amount per year that we would carry forward. So, can you remind me what the loan term would generally be for these? 20 years. 20 years. Great. Thank you. Vice Mayor Bennett. And just to clarify there, the bonds are very commonly issued for 30 years, but again, that's 30 years of obligation for the enterprise fund. So, a couple points. Vice Mayor Redmond, Councilor Hawley did her homework and you identified something that we talked about. So, I'll start over. Councilor Hawley did her homework and she looked at the numbers very closely and came up with a great idea, something that I focused on as well.

A very wise man told me recently that be careful about debt because the future city councils will hate you because of that debt. And some of the citizens may not be that happy. But the two scenarios that I have identified, and I believe it is possible to go with 4B. It's a 55 and a 55 percent increase. And yes, that is correct. With a $30 million loan, you're only dropping it by 5 percent. It's a 50 percent. So, that's not much. And then you incur a debt service of $2,395,712. That's a lot of money for another 20 years. And I'm not sure how people are going to feel about that down the road when I'm off Council and somebody else is here. And you keep looking at that number coming back to haunt you.

And that's, I think it's, maybe that's a good scenario is going to come back to haunt you. So, that cash 4B is a very good set of numbers. When you look at the projected costs for that 4B, it isn't that much. It's not that bad. But I'm saying that because I'm looking at it from a different lens because I've been so close to this. And I do respect we've had requests from a number of people to put this off a little bit and have some public review meetings about the cost and about the whole project. So, I'm going to just make that comment that 4B is a number I like. It's a scenario I think would be very good for Chico. But I'm going to wait and see what the City Council decides to do. Council Member Hawley.

As much as I agree with the theory of holding public workshops, we know how seriously this Council historically takes public workshop results into consideration. So, I wouldn't recommend that at this time. But I wanted, before I make a motion, I wanted to point out that we all have concerns about the ratepayers who are at risk. And I really appreciated Mr. Keene going over the high-use restaurants that are of significant concern. And it's really a number close to being around 40 businesses. And I'm very partial to agendas in the future, different solutions that could help those businesses navigate those significant increases. But for the time being, I think we have adequate solutions to help the residents of Chico navigate these cost increases when it comes to sewer rates, especially when we discuss item 5.2 on the agenda today.

So, that will make a motion for Council to move forward with Option 4B, a moderate risk cash option, with that 55-55% first two-year rate increase. That's a motion. I'll second the motion. I'd like to make a substitute motion. Let me know when you're ready, Debbie. Go ahead. I'd like to propose we do the $105 million moderate risk option with $50 million in debt. Could you restate that, please? I'm sorry. I would like to finance. I would like to do the $105 million moderate risk option with $50 million in debt. And I would like to point out that that should be paid over 20 years. I think you said, Mr. Keene, that the $30 million that numbers used are paying it back over 10 years. Or 20. Okay.

Thank you. Could I ask staff, would you now bring up the financing option slide? Just to make sure everybody's with us as we talk. So in requesting, Council Member van Overbeek, in, sorry, there wasn't a second on the, maybe someone else will second the substitute motion first. I'll second that. I would like to know what that percentage, and maybe we don't have the calculations yet. Do we have any calculations with a $50 million bond? We do that real quick. We do that real quick. We don't, but if you did go that route, we'd need to know also how you'd want that implemented. Large year one, year one, year two, spread out, how that would be. So if you do go down that route, there needs to be clarification on big year one increase was small, or moderate year one, year two was small, or how you would like that implemented.

So that's just if you go with that substitute motion. Mr. Keene, while you're up, can I ask two questions? Because I haven't actually asked anything yet. The first one is, when were these California regulations passed that we're now getting ready to implement? The big ones were 2016, and those were in our original permit to comply by 2022. We have since negotiated with the state to postpone those until 2032. So those have been requirements of the land discharge requirements that have been in our permit for a long time, and we have good relationships with our partners at the state, and they have allowed us to defer those. So it'll be 15 years until compliance if we deliver them by 2032. Okay.

Okay. And then my second question was, I feel like the residential is pretty palatable, and we can get there in line. The slide isn't in this presentation, but the presentation that we had last time showed where our businesses will be compared to all the other businesses in the area. And we, like, skyrocket to the top of being way more expensive than everybody else. Is there a way to bifurcate this somehow and do residential and business differently? I mean, I understand that I'll have to go through the 218 process, but is there a way to change that? So first you have to look at what we did in 2022. In 2022, we introduced equivalent dwelling units. So prior to that, everyone was charged the same cost per gallon.

So in 2022, residential went up a little bit, but all of the high-strength users, restaurants, mortuaries, breweries, all those things, they went up significantly because we introduced that cost per gallon fee. So now that we have that cost per gallon fee, we cannot charge a different amount and allocate the cost of service differently than we're actually seeing it performed. And we've tried to do that. We see the impact to restaurants. But then there comes the legal defensibility of the residential people saying, hey, why am I paying for commercial businesses? So we have to be careful on how much we use one group of people to subsidize another. And it has to be based in some level of data that we see.

And that's why we use the State Water Resources Control Board Revenue Program guidelines. Those are state guidelines. Whether or not they're accurate for every single business, that's a standard that we use, that they use across the state. Yeah, I understand that. And I appreciate that. But I agree with the mayor that for a residence, this is much more palatable. And again, that's not anything against you, David, or staff. But for a business, it's significant. I mean, you look at that increase, it is significant. And we've heard time and time again how difficult it is to run a small business, right? You guys have the cards stacked against you. And we're just adding one more piece to that. And that's my concern with this increase.

And again, nothing against staff or this situation. It's just a dynamic that's there. I share your concern and the concern of the mayors. I would suggest that let's get a financial framework in place. And then we can work out, you know, at what rate the rates increase and who pays what. But I am very concerned. I don't own a restaurant, but I own a building with a restaurant as a tenant. And it is really hard to run a restaurant. You run a food service business. You know what I'm talking about. But let's get the financial framework in place. I think doing something that's all cash is unpalatable. It just hits people too hard up front. And we've talked all the reasons why taking debt is a good option.

But we have a motion on the floor in a second. Yeah. That's okay. We can continue to talk. We've got a motion on the floor in a second. And a secondary motion. And Council Member Winslow has his name in the queue. So, Council Member Winslow. Yeah. Yeah. So, Council Member Winslow, I don't want to engage with your motion. Because you said that $50 million loan. And so, we have the different financing options. But I assume that you're saying, like, get the best option. The reason I'm not sure about the direction of B is because this iBank loan, we, like, pretty much know we can get it. And we can get it within four to six months. This SRF, the Water Quality Control Board loan, the one that's, like, two to three percent, which is, like, that's, like, inflation.

That's great if that's an interest rate we can get. But we don't know whether we can get it for longer. And so, I'm just wondering, like, how that would be translated if we were to move forward without specifying what do we apply for. And I will just say that if we had the opportunity, if we knew we could get the SRF loan, that's pretty appealing. But those ones that go closer to, like, five percent interest are less appealing. Well, the SRF loans have all sorts of conditions. And they're difficult to get. They take a long time. So, the vast majority of projects like this are financed with muni bonds because you can get them quickly. If you have a secured revenue stream like we do, the rates are very favorable.

We can get, I think, Director Martin has four months here. Maybe it's six months. We can get it relatively quickly. And, again, if we want to leverage the benefit of debt, then we want to do it reasonably quickly so we can get the construction projects done. Yeah. Okay. Do you want to weigh in on just, like, the direction being sufficient? I just wanted to mention that, you know, these are kind of big optics. And if we were to go for an SRF loan, we could also combine it. If we were looking for something more immediate, we could also finance some of it through some of the other vehicles. And that's kind of where our financial advisor really shines is that they go through this. And if we kind of get a framework and what the intention is in terms of rates going into the future, then they can really optimize that and see what's best in terms of financing and making that part of the conversation.

Right. So I just want to say before we go into a vote on this that I think that if – when we do a Prop 218 process, we're setting a ceiling for our rates. So if we were to apply for an SRF loan and we had a ceiling that was high enough that we could get by without it and then we got the loan, then we could justify lower rates. And I think that if the going directly into municipal bonds mission doesn't pass, I think that that's probably a good, like, I would ask for a friendly amendment on the cash finance option that we do see if we can get this low interest loan and utilize that to keep rates down if we are so favored by the state government. Yeah, if we can get a determination in a reasonable period of time.

But I trust Director Martin to navigate that alligator-infested swamp. Can I ask one more question that I didn't ask? I didn't ask this when we talked about this in 2022, so I'm going to ask it and get it on the record now. When we did this in 2022, if I remember right – Mark will correct me because he remembers a lot better than I do – we took the moderate path then. We didn't do the steep, but we did do a significant enough increase that we thought we were going to be able to do what we need to do and take care of. If we do this, are we going to be sitting back here in four years and you're going to tell me we need to do another 180% increase and we're going to take everybody to $200? The goal is for that not to happen.

As we talked about, you're taking a risk by postponing those projects. And in the slide, I put that there is – you're looking at potential rate increases. We put illustrative figures of 5% to 10%. And so for utility Management, 10% is sort of the standard of what you would like to stay under. But there's a lot of factors that go into that. So in staff's opinion, the moderate risk scenario is an achievable CIP. Council Member Bennett and I have talked about coming back annually and sort of reporting on the status of that to kind of give an update so we don't come into this position again. So we can see how inflation is going, how rates – how revenue is coming in. We can start talking about that more frequently.

Obviously, I don't have a crystal ball. But the moderate scenario is an achievable scenario. I'm really, really super frustrated that – I know we did the one transfer to – transfer money to take care of stuff. But the fact that we haven't talked about this in four years, and I'm worried that in 2031 we're going to be back here – I may or may not be here – doing this. And they're going to be doing the same thing. And I just don't think that's fair to our constituents to keep doing this. Sorry to interrupt you. That's okay. If I may suggest – you're asking him a question he can't answer. I mean, he doesn't know for sure what's going to happen in four years. But what I heard you say is you think this is going to get us on a sustainable track.

And that's what I was going to say, is the key to this whole effort here is to get the rates to an established – to a sustainable rate moving forward. So the problem now is they're just too low. We need to get them up so that we can start to build projects on time before things fail and before we deplete reserves. So that is something to keep in mind. So if we get everything up and everything taken care of, would we ever decrease if the fund got to a revenue balance that was maintained and take care of everything and we could go back and do a – Unlikely because of our assumptions. We've already assumed that every pipe is going to last 200 years. Is that assumption going to happen? You know, time will tell.

So under the moderate scenario, we're assuming every pipe is going to last 250 years. So if we do come into a surplus of money, we won't likely lower rates. We will instead increase our sewer pipe replacement program. And, you know, regulatory climate is not getting any less. We already know – we had a member of the public talk about recycled water. That's coming down the pipeline. All of the treatment that we do is going to have to be increased over time. Okay. Council Member Hawley. You're next in the queue. Sorry. Sorry. No, you're good. I forgot I hit it for a second. Okay. So I just want to relay upon to the council before we vote on the $50 million option that, if you don't remember from last council meeting, we discussed this for the rate payers.

We were looking at upwards of 20% rate increases we would be committing to now for 10, 15, 20 years down the line. And I want to impress upon all of you that that is damning the affordability for anyone who wants to live in this city 20 years from now. That's just what it is. So, Council Member Winslow, you seem to want to make a friendly amendment to my original motion. Is that correct? Yeah, it was whether we could shoot for if we get those low interest loans from the Water Quality Control Board, whether we could still pursue those. And if we get them, then we'd be able to not increase rates as much the second year. Okay. I would say absolutely not. Just because looking, again, back at the difference between 4B and 4C, if you're looking at something smaller than $30 million and we're looking at less than a 5% decrease for taking up that investment, it's just not worth it.

Just to be sure, those are based on a particular interest rate. This is the lowest interest rate option, so it's probably lower than what they had written out on the projections there. I mean, even if it is, it's not worth it to me, so I don't accept the friendly amendment. Vice Mayor. We have a motion on the floor in a second. We're still deliberating. Vice Mayor Bennett. Vice Mayor Bennett. So, I was going to talk to Ms. Martin first before I suggested Deputy Director Keen brought up the point that we need to look at this every year and make sure that all of the costs and all of the progress that we make each year is acceptable and we don't have any surprises. That's what hurts. The surprise always hurts, unless it's we've got more money than we have, which is never going to be the case, I don't think.

So I was going to talk to you first, but I'm going to make a motion eventually after talking to you that we do review this every year. And we don't see four years down the road we need to do something and we should have looked at it sooner. And I was on this finance committee in 22. That was a difficult decision because at that time we were making what we thought was a substantial increase in fees. It hit the restaurants harder because of the volumetric component. And residential wasn't that bad. But that went into effect, I can still remember, September 6th of 22. We wrestled with it for a long time before we made a decision. So at that time, four years ago, we thought we were making a good decision.

In retrospect, maybe not so. Council Member Bennett, I'd be more than happy to amend my original motion to include an annual report to the City Council on this exact item, if you would be more comfortable with that. Yeah, I'm fine with that, too, to add that to my... All right, Council Member Goldstein, last one in the queue. Okay. Also, if needed, for any amendments that I... Okay, so just for the record, we're on the substitute motion. And so we can't be doing friendly amendments on the very first original motion. Thank you. So I'm sitting here trying to track it, but I was going to have to interfere, so I apologize. So I will accept that as a friendly amendment to the substitute motion. Okay, that an annual report...

Council Member Bennett made to, that we get a report annually. Okay. So, and it remains that you want to select an option of the $105 million risk option with $50 million in debt, with an annual report brought back each year. And then did staff still need to know how council needed that to be implemented? Yes. So if you recall, David asked to please indicate how you want that implemented for staff to have direction. So I wanted to make sure I covered that so we had it. And you might want to call him up so he knows. I think you're going to need to give us some guidance to get to that. I think just relating to fiscal year 27 and 28 kind of thing, is it spread out over those first two years similar to option 4C?

Or are you looking for that to be made up in the first years is the direction we're looking for with that option? It's your motion. It's one more time. Sorry. So is your motion essentially 4C in concept, but with a $50 million debt? Correct. Yeah. Yeah. But, I mean, I'm assuming with another $20 million, you guys can play, we can play with the rates and the rate at which they increase. We'd have to back. Some version of better. Correct. Yeah. We'd have to back it in from what the total cost would be and then basically look at the first, spread it out over the first two years. Right. Yes. Thank you. So is that enough direction for you? Yes. Okay. Awesome. All right. Okay. I think I was next on the speakers.

You're next. Yeah. And basically, I was going to ask for a clarification on that just to make sure. We're looking at the moderate option for Tom's motion. And it would essentially be, as Audubonty stated, 4C, but with higher debt financing. And, Council Member van Overbeek, can you clarify, like, what specifically you'd like to accomplish by raising the debt financing on what I perceive as 4C? Well, there's two buckets in the $100 million. There is the compliance with the state mandates around the equipment for the nitrates removal, I believe, David. And then the lining of the ponds, which we're hopeful we can do with clay instead of concrete. So that's part of it. But the second part of it is we've got some extremely old infrastructure that needs to be replaced.

And the sooner we replace it, the less risk we have that we have some catastrophic failure in the system. And speaking to the financial risk part of this, we know we've seen the last, certainly since the campfire, we've got about 6% annual rate in inflation and construction costs. So we can borrow money at 4%, build it out sooner. In theory, the realities will probably break even, but in theory, we could save a few bucks. So you're intending. That's how we offset it. But if we have to take it down enough debt to actually make an impact on this. So is the intent to invest more up front and then later on perhaps reduce those 5% to 10% rate increases that would happen in- The idea is to get the construction projects done now.

And that creates jobs, right? And because every year we wait, the cost goes up and up. So wouldn't that fall more into the proposals we looked at before with the low risk than the moderate risk? Well, I'm, so what I'm proposing, my motion was the moderate risk, $105 million, but financing $50 million of it instead of $30. So it's 4C with $50 million in debt instead of $30. Yeah, I just don't see how you're paying for more projects up front with the same. Because you have $50 million in your hand instead of $30. So that's $20 million more. I was just going to- Don't you get new math in school? Thanks, Tom. We can establish the rates and then look at what the debt options are in terms of dollar amount and that sort of thing and how it plays into this.

And if the rates provide more cash flow than we expect, then we can always pay off the debt sooner. So that's an option as well. Council Member Wynne. Just to follow up on that. I mean, I'm looking at these different financing options. I'm still interested because the SRF one is like a sub-market and it's close to inflation. And so it'd be about half of what we'd look at with the municipal bonds. But it says that prepayments, well, it says it can't happen without penalty, not without state approval. So there's conditions and different financing sources for whether we can pay it back sooner. Correct. And that's where the mix and the appetite comes in in terms of what options we choose. Could you just- I know that you don't have all the numbers there, but could you weigh in on the benefit of getting the SRF loan at the 2% to 3% as opposed to going to 4% to 5% municipal bonds?

Because we don't have the numbers up here. They don't say what the interest rate is. But naturally, if you have half the interest rate, you're going to be paying a lot less in interest over this period. Right. And it's just the time value of money and that cash that you're paying in interest that is money that's just out the door, that's not paying for even for the construction. That could be going into reserves or going to be paying for other operational costs down the road. So it's a tradeoff. But I- Listen, once Director Martin wades into the finance options, it'll become clearer what they are. And I- At this point, I think it's a mistake to constrain her. Obviously, we can get a 2% loan.

That's better than getting a 4% bond. But the reality is when you- Rates can change in the next couple months, there's a bunch of variables. So I trust our finance department to figure that out and come back to us with a set of options. Council Member O'Brien. I hate to extend this. We really need to get to this substitute motion. But there's been so many comments. I just want to, again, remind everyone this is not just about the infrastructure needs. It's about the economic impact. And we have to soften that economic impact. This does this in a way that I think is palatable. I think it's something we can manage. And I do trust Director Martin to find the best possible rate for us. We don't need to hamstring her in the process.

So if this passes, then this comes back to us at the next meeting with all the detail on all this? Or where are we at? But what happens next? The detail on what are you talking about? The loan financing? Is it 50%, 50%? Is it 60%, 50%, 2%, 3%? If you go with the $50 million? Yeah. Because we don't have any of these scenarios in front of us. So we're just saying, oh, take out $50 million and go do this. So I feel like we're being very nebulous here. Yeah. And it would basically be option 4C with slightly less percent those first two years. And we don't have, I mean, I don't have a calculator here in front of me. We could come back with those options, certainly. But it would reduce those first two-year increases.

I don't know how much by percent. I'm just not comfortable voting on something that I don't know exactly what we're looking at and how much and is it 5% that we're saying, you know, like Council Member Hawley said, taking out $30 million of debt to save by 5% is not feasible. So what does $60 million look like and where does it get us? And, yeah, that's where I'm uncomfortable. It mostly, you would think it reduces the near-term impact and places that on the long-term impact. So the more loan you take out, the less now and the more later. That's the bottom line. But then we're getting the infrastructure done now and taking care of now. Correct. And the rates still have to go up. And I think that's the point of this slide.

I really wanted to include that right-hand column, that debt is a useful tool, but $50 million seems, you know, reasonable. But too much, it's a balance. And that's why we went with $30 million for this particular presentation. So exactly, Madam Mayor, exactly what rates are in year 1, 2, 3, 4, 5 are all things that are flexible. What we know is if we have $50 million in debt as opposed to $30 million, we can have lower rates in the short term. But exactly what they are, I mean, I want the staff and finance to go back and give us a couple of options. So then we're passing this to come back at the next meeting. Well, I mean, first of all, let's decide what the financial structure is. So we have about $105 million of capital need.

And we're going to borrow some number, 50, to soften the rate, impact of rates on businesses and consumers. To the extent that the debt is lower, the near-term impacts are higher, and the debt is higher than near-term impacts are lower. But then there's a long-term. So the question is, what's the balance? And I guess I came up with $50 million because that's a number that you guys can take, knock out those construction projects, and we get the short-term benefit of not having to pay for them in three or four years. We pay for them now at lower cost. Okay. So I have nobody in the queue, and I think I have all my questions answered. Thank you. Sorry to keep bringing you back up. And so we have a substitute motion.

Mm-hmm. Let me go back to Granicus. Could I ask the clerk to reread the substitute motion just so everybody's clear on it? Yes. I'd be happy to do that. It was a vote to select the $105 million risk option, which is basically 4C with the $50 million in debt instead of the $30 million. That report would be required to come back annually, and that was... how I heard it. Is that correct? Okay. And then staff would be bringing back options at the next meeting. Okay. So... Just a second. Council Member Goldstein? No. Council Member Hawley? No. Council Member O'Brien? Yes. Council Member van Overbeek? Yes. Council Member Winslow? No. Vice Mayor Bennett? No. Mayor Reynolds? No. It fails 2 to 5. So that goes back then to the original motion that was on the floor that was made by Council Member Hawley, seconded by Council Member Goldstein to select option 4B, moderate risk with a friendly amendment for an annual report.

I don't know that Council Member Bennett officially said. Is that okay if we attach the annual report onto my motion? Okay. Just making sure. And were there any other friendly amendments to this motion? Just checking. All right. So the vote on that one. Council Member Goldstein? Yes. Council Member Hawley? Yes. Council Member O'Brien? No. Council Member van Overbeek? No. Council Member Winslow? Yes. Vice Mayor Bennett? Yes. Mayor Reynolds? No. It carries 4-3. Or option 4B? We're going to take a recess. We'll be back.

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Thank you. Thank you. Thank you. Thank you. All right. Item 5.2, consideration of a needs-based sewer assistance program. Barbara Martin, our Administrative Services Director. Take it away. Thank you. Again, Mayor Reynolds, members of the Council. At the May 19th City Council meeting, Council directed staff to evaluate options for a need-based sewer rate assistance program and return with some considerations for you all. The staff report presents information regarding potential funding sources, eligibility criteria, administrative requirements, and some legal considerations associated with establishing such a program. Three potential funding sources were identified for your consideration. A general fund appropriation, delinquency fee revenue, and voluntary donations.

What is not an option is to use sewer service fees themselves to pay for the program because the sewer service charges are fees that go through the Prop 218 process. To establish, the city can't use those sewer rate revenues collected from one customer to pay for a discounted program for a subset of customers. Therefore, the assistance program would need to have an alternative funding source. Of the three options, the general fund would be the most predictable and administratively feasible funding source, but there are competing needs for revenue for the general fund revenue dollars. Both the delinquency fees and donations can vary in amounts, so that's not an easily budgeted or predictable way to fund the program.

And on the topic of delinquency fees, to establish delinquency fees that would pay for the program like this could potentially be shifting one customer's financial burden because they are delinquent to another to assist another financial need. Staff also reviewed programs offered by other California utilities. There are some in Sacramento area, for instance, and they utilize income-based eligibility criteria to tie to existing programs such as the PG&E's care program. Tying eligibility for a city program to something that is already established could reduce the administrative burden of verifying and confirming eligibility for customers. In other words, if they qualify for the care program and can prove that, then they would qualify for this program kind of thing.

And it would make the legwork of that verification be on a different governmental agency. An example of estimated cost was provided in the staff report. We were in contact with an employee of PG&E who is involved with the care program, and their estimate is about 35% of Chico residential customers may be eligible for the care program. And with the estimate of about 20,000 residential customers at 35%, and they said that about 88% of the people who are eligible actually participate in the program. You're talking about 6,100 customers. And if you're taking an estimate of a sewer bill of $70 offering a 20% discount, which is about $14 in reference, bless you. For instance, in Sacramento, they do have a program where it's a flat $15 discount on a bill.

So a $14 discount is 20% of that $70 just for example's sake. And you applied all the 35% of customers, 88% participation. That would be a cost just under $1,035,000 to fund just the program and not all the administrative costs that are involved with it. Something else for the council consideration involves renter participation. So under the Chico Municipal Code, property owners are the ultimate responsible party for sewer service charges. And we are attempting to move toward a building structure where the sewer bills will be going to the property owners themselves, not to the people who are necessarily residing in the residences themselves. So offering assistance to qualified property owners is straightforward because they are attached to the address.

But if the landlord's passing on the cost of the sewer rates to the renter, then we would need to establish some sort of way to tie the fact that they are paying the landlord for the sewer fee. And how do we connect them that they are the actual eligible participant for this need-based program. So that's a consideration as well. The other things to think about are what modifications need to be to the municipal code. The ongoing costs of administering the program. There'll be customer support that's needed. There's going to be some public outreach that's going to need to be done to establish the program to let people know it's available. Billing system modifications, application and verification procedures, et cetera.

So with all of that, we're just seeking direction on do you want the city to pursue this assistance program? And if so, do you want it to be a permanent program or maybe perhaps a pilot program to see how it goes? What kind of eligibility criteria you'd like to see? What funding source should be pursued? And whether participation should be limited to property owners or include renters? And what kind of level of assistance you'd like to see? And available for questions. Council Member Hawley. Yes, Mrs. Martin, thank you so much for your staff and yourself for taking the time to put this together and present it to us as well. I only had one question. I remember when council discussed this, we did hit upon the vast majority of tenants do have the property managers and property owners passing along the sewer rate costs to the tenants themselves.

And classically looking at other municipalities with similar need-based rate, sewer rate programs, landlords are not eligible to apply on behalf of tenants. The tenants would have to be the tenants. The tenants would have to be the ones holding the bill like you were just talking about. So with that, I am curious if you would anticipate a significant or any sort of drop for the amount of PG&E care customers who would ultimately be program eligible. Because there is that rough, oh, is it 35? Yeah, 35% of customers are eligible with 88% participation. Yeah, and that was just an example. Number one, if you're using the care program, not every PG&E customer is a sewer customer. So there is that in there.

In Sacramento, for instance, when the renters are involved, if the landlord is paying for the utility, they would provide proof of their lease that they are paying the sewer bill in their lease. And that would be part of the verification process. So there is a means to do that, but it is just more onerous and takes more time to do. If you are keeping it just to the property owners, that will, I would assume, would significantly reduce the eligibility of the program just because of the nature of owning property versus renting and all of that sort of thing. Of course. So I just don't have those statistics to be able to tell you. Right. It's so hard to pinpoint that. And then there's other factors that determine how many residents sign up, such as how well it's advertised, et cetera.

All right. How many? Councilmember Goldstein? I think this is more of just a comment. I'm just glad that you're clarifying the eligibility factor. Yeah. One thing, just to make sure I heard it right, Barbara, are you saying that in Sacramento, renters could provide their bill to the city to be eligible to the program? How would they get the bill if the landlord has one? So if they are paying their, if their sewer rate is part of their rent per se, so the property owner is paying for the sewer bill, but the lease says that you are responsible for the value of the sewer bill or whatever it is, then that has to be part of the verification. And proof process. So could they provide a copy of their lease that says your sewer fee is into this?

Yeah. That's how they do it down in Sacramento. Okay. Good to know. Thank you. So how is that verified? Would you provide what the process would go into verifying that? Because it seemed a little onerous, but maybe I'm wrong. Yes. And that's why, number one, if you tie it to another government program where they have already done the financial eligibility piece of it, that's one piece of it. And then if you're talking about the renters versus property owners, then you would also have to provide something that proves that as part of your rent, you are paying for the sewer rate. Right. And if we're not making this available to renters, I think we lose the value and I appreciate what you're trying to do.

But if we don't capture that for the renters, I think this is all for not, quite frankly. How many speakers do we have? We have one. All right. Three minutes. Okay. And it is Tracy Vincent. I don't know. I bet it only take a second. Everybody was kind of nodding. I was just going to say, please, please vote yes on this for everyone. We need to keep our seniors low and fixed income people in housing, and this could potentially break them. Everything is going up, up, up, and it's going to cost us a lot more if they become homeless than if we pay a little bit upfront to keep them in their homes. So please vote yes on this. Thank you. That was it. All right. Will the council. Holly. Sure, I can kick us off.

Obviously, there's a lot of administrative technical assistance, most likely with the application process, as well as processing any applications. And I really, the spirit of this agenda item was to ensure that the council was comfortable passing the sewer rate fee, which we just passed, knowing that the residents wouldn't be severely harmed due to that. And we would have some sort of buffer mechanism if we did run into a vast majority of the public saying this is significantly burdensome to our rents. And really, like Councilmember O'Brien pointed out, the vast majority of the benefit would likely be reaped by homeowners who maybe are low income and elderly people who are on fixed incomes. It could also be a help for that.

But again, it would likely be coming from our general fund. And there's so many competing needs that our general fund fulfills. So really, with this item, like we have a foundation to look back on in the books if this ever comes up again. But I'm not going to die on this hill at all. I'm just trying to take a temperature of council. Yeah. Councilmember Winslow. Thanks, Councilmember Hawley, for voicing that. Because if it was able to be mixed into the broader program, like through utility surcharges, it makes a lot of sense. Once we start to look at finding a different funding source for it, it's difficult. It's also difficult because while we can reduce the administrative overhead in figuring out who's eligible and qualifies for the program, the fact that the PG&E's care program covers like 35% of our community makes it like really steep off the bat.

So if there was a lower, like a very low income, like extra care program that would get a smaller number of people that are more in need, it would be easier for us to move forward and see that that's like who's at risk of becoming homeless over the sewer bill. And then again, as Councilmember Ryan said, the fact that it's so difficult to grasp renters into this and we end up subsidizing low income homeowners, but then leaving out probably a lot of the worst off people who are again, most at risk of homelessness. It makes it hard for us to have the most impact with what funds we put in there if we were to commit the funds. And then once again, we have a lot of competing general fund needs. So we may find that it makes sense to pick this up or we may find that there's better better usages if we're going to put money into preventing homelessness and we can do it in a different in a different program than this and worry less about eligibility and administrative burden.

Councilmember Goldstein. Councilmember Goldstein. Councilmember Goldstein. Um, yeah, I'm I'm feeling a little uncertain because I love the spirit of this program. I think the implementation we're just likely to run into some hangups but if other cities have done this type of program that I think we can do it. Um, definitely don't want to lose renters who are qualified I could imagine that that will take a lot of outreach, um, and a lot of administrative time to get renters to bring bring their lease in and show that they get this discount. I would support this. I also would support potentially seeing how things go with our rate increase. And one thing that I think we need to be really careful about with that is we've heard from some property managers that if we increase sewer rates they're going to pass that cost along to their renters. And so I'm worried that we're going to start seeing renters ending up with rent increases to cover this. And then at that point we we should really consider implementing some kind of low-income sewer fee program for sure if that's the case. So I do have a question for Barbara. Do you foresee that if we implement a program like this a lot of just more time from your staff to have to administer it? Yes definitely. We do a utility users a rebate program every year and it is just in the couple months that we provide that it's quite a lot of paperwork that comes through and quite a lot of review that comes through. And again to implement a program like this effectively we would have to do some sort of increase in staffing or something to about the public outreach and just the you know calls that will be coming in and that sort of thing especially initially. So it would be a spike for sure at least in the initial phases. Councilmember van Overbeek. Yeah the reality of these programs is that there's no there's no free lunch right now the sewer system at the current rates generates 16 million dollars in revenue annually if we give forgiveness forgiveness to for a million dollars that means there's about six and a half seven percent additional increase that the other rent payers have to pay.

So two points I commend the spirit of this we don't want elderly people on fixed incomes to lose their place of residence but we have to ensure that this gets to renters not just homeowners A and B we need to reduce the scope of it so the hits may be a half a million dollars instead of a million dollars. But so if we raise rates an additional three percent okay that's that's not terrible that's not terrible but six and a half percent on top of the rate increase we're already talking about is to me undoable. Councilmember Hawley. Councilmember Hawley. Thank you Mayor Reynolds. Yeah this is exactly why items are agendized so we can have staff go over the nuances of implementing programs of this nature with council and then we can make an informed decision on the benefits and fiscal impacts that it will have on the community. So I'm very comfortable taking no action on this item tonight and just moving right along.

Councilmember Hawley. And at least we can have it in our back pocket if the sewer fee impact is way more burdensome on our renters and low income homeowners than we anticipated. Councilmember Hawley. And at that point I think that's when we we could move forward with it. But yeah great report very informative and I think the message is very clear that right now it would just be too onerous on our staff for a pretty slight benefit that might have a lot of low income residents falling through the cracks. Councilmember O'Brien. Councilmember Hawley. No I was just going to say the exact same thing so thank you for setting me my breath but that was well said Councilmember Hawley. I agree wholeheartedly.

We can look at this later if necessary and then fine-tune it at that time to reflect those concerns. Thank you. Councilmember Hawley. Yeah and just before we go on to the next one that we're talking about $14 a month for a million dollars of overhead so $14 a month is not probably likely significant enough. If we wanted to make sure rates were low we probably shouldn't raise them 108 percent. So anyways 5.2 consideration of we already did that. Councilmember Hawley. I actually had one more question I'm sorry. Do we how much do we take in from the delinquent fees annually? Councilmember Hawley. We don't know. Councilmember Hawley. We don't currently charge. Councilmember Hawley. Good point we don't know yet okay great.

Councilmember Hawley. We don't we don't we don't charge extra fees for delinquencies right now we would have to establish that. Councilmember Hawley. Okay all right thank you all right I'm done. Councilmember Hawley. All right 5.3 sobering center funding extension we have a report from our city manager Mark Sorensen. Thank you mayor and council on May 7th 2024 the city council authorized the execution of an MOU with Butte County. The MOU commits the city to provide $119,000 a year annually for three years for the operations and maintenance of the sobering center and all of those funds come from the opioid settlement funds. The current Agreement expires in about a year on June 30th of 2027. So we're looking for council approval to extend that Agreement so that there's some operational certainty for the sobering center moving forward.

With that recommend that the city council authorize a city manager to amend the MOU between the city of Chico and the and Butte County to extend the MOU for an additional three years to expire June 30th of 2030. Thank you very much. Question. Councilmember Barroso. So I attended like the opening of it and took a little tour so I haven't really heard much since then I wondered if you just have any information as far as like do they have metrics of success for the sobering center. I did send some stats out. Let me see. Some monthly stats. Okay. You know to hear behavioral health talk about it they consider it a success. That it fills a need in our community and we have very limited uses for those opioid funds.

So from June of 2025 they had 304 total admits. As of May of 2026 they had 297. So they run average about 300-ish per month. January was really high. So it seems like they're in of those about 60 to 70 of them are unique individual clients. So some repeats but people coming in for 10 to 12 hours and getting some respite and yeah. I can see out of the 297 there's 281 from Chico. We got one from Megalia. A couple others from some other places. I don't think that's because we have more people who need it. It's just in Chico. It's in Chico. Councilmember O'Brien. I just want to hear from our police chief on his perspective if he wouldn't mind weighing in. Thank you. And I would say that right now currently the if I look at the model that we have with our dispensaries.

I have to be honest they're running very smoothly in the city. We have zero issues with them. The owners have been extremely compliant. Helpful if we need help from them. So if that gives you a little insight as to my perspective but in terms of cultivation I just don't have enough information on that. We're on the sobering center. Oh I'm sorry I missed the topic. You missed the one. That's okay. We're on sobering center for the. Wow it's late. Well we'll save those comments for the next. Yes. I was reading it just now and I'm like oh I'm one head. The sobering center. Yes we currently utilize the services there especially the one on you know Cohasset and Rio Lindo. We have had people who volunteer to be dropped off there.

And you know so the service is definitely one that assists us in the time of need. And you know we get those stats and it's always a positive thing when we see people utilizing the services. So I support you know the continued you know support of the county services. All right. Thank you very much. I've also noted your comments on 5.4 so duly noted. All right. Do we have any speakers? We have one. Okay. Charles Burton. Okay. So 5.4. Okay. All right. So we don't have a speaker. All right. I consider any further comments or consider a motion please. I'll make a motion to approve. All right. I'll second. Motion and a tied second. We'll just merge our names together. Council Member Goldstein. Yes.

Council Member Hawley. Yes. Council Member O'Brien. Yes. Council Member van Overbeek. Yes. Council Member Winslow. Yes. Vice Mayor Bennett. Yes. Mayor Reynolds. Aye. Carries 7-0. All right. Commercial Cannabis Cultivation. We have a report from Garrett Norman, our principal planner. Welcome.

All right. Thank you. And good evening, Mayor Reynolds and members of the City Council. My name is Garrett Norman, principal planner with the Community Development Department. I'm here this evening to present on the feasibility of permitting commercial cannabis cultivation within the city limits. By way of background, at the April 21st Council meeting, the Council passed a motion directing staff to report on the feasibility of permitting commercial cannabis cultivation within the city limits. The city currently allows four types of commercial cannabis businesses, which include distribution, manufacturing, testing, and retail. Currently, there are two distribution licenses, one manufacturing license, three retail licenses, and zero testing licenses.

The Council retains authority to maintain, increase, or decrease the number of licenses for each cannabis business type. As of January 7th of 2022, the Council closed the application process for all commercial cannabis businesses. The state of California categorizes commercial cannabis cultivation into three groups. This is indoor, which is fully enclosed buildings, typically warehouses, and rely on artificial light for growing. There are mixed light facilities, which are essentially greenhouses that can take form in a variety of structures and may rely on some artificial light. And then there's outdoor, which is strictly for outside use without any artificial light. The Department of Cannabis Control issues license types based on these three categories and the size of the operation in terms of the number of plants and the canopy size.

There are also licenses available for processing the plants and propagation. It is more common to see indoor and mixed light facilities in an urban setting, whereas outdoor would be seen in more rural locations with a suitable growing climate. The Council would decide which type of cultivation would be permitted within the city limits. Cannabis is regulated within three sections of the Chico Municipal Code, Title V, Title V-R, and Title V-19. Title V establishes the permitting and regulatory framework for licensing. Several provisions of this chapter would require amendments, including limits on the number of permits, eligible cultivation license types, and operating standards, which would be inclusive of odor control, security protocols, and hours of operation.

Title V-R establishes the city's merit-based application and permitting process for commercial cannabis businesses. This code section applies broadly to all commercial cannabis licenses, and therefore staff would not anticipate many amendments to this section. Title V-19 establishes the city's zoning and land use regulations. Title V-19 establishes the permitting and permitting process. Title V-19 establishes the permitting and permitting process. Title V-19 establishes the permitting and permitting process. Using cannabis manufacturing as an example, the city allows manufacturing in the industrial and airport zones and requires a use permit if the operation exceeds 5,000 square feet in size.

Since cultivation is similar to manufacturing in terms of operational characteristics, staff would anticipate cultivation would be permitted in a similar fashion. On the screen is a spatial illustration of the zoning that permits cannabis manufacturing and could potentially allow for cultivation. These areas are in the city's industrial zones, which are shown in the shades of purple. The airport zones shown in the lighter gray. And commercial services zones shown in darker red. The airport zones are in the middle of the city's industrial zones. Staff is seeking direction from the Council to either proceed with amendments to the municipal code to permit commercial cannabis cultivation or to maintain the existing prohibition on commercial cannabis cultivation.

If the Council directs staff to proceed with code amendments, staff would bring forward an ordinance to the planning commission for its recommendation and then to the Council for ultimate consideration. This concludes my presentation and staff is available to answer any questions. Thank you. All right. Councilmember Hawley. Councilmember Hawley. Mr. Norman, thank you so much for the presentation and all the time you and the rest of your staff put into this. I did have a question that I wish I would have emailed you, but I just got a full-time job. So, you know, I'm not as good as I used to be. It's in relation to vertical cultivation as an option. I understand that some municipalities have allowances for spaces above, you know, buildings to add cultivation.

Is that something that you and your staff ever touched on just out of curiosity? Based on how the Department of Cannabis Control researches or regulates or issues license, I think it would still need to follow one of the three categories. So, if it's vertical outside, then it would be part of that. Or if it's inside, it would be that. Or if it's part of a mixed light or greenhouse structure. Okay. So, maybe a minute detail that if Council decides to pursue could probably be hashed out later on. Yeah. I guess. Okay. All right. How many speakers do we have? We have five. All right. Three minutes each. All right. I'll call the first three. Tracy Vincent, followed by Josh Lewis, and then Mark Breckenridge.

So, Tracy's first. I would absolutely support exploring a limited pilot program in this. We really need to know how this is going to play out within the city limits, especially when it comes to our infrastructure. It is a very high water consumption. It is high electrical, especially if you're going to be doing indoor, of which I've talked before on this, you're going to probably have to have indoor. It's just too hot here. And to make any money, you're going to have to have at least three crops, if not more. So, I just think we need to protect everyone and resources and infrastructure. I think a pilot program would definitely be warranted, like I said, especially inside the city limits. And water is going to be a huge issue unless they are very savvy and have a recycle program within their system.

Thank you. Thank you. Josh Lewis, followed by Mark Breckenridge and David Peterson. Hello. Good evening, Council, and good to see you again. As a reminder, Josh Lewis, I do government and community relations for EMBARK. Excited to be here. Councilmember Goldstein, I'm reminded of your comments about whimsy. And I just got to say cannabis cultivation is a whimsical topic. Cannabis is agriculture. Cannabis cultivation is agriculture. And I'm a big fan of agriculture and the whimsy it brings with it. So, I wanted to lead with that. Contrary to some of the characterization of our remarks last time we were before you, we are not at all opposed to cultivation. We are in support of a thriving local supply chain and the opportunities it brings for entrepreneurs.

And to the extent allowing entrepreneurs to take advantage of the full benefits of cultivation licenses being available locally, we'd also support the addition of micro business license types. Obviously, with the caveat that those micro business license types don't include a retail component, I think we've made our position on that clear. So I won't ask to relitigate that tonight. But I just wanted to say this is something we hope that the Council considers moving forward with. We are grateful for the sensible and thoughtful regulation of our industry. And would again commend you all on creating one of the strongest in the state in terms of sustainability. You know, everyone in the state in this industry is struggling and will be struggling for a while, but you guys have created the conditions for at least that long-term sustainability, hopefully, you know, in the near future leading to long-term success.

So appreciate you for that and thank you for the opportunity to be here tonight. Thank you, Mark Reckonridge, followed by David Peterson and Charles Burton. Good evening, Mayor and members of the Council. As a co-founder and owner of Oregon Chico, one of the city's licensed dispensaries, I'd like to express our sincere appreciation for the ongoing partnership between the city of Chico and our business. We remain grateful for the city's careful and deliberate approach to cannabis regulation. The current licensing framework has helped foster a stable and well-functional local market, one that supports tax revenues, local jobs, and meaningful community investment. Should the Council consider updates to the ordinance, we would support exploring the inclusion of indoor cultivation in a matter consistent with the city's existing standards and priorities.

We believe this could be a measured step that supports the continued evolution of the industry while maintaining the integrity of the current system. At the same time, we believe the broader ordinance is working effectively as written and has provided a strong foundation for both operators and the community. Thank you again for your continued leadership and your thoughtful consideration for this matter. Thank you. David Peterson, followed by Charles Burton. Good evening, Council and staff. Good to see you guys. I just want to say I appreciate the staff doing all the diligent work on creating this report. It's really exciting to see the city taking the opportunity to potentially expand the cannabis industry. Again, my name is Dave Peterson. I own Chico Cannabis Company, which is the one manufacturer that was listed, and the distribution company NorCal Distro, so one of the two distribution companies. I just want to encourage you to not limit the regulatory framework if you start going down this path for cultivation to just focus on indoor. I know that currently when you look at the map of the city of Chico, there's nothing that really stands out as a potential opportunity for land use that would be considered for outdoor, but that doesn't mean that's always going to be that way in the future. There are farm, you know, farmland and farms that are just on the outskirt of Chico that have expressed their interest in participating in this, even though they're technically Butte County. I don't want to get into the possibility of what that annexing looks like for that, but I know that there's property owners out there that are interested in potentially occupying or utilizing that land use for cultivation. And if that's a potential in the future, I just suggest let's go down that road and look what the regulatory framework for outdoor cultivation would also look like. I just want to say I appreciate the comment that Josh made regarding micro businesses. I think it's really important to potentially consider that if we're adding cultivation to the regulatory framework, you know, the way the framework is set up right now, we have independent licenses. Just like I said, I have the manufacturing license and the distribution license. We kind of operate as one entity for the most part anyway out of the same location, but technically we're two separate licenses. So it's double the work for the staff. They have two reports to write. They have two audits to do. I have multiple audits to deal with with the HDL. We have double the staff time that's used for developing or regulating the licensing renewals. There's two fees that come along with that. And if I want to do cultivation now, I'm going to have a third. Same location, same property, same company essentially operating out of the same space, but I'm going to have to have three audits and three license renewal fees and three times the work for the staff when we don't really need to have that. We just need to look at adding micro business licenses from the department of cannabis control onto the framework as well. So we can minimize staff work. I appreciate the time. Thanks.

Thank you. And our last speaker is Charles Burton. Good evening Chico City Council. Thank you guys for bringing this topic to light. I'm very excited about tonight. Once again, my name is Charles Burton. I am one of the founders of Chico's Best, your local cannabis company. As we bring cultivation to Chico, I think we need to look at places that have failed and places that have succeeded. Mendocino and Santa Rosa are communities close to us that seem to be making it. In California, there are 4,800 current California cultivation licenses. Only around 2,000 of those are actually profitable. I think we need to set up a road to success for our cultivation community. We are way behind, but we can look at the successes and fails of other communities to put up a good roadmap for our people. One of the biggest things that other communities are doing is a micro business.

I don't know if you guys realize this, but it takes one license to grow it. Then it goes to a manufacturer, another license who puts it in a bag. From the bag, it goes to get tested, another license. From the testing, it goes back to the manufacturer, and then it goes to a distributor who holds it, to the fifth license who brings it to a dispensary to sell it. If we could get our cultivators to get a micro business, they would pay one fee for three licenses. Those three licenses, they could cultivate it, they could put it in a bag, and then they could take it to a dispensary to sell it. That seems to be the roadmap that's been working for a lot of people. That seems to be the roadmap that's been looking for a lot of communities. I'd also like to look at what's been working right here in Chico. I'm going to keep bringing this up. Let's look at the Sierra Nevada Brewery Roadmap. They're right there. The Sierra Nevada Tap House is probably one of the most famous restaurants in this north state that we have. I think that if we look at that, we could start doing that with our cultivation facilities. A cultivation facility that can also sell product there and have a consumption lounge would be a great thing. As we're looking at tourism and things, wineries are a thing that many people go to. Cannabis facilities could be a thing of the future, and that could bring tourism right here to our town. Now, we set up a great roadmap for our current and our local dispensaries, and they are very successful. I think if we take the time to do that with our cultivation facilities, get those going, reopen the manufacturing, and reopen our distro licenses, I think we could have a successful roadmap for all of our cultivation. I do think it's something we need to look at because half of these businesses are going to fail, and so we need to make them succeed. Thank you guys for bringing this to light. Thank you guys for listening. You guys really have made me feel good, and I'm really excited about our cannabis that we're going to bring, and yes, we could have tourism here. I know that scares you over Beak, but that's okay. We could have a lot of dopers in this town, and it will still be great.

Thank you. He was our last speaker. All right. Who wants to go first? Council Member Winslow. I just want to ask a little further, whether whichever of you two wants to answer about this micro licenses, and they're talking, I mean, it's a bit tangential to this discussion, but that if somebody's going to grow it, they would want to also have the opportunity to package it in site or something, and they're talking about a reduction of administrative burden on that. I'm just curious to hear your perspective on why we do it the way that we do it, and whether it would make sense to look into going that direction. You can stand up as well, but my understanding is we could look into that as well, the vertical, everything integrated. It's just not the model that we currently have, but you may have more to share. Garrett has some experiences working in Sacramento as well.

Yeah, I think the micro business is sort of a carve out, if you will, that the state allowed, where you can combine multiple of these license types. It does limit your overall canopy size for cultivation. I think the 10,000 square feet, so there are some limitations with it, but as some of the the other commenters were noting that there is the ability to merge a lot of these licenses into a single one, so it reduces administrative costs for them. So that's great. I mean, I would just say that makes a lot of sense to me, you know, here, the other people in the council feel about it, but especially given looking at the scope of where within the city of Chico cultivation could occur, they're not going to be super large sites.

There's a picture on here of an outdoor cannabis cultivation site. I was saying, tell in the link that it's literally the largest in California, the picture they put up there, most are going to be much smaller. Something here would be much smaller. The idea that we could make it a more feasible business model by allowing them to like do some packaging on site makes sense. It's like we, if we're going to legalize this, we should go in a direction that's going to make actual successful businesses. And that I'm hearing from people that that makes more sense. And it could be that it's tied in with operations that have some offsite location where maybe they grow more. And that's currently the case is the production is going to be happening outside of Butte County because we just don't allow it. So all that tax revenues go into Yolo County or wherever. And yeah, thanks.

Council member O'Brien. Council member O'Brien, so here's, what's not whimsical, and I'm not picking on you guys, when I say and make these comments, so I don't blame you, I blame weak, California laws, but everywhere marijuana is legalized, the illegal marijuana, black market, rise, to include Butte County, that black market profits, drug cartels, and other foreign national crime Organizations. That is a fact. To the tune of hundreds of millions of dollars each year in Butte County alone. And make no mistake that money funds violence, human trafficking, and the production of fentanyl and methamphetamine that kills thousands of people in our country every year. Not to mention the environmental damage to our waterways and foothills. The lines between legal and illegal cannabis have been blurred. The systems to separate both are ineffective. Dangerous chemicals have been found in the legal cannabis supply. That also is a reality. Second, we are just learning of the mental health impacts of high-potency, high-frequency use of marijuana on the developing brain. We have heard from our director of behavioral health as to those concerns, and they echo emerging research, including a recent study involving almost half a million Northern California young people and those impacts.

I myself, I can't ignore those impacts for any reason to include financial.

Councilmember Hawley. You've heard my mind. Okay, I don't know what to say to that. I included a Councilmember report the first time. We spoke about this on the dais, and honestly, most of the academic research I found was pretty much contrary to that. I completely agree that illegal grows add a whole bunch of ugly stuff, including criminal activity and chemicals into our waterways. But I think Councilmember Goldstein said last time that's the exact reason we are trying to create legal pathways that are competitive with those illegal markets because they exist whether or not we want them to. And we have to create some means of legal and ethical competition where we're actually getting dollars back into our community. So that's that's kind of the vision here. And I'm also looking forward to more circular economy I think that's the values here and that's why I am interested in kind of the micro business licenses like potentially coupling cultivation with manufacturing or packaging.

And I'm sorry to put you on the spot, but Mrs. Presson, are you able to speak to the possibility of taking any action on coupled micro business licenses because this agenda item specifically has to do with cultivation only or is that something that would have to return by Councilmember request at a later date? I would think that if the Council provided direction, if they agreed with that, you would have to bring back an ordinance anyway that would require to an introduction and a final reading. If you're asking to expand your original request to include the micro business licenses, I think it would be, you know, I would ask the city attorney what he thinks it is part of the it isn't specific to that, the original request, but but Excuse me, Councilmember Holland. The issue is how it's phrased on the agenda. So people, the public, if they wanted to know what we're talking about, it says cannabis cultivation. So if we arguably could say that that's part of cannabis cultivation, I'd be think that's fine. But if we're expanding beyond that, I don't think we want to go. We'd have to agendize it for a future one because a member of the public wanted to talk about that and didn't see it on there. They wouldn't know.

That's the answer I anticipated. Yeah. Did I cut you off? Were you done? Excuse me? Did I cut you off? No, we're good. Okay. Great. Okay. So yeah, as partial as I am to Councilmember Winslow's comment, as far as other public speakers go with micro business licenses, I don't think that's an action that we can take tonight. But would love to take a temperature of the room of moving forward with options, honestly, for all mixed light outdoor and indoor as viable in the zones that were proposed by our planning department. Councilmember Goldstein? Councilmember Winslow, Yeah. I want to reiterate from last time my support for legal, controlled cultivation and ability for people who need or want it to use cannabis products in a way that benefits our city. And we already have our dispensaries, so why not also allow local cultivation?

We also have, we have all the other permit types. I don't see why we should suppress business from this industry. Also, I want to reiterate, as Councilmember Hawley alluded to, I talked about last time, Northern California has been the place with the black market cannabis for so long. And then Prop 64 we have legalized it, but also put a lot of those, you know, local growers who were unfortunately in a black market out of business. And we have lost some of our economic vitality because of that. I don't think it's easy to study that, but if you ask around people who've been here for a long time, I think that's part of the reason why we've seen some negative impacts economically on small business locally.

I think that we can bring back some of those dollars in a more legal, safe way that benefits our community. Councilmember O'Brien, did you, your mic was on, I didn't know if you. So no, I would just, it seemed like that was amusing to Councilmember Hawley, the concerns of the studies, quite frankly, that is emerging about the developing brain and the impacts of marijuana. I hope you didn't find that funny, because I would be very disappointed in you if you did. But I saw you chuckle at that as if that was something funny. This is something that is real and impactful, and we just can't ignore that data. That's out there. Councilmember Hawley, Yeah, I'm happy to respond. I honestly, yeah, that was very insensitive of me. You're right, there are concerns. And in fact, members of my own family have struggled with drug addiction, including cannabis as part of that. So it's a sensitive subject. But I would appreciate to maybe talk further about those studies, and I can assess them further.

And certainly that's fine. I'm just, I'm just making sure that we understand that that is emerging data. And it's not my data, it's not law enforcement data, it's data that's coming from scientists who are doing the study. And our own director of behavioral health has real concerns about mental health impacts and long term use of high potency marijuana. Sounds like an important person for me to talk to that I haven't spoken to yet about this. Thank you for that. Councilmember Winslow. Thank you. So we're not going to let any grows that are occurring within the city of Chico pollute the waterways. There are terrible things that happen with illegal grows elsewhere. And I think that's a great reason for making sure that some of that can happen here. I don't see how having some grow in an industrial park in Chico is going to have lead anything but less grows happening up in unregulated areas. So I think we can move forward. And I'm looking at the areas of different industrial areas that are on the list there. They all seem like viable places where it can happen. I can see outdoor not happening, but I don't see any reason to preclude it. We have locational requirements, says it can't be near schools, daycare centers, youth centers. We could add something else on that.

I'll note that industrial office mixed use is included in that area. And right now we allow multi-family housing there. Like the Jesus Center Renewal Center is located within that zoning. Whether it be a problem if there's a marijuana grow next door or not, I don't know. But those things we consider. But I'd make a motion that we move forward with drafting an ordinance to legalize commercial cannabis cultivation. And the three categories that are allowed under state law outdoor mixed and indoor in the areas that are listed in the map. I'll second that. Are you ready for me? Okay. Yeah, motion and second. Sorry. Council member Goldstein? Yes. Council member Hawley? Yes. Council member O'Brien? Nope. Council member van Overbeek? No. Council member Winslow? Yes. Vice Mayor Bennett? No. Mayor Reynolds? Yes. He carries 4-3.

All right. Item 5.5, Confirmation of Interim Deputy Fire Chief. Mark Sorensen, City Manager. Thank you, Mayor and Council. Council is presented with the employment Agreement for the interim fire chief to serve the department while a permanent deputy chief is recruited. As an interim deputy, Shane Lauderdale has extensive experience in the fire service, including previously serving as the fire chief at the City of Chico. Pursuant to the government code, I'll state for the public record that the City of Chico is proposing to enter into an employment Agreement with Shane Lauderdale as the deputy fire chief with an annual salary of $184,218. And with that, I recommend Council confirmation of the appointment of Shane Lauderdale as the interim deputy fire chief. Move to approve. I'll second that. I worked with Shane when he was fire chief and in other ranks. He is a fantastic individual and we're very lucky and fortunate to have him.

Thank you. Just for the rest of making sure we don't have any speakers? We do not. Okay. So we have a motion and a second. Okay. Council member Goldstein? Yes. Council member Hawley? Yes. Council member O'Brien? Yes. Council member van Overbeek? Yes. Council member Winslow? Yes. Vice Mayor Bennett? Yes. Mayor Reynolds? Aye. Carry 7-0. 5.6. First amendment to the fire chief employment Agreement, Mark Sorensen, our City Manager. This might be the shortest agenda report you've ever heard. The item before you is a proposed amendment. It has no cost to the city. It merely allows the fire chief to continue to participate in and make payroll contributions to the designated retiree medical trust. Absolutely. Move to approve.

I want to hear public comment first, right? Yeah. No speakers. We confirm no speakers. No speakers. All right. Okay. Now I'll move to approve. We got a first and a second. Yes. Okay. Council member Goldstein? Yes. Council member Hawley? Yes. Council member O'Brien? Absolutely. Yes. Council member van Overbeek? Yes. Council member Winslow? Yes. Vice Mayor Bennett? Yes. Mayor Reynolds? Aye. Carry 7-0. Reports and communications. The following reports and communications. I are communication items are provided for the council's information. No action can be taken under this section unless the council agrees to include it on a subsequent agenda. City Manager's report? I have a news flash for you all. This is my last council meeting. Oh, no.

It is. Yeah. Yeah. Wow. Breaking the rules. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. But I want to make a couple of quick comments. It's a funny story. 21 years ago, I came into City Hall to talk with Debbie Presson about running for Chico City Council. And what a wild ride it has been since. So I avoid this lady. My gosh, Planning Commission, City Council for two terms, Mayor, 10 years as a city administrator in another city, four years as a city manager here. It's just all have been an absolute honor. And I really want to thank the department heads and really all of the employees at the city of Chico. They've just been fantastic to work with. Thoroughly enjoyed working with our professional, very talented department directors. And I want to thank all of you for the professionalism and working with you for the past four years.

So I apologize for being asleep at the switch and not realizing this was your last meeting. I so appreciate what you have done for this city. When you took over, we had, it was chaos. And you came in, stabilized the organization, fixed a whole bunch of issues that were broken. And the thing about you, I admire the most, and I've read a lot of Civil War history, and they used to describe good generals as somebody who rode to the sound of the guns instead of went the other way and hit under the table. And you're one of those people. So it's been a great privilege for this city to have you as our city manager. And thank you. Thank you. Yeah, I want to sincerely, sincerely apologize. Your last day is not until the 10th. And I have on my calendar that we are meeting on the 7th. And so this was planned for it to be your farewell on the 7th. And I think you purposely moved it to the 14th because I set the calendar and I said that we were meeting on the 7th so we could have five weeks off, but it got moved. So we have way under done ourselves tonight. Mark, you are like just a gem.

And we will miss your knowledge. I will probably still ask you and text you and say on the 1985 on Wednesday night when it was 85 degrees outside when that water main work, what happened? And you will remember. Happy to get those. Yeah, it's so anyways, thank you so much. So I remember you were mayor when I was chief mark. And when I was given that appointment, I remember you sent me a text and you said something like, do you have your track shoes on? I always appreciated that perspective and advice. But really what you have done is you have stood in the gap when the city needed you most. I remember your time on council and covering some really unscrupulous financial practices that brought us to the brink of bankruptcy. And now your stint as city manager took over at a very difficult time. I was fortunate enough to be part of that decision.

So every single time we have needed you, Mark, you have stepped up and more than met the match. And I could not be more thankful and appreciative of your service during these last several decades. Thank you. You could always call for a special meeting. Thank you. We should definitely I mean, there's there's going to be a proclamation whether you show up for it or not. I'm sure. We'll trick it. We'll cruise. We'll coax them back here. Yeah, thanks. I've learned a lot from you. I really appreciate your role here at the city and keeping things stable. I didn't know how it would be coming in. It could have been a lot worse. And all the worst decisions made by the city since I've been on here were not your direction.

This is a true statement. Councilmember Goldstein. Sure. Mark, when I first started coming to city council like nine years ago now, I remember you were on the city council. I usually didn't agree with the city council in general. And so that might have been my first impression with you is that I wasn't going to agree much, but you've been solid. And I was thinking the other day when the when UP's freight trains were blocking the railroad crossing, I was like, I know if something's seriously wrong here, that it would be in my email because Mark would be on it. Absolutely. Thank you. Yeah. All right. Acceptance of the Pbid is violent. We have the draft sunshine MOU POA, and we have council member requests for pursuant to APMP 1010. Council members may verbally request an item to be agendized at a future meeting after stating what the item would be. A majority vote on council is needed in order for staff to agendize. Do we have any council member requests? No. All right. We are going to adjourn back into closed session to finalize something that we were working on earlier. And then we will be back here on July 14th with a proclamation for Mr. Sorensen.

awesome awesome awesome awesome

Thank you.