City Council - Special Meeting

Great. Good evening, everyone. Welcome to the Monday, March 30th, 2026 regular meeting, sorry, special meeting of the Larkspur City Council. It's 630 p.m. and the meeting will come to order. Madam Clerk, can we get a roll call, please?

Council Member Margulies.

I'm here.

Council Member Way. Here. Vice Mayor Paulson. Here. Mayor Andre.

Here. If you can, please rise and join us in the Pledge of Allegiance.

I pledge of allegiance to the flag of the United States of America and to the Republic for which it stands, one nation, under God, indivisible, with liberty and justice for all.

All right, now we'll move on to public comments. This is a time for the members of the public to address the city council regarding items that are not on the agenda. If you would like to make a public comment, please approach the podium. You have three minutes. Is there any member of the public who would like to make a public comment? Seeing none, are there any online? Okay, great, then I'll close public comments and we will move on to presentations. We are getting a Climate Action Forum update.

Hi, thank you. I'm just reporting on our February meeting. The Climate Action Forum met on February 11th, and we had a presentation from Cool the Earth. That's cooltheearth.org, and they presented their Ride and Drive Clean initiative, which focuses on transportation and getting folks out of gas-powered vehicles. So they're focusing on both EVs and e-bikes through community outreach and education, and their overall goal of reducing greenhouse gas and providing economic savings. Last year, Cool the Earth was able to help recognize about $100,000 in savings to income qualified individuals to replace their internal combustion engine vehicles with EVs both new and used. They reported that 41% of new cars in Marin in Q3 of 2025 were electric vehicles registered, and that these vehicles are spending two to five times less to charge their cars than the owners of gas vehicles. And that may have increased even more recently, of course, with the price increases that we're experiencing now. So the Climate Action Forum will meet again on April 8th. That's the second Wednesday of the month from 630 to 830 here. And all are welcome to join. And we will be working on finalizing a recommendation to bring to Council for the top five priorities and the corresponding actions for achieving a demonstrable reduction in GHG over the next year. There will also be an emphasis on increasing EV infrastructure for multifamily homes and apartments. where we know there is a deficit of charging capability due to the high expense of installing electric capacity to charge vehicles. So please come if you're interested in helping us to prioritize our climate goals for reducing our greenhouse gas emissions and getting involved. We need everybody to get involved. as a large portion of these gases are now really coming from the community and the city is doing quite a bit already to reduce its carbon imprint or impact, sorry, but what we're going to really need to do is focus on outreach to our community members and try to get everybody educated about how they can reduce their own carbon imprint. So thank you.

Great. Thanks for the presentation, Sarah. Do any council members have any questions?

um thanks sarah um i was thinking after saturday there was a really great bark redwood bark reporter who was there yeah and she wrote and there was they did an instagram post and she's going to write an article about the library i'm wondering if they might be an interesting group to reach out to there i'm sure redwood has a climate student group that might find our, they're really working at trying to get more Redwood, more high school students civically engaged in their local community. So that might be an option to reach out to them to see if anyone would like to attend.

It's a great suggestion and perfectly timed. As I met Madison, who's the president of the student government at the Women's PAC luncheon, and she and I exchanged information and I plan to reach out to her and meet with their, they have a meeting regularly, meet with them and talk to them about bringing in student stakeholders to get involved. Thank you, Kathy. Great. Thanks.

All right. I'll open it up to public comments. Do any members of the public have public comments on this item? Seeing none, any public comments online? Okay. Great. All right. Well, thank you, Sarah. All right. So next we'll move to approve the consent calendar. Are there any council members who want to remove any item off the consent calendar for discussion?

No.

Seeing none, can I get a motion to move?

Oh, I'm sorry. Anyone in the public have public comments on the consent calendar?

Anyone online?

Okay.

Great. Can I get a motion to move the consent calendar?

I'll move the consent calendar. I'll second.

Great. All right. All those in favor, say aye. Aye. Any opposed? Any abstain? Great. Thanks. The consent calendar passes. Next, we'll move on to the city manager's oral report.

Thank you, Madam Mayor, Council Members. I first want to acknowledge all of the city staff that helped make Saturday a wonderful grand opening for our new library. I particularly want to acknowledge the library staff because I can't believe they were still standing at the end of the day. I haven't heard the tally yet, but I was told they're pretty confident they broke the record for issuing library cards in one day, probably in all of Marin. I personally watched them issue at least 12 while I was standing at the desk. And that was just in a short snippet of time. So really enthusiastic. And I was particularly touched watching the children's room, you know, finally having a real, a true children's room. And I was standing with Damon Hill, the library director, and he said, he's never seen this many elementary school age children in the library. We usually get the really young children, and then we get middle schoolers who are studying after school. But to see all those other kids was a real sign that this investment is exactly what the council now and the councils before said they wanted to do, which is create a generational opportunity Anyway, more positive things to come. We will start our regular operations on Wednesday the 1st. That's after we get a few more kinks out of the building now. And I had a lot of questions on Saturday asking if Monday services are coming back. We'll be open on Monday. Yes, we will, but we're in the process of hiring people to make that a reality. So it'll probably take us all of April to complete the hiring process and get those folks trained. and ready to go. Business doesn't stop for us, though. And this is the kickoff to our budget season. So this is probably the last sort of fairly light looking council agenda, because I think we have some heavy lifts coming up as we start to work our way through the budget over the next subsequent April and May meetings. So folks who are interested in sort of our financial picture, please stay tuned. Turn it back to you, Madam Mayor.

Great, thank you. Any questions or comments from council members? Okay, great.

Yeah, I just want to... Thank you, staff, also for a tremendous Saturday. Actually, it was many, many days, not just Saturday. I texted Dan on Friday because I had been out of town and said, can I get a tour on Friday? And the whole room was packed with our staff on Friday, including our city manager who stayed overnight to make sure he could be here on time. And I think that that's exemplary. work that this project has done it's taken all of us and that came across in many of the comments that were made but the staff went above and beyond to to really make sure public from everybody from public works to the guys who were out there with their orange their lime vests on making sure the grounds were clean and all day long it was it was a great team effort so thank you

Yeah, I just, I wanted to echo that. I think you said it well, Catherine. I feel Damon and, I mean, the fact that this was on time, on budget, I heard that so many times from people, you know, so for Julian and for you, Dan, too. I know you were super busy till the end. The one really cool comment I got, someone said, this is positive politics, right? And it was kind of like when you read the headlines, it's nice to see people happy about something that the public sector does. So it was a great day.

Yes, I echo all of those comments. I think it was wonderful to see so many of our community come out to celebrate the historic occasion. I think it really was just a joyful day. And I know a lot of work went on behind the scenes to make that happen. our community so thank you very much to our staff who did who did all the heavy lifting thank you okay um do i do i open this up for public comments or no okay all right so we'll move on to council members oral reports and comments does anyone have a report that they want to give

I attended, I'm our representative to the Marin Wildfire Protection Authority. So the last meeting that I attended was last week, or was it two weeks ago? March 19th. So just a few things. A lot is happening internally with really focusing in on how the, um, renewal for the tax measure will be positioned in discussions about that. Um, and that's being worked on internally. Um, they are planning a strategic retreat for the board members to really try to drill down on how, um, the, uh, This will be rolled out in another couple of years, but a lot of committees get on board for their renewals as early as they can, and I think that's where we're leading with this. To that point, if people look at the website, there's a really good and handy new tool called the Dashboard, which lets residents see exactly what projects are being done in exactly areas in a more concise format. Because one of the arguments for getting a bond measure renewed is, look what we're doing for the community. And they created a terrific dashboard for that. They're about to launch a new campaign instead of Zone Zero, which was sort of this idea that five feet out from a house or a structure is zero zone for any vegetation. They've really retooled that to be called ember-ready. So the idea that most structures catch fire because they hit, are hit by embers, flying embers, that hit the house and land in the vegetation or land in the eaves. So that'll be launched soon. I think they're launching it before fire season gets up and running, so sometime early summer. It's a good committee. I mean, Gabe was on it for a number of years, and then he stepped down, I stepped up on it, and they've done a lot. The other thing that is sort of related is Central Marin Fire is also engaging in the evacuation route vegetation clearing. And I happened to get a personal letter to my home because they're starting on the Palm Hill area. And evacuation routes is a really key part of what Marin Wildfire Prevention Authority is trying to make sure vegetation along key roadways and pathways for evacuation are clear. So I see that they're going to be starting a big project. And with this letter that got mailed to residents is an opportunity to opt out, but then you become responsible for your own roadside vegetation management. So people can look forward to seeing those. I'm not sure what neighborhood's next, but it's continuing in the process of vegetation management for prompt evacuation. And that's all.

Great. Thanks, Catherine. Anybody else? Go ahead.

Yeah, just one brief comment. So we had the flood zone nine meeting this past Thursday, the 26th. And so after long last long being 20 years, they have canceled, you know, pretty much all the projects. So the building bridge to project in San Rafael and even the Corte Madera project. So I had asked that the county maybe start looking at all the mistakes that have been made over the last 20 years with an eye towards how to develop a plan for the future and I started writing and I have a draft already that I want to work with Chris Blunk at the county and others and you know get this to the public because it's it's a big issue there were lots and lots and lots of missteps and I think No one's interested in litigating. I'm not interested in litigating the past, but we really need to understand how to manage our watershed. It's very complicated because we have four jurisdictions. We have sea level rise. We have riverine flooding. There's a host of issues. There's a lot of communication channels with FEMA that need to be tightened up. So I look forward to really diving into that. That's it. Thank you.

Yeah, I was just going to report out on the regular board meeting of the Ross Valley Sanitary District. They meet on the second Wednesday of the month. So on March 18th, the board authorized the general manager to notify and enter into an ENA, which is an exclusive negotiating agreement. for the disposition and development of 2000 Larkspur Landing Circle with Brookfield Residential and Carmel Partners as preferred respondent to their RFP and to notify the runner up for the RFP as their status as a runner up. The goal of recommending an execution of a finalized DDA, a development and disposition agreement to the board, they want that to be in front of the board for the third quarter of 2026. So they're hoping to move pretty quickly. It's just a little bit of update, I should say context that per our housing element, the 10 acre parcel will receive a buy right. So the general plan update included a rezoning, which applied a housing priority overlay designation to the property to facilitate housing development on the property. This designation specified that a housing project would be allowed by rights so long as the project met certain requirements, including a density of 25 to 35 residential units per acre and a minimum of 20% affordable housing. So some of the key terms of the exhibit to the DDA show that this property is being purchased for $60.1 million and that the proposed project will consist of approximately 357 residential units comprised of approximately 72 for sale three-story townhomes and approximately 285 rental apartments in a five-story building, which will include approximately 90 rental units affordable to low-income households, earning up to 80% of the area median income. In all events, a minimum of 25%, which is a little bit more than Larkspur's requirement, of the total residential units will be affordable to lower-income households. So, just wanted to let everybody know that that's coming down the pike. It was a very competitive bidding process. They had originally 25 companies that responded to their RFQ, and then out of those 25, they selected five to respond to the RFP. And so I think it's an exciting moment for Larkspur to see some new development on a beautiful piece of property and to hopefully get some more affordable housing and to reach some of our arena goals. So that's it.

Great. Well, thank you, everyone, for your updates. I just want to report that last week on March 24th, Serenity of Larkspur was sold and that transaction closed. It was sold to Pacific Multifamily Investors for $170 million. Pacific Multifamily Investors is a private owner-operator, and so that property will be coming back onto the property tax rolls. You know, I think this is the best outcome for the city of Larkspur, as that project was underperforming and was not meeting its financial targets or its rental goals, and it was in default. So I think that, you know, this... This ultimately was the best outcome for the city and taxpayers. That said, while that project did not succeed, the city of Larkspur remains dedicated to exploring effective, fiscally responsible ways of building housing for all income levels. And I think what Council Member Margulies just described with 2000 Larkspur Landing and our other housing element sites, I think that we want to focus on ways where we can continue to build housing across all income levels for our community. Great. Thank you. Okay, so I think that concludes the council members' comments, and now we're moving to public hearings, of which there are none. And now we are at business items 8.1, the 2025 California Energy Code and Green Building Standards. Can we get a staff report, please? And welcome, Mr. Avila, our new chief building official. Thank you.

I was going to introduce Matthew, but I think I'll leave it at that. Just before we begin, I just want to say this is sort of an extension of our prior item back in January, February, when we adopted the 2025 building code that is now in effect. This kind of drills down into the details of what is involved with that code to educate everyone and make them understand all of the different requirements that are now in effect that used to be tier one reach codes. It is a very complicated building code. Matthew will talk more about that. But really, this is an informational item to just give you kind of a framework of where we're at, where things are moving forward, and what the future is looking like with the new tier one codes. So with that, I'll hand it over to Matthew. Thank you.

Hello. Is it on?

Welcome. Yes.

Thank you. So today what I'll be going over is the California Building Standards Commission and how they adopt new codes every three years. The 2025 California Energy Code Title 24 Part 6 and the 2025 Energy Building Standards, which is called the Green Code Part 11, became effective January 1, 2026. These codes apply to all new residential, multifamily, and commercial buildings. Key objectives include reducing greenhouse gas emissions, improving energy efficiencies and indoor environmental air quality, supporting the transition to all electric buildings, expanding EV infrastructure, and promoting sustainable construction, water efficiency, renewable energy, and solar energy use. This presentation summarizes relevant requirements for the local development and highlights changes from the 2022 code cycle, as well as compares the 2025 to the Tier 1 requirements. Just to kind of bring everything into perspective, building codes are complicated. One thing to keep in mind with the California green building standards code, CalGreen, is just how complex it is to work with and practice. We're dealing with 12 different code books, CalGreen being one of the three, one of the 12. And the code updates happen every three years. On top of that, there are errata and supplemental updates that come out mid cycle. So this is not always a static process. There are also frequent changes driven by state legislation, which can also add another layer to track and interpret. The code itself includes a number of exceptions, exclusions, and there are areas where different sections overlap, which sometimes creates confusion on how to apply specific requirements. And depending on the project type, you can have different requirements for different applications, so it's not always a one size fits all approach. I say that to make the point that I'll be discussing here a high level, as this topic can be pretty complex. Electricification and electric ready requirements. The 2025 code continues California's transition towards all electric buildings by requiring new construction to be designed and accommodate electric appliances and systems. New residential and multifamily buildings must include pre-wiring and sufficient electrical capacity for heat pump, water heaters, space heating, and cooling systems, and electrical cooking appliances and dryers. Electrical panels and branch circuits must be sized to support these loads even if gas appliances are installed. These requirements ensure that buildings can transition to fully electric systems in the future without requiring significant electrical upgrades. For EV charging, the 2025 Cal Green Code significantly expanded the EV infrastructure requirements across most project types. For multifamily developments, each dwelling unit must now be served with an assigned EV-ready parking space with substantial increases in the number of Level 2 chargers installed compared to the 2022 code. Hotels and motel projects also saw increased requirements for both EV-ready spaces and installed charging stations. Commercial developments with larger parking areas must be provided with a higher percentage of EV-capable spaces to ensure that electrical infrastructure is in place to support future charging infrastructure. Load management systems are permitted to allow multiple chargers to share electrical capacity efficiently. These changes are intended to support increased EV adoption and reduce barriers for future EV installations.

Matthew, would you mind if I asked a question before you go on?

Absolutely.

When you say EV-capable space, does that mean that an EV charger has to be installed or it has to be plumbed or wired for it?

So there's three different terms that are used within the CalGreen code. So there's EV capable, electrical vehicle charging stations, and EV ready. There are three different terms that are used in different ways that mean different things. What you typically see with like an EV charger that you're plugging in, that's an EV charger. There are requirements, which is kind of like what I was talking about earlier, where part of what the code is trying to do is prepare. So it's making sure your existing electrical panel has the amount of service that it can in case you have those number of spaces installed, have the conduit run and prepared so that that can be installed. It is not the requirement to install all of the chargers, but it provides the infrastructure. Got it. Sorry.

No, that's great. Can I ask you a question on your prior slide?

Absolutely.

When you said electric ready panels and circuits are required for single family, multifamily, is that not required for commercial? Or does the code not require that for commercial properties?

It is required for commercial. And I want to say that, yes, it is required.

Okay, great. Thank you.

When it comes to energy efficiency, one thing I want to, I think I put it in the staff report, the energy code and Cal Green, it overlaps. It's not one and there's things that overlap. So I do mention things in these. I'm heavily focused on Cal Green, but energy code sort of comes into play, so just wanted to make that point. The energy code strengthens efficiency standards for building systems and significantly reinforces the use of electric heat pump technology. Electric heat pumps are now the baseline requirement for space and water heating in most applications, replacing prior language that primarily encouraged their use. Minimum efficiency standards for HVAC equipment have increased, resulting in lower energy consumption and improved performance. Solar photovoltaic systems remain mandatory for low rise residential buildings and many commercial buildings with adequate roof space, with some exceptions. PV systems also continue to be mandatory for new single family homes.

Can I ask a question about that?

Absolutely.

Low-rise residential buildings. So in the case of, say, this new development happening in Larkspur Landing where they're going to build a five-story apartment complex, does that mean they won't be required to put solar because it's not under three stories?

No, so they would likely be required to. There are exceptions that come into play. Like if they can't meet the requirement because the size of their roof and things like that, there are exceptions that they may not need to... how it comes to be is there's a calculation based on what your consumption is. And so if you're over a threshold, you need to provide that amount. Now, if you have, this is where the exception comes in. My roof is only this big. Sometimes there are exceptions that don't require them to meet whatever that kilowatt hour requirement that they have. There are other ways around it. Sometimes if there's, you know, if we say, oh, you have a parking lot here and They have to prove that they have no other option.

Okay. But even still, they wouldn't be required to put some amount.

No, they would.

Okay. So they may not have to meet their total kilowatt hours based on the size of the roof and, you know, the actual readiness for photovoltaic, I can't even say it, capacity. But they're required to put something there as, you know, as a way to offset.

Correct.

Okay. Okay.

construction waste and diversion, waste diversion and recycling. The 2025 code requirements increase the demolition diversion target and place a greater emphasis on documentation requiring applicants to track, verify and submit waste management records to demonstrate their compliance. For solar-ready and energy storage, the 2025 CalGreen Code provides expanded solar and energy storage requirements, including solar-ready and battery-ready design elements, which increase coordination and upfront design for new construction. Also, battery energy storage systems integrated with minimum performance criteria with potential reductions in sizing when integrated. For water efficiency, the code also made some enhancements. Certain exemptions that previously allowed natural gas tankless water heaters, particularly in specific climate zones or for additions, have been removed or limited, reinforcing the transition to an electrical hot water system. Indoor water fixture requirements have also been tightened. Maximum flow rates for showerheads have been reduced from two gallons. per minute to 1.8 gallon per minute, contributing to an overall water savings. These updates align with statewide goals to reduce both water uses and associated energy demands. These are some other features. They also have is the Cal Green provisions expanded requirements related to alternative transportation materials and indoor air quality. Bicycle parking is now required for all residential developments in a per unit basis. and the number of bicycle parking spaces had increased significantly for commercial projects. Indoor air quality standards have also been strengthened through lower allowable limits for volatile organic compounds, VOCs, and paints, coatings, adhesives, and sealants for the reducing occupant exposure. These new measures contribute to healthier indoor environments and broader sustainability goals. So this first chart that I have here compares 2022 code to 2025 code. I want to clarify that there are a lot more things outside of this. I just tried to pick some higher level items just to show the difference. So for a single family, multifamily, when it comes to EV charging, it was 15%. The new code cycle requires 25%. I didn't put in there the hotels and the commercial, but those two have also increased for hotels and commercial as well. When it comes to energy efficiency and electrification, in 2022, heat pumps were encouraged. For 2025, heat pumps are now required. For HVAC, this is for the California, this is for the CEC code, not for the energy code. Sorry, this is for the energy code, not for the CalGreen code. But the SEER rating, which stands for Seasonal Energy Efficiency Ratio, and the HSPF rating, which is the Heating Seasonal Performance Factor, both have increased, making things more efficient. Solar mandatory was mandatory in 2022. For 2025, solar is mandatory. Plus, they're also recommending a two kilowatt storage per 100 square feet. For battery energy storage, solar ready was required in 2022, but battery storage wasn't generally required. For the new 2025 code, battery energy storage systems integrated with a minimum performance criteria and potential reductions in sizing when integrated. That means you can possibly have a smaller system if you, they're trying to encourage the battery requirement. For water efficiency, in 2022, gas water heaters were allowed with exceptions. For 2025 current code, the exceptions were limited and it's scheduled to be prohibited by 2030. The showerhead we talked about already. Bike parking requirements wasn't required in 2022 code for residential. It is now for the 2025. Commercial it was, it was at 5%. In the new code, it's at 20%. And VOC limits were 75 grams per liter in the 2022 code and 50 grams per liter in the 2025 codes. This is a comparison for the 2025 green code to the tier one code requirements. So the information on the left is the same from the previous slide. For tier one, it demands higher EV infrastructure percentages for parking spaces, some of them up to 60%. Heat pumps are also required, but they also require a demand management system. HVAC system, it's not covered, it's the same. For any modifications to the solar, we would need to consult with the local utility to exceed the requirements of CalGreen. For the battery energy storage, it's required with system controls. energy efficiency. Gas is effectively banned, but allowed for supplemental heating in spas. There's a lot of exceptions in the code. So, yeah. For water efficiency, increasing some fixtures all the way down to 1.5 gallons per minute, alternative water sources, Energy Star requirements, compostable toilets. There's a whole bunch of different requirements when it comes to energy, water efficiency, I mean. For the other features, they're the same between Tier 1 and the 2025 Green Goals.

Can I ask a question?

Absolutely.

Sorry. So under the 22 to 25 comparison, there's a underwater efficiency.

Yes.

It mentions that gas water heater exceptions are limited and will be prohibited. So do you know of an exception in which somebody could put in a gas water heater versus a heater? I'm sorry, an electric water heater.

So like, for example, if someone wanted to change. So keep in mind, this code addresses everything. I'm going in my house and I'm putting in a new system versus I'm building a brand new house. It covers it all. So some of the exceptions, I believe, is I have an existing water heater and I want to go get a new one and put a new one back in. There are exceptions to that exception. But just keeping in mind, this code covers even you in your own home. I just want my water heaters out. I need a new one. This code covers those requirements.

OK. And so maybe I can just on your staff report, you do talk about certain exceptions that previously allowed natural gas tankless water heaters. particularly in specific climate zones or for additions have been removed or limited. So by additions, you mean if somebody is doing an addition to their home?

Correct.

Okay.

Yeah. So this code covers it all.

Okay.

If I want to just go put in a new one, if I'm adding an addition or if I'm building a brand new.

Okay. Okay. Interesting. All right. Thank you.

Sorry, Matt, I'm a little unclear on two points. So exactly what Sarah's asking, how does this relate to the Ninth Circuit ruling? So my understanding from that ruling was that we put in the plumbing, but the appliances themselves, can you say a little bit more about, and let's use Larkspur Landing because it's a great, probably the most relevant use case I can think of right now, so.

You might want to send that one to Sky.

One of the things that the Ninth Circuit ruled that the Supreme Court agreed with was that rules that were implemented through the structure of the International Code Committee all the way down to the California Code are not covered by the ruling. So let me put that differently. The state, through the building codes, is allowed to impose new limitations on the installation of gas infrastructure. An individual city adopting its own amendments to the code was in conflict with the energy efficiency standards that had been created in the federal appliance standards. But the court said if this is all through the state building codes, then that's allowed. Okay. I could maybe state it one more way.

That's fine. I think the question is when they build, is that consistency in place where there won't be any gas appliances?

Whatever is the building code plus any local amendments that are allowed will be the standard for any new construction when they submit for building permit because building permits have to comply with the building codes in effect at the time that the permits are applied for.

And is the most relevant legislation here AB 130?

The most relevant legislation is going to be the 2025 building code plus any local amendments that are allowed to be in effect. What 130 says is that is all that you're allowed to do. You can't unless you follow one of the other pathways for additional local amendments one of which is through a general plan amendment consistency with the general plan amendment but basic that the baseline will be what 130 says is you can't do anything more than the 2025 code plus any allowed amendments okay okay

And are there some exemptions for energy efficiency in that green code? So I think it's the A42 residential and A52 non-residential exemptions. So you don't actually have to comply fully with those energy efficiency standards.

That one I'm going to throw back.

Yeah, so those would have to be adopted.

by us right okay and so one of and so re covering the ground that we've kind of covered before but um we have attempted to to adopt those previously we're not able to get them through in the pathway that council adopted them last september we do have a potential pathway of revisiting those as policies that are necessary for compliance with general plan policies but we need to work through some some some

legal considerations and then bring those forward for council consideration if that's council's desire great and sorry just one more question about the ev charger so this is fairly technical but i'm trying to understand you know when you say ev ready so there's um conduit only and there's actually with circuits installed you know what level of readiness are we talking about for again our use case being larkspur landing If they built that, you know, right now, or as soon as all this is passed and done, you know, what would the requirement for EV readiness be at what level?

So are you saying, like, as we certainly, like, if the application was in today, what would we be looking at? So it's a percentage based on number of spots. So there's a table that says, if you have one to 10 spots, the general rule of thumb is 20% of them need to be EV ready. 50% of those 20 need to be EV ready. Sorry, EV. I know. So EV charging stations. So 50% of them.

You can use them like I could charge right now. Correct. And the EV ready, I guess that's the question. The other 50%, you know, at what level is it just the conduit or the circuits or like, I'm just wondering how, how much more work would be needed to, to, you know, complete that, that quota, you know, as far as plug in ready.

So it's typically the charging station with a little bit of extra work. They've already have the space that has to, they have to have defined space in their panel already for that. They have to have the conduit run. Depending on whether it's EV ready or EV capable, there is a difference in having the electrical run. Yeah.

Okay, that's good enough. I mean, obviously, like you prefaced it, there's 11 other documents.

So with the reach codes, Calgary and reach codes help to meet climate and sustainability goals while improving overall building performance. It can also lead to lower long-term utility costs and shows a strong commitment to sustainability, which the public tends to view positively. However, it often... It often comes with a higher upfront cost and added project complexity and less flexibility in design and materials. It can also increase the workload for plan check and inspection and as frequent updates along with differences between jurisdictions can create confusion, especially as tier one measures often become the next code cycles baseline.

So, Matt, did the state estimate what higher cost percentage-wise might be, 5% or 10%? Or did they ever give numbers on that?

I'm not familiar.

I just wondered. So...

I don't have a direct answer to your question, but my understanding is you, the agency, have to prepare and submit an analysis where you've figured out or estimated what those upfront additional costs are. That's the primary reason. We were told not to bother completing the application process when we tried to do the entirety of the Calgary code was those calculations weren't possible for us to do. Yeah. So if you were going to do the reach codes to get them through those same committees, we would need to figure out a way to do some sort of estimating what those costs are.

Do we, are we able to estimate the increased plan check and inspection workload costs to us?

own cost?

Yeah, our own cost.

I'm sure that Andy and Matthew could work on that.

I mean, we're going to be talking about budget. I don't know if these codes are going to mean we need an extra inspector or we need an extra plan check person.

Well, remember, we outsource a lot of things when they're specialized and require full cost recovery for that specialty item. Unless you, as a council, choose to subsidize for policy reasons, we wouldn't incur costs toward our budget.

Can I ask one more question? In your second to last bullet point, difference between jurisdictions creates confusion for residents. Is there a collaboration among our 11 cities and town partners to have a consistency in this?

So I want to say that I've, I know you're brand new, but I have joined Redwood Empire has a group as well as there is a group here in Marin County hasn't been a topic of conversation yet I am familiar with some of the other jurisdictions adopting some form or fashion of a tier one system.

I'll chime in. Yes and no is the answer.

Yes, there is a group that meets regularly to try to coordinate across jurisdictions. Have they entirely been successful? No, and they probably never will be because each council has a different level of interest in how far they want to push their reach code. They have different interests in how many costs they're willing to push onto the resident. You've had that debate. Here, and so the answer is, there's never going to be uniformity, but I would say marines trying very hard. To make sure the process feels similar, no matter which jurisdiction you go to 1 of the big distinctions that that we've asked. Our key development staff to look at is whether or not we ought to adopt a process. like a flexible path process that you see being adopted around the state, which is a way of trying to package a path to land incentives and get yourself to the finish line on a particular project. Some of the jurisdictions in Marin have done that, and some have chosen not to, and we have yet to make a decision.

Yeah, it's one of those things I sometimes hear from construction or builders or architects is inconsistency between our small jurisdictions. And they may be working on projects in four different smaller jurisdictions in Marin with very different rules and requirements. So I was just wondering if that bullet point with the difference between jurisdictions creates confusion is something we have an opportunity to try to resolve. But it sounds like it's challenging.

Yeah, and I just want to make one other point that's a contextual point, and it's regarding your last bullet point about Tier 1 measures often become the next cycle's baseline. And we know, or just in case people are not aware, as of AB 130, it's six years instead of the traditional three-year cycle, which we're used to. We've now been told that there will be no changes in six years. So it actually kind of makes it more important for reaching our climate action goals that we do do some tier one adoption.

The role of the city and the impact on development. When we look at the role of the city and development, it really shapes how projects are planned and built out. One of the key responsibilities is plan check and inspection. The city reviews construction plans and inspects projects to make sure they meet the building codes, including Cal Green building standards. This ensures new developments are not just safe, but also energy efficient, water saving and sustainable. Other areas is utility coordination, particularly as we expand to electrification and EV infrastructure. The city works with utility providers to make sure new developments have the proper electrical connections and other infrastructure needed to meet both current and future energy demands. Finally, the city enforces compliance with environmental rules covering waste management, water usage, energy consumption and air quality with cal green in play these requirements directly influence development decisions for material choices of construction methods so projects can align with the state sustainability goals Key takeaways. In summary, the 2025 California Green Building Codes update represent a major step forward in creating buildings that are safer, more energy efficient, sustainable, and ready for the future. They touch every aspect of the development from the electrification and EV infrastructure to water efficiency, indoor air quality, and construction waste management. While these codes are complex and constantly evolving, understanding these requirements helps us plan and build projects that not only comply with the law, but also support California's climate, energy, and sustainability goals. Thank you for your time.

Great. Thank you, Mr. Avila. Great presentation. Yep. Do you have questions? Yeah, sorry.

A few more. So, Matt, have you heard back from, you know, the builders, you know, what some of their feedback is or, you know, have any of the, you know, even, you know, for Larkspur, you know, the new development, like, you know, the Marin County developers, have they given you any feedback on costs or what might be challenging here?

It hasn't been a topic of conversation yet, so I haven't gotten any feedback since I've been here.

Okay, thanks.

Any other questions from council? Okay, I'll open up to public comments. Mr. Muller?

Good evening, council. David Muller. I live here in Larkspur. Welcome, Matt. Good to see you here and Andy. I have to tell it's very heartwarming that we're having this conversation tonight. I think this is a great topic to be talking about. And I think it's a really good thing that the specifics of these standards are being discussed. Because I remember that meeting back at the beginning of the year when tier one, Cal Green tier one was being adopted. And it was like there was a real vagueness about what was in it. But the council went ahead and took a leap of faith. I really appreciate that. Anyway, I certainly agree that the 25 Code and Cal Green Tier 1 did a lot, but there is a gap and I want to focus in on that gap. And this might sound a little different than what you've heard, but this is my understanding of the situation. uh specifically around the code provisions to move away from gas and toward electric are really all targeted at new buildings and there's still a gap for existing buildings a lot of the code provisions do apply to existing buildings like if you're going to do a major remodel a lot of the code provisions there but that encouraging toward transitioning from gas to electric, as I understand, it really isn't there for major remodels. And that's why jurisdictions are adopting this flexible compliance pathway that Dan spoke about. And what that pathway is, is it basically sets a target, a score that, or a major remodel, and most jurisdictions have adopted 500 square feet, greater than 500 is a major remodel, that the remodel would have to meet a score. And the score, the way they can score points toward that score is to do a number of different measures. And when points are applied to those, electrification going from gas to electric scores big. In fact, for most jurisdictions, all you would have to do is change one gas appliance to electric and you would meet the score. But if you don't do that, you'll have to do a bunch of other stuff. So I just want to say this is not a rare thing. Here in Marin County, we have 12 jurisdictions, including the county. Right now, eight of the 12 have adopted the flex compliance path for major remodels. And most of them are using 500 square feet as the triggering point for that. So it's not a rare thing. In fact, Larkspur right now is the outlier with remodels. Ross, Belvedere, and Novato. All other jurisdictions, including the county, have adopted the flexible path. So the main thing I want to say tonight, it's great we're having this conversation. I totally agree that the 25 Code and Cal Green have done a lot. And especially for new construction, it We're there. I mean, it doesn't absolutely require electric, but again, it sets the stage so much leaning in that favor. Everything's going to be electric. You don't have to worry about the new development down there at Larkspur Landing. It's going to be all electric. But for major remodels, and there have been a number of them in Larkspur here recently, they really don't have to be all electric. So I would urge that the council direct staff to really dig into the flex compliance path, see what it means. Is there a gap? How would it work out in Larkspur? And then I would encourage the council to follow the example of eight of the other 12 jurisdictions and to adopt the flex path for major remodels. One last little quick thing. I wanna, cause I'm not so sure your question Gabe quite got squarely answered. And so as I understand it, the difference between EV capable and ready, capable is the conduits are in, the panels in, but no wires are pulled. Ready means the wires are pulled, there's electricity there, but there's no charger. You can't bring your EV up and hook a charging cable into your EV. And then charger means there's actually a charger there. So the capable is important because it's when you're building is the time to put in the conduit. to run the wires later it's real cheap to do it then it's expensive to do it later so capables conduit ready means wires are in there but there's no charger uh ev charger means there's actual a charger you could go up there and plug it into your car and charge So, Dave, can I ask you a quick question?

Again, I'm not an electrician, but my understanding is the conduits, it's not the expensive part, especially if you're pouring and doing it. But the transformers and the switches and all that circuitry, so in both of those categories, is that stuff in place? Because I'm thinking if you have a bunch of wires, but then you still have to put that as well as the terminal, that just sounds like that's a very large barrier.

Not necessarily. And as Matt was describing there, this is really about future-proofing new buildings. I mean, let's face it, it got reported out in Sarah's report that about half of new vehicle registrations in Marin last year were EVs. I mean, this is happening. You know, it's slowed down a little bit right now. Turn the clock for 10, 20 years. It's going to be all AVs. So new buildings that are going to last 25, 50 longer years, they really need to be future-proofed. You put in the infrastructure now, the conduits, which are cheap. It's like plastic pipe. And put a number, go ahead and develop a number of those spaces. to actually have electricity to them. So it's easy, all you have to do is add the charger. And some of them go ahead and add the charger now. And then as more and more people have EVs, all the conduits in there to easily pull wires in the future. And one of the things that I think Matt touched on, even an EV capable, you're required to have the electrical panel capability to do that. So it's not like a whole new thing there. And they're allowing use of load management systems. So you don't have to do it so every single charger could be every single space charging at once. You could have a load management system, sort of like Larkspur has. I think we have that at the library, right? Load management system. So I just wanted to add that in. Those terminologies, every time they get mentioned, everyone's going, what's that mean? So it's very common. So just that I'd add that. Anyway, thank you. And I hope you will consider, you know, or at least look into the flexible compliance path because I think there's a gap there.

We'll bring it back to discussion. I'm on council here. Thank you. Any public comments online? Okay, great. Okay, so I guess I have some questions. I'm a little confused. So we passed... The 2025 Cal Green Code, not the Tier 1. We voted to, but we were not able to implement it, right? So right now we're at the 2025 Cal Green Code. That's what we were able to adopt.

That is correct. Council did adopt it with 2025 Cal Green with Tier 1 in September with the goal of getting it in place prior to AB 130, preventing those changes. But as Dan said, the city was not able to generate the information necessary to support that, and the state was not able to do it either. And so when it came around again to update the code, the city basically went back to standard Cal Green 2025.

Okay. So what's currently in place is Cal Green 2025.

Correct.

But I also remember having this discussion about the flex path. So do we not adopt that I remember talking about it, but I don't remember what the action was.

The FlexPath is a tool. It's a tool the state promotes to empower local agencies, local regulatory bodies, to take the policies of the local jurisdiction and incentivize... that encourages people to make the choices that the regulatory body, you, want to see happen. So as Mr. Moeller alluded to, with the flexible path system, and it's a common regulatory tool. It's not unique to building codes. It's used in all sorts of policy avenues by government entities. The idea is you create a scoring system and you create scores that are achievable if you make the choices that are what the policy body would like you to choose. And that's what a FlexPath system does. Where I might differ because I'm an administrator and a practitioner and Mr. Mueller's not, is I don't think the eight jurisdictions that have adopted it are all actually flexible. fully implementing it now because I've talked to them and the adoption to actual implementation is a big step move. So going to council member way's point, we are in the period where a lot of the jurisdictions are trying to figure out and make it work. And unlike sending an inspector out to the property, these are the gentlemen that actually have to understand how the flex path works and administer it.

And you will bear the cost for that. That's not cost recoverable. So yeah,

we do have to just make sure we have it where we're comfortable with it and that we encompass any policy goals you have.

Okay, so I guess my question is, we are able to adopt the flex path should council want to. That is not prohibited by AB 130. Is that fair?

It's part of the direction you gave staff to work on linking your desire to do reach codes or expanded green building and tying it to the general plan and achieving the policies in the general plan. Okay. we can adopt the flex path as part of that process.

I see. Okay. Okay. That's my question. And then.

I'm sorry. Just because the flex path at the end of the day is a tool for staff to reach your policy goals. And so we need to have a pathway. I'm overusing the word path, but we need a, we need a way for you to establish those policy goals. And that's what Mr. Wood is referring to.

Okay. Okay. And then my last question is the whole conversation around the 500 square feet or the 50% remodel.

Those are all policy choices.

Okay. Right. But we have a definition currently because I remember talking about that. We do. And that's the 50%. Is that what our definition is?

Yes. Okay.

Okay. But that's where I'm confused. So we talked about the definition, but was that in relation to the flex path or was that in relation to some other policy?

That's the definition in code today for what constitutes a remodel for which these various code sections apply.

Okay.

Establishing the 500 square foot number is what some jurisdictions are doing to pretty much force most remodels into pursuing green building options.

Okay, so if we change the definition from 50% to 500 square feet, so that would have other implications because that is a definition that lives, I guess, it's overreaching.

We'd have to bring that to you and say, here are the choices you're being asked to consider, and this is what our estimate of the implications of those choices are.

Okay, I see you're sitting here.

Yeah. This is maybe weedier than you were looking for in terms of an answer, but – so the definition of remodel right now is partially relevant to this conversation, a trigger for compliance with 2025 CalGreen. Additionally, when a version of the FlexPath comes forward for council to consider, where you will give direction about how you want to allocate points to achieve certain goals, you'll also be able to define, and then we'll have to figure out how to make it integrated within the code, but to define a remodel at this size is one to which the FlexPath can apply. And so you will be able to get the incentives to define to um uh to get enhanced processing by doing these things um by getting these points for a remodel at this level so well they're two different things but we'll have to and we'll have to figure out how to integrate them once we get direction from council okay i think it would be helpful for me to understand as well like if we change the definition does that change i mean i understand we're talking about calgary codes right now but does that change other

areas of the code that we're not talking about for homeowners. And I think we need to understand that, or I would like to understand that before we change a definition.

Yes, that's potentially yes, which is why I was saying we'd have to make sure that we were comprehensively throughout the code, only making the changes that council wanted, because right now there's a definition of remodel that applies to things that are completely unrelated to these energy efficiency provisions.

Okay, great. Thank you. I think the way to think about it, Madam Mayor, we will come to you and ask what type of remodel do you want to trigger going through this process? And I think if you think of it that way, once you give us that direction, we'll sort out how it has to read.

Great. Thank you. Okay. Any other questions? So it sounds like that this item might be coming back at some point for discussion. So I just wanted to respond to the public comment. Any other items, questions, discussion?

No, I guess I just want to confirm that we are actively looking at another path to move forward the Cal Green Tier 1 codes through our general plan so that it can come back to Council.

We have two processes active per council direction. One is we've asked the city attorney's office to analyze how to create a defensible tie between your expressed desire and goals to the general plan. And so that's one path, and that'll facilitate bringing it back to you. We've asked the Department of Community Development to analyze the implementation of those goals. The most likely tool is the one that's been referenced, the FlexPath tool. That's the one the state promotes. So they're analyzing, in parallel with the city attorney's office, how could Larkspur implement that and what would be the necessary dialogue with the council to understand the full policy goals that you would like to achieve. The timetable is probably sometime in the middle of this year before both those paths are ready.

Okay. I guess what I don't understand is why other jurisdictions have updated their and adopted the Cal Green Tier 1 codes under the general plan already as of this year per the public comment that was submitted. and how they had a path forward, but it's taking us more time to have a legally defensible path forward.

I think what the public speaker was referring to are agencies that adopted flex paths in the last cycle.

Yeah, I have to bring up the graph that he submitted. But on it, it's it suggested that I thought it suggested that some of those jurisdictions had also like readopted Calgary tier one codes as of early this year. But I may be mistaken. So let me just bring it back up and take a look at it.

I think it'd be my request, Councilmember, since that was submitted in public comment only an hour or so before the public meeting, I think it's difficult for your staff to be appropriately responsive to that level of detail. We can do that in writing, perhaps, afterwards for you.

Okay.

And we can publish that response.

Sounds good. Thanks, Dan. Okay, great. Thank you.

Well, thank you very much, Mr. Avila and Mr. Mogenson for your presentations. All right, so I don't think we need to, that was just for information only. So now we'll move on to item 8.2, which is establishing a fee structure and operating policy for fee-owned electric vehicle charging stations.

Very simple staff report. Madam Mayor, we brought this to you at a very robust discussion at your last council meeting. We'll bring it back to encompass the direction you provided to us on how to set up the new charging system and pricing that will comply with the current directives from the Equality Board. I do have one update and correction to the presentation from the last meeting. It actually goes to Mr. Muller's comments about load management. We have discovered that the load management and the way we've designed the chargers at the libraries They're actually all going to be able to be at full capacity, even if two cars are plugged in. I think I told you if two cars plugged into them, they'd have to share six kilowatts per hour. It actually turns out we can go up to 12 with two cars plugged in because of the way we've done the library. So another kudos to our project team. So other than that, this just reflects the direction you had, and we're looking for you to adopt it today, and it will be implemented and online tomorrow. Oh, except in Piper, we're going to put up signs and give people two weeks notice before we switch.

Okay, great. Thank you. Any questions or comments from council?

So my only question was regarding the rate adjustment authority. It says a city manager or designee may adjust energy fees annually. And I thought annually may be not frequent enough that maybe we would want to consider something more frequent, especially since we've discussed doing this for the first six months to get some data and to really understand our costs. So that was just a thought.

So we crafted that language to allow the city manager to respond to the annual rate changes that may occur with MCE and PG&E.

Okay.

And just to adjust the rate to account for that shift that may be occurring. If we, for example, see that, hey, it's actually not as expensive as we thought to deliver this electricity, we would bring that to the council for discussion and decision. We wouldn't wait a whole year to do that.

Okay.

Yeah.

Okay. Thank you.

Yes, Kathy. I apologize that I was not here for this robust discussion. But I was helping a baby. So I don't want to weigh in on a lot of stuff because I didn't really get to hear that debate. But I did have a question about exhibit A, item 4, employee rates, city employees only. Because we did get one public comment that was a letter from a middle school employee teacher. And I wondered if that had been addressed when this was discussed at the last council meeting. And that letter from that employee was asking that we consider, as a council, a reduced rate for teachers. Was that discussed at all? Okay. I just wondered. I guess that email came to us on 3-25, so it was after this last meeting. We do have a reduced rate for employees. Had we ever thought about school employees either? Or is that, I don't know.

I think Council Member Margulies suggested Larkspur residents. And so the staff response is, you can define any group you want. And the system generally does provide us with the ability to allow groups to be charged different rates. So it's not really a staff response. It's the council response.

You know, I was sympathetic for the letter that the teacher sent. But on the other hand, I think the school district has a responsibility to their employees to provide infrastructure for their commuting teachers, too. So they don't have any electrical EV charging on that campus. But perhaps they need to step up and do that for their employees, too. So I just wanted to see if we had debated that concept. If you would like.

Madam Mayor and council members, we could reach out to the school district and ask if they would like to perhaps do a cost sharing to provide some sort of subsidized rate to their employees.

Well, I don't want to... I mean, this has already come to us before. I don't want to... That won't stop this. Okay.

We can do that separately, but it seems like that would be a good approach in response to what you had just articulated.

Yeah. I mean, I don't want to stop this whole 8.2 to moving forward because it's already been robustly debated. But I also think the school district has to step up and help their employees also. So... I mean, we are responsible for our employees, and I like that idea that we're giving them that opportunity, but maybe that's something that your committee, Sarah, can noodle is how to get the school districts to be more proactive in supporting EV chargers for their staff.

You know, I honestly like city manager's suggestion to reach out to the schools to see if they want to subsidize their employees charging rates and work with us as a partner. That then, you know, does bring home the point that it is partially their responsibility to support their employees and to encourage them. to drive electric vehicles and to help them out. The letter we received was after the fact, so it was obviously prior to this meeting, but we didn't have it prior to the meeting. And I do sympathize with her, or he, sorry, I don't remember if it was a woman or a man, but on their salaries and figuring out ways to help them afford to drive EVs and make it convenient for them. So I agree with you there. But to me, it seems like a really good idea, as a city manager said, to reach out to the school and ask them if they might want to work on a plan to subsidize those costs.

Great. Okay. Thanks for answering that.

Yeah, thanks for bringing that up, Catherine. And a couple of more pieces of contextual, you know, just for what we discussed last time. We can create certain groups, but obviously like the administrative aspect of it is like you've got to keep track of who's actually an employee of the school district over time, and it's hard administratively, I think, to do that. And then the second piece of it was even with this new rate, there is still some subsidization going on. We are still subsidizing the charging. We waived a $1 session fee. So I think we were going to see how things were looking for, you know, six months and just see whether this scheme here is working. But there are maintenance and other costs that we are paying out of pocket that the city is not recovering fully. So... So in that sense, everybody's getting a subsidy from the city. Yeah. Okay. Thanks for answering that. And I just had one other comment when I thought about this a little bit more. I think when we look at this in six months, it would be helpful to see, you know, the way this is, we've picked a specific, you know, 42 cents per kilowatt hour, but obviously rates fluctuate. So, I mean, from a policy perspective, I think it would make more sense to say we are going to be our rate plus or minus three percent. We as a council should adopt a policy that is like, this is the rate plus three percent is what we're going to charge. Otherwise, we're all going to forget that this is 42 cents for five years. And then, you know, rates have bounced around. So I think from a policy perspective, I think we want to write something that is flexible and can change. And, you know, the city manager can change the rates as appropriate.

Well, we've been studying the back end of the system. I think we'll be able to give you a lot of robust analysis of just how people are using the charters and what it's costing us. And I think you're right. Then we could make an informed decision on what that rate calculation should be.

Got it. Great. Any other? Okay. Any other comment from council? Okay. I'll open this up for public comment. Any, any comments from the public, Mr. Muller?

David Mahler, I live here in Larkspur. So I missed the robust discussion, I'm sorry to say, but I thought the outcome looks pretty good. Just hearing this discussion though, I would be a little cautious about establishing too many special discount groups because part of the reasons to put those at the library is so library users can charge. and people who are renters who are in the vicinity can charge. It might be a shame if all the chargers were used all the time by teachers who are working right across the street. It's not really intended for workplace charging provided by their employer. So we wouldn't want to bump the opportunity for Larkspur residents to be using the chargers that the city is providing by employees of an employer that happens to be located right across the street. So I think, you know, see how it plays out. But I would be a little cautious about that, making it too attractive for teachers at the local schools to come charge there. Just a point.

Great. Thank you for your public comment. Anyone online? Allison? Okay, great. All right, so I'll close discussion on this item 8.2.

I'll move resolution 1726. Can I get a second?

Yeah, I'll second. Okay, great. All those in favor? Aye.

Any opposed? I meant to say aye when you asked, but I see you have my aye also.

Great. And any opposed say nay? Okay, great. Motion passes. Wonderful. Okay, so now we'll move on to item 8.3, which is fiscal year 2026-27 budget city financial outlook. Right, Ms. Gabrielle. Welcome.

Got one handout, huh? Yeah.

Good evening. My name is Emilia Gabriel. I am the Administrative Services Director for the City of Larkspur. This presentation is an update on the financial outlook of the City of Larkspur for the general fund. The outlook includes a projection of the general fund revenue and expenditures for the next five years, beginning with fiscal year 26-27 through fiscal year 30-31. So we are beginning our annual budget process tonight. The budget data you'll see tonight for fiscal year 26-27 is still based on preliminary estimates that will be finalized over the course of the upcoming budget sessions at city council meetings in April and May and lead to the adoption of the city's budget at the city council meeting on June 3rd. Starting with an overview of the economic environment and a few statistics. So the U.S. economy is growing at a modest pace with GDP growth to 1.4% in the fourth quarter of 2025, down from 4.4% in the previous quarter. The full year in 2025, the growth was 2.2%. U.S. inflation started to cool down. The CPI in February 2026 was 2.4% over the previous year. However, we're starting to experience inflationary pressure again, this time mainly due to geopolitical events. Interest rates remain elevated. We know mortgage rates are at around 6.5%. We're seeing weaknesses in the national labor market with lower job growth in 2025 compared to 2024 with a 4.4% unemployment rate as of February 2026. California labor market is weaker than the national trends with a 5% to 6% range unemployment rate. And we're seeing the consumers remain pessimistic and cautious due to high prices, concerns about job prospects, and rising gas prices. So they are still unknown in the economy. The immediate and near-term impacts at the local level are still difficult to predict. Property tax continues for us to be a steady source of revenue. Sales tax continue to hold steady for now. And we've seen some softness in the transient occupancy tax, or the TOT, in recent months. Business operating costs remain high due to the high inflation we experienced during the pandemic. And for fiscal year 25-26 and beyond, the city has taken a generally conservative approach with its revenue and expenditure projections, and we're going to continue to monitor closely for any substantive deviation from our forecast. This slide is a snapshot of the projected general fund revenue for fiscal year 26-27. Our property tax revenue is estimated at $17.4 million or about 65% of the total general fund revenue. The next largest share of the general fund revenue is the sales tax estimated at $3.2 million or 12% of the total general fund revenue. This is followed by other taxes at 1.5 million, or 6% of total revenue. And the other taxes include the TOT at $871,000, business tax licenses at $475,000, and property tax transfer at $175,000. Charges for services are estimated at $2.2 million, or 8% of total revenue. Charges for services include fees for service for plan checks, planning, encroachment permit, recreation fees, fiscal services provided to outside entities such as Central Marin Police and Ross Valley Paramedic Authority. The franchise tax fee is estimated at $1.2 million, or 5% of total revenue. The composition of the franchise fee includes fees paid by PG&E, cable and AT&T, and garbage franchise fees. Licenses and permits revenues estimated at 1.1 million or 4% of total revenue. And licenses and permits include building permits, which represents most of the revenue in this line item at $1,084,000. It also includes in this line item, the residential inspection and tobacco licenses. Other revenues projected at $80,000. Penalties and fines are projected at $88,000, and mainly consist of vehicle fines. And use of money is estimated at $30,000, and it represents the anticipated interest that will be earned on the non-reserved general fund cash balance in fiscal year 26-27. The total revenue on this chart is $26,828,000. And I want to make a note that it does not include the transfer in from special fund of $694,000. Those special funds are the gas tax funds, the Measure B, the Measure G, the library foundations. Next slide. shows a property tax revenue received beginning in fiscal year 2014-15. And all the way up to 24-25, the blue bars, it shows the actual property tax revenue received by the city. The green bars starting in 25-26 all the way up to fiscal year 30-31 represents estimated or forecast, forecasted property tax revenue. Back in 2014, the city received 9.6 million dollars in property tax revenue. And since then, the city has been averaging a growth rate of 5% through 24-25, with some years that have been higher than others, like with a double-digit increase of 10% in fiscal year 23-24. I also want to mention that in fiscal year 25-26, when we did our budget, we estimated an adverse impact of $225,000 due to the Skylark apartments reassessment. And so that resulted in an annual increase forecasted at 3% instead of 4%. And looking at the chart, moving forward in 26-27 all the way up to 2030-2031, we're forecasting an average of 4% annually increase for the property tax. I also want to mention that those forecast data do not include any property tax that will come on board that may result from additional housing developments. So that has not been factored in in this forecast at this point in time.

Amelia, would we factor that in should there get some permits that are actually issued? I mean, we're looking at possibly... Three or two or three large.

So a good best practice for budgeting purposes is to discuss them. But not build them into your model until they're real. Got it.

Okay.

It's relevant, and we're going to talk about it a little later in the presentation about a good way to think about it. But your question's spot on, so it's relevant to this conversation.

Yeah. Second thing, I'm kind of struggling to read your really tiny print here because I'm old, and it's really fate. So I'm going to bring a magnifying glass to the next reading. But just let me know, what's that big bump up to 10.5 about again?

That's when Skylark was purchased.

Got it. Okay. So that's how it went up because...

There were some other major purchases that year, but that really spiked our... Okay.

That's what I thought, but honestly, I couldn't read the date at the bottom of the blue bar. Which is my third ask, is that when we redo these, can the type that's at the bottom of the bars be as dark as the type that's at the top? I will make sure that I do that.

Thank you very much. We'll print an 11 by 17 version for you.

I could read it if it was actually just a little bit darker. And I had a spotlight on top of it right here.

Amelia, before you go, can you go back to the pie chart? Maybe I missed something. Which one of the sectors of the pie chart is the ERAF?

ERAF is part of the property tax.

Oh, okay.

Yes. It's part of the 65%, $17.4 million. Okay.

To the tune of what? 1 million or one and a half?

Yes.

I have the exact number. I can get it to you.

Okay. It's also broken out in your budget book. It's just for the pie chart. We roll it up to illustrate.

Okay. And that decision is coming in June, right? Sort of the renewal of us getting that ERAF money or is there a need?

Well, the ERAF money is, you're talking about the states trying to figure out whether they may have another ERAF, right? Yeah. But for us, it's not something we, it just happens. We wait to see the outcome.

Okay. Yeah.

And Amelia, for this year, are we factoring anything with the Skylark? Because I heard they put in another appeal. So are we, do we factor something?

We just asked for a meeting with the assessor to understand it. Okay, great. So we're hoping to have that scheduled the next week or two.

Okay, great. Thank you.

I'm just looking at the eRAF data. Just hold on a second.

Sorry.

So for ERAF, in fiscal year 24-25, we receive $1,657,000. And in fiscal year 25-26, we're forecasting $1.7 million. And 26-27, it's at $1,726,000. So that's what you have in your pie chart. That is in that 65% share of the total revenue.

It's about 10% of our property tax. I know it's that high. Thank you.

Ms. Gabrielle, can you just tell me what ERAF stands for, please?

I don't have the exact term with me. Okay.

Education Realignment Augmentation Fund, I think is what it stands for. We could do a whole presentation about it, but the gist of it is... Did I get it right or wrong?

You got it right. Okay.

um essentially the state needed to figure out a way that it could shift money around to meet its own obligations given there's limitations to what the state can and can't dip its hands into so one of the things they realized is that they had an opportunity to play around with how property taxes are moved between all the different jurisdictions that get property tax And they made a number of shifts so that they could meet their funding obligations to schools. And then they made a commitment to backfill cities with other pots of money. Some cities were winners and some cities were losers in the ERAF process. We thought we'd be a loser. We ended up actually being okay. And it's for a conversation another day why that happened. We can go through kind of the uniqueness of the Marin situation. But I can tell you that at a league conference, this is easily a two-hour talk just to explain it.

Thank you. Okay, so now we are on slide number six, City of Larkspur sales tax. So this chart is showing the sales tax revenue beginning in fiscal year 2014-15. And up to 24-25 fiscal year, you're seeing actual tax received, sales tax received. And this is represented by the blue bars. with the dollar amounts in millions of dollars. The annual forecast starts in fiscal year 25-26 all the way up to fiscal year 30-31 and is represented by the green bars. You can see that the sales tax is more volatile than the property tax. We can see some big swings changing from one year to another year, depending on the state of the economy. There was a dip of 25% during the first year of the pandemic. Now we're seeing some softening of the sales tax. If you look at after the pandemic recovery of 21-22, we're seeing slight annual decreases. And in fiscal year 24-25, it looks like it's leveling off at $3 million a year. Future annual increases are conservatively projected at 3%. On the next slide, slide number seven, you're seeing the transient occupancy tax, also known as the TOT. So this is the revenue is showing from fiscal year 2014-15 all the way up to 24-25 actual revenue received by the city. And then the green bars starting in 25-26 all the way up to 30-31 are annual forecast. The TOT is a volatile source of revenue for the city. So we've seen some increases from 2% to 16% start annually, starting in fiscal year 14-15. And then we've seen during the pandemic that we lost two-thirds of revenue during that time. And then there was a rebound right after the pandemic. pandemic and we can see now that there's a softening that started in 23-24 fiscal year and it continues to persist this year so next year I'm projecting a 0% increase from this year and thereafter 2.5% increase annually starting in fiscal year 27-28 so these are just projections at this point in time but this is how we're using this data to populate our annual budget basically for the next five years.

Can you remind me what the percentage of the TOT is? Is it 2% or? These are 10%. 10%. Is there a cap in the state? Like sales tax has a cap at 10, I think 10%. Is this an item that we could raise it? Is there a cap on TOT? Yes. Ours is 10, but is there... Because I think there's some jurisdictions that sometimes it's 20%.

There's no state limitation on the rate, but it is subject to voter approval. And you're correct that some jurisdictions have much higher rates. Some have a split where they have a component that's general tax, a component that's special tax. Then others will have conference center tax on top of it or entertainment district type of tax on top of it. But it's all charged to the tourist who's staying at the hotel.

So if we were to look at raising that, it would have to be a budget. It would have to be a tax measure passed by the voters.

That's correct. It requires a simple majority.

Got it. Also, I should note, to Mr. Wooder's point, the Courtyard of Marriott, they've chosen to participate in a business improvement district. So there is actually another 2% being charged that goes into a pot to promote Marin, basically. So from the person staying, there's a point of view they're paying 12%.

So that 2% goes to a countywide fund, not to us?

It goes to a business improvement district that I believe about 80% of the hotels in the county chose to join. But don't hold me to that 80% number. I'd have to go look.

Do we get money out of that or improvement?

In theory, that promotional dollar then encourages people to stay there at the hotel. That was their choice to impose that tax on themselves. That's separate. But from the person who stays there, they don't see a distinction.

Okay.

So I am on slide number eight. So slide number eight shows the projected fiscal year 26-27 expenditure for the general fund. So public safety makes up 50% of the total expenditure for the city of Larkspur. Fire expenditures estimated $7.6 million or 29% of total expenditures and lease expenditures estimated at 5.6 million or 21% of our total expenditures. Expenditures of $8.5 million in aggregate is for services such as the library, recreation, streets, parks, engineering, planning, and building inspections. Administration along with city contracts, debt service, city council, building maintenance, and the CalPERS unfunded liability are totaling $4.9 million on this chart. The total general fund expenditure on this chart is $26.4 million, and it does not include transfer out of $1.5 million to the debt service fund for the pension obligation bond. Next slide. You're seeing the Central Marin Police Authority expenditure over time. These are annual expenditures starting in fiscal year 2021 through fiscal year 2024-25. The annual contribution reached $5.36 million in the current fiscal year and grew at an average of 5% over time, except for 2025-26 fiscal year, where you see a growth rate of 8.7%. And this is mainly due to the negotiated labor agreement. The projected contribution for 26-27 fiscal year is expected to grow at about 4%, or to $5.57 million, and the growth rate forecast for the out years is conservatively estimated at 2.5% each year. Next slide. You see the Central Marin Fire Authority. So you can see that the actual contribution starting in fiscal year 2021 all the way up to 2024-25, the annual contribution reached $6.86 million in the current fiscal year and grew at an average rate of 6% over time. And we can see that there are two years that experience a double-digit growth, mainly due to the negotiated labor agreement. The projected contribution for Fiscal Year 26-27 is expected to grow by about 7.3% to $7.36 million, and it's based on preliminary data that we received from fire management. The grow rate in the out years is conservatively estimated at 3.5%. Next slide. So this is slide number 11. And this shows an estimate of the revenue and transfer in the green line and expense and transfer out in the blue line. And this is for the upcoming five fiscal years. For fiscal year 26-27, the city is estimating $27.52 million in revenue and transfer in and $28.01 million in expenditure and transfer out. They show a negative change in fund balance of $486,000. This is a funding gap. The amount is available in the general fund balance reserve that was set aside for the unfunded accrued liability, the CalPERS unfunded accrued liability. So the chart is also showing for the out years that annual expenditures are expected to exceed annual revenue over time based on conservative revenue assumptions. The five-year forecast assumes that the overall revenue and expenditure will grow at about the same pace, 3%, with an annual operating deficit holding steady at $500,000 a year. The initial assessment is that the infrastructure cost and additional staff at the new library are contributing to this funding gap of about $150,000. And the other factor contributing to the annual operating funding gap is the CalPERS unfunded accrued liability. Again, these are assumptions at a point in time that will change as we get closer in time to the future fiscal years in question. I also wanted to remind you that the General Fund Reserve Contingency Fund has $2.5 million that was set aside for the CalPERS unfunded accrued liability costs, and this will be available to close the annual operating funding gap for the next five years. Do you want to add anything?

This might be a good point to go back to Council Member Way's question. So since the green lines, we didn't include potential new growth, and the blue lines, what we think is going to happen with expenses, one of the questions that we'll be wrestling with is whether the growth that we anticipate can close the gap between the green line and the blue line. That's part of some of the questions we have for the assessors. We try to fully understand a couple of big ticket items. The Skylar complex keeps filing for annual reappraisals on an individual year basis. We want to see what happens when Serenity comes back online. And then, of course, the new growth. So we're trying to model all that so we can talk about that gap. So one of the questions that we'll be wrestling with through this whole budget season is, are we comfortable being in a deficit position and drawing on reserves to cover that gap while we wait to see if that property tax growth will occur? I do want to remind the council, and for the benefit of the public who may see this presentation, As Ms. Gabriel said, we went through a period of seven or eight years of 5% or more growth in property tax. During that time, your staff was very aggressive, and all department heads and two public safety agencies all worked very hard to keep costs in the 3% and 4% range. So revenue growth was outpacing cost growth, and that was why we were able to build up reserves that we needed to manage a lot of projects that the council had set as our goals and so a few years ago we asked the council to park a little bit of that savings that we accumulated so that we could ride a tough period and that's where we are now so you heard miss gabrielle allude to you set aside two and a half million dollars um because we were worried that pers was going to start hitting us with additional costs That two and a half we think is enough to ride out a lot of this storm. What we didn't plan for that we're now having to deal with, and you've heard us talk about it before, and I am not trying to pick on individual police officers or firefighters, but their industries went through a rather rapid escalation in compensation. And that's not just Central Marin. That happened all over California, and it was particularly bad in the Bay Area. Basically, agencies started going to bidding wars. And it's been compounded by the fact that a lot of the incentives for police and fire to work in the same place for 30 years are gone. So they're more than happy to start listening when other agencies are willing to pay them more. So the spikes that were on those other charts were not something we were anticipating, but we had to do to make sure that we stopped the bleeding in those two agencies and we retained talent. And so the blue line does reflect what we believe will be our costs going forward, including those higher public safety costs. But now there's a big pressure coming, which is the next time those contracts are up for renewal, we need to work with our two labor groups in our public safety JPAs to help them understand the circumstances that we are in. And of course, our challenge is always we're just one partner agency in those JPAs. So we need to work with our partner agencies to all come together and look at our pictures collectively. I really want to compliment Ms. Gabrielle. I know she hasn't finished her presentation. She saw, I think, much sooner than her counterparts in our partner agencies where these trends were going and brought them to my attention so that she and I could start working on these strategies. So we're a little probably ahead, but I know from talking to them, they're seeing these exact same trends. So I know we'll have a welcome conversation on how to move forward.

And that contract renegotiation is next summer or summer after?

I think police is coming up in the next fiscal year. The next fiscal year. And then I think fire is half a fiscal year behind.

I don't know. I'll be retired by then. But that's a Huge concern, frankly. And our partner agency for police is San Anselmo and Corte Madera. And keeping abreast of where their financial status is is going to be important, too.

And I think from past experience, San Anselmo's trends and our trends tend to look very similar. Our mix of revenues are very similar. And they operate a library. And I'm not picking on a library, but Quartermere doesn't. So that's a totally different expenditure mix than Larkspur and San Anselmo wrestle with. I also don't want to pick on our amazing new library. And we did built into the model what we think are the increased costs. But I'm pleased that our support partners in the community are already thinking about how to help us bridge that gap. That's great. I'll let Amelia continue with her.

Thank you. So I'm going to move to slide number 12. So the next two slides, 12 and 13, show the assumptions used to build the five-year forecast. So the first chart that you see on the screen shows the general fund revenue assumptions for the major revenue line items. City staff used conservative assumptions to prepare the revenue estimates over the next five years, so the annual property tax increase, as I mentioned earlier, is at 4%, sales tax at 3% annual increase, the TOT at 2.5%, and charges for services and building permit at 2.5%, based on CIP, or the Consumer Price Index, I should say CPI. This is not any change in volume, that's just based on change in pricing. So for fiscal year 26-27, the city is anticipating a one-time increase in revenue of $535,000 for plan check fees, $200,000 in building permit fees, and $100,000 in planning fees, and this is due to higher volume of construction and renovation activities that are anticipated. So going to slide number 13, here you're seeing the general fund expenditure assumptions for the major expenditure line items that were used to build a five-year forecast. The first two expenditure line items I mentioned earlier, they're showing the forecast for public safety, police and fire. The contribution to the Central Marin fire is estimated to grow at 7.3%, mainly to... purchase of a one-time purchase of vehicle and of course the labor cost and public safety in general is estimated to grow up conservatively at an average of two and a half percent in future years. So the next two expenditure lines are the CalPERS unfunded accrued liability and the retiree health other public employee benefit. As I mentioned earlier, the unfunded accrued liabilities and unexpected costs that started to develop in fiscal year 24-25 and is expected to continue. There is a contingency fund balance of $2.5 million that was set aside by your council previously and will be used in the upcoming years to close the funding gap. Retiree health pay as you go on the chart will grow at a modest pace in 26-27 due to beneficiaries enrolling in Medicare. So that is lowering our costs once they reach the age of enrolling in Medicare. Expenditure growth is expected to resume at a higher pace in fiscal year 27-28 due to increases in health premiums. The next two expenditure lines are debt service for pension obligation bond and the Bay City self-insured cost estimates. So both are expected to grow between 3.5% and 4% over the upcoming year. For Bay City's fiscal year in 26-27, we're still waiting for an estimate from the agency. So I put in a 10% increase pending the final number that will come in hopefully over the next week or two. The next expenditure line item is the employee salaries and benefits. In 26-27, the preliminary budget that will be presented to your council continues to include two positions currently vacant that are proposed to be unfunded. The estimate includes a COLA of 3% for employees and a health premium increase of 6-10% in the upcoming year, 6-10% annually. The last expenditure line item represents all remaining expenses not listed in the above chart. Some line items within this category include increases of 3% to 4% due to inflation. And I want to point out that the 15% decrease in fiscal year 27-28 in this line item is due to a one-time expenditure of $905,000. In 26-27 fiscal year, that will not repeat itself in the future. And those expenditures are the plan checks and building inspections for $700,000, community planning $135,000. We're thinking about buying a lawnmower for $30,000 in 26-27. So that's a one-time purchase and the whole gym purchase. will be, I believe, spending about $40,000 to something about the floors. Leanne can comment on that.

Were you going to comment on that, or can I ask a question?

I'll only add just a reminder on things like the hall gym where there's a dedicated revenue. It sits in a pot for that purpose. The money's there to do that improvement.

So I have a question about CalPERS unfunded accrued liability, which is, you know, this star chamber thing we have to pay into. But the general assumption of 15.3%, then 7%, and then 0, 0, 0. What are we thinking with the 0, 0, 0 for those three?

So CalPERS publishes the actual report on an annual basis. And they give us a table. And in this table, they tell us this is how much you have to pay in the future. So the increase in 26-27 of 15.3% is a prescribed increase by CalPERS. And then it's going up by 7% per their schedule. And then after that, it's... trending to go down slightly based on the schedule they provided to us. So I left it at 0% increase because I want to be conservative in my estimate and not project a decrease when we've seen historically there's consistently been increases.

It's very difficult for your staff to plug a guesstimate into those numbers, so it's best practice for us to just show you what CalPERS is saying publicly, but you're right to be skeptical.

Okay, so that just, it was a jump from 15 to zero, and I was like, oh, wait. All right, that's my, I figured out I could bring it up on the screen and then raise the font, so don't worry about me.

Okay, next slide. This is the final slide. Next step, so today I presented to you a five-year financial outlook for the city. Over the coming weeks, the city will be refining its revenue and expenditure assumptions for fiscal year 26-27. We're thinking possibly to have a budget session on April 15. And then on May 20th, you'll see the preliminary budget and capital improvement budget. And on June 3rd, hopefully we'll have the budget adopted by your council.

I may shift that April 15 session to the first meeting in May.

I'm trying to work with the department heads to make sure you're not overloaded at any one meeting.

And we do have some other big ticket items coming. So that's the one fungible date there.

Thank you, Ms. Gabrielle. That was extremely thorough and detailed and very informative. So thank you for all the work that you put into this. I think it sums it up really well. We'll look forward to the rest of the budgets as you bring them to us. I think we understand the general situation that we do have a structural deficit. And unless we find a way to really increase our revenues or decrease our expenses, we'll be drawing on our reserves. And I think it's also important probably to see our reserve balance and how that is going to change in the five-year projection. as well. But, you know, I think that it's great that the city manager and Ms. Gabrielle, you've flagged these, and it seems like you guys are thinking about all the right things. So I think it's just a matter of, you know, we have a strategy and that we have a plan. So that's just, that's how you work through these issues. So I think that's, so more to come in the next couple of months, but Thank you very much for setting the table for discussions.

I know if I could, Madam Mayor, one thing I didn't say, and I feel like I should, many cities would turn cartwheels to only have 50% of their general fund going to public safety. So as much as I flagged it as a concern and the growth in those personnel costs have caused us some consternation, We're starting from an incredible place because of the fiscal creativity of those two joint powers authorities. Many agencies throughout the state are looking at 65-70% of their general fund goes to public safety.

Wow. Well, thank you again for your stewardship also of the two public safety JPAs. Okay. Any questions from council? Okay. Any public comments online? Okay. Great. All right. Well, then I shall close this item 8.3 and that moves us to adjournment. So I will adjourn this meeting to our next regular meeting on Wednesday, April 15th. And we look forward to seeing all you there. Happy Easter and Passover to those who celebrate. Thank you.