City Council/Public Finance and Economic Development Authority/Parking Authority - Regular Meeting

Okay. SPEAKER one:

Gen item A, study session roll call. Council member DuPont?

SPEAKER Present.

Tao? SPEAKER Present. Harris?

SPEAKER Present.

Present. Zhang?

SPEAKER Here.

Mayor Pro Temboil? Here. And Mayor Serato? Okay, agenda item B, study session. B1, study session to discuss formation of a new community facilities district for services.

Sorry. Okay. Good evening. No mayor, but council. Tonight, we will be presenting well, mostly Cindy Yan here is of good here with Goodwin Consulting, and she she and I have been working on a citywide fiscal impact analysis to come up with a potentially new CFD tax rate. And so I'm going to let Cindy take it from here.

Good evening, members of council. My name is Cindy Ann. I'm with Goodwin Consulting Group. We've served as the special tax consultant for the city for as long as I've been with the company, which is going on twenty three years now. We helped the city form its first infrastructure CFD as well as the services CFD.

So the current services CFD was formed in 2003 and the special tax rates were set at the time. And an initial citywide CFD analysis was completed in 2006. And subsequent update was done in 2014. However, the rates were determined to be too high. So we've kept the rates from the initial 2003 analysis for current annexations into the services CFD.

The current update was initiated in 2023. And the goal was to create a new citywide services CFD to streamline future annexations because the process as it stands currently, each annexation there's prolonged process since the CFD was originally formed. Changes have been made to the CFD laws that allows unanimous consent so it would be an internal annexation process. We wouldn't need to come back to counsel because the analysis and the methodology would be the same. And then so just as some background fiscal impact analyses, the purpose is to compare the annual project revenues for any development against the cost to provide services to that project.

And the goal would be so that no project has a negative fiscal impact on the city general fund. And as part of this update process, we had several meetings with all of the department heads or their representatives to discuss level of service needs, whether the current budget provides sufficient levels of service or if a preferred level of service is warranted and those preferred level service costs are reflected in the analysis. And so as part of the fiscal impact analysis process, we'll look at the different land uses, demographic assumptions and then look at the city's budget and separate both revenues and costs into average costs whether that's a good approximation or if the project doesn't look like what it currently exists in the city or revenues or costs are different than as they currently exist in the city, we'll do. So on the top, it's the multiplier method. And then on the bottom, it looks at the case study method or if marginal costs are and then we compare revenues against expenses to come up with enough fiscal impact.

If it's a surplus typically for commercial industrial developments, there is a tendency to generate a surplus. We stop there. And then if there's a deficit similar to a lot of residential development projects, we'll estimate what the special tax needs to be for that project to mitigate its deficits. And then so these are instances where we would use the case study method in the prior table. That's the red.

And then the multiplier, the average cost method, it was the blue. And then so I know we're short for time, but so I'll briefly go over the analysis tables. I think I've presented this to some of the members of council but not all. So table one lays out, as I indicated, the analysis was initiated in 2003. We used the twenty four-twenty five budget.

And for all of the revenues and costs that are calculated using average costs or revenues in the city. The demographic assumptions are presented here. It shows the city at the time had about 90,000 residents and then about almost 32,000 jobs, which translates to about 105,000 persons served. And that represents 100% of the residents plus 50% of the employees. Those are standard fiscal practice assumptions.

And then as part of the analysis, we're calculating the fiscal impacts on five different land use types per single family unit, per multi family unit, and then per thousand building square feet of retail, office, and industrial. This table lays out all of the tax rate areas that is within the city's general plan boundaries. And it shows that future development within any of these tax rate areas are generating about 37% of the 1% Prop 13 property tax revenues to the city. However, the city has an agreement with the county where it pays half of that to the county as a services fee as opposed to a general property tax sharing agreement. So this table summarizes all of the case study methods and it shows assumptions used to calculate property taxes, sales taxes, and property tax in lieu of vehicle license fees.

Those are generally the three biggest components of revenues for any fiscal impact analysis. And then tables five and six summarize the sales tax credit given to even though taxable sales is generated on-site for commercial, it's the demand. It's like the chicken and egg without the residential demand. There would be no supply for the commercial. So we're giving a portion of that sales tax credit, half of that to the residential development.

And then this table summarizes all of the other revenue items that are calculated using the multiplier method. And then on this table then summarizes all of the costs that are calculated using the multiplier method. And I had mentioned earlier that we met with department staff to figure out whether the current budget or the twenty four-twenty five budget was sufficient to provide a level of service that's needed. And it was determined that it wasn't. So we've augmented the twenty four-twenty five budget.

It's the very last section. It's the additional personnel and equipment needs adjustments to the budget that would provide service to development in the city at the preferred level. And then the next table actually details what those what's included in those costs. So for personnel, it's an extra $3,500,000 and that is made up of various admin and support services, public safety, public works, and then recreation and park staff, as well as about $14,600,000 to main a majority of that is for road maintenance. The city prepares a pavement conditions index report that showed that to maintain its current PCI, it would need to fund, spend about $14,000,000 a year on road maintenance.

And so this is the Cadillac of the results. I think council has done in the past, these are the maximum calculated levels. So if council were to decide on something less, that's an option. But we wanted to present what the maximum amounts were. And then so the next five tables summarize the fiscal impacts on single family unit, multifamily unit, and then per thousand square feet of office, commercial, and industrial.

And then combined looking at development projections through 2040 that was done as part of the city's public facilities financing plan. We're looking at a net shortfall about $8,100,000 annually at build out. And that translates to the special taxes that we had calculated earlier, essentially about $1,500 per unit for single family and $1,300 per unit for multifamily. We've been asked in the past to create some kind of distinction between single family and multifamily in that the multifamily rate represents 70% of the single family rate. And so that bumps the single family rate from fifteen forty eight to sixteen fifty eight and then drops the multifamily rates from thirteen thirty one to eleven sixty one.

And so this chart shows what the on the left hand side, it shows what the calculated mitigation amounts are based on straights, the persons per household and the specific assumptions for single family and multifamily. And then the right hand side adjusts those so that the multifamily rate represents 30% of the single family rate.

Questions?

Does anyone have questions? I don't have the request to speak on my cell. Does anyone have questions? Okay, go for Ashane.

Thank you, Mayor Bartzem Boyle. Thank you, Ms. Yan for the presentation. I want to make sure I'm grounded here because we didn't get the presentation in advance, that's fine. But the subject of this informational item is to discuss the formation of a new community facilities district. It seems like a lot of what you told me is how much sort of space there is left in our tax base to even impose a citywide facilities district fee. Am I getting that right?

Yes. So there's currently a services district as it stands right now. That rate is $750 per single family unit for fiscal year 'twenty five-'twenty six. And that rate has been escalated since 2003 based on CPI adjustments with the updated budget analysis. We're showing that rate should be 15.48 in order for future development to fully mitigate their own impacts on the city.

Okay. So at step one, there is a citywide communities facilities district, right?

I think it's supposed to be citywide, but it gets annexed as development moves forward. So if council were to adopt this new citywide services, CFD, we would have a colonel project. But the entire city boundaries would be within the future annexation area. And as developments come forward, they would not need to go through the current process, which could take

two to three months. Depends on the project. But yes, around there.

Okay. So if counsel agrees with your recommendation tell me again, you said the number. What's the increase in the tax footprint for each single family home?

So the current rate, if it were to annex, that's just the baseline city services. That doesn't account for any project specific needs, which are currently layered on anyways. It would go from $750 to either $15.48 dollars or some amount lower than that if the preferred levels of service were not applied.

Got it. So we're talking about formalizing and extending to the current now existing city limits the citywide community facilities district and potentially doubling the assessment on each single family home as much as twice but maybe less. And you showed us a list of the different services that are covered by the fee. It seems to me to be kind of like a lot of sort of indirect costs that get kind of lost in the budget sometimes. It's not specifically for, say, police and fire or tree trimming or something. It's like an across the board fee charge for all city services.

Yes, correct. I'm sorry. That's why. So the current CFD services that we collect on now, we have a very specific structure on how we break that down. And so there's a portion that goes towards admin. There's a portion that goes towards parks. Type of service that the city gives gets a little piece. Some get more than others. Your public safety gets the bulk of it. But other pieces go to airport, development services, parks and recreation, streets, trees. They all get a little bit of it. And we have a very specific breakdown that we do to allocate. So we actually take the money into their specific CFD funds. So we actually have a fund that's called CFD admin. And we bring it all there.

And then we collect it. And then we send it over to the general fund. So it's very trackable and transparent because we do have like 10 funds set up for this process.

Who decides what line items are in and out of the CFD expenditure set?

It's basically just a supplement. So for instance, Parks and Rec gets a piece, right? So whatever comes in for the year, we estimate a budget that's going to come in based on the assessments that comes in. And then we take that amount of money and transfer it out to Parks and Rec, and it supplements their budget. So when you saw other revenue when you see other revenue on the forecast, part of the other revenue is the CFD money that's coming in. So it's not specific to a program, but it just like the general fund just supplements, the CFD just supplements too.

So everything the city does is somehow represented proportionately under the CFD?

Correct. From this base piece.

Yes. And so who decided that baseline? Who decided the proportions?

When the first services CFD was created, it was created very specifically with rates for each of those areas. So we took the dollar amount that was adopted by counsel and proportionately put that percentage to those areas.

This is the 2003 council?

Yes. No, I think it was before that. Got adopted in February and they started the process sooner. I think it started in 2001.

Yeah, the oldest file I could find in our computer system was 2001.

Wow. All right. Get the floppies out of the closet. So an at large council when Merced was about 45,000 people decided what's on the list and what's the proportion of services that draw from the CFD, right?

Well, they approved the study and the study kind of created the percentages.

Do you think it needs to be updated?

Yes, likely. I mean, I will say probably public safety and roads is probably going to get the biggest chunks of it based on how we see the numbers. But likely, yes. So depending on where it's approved, we would apply the same.

Would that be something counsel would be asked to look at as a part of forming the CFD and approving any rate increase?

I don't believe that happened the last time. But if it's something that you want to request, we can definitely bring it to you.

All right. Well, stop short of requesting it. But it's something I think you should consider. And this is not being proposed to do new stuff, just hypothetically like building streetlights? This is the existing operations and indirect costs?

It's purely for operations and maintenance, nothing for capital.

Okay. Is there a way in this existing structure and the answer could be no. Is a way to add new capital investments or other cost line items to the CFD?

Only if you have a specific development project. Think oh, sorry. So the proposed VST project is anticipating to create both a facility CFD and a services CFD. It's only through the facility CFD that you could fund infrastructure projects.

And that's not this?

That's not what this analysis does. This purely looks at O and M and it's for services.

Got it. No, that's fine. I'll stop after this last question. What's the timeline in terms of bringing this back to counsel for potential action?

So if you wanted to see different rates or some different structure, we would probably try to bring that back within the next couple council meetings. And then once you're set on a rate, then we would need a first project to come in to a CFD to start the process to use this new rate.

All right. Right.

A lot of moving parts. Like springtime?

So you would I'm trying to remember the process. So was this really is a planning process. I kind of got because of all the numbers right. So Scott might be able to answer some of these questions from the planning perspective.

Venus is right. I mean, we need a candidate project to really push the colonel to go forward. We kinda need a a, you know, a definitive answer that we wanna initiate the new process to say we no longer want to use the old CFD methodology and rates. We wanna proceed forward. And then from that point forward, we need the candidate project to say, you're the one we're going to proceed forward with. That's kind of what we're looking for to start with.

All right. I appreciate that. I guess two things. One, this is a study session, not an action item. So I think it has to come back Regardless, I'll just signal the fact that I think we should update our processes and fees and structure to what extent can be discussed with my colleagues. But Scott or sorry, we're still in session here. Mr. McBride, can you please give me can you explain what this means as colonel project? I assume that doesn't come from the city. That comes from a developer.

That's correct. You've all set the dais when you take an action when we annex a project into the CFD. You've taken actions where we've gone through the process. You count the votes. You've done the canvassing. That's the process we're talking about. Although going forward, it would be very different because you don't have to go through all that methodology. All that formality goes away. That's done at a very streamlined process. It actually saves time and money for that.

We can streamline that. That's one of the benefits of doing this. But that would be done in the background so that process gets done quicker. But that's kind of what we're that's the mechanics of it is that a new project that's going to go to a final map would have to become the colonel. It's like not the guinea pig, but it's the first project that becomes part of the new CFD. That's what would be occurring.

Please not a guinea pig like a leading edge. Let's call it that. I I know Kim and Lee and others are not here, but do you have a sense for when the next project might be coming up?

Yeah. I don't have a good idea right now on a map that's coming forward. But we might be able to do that if we want to report back on if you've got some thoughts about things you might want to see back, we might be able to kind of connect a potential one down the road.

So what is it you're looking

from counsel tonight? Well, I think for us, there was a lot of discussion about the CFD update. Like, what is it? We know that you had a lot of attention into seeing this brought forward. And I think for us, you want to explain what it is and what it isn't. I think you heard some of that tonight. Like, it's not a process to create a way to finance new capital investment. That's not what this is. But it is a way to help address shortfalls in services. And Cindy mentioned, just wanna make sure that we address this as well.

There are two sides to this that this handles the city general side of things. But there's still another component here that's project specific that would handle things like storm drainage, lighting, landscape maintenance that has to be driven at a project specific level. And that's usually done through work of our public works engineering department. That's a very project specific function, right? So that gets coupled with this.

So this fee and Cindy, please help me if I'm incorrect, will actually change on a project specific basis. It will be this core plus some of the calculation that ends up being on the assessment because it's going to calculate those fees that are necessary for that neighborhood plus these base fees that are for the city. So I want to make sure you all understand it's not just this fee. It's actually those plus the project specific that would be going forward. This is part of your ongoing discussion about it becoming fiscally stable was looking at the CFDs.

So this has been going on since 2023. It's complicated. We just want to tell you from the work we've been able to conclude, we're essentially done. But we need to kind of explain to you what it's going to look like to see if we're way off base or if this is something that you think you can support to go forward. If you've got some ideas about how you might want to make it more, I don't know, applicable or if you've got some concerns about going forward and kind of fill you out on what you'd to see for next steps, really.

Well, I mean, I'll just conclude and then I will stop. I would actually like to continue a separate parallel discussion on ways citywide to do more, particularly with capital projects. But I'm encouraged and I appreciate the presentation. I mean, if you're looking for like a straw poll, I mean, I'd like to see this come back in a form where we can actually discuss and take potential action. So you feel like you've got a green light.

Mr. DuPont and then Mr. Harris.

Thank you, Mayor Pro Tem. No specific questions right now. If we could make the presentation available to counsel and also the public since we are seeing this for the first time, I think it allows us to go through the information a little bit more finer detail. But I do think it warrants a discussion, a further discussion on the CFDs for services and how really all of not only the CFD services portion but the project specific fees that you discuss, Mr. McBride, that would be helpful to just have the full discussion so we understand where we're moving forward and what are our options as well as projects come more online throughout the city.

And we're looking at how those impacts are really being paid attention to by the city so that we are not, I would say, in the red in a lot of our operational costs. So I'd support bringing it back, but would love to obviously have the presentation so we can dive in a little deeper.

Thank you, Mayor Pro Tem. If I missed this, I apologize. What is the effect on the, if any, on the maintenance districts, specifically the ones that just submitted their ballots?

There is none because maintenance districts are not part of the CFD. You're either in a district, not in the district, or not in the CFD.

Could they become part of the CFD?

They'd have to elect to become part of the CFD. You'd have to vote yourself out of the district and vote to become part of the CFD. The problem is you can't vote to be only partially to the CFD. You have to go all the way to the CFD. So basically, you have to say, sure. I wanna assess myself $1,500 plus the project specific rates, which I think probably is not very likely. Because we just went through the 12 ballots for some rate increases, and we had some moderate increases, and they were not voted favorably.

I guess I looked at this as a way to incorporate those and get funding for the districts that are not voting for their rate increase. And we have to still do the maintenance. But you're saying that's not achievable.

I just don't think it's practical. I don't know that people are going to vote to take on this level of debt.

I also support bringing this back for further discussion.

Mr. Zhang?

On that note, with regards to the increase to 1,500, so my understanding is that that only applies to residential units that are within the CFD already and including new annexation? Or is it just for new annexations?

It would only apply to new development that annexes into the CFD. So the CFD law is very clear. For any district that has 12 or more registered voters. It becomes a registered voter CFD and those rarely ever get passed. Analysis is meant to apply to future development where the landowners can elect to join the CFD without a registered voter vote.

Okay, understood. And then you also mentioned the multifamily units as 70% of a single family unit. Could you explain more of how that number came about?

So there's no benefit requirement for a CFD special tax. It was just meant to a way to make multifamily more feasible because as it stands, the relationship between single family and multifamily is very close if we're just looking at the person served and their value, the property taxes that are generated by the two different developments. And so this is an approach that some public agencies take to make multifamily housing more affordable and more feasible.

Okay. Is that 70% is that industry standard across multiple cities? Or is that something that's

specific I think that's something that historically we've run the analysis for the city at staff's request. Not necessarily this staff or this council, but that 70% number can be adjusted.

Okay. So historically, it's part of just the city of Merced's number?

Okay.

Yeah. We have some public agencies that feel multifamily should only pay half of what a single family pays. But that percentage can be a wide range.

I think it'll be good to see industry standards or across multiple cities what their relationship are. And then I echo Councilmember Smith's point with regards to a facility CFD as well. I know this is for operation, maintenance, and services, but I think it's important that we start looking at facilities as well.

Thank you.

Any more questions?

I just wanted to add a little bit more history because the question came up. So Cindy and I were not part of the first process, right? But we have a lot of documentation that we've been through. When I started, I was actually given the CFD to just figure out how we're going to do it, right? But it was already adopted.

It was already in place. And so I do know that when it first came to counsel and the rates that were provided, the counsel at that time felt that they were very high. And so not only did they reduce what was recommended, they reduced it I can't remember exactly. I'm going to say it was very close to half of the recommendation. And so we ended up at like four thirty and three ninety five as a single family and multifamily.

But that was very low to the recommendation at the time. And then they also felt that the single family to the multifamily that they wanted to lessen the tax on the multi family. And so that's where you got the 70% of the single family methodology was at that time that was something that counsel had asked for.

If I could just make a comment on the facility side. That tool is out there. It's tried and true and it works. But the reason why it works is because, as you heard from Cindy, if it takes 12 or more voters, it takes them all to you have to get a positive vote, right? You have to get something that could be supported.

And so the reason why it's often formed in areas where you only have one developer is they control all the votes. And so we touched on this a little bit, I think, this weekend at one of the goals and priorities. It could be used to install infrastructure in areas where you don't have it, but you have to have the residents, just like with the maintenance districts, decide they don't want to approve that assessment. It's basically a CFD, which is an assessment. So the tool's there.

The tool works. But the power is not up to the city to decide if they want to assess themselves. It's up to the residents that they want to do it. So just like we do with the rates, residents have to decide if they want to do it for the maintenance side of things. The reason why it works for non developed areas for developers is they control the votes. They can decide to put the CFD together and finance it, then pass it on so it stays on the assessment for future rate future property owners, so to speak. So that tool is there. That can work. We've got experience using that.

All right. Thank you. If

I could just add, in my twenty plus year career I've only seen one infrastructure CFD that was passed by registered voters and was for a fire station up on a really wide to provide fire service to less than 20 homes in Montecito, California, so by Santa Barbara.

Okay. So this will come back at a future agenda then?

Yes.

Okay. Thank you. Thank you.

Thank you. Have a good night.

So should we take a break or should we go to closed session roll call?

We can't start the closed session until five as it is agendized for five.

So we have an eight minute I

would love to take a break.

We'll take an eight minute break. Let's call the meeting to order.

Okay. Agenda item c, closed session roll call. Council member DuPont?

Present.

Tao?

Present.

Harris? Present. Smith? Present. Shang?

Here.

Mayor Pro Tem Boyle? Here. And Mayor Serato? Okay. Council will go into closed session to discuss items d one and d two. And just for the record, there are no audience members to leave a public comment.

Mayor Pro Tem, for the record, I will be recusing myself from d one as Merced County Office of Education is a client of my law firm.

Thank you.

We'll start in one minute. One minute, ladies and gentlemen. February. We're going to begin tonight with an invocation from Debbie Croft from Alpha Pregnancy Health Center. And then after that, Council Member Smith will lead us in the Pledge of Allegiance.

Thank you.

Good evening. Would you bow with me in prayer, please? Father God, we thank you for this beautiful day and for another new year. Thank you for every person here this evening. Thank you for how they serve our city and our community and for their desire to create more good in the Central Valley.

Father, you know the challenges that we face as one of the poorest counties in the state. Tonight, we look to you and call on you to show us the way forward in making Merced a safe place to live and in helping individuals, families, businesses and others to have greater stability and more opportunity for pursuing life, liberty and happiness. We ask you that you guide these men and women in their discussions and their decisions tonight, and we thank you for the good work they do in caring for Merced, and I ask all of this in Jesus' name, Amen.

Thank you, Ms. Croft. Thank you, Councilmember Smith. Jennifer.

Agenda item F, roll call. Councilmember DuPont.

Present.

Tau. Present. Harris.

Present. Smith. Present.

Zhang.

Here.

Mayor Pro Temboil. Here. And Mayor Serrato.

Here.

Mayor, I'd like to remind the audience that if they wish to address the city council, they must submit a green request to speak form located at the podium in the back of the chamber. Additionally, citizens can submit public comment to the city council electronically no later than 1PM on the day of the meeting. Comments received before the deadline will be sent to the city council and will be part of the record and will be mentioned as part of the written petitions and communications portion of the agenda. And they will also be posted on the city's website. Material may be emailed to cityclerkcityofmerced dot gov. And any correspondence received after 1PM will be distributed to the city council and retained for the official record. Also for those audience members who wish to hear the council meeting translated into Spanish or Hmong please let our interpreters know.

Thank you. Hi good evening.

In accordance with government code five four nine five two point three, it is hereby announced that the city council sits either simultaneously or serially as a public financing and economic development authority, parking authority, and or successor agency to the redevelopment agency. City council members receive a monthly stipend of $500 by charter for sitting as a city council, and the mayor receives an additional $100 each month as part of the adopted budget and resolution twenty twenty four dash 78. The Public Financing and Economic Development Authority, Parking Authority, and successor agency to the redevelopment agency receive no compensation. Agenda item G, report out of closed session.

There's no report out of closed session.

Gender item H, special presentations H1, Merced Downtown Partnership annual report and update.

Thank you, Jennifer. Gloria, welcome Ms. Gloria Valdevinos from our Downtown Partnership up to the podium. Gloria, welcome.

Good evening everybody. Thank you so much for having me here. I am here today to give you a quick summary of our annual report for 2025. I love a quick and efficient presentation so I'm going to do my best to give you just that today. For some background, I am with the Downtown Merced Partnership and we are the nonprofit organization that's responsible for delivering clean, safe, beautification, and economic vitality services throughout Downtown Merced.

These services are funded by the downtown Merced Property Based Improvement District, otherwise known as the PBED. You may have known us as the Downtown Merced Property Owners Association. We are still that but we have taken on a public facing name of Downtown Merced Partnership. We just felt like this better aligned with our overall organizational mission. This is our Downtown Merced partnership team.

It includes myself as executive director and our dedicated downtown ambassadors. We carry out the on the ground work that supports Downtown Merced and helps bring the PIVOT's core responsibilities to life. The work that we do is guided by the PBITS management plan and it outlines the core services delivered within the district. Our core PBITS services in 2025 included clean and safe, beautification, and economic fatality. To fulfill these core PBID responsibilities, we organized for work this year into four focus areas that helped guide daily operations, shape priorities and ensure we deliver visible meaningful impact across Downtown Merced.

Those four are clean, safe and welcoming, identity, experience and connection. I'll briefly talk about our clean, safe and welcoming services. They are one of the PBIT's most distinctive roles offering dedicated on the ground support tailored specifically to Downtown Merced. In February 2025, we launched the Downtown Ambassador Program. We partnered with Restore Merced and we fund our Downtown Ambassadors.

Our Downtown Ambassadors provide consistent care for downtown that include a variety of services like power washing, hospitality support, as well as outreach and information for unhealthy individuals. You may have seen them around downtown. If you do, please say hi to them. They're very friendly and we're just so happy to have them on the ground five days a week. Our downtown ambassadors track every task that they complete giving us a clear picture of their impact.

So this is the work that they did in eleven months. I won't go over all of them but I will highlight a few of them. A couple of them being graffiti over 3,900 graffiti and sticker removals, over almost 500 large items removed, over 8,000 spot cleanings that includes spills and litter throughout our corridor, as well as over 1,000 public encampments addressed and over 1,500 interactions with unhoused individuals providing resources. This is not individuals, it is interactions throughout the year. A big goal of having our downtown ambassadors is to make sure that we are trying to provide services to unhealthy individuals that we have in the area and it is really nice to be able to have that rapport and that daily conversations with them through our ambassadors.

The value of on the ground presence, these are just some before and afters. Our ambassadors are scheduled to be in our district in the mornings and this is just so we can make sure that downtown is looking clean when visitors are coming in, when owners are coming in, and it's just been a really great asset to have in downtown. Thank you so much mayor for the shout out. During the previous rainstorms that we had, our ambassadors were up and down downtown making sure that the that there was clearing of the blocked street drains. So that was really awesome to just have that that on the ground presence.

Beyond daily ambassador services, maintaining a clean, safe, and welcoming downtown also requires coordination, visibility, and response. We can't do it on our own and the Downtown Merced Partnership has begun to participate in established community coordinating meetings like the Merced Continuum of Care and as well as the community outreach meetings that is hosted right here in City Hall by the Merced Police Department. This participation ensures that Downtown Merced is represented and supports coordinating with service providers. We also use this opportunity to connect with other service providers to better train and inform our downtown ambassadors. Downtown Merced also has a dedicated Merced Police Officer assigned.

This has been something that's been really amazing. Our ambassadors have direct contact with Officer Garnica and it's just really been a big change that we've seen that we've heard from different businesses. So thank you so much to Officer Garnica, Sergeant Gorman, Chief Stanfield and the Merced PD for this because it really has made a difference. Identity is another key focus this year. We really tried shaping a shared identity for Downtown Merced.

We wanted to present it as a connected space rather than a collection of individual businesses. These are just some of the collateral that we've been sending out and that we've been printing and just promoting Downtown Merced as a destination. Through branding, storytelling, visibility, and partnerships, we began building a unified downtown voice. We also began uploading business directories so you can go to downtownmerced.org and you can see a list of all of our nightlife, restaurants, coffee shops, performing arts and theaters, and places to stay. And we are hoping to continue to add that to add categories and features.

This is something that we'll be sharing with hotels and with people that are staying in downtown that are staying in Merced so they have a one stop shop on all the things that Downtown Merced has to offer. And one of the very first things that I heard when I was coming into Merced was we need a community calendar. And so we have started providing a community calendar for downtown specific events. It's a single place to see what's happening in downtown. We also support in promoting this and we have enabled the businesses and organizations throughout downtown to submit the events directly.

We also launched identity and Downtown Merced social media that includes an Instagram and a Facebook. Through that Instagram, a six month span, we got over 4,000 followers and almost half a million views on the content that we've been posting. A lot of this posting of this content has to do with downtown businesses, downtown events, and just things happening in downtown. We also launched a Facebook and that has over 1,000 followers and had almost 200,000 views. In partnership with the City of Merced and the Merced Arts Council, the Downtown Merced Partnership supported the application that resulted in Downtown Merced being officially selected as a state designated California culture district for 2026.

This designation recognizes Downtown Merced as a hub of creativity and culture activity and this is just really something really another thing to 's really amazing to help us market what an amazing space Downtown Merced is. Experience. The Downtown Merced Partnership helped shape how Merced looks, feels and is experienced. We partnered with Merced Downtown Neighborhood Association DNA to install a new downtown community Christmas tree and this was made possible through grant funding from the Central Valley Opportunity Fund. We were so excited to bring the community a brand new Christmas tree.

We hope that you guys were able to make it out this past holiday season to check it out and we can we're gonna continue to see what ways we can continue to add to this. We also participated in the Christmas parade and our ambassadors actually closed out the parade, participated through the event, and assisted with post event cleanup. We also painted over 100 streetlight poles within the Peebead Beautification Zone. That was one of the first things that I saw as an outsider when coming into Merced was just the need to for little details from an outsider and so one of the first things that we did was streetlight painting. Huge thank you to the city of Merced Public Works Department.

That was the first project that I kind of took on as a newbie here in Merced and they were just so wonderful. Ken and his team were just so helpful and just really provided the guidance that I needed finish this project. And we also partnered with local garden club. We planted four previously empty pots on Canal Street and it was just really awesome. Our goal is to continue to bring organizations outside of downtown to continue to give into our downtown spaces as well.

Connection. As a new organization, a key focus of this was listening, learning, and building trust, creating space to connect with the people and institutions that shaped Downtown Merced. We did this in a variety of ways. One of the ways was we did have a downtown hall and we hope to continue those in 2026. We also had our first restaurant and nightlife meeting.

We had over 15 downtown businesses, cafes, restaurants that joined us and this is just in an effort to make sure that we're collaborating as a district and not individually and trying to see how we can support each other. Looking ahead through these restaurant and nightlife meetings in downtown halls, one of the big goals for the Downtown Merced partnership is discussing and figuring out ways to further shape our relationship with UC Merced and Downtown Merced. I've already had conversations with UC Merced in a variety of ways and that's just really something that I feel has been missing, a direct contact with Downtown Merced to directly connect with the contacts in UC Merced. So we look forward to 2026 and seeing what comes into fruition. Thank you guys so much for your support.

We are so grateful to work alongside the city in supporting Downtown Merced. I am so grateful to be here. I'm constantly saying what an amazing community Downtown Merced is as a whole. Being an outsider here from not from Merced, it was a little scary but honestly everybody's just been so welcoming and so easy to work with. So I just wanna make sure that I give a personal thank you from myself to you guys. And as Merced continues to grow, it is important to remain that downtown remains a shared priority as the heart of our city and the home of many small locally owned businesses. So just want to remind everybody to continue to support local because a lot of our businesses in downtown are local. Thank you so much.

Thank you, Gloria. You can cheer everybody. You're loud. Any questions? Okay, see, know, Gloria, thank you. Yeah, continued shared priority to make downtown, keep making it better and better. Just you guys are doing a great job. And just in the past few days, I saw somebody post online just blurred out, I've never seen downtown so busy on a Friday. Somebody said that. And then the other day, actually Jermaine and I were out yesterday, and one guy tells us, he goes, I used to never like going downtown. Now it's so different. I love it. And then multiple other people, this is

just in

the past few days said, it's never looked better. So you guys are doing great work. It's being noticed. And keep it up. And I think continuing to have downtown as a shared priority is a big, big deal. Customer DuPont.

Thank you, Mayor. A couple of questions and really just get more information out. But where can people find more information about Downtown Merced partnership as well as not only social media but website?

Yeah, of course. I didn't want to shamelessly plug myself but yes you guys can follow us downtown Merced on Instagram, downtown Merced on Facebook and then we do also have our downtownmerced.org website. Our full annual report will be on there If you guys are interested, that'll have a lot more information than the summary

that I gave you guys.

Thank you very much.

Mayor Pro Temboil.

Thank you, Mayor. I don't have any questions, but I just want to say thank you and thank you to the ambassadors. It's a huge improvement with our downtown. I get compliments all the time. And it's not just us that are sitting up here. It really is you guys. So thank you. Thank you,

Doing great. Keep going.

Agenda item I, written petitions and communications. Mayor of the Clerk's Office received an email from Bruce and Kathy Nichols regarding agenda item L1. The email was received by the 1PM deadline. It was sent to counsel and post on the city's website. Any emails received after the 1PM deadline will be sent to counsel.

Agenda item j, public comments. Members of the public who wish to speak on any matter not listed on the agenda may speak during this portion of the meeting and will be allotted three minutes. The mayor may propose a further limit to the time available for all speakers at the discretion of the city council in order to accommodate as many speakers as possible. State law prohibits the city council from acting at this meeting on any matter raised during the public comment period. Members of the public who wish to speak on a matter that is listed on the agenda will be called upon to speak during the discussion of that item. And may I currently have six requests to speak forums? JENNIFER J.

Jennifer, three minutes each.

JENNIFER J. Okay. If I can

get the first three speakers to the podium to my left, Cindy Kelly, Augie Freeman, and Israel Salgado.

Oh, there we go. Well, good evening mayor city council. Happy New Year. Sorry I haven't been here. I've gotten this yuck that has kind of laid everybody low and I've been struggling with it for a couple weeks. I just wanted to bring you some stats. We finally got our spay and neuter stats for 2025. So I just wanted to give that to you. I'll bring you back other stats as we get those produced. But in our spay and neuter programs, we were able to spay and neuter 650 pets in 2025.

If you look at the average value of that, usually cost about $250 some are more some are less. So we invested a $60,102,500 dollars in the community pets here in Merced. For the dogs, had a 110 dogs that have either been spayed or neutered or scheduled. 74 of those were female. So we're glad to see that coming through that we're having more females come in.

And if you take a look at that, that's 360 new puppies that will not be born this year. And with the City of Merced's contract with Merced County Animal Services, there's a surrender fee of $85 So there's a potential savings of over $30,000 to the City of Merced by not having to surrender those puppies. That, you know, I'm pretty sure the chief could find somewhere to put that $30,000 in the police budget this year. With cats, we did five forty feline pets, three forty four were female. And if you put those into numbers, we prevented the birth of thirteen seventy six.

But more importantly, cats can breed a lot faster than dogs usually one starting between five and six months. That would have been an additional 2,700 plus cats that would be on the streets. So about 4,000 new cats are not running around in our communities and in our city this year. These programs were all funded through the following organizations the ASPCA, the Glide Foundation, the City of Merced, the Holman Foundation, and Hearts and Paws. Those are all the organizations that gave us grants this year because they realized the value of these programs.

And just finally a huge thank you to Turlocks Bay and Neuter and the Hope Foundation. They gave us really great discounts and they also did mass appointments for us. We're talking 20 a month for the dogs and about thirty to forty a month for the cats. So they made that exception and if you've tried to spay or neuter your cat, you know it's about three months out before you can even get an appointment. So they've been great but just want to reinforce spaying and neutering is the answer to our stray problem here in Merced. And the more we can get money, the more we can offer these programs to the residents of Merced cause it's quite expensive and we want to make it easy for them. Thank you.

Thank you, Cindy. Thank you for you guys gonna clap? All right. Thank you for making such good use of the grant and our precious resources. Ms. Freeman.

Good morning, good evening mayor, city council, chief Stanfield, chief Wilson, staff and council. My name is Aggie Freeman. I serve six clubs in Merced County as Area Governor for Rotary District five thousand two hundred twenty which represents 50 Rotary Clubs and 1,400 active Rotarians across Central Valley. We are neighbors first and volunteers always committed to strengthening Merced through service, leadership, and partnership. First I want to begin by congratulating City Manager Scott McBride for his commitment to join Merced Rotary, the oldest Rotary club in the city.

Scott, when leaders step forward to serve, the entire community benefits. Thank you. Second, Rotary is deeply committed to the youths of our city, as you know. On February 25, a Wednesday at noon, Merced Rotary will host the Area eight Youth Speech Contest at the Elks Lodge from twelve until one. Students from high schools across our region will step forward to share their ideas, courage, and vision. The speech topic is Unite for Good. They're not just learning to speak, they're learning to lead. Finalists from Macros, Rotary

District five thousand two

hundred twenty Central Valley will advance to the speech contest finals on March 21, Saturday morning, hosted by the Multicultural Arts Center and Colton Dennis, the Executive Director. Hearing these young leaders reminds us that the future of Merced is bright, capable, and compassionate. And finally, in partnership, Rotary Area eight is proud to work alongside with the Merced Police Department to plan a spring Fund a Need five ks-ten ks with runners at eight a. M. And then at ten a.

M. And your dog can run a course around Lake Yosemite Park. This event will bring families, officers, neighbors together to build trust and connection because safer cities are built through relationships as much as resources. The date will be announced and the website will be up shortly. Rotary stands to serve beside you, our council, our city, supporting youth, veterans, strengthening community partnerships, and creating opportunities for families in Merced to thrive. So we thank you, council, for your leadership, your service, and your commitment to our community. Together, we unite for good. Thank you.

Thank you, Area Governor Freeman. All the time. Right. Mr. Salgado.

Good evening, everybody. My name is Israel Salgado and I'm a resident here of Merced. Today, my purpose is to bring awareness to a potential shutdown of a school that MCOE is trying to shut down. Essentially, my daughter goes to Merced Scholars Charter School, which is a public school that is out in Wardrobe Avenue here in Merced. And just to give you a little bit more information about this, this school has about 100 students, about 20 staff members.

And again, it's being run by MCOE. And just last Tuesday, we got a ParentSquare, message, essentially an email letting us know that at the end of the school year, the school was gonna shut down with no previous indication, no previous knowledge, just an email, essentially. We as parents were all just mortified, surprised, you know, about our kids' future and we wanted answers. They set up a potential meet a meeting for the following Thursday, this last Thursday, to give us some information about the shutdown. Nope.

They gave no alternative, just a shutdown, not, you know, this may shut down. We're trying our best to keep it open. Just this is what's gonna happen. And in that meeting, all they said it was essentially low enrollment numbers and a budget deficit. Essentially that it costs $2,500,000 to run the school and the school only generates $1,600,000 And they try to make it seem that it's an enrollment issue as if there is no interest.

Just to give you more feet, more context, this school it provides it's a dual language academy. So its classes are 50% in Spanish and 50% in English. So there is definitely a lot of interest in this program. I mean, 60% or more of the population here in Merced County is Latino and potential second language is Spanish. So the fact that they try to make it seem like there's no interest, the reality is that it was it has been poorly misrun.

They there is nobody that follows up on potential interest, know, and after they let us know that that was the reason we immediately as parents organized to try to rally the families in Merced. And from that, within less than a week later, we've had 60 families show interest of joining this program. So it's not that there is no interest in this dual language academy. It's more so that it's been poorly run by MCOE. And so my point here is to continue to raise awareness, to the city council about this.

And I did also wanna, give thanks to Darren DuPont. I reached out to him I think the same day or a day after about this. And he gave me some feedback as to who to reach out. And I really wanted to thank you for that. Thank you, everybody. Thank you.

Okay, thank you next

three speakers. Miranda Griswold, Chayang Lee, and Nantiza.

Okay, Miranda.

Good evening council members. I'm also here to speak about the Merced Dual Language Academy. We came here tonight because we wanted the city council to be aware of the closure of our school and it is within the city of Merced boundaries. As, the other parent said, out of nowhere, we were informed that the Merced Dual Language Academy, which is fifty fifty Spanish immersion and English language instruction, would be set to close at the end of this school year. We have 96 children enrolled from TK to fourth grade.

It is the only school in Merced County that has a dual language immersion program that goes to that level. The parents of the school put together a parent led interest form which we shared on all of our social medias in various groups of the city and the county. And within twenty four hours, we had about 36 families say, yes, we would love to enroll our kids in a school like that. As of today, I think the count was at 70 and rising, and this is families with multiple children. So not just like 70 families, but TK, kinder, first, second, third.

We even had responses up to seventh grade that they would enroll if the school were to stay open for the twenty twenty twenty six and twenty seven school year. So I just wanna come here today so that the council is aware. This school is located in South Merced, which is historically underserved, and it was also supposed to start among immersion classroom as well. So I'm just asking for your advocacy, for your ear to listen, that you keep our school on your radar within the next few weeks. If you see our social media posts, we do have a Facebook page we created called Help Save DLA.

Just take a second to read our story. We've been interviewed by Univision, Telemundo, the Merced Focus, and doing an interview tomorrow with the Sunstar. And we have asked for a probationary period to keep our school open and give them a chance to meet these enrollment gaps that the administrative administration is claiming. Thank you for your time.

Thank you very much. I'm sure you guys are aware, but city Mr. City Manager McBride just showed me too. The MCOE board meetings they're obviously an independent entity, you guys are all aware February 17, March 16 at 3PM are their next board meetings.

And we were already there

this week.

So we're working everywhere. It. On it. Thank you. Just wanted to make sure you knew. Go ahead.

Good morning, mayors, city councils, and staff. My name is Nunzia. I live in Merced. I have just two things tonight is number one, I wanted to say happy New Year and pass out the calendars to all of you. We do calendar every year. Last year, our youth actually have a competitions on art drawing and we picked the art and we put in 12 calendar. This year we were in a rush so we just did one consulting. They did everything but we want to make sure that all of you get a calendar because it reflected Hmong culture. Secondly, I wanted to say thank you for your patience. We live in a very tough times and when I say tough times, particularly our Hmong community live in a very fearful times right now.

I don't want to say what it is, but all of you probably know what it is. But with that, I just wanted to thank two person in this room, Chief Stanfield for working with Lumong Center. We've been working really closely with our senior center, our senior senior citizens to really address some of the issues impacting Hmong seniors at this time. And also working really hard with Chris Jensen, partner Rick. Thank you for your leadership.

We're looking forward to do a Hmong American Day here in Merced. As many of you know, we did it last year at the castle and many of you came out. Two years ago, city council passed a Hmong resolution Hmong American Day. We want to make sure that that continues. And thank you Chris for working with us and hopefully the city council could lean in to really support our goal as well.

But I also wanted to introduce one of the staff. He worked with our youth. He's ages 14 to 25. If you know, Hmong community have the highest youth suicide in the state of California. And we got a grant from VHRS and California Youth Initiative to address the situations.

But then I think that we have more youth are really still even after fifty years, they still have a culture generation gaps. And yesterday we had a listening sessions on learning Hmong and we have over 60 people coming in and say I'm willing to learn Hmong. I'm losing my Hmong language. It was to my surprise that we have so many teenagers and little kids come and say I don't speak Hmong anymore and I'm willing to take anything to learn about my culture and my language. And I just want to say how important it is to really keep our culture, language, identity and with that I wanted to introduce one of our staff, Chai Ying, He works directly with the youth and introduce himself.

Thank you.

Thank you,

We have calendars for all the audience, too. Everybody, you get a copy.

You. Calendars for all.

Good evening, mayors, city council, and staff. These calendars are also coloring books. So if you've got kids, they are also coloring books. Just wanted to mention that. My name is Chaiyeng Li. And I was born and raised in Merced. I am now 29 years old, so I'm getting older. But some of you may know my uncle. His name is Cal Sky Hawkins, and I've been performing with him since I was, like, six years old within the schools and city parades and community events. And that's where I got my real love to work and help with the community.

And so now I serve as a program coordinator at Lou Meng Center, mainly working with Hmong youth from ages 14 to 25 in really building their leadership skills as well as maintaining their mental health, mental well-being. I hope I really support them as they find their voices, explore their leadership, engage in their communications, and caring for mental health. Every day, I see their strengths and their stresses and their issues that they go through as well as their potentials. And I just want to bring to light that these young people carry very powerful stories and very big dreams. Often, they're very unheard.

Their voices are very unheard because when it comes down to it, it's adult decisions. And we don't really take their voices seriously from or for a majority of the time. So I want to bring to light that we also need to listen to the youth voices as they are the heartbeat of what Merced is in the future. And in light of that, as mentioned, we are doing Hmong American Day on May 9 on Canal Street. We're going to block off the street.

And the youth are really going to take initiative and lead. So those of you who can join us, come down and see the Hmong, you've been really lead and take essentially be the face where they need to be and support them. Thank you for listening.

Thank you very much for presenting. Jennifer, any more speakers for public comment?

That's all we have, mayor.

Okay. On the consent, please.

Okay, agenda item K, consent calendar.

All right. Any items on the consent agenda that members of the council like to see pulled for separate consideration?

All right.

I'd ask that had a discussion about K3. Last time I'd ask that be pulled. Jennifer, anything from the public?

We don't have anything there.

Okay. Discussion or a motion with respect to the balance?

Motion is approved. Second. Harris DuPont.

We have a motion by Council Member Harris and a second by Council Member DuPont. The motion will include agenda item K5, the adoption of resolution twenty twenty six-eight, a resolution of the city council of the city of Merced, California, rescinding resolution number twenty twenty five-fifteen and authorizing a joint application and participation in the Homekey Plus program, the execution of a standard agreement if selected for such funding, and any amendments thereto and any related documents necessary to participate in the Homekey program. Merit and counsel, please cast your votes. And the motion passes unanimously.

All right. Thank you, Jennifer. K3, this is our contract with West Coast Arborist, a $413,000 contract for tree work. It was on two weeks ago oh, either one council meeting or two council meetings ago for discussion. He's going to come back for some more. I see Juan's here. I see Angel Nunez here, too. I wanted to make sure he didn't come in vain, sir. We actually gave you know you came for this, so we put you to work as well. But Mr. Olmos, what say you, sir, about this contract and why this contractor was selected?

Good evening, Mayor Council Van Almos, Deputy Director of Public Works. Thank you for allowing us the time to do some research. So we, you know, we went back and looked at the selection process that took place. And again, I'll be brief. There was a committee that was convened and that was comprised of the public works manager for the tech services who oversees parks, trees, the tree arborist who is also the public works supervisor, and the landscape coordinator.

So this committee review all the nine proposals and then they look at different aspects and how much is some of the things. It was the project experience for the companies, the project understanding, the overall approach to do the work, the scope of the work, the completeness of the proposals, and also the fee proposal. Each one of these proposals, again, was evaluated independently by the committee. And they were ranked and West Coast Arbois was selected as the best proposal.

Councilor Harris.

Thank you. Director Olmos, were there scoring sheets used in this whole process?

There were scoring sheets by the committee, yes.

And are those still available or have they been?

Yes, they are available.

Thank you. All right. Anybody else? Additional discussion?

Move around.

If I could ask Mr. Nunez, are able to speak on this as well? Sorry about that. I wanted to pick on you.

I know. I feel it.

I know you're gonna rise to the challenge.

Oh, no. No. Not today. Good evening, Mayor Councilman. Well, I would summarize it like this. You know, when, when you've worked out in the field and you got boots on the ground, you know pretty quick when somebody's a good worker or somebody who's not putting their you know, holding their weight. West Coast Arbis is a machine. They are the size they are because of what they do. They have all the equipment, the personnel. You know, on-site, there's always an arborist.

He's a he's a very well trained man, Steve Hunt. So from their leaders to their crewmen, each one of them have their own they have all their experience that they need. So it's not just price. It's not just the fact that they, you know, are able to meet our GIS requirements. It's not that they update everything with us. They're they're boots on the ground and they just plug away. They're quite the they're quite the the team to watch when you're watching them. So they're they're very efficient in what they do. They have all the equipment. So there's nothing that they don't have that makes the job and facilitate the work that they need to get done.

So, that's my part on that. That's it's very, very it's very compelling when you see them doing the work. So when you see them out there, they're doing a lot of work for what they're getting, you know, for the city. So as you guys already know, city needs it's tree tree city USA. So it's works well with what we stand for. Sure. Thank you.

Councilor Smith.

Thank you, mister mayor. I appreciate the discussion. I think we might be missing the issue. Council asked that this be looked at for another couple of weeks because there was a bid protest. There were allegations of irregularities, and I don't think that has been addressed since we're talking about it. Did the city look at the protest letter that we received? And were any of the allegations identified as being founded?

Mayor and counsel, I can weigh in. There was one irregularity with notice regarding the conclusion, I believe, of the process and of the bid. But I was unable to identify any material issue that would undo the ranking order from my review of the information.

So in your opinion, City Attorney Cornwall, the absence of notice to one of the applicants with regard to end of the bid period is not a reason to throw out the results and start the process over?

Correct. And also our municipal code gives City Council the discretion to move forward in light of irregularities. I feel comfortable moving forward.

Okay. And you think that irregularity, to use your term, was immaterial? Correct. Okay. Thank you.

Councilor Harris.

Thank you, Mayor. The low bidder, do they have any experience in Merced at all? Have you been able to observe them like you have been West Coast arborists?

There there were nine proposals. I believe the company who did the the protest was not the low the lowest of the ninth. It was lower than West Coast, but it wasn't the lowest of all. I'm not familiar with them. Based on the proposal, I don't think Merced was listed on their as a project experience for them.

Here's my concern is that and I certainly appreciate excuse me going with a known quantity, especially one that's been responsive and is given good service. But where does that leave competitors? Now you're creating a sole source environment and how do you what do you say to people who want to come into Merced in this in this vein and have never worked here before? You've you've assigned a category to rate that not everybody can compete with. Because if you haven't done business in Merced, you can't evaluate them on personal observation.

At the very least, you should be looking at references from other places that have used them. And, if you've created that environment, then what's to stop the price from going up year after year if they know they're going get picked? Those are my concerns.

Is that a question too or just expressing concerns? Did you want a response?

If there is one.

Mr. Romans?

Again, price was evaluated as well. The proposal was selected. It wasn't the most expensive or the lowest. It was, again, was evaluated as a whole, you know, included as well with their experience and the proposal, the content of the proposal itself, too.

Any additional questions? Jeff or anything from the public?

We don't have anything there.

Additional questions? Thank you guys for this. I think our job, obviously, is to be good stewards of taxpayer money and make sure that we're getting that our city's getting the best value for our precious resources. And I just want to thank you both for being here and making a strong case that this is definitely the right decision. I'm certainly comfortable moving forward and would entertain a motion if counsel is so inclined.

Move to approve. Second.

We have a motion by council member DuPont and a second by council member Smith, mayor and council. Please cast your votes. And the motion passes unanimously.

Okay. Thank you, Joe. Thank you. Thanks. Sorry about that, Amy.

Okay. Agenda item l, action items l one, assessment ballot proceeding voting results, Quail Creek, Oakmont Number 3, Northwood Village, East College Homes, Oak Brook, Pleasanton Park, Merced Auto Center, Ridgeview Meadows, Farrance Park 1, Olivewood, Campus North, and Hansen Park Maintenance Districts.

Thank you, Jennifer. Welcome back. Good

evening. Seems like we're making this a regular occurrence to come and talk to you. We are back

Every seven years.

Right? We are back with the assessment ballot proceeding, the results that we have from the voting. As a reminder, this is the map of the 12 underfunded maintenance districts that we did go out to ballot to propose an assessment increase to each property owner in those areas. Out of the 12 maintenance districts that we did go out to vote for, we had five that passed. And on this slide it shows you those results.

Quail Creek, Oakmont Number 3, Northwood Village, Oakbrook, and Ridgeview Meadows. Those are the five maintenance districts out of those 12 that passed. And then here is a breakdown of what the district assessments will look like for the fiscal year twenty six-twenty seven. You can see those that will not change, and then the ones that we will be increasing due to the passing of the ballot assessment. So based on those results, we will continue to develop the budgets for the Maintenance District, and we will be bringing those to council as we normally do in June at the June 1 meeting as part of the regular budget cycle.

Any questions? Jennifer, anything from the public?

We don't have anything, Mayor.

Questions from counsel? Councilor Smith.

Thank you, Mr. Mayor. Thank you for the presentation. Thank you for running this process. It's been several months. I know that the two of you and others did at least three town halls. They weren't always easy. I went to the one at Chenoweth. Let me just say that I am surprised, but I am pleasantly surprised that five of these district residents voted to up their fees to match current pricing and continue these services. I'm a little bit surprised that all the one of them did not I think auto center may be something that we can take a little bit separately.

I want to comment on the process, but first let me ask you, do you guys know off the top of your head what's the vote differential for Hansen Park between 47% approved and 53% opposed?

It actually came down to one vote.

One vote. Okay, alright. Is there any? Have you gotten any feedback from these residents or others? Or is anybody contesting these results?

No, have not received any calls and I have not heard anything from our front office at Public Works. I don't know if the city manager's office or city clerk's office has received any phone calls either, but I had one resident reach out asking for the results. He wasn't contesting them. They just wanted to know if their district passed.

Now I don't know the process as well as you guys. Is there an appeal period or a comment period or is this process now final?

This would be final.

Okay. All right. I'll hold the rest of my questions for now. Thank you.

Customer DuPont. Thank you, mayor. Just a couple questions on kind of next steps. You know, I've been contacted by some residents in Park 1 that And was that some of the town halls that may be interested in maybe not a full price adjustment at what it was, but an incremental adjustment. Is there any plans or discussions to maybe look at other avenues to try to increase our revenue in those maintenance districts, but also not at the level it may have been?

We've been having some discussions on how we can possibly, you know, what alternatives on Ferens Park do to and this is out of the districts that they didn't pass. This is the one that has, you know, still nice landscape. And, you know, counsel, I will I will pass these copies of some proposals that we just put together today. There are some reserves on this district. If I'm not mistaken, it's about $38,000 It's just about $38,000 just to, you know, as a way to ask for guidance from you, we put three options here for ferns.

And the first one was turning off irrigation, turning it off just during the summer and decreasing the service to just twice per year. Setting some money aside for storm pump supplies, some for direct service charges when the pump gets serviced and that will deduct about $10,000 and leave about $28,000 on the reserve. That option one will just kind of stretch the reserve funds the longest. Option two, it's going from biweekly service that they're getting currently to quarterly, adding some money for storm pumps and some irrigations and also turning on the irrigation throughout the year. Obviously, it will be a biggest deduction on the reserves and obviously we'll leave a 14,000 balance.

Again, I want to emphasize that these numbers are just some preliminary numbers. Option three, doing monthly service will, know, obviously cost the most amount of money for the landscape service, adding the same money for pumps, the storm drain, for irrigation supplies, and that will, you know, leave about $3,000 in reserves. Those are some of the potentials for, I will say, phasing out the reserves. In regards to another approach to, I I guess everything, we can explore everything.

Thank you. I thoroughly appreciate this. I did not expect this at least a budget proposal like this from the question. So I think thank you for the diligent work. You know, I think this starts off on a good step for at least Farrance Park one because I know it was the largest increase of all the increases, but also a way in which to have a discussion with the residents of what the impacts are as well. Yes. And what they would be open to. So thank you.

Mr. Cornwell, how are we agendized potentially for direction in addition to what's not if we discuss it but no definitive direction, what's your thoughts on it?

We're not agendized for Fairance one decisions today. Okay.

But we can we can have the discussion and but no, we can't give direction, but we can certainly talk about it. Sure. Okay. Customer Schmidt.

Thank you. I was gonna hold some of my other comments. I've been holding them since the last time we talked about this. Continue the item. I mean a couple of things.

One is I feel like your team did a fantastic job, but I don't feel like you were also supported properly in bringing the message to the community. That was clear to me when I was at Chenoweth that people really didn't understand what the issue was, and I don't think it's a fault of anybody. But I raised concerns about having this community discussion over the holidays and I don't think that those concerns were appropriately considered when I heard residents. This was viewed as being an additional tax. Which is not the case.

These are neighborhoods in Merced who have an amenity that most of Merced does not have, which is a facilities district to pay for added value like external landscaping around a subdivision that was provided by the developer when people bought their homes, but the rest of the city can't be on the hook for paying for that amenity for that neighborhood, right? I don't think that that was clearly communicated. I think we asked residents to be willing to pay their fair share as costs have gone up. And quite frankly, I felt like your team showed a lot of courage in director Ellwin as well in saying in pointing out that there was a problem. The fact that you pointed out that, oops, you know, generations of city staff and councils have allowed this problem to fester.

You guys stood up and wanted to fix it. But the fact that it was viewed by some people as being a new tax and that city services were not high enough value for them in the first place, I felt like that was kind of a failing of all of us for not communicating the right message. I think there's probably some neighborhoods in here who voted against this because most folks in the middle of the voting pool maybe didn't understand what the question was. So just we're not agendized for this. I think for some of these neighborhoods like Hansen Park in my district, it's probably worth having another conversation, maybe trying again. On the other hand, you know, Farron's one. Right? I'm kind of hearing my colleagues wanting to come to the rescue. And I want to hear what mayor pro tem Boyle has to say. This is her district.

But I mean, folks voted four to one against paying their fair share. Now I don't know where these reserves are that we're talking about here, but folks in Fair And Spark have gotten a pretty good deal for a long time. And now we're asking them to pay their fair share. So is council gonna be asked to dip into the general fund or some other pot of money that benefits the entire city to pay for this neighborhood? I mean, I think we probably should try again.

And, you know, maybe I could see my way to supporting some kind of tiered increase. But most of these neighborhoods that voted for the increase are in District 4. These are people who are willing to pay their fair share. So, you know, we got a budget coming up. And if Farrance Park wants to be assessed $30 a year, then it'll be $30 a year until we can find some other solution.

Some of these other neighborhoods, they don't want to pay for their landscaping. Well, you know, again, I go back to these are neighborhoods that have an amenity that most of the city does not have. Most of South Merced does not have these amenities. So I don't feel quite as much of a need to come to the rescue, although I do think that we need to do a better job of communicating what the issues are. And I think if we can successfully do that, I do think that a lot of this problem goes away. So my thoughts for further discussion with my colleagues.

Thank you, sir. Mayor Pro Tem Boyle. Sorry, I tried to turn it all into one word there.

It's easy for you to say.

Thank you, Mayor. Council Member Smith, it's actually in District 6, Parents Park 1. Yes. With the redistricting, anything South Of Buena Vista is District 5. However, I will just say during my one on one with Scott last week, I just kind of mentioned, yes, messaging.

I don't think that was clear, really educating. Unfortunately, I couldn't attend any of the meetings just due to other commitments. But one thing I did mention to city manager McBride was I think we need to look at what it was we were going to be providing because is it the time that they had to go out there from monthly to weekly? I don't I'm just giving an example. I don't can't remember all of what they were, But really looking at what's that time that they need to go out there or what are the services and are there areas that they could be cutting down.

So I think it's just a bigger discussion that our staff needs to have. But then also the education, I think that's really what it is. But I think, yeah, Farrance Park had a huge one. Campus North, there was a huge increase. It's a sticker shock. So I think just the education really needed to come and explain why this was needed to happen.

How many maintenance districts citywide?

39.

39? Yeah. So that leaves the seven here are now the only seven that are in your view underfunded?

Me? At this time, yes.

Yes. So we have 32 out of 39. I think gives us the chance to potentially, you know, laser in and focus a little more on these and kind of develop an action plan. It's nice now because it's a little instead of twelve, seven is a little more manageable, so that enables us potentially to do more work or the necessary work, and especially work. But I just, again, want to thank you. You guys go and do these town halls. I mean, it's a tough sell to folks, and you guys are kind of walking into the lion's den a lot of the times, and appreciate you doing that and all the hard work. Juan, this is great. Thank you for doing that. Again, we're not agendized for direction on it tonight, but at least in my view, I mean, think we trust you guys to at least I do to figure out speaking for myself, know, to come up with something.

But if you want direction from us, sure, I think we're happy to weigh in. So come back and we'll have it agendized and we'll have the discussion. But if not, I think, you know, we trust you as well. Customer Harris.

Thank you mayor. On the subject of the reserves do they replenish themselves or there's still money going into the reserves or is it a fixed thing that we're just going to deplete for one of these options?

Those reserves get to the point over several years. Mean, I think currently there will be no more additional funds going in. So, it will be pretty much using those reserves and once they are depleted, there will be no more money there.

Okay. Thank you. And thank you for the proposals. It was a surprise. It was a pleasant surprise.

Councilor Jean.

Yeah, I wanted to echo council member Smith's point. I agree that we shouldn't be utilizing more general fund dollars to supplement maintenance districts here. We have heard from multiple community members that are outside of a maintenance district and we have told them we can't, right? We're not going to come and do more landscaping in your area. And so I don't think it's fair in this case to say, hey, in this area now because there's going to be a reduction in service, we're going to supplement that. So I think the hard reality of it's going to they're just going to have to see what happens, right? And whether or not they want to increase service, that's a matter of whether or not that neighborhood wants it.

Yeah, I think that's why we're here. Okay. Tonight, our motion before us is just to accept the proceedings, improve the increases, and improve the no increases as well. Again, I want to thank you all for your work on this. Just seven out of 39, I think that leaves us certainly in a better spot than we were.

And I think we have the opportunity and we again defer to your experience and expertise on this going forward to how are we going to address each of those seven. Where is there for example, in Hansen Park, if it's one vote, what can we do there? The other ones, too, I don't know what sort of flexibility there is. But I think, you know, important that now we get a chance to kind of zero in on a little more and we can do a little better outreach and please involve all of us in that endeavor. All right, additional discussion, questions or a motion?

Motion. Second.

Okay. I have a motion by Council Member Harris and a second by Mayor Pro Tem Boyle. Mayor and Council, please cast your votes. Okay. The motion passes unanimously.

Thank you. Thank you, Warren. Thank you, Stacey.

Agenda item l two, adoption of a resolution to dissolve the traffic committee and transfer the duties to city staff.

Thank you, Jennifer. Mr. Jordan.

Good evening, mayor council members. On 11/25/2025, staff met with the transportation subcommittee to discuss options on streamlining the traffic committee process and improving response times on citizen requests. Staff presented the options to create an online request form and to have processes administered internally to allow requests to be addressed in a timely manner rather than every two months when the traffic committee was scheduled to meet. Handling traffic matters internally will allow staff to address safety issues quickly and assist in reducing the workload of agenda preparation, minutes, staff time, and meeting coordination. Transportation subcommittee supported this request with the goal of increased efficiency and responding to citizen requests in a timely manner.

Staff has worked with the IT department to set up a website if this is approved tonight that will go live tomorrow and allow our community to submit the requests as of tomorrow. Even though we already have two submitted already, we'll go live tomorrow with your approval. I'm here to answer any questions you might have.

Questions for us in an engineer. Mr. Harris.

Thank you, Mayor. Thank you, Mr. Jordan, for your responsiveness to this. I think the resolution in the website is going to be a huge improvement. Thank you.

And Councilor Smith.

You, Mr. Jordan. Do you have a and if you don't, that's okay. But I mean, you have a sense for what direction cities are going in terms of handling citizen suggestionscomplaints about traffic and roadway conditions, safety, etcetera? Most cities with my experience and

I can attest to about five different cities handle it through the engineering department like we're progressing now and asking you to approve tonight.

Okay.

Yeah. It I mean, we all like having a place to go and air our grievances, so to speak, to use the the classical term. But, I mean, traffic committee seems to be there's something before the Internet and computing power and things like that. And you know, you think about who's on the traffic committee. I mean, our city engineer, fire chief, representative, police department goes on and on. I mean, there's a lot of billable firepower that gets tied up. So if if you think that there is a better, more efficient way to be responsive to our residents but still getting that important information from people on the ground, then I'm all in favor.

Absolutely. We're still willing to meet one on one with anybody who needs to speak to us.

Thank you. Casper DuPont.

Thank you, City Engineer Jordan. You had set a website working where where will that website be located?

Well, have Jeff here tonight but it will be on the city website. Is that correct yet? Underneath the engineering division, you'll find it. Thank you.

Councilor Bershaw.

Will the website include tickets that folks have submitted so that other community members are able to view them as well?

I'll have to ask Jeff on that. I don't believe it is set up that way as now, but we can work through Scott for any type of feedback that you need to see or processing that you need to see. We'd glad to provide that.

Okay. And then I think you mentioned earlier that you're open to having one on one discussions with community members as well. Yes.

We already have those set up. They're already happening. Yeah.

All right. Just want to ensure that we are, one, transparent in terms of what tickets are submitted to the city, what we're addressing, what we denied, and then on the same hand of hearing if we're seeing multiple of the same requests come through, giving community members the opportunity to work together and see what else can be done. So appreciate this being a process that's streamlined, but again, sure that we're transparent and accountable to community members.

That's a great point. We'll be

tracking each and every one of them. Thank you.

Ms. McBride. Before we begin, Jennifer, anything from the public?

We don't have anything, Mayor.

Thank you.

Ms. Mayor, I think I heard a comment this week. We're trying to find ways to increase the bandwidth for staff. I don't remember who said it, but this is a good example. I think that we kind of overlook the time we spend preparing the packet, the agenda, the minutes during the meeting, and we get away from actually focusing on the problem and working with the people. And so we're trying to do that. And so I think the subcommittee got it. I think it was a simple request. I think with your support tonight, we can get back to solving problems and get away from some of the external things that we were trying to do, which got us away from working on the real issue at hand.

Daryl, two questions. One, say I'm a citizen. I come to you. I have a really good idea. It's going to it's a great idea. It's going to do a lot to help traffic in town. And you say, no, I don't like it. What recourse would the citizen have to appeal or to challenge potentially a bad decision on staff's part?

Initial recourse would be that they could speak with the city manager in anything that a director chooses to do or not to do and we would direct them to our city manager if he wants to appeal that. Beyond that, it would come back to this body after that point.

Is there a process built in that would potentially come to the city councilor come to a different body?

No process yet, but we glad to add that to questions asked on our website. If maybe we with that idea we add that to some of the commonly asked questions. If you want to appeal this, then this would be an alternative for you to follow.

And what if a citizen has a really good idea, you like it a lot too, but the money is just not there for it?

Well, hopefully I'm ahead of that and asking you during budget time to have had some traffic funding so that we have a little bit of a fund there to address some of these good ideas that come up during the year and we don't have to go through a long procurement process. Okay.

All right.

Thank you, sir. Anybody else? Councilor Smith.

You've got the lawyer in me excited. I'll just reflect on what the mayor was talking about with, you know, an appeal procedure. I think we kind of intuitively know this due process is flexible. I would appreciate a chance for a second look by the city manager or city manager's designee. But we're not talking about taking away a right or a benefit. This is just an idea that didn't pass muster. So if folks want to get up at the podium and talk in public comment about their issue and try to persuade us, that's fine. But I don't think that this needs some kind of formal appellate procedure beyond the city manager unless there's something more to it than just a traffic request. And maybe it's worth talking to Mr. Cormier about it.

Councilperson Smith, too, I could also tell them that they can always have this forum here every other Monday to come here and speak with certain items too and bring that to your attention. So I'll be glad to do that.

Anybody else? Okay, seeing no additional comments, questions, or entertain a motion at this time as well.

Move to approve. Second.

Okay, have a motion by Councilmember DuPont and a second by Councilmember Harris. The motion will include the adoption of resolution twenty twenty six dash zero seven, a resolution of the city council of the city of Merced, California dissolving the traffic committee and transferring its duties to city staff. Mayor and council, please cast your votes. And the motion passes unanimously.

Thank you, Councilman.

Thank you all. Thank you, Darrell.

Okay, agenda item L3, approval of a supplemental appropriation in the amount of $50,000 in the general fund for service agreement with Hinderlitter Telemas and Associates HDL for a business license ordinance slash fee study in compliance services.

Good evening, Mayor, members of the council. Tonight, the item before you is to approve a supplemental appropriation from the general fund of $50,000 and to approve a service agreement with HTL to provide two different services. So the first one would be to review our business license ordinance and come up with some options for a new revenue structure. And that is really what the $50,000 is for is for that process. The second service is to essentially do a business license audit.

They call it a compliance service where they try to find businesses that are doing business in the city of Merced and do not have a business license. And so they would work with trying to get them on board to applying for and getting a business license and paying the fees. And that structure is anything that they find, they would take it out of the fund. So they would charge them our business license rate. They would take 50% of anything that they recover in that process.

There's also a separate process where if we find something and tell them about it, then they would treat that like a collection service. So they would take 30% of that, and that would just be from first year or prior year amount. Anything moving forward, that would all be our revenue moving forward for business license fees. So if there's any question, I'd be happy to answer this.

Questions for our finance officer? Jennifer, anything from the public?

We don't have anything, mayor.

All right. Back to council for discussion, additional questions, or action. Councilor Smith.

Thank you, Mr. Mayor. Ms. Rodriguez, have we used HCL before?

We have not used them for this service that I'm aware of, but it has been a few years since this has been looked at previously. But we do use them for sales tax quarterly reports, projections. We use them for sales tax audits.

Okay. Do other municipalities in California use HTL for this proposed service?

Yes, several. They have a lot of experience with several cities and they've been very successful in finding additional revenues for them.

I know there's no crystal ball, but I mean do you have an expectation that they're going to find quote unquote, find businesses that need a proper license so that the revenue to the city, even with their 50% cut, exceeds the $50,000 startup cost?

In discussions with them, they are very confident that they have somewhat of a success rate of 30%. So for us, we get about $2,000,000 in business license fees a year, so 30% would be in the $600,000 range. So we are very hopeful that that would be a good number, but it's yet to be seen, right?

Yeah, I mean did they show you any preliminary analysis of Merced, not just their historical experience?

They didn't show us any no, not preliminary analysis. I think it's just based on what they're used to doing for other cities.

Okay. I mean, I'd like to think our businesses are all properly permitted and licensed. I mean, don't want to project too much. This arrangement kind of gives me a little bit of pause. I've to think about it.

This is not something an attorney would do. I kind of don't like the idea of giving a third party vendor carte blanche to go after our business community with the financial incentive of finding problems so that they could collect already on top of a $50,000 fee. I guess I'm looking for more assurance that we actually believe there's a problem. We're not just gonna be sending these folks loose in our business community. I don't mean to phrase it that way, but I mean, just to be candid, that's how I'm thinking about it. I don't know if Scott wants to jump in, but I

mean I can just tell you from the background with HDL, there are many communities that use HDL for all the business license process from application through the whole everything. We don't. We have our own staff that manages it. As far as reputable firm, they're highly qualified. The incentive staff did do an RFQ. There were other applicants that were looked at. So I can tell from a procurement standpoint, they weren't the only one that responded. I'm just going to reflect back on some comments we had this weekend. We need to make sure that we've got revenue coming in from sources that are appropriate. If there's actors that need to be held accountable for paying what's due to the city, we're going after those.

We're not going after people that are already doing the right thing.

Let me follow-up on that then, Mr. McBride. Is there a process by which the business license is charged against the company? Like, do they get a chance to present additional evidence to say, no, no, no, we're not that guy? Is there an appeal process or just is HCL's determination taken as final?

No, I I mean if they're if they're telling somebody they need a business license and that's not accurate that they don't, for whatever reason, they're not doing business in Merced and that they don't need one, I would imagine that we're not going to make them pay or send them to collections or anything like that.

Okay. Well, I mean, I'd like to hear my colleagues discussion, but I guess where I come down is I can be supportive. I would like to get some kind of readout or reporting back maybe after six months of this contract if we decide to move forward. And I appreciate you taking my questions. Thank you.

Appreciate the questions. Councilor Dubois.

Thank you, Mayor. Just a couple questions. Is this something that in the past that we've put on our radar to look at in previous years or every five years we're doing this?

Since I've been here, I've not known us to do something like this. It's something new. And every once in a while you do hear businesses doing business without business licenses, and that goes from TOT to, you know, other types of things, right? So Airbnb's, those kinds of things, right? So we have processes in place where we can send out letters and do that kind of a thing.

I know we have code enforcement that sometimes if we really wanted to, we could send code enforcement out and check. But some businesses are not in a location, right? They're doing business out of their home. Some people it's education, right? So it's just determining who doesn't have a business license, why they don't have one, and then making sure that they're understanding that they need to have a business license.

I guess that kind of answered my question as well as like what sparked the need or the want to do a study like this. You gave a couple answers there. Say we do this study and there's a determination of, you know, there's a 100 businesses. Not saying that there is, but rough numbers. I don't do numbers well. So a 100 businesses, what's the process to then go collect from those 100 businesses? Is it through code enforcement or what type of avenues are we going to use?

So in the beginning with HDL involved, they would actually take on the role of trying to collect from them first because they would actually the fee would go to them first and then they would give us the 50%. And then we would have them a registered business license in our system after that. And then after that, it's just the annual process of sending them the letter and the information that they need to pay the business license.

Say they don't pay HDL?

There's a there's an a city attorney process that happens even currently, so we have businesses that don't renew their license but haven't. Close them out either, so there's a whole process that we work with the city attorney sending out a city attorney letter to try to get them to pay. So we would just continue to follow whatever that internal process is.

Was there any indication from HDL of that their estimate of 30% what their return on collecting is on for business license?

Other than the 30%?

No, the 30% that they deem that don't have a business license.

Oh, what the dollar amount is?

What is the collection rate of those 30% of business

Oh, I see what you mean. Other than saying that they can likely get us 30% increase, I'm not sure what the I mean, for me, when they say that, it's telling me that they're going get us 30% more in revenue, right?

That's all the questions I have for now. Thank you.

All

right. Anyone else? Finished, two things you're doing. One is the fee study and reviewing our ordinance. And then two, kind of along the same lines as questions of my colleagues, just kind of interested in what, know, kind of at a real practical level, what this looks like. 30% is a lot. It's quite a bit. So that means there's a lot of, you know, a lot of businesses that aren't either licensed or there's just underreporting. Realistically, what does it look like? What kind of you mentioned Airbnb, those kind of businesses.

Is it street vendors? I don't know. What sort of or just regular businesses that aren't licensed or have their licenses left. 30% just seems like a lot. How are they able to

Honestly, when they told me 30%, I question that too because it seems very high to me too. But they have certain ways that they get listings of businesses. They have certain way of gathering data and have access to other types of data than we do. And so from that, they say that they are able to identify businesses that don't have business licenses. And they were very confident in that number. Is

your department going to see savings, efficiency savings in, you know, maybe farming out some of this work and not having to do it so much internally?

Well, we can only so we have one and a half person that work on business license in the finance department. And, you know, the collection process only goes so far after we do the city attorney process, right? Unless we're sending people out there like code enforcement, and code enforcement is already very impacted. There's not much more than that that we can do, and so it will help. I mean if they identify people that are not paying, that will help our department.

That gives you a lot more. That just leverages your resources a lot more.

Yes.

Okay. All right. Anyone else? Okay. Five vote item, I believe.

I did want to go back and review. I know there's some questions about kind of discussion about why we're talking about this. You did have it as an adopted goal and priority for your current year. So it fell under fiscal recovery. You had identifying options for cost recovery or recovering lost revenues, your business license. So it's something that it's been worked on for a while. It was really about trying to fix the award dense going forward, take into consideration new types of businesses. But one of the additional services was the fact that they could go through the process to look and see if you've got any that are already acting without them. So that's why it's a two part process.

If I could to, fire chief here would like to say a few words just from the fire's perspective on some of the things they find when they go out and do inspections for businesses.

Okay. Thank you. Chief Wills.

Good evening mayor and council. So our records management system for fire prevention inspections for all businesses in town are based off the business license system. So what we often find is those aren't necessarily up to date. We get a quarterly list for new business licenses, and we update our records management system over at the fire department. We often find that they're they've moved to another business or they just didn't update their business license or they haven't paid their business license for a number of years.

So to be honest with you, that 30% factor is is not a surprising number to me because we've been chasing this from the fire department perspective for years now trying to keep our records management system up to date. Oftentimes, we'll go out to do an inspection and the business will change from one business to another and then we'll go back. We'll look at the business, license system to try and update the contact information, the emergency contacts, and that information, and we'll find that they don't have one. Pretty common occurrence. This is I would say almost a daily occurrence for our prevention staff trying to keep that up to date.

One of the other things that we come across with business licenses is sometimes folks will start a new business. They'll just, you know, rent a building and they'll start their new business and then we will come across them and sometimes this is two, three, four, maybe even six months in. And what we realize when we get out there is that type of occupancy isn't that building isn't intended for that type of occupancy And sometimes it can be very costly for the businesses because they were supposed to have a fire sprinkler system and they don't or or the building doesn't meet the exits or certain things like that, which are safety concerns. But they're also frustrating for them because if they thought they were operating you know in a business that was intended for it but it isn't necessarily the case so it's kind of the car before the horse sometimes so I think improving our business license process will help us at least in the fire department so I just wanted to share that perspective with you.

Alright. Thank you, Chief Wills. Questions for Chief Wills? Councillor Smith.

Just give you guys a real time scorecard, I think I'm getting the point where I can trust but verify. I kind of want to negotiate the contract from the dais, but I don't think that's appropriate. But it's the contingency percentages that still concern me. I think this question is for Venus here. To your understanding, we talked about a bunch of different businesses that might be looked at. Is this also going to potentially target people who are running like Amazon sales business out of their homes or people from work from home?

So they're going to look at the that will be the ordinance piece of it, right? Because a lot has happened over the several years with online businesses and how that's performing. The wording in our ordinance has a lot to do with it, right? Whether you're working in the city limits, some people work from home outside of the city limits, so should they have a business. So there's some language things that have to be kind of trued up so that we can require, you know, confidently require businesses to have business licenses.

Okay,

that'll be the structure. The ordinance review and structure portion of it.

So it's possible we're missing somebody who sells stuff on Amazon out of their house.

Yes,

but a decision about whether or not to tax that activity would come back to Council before it's taxed.

Correct.

Okay, alright, thank you.

And just note from the report too, they collect the fees from non compliant businesses 30 or 50% of the current year and any prior year fees. And then any future would go 100% to the city. Correct. All right. Councilman, anybody else? Craig, did you have something?

Mayor and council, I was going to add to the discussion that I've had internal assignments that have brought me to review the current ordinance on business on the business license. And I think the city would get a return on the investment in a modernized ordinance alone, not before we even deal with, I believe there's over 100 letters that I send out a year on businesses not paying. But in dealing with the ordinance, it's I don't want to say it's not current, but there are various areas for improvement on the ordinance. So I'm looking forward to getting a multi city approach to the ordinance and see how we can best optimize revenue for businesses. Thank you.

Further discussion or a motion?

I'd like to make a motion with the addition of requesting we get a four month status report.

I'll second.

Okay. Have a motion by councilmember Harris and a second by councilmember Smith. Mayor and council, please cast your votes. And the motion passes unanimously.

Alright. Thank you, Venus. Thank you, Casey. Thank you, Craig. Everybody everybody had your back on that one, Venus. We'll look forward to the first four month status report in City Council history.

Only agenda item L4, authorization to enter in memorandum of understanding with Merced County to manage the distribution of 150,000 matching grant from the continuum of care to 73 South R Street Veterans Village Project and authorization to accept, execute, and appropriate that grant.

Thank you, gentlemen. Leigh Brown.

Good evening, manager and mayor council. Tonight before we have a memorandum of understanding between the city and the county, This is for Veterans Village and as we've talked before, Veterans Village found themselves in a bit

of a deficit

financially and so our partner CC915, enlisted local veteran Mr. Adam Conyers who actually is here tonight to go on a bit of a fundraising campaign to kind of finish off the project. The project, as you're aware, did get completed at the end of last year and is now open for veterans. There was 11 units occupied as of my last conversation with the developer and they're going to be finishing up here within the next thirty days. But they did find themselves in need of some funding and back earlier in 2025 you approved a matching grant with the Central Valley Opportunity Fund and it was for a $150,000 and the match was Central Valley Opportunity Fund with the COC funding and so at that time we only had the first 150,000 and so since then the COC has approved the 150,000 but they couldn't just give it to them directly because they didn't have that kind of a fiscal relationship with the development team.

The city did And so the city has been partnering on this project since 2022. And so in order to facilitate the $150,000 match, the COC, which runs through the county, had to develop an MOU. And so with our deputy city attorney's help, we reviewed the MOU that was provided by the county, did some small changes, went back and forth, and they've now agreed to this $150,000 match. And so tonight what we're asking for your approval is for that memorandum of understanding which basically means that the city will be financially managing the $150,000 and dolling that out to the developer to pay the final construction costs.

Questions

for Ms. Brown? In case you have anything from the public.

We don't have anything, mayor.

All right, back to counsel for additional discussion or a motion.

Motion.

Is there a second? Second. Okay. One motion second. Pending discussion. Council Member Smith.

I fully in support. I just want to thank Mr. Conauer and your group for doing your best to end veteran homelessness in Merced. It's Much appreciated. Glad we could partner with you on this project.

On this project. Yeah, on that point, think, Adam, if you want to come up, this project gets us to what's called functional zero when it comes to homeless veterans. With when it comes to homeless veterans

this yeah mr. Mayor this this point in time count we had two unhoused veterans counted in the city of Merced which is an extremely low number compared to the nines and teens that we've had before We haven't even verified that those two self reported veterans are actually veterans yet. So if we're not at an actual zero, we are very, very close and functionally at zero. I really want to thank Mr. McBride and Ms. Brown and the city staff and the city council for making this happen. We're very thankful and I'm very honored to have your support and your help to house our veterans. We actually have more now. We have 16 veterans housed at Veterans Village and we have three non veterans housed there and we're almost full. We got two more rooms to rent out. So thank you very much.

That's wonderful news. Thank you for all your work on this, bringing this thing home. All right. You can cheer that. Okay. We have a motion and a second pending any additional comment. Okay, seeing none.

All right. I have a motion by Councilmember Harris and a second by Councilmember Zhang.

Yes, we'll call for the question and city manager or city attorney notes it's a five vote item.

Okay. Mayor and council, please cast your votes. And the motion passes unanimously.

Thank you, Leah. Thank you, Adam.

Agenda item M, reports M1, City of Merced, financial forecast and CalPERS update.

Right, Venus, welcome back.

Good evening again. Tonight I'll be presenting the financial forecast. I know on Saturday with goals and priorities, I did present kind of the biggest substance of the presentation tonight. We'll be adding some informational slides and a CalPERS update to that. So again, what is a forecast?

It's a management tool based upon a snapshot of today and it presents estimated information based on past, present, current, and projected financial conditions. It will help identify future revenue and expenditure trends and have an immediate or long term influence on government policies, strategic goals, or community services. But the longer that we have this snapshot, the more it can deviate from actual from what we actually experience. So again, this is just a tool for kind of figuring out what potential concerns we see coming down the line and trying to mitigate those. So it's not able to predict with any certainty what the future will actually hold.

Again, it's a tool to highlight significant issues or problems. It's important to note that a forecast is not a budget. It doesn't make expenditure decision, but it assesses the need to prioritize the allocation of city resources. So we do have the budget process every year, and depending on what happens in that budget process, it could significantly also change what this forecast would look like in the future. So how does the flow of money work?

The city of Merced receives revenue from a variety of sources, and some of the revenues can be used for any purpose. They are discretionary or unrestricted, so some of those are property tax, sales tax, real property tax, tax on construction, business license tax, transient occupancy tax, and vehicle in lieu. Most of these are received in the general fund. Some primary areas discretionary are, again, in the general fund, and a lot of times we fund police and fire, parks maintenance, economic development and administration out of that fund. Another discretionary fund is development services, parks and community services in the airport, and then internal service funds to the extent that they provide the support to the above funds.

So a lot of the revenues we receive are actually limited to their use, and they are considered non discretionary or restricted. And some examples of those are federal and state grants. You have to use them specifically for what they are awarded to be used for. A gas tax, which would be for your road maintenance types of expenditures. Water refuse and wastewater charges that should only be going to the operations of those types of programs.

Utility connection charges, any proceeds from loans or assessments, CFDs and maintenance districts, which we've talked about earlier today. Due to the various types of revenues, different funds are used to track all of these revenues and expenditures. This is for transparency and it's also to make sure that we're using the funding for the correct purposes. The city Of Merced currently uses two eleven separate funds for budget purposes. Tonight, we will only be focusing on a few of the funds, and the funds that we focus on tend to be the general fund, and it tends to be other funds that we know will likely look like they might have some issues coming down the line or they are impacted they could impact the general fund in some way.

We follow GASME which is Government Accounting Standards Board pronouncements and they're categorized into three main categories governmental funds, proprietary funds, and fiduciary funds. So, some of the economic factors that we took into consideration while creating the projection And I wasn't sure if the city manager wanted to speak on this or

She always turns this one over to me, doesn't she? Like every year I'm getting prompted here. I just wanted to point out a few things here. There's still some indecisions and uncertainty that we face as a city similar to any business that's out there. I know just I'll give you an example.

Your goals and priorities are there's some items that we're trying to get to fulfill your goals and priorities that have been they're back ordered, right? And so we compete in the same market as a lot of other businesses and industries. And so some things have not completely recovered. It's often difficult for us to kind of forecast on the economic future, especially with regard to construction. This past year, we saw more activity than I think we anticipated.

It was a nice surprise. But we tend to plan a little bit conservatively going forward. And if we overachieve, that's a positive thing. Just because we don't know how markets are going to react too often, let's say, not changing of rates. Right? There's been a lot of forecasting that rates are going to change. When things don't change, it didn't have a negative reaction. So things are still very good, Amr said. There's a lot of positive things lining up. I think you all know just from a development standpoint what you got on the horizon from us in terms of potential developments that are out there on the horizon.

But there's still a market rate, right? There's still a market absorption that goes on. So we can't get overly excited about the prospects because the market still kind of has a rate that it grows on. And so we're to calibrate that the best that we can, but things are still very positive for us.

Okay, now moving into the actual five year forecast. Some of the revenue assumptions that we made in creating the forecast are we do talk to sales tax consultants. So we talk to HDL, we look at historical actuals, we look at the general economic forecasts, we meet with our investment service provider, and they give us some economic forecasts. And then we also look at the state of California and what they're doing in their budgets. And we come up with some reasoning and methodology behind most of the projections.

Most of the smaller type of revenues, used anywhere from a 1% to 3%. In sales tax, we used a 3% increase per year. Property taxes 5% to 6% increase. We started to add we're already a residual into the general fund. We added a million dollars in this year's budget, and we added a 2% increase each year for that.

We are not adding any new grants. We did remove the stop gap agreement from the projection after December 2026 because that expires, and we were getting a little over 300 and or about $328,000 a year for that. And so we don't know exactly where that will go, and so we did remove it from the projection. We're making an assumption the college, the high school district, and middle school contracts will continue with school resource officers, Community facility districts, development services, and construction tax we are including based on projected building growth for the next five years. We did include increases to parks and community service program fees that council approved in December 2025.

And then we make an assumption that each year we'll end the year with at least $1,500,000 in savings to be able to leave in the balance for future years. On the expenditure assumptions, we start with the twenty five-twenty six approved budget as a base. We don't add any new positions or programs. Estimated labor increases are only for twenty six-twenty seven, so the last four years of the projection have no labor increases as far as COLAs. They would only have your typical merit increases.

Benefits insurance, we have that to 10 to 11% increase. We saw a very large increase in this year, and so we did up that number for the forecast. Workers' compensation, we have 8% increases per year. General liability insurance, we reduced this actually a little bit from prior projections. We did see a huge bump for a few years, but we are seeing it go down slightly.

And then, CalPERS, we have anywhere from 29.2% to 50.4% projection of salaries. Most of the materials and supplies and services costs, we estimated a two percent increase. There are no new grant funded expenditures in here, no one time expenses. So this really is your operating budget. There are no one time purchases, capital, or anything of that nature in projections.

The general fund, it's assuming that the general fund will continue to transfer funding to Parks and Community Services, and it will increase 4% a year. And then there are general fund transfers in the projection for the airport of 4% increase or less. And we do calculate what the 25% general fund reserve set aside would look like and how that would make the numbers look if it's included. What is not included in this projection is PC and fleet replacement costs. And then your one time set asides that are based on savings from prior years are not included.

So that would be the economic development opportunity set aside your ongoing Trust 01/2015 and the affordable housing fund set aside. So just a quick slide on sales tax and how we've looked in the past few years compared to what we're budgeting, how we ended last year, and then how we're budgeting for this current year. So last year, we did come up a little ahead in the general fund by 0.8%. We were still a little under our we still got a little bit less last year on Measure C, 0.6% less. And then for the budget, we are estimating an increase for this year.

We actually think we might end up a little bit more than $17,000,000 but we're hoping to be at the $17,000,000 so that would give us a 1.4% increase. And then on measure C, we took a hybrid approach between HDL and kind of our trend analysis, and so we're estimating a 1.2% increase for this year. So, as we go into the actual numbers of the projection, I wanted to bring up what some of the operating concerns are. Again, these operating concerns are not very different from last year. So, in the general fund, of course, the SAFR grant expires in March 2027.

Funds 24 firefighters, and that cost is anywhere from 3 to 4,000,000 annually. Again, we removed the county fire agreement, so that was 328,000 in this last year. And then CP42, there's a

lot of

uncertainty still around that and what the costs will be, what type of revenues will we see, how will the JPA work with CP42? And continuing to work that out. And just in general, expenditures are outpacing revenue. So we need to identify either additional revenue sources or try to maintain our expenditures low. In Fund ten eighteen for Parks and Recreation, the CalVIP grant has expired and that was funding one person.

So initially, we had hired a person to run outdoor programming, and so that started with Prop 64. That expired. We were able to leverage the CalVIP grant and continue that program. That expired in December 2025, so we did have that funded for half of the year this fiscal year. Moving forward, I know that Parks and Recreation are trying to secure funding to continue that.

We had accepted funding for two vehicles to continue outdoor programming that would continue to commit us to that program Without this person, without this position, it's unlikely that Parks and Recreation would be able to continue that outdoor program. So then the funding from the grant would be in jeopardy there. But they are continuing to look for resources to fund that position. There was a zookeeper that was funded by a donation for the last several years. That donation ended.

Then Parks and Recreation was able to secure some private donation that is funding that position for an additional three years. So that would end in twenty seventwenty eight, and that position is about 73,000 annually. But once twenty seventwenty eight comes, there will no longer be funding for that position. A measure why cannabis tax is still continuing to decrease slightly. We're still not seeing the bottom drop there, even though it's a little bit.

It is being reduced quarter over quarter, and we'll show you a slide later about that. And so depending on where these go, that means we either have to need additional general fund support in order to make Parks and Recreation balance, or we have to reduce the expenses in some areas. On the airport, so we're just seeing that expenditures there are outpacing the revenue in some of the years. In the outer years, they actually look like their revenue goes up a little bit, but it's still requiring general fund support in all five years. And even though I don't have a slide for housing administration, I just wanted to bring to the attention that in the last couple of years, we have needed additional funding to make that balance.

And so it's likely that will continue. And so we will likely be starting to put that in our budget process to either whether it's affordable housing fund that's going to support that or the general fund, but they will need additional support. So this is the cannabis tax since inception, what we've received over the last few years. Of course, we received a lot in that second year, right? But since then, it's been drastically reduced.

We hope that we're seeing some steadiness now in the last couple of years, but that's still yet to be seen. Like I said, we're still seeing some slight quarter over quarter reductions, which you'll see here in this next slide. So they are it isn't a lot, but it can add up to a lot when we're needing funding to go into parks and recreation, into parks maintenance, to police and fire. So, here we have the Fund ten eighteen Parks and Community Services projection. So, as you can see, it is estimating to get 4% increase a year from the general fund.

That's your first line. Measure Y transfer in is we've kept that level, again because we're not sure of Measure Y will continue to decrease, so we're hoping that at least it will stay level for all five years. And then other revenue is their program revenue, transfers in from the CFDs, interest, all those other types of revenues that they could get is in that third line. So you can see there total revenues, they have a little bit of increases every year. Expenditures are still outweighing just their revenues, so you see a little bit of expense over receipts in the first two years.

What is not in here is that zoo contribution for the zookeeper. So what if we were to put that in, that could actually clear some of this some of this red in the first two years. But after that, we would no longer have that contribution. So development services, project a little bit of revenue increase year over year for them. But even with that increase, it's not exceeding their expenses.

So you see that they are about 1 and a half million short each year. Again, they are in the process of a development fee study, and they will be coming to counsel to propose some increase to their fees. And based on that fee study, that could help to shortfall about $1,000,000 a year that's projected from that study. But otherwise, you would need to start giving them support from the general fund or you'd have to decrease their expenditures. So, Measure C, I combined the old Measure C funding, so we're not really getting any more sales tax revenue there, right?

But we did have a fund balance in that fund. And so, I combined it with the new Measure C for public safety because we have now several positions in measure C, 34.79 positions in measure C. And during the budget process, we added an additional seven. And so in order to leverage some of the balance from the old measure fund, I did combine this. But even with that, as you can see in the second year, we won't have enough funding to fund all these positions.

So we would really need to figure out what we want to do with the positions, whether it's our unfunded them, reducing them, or moving them to another funding source. This is CFD for fire. So we're basing the increases in revenue on additional permits that are being estimated, 200 single family and 150 multifamily each year. So, based on this estimate, it looks like this fund would be able to support the 5.52 positions for the next five years. And in addition, in the fifth year, we could either absorb a position from a different funding source or we can add a position, I guess depending on where we are in five years.

So this is the CFD for police, so very similar to fire. They will also be able to support themselves over the next five years based on this growth. But in this fund, we do estimate that we can either add or absorb positions every other year for the next few years. CFD parks has a little bit of a different look to it. Even though they do receive money from the CFD also, they receive quite a bit less.

And so based on the projection of revenue compared to the increase in expenditures, we are seeing that they will be expense over receipts and will not have enough fund balance to support this level of expenses moving forward. So we would either have to move expense funding into the general fund, which is where the other park maintenance is being supported, or they would have to reduce expenditures. And we talked a little bit about the airport. So we are estimating anything from 4% or less of general fund transfer. They do get a little bit of their program revenues, not enough to support themselves, which is why they require general fund transfer in.

First year, it still looks like it will be negative there for them, but we are basically moving in enough to make them balance for all five years. And the last slide here is for your general fund. So as you can see, because the SAFR grant is removed in the first couple years there, you see not much change in revenue or not much increase to revenue, but in the last few years you had about 4% increase. Your expenses are not huge increases, but again there are no labor estimates for MOU agreements that could potentially come into play. And so your increases are not a lot, but they're still increasing based on your maintenance supplies and services estimates.

And you do see that expense over receipts are anywhere from 5,000,000 to $6,000,000 per year. And then we do have what would be required to set aside for your 25% reserve. So it gives you your estimated ending balances. In the first two years, you could have balance, but in the last three years, we would not have any balance to support this level of expenses. Okay, and just to show typically what type of expenses are in the general fund, right?

So most of your expenses are personnel, 75%, 22% are supplies and services. And then everything else is either it's less than a 1%, so that's why you see zeros there. And then you have some transfers at 3%. So the bulk of your expenses are personnel, so anything that you would want to do would impact personnel in some way. And this slide is just to show that based on the general fund projection and what the 25% set aside would be for that projection, this is how much we would have to set aside each year to meet that reserve requirement and then what the balance would be after moving that amount of money in.

So last year when I presented forecast, we talked about, like I said, that there wasn't much change in what the concerns were. And so what were some of the options that we were going into budget that we can do to mitigate all those negatives? And so, one of them was to keep three police officers vacant. So, I wanted to show you what the list was and then what happened and what the outcome was with budget. So we said, keep three police officers vacant.

The budget actually added funding for those officers, but they added it to Measure C. In addition, four other public safety positions were also moved from the general fund into Measure C. We recommended eliminating the CALVIP program. So in the budget, it went through December 31, which is when the grant expired. And so then that was eliminated after that, and then there was none of that in the forecast for the general fund.

The only piece that did stay was the recreation coordinator did not get eliminated. We also said to increase development services fees was an option, and again, that is in progress. That will be coming to council soon. We said don't increase maintenance supplies and services, so we did try to manage that during budget. We did make some small increases, but most departments did not increase maintenance supplies and services.

We said no additions to fleet, only replacements. We did allow some additions to fleet, so that continues to increase your maintenance costs over time. We said to evaluate the use of RDA and Trust 115, which we did, and we added an additional million dollars in RDA residual to help balance the budget. And then revise the general fund reserve policy, which counsel did choose to revise the policy from a 35% to 30%, and that also helped to balance the twenty five-twenty six budget. So, moving forward, what are the options for 2026?

It's to increase It's to increase development services fees. So, we're continuing that process, but once they're finally adopted, you wouldn't see the benefit of that until next fiscal year. The airport is looking at increasing their airport fees, so hangar fees, user fees that they can increase out there. They're looking into bringing that to council to be able to update and increase those fees to help some of their costs and their operating fund. We had the study session earlier today talked about potentially increasing the special tax rate for the CFD, so that's where you could get additional funding for police, fire parks.