City Council - Regular Meeting

meeting is started at about 5:00 from Gary. Anybody heard from Gary?

Okay, we're going to wait for Council Member Barbadio. Give him a couple minutes. Thanks. This meeting is now called to order.

So today is March 3rd, 2026. While this meeting is being He always interrupts me. While this meeting is being broadcast via Zoom, oral public comment may only be provided live at the city council meeting in person. City council meeting is available for instant translation in over 60 languages with wordly accessible via mobile phone, computer and video displays by so by scanning the QR code located on the title page of the agenda in the upper right hand corner. So back to today's business, city clerk, please take role. Vice Mayor Barbado here. Council member Chua here. Council member Lamb here. Council member Leanne

here. Here. Mayor Montano here. So, okay. So, now we uh I'm going to call for a motion to approve the agenda. So, um I'm going to ask that presentations be moved before close session. Is there a a motion for that? So, we have council member Chua. Is there a second? And we have council member Lean who second that. So, let's call for the vote. Vice Mayor Barbado. I. Council member Chua. I. Council member Lamb. I. Council member Leanne. I. Mayor Montano. Mayor. Okay. Thank you.

You need a vote. Oh, I thank you. Okay. All right. All right. So now uh we will receive the presentate. Well, so we're Yeah. I do that one. Yeah. Okay. So, I just wanted to make sure. Okay. Okay. So, now we'll receive a staff presentation on the preliminary preliminary uh fiscal year 2027 303 2031 5-year general fund financial de forecast and provide feedback on desired service levels to inform fiscal year 2026 2027 budget development. So, we have uh our uh finance director loosey out.

Good evening council members. Good evening, council members. Lafresi, how finance director for the city of Malpus. Uh, thank you for your time today. We have before you a presentation for the preliminary FY202731 general fund financial forecast and we'll head into it right now. Let's go over the agenda briefly. The city manager will make some remarks. He will also go through the achievements by council priority for the audience. Uh the economic outlook and regional will move into economic outlook and regional factors. We'll then proceed into the forecast itself. Provide you with some perspective on our forecasting assumptions. give you an update on our preserved policies and balances as of June 30th, 2025, which are our audited numbers, proceed to the budget calendar overview, and then a final recommendation. I also do want to welcome the public to this meeting. This is one of our favorite meetings in the finance team because we get to tell you what our strategic plan is and the organization gets you tell you what how our budget reflects the strategic direction that the council has given. With that, I turn it over to our city manager.

Thank you. Good evening, Mayor, council members, and everybody else that's here uh from the public to join us today. I'm pleased that we're going to be able to share with you a budget update that reflects some positive news. Um what you'll see tonight is that we were able to put ourselves in a um significantly stronger fiscal position today than what we anticipated we'd be in today back in February of 2025. Excuse me. And that's definitely something that we're we're proud of as as a body coming to you today for council. That didn't happen by accident. Um it's the result of clear fiscal strategy and it's also a lot of focused work by our department directors and our city staff. Um all the departments contributed and made it um thank you so much. They made thoughtful adjustments to stabilize our fiscal position and strengthen our city's finances. Um, you're going to hear more about that strategy from our finance director here in a few minutes. But I wanted to thank council for your support and your patience as we work through this process. Um, the fiscal turnaround, it doesn't happen overnight and it's your confidence in the staff that allowed us to make a real difference and get the work done. Uh, we know that there's still more work ahead of us. Um but uh we're not declaring victor yet, but we are saying that we're in a in a much better position and we're really happy to share that with you now. So I'll pass it to myself. Right. I'm doing the achievements. Awesome. All right. I'm going to pass it to myself. So can we do the next slide, please? So the slide in front of you for our community wellness and open space, one of council priorities is to continue providing parks and amenities to all of our uh members in our community so that they could live happier and healthier lives. Um over this current budget year, our public works department, planning department, recreation and community

services departments along with others delivered uh key projects. These include the innovation district parks and master plan meant to connect our parks and trails in the innovation district area. The main street sense of place plan meant to revitalize community gathering spaces and the pedestrian experience along Main Street. The public arts master plan that's meant to highlight the local talent while creating centerpieces for local values and community identity. and of course the pickle ball courts uh and programs which we heard a lot about over the last year and we've made improvements at both Hall and Gil Park. Next slide. Another of council's priorities is to continue continue strengthening our economic foundation so that our programs and services are sustainable. A couple highlights and milestones delivered through our economic development department, planning department, finance department, as well as our city attorney's office include the Rivian Last Mile Hub, which held its grand opening on February 27th. I know all of our council members were there. That was a pretty awesome experience. And it's also anticipated to be a contributor to the future revenue generation in our city. the completion and the adoption of the gateway main street specific plan which will be the roadmap to our future in that area of town and of course the ongoing business development where we continue to process high volumes of projects permits for both businesses and multif family units. Next slide. Streamlining processes to better serve our community while ensuring optimization and financial stewardship also remains a council priority. As you can see here in our tiles, our finance department, HR department, IT department, CMO, and PIO continue to make significant headway. You can see with the number of um procurements, the Instagram followers, how we manage our commissions, the reduction in the

structural deficit, um how many permits we're processing. There's a lot of really good work that's being done by our different departments. Next slide, please. Another council priority is to be innovative in how we attract affordable housing and pro uh affordable housing projects and how we work with our stakeholders as well as supporting our neighborhoods. Programs uh like our ADU incentive program, our housing assistance program, and our comprehensive zoning ordinance update delivered through our building department, housing department, and code enforcement division. They also scored very big with our community, and we're very proud of each of those projects. Next slide. Our public safety departments continue to excel in several areas. Um you can see uh on the slide in front of you there. The areas in red are milestones for our fire department while the ones in blue are milestones for our police departments. We continue to have um magnificent response times from both public safety departments. We continue to uh operate our emergency ambulance in our city, which is a tremendous community benefit. And our police officers are out there diligently reducing crime, reducing part one crimes by uh 10.8% during this reporting period, as well as our dispatchers who continue to answer and blow away the state standards as are answering 911 calls in our city. They've also delivered several different types of programs from teenmies um to utilizing grant funding effectively and then also new programs that were launched with um some community safety programs teaching women and seniors how to better defend themselves in um crisis situations. Next slide, please. council um wants to promote sustainable

community and protect the natural environment. Those projects are being delivered through our public works department and our building department. They have expanded their electrification initiatives. Uh they launched the go electric Malpus program, brought in significant grant dollars to help improve city facilities and other areas in town. And then of course the neighborhood outreach that they were doing um through their rebate programs and and other offerings. Next slide please. And the final one is um council wanting to develop collaborative solutions to meet transportation needs facing our community and our region. This is offered through our planning department and public works. one of our hit programs. SMARTTRT continues to be very popular amongst our residents and a very valuable resource for our community. The writership is averaging 5,292 monthly and um it's been a 16month program funded through 2027. So, we'll be looking to continue that in the near future. We're really excited about that. As well as the South Militus Boulevard uh bridge uh project, which is going to be very important for our community in that area. the southern portion of town. Next slide, please. So, that concludes some of our accomplishments and I would like to pass it over to our finance director to give us our presentation.

Okay. Thank you very much. Um, city manager n.

Thank you. We'll start with a brief discussion on our general economic outlook and regional factors. Um starting with the economic outlook for Silicon Valley. Uh these are key regional and local indicators that would inform the city's revenue assumptions and how we do planning all of our fiscal planning. So the Silicon Valley remains healthy to some extent. It's the venture capital investments in 2025 around 69 billion. Total employment even though we're reading some interesting things in the paper still as of December 2025 slightly down. So, a slight decline. Per capita income is very high across the country. I don't think that we've beaten Len County, but we're kind of close. Uh statewide sales tax outlook from our professional uh from our um our advisor, sales tax advisor, we're looking at 2025 26 overall, this is for the state, not specific to Mopas is going up 1.7%. Uh for 2627, they're looking at 2.6% 6% and those percentage are growth from today. Um this is generally led by e-commerce and business industry sectors is where we're going to see expect to see that growth with straight statewide sales tax. On the local employment and inflation side, our local employment numbers are December of 2025. Santa Cler overall is 4.0. California is 5.5. The US is 4.4. and militas comes in or unfortunately that that number is as of September 2025 it is the latest number that we have and that is 4.8 So we continue to track to to to do okay continue to do okay Bay Area CPI is 3% year-over-year that is above the and what where we are above the national average is with food we're higher than the national average

of CPI for food at 4.3% and transportation costs are 4.5%. Hang on a second. Let's turn to housing, commercial real estate, and again, Mopia specifically on the housing and commercial real estate market. Our medium home price in Santa CL County is $ 1.92 million. That is our medium price. Affordability, about 26% of firsttime buyers can afford to buy a home in this area. commercial development overall uh 5.3 million square feet was completed uh in progress projects are at the lowest level since 2013. So we're seeing that slow so that commercial development slowing down is certainly a reflection of the hybrid approach to work. It's while people are returning to work they're still not fully back as worker they were pre- pandemic. Then mortgage rates are expected to ease a little bit towards 6%. So that's good news. the key uncertainties for mil pitus the what's happening at the federal government level uh the uncertainty about tariff pass about tariff policy and then the subsequent tariff pass through to consumer spending and sales tax that'll have an effect on sales tax obviously we are a little bit concerned about the Federal Reserve Bank transition that's going to be happening in May uh so there is some certainly some uncertainty about that that affects the Federal Reserve rate we also have potential funding impacts of California's 18 billion structural deficit. While the city of Mito in and of itself is not overly dependent on state goods, state dollars, most of our money from the state and the federal government comes through formula dollars that's dependent on population. We still are concerned about the fact that we might have some people who are dependent on some of these monies that come from the state whether those people in our community would rather than getting state monies or federal monies

would come to us. We still continue to have exposure on the RAF litigation. That litigation is still pending. My understanding from our acting city attorney is that is on the docket for April 2026. We have about 18 to 20% at risk of our raft dollars. Those dollars we I want to remind folks that we have been very conservative. If we set those dollars aside as we have since I believe 2021-22 and that is set aside deliberately in pending a in in a potential adverse um ruling in that litigation. I will say that we have been successful so far but if you want any additional information I would turn to acting uh city attorney to provide any information on that. And uh commercial real estate vacancy trends are very concerning. uh those feed into their additional assessments that are coming the AB8 assessments. We're once again seeing I would venture to say more than usual requests for assessments and certainly in the commercial real estate space. We do have a new assessor while they were worked for Larry Stone. So we're you know we have some certainty around there. This is still a new assertion and we are not certain how aggressive uh that p that individual will be. So, it's processing those A8 assessments that many commercial owners are asking for. Um, and statewide job stagnation. Only 10,000 non-farm jobs were added in 2025. And an additional concerning overall at the state level is 10% of Californians are either unemployed or undermployed. The number I gave to you before was the unemployed number, but underemployed as people who are doing jobs that are um are less than their qualifications is the best way to phrase it. So we move into the pre the forecast itself. We're going to start with a little bit of of of going back at back to February

2025, where we are, what we did, and what we've done to apply fiscal strategy, our fiscal strategy and action. On the top of the timeline is our one-time actions, and on the bottom is recurring and ongoing actions. So the oneeyed time actions that we took uh when we did that presentation on February 18th 2025 I believe is the date we identified a structural deficit of 28.5 million through FY202930 and subsequent council direction at that time was for us to balance the budget the FY 2526 budget year that we are currently in now to resolve that that that shortfall which is uh about $3 million if I remember Right. Um, and I don't remember off hand, but it was somewhere around there. But we were to resolve that with no reserves. We did manage to resolve that. We resolved it with one-time savings of 1.7 million of expense reductions, including that. That was net of about $400,000 worth of council initiated proposals. We funded those. We also had some one-time revenue improvements. Uh, we had originally been putting aside about 20 or 25% if I remember right. We were certainly putting away more than we needed for the ear money. And so the c the county came back and said you only need to put aside about 18% of that. And so we updated property tax, sales tax. We had estimates updated because we did have additional monies coming in through those two sources and that was up 1.7. And then the other one-time action that we're taking, we done a uh significant organizational assessment of just about every department. Um we do have those consultant evaluations are underway. They are nearing completion and you should see some results from those in the next two months. Recurring actions are below the recurring savings which are the ones that are most strategic in nature because recurring uh recurring actions mean recurring results. So recurring actions of 2.5 millions that

was a reduction of staff but of three people three positions and the subsequent reduction of levels of service. to remind you, we took that reduction of level of service in the in the development department because we were no longer seeing development function I should say because we were no longer seeing that level of activity in development. So that reduction was a position in the fire department and a position in the building department. Um contracts due diligence way back when uh we were looking at roughly 1,600 contracts. We reviewed those. That review is complete and that was part of our transition from our legacy financial systems to our new Tyler system. We have issued to date, I actually got this number today, so I thought it was really important. We issued our thousandth contract this year. And so those have all migrated to Tyler. They have all been examined. They're all captured by commodity code and we have an incredible font of information to help us in analyzing those contracts and preparation for phase three. And phase three is where we are looking at this a thousand contracts and to see whether we can consolidate any of those functions, any of those commodities, any of those services and realize improved costs, cost containment and operational efficiencies. We did take a strategic recruitment approach that we took last spring. Yeah, last spring. Uh we had some travel reductions. So travel travel was minimized and some operational efficiencies as well. And then upcoming we continue to look for forward to the November 2026 ballot. We are staff is currently working working diligently on putting together a um ballot measure for your consideration later on this year uh to put before the voters in November 2026 to change our business license tax structure.

Where are we now? This is our fiscal progress scoreboard. This is a very high level look at what we've done and what we have achieved under your guidance. uh reminder back then of course the February 2025 forecast 28.5 million structural deficit through FY202930 through the actions that I just described on the previous slide we reached a 43% structural deficit reduction as of June 3rd at our 20 or June 2025 forecast. So we took that number of 28.5 million to down to 16.3 million once again through FY2930. Okay. Further and what you will see today in the next couple of slides is what further actions we have taken to get us down to a 59% reduction. That's a structural deficit reduction since February 2025. And we are comparing the same year to the same year. So the same fiscal year we compared in FY202930. We are comparing our our results here. We went from 28.5 million down to 11.8 million as a structural deficit in the year out years of FY2930. A little a little slightly different look with much more detail. This is our fiscal pro progress. This is our fiscal deficit trajectory and it's a good one to be honest of course. Um once again on the left hand side you have accumulative structure structural deficit is what we're talking about on this screen. And so we have February 2025. These are the numbers you saw on the February 18th. The second line June 2025 those are the numbers that you saw on June 3rd when we adopted the b this year's budget. And then February 2026 the numbers that we're talking about today. And so you can see all the way on the right hand side on the forecast FY 2930 we go from 28.5

to 16.3 to 11.8 which reflects that 59% reduction in the structural deficit. So as of today we are seeing that 59% reduction the deficit now and we have of course got through this year. Thank you for your uh approval of our midyear actions. We continue to be balanced in FY2526. FY2627. We are projecting a $2.1 million surplus that does include council approved reserve usage. All right. And here we are at our financial forecast. So uh revenues, use of reserves, expenditures, surplus deficit and the structural deficit. Historically we had not pres presented use of reserves separately. It is important to consider those separately as reserves are one-time money and so we just want to really call that out. I'm going to remind everyone that we were balanced at FY226 at the as of June 3rd. We were forecasting a balanced budget. We took our mid-year adjustments to council and council approved those adjustments last month and that was um that was also balanced. We increased it to from 144 million to 150.9 million. We continue to be balanced and we did take some actions absorbing some costs in that time about over $700,000 but we continue to be balanced and now at the base we are at $146.4 $4 million worth of revenues with a council approved $2.7 use uh million dollar use of reserves. This was approved back in November November 19th of 2024. This was a council this was a council approved use of those reserves and this was to support the IAFF contract at that time. Further on, we go into a nominal and I'm

going to be focusing on individual surplus deficits from line and from balanced balance 2.1 we go into the red and 2729 and so on. Our structural deficit however remains effectively really doesn't start for all intents and purposes because that $1 million structural deficit in FY2728 is nominal in in in reality. we can make that money up very quickly and we intend to do so. So we are looking at a structural deficit to some extent starting at 2829. Um the big thing of course here uh going back to FY2627 we're focused on the 2.1 uh we did have the reserve usage and so that enabled us to flip that but we also had uh used some interest income. Historically we'd been underestimating our interest income from our cash deposits. Our cash deposits are not idle cash. These these cash deposits continue to earn interest rates at what's called Lif Lif. And Lif is local government investment fund. It is managed by the state of California with a huge portfolio billions of dollars. So they move the market when they invest. So they get excellent returns. They are a conservative portfolio. They do generally follow US Treasury rates. And the calculation that we came up with from the 1.1 that we have been looking at is and came to 3.8. And the reason we've gotten 3.8 is what we use. We looked at our balances in general overall and we looked at the yield projections aligned to the federal reserve rate outlook. The lay portfolio overall trails the federal reserve rate about two quarters. So that's 180 days. So if I'm looking at a rate for two month two months for the rate that is for the Federal Reserve two months from now is generally what we'll be returning will be the yield on our portfolio. So this is why we're able to calculate that

the feds project this out to the federal open committee projects this out for 10 years. This is this is roughly about three and a half three and a half 3.25 to 350. I actually also to be conservative we also took a 25% haircut. So that 3.8 8 million is on the low side and that's deliberate. We budget towards on on revenues towards the bottom, not the top. Uh our average uh interest over the last three fiscal years was roughly $4 million. So this 3oint is comfortably within those numbers. Um these are just a picture of where our sources of revenue are. Once again, they are always going to be property taxes, sales to use and use taxes. That that 25.5% does include measure F/J and then of course transient occupancy tax. Our general fund expenditures, again, the key driver is we are a service business. Sometimes folks have a hard time understanding what public agencies do, but we are we provide services and people provide services and our staff provides those services. So our personnel costs are always going to be high. We don't have merch. We don't sell merch or widgets. So our personal costs about 79.1% of our total budget for the general fund. And then our service supplies are a little bit under 20%. We did look at those and I forgive me I did not correct this number. We are actually looking about 4% annual growth on these. And so I'll collect that. I'll correct that. Sorry. Forgive me for the error. What are our forecasting assumptions? So this is the trajectory of our property tax revenue. It does take a dip from this fiscal year to next fiscal year. This is once again, I talked a little bit about this before about the AB8 um reassessments and essentially we do

expect to see those assessments happen. Um and we also expect to see fewer real estate transactions, although the mortgage rates improving may may help with that. Our long-term forecasts on property tax rate, which um property tax revenue, we get this this is administered by the county and we do get assistance on this from our financial consultants on this particular issue. Um it did assumes about 3.7% growth uh annual growth. We've talked again about the excess ARF litigation money. It remains pending. We don't know what's going to happen. We will continue to set aside the reserves for a potential adverse funding. This is a conservative way to budget. And so of course we continue to monitor the traffic impact the tariff impacts on construction costs and new development evaluations. Sales and use tax revenue. This is administered by the state of California. Even though our MOTA's current sales tax rate is 9.375, the city only receives 1.25% of that. The 6% goes to the state, the remainder and we get 1.25 and the county gets the rest in various shapes and forms. Uh we did were successful obviously in extending the uh measure F to 2000 in 2025. We get about $7.3 million a year at this rate. Um overall um we are expecting a $37.2 million in 2627. That's a 5% increase over this current year. We had some really good numbers for our third quarter. Our receipts grew year-over-year 8.5% and we while we don't have a formal report yet for our fourth quarter. We did very well in that in that holiday season quarter. Our long-term growth rate on this sales and use tax is estimating at an average 2.3% annually. We are concerned about consumer spending. We continue to have elevated credit card balances and there once

again the federal tariffs and the uncertainty about those federal t federal tariff policy is it may very well drive additional price increases. Some other revenue and expenditure assumptions. Transit on the revenue side transit transient occupancy tax. It's about a 3% annual rate. Um they're still recovering from the pandemic and there you know also people are now more accustomed to working remotely and using rather than traveling to somewhere they'll work from their business location or home and rather than traveling and and spending money at hotels. the licensing permits and fines and the charges for services. You have already seen that work. We brought that work for you for you a couple of months ago. I think it was November. And this was where we uh increased our fees. We were expecting an increase of about $790,000 over in a year. Uh and that was just a national annual increase from uh FY23 24 to excuse me FY2 24 25 to FY25 and 26. Um, we are doing our usual five-year study and that will be coming to you in April. We don't think that we're going to have very many increases then because that work that we just did in November, we don't expect to see much of an increase. We do expect to see a couple of extra fees mostly to mostly attributable to our zoning ordinance uh deployment, but that's the only place we expect to see that. And then, of course, franchise fees are based on utility rate increases. As an aside, we are doing a a rate study on on water and sewer rates. We're going to be kicking that off pretty soon. That is a two-year study that has an enormous amount of community outreach. Uh we want to respect that completely and we finance is working in collaboration with public works to deliver that product and you'll be hearing about that over the next couple of years. On the expenditure assumption side, the salaries are based

on council approved labor contracts and union negotiated salary increases. The 26 27 base reflects vacancy savings and we all know what that number has been. We've been pretty consistent about that. Um it is also it is if yeah let me move on from there. Okay. Benefits is one of our challenges this year. I will tell you quite honestly and into the future we're looking at approximately if you're smoothing over the uh climb on our uh benefits we're looking at a 5% transition year-over-year which is fairly significant and we are concerned about that. um services and supplies. Here we are looking at as as I said before in correcting that number and I I had on a prior screen that's a 4% long-term increase. That's slightly above the CPA C CPI for the Bay Area over the last 60 61 years which has been pretty much around 3.67 3.87. And then finally we have some transfers out that are per council approved policy. We have two reserve policies. We are transferring $300,000 to the information technology fund. That's are your policy 52 and it's $500,000 to your storm drain fund which is policy 44. What are our key risks and sensitivities? You've heard many of them during this discussion before. Certainly is federal policy and tariffs that drives costs that drives prices that drives spending. The year of litigation once again we are taking care of that by using our reserves but it still is out there as a potential liability. Um, I'll move to Kalper's investment returns. Uh, we're also concerned about Kalper's investment returns. I think they're at 6.8 recently. They still need to make those numbers. The Dow dropped,000 points today, I think, or something like that. I was scared. I don't know about anybody else. Um,

economic slowdown as well was very, very challenging. And then we have some variances in revenue streams. Some of them are good and we have some expectations. We did have a Rivian opening the other day and some of them are are you know we do have to say that a 1% shift in either um our property or sales tax if they're both combined that would be about a little bit under a million dollars in our revenue. But we do continue to monitor these key risks and sensitivities that are affecting the city. We continue to monitor them continuously. Let's move into reserve policies and balances. I just want to say this is my waterfall. I worked very hard on this. I want every there's been a lot of laughter and snickering in the office about this, but I worked very hard on this. I just want you all to know.

Well, I think we would you rather it's up to you. This is a conversation. Okay. Yeah. Let's twist. Let's ask um let's ask um before you forget, why don't you just mark it down on your p on your paperwork so that way you won't forget and uh we'll continue. I only have a couple. Is there a pressing question that you want to ask? Should or can you wait? I only have a couple more slides. I just Is that okay? Thank you. Thank you, council member. Thank you. Thank you, mayor.

So, this is the waterfall. This is a picture of the policies that you adopt as a council every year as part of the budget process. I'll leave you to admire it later at your pleasure. Um these reserve balances, these are audited numbers. We get these numbers every year as of June 30th. We continue to have nonsp, you know, committed dollars to pur stabilization. That's a good that's a great number. We continue to have dollars contributed to artificial turf replacement at the sports center. And and once again, these do not reflect any actions that we've taken since July June 30th, 2025. So there have been a couple of actions on this, but this does not reflect it. This is an audited number. Another thing I want to point out to you is that last year, last fiscal year, we were a as we closed out, we were able to once again contribute to the contingency reserve and budget stabilization and each of those reflect the operating the operating budget um for two months. So we have four months of operating budget and the standard I believe the standard is two months. So we're doing well there. We also have some future deficit monies left over the RAF litigation that I've talked to you about during this presentation and then some SPAR money community investment program that you've been busy appropriating appropriating and then we have some unassigned money but this is a very healthy reserve balance for an organization of our size. This is a graphic of the same information just as a point of information. Those categories non-spendable, assigned, committed, and unassigned. Those are actually those are audit character characterizations. They don't mean that money is unassigned in this in that sense. It means that we could move it elsewhere, but this this organization has chosen not to. This council has chosen not to. So with that, I believe we have a budget calendar and a recommendation, but I can go back to the presentation if you wish.

I'll go through quickly. We'll have meetings. Today's March 3rd. We've already had the statistically valid community survey. We've already had the CIP presentation. Today is today, March 3rd, 2026. We're having this. Um, and then we expect to have open halls, employee town halls, additional council operating budget study sessions. We will be back to you, as I said before, in April 2026 to talk look at that 5-year update. On May 5th, we are uh planning to bring the CIP for you for budget adoption and subsequently on June 2nd to bring the um the 2627 operating budget adoption for public hearing and for adoption at the council's pleasure. Following is the recommendation and then that is the it for my presentation. So we remain open. I want to welcome all the departments here. I do want to acknowledge in particular all the departments directors are here and ready to serve and answer any questions. I want to acknowledge the extraordinary effort that they did. We start we started doing a hybrid zerobased budget this year which is why we achieved were able to achieve so much their intent and intention during the sessions that Alice Furick who's the budget manager went through with her and her team and their deliberation and their thoughtful consideration and the profering of of things that they could give up in order to meet the strategic goals that this council and direction that this council has given was extraordinary and I don't usually use the word extraordinary. I'm a pretty conservative person, but they were absolutely extraordinary this year. So many many kudos to the departments and the department directors. And with that, I turn to mayor. I return it to you for direction and questions.

Okay, great. Thank you for that presentation. And you know, the balancing the budget is paramount. And um it seems like you've did you got you all did a great job. So uh I think we have council member Lamb that wanted to make a comment. Mayor, did we want to call for public comment first? Oh, yeah. I I need to before that, I need to I need to go to public comment. So, is there anyone from the public that would like to make any comments? I have no public speaker cards at this time, but if anyone would like to speak, they can approach the microphone at the front. Okay, seeing none, let's move on to our colleagues. Council member Lamb, you had your hand raised or your Can you Can you click your

If I may, Mayor, one last point that I did forget. This base budget that you see before you does not include any proposals. We are in deliberation with the city manager's office and the departments reviewing some some nominal requests that the departments have made so far and we will bring them to you for consideration in future sessions. But I just wanted to make sure that this is the base. Thank you. So, Council Member Lamb, you had a question.

Uh, yes. Thank you, Mayor. Um, let's go back to this is slide 18. Um can you um explain adopted 2025 26 and amended 2526 uh that's a on revenues it's approximately 7 million increase oh about 6 million plus and then expenditure There's about four five million.

Can can you explain to those two items?

Thank you for the question. Those are actions that the council has that we have brought to the council since July 1st, 2025 up to today. We are preparing an information memorandum specifying those actions. But those include things like um you took an action to accept a grant, the midyear actions that you took. So you took an action to accept a grant. If you accept a grant, you also have to accept the fact that we're going to spend on the grant, which is why it remains ba balanced. And so we took some additional when we also took on after uh June 30th last year, we also had union contracts that came into play and those were also came to the council. But we do have a breakdown. We've already got a draft of a memorandum that explicitly states each of the actions that were taken by council. So the increase from the 144.0 zero to the 150.9 are all action council driven.

Um you mentioned there's a breakdown. So we're going to see a put down on those numbers in the near future. There were about six different actions that were taken on on because on any given day the council can take an action appropriating uh monies to the for the budget and the council during that time I believe took six different actions and we have them explicitly in a table format so they're easy to follow and we'll give that to you but these are none of these all of these are approved actions. So the difference between the 144 and the 150.9 is council approved. Okay. Um on page 23 um second bullet point um current sales tax 9.375 that's not including the senator increase by 6.25 25 recently I mean last year they passed a measure for um from Sen County to increase the sales tax of 62 uh 675 uh 25 um

this is the current sales tax on sorry this is the current sales tax yeah that was that was measure A correct that does not include that okay okay and and then um Um I assume that entire 0.625 goes to Senator Kur County, right? Not any of those to us. All we get is 1.25%. Our 1% through the base that's allocated to us and then the 0.25% that's measure F. We don't get any of the county money. So we don't get any of the measure A. We do not. Okay. But I will add that now we are paying 10%. Yes.

Thank you. Yes. Correct. That's a mix. That's a miss. Sorry. Yeah, that's why I asked. Thank you. Yeah. Have it.

Um um on page 24. Can you explain a little bit more detail on the benefits? I'm concerned about the benefits to um the city has a wide city has a wide variety of benefits. It actually is benefit healthy. We have uh Kalpers rates that in some cases go up to 64 cents on a dollar. So if a set one salary dollar gets a 64 cent contribution to the respective um retirement plan. So our retirement rates. So if I earn a dollar salary 36 cents up to from 36 cents 36.5 cents to 64.4 cents is a contribution towards retirement.

Then we also have health, dental, vision, workers compensation. I could continue. Mhm. Cal retiree I can give you the whole listing it's fairly it's fairly complex we have roughly um individual depart uh functional increases as far as benefits are concerned so but Medicare we pay Medicare we don't pay social security so we have a very healthy benefit package in the city of litus and you mentioned 5% annually it's on average

you're going to be digging into that with that with the HR is very closely looking at that. We'll be having lots of talks with our providers. Okay. Um and transferring out um can you explain why we need to transferring out uh 300,000 from IT funds and 500,000 to storm drain fund?

That was a a decision by a prior city council and that decision was uh made at at some point there was some action taken. These are fiscal policies that are in the budget book and that is adopted every year on an annual basis as part of the budget process. And policy 52, it says that we will endeavor to transfer $300,000 to the information technology fund and $500,000 to the storm drain fund. These are in the the language in both of those policies is endeavor to transfer. And we found that we were able to do that even with even with the given the surplus that we had. And so we continue to contribute to the information technology fund because that's important to keep our systems up to date and then the storm drain fund and that's uh allowing for future capital projects.

Oh, when you say transfer Oh, it transfer to that department. Transfer to the fund and that fund can be used by that department. It can be used for the eligible purposes for that fund. M so when we transfer monies into a fund it has a purpose and so it's for the information technology fund funds we use monies from that to support any informationational techn information information technology funds that we need that are once again eligible under the criteria of the fund. Okay. Thank you. Thanks. Can I piggy piggyback on that? Can I ask uh do we get interest on do we earn interest on this money?

We don't have lazy money ma'am. No, we don't. Our money works all the time. Okay, thanks. You're either gaining interest on it no matter what.

Do you have another question? Council member Lamb, is that it? Okay. All right. Um, any other council members? that would like to make any comments. Okay, we have council member Chua. I wasn't clear, mayor. Thank you, mayor. I wasn't clear what what was the question on the interest. Which one? You can explain because I have this

Can you elaborate with what what I my question? our our money is either we have very little money in I think we probably might have some nominal petty cash money if it's under $2,000 I think it's a lot maybe certainly under five but most of our other money is invested in vehicles it's either leif or a cash vehicle uh very little money sits around and does nothing or it's in our our major director can you I'm so sorry forgive me um let me move this aside So all of our money is working in general that very few monies are set aside or doing nothing. Uh for example, our cash money as we talked about is earning le returns. So that the yield on those on those in more liquid cash is closer to the treasury rate, the 3.5 4% range. That's because we need liquid money in order if I've got payroll tomorrow, I got to have cash today. Um the other rate the other interest that we earn that is gained when we liquidate the particular investment vehicles is our in our larger portfolio. So we have a couple of portfolios. We have the largest portfolio, our general fund portfolio and then we have of course a section 115 trust portfolio that's dedicated for pensions. My question on that is on page 20 I mean slide 28 there is a reserve total cumulative total of 89,451.

Yes ma'am. Do we earn interest on those? Yes. Yes. Absolutely. We don't. Cash is not doesn't mean anything if it's sitting around doing nothing. It's it's no everything everything that I the only thing we don't earn interest on here is the property because that's not a that's not a liquid asset. Which one is that? What the uh uh property and the prepaids because we've already paid somebody that money and that money exists elsewhere. The property is under non-spendable. There's a total of 5.2 million there. Yeah, we can't spend it.

But everything else we it is may it may be designated in a fund but it earns money.

Have we done statistical comparative analysis on how we're doing maybe the last three years in terms of interest on this uh funds. We do we do have a an investment uh port investment manager. We have two investment managers that do do uh compare our earnings to the Bank of America benchmark. So we do do comparisons on an ongoing basis uh as comparing to what we call is is a benchmark. We and we do fairly well. I mean last quarter we did about 4%. I do need to remind folks that our investment policy is first and foremost secure is security. The city cannot invest in something that's junk funds.

Of course. Yeah. So and so because that's that is absolutely the first and foremost pillar of how we for our investment policy but we do earn a fairly good return on our dollars and if the market does better we do better for the next round when we do the budget can we see like even three three years just to compare we we have funds are in the interest bearing accounts and how have we done the last three years that would be pleasure to bring that to you. We have an investment banker, investment counselor, one of our investments counselor is very eager to speak with you and we'll bring him to one of our presentations and he can you can very he's a very he wants to y

we'll do that. Thank you. Thank you for the question. My other question is 37. You you didn't you just touch on this one. I know we allocated a 100,000 for Main Street revitalization right here. I just br I just I just got um last week Congressman Roana awarded the city 250,000 for Main Street Main Street uh lights and signal improvements. I'll let I'll let

I'll let assistant city manager Ko address that. Do what was this about? Uh is it the same? Just refresh us, please.

Sure. Thank you, Council Muer, for the question. I'm glad you referenced this slide. And so this slide is um in the deck because we thought we might get some questions on the funding that you allocated in December. And so as part of our last prioritization effort, um we had the one-time funding that was available. And in the first meeting in December, the surveyor and city council allocated the onetime funding to these city council priorities. As noted on the asterric in the bottom, some of that one 900,000 onetime funding still does remain mostly from the re VTA reimbursement for Bard and a portion from Stratford. Um we'll be in front of you again the first council meeting in April to talk about the priorities again and all the items that you've raised since the last prioritization session we'll have a chance to discuss and prioritize. So to answer your question council member Chua the main street revitalization the 100,000 that was added um by the mayor and city council and onetime funds in December is different from the 250,000 that Roana's office just got us. In total, we re we have 750,000 from Roana's office. We received 500,000 a few years back and just got 250,000. The public works team is working on um pedestrian safety signal type improvements on Main Street. Um, with that 750,000 from Roana's office, this 100,000 here, um, Cal Zubar from our economic development team has been talking to a lot of departments to get ideas on what this could be spent on. We're still going through those internal conversations. Then we'll bring those ideas to the mayor and city council for approval prior to and and feedback um, uh, prior to spending any of that money. and we'll likely reach out to each of you individually to get any feedback that you may have um before we um spend any of this $100,000.

I think the 250 from Congressman Roana is specific from Main Street. Correct. Main Street improvements and signal I mean lightings and and signal improvement. So I don't think we can mix it up with the other 500,000 because this is specific for the main street.

Correct. So the um there's three allocations. One of 500,000 from Roana's office from a few years ago, a new one of 250,000 from Roana's office that we just got approval for, and then this 100,000. So for the Roana money, the 500 and the 250, um since that's federal money we need to use for capital type improvements and go through CALR to access that money. We are um again focused on capital or pedestrian safety type improvements.

This 100,000 it's general fund money so it's very flexible on its uses. It could be used for construction, it could be used for grants to businesses. It could be used for a whole host of different type of things. And so we are still going through those discussions and come back to you soon. Sorry, I'm not sure if I answered your I think you did. I I just want to make clear that that is there this I mean when you do your presentation that this 250s the way I understand it is earmarked for Main Street. Correct. Okay. Can I piggy back on that? Yes. Thanks. Yeah.

That's your favorite. Um, so I just want to I I'd like a a list of what you're spending this money that Ro Connor gave us specifically what it cuz because we need to know what it's what exactly because that money is targeted for Main Street. So I'd like to see what exactly you're spending it on and or we are projected spending what what is is they're going to be projecting to spend it on. And um the other question that I had was um so the 100,000 that could be spent for grants and and where did that money come from?

So this was allocated through onetime funding by the mayor and city council this past December. That's general fund source money. It can be used for um anything appropriate um for the use of public funds. And so we're brainstorming some ideas and we'll be back to you in the near future with some um ideas and proposals and and um we had requested a um what is it called? Entertainment zone. So how is that is any of this money going to be used for that?

Correct. We had we um defined the entertainment zone in the main street gateway specific plan. Um and so we'll um we'll um forward that information to the mayor and city council. This money um can definitely be used in that area for specific purposes. Um so we'll uh we'll consider that comment as we're brainstorming some ideas on the use of funds and if there's anything entertainment zone specific, we'll bring those ideas forward. Yeah, there's a there's a lot of businesses there that would love to have um an outside patio, but you know, it's not an entertainment zone. So, just would like for you guys to consider that so we can revitalize because the whole point is to revitalize the area to bring folks into the area, spend their money, bring in sales tax. It's um it's a win-win for the city and for the for that business district there. Okay. Thanks. Uh thank you. Uh, Evelyn,

I'm not done. My the next slide is uh

Okay, we'll go with slide 17. Oh, let let's go to 24 please first. So there is there is this revenue column and the expenditure column and just a snapshot it the first time I look at it and I see like forecast is 3% on the revenue side but if I look at the expenditure side I can see what comes out is the 5% % just by looking at this I'm already concerned. So now we can go to to page 14. Is that what I said? Or 17 here is uh page 18. So this is the general fund financial forecast for five years a snapshot again. If you look at this the goal is to look at the defits it should be going down but I looked and at if you look at 2728 there's a deficit of 1 million and then 28 29 5.6 6 and then 2930 is 11.8 and then 3031 is 19.2. It should be the other way around. It should be decreasing. That's my comment. May I respond? Sure. Yeah. Um, back to the original P page that you talked

about where the revenues were roughly around 3%. That 5% was specifically for benefits and that's an increase. The other areas of expenditures are increasing at different rates. But it is true and it is reflected here as you've just pointed out in our structural survey. If I'm looking on average the there's about 80 basis points between the expenditure and revenues. In other words, I'm I'm increasing on average overall 3% of I'm looking at the whole package on the expend on the on the revenue side. On the expenditure side, I'm I'm increasing overall in general about 3 80% 3.8%. This is this is sign this is demonstrated in our in our structural deficit. So that's a no. However, we do have mechanisms and I'm going to draw your attention back to the last slide where we talked about varial streams of revenue. We do have in our for we do we do have in our financial picture some some things that are coming into play that we still don't have sufficient information to bring this into the forecast and that is a deliberate choice because we are very conservative on how we budget revenues revenues because that's just best practice and that is not included in the revenues here. Once we get an additional trend data on those particular revenue work streams, we will bring them for consideration and deliberation to the council. But again, some of those work streams and I'm going to point to one that we've already identified in the presentation which is the potential business tax modernization. And so we do expect to realize some money from that. We're not revenues from that that has not been updated for 50 years or 40 years some 50 50 years it is

and um you know the perspective is is that we should see some gains that are that still keep us competitive with our colleagues in the Bay Area as far as attracting business or making sure that we don't scare business away because our business license tax is so large but also bring some additional revenues that really has essentially caught up with um inflation over those 50 years as far as business tax is concerned. So I do want to reflect that this is we're we have not put into there are certain revenue work streams for which we do not have trend information at this date. So to be conservative we didn't include them. We do expect to come with you mid mid year in the January February time frame with some additional information on those once we have certainty on what has or has not been collected. to address your question that is to address that that debt differential between in growth in the growth slope between revenues and expenditures that yeah I I got you that this is telling me that you don't have enough information to adjust this basically so as I always say revenue is a forecast expenditure is a contract you know so just keep that in mine because we need to increase revenue

and decrease expenditure. Very basic. Uh thank you all. Thank you council member. Thank you for now mayor. Thank you. I have questions still but I want to give the floor back to you. Thank you director LSE. Okay. Anyone else? We have council member Leen. Thank you mayor. Director Lse page 28.

Oops.

Thank you, mayor. Would you tell me what is in the uninsured claims payable? you can explain. I'll give that to Alice Burk who is our budget manager. Explain. Thank you. Good evening, council member and mayor. Um, thank you for the question. So, the uninsured claims payable is our workers comp um reserve. So, if we have workers comp claims and think that's where we have our monies. Um, is it possible to ask you for the list of claims?

I don't have that. I'm going to defer to our director of human resources. I want to be careful what I say about workers compensation and what information we can and cannot share. Okay, fair. Can can I clarify the council member's request before we even answer the question? Are you are you seeking the actual names of the individuals? Um, if I cannot get their names, I don't care about their names, but I just want to see how many claims are there in this um chunk.

I think aggregate data is is something that could be provided. That's I don't think that's an issue. But when you when you start tying names to it, then do you run into HIPPA and privacy information? No, doesn't have to be the names. Good evening, council members. Kelly Barley, HR director. Could you remind me which fund you were pointing to? Uninsured claims payable for three 3 million for where the assigned. Yes. Um I can't speak to it in any detail here but I will find out what I can and I'm able to share with you. Okay. Does that work for you? Sure. Okay. Okay. Got it. Thank you.

So we will bring that back to the next meeting or you can provide it by email. Council member. So, we're taking a list of a lot of the requests here and some of them we'll be providing. Um, I I don't know when how quickly be we'll be able to provide it, but we're not going to wait for the next meeting. If there's data here that we can quickly compile and provide the council, we'll do it in like a memo format to you as soon as we can get it together. Yeah. Okay. Thank you. That easy. Awesome. page 20.

She wants you there. So later, okay. Yeah, I I guess she can go back when she wants you later. She'll call you back. Okay. You want me to sit here? Yes. Whoever you want. Okay. So I'm looking at this key expenditure drivers. If I add the two together 79.1 and 19.9 that's 99. Uh would you share with me what is the other missing 1% is two.

Thank you for the question. um it is debt service which we pay on our lease our um lease revenue bonds and then the operating transfers out that we spoke of the 300,000 and the 500,000 and then we actually have a reduction that reduction of CMO and unanticipated expenditure that's actually a negative on the expenditure side we're taking money from that expendit from that pot of money that is also to support the IIAF contract and that was also council directed on November 19th, 2024. So that's the balance. All right. Thank you.

I have this. Okay. And there's one last one. Let's see if I can get my notes. Okay. I can't find it yet. So, I'm going to give the floor back to to the mayor. Thank you. Okay. Uh oh. Kelly left. And she'll be back. She'll be back. Oh, I found it. It is. Okay. Go ahead.

Page 15. Can you share with me or explain a little more uh with the cost containment and the operational efficiencies? So we um uh the cost containment and operational efficiencies a significant number of that is the effort that we have in managing how we recruit folks in other words how we bring them into the city when we hire them and that is done by a very structured process now and I'm going to ask our coun our dire HR director who is probably going to key my car after this but if she could come up and explain that process that would be very helpful. told you you should just stay here. Sorry, Kelly.

Good evening again. Kelly Parmley, director of HR. Um so you're referring to the strategic recruitment approach. Yes. Um I think over a year ago we enacted a process where we would review any vacancy that came up whether somebody retired, somebody left um and have used an approach with the city manager's office um in order to approve anything that would um be hired into those vacancies. So everything was scrutinized. Um it's kept us on track with recruitment in many areas but has allowed us to be very thoughtful about the positions as we evaluate them. Directors have to submit um a justification. It goes through several levels of approval and then um we make a recommendation to the CMO and they approve. Is that helping at all?

Slowing it down and being very thoughtful is the way I would shortcut it. Okay. So, how much have we saved on that process? I personally don't have an answer to that question. Um, I would have to turn it either over to finance or I don't know that we've sat Matt and had a specific answer on the savings of that process. We don't.

So, when you were explaining this page, LE, I heard something about the building department and the fire department. Those were reductions in levels of service that we took as part of the actions on June 3rd, 2025 to balance the FY2526 budget. Um, and then to get to your question regarding how much this pause has has saved, the thing that I would say to you is that, and Kelly, you're going to correct me if I'm quoting numbers wrong, but we generally operate at about an 8% number as far as vac certainly under 10. We are now over 10. We're just over 10.

We're just over 10. So, dad differential is effectively the savings. So, a 2% savings, which on a budget of this size is can be significant. We uh we could give you a rough estimate and we would be very glad to do that in an information memo. All right. Thank you. Thank you, Kelly. Okay. Thank you, L. I mean, one other way I would just translate that is we might have regularly like 30 vacancies in the city and 30 to 40 and now we're like up to 50. So, if you want numbers versus percentages. Yeah. Got it. Okay. Thank you. That's all I have. Thank you,

Director Kelly. I said don't leave. Okay. Again, I'm on page 28 and piggybacking on council member Lean's question on uninsured claims payable. And you mentioned that it's for workman's comp. I'm going to be I mean I'm relying on um our budget director to in fiscal language to say that that's what that is. I'm it was I wasn't recognizing it when I first heard it, but I expect that that's true. Yes, it's it's unplanned workman's comp payment.

Um no, I think it's either insurance or claims that we um have sitting in a reserve waiting in case they get have to be paid. That's my lay person's language for it. Um, but I can't I can't give you a direct answer right here. I need to go back and make sure I understand what that is and then what falls within that category. Okay. Well, one of the things that was not mentioned on the presentation which has been brought up by a number of the council members is the issue with overtime, right? Mhm. And it's really small in my department. No, not overall.

Okay. Uh I think it's specifically for the fire department and and one of the reasons that has been mentioned to me is the the issue with more workman's comp processing. Mhm. and explain what is the role of Sedwick administration. What do they do? Did you want I'm sorry for forgive me your exact question please. Pardon?

If you would repeat your exact question so I may answer it directly. Pardon? You're answering asking the what is the role of Sedwick administration right do we are they contract do we contract with I mean are they our consultant

so they are actually the folks who administer the program on our behalf so we pay them like most agencies right unless you had an entire team of of staff to actually manage workers compensation claims which I used to be part of a city where we actually had a team of people who did that. It's very costly. They would do all of the the looking at the claims, talking to the um to the injured workers. They would deal with all of the medical considerations. They would deal with the state board. They would deal with all of that stuff. The third party administrator is what they're called, a TPA. Sedwick is does that on our behalf. So, we pay them an administrative contract fee to manage the claims.

How long have we employed them? Um, their contract is going to expire a year from this June. How long have they been with us? So, I So, I'm just doing the math in my head out loud. Sorry. Uh, so I think they're on a 5-year contract and that means that we would have had them for four years. They've been here for two years that I've been here. So, go and do an RFP next year in order to see if there are other um third party administrators who might be viable.

Have we done a performance review on their effectiveness? Yes. So, uh I just received before I was away for a few days um essentially an audit report by an outside independent consultant who has given us a bunch of um a bunch of has given us a series of analysis and uh recommendations related to both how the HR team manages the program, how we have some risk considerations in terms of the risk function and then also the third party administrator. So, I'll be able to come back uh in a little bit of time after I vet it with the CMO about improvements that we need to make to the program, including anything that Sedwick would need to do.

The goal of this admin, I mean, consultant, if you will, is to expedite expedite to get our, you know, especially the fire departments healthy again to go back to work. Mhm. The feedback that I got is they're slow and that's the reason why we have we we got another rebound ready rebound tool. Explain a little bit what the rebound re ready rebound.

Sure. Um so first on the third party administrator I think one of the main recommendations that I see in the report that has come out that I haven't fully digested and haven't shared with the CMO yet is that we need to make sure we have a dashboard of key indicators that would help us understand if the third party ind uh administrator is on par with what they're expected for the first points of contact for followup with um medical doctors with uh uh engaging with individuals if they need to do um some sort of review of their case that sort of things. So, I'll offer that. Um, that's pretty standard and I haven't seen that yet from from Sedwick. However, um I just also want to remind us all that this is all positioned within a broken workers comp system in terms of the way that it functions and it's also positioned within a medical system where doctors don't cooperate with what they're supposed to do in addition to making sure that we're administered the way we're supposed to. So, Ready Rebound has jumped in. They launched the program uh right at the end of December and we've been working with them and their job is to specifically work with injured workers as what I would call an advocate um and a point of contact to ensure that the employee meets the expectations of the system as well in terms of their timeliness going to doctors and getting information back to us. And so far, I think they've got six cases that they're working and I meet with them about every week uh in order to sort out communication and see what progress they might be making with our public safety employees.

The bottleneck I think the way I see it is in ready rebound gets our employees prepared. But once they get into Sedwick, that's where it stays because the way I understand it, Sedwick needs to approve if the incident is workman's comp in order to be declared as workman's comp. And it takes months. This is my feedback to get that approval for our for our firefighters to to get the necessary medical help. And that's one of the contributing factors of of overtime.

So, so what I'm hearing from you, thank you for the push back on I need you to look at this Kelly, which is your understanding is is that the timeliness of Sedick is not on par with what one would expect and that that's causing the delays in fire that's then causing the overtime. So that's what I hear is your um your inquiry and um I can go back and I can see if that's actually true.

Yes, I would. But we know we know that if somebody's out on workers comp, it automatically is going to generate even even if they're on a on a trajectory to be returning to work in a healed fashion, any amount of time that somebody's out on workers comp is going to generate overtime in both potentially PD and fire because particularly in fire because of the staffing structure there may or may not be the case in in PD, but we certainly have seen that as well. So I hear you on the I want to understand uh how Cedric may be contributing to this problem and I can come back with you with some more information about whether or not and how that is true and what we would do to rectify that. Yeah, an example was given to me that that that one of the firefighters got injur injured and

um and okay, these are very there there are very modest cases here at the city of Militus and just by talking about one we could be revealing information. Okay, I don't want I don't want to do that, but I would like to have some statistical study to see how effective is this consultant of ours and how we can Yeah. On top of that, how we can do better because we have the ready rebound already to prepare our, you know, our claimments. Sure. And ready rebound is just implemented. So, this is a brand new program. It's being piloted and that's the best time to do it and

Okay, that's all I have, mayor. Thank you. Good questions. Thank you.

Anyone else? We have a vice mayor. I think I'm going to do it in three ways. Uh first is comment, then uh suggestion and then question. So so that uh hopefully we can everyone will will follow it including me. So my comment is you know we are 3 months to adopting the operating budget. We are six meetings away to do that in June. And uh a recurring observation I had is every time uh there is a question uh I keep on uh hearing and this is with doesn't mean anything. It's just that we don't have the information. We will come back to you about that information. uh the process is not done yet but we are six months away and three months three six meetings away and three months away and we need those information to decide in June uh how to adopt the operating budget. So my suggestion to that is if someone uh could make a tab a list right of each and every uh uh requests for information that we have including staff so that we have a timeline cuz me I'm forgetful I will ask something today you will tell me I'll come back for uh I'll come back with that information I will forget once we got get into uh so intertwined with a discussion of the budget which I believe every questions that we have either staff or uh council is very important on that decision making process we'll have in June. So hopefully somebody's having uh you know a listing uh what we uh are asking uh

you mean keeping track keeping track

yes please. Yeah cuz I Right. All right. With regards to uh 15 uh slide 15 please and this fascinated me really. All right. So uh this is our fiscal strategy in action. Right. First time I saw this is on February 2025 and uh up to and until uh prior to the end of the fiscal year of 27 we turn this into a positive number 2.1 million and if I further uh compartmentamentalize the the uh history right so since Feb to June that's 4 months we uh are able to uh claim 12.2 million to reduce uh the structural deficiency for about 43%. And then from June 2025 all the way to uh Feb this this this this uh February uh that's 8 months and we were able to claim an additional 59% uh reduction to what we had uh uh anticipated as structural deficit in June of 2025 to the tune of 4 4.5 million and then from the last quarter of 27 to to 28 eight uh we are projecting positive uh 2.1 million and we're anticipating if this is uh the right I mean this is how how we anticipate it we're anticipating 6.6 million raising 6.6 6 million again to arrive at the 2.1 million production that we will be positive at 2.1. So in a

span of a year and few months that crosses to the 2728 uh fiscal year. Can we have information right on what we did uh both on recurring uh actions you know that would justify this 12.2 million 4 months 4.5 million in 8 months and 6.6 million in 8 months projection. Uh where did they come from? First question is we know that some came from recurring uh sources right like a vacant position that we had budgeted before and now we eliminated that and that's why it's recurring things like that and then uh second one uh I'm hearing is you know from interest uh on money that we have right uh the the things the uh interest on general funds being stuck away for uh rainy days and is generating uh funds and uh cost containment right this has been a question since uh Feb of 2025 what cost containment efforts or actions we did you know that equated to the 12.2 4.5 and 6.6 6 million that we have projected for a year and a month that solve that assumably solve that the 28 uh.5 million structural deficit and also the organizational assessments as I said we're 3 months away from uh approving the operating budget in June and up to this point uh we are still I forgot how

many times you know we were briefed that it's nearing completion and on probably on the second or third or fourth prior to June uh study session we will pre be uh presented with each department's budget request. this thing that's being presented to us this early is just base and this base early projection is what we're using you know as the presentation. So if you go to uh slide 17 and I think this is where as they said uh the rubber hits the road right our projection for 2627 there is the 2.1 million right substantiated I mean projected by our efforts since Feb of 2025 and as uh as I see it although you know 2930 is for purposes of you know just future consideration we start to we start to decline again even the last two years of the 5-year projection declining and I don't know the rate from 1 million to 5.6 six and even uh you know forecasting without you know considering expected uh revenues as as we said right there's going to be at 11.8 8 considering that business tax didn't go through considering that what we are expecting in additional uh sales tax revenue doesn't go forward as as expected. So that's the question. So what efforts you know we're going to adopt the budget in

3 months. What efforts work aside from being presented that it had worked when we ask questions what what are the savings for for this one? we we don't have information we rely on uh um what is presented to us right so I believe that you know we can work things on this budget if not only if you assure us through your words that we have data to back it up but uh it's going to be more productive is as we speak both council and staff as we speak on the budget we have a a data in front of us for us to gauge and see if we're making the right decisions come June cuz 28.5 million in a year and 2 months we have eliminated that and I haven't still heard other than theories right cost containment uh recurring interest rate from IRAF or or whatever fund those are theories that you are telling us that had eradicated or will eradicate the 28.5 million for the year and year and 2 months that has been projected. So how could we be assured? How could we assure the community that what we are being represented what being what the community is being represented in uh you know solving the structural deficit is working and that it will continue to work and not as projected on slide 17 that after

the 2.1 million uh positive which as we all know that is uh council that that is from the general fund that that council initiated right the 2.1 million so it's not coming from anywhere other than the general fund itself so so I think that's how uh I suggest that we should proceed towards the adoption of the operating budget in June uh we present data we be ready you know because you're not just answering to the council you're answering to the community hey Did we get this you know I somebody calls us you know I cannot say I'll come back to you when stuff come backs to me right because it's a different gauge when you are uh on the grassroot than u making the policy decisions so I believe that you know when we were we are fed with the right information the correct data and the right uh formula then that's a more productive and more decisive way to adopt a budget in June. those deficiencies I've been uh you know asking ever since even before we started uh the budget so that's uh the comment last comment last comment is since June we know where we will going to get uh sources to solve the projected 28.5 million deficiency what is lacking not lacking partially right is the sales tax and usage All uh we have been looking at are things outside of other than of course the interest uh we generate from funds are those that are

things that we may control sales tax uh to and those things we can control then that's I'm going to throw that back to our economic development uh department What contribution we have been funding economic development uh uh uh department. What contribution what data do we have right to en to encourage us from from believing that efforts of the city is generating sales tax and it's increasing not only because of some measure that added 25% or some uh uh efforts that we have uh to to increase sales tax revenue report I'm getting is you have an increase, but it's based on some measure. It's based on something that is not contingent to our efforts to sell Militas and generate sales tax. I I think those information we want to hear so that uh uh and and the information that we've been asking to substantiate how we eliminated the 28.5 million. If we have that objectively, then we can rightfully decide what to do in June. Is is June uh something that uh we rely on or is June uh adopting of the operating budget is something that uh we formulated based on a good discussion and good data. And lastly, overtime. We knew already right that the overtime issue uh is uh mostly based on uh the staffing structure. That's why I I've been asking uh information on that so that if we

cannot solve it through uh whatever measure and it is a staffing issue then the council would be able to formulate policy changes to address that. But until now we I I haven't heard any uh explanation or uh you know information as to how does staffing structures affect overtime. I'm hearing side side things workers comp vacations things like that but you know these are the this factors are are things that beyond our control what I'm looking at as a solution is if indeed uh the issue of overtime especially fire is because of a policy consideration present that policy to us and let's see we will balance what is uh uh appropriate uh to see if there can be some pol policy changes that we can control to address uh the issue of overtime not only for maybe the other departments. What I'm saying is you know if we can't solve it on on a level that we're discussing maybe the solution is on a policy consideration and this council have uh the the uh uh power to change those policies if need to. So we look at the budget not only on on on several angles. I I staff is making I mean uh doing a great job but include us right include us by presenting to us uh you know good data objective one and good explanations because maybe the five of us may contribute something to better how we

adopt and u the budget in June. So those are my comments. Just list what we asked and then hopefully you come back to us timely so that all of us can look at this and and decide as we go forward again 6 months to June or six meetings to June 3 months to adopt the to adopt the budget from today. So in I'm hoping that in the next few study sessions we have all these informations questions of uh council member Cha uh questions for uh council member Lynn and Lamb. These are all uh factors contributing to to an explanation how we're addressing the structural deficit.

Yes. Thank thank you Vice Mayor Barbado. Is there anyone else that would like to make any more comments? Anyone? Okay, we have Lamb. Did you have a question?

No, that's it. You do have a question. Yeah, you might want to press share there. Yeah. Um, if if I may, um, with all due d respect, Mayor Montana, before I respond to council member, we respond to council member Lan's question, can I address a couple of the points? Yes, sure. That coun vice mayor bad brought forward.

Uh, I do want to assure you I hear note takingaking to my left to in two people. I also hear note-taking behind me and so we are actually taking very good notes. Uh the other thing I will tell you that certainly I will yes the 2.1 million is an artifact of the fact that the council did give us $2.7 million in reserves and also in reality the $800,000 that is coming out of a reduction of monies to the city manager's unanticipated funds. So together those are 3.5 that would be a 3.5 swing. So that that's not meant to be hidden or and and any of that. Um the benefit of having done a hybrid zerobased budget and the benefit of having transitioned from a less uh informative financial system to a more transparent final and a system that can allow us to provide more information is that we do have information on what's transitioned from prior budgets to this budget. So we do have that information and we will present that to you in a consolidated fashion over the next over the next number of presentations that we have. But we do take very seriously um the budget itself is a strategic document. It is it is a policy in and of it of itself and that is with the direction that the council gives us each and especially at this time of the year and certainly every single Tuesday that you we talk to you and so we uh we hear you. We uh as far as the overtime and the organizational assessments, I will defer to the city manager's office to provide you timing with with that, but we can certainly give you the financial information that you need and discuss that in in in a level of detail that I believe that you'll be comfortable with because it is uh it is an outstanding thing. I will tell you one number that

that we have. Um this year in FY2 for FY2627, we were able to um legitimately transfer to other funds that are not the general fund about $16.3 million between salaries and benefits. And this was not this was not a shuffling of the cards. Effectively, there were activities being performed and and other funds and other activities such as water enterprise, other funds like that. Uh even water sewer and everything else that were not transition that were not charged appropriately in the past. I'm not going to speak to how it was done in the past, but this year we have a very clear distinguished path to be blunt down to the penny of what is being allocated to those other funds. So that's another mechanism that you're seeing the results. Um but we can bring that level of detail back to you. We commit to on behalf of the city manager so we can get to council members lamps. We are committing to provide you much more detail over the next coming months. And of um acting city manager, would you like to add anything to that before we answer council members question?

I think we're good unless you have a a question in there.

We are sure of that information in the next coming months. We have three months. I don't know if uh you know that information that we have asked like the organizational assessment that we first heard in Feb of 2025 and uh the policy with regards to overtime which are big bites uh with regards to our discussion about the budget will come in time. So I I hope that few months uh comes in a month just so that you know it takes us a month to digest discuss and be ready on the third month uh for uh the June adoption unless uh you tell us that that's not necessary to uh adopt uh the budget in June.

Yeah, I I think that's I think that's accurate to the timeline that was shared with council last Tuesday on the Gant charge. think it's March, mid to end of March at the latest that we could expect those. So, I think that was delivered to council as far as the timeline and um to the best of my knowledge, I think we're a little bit ahead of schedule on each of those. So, I'm optimistic that correct, we should have the data by the end of March and so shortly thereafter, we'll start sharing that in briefings with council members. So, you'll have that information um as you're making budget deliberations. Okay. And vice mayor, I want to thank you for your comments and I welcome them. You know that. So, we all do. So, thank you very much. She gives us direction which is good. Appreciate the information too and the comments you know we both learn for this city. Yeah. Right. Thank you.

Okay. Thank you very much. Is there anyone else that would like to make any more comments? We have council member Chua. Thank you mayor. I don't know if anybody else is done with questions. I would like to request uh assistant city manager Kano. Can you please enumerate the the ask from all of us if you have it? Sure. Thank you. Um do you want to do that now or maybe wait to I I can do that now. That's fine. So and then if there's others I can Yeah, I think well I go one more round ask um I think we have council member Lamb.

You don't should I sorry I want to council Chu would you like me to I'll wait respond now or wait till council member Lamb's question. Okay. Thank you.

Um I'd like to go back to slide number 18. Um I just try to understand the okay second column amended fiscal year 2025 26 and then expend expenditure is 150.9 and then the base for fiscal year 2026 2027 is lower than the current here. Um is that um is this 147.1 based on the previous year's projection and we haven't updated that's why it's 147 since we know the number for this year is 150.9. Should we update the 2026 and 2027 number and so forth?

If it Thank you for the question, council member Lamb. The one big thing Thank you. Um that 150.9 about 3 million of that is that onetime grant. So, in the uh adopted and amended and in the amended budget that you this is the action that you just took for midyear, you there's about $3 million in a in a onetime grant that we got there that we're not getting next year. So, just that 3 million alone gets you down to 147. But to be clear, the f the base for FY 202627, that $147.1 million represents the expenditures that we expect to experience during the coming fiscal year. So it would not include any one-time dollars that we have to appropriate through through these actions. And that's why you see the 150.9, that's the big one. Um, we have to appropriate we have to appropriate money before we can spend. We can't I can't spend a penny without your permission. And your permission comes through a resolution that has an appropriation action attached to it. So even though it's one-time money, it still goes into our budget and it still gets spent both balanced and then because we don't no longer have that money next year in 2627. That's pretty much the big hit there.

Thank you. Okay. Um, as far as um overtime, I would like to see um um a overall a total dollar amount. Um the city span on overtime for all departments. Um and also a breakdown of the overtime on each department. Yes, we can provide that. Yeah. Yes, council member. We will be able to provide that and we're putting that on our list even though we've already have it on our list. Okay.

Thank you. Okay. Thank you, Council Member Lamb. Is there anyone else that would like to make any more comments? Okay. With that, um I guess we just uh note receipt and file. Is this isn't this is not

Yes, mayor. Would you like me to summarize the follow? And so just just to be clear, I I I'm not summarizing all the feedback we received tonight, just the follow-up action items. We're taking other notes on all the feedback and other people's notes will be combined with mine so that we capture everything, of course. But these are just the follow-ups. And I want to note some of this stuff we can provide extremely quickly by next week. Some of it will take a little longer. Um but we'll definitely keep council up to date and we'll keep we actually Julie already has a tracking list um of these requests so we can keep ourselves honest and make sure we're getting back to you. So, Council Member Lamb asked for the in the difference between the amended budget for 2526 in the final budget. Um, Council Member Chua asked for three years of funds um in the interest bearing accounts and how have we done the last three years. Um, sorry, my wording is a little off on these, but we'll combine the people's notes. The mayor asked for more information on the entertainment zone um and how we can allocate some of the funding possibly to improvements there. Council member Leanne asked about the aggregate data on uninsured claims that are payable and define exactly what is in that reserve to the extent we can. Um, Council Leanne asked for an info memo on the vacancy savings. Council member Chua asked to um do a statistical study on how we've been doing better um with our claims and on our consultant with Cedric. Um, Vice Mayor Barbadio asked for a clear um road map of how we got to where we did with the budget deficit. um the structural deficit changes um more assurance um with data um than than verbal and um kind of how much from each area um of you know cost containment and and contracts etc. wants to understand how our um sales tax and toot increases been have been influenced by our actual actions um through economic development and and the rest of the city departments. Vice Mayor Bardia wants data on overtime and how staffing

structures impact overtime so that a policy discussion can be had um that if the city council chooses to do so. And council member Lamb asked for the overtime dollar amount the city spends per department annually um overall as a city and then a breakdown per department on an annual basis. And we'll for that we'd probably look at calendar year 2025. Thank you. Uh I'd like to add one more. You know the business tax. Can you um I I don't I can't remember if you all gave us a list of all the cities what their business uh license taxes. Thank you. We I don't think we provided that to you, but we do have a comparative cities and so we will provide that to provide that. Yes,

that would be great. Okay. All right. Thank you. I think that's it. We're just going to note receipt and file this and then we're moving on to the next item. Thank you. Okay. So, mayor, we have to take a break until 7 p.m. Okay. Yeah, that's right. We got three uh 8 minutes or 4 minutes. 4 minutes. Okay. We'll take a break for 4 minutes. Come back at 7. Thank you. Thank you, clerk.

Okay, this meeting is now back to order and um we will do our proclamations and we have two proclamations. So, let me see. Okay, let's go down the to the podium and present the proclamations.

That's right. Yes. Hi, I'm Liz and my husband.

We're married 56 years. Oh my lord, that's a long time. Yes, it is.

You guys are a rarity nowadays. Anyway, well, I'm glad you're here. So, we're today we are going to do a proclamation for the Red Cross. So tonight we recognize March as American Red Cross Month and honor the volunteers, the donors and supporters who serve our community with compassion and dedication. For more than 140 years, the Red Cross has provided disaster relief, life-saving blood support to service me members and veterans, and critical emergency preparedness training. Here in the Santa CL County, the Silicon Valley chapter continues to respond when families face emergencies and need help the most. We thank the Red Cross for strengthening our community and encourage residents to support its humanitarian mission. Please so please join me, Mayor Carla Montano, and the Milpita City Council in proclaiming the month of March 2026 as Red Cross Month in the city of Militas. Thank you so much. And we have a proclamation here for you.

Say something. You sure can. We want we want to give Let's take a picture first. All right. Come on. What about your husband? Come here. You and have somebody. She'll take it. Come on over here by the console. And then you're going to say something. Any of you can say. What about his with his with his too? Yep. Thank you. Where would we be without a iPhone? Good thing I didn't bring a camera. Thank you very much. Remember when we used to pay a dime, put a dime?

Oh my goodness.

My name is Dr. Liz Deetsz. I am a 46-year volunteer with Red Cross. I started in Red Cross because I wanted to be tenured at San Jose State. Um, and I had to do two things. I had to go back and get a doctorate which I did and I also had to become a work in the community because my field was community health nursing and public health which I did and after I got tenured I just fell in love with it because it gave me grounding and it was very important. Now, I do not live in uh Mil Pedus. I'm sorry to say. I passed through here on on the road very very frequently, but we've had friends that live here. And our newest member of the board of directors, she's been with Red Cross now, Annie Chen, has been with us one month.

She is a mother and wife and has kids that live here and families that live here. We love to eat here. We Oh, yes. and and I've used the Kaiser service over here. So I've used many things but it's really important and I believe the original name dealt with the fact of a thousand um corn fields. That's how you got

yeah cornfield. We are in the midst of is interesting times and the fact that we need blood more than ever because of the number of surgeries that are occurring not so much from accidents but because of diseases and other kinds of things. We also continue to do our service to armed forces. Actually we've been doing that since 1881. I wasn't alive then. I will be 80 this month but I wasn't alive in 1881. Clara Barton started that uh the Red Cross and it's really important. We have youth programs. We actually go to um Militas High School because you have a JOTC Navy program. Both my husband and I are veterans. And so uh we pay attention to the kids and to the people uh at Moffett and all the rest of the fields. So it's really very important to us. We appreciate everything that you do and we want to make sure that you know that we are available 24/7. We just finished a crazy drill called Thunderbolt. And what would what happened was every single chapter had to go and open up three shelters and act as if they were going to be there for 4 days. That meant taking all of the equipment out, etc. So, we we do drills, we do other kinds of things. We want to make sure that you know that we're here in the good times and the bad times. Um, we'd prefer not to have the bad times, but that happens. And we appreciate Mill Petus. We appreciate everything that you do. And we thank you for this moment. Thank you.

Thank you. Thank you for your service. Thank you. and congratulations.

Very good. Thank you. I have Thank you. Thank you. Welcome. And don't forget to come back to Militas to visit us. Okay. All right. While you do your wonderful work, we get to go. All right. Let's do that. Uh, now if we have now the proclamation for youth arts month, is there someone here to represent to to bring this youth arts months pro to accept this arts month proclamation? Mayor, I'll share this with the office of education.

Okay, we will leave this here and you can take it with you. Thank you everyone. Okay, let's move on. So, before uh we adjourn to close session, acting city attorney, please brief the con the public on the close session items for today.

Thank you, mayor. You have two items on close session. The first is conference with labor negotiator pursuant to government code section 54957.6. The agency's designated representative is Rick Balanos of LCW. Um the employee organizations are Protek, Midcon, MEA, AAFF, MPOA and unrepresented employees. The second item is conference with real property negotiators pursuant to government code section 54956.8. The prop the uh APN for the property numbers are stated in the agenda. Um the agency's negotiators are assistant city manager Matt Kano, the negotiating parties of the city of Militus and the Militus Community Museum under negotiation are price and terms of payment.

Okay, great. Thank you. Uh so now we will call the any for public comment on this item and we will give you two minutes. Is there anyone from the public any cards? I have no public speaker cards, mayor. Anyone from the public that would like to come up and speak on the items that were uh discussed announced of the on the public on the close session items? If not, uh let's move on to close session. Okay.

It is now, what time is it? 8:31. And we will come back to order. Uh oh. Uh Mayor, I can Mayor I can report out of close session. Thank you very much. Um there is nothing to report out of close session at this time. Thank you very much, Mayor. Okay. Thank you. Okay. All right. Uh, did we do the pledge of allegiance? We haven't. Okay, we still have to do the pledge of allegiance or remember everything was we done everything backwards. Okay, let's pledge of allegiance. Who wants to lead?

I'll do it. Mayor. Okay. Vice Mayor. Okay. Great. Thank you. All right. Now, invocation. Council member Chua. Thank you, mayor. We come before you tonight with gratitude for the privilege and responsibility to serve our community. Grant us wisdom as we deliberate. clarify clarity as we listen and humility as we lead. Help us to seek understanding over division, collaboration over conflict, and the common good above all else. Bless the residents of our city, families, businesses, educators, first responders, and all who call this place home. May our decisions reflect integrity, compassion, and fairness. Give us steady hearts to make difficult choices and the courage to stand for what is right. May this council chamber be a place of respect, transparency, and thoughtful dialogue. Guide our words and action so they

uplift our community and strengthen the trust placed in all of us. Amen. Thank you, mayor. Thank you. Okay. Um, no, we have a comment. We have council member Lamb has a Council Member Lamb has a comment.

Yes. May I? Um, the first 15 days of Lunar New Year, also known as spring festival. Each day carries special meaning and traditional in Chinese culture. The celebration begins on no new year day and ends on the 15th day with the new new um nant festival. Today, tonight we are celebrating the 15th day of the new year so-cal net uh lantern festival. A beautiful tradition that marks the close of this festive season. This day symbolize reunion, harmony, and the first full moon of the year. As lanterns shine brightly, they remind us of the strength of family, the warmth of community, and the promise of the new beginning. M. Peters is a proud to be the diverse and vibrant city where cultures and tradition are celebrated and shared. May this year bring good health, happiness, prosperity to you and your loved ones. Thank you.

Uh thank you. But but you know, I guess that could have been done at during announcements. We're not at announcements yet, but that's okay. You It's already over. Okay. So, now let's move on to public forum. Members of the public are invited to speak on any item that does not appear on today's agenda. Please note that oral public comment may only be provided live at the city council meeting in person. Public forum will be limited to two minutes. Call for speakers. Anybody? I have one public speaker card from Voltater Monttoor.

Welcome, Mr. Monttoayor. Volter Monte mayor of Mel Pis on the yellow card says to the mayor. Anyway, of course, members of the city council and um city man active city manager staff, but I'm directing to the mayor. It's all right. I uh I always do this. Uh there was a speaker um this evening. I think they left or she left and she was in uniform. So I believe that's a Red Cross uniform. Oh yeah, Red Cross International. They're brave. Um the the people uh they are very brave people. Um I heard a portion a little bit and I believe they always uh conduct a blood drive and um sometimes at St. chance. Uh, youth art month. I don't know if there was a proclam. I believe there was a proclamation. I wasn't here yet. Um, simple art is valuable. Uh, it's a treasure. It symbolizes the meaning. Uh, the past, present, and future. Just a little and simple mark or point could be a happiness for all and a savior for someone. Thank you.

Okay. Thank you very much. Okay. Now, uh moving on to the announcements of conflict of interest. Thank you, mayor. Ask the mayor and each member of the Milia City Council to please disclose whether he or she has any financial or personal conflict of interest relate to any of the items on tonight's agenda. Vice Mayor Barbado, I have none. Council member Chua, none. Council member Lamb, none. Council member Leanne, none. Mayor Montano,

none. I further ask the mayor and each member of the Mil City Council to please disclose any campaign contributions of $100 or more received within the last 12 months from any of the parties entering into contracts with the city on tonight's agenda or contributions received from development projects for development projects on tonight's agenda. Vice Mayor Barbado, none. Council member Chua, none. Council member Lamb, none. Council member Leanne, none. Mayor Montano, none. Let the record reflect no reported conflicts. Thank you very much, mayor.

Okay. Thank you. So, I will read the Melpita city code of conduct. Be respectful and courteous. Words, tone, and body language do matter. Model civility. Avoid surprises. Praise publicly and criticize privately. Focus on the issue, not the person. Use electronic devices appropriately while on the console dis. Disclose conflict of interest and affiliations related to agenda items. Separate governing from campaigning. The council speaks with one voice after making policy on issues. Respect the line between policy and administration. Council will hold one another accountable to comply with this code of conduct. And now moving on to the approval of the agenda. Does anyone want to

Mayor, we took the approval of the agenda earlier today. So now we're going to do the consent calendar. Sorry, just throw it out. So we'll need uh consent. Anyone for the would like to approve the consent calendar? staff, do you have any changes? No changes. So, we have council member Leen that has moved to accept the consent calendar and we have Vice Mayor Barbado to that seconded the consent calendar. So, now we'll call and then we need to call for public comment. Public comment. I have no public speaker cards. Anyone from the public? Seeing none, let's call for the motion. So, that was the motion by council member Leanne. Yeah. Yeah. Sorry about that.

Then we'll call for the vote now. Call for the vote. That's what I meant. Vice Mayor Barbadio, I. Council member Chua, I. Council member Lamb, I. Council member Leen, I. Mayor Montano, and I am an I. Okay. So that consent calendar has been approved. And so then now moving on to uh public hearings. So we have city man city manager. Thank you, mayor. for a public hearing. What we have for council item number 10 is to conduct the 2026 weed abatement public hearing and adopt a resolution to abate the weeds. Today we have with us deputy fire chief and fire marshall Belton to present on the item.

Good evening Mayor Council Arthur Belton deputy chief functioning as your fire marshal here in the city of Malpus. And I'm going to see some slides hopefully come up. Um I'm here to present on the weed abatement program. Next slide, please. In February, this council adopted a resolution declaring uh weeds on properties a nuisance um and set the hearing for this evening. Resolution was sent to the county to engage the program. Notice for this public hearing was sent to the city clerk's office for publication in the local newspaper as well as being mailed to individual property owners from my office. Next slide, please. Background. This is the second time of three times that this comes before council each year. This evening is for parcel owners to come forward and state any objections um to being on the list prior to abatement of weeds uh that are placed on the weed abatement list and the associated associated resolution for this are included in the city council agenda packet this evening. Next slide please. Uh we have jurisdictional oversight for the entire city. The three exceptions I want to point out are those areas around the freeways and off-ramps. Those are the California Department of Transportation. Any areas associated with waterways are under the Santa Clara Valley Water District. And lastly, the median strip on Monagu Expressway um is handled by county roads and airports. Next slide, please. The process is that they will begin their inspection between April 1st and October. Usually the end of October is when they declare the end of fire season. After inspections are conducted, any owners are notified um given two weeks to abate any hazards that are identified. If the property owner abates, the only cost incurred is the inspection fee. If hazards are not

addressed, then that's when the county then hires a contractor to come out and do the weed abatement. As an example, you can see the fees last year that how that played out. Next slide, please. Recommendation open and close the public hearing following any public comment and adopt a resolution directing the county of Santa Clara Consumer and Environmental Protection Agency weed abatement program to abate the nuisance keep an account of cost and embody such account in a report and assessment list to the city council in accordance with the malpas municipal code. I'm here to answer any questions as well as Garrick Eioski is from the county we deabatement program here as well. Okay. Thank you. So, thank you um Mr. Belton. Um so, now I'm going to open up the public hearing on this item. Is there anyone from the public?

I have no public speaker cards. Mayor, is there anyone from the public in audience? We have Voltermont Mayor.

Welcome. Name was mentioned from Adidas. This is Volmont Mayor. Yeah. I always uh admire or uh commend the uh fire department and uh the city or I believe they always u uh understand the uh the side of the uh people having this weed uh by their uh lot. and I I think uh I've seen the future and it's not much of a a problem in Milpida. So, thank you, Chief.

Okay, thank you. And um we will go ahead and close the public hearing and then again, thank you, Fire Marshall Belton. And we will have council discussion on this item. If not, then we can ask for a motion. We have a William, Council Member Lamb. Um, just one quick question just to educate me. Uh, what's the minimum height of the wheat? Uh, uh, we look at 4 in. We do not get out there with rulers, though. Is really looking at more landscape. Yeah. So, is that can you

6 in? My apologies. 6 in. Wow. But it's it's to be clear, they're not going out there with rulers and measuring. It's more looking at a larger landscape and that that's sort of the differential. So uh is is that it? Okay. So is there a motion? We have uh council member Chua

none move to approve the the item number 10 based on the recommendations by staff which features item one to item one and two. Okay. Is there a second? And we it was seconded by council member Leen. Okay. Let's call for the vote. Vice Mayor Barbado I. Council member Chilla I. Council member Lamb. Hi. Council member Leanne. I. Mayor Montano. I. Okay. So, now uh item 11, Chief, I mean, city manager.

Awesome. Thank you, Mayor. Uh today we have for you item number 11 and the final item item of the evening which is the approval of issuance of tax and equity fiscal responsibility act also known as TEFR A tax exempt revenue bonds by the California Municipal Finance Authority for an amount not exceeding $25 million to finance the CA family apartments an affordable housing development located at 1355 California Circle and I'll pass it on to assistant city manager Matt Kano. Thank you. And and Hansen Hal who supports our housing team is online just going to give a quick two-minut summary of this item to you. And if you have more questions, he's available as well. Hansen, are you there? Okay. If not, I I'll go so I'll go ahead and continue. So, next slide, please, Susan.

Yeah, he is promoted. Okay. Yeah. No, I'm here. Sorry. Okay.

Um, yeah, this is the project location is uh at 1355 California Circle. uh is a project that's been approved already by the city council and uh what's being what you're hearing tonight is proposal by the California Municipal Finance Authority uh short for authority which is a joint powers authority formed in 2004 to assist local governments, nonprofit organizations and businesses um with the issuance of bond financing. Uh the authority is proposing to issue tax exemp multifamily revenue bonds an amount not to exceed $25 million to finance the construction of this project and the funds will be used for acquisition construction improvements to equip the project. Next slide. So um that summarizes what I just said. Next slide please. So the requested city council uh action it requires several local government actions. First uh the local government uh representative which is the elected body with jurisdiction over the area where the project is located must much must much must approve the bond financing. In this case it would be the LPA city council. The uh designated government representative also needs to hold a what's called TERA public hearing which was noticed uh um earlier this month on February the 18th and then also approve the resolution that's attached to the staff report. Next slide. So the the bond repayment responsibility is really the sole responsibility of the borrower and developer. The city has no jurisdiction or no part of the um not a party to the agreement and further the city will not have any financial legal

moral obligation liability or responsibility for the finance project or the repayment of the bonds. However, the city will um receive a portion of the bond issuance fee of about $13,500. Next slide. So, just real quickly, the family circles apartments was approved by the city council, the amended project just last year, a little less than a year ago. The developer of the project of these apartments are is the California Circle Family Apartments LP which is a parent company of Waterford Properties Company. They're actually a fairly large development company that's done both non um you know for market rate um affordable housing as well as owning and managing uh many commercial properties and certainly this project contributes to the city's goal for new affordable housing. Next slide. So just real quickly, this project, as I mentioned, is part of a larger project that includes 131 town homes. However, the bond financing only covers these uh affordable units in this apartment project. Next slide. So just real quick, the the project departments include 75 very low and lowincome units which represent uh about over slightly over 36% of the total units in the overall development. Next slide. So the recommendation before the council is to first conduct a public hearing on the requirements of the tougher act and then secondly adopt a resolution approving the California municipal finance authorities issuance of tax exe revenue bonds for the benefit of the California Circle family apartments LP

uh to finance the multifamily affordable housing development located at 1355 California Circle pursuant the requirements of TERA. Might also mention that the resolution does include a ZQA finding finding finding that the project is exempt from the California uh environmental quality act. And with that, that concludes my my presentation. Happy to answer any questions. Okay, great. Thank you so much. Um is are there any questions? Actually, I need to go to public hearing. first. Is there anyone in the public?

I have no public speaker cards. Mayor Okay. Anyone from the public? Seeing none. Okay. We do have Mr. Monttoayor again.

Thank you. I think my name is on record now. Uh yeah, I always go there at least um twice a week. I have friends and relatives there. uh down either I get the Milmont or uh the California Circle is is improving place. I um anyway I think it's a a positive note that um the city will get from get something a little bit of the fee as the issuance of of the u what's the the buns And uh eventually also that bonds is um um could be an investment like uh from the um borrower because if there will be a reuse uh generated from there then it will be a it will be a help for our lower interest. Thank you.

Hey thank you Mr. Mayor. And now um we have questions from our colleagues on this item. Any questions? We have a vice mayor. So this is a ministerial um role of the the city because uh it is within its jurisdiction. Uh but the financial liability lies with uh the developer. Is that correct? That's correct. Right. So, what will the city get out of this? Uh, aside from the 13,500.

Um, well, you know, the affordable units, you know, adding to the city's housing goals for affordable units. That's probably the primary public benefit u that the city's receiving is and it's also a purpose for these bond monies is to provide public benefits to jurisdictions such as affordable housing. But far as financially um there's no obligation of the city. City has no liability but but they will share this modest uh tax insurance fee. M so uh is it the same as uh regular projects? It goes to uh you know to our planning all the permitting and then once it's approved uh this is uh the last step for their financing or we do this first and they come to the city for approval of the project.

The project has already been approved. Okay. Yeah. Is have been fully entitled was before the council last April of 2025. In fact, at that time, the project was amended uh by the new developer uh to specifically qualify for this type of financing. Okay. All right. Thank you, sir. All right. Thank you. Anyone else? So, I have I have a a question. So, um how many years is this agreement with I mean

is is a tax credit financing? That might be a good question for for for Jared Satsuki from the authorities who's actually in the audience and could probably provide a little bit more details of the structure of the bond financing that's being thank you Hansen and good evening honorable mayor, vice mayor, and city council members. The regulatory agreement or the deed restriction is for 55 years. Yeah, five years. Okay, that's the standard length for um these affordable projects. And and then after the 55 years is over, then what happens?

They have the option to reapply to get it recented with at the property or it's um it could turn over to market rate. There are number of options depending on what the owner at the time wishes to do.

Yeah. Yeah, we uh and the reason why I'm asking we we have uh we had a you know there was there used to be um some apartments in Sunny Hills with uh section 8 and you know when the government built those or housing authority rather and there was I think it was 50 years but now after the contract ran out then the owner I think it was sold to a private private owner and then after that the uh low-inccome homes were not they they had nowhere to go. So, luckily the owner reinstated the low low income. But I guess my concern is it's you know it there's no um you know it's it's not ongoing. It's only 55 years. 55 years goes by really fast. So I guess we whoever I won't be around then but whoever deals with that we'll have to come up with that. But anyhow I was just wondering about that. And then also the other, you know, we we've had that o the odor issue was had the the buyers and well actually are you incl are you also representing for the the home the the home the homes that are to be bought or just the apartments?

Uh the the apartments specifically. Okay. I was just wondering you have the affordable units or the the project itself?

Yeah. Okay. Not the not the homes. See, I was just wondering if there was a disclosure on the air the air because every once in a while they get the the odor from the landfill. So, um, but before they buy, they should they should have they should be aware of the odor. So, there should be some disclosure there. And it's not doesn't happen all the time, but every once in a while they get that whiff, you know. Um, yeah, that's that's basically my my whole question was how long was the contract for and after that then what happens? Well, whoever deals with that, we we won't be around. I don't think so. 55 years. Okay. Anyway, that was what happened with the Sunny Hills Apartments. So, understood. All right. Thank you for that. Of

course. And now, anybody else have any questions? Oh, we have uh Council Member Lamb. Okay. Thank you, Mayor. Um this is 75 affordable rental unit. So um it's not for purchase. Um that means you guys has to decide the rental price. Is there a tier system you guys use?

Yes. So there's a the state agency SIDLAC, the California debt limit allocation committee, which consists of members of the treasurer, controller, and governor. They have a rent schedule that the the rents in different the different counties need to adhere by that qualify at the different AMI levels. I see. And um if you compare this with section 8, which one is better in term of the renter paying rent? The section 8 rents? I I don't know off the top of my head, but these in order for these projects to get awarded the tax exempt volume cap and to win the 4% tax credits, they need to meet these federal affordability levels that have been set by the state and this project does so.

It's the AMI that drives the the cost, right? Okay. I'm just wondering if if someone applied for section 8, they would they might get better deal than renting this unit. The question would be are those uh cuz section 8 could be for anybody that so your your apartments can al also rent out to rent section 8. So vouchers orin from the develop the owner of the property is also on the line. Orin are there any section 8 units at this property?

Give me just a moment to promote him please. Orin should be joining in just a moment. Just an uh an FYI, we can't change any anything on the contract because it's it's already been approved. It's just for information only. So, but but it's good to for it's just good for us to know. Yeah. Just Absolutely. Good evening, council. Can you guys hear me? Okay. Yes.

Good evening, city council and honorable mayor. Thank you guys for the time. Um, yeah, as Jared was mentioning earlier, just to answer some of the questions. So, currently there are no section 8 vouchers assumed in the project on the on the projectbased voucher side. There could potentially be tenant-based vouchers who come and would like to rent the units. Um, and and the mix of AMI at the project is anywhere between 30% AMI to 70% AMI. Okay. Are you done? Okay. I guess we're we're done. Oh, one more question.

So, uh, cuz, you know, there's quite a few people that call me and they their their rents have been increased and they're, you know, really, I guess, hurting. And so who will they go to if they want to apply for these below these uh affordable rental units? Yeah, absolutely. So, we actually will have a pre-leasing and marketing plan that uh we will share and and work with the city with Hansen on um probably about 3 to 6 months before we begin lease up. Um and that you know and another thing mayor is uh we will also have a local preference for employees of the Militas Unified School District. Oh great.

Uh for the project. So we were working handinhand with planning with with Jay Lee um and and kind of you know coming up with the best marketing strategy for the project to serve the public. Um, and now we've been working closely with Betty Chan and the building department, engineering department in plan check, uh, with the target construction start date of June of this year. So, the project is really progressing forward well.

Yeah. And and if I could just add to that, we're in we're in the pro we've drafted a affordable housing and regulatory agreement uh for this project that's uh undergoing internal staff review. So, this agreement will spell out all the city requirements for the project as required under the city's inclusionary housing ordinance and the approved entitlements. Thank you. that well we are we are so grateful that um this developer was is building affordable housing that's real affordable housing you know that's low to low because it's hard for a lot of people to to find housing and uh it's going to help our housing element as well so we're really happy that this project is going through. So with that, is anybody have a would like to make a motion to accept or anyone have any more questions? We have a vice mayor.

Yeah. Thank you, mayor. So I move to uh adopt a resolution approving the California Municipal Finance Authority issuance of tax exemp revenue bonds for the benefit of uh California Circle family apartment LP to finance the multifamily affordable housing development located at 1355 California Circle pursuant to the requirements of the TEF. Okay, great. I second that. Okay. So now, uh, let's call for the vote. Vice Mayor Barbadio, I. Council member Chua, hi. Council member Lamb, I. Council member Leanne, I.

Mayor Montano, I. Congratulations. Okay, now let's move on to our announcements and any future items. Uh, acting manager Hernandez, would you like to mention anything? Just a big shout out to all the staff that presented today and to council as Well, I think we had a healthy and productive conversations this evening. I appreciate it all. Thank you, mayor. Thank you. Any council members? We have a council member Chua.

I have two I have two items briefly. The first one is it has come to my attention that our current process of filling a city council vacancy when a member does not complete their term relies on an ordinance that has remained unchanged since 1976. After conducting initial research and consulting with the city attorney, it is clear to me that this policy warrants a thorough and timely review to ensure it reflects the current law and best practices. I therefore ask the city attorney's office to utilize a previously authorized 4 hours to prepare a legal brief for the council. This brief should include the ex the existing framework, identify any legal or or practical gaps, and provide recommendations for updating our ordinance to ensure it is current, defensible, and align with the modern governance governance standards. And I want to thank the executive team for bringing this uh issue to me. Thank you, mayor.

Okay. is abs well so they you just want four hours of work which doesn't actually require consensus or it does require more than you can uh so for consensus Vice Mayor Barbadio I council member Chua hi council member Lamb I council member Leanne I mayor Montano hi I also want to thank the city acting city attorney for for answering my questions thank you yes and and I can absolely get that briefing expeditiously to council. Thank you. Just for clarity, that was also discussed uh during my briefing. Uh so Oh, okay. I didn't know that. Oh, I did. I I wasn't briefed on it.

Oh, okay. That's why we're getting this brief. Okay. Okay. Thank you. Um is that it? Did you said you had a couple? Okay. Okay. Well, now we have uh Council Member Lamb. Oh, I have a couple. Yeah, you said you had a couple. Sorry. Uh March 8th is International Women's Month. and and there's a suggestion for myself and parents from mayor to honor at least up to however you want maybe it depends uh two each two each women for for international women's month

so it will be presented on March 17 right city attorney I mean city manager That is correct. Okay, here you go. So, who do we send the names to Matt? It'll be Send them to I I'll be off next week, so send them to Julie. Julie, we'll get you an email. Julie will send you an email tomorrow with on this. Awesome. Thank you both. Thank you, Mayor. Do we need a consensus on that? You do not. Okay. Anyone else have any announcements? We have Council Member Lamb.

Uh, yes. I'm um currently the liaison for uh science technology and innovation commission. Uh a number of people has approached me saying the name is too long and some doesn't remember the names. So um I brought this to the commission uh on the our last meeting and we have consensus of most of the commissions agree well actually all the uh commissioner agreed uh to change the name and I propose uh change it to technology commission and um all commissions agree to that. So I um I'm proposing a name change for that commission to technology commission instead of science technology and innovation uh science technology and innovation commission.

Okay. Can I piggy back on that or would you like to amend that to include the library commission because right now it's the library education commission because it's kind of redundant because we already know commission uh to the library commission uh well William Lamb. Um would you like to I'm not leazison for that. Would you like to include that? Uh if if it's okay with the leazison I'm not sure is council member Lynn the le for that I have I haven't heard any complaints on so maybe they don't know that they can change it maybe maybe ask them when next I'll ask them when I meet with them

ask for mayor okay then we'll do that mayor if I could briefly say just um we are tracking a um a council priority item for consideration at the April meeting that um you made on November 18th, 2025 to review city commission names and potential naming. So if this getting consensus tonight, we can kind of add this to that item for further discussion. Okay, that's great. So we don't need to do a consensus. It's already on there. I mean, you already it's already in the in the

We are coming back with um feedback on this item and discussion on this item at the first meeting in April during prioritization. Um however um if this name that council member I would suggest you gain consensus if that's okay because then the specific name that council member Lamb mentioned if it gains consensus we have that we should do it all at once you know come back we should do it all at once when he when they come back with the because it's already in the pipeline. Oh you want to do it April April. Okay. You want to do it in April? Mhm. Yeah, we we'll we'll add that and then and then council member Lynn's going to ask the library commission as well. Yeah, either way is fine with me. Um so we'll add that when you bring that back.

Yeah. Um right now I'm proposing technology commission. Um and um and all 100% all the commissioners support me on that. Yeah. And then we we went there might be another one that might need to be changed too. Okay. All right. That's just information only then for you. Right. Thank you. and that the item it'll be part of the prioritization. So we won't be doing a specific action at that first meeting in April. Um but it'll be we'll get direction from you at that meeting on this item. Okay. So okay. All right. Uh anyone else? Okay then this meeting is adjourned. Thank you everyone. Good night.