City Council - Special Meeting

Two o'clock.

Good afternoon, everyone. I will call this special joint meeting of the Milpitas City Council to order and with the Housing Authority on June 9th, 2026. City Council meeting is available for instant translation in over 60 languages with Wordly. It's accessible via mobile phone, computer and video displays. So by scanning the QR code on the upper right-hand corner of the agenda, you can find that. So back to today's business, City Clerk Guzetta, please take the role. Vice mayor of our deal.

Here council mature here council member lamb yeah council member Leanne here mayor Montana here.

Okay, so before we adjourn to close session city attorney Curtis please brief the public on the closed session items for today.

Thank you mayor there's one item for closed session today, it is public employee performance evaluation. pursuant to government code section 54957B1, employee position, city attorney.

Thank you very much. I will call for public comment on the closed session item. Please note that tonight's public comment will be limited to two minutes. Is there anyone from the public that would like to make a comment on the closed session item?

I have no speaker cards for the closed session item, Mayor.

Is there anyone on the floor that would like to make a comment? OK, seeing none, we will adjourn to closed session. Members. Okay, it is now 5.10. We will come back to order. We will, what's that noise? We will, if the city attorney has anything to report out.

Thank you, Mayor. There is no action to report at this time.

Okay, thank you for that. Okay, so now we will rise for the Pledge of Allegiance. Everyone rise. And who wants to lead? Okay, we'll have Councilmember, Vice Mayor Barbadio lead the Pledge of Allegiance. Oh, sorry about that. Okay, so now we will have the invocation, and Council Member Lam, would you please? You have the honor.

Thank you, Mayor. As we gather this afternoon in the month of June, let us take a moment to reflect on the opportunities and responsibilities that come with serving our community. Let's approach today's meeting with wisdom, patience, and respect for one another. May we listen with open minds, engage in thoughtful dialogue, and work together to address the needs of our residents. Even when we might hold different viewpoints, let's remain united by our shared commitment to serving the public interest and strengthening our city. May our decisions be guided by integrity, fairness, and a vision for a brighter future. honor the trust that our residents have placed in us, and fight to make choices that benefit our community today and in the future. God bless us all.

Thank you very much, Council Member Lam. So now we will move on to the public forum. Members of the public are invited to speak on any item that is not 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.

So call for speakers, city clerk. For public forum, I have one speaker card from Rob Means. Hey, welcome.

Good afternoon, Council, and welcome to Milpitas, Mr. Hopkins. Hope you have a long stay here. I'm going to bring folks up to date a little bit, and perhaps yourself also, about the VTA, the Valley Transportation Authority. They were investing somewhere in the neighborhood of $10 million a week in digging the BART burrow. And that concerns me because I don't think that they're going to get the funding to actually finish the project. So I spoke to them, and this is what I said, that most board members believe that somehow VTA will secure the funding for the BART burrow over This past year, I have argued that the $5 billion from the federal government won't come because the corrupt Republican regime hates California. So let's say we force the regime out of power in 2029. What mess will we inherit? The regime is actively destroying our government agencies along with standard policies and procedures. How long will it take to rebuild a system that doles out $5 billion? And will the system be the same? Or will a new one be created that ranks low those projects with poor ROI numbers, return on investment numbers, like the BART borough? How long is the VTA board willing to wait before thinking about plan B? We have a representative from the council on the VTA board and the rest of this council also needs to back up whatever decision will be made because it's affecting all of us taxpayers. Please consider that moving forward. Thank you.

We have one more public speaker card from Yoli Garcia.

Hey, welcome.

Good afternoon. My name is Yoli Garcia. I'm a longtime resident at Milpitas. The recent issue regarding our Milpitas pantry is very concerning. And I'm hoping before any city decision is made, the council will allow and schedule a separate meeting for Milpitas residents to be able to come in, make comments, and have a discussion. Thank you.

I have no additional speaker cards at this time.

You have no more?

No additional speaker cards, ma'am.

Okay, is there anyone from the public that would like to come and speak? Okay, we have Mr. Montemayor. Welcome.

The mayor, vice mayor, members of the city council, our new city manager, and staff. Thank you. Anyway, I have a short one too. I just want to express my feeling of what's happening in the world and some calamities, some problems out there. You know what I mean already. But anyway, as I heard from the invocation, I like that. Thank you. This is Council Member Lamb. um yeah we had 10 topics of public hearings and the leadership but i used to uh anyway this this should not be mistaken i used to finish the whole meeting but this time maybe uh some people i cannot be in two places at the same time but i'll try to be here and uh

it's there's a lot of decision here so uh we hope that we'll decide to the best of our community thank you okay thank you very much is there anyone else okay with that i will close the public hearing so now moving on to the reading of the city council code of conduct mayor we still have to have the conflict of interest in campaign contributions

oh that's right go ahead city attorney uh thank you mayor at this time i would ask the mayor and each city council member whether he or she has any financial or personal conflict of interest related to any of the items on tonight's agenda vice mayor barbadio i have none council member chua none council member lamb none council member lian none mayor montano none I'd ask that the reflector that sorry, I'd ask that the record reflect no reported conflicts. And Mayor members, the the MoPEDA City Council, I would ask that you also 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 project applicants for development projects on tonight's agenda.

Vice Mayor Barbadio.

None.

Councilmember Chua.

none council member lamb none council member leanne none mayor montano none i'd ask that the record reflect no reported conflicts okay thank you for that and so now moving on to the milpitas console code of conduct i will go ahead and read this one here uh 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 dais. Disclose conflicts of interest and affiliations related to agenda items. Separate governing from campaigning. The console 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. Okay, so now moving on to the approval of the agenda. Does anyone have any changes before making a motion? Anyone? Council Member? We have Council Member Lin.

Okay, hold on a minute. No changes on it, Mayor. Move to approve the consent, the agenda.

Second. Okay, so it was a motion by Council Member Lin to approve the agenda and seconded by Council Member Chua. So let's call for the vote.

Vice Mayor Barbadio.

Aye.

Council Member Chua.

Aye.

Council Member Lam.

Aye.

Council Member Lam. Aye. Mayor Montano.

Aye. Okay, thank you for that. So next we'll move on to the consent calendar. Does staff have any comments to make? I don't see anyone. So let's see if it's okay to proceed with the agendized item. So we'll call for public comment on the consent calendar. Anyone from the public?

I have no public speaker cards, Mayor.

Okay. So I will, I am going to pull item 4C4 and item C5. And is there a motion? And there is this. I need a motion and a second.

So we have Council Member Lin. Move the consent item except for C4 and C5.

I need a second. Second. Okay. So it was moved by Council Member Lin and seconded by Council Member Chua. So let's call for the vote.

Vice Mayor Barbadio.

Aye.

Council Member Chua. Aye. Council Member Lamb.

Aye.

Council Member Leigh Ann. Aye.

Mayor Montano. Aye. And I am an aye. Thank you. Okay, so the so city attorney, should I go ahead and discuss this, the one that I pulled or wait till after?

I would say mayor's prerogative. I'm each council does slightly different. So where everyone put in the agenda.

Okay, I'm going to go ahead and I'll go ahead and wait till the end of the of the agenda. Alright, so then now moving on with to public hearings, city manager.

Council item number 10 is adopt a resolution to approve the fiscal year 2627 proposed operating budget for the city of Milpitas the Milpitas housing authority approved the physical 2627 games appropriations limit authorized various financial actions physical policies and budget guidelines and amend the classification plan for alignment with the FY26-27 proposed operating budget. The minimum wage increase and salary schedule consistent with previous council actions. Our staff contact on this is our finance director.

Good afternoon, Mayor Montano.

We have one council member that wants to say something. I guess before we start, go ahead, Council Member Lam.

The City Annual Budget Plan is one of the most important documents reviewed by the City Council each year. It reflects our community's values and priorities, determines how public funds are spent, directly influence the quality of service facilities and programs that support our residents and business throughout the years. As council members, it is our responsibility to carefully review the budget, ask questions, and ensure the taxpayer dollars are being used effectively, efficiently, and transparently. It is also our responsibility to provide effective oversight, uphold accountability, and ensure that public funds are managed responsibly and in the best interest of our community. Reviewing the budget and asking questions is one of our most important responsibilities as elected officials. The budget is hundreds of pages long and involves hundreds of millions of test dollars. For that reason, careful review, detailed analysis, and thoughtful discussion should be encouraged. Effective governance requires preparation, engagement, and respect for colleagues who diligently carry out their oversight responsibilities. Our residents deserve a council that is informed, thoughtful, and committed to understanding the budget before making decisions on their behalf. By taking the time to review the details, evaluate priorities, and discuss potential impacts, we can make some financial decisions that strengthen our city's fiscal health and ensure public resources are used in a manner that best serve our community, both today and in the future. Thank you.

Okay, thank you for that. Continue, City Manager. Oh, we have one more here. Council Member Lin.

Thank you, Mayor. And at the last Tuesday's meeting, we've gone through the budget. All questions were asked. Answers were given. And most importantly, we have the interim, the acting chief, not acting chief, acting city manager. And our new city manager confirmed that that was a solid document. So I move to support and adopt this and not to discuss further.

Are you making a motion?

Yes, I just did. OK, thank you for that. There was a motion on the floor. Is there a second? Seeing none, it died. Let's move forward. City Manager?

Can I comment for a minute?

Well, since everybody is making a comment, I guess it's appropriate to go ahead and let everyone make a comment if they choose so.

And this is just one time.

Sorry, Mary, it's going to be brief. I just want to thank Council Member Lam for reiterating the duty of a council member and hopefully with everybody here, since the room is full, that we understand the process of budget and We come to a dialogue and see what we can do to pass this budget tonight. More questions later. Hopefully the questions will answer questions that would help us make a decision prudently with regards to the adoption of the budget. I'll reserve.

Okay. Is there anyone else? All right.

Is there anyone else? Okay. Let's move on.

A city finance director? Good evening, Mayor Montano, Vice Mayor Varadillo, Council Members Chua, Lian and Lam. It's a pleasure to be here tonight with you. To my left is the city of Milpitas budget manager. Before you are all the directors of the city, and they come here along with others to provide support in answering any of your questions. I do want to once again say thank you to my colleagues for their work and their teams for putting in a significant effort into the document that we produced. I have no intentions of doing a presentation today. I think our time is best served responding to any questions you might have. Our presentation from last time is available if you want to talk to a particular screen. I just ask for your patience. in pulling up that screen. We have provided you with significant amounts of documents to respond in writing to many of your questions and we will continue to fulfill those requirements. Some of those are pending a little bit of deeper dive, but in essence that we stand before you at your service to answer any questions as you wish.

Any comments from our council? I personally would like for you to do show the slide because I think that the audience deserves to see what the budget is and then the questions will come at the end. Of course. Okay. Are you guys okay with that, council members? No questions till at the end.

Good afternoon, Mayor, Vice Mayor, and City Council. I'm going to briefly go through our presentation that we did for you last week over the 26-27 proposed operating budget. This will include our five-year forecast, the budget adoption, and the recommendations. Next slide, please. Included in this, we'll go through our budget process and calendar, the economic outlook, our five-year forecast, narrowing our structural deficit, our gap, showing the changes from last year to this year, our budget overview for 26-27, the proposals, which will have a net general fund impact of $0, go through our reserves and our Section 115 pension trust fund, a quick capital improvement program update, and one-time funded projects that we had been brought up previously. And we'd like to have those for consideration. And then finally, we'll close it out with recommendations.

Next slide, please.

Okay, so this is just the budget process in our calendar. As you can see, this is a strategically long-term budget process that we do that starts in December with our statistically valid community survey. We give our CIP came to you in February. We came back in March with our preliminary five-year forecast. We came back in April for the user regulatory five-year fee study update. In May, we did the CIP adoption and our community employee town halls. And then in June, last week and this week, we are doing our budget adoption, hopefully bringing the budget for you to consider and adopt, as well as you approved last week the specific fees. And we'll bring back those at a later date, the ones that were not part of that process. Next slide, please. OK, so our economic outlook, the MOPEDIS You can see our unemployment is setting at 3.7% as of March. Our US inflation is 2.4%. And the Bay Area CPI is 3.8, which is our median home price is $1.585 million. And then, as I mentioned before, our Section 115 pension trust fund which was originally established in 2022, I believe, was at 33 million at the time that we started this. It's grown to 44.6 million. Next slide, please. Our five-year forecast is updated from the original presentation we provided you back in March. This is because of updated numbers, updated expenditures and revenues, which is expected. Our current, for 26-27, we are estimating a surplus of $1.3 million, a small deficit at the moment in 27-28 of 1.6, and finally, over the five-year forecast, a deficit of 16.6 million. Bring in mind, though, this is a reduction from the prior last year's final forecast that we had brought you originally we had a 16.4 million in february of 2020 um 25 26 in that february forecast and that's been brought down to 6.2 in um in our forecast for 27 28 i'm sorry 28 29. But in the out years, we brought that forecast down from structural deficit of $40 million to 16.6 this year. Next slide, please. So refinements since last, since March when we originally brought this forward, Originally, we had brought forward that the adopted amended budget at mid-year was $150.9 million. For 26-27, our proposed budget is now for general funds. It's at $152.1 million. Some of the refinements include additional revenues that have been more favorable with property tax from our county assessor. We've had increases in service levels for our equipment. We had 11 proposals. This includes what's in our proposed budget before you today. Please mind that all of the proposals net a zero impact to the general fund. There are 11 in total, and there are increases in some of our enterprise funds and our vehicle maintenance fund. CalPERS actuarial update had an increase of $1.5 million to our forecast and then our CMO unanticipated expenditure reserve was reduced by .8 million for this is in line with the IAFF contract that was approved by Council November of 2024. Next slide, please. This is just giving it to you in a different perspective. Our five-year forecast from last February of 2025 to tonight, we had a $40.8 million structural deficit forecasted to you back in February of 2025. Through a lot of hard work of our city departments and staff, we have reduced that forecast structural deficit to $19.6 million as of today. Next slide, please. So now we're going to go into our budget, our proposals included in the 26-27 proposed budget. Our total budget for 26-27 is $292.2 million. I'm sorry, make a correction to this. It's actually $292.3 million. There is a typo here. And this is for all funds. So this is for the general fund, which is 152.1 million, our CIP of 33.8, And then the rest of our enterprise and special revenue funds make up that $292.3 million. We also maintain staffing levels of 451 full-time permanent staff. Next slide, please. This is just giving you the breakdown. You used to see the $100 bill. This is committed to you in that same context. So if you were to take $100, This is how we would allocate that $100. Public safety remains very high with our community and our organization at $39.58 is what we would take of that $100. Next would be our neighborhood and housing at 22, community wellness at 18, and your economic development and job growth at nine, and our environmental at six, and rounding that off with our transportation and transit at three. Your governance and administration supports all of your council priority areas. So just keeping that in mind. Next slide, please. So as I mentioned earlier, our net general fund impact for general fund proposals is $0. In total, we have 11 proposals being brought forward to council. 94% of those are funded outside of the general fund, which is $2.2 million. 2.28 of that is in your equipment maintenance fund. 38,000 is in our water and sewer funds. And then we had some other adjustments of a net savings of 68,000. General fund, there's a dollar for dollar offset of the $131,369 in proposals that we brought forward. 131,369 are new fit spending. We have matched revenue or cost savings that have been identified to net those costs out and eventually get you to the place of zero net general fund dollars added to the budget. Next slide, please. Here's a list of our general fund proposals. Again, as we mentioned, that are net to a zero impact to the general fund. We have proposals in our recreation department for the After the Bell and summer camp. and facilities rental staffing. We have in the city manager's office reduced grant consulting services. In our police and fire, we have an injury navigation, or better known as Ready Rebound. Our city attorney is a law clerk internship. IT, information technology, we have some system investments. in our public works department and asset manager staffing realignment, and finally in our finance department, the reclassification of the purchasing agent. Next slide, please. The investments that we have outside of our general fund, as I mentioned, we do have some proposals that do hit some of our other funds. We have $2 million out of our equipment maintenance fund to fund 11 vehicles that have reached the end of their age and useful life and need to be replaced in order to maintain a safe, reliable, and compliant fleet. We have another $281,000 to our police department out of that equipment maintenance fund to fund four vehicles that have reached their useful life and meet the thresholds for replacement. And then there's a utility engineering reclassification position that nets to our enterprise funds of water and sewer funds of $38,000. As I'd like to just reiterate, these proposals at the end of the day have zero general fund impact and no draw from our general fund. Next slide, please. So this is a slide for our reserves. Our current general fund reserves sit at $89.5 million. In addition to that, we have our Section 115 pension trust fund of 44.6 combined. That equals $134.1 million in reserves. Out of those reserved, we have our contingency reserve and budget stabilization reserve, which, based on council policy priorities, maintain a 16.67% or two full months apiece. of operating expenditures in those reserves of $23.4 million a piece, and those have been maintained intact throughout this fiscal year. We have other unassigned and designated reserves equaling about $19.3 million. Outside of that, we have our other components, which are your per stabilization reserve, your turf replacement, technology replacement facilities, Those are our other types of reserves we have, which equal about $14.7 million. Insurance, contracts, and others are about $7.5 million. And then we have non-spendable asset reserves of $1.2 million. In this budget, that was... We do have some use of reserves, but this was due from a prior approval in November of 2024 at the time of approving the IEFF labor negotiation agreement, that MOU. This would be the final year that council had approved use of reserves, the per stabilization reserve at $1.9 million and 0.8 or $800,000 in the future deficit reserve were included in that. We maintain our ERAF. excess eRAF litigation contingency reserve, we are setting aside 18% of any of that excess eRAF monies into that reserve based on the county's recommendation pending the conclusion of that litigation. And we will bring that forward when that time comes. Next slide, please. So quickly, I'd like to go over the one-time funded projects that have been funded either in last year's budget, so in our 25-26 adopted budget, or were brought forward during our November and December study sessions that you allocated one-time resources to consider. So already funded but would need additional money if they were to continue would include your Milpitas summer college internship, which goes through the summer of 2026, the Ring Doorbell Initiative of $60,000 storefront crime prevention of 100,000, expanding the emergency motel stay, library improved security and maintenance at 150,000, and the expansions of the Milpitas Youth Force. Currently, the expansion of the Milpitas Youth Force is funded through summer of 2027 based on the action you took in December, but additional funds would be needed if we wanted to bring that out past summer of 2027. So that brings us over to the potential one-time funding on the right of your screen. The expansion of that Milpitas Youth Force would need an additional $40,000. I'm not going to read all of these dollars to you, but would need additional funds to extend it through summer of 2028. We have our Ring Doorbell Initiative, the Care Solace. These are all items that council brought up in May to discuss. The choir and band support, which would be a reduction of revenue. there, Milpitas Smart, and our community center of roof replacement. Next slide, please. So our staff recommendation to you today is to adopt the resolution approving the 26-27 operating budget in the amount of $292.3 million, approve amendments to the 26-27 proposed operating budget as presented Here, amend resolutions number 1626 for the classification, additional positions, and amended allocated positions, the minimum wage, and the salary table and schedules to align with the current memorandum of understandings that exist today. Next slide. Thank you for your time. And we are open for questions.

OK. Great. Thank you, staff, for that great slide show that you have I know you have worked really hard on that. So, I wanna thank everybody for being here, but I wanna also point out, I want to point out that this is a proposed budget. It's not an adopted budget. It's proposed. And we, the council, have a right to do our due diligence that the voters voted us in, to do our due diligence, to ask questions, to make sure that we have a good, solid budget. That's all. And as far as public safety, you can see 39.58 million we love our public safety we we we you are number one we most of our city money most of the money goes to public safety so i'm just here to tell you that we're not going to kick the can down the road and we are here to do our due diligence to make sure that taxpayer dollars are being spent wisely this is why we are having a discussion And we're not going to, for my one vote, I'm not touching, we're not touching, I'm pretty sure that we're not touching public safety. We want to make sure that all of our citizens are protected. We love our public safety. So the only thing that I can see is that the council has a few, they've seen a few inconsistencies, that's all, and that's what they're questioning. So I just wanted to make that clear that we're not gonna be kicking the can down the road because we do have a structural deficit. And if director, finance director, can you please explain to the audience what a structural deficit is? Because a lot of people don't know.

Thank you for the question, Mayor Montado. What a structural deficit is, is when essentially your revenues are not meeting your ongoing expenditures. And a structural deficit is when that gap widens. So the city has a structural deficit at the fifth year of over $19 million. And that was brought down from our February number of $40 million. So we did a great job this year of reducing that greatly. But we do need to take steps. to essentially flatten both the trajectory, which we have, but essentially close that gap. We have, and effectively, it's a very, structural deficit is very simple. In the out years, you have your revenues are outpacing your expenditures.

Thank you for that. So I wanna make sure that the audience is clear that we have a structural deficit. Our job as elected officials is to try to bring down that structural deficit. So we won't be kicking the can down the road because you don't know. The way the world is now, the petrol dollar has gone down. The value of our dollar is not as what it used to be. It's a multiplier effect. So we just have to be prepared. We're one of the very few cities that have a, more of a wise way, we're more prudent. And thank God because we want to make sure that we have public service, public safety, that our public works, our streets are being kept up. So we're one of the very few cities in the Bay Area that have a very prudent, conservative budget. So I just want to bring this back now to the council. And again, we want to make wise decisions. So don't take it the wrong way. It's just we're doing our job. That's all. And again, public safety is always going to be number one in this city because that's what the voters want. Okay, does anybody have any questions? Back to the council. We have Council Member Chua.

Thank you, Mayor. Director Luce. I've asked this question last time, and I asked this question again at my briefing yesterday. If we turn to Ms. Quesada, can we show a slide? I think it's slide 15. It's page 14 on the budget, proposed budget binder. I think was slide five. Is it five? It's the five year general fund forecast. Thank you. Perfect. Thank you. Thank you, Mr. Sarah. Ms. Luce, I ask you, I want to bring this 1.6 down to zero or positive. My question to you is, how can we do that? What areas do you recommend that we can do that?

Council Member Chua, forgive me, but I forgot to ask a public hearing. I'm going to open up a public hearing. Then I'll go to the council. Okay, you know, I get too excited. Okay, I'm going to open up the public hearing now on this item.

Yes, Mayor, we do have several speaker cards. I'll call them out in a row, and then the first is going to be Jacob Stock, followed by Brian Ton, and then Jason Speckenweir.

So welcome.

Thank you. I'm here with the Milpitas Professional and Technical Association. Our members are engaged in the ongoing work of planning and developing the City of Milpitas. We ensure our residents have safe buildings to occupy, clean water to drink, functioning roads, and adequate light by which to traverse them. Our members staff city facilities and operate the programs running from them. when this council decides to provide a service to its constituency or a public space for them to enjoy it's we our members and city staff more generally which make those things real as council continues its deliberations tonight on the city budget it's my hope it will recognize the immense body of work it represents not just my own work and that of my colleagues who spend our lives providing the services presented in its line items, but of those who have spent themselves preparing it for your consideration and the work of this and previous councils whose past deliberations are embedded within it. This council faces hard decisions today about how to allocate the finite resources at its disposal and the knowledge that each cut represents real citizens who will go without a necessary service or a real piece of infrastructure that will go unmaintained. However, as council considers these matters, I know it will do so in a manner which affords the real lives involved the respect all human lives deserve. Thank you.

Next, we have Brian Todd, followed by Jason Speckenheuer, and then Mayra Zuniga. You're welcome.

Good afternoon, Mayor, Council, and professional fiscal staff. My name is Brian Todd. I grew up in the city of Milpitas, and I lived in Milpitas. I'm a proud police sergeant, and I'm also the president of the Milpitas Police Officers Association. Yesterday, I emailed a letter to each of you about my association's serious concern with what I observed last week during council discussion over the adoption of the city budget. It was clear to me that several council members were driving an agenda that failed to recognize the central role city workers play in ensuring a safe, clean, and vibrant Mopedas. There were discussions of a five and even 10% across the board cut to city services. You see, when some of you demand or demagogue about cuts, To city departments, you're really advocating to cut city workers and services we deliver, such as answering 911 calls, responding to violent crimes, fires, or medical emergencies. City workers pave our streets, fill our potholes, approve new construction, and staff our libraries and senior centers. When some of you advocate for cuts, tell the community, tell the city workers, who goes on the chopping block? What service will be cut and for what reason? Several members of the council advocated cutting services, even though a proposed budget before you last week would have preserved services. Yet for some reason, and a reason I can't figure out, the budget process was hijacked last week for some performative show and our professional fiscal staff that provided clarifying, explanatory answers to off-the-wall questions. Our professional staff were treated very dismissively. What was the reason for that? I want a safe, clean, and vibrant Mopedas that honors and respects its civil servants that deliver quality services to our residents, businesses, and visitors. I hope that each of you come to City Hall wanting the same thing. This is not what I observed from some of you last week. Mopedas deserves better.

Thank you. Next, we have Jason Speckinoyer followed by Myra Zuniga.

Hello, my name is Jason Spangenheuer. I am a member of the Milpitas Police Officer Association. I have been a Milpitas Police Officer for 25 years, and I'm proud to wear a uniform that represents the city. Last week, city council budget discussed, shown me and many of the city residents that there is a serious disconnect that some on the council have in regard to our city budget and what that budget funds. A large portion of the budget funds personnel. That personnel are city workers. They are very city workers, and they deliver direct services to our residents and to our businesses. They are the city workers who respond to 911 calls. They are the city workers who fill the potholes in our streets. They are the city workers who process building permits within these very walls. And they are the workers who enforce our city codes and maintain our city's infrastructure. Last week, there was talk, some of the council randomly cutting 5% or 10% of the balanced budget that the city's professional staff presented to you. For those who advocate for those reckless cuts, tell us. Tell the residents and the businesses. Tell us what you would cut. Our city workers deliver services to the Milpitas community. So if you want to cut them, then have the courage to tell everyone, including your constituents, what services do you want to cut? Is it fewer police officers, fewer firefighters, fewer building inspectors, or maybe fewer public work employees? A cut to any of these workers from any city department amounts to a reduction in services for this community. The frustration of city workers is growing because it is clear that a few on this council have minimal regard for us, for our families, and the work we do for the betterment of Milpitas. Your words and your actions matter, and it's time to stop pitting city worker against city worker and start supporting the very people that keep Milpitas running. And in case you forgot, it's those of us in the room, not you on the panel. Thank you for your time.

Thank you. Next, we have Mayra Zuniga.

Welcome. Good afternoon. My name is Mayra Zuniga and I have been a police records clerk for the last 10 years and originally started with the city in 2015 as an HR assistant. I'm proud to work for the residents of the city of Milpitas as I grew up and I'm a product of Milpitas. Last week, the council discussion surrounding the budget went down so many unnecessary rabbit holes that I was worried I was going to step in one and twist my ankle coming to City Hall today to speak. Taxpayers expect a return on their investment when they fill the City of Milpitas coffers with their hard-earned money. That return on investment consists of a safe, clean, and vibrant Milpitas that keeps its small-town feel and its welcoming and neighborly vibe. That return on the taxpayer investment consists of ample and quality city services delivered by qualified and dedicated city workers. What your city workers constantly hear from many on this council is how expensive workers are, some question why we receive the health and dental benefits that we do, and others decry the affordability crisis when running for office, but forget that the affordability crisis impacts Mopeta city workers just as much as everyone else. It's time for some on this council to stop playing the fiscal game of Milpitas is broke and therefore city workers should do more with less. Reserves are stuffed with cash. Revenues have exceeded expenditures for several years and Milpitas enjoys an excellent credit rating. Residents and businesses want you to invest in the city workforce so that we can continue to deliver services and work toward for towards for a safer, cleaner, and more vibrant Mopedas. Not only do I understand the importance as a city employee, but as a member who serves this community outside of work. I am the co-commissioner of Mopedas Pals Soccer and have used the services of Park and Rec, Public Works, Police and Fire, where we heavily rely on their services to keep Mopedas youth programs alive and safe. I have heard feedback from non-city residents when they come to our fields and use our restrooms. Now that's a topic for another time. It's time to stop playing games and support your city workers. Thank you.

I have no additional public speaker cards at this time, Mayor.

Okay. Is there anyone from the public that would like to make any comments? We have Mr. Rob Means. Welcome.

You know, it seems almost since... the Reagan years, that I've been hearing about cuts and tight budgets, austerity budgets, et cetera, et cetera. Why is it that I hear it always on the cutting side instead of on the revenue side? We could get more revenue into this city by charging those folks that are, and let me rephrase that, charging those corporations and billionaires for the toxic products, for the freeloading, the extraction that they're committing on the residents and businesses of our community. There's a long list of things that we could tax that would actually benefit our community. Top of my list is diesel exhaust. tax that somehow, either tax it by taxing people that own diesel-fueled vehicles, or right there at the pump. A 2% tax on a gallon of diesel fuel, for example, is not something people are going to be driving out of town to get more of. It's just not big enough. I see a 10% split across the street at some gas stations for gas. That 10% is a lot larger than, say, a 2% enhancement revenue for dealing with the toxic chemicals coming out of a diesel vehicle. We're talking 40 different carcinogens. Particulate matter, that 2.5m that they talk about that is so damaging to people's lungs, aggravates or even causes asthma, that's just the first one. And I've got a list of about 40 different chemicals that the corporations dump on us. We ought to tax them.

Thank you. Is there anyone else from the public? Okay, so it appears we have Voltaire Montemayor. Come on up. Welcome.

Thank you, Voltaire Montemayor Milpitas. Yes, we should be proud living in Milpitas. The main thing is the city is trying to help everybody. But really, sometimes we help extend the full extent We cannot multitask workers, just to say some, but on the side of the city, in some extent, examples, we cannot be like other examples of like, I don't know, should I say, kind of chapter 11. Is that right? So in other words, it's really tough. But as I heard the speakers, I think multiple sides of the reasoning and needs. So we really maximize the hope not as much possible and not to cut at all. We will, hopefully we'll have some ways to have some resources and that's all. Thank you.

Thank you. Okay. So is there anyone else? Now I'm going to close the public hearing and move on to our council discussion. So the last person that spoke was council member Chua. And I think you wanted that slide.

Bringing the slide up down.

Do you want us to do the lunch and then?

Okay, we're going to keep going.

Okay. Thank you, Ms. Gussetta. Your response?

I have been working at the City of Milpitas for two years now. My anniversary was, yes, good heavens, isn't that amazing how time flies? And I think you all know me well enough that I am continuing to be and will always be a conservative CFO, no matter whether I'm working for City of Milpitas at a $292 million budget or where I was the functional CFO for a $6.1 billion commuter rail system out of Virginia, or whether I work for a $2.5 billion organization that provides transit support for 26 to 28 agencies in the San Francisco area as a funder.

I have passed tax measures in my time.

I have found large large numbers of money through TIFIA and WIFIA and negotiated and been the primary negotiator on several significant revenue sources, including a deal which funded our $6.1 billion project out in Virginia with a mix of toll money, cash, community facility districts, TIFs, parking fees, passenger fees, toll road fees, cash, grants, and I could go on forever. I don't like to talk about that experience because it makes me sound fat-headed. And I'm not fat-headed. I am proud of my experience. But all of that has been through deliberative thought with partners and colleagues. So when I'm asked to present something in a short period of time, I am inherently uncomfortable. And you see me do this at the dais. So I understand your anxiety. I'm going to be honest with you. I'm likely more anxious than you are. Because if you all remember, when I first came here at my first meeting, I was asked by a prior council member, why are you here? And my response was, because I see opportunity here. I still see opportunity here.

Yeah, I remember. Council Member Chua, I want to interject first. I want to make it clear to all the council members that we need to show respect. Even our tone, I mean, even in our code of conduct, our tone, our body language, all that matters. And I think that's probably one of the issues that I heard. Respect, respect, respect, respect is what is so important, how we treat one another. So I just want the council to be mindful of that. That's all. OK. Please continue.

Am I being disrespectful?

No. Respect. I'm just putting that out there. It's in general. I think the mayor meant in general, not you. Oh, good heavens, no.

If I am, my apologies. It's never been. My apologies if you have a sunset. And the reason I'm giving you my resume, which is embarrassing in its nature that I have to do that, is I do know how to find money. And I do know how to find reductions. Because on the other side, I was a budget officer for Loudoun County, a $3 to $4 billion organization.

We trust you. I know you trust me.

Then trust us. And trust us to provide some time and do this deliberatively.

So, okay, my question is, I'm looking at 1.6 for the year 27-28. How can we make this zero?

The way we can make it zero through budget balancing measures on both the revenue and the expenditure side. But once again, that will take time. I will tell you that I am planning to bring a couple of bond refunding measures to you that will realize about $350,000. And that's actually a rehearsal for issuing a bond in two years, two to three years once we have a master plan, a master infrastructure plan, so we can really look deeply at our assets and position them better and put them into a state of good repair so we can use our committee, our facilities for the near future.

I'm not talking about future. I'm talking currently based on the data that made up this 1.6. Where can we, how can we make this zero?

You would, if you want us to, we are already in a position that we can do that, to be honest. We expect to have additional funding at the end of this year.

I don't mean this year. I mean now.

I'm not going to answer that question. I'm going to ask you to give us time to go back. If you want us to do this, I would ask the council's indulgence to essentially come back with a budget balancing measure. We could do this, to be honest with you, frankly, right now. How? by assigning one-time reserves. But you know, and I know, council member, that is an option. I know. That's one of your options. It is certainly one of the options, because that's precisely what that budget stabilization reserve is for. That's what the name of it is. And you could use that. But my preference is not to use that. It's to explore other methodologies.

Thank you. What other things do you have in your?

We have a significant amount of money in our unfunded actuality library, our investment in our retirees and our current employees, all of us, including you, your retirees as well. And so given the fact that we have those extra dollars set aside, the concept would be to take those dollars that we have deliberately set aside for that purpose and effectively reduce our debt on an ongoing basis.

So what do you call this bucket?

An unfunded actuarial liability. It's colloquially called a UAL.

And where would I find that in this proposed budget?

It's not a baked idea, Councilmember. It requires some time to think about it because it would require some measure of thoughtful preparation. because we would have to educate everybody, including myself, even though I've done things similar to it. So we would have to do that and do that in a measured fashion so we could do it the best way possible. The quick way, as everybody tells me, is to effectively pay down some of our public safety UAL. But however, I question how we can do that without, we have to be paced about how we would take money out of our, of our reserves, which are specifically for this purpose and reduce our ongoing costs. Because if you, I don't know if anybody, I've refinanced the properties that I've owned, if I see a better interest rate. And effectively what we're doing is reducing our ongoing payments. So there's that, there's refunding, there's, and I'm talking, and we also have Rivian who had its first quarter, its first months of revenue as well. Then if we could look at others, we could also look at the other sides as well. We could look at the expenditure size as well. But that would require us going back to the departments and really evaluating what levels of service we could proffer. But that would require guidance from the council.

Did we do that in the organizational assessment? That was the whole purpose of the organizational assessment.

It was the purpose of the organizational assessments. Unfortunately, those are not completed. To be honest with you, and candid, those things take longer than they're always expected to take. And they were not done in time for us to present them as part of the of the budget discussions. And in some areas, while we have already implemented, we have already proposing two options that were raised. Everybody needs to stop teamsing me. Thank you.

Everybody stop what?

Folks are sending me reminders because they think I'm old and don't remember things. So anyway, so, you know, quite frankly.

Everybody's texting me.

Please text me. Yeah. Anyway, so, and then of course, see, now you guys, I've lost my train of thought. So we can look on the expenditure side, but that would require us bringing you a portfolio, a basket, for lack of a better phrase, of options for you to choose what services you don't want us to provide anymore. And someone has reminded me of the business tax. The reason I don't talk about the business tax is that still has to go, frankly, to you all to discuss and, frankly, to the voters to discuss. So if you don't think I'm not counting the Rivian money, I'm certainly not counting on that. But the things like the UAL are money that we already have in our hands and are best applied to doing things and reducing long-term debt. I hope that answers your question. But once again, Council Member Chua, it is time because you want something that is thoughtful, is well known. We can educate not just us, but you and the community. And they know that we are using our monies, their monies, as best we can. So those would be my options. I would suggest providing the city manager at his discretion to essentially bring back budget balancing measures at mid-year. And that's how I would address it. But my intention would be is that with all due respect, Councilmember Chua, I'm not looking at the 1.6. I'm looking at the 19.6. And so how do we do that? And these mechanisms can take us closer to that. But again, we'd have to Monte Carlo the hell out of the scenarios, make sure that they're right, make sure the numbers are right. And if I bring you a half-baked idea, it's going to be exactly that, half-baked.

I still can't grasp why it would take long. I mean, you have the data now. I understand you're being conservative in terms of getting your data, but I don't see why, there's obviously some, The data that came out of 1.6 should be there.

I just came from San Jose and I led an effort for the, and I'm sorry, this sounds like I'm running my resume down, but I feel like I have to. I just came from San Jose. I was the assistant director there. I led the effort for the clean energy folks to get their first credit rating AA, tops, tops. That effort has resulted in a multi-billion dollar deal long-term that saves them eight to 10% per year on their costs. Long effort, that took a year. That took a year of planning, education, education ourselves, educating the community, educating the council. Again, all I can say is we have a year, we have a surplus, we have known revenues that are coming in, I'm not counting on business tax, I'm not counting on business tax, until January, 2028, because we don't know what that will be. And frankly, the voters need to come and say, this is okay. So it is remarkably presumptuous of me to say that business tax is a factor. What is not in doubt is that we do have the available dollars to pay down our long-term retirement debt, but we have to do it well.

OK, granted, you gave me, I think, five options. Correct me if I'm wrong. One is tapping reserve, and we're not going to do that. Number two is the UAL, the unfunded account liability. Number three is an input to this is the result of the organizational assessment. Number four is looking into the portfolio, meaning the expenditure and the revenue projection. And the last one I heard is budget balancing measures.

Those are all meant That fifth one are encompassing the first four. So that's everything.

Now my last question is, how long do you think is the UAL? You said mid-year.

We would be fairly far along in designing the program. But once again, we're looking at a program. We have to look at the program itself. We have to see which, it's easier to explain if you've mortgage to house, although that's not quite what we do, but effectively we pay down future debt. So we're paying it down with today's dollars.

Is that a policy consideration?

Thank you for introducing that because I would have to bring that as a policy.

Okay.

And that requires time.

Well, what time are we talking about?

Council member, again, this is a city that would be new to that concept. So my concern is that when I bring it to the council for a vote, I would want a 5-0 vote. And not because I think it's, I would frankly want everybody on this team to have their support.

Is that a year, two years, five years, ten years?

We would, again, I'm going to say probably a year to a year and a half because part of our portfolio goes longer than a year. And part of our portfolio goes two years. So I have to sit there and figure out the puzzle pieces. Gotcha.

Okay. What about the, when is the final organizational assessment be presented to?

I'm going to defer, I don't know who, well, city manager, I'm going to defer to you.

What are you talking about? No, seriously.

Thank you for your support.

Seriously, I'm aware of the organizational assessment, and there has been some delays in it. So hopefully, we anticipate within the next 90 days or so, we hope to be able to present that.

Okay. Thank you for not putting me in an awkward position.

If you do the expenditure and revenue, how long will that take?

This would be, I'm going to restate what I believe is your question. If we did the revenue, the tax, the debt refinancing, which is about $330,000, but it frankly, the only reason we're doing is frankly a rehearsal for two years from now, where we have bigger debt challenges. But we will realize about $330,000, but that's also More money goes to others because it's shared debt. But your question, let me, I've wondered. Your question is about how long it would take us to look at the revenue and expenditures as the budget stands today. I'm not.

Just at this amount. I don't want the whole thing. To make it simple.

To make it simple, frankly, we have money left over this year that we could apply through a policy that would basically take care of that. And we've already done that mechanism. We did it last year.

Okay.

So we can make it zero.

I asked this question before, policy on reserve. And I think you answered my question on that one. And okay, I'll bring that up.

Thank you for your question.

Thank you. Thank you for your answers.

Thank you, Council Member Chua.

I have a quick question for Luz. The Rivian money in the future, will that bring that 1.6 down? Yes. Okay, that's good.

I will share with you, and I will share with you, I cannot share their data because it is confidential. What I can share with you is a preliminary look at their first quarter, which started February 27th and they opened their ribbon cutting with February 27th. We had roughly a month, about $170,000. If you flatline that out, they look to be below their 1.9 million that they're expecting, but to flatline that out, it would be irresponsible. And frankly, my concern on the other side is what does that represent as far as their opening day sales? When you look at sales of anything that's opening, there's also what they call a pre-opening book. So you'll have a lot of sales on the first day or first week or pending. We also are looking at how they're moving their cars around because before we had the hub, They were moving them around to other cities like San Francisco and other showrooms. So we're going to see how much of that traffic comes to us. They're also releasing their newer, smaller, less expensive vans and vehicles. And so we're going to see what piece of sales we're going to get of that.

Right, but I just don't want to be dependent on just the Rivian. And there was a previous speaker that spoke about revenue generation, revenues. And we've been saying this for the longest time. We need more revenue generation businesses to come into Mopedas. And I'm glad that we have our new economic development director that will That's her task to bring in more businesses to Milpitas so we don't have to have a structural deficit. That's one of the goals of the council. That's why we hired anyone. But yeah, I just wanted to ask that quick question. Is it going to bring that?

Yeah.

And so any revenues will bring that down. And that's, I think that's the focus. We got to bring that. Yeah. Okay, so anyone else have any questions? We have Council Member Chiu again.

I forgot to ask Director Lue. If I want a policy that says any surplus for the year should go to bring down the structural deficit, where would that be?

We do currently have a waterfall policy, as you well know. You adopt it every year in the budget documents, in the budget book. That can be modified at any given day, provided with proper notice and guidance from the city attorney that you're sitting at the diocesan voting. Our waterfall policy could do some work, to be honest with you. And we wanted to do that this coming year. That's going to be challenging as well because that's going to require study sessions. But looking at it, there could certainly be a position for basically directing some of those extra revenues that we have elsewhere to perhaps a structural fund for the city manager to provide their direction specifically.

Thank you.

And in both those things, I have some language for you that I can propose.

I'm looking into a policy that if there's a surplus, like we do according to slide 5, 1.3, I want a policy to bring that over to address the structural deficit. How do we do that?

If I, can I read something into the record? Let me give you, if I may, I'm going to have a suggestion and speak clearly. The city council directs the city manager to develop for city council consideration, a policy establishing a purpose specific reserve within the general fund reserve waterfall to be funded from year end available fund balance after the budget stabilization and contingency allocations are satisfied. The policy shall specify the funding priority, any annual or cumulative caps, permitted uses, and the appropriation approval required for expenditure, and shall be returned to the City Council for adoption as an amendment to the fiscal policies. So we could bring something back in the, Not during the summer, but in the September quarter? Is that the fall quarter? No. For consideration.

Can we do it now? Effective for this budget cycle.

if we would need relatively specific language to be able to adopt anything that would be affected now. I will say I had initially thought that these were contained in a separate policy document. I was corrected. It is within the budget itself, but it's relatively limited language. um there are some details that would need to be worked out in terms of the specifics of the number um if the council is able to get to something very precise today we could do that as part of the action otherwise what i would be recommending is language similar to what director luce had mentioned that essentially would be to bring that back yeah there are some policies here in the in the budget book yes and and my what i'm looking for so how specific do you want do you want a percentage or do you want well i i give me guidance and what we would need is something that is sufficient such that the finance director would know know exactly when the money would need to go and how much money would go in um so i might look to director to lose a little bit in terms of if there's a suggestion as to a specific know percentage is potential but if what you're talking about is say a specific amount say the 1.6 to be able to cover if i understood your question member to a 1.6 to be able to cover that that structural deficit in the next year um there we may be able to work out language that would accomplish that and if that is the desire i actually might ask for when the council gets there i might ask for a brief recess to be able to possibly workshop that language a little bit with staff and then be able to come back to you

Okay, we can have a recess now.

But I want to be clear as to what the intent is.

The intent is to address the structural deficit. And since we're saying that we have a surplus, so I want, and you're asking to make it more specific. My question now is, when is this amount, Director Luz, when is this amount 1.3 firm? Because that's the only time I think, meaning firm, meaning it's what the projected is the actual.

For that year, in 26-27 or for the year that we're currently in?

You're projecting that we have 26-27 surplus of 1.3. When do you know this is real?

Every year we bring to council your annual, what's called the waterfall. And that generally comes to you in the December timeframe. That comes after our audit is complete. Because that's when we know that we have met all our financial obligations. And so it comes in December. You all take an action to adopt the waterfall. You receive the audited report because you can't do anything about it. It's not it. But what you do at that point in time, for example, last year we had also, coincidentally, $6.2 million available to us. the bulk of which went to our budget and contingency to fund those two months, 16.67% in each. And then the subsequent amount went into that additional PERS fund. And that PERS fund is based on whatever we budget at the beginning of the year, minus whatever is actual. That balance by your fiscal policies goes into our effectively Not quite our section 115 trust. We don't do that transaction. We keep it in house and we invest it actively within our portfolio. So we've increased that.

Oh, sorry. I'm sorry. If I may, there's one thing that I wanted to make sure was clear. I think Director Liz was saying that that 1.3 becomes firm in December of 2027. Yes. So just to make sure, because I don't think that's where I was headed.

But thank you.

That's what I'm looking for. Oh, yeah. That's the time we can say whatever amount to go to the structural deficit.

Yeah. But you would, which you would know, the structural deficit when we do our forecast. Again, a forecast, you would see the condition of that. But we already have talked, and Allison, do you want to talk about the potential of what we're looking at for 2025-26? That's the year that we're currently in.

Good evening. So currently, our sales and property tax revenues are coming in above what we had originally anticipated, in the ballpark of about $4 to $5 million this year. So one of the recommendations I brought up to Director Luz was based on how we did the budget last year when we balanced our budget for 25-26. We recognized additional revenue that we knew we were going to see at year end and allocated that towards the deficit to balance the year. Currently, we are assuming a $1.3 million surplus for next year. But in the current year, in 25-26, I'm projecting at least $4 million in excess revenue that I would recommend we could put, ensuring that the city attorney agrees, we could add to that 1.3 structural surplus appropriation that we included in the proposed budget on page 21 of the proposed budget. I like that. I'm sorry, not 21. On 39, page 39, we have an appropriation called the structural surplus right under your fund balance that holds that $1.3 million right now because we have to balance to zero, right? which number is that what so on page 29 page 39 what and under the financial information section yes And if you look about two-thirds of the way down the page under the fund balance, you'll see a line that says structural surplus. And we added that as a balancing line, right, so that we're fully balanced with our revenues and our expenditures. What is the item name, please? The item name is called structural surplus. So it's about two-thirds, three-quarters of the way down the page. Oh, okay. 1.2, the 1.27, which rounds up to 1.3. That's where that $1.3 million surplus that we're projecting for 2627. Okay. If we wanted to, again, based on how we did it last year, allocate another 1.6 million after our books close and we've reconciled our expenditures on our revenues and add that to the structural surplus appropriation we're looking at would fully would fully balance your 2728 budget of 2.9 million dollars oh i like that so we're looking at december 2026 correct did you get that city attorney

so it's it's uh i like that so i don't know how to the verbiage would be but that would address the structural deficit of the city based on that policy uh and if you did want to take a quick break i believe we might have some draft language we could throw together quite quickly perfect Thank you. Thank you so much. Thank you, Director Lewiston.

Thank you all. May I ask for your indulgence just one moment, please, if I may? I have a wonderful resume. I've worked really hard at it. So does everybody in this audience, including everybody in the dais. So let's use it. Then let's make Mopedas better because we can. Thank you for your indulging me.

I didn't get it. Thank you for that. And so this is the beauty of having the discussions, having this dialogue. It's not to demonize or it's to, this is constructive and I appreciate it. We're going to take a break for how long?

Five minutes.

Five minutes?

No, not for the break. Do you want to

Amelia, half an hour? We're going to return in half an hour. So that would be what time?

Just about 6 p.m.

Okay.

6 p.m. we'll return.

All right. Thank you, everyone. We are adjourning for now. Thank you. Can you see if they're over there? Okay we are back from our break and we are continuing where we left off and this is item 10 on the fiscal year 2026-27 proposed operating budget for the city and we were at council discussion and I'm assuming that there was some I GUESS FROM THE LAST ITEM, THERE WAS SOME RESOLUTIONS OR SOME. CAN YOU EXPAND ON THAT, PLEASE?

NEW SPEAKER YES, MAYOR. DURING THE BREAK, I MET WITH FINANCE STAFF AND WE DISCUSSED HOW WE WOULD BEST CAPTURE IN A MOTION COUNCILMEMBER CHUA'S PROPOSAL. AND THAT WOULD BE TO ADD ADDITIONAL ACTION TO THE RECOMMENDED ACTION. which would be to allocate another $1.6 million to the structural surplus item in the fiscal year 2026-2027 adopted budget funded from projected fiscal year 2025-2026 general fund excess revenue to offset the projected fiscal year 2027-2028 general fund shortfall with the appropriation to be adopted and reconciled at the fiscal year 2025-2026 fiscal year end close.

I really like that and plus the fact that we still have the mid-year to come back and if there's any other issues. So go ahead and I think Councilmember Chua, did you? So it was moved by Councilmember Chua and I will second that.

Is that moving the staff recommendation including that motion, including the additional recommendation from city attorney?

Yes, yeah.

Can you speak on the, hold on.

It's a new policy in terms of the budget relating to surpluses.

So you're just making a motion for that policy and not the staff recommendation? That's it, yeah.

Thank you. So moved and seconded by Mayor.

Okay, so it was, as I mentioned, it was moved by Council Member Chua, seconded by myself, and so now we will call for the vote.

Vice Mayor Barbadio?

Aye.

Council Member Chua? Aye. Council Member Lam?

Aye.

Council Member Lien? Aye. Mayor Montano? Aye.

Okay, motion is passed. And so now, since we've already taken care of that, now we're going to go back to the budget hearings, right? Yeah. Continuous. Continuing. Okay. Anyone else have any comments on the budget that Director Luce Cofresi has presented? We have William Lam, are you the one? You want to go first? Or was that council member? Who wants to go first? We have Vice Mayor Barbadio.

Thank you, Mayor. I wish while I ask questions and put on my thoughts, the same number of audience would have been present. Especially, you know, I want to acknowledge the letter from the Milpitas Police Officers Association that was received yesterday. And, you know, as I was preparing this deliberation, I use it. I use it as a flow chart on questions I have. When I received this letter, I was mixed emotions, I'll be honest. But I want to think positive. I said to myself, maybe, maybe what happened on June 2nd created awareness. Awareness for the right reasons. This letter has been published, this window has been published in the internet several times and I received text messages that even next door is a recipient of this letter. But I take it positively, this letter. I want to inform the public that this council, my vote alone, I received and reviewed at least a minimum of 35 budget agenda memorandum from finance and the staff. I had every week of staff meeting, mainly discussing this agenda. We post offline questions and we get answers. We get answers for us to help deliberate this budget. That's how we are prepared with all due respect. All right, so one correction about this, one clarification about this letter, and then I'll go use it as a list on my questions, right? I was quoted, I'm not a mathematician nor a CFO, understanding deeply financial affairs. I'll go back, you know, because whoever wrote this, watch the replay. I will go back and see if this innuendo is really right. But what I meant, we can go back together. I said I'm not a mathematician nor a CFO. We just need to to involve our logic and sensibility and the principles of a good budget can be discerned. That's what I meant. All right. So firstly, Can we put on slide five, please? You know, that backdrop is just like when you're in a Zoom meeting. So I want that on the backdrop as I pose my questions, so the public would have a better understanding where I'm coming from. And I'll use simple math this time to see and try to understand this projection, this forecast. So if you look at revenues and other sources, let's do it basically. And let's see, hopefully we can have an understanding what the issue is on my layman understanding of finance. So if you look at the revenues and other sources, it's a projection of five years. And if you add, you know, the first year to 2026-27 is 4.4 million, and then it became, it becomes 4.1, it becomes 4.4, then it becomes 4.6, then it becomes 5.2 in 2030, right? And then let's look at expenditures. I will add it again. The difference between 2025-2026 and the next fiscal year is 1.2 million, and then it becomes 4.8 million, and then it becomes 6 million, and it becomes 6.2 million, and it becomes 6.4 million. Let's go to the annual deficit. I subtracted them again. So 1.6 million, then 1.6 million, then 1.6 million, then 1.2 million. Here comes the structural deficit. We are positive. We have a surplus 26-27. And then the difference between 27-28 and 28-29 is 4.6 million. They want to direct our attention to going up with the revenues. It seems that we're making it, right? So 4.4 contrast to 4.6. If you add the revenues the same year and you add a structural deficit. We go to the next year. That is, the difference between 2029-30 and 2028-29 becomes 6.1 million. Look at the difference from the projected revenues and other sources. It multiplies. It goes up. On the fifth year, the difference between 2030 and 2029-2030 would now be 7.9 million. So if I look at it, the revenues and other sources seem to be stagnant. And if you look at the structural deficit, right, at some point, not some point, next year, it intersects what we are recurring revenues and other sources next year, and it soars up to a difference of 7.3 million in a year. So my point is, right, I believe how, and this is a product of all those hard works of the staff. I appreciate all the information, right? My point is, if we look at recurring sources of revenue and the one-time sources, how could we compare them from recurring expenditures going forward? So how would revenues and other sources, mostly I hope recurring, would catch up to the recurring expenditures that we have going in five years? So part of the reading I had, right, it says that Let's look at the mid-year. We discussed the mid-year adjustment last June 2nd, right? And we lengthily discussed about the 3 million. And I was informed, it's part of the POA letter, I was informed that it is a grant and then we have to expand it. That's just the law. We have to expand it because we cannot spend that. But if you look at one of the budget memoranda, it's actually a total of 6.4 million. I'll refer you to that memoranda. So what we really did add in mid-year is about 6.4 million. I'll give you the exact amount. We added 6,893,243, 3 million from a grant, 257,807 in recurring right. It's 6.8 million to balance the mid-year budget last December. And what we discussed on June 2nd is only the 3 million. I agree that 3 million was explained to be one time, and not recurring expenditures covered by those grants. But if you look at the difference, there are recurring expenditures that we use one-time funds. It's in the report. So it says that 257,807,000 is the only recurring item, including it with the 6,893,243 increase. The 7,151,050 combined total is 96% one time and 3.6% recurring. That's our own data. So what I'm saying is to pass a feasible budget, regardless of whose thoughts they believe they are mathematicians, right? It is basic. How could we, look, even our experience, how could we in mid-year fund something we will inherit on that mid-year, the 257,000, in addition to any recurring expenditures that we have when the only source of our revenue is what we know deep in the research? Go for a ban. or do the URL. So now my question is, is that prudent? I do not know. That's why we need information from you. We need a consented decision to feel, to understand that what you are suggesting, the very least on my understanding, satisfies elementary mathematics. So that's the question, right? Just look at our own projected. We cannot overtake expenditures in the next five years. Yes, we are so lucky that with all the housekeeping we had since the last year, with all cleaning the contracts, looking at surpluses and things like that we were able to cover the original 40 million but until when one what happens when the house is clean what happens that there's no more bucket to dip in so so that's the question so now putting that now on our agenda today right 290 92.1 million. How much are those are recurring in expenditures as compared to how much of those we can cover with recurring revenues and one-time funds? So if we answer that, Even again, even if I'm not private with finance, we can determine even in a logical projection if we can afford. See, I'll refer again to the letter because as I said, this is my guide. The issue is not cutting services. The issue is trying to afford services for the people. You know, we can promise heaven, right? What happens if that promise is only until two years? Then we'll expect hell in the third year? Basic example, right? Like our very good program, the SMART. Just an analogy. We are looking for one-time funds to make that SMART program well loved by the community to go forward. But we're scrambling. hey, we'll wait for some politician to give us grant to extend that, but the people are very dependent to that smart program already. So what are we going to do? We keep on trying our luck to get funds for that, to continue the service, or we try to have a strong decision now to see how we can continue that program without relying on future grants. Same thing with the budget. You know, my colleagues are correct. What we've been hearing so far is we have a bucket to dip in, but we are not hearing, you know, we have increased our sales tax because last year we have 400 businesses this year we have 500 businesses that's what we what that's at least my one vote wants to hear to support this adoption to be fiscally responsible and prudent and feasible That's all I ask. It's not about, hey, you know, if somebody lives here in Milpitas for 13 years, probably I'm longer than that, right? I raise my children here too. So as the mayor said, it is not to confront. It is to aristocratically debate so that, you know, we pull our ideas, we pull our thoughts, and make a visible one. Am I against this forecast? No, I trust staff. but at least show me some visibility. Let's have the council members do a discussion, right? So I notice it's a very good thought, right? The one that we just approved. We did not look at the other part of the equation. We tried to address the bottom, the structural deficit, making policy to remove that 1.6 next year by a policy. Wouldn't it be nice if we have a policy to make sure that the very least, revenues and other sources will have the same policy to catch up with resolving the 1.6 because that will be again an issue next year like you know Council Member Chua will again say can we make a policy to eliminate the 6.2 remember we're now in 27-28 so do we keep on using a policy or non-recurring funds to address the incremental structural deficit? So that's the question. What feasible means can we solve structural deficit? I understand it's just a projection. You said, let's focus on the 1.3 now, let's look at 1.6 later. maybe you know that's that's a sound fiscal policy but again to a layman like me the person in the street they don't understand that right put this on on online now and you know it will create different interpretations as to those reds starting next year so what i'm trying to say is how We want policies, if not policies, we want ideas other than we have 48 million reserves, we're good. No, that's why when I said last year, Let's not talk about reserves. I may be wrong in fiscal formula, but that's a layman's understanding of what reserves is. You're right. I read your report, Luz. You said it's not like a household, right, that you put aside money for later on to spend. That's not how government works. I understand that. But unfortunately, you know, people, most people, maybe like me, wouldn't understand that. And how do we have them understand? Make them feel it. How? First, by explaining them how it is, how to resolve it, and this is what we're doing about it. Right? I don't agree with a concept that it's so volatile to use numbers next year, next two years. That's why there's statistics. That's why there is a an educated projection, right? You did that. You look at the last 10 years, you look at the growth in sales tax, TOT, as compared to revenue. So those things, that's how we explain. When we ask, it's not about just because we didn't understand, because we want to share the same questions what community may be asking us, right? With the letter that went out, I hope that what corrects it is not a counter letter. What corrects it is a correction during this council meeting to explain why the concepts put in that letter were inaccurate, that we are doing something about it. I don't care if this is against me. What I care is it's explained to the people and that's why we ask questions. So that's the point. So going back to the mid-year, right? You said that we will have another mid-year and it's standard. But look at our history, out of the 6.8 million, there's 257 recurring, whether we like it or not, it's going to be recurring all those years. It's a benefit that we provided, right? And the source of that last year is non-recurring. So now we will have to incorporate that the next few years. What happens if we have a recurring expense again before we reach December of 2027 that we cannot account? For example, we have contract negotiations going forward. What is a feasible way? Forget about the contract negotiation. Let's say we hire two more employees. That's likened to the 257,000 that we did last mid-year. Let's say we hired two more employees that staff wanted to have in their department. And let's say that two employees with benefits cost the city 300,000. This happens between now and December of 2027. Of course, in December 2027, we will have to balance the budget because of the hiring of, hypothetically, two employees. So those contingencies, where are they in trying to project a feasible and sustainable budget? Those are really the questions. It's not about cutting people. It's not about cutting services. As I said, that's the last. That only happens if we're really, really down financially. But I agree with you, we're not. But I don't want to be on the situation that at some point we will make that decision. So let's do it now. What can we do now? If you look, I can tell you probably what I can do now, but it's too late to be considering this budget. And I won't rub it in, the organizational assessment. But there are others. If you look, part of the budget memoranda that you provided the council, everybody receives it, is the effect of overtimes, especially public safety. If you look at the police summary, it seems standard. If you look at fire, there's more information needed to assess what kind of policy or what kind of move do we need to address those overtimes. Have we done anything about it? I don't know. But what I know is the consequence of that is an additional recurring expenditure for that certain department. Have we looked at other departments? I believe we have 12. Right? I may be wrong with the numbers again. So what I'm saying is, have we looked at them? What we've been trying to look at is where are we going to get the dollar to erase the red? But how come? I understand everybody's new, right? I understand it's too late now to consider organizational assessment, but would that be a reason to approve now what's in front of us? because we were not able to do it. I don't know if that's an excuse. On my books, maybe, but at least compromise. Compromise on the uncertainty, on the deficiency, admitted deficiency we had in preparing this budget. And compromise in a good way. I'm not saying, when I say cut 5%, you know, Maybe it's half-meant truth, but it's a figure of speech. What I really meant is let's have a contingency because most of our projections are based on contingency anyway. Let's face contingency with contingency. It's contingent to a better sales tax in the next quarter. It's contingent to this. Why not make a contingency too? on the expenditure side, so that not only we can increase the revenue, we can also slow down expenditures. Those concepts, again, I don't know if those are fiscal considerations, but at least those are logics to me. So that's one. Another one is... the general fund reserves, right? I received a memoranda and I'm going to discuss this because I want the public to understand what is the hundred, correct me, the hundred something million in reserves, right? It is that, so what comprises this? And it's in the, it says the portion of the reserves are several buckets. and i think uh only 44 million of it can be touched is it supplement me because i read too much so talking about uh general funds that is the It's one of those memorandum that we receive.

The reserves?

Right, the reserves.

So Luz, can you reiterate or kind of, because you mentioned that about the reserves, can you go ahead and reiterate?

There is a slide for the reserve. There's a slide.

There is a slide for the reserves? Do we know what slide number that is?

We've shown it earlier. Right.

So let's explain. Slide 13, please. Thank you.

This one, yes. Right. So we understand, you know, when you look at 134.1 million, it's a lot, right? But what I want to understand is what is it broken into and what part of the reserves is claimed that would last only four months should, you know, heaven fall? So what I'm saying is, yes, you know, as the letter said, right, we have a lot of reserves, but let us together understand what we can touch with this reserve because not everything on that reserve we can touch if heaven falls, as I said, right? What part of it? I think it's the 44 million, no? The one that you said it will last for four months.

Go ahead. You're just talking about the 16.7.

So currently we have the Contingency and Budget Restabilization Reserve, which total $46.8 million.

So tell me please, so that's the only portion of the $134.1 million that we can dip in should something catastrophic happens?

There are other unassigned and designated reserves. that based on council policy, you could pull from those, but those are set aside for various other council priorities that they've set up. There's 19.3.

19.3 million. Right. So out of 134 million, which seems a lot, now we're figuring out that only the 46 million can be allotted. Of course, we have those unassigned should economic reverses happen. as a last resort, am I right? You said yes. You said if everything stops, yes, that will last us for four months.

Okay. I want to be very careful here. Okay. The contingency reserve is the two months, and that's the $23.4 million.

Okay.

The budget stabilization reserve is another two months on top of that. It's $23.4 million. We have additional monies that are not specifically called out. I'm going to go through them. And I do owe you that. I just haven't gotten to you that. But if I may read into the record, if you are OK.

Yes, please.

OK. So the non-spendable amount, that represents prepaid amounts. That means that we've paid something that is coming in the future. OK, property health and that's and I'm going to round stuff up, please forgive me for rounding stuff up for the purposes of this discussion. OK, that's about a million fifty thousand. We have another four point four point two million in a property that we hold on Main Street. In we have the forty four million and I can't see the number.

Forty six.

44.6 million plus in the committed bucket, you see PERS, At the end of 24-25, we had $7.3 million. So add those two numbers, it's over 50 million. That's the money that I'm proposing to use specifically for the purposes in order to apply against future retirement debt. We talked about the UAL. And the thing is, if we can do that in a way that allows us to effectively without affecting our investment portfolio. And the reason I'm being careful about it is if you buy out or if you, I'm trying to get the word, if you basically cash out your bonds early, your investments early, you pay a penalty. So I'd rather have them, you know, basically if we borrowed somebody's paper, I'm gonna make it up, you know, by Chevron. But if we bought Apple Paper, Apple Debt, we want to buy it until it comes back because then we can realize the full stream of interest from that particular investment. But so this is why I keep saying to you, I need to come back to you so I can figure out what the schedule is to do that so we can apply it in a way that we do make the best benefit. The recommendation that I have, and this is a very easy recommendation to make because I've read the numbers several times, is to basically pay down our UAL on the public safety side, because that's the one that's more challenging. What that will result in is a reduction in our ongoing payments of retirement payments out the door. That's recurring. The fact that we have over $50 million to dedicate to that effort is amazing. We have 1.9 million in artificial turf. We're going to put another $100,000 this year because generally we put $230,000 a year into it. We'll cap it out at $230,000. That $130,000 goes beyond the waterfall. We have some money in technology replacement, and some of this money may be committed. I know the artificial turf isn't because we're just saving it. I know the PERS isn't committed in the sense of it's in that pot, but we haven't designated a use for it. Okay. Facilities replacement, 3.2 million. I know that we have some areas that we have committed. In other words, we have the council at some session has committed that. We have contract can't touch. We can't, other assigned we can't touch. We have the contingency reserves at 23.4. We have the future deficit at 23.4. We have the ERAF litigation. Council Member, thank you for your question. I have not pushed the button send, Council Member Leigh Ann. Our balance in that is about 2.8. That is hedging against the fact that the litigation that is currently ongoing will go against the county and therefore its cities. We have the SPAR, which is that strategic investments. It's $710,000. Last year, council took a direct action from from the diaries to provide more money from that. Then we have the community investment programs, which at the end of the year, the numbers that I'm quoting to you, or at the end of the fiscal year, they are audited numbers. And you will get this in a memo, If you wanna write it down, that's great. I'm reading it to the record, but we will get this in a formal memo. And then we have undersigned of about $10.8 million. Of that $10.8 million, we have about 7.7 million that we can also believe that I believe that we can spend. But again, I'm conservative. I wanna make sure that I understand what that 7.7 million is. So we may have more money to basically take out of reserves, because that's unassigned, it's not assigned to anything. But if I give you a number, and you guys know I'm terrible at the, when I'm here, and you're all at the dais, I'd rather give you a memo that's a little bit thought out. But effectively, the fact that we have that money, that over $50 million to apply to our URL, that is going to be absolutely great. But that does not solve our overall problem. And can you bring up slide seven, please? And thank you. Vice Mayor, thank you for the question. OK. What you're talking about in very simple terms, which you talked about in the first section of your question, number one, is how do we flatten that trajectory?

Yes. Right.

So the UAL will flatten that trajectory. Additional revenues, ongoing revenues will flatten that trajectory. The Rivian Stream will flatten that trajectory. Recurring revenues will flatten that trajectory. But it is a budget balancing and considered budget balancing to do.

But Luz, that is theory. I agree with you. Increase this, it flattens it. Why are we not hearing what those theories that you're mentioning is applying now in disapproval of this budget in consideration with next years?

Because we have to have actions and consider thought about and be realistic about the numbers we've brought to you. I am not a person, especially around bringing you numbers, I'm going to bring you numbers that I can actually be confident about that they will return. The numbers that I say to you are real, are based in fact. If I bring you a UAL pay down strategy, that needs to be footed in reality. How do I bring down those investments in those portfolios that we're not, that we don't have lost opportunities.

So here's what I have expected as a response, right? And no, no, your response is great, right? So when I said, when you say you cannot predict it, I wish I could bring the numbers from, you know, this source fund you're saying, I think what we and maybe the people want to hear is this is what's going on. That can manifest itself to the theory that we're discussing and hence that would alleviate our structural deficit going forward. I think that's the answer that I was expecting at least. I understand we've been talking about this budget, we already know that we cannot predict what happens in the future, but you can substitute that with programs that we currently are doing to realize those theories that would solve our structural deficit. Wouldn't it be better? We present the people, we have the structural deficit, these are the theories that we're going to solve it with. than saying, here's the structural deficit projection. This is what we're doing now. This is based on a theory to flatten the two going forward. Wouldn't that be a better answer?

And I thought that was the answer that I was providing. And so with all due respect, Council Member, excuse me, Vice-Mayor, what you're not seeing here is Rivian revenue. That is known, and I know you don't want us to speak about it, but that is known. Before, the facility wasn't open. And now we have revenue, and you still don't see it, because you're not going to see it until we understand

all right it's 170 000 you know i i tried to do the math at home 170 000 and i asked council member lamb to uh calculate with me 170 000 is 65 percent of one percent of ten percent sales tax question how many cars does revian have to sell to for us to realize 170 000. did we calculate that i i have an answer i might be wrong because i'm not that good in math

Council Member, in the Rivian sales agreement, There is a projection that includes how many cars that we are expected to sell next week.

You said that there's already a report, and you're saying now, you're verbalizing that 170,000. And that's only the first quarter, is it? The first month. The first month. So now putting it in a formula, tell me if our agreement with Rivian is not this. We get 65% of 1% from the 10% sales tax that they generate.

Yes.

Right. So now let's put on the numbers. That 65% of 1% of the 10% is $170,000. So what is the total sales for us to get $170,000 for one month? How much will we have sold?

Council Member, we're coming dangerously close to disclosing sales tax information that I am not capable of providing.

i chris city attorney i need some guidance on this because i think i'm going to slip so i i would suggest getting away from the specific uh numbers that have been reported today if you want to talk about the hypotheticals as to you know the total amount of sales um you just keep it away from any specific information that we have and the calculations anything that would be um you know protected or proprietary there i would also if i may just suggest one point of clarification because i think If I understood correctly, the 1% is one of the 10 that are collected. It's not 1% of 10%. But I'll look to finance to correct me.

I'm not going to because I'm bad at it.

Okay.

Because I'm going to, council member, I'm very honest with you guys. You guys hired me and I should have told you I'm not really good at math. But what I am good at is negotiating contracts. And if you look at the Rivian contract and you actually have a write-up on it,

provides you additional information it's a very long write-up and then i have a short one in front but effectively we do have a plan going forward right now the region contracts i said i trust you you know whoever negotiated that i i did i'm just trying to find out what policies are in place as a response to uh everybody's question how to flatten the graph between a revenue and expenditure As you said, we anticipate this, but we cannot know the right numbers because you can't bring them, you want to be sure. As I said, I'll compromise. What programs are in place to realize your theory of flattening the distance between expenditure and revenue? What do we have?

That is a fiscal strategy that we started going through. And so that program is in place. And so we've already implemented steps of that program. We did do one time money when we looked at all the contracts and we realized about a couple of million dollars from effectively closing contracts that were not in use. We started doing appropriate allocation of folks of staffing to the activities where they were performing. So in other words, their salaries, their compensation package, If they're performing work or activities on the water fund, they should be charged through the water fund. So we have done that. We are implementing things, and I'm going to regret this, but I'm going to bring up the fact that we are looking. Another program that we're leading is the business tax with the hope that the voters see the benefit to us and the fact that this tax has not been renewed in 50 years. And there are multiple programs that we can talk about. Some of them, I will be honest with you, I'm not talking about them because again, and I use this phrase, half baked. But again, things take time. If you want to do things well, they take time, they take persistence, they take thorough thought, and they take explaining it. And you're absolutely right, Vice Mayor, I could not agree with you more. in that the public needs to be educated. So we have had open sessions with folks with budget to come and talk to us. On any given day, I will talk to somebody and Alice would talk to anybody and her staff would talk to anybody about budget because budget represents strategy to us. My comment always is your budget, because frankly, this is your budget. reflects what you are most interested in. So that's when I always respond to you. What levels of service do you want to reduce or change or increase or modify? It is because that is what you come to us from the community. I'm not in the community. That's not my role. But you all come to us with strategies and thoughts about how money is to go. And the budget that you approve is a manifestation of that strategy. It's a manifestation of what folks want as far as community service. It's a manifestation when we do a cost recovery program that reduces our costs, that you believe in that community, you believe in the youth. So those are programs that are ongoing. The others that I've spoken about earlier are also programs that UAO, I expect will do well. But again, I'm gonna tell you that it's gonna take time.

Is it fast enough to address the next year or the next few years, at least?

I do expect it in the next two years, to be honest with you. The tax refunding I expect to bring in August. But again, it takes time.

Let's talk about personal services expenditures, right? Out of the 292 million, you know, personal services, both salaries and benefits totals to correct me, 139,638,798, right? So if you look, how much about, and the difference will be 52 million. If I just subtract it easily, 292 minus 139, I rounded it off, it became 52.

Forgive us. The 139 is the complete personnel package? Right. And what is the number that you're resulting with at the end?

If we subtract that from the total operating budget, what's left is 52 million. We are trying to prove 292 million.

200, if I can, just to clarify. I want to take a step back with your indulgence. Yes, please. Okay. We have an overall budget and we're probably going to start bringing you the overall budget because frankly, it's surprising to me that we haven't historically. Your overall budget represents everything that we do.

Just for tonight, the 292.3.

I'm getting there. Okay. Forgive me. Okay, sorry. Hang on. Okay, so 292.2 million is our entire budget. The 152 is the general fund money that we are always talking about. The remaining money is what's called enterprise funds or capital funds or other stuff. They are self-contained. You could draw a box around them. You could draw a virtual box around them. water sewer the rate payers pay that we can only if we i don't even think i don't think and and i'm going to look to you we i don't think we well we don't have a nitro fund policy that's a longer discussion but we can't mix those monies there's basically a wall i understand yeah all i'm asking is uh the personal

the money we expended for personal service and benefits is 139 million. I understand that you cannot spend it from the other ones as you're explaining. My only question, here's the question why I predicated it like that. Out of the 139 million, right, and that is a recurring expenditure going all throughout, right? So how are we covering that now? Is it sourced from revenue? Is it sourced from different buckets of funds? Is it sourced from one-time fund? I know the answer. I just want to ask this so that people know.

May I ask you to bring up slide five again?

so so council member if i may yes the the 139.6 million dollars in personnel costs that you have ongoing costs are covered by ongoing revenues so that's going to be covered by your property tax your sales tax your user your um your users right with the enterprise funds are our constituents that pay into the water fund the sewer fund um through grants like our housing authority and things of that nature so those are Those are funded by ongoing revenues.

Right. So the personal services, salaries, and benefits on this chart is covered by revenues and other sources. Correct. So let's say we subtract 139 million and rounded it off, right? To each and every one, what's left is for the rest.

So just so we're clear, this is a little bit of apples and oranges in that the 139 million is all funds. The general fund, which is what you're seeing here is our general fund forecast. The general fund personnel is 121.7 million, right? So that's the general fund bucket that you're gonna be seeing here on this slide represented in the expenditures line of the 152.1. I would take out the 121.7 million out of that. And what's left over is your other services, right? All of your other expenditures, your debt and everything else.

So it's a must that it's funded, the personal services, salaries and benefits.

I'm sorry.

It's a must that the personal salaries and benefits needs to be funded. It should be readily available.

Correct. And just if I can just remind Vice Mayor, we did endeavor this past year with the help of all of our department heads to do a modified zero-based budget. We went back to the table with all of our directors and departments and asked them to look at every single one of their expenditures, personnel and non, right? Personnel, are they being charged appropriately? Are they being charged to the services that they provide? In addition to that, we had them look at every single contract, every single vendor on line by line on their non-personnel budget and reduce where there wasn't a contractual obligation, or there was a little bit of cushion, if you would, or slush money there to ensure that the budget that we're bringing forward here is bare minimum what we need in order to provide the services without doing a service level cut. And that at the end of the day resulted in that reduction of our overall structural deficit, you know, to create, to fix the structural deficit we need, as you mentioned, we need to decrease expenditures and increase revenues. And we've worked very diligently with our department heads to reduce those expenditures and have cut that structural deficit by half. And we are putting in place and our economic development team is working really hard to bring more, you know, taxpayers to the, to the city, right. To increase that revenue. We're looking at the possibility of the business tax going on the ballot next year. And, you know, we already have the Rivian in place, but unfortunately, unlike our expenditures that we can see an immediate result of, right. I can cut that and I can immediately see the savings there, the revenue, because of the way we do our budget is very conservative. We're conservative on expenditures. and conservative with our revenues, we choose not to assume revenues until we have some backup to respond to that, to be able to track that and trend it. And so I know Director Luz has already asked this, but I truly think that we give this time to see those other those other efforts that we've already put in place, right? It's going to take time for those to show their true colors. And so if we can give ourselves, we've budged, we've now with that, the new action that you guys took with the 1.6, we have fully balanced projected wise, our 26 and 27 fiscal years, giving us a little bit more time for some of those unknown revenues to become a little bit more known. to bring you a better idea of our true structural deficit or surplus, if you would, reality come the next year and possibly into the next two years or so. But I think we'll have a much better image for you and a true fiscal status that we can talk about next mid-year or February when we're bringing the next forecast because a lot of those efforts that are going to take time that are already in place, we just have to see them play themselves out. I think that's going to help alleviate some of your concerns. We just need a little bit of time for that to come up.

Okay. It's good to hear that we have asked each department of reducing the expenditure, really, because what I meant when I proverbially say cut it by 5%, right? So what really that means is let's see if there's some expenditures for whatever expenditures there are in each department that we can remove so that, you know, some of our revenue covering them now we know that they have to be funded by the general fund you know we'll be able to catch up but what assurance that whatever reduction each department have because we didn't receive a report about that would be prudently maintained so that you know we can realize and feel the effects of this and as you said you know, see the true color of them in the future? Do we have a policy to say, hey, you know, before you bring back expenditures that, you know, we tried to save, you come to city manager really? Is there something like that? I mean, as a safeguard, you know, I smile about it, but I think, you know, it's a good policy, right, to have a review whenever that department's own valuation, a reduction of the expenditure will have a, you know, a check valve, like at the city manager's office before it can be released again. Or is it the discretion of the director as well to put back

uh whatever that department contributed to reduce expenditure it it it it is part of the base budget process so the departments can bring a contract we we have you know contract to do our landscaping on our parks and maintenance park maintenance right there is contractual obligations to that and if we're not adding a park and we're not adding extended hours for restroom cleaning or what have you, they're keeping the service level status quo, but the cost itself increases because there's an adjustment that's built into the contract. As part of our base process, we would make them whole to maintain that already council approved level of service. They cannot come back and increase that level of service without that being a budget proposal that we would bring forward to you as part of your budget deliberation. So, and it's a best practice that we look at this with our directors, department directors, and every single year when we're doing what we call our base budget. And that happens before that December timeline comes up. That happens back starting in October, November. We're already working with our departments on, okay, we're coming up. Let's start looking at the next year. Where are your contracts? Let's pull them. Let's look at, see what increases are part of that. If, for example, supplies, you know, they have a widget and that widget has gone up over the last three years. They've paid a dollar more every single year. Each year it's gone up a dollar. They can show me that trend analysis. Again, we're maintaining the same level of service and not increasing it. We're just the costs have increased and we make them whole for that. That's part of what's included in this forecast that you see, which is our base budget.

If I may, I want to add on to that, because the important part of this is the reason that you have a purchasing agent being reclassified to a purchasing manager. So we have an extraordinarily experienced purchasing agent, but unfortunately she's not interested in full-time work. And the other thing, we issued over in the last year and a half that we've been here, We issued what I call umbrella contracts. So these are pools of vendors. And we've done it with architectural engineering services, and we've done it with on-call services. And the benefit to that is you have identified a pool of service providers that have the appropriate certification, that have the appropriate licensing, that have the appropriate experience, and can meet our terms and conditions. And all of those contracts, I think it's 22 plus 13. Yeah, I think it, oh dear God. Okay, it's close to 40 contracts between those two areas are all capped at 3% a year. So we know for the five years that those contracts are in place. We have certainty around those contracts. If you procure well, that person's return of the return of investment of an organization, no matter where you are, corporate nonprofit is absolutely extraordinary. We have saved the organization over the years already. I wouldn't venture to say at least hundreds of thousands of dollars simply by executing a program, a conscious, way to deliver products and to deliver services delivered to the city that meets our terms and conditions and meets our high quality. So when we get those trucks and we buy those trucks off cooperatives at price because we're buying into a pool and a buyer has gone out and sought these cooperative contracts that offer the best price to a municipality or business like us, we are getting the best buy. And when we maintain those trucks by having this asset manager, having that on a replacement program so that we're not driving vehicles or items that we can't get our park maintenance workers from here to there, or they can't use a piece of equipment, that's a program.

Okay.

And we've already had that in place.

All right, another question while we are in personal salaries and benefits. So we know that they come from general funds. So here's the question, you know, it was an experience we had with MidCon before mid-year last year. No, no, no, the benefits that we, you know. The 257,000, right? So are we expecting any of our contracts going forward after we approve this budget of those kinds of benefits we provide through their, you know, their negotiated contract already we're expecting the next year? have we incorporated those as part of our expenditures for the projection? I don't know if I'm clear.

Included in the budget projection, included in this forecast is an estimate, an assumption for anything that any labor contract that has not been negotiated and executed, we carry

Right. I understand that. So we carry it, right? And I will not talk about that. What I'm saying is those contracts that were already negotiated, let's say a three-year contract, a four-year contract that resets on a certain percentage or a certain benefit along the life of the contract. Are we looking at any of those kinds of expenditures?

I'm going to rephrase the question with your permission. Are you talking about renegotiating our benefits contract first?

No. I'll give an example. Let's say we have what we call a fund department. Let's call it a fund department. It's hypothetical. And then last year, we provided them with a three-year contract and an increase of 5, 10, 15%. if we project the budget, we can budget that, right? And then because they're so good last year in six months, they came to us, hey, can you provide us with, I'll make this benefit up, more fund benefit, give us, it's like a call, let's say, give us 50,000 more. And then we amended their contract. Or it's part of the original contract. Now it says in the original contract, it kicks in on the second year. on the life of their contract, which is a four year. So it's just like that question. Do we expect any benefits that were already part of an approved contract on any of our employee groups to kick in during this fiscal year that we haven't incorporated yet on our budget?

Council member, Vice Mayor, I'm concerned that we're getting, we're in the middle of having discussions with unions and I think...

I'm not talking about, whatever we have now, the question is clear. So whatever we have now, whether we approve it last year or the other year, is there some benefit that will kick in during this fiscal year?

Could I ask, Vice Mayor, are you asking about benefits, for example, like health insurance that will increase over time?

That's already part of a negotiated contract, valid contract ongoing.

So we're talking about costs that are part of the contract, not just on the salary side, but on the benefit side, that are likely to inflate by some percentage as well? Yes.

So it's not about a contract that we're going to do. It's a contract that we had already. existing contract that inflates, that's a good word, that inflates during this fiscal year that we have not incorporated on our expenditures yet. Yes, ma'am. Yes. That will happen, yes.

That will happen under an existing contract. It just kicked in. Have we accounted for that in this budget? Is that what you're asking for? And I would say yes.

Okay. Yeah, yeah.

That's done through the projections with the budget office. Okay.

Yeah, yeah. That's the question. So, you know, we have accounted what we had approved before as part of, you know, trying to have a balanced budget. Okay, I think I'm good for now, Mayor. Thank you. Thank you for your patience.

Thank you. Who else wants to make any more comments on this subject?

I want to thank you for the conversation. You and I like to debate too much.

Yeah, that was very thorough. Okay, we have Councilmember Lam here.

First of all, I'd like to address the letter from police officer association as well. One of the comment was saying the council member need to come to work prepared. The letter was aiming at Vice Mayor Papadero, council member Chua and myself. I believe we come prepared and well prepared. That's why we ask the question very thoughtfully. If we're not prepared, we are not able to ask those questions. That's all I want to say for that. And let's get back to the budget. One of the Question I had is related to gas and electric. I noticed for the past couple of years, the expenses were about $2 million for electric, and gas was about $220,000. And this year's projection was, you projected to be about one and a half times. So it's about $1.1 million more than the previous two years. And you mentioned you need more time to go into find the details and give me an answer on that. to say is I'm not sure you are too conservative on this estimate or not. But if you come back with a number less than the projected amount, I would like to have the remaining amount to be allocated to the surplus.

I believe that any leftover funds would automatically get added to your waterfall and thus be part of the surplus. Per Council Member Chua's motion, that would be for the, to cover the deficit, that would go into that fund covering that component.

Well, I understand it will go into the waterfall, but the waterfall will go through lots of steps, so by the time, it might not make it to the surface.

Oh, and it's possible I misunderstood, but the prior motion essentially requires that 1.6 go to that surplus, regardless of the source. So if it was an overly conservative estimate in terms of the expenses and money is saved, it'll go in there until that 1.6 is hit.

Okay. And Councilmember, if I may, we're going to give you a much more detailed explanation of that. 0.8 million of that so 800 000 of that was a one-time rebate that happened to get thrown into the base in a prior in prior years that we fixed this year so that you're going to see our electricity went up by 800 000 because there was a rebate a refund that the city received it was a one-time refund that accidentally got mixed into the base in prior years and we corrected that so we're going to give you more details on that but but we did go pretty deep in depth and looked at the last four years of spending on electricity and gas to come up with that projection that we gave you okay thank you um can we go back to the waterfall picture

One of the items on the waterfall is on PERS rate stabilization. Is there a percentage that goes into this item?

Could we get slide 13, please?

The PERS rate stabilization is a calculated number. So after the waterfall, it's 16.67%, another 16.67%. The PERS number is what was budget, and there's many funds. You take what has been budgeted, as we would have budgeted in FY24-25, and you subtract what is actual. That difference goes into PERS, and there is a cap on it. But if I could beg your indulgence, you are getting one of these in great detail. And actually, I'm going to have a little demonstration of it. But effectively, it is the difference between what was budgeted, that's what was paid out, goes to PERS until a certain cap.

OK. Is there a cap?

I keep using the word cap. Let me hang on one second.

Oh, maximum amount. Yeah, I'm gonna look.

Pension budgetary savings, budget minus actual. Unfortunately, I do not have... We don't have a cap in our policy, so I'm going to make up numbers now for a minute. Okay? I have a million dollars in retirement debt. I have $500,000. We're going to get back to you because there is a level of cap because the reason I know this is because the next level, and it's not displayed on the chart, so I don't have it easily in front of us. We don't have it easily in front of us. Because the next level of the waterfall, and I wish I could put this up there, goes to the artificial turf replacement, and that bucket's already been filled. Right. It caps at the UAL. I'm going to defer that response because if I give you the wrong answer, I'm going to regret it forever. Because my, oh, I didn't mean it that way. I'm going to personally regret it forever. Not because of you, because me personally.

Okay. The next question is regarding the future deficit rest reserve. Is that the reserve we use on the other picture, this 0.8 million? You use it on the other picture, which is on slide five. Is that the 0.8 million from Yeah, there's a 0.8 million here. Is that the 0.8 million dial on the other slide and transfer to this? The future deficit reserve. Right. And it labeled as use. So is that where it is used on this point? Yes. Okay.

Yes. That was part of that council action in November of 2024 that approved the IFF contract approved 0.8 million of the future deficit reserve. And then, um, uh, another reserve for the remainder of that, the purse. Yeah.

I just want to make sure this point is the same as the, future deficit 0.8? Correct.

Okay.

As for community investment program, is there a percentage that goes into here or

So the community investment program had started off as the ARPA, the American Rescue Plan Act, that the city received $16 million from the federal government. Council took action of that in June of 2021. And then in April of 2024, because of the possibility of clawback of those funds, council made the direction to use that as a revenue loss replacement, basically swap it, change the color of money with general fund And so technically that community investment fund is general fund dollars, but it's just the residual money that was left over from the programs that were allocated and budgeted as part of that ARPA plan. Once those programs and those funds are gone, we are not adding monies to that, because essentially it's just the general fund. Originally it was set aside because of the grant fund. Needing to be set aside for that. I see so is that mean even though is on the waterfall It's not going to be any additional money add to this item That'll be part of the one-time funds that will be available for council, but I know that we are working at Finalizing those numbers and that will be part of a memo that we've come back to you with with a more detailed explanation of what funds are left there I see

So what you're saying that this is basically a general fund dollars? Correct. And not restricted?

It does not have a restriction to it, that's correct. Okay.

And one of the last item on the reservoir is unassigned, unrestricted. This is whatever remains goes into here.

Correct. At the end of the day, if it doesn't fall into one of those reserve pots, it's what we call fund balance. It's your ending fund balance. It's the pot that it all gets there until it's allocated for a different use or a different reserve.

OK. On this March 3 presentation, it says $10.8 million. We still have $10.8 or more than that?

As of those numbers are audited numbers. I always like to remind folks. I'm sorry. Those are audited numbers. That was in a point in time because those are one time monies. So as of the closing of our books, as of June 30th, 2025, after we completed all our transactions, made sure we paid our debts and got the revenues in December, we accepted the the the waterfall at that time. Last year for 24, 25 and 6.2 million.

Can you repeat that last?

Last year, it was $6.2 million that went into the waterfall.

OK, $6.2 million went into the waterfall. OK. And these two items, the community investment program and the unassigned and unrestricted, those are

we have um we can allocate to any funds we want to that is that is correct theoretically that those are those are open for council they are not assigned for any purpose at this point in time okay i want to be clear you said you you can allocate it to any funds you can allocate it to any purpose purpose okay thank you um

Well, on this presentation, June 30th, 2025, it's about $12 million.

But please be mindful that this was the audited numbers as of the end of 24-25. Council did take action with the Community Investment Fund. And so we are putting together that council, a memorandum, an informational memo for council to show you what those funds at the end of the day, how much is left in this community investment funds.

Yes, because we have allocated some funding for that.

Correct.

We need, I just want to make clear that we did allocate some funds, some funds for those, for that.

As part of the November and December actions that council took with those one-time council priorities, some of those funds came from that community investment fund. And so we are We are putting together that reconciliation for council and we will get that to you.

Aren't you going to ask us the same question tonight as well? Is that true? Excuse me.

Yes, it was part of the presentation last time. We wanted to bring it back to you with a great deal more detail so we can understand and demonstrate to you, also provide you basically an update on what's complete, what's ongoing, what's not. So to give you a better picture of how that fund is performing for our community.

Are you doing that tonight or next time?

We're going to do that next time because we want to make sure we have really good solid numbers for you.

Okay, gotcha. Thank you. Thank you, Council Member Lamb.

I just want to interject here. It's already 7.30 and we still have quite a few items to go. Just reminding everyone. Thank you. That's it for now. Okay, that's it for now. Anyone else have any questions on this budget? We have Council Member Lian.

Thank you, Mayor. I just want to thank Luz, city attorney and city manager, also Suzanne, for answering all the questions that I sent in. That was very helpful. And I do not have any additional questions for now. So thank you very much.

Thank you.

Thank you. Thank you.

Oh, excuse me. If you can go back to, I think it was slide, it's the one with the funds that are that we have extra. What do you call it? There's a term for it. I just can't remember what it was. Yeah, the surplus.

It's slide 14, please. Oh, is it this? Or is it slide five?

Yeah, that one. So you wanted us to decide on this. I was just wondering if the council is ready to decide on these or what is the will of the council. But I also wanted to ask about Well, I know I talked to you earlier, but if you can reiterate what you mentioned about the community police center. So I know that we already allocated, the council had already allocated 300,000, but because we did a site visit that was chief, who else was there? Matt and a few other people. And so we did, oh, and Council Member Lam. And we did an assessment and it looks like it's going to be more than 300,000. So where, when is this, when will this be on, why is it not on here?

It was presented, essentially we rolled over the presentation from last year. So we proved it in your but we've already allocated money for the police right now I want to add more because I think it's going to be more so so what will be the process.

It may or if I could ask if you're you're asking about adding one time money at this point as part of the one time allocation.

Yeah, it's to add from the one that was already allocated.

Yeah, so I do believe that this item does give you discretion as part of this, the one-time component to consider how to allocate that $937,000. So, you know, you have the options in front of you, but you're not limited to those options that are on this page.

Okay, that's good to know. Yeah, I just, and I really feel that it's really important because we have a few businesses there on the South Main Street, and we've had a lot of break-ins. We had Jerry's Market that's been burglarized several times. And then the community, I've asked some of the communities in the Pines, and they're really, they would like to see some kind of a community center there. because there's really nothing there for them to do or go and then and also to have police presence there so I really feel this is really important for the community and so that's why I want to make sure that we that there are represented so anyway so what the process would be to add it on the surplus I would like to add that and I think we need a consensus we with all the pardon me we need a number as well Oh, a number. Well, right now we have 300 allocated, but I really feel it's going to be like 500. And I know that we have the lion living that gave us that 700,000. So if we could use some of that for the community benefit, it was a community benefit. And I don't know if that is that part of the surplus.

Julie Manow is going to answer the question on the specifics of how much has been allocated. Okay. But I'm going to remind you that that is the item that we're going to bring back to you fully because we also have.

Can you repeat that again? It's the item you're going to bring back when?

Go ahead, Julie. Mayor Montano, the council had allocated $310,000 to the police community room as you describe it. And so as I understand it, we understand it. Can you speak a little bit louder? Certainly. So you're proposing then to add an additional monies to reach what amount then?

I'm thinking it's going to be, well, actually I never had gotten any numbers from Christian DiRenzo. Can you come down here and kind of give us a ballpark figure of what it's going to cost? So that way we can add it in hopefully.

We have both microphones active.

Good evening, Madam Mayor. Thank you for the question. The answer is a flat I don't know how much it's going to cost. As I mentioned to you when we did the site visit, there are some unknown variables and factors that we won't be able to quantify until we do environmental and structural assessment. I don't know. It could, you know, environmental remediation is very, very expensive. And so, you know, I would suggest an option is for us to move forward with that portion of the exercise. We can do an environmental. We can come back once we know what that discloses. And then we can revisit what potentially the cost could be for doing full remediation of that facility. Okay, so you don't have a ballpark figure? I don't have a ballpark.

So I'm going to throw something out there. Okay, so I'm thinking maybe 500. So adding another 200 to that.

We understood.

And if it's less, then that's great. If it's more, then we'll come back.

We will come back. Staff will come back once we've done the environmental, the quotes that we received for some of the sort of tenant improvements. We're already nine months old, so we could refresh those and come back with more informed numbers. Okay, that sounds great.

So with your permission, may I clarify your ask? You already have $310,000 in appropriated, you've already appropriated, and you've taken that action, and you're seeking 190,000 more, so that it would be.

200 more, yeah. Because, and I don't know if we can, that surplus, does the Lion Living Bennett Community Benefit include that surplus or not? That is not yet in the surplus. We have not considered it yet, but we will include it.

We'll go back and see.

That's what I'm going to propose. Okay, thank you very much. Appreciate it.

I believe that needs consent. Do we need a.

So you're going to have to make a decision in terms of all of the one time funding needs and how that money gets spent. So it's the council's discretion as to how you want to proceed, whether you take those one at a time or whether you incorporate them all in a final motion. But you have a finite amount here to allocate. So we'll need some sort of final direction that gets incorporated in the ultimate motion.

So I guess a question for Luz, will it make a difference if we just wait till we get an assessment since the money will still be there in the future or just leave it alone and don't even?

If the council wills. Director DiRenzo seems to believe he has sufficient money to do the assessment. So perhaps we come back to you with a robust reconciliation. of those dollars. We will also go back and include the Lions dollars and also the cash flow of those dollars, because I seem to remember there was some timing around it. But our preference is we have certain monies already, and then what do the Lions contribute? So we can present you with a rounded picture.

Yeah, I just don't want it to slip under the rug.

It's money is going to start to work under Director DiRenzo, because he won't allow otherwise.

We'll go with your suggestion.

excuse me i met a mayor council if i may just one thing to keep in mind also is your community center roof um is still listed as one of your potential one-time fundings and given the condition of what i've been briefed on at this point i'd highly recommend that you give it some consideration because it can have a significant can you speak a little bit louder i don't think they can hear you It can have a significant impact on the overall viability of the facility, given the condition of the roof that is in need of replacement.

So what are you suggesting?

I suggest you consider allocating some funding for the community center roof to be addressed.

Okay, we'll do that. Okay, we have Council Member Chua.

I think it's okay to approve the community center roof since it's a safety issue.

Yes.

Let me have Council Member Barbadio.

Right, can we go around and pull what each council member has to say about a potential project or program and then once we have them then we see if we have enough and if we don't then we prioritize and that's how we approve it?

okay so for me if i'm starting it's just okay with mayor yeah right i'm okay with the mopedas youth force for 40 000 i'm also okay with the ring doorbell initiative for another 60 in case the assistant chief of police need needs it and the care solace and i it's okay with me that's a pilot project the choir and band support i think we need that and we recognize their contribution to our city i'm going to put aside this milpitas smart because we don't have that much funds to to address that and we have until 2027 to hopefully we'll get some funds somehow. And I moved I also I'm okay with the community center roof for 300,000 for design. And we'll talk about the 6 million after your design in your proposal. And in addition that 200,000 for the Milpitas Police Center. Oh, community police center?

Okay. It's modeled after the Alviso one. It's a community.

That's all I, that's my feedback.

And Mayor? I'd like to see if we can save $120,000. That's a $5,000 a month. to help with Milpitas Food Pantry, that will give them enough time to work on getting themselves grants to support them. So that's my $120,000 for two years, $5,000 each month.

Rent? What is that for? What is the $120,000?

Funding for food.

For food?

Yes, for food. Well, there's no restrictions.

So what about all the other ones? Do you agree with expansion of youth?

I agree with Council Member Chua on the others. Okay.

I don't have a problem with... I've been supportive of Milvita's Pantry. You didn't have to bring it out in the newspaper. But here's my question. Can an organization like that receive donations like this?

so if your question is whether the city council can can make the donation you do have some ability you have to make a finding that it's a public purpose um that's fundamentally a council decision um but as long as you you made the determination that that was serving a public purpose of the city you can do that i would say we would probably want to refine that a bit when we get past the funding stage so what i would be recommending typically you have a grant structure you have some sort of language that restricts it to be used for a specified purpose um and that may be the charitable purposes of a particular organization um but just something that ensures that it doesn't get diverted from something other than what the city council was deciding to fund i have a question city attorney we need your microphone council member yeah there isn't a requirement for task tax exempt status in terms of um the ability of the city to get grants so for example there have been uh you know one of the older cases that i had reviewed involved the city that set up a small business loan program there was an ability essentially to provide some amount of funding uh through a program along those lines to to provide some benefit to the committee or the community you can have economic development it doesn't have to be tied to task exempt status but you do have to make a finding that what it is that you're funding is a public purpose of the city of milpitas

Mayor and Council, I'd also like to include that this was a future agenda item request to direct staff to bring back something on the food pantry. We have not yet taken action to increase the rent of the food pantry.

Well, I'm going to interject here because the issue is that we want more days open with five days a week. The problem is that she doesn't want to be open more than... two three days only two and three hours a day our homeless population is growing people need even our uh the the cost of living people need more food but that she's not open she does get a lot of foods and so she has to wind up throwing a lot away because she's not open every day that's the issue and that's why you know i was even considering asking the staff to do a rfp this is not okay we Two days or three days a week for only two or three hours a day is not sufficient to help the most vulnerable. I even asked her to stay open on Sunday where we have the homeless showers there, but she doesn't want to be open on Sunday. She said she serves a different clientele. So there's a lot of other issues that we don't know, so I would not, go into this, to even, I would want staff to do some research first before we even go into that, because there's a lot of other issues. Okay, so we're going down the line. How about Council Member Lam?

They said there's already a task. Okay, I'm losing my voice.

Council Member Lam.

I'm okay with it.

Sorry. I'm fine with council member Chua's suggestions.

Okay, so that's a For me, I also am with the expansion of Milpitas YouthForce, that's 40,000, Ring Doorbell Initiative, 60,000, Care Solace, Solus, 80,000, Choir and Band Support, 3,500, Not Milpitas Smart, and then also allocating 370 for the group. cons the consultant to do a to do a design the design for the community roof center and then also to add the malpitas police community center that added 200 000 so i'm good with those we have council member council member bombardillo

all right i had a i think uh during the time of math and and christian already i knew this is a bench uh near the uh toilet in murphy park did yeah murphy park we we good thing i'm here Yes. I'm here to talk about the bench.

We have a spare we can use for that purpose. Okay. Yes. Can I, since I have your audience for a second, can I just briefly clarify the community center roof action? The action is to add funds so that we can complete design services for an in-kind roof replacement. You'll see the estimate at 4.6 million, or if we do the add alternates, the total is 6 million. It's 6.2 million. I've talked to staff a lot about this. We will not execute or move forward on this item, even though you may appropriate additional monies towards this project until we come back in August. Staff and I have a thorough presentation We want you to be mindful of the pros and cons of moving forward with an in-kind roof replacement with potentially a new facility of the same footprint. It's about 19,000 square feet or potentially bonding for a brand new facility that is future looking. That is twice the size at an estimated cost of about $58 million. But we would like to have a thorough dialogue around that before and get your input and advice before we move forward with doing just an incline roof replacement.

See, now you're talking. It would be better for us to just do a little patch up on the roof and go out for some kind of a bond. I think the community would really go for that because we really need to, we've outgrown it. The stage is too small.

And I really feel that we really need a new community center.

We have council members. Oh, wait, do you want to say something else, Kristen?

Council member Chua, please.

With my last briefing, and I brought up, because I know four point something million dollars we don't have. And I ask, when you come back in August or September, please come back with my suggestion on looking at other CIP projects that we can hold off for two years maybe and use that funds to address the community center as one of the alternatives. Might not be the best one, but it's one of them.

Yeah, but the problem is it's just going to patch.

We can discuss that when director comes.

We can. In the meantime, while we prepare for an August presentation, staff and I can put together a plan. I'm not exactly sure where we could couple together $6 million on other deferred projects. It's a lot. But we can do some due diligence and present to you some numbers around that front. with particular attention to doing a modest patching, as you will, until we, you know, until we bond or construct a new facility. You should know, and I will be clear about this, that is not feasible for that facility. Whatever we decide to do, we're looking to spend a few million dollars. Even if we wanted a brand new facility, that is two to three years in the future, possibly four years in the future. The state of that facility right now behooves us to spend and compels us to spend some modicum of money. It may not be $6 million for a roof replacement, but it could be $2 million, $2.5 million that we will have to identify through either defer maintenance. The facility sinking fund has $3.2 million left in it. We could entertain that as well, even though some of that money is being entertained for the new HVAC system. the new chillers at the top of this facility so but we can come back with you and have a more informed decision which is what i wanted to say this evening okay in august in august right yes but there is one more christian please yeah

Is your mic open?

I remember last June, some kids who love soccer came and suggested that Delano Park is a good park. I met them again on Saturday. Is there something that we can do with that, with this budget?

Is it a park?

Yeah, to make it a turf soccer.

Renovate it.

it's the delano park the delano park grass that we already have it's already in the books you're going to put artificial turf oh they're going to put yes vice mayor as part of the cip adoption council appropriated 300 000 for a design for that for that park conversion of natural turf to artificial we will begin that not too distant future and then we'll come back with an award about a year later. So in the meantime, staff will continue to do, to monitor the facility and to do whatever incremental modest, you know, TLC we can provide to that turf until that time. Okay. So that our plan is to convert that.

All right. I think I'll stick with the bench.

Stick with the bench.

I will. Okay. Thank you. Thank you, Christa.

Okay. Did everybody have a chance? We have Council Member Lam.

Yes. I have a suggestion or proposal for vacant positions. For management level positions, whenever an employee resigns or retire, I'd like to propose that the vacancy should be reviewed and evaluate by city council along with city manager and staff to determine whether the position need to be filled immediately or if it can be deferred to a later date. This review process would help ensure that staffing decision align with city council operational needs and organizational priorities and fiscal responsibility while promoting the efficiency and responsible use of public resources.

Is there any feedback from staff on that I do have feedback, but I believe I'm going to defer to the city manager. But I will I will make a statement that we already have a strategic recruiting process in place, where we do thorough vetting of positions as they become vacant, and when they become vacant. And those positions are held until the city manager and forgive me, I'm providing you the process um that we currently do and so i'll let you him uh i'll defer to the city manager for the rest of that but we already have a very robust strategic hiring process in place my comment is to get the city council involved for management level positions

did you have a comment to say um mayor council um and thank you for that uh councilmember um i get a i do get a little bit concerned uh being that as uh the finance director stated we already have a um a process but i would say you're from a administrative interference angle to be cautious. And I think I'll just stop right there.

Yeah.

City Manager, isn't it true that... Are you done, Council Member Lam?

Yeah. Okay, we have Council Member Lam.

Thank you. City Manager, isn't it true that the policy is clear that Council make the, or come up with the policy, but the implementation, to execute that is on the City Manager, especially these positions are management positions. I think it is in your capacity and under your role as a city manager to do that. I don't like the idea of micromanagement. We have nothing to do with hiring, and I really don't want to be a part of that. Did you want to speak? Still, that is not our role. Our role is not to do an everyday kind of job, we have nothing to do with hiring or evaluating who we should hire we have no saying in this so uh i'm going to interject here and um i'm going to interject here and i'm going to um

with the city manager, that is his role and they've already made an assessment. So I'm going to lean with the city manager because I think that's, I think that they're already doing that. They're already looking into that. And we don't want to really get into the nitty gritty, you know, that just so, but we'll leave it like that. Council Member Lin, do you have any more to say? That's it? Okay. Thank you. Okay. And Council Member Lam, did you have any more to say?

No, I'm fine. Mayor.

Okay. And we have Vice Mayor.

All right. Let me be careful. Another group might send me a letter again. okay i think i know where council member lam is coming and this is my statement last time and i think it was just misunderstood see i'm kind so i think what she's trying to do is to make it policy-based and not an interference of you know the wall in between staff and city manager If I understood it right, it's based on a policy consideration, which rightfully and legally we can do, if I may ask the city attorney.

The attorney.

So the division really is between the hiring and the filling and directing versus the creation of the positions. So you do have the ability to ask the city manager to go ahead and bring to the council vacant positions for review as to whether they should be removed from the table. I would recommend, and I do want to let the city manager speak for himself, but I would recommend a little bit of caution when it comes to actions on a an existing position that becomes vacant that you may be effectively preventing the hiring process while the review is ongoing. So, you might want to build into that a little bit of discretion, particularly for vital positions that might need to be filled right away. You know, there's a few ways that you could tackle this. Usually, a position allocation issue is something that would be done on a more comprehensive scale. It wouldn't just be those positions that are vacant or becoming vacant. what are the positions that we can lose and how do we get in the process of losing them? You don't have to go that way, but I do recommend however you go about it, you're just careful about the impacts on the operational side, because if the city manager is not able to hire while you're going through that review process, there may be things that have real interruptions on the city operations.

Right, so it's hiring versus policy determination whether or not We believe that that position being vacant or had become vacant per se is needed for the organization. And of course, that's with the guidance of the city manager. So that distinguishes. you know, the interference of hiring, because Council Member Lam will not ask CM Wheelie, I like this. So the conversation between Council Member Lam and CM Wheelie will be, CM Wheelie, this position, there's five of them, maybe it's, you know, if you look at the organizational assessment, it's something that we can eliminate through policy. So those kinds of conversation. or we can add on to those position.

That's up to the city manager. We have Council Member.

Thank you, Mayor. I think that discussion is really at the time of the budget and the mid term budget to be appropriate, but mid-year and the regular budget. I know, but what I'm saying is, I don't think I do agree with the city attorney and also city manager. This is really their responsibility. As a CEO, the CM, the city manager has that responsibility and accountability to recommend to city council for funding a position or defunding a position. And that's, I think, is appropriately done during the budget process and the midterm budget.

That's all I have. Thank you, Mayor. Thank you. So has everybody had a chance to speak? So I guess I want to, everybody already, did you guys already have, staff, did you already get the prioritization? We did. Thank you so much. Okay.

So I can read back what everyone has agreed to prioritize. Um, and then we can include that, I guess, as part of the motion to finally approve the budget.

Right.

So let me scroll back here. Council Member Chua was supportive of expansion of the Bill Petus Youth Workforce, or Youth Force, the Ring Doorbell Initiative, Care Solace, choir and band support, the community center roof for 370K, and the police community space for 200K. uh and Councilmember Leigh-Anne had also said that she wanted 120k for the Milpitas food pantry I don't know if you want to pull that back because we haven't gotten to that point yet okay and then you agreed with Councilmember Chua on the rest of her allocations not for Carasolus except Carasolus thank you except solos and then council member lamb agreed with council member chua's allocations i'm sorry council member lamb you don't have your microphone on yeah um the only thing i don't agree is uh we don't agree the funding for the pantry until we further discuss that we are not asking for funding

Yeah, next.

Okay. And then next, uh, the mayor supported the expansion of the youth force, the ring doorbell care solace choir band support the community center roof for three 70 and adding 200,000 to the Milpitas police community center. And then we didn't go down the list with vice mayor Barbadio.

I'm fine with the bench and, uh, all the council members a suggestion i do agree as i said i support me this country but i i believe it deserves uh some discussion uh not that we don't want to give them it's just that probably technicalities because of the status as an organization and i want to hear uh you know the legitimate issues raised by the mayor i want to hear council member celine and further information on that, then we decided at that time.

Okay, so then consensus we received was on the Milpitas Youth Force, Ring Doorbell, Care Solace, choir and band support, the community center roof, the police community space, I believe.

The bench.

The bench. The bench. I think that's everything.

Okay. So all the items, there was one that did the food pantry. Giving them more money is not the issue. It's the hours of operation. That's the issue. So I don't think we have a majority on that. we do not have a majority on the food pantry all right yeah and and i want staff to to to investigate that to look research that okay all right second call for the vote i just want to confirm that this is for the staff recommendation as well as those allocations thank you uh so vice mayor barbadio aye councilmember chua

Aye. Councilmember Lam?

Aye.

Councilmember Lien? Aye. Mayor Montano? Aye.

Okay, so we have a, okay, so we already voted for that. So the next one is, conduct the public hearings, city manager, item 11. What'd she say? You got it.

The lights. We missed the staff recommendation piece with that, sorry.

So the city clerk did ask for clarification that the motion was including the staff recommendation being adoption of the remainder of the budget with member Chua's modifications and the approval list. I understood that to be the motion and what was voted on at this time.

Yes.

Okay. I thank you. You wouldn't have to put the paddles to me. Thank you so much.

Congratulations.

I want to congratulate you as well.

Thank you, staff, for all the hard work.

Okay, patient. Yeah, thank you.

Okay, so now moving on to the item 11.

Madam Mayor and Council item 11 is conduct a public hearing and adopt a resolution adopting the 2025 urban water management plan. And the staff contact is the public works director.

All right. Hello, and good evening. My name is Arielle Morales. I'm the Public Works Division Manager for Utilities Engineering, and tonight I'm presenting item number 11, to adopt a resolution adopting the 2025 Urban Water Management Plan. Next slide, please.

Welcome.

Thank you. Tonight's agenda, we're going to look at an overview of the Urban Water Management Planning Act. We're going to look at the 2025 updates to the Urban Water Management Plan guidebook. I'm going to provide a summary of the 2025 Urban Water Management Plan itself. We'll review the city's water portfolio. We'll review the current, the city's current and future water demands. I'm going to discuss our next steps and provide our staff recommendation. Next slide, please. So the Urban Water Management Planning Act was brought came into being in 1983. The California legislator enacted the Urban Water Management Planning Act through Assembly Bill 797. The California Water Code Sections 10608 and 10610 through 10656 requires that an urban water supplier adopt an urban water management plan every five years. Demonstrating water supply, reliability in normal, single dry and multiple dry years. Every urban water supplier that either provides over 3,000 acre feet of water annually or serves more than 3,000 urban connections is required to submit an urban water management plan. The city of Milpitas serves more than 3,000 urban connections and therefore is required to prepare an urban water management plan. The City Council adopted the current 2020 Urban Water Management Plan on June 15, 2021, and the 2025 plan must be submitted to the Department of Water Resources by July 1 of this year. Next slide, please. So the Urban Water Management Plan guidebook is provided by the Department of Water Resources. gives guidance to suppliers when preparing the urban water management plan. The 2025 guidebook has been expanded since the previous guidebook in 2020 to better address groundwater overdraft, regulatory revisions, and changing climatic conditions. A summary of those changes are as follows. First, suppliers with multiple water systems, criteria has been added to determine when a supplier with multiple water systems must submit an urban management plan. The department, the DWR submittal tables, these were updated to be more accurate and clear, identifying between required and optional data. The water loss standard reporting requirements were added for meeting the 2028 water loss standard, which is no more than 34.9 gallons per connection per day. The direct potable reuse. The State Water Board has adopted regulations for the use of direct potable reuse. So the guidebook was revised. The supply and demand tables to support clear direct potable reuse reporting. Lower income housing demands. Guidance for optional reporting of the method used to project water use for low income housing. Incorporating regional housing needs allocation into projected land use and water demands. And lastly, reporting groundwater recharge and water storage. New clarification was provided to prevent short term storage from being double counted. Next slide please. So the 2025 Urban Water Management Plan now serves as a guide for local water conservation planning and implementation purposes. It informs our customers, the community, and the state of the city's water management practices, long-term supply reliability strategies, and drought response measures. Adoption of this plan will allow the city to be eligible for state grant funding opportunities and to receive drought assistance from the state. In addition, the plan also addresses emergency supply interruptions and complements other local planning documents. To name a few, our general plan, water master plan, our water shortage contingency plan, and other regional resource plans. So an important management and planning tool that helps us connect local and regional land use planning. regional water supply planning, infrastructure and demand management, and broader statewide initiatives and regulatory revisions. It provides management actions related to water storage and necessary infrastructure improvements and emergency connections with our neighboring suppliers. It also provides trends in water supply consistency related to climate change and regulatory conditions. So with that said, what does our system look like and how much water do we use? now and into the future as our population grows. Next slide, please. So first let's take a look at our water system, starting with our physical components. The city's water system is shown to the right. And it's comprised of pipes, valves, pump stations, reservoirs, turnouts from our suppliers, being SFPUC and Valley Water, emergency interties between the City of San Jose and Alameda County. We have one emergency groundwater well, and we have a recycled water network that's owned by the City of San Jose and operated by South Bay Water Recycling. So where do we get our water? Next slide, please. The city's water portfolio is made up of wholesale water from SFPC, Valley Water, and recycled water. 60% of our water is purchased from San Francisco Public Utilities Commission, 30% is purchased from Valley Water, and 10% is recycled water from South Bay Water Recycling. As a note, the city does not currently rely on groundwater. However, we do have an emergency backup well. It's the Pinewood well. And we do have the new McCandless well, which is under construction and expected to be active within the next year. And the Curtis well, which is still in design. These new wells are intended to augment potable supply. Next slide, please. This map is just showing what the SFPU system looks like from the reservoirs up in the Sierras, the main one being Hetch Hetchy and the pipelines through the Central Valley into Santa Clara County and up the peninsula. So this is SFPUC and this is where we get most of our water. Next slide, please. This is the Valley Water System. The main reservoir here is the San Luis Reservoir, and you can see the pipelines coming throughout Santa Clara County up the peninsula into Palo Alto Mountain View and Milpitas. Next slide, please. And lastly, we have the South Bay recycled water system. It's shown to the map. It's shown on the right of the map here, the map on the right. Our recycled water is used for irrigation and some industrial applications. We have about 252 recycled water accounts. And the industrial applications are cooling towers and then at our odor control facility at our main sewer lift station. Next slide, please. So now we know where our water comes from. How do we use the water we purchase? In 2025, with our population at 81,773, we had 16,760 water service connections, which comprises 887 million gallons per day. 0.12 of those million gallons per day is potable water. 5.28, approximately 60%, is coming from SFPUC. The 30% from Valley Water at 2.84 million gallons per day. And then 0.75 million gallons of non-potable use via recycled water. Next slide, please. So what do our future water demands look like through 2025? Our population is expected to grow from the 81,000 to 137 by 2025, and demand is expected to increase to 9.9 million gallons per day. The city's population is this growth is based on a 2.7 percent annual growth rate Which was established by the 2025 Bay Area water supply and conservation agency regional water demand and conservation projections report So coming back to the urban water management plan With all of this taken into account Our 2025 urban water management plan demonstrates that the city can maintain a reliable long-term water supply portfolio under normal conditions. However, successive dry years will trigger wholesale rationing. Rising temperatures will lead to increased drought frequency severity, which will reduce imported water reliability and spike outdoor irrigation demands. However, continued investments in conservation, recycled water use, groundwater development, and regional coordination will help reduce dependence on imported supplies and strengthen our long-term reliability. So some mitigation strategies include transitioning our emergency groundwater well into active status, installing new wells such as McCandless and Curtis, and expanding water efficiency and mandatory reduction programs. Next slide, please. So our timeline up to date has been as shown here. In April, we presented the draft management plan to the Energy and Environmental Sustainability Commission. The document was made available to the public via the city's website on May 22nd. And we've provided noticing in the Milpitas Post in the two weeks preceding this meeting tonight and once adopted we will submit to the state by july 1st next slide please so our recommendation this evening is to adopt the resolution adopting the 2025 urban water management plan adoption is recommended as missing the july 1st deadline makes the city legally non-compliant and ineligible for state and department of water resources grants loans and drought assistance And that is the conclusion of my presentation. Thank you very much.

Okay. Thank you very much for that presentation. So do we have, well, I'm going to open up for the public hearing. Any questions from the public on this item?

I have no public speaker cards, Mayor.

Anybody from the floor? Okay. I'm closing the public hearing, and I will move to council discussion on this item. Any dialogue on this? We have Council Member Chua.

Since staff did a great job briefing, I think me and all the council members, I would like to move to adopt.

I have a question.

Okay, but I will make my motion. Adopt a resolution adopting the 2025 Urban Water Management Plan.

Okay.

One second.

So I have a question on that. I have a question. So can you go to slide... Which slide was it? It was the one where it has the pipelines, the Hetchy pipelines. It should be slide 8. I think it was. If you can put it on. So my question is, actually I'm surprised because I thought the area where I lived was We had Hetch Hetchy water, but it's not. And now I know why it's not sweet. I think there's another one with the city. Not this one here. Mayor Montana. I should have wrote it down on the slide. Mayor Montana. There's another one. I think it's 8.

You live in the Pines, correct?

I think it's 8, slide 8. No, that's not it. Well, I guess go seven. So we have, I've seen, so you're saying that Hetch Hetchy water is all the blue and Valley water is all yellow, but I always see Hetch Hetchy pipelines on right near Elmwood, which is near the pines. Why is that?

So the Pines is served by the Hetch Hetchy system.

I'm sorry, I didn't hear you.

The Pines area is served by the Hetch Hetchy system. That's that neighborhood you're near.

Oh, okay.

Where you see that blue, where you see kind of those two stars, that is approximately where the Pines is or that neighborhood is. So that area where you see the Hetch Hetchy that come in by Elmwood, that is, Hetch Hetchy does serve that area. okay so very secluded in between the valley waters okay so the borderline is not calaveras it's really more where elmwood is well yes but you have a pocket there that's great mall parkway that there's just a little localized area that hse serves

Okay. So the Pines is a Valley water.

That is correct.

Okay. All right.

No, I'm sorry.

Sorry. I was okay. The Pines is Hetch Hetchy.

Oh, Hetch Hetchy. Correct. Correct.

Okay. So that's why it's not a hard water. It's not hard water. It's soft water.

Valley water. Mostly, um, specify is it's kind of allocated for the industrial commercial areas. Okay. So that's how they split it up.

Well, I'm glad to hear that, and I know that the residents are happy that they have Hetch Hetchy because that's really good, good, clean, safe, clean, as Bosco says, safe, clean water. Anyway, Bosco is Bay Area Water Services Conservation Corps, and I serve on that board. Let me see what else. Oh, yeah, one more. The water meters. Do school districts, does our school district, schools, and parks have water meters? They're required to have water meters as well.

Yes, they do.

In their facilities.

Yes, all facilities, all properties have water meters.

And who's in charge of them, us or the school district?

We are responsible up to the meter. They're after the private owner. In this case, the school district will be responsible for that.

Okay. Yeah, because I've been to some school districts, and sometimes the toilet just keeps running and running. The water is just wondering if somebody monitors that. Okay, that's it. That's all for my questions. So we had a motion by Councilmember Chua and a second by... myself i will second that and so now that's um we already did public hearing there was no public hearing so now i'm asking for um uh a vote vice mayor babadio aye councilmember chua aye councilmember lamb aye councilmember lian aye mayor montana aye item 12 city manager

Madam Mayor and Council, item number 12 is to conduct a public hearing and adopt a resolution adopting the 2025 Water Shortage Contingency Plan and introduce ordinance number 240.8, amending the section of chapter 6 of this Title 8 of Milpitas Municipal Code relating to water shortage contingency plan and permanent water waste restrictions, including a ban on watering of non-functional turf And the staff point of contact is, again, the public works director.

Good evening, council, mayor and vice mayor. I'm Elaine Marshall, deputy public works director, and I'll be going over the presentation related to the water shortage contingency plan. So this plan goes hand in hand with the urban water management plan in that the state does require that this plan also is updated every five years when the city does the update to the urban water management plan. Next slide please. This water shortage contingency plan really is more of a point in time look at the water demands from our community along with what our wholesale suppliers are able to provide to us in terms of water supply. The procedure includes an annual water supply and demand assessment. The water shortage contingency plan also defines different water shortage levels and corresponding conservation measures and water prohibitions in response to any water shortages. The plan also includes the city's communication plans during a water shortage and drought declaration. Next slide, please. So as I mentioned, annually the state does require the city to conduct an annual water supply assessment. Both SFPUC and Valley Water conduct their own assessment and then inform their customers of how much water they are able to provide and whether or not there are any reductions in available water supply. If there is a shortage anticipated, then the city goes into implementing the water shortage contingency plan. So every year around May or June, the city staff and I conduct the annual assessment. If there is no shortage, there's no further action needed. But if there is a shortage identified, we would then bring that information to council with a recommendation on an information on the shortage level we anticipate and what our response action should be as outlined in the water shortage contingency plan. Council would then declare a state of drought emergency and implement the water shortage contingency plan along with communications, compliance, and enforcement actions. Next slide, please. The water shortage contingency plan follows six standard water shortage levels. You can see everything from zero shortage, which is normal conditions, through the sixth shortage level, which is a pretty severe drought, more than 50% reduction in our available water supply. Water shortage actions include water use restrictions, reductions in irrigation and watering schedule that's allowed, as well as additional actions as you go further into a higher shortage level. The zero shortage level is really kind of the permanent water use restrictions that are in place. The city has adopted permanent water conservation measures as a way of life here in Milpitas. One of the new actions that we will be adding to this level zero plan is the prohibition of watering of non-functional turf with potable water at commercial, industrial, and institutional properties. And I'll talk more about that in The next slide. We're also updating the water shortage contingency plan to incorporate and align with the update to the urban water management plan that you just approved. Next slide, please. So the biggest change is instituting the nonfunctional turf watering ban. This was originally a statewide ban during the last drought. And through AB 1572, was made permanent even during non-drought times. This applies to non-functional turf, which is defined as decorative grass that does not serve a recreational or community purpose. It applies to those types of turf areas at government and public agencies, commercial, industrial, and institutional properties and HOAs on a rolling implementation schedule. which I'll go over in the next slide. It does not apply to parks or single family lawns or turf areas that are watered by recycled water. So those areas will continue to be watered by recycled water and allowed and single family residences can continue to keep their lawns. AB 1572 requires that a local ordinance be adopted by January 1, 2027. which is why we are bringing this to you along with the update to the water shortage contingency plan. Next slide, please. As I mentioned, there is a phased rollout starting in January, 2027. It starts with our own facilities as well as state and public agencies, including public schools and universities. A year later, the prohibition will apply to industrial, commercial, and institutional properties, including private schools and universities. Starting in January 1 of 2029, the implementation then applies to homeowners associations and common interest developments. In 2031, any public agencies, local governments, or water systems in disadvantaged communities are covered. Next slide, please. Just as a reminder, while staff will be educating and bringing information out to the affected properties in accordance with the rollout schedule, we continue to also encourage the efficient use of water as a way of life. And so we have and continue to offer a water smart customer portal where Customers can log in and actually see their near real time water use. They can also sign up for leak alerts so that if the smart meters sense that there is some sort of continual flow through the meter, they can send an alert to the homeowner or the property manager, letting them know that there might be a leak on their property. The actual portal also walks them through how to look for the leak. The city also partners with Valley Water and we continue to offer add-on rebates for converting lawns to water-efficient, drought-tolerant gardens as well as lots of other education and opportunities to change out inefficient fixtures with more water-efficient fixtures. And then also, you know, we continue to respond to reports of water waste and continue to educate our residents and our community about the importance of conserving water. Next slide, please. The recommendation before you tonight is to conduct the public hearing on the Water Shortage Contingency Plan and introduce Ordinance 240.8, amending Chapter 6 of of title eight of the municipal code. I did want to point out that in the gender report, we did have a typo. The water use restrictions align with water code section 10608.14. There was a typo when we dropped the one at the beginning of that water code citation. And then the second recommendation is to adopt the 2025 water shortage contingency plan. And I'm available for any questions.

All right. Thank you, Elaine. Thank you for that presentation. Is there anyone from the public that would like to make any comments on this item?

I have no public speaker cards, Mayor.

Anybody from the floor? Seeing none, I will close a public hearing on this item and go to my council. I do have a couple questions, just so you know. So any council members? We have Council Member Hanlian.

Thank you, Mayor. In addition to that 10608.14, 10632 also got the leading one missing, too. Sorry about that. You might as well just correct that.

That's all I have. Thank you. Thank you. All right. Thank you. Anyone else have any more comments? I have a couple of comments. If you can go to slide 5. Okay, on bullet number two, HOAs, when does that come into play? I think that's on page seven, I think.

Yes, HOAs would be January 1, 2029. 2029. Okay, and then page eight.

Page eight. Is that the one? Yep, no, page eight. Oh, the water waste reporting. Is there like a hotline, a number that?

There is a hotline. You can report water waste to our 2600 number and then, I apologize, there is a hotline number and I don't remember it off the top of my head. And how do we let the people know, the residents know or anyone? It's on our website. And then during times of drought and heightened enforcement, we do social media as well as communications, regular communications about reporting water waste.

Can you put it on the utility bill? Because a lot of people don't use, they don't look at the website. We can do that. That way they can, because sometimes I even see, you know water flowing out in the street and but you don't i don't know who to call so yeah and that definitely also through my milpitas you can report water okay good and going back to the hoas um so what are we doing to let the hoas know that this is coming and um because i think there's 12 hoas no i think there's more now because of all the new development how do we let them know

Yeah, that's a great question, Mayor. Actually, there is a association of homeowners associations that Valley Water is actually leading some presentations to. Our staff will be participating. We'll also be sending out direct mail information and getting the word out. But I think a lot of people are starting to hear about it. You've even seen right here, Town Center has already started converting turf to different types of landscape areas.

That's great. Yeah, I think they need to be prepared, not all of a sudden they have to, you know, do it. But they need to know ahead of time and that way they could start converting their lawns into drought tolerant landscaping.

Yeah, and I think our Calaveras Munian project is also a good example of how the city is leading by example as well.

Is it only the Valley Water that's doing that? Shouldn't the city be doing that with our city? Oh, no, it's city staff are working with Valley Water and we'll be doing a lot of outreach and education as well. Okay, great. Well, that's a good partnership. That's great. Okay, I'm done with my questions. So now I'm moving on to Council Member Lam.

Thank you Mayor. I just have one question. How many locations we need to convert turf into non-bass?

You mean city properties?

City properties, sorry.

You know what, that's a great question Council Member Lam. I don't have the number off the top of my head. We have an inventory of it and we'll be working with our operations team on

complying so first we'll stop watering and then we'll look at opportunities to convert it either to mulch or something else okay is that it okay I have another idea so if whenever we do we whenever we are in a drought if we can have that number displayed on our Oh, on all the digital signs? Yeah, that way people will know what number to call. Okay. Thank you. So that's it with that. I need a motion and a second.

Mayor, this item included an ordinance to be introduced by title only. Would you like me to read the title at this time?