Orange City Council - Regular Meeting

I'd like to call the regular city council meeting of 05/12/2026 to order. If you have not silenced your cell phones, please do so at this time. Tonight's invocation will be given by Rabbi Cassie Kale from FISH Interfaith Center at Chapman University, followed by the Pledge of Allegiance led by Mayor Pro Tem Dennis Bellodeau. Please stand.

Distinguished mayor, council members, city staff, and members of our beloved community, As we gather this evening in service to the people of Orange, let us begin with a moment of reflection. May we approach this work with wisdom, humility, and genuine commitment to the common good. May those entrusted with leadership tonight be guided not only by knowledge and experience, but by compassion, patience, and moral courage. In moments of disagreement, may we give one another the benefit of the doubt. May we list it not only for the words being spoken, but for the values and hopes those words are trying to express, concerns for safety, desire for fairness, love of community, and hope for an even better future.

May we remember that every person who comes before this council carries a human story and that there is something sacred in the face of every fellow human being. Even when perspectives differ, may respect remain stronger than division and may understanding rise above suspicion. Let this chamber be a place where thoughtful dialogue is valued, where integrity guides decision making, and where service is measured not by personal gain but by the well-being of the community as a whole. May the work done here tonight help strengthen trust among neighbors, deepen the bonds of community, and contribute to a city where all residents can flourish in dignity, safety, and peace. And may we go forward together with wisdom, compassion, and purpose.

Amen. Amen.

Please place your hands over your heart and say with me.

I pledge allegiance to the flag of The United States Of America and to the republic for which it stands, one nation under God, indivisible, with liberty, justice for all. Thank you, rabbi. Madam clerk, please call the roll.

Mayor Pro Tem Bellido?

Present.

Council member Barrios? Here. Council member Dimitriou?

Present.

Council member Tavallaris? Here. Council member Gutierrez? Here. Council Member Gillenhammer?

Here.

Mayor Schlater?

Here.

A quorum is present.

So we have a couple of presentations and announcements this evening. We're going to start with our two high school liaisons who are giving their final school updates for the school year. And so I will invite forward El Medina High School representative Dylan Platfoot first. Dylan, when you're finished, please standby. We have a little momentum of thanks for you. And then stay on upfront, we can all come down and get pictures with you.

Hello. Good

evening, you guys. Almedina High School has had an action packed couple last days where we had our decision say and our AP test occurring. And then beginning with old business, April 29 was senior signing day where Andrew Alvarez, Sadie Caballos, Jack Davis, and Leila Grajeda were all put on the

spotlight to commit to different universities.

And then continuing with sports, track and field finals took place the twenty ninth and the April 30. And then right after that, we had our swim finals, which was April 30 and May 1. And boys volleyball also had their final game where they sadly lost, but they showed that they were not bad sportsmen. And then continuing, athletic night was May 4 where participants were able to get a feel for Vanguard athletics interacting with and experiencing, all of the sports that we have to offer. And then lastly, Al Madina Varsity Baseball went against Canyon on the fifth, where we would like to congratulate them on achieving the number one spot, receiving the title of 2026 league champs.

And then also, recently, we had our Al Madina Little Mermaid put on, lasting from the twenty second to the April 25. And then we also have the second annual Jazz Under the Stars taking place April 30, where our jazz band, including others, all gathered and showed us what music was really about. And the Olympiad Games also took place on May 1, where multiple different schools united to making it an immersive experience for our students with disabilities. And then was also May 1, which was a Chicano dance, and everyone had fun dancing to cumbias, reggaeton, and more. And then May 1 was also National Principal's Day where we'd like to honor mister Bob King.

We love him. And then continuing, we have dance auditions just concurring, I think they happened last week. And then for our seniors, we already have our grad caps, gowns, yard signs, yearbooks, prom tickets, senior brunch tickets, senior trip tickets, and Universal Studios tickets all being sold currently because the year is to an end. Very sad. And then thank you guys for your time and everything you have done.

Alright, Dylan. Thank you for keeping us informed about all the goings on at Alameda High School. You've done a great job. Please stand by until we have the next update, and then we'll all come down. So I'd like to invite forward to Orange High School representative Jacob Gonzalez, who I think just arrived.

Good evening, city council. I am proud to represent Orange High School this evening and share highlights from our school campus and student committee. But first, I would love to introduce next year's Orange High School city council representative, Zevi Nava. Give it a round of applause for her, please. You guys are in great hands next year.

So this month, we have been in an exciting and successful time for our campus. Orange High School has recently celebrated our annual signing day, recognizing accomplishments of the students at the Hyatt, a a city, and Wesley Lindo as they committed to continue their academic and athletic careers at the collegiate level. We are incredibly proud of their hard work, dedication, and leadership, and we wish them continued success in the future. In academics, AP testing is currently underway. Many of our students are participating in AP exams and demonstrating their commitment to academic excellence and college readiness.

This last week, our campus is also celebrating teacher appreciation week appreciation week. We're taking time to recognize and thank our teachers and staff members for the dedication, support, and positive impact on our students every day. Their hard work continues to make a difference for both inside and outside the classroom. In student activities where excitement is is in the building for prom, which will be held May 30, students are encouraged to purchase a ticket as soon as possible because prices will be rising. And athletics brought tremendous pride to our campus.

Our softball team recently earned a title of Grove League Champion, making the program's first league championship in a hundred and twenty five years. This historic accomplishment reflects the dedication, teamwork, and perseverance of our student athletes and coaching staff. Congratulations to the entire softball program on an outstanding season. As we move closer to the end of the school year, Orange High School continues to demonstrate excellence in academic athletics and students involvement. We are proud of our students, staff and community for making this an accessible and memorable year. Thank you.

Thank you, Jacob. You've also done a fantastic job of representing Orange High School this year. So thank you so much. Councilor Dmitry, did you have a few words you wanted to say? And then I'll ask

Doctor. Gutierrez to follow-up. Sure. Thank you very much. And Jacob, thank you so much for your year that you've dedicated coming here. And hard hard to believe, I graduated from Orange High School just just a couple of years ago. So as did council member Barrios. So we're very, very proud of you. I think both you, Jacob and Dylan, are going to go very, very far. And please don't forget us. Once in a while, drop us a little line, let us know how you're doing. Like I said, it's been an extremely wonderful year and we're very, very fortunate to have watched you grow in this last year. So thank you for all you've done.

Thank you. I appreciate the opportunity that you all provide

me with. So thank you.

All right. And Councilor Gutierrez?

Yes. Dillon, I wanted to thank you for always coming to give us an update on my fellow vanguards. Al Medina obviously is my alma mater, and just a few short years ago I graduated from there. So I appreciate you giving us all the happenings at Al Medina, and I'm excited the graduation ceremonies that are to come. And I'm excited for your future. You always did such a great job coming and letting us know what's happening, Almo, and as did you, in regards to Orange High School. So I thank you, and I wish you the best and much success in your future endeavors.

Thank you.

Perfect.

Okay. So we are

Oh, I'm sorry.

Oh, I'm sorry.

I was gonna show the high school presentation, the community service project. Oh, absolutely.

Inspired us speaking at our opening Penny Drexel. She and her family also led the march at our first annual Oasis Life Banana event. This event was open to the entire community and took place on a recently renovated track.

Alright. Thank you very much. Good luck in your future. Okay. So we're trying to create more interaction and cooperation with Chapman University and take advantage of the fact that we have all this talent right here in our city. So our economic development department has worked with Kevin Meredith from Chapman University's Leatherby Center, and they want to introduce a student team making presentation on the West Cotella Orange Yard. So I'd like to invite Kevin forward at this point.

Good evening. Thank you very much for allowing us to be here. I'm going to keep my part super short. I'm a professor, adjunct professor at Chapman. I'm a business owner here in Orange and an Orange resident.

Resident and the overlap of all those things is my obsession for innovation and that's what has kind of brought us here today. So if we go to the next slide. This is the layout, the class that all these students are here representing is a cap stone class in the business school. In order to graduate, every student has to take this class and it's an integrative class that pulls together everything that they've learned regardless of their minor or major in the business school. Our term project for this year was to develop a digital twin that can be an expert in strategy, basically their co pilot for strategy that they can take upon graduation and use it on an ongoing basis.

This part of the project was designed to look at a twenty year economic strategy for the city of Orange, recognizing the tight current situation and what that long term vision might be. There were 15 total teams that were a part of that class, and two teams were down selected, and one team will be presenting tonight. So with that, I'll get it over to the students who really are the ones that

we want.

Thank you.

You can move to

the next slide.

I'm Whit Wilder.

I'm Colin Murphy.

I'm Nova Warnstrom.

Move to the next slide.

And we're proposing the Living Back Lot, an open walkable production district that fits naturally into Orange's historic identity. Productions don't just create filming revenue, they also support restaurants, retail, hospitality, local vendors, and creative jobs at the same time. So while productions are filming, the district is still functioning as a real destination with thriving businesses and consumable entertainment for residents and visitors. And because Orange already has this historic architecture, the district will feel authentic rather than manufactured. Orange is also home to Chapman and Dodge College, which is the fourth best film school in the country, so the district gives Dodge College graduates a reason to stay local, continue building careers in Orange rather than relocating to Los Angeles.

Next slide. The proposed district sits directly across the river from OC Vibe, which is already set to become one of the region's largest entertainment destinations. That means Orange has the opportunity to benefit from the traffic, energy, and investment already being drawn into the area instead of competing against it. The district would also activate underutilized industrial space while still connecting back to Old Town Orange and the city's historic core. This gives world class creative talent a reason to come stay, work, and invest in Orange.

If OC VIBE becomes the entertainment anchor, the Orange backlot is the creative and production hub next to it. Together, they create an actual reason for people to visit, work, film, and spend time in Orange long term. Next slide, please.

All right. And building off of what Nova said, the state of California understands that it's absolutely imperative to keep filmmaking and creative things like that in California as they're trying to leave the state of California actively. So the state of California has given a 35% baseline credit for films being made inside of California and there's another 15% credit for those being made outside of Los Angeles in the 30 mile zone, which Orange sits directly outside of. So that's about 50% back on qualified production spending outside of the 30 mile zone, And Orange is a great spot for that to already happen because like Nova mentioned, there's a lot of infrastructure that's already here that would provide a great background and a great filming location for many different TV shows, movies, and things like that. So the state of California has a $750,000,000 annual budget for that and already $4,100,000,000 in economic activity has been created over about 120 projects.

And to explain more, Whit will tell you about why the City Of Orange is so perfect for this.

Yeah. So one of the biggest advantages that the City Of Orange oh, next slide, please. One of the biggest advantages that the City Of Orange already has is that we're not starting from zero. The infrastructure, identity, and creative foundation is already here. Old Town Orange is already functioning like a built in back lot with over 1,400 preserved historical buildings and a recognizable visual identity that productions can use without needing a massive new development.

What makes this especially important is that we do not need to wait years for, like, a studio district or an entertainment hub to be built up to start seeing an impact. We can start amplifying the work the city's already done and the resources that already exist here, like Chapman students, local businesses, Dodge College, and the historic district itself that create a foundation for production and content creation to grow organically. And by leaning into what Orange already offers, we can begin to build momentum now instead of later supporting local restaurants, retail, housing, and production services while also giving creative talent a reason to stay and work in the city after graduation. At the same time, recurring production being filmed here generates, tourism, culture recognition, and helps establish Orange to be a recognizable creative destination in Southern California. And thank you.

Well, thank you. Your timing could not be better and we really appreciate your efforts and creativity. And again, this is why we're happy to be working with Chapman on future endeavors like this as well. Anyone oh, Councilmember Barrios.

I just had a question about your vision of the particular area that you were showing highlighted on the map. So obviously, you went and visited. It's all low level industrial. So is the idea that we would either incentivize or when we look to modernize or renovate that particular area, that we would do so with filming in mind. So versus like the original orange yards that had a very particular look, very modern, very sleek. Or even you could do that, but you would still you would just constantly have the filming in mind? Or you're suggesting that keeping it with a historic look and feel is what would be the most attractive.

Yeah. So we looked into and studied how OC Vibe is going to look, which is very commercialized and very modern and sleek, like you were talking about. So what we're proposing is that across the river, we have something that's more authentic to Orange that kind of keeps that historic vibe while being able to use it as a kind of a mixed use place where filming can happen. So there would be film studio probably more towards the back. And then we also have this proposed Main Street where it's a lot of just built up looking like Old Town Orange, but there's a lot of infrastructure already in place for filming to basically be a film set and also a mixed use entertainment district where people can go in and out when films aren't being made and there's actual shops and businesses there.

So just a lot of mixed use. But we investigated and found that it has to be more of its own like an old town vibe because why would people cross the river from OC Vibe to basically go to the same place? So there has to be some sort of strategy that allows it to be its own and capture that audience instead of trying to replicate what's already across

the river.

Thank you.

Councilor Merritt Gutierrez.

So am I correct in understanding you've already done your capstone study? Or are you in the middle of it? Or you're already completed and you have an iteration, and you have a plan, and you have something to present to us besides what I just saw?

This is our culmination. We do have a whole 12 page paper that we are actually submitting tomorrow about it, which we can send over that has

a Yeah. Lot more

I would appreciate the details too. Yeah. Just because I was questioning the same thing. So are we using Old Town? Are we using that location across the river that we were thinking like an economic thinking tank for Chapman? But now I think this is really innovative, I would appreciate an actual plan, your iterations, or how do we get there, next steps, things of that nature.

Yeah, we have a twenty year strategic plan lined out that we just didn't have enough time to present in a short period of time. But yeah, we can get that sent over.

Thank you.

Yeah.

Councilwoman Talaluis.

Thank you. That's actually this is my district. And so I want to thank you because we've been racking our brains thinking about themes and, you know, what this could be next to OC Vibe. That's not OC Vibe but attractive in a different way. And I think you've taken something relatively so simple and made it very attractive. Just the thought of you calling it the back lot, I think is amazing because everybody hates the word orange yards. I think it's fine but everybody else hates it But I just leave them like that. So I really want to thank you for that. You've kind of taken a lot of thought into this obviously, but it's really kind of answered a lot of my questions in my head. So are you guys graduating this year?

Yes.

Are you all staying in Orange County?

TBD. TBD. TBD.

I would love for you I mean, let if your teacher can let our city manager know your contact information, maybe you guys can come to our next meeting and the city manager and I discussed this with the property owners and we're trying to get everybody enthused about something that's different and on the Orange side. I would like love for you to present your ideas to them. Cool.

Okay. Yeah.

Thank you very much.

Thank you. Thank you. You.

I hope

they got

an A. No pressure. Yeah. No pressure.

Well, and what council member Tavalares didn't tell you is that her uncle is an Academy Award winner for the Godfather movies. He knows a thing or two about set design.

With that Bad Dead Horses.

Very true. Very true. But I was also just listen. You looked at this specific area. Is that because the Orange Yards project had already been in place? You had something to look at representative that had already been carved out, or did you look at other areas of the city? And I asked specifically because the biggest area that's going to go for a full teardown and rebuild would be the Orange Mall. In council member Tavalares' district also, but would lend itself in terms of being almost a blank slate as it's built. And that's something that we've been talking to developers about who already have kind of one foot in already. So I was just wondering if you had looked at anything else.

I mean, area across with Orange Yards, we just saw that it was the prime opportunity because it was a lot of underutilized space, but then also because we knew about OC Vibe and that's kind of more what draws to that area rather than away from another area. We just thought it would be the perfect opportunity to while people are already in Orange County coming to do all these things, they can cross the river to Orange.

One thing we did note that's in our paper is that Anaheim is going to be building a road like right along the river, which kind of could impede the foot traffic. It's just a natural barrier that people aren't going to want to cross. So we were kind of playing with the idea like how can we work with the city of Anaheim. I don't know if they I mean, it's a fine line because it's like, we ask them, hey, can we work with you to maybe get some sort of structure in there that really incentivizes foot traffic to come across? But then we also are like, Okay, do we want to point out the fact that we also want to leach off of them and then make the road even more of a blockade? So it's there's a fine line between that. But like Nova said

And honestly, cities, there really isn't. That's good to know. But later tonight, we're going to hear from our public works director who's working on the river part, the riverfronted part. So yeah, maybe a meeting to come in and chat would be very timely.

Yeah. But we noted that area specifically because we've been to the movie theater and noticed that how much parking space there is. And then it's literally right across from OC Vibe, which is, I read somewhere like the largest real estate development in the country at the moment.

And it's also transportation. So really easy for people

to get in and out.

Yeah. So perfect spot.

Alright. Councilmember Gillenhammer.

Nice work. So I think you do get an A for presentation and creativity. I wanted to say thank you. I want to say thank you to your teacher for having this idea. I would encourage you to continue to have this idea. I think there's multiple opportunities to engage one of the biggest partnerships that the city could potentially invest in through the Chapman Brain Trust. Right? So I love it. Yeah, if you are looking for a job, let me know. I work at Amazon.

Then my one practical question for you is, did you look into this? And do you envision this like a studio has a demand to actually purchase this land, build it, or are you envisioning this more as the landowners sell it and it's like if you build it, they will come type

opportunity? I specifically did look into that and it's more so we we were thinking, and again, we don't know how exactly this would work, but somehow get the studios to understand that there is a lot of incentives to start filming in Orange and that there's this kind of open lot to do it. And who knows how long the incentive is going to last. But just for right now, there's so much pull. I mean, like I said, it's basically you're filming for half off.

And that's huge. Studios will recognize that. And but I think there needs to be some sort of and again, I don't know much about it. Like, don't know if you guys would present to the studios and say like, hey, there's a lot of incentive to film in Orange. And then we also have this space where if you guys want to make a studio you know, incentivize that studio, we have a perfect spot to do it.

And there's going to be a lot of revenue, a lot of foot traffic. It'd be multi use. But no, we were more so looking at it as we get a poll here and then those companies, the studios like Netflix, Warner Brothers, whatever would recognize that opportunity and hopefully jump on it.

Nice work. Thank you.

Council Member Dimitri. So I've got two questions.

First of all, thank you. It's interesting and I'll be the guy to rain on the parade and throw a hard one at a real hard one. Did you guys, in your report or your studies, as you were working through this program, look at all the property that is within that scope that belongs to the county and they have no interest? And how do you work around that?

Stumped him. Could you

repeat that? So there's county property. So for instance, in that scope of area, there's the Orange County Sheriff's Training Center there. There's also a major Orange County Public Works yard that the county is not gonna be interested in working with the city to do anything with that property. So did you guys, your formulation of your outcome here, take that into consideration? And did you work out any how how would you accomplish a goal of establishing the back lot with that in mind?

For extra credit.

Yeah. I told you it's going to be tough.

I'm not sure we looked at that as a goal, but I think that's something valuable that we can add into our paper or a plan that we will be sending.

Yeah. Okay. And then the other one the other question is, did you did you do any type of research with past productions that have occurred in Orange? We've had some pretty big ones, Thingy Do, Ghost Whisperer, Clockstoppers, and reach out to those production companies and ask them what were some stumbling blocks that they ran into in the city when it came to production or permitting or what have you in ways that we can streamline or assist them in making it more encouraging to come here other than just the cost, which, of course, is the major factor.

That's a great perspective that I wish we would have heard Great a idea. Few weeks We are aware of what has been filmed here, we looked into that. And what we really honed in on is that we want more series to be filmed here because that keeps a crew around and it incentivizes people to live close. And then we also had thought about a great way to raise revenue would be if you're filming in Orange, especially a series, maybe your catering contract has to be from a local restaurant or food business. And just little things like that in the contracts that would keep the revenue and the tax revenue in the city of Orange.

And support those businesses.

Exactly. And support the businesses, not just the tax, also the businesses. But, yeah, we we did look at those, and we noticed a lot of movies. And then some, like, here and there, some reality TV shows. But, you know, that's a great perspective I'm

sure we have.

Also why we're looking towards Dodge because a lot of the Dodge productions do film in Orange because that's where we are. So, you know, encouraging the, you know, new generation of filmmakers as they already are in orange to stay in orange be ideal instead of trying to pull from outside.

Fantastic. Thank you.

Alright. I think we're good. Really appreciate you guys helping. Good luck with your future careers. Stick around in orange.

Thank you. We'll see. Thank you.

Thank you, guys.

Just to tag in on that city manager forgot to mention, I spoke with Chapman President last week, Mr. Matt Parlowe, and he is ready to commence with the liaison committee that we've been talking about. So we finally can get that moving forward. Okay. We have some awards from Celebrate Orange. I'd first like to invite Elizabeth Holloman, Orange Chamber of Commerce Foundation head, to present the awards for the May Parade.

Thank you. Good evening, mayor Slater and city council members. Nice to see you all. I'm Elizabeth Holloman, the 2026, Orange May Parade Chair and a board member of the Orange Chamber of Commerce Foundation. The Orange Chamber of Commerce Foundation was happy to bring such a wonderful event to the citizens of Orange as part of the first Celebrate Orange weekend.

We are thrilled to acknowledge our first place award winners in this evening's city council meeting, and thank you very much for allowing us the privilege to do so. Before we turn to our award presentation, I would like to acknowledge the work done by the volunteers on the Orange May Parade Committee. Angie Catale, who is the foundation president Barbara Brock, who has worked on all five parades since 2019 foundation board members Rebecca Martinez, Alisa Driscoll, Kathy Seelig, Mike and Maria Yablanca Gina Cunningham, Jack Carlisle and the birthday girl, Connie Benson. We'd also like to thank our judges, Mike Short, Chuck Jay, and Dan Rowe. And last but not least, thank you very much to Lisa Tembarelli from the city.

Lisa's back there. She was so great in helping us coordinate the Celebrate Orange weekend. Besides the trophies presented by the Chambers Foundation, Orange County Supervisor, Dawn Wagner, has also created congratulatory certificates

for our winners. So let's get started.

And when I announce your award, please send up one representative. The Liberty Bell Grand Prize overall award winner was first but first place to Lionheart Pride.

Congratulations.

The Stars and Stripes Spirit Award, which is the best use of theme, first place to the Freemasons of Orange Grove Lodge, two ninety three. Masons are also our hometown heroes by being one of the main sponsors of the parade this year. Then the Sound of Freedom Award goes to the best band, And first place was the Orange Unified School District combined band. The Rolling Revolution Award is the best float or vehicle. First place, GoCat.

The Spirit of 'seventy six performance award, which is the best cheer and dance squad, first place went to Orange High School Spirit Squad. The Young Republic Award, which is the best best youth entry, first place went to Orange Little League. The E. Floribus Irum Award for Best Community Group, first place, Orange Homegrown.

Angie.

And the Jubilee Choice Award, which is the Foundation Board of Directors Choice, first place, El Poder de la Cotura Morenze, or the Chinelos.

Congratulations.

Congratulations to all of our winners. The second and third place award winners received certificates before the city council meeting, this evening outside on the steps. So thank you again for allowing us to do this in front of the city council members as well.

Elizabeth, thank you for your tremendous effort in making the parade one of the best in memory.

So Thank you.

Thank you for your hard work on that and bringing out the community spirit again. Really really awesome.

Thank you

very much. Appreciate it.

Next, I'd like to invite forward Wendy Forrest from the Assistance League of Orange of Orange Blossoms to present awards for the taste of orange.

Okay. Hold on.

Hello, everyone. I'm Wendy Forrest. I wanna extend, along with Elizabeth and the Orange Plaza Rotary, our thank you for helping us bring Celebrate Orange to life. It was a huge endeavor, a huge dream, and and just onward and upward from here. I also wanna thank Lisa from the city. She was instrumental in making it all happen and all of you, so I really appreciate it. We are here to announce our Best Taste of Orange winners. We actually already gave them their fun plaque, so I don't have the trophy to give them, but I'm going invite you guys up for everyone who's here from the winners and we will take a group photo and then that will be it. So best taste of orange, we did five categories. So our best newcomer was culinary dropout.

I don't know

if they're here, but if they are, come on up. Our best drink of the day was Pfeiffer Brewing, specifically their watermelon Agua Fresca seltzer. So feel free

to check it out.

Best Brewery was a new brewery, and they are Honey River Brewing. The owner made a whole display the night before, which was just beautiful. And then Best Taste of Orange is a longtime supporter of ours and a great representative in the community, and that is Cortina's. Come on up. And then this year, we added a mayor's choice. And I know it was a hard decision for our mayor, very hard. But he selected a longtime supporter as well, and we were thrilled to recognize Wise Guys Pizza. So anyone who's here, come on up. We'll stand here, and then Brie will take a photo. I know we don't have everyone here,

but please come on in. Everybody likes pizza.

You're all in the photo.

Okay? Nope.

Alright. Ready. One, two, three. Got it. Perfect. Thank you.

And I just wanna

add Congratulations.

One more thing. Again, I want to thank the You city guys were all very supportive of this vision that we had. And I know that that's just laying the groundwork for a wonderful tradition that we can really all hold very sacred. It was a sold out event for us. And I know it was a great success for everyone. So thank you. Thank you very much.

Thank you also, Wendy, for your efforts. And the whole weekend was a big hit and flawless, I can't wait till next year, repeat. Thank you. Okay. Closed session report. City attorneys, anything to report out?

Thank you, mayor. And nothing to report at this time.

Alright. We'll move on to public comments. At this time, members of the public may address the council on matters not listed on the agenda within the subject matter jurisdiction of the city council, provided that no action may be taken on off agenda items unless authorized by law. Public comments this evening are limited to three minutes per speaker. First speaker is Greg Aerosmith followed by Kurt Peterson.

California Brown Act of 1953 enforcing local government agencies to be transparent with the taxpaying citizens for this presentation to the US DOJ. Focus, Orange expected to defer millions in infrastructure repairs amid budget crisis. Voice of OC, Osama Lauter I hope I pronounced his name right 04/15/2026. City of Orange, Irvine, Santa Ana, and Fortin dealing with multimillion dollar budget gaps. Taxpaying citizens should and potentially consider an increased sales tax measures on the November ballot this year.

Solution number one, Jared, is there any up to date information you can share with the taxpaying citizens about what is currently in the pipeline to generate revenue for the second half of the year besides what Chapman University just mentioned? Solution number two, Jared, is there any up to date information you can share with the taxpaying citizens about a private fiduciary company executing a $4.00 1 millionaire retirement plan for, the new hires in the city of Orange? The white elephant in the room is that California's total unfunded pension liabilities CalPERS at $166,000,000,000 CalSTRS at $39,000,000,000 equates to $265,000,000,000 in 2026. California's total unfunded pension liabilities was $250,000,000,000 according to my CalPERS presentation email dated 10/31/2025. This is an increase of $15000000000.5.7 percent from 2025 to 2026.

Why are the CalPERS employees executives making over around $1,000,000 a year for a failing system? Solution number three, artificial intelligence will eventually, replace a significant number of white collar jobs. It's from Fortune. What jobs can the local governments and the state of California potentially cut in the near future? Business and finance, financial analysis and account accountants, legal, paralegals and lawyers, management for project managers, administrative roles, computer science, software developers, and data entry clerks, marketing, marketing analysis, and content creators.

In conclusion, it's time to utilize new methods to significantly reduce expenses and financial losses in the best interest of the taxpaying citizens and not the public civil servants.

Thank you, Greg. Following Kurt Peterson is Rick Olson.

Good evening, mayor, council, and city. I've missed a couple of meetings, so some of this is going back a little ways. But with nine point one on the agenda tonight later, I'm going to address expenditures and more potential cuts that I think a lot of people are looking for possible. A couple of meetings back, Councilmember Barrio stated, we must be prudent with our spending. If we don't show the fiscal discipline that needs to be shown, why would anyone trust us?

Perfect verbiage for where we're at right now. Unfortunately, there are a lot of people in Orange that still don't think there's been proper and effective stewardship of the tax dollars. And I don't agree with that, but unfortunately, it's out there. And they're looking for cuts, cuts, cuts. And with a sales tax on the agenda later without cuts, a lot of them are turned off by it.

I would like to the other part is a lot of them still don't and this is a PR campaign notice a lot of them still don't differentiate between what you guys have been doing with all the cuts and all the heavy lifting. It's not being differentiated enough with the previous councils who contributed to getting into this point and or kick the can to avoid dealing with it. So PR is a big deal right now. It's a big deal. Councilmember Dimitri stated cost cutting alone is not a long term plan and we're running deficit budgets and we need to make some real hard choices what service cuts are made and how they'll impact the residents.

That's what we're looking for, what's impacting the residents. And Councilmember Tavallero spoke about we can't just fix this with one item and we have to look at things like selling assets. I agree with all these statements. And I know there's a lot of things happening behind the scenes. There's lot of things happening for public consumption. But I'm going to bring up a few more, and they're not going to be popular. But they need to be looked at, at least explored. So here I go, selling assets. If we were going to look at selling the water district, I think it's a great idea. I'd never looked into it, but since then, I have.

It's got a lot of potential, but in other municipalities, what's happened right after that is a huge rate increase for the residents. So unless and it's highly unlikely, but unless we can factor in a contract and sell it to someone that says there's a moratorium on rate hikes and or a cap on annual rate hikes, we might want to look somewhere else for that because what I've looked into is tremendous rate hikes in other areas. Selvitaft Library.

Three masks goes quick. I'm sorry, Kurt. After Rick Olson is Chuck Walstead.

Greetings, mayor, council, city, city staff, citizens. My name is Rick Olson, and I bring you news from the American cause on behalf of the citizen American Revolution. The spring of seventeen seventy six has been a huge transformative period for our colonies as the New England rebellion is slowly becoming a full scale continental war. Since my last report in March, the continental Marines conducted their first amphibious landing in The Bahamas to capture the British gunpowder and military stores. March 17, after eleven month siege, the British Army evacuated Boston and left for Nova Scotia.

This was a huge morale boost for our troops. Our Patriot forces defeated loyalist forces in North Carolina, ending the King's plans to invade from the South. And on the March 31, Abigail Adams wrote a letter that I told will become a famous letter in the future to her husband John urging him to remember the ladies as Congress was moving towards a new government. In April, the American ports were open for the first time to foreign trade not limited to Great Britain. A formal alliance with with France was being explored.

And in May, the Continental Congress is advising that all colonies replace British authority with local governments based on the authority of the people. This means, dear counsel, that this is the two hundred and fiftieth anniversary of an American institution independent of royal authority. No more kings. May 15, the Virginia Revolutionary Convention passed landmark instructions to its delegates in the Continental Congress to propose the colonies declare themselves free and independent states no longer to be referred to as colonies. Congress has suggested May 17 as a day of fasting, humiliation, and prayer across the colonies to seek divine support for the American cause, which I'm told will continue to be practiced for many years to come.

This has been two minutes and fifty seconds of US history. Happy two hundred fifty. Thank you, Rick.

Following Chuck Walstad is Cristobal Garcia.

Good afternoon, city council mayor. As a part of the skateboard community, City Of Orange, I'd to thank you for the skate park being brought to fruition soon, we hope. Just had a funny story. Back in the day, Carolyn Kovacic told me, your grandkids will enjoy the skate park. This is years ago. Well, I'd just like to say my son Levi and his wife are gonna have a baby in September. So

here we go.

But just really looking forward to getting the skate park going. Not sure. Mark Connors couldn't be here tonight, but we're just trying to figure out what the line of of construction is and who actually got the build. Is it a skate park company involved with that, or is it just a concrete general contractor? So and then how do we keep track of how that's going? So anyhow, like to say thank you.

We're Just raise your hand and then you know.

That's great part.

Ask. I'll

have a couple words with

her. Thank you, Chuck.

Thank you.

Thank you.

After Christabel is Ethan Dong.

Good evening, honorable mayor and city council members. I know his job is not the easiest. I actually ran for city council in my hometown right now, which is La Habra Heights, and I actually did grow up in Orange County and attended school at Horace Mann Elementary School, but now I am competing for the title of Miss Rupa Valley Pro Rodeo Queen. And I want to attend the City of Orange meeting tonight because our community share a profound appreciation for historic preservation, communities, and a keeping the local traditions alive. As someone who grew up in Anaheim and was raised in Orange County, I have always appreciated the strong sense of community and local pride that cities like Orange continue to preserve.

Those values are part of what inspired me to pursue this opportunity and represent the western ways of life with integrity and service. Competing for this title is about representing the western ways of life. As a rodeo queen, I will spend the next year traveling across Southern California promoting youth development, agricultural heritage, and rodeos. To successfully submit for my title and fund this journey, I am seeking community partnership, local businesses. While I know this falls outside of the municipal funding, I am utilizing this public comment microphone to reach to other local businesses, community leaders, and residents sitting in this room.

Partnering with me offers local businesses promotional exposure and marketing visibility during the pageant. I have actually had my sponsorship package ready with me tonight, and I will leave copies hopefully with the city clerk or anyone that I can leave copies with. Thank you for your time, your leadership, and for your support for the goal for young leaders in our community.

Thank you, Christabel. Ethan.

Good evening. My name is Ethan Duong, and I'm a it doesn't look like it right now, but I'm a member of the Boy Scout troop five forty three. I'm here to talk about the homelessness problem in Orange City. I mean, it's just rampant. You go to Hart Park, you see a lot of homeless there. I mean, there's homeless almost everywhere. You go on Chapman or on Tustin, and you can actually see the statistics. In Orange County, over the past two years, homelessness has risen over 28%. And I'd just like to know,

what is the city

of Orange doing to help counteract this homelessness issue? I'd just like to state my concern.

So thank you, Ethan. This is not a time that we do Q and A, so someone from our staff or you can look up and see how much we're doing, but or someone from our staff can talk to you after the meeting. But thank you for coming.

Thank you.

All right, that ends public comments. Next is the consent calendar. Would any of my colleagues like to pull anything for any reason? Discussion, questions? Mayor? Abstentions, yes.

I'd like to record a no vote on 03/2012 and 03/2016.

Okay. Anyone else? Yes, Councilor Gellenhammer.

I have to recuse myself from 03/2017 due to proximity of residence.

Duly noted. Anyone else?

We have a public speaker on '3 0.9. Thank you.

And Mayor, can I just pull 3.14 to ask a

question? Sure.

All right. We have a motion to approve the ballots from Mayor Pro Tem Billido, seconded by Council Member Dmitry. Any further discussion? Hearing none, please vote. That's approved unanimously.

And 3.9, award of contract to Owen Walstead LLC, a California limited liability company doing business as U. S. Door Incorporated for replacement of rolling garage doors at Fire Station 7 and Corp Yard continued from 04/28/2026. And council member Barros, you may go ahead.

I just want to let the staff know and and my council colleagues know that this was the item that I had asked to be, postponed, until I could meet with the city manager and city staff. And I wanna thank city staff for walking me through the procurement per process as someone who lives and dies by that. There were a lot of questions that I had that hadn't had a chance to get answered,

so I

appreciate you taking the time. And you answered all my questions, allayed all my fears, and I have no problem with this moving through at this point. So thank you for indulging me in that.

Certainly. I'll invite Laura Thomas forward. Did you happen to speak on this item? Uh-oh. What number did you want?

Oh,

okay. Sorry, we already passed that. It's all right. Okay. We have a motion to approve this item from Councilmember Demetrius, a second from Councilmember Barrius. This is item 3.9, the rolling garage doors. Please vote. Prove unanimously. And then item 3.14, this is the 2025 general plan annual progress report. Council member Gutierrez.

Yes. I just wanted to ask staff. In the report, I did not see or maybe because there was a lot to read. But I did not see did we include in there the Santiago Creek Plan that we just which you can say,

I don't know if

we adopted it or what we did, but I know it was presented and we yes, from the Commission. Did we include that into the general plan? And does that need to be in there?

I'm not entirely sure. Was the Seneca Creek plan adopted in 2025 or in 2020

about two months ago, a month ago.

Okay. So this was for the calendar year 2025. So that will show up next year.

So it will show

up next year. Okay. Just wanted to clarify. I wanted to make sure that we get credit for that hard work that the committee did.

Yeah, absolutely.

Okay. That's all I wanted to clarify, and I'm happy to move it forward. Thank you.

Okay. We have a motion from Council Member Gutierrez, a second from Council Member Barrios. Any other discussion? Please vote. That is approved unanimously. Alright. That ends the consent calendar. Reports from Mayor Slater. I don't, have anything specific this evening. Next is report from council members, and council member Gutierrez is going to hold her business highlight until the next meeting. Any other council members other than council member Gillenhammer have anything else?

Yeah.

Council member Dimitri. I do. Thank you. It's not really an AB twelve thirty four report, which is where it would normally go, but I did attend on behalf of the city and, the Southern California Association of Governments District seventeen as a representative for Orange Villa Park in Tustin, the annual conference out in the out in Palm Desert this last week. There is no city money that's used for this conference to attend.

It's through our membership with the Southern California Association of Government. The focus this year was specifically around mobile a majority of it was specifically around mobility of goods and commerce and passengers associated with LA-twenty 8. And I think that'll cover my report and an AB twelve thirty four report.

Okay. Thank you. Anyone else? All right, then it's time for Councilmember Gillenhamer's budget analysis. Council, I understand that this analysis oh, I'm sorry.

I just had a quick question. Miss Laura Thomas, she had a question, but she did it in the wrong place. But we never gave her a chance to speak on the item she originally wanted to speak. Now the tolling was part of the consent, wasn't it?

She's welcome to, although we already voted on it.

No, of was the consent. We just I just wanted to bring that up and make note of it since Yeah. Shouldn't we go back to it at some point?

I'll just give her a few minutes.

You're welcome to still speak on it, Laura, if you wish to, but we have already passed it. Did you want to speak on it still?

I'm sorry

I messed up the numbers.

That's alright, but please come forward.

City manager, city attorney, and staff. I'm Laura Thomas, forty year resident of Orange Park Acres Of Orange. I'm here this evening regarding the 30 homes stated in the MOU on the seven and a half acre arena site within Orange Park Acres. I am very concerned. My understanding is the 30 home lot sizes are between four and five thousand square feet postage stamp size lots.

None of these provide animal keeping opportunities, and it is not in keeping with the Orange Park Acres specific plan. I'm certain, as the council does support Orange Park Acres, the council will protect and preserve OPA at a level equal to that of Old Town Preservation. When asked about Milan's legacy when divesting from Orange Park Acres and Orange, Mr. Nicholson's response was, we don't care. The ask is to and preserve this 98 year old equestrian community.

Thank you.

Thank you. And thank you, council member Barrios, for, suggesting she be able to speak. All right. So item 5.2 is a budget analysis by Councilmember Gillenhammer. I understand that it is lengthy, perhaps as long as thirty, forty minutes. So I just ask the counsel to indulge him. He has spent a lot of time and analysis on this, and I think we would give any of our fellow colleagues the same consideration if they wanted to make such a presentation. So I'd ask that you please indulge him. And with that, Councilmember Gillenhammer.

Thank you, Mayor. And I'll ask for that. Thanks, too. Over the last couple of weeks, we started down discussing the new going towards the twenty twenty five, twenty twenty six budget cycle. We have an item later on today tax initiatives.

Last couple of years, just kind of connecting and diving into some of our financial assumptions, actually don't have I'm not of the opinion that we need a sales tax right now. So I wanna be able to just kind of walk through what I see in the form of data and just kind of let that stand for the conversation, especially as we move into subjects later on today talking about sales tax initiatives. So I apologize in advance for this as being about thirty minutes, but thank you for indulging me as the mayor says. I just want to start off with talking through what I did. I took our last twelve years' budgets.

I pulled six city budgets from 2023 and 2026. I built and trained what's called an agent, a municipal finance agent that is designed to have the personality and deep dive to understand city finances. I pulled together and modeled CalPERS data for up to twenty twenty five existing rate of return, and then I forecasted the 2025, 2026 rate of return for our CalPERS funding. I pulled our pavement management program, and then I set it to work on trying to identify specific cost reduction options in light of the data that we have. I did my best through many hours to go and validate all of the numbers that I could in this doc.

When you review about 11,000 pages, I didn't review them all. So some of these may be actual, some of these may be forecasted, but they're all directionally very close to those actual numbers. And then I think the other thing to note too is where there's forecast, there's assumptions made. And I'm going do my best to explain my assumptions as it relates to any forward looking numbers, which I think assumptions are super important when you make forward looking decisions that are structural or change the direction of the city. So that's kind of the approach I took.

I just wanted to start with kind of a trend analysis historicals for the city of Orange. This is just going back to the twelve years, pretty close to the actuals around what our revenue and expenditures were over the last twelve years. What you'll see here is high level expenditures are outpacing revenue, tied to the beginning and ending numbers of the twelve year. But they pace during normal growth years prior to COVID around three to four percent. And then what you see is you see a COVID stall out in twenty nineteen, twenty twenty into the COVID years.

And then you see a rapid pickup in revenue, which was a combination of a market that had pent up demand along with one time dollars being spent. And then you have back to what's more like stable growth post the COVID years, which is around 4% to 4.5% revenue. If you go to 2021, 2022, 2023, many, many cities did the same thing during these years, and many, many cities that were acknowledged as being financially stable prior to COVID are all saying the same thing today, which is that, hey, I need to go get this additional sales tax revenue. There is an explosion in salaries and benefits expense with one time revenue, and that included the hiring of additional people, the ability to increase pay to get comp raises, and a combination of hiring and adding headcount and hiring frozen positions. So that in and of itself created an overcorrection in salaries and benefits that has not come yet down to a run rate for the city.

You see this in almost every city. One thing to note during this time frame is that while while these revenues and expenditures were going, we were actually pretty close to running a surplus every year. Over the last two years for the twenty twenty for twenty twenty five budget cycle, we had anticipated a $19,000,000 deficit. We ended up slightly have a slight surplus. Right now, what numbers are in there is what our initial budgeted forecast was, which was a $2,600,000,000 deficit.

As of today's numbers, we're running about a $700,000 deficit. And I think there's a solid chance that we surplus this year as well. So I only say that to say that the city has been pretty close to the pin. Even in the last couple of years when we've highlighted a financial crisis, we are still managing to run small surpluses. Right?

And we can talk through how we've done that. The last thing I want to say too is that when we talk about our expenditures, we talk about infrastructure, we talk about public safety, We've seen solid improvement or reduction in crime statistics, which is recognition to our police department. We've also seen continual improvement up to the last couple of years in our pavement condition index from the mid-60s to where it is today, which is around 80. And we'll go through that later on. So while these years were progressing, we were actually achieving small surpluses.

And we were seeing improvement in main service metrics that the public sees. So this is pulled from our audit committee's financial review. This is a good, I think, way to see what I said before, which was an explosion in FTE due to onetime money. So what you'll see here is those revenue expenditures are your lines. Your bar graph is tied to your FTE.

Around COVID, you see a drop down in FTE to just around six sixty. The 2022, 2023 budget cycle picks up. And then if you look at the bottom right, you'll see our FTE goes up to seven sixty one. In the last two years, we've had an element of correction to the existing budget due to mostly inaction around hiring, essentially allowing positions to go unfilled. Right?

So we stumbled into essentially a surplus as a result of inaction on hiring. And now in the last budget cycle, we're taking specific actions to start to remove headcount out of the budget. I believe our run rate needs to be around six eighty realistically based off of historical trends within the city. And I think we are starting to correct down to that run rate, but we are still elevated relative to that one time hiring spree for salaries and benefits. The other thing to be thinking about too as you go through and we discuss like are are we approaching insolvencies?

You have to keep an eye on the fund balances for our internal service funds. And I have this up to 2024. You know, early twenty tens, we're in the 60,000,000 mark. We've elevated up to the 90,000,000 mark. This is dollars will move in and around these internal service funds partially due to how view and model some of these funds relative general fund.

We'll make changes in terms of how much and what percent we need to keep in these funds, but the total number is something you want to be paying attention to because that's tracking the total amount of money that we have relative to these funds. And you'll see too here that a a key call out is that we are we need we're way underwater in workers' compensation. I just wanna acknowledge that that that's been the case for just shy of a decade. That's not a new thing. Like specifically in that fund, we've been running negative 9,000,000 for a long time.

So it's not a new phenomenon. The other thing to be paying attention to is our cash balances. And what happens is we have a a cyclical in and out of funds. So what you wanna be tracking is your quarter over quarter. So if you look at September 2024, September 2025, December 2024, December 2025, The most recent update, we have a balance of $162,000,000 in our cash.

And that's through a number of different investment outlets. Some of them are more liquid than others. That's essentially our cash on hand. So we have $162,000,000 cash on hand. And what we've been seeing is we've been seeing our yields grow to the low 4s. Recently, some reduction as the interest rates come down. But our treasurer, Garrett, has been paying attention to this for the last couple of years, so just recognition to him. And our cash balances are growing. All right. So we have a solid cash balance, and we see that slightly growing as well.

We also recognize that that's probably going to be the case if you're not actually having and running a major deficit in your actual general fund. This is just our current budget adopted snapshot for the year ending in June 2026. Notating that we projected a $19,000,000 deficit for 2025. We will resolve that into a surplus. We are continuing to see higher than anticipated revenues, and we see in each update that our deficit is being driven closer and closer to a surplus as the updates come.

We also have additional revenue initiatives underway, fee studies, paid parking, various forms of economic development that are hitting or starting to hit later in the budget cycle driving some additional revenue in. Salaries and benefits continues to be the dominant share of expenditure in our budget. And we had two major assumptions misses as we went into this year. One was total headcount as we significantly under expended total headcount. We also had a major miss in assumption specifically for fire department overtime expense, a multiple million dollar miss in under assuming the overtime expense.

And that partially offset with additional revenue on top of that due to some of the headcount savings. So it's very important that when we make assumptions going forward, we're trying to pull in all of what we know to be true as much as we know, as with much information as we have. So I tried to figure out, how do I do this going forward with a reasonable modeling level? If you go back and you look at the last twelve years, you saw stable revenue growth around 4%. You saw a COVID cliff.

You a demand spike with one time money. And then you saw about a 4% to 4.5% growth post COVID. So if we attempt to model revenue at negative percents or 1%, there's nothing that demonstrates that that's the right way to model revenue going forward. So I modeled it in a basic three year revenue, expenditure growth. Obviously, that's going to stay the same.

You'll see the cumulative return. It stays very close to the line based off the current budget, which is operating at a $700,000 deficit. Now if you were to do this in what is a more realistic approach and an optimistic or slow growth scenario, I modeled a 4% revenue, 2.5 expenditure growth, and then a slow growth, 2% revenue, 3% expenditure growth. So you could so we can all see over the next six years realistically, where does that put us both in terms of a annual deficit and then a cumulative deficit. Obviously, the optimistic scenario corrects.

The base scenario, if we maintain, gives you a moderate deficit. And then if we have slow growth, then you start to build the deficit if you're not addressing your expenses. I did not model shocks or catastrophic events in either direction. For example, if we were to pick up multiple county islands and add additional property taxes to our property tax revenue, there is the possibility of the expenses not meeting that and having a revenue shock. I didn't model that.

Didn't model a recession or a significant downturn. There's a possibility of that. These are realistic scenarios. Second thing I did is I went into You're going to hear a lot of people talking about this is the biggest risk to the city, and this is the biggest risk to the city. So I dug into. These are your actual returns for these years. CalPERS, cities typically are running two years behind. And that is forming the basis for the unfunded liability payment. These are all actual numbers. In the 2024, 2025 rate of return will show 11.6.

But if you dig, it'll show 12.1 with some additional money or real assets that accounted for. If you log into the system and log into the city of Orange, you can model forward looking unfunded liabilities, and you can also model forward looking normal distributions from the city relative to Classic and Pepper accounts. This is how they distribute their investment portfolio. I pulled in 2023, 2024, and 2024, 2025. You'll see that there.

It is a basket of public equities, fixed income, private equity, real assets, and private debt. And then I also pulled up the twenty twenty five, twenty twenty six current stock performance. Our public equities constitute slightly over 40% of their basket, and our current stock market performance is outpacing the last two previous years by 4% to 5%. I looked at the approximate weight of each one of these the estimated return based off of existing data we have on the market for each one of these. And you see about a 12% to 16% return with a midpoint around 14% for twenty twenty five, twenty twenty six.

That's the current budget year we're in. The year that ends June 2026. I assumed a 12% return, the low end of the estimate. We have the rest of May and June for CalPERS data to be finalized. CalPERS will not finalize this year's data till next year.

But if we assume a 12% return on the low end, again, with the caveat that things stay as they are today, right, there's no major increase or decrease. And if you add that to the rate of return here, 12% for 2025, 2026, this is what you get. CalPERS is broken into miscellaneous and public safety. Currently, in the 2024 CalPERS cycle, at 9.3% return, we are unfunded by $85,000,000. With the 2025 return of 12.1%, we are unfunded by approximately 33,000,000.

Dollars Both of those require an amortized repayment to CalPERS to eliminate the unfunded liability. With the existing or forecasted 12%, both miscellaneous and public safety become funded. Our total assets are $4.82 for miscellaneous, $492,000,000. Total assets for public safety are $762,000,000. Overall combined, we're running at $30,000,000 surplus.

We won't have this information, assuming a 12% is where we land, for about a year and a half. We will have a repayment schedule over the next couple of years, but what is likely with what we have today is we have a city that is funded once these numbers come out. We cannot remove any of this money, and we also took out a bond to fill $281,000,000 of a hole of unfunded liability that we had in 2021. We took out a pension obligation bond then, and our current budget runs a $15,000,000 debt repayment in our operating budget. Prior to that, we were on an amortization schedule paying 16 and a half million dollars with volatility built into that schedule.

This is just a a modeling of both the projected funded position and then our employer rate or city normal distribution. Every year post the forecasted year is modeled at 6.8%, which is a realistic assumption built in for future years. Take a look at the pension obligation bond. I think there's a lot of questions around, is this good or bad for the city? For those that initiated this bond, they did a really good thing for the city.

We took the bond out in 2021 at 2.7% interest. It's unfortunate we took it out then. It would have been better if we took it out the year after. But we put it into purse, and immediately we took a negative 6.1% hit on it. And then the years after that, that's the actual PERS rate with the forecasted 12%.

That pension obligation bond with that rate of return has an investment value of $383,100,000. Our total interest paid on that debt is $337,900,000. There's an arbitrage of $64,000,000. So the fact that we put that in there reduced the volatility of an unfunded liability payment. We also took it at a rate that it grew at a higher rate.

So it was a good decision for the city. Obviously, that surplus or any surplus as a result of this bond will stay in the CalPERS account, cannot be removed. Some details on employer contribution projection projections from the previous plan. As you go forward, there's an inflection point between Classic and PEPRA. So the city will realize that inflection point, which is only good news for the city as we continue to pay normal distributions into the account over time.

We have a lot our biggest risk is our pension, specifically its public safety relative to the existing dollar amount and existing headcount going into this pension going forward. It is tightly funded with the assessment, and it is still currently underfunded at the 2025 market. This is not commentary on the police department or fire department. This is commentary specifically on the financial impact of public safety's pension for where we're at today. One thing to note that any increase in pension is disproportionately high in this area given the size and rate of the amount that we have and owe.

And then one thing to note too, as a percentage of our total budget, we've invested heavily in public safety. We have shives 69% of our budget in public safety relative to the six cities I've pulled is the highest. One thing to note too is if you were to compare this across The United States, California, Orange County cities, we still are close to the highest. From a pavement management program perspective, dove into basically our most valuable asset. It's over 1,000,000,000 from a replacement value perspective.

From 2025 to 2024, our pavement condition index rose from the mid sixties to 80.9. Los Angeles cities and the Inland Empire cities are averaging in the fifties and sixties. North Orange County cities, Orange is one of the highest. South Orange County cities have a higher PCI than Orange with newer streets. The County Of Orange PCI is almost identical to the City Of Orange.

We have good conditioned roads. Obviously, red demonstrates we have some really bad roads, and I think that can play an outsized role in how we feel about our roads. But relative to Orange County cities, North And South, LA, Inland Empire, other parts of the state, we're in good shape. And the city has done good work over the last decade and a half to improve the conditions of our roads. We have a future or forward looking funding gap in road improvements.

We're budgeting around $8,700,000 We estimate first year funding to maintain the PCI of 80.9, about $10,500,000 Initial funding shortfall, dollars 1,700,000 a year with additional cost increases, right, as long as we're able to maintain good controls, that'll range between one point seven and three point one absent any major changes in roads. There is budget shortfall here. Infrastructure is not an emergency, and it is it's something that we can see and plan for over time. If we did not invest another dime and and kept our expenses at 8.7%, our PCI will drop to a 77 over the course of the next five, six years. 77 compared to other cities is still very good.

So we do have a decision to make to invest to 10,000,000 and maintain the PCI at 80.9. Our investment in the library is disproportionate to the service it it provides. Again, this is not commentary on the individuals that work in the library. This is an organizational and structural decision that we've allowed to occur. We have 34 budgeted FTE in our three libraries, and that includes frozen positions from an existing 40 plus budgeted head count.

Our two branch libraries are open for sixteen hours a week. That is four hours for four days. Our main library is open for fifty two hours. We are open for eighty four total hours across three buildings a week. This is a disproportionately high expenditure for a very low service impact to the community.

There is absolutely a decision to be made here as we look at this and decide how we wanna move forward. I recommend a full reopening of the libraries, but we can discuss this one. As we get into the finance department, we do have relatively high FTE. There are multiple opportunities at an organizational level to invest in additional software tools, tech, and AI support to help automate and provide efficiency factors to the team here. On top of the existing centralized team, we have a decentralized finance team working in other departments within the city.

We have a purchasing and warehouse function with multiple individuals. We have a multilayered management division. We have a very low management to direct report structure. And there's opportunity in this space to drive some efficiencies. I listed a number of things here that we can discuss and talk through.

I think these are all decisions that we need to make. I do think that there are organizational opportunities as we look at determining how what is the appropriate reporting relationship? Is it two people to one, which we find in multiple places? Is it three to one? Right? Is there opportunities there? Right? How can we continue to centralize our functions? How do we find additional opportunities to automate leverage tech, leverage some of the AI tools that are out there that help remove large quantities of work. I think there's an opportunity to look at certain elements of revenue generation.

I do think we need to get to a six eighty run rate relative to our population and the data that is tied specifically to service impacts. There's a lot we can talk through before we talk through sales tax. There's a lot of risks. May and June could just bomb. We can have a really deep investment portfolio underperformance, miss the 12% assumption.

Future years, we can have a recession. We can decide to not address the pavement backlog growth. We could pull from that. We can see major unforeseen infrastructure impacts, sinkholes, workers' comp deficit compounds, liability impacts to the city, revenue concentration, any single entity paying a lot of money to the city in a form of a sales tax, public safety expenditures, and pension obligations related to public safety expenditures, fuel price instability. The biggest risks result from our exposure in the pension, which thankfully, due to three years of outperformance outperformance across the investment portfolio, has us just funded with an obligation bond.

But if it were to go negative, we would expose ourself at a negative 5% to the 12 to approximately 50,000,060 million dollars unfunded liability swing. There's the economic recession impact. Right? If all of a sudden, some component in the economy drives down demand, we lose sales tax revenue. There's that risk as well.

These are all things that are possible, but we don't see right now. I put in here just appendixes. I won't I won't go through those. They're just more detail. But I I guess the last thing I would say as I wrap this up is I think the city's always run pretty lean.

The city is very different. So when I attempted to compare to other cities, it's very, very difficult to do so. Other cities have unique sources of revenue. But what is the same is that all cities spend everything that they have. And what I did see is in the 2021 to 2023 year, there was a significant increase in salaries and benefits, which is a structural cost that was born from one time money.

And I think a lot of cities are experiencing a very similar outcome today. What I'm also seeing is that pension obligation is there for all cities. Our pension obligation bond fulfilled our shortfall. But even with the outperformance the last couple of years, cities are still underfunded, or they're very closely funded. So any major shift is going to cause impacts across all cities.

I do believe we should not compete directly with some cities. I believe Irvine has in its MOU, we shall pay the most amount of money. Jared, can you correct me if I'm wrong? We should not compete directly with these cities. We need to determine our value proposition.

We need to make our compensation as competitive as possible. Right? We need to make sure that our ability to hire, retain, and onboard improves as we build the workforce for Orange. I think we've taken some actions over the last couple of years, some of it being inaction that has allowed us to cut some expenses specifically related to salaries and benefits. But I do think that we've left a lot on the table, and there's a lot more that we can do proactively.

I think Jared having the opportunity to do that is a good thing. I do see emergency scenarios. I don't think we should be forecasting or budgeting for those, as those are not reasonable to budget to. So I do think when we make assumptions going forward, we should do so in a reasonable way so that our longer term decisions are reflective of what is most likely to be true. And I think as we look at our assumptions tonight, and as we look at our assumptions in the upcoming budget, we should question them.

I don't believe, you know, a sales tax is a foregone conclusion. Whenever we tax our residents, we're asking for their money. I do think we have work to do at the city to continue to demonstrate our resolve around spending other people's money as efficiently as possible from an organizational perspective. None of what I say today is meant in any way to address an individual or team within the city. This is all meant to be higher level structural decisions strictly from how do we run as efficiently as possible with our residents' money.

I love this city. I've been here ten years. My kids are eight and 11. I'm gonna be here for the rest of my life. I would vote for a sales tax. I I would put the collective $37,000,000 expense on our residents if I believed we need that needed that today. I do not believe we need that today. In fact, I believe we have a lot of more work to do to be the city that runs as efficient as possible so that we can go back and say, I'm gonna use this money for this. And once we get to that point, I'll be able to absolutely jump into that space. That's it, Mayor. That's what I wanna talk about.

Well, thank you, Councilman Gillenhamer for an extremely thorough analysis. And, yes, I'm convinced you love the city or you would not have spent this much time on something that I don't know where you found the time to do this. But anyway, thank you. Colleagues may have some questions for you. Council Member Tavalares.

Thank you, mayor. If I may, I wanna ask some questions of the city manager. I know there's a lot of numbers out there tonight and I just want to make sure as we go forward into some of these issues that everybody has everything right. Jack, could you take down some notes in terms of what the city manager's answers are so we all have an overall scope of where we are. Mr. City Manager, what is our total pension bond debt right now? I mean, give or take, you know, you give me change and stuff.

$228,000,000, I believe, in POB bonds. Dollars 15,400,000 paid off in 2044. Our current PERS UAL is approximately $85,000,000 Combined, you're about $300,000,000

So the bond itself, we owe $228,000,000

You

said $228,000,000 but I think it's $2.80 Approximately

$228,000,000 I believe, with the last ACFR or CAFR. Trang might come out

and But that's the pension obligation

bond alone, plus we have new accrued

liability that risen. What's the the current pension, 85,000,000 a year or total? Total. Jack, is there any way you could put these numbers down so everybody can see this and just start adding up these numbers? Fire Station one bond, how much do we owe there?

Approximately, I'm looking at trying to confirm $28,000,000 27,000,028 million

Fleet vehicles, we have obviously police and fire. How much are we spending roughly any kind of debt service we have on that? Because I know we have to change out our ambulances and our fires every there's a certain time limit to our equipment. So what is that number?

I would call out Mr. Cash on that one. Don't have it ready in the pocket.

Okay. Let's call out Mr. Cash. Employee benefits? What are we at right now?

Benefits, accrued leave liability. We spend about $5,000,000 annually on I think we have a in that account of, to begin with, minus 5,500,000.

5,500,000 for accrued leave. Workman's comp, what's the total debt we have there?

Negative 12,000,000.

About 12.6.

0.6?

About 12. Yeah.

Mr. Cash, what do we spend on or what kind of debts do we have when we have to keep buying fleets for police and fire? Like, what are we looking at?

So we just recently entered into a lease agreement for a new fire apparatus. That's sort of the first, I'll call it, debt that we have. We spend approximately $2,500,000 a year on fleet, but that comes out of our internal service fund.

Understood.

So that lease payment, though, is the first debt that we have relative to the fleet.

Okay. Capital infrastructure, streets, signals, roads, where are we on this? How much do we owe? How much are we behind to fix everything that's out there right now?

I don't have that number.

Okay. Can you get that number?

Not readily.

Okay. Last meeting, city manager or a couple of meetings ago, we deferred $17,000,000 from our CIP budget to give to the general fund to balance the budget. How much do we owe ourselves in capital infrastructure?

Is an open ended question. We can put that together. I mean, my opinion is likely going to be different than yours. Aging parks, aging infrastructures, aging building, carpet, roof replacements. It could be, in theory, a blank check.

And we also have not done a facility infrastructure assessment in the

So can you give me a rough number that

I can tell you exactly what we listed it as, it was $143,000,000 in the last budget analysis we had a month ago.

$143,000,000 Litigation exposure.

I

know that's a moving target. I just want a number that we can add up so people can see. Jack, you don't have it on the screen. I want people to see these numbers.

So for long term debt with the city between all of our loans, lease, subscription, our bonds, our lease revenue bond, our pension obligation bond, our compensated absence, our claims payable. This is as of 06/30/2025, that's about 2 and $94.4.8 dollars Okay. So $294,800,000 that's as of 06/30/2025. This does not include our other post employment benefit, OPAP, that's another $33,100,000 So if you add those two number up, that will give you a good understanding of our outstanding long term obligation.

Okay. Are you going to add all that, please? In addition, I know that we need three new fire stations in the next ten years. Each station has been roughly estimated at 12,000,000, so 12,000,000 times three. There's another one that needs a full remodel, let's say that's 10,000,000.

You could please add that. Parks, green space, all the stuff that we have frankly put aside because we can't spend any money on it, including we don't have a deputy city manager, we don't have a historic preservation planner, we don't have an executive director or a director of economic development. So all those salaries out there, I think that also is something to look at. So what I'm trying to get at folks is if you could add all that up for us, that's our total debt. I only can speak for District 3. District 3 was built out post war. Obviously Old Town was first, but we're the North part.

I'll just

tell you what life is like on the North part. When you call an ambulance where I live, you don't get orange fire, you get Anaheim. Even though they're just as handsome as orange, wouldn't you rather just get picked up by orange? It's because we don't have a fire station to serve the north part of the city. That would be nice to not depend on Anaheim and having our taxpayer dollars go there to pay for them. On the border of Mr. Billadeau's district and I, on Meats in Santiago, we recently had a water pipe burst from the ground. How much was that, Mr. City Manager?

You just approved that last meeting, dollars 163?

No, I think the one that was earlier in the year where we had the sinkhole.

Meats in Santiago?

Yeah.

Roughly? That was roughly, I think, 100,000.

Okay. We have aging pipes. I don't know if everybody knows, we're an old city, except for the 4th And 6th Districts. These things are going to start happening more and more. And our residents in Dennis and my district didn't have water for a couple of days. No big deal, right? A whole water pipe burst. So we got lots of calls. People couldn't get ready for work, couldn't do that. I have just a park in my district, Olive Park, where pony plays and we bought the building, it's an old nursery, we wanted to turn that into a parking lot because parents don't have anywhere to park to drive their kids to pony baseball. We don't even have the money to

Pave it.

Pave it. I've asked for years, and I can't even get a parking lot paved in my district. The parents don't have anywhere to go. They're parking like down Lincoln Avenue, miles away, walking their little kids like those little kids that you saw on major streets just so they can play pony baseball. Because we don't have the money to spend a million dollars which in this term is pocket change, right?

To handle that. I've got the mall. All that economic development closed for a while until the owners come to some kind of agreement. That's going be a couple of years less economic development. As you heard about tonight, orange yards or the back lot as the kids called it, that also is in the North District.

I spend my Saturdays cleaning up trash behind the mall because the city can't. And I get 20 volunteers and we go pick up trash. I did that on my own time, not doing it to brag, but that's how dirty my district is because I feel bad and you know it's not fun picking up used things from the night before if you get my drift Between Peralta and the mall because school board doesn't care about Peralta, so they treat that place like crap. So there's beer bottles strung all over canal and I can't get the city over there to pick it up every day, so I have to do it. The sidewalks, if you go down Cotella from Tustin to Cambridge all the way probably to Maine and just walk it, just walk on the sidewalk and tell me you will have to look down the whole time because the sidewalks are lifting every two seconds.

And any time anybody trips over those things, we're going to be liable for all that. So what Trang told us about the liability expense, that's what I'm asking. When people sue the city, they fall or whatever happens. So that's just a little taste of what I'm dealing with. So when people are coming up to me and saying, You don't have a problem, I'm having a little bit of a panic attack because I can't get anything done for years.

A little thing I can't my neighbors call me, they have million dollar houses, they're sitting in million dollar equity houses and they can't get their sidewalks paved. And I call in, we don't have one on the budget. Riverdale, the North Street, the north part of my district, hasn't been touched in thirty years. Thirty years. And after the homeless were camped out on the river there, Tom Casella and I had Chris Cash come over one morning and I'm like, just come and see.

And thank God they did and they came and see. The trash is in the bushes, just disgustingly in the bushes, meals, all that, in orange, where the kids are walking. So I'm pretty conservative, pretty cheap. I don't want to raise anybody's taxes. I don't want to pay extra fees on anything either. But when you look at these numbers, can you add all these up? Is this everything? I think you missed some stuff. Give us some assessment. How are we going to pay for this?

Because guess what, a 1¢ sales tax for one year they're estimating we get $35,000,000 a year extra into our general fund. Do you think it's going pay for all this? Do you think we can make the minimums on these bonds $228,000,000 for pension obligations? That's for people who used to work here. They don't work here anymore.

The work here now is the 85,000,000 So I don't see how we sit here and say, if we could just get this tax passed, we'll talk about that. That's one arm of the stool here. We have got to look at this seriously. Our predecessors didn't. And I've said this over and over again, even though they blast us on social media about all this stuff because they don't believe they did anything wrong.

They didn't do it to hurt the city. They just didn't want to pass on the cost to the residents. And yes, that's very noble, but look where we are now. So, the rest of the county was flourishing, while Garden Grove or when I was in high school they called it Garbage Grove is now like the best part of the Anaheim Resort and has all this money, we are just the same little orange. And you have Kathy Tavelaris picking up trash and gloves and needles on Saturday mornings just so her neighbors are happy.

If that's the kind of city you want to live in, you can. You can live in the 6th District that is very clean and the streets are pristine at OPA and it's beautiful. Or you can live in one of the districts in the Flatlands and understand how much we have wrong and how much when residents call police they have to wait because we have less police, because somebody thinks we need 144 instead of 156 police. We live in a city, we live in times where things are out of our control, the state has taken away local control. Some of this stuff we can't even control because the state is going to take over.

That's a whole other issue for another day. What I'm trying to say is when we go look into this and we talk about the sales tax and all these other fees and stuff, just remember those numbers. Can you say that number out loud? That billion, $4.00 2,000,000,000 or is that $4.00 $2,000,004.00

2,000,000.

Okay. That's how much we're in debt. Where are we going to get the money from? So when people call and yell at me and go, Kathy, you can't sell Taft Library. Okay, where do you want to get

the money? I don't know but not

Taft Library. Kathy, you can't sell the water department? Okay. What do you want to sell? I don't know but you can't do that. Kathy, I don't want to pay more taxes? I don't either. What do you want me to do? I don't know. Last time this happened, two years ago, I voted yes to put this on the ballot and people just called and yelled at me and all that stuff and I said, You know what? It's up to the people. Whatever the people decide is fine. When you look at those results, District 123, And 5 all voted overwhelmingly yes on the tax measure. And 4 And 6 didn't. And I think we all know why, because everything is newer up there and that's okay.

I don't blame them. But this city is falling apart. And I can sit here and ignore my neighbor's calls and call them every night and say I can't do anything about your trash haul tonight. I can't do anything about the pothole tonight. Sorry about your tire. I can't I'm so sorry your mother slipped on the sidewalk. Call the city attorney. I there's nothing I can do. We want to do things. We are districted now. We want to do things for our I mean, mister Dimitri has been begging for a park. Anna has a lot of underserved people in her district. There's a lot to do here. I'm asking everyone to take it seriously.

Giving me the evil eye. Anyway, go ahead. That's it. All right, point counterpoint. One, Arianna, or Councilmember Barrios, and then we really need to move on. Councilmember Barrios?

Mr. Mayor, if I may, just as a gentle reminder, the item before you is for informational purposes only. The counsel is absolutely welcome to receive the presentation and ask for clarifying question, but just a gentle reminder that any deliberation or any direction or action can be reserved for item 9.1 later in tonight's agenda, where you can freely discuss it without any Brown Act issues potentially coming forward.

Excellent point. Thank you so much.

And while I hear your point, my problem is there are some specific information in here that is misleading to and relative to the later question that is really important that we get right. Because if we don't address some of it now, we're going have a problem later.

And council member Barrios, are more than welcome to ask for clarifying questions to correct to the record. That is correct. That is absolutely okay. Please feel free to.

A 100%. So couple of things. I don't because you and I have been on the same page about a lot of stuff over the years, and I really do appreciate all the work that you did. Just for sake of the historic record that what you put in there in terms of where you started on your timeline, what that doesn't take into consideration is the two major catastrophic events that happened right before that that put us into this system of up and down porpoising from that day forward, and that was in 2008. So that's really significant.

We talked about that exhaustively before, like when you right when you got on the council and we were talking about the problems that we were in. And I think you just by not showing it, it does a disservice to people and to show where it all started. Councilmember Tavalares is absolutely right. The councils back then in 2008 did not address this head on in the way that it needed to be addressed in a more structural systemic way. So I think a lot of your questions are really valuable.

For example, in 2008, we had a headcount of seven ninety seven at that point. So we've never hit up that high. They were that high. So we have really I think it's good that you mentioned how hard we've worked throughout when you're showing this. I'm a little concerned about the finance, where you show the finance department.

This is just a specific example that I was surprised to see you showing Huntington Beach as so much lower than the city of Orange. And I'm just wondering, did you check to see if maybe they disperse some of their people into other areas so they're absorbed into other departments? Or was that a standalone number? So because I do appreciate being able to find new areas that we can do like that. The library, I was really unclear about what you were saying.

And I think that's important because, again, looking at that, it sounded like you were saying we were running at structurally unsound, basically, in terms of how many hours relative to the multiple branches. So my guess my question was for information purposes, are you asking for us to really pull back and just rally around the main library or were you asking us to fully open all the libraries and then incur more costs. I think you're right to say well, you're right to say that we can't necessarily anticipate catastrophes. But your analysis, I think, it doesn't show long term enough of CalPERS. Yes, the returns in the last couple of years have been good, but it's neither none of those dates are long enough to really see a trend line that I think we could reliably base any assumptions on.

So that makes me extremely nervous. Although some of your other assumptions I was really grateful for.

Thank you.

So before that, let's make sure we have all the clarifying questions on the table. Councilmember Dmitryu and then Councilmember Gillenhammer.

Sure. Real quickly. John, in your figures, did you account for when you were comparing public safety, for instance, on the expenditures, did it account for the actual population,

call

volume, staffing patterns, and such, you know, in just a quick a quick text to different city managers and electeds in these cities. Just doing the quick math, it shows really just from the cities you compared us to of Orange, Fullerton, Huntington Beach, and Costa Mesa. There's only a 7% spread from Orange to the Costa Mesa being the lowest. But what's also interesting is their staffing patterns are higher. Their floor coverage is higher.

There's for instance, another thing I'm curious about with your modeling is did you take into, for instance, on their sales tax basis, like Huntington Beach, for instance, has a completely different type of sales tax structure in what's available as is Costa Mesa being they all both have significant tourism that we don't. Costa Mesa has South Coast Plaza sales tax that comes. I don't think the fairgrounds really account for that, but that all comes in. Was that modeled as well? Because I think those are all fair.

An interesting side note with these same cities was Fullerton's running a $14,000,000 structural deficit. Huntington Beach has an $8,800,000 deficit. And Costa Mesa has a $3,600,000 deficit, but that wasn't recognized in your presentation. And I'm curious how that works in to the actual numbers once that's produced.

All right. Councilmember Gillenhamer. And then we need to move on.

John, I'll start with you. I did go it was like 11,000 pages. So what I notated, I think, earlier on is that it's very difficult to compare cities to each other. It's an apples to oranges comparison. I think I said specifically Huntington Beach as an example of a city that has a very different revenue structure. As you start to get into these cities, I took my PowerPoint and just started pulling cities out. Specifically, Fullerton says x amount of FTE, but then they have additional budgeted hours for the library. Right? So I have to sift through each one of these to understand the differences. So I started yanking a lot of the comparisons out.

I did keep a couple in there that I thought fit just to show what was possible. So in terms of public safety, I did compare to population. I did not compare to staffing patterns. I did look at crime statistics. I did not compare to call volume.

For the cities, again, that are running a deficit, I guess my attempt to acknowledge that is that all cities made the same mistakes, I think, which is that 2021 year to 2023, specifically Irvine, was took a cert like, there was a survey out around Irvine being one of the more financially stable cities out there in 2021. They're talking about a sales tax measure today. Their salaries and benefits grew over 50%, right, over the last five years. The point I was trying to make is that cities have very different revenue sources. Orange is not those cities.

I also tried to make the point that we should not try to compete with those cities. And I think what you can get is you can get a little bit of a glimpse around cities that have attempted to be efficient in certain areas. Ariana, I use twelve years because that's what we have on our website. So we've got twelve years of backdated budget data. I do think, you know, we had a massive recession in 2027, 2028.

Absolutely changed the the dynamics for a lot of cities. Right? So I just didn't have that information to pull from. But there's there's truth to, like, what created the structure going into my twelve years that I just didn't have visibility into. The head count around seven ninety seven, I think it's an interesting one.

Right? I don't know if we want more. Right? But I what I will tell you is that over time, determining how to improve the efficiency of the city through going digital in our community development department, getting away from paper, finding ways to automate, putting a self-service kiosk in the library, pulling some services away, reducing library. There are things that we're going to do, and there's a lot that we continue to need to do to build efficiencies into the city.

What's the right headcount number? I assume it's around six eighty. That might actually go down in the future in certain areas if we find ways to improve it. And it may need to go up in the future if our population goes up. And I think that's the debate at this council. That's why there's decisions that need to be made in this council. We may decide to add 50 police. But I think the discussion needs to be based off of the data that we have and the best data that we have to make that assumption. Assumptions around Huntington Beach Finance, again, very different revenue model. Like oh, the the actual headcount from the finance department.

Again, like I said, I was pulling things out. Right? And I saw certain enhancements or tools or software that Huntington Beach was able to use that I thought was valuable. For libraries, from a headcount discussion, I guess my main point there is that we have options, and I put them up there. But what we are doing is we are definitely overspending to the service that the public is receiving.

If you think about the 700 approximately headcount that we have as a city, 34 in our libraries, and we're only opening our branch libraries for sixteen hours a week. Right? Two to six on four days. So my main point here is that when we think about how we spend our money, we gotta be 've to go through all of the different areas. And this, I think, is an area that represents a high expenditure to service impact to the public in terms of who's engaged and impacted by the library services.

Now, I'd love to keep all three and open them up, right, and do so in a service level increase at a lower or a higher efficiency level. And that's what I would want. But I think I just opened it up to the discussion around there's also options there. For CalPERS accruals, I ran it to twenty fifty. There's no way to know, like, the long term accrual amount.

You can forecast close to 12% for 2025, 2026, then I use 6.8. 6.8 is what CalPERS uses. So I just adopted what they use for their model to model the remainder of CalPERS going forward at a 6.8% level. Can we put those numbers back up on the board? The $2.28 is what we currently owe off of an initial February pension obligation bond.

That is amortized at a 2.7% interest rate. We are paying that off. We're paying that off. It has been in our budget at the tune of $15,500,000 and it has been a part of our budget. Prior to having this, we had an unfunded liability of $16,500,000 $16,000,000 right?

And it is true that it is a negative impact to where we can spend money in the city, but it's a burden that's been built into our budget for a little less than a decade at the current level at which we're paying it off. The undead funded liability right there is based off of the 9.3% from 2023 to 2024. That is put into an amortization schedule, kind of a bell curve of repayment. And we are at the onset of that. So we do owe money to CalPERS on top of the $15,000,000 plus that we owe for the debt and the pension obligation bond.

My point was that is now $33,000,000 with the 12.1% return in '24 or '25. And that in and of itself goes into a repayment schedule. And at the 2025, 2026 current understood assumptions at the lowest level, we become funded and that unfunded liability goes away. That happens we will be paying back over the next two, three years until we achieve a state of funding. So yes, we're paying that back.

That's been in our budget. The budget, by the way, that has run a tight and small surplus. The lease revenue bond, fire station, that's currently also in our budget post the fire station. And that is something we have to pay off as a result of our budget as well. So those are all hard debts with an annual repayment schedule that has been and is continually baked into our budget.

If you go back to the one of the first slides I had, that is in the expenditures. Right? And if you tie our revenue to those expenditures, last year, we ran a small surplus. This year, we're at a $700,000 deficit. The point being, we can have a continued conversation around how we want to spend our money. My perspective sees us in this place and sees opportunities for additional efficiency efficiency factors. Factors.

All right. One last clarifying question, and we've got to move on. Councilmember Barrios.

Well, I appreciate the desire to move on, but I actually think that this conversation is super valuable and relevant to what we're about to talk about. It's just not part I understand. I know on

Acton, so we can discuss that when we get to item 9.1.

I hope

we can. Please. Because it is part of the conversation that we've needed to have for a long time. And looking at some of the things you've put together and some of the answers that you're saying, I guess I just want to clarify because you noted that in terms of how you were feeling about this and where the city was, while you have questions and while you have obviously a lot of input and a lot of data that you've looked at, that you still do understand that we aren't making our nut, basically, at this point. I mean, we're just not.

We're not doing it. What your I think your analysis didn't show or maybe you were trying to show is that there are the conditions are changing. Would you agree with that?

Yeah. I mean, think there's a lot of risks. So I tried to walk through those risks. I think the biggest things that I looked at for like where we at today is your the amount of money in your internal service funds, the amount of money in your cash investment accounts, and the current budget or surplus with our operating budget. So I think if you take those three things together, they show you your near term health. Right? And our we have, I think, 160,000,000.

That explains a little bit better what you were trying to

That's your near term health. There's risks. Right? And I attempted to communicate those risks. But I think when we model forward looking assumptions, right, we can get money in advance of the potential risks. Right? We can go through a list of, like, where do where do we wanna spend, you know, where do we wanna invest now, and, you know, we can determine, hey, listen, you know, we do have a shortage here of a million, etcetera. My point is I see multiple opportunities within an existing operating budget that is close to the pin from a surplus deficit where there's still spending opportunities to pull back on some of our spending just to be as efficient as possible before we move forward and asking for more money.

Okay. Well, that helps me understand your position on it because there are very specific things when we get to the next question that I'm gonna press you on. Please do. Because I think there's a middle ground. I think what I'm hearing, and this is what I wanted to convey, is that, you know, everything that council member Tavallero said is true. A lot of what you're saying is new and different scenarios, and you're coming at it from very different angles. But I think that we need to be looking for some solid middle ground here where we can both meet

in the middle.

Just one comment. I I'm not married to this position. Like, I'm absolutely open to anyone challenging any assumptions in this doc. A 100% want to know if there's anything that I'm missing or seeing in this doc. And again, these are all directionally very accurate because I've searched through this as much as I possibly can. And I have this perspective advantage on this. We are not flush with cash. Right? But we have shown our cash and cash investments to have moved up over time. We have shown our operating budget, although we have voiced massive deficits, to actually end in small surpluses, at least the last budget cycle.

And inside those, we are repaying the debts. Right? There is an opportunity to get more money and to get well ahead of our infrastructure needs. I think the last infrastructure was around $45,000,000 that I saw. The list of it, I got to find it to the question earlier.

A portion of that was retrofitting City Hall. City Hall was in here for replacing carpets and painting. And each one of the items on the building's infrastructure list has a rating of fair, good, poor, essentially the life of the asset due to whatever we need to do to challenge it or change it. Right? I may have a different opinion on whether or we need to repaint or recarpet city hall, but I do think that's a discussion we need to have on whether or we need to pull forward infrastructure projects, stuff like that. So, again, not married to my position. This is what I see. I'm telling you how and why I see it. And this is what I believe is best for the city.

And while I greatly appreciate that, absolutely put a pin on what my biggest concern is. And that is that everything you just showed doesn't tell the story. And Mr. Peterson was absolutely right in terms of what he brought out. We have failed to tell the story in terms of what we have done.

So in terms of just your overall presentation, it fails to recognize the work that has been done today. We have failed to tell that story to date of how we are here now needing something bigger and better to fund the gap, which we're going to discuss. But I think that that's the number one thing that bothered me about the presentation overall. And we've been shoulder to shoulder on that, and it was really important that that piece is communicated. In addition, I think a lot of what you're saying here is that's the other piece of the communication story is that we have to come forward, whatever we decide on the next item, to tell the story of our strategy.

What is our strategy? Packaging it all up, making sure people understand it, that's certainly where I see a lot of value in what you presented to us. So I do lodge you for the work.

Thank you. Dan, can I

close out my one more comment, and we have to move on?

Appreciate it.

Sorry. No, it's fine. I appreciate it. Thank you. I do want to be the amount of work that this council has done diving into it, my position in no way negates your position and how you got to that position. Today, all I wanted to do was frame why I believe what I believe, and I wanted to convey and communicate how I got to that belief. Inside of the city, there's been a tremendous effort to go after cost components. I do think some of them were more symbolic than others and less impactful. And I do think some of them were a result of some level of inaction from a hiring, and there is still continued opportunity to build organizational efficiencies in. So there is work there, I think.

But there's been tremendous efforts on the part of the city and this council. And I absolutely value the position of everyone on this council. And that's why I say, again, I'd love the discussion. And I wanted to make sure that my perspective was heard in light of where we're at today.

We heard you. Thank you very much. With that, I will segue into a comment made by Councilmember Dmitry. City manager, would it be possible for the next council meeting have a brief staff analysis of Councilmember Gillenhamer's presentation? Absolutely. And that would

be a good time, right? We're receiving copies of this just now. We can go through it over the couple of weeks and we'll have the preliminary budget scheduled for May 26 as well. So it would be a great time.

Great. Thank you. Fantastic. Okay. Item six, any additional AB1234 reports? And we have a request for a restroom break, so we'll continue with item seven in ten minutes.

Heritage and the benefits of preserving local history. Staff is present to provide an update on the city's historic preservation efforts. Mills Act contracts offer significant property tax relief in exchange for the preservation, maintenance, and rehabilitation of the site. As of today, there are currently four nineteen MELZAC contracts in the city. In July 2025, a letter was sent out to all MELZAC contract holders notifying them that staff would be reviewing compliance of the contracts.

In response, eight contract holders requested a nonrenewal of their contract. In addition, staff found 97 contracts in violation. To date, 48 contracts have been sent notice of violation letters, providing a thirty day opportunity to rectify their breached contracts. These letters were grouped and sent in February, April, and most recently, the beginning of May. The remaining 49 contracts will receive their notice of violation letter over the next several months.

Community development, Chattel Historic Preservation Consultants, the Old Town Preservation Association, and the Orange Legacy Alliance have been collaboratively working on the creation of our city's historic preservation ordinance. A listening session with the Old Town Preservation Association and the Orange Legacy Alliance was conducted on February 17. A joint commission a joint planning commission and design review committee study session occurred on March 16, and a community workshop the following week on March 25. We expect a first draft of the ordinance from Chattel Historic Preservation Consultants in the coming weeks for ourselves and our collaborators to review. We hope to have a final draft prepared for the public review for a public review at the Design Review Committee and Planning Commission meetings this August.

Our goal is to bring the ordinance for your review this fall in October. October. An El Medina Barrio story map was completed by Charlotte Casey, our community development intern. You may scan the QR code on the screen to visit the page or linked on our city website found on our historic preservation page. Charlotte conducted research and interviews with family members and residents to best accurately depict the community's heritage and culture.

The Almaden Barrio holds significance for its agricultural history and early segregation struggles, historic impact that should not be forgotten. Thank you, and I'm available for any questions.

Thank you very much. Any questions? Councilmember Barrios?

I just wanted some clarification on the violations that you noted. So I'm actually surprised it's only 97. But can you define that in terms of what you're calling a violation, or like they're not in compliance? Yes.

So

I prepared a slide that shows the requirements of having a Mills Act contract, reinvestment of the tax savings to restore, rehabilitate, and maintain the historic integrity of the property, and the annual fee that's mailed out by finance along with the annual report, and a current ten year plan. So it could be one of the requirements. It could be a combination of the four different requirements. I would like to note that when we were sending out the violations, we did go after the contracts that had the most breaches in their requirements first.

And specific to that, because I and I want to make sure I don't run afoul of this since I am a Mills Act holder. But the current ten year plan issue, no one has asked for that. I'm sure I'm not alone in that in terms of it. So are we looking at a future plan of how we will deal with that?

We are yeah.

I can assist with that. Good evening, counsel. So what we have typically been doing is as the properties have undergone their five year inspections, at that point in time, we enter into discussions with the owners about refreshing the work plans if they haven't already.

Any other questions? Alright. Thank you for the wonderful presentation.

Mayor, can I just say that I wanted to thank our intern Charlotte? I wish I could see her in person to give her a big hug because that was very, very well done. I appreciate all her hard efforts and kudos to interns and we'd love to have more. So thank you.

Great statement. Thank you, Council Member Gutierrez. All right. Public hearings, item 8.1. Staff has requested that we continue this item to the next council meeting. It's a public hearing to consider the introduction and first reading of an ordinance to update regulations for residential care facilities and daycare homes to ensure consistency with state law. I'll entertain a motion to continue this to the next meeting. Motion made by Councilmember Gutierrez, seconded by Councilmember Gillenhammer. Any other discussion or questions? Seeing none, vote.

Approved unanimously. Item 8.2, a public hearing to consider the fiscal year 'twenty six-'twenty seven annual action plan for the community development block grant and home investment partnership programs. And I'd like you're ready for a staff report.

Good evening, mayor and members of the city council. Before you tonight is the draft twenty twenty six-twenty twenty seven annual action plan, which represents the second year of implementation under the city's twenty twenty five-twenty twenty nine consolidated plan. As required by HUD, the annual action plan identifies how the city will allocate CDBG and HOME funding to address local housing and community development priorities. These priorities include economic development, homelessness, affordable housing, public programs, and public infrastructure improvements. The city released a notice of funding availability in November 2025 and accepted applications through January 2026.

In total, the city received nine applications to public service programs and one application for a public infrastructure project. The CDBG committee conducted a public hearing on 02/12/2026, where applicants presented their proposals and the committee later deliberated funding recommendations in March. Initially, recommendations were based on estimated HUD entitlement amounts. However, in April 2026, the city received final allocations from HUD totaling approximately $998,000 in CDBG funds and $343,000 in home funds. Staff subsequently adjusted the recommendations consistent with the committee's direction.

Additionally, the draft annual action plan includes a home funded affordable housing activity to reserve funds for future affordable housing opportunities, including the required community housing development organization, or CHOTO, set aside. Staff will return at a later time with a specific project recommendation. Staff also identified approximately $58,000 in unused prior year CDBG funds resulting from completed projects coming in under budget. Consistent with HUD regulations, staff recommends reallocating those funds to eligible infrastructure and business assistance activities that are not subject to funding caps. The draft annual action plan was made available for a thirty day public review period from April 9 through 05/11/2026.

As of this evening, no public comments have been received. Staff has recommended City Council approve the draft twenty twenty six-twenty twenty seven annual action plan and authorized staff to submit the plan to HUD for review and approval. I'm available for any questions.

Thank you. Any questions? Councilmember Barrios?

I just had a question about that overage or I guess the surplus that's there. Do we have the ability to find a project that maybe we perhaps have been talking about for some time that we could put that towards, or does it have to go through the whole CBDG program again? Like a process for

Are you referring to CDBG or HOME?

Probably CBDG because what I'm thinking about specifically is the projects that we've looked at in Al Medina for some time.

The 58,000.

The 58,000. Yes, I'm sorry. Absolutely. The restrooms or something that we've looked at for

a while. Yes. So city council can redirect funds to those type of projects. However, because of our citizen participation plan, it might be something that we would want to take back to the CDBG committee, or that the city council would like us to go in that direction. For now, because we do need to submit the annual action plan by the end of the month, it would probably be advisable to submit it as is and then use any unallocated funds from the current year towards that project that would give us time to look at our current resources and capacity and to see if that's something that we would actually be able to implement.

Can you just piggyback on that? Because I read that $58,000 it sounded like you wanted to reallocate, give some to the pavement management and some to the facade program correctly? Am I correct in reading that?

Yes. So right now, a portion of that is going to offset some of the costs related to project delivery for the street rehab. And then the balance would go to the business facade program. Okay.

All right. And I'm sorry, did you want to ask another question? I just wanted to go somewhere else. Me too. Would really like and I know I asked this last year, and I know we and I talked about it Killerford Park needs a bathroom, a permanent bathroom, because they still have the porta potty. Really like to see obviously 58,000 is not enough, but I would like to see that brought up next time when you reallocate monies. And I'm just curious about the facade program. Has there been any interest in the businesses and how do we reach out to them? I'm happy about that. I think that's a really good thing. I'm hoping that they use it.

Staff will be bringing forth a proposal at the next city council meeting for the facade program. In the interim, we have started to reach out to businesses to inform them that this program is forthcoming.

All right. And do you have any interest from them? Are they seeming like they want to participate?

Yes, absolutely. We want to make sure that what we present are the guidelines for what will be required for the program to qualify and then hold workshops where we can actually assist the businesses that are interested with the process.

And just like Councilmember Member said, the $58,000 instead of reallocating it to the facade program or to the pavement management, could we look at doing something else in some other area that might need something? Like, I don't know. I know the bathroom at Almedina Park still needed the I went on at the actual Almedina Park. It needs some love, the original bathroom. So it needed some re hanging of doors, and I know we need some more updates and whatnot. So I don't know if that is and, again, that is something that it needs to that we as a council need to decide or you need

to be back to the committee. We would have staff would need to evaluate because CDBG funds cannot be used for maintenance improvements. It would need to be like a new construction or, yeah, something So of that we would need to evaluate the proposal. I would recommend that we approve the funding as is and then if council would wish me to bring back this item, we can reallocate these funds through a substantial amendment that we could take to the CBG committee and redirect those funds if that is what the council desires.

Or we could actually add on to the facade program, right? Because that's another uncapped item, right? Yes. We could add, put more money into that facade program. Okay. All right. Thank you. I appreciate it.

I like the idea of adding on to the facade program if it's working. It looks like the community development directors would support that highly. This is a public hearing. I'm going to open the public hearing. Are there any speakers? Seeing none, I'm closing the public hearing and bringing it back to the council for a motion. And we have a motion from Council Member Gutierrez to accept the recommendations, I assume. Very well. And second by Council Member Tovallaris. Any further discussion from the council?

Questions? Okay. Please vote. As approved unanimously, thank you for your hard work on this. Okay. Item 8.3, a public hearing to discuss and consider a draft city charter. And I will ask for a staff report.

Good evening, Mayor and Council members. So pursuant to direction given to staff at the March 10 council meeting, staff was presenting a draft city charter for council review and discussion. Ultimately, at the conclusion of this item, staff is seeking public and city council input on the proposed changes that can be incorporated into a future draft for further discussion and consideration at the 06/23/2026, city council meeting. So as a brief overview, and I know we went through some of this on March 10, our current structure as a general law city can be described as your default city. When a city incorporates, it is a general law city and derives its authority from state statute and must follow state law and regulations, even when a matter is purely local.

Alternatively, charter cities draw some, but not all, authority from a locally adopted charter, particularly if the matters deemed to be a municipal affair. So when we look at a charter law versus general law cities, the crux of the issue is, what is a municipal affair? Essentially, charter law is a local constitution that governs those matters exclusively deemed to be a municipal affair. So when the state of California repeatedly redefines what was once a municipal issue as a matter of statewide concern, then the charter is preempted to the extent it focuses on those matters the state has deemed to be a statewide issue. Overall, in its simplest form, two sources help define what is a municipal affair.

That is California Constitution under Article 11 and the courts making determinations on a case by case basis of what is a municipal affair utilizing a four part test created by the California Supreme Court. So with this in mind, a draft charter is presented tonight for counsel policy discussion and direction of staff. The draft includes nine articles laying out various policy statements and administrative functions. In general, these nine articles can be categorized into six areas. I'll go through each of those six.

I have the articles that best apply to those categories, and then I'll go through generally what is within each category. So the first one is incorporation of powers and municipal affairs. That's articles one and two. And generally within articles one and two, it establishes the city's authority as a charter city under the California constitution. It confirms all powers available to charter cities over municipal affairs.

It preserves all existing ordinances, resolutions, contracts, obligations. It declares that the charter shall be broadly interpreted in favor of municipal self governance and maintains compliance with general land use requirements, including general plan consistency, zoning regulations, subdivision laws, and housing law compliance. For the second category, that's the form of government city council structure. It preserves the existing council manager form of government. It confirms all municipal powers remain vested in the council except for otherwise provided by law and preserves flexibility regarding district elections, at large elections, and future law adjustments to election methods.

The third category is listed as term limits and vacancy procedures. You have Articles five and seven listed there. This establishes a two term lifetime limit for the mayor, establishes a three term lifetime limit for members of the council, clarifies treatment of partial terms for term limit purposes, establishes procedures for filling permanent vacancies pursuant to the California government code, and provides procedures for temporary suspension of elected or appointed officers facing felony criminal proceedings. The fourth item has to do with procurement, contracting, and local control. That is Article six.

And you'll notice that the categories four and five are kind of split. You have Article six falling within both categories. For this particular one, as it relates to procurement, this provides the city full authority over municipal contracting procedures and public works procurement, establishes authority for best value procurement, design build authority, alternative project delivery methods, and professional services selection, and clarifies the city's authority to establish exemptions from state public contracting statutes where permitted to charter cities and preserves local authority over prevailing wage procedures where constitutionally permitted. On the flip side of that, with category five with city assets, public utilities, and eminent domain also within Article six, this restricts the use of eminent domain for transfer of private property to another private property without owner consent It preserves the city's authority to purchase, lease, hold, and dispose of city owned real and personal property and clarifies that disposition of city owned public utilities remains subject to all applicable state law requirements, including voter approval where required. And finally, the last one is fiscal responsibility and legal provisions.

That's Articles eight and nine. And that includes requires adoption of a balanced budget, requires an independent annual audit presented publicly, preserves constitutional voter approval thresholds for taxes, and requires twothree vote of the full city council before placing a city sponsored tax measure on the ballot. And lastly, severability, amendment procedures, violations, definitions, as well as the effective date of the charter should it be approved by the voters. So now pursuant to California government code, the city must hold two public hearings before the council considers voting to place a charter before the voters at the November twenty twenty six election. There must be a thirty day spread between the first and second public hearing, with twenty one days having passed after the second public hearing before the final vote can take place.

This is the first of the two required public meetings required public hearings. So with that in mind, staff is seeking public and counsel feedback on any changes that should be incorporated to the draft charter for the second public hearing discussion scheduled for 06/23/2026. That concludes my overview, and I'd be happy to answer any questions that the council may have.

Thank you very much for that. Any council questions at point before we open the public hearing? Okay, seeing none. I will open the public hearing. Oh, I'm sorry, I missed Councilmember Gutierrez popped up there.

I just have some questions, Jack, that I was hoping that you could answer. In regards to the sale of any city assets, so if I'm to understand, under a charter city, would we not be under the same what we currently have to do now, which is what's the word? I'm forgetting.

Surplus Land Act.

Surplus Land Act. Would we no longer be under the Surplus Land Act? Would that change, or would that still be the same?

I may have to defer to our city attorney on that. With Surplus Land Act, I would have to imagine the state has deemed that a matter of statewide concern. So even if we have as we're a charter city, we would probably have to follow that process to dispose of any city assets.

Okay. And then in regards to where's my other question here? I'm forgetting here what I was going to ask. Same thing for public utilities, like for example, the water department and whatnot. If you have that in the charter, we could dispose of any public utility, would that still have to go to the voters?

As written in this proposed charter, we're saying that it would have to go to the voters. The Public Utilities Code requires that it goes to the voters. We'd have to look into it further to see if we have an adopted charter, if that would essentially bypass that process and the city could do it on its own.

Okay.

And let me see. I feel like there was another question I had. I wanted you to walk me through the procurement, the whole authority over municipal contracting procedures, public works, and maybe Mr. Cash's he can answer this. Walk me through what are all the steps you have to take now? And if we were to be a charter city, give it to me in layman terms, how would it be different?

I know one of the larger benefits you can have as a charter city is you can essentially help bypass the prevailing wage requirements. Now, the state has drawn that back a bit to the extent that you could bypass prevailing wage requirements on public contracts if the funding is solely coming from the city. If there's any state funding that's involved in that potential project, you would have to follow the prevailing wage requirements. But if we have a public project that would be, say, fully funded by the city's general fund and we are a charter city we could bypass the prevailing wage requirements, which should drop the cost of the project.

So would anything other you still have to do RFPs. Would you still have to do the lowest bidder? Would it still be similar to what you do now? Or tell me how it would make it where you have more local control.

So council member, my understanding is that one of the barriers aside from the prevailing wage is actually in the selection of the contractor. So you would still put together bid specifications, RFPs, because that's basically how you tell a vendor or a contractor what you want. But in terms of selection, it would not necessarily have to be to the lowest responsible bidder. You can use other factors. There's other criteria that you can throw into it where perhaps maybe you aren't awarding it to the lowest bidder, but to another bidder based on experience and other factors that isn't necessarily just cost.

So in that case, it may not necessarily result in the lowest cost, but it certainly gives you much more flexibility in terms of the type of vendor or contractor that you could procure to do a project or to provide service.

Okay. All right. Thank you very much. Those are my questions for now.

Great. Councilmember Gillenhaver.

Thank you, Mayor. I have very similar questions. Just a couple of building points, I guess. For the city's authority to establish exemptions from state public contracting statutes permitted to charter cities, specifically with prevailing wage, that has not been overturned? Or is it confirmed that if it comes from the city's budget, we can bypass prevailing wage?

That's our understanding. So if we're a charter city and we have a project that's completely from city funds that's why I'm using general funds as an example we could bypass prevailing wage requirements. It's just on public projects. It's not often that we are dealing with money that is solely coming from the general fund. Oftentimes, it's going to be grant funded or it's state money.

That's my next question. If we were to look at our existing expenditures for RFP, much of that is actually coming solely from our general fund today?

I can defer to our public works director, but I have to imagine it's pretty it's a small percentage of public projects that are solely funded from city funds.

I was going to say, it's sort of indicative of our financial situation. Almost nothing that we build is 100% general fund. And if it is, it's very low dollar value.

Okay. Got it. All right. And then for this city's authority to purchase lease hold and dispose of, if we are still subject to the Surface Land Act, is there any other regulatory component that we could side step in a charter that would make a charter unique from being under state law?

I don't believe so. Because the Surplus Land Act has been used as a tool to develop housing, and housing has been made clear to be a matter of statewide concern, I think us, if the city and the voters were to approve a charter, I think the city would be hard pressed to try to bypass that. The state's been pretty clear that they want the city to go through a particular process to make it available for the option of housing if that property could allow for it.

Okay. Thank you.

Any other questions before we open the public hearing? All right. I'm opening the public hearing. We have one speaker, Regimentakis.

Hi. No member of the public asked for this charter. The only thing that this charter does is campaign reform. It limits limits on term limits and that could be accomplished by a ballot measure, which is how the term limits were we don't need this. Thanks.

Thank you. Any other public speakers? Seeing none, I am closing the public hearing, bringing it back to counsel for discussions and or action possibly. Council Member Dimitriou.

Thank you, mayor. I just want to just go on record as complementing Council Member Tavallaris. This isn't something that is new to us on the dais for her discussion. This is a signature piece that she has been working on for a significant amount of time and dedicating her time on council to making a significant change to the city that doesn't look at just today but looks at our future well past our nose and actually will make a significant difference in our governance. And in that time frame and items that have been proposed in the past, I really truly believe in reading this and looking at what has developed over time.

She's taken all the feedback and come back with staff with a with a heartfelt charter for the city that some of the items that I think we all kinda looked at and questioned, she took to heart and either, a, removed or modified. And at this point, I think, you know, this is something that, Kathy has worked on extremely hard. She never, really asks for anything towards, you know, her goals, for the city other than the best output and the best foot forward. So I'm gonna be happy to support this. I think she's done a tremendous job on getting this to where it's at, and, I think it deserves a vote of the people.

And that's all we're doing is, much like a lot of other things is we're putting this forward to be on a ballot for public discussion, and the public will have the opportunity to either say yes or no. I think we owe it to Kathy to at least have that opportunity.

Thank you, council member. Council member Barrios?

I flipped away from my notes. I apologize. I had some specific questions relative to what you were running us through, Jack, specific to term limits. So while I can read what's written here, in reality, what does that do if this passes in November to the current council? What does that allow for?

If this were to be adopted, I believe this would reset the term limits, and the city attorney may correct on that. And then as resetting it, the individuals that would serve in these terms, after the terms that are set in here, it would be a lifetime ban from the council. But it would reset it.

But it would reset it. Okay. On the sale of assets, because I think this is one that, at least I've heard from my constituents, that they're concerned about. I know we surveyed on it in terms of the water district. This does not authorize specifically the sale of an asset like the water district. It's not calling for that in the charter, but it opens up the option for it. It provides us an option to do so at a future date if necessary without going back out to a vote of the residents?

I can answer that one. That's something that we still have to work through, right? It's written to the next staff report item, the potential sale of the water and utilities. Potential sale of the water department, whatever you want to call it, is a massive twelve to eighteen month undertaking. We need to dive through it a little bit more. I've seen an argument that says if you're a charter city, you don't have to go to the voters. I've seen an argument that says even charter cities do have to go to the voters. Ultimately, we need some more research analysis to dive into that. That decision isn't going to be made with this charter today. It will be made by potentially future councils.

If that's a path that we go down, you'll issue an RFP, you'll get a market evaluation. And again, we can talk about it more with the next item, point four on the agenda. But this does not commit you to selling the water department, no.

All right. It's more just like opening up some options. Correct. Okay. One of the things I noted in terms of removal of council members in terms of temporary suspensions based on felony and criminal proceedings, is that something that we would be able to play with a little bit more for also ethical violations since we go through ethics training?

We have Can

that hear loud? I don't see why not. Do we have the option,

I guess,

I'm asking. We can have that option. Again, this is the first public hearing, so we can evaluate that option over the next thirty days and have sort of a recommendation for you at the second public hearing, which is June 23.

Okay. That would be very helpful. And typically and I'll just stay with you, Mr. City Manager I've seen other cities do this where you go through a commission and a blue ribbon panel, that type of thing. We're not doing that here.

We're moving through very quickly. I agree with my colleague, Council Member Dimitri, that I really respect Council Member Tavalares for doing all this because it is part of all the efforts of looking ahead, of looking for other mechanisms. And to that point, Jack, my question to you is you mentioned taxing authority above and beyond, I think. And I just missed what you said because I think you were the twothree vote for taxes. So does this give authority?

So this is it's really codifying what's already in government code. So if the council came to a point to decide to put a tax measure on an upcoming ballot, it requires right now, California government says twothree. This is reflecting that requirement, the twothree. So five out of seven for the council.

So it's just codifying that twothree before we move something onto the ballot. It doesn't take away the going to our residents to

make Correct. That

Okay. That's what I was missing. Thank you. Those are all my questions.

So I agree with Councilor Dmitry's kind of summary. And I appreciate the fact that this has been slimmed down from the first drafts that had a lot more in it. I like this simpler version. I still have some heartburn over the term limit extensions. The voters passed two, three year terms for mayor, two, four year terms for council.

This point, I think I would still prefer that. However, for the sake of moving this forward, it's going to go to two public hearings. Is that correct too?

This is

the first of the second. Second meeting will be June 23. Then the city must wait twenty one days before you can ultimately consider it to put it on the ballot for this November.

But we'll have plenty of opportunity for public input, and that's what we would love to hear from because but ultimately, again, this will be put before voters and given voters given the opportunity to decide. So I can support moving this forward this evening. Mayor Pro Tem Bilderow?

Yes, briefly. I too wanted to thank Councilwoman Taylor for bringing this forward. It's very basic. I know she took input from a lot of stakeholders. And I think this provides a good framework moving forward for the city to bring other issues to the voters and let them decide. Thank you.

Councilmember Gillenhamer.

Yeah, I love this idea, the idea of taking control, right, to the extent that we have the ability to take control. I think it's too basic, right? So I can't find actual major changes that we would be able to apply to our city. Think we're still beholden from a tax perspective. We're still beholden from a sale of a water department perspective.

We it sounds as though from a sale or disposal of assets, we're still beholden to state law. Sounds as though from a procurement or PFP perspective, we're not really gonna get a a ton of benefit because we're under the same rules or regular regulations. I'm combing through this, and I'm looking for where is this going to be anything different or pull us out of state regulation or statutes where we can assume more control. Outside of Article four and some of the term limit components, there's just too much here that's just a reiteration of what we're already under state law for. So I'm going to move forward.

And I think what we need to discuss here is what is actually tangibly going to change if we pass a charter, and where can we assume some level of control that's beneficial to the city. I can't see it in where we're at right now. And I think we should have that conversation to see if we can find those things. So I'll continue it.

Councilmember Gutierrez.

So I too want to thank Councilmember Tavalares for bringing this forward, championing forward, and changing quite a bit and working hard on this. But like Councilmember Gillenhammer, I still don't see the benefit, which I asked last time as well. I still don't see the benefit. I'm having a hard time with the benefit. And I'm also having a hard time with our next item that we're going to be discussing.

And if we were to have to put anything else on the ballot, this just muddles the water. There's just too many things we're going to be asking voters to vote on. I do not feel comfortable moving this forward and would prefer that we do this at a later time when we don't we can discuss it later, but this should not be, in my opinion, the number one thing that we're discussing. So I am unfortunately not going to be able to support this, but I do thank you for your hard efforts.

I wanted to make a comment that I forgot. I would love ideally to see if we do any more polling, and I think we should. I would love to see some of the questions about the charter included and get the public's input on that. Because if the public isn't ready to support this or even vote on it, then I don't want it to get cluttered up with other initiatives that we might be putting on ballot. But again, that's something I would ask that's a possibility if we plan to do any more, polling or surveys that there's something related to the charter, some questions be included.

So with that, we have a motion, from Council Member Tavallaris and a second from Council Member Dimitriou to move this forward. Any further discussion? I will call for the vote. As approved, six to one with council member Gutierrez voting no. Okay.

Our last item, but we saved the best for last. Item 9.1, consider revenue measures to address ongoing structural general fund deficits and provide direction for the November twenty six general municipal election. Counsel, I'd to propose how we proceed with this for just to keep it simple is have the staff present each measure separately, and then we can have a discussion on each and every measure so we don't get convoluted and start talking about different measures at the same time. Then I'd like to go back and ask the council if they can prioritize what their measures they would like to see further discussion or we can have a vote on all of them if you want. But just to kind of keep it simple and move things forward.

Does everyone seem good with that? All right. Thank you. So with that, let's discuss the first measure, which I believe is sales tax, if I'm not mistaken. And right. But first, we're just going to have a staff report. So the first item is, sales tax increase.

Thank you, mayor and council. So, as you see on this slide, we have several different revenue measures that the council is going to consider tonight. I'll note as we get to these last three, we recognize that there may be larger policy discussion there. So we may not have the anticipated revenue but are receiving separate direction on those particular items. When we look at the sales tax measure, and you'll see at these slides, we have a similar kind of uniform format on the description, estimated additional revenue, and then the vote requirements.

So I'll begin with the $01 sales tax. This is a common revenue option for cities across California. A local sales tax increase is technically referred to as a district tax. It functions differently from the base Bradley Burns tax the city is already receiving. Where the Bradley Burns is generally calculated on the place of sale, the district tax is calculated on where the purchased goods are put into use.

So because of that calculation difference, if we're receiving around $50,000,000 a year on Bradley Burns, that's why you see a drop off is because it's calculated different for a district tax, which is what a $01 sales tax measure is. And so the estimated revenue on a 1% or a $01 sales tax is $37,000,000 in additional revenue a year. The vote requirements, and you'll see this consistent with a lot of these measures, For city council to place this measure on the ballot is twothree requirement. If it's a general purpose measure, which means the revenue would go to general government services, it's 50% plus 1%. If the revenue would go for specific services, for example, you'll see in other cities they may do a public safety measure, it's twothree of voter approval.

So that's my just brief overview on the sales tax measure.

I'd be