Fund Structure
12 • Non-spendable Fund Balance: Cannot be spent due to form or must be maintained intact legally or contractually.
• Restricted Fund Balance: Subject to externally enforceable limitations by law, enabling legislation, or limitations imposed by creditors or grantors.
• Committed Fund Balance: May only be used for specific purposes due to formal action of the City Council through adoption of a resolution prior to the end of the fiscal year. • Assigned Fund Balance: Reflects the City’s intended use of resources. • Unassigned Fund Balance: The residual classification that includes all spendable amounts not contained in the other classifications.
For the purposes of budgetary fund balance, the last three classifications listed above (Committed, Assigned, and Unassigned) are generally not legally restricted by external parties or forces.
FUND STRUCTURE
The City records financial activity in six fund types as guided by generally accepted accounting principles (GAAP): General Fund, Special Revenue Funds, Debt Service Funds, Enterprise Funds, Private Purpose Funds, and Agency (Fiduciary) Funds. Within each fund type are multiple funds that relate to a city department or multiple city departments.
General Fund
The General Fund is the government’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The General Fund is generally used to account for functions of the City that are principally supported by taxes and intergovernmental revenues. The General Fund budget provides the majority of services commonly associated with local city government (e.g. public safety, recreation, community development, general government, and public works).
Measure O-06 Sales Tax Fund
The Measure O-06 Fund is a component of the General Fund and is used to separately account for and report the use of Measure O-06 revenue derived from a local 1/2% sales tax approved by the City's voters in November 2006.
Measure E-24 Sales Tax Fund
The Measure E-24 Fund is a component of the General Fund and is used to separately account for and report the use of Measure E-24 revenue derived from a local 1% sales tax approved by the City's voters in November 2024.
Special Revenue Fund
Special Revenue Funds are used to account for specific monies that are legally restricted for use for a particular purpose. Miscellaneous grants and other restricted funding are recorded as Grants of within a Restricted Programs fund. Grants are budgeted by individual Council action, whereas restricted funding, if recurring, guaranteed, and predictable, is budgeted in the City’s budget. • Developer Impact Fees are collected from developers for the expansion of the existing City service in order to serve future development, the budget includes 9 Special Revenue Funds:
Fund Structure
13 o Fire Protection Fund: impact fees collected from developers for the expansion of the existing fire station in order to serve future development. o Police Protection Fund: impact fees collected from developers for the expansion of the existing police facility in order to serve future development. o Park Development (Quimby) Fund: This fund accounts for the receipts of park-in-lieu fees (Quimby) and grant revenues that are used for construction, park acquisition, and development of park facilities.
o Recreation Community Center Fund: impact fees collected from developers and used for recreation facilities in order to maintain the adopted level of service of recreation/community center facilities of 542 square feet per thousand population. o Park Improvement Fund: Impact fees collected from developers for park improvements are to be used to maintain the adopted level of service for neighborhood and community parks of 4.0 acres per thousand population. This fund accounts for the receipt and use of these monies.
o Traffic Signalization Fund: impact fees collected from developers and used for the future cost of traffic signals.
o Traffic Circulation Fund: developer traffic mitigation measure fees charged as a result of an environmental review.
o Transportation Facility Fund: impact fees (AB1600 fees) paid to protect the public health, safety, and welfare by maintaining the existing level of public services for existing and future residents within the City of Arroyo Grande.
o Drainage Facility Fund: impact fees paid by development and are restricted to improving drainage within the City.
• The Community Development Department budget includes three Special Revenue Funds:
o In-Lieu Affordable Housing Fund: This fund accounts for monies paid by developers in meeting the City's mandatory affordable housing requirements. o In-Lieu Underground Utility Fund: This fund accounts for monies paid by developers in meeting the City's underground utility requirements.
o Community Development Block Grant (CDBG) Fund: This program is a flexible program that provides the City with resources to address a wide range of unique community development needs.
• The Police Department budget includes one Special Revenue Fund:
o State COPS Block Grant Fund: This fund accounts for the receipt and use of monies from the State of California restricted to the purchase of police equipment and technology for crime prevention.
• The Public Works Department’s budget includes seven Special Revenue Funds:
o Three Landscape Maintenance District Funds account for and report on the activities of landscape maintenance districts.
o The Special Gas Tax Fund is used to account for the construction and maintenance of city streets funded by the City’s share of State gasoline taxes. o Transportation Fund: This revenue source is provided by the San Luis Obispo County of Government’s (SLOCOG) Local Transportation Fund (LTF). The annual appropriation is restricted to transportation systems, including transit, pedestrian, street and road maintenance.
o Water Neutralization Fund: The City requires development projects that increase total water consumption in the City to “neutralize” that demand by reducing water consumption in existing development by an equivalent amount or by paying a fee in-lieu
Fund Structure
14 of performing water consumption reductions. This fund accounts for the amount collected from developers and is used towards the City’s water conservation efforts. o Water Availability Fund: Pursuant to the provisions of Section 38743 of the Government Code, water availability charges is a “special charge” which is levied to each parcel of property not served with city water. These charges are restricted for the sole purpose of expanding water supply such as a desalination plant, recycled water, a scalping plant, etc. • The Recreation Services Department budget includes one Special Revenue Fund:
o Tourism Business Improvement District (TBID) Fund: The purpose of the Tourism Business Improvement District (TBID) is to provide projects, programs and activities that benefit lodging businesses located and operating within the City of Arroyo Grande. A two percent (2%) assessment is levied on all lodging businesses of the rent charged by the operator per occupied room per night for all transient occupancies. Revenue collected is used to promote the lodging industry within the City.
• Other Special Revenue Funds include:
o Public Access Television Fund: This fund accounts for fees collected from Charter Communications that are restricted for support of public, education, and government access programming and equipment.
Enterprise Funds
The City’s enterprise funds are a type of proprietary fund used to manage services delivered to the public on a user-fee basis, operating much like a private business. These funds are self‑supporting; revenues come primarily from service charges, and they cover both operating expenses and capital costs. The City has 5 Enterprise Funds: Sewer, Sewer Facility, Water, Lopez, and Water Facility.
Agency Funds
The City’s agency funds are used to account for assets held temporarily on behalf of others—such as the Successor Agency to RDA, Downtown Parking, and the Sanitation Distribution funds. They are not City revenues and are excluded from government-wide financial reporting of expenses or fund balances.
Fund Structure
15
Fund Structure
16 GOVERNMENTAL FUND TYPES
General Fund – is the general operating fund of the City and accounts for all unrestricted financial resources except those required to be accounted for in another fund.
Special Revenue Funds – to account for the proceeds of specific revenue sources (other than special assessments, expendable trusts, or capital projects) that are restricted by law or administrative action to expenditures for specific purposes.
Debt Service Funds – to account for the accumulation of resources for and the payment of interest and principal on general long-term debt and related costs. The City currently does not have general long-term debt that would be obligated to use a debt service fund.
Capital Project Funds – to account for financial resources segregated for the acquisition of major capital projects or facilities (other than those financed by proprietary fund types).
PROPRIETARY FUND TYPES
Enterprise Funds – to account for operations in a manner similar to private business enterprises, where the intent is to have the costs (expenses, including depreciation) of providing goods or services to the general public to be financed or recovered primarily through user charges.
FIDUCIARY FUND TYPES
Agency Funds – to account for assets held by the City as trustee or agent for individuals, private organizations, or other governmental units, and/or other funds. These funds are custodial in nature (assets correspond with liabilities) and do not involve measurement of results of o
17 COUNCIL GOALS
Council Goals
18 On December 9, 2024, an Arroyo Grande Community Priorities Survey was published. This 4-question online survey was posted on the City website and promoted on social media channels. The survey was open for one month and closed on January 15, 2025. The survey allowed community members to provide input regarding their thoughts on what the top priorities should be for the City over the next 2-3 years.
The survey included a combination of multiple-choice and short-response questions.
On February 10, 2025, the City Council held a Goal Setting Workshop focused on priorities for the FY 2025- 27 Budget. The Results of this Goal Setting Workshop were provided to the City Council on March 11, 2025.
The City Council established five (5) major City goals for staff to prioritize for the biennial budget cycle.
The goals were established considering the results of the community survey and input from the public and staff. This set of priorities has been used by staff to create work plans and the biennial budget. Here are the five major goals.
Council Goals
19
Council Goal’s Work Plans
20 The budget is built from base operations. Once the base budget is established, work plan budget items are considered. These items include program enhancements, staffing modifications, service modifications, etc., that fit within the City’s goals. The ability to add work plan items changes from year to year and is based on the amount of funding available.
Goal Strategy Task/Action Carryover Action
or New
Responsible
Department
Anticipated to
Start
Completion
Target
1.1 Revenue Generation 1.1a 400 W. Branch Disposition and Development Agreement Carryover CMO/CA/CD In Progress 1Q FY 2026-27 Pursue New Revenue
Sources
1.1b Develop a Special Event that drives visitation during shoulder and winter months and build destination awareness Carryover Rec In Progress 4Q FY 2025-26
1.1c Develop an Economic Development Program New CMO 1Q FY 2025-26 4Q FY 2025-26
1.2 Consider Cannabis as a Means
of Economic Development 1.2a Evaluate cannabis operations that bring in revenue New CD/CMO 1Q FY 2025-26 2Q FY 2025-26
1.2b Conduct study session with the City Council regarding potential cannabis ordinance Carryover CD/CA/CMO/LIS 3Q FY 2025-26 3Q FY 2025-26
1.2c Conduct study session with the City Council regarding potential cannabis development agreement Carryover CD/CA/CMO/LIS 4Q FY 2025-26 4Q FY 2025-26
1.2d Prepare and adopt cannabis ordinance, if directed by the City Council Carryover CD/CA/CMO 4Q FY 2025-26 1Q FY 2026-27
1.2e Evaluate feasibility of a Cannabis Tax, if directed Carryover CD/AS/CA/CMO 4Q FY 2025-26 1Q FY 2026-27
1.3 Transient Occupany Tax
Changes
1.3a Work on changes to TBID ordinance for expanded use of TOT funds New CMO/Rec/LIS 1Q FY 2025-26 1Q FY 2025-26
1.3b Bring changes to TBID assessment and ordinance to Council for approval New CMO/Rec/LIS 1Q FY 2025-26 1Q FY 2025-26
1.3c Evaluate opportunities related to City TBID and potential TOT Measure New CMO/Rec/LIS In Progress 4Q FY 2024-25
1.3d Hold study session with City Council and visitor serving accomodations to eliminate TBID New CMO/Rec/LIS 1Q FY 2025-26 1Q FY 2025-26
1.3e If directed by Council, issue RFP for consultant to develop a survey and outreach strategy to community for TOT New CMO/LIS 1Q FY 2025-26 2Q FY 2025-26
1.3f Award contract for consultant to survey and develop outreach strategy for TOT New CMO/LIS 2Q FY 2025-26 2Q FY 2025-26
1.3g Conduct public education regarding need for TOT New CMO/LIS 2Q FY 2025-26 2Q FY 2026-27
1.3h Bring TOT measure to City Council for consideration of placing on the November 2026 ballot New CMO/Rec/LIS 4Q FY 2025-26 4Q FY 2025-26 FY 2025-27 City Council Goal's Work Plan
Council Goal’s Work Plans
21 Goal Strategy Task/Action Carryover Action
or New
Responsible
Department
Anticipated to
Start
Completion
Target
2.1 Pursue 2026 State Water Ballot
Measure
2.1a Meet with Department of Public Works at the County of San Luis Obispo to begin discussion surrounding purchasing some allocated State Water
New CMO/PW 4Q FY 2024-25 1Q FY 2025-26
Achieve Water
Resilience
2.1b If directed by Council, Issue an RFP for a Consultant to evaluate feasibility of State Water Ballot Measure New CMO/PW/LIS 1Q FY 2025-26 1Q FY 2025-26
2.1c Award bid to consultant and begin public outreach and community messaging regarding a potential State Water Ballot Measure New CMO/PW/LIS 2Q FY 2025-26 2Q FY 2026-27
2.1d Seek Council approval on placing a November Ballot Measure New CMO/PW/LIS 4Q FY 2025-26 4Q FY 2025-26
2.2 Seek new Water Sources 2.2a Identify opportunities and constraints associated with new Water Sources New CMO/PW In Progress Ongoing
2.2b Support ongoing development and financing of regional water solution New CMO/PW In Progress Ongoing
2.2c Conduct a water and wastewater rate study to adjust rates based on changes to water supply and changing or new regional partnerships New AS/PW 1Q FY 2025-26 4Q FY 2026-27
2.3 Work with Regional Partners 2.3a Preserve Lopez water supply by working with the County on Lopez litigation New CMO/PW/CA In progress Ongoing
2.3b NCMA Management Agreement Amendments Carryover PW In progress Ongoing Prioritize Key
Infrastructure Projects
3.1 Prioritize Key Infrastructure
Projects 3.1a 2025 Pavement Management Program Construction New PW 3Q FY 2025-26 4Q FY 2025-26
3.1b Traffic Way Bridge Replacement Project Carryover PW In progress 2Q FY 2025-26
3.1c Halcyon Complete Streets Design and Construction Carryover PW
3.1d Concrete Repair Program Carryover PW 2Q FY 2025-26 4Q FY 2025-26
3.1e CMP Lining Carryover CD/PW In Progress Ongoing
3.2 Pursue Alternative Funding
Sources for Infrastructure Funding
3.2a Pursue Grant applications and administration for infrastructure projects
Carryover PW/CD/AS In progress Ongoing
4.1 Economic Development Tasks 4.1a Retail Market Analysis Carryover CD 4Q FY 2024-25 1Q FY 2025-26
4.1b Market Demand Studies Carryover CD 4Q FY 2024-25 1Q FY 2025-26
4.2 General Plan Elements 4.2a Land and Safety Analysis Carryover CD 3Q FY 2023-24 2Q FY 2025-26
4.2b Administrative Draft Carryover CD
4.3 EIR 4.3a Complete draft EIR Carryover CD 1Q FY 2025-26 3Q FY 2025-26
4.3b Complete final EIR Carryover CD 3Q FY 2024-25 4Q FY 2025-26
4.4 Code Update 4.4a Kick off code update Carryover CD/LIS
4.4b Bring code changes to Planning Commission for approval Carryover CD 3Q FY 2025-26 3Q FY 2025-26
4.4c Bring draft Ordinance of code revision update to Council Carryover CD 4Q FY 2025-26 4Q FY 2025-26
4.5 Climate Action Plan 4.5a Kick off CAP and research Carryover CD 1Q FY 2025-26 4Q FY 2025-26
4.5b Admin Draft Carryover CD 4Q FY 2025-26 2Q FY 2026-27
4.5c Final CAP Carryover CD 2Q FY 2026-27 3Q FY 2026-27 FY 2025-27 City Council Goal's Work Plan Continued
Complete General Plan
Update
Council Goal’s Work Plans
22 5.1 Scope of Work and RFP 5.1a Define scope, research other communities New CD 4Q FY 2024-25 1Q FY 2025-26
5.2 Kick Off and Public Outreach 5.2a Kick Off New CD 1Q FY 2025-26 1Q FY 2025-26
5.2b Public Outreach New CD Ongoing Ongoing
5.3 CEQA 5.3a Environmental Review New CD 2Q FY 2025-26 3Q FY 2025-26
5.4 Plan Draft 5.4a Administrative Draft Plan New CD 3Q FY 2025-26 4Q FY 2025-26
5.5 Final Draft and Hearings 5.5a Final Draft New CD 4Q FY 2025-26 1Q FY 2026-27
5.5b Planning Commission Hearings New CD 1Q FY 2026-27 2Q FY 2026-27
5.5c City Council Hearings New CD 2Q FY 2026-27 2Q FY 2026-27 CMO
AS
LIS
PD
PW
Rec
Fire
CD
City Manager's Office
Administrative Services
Legislative and Information Services
Key
Redevelop the East
Grand Avenue Corridor
(Halcyon Road to Elm
Street)
FY 2025-27 City Council Goal's Work Plan Continued
Community Development
Five Cities Fire Authority
Recreation Services
Public Works
Police Department
23 BUDGET OVERVIEW
Overview
24 The City’s Biennial Budget serves as the Council-approved spending plan and provides the legal authority for departments to commit financial resources in support of services provided to the Arroyo Grande community. As part of the biennial budget process, the City conducts a mid-cycle review to evaluate current economic conditions, revenue trends, expenditure projections, and operational needs for the second year of the budget. The FY 2026-27 Mid-Cycle Budget Update includes recommended adjustments to revenues, expenditures, and service levels based on updated financial information. The proposed FY 2026-27 budget reflects projected expenditures of approximately $55 million, including salaries, benefits, services, supplies, maintenance, debt service, and capital-related costs, as summarized in the consolidated fund information presented in Table 1.
Table 1: FY 2026-27 Consolidated Fund Summary
Beginning Fund Balance $ 7,205,860 $ 943,263 $ 1,290,888 $ 4,763,064 $ 13,143,442 $ 5,109,805 $ 32,456,321 Revenues:
Revenues 21,055,350 2,975,500 5,936,000 10,876,832 2,522,991 423,944 43,790,617 Transfers In 2,862,500 - - 4,789,480 730,000 - 8,381,980 Total Revenues 23,917,850 2,975,500 5,936,000 15,666,312 3,252,991 423,944 52,172,598 Expenditures:
Salaries and Benefits 14,908,800 - - 1,475,700 659,000 - 17,043,500 Services and Supplies 11,073,570 1,415,800 32,500 5,802,225 1,011,941 7,900 19,343,936 Debt Service 282,786 - - - 8,369 382,944 674,099
Capital Outlay 51,529 - - 1,024,256 195,000 - 1,270,785 Transfers Out 115,000 1,984,750 5,846,200 7,246,069 1,318,000 179,900 16,689,919 Total Expenditures 26,431,685 3,400,550 5,878,700 15,548,250 3,192,311 570,744 55,022,239 Total Operating Incr/(Decr) (2,513,835) (425,050) 57,300 118,062 60,680 (146,800) (2,849,642) Available Fund Balance $ 4,692,026 $ 518,213 $ 1,348,188 $ 4,881,126 $ 13,204,121 $ 4,963,005 $ 29,606,680 General Fund Measure O-06 Measure E-24 Total
Enterprise
Funds
Special
Revenue Funds
Agency
Funds
25 FUND SUMMARIES
26 GENERAL FUND
27 GENERAL FUNDS
FUND: 100 GENERAL FUND
2023-24 2024-25
FINAL FINAL ADOPTED AMENDED ESTIMATED ADOPTED PROPOSED
ITEM ACTUAL ACTUAL BUDGET BUDGET BUDGET BUDGET BUDGET
Beginning Fund Balance $ 11,784,649 $ 11,604,740 $ 7,460,674 $ 9,467,073 $ 9,467,073 $ 5,703,133 $ 7,205,860 Revenues:
Revenues 20,108,630 20,476,541 20,304,750 20,303,000 20,443,562 21,180,350 21,055,350 Transfers In 2,755,008 2,751,258 2,940,200 2,951,500 2,851,492 2,986,900 2,862,500 Total Revenues 22,863,638 23,227,799 23,244,950 23,254,500 23,295,054 24,167,250 23,917,850 Expenditures:
Salaries and Benefits 12,790,046 13,509,247 14,292,200 14,357,774 14,383,696 14,879,500 14,908,800 Services and Supplies 8,808,940 9,222,388 10,287,905 10,275,531 10,140,756 10,609,350 11,073,570 Debt Service 492,390 302,422 294,386 294,386 294,386 282,786 282,786 Capital Outlay 135,043 379,500 13,000 50,100 50,693 51,529 51,529 Transfers Out 817,128 1,951,909 115,000 686,736 686,736 115,000 115,000 Total Expenditures 23,043,548 25,365,465 25,002,491 25,664,527 25,556,267 25,938,165 26,431,685 Total Operating Increases (Decreases (179,909) (2,137,667) (1,757,541) (2,410,027) (2,261,213) (1,770,915) (2,513,835) Available Fund Balance $ 11,604,740 $ 9,467,073 $ 5,703,133 $ 7,057,046 $ 7,205,860 $ 3,932,218 $ 4,692,026 Percent of Expenditures 50.4% 37.3% 22.8% 27.5% 28.2% 15.2% 17.8% This is the primary operating fund of the City, which accounts for resources and services traditionally associated with government. The General Fund provides administrative, financial, police protection, community development, public works, and recreation services to the community and other funds. The General Fund accounts for revenues that have unrestricted uses and are not required legally or by contractual agreement to be accounted for in another fund. 2025-26 2026-27
28 LOCAL SALES TAX FUNDS
2023-24 2024-25 ADOPTED AMENDED ESTIMATED CURRENT PROPOSED
ITEM ACTUAL ACTUAL BUDGET BUDGET BUDGET BUDGET BUDGET
Beginning Fund Balance $ 7,887,211 $ 5,017,872 $ 3,753,651 $ 3,575,443 $ 3,575,443 $ 2,129,471 $ 943,263 Revenues:
Revenues 3,283,349 3,191,022 2,942,500 2,942,500 2,944,500 $ 3,019,500 2,975,500 Transfers In - - - - - - -
Total Revenues 3,283,349 3,191,022 2,942,500 2,942,500 2,944,500 3,019,500 2,975,500 Expenditures:
Salaries and Benefits - - - - - - -
Services and Supplies 1,006,561 1,025,365 1,119,800 1,119,800 1,119,800 1,150,600 1,150,600 Capital Outlay - - - - - - -
Transfers Out 5,146,127 3,608,086 3,446,880 5,602,957 4,456,880 2,286,435 2,249,950 Total Expenditures 6,152,688 4,633,450 4,566,680 6,722,757 5,576,680 3,437,035 3,400,550 Change in Fund Balance (2,869,340) (1,442,429) (1,624,180) (3,780,257) (2,632,180) (417,535) (425,050) Ending Fund Balance $ 5,017,872 $ 3,575,443 $ 2,129,471 $ (204,814) $ 943,263 $ 1,711,936 $ 518,213 FUND: 120 MEASURE O-06 LOCAL SALES TAX
This fund accounts for the revenues derived from Measure O 2006 Sales Tax, a local 1/2% sales tax approved by the City's voters in November 2006.
2025-26 2026-27
2023-24 2024-25 ADOPTED AMENDED ESTIMATED CURRENT PROPOSED
ITEM ACTUAL ACTUAL BUDGET BUDGET BUDGET BUDGET BUDGET
Beginning Fund Balance $ - $ - $ 1,409,028 $ 1,409,028 $ 1,409,028 $ 1,293,888 $ 1,290,888 Revenues:
Revenues - 1,412,063 5,870,000 5,870,000 5,867,000 6,025,000 5,936,000 Transfers In - - - - - - -
Total Revenues - 1,412,063 5,870,000 5,870,000 5,867,000 6,025,000 5,936,000 Expenditures:
Salaries and Benefits - - - - - - -
Services and Supplies - 3,035 32,500 32,500 32,500 32,500 32,500 Capital Outlay - - - - - - -
Transfers Out - - 5,952,640 5,952,640 5,952,640 5,846,200 5,846,200 Total Expenditures - 3,035 5,985,140 5,985,140 5,985,140 5,878,700 5,878,700 Change in Fund Balance - 1,409,028 (115,140) (115,140) (118,140) 146,300 57,300 Ending Fund Balance $ - $ 1,409,028 $ 1,293,888 $ 1,293,888 $ 1,290,888 $ 1,440,188 $ 1,348,188 FUND: 140 MEASURE E-24 LOCAL SALES TAX
This fund accounts for the revenues derived from Measure E 2024 Sales Tax, a local 1% sales tax approved by the City's voters in November 2024.
2025-26 2026-27
29 CONSOLIDATED GENERAL FUND
The General Fund is the primary operating fund of the City, which accounts for resources and services traditionally associated with government. The General Fund provides administrative, financial, police protection, community development, public works, fire, and recreation services to the community and other funds. The General Fund accounts for revenues that have unrestricted uses and are not required legally or by contractual agreement to be accounted for in another fund. The City has historically reported on the General Fund separately from the Local Sales Tax Fund, although the City’s auditors traditionally combine this information in the Annual Comprehensive Financial Report (ACFR). There are two Local Sales Tax Funds. Measure O-06 accounts for the revenues derived from the local 1/2% sales tax approved by the City's voters in November 2006. Measure E-24 accounts for the revenues derived from the local 1% sales tax approved by the City's voters in November 2024. To ensure accountability, these measures include provisions requiring the City to publish and distribute an annual report to each household on the revenues and expenditures from the sales tax proceeds. To aid in the collection and reporting of this information, the City has accounted for this fund in a separate account.
General
Fund
Beginning Fund Balance $7,206 $943 $1,291 $9,440
Revenues:
Revenues 21,055 2,976 5,936 29,967
Transfers In 2,863 - - 2,863
Total Revenues 23,918 2,976 5,936 32,829
Expenditures:
Salaries and Benefits 14,909 - - 14,909
Services and Supplies 11,074 1,416 33 12,522
Debt Service 283 - - 283
Capital Outlay 52 - - 52
Transfers Out 115 1,985 5,846 7,946
Total Expenditures 26,432 3,401 5,879 35,711
Total Operating Incr/(Decr) (2,514) (425) 57 (2,882)
Available Fund Balance $4,692 $518 $1,348 $6,558
Reserve % 17.8% 15.2% 22.9% 18.4%
FY 2026-27
Measure
O-06
Consolidated
Total
Measure
E-24
30 CONSOLIDATED GENERAL FUND
REVENUES BY SOURCE
31 CONSOLIDATED GENERAL FUND
REVENUES TRENDS
Property Tax
Property Tax revenues are estimated to increase by 4.25% in FY 2026-27.
Sales and Use Tax
Sales Tax revenues are estimated to increase by 1% in FY 2026-27.
Transient Occupancy Tax
Transient Occupancy Tax revenues are estimated to increase by 1% in FY 2026-27.
32 CONSOLIDATED GENERAL FUND
EXPENDITURES BY DEPARTMENT
2026-27 Consolidated General Fund Expenditures by Department
33 ENTERPRISE FUNDS
34 ENTERPRISE FUNDS
FUND: 612 SEWER
2024-25 ADOPTED AMENDED ESTIMATED CURRENT PROPOSED
ACTUAL BUDGET BUDGET BUDGET BUDGET BUDGET
Beginning Working Capital $ 1,413,624 $ 1,356,465 $ 1,430,236 $ 1,430,236 1,507,065 1,487,032 Revenues:
Revenues 1,153,501 1,383,100 1,383,100 1,383,100 1,424,400 1,427,900 Transfers In - - - - - -
Total Revenues 1,153,501 1,383,100 1,383,100 1,383,100 1,424,400 1,427,900 Expenses:
Salaries and Benefits 405,807 444,900 444,900 444,900 462,900 494,700 Services and Supplies 153,580 221,200 221,200 221,200 216,100 216,100 Debt Service - - - - - -
Operating Equipment 10,285 35,000 35,000 35,000 175,000 175,000 Capital Improvement Progra 21,997 - 10,000 10,000 332,000 193,256 Transfers Out 545,220 531,400 615,204 615,204 578,900 578,900 Total Expenditures 1,136,889 1,232,500 1,326,304 1,326,304 1,764,900 1,657,956 Ending Available Working Capi $ 1,430,236 $ 1,507,065 $ 1,487,032 $ 1,487,032 1,166,565 1,256,976 2025-26 2026-27
This fund is used to account for maintenance of sewer lines connecting City residents to the South San Luis Obispo County Sanitation District sewer treatment plant. Money is collected from utility bills paid by customers.
2024-25 ADOPTED AMENDED ESTIMATED CURRENT PROPOSED
ACTUAL BUDGET BUDGET BUDGET BUDGET BUDGET
Beginning Working Capital $ 378,609 $ 415,609 $ 557,805 $ 557,805 452,609 594,805 Revenues:
Revenues 179,196 37,000 37,000 37,000 37,000 37,000
Transfers In - - - - - -
Total Revenues 179,196 37,000 37,000 37,000 37,000 37,000 Expenses:
Salaries and Benefits - - - - - -
Services and Supplies - - - - - -
Debt Service - - - - - -
Capital Outlay - - - - - -
Capital Improvement Program - - - - - -
Transfers Out - - - - - 138,744
Total Expenditures - - - - - 138,744
Ending Available Working Capital $ 557,805 $ 452,609 $ 594,805 $ 594,805 489,609 493,061 2026-27
FUND: 634 SEWER FACILITY
This fund is used to account for the accumulation of sewer facility revenues to be used in capital improvement projects in the City. Money is collected from development to offset the impacts new development has on the sewer collection system.
2025-26
35 ENTERPRISE FUNDS
FUND: 640 WATER
2024-25 ADOPTED AMENDED ESTIMATED CURRENT PROPOSED
ACTUAL BUDGET BUDGET BUDGET BUDGET BUDGET
Beginning Working Capita $ 1,766,698 $ 1,222,829 $ 1,854,225 $ 1,854,225 1,431,068 920,207 Revenues:
Revenues 7,959,864 9,077,095 9,077,095 9,077,095 9,346,932 9,346,932 Transfers In 578,700 401,100 443,872 401,100 191,955 191,955 Total Revenues 8,538,564 9,478,195 9,520,967 9,478,195 9,538,887 9,538,887 Expenses:
Salaries and Benefits 758,144 919,000 919,000 919,000 955,800 981,000 Services and Supplies 843,442 958,900 958,900 958,900 988,600 988,600 Debt Service - - - - - -
Capital Outlay 101,578 94,000 194,000 194,000 206,000 106,000 Capital Improvement Pr 662,380 800,000 1,182,772 700,000 885,000 550,000 Transfers Out 6,085,494 7,486,147 7,607,351 7,640,313 7,785,100 6,528,425 Total Expenditures 8,451,038 10,258,047 10,862,023 10,412,213 10,820,500 9,154,025 Ending Available Working $ 1,854,225 $ 442,977 $ 513,169 $ 920,207 149,455 1,305,069 This fund is used to account for the activities associated with the transmission and distribution of potable water by the City to its users. Money is collected from utility bills paid by customers. 2025-26 2026-27
FUND: 641 LOPEZ
2024-25 ADOPTED AMENDED ESTIMATED CURRENT PROPOSED
ACTUAL BUDGET BUDGET BUDGET BUDGET BUDGET
Beginning Working Capital $ 1,202,662 $ 1,202,662 $ 0 $ 0 1,130,291 1,082,480 Revenues:
Revenues - - - - - -
Transfers In 4,200,059 5,283,297 5,283,297 5,283,297 3,889,750 4,597,525 Total Revenues 4,200,059 5,283,297 5,283,297 5,283,297 3,889,750 4,597,525 Expenses:
Salaries and Benefits - - - - - -
Services and Supplies 5,402,720 3,962,121 4,200,817 4,200,817 3,889,750 4,597,525 Debt Service - - - - - -
Capital Outlay - - - - - -
Capital Improvement Program - - - - - -
Transfers Out - - - - - -
Total Expenditures 5,402,720 3,962,121 4,200,817 4,200,817 3,889,750 4,597,525 Ending Available Working Capital $ 0 $ 2,523,838 $ 1,082,480 $ 1,082,480 $ 1,130,291 $ 1,082,480 2026-27
This fund is responsible for the purchase of water from Lopez Dam. The City has a 50.55% share of the water and expense generated by Zone 3 – County of San Luis Obispo’s Flood Control and Water Conservation District.
2025-26
36 ENTERPRISE FUNDS
FUND: 642 WATER FACILITY
2024-25 ADOPTED AMENDED ESTIMATED CURRENT PROPOSED
ACTUAL BUDGET BUDGET BUDGET BUDGET BUDGET
Beginning Working Capital 1,094,568 1,159,568 1,238,470 1,238,470 $ 1,224,568 $ 902,370 Revenues:
Revenues 143,903 65,000 65,000 65,000 65,000 65,000
Transfers In - - - - - -
Total Revenues 143,903 65,000 65,000 65,000 65,000 65,000 Expenses:
Salaries and Benefits - - - - - -
Services and Supplies - - - - - -
Debt Service - - - - - -
Capital Outlay - - - - - -
Capital Improvement Progra - - - - - -
Transfers Out - - 401,100 401,100 - -
Total Expenditures - - 401,100 401,100 - -
Ending Available Working Cap $ 1,238,470 $ 1,224,568 $ 902,370 $ 902,370 $ 1,289,568 $ 967,370 2026-27
This fund is used to account for the accumulation of water facility revenues to be used in capital improvement projects in the City. Money is collected from development to offset the impacts new development has on the water distribution system.
2025-26
37 SPECIAL REVENUE
FUNDS
38 SPECIAL REVENUE FUNDS
2024-25 ADOPTED AMENDED ESTIMATED CURRENT PROPOSED
ITEM ACTUAL BUDGET BUDGET BUDGET BUDGET BUDGET
Beginning Fund Balance $ 426,745 $ 463,313 $ 463,313 $ 463,313 $ 489,313 $ 489,313 Revenues:
Revenues 36,568 26,000 26,000 26,000 26,000 26,000
Transfers In - - - - - -
Total Revenues 36,568 26,000 26,000 26,000 26,000 26,000 Expenditures:
Salaries and Benefits - - - - - -
Services and Supplies - - - - - -
Capital Outlay - - - - - -
Transfers Out - - - - - -
Total Expenditures - - - - - -
Change in Fund Balance 36,568 26,000 26,000 26,000 26,000 26,000 Ending Fund Balance $ 463,313 $ 489,313 $ 489,313 $ 489,313 $ 515,313 $ 515,313 FUND: 210 FIRE PROTECTION IMPACT FEES
This fund accounts for impact fees collected from developers for the expansion of the existing fire station in order to serve future development. 2025-26 2026-27
2024-25 ADOPTED AMENDED ESTIMATED CURRENT PROPOSED
ITEM ACTUAL BUDGET BUDGET BUDGET BUDGET BUDGET
Beginning Fund Balance $ (120) $ 20,865 $ 20,865 $ 20,865 $ 23,165 $ 23,165 Revenues:
Revenues 37,531 42,200 42,200 42,200 42,200 42,200
Transfers In - - - -
Total Revenues 37,531 42,200 42,200 42,200 42,200 42,200 Expenditures:
Salaries and Benefits - - - - - -
Services and Supplies 16,546 39,900 39,900 39,900 39,900 39,900 Capital Outlay - - - - - -
Transfers Out - - - - - -
Total Expenditures 16,546 39,900 39,900 39,900 39,900 39,900 Change in Fund Balance 20,985 2,300 2,300 2,300 2,300 2,300 Ending Fund Balance $ 20,865 $ 23,165 $ 23,165 $ 23,165 $ 25,465 $ 25,465 FUND: 211 PUBLIC ACCESS TELEVISION
This fund accounts for fees collected from Charter Communications that are restricted for support of public, education, and government access programming and equipment. 2025-26 2026-27
39 SPECIAL REVENUE FUNDS
2024-25 ADOPTED AMENDED ESTIMATED CURRENT PROPOSED
ITEM ACTUAL BUDGET BUDGET BUDGET BUDGET BUDGET
Beginning Fund Balance $ 64,023 $ 79,321 $ 79,321 $ 79,321 $ 84,621 $ 84,621 Revenues:
Revenues 15,299 5,300 5,300 5,300 5,300 5,300
Transfers In - - - - -
Total Revenues 15,299 5,300 5,300 5,300 5,300 5,300
Expenditures:
Salaries and Benefits - - - - - -
Services and Supplies - - - - - -
Capital Outlay - - - - - -
Transfers Out - - - - 25,000 25,000
Total Expenditures - - - - 25,000 25,000
Change in Fund Balance 15,299 5,300 5,300 5,300 (19,700) (19,700) Ending Fund Balance $ 79,321 $ 84,621 $ 84,621 $ 84,621 $ 64,921 $ 64,921 FUND: 212 POLICE FACILITIES IMPACT FEES
This fund accounts for impact fees collected from developers for the expansion of the existing police facility in order to serve future development. 2025-26 2026-27
2024-25 ADOPTED AMENDED ESTIMATED CURRENT PROPOSED
ITEM ACTUAL BUDGET BUDGET BUDGET BUDGET BUDGET
Beginning Fund Balance $ 1,490,533 $ 1,630,136 $ 1,630,136 $ 1,630,136 $ 1,686,136 $ 1,686,136 Revenues:
Revenues 139,603 56,000 56,000 56,000 56,000 56,000
Transfers In - - - -
Total Revenues 139,603 56,000 56,000 56,000 56,000 56,000 Expenditures:
Salaries and Benefits - - - - - -
Services and Supplies - - - - - -
Capital Outlay - - - - - -
Transfers Out - - - - 310,000 175,000
Total Expenditures - - - - 310,000 175,000
Change in Fund Balance 139,603 56,000 56,000 56,000 (254,000) (119,000) Ending Fund Balance $ 1,630,136 $ 1,686,136 $ 1,686,136 $ 1,686,136 $ 1,432,136 $ 1,567,136 This fund accounts for the receipts of park-in-lieu fees (Quimby) and grant revenues that are used for construction, park acquisition, and development of park facilities. 2025-26 2026-27
FUND: 213 PARK FACILITIES
40 SPECIAL REVENUE FUNDS
2024-25 ADOPTED AMENDED ESTIMATED CURRENT PROPOSED
ITEM ACTUAL BUDGET BUDGET BUDGET BUDGET BUDGET
Beginning Fund Balance $ 207,747 $ 242,947 $ 242,947 $ 242,947 $ 231,847 $ 231,847 Revenues:
Revenues 71,427 50,900 50,900 50,900 50,900 50,900
Transfers In - - - - - -
Total Revenues 71,427 50,900 50,900 50,900 50,900 50,900 Expenditures:
Salaries and Benefits - - - - - -
Services and Supplies 36,226 62,000 62,000 62,000 62,000 62,000 Capital Outlay - - - - - -
Transfers Out - - - - - -
Total Expenditures 36,226 62,000 62,000 62,000 62,000 62,000 Change in Fund Balance 35,200 (11,100) (11,100) (11,100) (11,100) (11,100) Ending Fund Balance $ 242,947 $ 231,847 $ 231,847 $ 231,847 $ 220,747 $ 220,747 FUND: 214 PARK IMPROVEMENT
Impact fees collected from developers for park improvements are to be used to maintain the adopted level of service for neighborhood and community parks of 4.0 acres per thousand population. This fund accounts for the receipt and use of these monies. 2025-26 2026-27
2024-25 ADOPTED AMENDED ESTIMATED CURRENT PROPOSED
ITEM ACTUAL BUDGET BUDGET BUDGET BUDGET BUDGET
Beginning Fund Balance $ 32,468 $ 43,137 $ 43,137 $ 43,137 $ 48,487 $ 48,487 Revenues:
Revenues 10,669 2,350 2,350 5,350 2,350 2,350
Transfers In - - - - - -
Total Revenues 10,669 2,350 2,350 5,350 2,350 2,350
Expenditures:
Salaries and Benefits - - - - - -
Services and Supplies - - - - - -
Capital Outlay - - - - - -
Transfers Out - - - - - -
Total Expenditures - - - - - -
Change in Fund Balance 10,669 2,350 2,350 5,350 2,350 2,350 Ending Fund Balance $ 43,137 $ 45,487 $ 45,487 $ 48,487 $ 50,837 $ 50,837 FUND: 215 RECREATION COMMUNITY CENTER
This fund accounts for impact fees collected from developers and used for recreation facilities in order to maintain the adopted level of service of recreation/community center facilities of 542 square feet per thousand population.
2025-26 2026-27
41 SPECIAL REVENUE FUNDS
2024-25 ADOPTED AMENDED ESTIMATED CURRENT PROPOSED
ITEM ACTUAL BUDGET BUDGET BUDGET BUDGET BUDGET
Beginning Fund Balance 34,455$ 37,020$ 37,020$ 37,020$ $ 30,920 30,920$ Revenues:
Revenues 10,955 10,000 10,000 10,000 10,000 10,000
Transfers In - - - - - -
Total Revenues 10,955 10,000 10,000 10,000 10,000 10,000 Expenditures:
Salaries and Benefits - - - - - -
Services and Supplies 6,795 14,500 14,500 14,500 14,500 14,700 Capital Outlay - - - - - -
Transfers Out 1,596 1,600 1,600 1,600 1,600 1,600
Total Expenditures 8,391 16,100 16,100 16,100 16,100 16,300 Change in Fund Balance 2,565 (6,100) (6,100) (6,100) (6,100) (6,300) Ending Fund Balance 37,020$ 30,920$ 30,920$ 30,920$ $ 24,820 24,620$ FUND: 216 GRACE LANE ASSESSMENT DISTRICT
This fund accounts for the landscape maintenance within the Grace Lane housing tract. A special benefit assessment is levied on property owners to pay for landscape maintenance expenditures.
2025-26 2026-27
2024-25 ADOPTED AMENDED ESTIMATED CURRENT PROPOSED
ITEM ACTUAL BUDGET BUDGET BUDGET BUDGET BUDGET
Beginning Fund Balance $ 6,460 $ 9,828 $ 9,828 $ 9,828 $ 8,628 $ 8,628 Revenues:
Revenues 6,107 5,900 5,900 5,900 5,900 5,900
Transfers In - - - - - -
Total Revenues 6,107 5,900 5,900 5,900 5,900 5,900
Expenditures:
Salaries and Benefits - - - - - -
Services and Supplies 1,336 5,700 5,700 5,700 5,700 5,700 Capital Outlay - - - - - -
Transfers Out 1,404 1,400 1,400 1,400 1,400 1,400
Total Expenditures 2,740 7,100 7,100 7,100 7,100 7,100
Change in Fund Balance 3,368 (1,200) (1,200) (1,200) (1,200) (1,200) Ending Fund Balance $ 9,828 $ 8,628 $ 8,628 $ 8,628 $ 7,428 $ 7,428 This fund accounts for the landscape maintenance of parkways within two housing tracts. A special benefit assessment is levied on property owners to pay for landscape maintenance expenditures.
FUND: 217 LANDSCAPE MAINTENANCE DISTRICTS
2025-26 2026-27
42 SPECIAL REVENUE FUNDS
2024-25 ADOPTED AMENDED ESTIMATED CURRENT PROPOSED
ITEM ACTUAL BUDGET BUDGET BUDGET BUDGET BUDGET
Beginning Fund Balance $ 532,186 $ 578,032 $ 578,032 $ 578,032 $ 364,202 $ 364,202 Revenues:
Revenues 70,119 46,500 46,500 46,500 46,500 46,500
Transfers In - - - - - -
Total Revenues 70,119 46,500 46,500 46,500 46,500 46,500 Expenditures:
Salaries and Benefits - - - - - -
Services and Supplies 21,969 32,400 32,400 32,400 32,400 32,400 Capital Outlay - - - - - -
Transfers Out 2,304 2,300 2,300 227,930 2,300 2,300
Total Expenditures 24,273 34,700 34,700 260,330 34,700 34,700 Change in Fund Balance 45,846 11,800 11,800 (213,830) 11,800 11,800 Ending Fund Balance $ 578,032 $ 589,832 $ 589,832 $ 364,202 $ 376,002 $ 376,002 FUND: 219 PARKSIDE ASSESSMENT DISTRICT
This fund accounts for revenue derived from annual assessments, which are used to pay the cost incurred by the City for landscape maintenance. 2025-26 2026-27
2024-25 ADOPTED AMENDED ESTIMATED CURRENT PROPOSED
ITEM ACTUAL BUDGET BUDGET BUDGET BUDGET BUDGET
Beginning Fund Balance $ 3,569 $ (969) $ (969) $ (969) $ 61 $ 61 Revenues:
Revenues 1,042,786 1,044,700 1,044,700 1,033,000 1,059,800 1,072,200 Transfers In 520,703 695,000 695,000 708,900 730,000 730,000 Total Revenues 1,563,489 1,739,700 1,739,700 1,741,900 1,789,800 1,802,200 Expenditures:
Salaries and Benefits 528,655 623,100 623,100 623,100 647,300 659,000 Services and Supplies 321,253 382,700 382,700 382,700 382,700 382,700 Debt Service 8,369 8,369 8,369 8,369 8,369 8,369
Capital Outlay 122,076 140,000 140,000 140,000 140,000 140,000 Transfers Out 587,673 586,700 586,700 586,700 605,200 605,200 Total Expenditures 1,568,027 1,740,870 1,740,870 1,740,870 1,783,569 1,795,269 Change in Fund Balance (4,538) (1,170) (1,170) 1,030 6,231 6,931 Ending Fund Balance $ (969) $ (2,139) $ (2,139) $ 61 $ 6,291 6,991 This fund accounts for receipts and expenditures of money apportioned by the State under Streets and Highway Code. The use of gas tax revenues can only be used to construct and maintain streets, roads and highways.
FUND: 220 STREETS (GAS TAX)
2025-26 2026-27
43 SPECIAL REVENUE FUNDS
2024-25 ADOPTED AMENDED ESTIMATED CURRENT PROPOSED
ITEM ACTUAL BUDGET BUDGET BUDGET BUDGET BUDGET
Beginning Fund Balance $ 1,195,833 1,235,706$ 1,235,706$ 1,235,706$ $ 1,271,706 $ 1,271,706 Revenues:
Revenues 76,888 36,000 36,000 36,000 36,000 36,000
Transfers In - - - - - -
Total Revenues 76,888 36,000 36,000 36,000 36,000 36,000 Expenditures:
Salaries and Benefits - - - - - -
Services and Supplies - - - - - -
Capital Outlay - - - - - -
Transfers Out 37,015 - - - - -
Total Expenditures 37,015 - - - - -
Change in Fund Balance 39,872 36,000 36,000 36,000 36,000 36,000 Ending Fund Balance $ 1,235,706 1,271,706$ 1,271,706$ 1,271,706$ $ 1,307,706 1,307,706 This fund accounts for traffic signalization assessment levied against developments for the future cost of traffic signals.
FUND: 222 TRAFFIC SIGNALIZATION
2025-26 2026-27
2024-25 ADOPTED AMENDED ESTIMATED CURRENT PROPOSED
ITEM ACTUAL BUDGET BUDGET BUDGET BUDGET BUDGET
Beginning Fund Balance $ 159,741 $ 167,560 $ 167,560 $ 167,560 $ 168,060 $ 168,060 Revenues:
Revenues 7,819 500 500 500 500 500
Transfers In - - - - - -
Total Revenues 7,819 500 500 500 500 500
Expenditures:
Salaries and Benefits - - - - - -
Services and Supplies - - - - - -
Capital Outlay - - - - - -
Transfers Out - - - - - -
Total Expenditures - - - - - -
Change in Fund Balance 7,819 500 500 500 500 500
Ending Fund Balance $ 167,560 $ 168,060 $ 168,060 $ 168,060 $ 168,560 $ 168,560 FUND: 223 TRAFFIC CIRCULATION
This fund accounts for developer traffic mitigation measure fees charged as a result of an environmental review.
2025-26 2026-27
44 SPECIAL REVENUE FUNDS
2024-25 ADOPTED AMENDED ESTIMATED CURRENT PROPOSED
ITEM ACTUAL BUDGET BUDGET BUDGET BUDGET BUDGET
Beginning Fund Balance $ 2,835,751 $ 3,084,459 $ 3,084,459 $ 3,084,459 $ 2,744,459 $ 2,744,459 Revenues:
Revenues 248,708 60,000 60,000 60,000 60,000 60,000
Transfers In - - - - - -
Total Revenues 248,708 60,000 60,000 60,000 60,000 60,000 Expenditures:
Salaries and Benefits - - - - - -
Debt Service - -
Capital Outlay - - - - - -
Transfers Out - - 400,000 400,000 1,238,500 1,600,000
Total Expenditures - - 400,000 400,000 1,238,500 1,600,000 Change in Fund Balance 248,708 60,000 (340,000) (340,000) (1,178,500) (1,540,000) Ending Fund Balance $ 3,084,459 $ 3,144,459 $ 2,744,459 $ 2,744,459 $ 1,565,959 $ 1,204,459 FUND: 224 TRANSPORTATION FACILITY IMPACT
This fund accounts for developer impact fees (AB1600 fees) paid to protect the public health, safety, and welfare by maintaining the existing level of public services for existing and future residents within the City of Arroyo Grande.
2025-26 2026-27
FUND: 225 TRANSPORTATION
2024-25 ADOPTED AMENDED ESTIMATED CURRENT PROPOSED
ITEM ACTUAL BUDGET BUDGET BUDGET BUDGET BUDGET
Beginning Fund Balance $ 1,412,141 $ 1,451,779 $ 1,451,779 $ 1,451,779 $ 1,402,229 $ 1,402,229 Revenues:
Revenues 481,591 570,450 570,450 570,450 516,000 516,000 Transfers In - - - - - -
Total Revenues 481,591 570,450 570,450 570,450 516,000 516,000 Expenditures:
Salaries and Benefits - - - - - -
Services and Supplies - - - - - -
Debt Service - -
Capital Outlay - - - - - -
Transfers Out 441,953 620,000 620,000 620,000 655,000 655,000 Total Expenditures 441,953 620,000 620,000 620,000 655,000 655,000 Change in Fund Balance 39,638 (49,550) (49,550) (49,550) (139,000) (139,000) Ending Fund Balance $ 1,451,779 $ 1,402,229 $ 1,402,229 $ 1,402,229 $ 1,263,229 $ 1,263,229 This revenue source is provided by the San Luis Obispo County of Government’s (SLOCOG) Local Transportation Fund (LTF). The annual appropriation is restricted to transportation systems, including transit, pedestrian, street and road maintenance. 2025-26 2026-27
45 SPECIAL REVENUE FUNDS
2024-25 ADOPTED AMENDED ESTIMATED CURRENT PROPOSED
ITEM ACTUAL BUDGET BUDGET BUDGET BUDGET BUDGET
Beginning Fund Balance $ 251,183 $ 275,490 $ 275,490 $ 275,490 $ 255,190 $ 255,190 Revenues:
Revenues 51,012 52,000 52,000 52,000 52,000 52,000
Transfers In - - - - - -
Total Revenues 51,012 52,000 52,000 52,000 52,000 52,000 Expenditures:
Salaries and Benefits - - - - - -
Services and Supplies 26,705 72,300 72,300 72,300 72,300 72,300 Debt Service - -
Capital Outlay - - - - - -
Transfers Out - - - - - -
Total Expenditures 26,705 72,300 72,300 72,300 72,300 72,300 Change in Fund Balance 24,307 (20,300) (20,300) (20,300) (20,300) (20,300) Ending Fund Balance $ 275,490 $ 255,190 $ 255,190 $ 255,190 $ 234,890 $ 234,890 FUND: 226 WATER NEUTRALIZATION IMPACT
The City requires development projects that increase total water consumption in the City to “neutralize” that demand by reducing water consumption in existing development by an equivalent amount or by paying a fee in-lieu of performing water consumption reductions. This fund accounts for the amount collected from developers and is used towards the City’s water conservation efforts.
2025-26 2026-27
2024-25 ADOPTED AMENDED ESTIMATED CURRENT PROPOSED
ITEM ACTUAL BUDGET BUDGET BUDGET BUDGET BUDGET
Beginning Fund Balance $ 5,965 $ 12,174 $ 12,174 $ 12,174 $ 16,174 $ 16,174 Revenues:
Revenues 6,210 4,000 4,000 4,000 4,000 4,000
Transfers In - - - - - -
Total Revenues 6,210 4,000 4,000 4,000 4,000 4,000
Expenditures:
Salaries and Benefits - - - - - -
Services and Supplies - - - - - -
Capital Outlay - - - - - -
Transfers Out - - - - 12,500 12,500
Total Expenditures - - - - 12,500 12,500
Change in Fund Balance 6,210 4,000 4,000 4,000 (8,500) (8,500) Ending Fund Balance $ 12,174 $ 16,174 $ 16,174 $ 16,174 $ 7,674 $ 7,674 FUND: 231 DRAINAGE FACILITY
This fund accounts for impact fees paid by development and are restricted to improving drainage within the City.
2025-26 2026-27
46 SPECIAL REVENUE FUNDS
2024-25 ADOPTED AMENDED ESTIMATED CURRENT PROPOSED
ITEM ACTUAL BUDGET BUDGET BUDGET BUDGET BUDGET
Beginning Fund Balance $ 1,306,929 $ 334,500 $ 334,500 $ 334,500 $ 371,000 $ 371,000 Revenues:
Revenues 105,941 26,500 26,500 36,500 26,500 26,500
Transfers In - - - - - -
Total Revenues 105,941 26,500 26,500 36,500 26,500 26,500 Expenditures:
Salaries and Benefits - - - - - -
Services and Supplies 1,078,370 - - - - -
Capital Outlay - - - - - -
Transfers Out - - - - - -
Total Expenditures 1,078,370 - - - - -
Change in Fund Balance (972,430) 26,500 26,500 36,500 26,500 26,500 Ending Fund Balance $ 334,500 $ 361,000 $ 361,000 $ 371,000 $ 397,500 $ 397,500 2025-26 2026-27
FUND: 232 IN-LIEU AFFORDABLE HOUSING
This fund accounts for monies paid by developers in meeting the City's mandatory affordable housing requirements.
2024-25 ADOPTED AMENDED ESTIMATED CURRENT PROPOSED
ITEM ACTUAL BUDGET BUDGET BUDGET BUDGET BUDGET
Beginning Fund Balance $ 20,648 $ 21,658 $ 21,658 $ 21,658 $ 166,758 $ 166,758 Revenues:
Revenues 1,011 - - 145,100 - -
Transfers In - - - - - -
Total Revenues 1,011 - - 145,100 - -
Expenditures:
Salaries and Benefits - - - - - -
Services and Supplies - - - - - -
Capital Outlay - - - - - -
Transfers Out - - - - - -
Total Expenditures - - - - - -
Change in Fund Balance 1,011 - - 145,100 - -
Ending Fund Balance $ 21,658 $ 21,658 $ 21,658 $ 166,758 $ 166,758 $ 166,758 This fund accounts for monies paid by developers in meeting the City's underground utility requirements.
FUND: 233 IN-LIEU UNDERGROUND UTILITY
2025-26 2026-27
47 SPECIAL REVENUE FUNDS
2024-25 ADOPTED AMENDED ESTIMATED CURRENT PROPOSED
ITEM ACTUAL BUDGET BUDGET BUDGET BUDGET BUDGET
Beginning Fund Balance $ 438,184 $ 383,013 $ 383,013 $ 383,013 $ 386,111 $ 241,813 Revenues:
Revenues 307,731 328,598 299,450 289,150 319,020 299,450 Transfers In - - - - - -
Total Revenues 307,731 328,598 299,450 289,150 319,020 299,450 Salaries and Benefits - - - - - -
Services and Supplies 312,899 275,500 469,350 380,350 411,850 451,850 Debt Service - - - - - -
Capital Outlay - - - - - -
Transfers Out 50,004 50,000 52,500 50,000 50,000 52,500 Total Expenditures 362,903 325,500 521,850 430,350 461,850 504,350 Change in Fund Balance (55,171) 3,098 (222,400) (141,200) (142,830) (204,900) Ending Fund Balance $ 383,013 $ 386,111 $ 160,613 $ 241,813 $ 243,281 $ 36,913 The purpose of the Tourism Business Improvement District (TBID) is to provide projects, programs and activities that benefit lodging businesses located and operating within the City of Arroyo Grande. A two percent (2%) assessment is levied on all lodging businesses of the rent charged by the operator per occupied room per night for all transient occupancies. Revenue collected is used to promote the lodging industry within the City.
FUND: 240 TOURISM BUSINESS IMPROVEMENT DISTRICT
2025-26 2026-27
2024-25 ADOPTED AMENDED ESTIMATED CURRENT PROPOSED
ITEM ACTUAL BUDGET BUDGET BUDGET BUDGET BUDGET
Beginning Fund Balance $ 73,035 $ 112,235 $ 112,235 $ 112,235 $ 170,235 $ 170,235 Revenues:
Revenues 39,200 58,000 58,000 58,000 58,000 58,000
Transfers In - - - - - -
Total Revenues 39,200 58,000 58,000 58,000 58,000 58,000 Expenditures:
Services and Supplies - - - - - -
Debt Service - -
Capital Outlay - - - - - -
Transfers Out - - - - - -
Total Expenditures - - - - - -
Change in Fund Balance 39,200 58,000 58,000 58,000 58,000 58,000 Ending Fund Balance $ 112,235 $ 170,235 $ 170,235 $ 170,235 $ 228,235 $ 228,235 FUND: 241 WATER AVAILABILITY FUND
Pursuant to the provisions of Section 38743 of the Government Code, water availability charges is a “special charge” which is levied to each parcel of property not served with city water. These charges are restricted for the sole purpose of expanding water supply such as desalination plant, recycled water, scalping plant, etc.
2025-26 2026-27
48 SPECIAL REVENUE FUNDS
2024-25 ADOPTED AMENDED ESTIMATED CURRENT PROPOSED
ITEM ACTUAL BUDGET BUDGET BUDGET BUDGET BUDGET
Beginning Fund Balance $ 787,470 $ 942,280 $ 942,280 $ 942,280 $ 831,570 $ 872,080 Revenues:
Revenues 235,134 140,800 140,800 167,300 140,800 140,800 Transfers In - - - - - -
Total Revenues 235,134 140,800 140,800 167,300 140,800 140,800 Expenditures:
Salaries and Benefits - - - - - -
Services and Supplies - 12,500 12,500 12,500 - 20,000
Capital Outlay 80,325 25,000 25,000 25,000 25,000 55,000 Transfers Out - 200,000 444,300 200,000 125,000 275,000 Total Expenditures 80,325 237,500 481,800 237,500 150,000 350,000 Change in Fund Balance 154,809 (96,700) (341,000) (70,200) (9,200) (209,200) Ending Fund Balance $ 942,280 $ 845,580 $ 601,280 $ 872,080 $ 822,370 $ 662,880 FUND: 271 STATE COPS BLOCK GRANT
This fund accounts for the receipt and use of monies from the State of California restricted to the purchase of police equipment and technology for crime prevention. 2025-26 2026-27
49 AGENCY FUNDS
50 AGENCY FUNDS
2025-26 2026-27
2023-24 ADOPTED AMENDED PROPOSED PROPOSED
ITEM ACTUAL BUDGET BUDGET BUDGET BUDGET
Beginning Fund Balance $ 3,453,077 $ 3,257,408 $ 3,257,408 $ 3,255,408 $ 3,253,408 Revenues:
Revenues 6,456 412,944 412,944 412,944 412,944
Transfers In - - - - -
Total Revenues 6,456 412,944 412,944 412,944 412,944
Expenditures:
Salaries and Benefits - - - - -
Services and Supplies 3,350 2,000 2,000 2,000 2,000
Debt Service 168,775 382,944 382,944 382,944 382,944
Capital Outlay - - - - -
Transfers Out 30,000 30,000 30,000 30,000 30,000
Total Expenditures 202,125 414,944 414,944 414,944 414,944 Change in Fund Balance (195,669) (2,000) (2,000) (2,000) (2,000) Ending Fund Balance $ 3,257,408 $ 3,255,408 $ 3,255,408 $ 3,253,408 $ 3,251,408 FUND: 286 SUCCESSOR AGENCY TO THE FORMER REDEVELOPMENT AGENCY This private-purpose trust fund was created to hold the assets of the former redevelopment agency of the City of Arroyo Grande until they are distributed to other units of state and local government after the payment of enforceable obligations have been made. 2024-25
51 AGENCY FUNDS
2025-26 2026-27
2023-24 ADOPTED AMENDED PROPOSED PROPOSED
ITEM ACTUAL BUDGET BUDGET BUDGET BUDGET
Beginning Fund Balance $ 1,675,016 $ 1,701,201 $ 1,701,201 $ 1,699,701 $ 1,698,201 Revenues:
Revenues 27,859 - - - -
Transfers In - - - - -
Total Revenues 27,859 - - - -
Expenditures:
Salaries and Benefits - - - - -
Services and Supplies 1,674 1,500 1,500 1,500 1,500
Debt Service - - -
Capital Outlay - - - - -
Transfers Out - - - - -
Total Expenditures 1,674 1,500 1,500 1,500 1,500
Ending Fund Balance $ 1,701,201 $ 1,699,701 $ 1,699,701 $ 1,698,201 $ 1,696,701 FUND: 287 SUCCESSOR AGENCY TO THE FORMER REDEVELOPMENT AGENCY - HOUSING FUNCTION This private-purpose trust fund was created to hold the housing assets of the former redevelopment agency of the City of Arroyo Grande until they are distributed to other units of state and local government after the payment of enforceable obligations have been made. 2024-25
2025-26 2026-27
2023-24 ADOPTED AMENDED PROPOSED PROPOSED
ITEM ACTUAL BUDGET BUDGET BUDGET BUDGET
Beginning Fund Balance $ 154,797 $ 156,796 $ 156,796 $ 157,496 $ 158,196 Revenues:
Revenues 11,802 11,000 11,000 11,000 11,000
Transfers In 6,217 - - -
Total Revenues 18,018 11,000 11,000 11,000 11,000
Expenditures:
Salaries and Benefits - - - - -
Services and Supplies 10,115 4,400 4,400 4,400 4,400
Capital Outlay - - - - -
Transfers Out 5,904 5,900 5,900 5,900 149,900
Total Expenditures 16,019 10,300 10,300 10,300 154,300
Ending Fund Balance $ 156,796 $ 157,496 $ 157,496 $ 158,196 $ 14,896 FUND: 751 DOWNTOWN PARKING
This agency fund collects assessments from Arroyo Grande Village merchants for the maintenance of the Village parking lots for the Downtown Village Merchants Association. 2024-25
52 CAPITAL
IMPROVEMENT
PROGRAM
Capital Improvement Program
53 OVERVIEW
This Capital Improvement Program (CIP) 10-year plan outlines anticipated City infrastructure improvements for fiscal years (FY) 2026-27 through FY 2035-36 and serves as a public information document, approved by the City Council, to advise residents and property owners on how the City plans to address significant capital needs. It contains information about the scope, location and funding for these projects.
Each year, the overall goal for capital improvements and the means for accomplishing them are assessed. Every project in the plan has been considered for its financial feasibility, public safety, state and federal compliance, environmental impact, conformance to previously adopted plans, priorities established from the City Council, and ability to meet public needs.
The FY 2026-27 through FY 2035-36 CIP totals $129,380,435. It is a flexible plan that can be altered as conditions, funding, priorities and regulations change.
The Capital Improvement Program (CIP) represents a 10-year scheduling plan of public infrastructure improvements and expansion, with many of it largely based on previously adopted master plans such as the IT Strategic Plan, Wastewater, and Water Master Plans. The CIP is divided into nine category types – Bridges, Drainage, Parks & Play Structures, Public Facilities, Sewer, Sidewalks, Streets and Transportation, Technology, and Water.
The benefits of adopting a Capital Improvements Plan are that it:
• Preserves and improves the infrastructure of Arroyo Grande through capital asset construction, rehabilitation and maintenance,
• Maximizes the useful life of capital investments by scheduling major renovations and modifications at the appropriate time in the life cycle of the facility;
• Improves coordination and scheduling of public improvements that require more than one year to complete,
• Provides an opportunity for long-range financial planning and management, and • Offers an opportunity for residents and the community to participate in decisions that impact their quality of life.
With growing demands for project expenditures and a limited amount of revenues available, it has become increasingly difficult to predict the availability of future funding for capital projects. As the population in Arroyo Grande continues to grow, so do the demands on City services. It is imperative that the City formulate and organize the use of our limited dollars wisely to complete this plan and ultimately benefit all citizens of Arroyo Grande.
CAPITAL PROJECT DEFINITION
Capital projects are typically projects that lead to the acquisition, construction, improvement or extension of the useful life of capital assets. Capital assets include but are not limited to land, facilities, buildings, parks, playground equipment, streets, sidewalks, bridges, water, wastewater and storm drain infrastructure, technology systems
Capital Improvement Program
54 and equipment, traffic control devices, and many other items that deliver a public benefit for a prolonged period of time.
Capital expenditures and operating expenditures are primarily differentiated by two characteristics: the dollar amount of the expenditure and the useful life of the asset acquired, constructed, or maintained. Capital expenditures typically enhance, acquire or extend the useful life of assets through a variety of activities. Activities that are associated with capital projects include: land acquisition, feasibility and design studies, planning, design, construction, rehabilitation, enterprise technology acquisition, and project Implementation. In general, capital projects in the CIP:
• Have a total project cost in the range of $25,000 or more, • Consist of construction, renovation, rehabilitation, conversion or demolition of infrastructure or facilities; and
• Have a minimum useful life of three years, significantly extend the useful life of a capital asset, or significantly alter the nature, character or use of an asset.
PLANNING PROCESS
Public Works serves as the lead Department for developing the Adopted FY 2026-27 CIP Program and Budget.
Public Works, in conjunction with other Departments, reviewed the City’s capital needs and prioritized project submittals based on established criteria outlined below. Departments submit projects for funding consideration with a priority ranking, and the Public Works Department, Administrative Services Department, and City Manager review and evaluate submittals. Project submittals are also evaluated within the context of available funding limits to ensure that the limited resources available fund priority projects, while at the same time, maintain the City’s existing infrastructure and minimize future replacement costs. The following criteria are taken into consideration:
• The ability of the project to meet health, safety, and legal concerns and mandates, • The value of the project to prolong the life of City assets or avoid/minimize future repair costs, • The benefit the project will provide the community is in support of the goals articulated in the Council Goals,
• The potential for the project to generate savings or increase productivity, and • The extent to which the project will secure future funds through program planning or grant eligibility.
PROPOSED PLAN
The FY 2026-27 through FY 2035-36 CIP totals $129,380,435. The City completed 9 projects in the previous fiscal year. Completed projects no longer to be shown in the CIP, and New Projects, are listed below:
Completed projects:
• New Play Structure – Parkside Park
• Traffic Way Bridge Replacement
Capital Improvement Program
55 • Financial Management Software Phase II – Payroll and HR Modules • Police Department Emergency Operations Center Upgrade • Guardrail Improvements
• Striping Improvements
• Bridge Street Bridge Habitat Mitigation
• Water Main and Service Replacements
• Sidewalk Improvements
New Projects in FY 2026-27:
• Public Tree Management Program
• City Facility Access Control Upgrades (PW, Parks, Chambers, Fire, PD) • City Council Chambers Remodel
• Replace City Hall upstairs flooring
• Facility Assessment Strategic Plan
• Trenchless Sewer Rehabilitation - Pilgrim Way, Orchard Avenue, West Cherry Avenue and California Street • Lift Station #3 - Creek Bank Analysis
• Le Point Street Parking Lot Expansion
• Huasna Road, Corbett Canyon, and E. Branch Street Intersection Roundabout • East Grand Streetscape Planning
• Radar Speed Survey
• Highway 101 & Grand Improvements
• Virtual Server Farm at City Hall and PD, and Nimble Network Storage • Update IT Firewall at City Hall
• Report Management System (RMS) Upgrade at PD
• Reservoir No. 4 Exterior Coating
• Arroyo Grande Golden State Interconnect
These capital projects represent the vision for short- and long-range development, maintenance, improvement, and building of new infrastructure and facilities to benefit residents, businesses, property owners, City service operations, and visitors. Because the Plan addresses several years of projects, it will serve as a guidance document and must be adjustable to changes and therefore the capital projects included in the Plan are not guaranteed to be delivered. If priorities change, emergent needs arise, or funding sources evolve, capital projects may be added, modified in scope, or eliminated.
Table 1 depicts the proposed annual appropriations for the 10-year period in each of the major project category, which are primarily major maintenance activities on City infrastructure. The largest categories of projects are for the Streets and Transportation, which includes the Pavement Management Program totaling $75.3 million, followed by Water projects totaling $14.7 million, including Water Main and Service Replacement and the Advanced Metering Infrastructure projects. This is followed by $10.2 million for bridge replacement projects, $9.3 million for public facilities, $5.8 million for Sewer projects, $4.7 million for parks & play structures, $4.5 million for
Capital Improvement Program
56 sidewalks, $3.4 million for drainage, and $1.5 million for technology projects. It should be noted that the types of projects are based on the best fit and may cover multiple project types.
Table 1 lists the types of projects and their total amounts by fiscal year for FY 2026-27 through FY 2035-36. Table 1 is followed by Chart 1 illustrating the types of projects over the entire 10-year CIP.
Capital Improvement Program
57 Table 1 – FY 2026-27 through FY 2035-36 Capital Improvement Projects by Project Type
Capital Improvement Program
58 Chart 1 – FY 2026-27 through FY 2035-36 Capital Improvement Projects by Project Type
Capital Improvement Program
59 Capital projects are scheduled throughout the 10-year plan only those projects with activity scheduled during the current FY 2026-27, are adopted as part of the City’s Mid-Cycle Budget Update process. Projects slated for subsequent years may be adjusted to reflect changes in priority or funding. Preparation of the CIP is a result of considerable effort from staff in all departments in the City. Each year staff reassesses overall goals for capital improvements, and the means for accomplishing them.
FUNDING
All funding sources that may be used for various capital improvements are reviewed each year. Much of the work to develop the CIP focuses on the balancing of available resources with the identified capital needs. Consideration must be given to factors such as annual revenue projections from various sources, restrictions on the uses of certain funds, legal limitations on debt capacity, and City policies relative to project funding.
There are limited sources of funding available for capital improvements, some sources like Development Impact Fees (DIF) have restrictions on their use within broad categories, which are described below. For this reason, outside grants are a significant source of funding for capital projects and are typically needed to advance major capital investments.
Internal Sources
Measure O-06 Sales Tax Fund (Fund 120): This fund accounts for the revenues derived from Measure O 2006 Sales Tax, a local 1/2% sales tax approved by the City's voters in November 2006.
Measure E-24 Sales Tax Fund (Fund 140): This fund accounts for the revenues derived from Measure E 2024 Sales Tax, a local 1% sales tax approved by the City's voters in November 2024.
Senate Bill 1 (SB1) Fund (Fund 220): On April 28, 2017, the Governor signed SB1, known as the Road Repair and Accountability Act of 2017. SB1 increases gasoline taxes and vehicle registration fees to address deferred maintenance on the State highway system and the local street and road system. These additional taxes are deposited by the State Controller into the Road Maintenance and Rehabilitation Account (RMRA).
State COPS Block Grant Fund (Fund 271): This fund accounts for the receipt and use of monies from the State of California restricted to the purchase of police equipment and technology for crime prevention.
Sewer Fund (Fund 612): This fund is used to account for maintenance of sewer lines connecting City residents to the South San Luis Obispo County Sanitation District sewer treatment plant. Money is collected from utility bills paid by customers.
Water Fund (Fund 640): This fund is used to account for the activities associated with the transmission and distribution of potable water by the City to its users. Money is collected from utility bills paid by customers.
In-Lieu Parking Fee Fund (Fund 751): This fund accounts for revenue derived from in-lieu fees charged to businesses when using parking spaces within the Village parking lots.
Capital Improvement Program
60 Development Impact Fee (DIF) Sources
Fire Facilities DIF (Fund 210): This fund accounts for impact fees collected from developers for the expansion of the existing fire station in order to serve future development.
Police Facilities DIF (Fund 212): This fund accounts for impact fees collected from developers for the expansion of the existing police facility in order to serve future development Park Facilities DIF (Fund 213): This fund accounts for the receipts of park-in-lieu fees (Quimby) and grant revenues that are used for construction, park acquisition, and development of park facilities.
Park Improvement DIF (Fund 214): Impact fees collected from developers for park improvements are to be used to maintain the adopted level of service for neighborhood and community parks of 4.0 acres per thousand population. This fund accounts for the receipt and use of these monies.
Recreation Facilities DIF (Fund 215): This fund accounts for impact fees collected from developers and used for recreation facilities in order to maintain the adopted level of service of recreation/community center facilities of 542 square feet per thousand population.
Traffic Signalization DIF (Fund 222): This fund accounts for traffic signalization assessment levied against developments for the future cost of traffic signals.
Transportation Facilities DIF (Fund 224): This fund accounts for transportation facilities fees paid to protect the public health, safety, and welfare by maintaining the existing level of public services for existing and future residents within the City.
Storm Drain Facilities DIF (Fund 231): This fund accounts for impact fees paid by development and are restricted to improving storm drains within the City.
Sewer Facility DIF (Fund 634): This fund is used to account for the accumulation of sewer facility revenues to be used in capital improvement projects in the City. Money is collected from development to offset the impacts new development has on the sewer collection system.
Water Facility DIF (Fund 642): This fund is used to account for the accumulation of water facility revenues to be used in capital improvement projects in the City. Money is collected from development to offset the impacts new development has on the water distribution system.
Other CIP Funding Sources
The City continues to aggressively seek grants for a wide variety of needs. While by their nature, these grants are only available for specific projects and purposes, and are often cyclical and competitive, they represent a significant addition to local funds. Grants are the most viable source to fund new improvements and allow internal funds to be kept available for existing assets. Internal funds are also necessary for leverage and matching fund requirements of grants.
Arroyo Grande receives a significant amount of funding from outside sources. These include grants received from the Active Transportation Program (ATP), Community Development Block Grant (CDBG), Highway Bridge Program
Capital Improvement Program
61 (HBP), and Safe Routes to School (SR2S). Outside grants fund a wide array of projects, including parks, recreational facilities, bicycle and pedestrian facility improvements, bridge reconstruction and retrofits, and transportation and safety projects. Staff continue to seek grants whenever projects are competitive and meet the City’s need to address unfunded priorities.
The FY 2026-27 through FY 2035-36 Capital Improvement Plan has 22 funding sources. The total estimated cost of all projects included in the ten-year plan, is $129,380,435. A summary of the costs by funding source is summarized below. This table is followed by a pie chart illustrating the percentage of each funding source supporting the entire 10-year CIP plan.
Capital Improvement Program
62 Table 2 – FY 2026-27 through FY 2035-36Capital Improvement Projects by Funding Source
Capital Improvement Program
63 Chart 2 – FY 2026-27 through FY 2035-36 Capital Improvement Projects by Funding Source The following pages provide summary information for each project with proposed funding during the ten year period as well as an overall summary of all projects. The final section breaks down each fiscal years projects.
10-Year Summary by Project Type
64
10-Year Summary by Project Type
65
10-Year Summary by Project Type
66
10-Year Summary by Project Type
67
10-Year Summary by Project Type
68
Projects Budgeted FY 2026-27
69
Projects Budgeted FY 2026-27
70
Projects Budgeted FY 2026-27
71
Projects Budgeted FY 2027-28
72
Projects Budgeted FY 2027-28
73
Projects Budgeted FY 2027-28
74 Project Number Category Request Title Description of Improvement Funding Source FY 2027-28 4423 - Active Transportation
Program (ATP) 640,000
4960 - Measure E-2024 Sales Tax 160,000
4825 - Developer Contributions
(Cherry/Rugged Radio) -
4926 - Transportation Facilities DIF 472,000
4950 - Measure O-2006 Sales Tax
328,000
350-56XX Streets &
Transportation
Opt-com preemptive devices on
traffic signals within City Limits
Adding opt-com pre-emptive
devices on traffic signals within City
4922 - Traffic Signalization
84,000
640-5944 Water Water Well #11 Facilities This project will develop and implement a blending strategy for
Well 11 to achieve compliance with
regulatory water quality standards.
While an existing treatment system
is in place, the well is not currently
able to meet required limits.
Completion of this project will allow
Well 11 to be fully operational and
available for use.
4940 - Water Fund
43,000
640-59XX Water Reservoir No. 5 Redundancy
Interconnect (Los Ciervos to
Andre Dr.)
The water distribution system for
Reservoir No. 5 pressure zone has
only one watermain that can provide
water to the pressure zone. This
project will provide a
redundant interconnect to assure
the zone has water delivery from
Reservoir No. 5 with the watermain
off. The project will interconnect the
watermain from Los Ciervos
to Andre Drive.
4940 - Water Fund
100,000
640-59XX Water AMI - Advanced Metering
Infrastructure
Upgrading to automated meter
reading system will allow the City to
4940 - Water Fund
750,000
Total FY 2027-28 Projects 11,189,700
350-56XX
A Traffic Way corridor plan is
needed to identify appropriate
improvements to traffic circulation to
address increased traffic due to
growth in this area.
Design phase of the East Grand
Streetscape project.
East Grand Streetscape
Planning and Construction
Streets &
Transportation
Streets & Traffic Way Corridor Plan
Transportation
350-56XX
Projects Budgeted FY 2028-29
75
Projects Budgeted FY 2028-29
76
Projects Budgeted FY 2029-30
77
Projects Budgeted FY 2029-30
78 Project Number Category Request Title Description of Improvement Funding Source FY 2029-30 4920 - SB1
541,400
4960 - Measure E-2024 Sales Tax
4,854,400
4463 - CDBG
50,000
350-56XX Streets &
Transportation
Branch Mill Road Slope
Stabilization
This is one of the 3 main streets not
addressed in the 13-year PMP. The
design phase of this project will help
find solutions to correct the slope
that continues to fall into the nearby
creek area. Once the City Council
has approved the design of the
slope stabilization the construction
contractor will be selected and
construction can begin.
4960 - Measure E-2024 Sales Tax
600,000
350-5491 Technology Digital Community Bulletin
Board Project
This project is to replace the current
outdated and deteriorating physical
community bulletin board located
outside City Hall with a modern,
digital bulletin board that allows for
more dynamic, accessible, and
user-friendly communication for
community members.
4950 - Measure O-2006 Sales Tax
40,000
The City’s Pavement Management
Program provides maintenance
history and pavement condition
index (PCI) for all public streets in
Arroyo Grande. The City annually
performs pavement maintenance on
public streets to the extent that
funds are available. Streets are
selected based on pavement
condition, location, and the type of
maintenance application.
Maintenance applications are
digouts, slurry seals, chip seals,
and pavement overlays.
350-5638 Streets &
Transportation
Pavement Management
Program
Projects Budgeted FY 2029-30
79 Project Number Category Request Title Description of Improvement Funding Source FY 2029-30 4940 - Water Fund
143,045
4942 - Water Facility 191,955
640-59XX Water Reservoir No. 5 Booster
Modification & Temporary
Storage (Rancho Grande)
Improvements to Rancho Grande
Pump station to increase long term
reliability and reduce temporary
storage required to provide water
supply with Reservoir 5 offline which
will occur for Reservoir 5 Cleaning
and Interior Coating.
4940 - Water Fund
500,000
Total FY 2029-30 Projects 13,170,800
Phased Main Replacement -
Highway 101 Crossing Upgrade,
El Camino Real to West Branch
Street
Upgrade the existing 8-inch cast
iron pipe to an 8-inch high density
polyethylene (HDPE) pipe under
Highway 101 from El Camino Real
to West Branch Street.
640-5973 Water
Projects Budgeted FY 2030-31
80
Projects Budgeted FY 2030-31
81 Project Number Category Request Title Description of Improvement Funding Source FY 2030-31 350-56XX Streets &
Transportation
Branch Mill Road Slope
Stabilization
This is one of the 3 main streets not
addressed in the 13-year PMP. The
design phase of this project will help
find solutions to correct the slope
that continues to fall into the nearby
creek area. Once the City Council
has approved the design of the
slope stabilization the construction
contractor will be selected and
construction can begin.
4960 - Measure E-2024 Sales Tax
2,000,000
350-56XX Streets &
Transportation
Harden Street Slope
Stabilization
This is one of the 3 main streets not
addressed in the 13-year PMP. The
design phase of this project will help
find solutions to correct the slope
that continues to fall into the nearby
creek area. Once the City Council
has approved the design of the
slope stabilization the construction
contractor will be selected and
construction can begin.
4960 - Measure E-2024 Sales Tax
200,000
350-56XX Streets and
Transportation
Safe Routes to School -
Newport Slope Stabilization
Solution for access and slope
stabilization on Newport
4493 - SR2S (Safe Routes to
School) 2,000,000
4940 - Water Fund
150,000
4942 - Water Facility
150,000
Total FY 2030-31 Projects 12,578,500
Complete upgrade on the Miller Way
Booster Station, including a new
pump building (or enclosed package
pump station), new pumps and
motors (2 x 5-HP), and new bladder
tanks. The upgraded booster station
will have a design capacity of 75-
gpm. This will increase the reliability
of the water supply to the Miller Way
zone and will improve water service
pressure. In addition, this is
expected to decrease maintenance
costs and increase efficiency.
640-59XX Water Miller Way Booster Zone
Upgrade
Projects Budgeted FY 2031-32
82
Projects Budgeted FY 2031-32
83 Project Number Category Request Title Description of Improvement Funding Source FY 2031-32 350-54XX Technology Virtual Server Farm at City Hall
and PD, and Nimble Network
Storage
Update the existing Virtual Server's
that the City uses for storage at City
Hall and the Police Station.
4950 - Measure O-2006 Sales Tax
100,000
350-54XX Technology Digitalize Records Consolidate any remaining physical records into one digitized storage.
4950 - Measure O-2006 Sales Tax
100,000
640-59XX Water Reservoir No. 5 Cleaning and
Interior Coating
Interior coating is showing signs of
failing and must be recoated to
preserve the steel tank and protect
water quality. The inspection in 2003
indicated it had a useful life of 5
years which has elapsed.
4940 - Water Fund
730,000
Total FY 2031-32 Projects 8,796,500
Projects Budgeted FY 2032-33
84
Projects Budgeted FY 2032-33
85
Projects Budgeted FY 2033-34
86
Projects Budgeted FY 2034-35
87
Projects Budgeted FY 2034-35
88 Project Number Category Request Title Description of Improvement Funding Source FY 2034-35 350-5491 Technology Digital Community Bulletin
Board Project
This project is to replace the current
outdated and deteriorating physical
community bulletin board located
outside City Hall with a modern,
digital bulletin board that allows for
more dynamic, accessible, and
user-friendly communication for
community members.
4950 - Measure O-2006 Sales Tax
40,000
640-59XX Water Alpine Crossing, Bennett and
Bell Mains and Services
The 4 inch main segment along
Bennett Ave and N. Alpine St. lacks
sufficient capacity to meet fire flow
requirements. This project was
identified as a project A-6 to
upgrade this main to 6" or greater
PVC pipe.
4940 - Water Fund
719,000
640-59XX Water Well #1 Replacement A supply shortage was identified if Lopez and Well 3 are out of service.
Well No. 1 is the oldest well installed
in 1940 and is the candidate to be
replaced.
4940 - Water Fund
2,635,000
Total FY 2034-35 Projects 13,577,435
Projects Budgeted FY 2035-36
89 Project Number Category Request Title Description of Improvement Funding Source FY 2035-36 350-5601 Streets &
Transportation
Fair Oaks Ave Active
Transportation Improvements,
Valley Road to Traffic Way
Construct improvements on this
corridor with better pedestrian and
bicycle facilities, traffic calming and
improved access and circulation at
the intersection of US 101 south
bound ramps and Orchard Ave.
Work toward applying for Active
Transportation Project funding to
complete the design and
construction.
4950 - Measure O-2006 Sales Tax
2,000,000
640-59XX Water 4" Mains Upgrades Replace segments of 4" water main which are inadequate to provide fire
flow.
4940 - Water Fund
5,875,000
Total FY 2035-36 Projects 7,875,000
90 APPENDIX
91 BUDGET GLOSSARY
Budget Glossary
92 Account: A subdivision within a fund for the purpose of classifying transactions.
Account Number: A numeric identification of the account. Typically, a unique number or series of numbers. The City of Arroyo Grande’s number structure is comprised of three (3) fields of characters.
The first field is three (3) characters wide and identifies the various FUNDS within the account system.
The next field contains four (4) characters and identifies the PROGRAMS and/or DIVISIONS within the City.
The final field contains four (4) characters and identifies the OBJECT CODE of the account number. The combination of the three fields makes up the account number.
Accrual Basis or Accrual Method: Accounting method whereby income and expense items are recognized as they are earned or incurred, even though they may not have been received or actually paid in cash. The alternative is Cash Basis. The City of Arroyo Grande uses the method of “Modified Accrual” basis of accounting for governmental and agency funds. All proprietary funds are accounted for using the accrual basis of accounting.
ACFR: Annual Comprehensive Financial Report which is an audited and printed copy of the City’s financial statement at the end of a given fiscal year.
Actual: The recorded revenue or expenditure for a specific account number. The actual columns, referenced in this document, report the revenues or expenditures as audited by an independent auditor.
Adopted Budget: A budget which typically has been reviewed by the public and “Adopted” (approved) by the City Council prior to the start of the fiscal year. The adopted budget is the legal authority to expend money for specified purposes in the fiscal year time period.
AGPOA: Arroyo Grande Police Officers Association. This union represents sworn and non-sworn police employees working for the City.
AGTBID: Arroyo Grande Tourism Business Improvement District. Established in May 2013 by Ordinance, the district exists to provide projects, programs and activities that benefit lodging businesses located and operating with the boundaries of the City. Assessments are levied on all lodging businesses and are subject to annual review by the City Council in accordance with the requirements contained in the Parking and Business Improvement Area Law of 1989 (Streets and Highways Code Sections 36500 et seq.).
Appropriate: Set apart for, or assign to, a particular purpose or use.
Appropriated Expenditure: A budget amount set-aside for a specific acquisition or purpose.
Appropriation: An authorization by the City Council to make expenditures and to incur obligation for specific amounts and purposes. For most local governments, the adopted budget document is the source for all or most appropriations.
Budget Glossary
93 Assessed Valuation: An official value established for real estate or other property as a basis for levying property taxes.
Assessments: Charges made to parties for actual services or benefits received.
Assets: Property owned by the City which has book or appraised monetary value.
Audit: A review of the accounting system and financial records to verify that government funds were spent and received in accordance with Generally Accepted Accounting Principles (GAAP) and in compliance with the legislative body’s appropriations.
Authorized Positions: Employee positions, which are authorized in the adopted budget, to be filled during the year.
Available (Undesignated) Fund Balance: Funds remaining from prior years, which are available for appropriation and expenditure in the current year.
Balance Sheet: A statement presenting the financial position of an entity or fund by disclosing the value of its assets, liabilities, and equities as of a specified date.
Balanced Budget: Budgeted resources, including revenue, transfers from other funds, and unallocated fund balance from previous years meet or exceed the budgeted use of resources, including expenditures and transfers to other funds.
Base Budget: The ongoing expense level necessary to maintain service levels previously authorized by the City Council.
Beginning Balance: Unencumbered resources available in a fund from the prior fiscal year after payment of prior fiscal year expenditures.
Bond: A written promise from a local government to repay a sum of money on a specific date at a specified interest rate. Bonds are most frequently used to finance capital improvement projects such as buildings, streets, and bridges.
Budget: A plan of financial operation, for a set time period, which identifies specific types and levels of services to be provided, proposed appropriations or expenses, and the recommended means of financing them.
Budget Amendments: The City Council has the sole responsibility for adopting the City’s budget, and may amend or supplement the budget at any time after adoption by majority vote. The City Manager and Administrative Services Director have joint authority to approve line-item budgetary transfers between expenditure objects of the budget, as long as transfers do not affect ending fund balances.
Budget Glossary
94 Budgetary Basis: The basis of accounting used to estimate financing sources and uses in the budget.
Budget Message: The opening section of the budget, which provides the City Council and the public with a general summary of the most important aspects of the budget, changes from previous years, and presents recommendations made by the City Manager.
Budget Year: Is the FISCAL YEAR for which the budget is being considered.
Budgetary Unit: An organizational component budgeted separately, usually a department or a division.
Capital Expenditures: An acquisition or an improvement (as distinguished from a repair) that will have a life of more than one year.
Capital Improvement Budget: A financial plan or authorized expenditures for tangible, long-term construction of, or improvement to, public physical facilities.
Capital Improvement Program (CIP): A long-term plan for multi-year projects such as street or park improvements, building construction, and various kinds of major facility maintenance. The projects set out in the plan usually require funding beyond the one-year period of the annual budget and the plan details funding sources and expenditure amounts.
Capital Outlay: Expenditures that result in the acquisition of or addition to, fixed assets. A capital item is tangible, durable, and non-consumable, and has a useful life of more than one year.
Carryover: Unspent funds, either encumbered, reserved, or unobligated, brought forward from prior fiscal years.
Cash Basis: A basis of accounting in which transactions are recognized only when cash is increased or decreased.
Consumer Price Index (CPI): Measure of change in consumer prices as determined by a monthly survey of the U.S. Bureau of Labor Statistics. Many pension and employment contracts are tied to changes in consumer prices as protection against inflation and reduced purchasing power. Among the CPI components are the costs of housing, transportation, and electricity. Also known as the Cost-of-Living Index.
Contingency: A budgetary reserve set aside for emergencies or unforeseen expenditures not otherwise budgeted.
Contractual Services: Services rendered to a government by private firms, individuals, or other governmental agencies. Examples include maintenance agreements, professional contracts, and tree trimming agreements.
Budget Glossary
95 Debt Service: The City’s obligation to pay the principal and interest of all bonds and other debt instruments according to a pre-determined payment schedule.
Deficit: The excess of an entity’s liabilities over its assets or the excess of expenditures or expenses over revenues during a single accounting period.
Department: A basic organizational unit of government that is functionally unique in its delivery of services. The components are hierarchically arranged as follows: Department (such as Public Works): and Division (such as Sewer Maintenance).
Depreciation: The loss in value of an asset, due to physical changes, obsolescence, or factors outside of the asset.
Development-related Fees: Fees and charges generated by building, development, and growth in a community. Included in development-related fees are building permits, development review fees, and zoning and subdivision fees.
Disbursement: The expenditure of monies from an account.
Division: An organizational component of a department.
Encumbrance: The commitment of appropriated funds to purchase goods or services. An encumbrance is not an expenditure. An encumbrance reserves funds to be expended on a specific item or service.
Enterprise Fund: A proprietary fund used to account for operations that are financed and operated in a manner similar to private business enterprises. The intent of enterprise funds is to have the costs of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges. The rate schedule for these services is established to ensure that revenues are adequate to meet all necessary expenditures.
Expenditure/Expense: The outflow of funds paid or to be paid for an asset obtained or goods and services obtained regardless of when the expenditure is actually paid. The term expenditure applies to Governmental Funds, while the term expense is used for Enterprise and Internal Service Funds.
Expenditure Object Code: Unique identification number and title for a minor expenditure category. Represents the most detailed level of budgeting and recording of expenditures, also referred to as a “line item.”
Fiscal Policy: A government’s policies with respect to revenues, spending, and debt management as these relate to government services, programs and capital investment. Fiscal policy provides an agreedupon set of principles for the planning and programming of government budgets and their funding.
Budget Glossary
96 Fiscal Year (FY): The 12-month period for recording financial transactions. The City of Arroyo Grande has specified the fiscal year to begin July 1st and end June 30th.
Fixed Assets: Assets of long-term character such as land, buildings, machinery, equipment, and furniture.
Franchise Fee: A franchise fee is charged for the privilege of using public rights-of way and property within the City for public or private purposes. The City currently assesses franchise fees on utilities such as electricity, gas and solid waste collection.
Full-time Equivalent Position (FTE): Positions or fractions thereof based on full-time definition of forty hours of work per week.
Fund: A separate accounting entity with a self-balancing set of accounts to record all financial transactions (revenues and expenditures) for specific activities or government functions. Funds are classified into three categories: governmental, proprietary, and fiduciary. Commonly used funds in governmental accounting are General Fund, Special Revenue Funds, Debt Service Funds, Capital Project Funds, Enterprise Funds, Internal Service Funds, Agency Funds, and Special Assessment Funds.
Fund Accounting: The basis of accounting used particularly by governments. Since there is no profit motive, accountability is measured instead of profitability. The main purpose is stewardship of financial resources received and expended in compliance with legal requirements. Financial reporting is directed at the public rather than investors.
Fund Balance: The excess of assets over liabilities of a fund.
GANN Limit: State of California legislation that limits a City’s total appropriations from tax revenues.
Gas Tax Fund: A fund to account for receipts and expenditures of money apportioned under Street and Highway Code section 2105, 2106, 2107, and 2107.5 of the State of California.
General Fund: The primary operating fund of the City, which accounts for resources and services traditionally associated with government. The General Fund provides administrative, financial, police protection, community development, public works, and recreation services to the community and other funds. The General Fund accounts for revenues that have unrestricted uses and are not required legally or by contractual agreement to be accounted for in another fund.
Generally Accepted Accounting Principles (GAAP): Uniform minimum standards for financial accounting and recording, encompassing the conventions, rules, and procedures that define accepted accounting principles.
Budget Glossary
97 General Obligation Bond: Bonds that are usually limited by state law as to the amount as well as the length of indebtedness that a government can have. These “Full Faith and Credit” bonds are secured by all of the financial assets of the local government, including property taxes.
Goal: A general statement of broad direction, purpose, or intent that describes the essential reason for existence and which is not limited to a one-year time frame. Generally, a goal does not change from year to year.
Grant: Contributions of gifts or cash or other assets from another governmental entity to be used or expended for a specific purpose, activity, or facility. An example is the Community Development Block Grant awarded by the federal government.
Indirect Cost: Costs that cannot be easily seen in the product or service. Electricity, insurance, and data processing costs are examples of indirect costs.
Infrastructure: The physical assets of the City, i.e. streets, water, sewer, public buildings, and parks, and the support structures within a development.
Interfund Transfers: The movement of monies between funds to assist in financing the services for the recipient fund.
Intergovernmental Revenue: Funds received from federal, state, and other local government sources in the form of grants, shared revenues, and payments in lieu of taxes.
JPA: Joint Powers Agreement. An entity created by two or more public authorities to jointly exercise any power common to all of them. The City of Arroyo Grande joined in a JPA, California Joint Powers Insurance Association, for the purpose of jointly managing liability and workers compensation issues. The City is also a member of the Five Cities Fire Authority, a JPA for fire services with the City of Grover Beach and Oceano Community Services District.
Jurisdiction: Geographic or political entity governed by a particular legal system or body of laws.
Liability: Debt or other legal obligations arising out of transactions in the past which must be liquidated, renewed or refunded at some future date.
Measure O-06 Local Use Tax Fund: Fund to account for the ½% local sales tax increase approved by the voters in November of 2006.
Measure E-24 Local Use Tax Fund: Fund to account for the 1% local sales tax increase approved by the voters in November of 2024.
Long-term Debt: Debt with a maturity of more than one year after the date of issuance.
Budget Glossary
98 Modified Accrual Basis or Modified Accrual Method: Accounting method whereby income and expense items are recognized, as they are available and measurable.
Objective: Measurable statement of the intended beneficial and tangible effects of a program’s activities. An objective is a specific target toward which a manager can plan, schedule work activities, and make staff assignments. An objective is stated in quantifiable terms such that it is possible to know when it has been achieved. Examples are increase an activity by a specific amount by a certain date; maintain a service level; reduce the incidence of something by a specific amount by a given date, or eliminate a problem by a set date. The emphasis is on performance and its measurability.
Operating Expense: A series of object codes, which include expenditures for items, which primarily benefit the current period and not defined as personnel services, contractual services, or capital outlays.
Operating Revenues: Funds that the government receives as income to pay for ongoing operations.
It includes such items as taxes, fees from specific services, interest earnings, and grant revenues.
Operating revenues are used to pay for day-to-day services.
Organization Chart: A chart showing the interrelationships of positions within an organization in terms of authority and responsibilities. There are basically three patterns of organization: line organization, functional organization, and line and staff organization.
Performance Measures: Specific quantitative measures of work performed with a program (i.e. miles of streets cleaned). Also, specific quantitative measures of results obtained through a program (i.e. percent reduction in response time compared to previous year).
PERS: Public Employees Retirement System, which is the state retirement system for public employees that provides its members with benefits at retirement or upon disability or death.
Program: A group of related activities performed by one or more organizational units for the purpose of accomplishing a function for which the government is responsible.
Proprietary Funds: These funds account for records of operations similar to those found in a business, such as Enterprise funds and Internal Service funds.
Redevelopment Agency (RDA): A separate legal entity governed by the California Community Redevelopment Law. RDAs were officially dissolved by the California Legislature as of February 1, 2012.
To facilitate the dissolution process, Successor Agencies were established to manage redevelopment projects underway, make payments on enforceable obligations, and dispose of redevelopment assets and properties.
Redevelopment Fund: A fund to account for transactions related to proceeds from bonds and other resources and their use to perform redevelopment activities within specific project areas.
Budget Glossary
99 Resolution: A special or temporary order of a legislative body; an order of a legislative body requiring less legal formality than an ordinance or statute.
Restricted Fund Balance: The portion of a fund’s balance legally restricted for a specific purpose and, therefore, not available for general appropriations.
Revenues: Funds received from various sources and treated as income to the City that are used to finance expenditures. Examples are tax payments, fees for services, receipts from other governments, fines, grants, licenses, permits, shared revenue, and interest income.
SEIU: Service Employees International Union, Local 620. This union represents all full time employees other than police and management employees.
Special Assessment Fund: Contain moneys received from special charges levied on property owners who benefit from a particular capital improvement or service.
Special Revenue Fund: A governmental fund type used to account for specific revenues that are legally restricted to expenditures for particular purposes.
Subvention: That portion of revenues collected by other government agencies on the City’s behalf.
Taxes: Compulsory charges levied by a government for the purpose of financing services performed for the common benefit of the people. This term does not include specific charges made against particular persons or property for current or permanent benefit, such as special assessments.
Transient Occupancy Tax: A tax imposed on travelers who stay in temporary lodging establishments in the City. The tax is collected by the operators of lodging establishments located within the City, on behalf of the City. This tax is then remitted to the City.
User Charges/Fees: The payment of a fee for the direct receipt of a public service by the party benefitting from the service.
100
GUIDE TO FUNDS BY
NUMBER
Guide to Funds by Numbers
101
100 General Fund – The primary operating fund of the City, which accounts for resources and services traditionally associated with government. The General Fund provides administrative, financial, police and fire protection, community development, parks and recreation, and public works services to the community and other funds. The General Fund accounts for revenues that have unrestricted uses and are not required legally or by contractual agreement to be accounted for in another fund. 120 Measure O-06 Local Use Tax Fund – Fund to account for the ½% local sales tax increase approved by the voters in November of 2006.
140 Measure E-24 Local Use Tax Fund – Fund to account for the 1% local sales tax increase approved by the voters in November of 2024.
210 Fire Protection Impact – This fund accounts for impact fees collected from developers for the expansion of the existing fire station in order to serve future development. 211 Public Access Television – This fund accounts for fees collected from Charter Communications that are restricted for support of public, education and government access programming and equipment.
212 Police Protection Impact – This fund accounts for impact fees collected from developers for the expansion of the existing police facility in order to serve future development. 213 Park Development – This fund accounts for the receipts of park-in-lieu fees (Quimby) and grant revenues that are used for construction, park acquisition, and development of park facilities. 214 Park Improvement – Impact fees that are collected for park improvements will be used to maintain the adopted level of service for neighborhood and community parks of 4.0 acres per thousand population. This fund accounts for the receipt of these monies. 215 Recreation Community Center – This fund accounts for impact fees collected for recreation facilities in order to maintain the adopted level of service of recreation/community center facilities of 542 square feet.
216 Grace Lane Assessment District – Fund to account for revenues derived from annual assessments of properties within the District, which are used to pay the cost incurred by the City for landscape maintenance.
217 Landscape Maintenance District – This fund accounts for the landscape maintenance of parkways within two housing tracts. A special benefit assessment is levied on property owners to pay for landscape maintenance expenditures.
Guide to Funds by Numbers
102
219 Parkside Assessment District – Fund to account for revenues derived from annual assessments of properties, which are used to pay the cost incurred by the City for landscape maintenance.
220 Street (Gas Tax) Fund – The fund that accounts for receipts and expenditures of money apportioned by the State under Streets and Highway Code sections. Gas tax revenues can only be used to construct and maintain streets and highways.
222 Traffic Signalization – This fund accounts for traffic signalization assessments levied against developments for the future cost of traffic signals. 223 Traffic Circulation – This fund accounts for developer traffic mitigation measure fees charged as a result of an environmental review.
224 Transportation Facility Impact – This fund accounts for developer impact fees (AB1600 fees) paid to protect the public health, safety, and welfare by maintaining the existing level of public services for existing and future residents within the City of Arroyo Grande. 225 Transportation Fund – The fund accounts for revenues from the Local Transportation Fund (LTF), the South County Transit (SCT), and a senior taxi program administered by SCT.
Expenditures are restricted to public transportation.
226 Water Neutralization Impact Fund – This fund accounts for mitigation fees collected from developers to neutralize projected water demand, of development projects, above historical usage amounts.
231 Drainage Facility – This fund accounts for development drainage fees restricted to improving drainage within the City.
232 In-lieu Affordable Housing – The fund accounts for monies paid by developers in meeting the City’s mandatory affordable housing requirements. 233 In-lieu Underground Utilities – The fund accounts for monies paid by developers in meeting the City’s underground utility requirements.
240 Arroyo Grande Tourism Marketing Improvement District Fund – The fund that accounts for assessments collected from lodging establishments, which are restricted for programs, projects and activities that benefit lodging businesses in the City. 241 Water Availability Fund – The fund that accounts for impact fees collected to mitigate future water requirements.
Guide to Funds by Numbers
103
250 CDBG Grant Fund – The fund accounts for revenues and expenditures related to Community Development Block Grant Funds.
271 State COPS Block Grant Fund – The fund that accounts for the receipt of revenues from the State of California restricted to the purchase of police equipment and technology for crime prevention.
286 Successor Agency to the Former Redevelopment Agency Administration – Fund used to account for tax increment revenues to be used for Successor Agency administration and payment of the former Redevelopment Agency enforceable obligations. 287 Successor Agency to the Former Redevelopment Agency Housing Function – The fund accounting for tax increment revenues of the former Redevelopment Agency to be used for low and moderate housing within the City.
350 Capital Improvement Program – Fund established to account for transfers from other City funds and grant revenues to be used for infrastructure improvements within the City. The Program is divided into six project types – Miscellaneous Projects, Park Projects, Street Projects, Drainage Projects, Sewer Projects, and Water Projects.
612 Sewer Fund – Fund used to account for maintenance of sewer lines connecting City residents to the San Luis Obispo County Sanitation District sewer plant. Maintenance costs are funded by user charges.
634 Sewer Facility Fund – This fund accounts for the accumulation of sewer facility revenues to be used in capital improvement projects in the City. 640 Water Fund – Fund used to account for the operation of water utility service to the community. Revenues are received from fees for service. 641 Lopez Fund – The Lopez Fund is responsible for the purchase of water, debt servicing, and the maintenance and operation of Lopez Dam. User Fee charges for water availability and utility billing are the major revenue sources of this fund.
642 Water Facility Fund – Fund used to account for the accumulation of revenues from charges for current services to be used for future water infrastructure improvements. 751 Downtown Parking – Agency Fund collecting assessments from Village merchants for the maintenance of Village parking for the Downtown Village Merchants Association.
Item 11.c.
MEMORANDUM
TO: City Council
FROM: Matthew Downing, City Manager
Nicole Valentine, Director of Administrative Services
Jessica Matson, Director of Legislative & Information Services/City Clerk
BY: Aleah Bergam, Management Analyst
SUBJECT: Consider Placing a Local Cannabis Tax Measure on the November 3, 2026 General Municipal Election Ballot
DATE: June 9, 2026
RECOMMENDATION:
1) Adopt a Resolution calling for the placement of a General Tax Measure on the November 3, 2026, General Municipal Election Ballot for the submission to the qualified voters of a proposed ordinance adding Chapter 3.26 to Title 3 (Revenue and Finance) of the Arroyo Grande Municipal Code establishing a tax on cannabis businesses operating within the City of Arroyo Grande;
2) Adopt an Ordinance adding Chapter 3.26 (Cannabis Business Tax) to Title 3 (Revenue and Finance) of the Arroyo Grande Municipal Code establishing a tax on cannabis businesses operating within the City of Arroyo Grande (to ultimately be considered for approval by the voters);
3) Adopt a Resolution providing for the filing of direct and rebuttal arguments and setting rules for the filing of written arguments regarding a City Measure to be submitted at the November 3, 2026, General Municipal Election;
4) Adopt a Resolution requesting the Board of Supervisors of the County of San Luis Obispo to consolidate a General Municipal Election to be held on November 3, 2026, with the Statewide General Election to be held on that date pursuant to Section 10403 of the Elections Code;
5) Pursuant to Elections Code Section 9282, authorize and designate two members of the City Council to prepare and submit an argument in favor of the measure to the City Clerk within the time prescribed by law for inclusion in the voter information materials for the General Election to be held on November 3, 2026; and 6) Determine that adopting the Resolutions and Ordinance regarding a cannabis business tax relates to organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment, and therefore is not a project
Item 11.c.
City Council
Consider Placing a Local Cannabis Tax Measure on the November 3, 2026 General Municipal Election Ballot
June 9, 2026
within the meaning of the California Environmental Quality Act (“CEQA”) and the State CEQA Guidelines, section 15378(b)(5).
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:
To provide flexibility in responding to future market conditions, the proposed ballot measure and ordinance would establish a maximum cannabis tax rate at 10%. Based on current projections, staff estimates that an initial 6% retail cannabis tax would generate approximately $500,000 annually. The specific tax rate imposed would be set by the City Council and may be adjusted over time within the voter-approved maximum.
As a general tax, the proceeds would be deposited into the General Fund and may be used for any lawful purpose, as designated by the City Council, including being allocated towards maintaining Arroyo Grande City services, including public safety, road maintenance, infrastructure repair, recreational programs, and other general City services. Funding for the November 2026 General Municipal Election has been included in the FY 2026-27 Mid-Cycle Budget Update in the amount of $80,000 and is anticipated to cover costs associated with printing the ballot measure in the Sample Ballot booklet.
BACKGROUND:
California State Law
On November 5, 1996, California voters passed Proposition 215, also known as the Compassionate Use Act. This landmark initiative permitted the medical use of cannabis, making California the first state to legalize cannabis for medical purposes.
On November 8, 2016, voters approved Proposition 64, the Control, Regulate, and Tax Adult Use of Marijuana Act (AUMA). This measure legalized the possession and recreational use of cannabis for adults aged 21 and over. While most personal-use provisions took effect immediately on November 9, 2016, the commercial licensing aspects became effective January 1, 2018.
On June 27, 2017, Governor Jerry Brown signed Senate Bill 94, merging previous medical and recreational cannabis regulations into a single framework known as the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA). This legislation repealed the earlier Medical Cannabis Regulation and Safety Act (MCRSA) and consolidated key provisions under AUMA, creating a unified regulatory structure codified in the California Business and Professions Code. MAUCRSA’s general provisions under Business and Professions Code Section 26000, et seq., establish the Department of Cannabis Control (DCC) as the primary state agency for licensing and regulation, emphasizing public safety, environmental protection, and equity, including mandatory track-and-trace systems (Bus. & Prof. Code, § 26067-26068) using unique identifiers for all commercial cannabis.
Item 11.c.
City Council
Consider Placing a Local Cannabis Tax Measure on the November 3, 2026 General Municipal Election Ballot
June 9, 2026
A central tenet of MAUCRSA is the preservation of local control. Under Section 26200 of the Business and Professions Code, cities and counties maintain the authority to prohibit or regulate commercial cannabis businesses within their jurisdictions. The state cannot approve a cannabis business license if it conflicts with local ordinances. However, jurisdictions are prohibited from banning the delivery of cannabis from licensed businesses located outside their boundaries.
The regulatory structure established by MAUCRSA governs every aspect of the legal cannabis supply chain—including cultivation, manufacturing, testing, distribution, and retail—whether for medicinal or adult use. This includes Business and Professions Code Chapter 3 (Licensing), detailing over 20 license types (e.g., Type 1-5 for cultivation by size, Type 6-7 for manufacturing, Type 8 for testing, Type 9 for non-storefront retail/delivery, Type 10 for storefront retail, Type 11 for distribution, Type 12 for microbusiness, Type 13 for distributor transport-only, Type 14 for event organizers), requiring background checks, financial disclosures, and compliance with labor laws (e.g., fair wages, worker safety under Labor Code). License requirements under Business and Professions Code Sections 26050-26055 mandate applicants to demonstrate compliance with local laws, provide security plans, and adhere to environmental standards, including water usage reporting to the State Water Resources Control Board and energy efficiency mandates to reduce greenhouse gas emissions. Additionally, Business and Professions Code Sections 26130-26140 govern quality assurance and testing, requiring all cannabis products to be tested by licensed labs for potency, contaminants (e.g., pesticides, heavy metals), and accurate labeling, with non-compliance potentially resulting in recalls or license revocation. Initially, regulation was distributed among multiple state agencies, but in 2021, enforcement and oversight were consolidated under a single agency: the DCC.
The DCC is responsible for licensing businesses, ensuring regulatory compliance, promoting public health and safety, and reducing illegal cannabis activity through education, enforcement, and support for local jurisdictions.
In September 2025, Governor Gavin Newsom signed AB 564, which reverses a 25% tax increase on California’s legal cannabis industry and sets the state’s cannabis excise tax rate at 15% until 2028, allowing legal businesses to remain competitive and promoting the industry’s long-term growth. Under Revenue and Taxation Code Section 34010, et seq., this aligns with the existing cannabis tax structure, imposing a 15% excise tax on all cannabis sales (adjusted by AB 564 to remain at 15% until June 30, 2028), with the cultivation tax eliminated in 2022, and exempting medical sales from state sales/use tax but subject to excise. Environmental and health regulations further require commercial operations to comply with the California Environmental Quality Act (CEQA), waste discharge requirements, and pesticide use restrictions (Food and Agricultural Code), while Health and Safety Code Section 11362.3 prohibits cannabis use in workplaces or where tobacco smoking is banned. These provisions ensure state oversight complements local control to emphasize safety, equity, and sustainability.
Item 11.c.
City Council
Consider Placing a Local Cannabis Tax Measure on the November 3, 2026 General Municipal Election Ballot
June 9, 2026
Arroyo Grande Municipal Code (AGMC)
The City Council adopted Ordinance No. 6751in January 2016, which added Chapter
16.62 to Title 16 of the AGMC. This prohibited medical cannabis dispensaries, cooperatives, and collectives, deliveries of medical cannabis, and the cultivation of cannabis within the city.
The City Council subsequently determined that it was appropriate to allow limited cultivation and strictly regulated deliveries of medical marijuana, and on June 28, 2016, adopted Ordinance No. 6782, amending AGMC Chapter 16.62 to allow limited indoor cultivation of medical marijuana and adding Chapter 5.95 relating to delivery services.
On November 9, 2016, the AUMA, also known as Proposition 64, became effective, authorizing certain personal use and cultivation of marijuana at a private residence and creating a state licensing and regulatory scheme for various commercial marijuana activities, and on October 10, 2017, the City Council adopted Ordinance No. 6873to amend and clarify the provisions in the AGMC relating to marijuana (cannabis) in order to continue to prohibit all commercial cannabis activity within the city, except for limited delivery as permitted by then-existing Chapter 5.95, to ban outdoor cannabis cultivation, and reasonably regulate indoor cannabis cultivation.
In December 2017 and June 2018, the State implemented a new comprehensive licensing and regulatory system for cannabis based upon emergency regulations adopted in December 2017 and June 2018, including the adoption of regulations requiring background checks of licensees, requirements related to premises, testing and quality control of cannabis, a “track and trace” system for all commercial cannabis activity, and procedures relating to delivery. In response, the City Council adopted Ordinance No. 6944 on August 14, 2018, repealing Chapter 5.95 of the AGMC relating to the local regulation of cannabis delivery services and modifying Chapter 16.625to remove references to the City’s permitting requirements, specify that deliveries require State permitting, and clarify that deliveries must originate from outside of the city.
Previous Council Direction
In the current Council Goals workplan for Fiscal Year 2025-27, under the Council Goal of “Pursue New Revenue Sources,” the Council directed staff to Consider Cannabis as a Means of Economic Development, with the subtasks as listed below:
1.2a Evaluate cannabis operations that bring in revenue
1 https://library.municode.com/ca/arroyo_grande/ordinances/code_of_ordinances?nodeId=753760 2 https://library.municode.com/ca/arroyo_grande/ordinances/code_of_ordinances?nodeId=777350 3 https://library.municode.com/ca/arroyo_grande/ordinances/code_of_ordinances?nodeId=854948 4 https://library.municode.com/ca/arroyo_grande/ordinances/code_of_ordinances?nodeId=909088 5https://library.municode.com/ca/arroyo_grande/codes/code_of_ordinances?nodeId=COOR_TIT16DECO _CH16.62CA
Item 11.c.
City Council
Consider Placing a Local Cannabis Tax Measure on the November 3, 2026 General Municipal Election Ballot
June 9, 2026
1.2b Conduct study session with the City Council regarding potential cannabis ordinance
1.2c Conduct study session with the City Council regarding potential cannabis development agreement
1.2d Prepare and adopt cannabis ordinance, if directed by the City Council
1.2e Evaluate feasibility of Cannabis Tax, if directed
On December 9, 20256, City Council received a Study Session on Cannabis Regulation and directed staff to proceed with the preparation of a local cannabis tax ballot measure (and draft tax language) to be placed on a future municipal ballot, for consideration at a future City Council meeting; and upon passing of a tax ballot measure, proceed with drafting regulations to allow commercial retail cannabis uses and return with zoning, permit process and a draft ordinance.
ANALYSIS OF ISSUES:
The City Council has received information and discussed the City’s revenue and potential opportunities to increase revenue in the face of rising costs. The revenue from a cannabis tax would be deposited into the General Fund and may be used for any lawful purpose, as designated by the City Council, and could be allocated towards City services, including public safety, road maintenance, infrastructure repair, recreational programs, and other general City services. To provide flexibility in responding to future market conditions, the proposed ballot measure and ordinance would establish a maximum cannabis tax rate at 10%. A Retail Market Analysis7 estimated that a 6% retail cannabis tax could generate approximately $460,000 annually. For ease of communication, staff has rounded this estimate and references approximately $500,000 in annual revenue throughout this report and related public information materials. Actual revenues will vary based on market activity and the tax rate established by the City Council, which may be adjusted over time within the voter-approved maximum rate of 10%.
Structure of the Cannabis Tax Measure
In order to place a tax measure on the November 3, 2026, ballot, a 2/3 vote of the City Council (at least 4 members) must approve the proposed Resolutions and Ordinance.
According to California Government Code sections 37100.5 and 37101, the City of Arroyo Grande has the authority to establish a local business tax upon cannabis businesses that engage in business in the City, and per Section 9222 of the California Elections Code, the City Council has authority to place propositions on the ballot to be considered at a Municipal Election. Likewise, for general taxes, Government Code Section 53724(b) provides that the ordinance or resolution proposing the tax has to be approved by a 2/3rd vote of the legislative body.
6 https://pub-arroyogrande.escribemeetings.com/filestream.ashx?DocumentId=16587 7 https://pub-arroyogrande.escribemeetings.com/filestream.ashx?DocumentId=16588
Item 11.c.
City Council
Consider Placing a Local Cannabis Tax Measure on the November 3, 2026 General Municipal Election Ballot
June 9, 2026
Accordingly, the following language has been developed for the ballot measure, which is limited to 75 words:
“Shall the measure to maintain Arroyo Grande City services, including public safety, road maintenance, infrastructure repair, recreational programs, and other general City services by enacting a tax of up to 10% of gross receipts on cannabis businesses operating in the city if such businesses are permitted, estimated to generate approximately $500,000 annually, with spending oversight and until ended by voters, be adopted?”
The proposed Ordinance and Resolutions have been prepared and are included with this report for consideration (Attachments 1-3). It is recommended that the Council adopt the Ordinance and adopt the Resolutions as presented, for placement on the November 3, 2026, ballot. It should be noted that, if successfully adopted by the City Council, the Ordinance will be considered for final approval by the voters.
It is also recommended that the Council designate two Councilmembers to prepare and submit an argument in favor of the measure, using their personal equipment on their personal time, to the City Clerk within the time prescribed by law for inclusion in the voter information materials.
ALTERNATIVES:
The following alternatives are provided for the Council’s consideration:
1. Staff’s recommendation;
2. Adopt the Resolutions and modify the Ordinance to be considered at a future Council meeting;
3. Direct staff to not proceed with a cannabis tax ballot measure at this time; or
4. Provide other direction to staff.
ADVANTAGES:
Adoption of the proposed Resolutions and Ordinance will meet the provisions required by the California Elections, Revenue and Taxation, and Government Codes for submitting to the voters a measure relating to the establishment of a cannabis tax in the city.
DISADVANTAGES:
There are no identified disadvantages related to adopting the Resolutions and an Ordinance as they are required by State law in order to place a measure on the ballot.
The City Council still retains the land use authority over allowing cannabis businesses in Arroyo Grande.
ENVIRONMENTAL REVIEW:
Adopting the Resolutions and Ordinance relates to organizational or administrative activities of governments that will not result in direct or indirect physical changes in the
Item 11.c.
City Council
Consider Placing a Local Cannabis Tax Measure on the November 3, 2026 General Municipal Election Ballot
June 9, 2026
environment and therefore is not a project within the meaning of the California Environmental Quality Act (“CEQA”) and the State CEQA Guidelines, section 15378(b)(5).
PUBLIC NOTIFICATION AND COMMENTS:
The Agenda was posted at City Hall and on the City’s website in accordance with Government Code Section 54954.2.
ATTACHMENTS:
1. Resolution – Ordering the Submission of a Measure to Electors Exhibit A - Proposed Cannabis Business Tax Ordinance
2. Resolution – Rules for Filing Arguments
3. Resolution – Request for Consolidation with the County
ATTACHMENT 1
65501.00001\44949872.1
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
ARROYO GRANDE, CALIFORNIA, CALLING FOR THE
PLACEMENT OF A GENERAL TAX MEASURE ON THE
NOVEMBER 3, 2026 GENERAL MUNICIPAL ELECTION
BALLOT FOR THE SUBMISSION TO THE QUALIFIED
VOTERS OF A PROPOSED ORDINANCE ADDING
CHAPTER 3.26 TO TITLE 3 (REVENUE AND FINANCE) OF
THE ARROYO GRANDE MUNICIPAL CODE
ESTABLISHING A TAX ON CANNABIS BUSINESSES
OPERATING WITHIN THE CITY OF ARROYO GRANDE
WHEREAS, the City of Arroyo Grande currently prohibits all commercial cannabis sales within City limits, meaning residents are driving across city lines to purchase cannabis and local tax dollars are leaving the community; and
WHEREAS, the City maintains a balanced financial foundation, but the demands for services are potentially outpacing what the City has the ability to spend under its Biennial Budget; and
WHEREAS, the 2025 Arroyo Grande Community Priorities Survey identified maintaining and repairing streets and sidewalks, promoting economic vitality, and enhancing public safety as the top priorities for the City over the next two to three years, and this measure provides a dedicated revenue stream to meet those priorities; and WHEREAS, neighboring municipalities in San Luis Obispo County, including Grover Beach, Morro Bay, and San Luis Obispo, have already legalized commercial cannabis sales and successfully collect tax revenues from those sales to support their own essential services; and
WHEREAS, as part of the Arroyo Grande City Council's Fiscal Year 2025-27 Goals Workplan, the Council specifically directed staff to pursue new revenue sources and evaluate cannabis operations as a means of economic development; and WHEREAS, the money generated from these sales would remain in Arroyo Grande to invest in local projects and support city services, including public safety, road maintenance, public works projects, and continuing recreational programs; and WHEREAS, the proposed tax would only be levied if the voters pass the measure and the City subsequently permits and regulates local commercial retail cannabis uses; and WHEREAS, the City is committed to the highest standards of fiscal accountability and shall ensure that all revenues generated by this tax are subject to public disclosure and independent audit to guarantee they are used for the benefit of Arroyo Grande residents; and
WHEREAS, pursuant to California Government Code sections 37100.5 and 37101, the City of Arroyo Grande has the authority to establish a local business tax upon cannabis businesses that engage in business in the City; and
WHEREAS, pursuant to Section 9222 of the California Elections Code, the City Council has authority to place propositions on the ballot to be considered at a Municipal Election; and
WHEREAS, the City Council desires to submit to the voters an ordinance establishing a maximum 10% local general tax on the gross receipts received by any cannabis business, not including industrial hemp businesses; and
RESOLUTION NO.
PAGE 2
WHEREAS, exploring a local cannabis business tax at a rate of 10% could create a steady stream of new revenue, generating an estimated $500,000 annually for the City's general fund; and
WHEREAS, the proposed cannabis business tax is a general tax the proceeds of which would be deposited into the City's general fund and which could pay for important City services such as public safety, road maintenance, infrastructure repair, recreational programs, and general municipal services to the public; and WHEREAS, on November 6, 1996, the voters of the State of California approved Proposition 218 (California Constitution, Article XIIIC), an amendment to the State Constitution which requires that all general taxes which are imposed, extended or increased must be submitted to the electorate and approved by a majority vote of the qualified electors voting in the election; and
WHEREAS, pursuant to Proposition 218 (California Constitution, Article XIIIC, Section 2(b)) any measure proposing to impose a new general tax, or increase or extend an existing general tax must be consolidated with a “regularly scheduled general election” for members of the City Council, unless the City Council makes certain fiscal emergency findings by unanimous vote to place the measure on a special election at another date; and
WHEREAS, the next regularly scheduled general election at which City Council members are to be elected is November 3, 2026; and
WHEREAS, pursuant to Government Code section 53724 (“Proposition 62”), a two-thirds (2/3) vote of all members of the City Council is required to place the Measure, as a general tax, on the November 3, 2026 ballot; and
WHEREAS, the specific terms relating to the cannabis business tax are provided for in the ordinance to be considered by the qualified voters, attached hereto as Exhibit "A" (the "Ordinance" or "Measure") and by this reference made an operative part hereof, and in accordance with all applicable laws.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE, CALIFORNIA, DOES RESOLVE, DECLARE, DETERMINE AND ORDER AS FOLLOWS:
SECTION 1. Recitals. The City Council hereby finds and determines that the foregoing recitals are true and correct, are incorporated herein and by this reference made an operative part hereof.
SECTION 2. Submission of Ballot Measure. The City Council, pursuant to its right and authority as contained in California Propositions 62 and 218 and Elections Code section 9222, by a two-thirds vote of all members, hereby orders the Ordinance attached hereto as Exhibit "A" to be submitted to the qualified voters of the City at the General Municipal Election to be held on Tuesday, November 3, 2026. The proposed Ordinance shall be in the form attached hereto as Exhibit "A" to this Resolution and is incorporated by this reference as if fully set forth herein.
SECTION 3. Ballot Question. The City Council, pursuant to its right and authority, does hereby order that the Measure shall be presented and printed upon the ballot submitted to the qualified voters in the manner and form set forth in this Section 3. On the ballot to be submitted to the qualified voters at the General Municipal Election to be held on Tuesday, November 3, 2026, in addition to any other matters required by law, there shall be printed substantially the following:
RESOLUTION NO.
PAGE 3
“Shall the measure to maintain Arroyo Grande City services, including public safety, road maintenance, infrastructure repair, recreational programs, and other general City services by enacting a tax of up to 10% of gross receipts on cannabis businesses operating in the city if such businesses are permitted, estimated to generate approximately $500,000 annually, with spending oversight and until ended by voters, be adopted?”
Yes ☐
No ☐
SECTION 4. Conduct of Election. The City Clerk is authorized, instructed, and directed to procure and furnish, or cause to be procured and furnished, any and all official ballots, printed matter and all supplies, equipment and paraphernalia that may be necessary in order to properly and lawfully conduct the Election. In all particulars not recited in this Resolution, the Election shall be held and conducted as provided by law for holding municipal elections.
SECTION 5. City Attorney’s Impartial Analysis. Pursuant to Elections Code section 9280, the City Council hereby directs the City Clerk to transmit a copy of the Measure to the City Attorney. The City Attorney shall prepare an impartial analysis of the Measure, not to exceed 500 words in length, showing the effect of the Measure on the existing law and the operation of the Measure, and transmit such impartial analysis to the City Clerk not later than the deadline for submittal of primary arguments for or against the Measure.
The impartial analysis shall include a statement indicating whether the Measure was placed on the ballot by a petition signed by the requisite number of voters or by the City Council. In the event the entire text of the Measure is not printed on the ballot, nor in the voter information guide, there shall be printed immediately below the impartial analysis, in no less than 10-font bold type, the following: “The above statement is an impartial analysis of Ordinance or Measure _____. If you desire a copy of the ordinance or measure, please call the Office of the City Clerk at (805) 473-5418 and a copy will be mailed at no cost to you.”
SECTION 6. Notice of Election. Notice of the Election is hereby given and the City Clerk is authorized, instructed and directed to give further or additional notice of the Election, in time, form and manner as required by law.
SECTION 7. Placement on the Ballot. The full text of the Ordinance/Measure shall not be printed in the voter information guide, and a statement shall be printed in the ballot pursuant to Section 9223 of the Elections Code advising voters that they may obtain a copy of this Measure at no cost, upon request made to the City Clerk.
SECTION 8. Delivery of Resolution to County. The City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original resolutions. The City Council directs the City Clerk to deliver copies of this Resolution, including the Ordinance attached hereto as Exhibit "A", to the Clerk of the Board of Supervisors of San Luis Obispo County and to the Registrar of Voters of San Luis Obispo County.
SECTION 9. Public Examination. Pursuant to California Elections Code section 9295, this Measure will be available for public examination for no fewer than ten (10) calendar days prior to being submitted for printing in the voter information guide. The Clerk shall post notice in the Clerk's office of the specific dates that the examination period will run.
SECTION 10. CEQA. The City Council hereby finds and determines that the ballot measure relates to organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment, and therefore is not a project within the meaning of the California Environmental Quality Act ("CEQA") and the State CEQA Guidelines, section 15378(b)(5).
SECTION 11. Severability. If any provision of this Resolution or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect
RESOLUTION NO.
PAGE 4
other provisions or applications of the Resolution which can be given effect without the invalid provision or application, and to this end the provisions of this Resolution are severable. The City Council hereby declares that it would have adopted this Resolution irrespective of the invalidity of any particular portion thereof.
SECTION 12. Effective Date of Resolution. This Resolution shall take effect immediately upon its adoption.
I HEREBY CERTIFY that the foregoing ordinance was adopted by a two-thirds vote of all members of the City Council of the City of Arroyo Grande as required by Revenue and Taxation Code Section 7285.9 and Government Code Section 53724 and submitted to the voters at the meeting of the City Council held on the 9 th day of June,
2026, by the following roll call vote:
AYES:
NOES:
ABSENT:
_________________________________
CAREN RAY RUSSOM, MAYOR
ATTEST:
_________________________________
JESSICA MATSON, CITY CLERK
Ordinance No. ____ was submitted to the People of the City of Arroyo Grande at the November 3, 2026 General Election. It is hereby certified that this ordinance was passed and approved by following vote of the People of the City of Arroyo Grande:
YES:
NO:
This ordinance was thereby adopted by the voters at the November 3, 2026 General Election and shall take effect as provided by law.
65501.00001\44949872.1
EXHIBIT "A"
ORDINANCE NO.
AN ORDINANCE OF THE PEOPLE OF THE CITY OF
ARROYO GRANDE, CALIFORNIA, ADDING CHAPTER
3.26 (CANNABIS BUSINESS TAX) TO TITLE 3 (REVENUE
AND FINANCE) OF THE ARROYO GRANDE MUNICIPAL
CODE ESTABLISHING A TAX ON CANNABIS
BUSINESSES OPERATING WITHIN THE CITY OF
ARROYO GRANDE
NOW THEREFORE, THE PEOPLE OF THE CITY OF ARROYO GRANDE DO ORDAIN AS FOLLOWS:
SECTION 1. Subject to the approval of a majority of the voters of the City of Arroyo Grande at the General Municipal Election so designated by the City Council in a separate resolution placing the proposal on the ballot for such election, Chapter 3.26 (Cannabis Business Tax) is hereby added to Title 3 (Revenue and Finance) of the Arroyo Grande Municipal Code to read as follows:
"Chapter 3.26 CANNABIS BUSINESS TAX
3.26.010 Title.
3.26.020 Authority and purpose.
3.26.030 Intent.
3.26.040 Definitions.
3.26.050 Tax imposed.
3.26.060 Registration, reporting, and remittance of tax.
3.26.070 Payments and communications — timely remittance.
3.26.080 Payment — when taxes deemed delinquent.
3.26.090 Notice not required by City.
3.26.100 Penalties and interest.
3.26.110 Refunds and credits.
3.26.120 Refunds and procedures.
3.26.130 Personal cultivation not taxed.
3.26.140 Administration of the tax.
3.26.150 Appeal procedure.
3.26.160 Enforcement — action to collect.
3.26.170 Apportionment.
3.26.180 Constitutionality and legality.
3.26.190 Audit and examination of premises and records.
3.26.200 Other licenses, permits, taxes or charges.
3.26.210 Payment of tax does not authorize unlawful business.
3.26.220 Deficiency determinations.
3.26.230 Failure to report — nonpayment, fraud.
3.26.240 Tax assessment — notice requirements.
3.26.250 Tax assessment — hearing, application, and determination.
3.26.260 Conviction for violation — taxes not waived.
3.26.270 Violation deemed misdemeanor.
3.26.280 Severability.
3.26.290 Remedies cumulative.
3.26.300 Amendment or modification.
3.26.010 Title.
This ordinance shall be known as the Arroyo Grande Cannabis Business Tax Ordinance.
3.26.020 Authority and Purpose.
The purpose of this Ordinance is to adopt a tax, for general revenue purposes, pursuant to Sections 37101 and 37100.5 of the California Government Code, upon
ORDINANCE NO.
PAGE 2
cannabis businesses that engage in business in the City. The Cannabis Business Tax is levied based upon business gross receipts except for industrial hemp businesses. It is not a sales and use tax, a tax upon income, or a tax upon real property. The Cannabis Business Tax is a general tax enacted solely for general, governmental purposes of the City and not for specific purposes. All of the proceeds from the tax imposed by this chapter shall be placed in the City's general fund and be available for any lawful municipal purpose.
3.26.030 Intent.
The intent of this Ordinance is to levy a tax on all cannabis businesses that operate in the City, regardless of whether such business would have been legal at the time this chapter was adopted. Nothing in this chapter shall be interpreted to authorize or permit any business activity that would not otherwise be legal or permissible under laws applicable to the activity at the time the activity is undertaken.
3.26.040 Definitions.
The following words and phrases shall have the meanings set forth below when used in this chapter:
A. "Business" shall include all activities engaged in or caused to be engaged in within the City, including any commercial or industrial enterprise, trade, profession, occupation, vocation, calling, or livelihood, whether or not carried on for gain or profit, but shall not include the services rendered by an employee to his or her employer.
B. "Calendar year" means January 1 through December 31, of the same year.
C. "Cannabis" means all parts of the plant Cannabis sativa Linnaeus, Cannabis indica, or Cannabis ruderalis, whether growing or not; the seeds thereof; the resin from glandular trichomes or extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or resin. "Cannabis" does not include "industrial hemp," unless otherwise specified.
D. "Cannabis product" means raw cannabis that has undergone a process whereby the raw agricultural product has been transformed into a concentrate, an edible product, or a topical product. "Cannabis product" also means cannabis products as defined by Section 11018.1 of the California Health and Safety Code and is not limited to medicinal cannabis products. "Cannabis product" does not include any product created from industrial hemp, unless otherwise specified.
E. "Cannabis business" or “Commercial Cannabis business” means any business involving cannabis, including but not limited to cultivating, transporting, distributing, manufacturing, compounding, converting, processing, preparing, storing, packaging, delivering, testing, dispensing, retailing and wholesaling of cannabis, cannabis products, or of ancillary products and accessories, whether or not carried on for gain or profit.
F. "Cannabis business tax" or "business tax," means the tax due pursuant to this chapter for engaging in a cannabis business in the City.
G. "Commercial cannabis cultivation" means cultivation of cannabis undertaken in the course of conducting a cannabis business.
H. "Commercial cannabis permit" means a permit issued by the City to a person to authorize that person to operate or engage in a cannabis business within the City.
I. "Cultivation" means any activity involving the planting, growing, harvesting, drying, curing, grading, or trimming of cannabis and includes, but is not limited to, the operation of a nursery.
ORDINANCE NO.
PAGE 3
J. “Distribution” means any activity involving the commercial procurement, sale, transfer and/or transport of cannabis and cannabis products from one commercial cannabis business to another commercial cannabis business for purposes authorized pursuant to state law.
K. "Employee" means each and every person engaged in the operation or conduct of any business, whether as owner, member of the owner's family, partner, associate, agent, manager or solicitor, and each and every other person employed or working in such business for a wage, salary, commission, barter or any other form of compensation.
L. "Engaged in a cannabis business" means the commencing, conducting, operating, managing or carrying on of a cannabis business, whether done as owner, or by means of an officer, agent, manager, employee, or otherwise, whether operating from a fixed location in the City or coming into the City from an outside location to engage in such activities. A person shall be deemed engaged in business within the City if:
1. Such person or person's employee maintains a fixed place of business within the City for the benefit or partial benefit of such person;
2. Such person or person's employee owns or leases real property within the City for business purposes;
3. Such person or person's employee regularly maintains a stock of tangible personal property in the City for sale in the ordinary course of business;
4. Such person or person's employee regularly conducts solicitation of business within the City; or
5. Such person or person's employee performs work or renders services in the City.
The foregoing specified activities shall not be a limitation on the meaning of "engaged in business."
M. "Evidence of doing business" means evidence such as, without limitation, use of signs, circulars, cards or any other advertising media, including the use of internet or telephone solicitation, or representation to a government agency or to the public that such person is engaged in a cannabis business in the City.
N. "Gross Receipts," except as otherwise specifically provided, means, whether designated a sales price, royalty, rent, slotting fee, commission, dividend, or other designation, the total amount (including all receipts, cash, credits, services and property of any kind or nature) received or payable for sales of goods, wares or merchandise, or for the performance of any act or service of any nature for which a charge is made or credit allowed (whether such service, act or employment is done as part of or in connection with the sale of goods, wares, merchandise or not), without any deduction therefrom on account of the cost of the property sold, the cost of materials used, labor or service costs, interest paid or payable, losses or any other expense whatsoever.
However, the following shall be excluded from Gross Receipts:
1. Cash discounts where allowed and taken on sales;
2. Any tax required by law to be included in or added to the purchase price and collected from the consumer or purchaser;
3. Such part of the sale price of any property returned by purchasers to the seller as refunded by the seller by way of cash or credit allowances or return of refundable deposits previously included in gross receipts;
ORDINANCE NO.
PAGE 4
4. Receipts derived from the occasional sale of used, obsolete or surplus trade fixtures, machinery or other equipment used by the taxpayer in the regular course of the taxpayer's business;
5. Cash value of sales, trades or transactions between departments or units of the same business located in the City of Arroyo Grande or if authorized by the Tax Administrator in writing in accordance with section 3.26.140(B);
6. Whenever there are included within the gross receipts amounts which reflect sales for which credit is extended and such amount proved uncollectible in a subsequent year, those amounts may be excluded from the gross receipts in the period they prove to be uncollectible; provided, however, if the whole or portion of such amounts excluded as uncollectible are subsequently collected they shall be included in the amount of gross receipts for the period when they are recovered;
7. Receipts of refundable deposits, except that such deposits when forfeited and taken into income of the business shall not be excluded;
8. Amounts collected for others where the business is acting as an agent or trustee and to the extent that such amounts are paid to those for whom collected. These agents or trustees must provide the Tax Administrator with the names and the addresses of the others and the amounts paid to them. This exclusion shall not apply to any fees, percentages, or other payments retained by the agent or trustees;
9. Retail sales of t-shirts, sweaters, hats, stickers, key chains, bags, books, posters, rolling papers, cannabis accessories such as pipes, pipe screens, vape pen batteries (without cannabis or industrial hemp) or other personal tangible property which the Tax Administrator has excluded in writing by issuing an administrative ruling per Section 3.26.140 shall not be subject to the cannabis business tax under this chapter. However, any business activities not subject to this chapter as a result of an administrative ruling shall be subject to the appropriate business tax provisions of Title 5 or any other Title or Chapter of this code as determined by the Tax Administrator.
O. "Industrial hemp" means types of the plant Cannabis sativa Linnaeus or any part of that plant with a total tetrahydrocannabinol concentration of no more than 0.3 percent on a dry weight basis and is limited only to agricultural products, including seeds, propagated plant material, immature or mature plants, harvested plants, mature stalks of the plan, fiber produced from the stalks, oil or cake made from the seeds of the plant, or any preparation that does not contain cannabinoids.
P. "Nursery" means a facility or part of a facility that is used only for producing clones, immature plants, seeds, and other agricultural products used specifically for the planting, propagation, and cultivation of cannabis.
Q. "Person" means an individual, firm, partnership, joint venture, association, corporation, limited liability company, estate, trust, business trust, receiver, syndicate, or any other group or combination acting as a unit, whether organized as a nonprofit or forprofit entity, and includes the plural as well as the singular number.
R. "Processing" means a cultivation site that conducts only trimming, drying, curing, grading, packaging, or labeling of cannabis, and non-manufactured cannabis products.
S. “Retail Sale”, "Sale", "Sell" and "to sell" means and includes any retail sale, exchange, or barter. It shall also mean any transaction whereby, for any consideration, title to cannabis, cannabis products, are transferred from one person to another and includes the delivery of cannabis or cannabis products, to a customer pursuant to an order placed for the purchase of the same, but does not include the return of cannabis or cannabis products to the licensee from whom the cannabis or cannabis product was purchased.
ORDINANCE NO.
PAGE 5
T. "State" means the State of California.
U. "State license," "license," or "registration" means a state license issued pursuant to California Business & Professions Code Section 26050, and all other applicable state laws, required for operating a cannabis business.
V. "Tax Administrator" means the Director of Finance of the City of Arroyo Grande or his or her designee.
W. "Testing" means a laboratory, facility, or entity in the state that offers or performs tests of cannabis or cannabis products that is both of the following: (i) accredited by an accrediting body that is dependent from all other persons involved in commercial cannabis activity in the state; and (ii) licensed by the Department of Cannabis Control.
3.26.050 Tax Imposed.
A. Beginning January 1, 2027, there is imposed upon each person who is engaged in business as a cannabis business a cannabis business tax. Such tax is payable regardless of whether the business has been issued a business license or commercial cannabis permit to operate lawfully in the City or is operating unlawfully. The City's acceptance of a cannabis business tax payment from a cannabis business operating illegally shall not constitute the City's approval or consent to such illegal operations.
B. The maximum rate of the cannabis business tax shall be calculated as follows: For every person engaged in the operation of a cannabis business described in section 3.26.040(E), said person shall be subject to a maximum tax rate not to exceed ten percent (10%) of gross receipts generated by that cannabis business activity. The rate of the cannabis tax may be adjusted from time to time by the City Council as set forth in Section 3.26.300, subject to the maximum rate and methodology set forth above.
C. Persons subject to the cannabis business tax shall register with the City and pay the registration fee pursuant to Section 3.26.060. They shall also be required to obtain a business license pursuant to Title 5 of this Code; provided, however, that cannabis business activities subject to the cannabis business tax shall be excluded from determining the amount of any business license tax payable under Title 5.
3.26.060 Registration, reporting and remittance of tax.
A. Registration of Cannabis Business. All cannabis businesses shall be required to annually register as follows:
1. All persons engaging in business as a cannabis business, whether an existing, newly established or acquired business shall register with the Tax Administrator within thirty (30) days of commencing operation and shall annually renew such registration within 30 days of the business registration of each year thereafter. In registering, such persons shall furnish to the Tax Administrator a sworn statement, upon a form provided by the Tax Administrator, setting forth the following information:
a. The name of the business;
b. The names and addresses of each owner;
c. The exact nature or kind of business;
d. The place where such business is to be carried on; and e. Any additional information which the Tax Administrator may require.
ORDINANCE NO.
PAGE 6
B. An annual registration fee in an amount set by the City Council by ordinance or resolution shall be presented with the sworn statement submitted under this section. This fee shall be utilized to pay for the City’s costs of processing registrations and implementing the City’s cannabis regulatory system, and shall not be considered a tax. The registration fee may be adjusted by ordinance or resolution of the City Council.
C. The cannabis business tax imposed by this chapter shall be paid, in arrears, on a monthly basis. Each person owing a cannabis business tax each calendar month shall, no later than the fifteenth day following the close of the calendar month, file with the Tax Administrator a statement ("tax statement") of the tax owed for that calendar month and the basis for calculating that tax. The Tax Administrator may require that the tax statement be submitted on a form prescribed by the Tax Administrator. The tax for each calendar month shall be due and payable on that same date that the tax statement for the calendar month is due.
D. Upon cessation of a cannabis business, tax statements and payments shall be immediately due for all calendar months up to the calendar month during which cessation occurred.
E. The Tax Administrator may, at his or her discretion, establish alternative reporting and payment periods for any taxpayer as the Tax Administrator deems necessary to ensure effective collection of the cannabis business tax. The Tax Administrator may also require that a deposit, to be applied against the taxes for a calendar month, be made by a taxpayer at the beginning of that calendar month. In no event shall the deposit required by the Tax Administrator exceed the tax amount he or she projects will be owed by the taxpayer for the calendar month. The Tax Administrator may require that a taxpayer make payments via a cashier's check, money order, wire transfer, or similar instrument.
3.26.070 Payments and communications - timely remittance.
Whenever any payment, statement, report, request or other communication is due, it must be received by the Tax Administrator on or before the final due date. A postmark will not be accepted as timely remittance. If the due date would fall on a Friday, Saturday, Sunday, or a holiday observed by the City, the due date shall be the next regular business day on which the City is open to the public.
3.26.080 Payment - when taxes deemed delinquent.
Unless otherwise specifically provided under other provisions of this chapter, the taxes required to be paid pursuant to this chapter shall be deemed delinquent if not received by the Tax Administrator on or before the due date as specified in Sections
3.26.060 and 3.26.070.
3.26.090 Notice not required by the City.
The City may as a courtesy send a tax notice to the cannabis business which owes the City a cannabis business tax. However, the Tax Administrator is not required to send a delinquency or other notice or bill to any person subject to the provisions of this chapter. Failure to send such notice or bill shall not affect the validity of any tax or penalty due under the provisions of this chapter.
3.26.100 Penalties and interest.
A. Any person who fails or refuses to pay any cannabis business tax required to be paid pursuant to this chapter on or before the due date shall pay penalties and interest as follows:
ORDINANCE NO.
PAGE 7
1. A penalty equal to ten percent (10%) of the amount of the tax, in addition to the amount of the tax, plus interest on the unpaid tax calculated from the due date of the tax at the rate of one percent (1.0%) per month.
2. If the tax remains unpaid for a period exceeding one calendar month beyond the due date, an additional penalty equal to twenty-five percent (25%) of the amount of the tax, plus interest at the rate of one percent (1.0%) per month on the unpaid tax and on the unpaid penalties
3. Interest shall be applied at the rate of one percent (1.0%) per month on the first day of the month for the full month and will continue to accrue monthly on the tax and penalty until the balance is paid in full.
B. Whenever a check or electronic payment is submitted in payment of a cannabis business tax and the payment is subsequently returned unpaid by the bank for any reason, the taxpayer will be liable for the tax amount due plus any fees, penalties and interest as provided for in this chapter, and any other amount allowed under state law.
3.26.110 Refunds and credits.
A. No refund shall be made of any tax collected pursuant to this chapter, except as provided in Section 3.26.120.
B. No refund of any tax collected pursuant to this chapter shall be made because of the discontinuation, dissolution, or other termination of a business.
3.26.120 Refunds and procedures.
A. Whenever the amount of any cannabis business tax, penalty or interest has been overpaid, paid more than once, or has been erroneously collected or received by the City under this chapter, it may be refunded to the claimant who paid the tax provided that a written claim for refund is filed with the Tax Administrator within one (1) year of the date the tax was originally due or paid, whichever came first.
B. The Tax Administrator, his or her designee or any other City officer charged with the administration of this chapter shall have the right to examine and audit all the books and business records of the claimant in order to determine the eligibility of the claimant to the claimed refund. No claim for refund shall be allowed if the claimant refuses to allow such examination of claimant's books and business records after request by the Tax Administrator to do so.
C. In the event that the cannabis business tax was erroneously paid in an amount in excess of the tax due, and the error is attributable to the City, the City shall refund the amount of tax erroneously paid; provided that (i) a claim for refund has been timely filed with the Tax Administrator; and (ii) the refund cannot exceed, under any circumstance, the amount of tax overpaid during the twelve months preceding the last month for which the claim states the tax was overpaid.
3.26.130 Personal Cultivation Not Taxed.
The provisions of this chapter shall not apply to personal cannabis cultivation or personal use of cannabis, to the extent those activities are authorized in the "Medicinal and Adult Use Cannabis Regulation and Safety Act," as may be amended. This chapter shall not apply to personal use of cannabis that is specifically exempted from state licensing requirements, that meets the definition of personal use or equivalent terminology under state law, and provided that the individual receives no compensation whatsoever related to that personal cultivation or use.
3.26.140 Administration of the tax.
A. It shall be the duty of the Tax Administrator to collect the taxes, penalties, fees, and perform the duties required by this chapter.
ORDINANCE NO.
PAGE 8
B. For purposes of administration and enforcement of this chapter generally, the Tax Administrator may from time to time promulgate such administrative interpretations, rules, and procedures consistent with the purpose, intent, and express terms of this chapter as he or she deems necessary to implement or clarify such provisions or aid in enforcement.
C. The Tax Administrator may take such administrative actions as needed to administer the cannabis business tax, including but not limited to:
1. Provide to all cannabis business taxpayers forms for the reporting of the tax;
2. Provide information to any taxpayer concerning the provisions of this chapter;
3. Receive and record all taxes remitted to the City as provided in this chapter;
4. Maintain records of taxpayer reports and taxes collected pursuant to this chapter;
5. Assess penalties and interest to taxpayers pursuant to this chapter;
6. Determine amounts owed under and enforce collection pursuant to this chapter.
3.26.150 Appeal procedure.
Any taxpayer aggrieved by any decision of the Tax Administrator with respect to the amount of tax, interest, penalties and fees, if any, due under this chapter may appeal to the City Manager by filing a notice of appeal with the City Clerk within thirty (30) calendar days of the serving or mailing of the Tax Administrator's determination of the amount due. The City Clerk, or his or her designee, shall fix a time and place for hearing such appeal, and the City Clerk, or his or her designee, shall give notice in writing to such operator at the last known place of address. The finding of the City Manager shall be final and conclusive and shall be served upon the appellant in the manner prescribed by this section 3.26.150 for service of notice of hearing. Any amount found to be due shall be immediately due and payable upon the service of the notice.
3.26.160 Enforcement - action to collect.
Any taxes, penalties and/or fees required to be paid under the provisions of this chapter shall be deemed a debt owed to the City. Any person owing money to the City under the provisions of this chapter shall be liable in an action brought in the name of the City for the recovery of such debt. The provisions of this section shall not be deemed a limitation upon the right of the City to bring any other action including criminal, civil and equitable actions, based upon the failure to pay the tax, penalties and/or fees imposed by this chapter or the failure to comply with any of the provisions of this chapter.
3.26.170 Apportionment.
If a business subject to the tax is operating both within and outside the City, it is the intent of the City to apply the cannabis business tax so that the measure of the tax fairly reflects the proportion of the taxed activity actually carried on in the City. To the extent federal or state law requires that any tax due from any taxpayer be apportioned, the taxpayer may indicate said apportionment on his or her tax return. The Tax Administrator may promulgate administrative procedures for apportionment as he or she finds useful or necessary.
ORDINANCE NO.
PAGE 9
3.26.180 Constitutionality and legality.
This tax is intended to be applied in a manner consistent with the United States and California Constitutions and state law. None of the tax provided for by this chapter shall be applied in a manner that causes an undue burden upon interstate commerce, a violation of the equal protection or due process clauses of the Constitutions of the United States or the State of California or a violation of any other provision of the California Constitution or state law. If a person believes that the tax, as applied to him or her, is impermissible under applicable law, he or she may request that the Tax Administrator release him or her from the obligation to pay the impermissible portion of the tax.
3.26.190 Audit and examination of premises and records.
A. For the purpose of ascertaining the amount of cannabis business tax owed or verifying any representations made by any taxpayer to the City in support of his or her tax calculation, the Tax Administrator shall have the power to inspect any location where commercial cannabis business occurs and to audit and examine all books and records (including, but not limited to bookkeeping records, state and federal income tax returns, and other records relating to the gross receipts of the business) of persons engaged in cannabis businesses. In conducting such investigation, the Tax Administrator shall have the power to inspect any equipment, such as computers or point of sale machines, that may contain such records.
B. It shall be the duty of every person liable for the collection and payment to the City of any tax imposed by this chapter to keep and preserve, for a period of at least three (3) years, all records as may be necessary to determine the amount of such tax as he or she may have been liable for the collection of and payment to the City, which records the Tax Administrator or his/her designee shall have the right to inspect at all reasonable times.
3.26.200 Other licenses, permits, taxes, fees or charges.
A. Nothing contained in this chapter shall be deemed to repeal, amend, be in lieu of, replace or in any way affect any requirements for any commercial cannabis permit or City license required by, under or by virtue of any provision of any other Title or Chapter of this Code or any other ordinance or resolution of the City, nor be deemed to repeal, amend, be in lieu of, replace or in any way affect any tax, fee or other charge imposed, assessed or required under any other Title or Chapter of this Code or any other ordinance or resolution of the City. Any references made or contained in any other Title or Chapter of this Code to any licenses, license taxes, fees, or charges, or to any schedule of license fees, shall be deemed to refer to the licenses, license taxes, fees or charges, or schedule of license fees, provided for in other Titles or Chapters of this Code.
B. The Tax Administrator may revoke or refuse to renew the license required by this Code for any business that is delinquent in the payment of any tax due pursuant to this chapter or that fails to make a deposit required by the Tax Administrator pursuant to Section 3.26.060. A commercial cannabis permit issued under the Arroyo Grande Municipal Code may be revoked, suspended or not renewed in the event that the business holding that permit has failed to (i) make a deposit required by the Tax Administrator pursuant to Section 3.26.060 or (ii) timely pay all taxes, interest and penalties owed by that business under this chapter.
3.26.210 Payment of tax does not authorize unlawful business.
A. The payment of a cannabis business tax required by this chapter, and its acceptance by the City, shall not entitle any person to carry on any cannabis business unless the person has complied with all of the requirements of this Code and all other applicable state laws.
B. No tax paid under the provisions of this chapter shall be construed as authorizing the conduct or continuance of any illegal or unlawful business, or any business in violation of any local or state law.
ORDINANCE NO.
PAGE 10
3.26.220 Deficiency determinations.
If the Tax Administrator is not satisfied that any statement filed as required under the provisions of this chapter is correct, or that the amount of tax is correctly computed, he or she may compute and determine the amount to be paid and make a deficiency determination upon the basis of the facts contained in the statement or upon the basis of any information in his or her possession or that may come into his or her possession within three (3) years of the date the tax was originally due and payable. One or more deficiency determinations of the amount of tax due for a period or periods may be made.
When a person ceases engaging in a cannabis business, a deficiency determination may be made at any time within three (3) years thereafter as to any liability arising from engaging in such cannabis business whether or not a deficiency determination is issued prior to the date the tax would otherwise be due. Whenever a deficiency determination is made, a notice shall be given to the person concerned in the same manner as notices of assessment are given under Section 3.26.240.
3.26.230 Failure to report—nonpayment, fraud.
A. Under any of the following circumstances, the Tax Administrator may make and give notice of an assessment of the amount of tax owed by a person under this chapter at any time:
1. If the person has not filed a complete statement required under the provisions of this chapter;
2. If the person has not paid the tax due under the provisions of this chapter;
3. If the person has not, after demand by the Tax Administrator, filed a corrected statement, or furnished to the Tax Administrator adequate substantiation of the information contained in a statement already filed, or paid any additional amount of tax due under the provisions of this chapter; or
4. If the Tax Administrator determines that the nonpayment of any cannabis business tax due under this chapter is due to fraud, a penalty of twentyfive percent (25%) of the amount of the tax shall be added thereto in addition to penalties and interest otherwise payable under this chapter and any other penalties allowed by law.
B. The notice of assessment shall separately set forth the amount of any tax known by the Tax Administrator to be due or estimated by the Tax Administrator, after consideration of all information within the Tax Administrator's knowledge concerning the business and activities of the person assessed, to be due under each applicable provision of this chapter and shall include the amount of any penalties or interest accrued on each amount to the date of the notice of assessment.
3.26.240 Tax assessment - notice requirements.
The notice of assessment shall be served upon the person either by personal delivery, by overnight delivery by a nationally-recognized courier service, or by a deposit of the notice in the United States mail, postage prepaid thereon, addressed to the person at the address of the location of the business or to such other address as he or she shall register with the Tax Administrator for the purpose of receiving notices provided under this chapter; or, should the person have no address registered with the Tax Administrator for such purpose, then to such person's last known address. For the purpose of Section
3.26.240, a service by overnight delivery shall be deemed to have occurred one (1) calendar day following deposit with a courier and service by mail shall be deemed to have occurred three (3) days following deposit in the United States mail.
ORDINANCE NO.
PAGE 11
3.26.250 Tax assessment - hearing, application and determination.
Within thirty (30) calendar days after the date of service of the notice of assessment the person may apply in writing to the Tax Administrator for a hearing on the assessment. If application for a hearing before the City is not made within the time herein prescribed, the tax assessed by the Tax Administrator shall become final and conclusive.
Within thirty (30) calendar days of the receipt of any such application for hearing, the Tax Administrator shall cause the matter to be set for hearing before him or her no later than thirty (30) calendar days after the receipt of the application, unless a later date is agreed to by the Tax Administrator and the person requesting the hearing. Notice of such hearing shall be given by the Tax Administrator to the person requesting such hearing not later than five (5) calendar days prior to such hearing. At such hearing said applicant may appear and offer evidence why the assessment as made by the Tax Administrator should not be confirmed and fixed as the tax due. After such hearing the Tax Administrator shall determine and reassess (if necessary) the proper tax to be charged and shall give written notice to the person in the manner prescribed in Section 3.26.240 for giving notice of assessment.
3.26.260 Conviction for violation - taxes not waived.
The conviction and punishment of any person for failure to pay the required tax shall not excuse or exempt such person from any civil action for the tax debt unpaid at the time of such conviction. No civil action shall prevent a criminal prosecution for any violation of the provisions of this chapter or of any state law requiring the payment of all taxes.
3.26.270 Violation deemed misdemeanor.
Any person violating any of the provisions of this chapter shall be guilty of a misdemeanor.
3.26.280 Severability.
If any provision of this chapter, or its application to any person or circumstance, is determined by a court of competent jurisdiction to be unlawful, unenforceable or otherwise void, that determination shall have no effect on any other provision of this chapter or the application of this chapter to any other person or circumstance and, to that end, the provisions hereof are severable.
3.26.290 Remedies cumulative.
All remedies and penalties prescribed by this chapter or which are available under any other provision of this Code and any other provision of law or equity are cumulative.
The use of one or more remedies by the City shall not bar the use of any other remedy for the purpose of enforcing the provisions of this chapter.
3.26.300 Amendment or modification.
Except as set forth in this section 3.26.300, this chapter, or any section of this chapter, may be amended, modified or temporarily suspended by the City Council without a vote of the people. However, as required by Article XIIIC of the California Constitution, voter approval is required for any amendment that would expand, extend, or increase the maximum rate or methodology of any tax levied pursuant to this chapter.
The People of the City of Arroyo Grande affirm that the following actions shall not constitute an increase of the maximum rate or methodology of a tax:
A. The restoration or adjustment of the rate of the tax to a rate that is no higher than that allowed by this chapter, in those circumstances where, among others, the City Council has previously acted to reduce the rate of the tax or is incrementally implementing an increase authorized by this chapter;
ORDINANCE NO.
PAGE 12
B. An action that interprets or clarifies (i) the methodology of applying or calculating the tax or (ii) any definition applicable to the tax, so long as the interpretation or clarification (even if contrary to some prior interpretation or clarification) is not inconsistent with the provisions of this chapter; or
C. The collection of the tax imposed by this chapter even if the City had, for some period of time, suspended or failed to collect the tax.” SECTION 2. Pursuant to Article XIIIB of the California Constitution, the appropriation limit for the City of Arroyo Grande will be increased by the maximum projected aggregate collection authorized by the levy of this general tax, as indicated in Section 1, in each of the years covered by this Ordinance plus the amount, if any, by which the appropriation limit is decreased by law as a result of the levy of the general tax set forth in this Ordinance.
SECTION 3. If any portion of this Ordinance is declared invalid by a court of law or other legal body with applicable authority, the invalidity shall not affect or prohibit the force and effect of any other provision or application of the Ordinance that is not deemed invalid. The voters of the City hereby declare that they would have circulated for qualification and/or voted for the adoption of this Ordinance, and each portion thereof, regardless of the fact that any portion of the initiative may be subsequently deemed invalid.
SECTION 4. Pursuant to California Constitution Article XIIIC §(2)(b) and California Elections Code §9217, this Ordinance shall take effect only if approved by a majority of the eligible voters of the City of Arroyo Grande voting at the General Municipal Election to be held on November 3, 2026, and shall take effect ten (10) days after the City Council has certified the results of the General Municipal Election by resolution.
SECTION 5. The Mayor is hereby authorized to attest to the adoption of this Ordinance by the People voting thereon on November 3, 2026, by signing where indicated below.
I hereby certify that the foregoing Ordinance was PASSED, APPROVED AND ADOPTED by the people of the City of Arroyo Grande on the 3 rd day of November 2026.
[NAME], MAYOR
ATTEST:
JESSICA MATSON, CITY CLERK
APPROVED AS TO CONTENT:
MATTHEW DOWNING, CITY MANAGER
APPROVED AS TO FORM:
ISAAC ROSEN, CITY ATTORNEY
ATTACHMENT 2
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARROYO
GRANDE, CALIFORNIA, PROVIDING FOR THE FILING OF DIRECT AND
REBUTTAL ARGUMENTS AND SETTING RULES FOR THE FILING OF
WRITTEN ARGUMENTS REGARDING A CITY MEASURE TO BE
SUBMITTED AT THE NOVEMBER 3, 2026, GENERAL MUNICIPAL
ELECTION
WHEREAS, a General Municipal Election is to be held in the City of Arroyo Grande, California on November 3, 2026, at which there will be submitted to the voters the following measure:
“Shall the measure to maintain Arroyo Grande City services, including public safety, road maintenance, infrastructure repair, recreational programs, and other general City services by enacting a tax of up to 10% of gross receipts on cannabis businesses operating in the city if such businesses are permitted, estimated to generate approximately $500,000 annually, with spending oversight and until ended by voters, be adopted?”
Yes
No
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE,
CALIFORNIA, DOES RESOLVE, DECLARE, DETERMINE AND ORDER AS FOLLOWS:
Section 1. Direct Arguments. That the City Council authorizes (i) the City Council or any member(s) of the City Council, (ii) any individual voter eligible to vote on the above measure, (iii) a bona fide association of such citizens or (iv) any combination of voters and associations, to file a written argument in favor of or against the City measure, accompanied by the printed name(s) and signature(s) of the author(s) submitting it, in accordance with Article 4, Chapter 3, Division 9 of the Elections Code of the State of California, and to change the argument until and including the date fixed below by the City Clerk, after which no arguments for or against the City measure may be submitted to the City Clerk.
The deadline to submit direct arguments for or against the City Measure pursuant to this Resolution is July 17, 2026. Each argument shall not exceed 300 words and shall be filed with the City Clerk, signed, and include the printed name(s) and signature(s) of the author(s) submitting it, or if submitted on behalf of an organization, the name of the organization, and the printed name and signature of at least one of its principal officers who is the author of the argument.
Section 2. Rebuttal Arguments. Pursuant to Section 9285 of the Elections Code of the State of California, when the City Clerk has selected the primary arguments for and against the City Measure which will be printed and distributed to the voters, the
RESOLUTION NO.
PAGE 2
2 Clerk shall send copies of the primary argument in favor of the Measure to the authors of the primary argument against, and copies of the primary argument against to the authors of the primary argument in favor. The authors or persons designated by them may prepare and submit rebuttal arguments not exceeding 250 words. The rebuttal arguments shall be filed with the City Clerk not later than July 28, 2026. Rebuttal arguments shall be printed in the same manner as the direct arguments. Each rebuttal argument shall immediately follow the direct argument which it seeks to rebut.
Section 3. November 3, 2026 Election. That the provisions of Sections 1 and 2 shall apply only to the election to be held on November 3, 2026, and shall then be repealed.
Section 4. Certification. The City Clerk shall certify to the passage and adoption of this resolution and enter it into the book of original Resolutions.
On motion of Council Member , seconded by Council Member , and on the following roll call vote, to wit:
AYES:
NOES:
ABSENT:
the foregoing Resolution was passed and adopted this th day of , 2026.
RESOLUTION NO.
PAGE 3
3 CAREN RAY RUSSOM, MAYOR
ATTEST:
JESSICA MATSON, CITY CLERK
APPROVED AS TO CONTENT:
MATTHEW DOWNING, CITY MANAGER
APPROVED AS TO FORM:
ISAAC ROSEN, CITY ATTORNEY
ATTACHMENT 3
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARROYO
GRANDE, CALIFORNIA, REQUESTING THE BOARD OF
SUPERVISORS OF THE COUNTY OF SAN LUIS OBISPO TO
CONSOLIDATE A GENERAL MUNICIPAL ELECTION TO BE HELD ON
NOVEMBER 3, 2026, WITH THE STATEWIDE GENERAL ELECTION TO BE HELD ON THAT DATE PURSUANT TO §10403 OF THE ELECTIONS CODE
WHEREAS, on June 9, 2026, the City Council of the City of Arroyo Grande adopted Resolution No. 2026-____, calling a General Municipal Election to be held on November 3, 2026; for the purpose of submitting to the voters the question relating to the General Cannabis Tax; and
WHEREAS, it is therefore desirable that the General Municipal Election be consolidated with the Statewide General Election to be held on the same date and that within the City the precincts, polling places and election officers of the two elections be the same, and that the election department of the County of San Luis Obispo canvass the returns of the General Municipal Election and that the election be held in all respects as if there were only one election.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE DOES RESOLVE, DECLARE, DETERMINE AND ORDER AS FOLLOWS:
Section 1. Request for Consolidation. Pursuant to the requirements of §10403 of the Elections Code, the Board of Supervisors of the County of San Luis Obispo is hereby requested to consent and agree to the consolidation of a General Municipal Election with the Statewide General Election on Tuesday, November 3, 2026, for the purpose of submitting to the voters the following question relating to the Transactions and Use Tax.
Section 2. Measure Language. A measure is to appear on the ballot as follows:
“Shall the measure to maintain Arroyo Grande City services, including public safety, road maintenance, infrastructure repair, recreational programs, and other general City services by enacting a tax of up to 10% of gross receipts on cannabis businesses operating in the city if such businesses are permitted, estimated to generate approximately $500,000 annually, with spending oversight and until ended by voters, be adopted?”
Yes
No
RESOLUTION NO.
PAGE 2
2 Section 3. Canvass of Returns. The County election department is authorized to canvass the returns and perform all other proceedings incidental to and connected with the General Municipal Election. The Election shall be held in all respects as if there were only one election, and only one form of ballot shall be used. Pursuant to California Elections Code Sections 10403 and 10418, the election will be held and conducted in accordance with the provisions of law regulating the Statewide General Election.
Section 4. Necessary Steps. The Board of Supervisors is requested to issue instructions to the County election department to take any and all steps necessary for the holding of the consolidated election.
Section 5. Costs. The City Council determines and declares that the City will pay to the County the reasonable and actual expenses incurred by the County by the consolidation of the General Municipal Election with the Statewide General Election. The City shall reimburse the County for services performed when the work is completed and upon presentation to the City of a properly approved bill. The City Manager of the City of Arroyo Grande is authorized and directed to pay for the expenses incurred after receiving a statement from the County of San Luis Obispo.
Section 6. Filing of Resolution. The City Clerk is hereby directed to file a certified copy of this resolution with the Board of Supervisors and the election department of the County of San Luis Obispo.
Section 7. Certification. The City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original Resolutions.
On motion of Council Member , seconded by Council Member , and on the following roll call vote, to wit:
AYES:
NOES:
ABSENT:
the foregoing Resolution was passed and adopted this th day of , 2026.
RESOLUTION NO.
PAGE 3
3 CAREN RAY RUSSOM, MAYOR
ATTEST:
JESSICA MATSON, CITY CLERK
APPROVED AS TO CONTENT:
MATTHEW DOWNING, CITY MANAGER
APPROVED AS TO FORM:
ISAAC ROSEN, CITY ATTORNEY
From: Peter Williamson
To: City Council; Matt Downing; Jessica Matson; Bill Robeson Subject: Item 11C Public Comment
Date: Monday, June 8, 2026 9:45:00 PM
Dear Council Members:
As you consider placing a cannabis tax measure on the November 2026 ballot, I want to offer a land‑use and fiscal perspective that may help shape how Arroyo Grande approaches this revenue concept.
Cannabis is already legal statewide, and delivery is already occurring in Arroyo Grande. That means the question before us is not about access, but about what scale and form of cannabis activity best fits our commercial land and our long‑term financial health.
Because our commercial frontage is scarce, any discretionary use placed there carries a real opportunity cost. Traditional storefront cannabis retail requires high‑visibility space, dedicated parking, and significant tenant improvements. These are some of the most valuable square feet in the city, and once allocated, they are difficult to reassign. Before assuming storefronts are the default model, it’s worth evaluating whether they are the most efficient way to generate revenue.
We also don’t yet have long‑term data on how modern cannabis markets perform in cities similar to ours. Neighboring communities like Grover Beach saw strong early revenue, but that was tied to early adoption. As more jurisdictions allow retail, revenue per store tends to decline. Without multi‑decade data, it may be prudent for Arroyo Grande to take a measured approach rather than making large, irreversible land‑use commitments.
There are lower‑impact alternatives that could still generate taxable activity. For example, bike‑based delivery or small distribution operations located in light‑industrial areas would reduce vehicle trips, avoid pressure on commercial frontage, and align with our Healthy Communities goals. These models allow the City to participate economically while keeping the footprint small and adaptable as the market evolves.
Arroyo Grande’s long‑term strength is its family‑friendly, traditional character. As you shape the tax measure and the framework around it, I encourage you to preserve flexibility so the City can start with small, low‑risk models and scale only if the long‑term benefits become clear. This approach protects our identity while still addressing the fiscal gap the City is working to close.
Sincerely,
Peter Williamson Arroyo Grande Resident
Item 11.d.
MEMORANDUM
TO: City Council
FROM: Matthew Downing, City Manager
Shannon Sweeney, Acting Director of Public Works/City Engineer BY: Jessica Matson, Director of Legislative & Information Services/City Clerk
SUBJECT: Consider Placing a Measure for Participation in the California State Water Project on the November 3, 2026, General Municipal Election Ballot
DATE: June 9, 2026
RECOMMENDATION:
1) Adopt a Resolution:
a) Ordering the submission to the qualified electors of the City at the General Election to be held on Tuesday, November 3, 2026, as called by Resolution, a measure to repeal 1990 Measure “A” and 2016 Measure E-16 and replacing both by amending Section 2.08.070 of Chapter 2.08 of Title 2 of the Municipal Code to authorize the City of Arroyo Grande to participate in the California State Water Project; b) Setting priorities for filing a written argument regarding a City measure and directing the City Attorney to prepare an impartial analysis of the measure; and c) Requesting consolidation with the County of San Luis Obispo General Municipal Election to be held on Tuesday, November 3, 2026;
2) Adopt an Ordinance to repeal 1990 Measure “A” and 2016 Measure E-16 and replace both by amending Section 2.08.070 of Chapter 2.08 of Title 2 of the Arroyo Grande Municipal Code to authorize the City to participate in the California State Water Project (subject to approval by the voters;
3) Pursuant to Elections Code Section 9282, authorize and designate two members of the City Council to prepare and submit an argument in favor of the measure to the City Clerk within the time prescribed by law for inclusion in the voter information materials for the General Election to be held on November 3, 2026; and 4) Determine that adopting the Resolution and Ordinance regarding participation in the California State Water Project relates to organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment and therefore is not a project within the meaning of the California Environmental Quality Act (“CEQA”) and the State CEQA Guidelines, section 15378(b)(5).
Item 11.d.
City Council
Consider Placing a Measure for Participation in the California State Water Project on the November 3, 2026, General Municipal Election Ballot June 9, 2026
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:
This item is identified on the Council Goals Workplan for Fiscal Years 2025-27. Funding for the November 2026 General Municipal Election has been included in the FY 2026-27 Mid-Cycle Budget Update in the amount of $80,000 and is anticipated to cover costs associated with printing the ballot measure in the Sample Ballot booklet.
BACKGROUND:
The voters of Arroyo Grande approved Measure “A” in the November 6, 1990, General Municipal Election (Attachment 2). Measure “A” requires an affirmative vote of the voters of Arroyo Grande before the City of Arroyo Grande is authorized to participate in the California State Water Project. Specifically, Measure “A” states that the City “shall not participate, in any way, including but not limited to, the expenditure or commitment of any funds, in the California State Water Project without an affirmative vote of the majority of the voters voting upon such a measure” (Attachment 3).
On May 10, 20161, Council directed staff to prepare language for consideration of a ballot measure in November 2016 that would, if approved by the voters, allow for the purchase of State water under water emergency conditions, and on June 28, 20162, City Council adopted a Resolution placing a measure on the November 8, 2016 ballot authorizing the City to purchase water from the State Water Project to supplement the City’s existing water supplies during local water emergencies declared by the Arroyo Grande City Council. Measure E-16 was passed by the voters by 86.42%.
Between 2016 and 2024, City staff evaluated its water supply and demand several times.
On May 14, 20243, the City Council reviewed the City’s Water Supply Evaluation and discussed proceeding with a ballot initiative to allow the future purchase of water from the California State Water Project outside of local water emergencies declared by the City Council. The Council directed staff to defer a State Water ballot measure until 2026.
In the current Council Goals workplan for Fiscal Year 2025-27, under the Council Goal of “Achieve Water Resilience,” the Council has directed staff to bring forward a State Water ballot measure for consideration for the November 2026 election.
On March 10, 20264, the City Council discussed the option to purchase water from the California State Water Project as needed in order to take a proactive approach to longterm water reliability outside and in advance of declared emergencies; and directed staff
1 https://www.arroyogrande.org/AgendaCenter/ViewFile/Agenda/_05102016-711?html=true 2 https://www.arroyogrande.org/AgendaCenter/ViewFile/Agenda/_06282016-736?html=true 3https://pub-arroyogrande.escribemeetings.com/Meeting.aspx?Id=c07851c7-01b1-4928-ae00- 457a33d43fd6&lang=English&Agenda=Agenda&Item=25&Tab=attachments 4https://pub-arroyogrande.escribemeetings.com/Meeting.aspx?Id=4d347cbf-a8de-4634-9ad3- 50b0d681926c&lang=English&Agenda=Agenda&Item=35&Tab=attachments
Item 11.d.
City Council
Consider Placing a Measure for Participation in the California State Water Project on the November 3, 2026, General Municipal Election Ballot June 9, 2026
to proceed with the preparation of a ballot measure and draft language to repeal Measure A (1990) and Measure E-16 and to authorize the City to participate in the California State Water Project, to be placed on a future municipal ballot, for consideration at a future City Council meeting.
ANALYSIS OF ISSUES:
In order to place the measure on the November 3, 2026, ballot, a 2/3 vote of the City Council (at least 4 members) must approve the proposed Resolutions. According to Section 9222 of the California Elections Code, the City Council has the authority to place propositions on the ballot to be considered at a Municipal Election.
Accordingly, the following language has been developed for the ballot measure, which is limited to 75 words:
Shall the measure to repeal and replace Measure A (1990) and Measure E16 (2016) to allow the City of Arroyo Grande to participate in the California State Water Project without requiring prior voter approval, providing another potential water supply source, be adopted?
The proposed Resolution and Ordinance have been prepared and are included with this report for consideration (Attachment 1). It is recommended that the Council adopt the Resolution, as presented, for placement of a Measure on the November 3, 2026, ballot.
It should be noted that, if adopted by the City Council, the Ordinance will then be considered for final approval by the voters.
It is also recommended that the Council designate two Councilmembers to prepare and submit an argument in favor of the measure to the City Clerk within the time prescribed by law for inclusion in the voter information materials.
ALTERNATIVES:
The following alternatives are provided for the Council’s consideration:
1. Staff’s recommendation;
2. Direct staff to not proceed with a State Water ballot measure at this time; or
3. Provide other direction to staff.
ADVANTAGES:
Uncertainty of future water levels at Lopez Reservoir and the long-term reliability of the Santa Maria Groundwater Basin highlight the need to evaluate additional water supply options. Securing State Water as a supplemental supply would allow the City to take a proactive approach to long-term water reliability outside and in advance of declared emergencies.
Access to State Water outside of declared emergencies would provide greater operational flexibility than the current structure under Measure E-16, which limits
Item 11.d.
City Council
Consider Placing a Measure for Participation in the California State Water Project on the November 3, 2026, General Municipal Election Ballot June 9, 2026
purchases to periods of locally declared water emergencies, when neighboring agencies may also be experiencing water emergencies.
A supplemental water supply would diversify the City’s overall water portfolio and improve water supply reliability.
DISADVANTAGES:
Participation in the State Water Project is not guaranteed and may require longterm financial commitments that have not yet been fully analyzed or publicly disclosed depending upon the final amount of participation. If the measure does not pass, the City may expend resources without advancing a supplemental water supply strategy.
ENVIRONMENTAL REVIEW:
Adopting the Resolution and the Ordinance regarding participation in the California State Water Project relates to organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment and therefore is not a project within the meaning of the California Environmental Quality Act (“CEQA”) and the State CEQA Guidelines, section 15378(b)(5).
PUBLIC NOTIFICATION AND COMMENTS:
The Agenda was posted at City Hall and on the City’s website in accordance with Government Code Section 54954.2.
ATTACHMENTS:
1. Resolution
Exhibit A – Ordinance Repealing 1990 Measure “A” and 2016 Measure “E-16” and Replacing both by Amending Municipal Code Section 2.08.070
2. Resolution No. 2432 – 1990 Election Results
3. Resolution No. 2383 – Measure “A”
ATTACHMENT 1
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE,
CALIFORNIA, SUBMITTING TO THE QUALIFIED VOTERS OF THE CITY OF ARROYO GRANDE, A MEASURE TO REPEAL 1990 MEASURE “A” AND 2016 MEASURE E-16, AND REPLACE BOTH BY AMENDING SECTION 2.08.070 OF CHAPTER 2.08 OF TITLE 2 OF THE ARROYO GRANDE MUNICIPAL CODE TO
AUTHORIZE THE CITY OF ARROYO GRANDE TO PARTICIPATE IN THE
CALIFORNIA STATE WATER PROJECT, AT A GENERAL MUNICIPAL
ELECTION TO BE CONSOLIDATED WITH THE STATEWIDE GENERAL
ELECTION TO BE HELD ON NOVEMBER 3, 2026; AND SETTING RULES AND
DEADLINES FOR THE SUBMITTAL OF ARGUMENTS FOR AND AGAINST
THE MEASURE
WHEREAS, the voters approved Measure “A” in the November 6, 1990 General Municipal Election (Resolution No. 2432); and
WHEREAS, Measure “A” states that the City “shall not participate, in any way, including but not limited to, the expenditure or commitment of any funds, in the California State Water Project without an affirmative vote of the majority of the voters voting upon such a measure.” (Resolution No. 2383); and
WHEREAS, on May 10, 2016, in response to ongoing drought conditions, the City Council placed another ballot measure on the November 6, 2016, General Municipal Election ballot (“Measure E-16”) that would allow for the purchase of State water during local water emergencies declared by the Arroyo Grande City Council; and
WHEREAS, the voters approved Measure E-16 by a vote of 86.42% in the November 6, 2016 General Municipal Election; and
WHEREAS, staff continued to evaluate water supply between 2016 and 2024, and on April 9, 2024, Council discussed the City’s current water supply and directed staff to bring back an item to prepare a ballot measure to authorize the City of Arroyo Grande to participate in the California State Water Project, with or without a declared local water emergency; and WHEREAS, on May 14, 2024, Council directed staff to defer a State Water ballot measure until 2026 to allow for further evaluation of local water supply and demand and additional study; WHEREAS, on March 10, 2026, staff reported to the City Council that water supply is projected to meet demand for the next three calendar years, but that it is necessary to plan for supplemental water supply due to the need to diversify its water portfolio; and WHEREAS, on March 10, 2026, the City Council directed staff to proceed with the preparation of a ballot measure to repeal Measures A and E-16, and amend the Municipal Code to authorize the City of Arroyo Grande to participate in the California State Water Project, with or without a declared local water emergency; and
WHEREAS, California Elections Code section 9222 authorizes the City Council to submit local measures to the voters; and
RESOLUTION NO.
PAGE 2
WHEREAS, the City Council desires to submit to Arroyo Grande voters a measure that would authorize the City of Arroyo Grande to participate in the California State Water Project, with or without a declared local water emergency; and
WHEREAS, the City Council desires to consolidate the General Municipal Election for the ballot measure described herein with the Statewide General Election to be held on November 3, 2026; and
WHEREAS, the City Council further desires to set rules and deadlines for the submittal of written arguments and rebuttals for and against the measure; and WHEREAS, the specific terms of the measure are provided for in the ordinance to be considered by the qualified voters, attached hereto as Exhibit “A” (the “Ordinance” or “Measure”) and by this reference made an operative part hereof, and in accordance with all applicable laws.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE, CALIFORNIA, DOES RESOLVE, DECLARE, DETERMINE, AND ORDER AS FOLLOWS:
SECTION 1. Recitals. The City Council of the City hereby finds and determines that the foregoing recitals are true and correct, are incorporated herein and by this reference made an operative part hereof.
SECTION 2. Submission of Ballot Ordinance/Measure. The City Council of the City, pursuant to its right and authority as contained in California Elections Code section 9222, hereby orders the Ordinance/Measure attached hereto as Exhibit “A” to be submitted to the qualified voters of the City at the General Municipal Election to be held and consolidated with the Statewide General Election on Tuesday, November 3, 2026. The proposed Ordinance shall be in the form attached hereto as Exhibit “A” to this Resolution and is incorporated by this reference as if fully set forth herein.
SECTION 3. Ballot Question. The City Council, pursuant to its right and authority under California law, does hereby order that the ballot question shall be presented and printed upon the ballot submitted to the qualified voters in the manner and form set forth in this Section 3. On the ballot to be submitted to the qualified voters at the election to be held at the General Municipal Election to be consolidated with the Statewide General Election on Tuesday, November 3, 2026, in addition to any other matters required by law, there shall be printed substantially the following ballot question:
“Shall the measure to repeal and replace Measure A
(1990) and Measure E-16 (2016) to allow the City of
Arroyo Grande to participate in the California State
Water Project without requiring prior voter approval,
providing another potential water supply source, be
adopted?”
YES
NO
SECTION 4. Election Procedures/Request for Consolidation.
A. The City Council consents to the consolidation of the election on this Measure with all other elections being held in the same territory on November 3, 2026, and to hold and conduct the consolidated election in the manner prescribed in Election Code Section 10418.
RESOLUTION NO.
PAGE 3
B. The ballots to be used at the election shall be in the form and content as required by law.
C. In accordance with Section 10403 of the Elections Code, the Board of Supervisors of San Luis Obispo County is hereby requested to consent to consolidation of the election on this Measure with the Statewide General Election and all other elections being held in the same territory on November 3, 2026, and to having the Registrar of Voters render such election services to the City of Arroyo Grande as may be requested by the City Clerk’s Office of said City, the County of San Luis Obispo to be reimbursed in full for such services as are performed.
D. The election services which the City of Arroyo Grande requests the Registrar of Voters, or such other official as may be appropriate, to perform and which such officer is hereby authorized and directed to perform, if said Board of Supervisors consents, include: the preparation, printing and mailing of sample ballots and voter information guides; the establishment or appointment of precincts, voting centers, and election officers, and making such publications as are required by law in connection therewith; the furnishing of ballots, voting booths and other necessary supplies or materials for voting centers; the canvassing of the returns of the election and the furnishing of the results of such canvassing to the City Clerk’s Office of the City of Arroyo Grande; and the performance of such other election services as may be requested by the City Clerk.
E. The City Clerk’s Office is authorized, instructed and directed to procure and furnish any and all official ballots, notices, printed matter and all supplies, equipment and paraphernalia, or cause such actions to be made, that may be necessary in order to properly and lawfully conduct the election.
F. That the precincts, ballot drop box locations and hours of operations, vote center locations and hours of operations, vote-by-mail procedures and timing, and election officers, and all other persons and procedures for the General Municipal Election shall be the same as those utilized by the County of San Luis Obispo; and G. In all particulars not recited in this Resolution, the election shall be held and conducted as provided by law for holding municipal elections in the City.
H. Notice of the time and place of holding the election is given and the City Clerk’s Office is authorized, instructed and directed to give further or additional notice of the election, in time, form, and manner as required by law.
I. All ballots shall be tallied at a central counting place and not at the precincts. Said central counting place shall be at a County center as designated by the Registrar of Voters.
J. The San Luis Obispo County Registrar of Voters is hereby authorized to canvass the returns of said election.
K. The City Clerk’s Office of the City of Arroyo Grande shall receive the canvass as it pertains to the election on the measure, and shall certify the results to the City Council, as required by law.
SECTION 5. Arguments and Analysis.
RESOLUTION NO.
PAGE 4
A. The City Council authorizes (i) the City Council or any member(s) of the City Council, (ii) any individual voter eligible to vote on the above measure, (iii) a bona fide association of such citizens or (iv) any combination of voters and associations, to file a written argument in favor of or against the City measure, in accordance with Article 4, Chapter 3, Division 9 of the Elections Code of the State of California and may change the argument until and including Friday, July 17, 2026 at 5:00 p.m. after which no arguments for or against the measure may be submitted to the City Clerk.
Arguments in favor of or against the measure shall each not exceed 300 words in length. Each argument shall be filed with the City Clerk, signed, and include the printed name(s) and signature(s) of the author(s) submitting it, or if submitted on behalf of an organization, the name of the organization, and the printed name and signature of at least one of its principal officers who is the author of the argument.
The City Council hereby delegates the following of its members to author an argument and, if authorized below, a rebuttal [for/against] the Measure on behalf to the City Council, subject to the deadlines and rules set forth herein:
_______________________________
_______________________________
[no more than two members]
B. The City Clerk shall comply with all provisions of law establishing priority of arguments for printing and distribution to the voters and shall take all necessary actions to cause the selected arguments to be printed and distributed to the voters.
C. Pursuant to Section 9280 of the Elections Code, the City Council directs the City Clerk’s Office to transmit a copy of the measure to the City Attorney. The City Attorney shall prepare an impartial analysis of the measure, not to exceed 500 words in length, showing the effect of the measure on the existing law and the operation of the measure. The City Attorney shall transmit such impartial analysis to the City Clerk’s Office, who shall cause the analysis to be published in the ballot pamphlet along with the ballot measure as provided by law. The Impartial Analysis shall be filed by the deadline set for filing of primary arguments as set forth in subsection (A) above. The impartial analysis shall include a statement indicating whether the measure was placed on the ballot by a petition signed by the requisite number of voters of by the City Council. In the event the entire text of the measure is not printed on the ballot, nor in the voter information portion of the sample ballot, there shall be printed immediately below the impartial analysis, in no less than 10-font bold type, the following: “The above statement is an impartial analysis of Ordinance or Measure ____. If you desire a copy of the ordinance or measure, please call the election official’s office at (805) 473-5418 and a copy will be mailed at no cost to you.” SECTION 6. Rebuttals.
A. That pursuant to Section 9285 of the Elections Code of the State of California, when the Clerk’s Office has selected the arguments for and against the various City initiated measures which will be printed and distributed to the voters, the Clerk’s Office shall send copies of the argument in favor of the measures to the authors of the argument against, and copies of the argument against to the authors of the argument in favor.
The authors or persons designated by them may prepare and submit rebuttal arguments not exceeding 250 words. The rebuttal arguments shall be filed with the
RESOLUTION NO.
PAGE 5
City Clerk’s Office not later than Tuesday, July 28, 2026 at 5:00 p.m. Rebuttal arguments shall be printed in the same manner as the direct arguments. Each rebuttal argument shall immediately follow the direct argument which it seeks to rebut.
B. That the provisions herein shall apply only to the election to be held on November 3, 2026, and shall then be repealed.
SECTION 7. Placement on the Ballot. The full text of the Ballot Ordinance [shall/shall not] be printed in the voter pamphlet, and a statement shall be printed in the ballot pursuant to Section 9223 of the Elections Code advising voters that they may obtain a copy of this ordinance, the Ballot Ordinance and/or ballot measure, at no cost, upon request made to the City Clerk’s Office.
SECTION 8. Delivery of Resolution to County. The City Clerk’s Office shall certify to the passage and adoption of this Resolution and enter it into the book of original resolutions. The City Council directs the City Clerk’s Office to deliver copies of this Resolution, including the Ballot Measure attached hereto as Exhibit “A”, to the Clerk of the Board of Supervisors of San Luis Obispo County and to the Registrar of Voters of San Luis Obispo County not later than 88 days prior to the General Municipal Election.
SECTION 9. CEQA. The City Council hereby finds and determines that the ballot measure relates to organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment, and therefore is not a project within the meaning of the California Environmental Quality Act (“CEQA”) and the State CEQA Guidelines, section 15378(b)(5).
SECTION 10. Severability. If any provision of this Resolution or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of the Resolution which can be given effect without the invalid provision or application, and to this end the provisions of this Resolution are severable. The City Council hereby declares that it would have adopted this Resolution irrespective of the invalidity of any particular portion thereof.
SECTION 11. Effective Date of Resolution. This Resolution shall take effect immediately upon its adoption.
On motion of Council Member _______, seconded by Council Member ________, and on the following roll call vote, to wit:
AYES:
NOES:
ABSENT:
the foregoing Resolution was passed and adopted this 9
th day of June, 2026.
RESOLUTION NO.
PAGE 6
__________________________________
CAREN RAY RUSSOM, MAYOR
ATTEST:
__________________________________
JESSICA MATSON, CITY CLERK
APPROVED AS TO CONTENT:
____________________________________
MATTHEW DOWNING, CITY MANAGER
APPROVED AS TO FORM:
__________________________________
ISAAC ROSEN, CITY ATTORNEY
RESOLUTION NO.
PAGE 7
EXHIBIT “A”
ORDINANCE NO. ____
AN ORDINANCE OF THE PEOPLE OF THE CITY OF ARROYO GRANDE, CALIFORNIA, TO REPEAL 1990 MEASURE “A” AND 2016 MEASURE “E-16” AND REPLACING BOTH BY AMENDING SECTION 2.08.070 OF CHAPTER
2.08 OF TITLE 2 OF THE ARROYO GRANDE MUNICIPAL CODE TO
AUTHORIZE THE CITY OF ARROYO GRANDE TO PARTICIPATE IN THE
CALIFORNIA STATE WATER PROJECT
NOW THEREFORE, THE PEOPLE OF THE CITY OF ARROYO GRANDE DO ORDAIN AS FOLLOWS:
SECTION 1. Subject to the approval of a majority of the voters of the City of Arroyo Grande at the scheduled election so designated by the City Council in a separate resolution placing this proposal on the ballot for such election, Measure A, adopted in the November 1990 General Municipal Election, and Measure E-16, adopted in the November 6, 2016 General Municipal Election are hereby repealed. Pursuant to this Ordinance approved by a majority of City voters in the November 3, 2026 General Municipal Election, the City of Arroyo Grande is hereby authorized to participate in the California State Water Project with an affirmative vote of a majority of a quorum of the City Council. No declaration of local water emergency shall be required for the City Council to take such action.
SECTION 2. Section 2.08.070 of Chapter 2.08 of Title 2 of the Arroyo Grande Municipal Code is amended and shall read as follows:
[NOTE: deletions are identified in strikeout text and additions are identified in bold italics] "TITLE 2: ADMINISTRATION AND PERSONNEL.
CHAPTER 2.08 – CITY MANAGER
2.08.070 - Powers and duties.
. . .
Y. The City of Arroyo Grande may participate in the California State Water Project. The City Manager, or his or her designee, may bring an agenda item to the City Council seeking authorization, by a majority vote of a quorum of the City Council, for the City Manager, or his or her designee, to take action to participate in the California State Water Project; and YZ. Other powers and duties: to perform such other duties and exercise such other powers as are necessarily incident to the powers set forth in this section or as may be assigned or delegated to him or her from time to time, by actions of the council.” SECTION 3. If any portion of this Ordinance is declared invalid by a court of law or other legal body with applicable authority, the invalidity shall not affect or prohibit the force and effect of any other provision or application of the Ordinance that is not deemed invalid. The voters of the City hereby declare that they would have circulated for qualification and/or voted for the adoption of this section, and each portion thereof, regardless of the fact that any portion of the initiative may be subsequently deemed invalid.
RESOLUTION NO.
PAGE 8
SECTION 4. To the fullest extent allowed by law, the provisions of this Ordinance shall prevail over, and supersede, all other provisions of the Municipal Code and any ordinances, resolutions or administrative policies of the City of Arroyo Grande which are in conflict with any provision of this Ordinance.
SECTION 5. This section shall not be repealed or amended except by a measure approved by a majority of the electors voting on the issue at a General Municipal Election, or at a special election called for that purpose.
SECTION 6. This Ordinance shall take effect only if approved by a majority of the eligible voters of the City of Arroyo Grande voting at a General Municipal Election to be held on November 3, 2026, and shall take effect ten (10) days after the City Council has certified the results of the General Municipal Election by resolution.
SECTION 7. The City Clerk is hereby authorized to attest to the adoption of this Ordinance by the People voting thereon on November 3, 2026, by signing where indicated below.
I HEREBY CERTIFY that the foregoing ordinance was adopted by a majority vote of all members of the City Council of the City of Arroyo Grande as required by Government Code Section 53724 and submitted to the voters at the meeting of the City Council held on the day of June, 2026, by the following roll call vote:
AYES:
NOES:
ABSENT:
_________________________________
CAREN RAY RUSSOM, MAYOR
ATTEST:
_________________________________
JESSICA MATSON, CITY CLERK
Ordinance No. ____ was submitted to the People of the City of Arroyo Grande at the November 3, 2026 General Election. It is hereby certified that this ordinance was passed and approved by following vote of the People of the City of Arroyo Grande:
YES:
NO:
This ordinance was thereby adopted by the voters at the November 3, 2026 General Election and shall take effect as provided by law.
ATTACHMENT 2
ATTACHMENT 3
Item 11.e.
MEMORANDUM
TO: City Council
FROM: Andrew Perez, Interim Director of Community Development SUBJECT: Study Session on Efforts to Redevelop East Grand Avenue DATE: June 9, 2026
RECOMMENDATION:
Receive public comment and provide direction to staff regarding next steps for the project.
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:
The FY 2025-27 Biennial Budget allocates $250,000 to the development of an East Grand Economic Development Plan. These funds may be used for an economic development consultant to assist Community Development staff with the project.
BACKGROUND:
On February 10, 20251, the City Council held a Goal Setting Workshop focused on priorities for the FY 2025-27 Budget. The City Council established five (5) major City goals for staff to prioritize for the FY 2025-27 budget cycle. One of the major goals is the redevelopment of E. Grand Avenue, specifically between Halcyon Road and Elm Street.
The E. Grand Avenue (Halcyon to Elm) Economic Development Plan (EDP) was identified as a Capital Improvement Program (CIP) project in the adopted budget, and a preliminary work plan was provided to Council on May 27, 20252 and is shown in Table 1.
Table 1: Economic Development Plan Work Tasks
Task Action Target to Complete
Scope of Work & RFP Define scope through research of
other communities
1Q FY 2025-26
Kick-off & Public Outreach Project initiation
Public outreach
1Q FY 2025-26
Ongoing
CEQA Environmental review 3Q FY 2025-26
Draft Plan Administrative Draft Plan 4Q FY 2025-26
1https://pub-arroyogrande.escribemeetings.com/Meeting.aspx?Id=019b4a74-6804-43bb-aca8- 3dea71b7bd11&lang=English&Agenda=Agenda&Item=8&Tab=attachments 2https://pub-arroyogrande.escribemeetings.com/Meeting.aspx?Id=2ab110a5-a61e-423b-9c39- 5cd101fa6826&lang=English&Agenda=Agenda&Item=60&Tab=attachments
Item 11.e.
City Council
Study Session on Efforts to Redevelop East Grand Avenue June 9, 2026
Task Action Target to Complete
Final Draft & Hearings Final Draft
Planning Commission Hearing
City Council Hearing
1Q FY 2026-27
2Q FY 2026-27
2Q FY 2026-27
A Request for Proposals (RFP) to retain a consultant has been developed to allow the City Council to weigh in and provide direction on the objectives and vision for the corridor.
The selection criteria will be based in part on qualifications and examples of previous projects in other communities, among other factors. The RFP is attached as Attachment 1 for reference. The dates are removed, and it is watermarked “draft” to make it clear that this RFP is being provided for discussion purposes during the study session.
Previous Efforts
The E. Grand Avenue corridor has been the focus of previous planning efforts. Most recently, an effort called the “East Grand Avenue Master Plan” was initiated in 2017 and included some initial research, evaluation, and studies, and was essentially a conceptual parking and streetscape plan heavily focused on parking supply and demand. This effort stalled around 2019/2020 due to a number of factors, including staff turnover, differing opinions on how to address parking, and the onset of the COVID pandemic. The current effort to enhance and revitalize the corridor is intended to partially revive that original stalled effort but go much further as a transformational tool that ties together land use, zoning, streetscape strategies, and economic development programs.
ANALYSIS OF ISSUES:
The EDP is one of several projects aimed at enhancing and revitalizing the corridor. Each of the projects has specific objectives, and when combined, further the Council’s goal of a revitalized E. Grand Avenue. While the first three projects described below present a broader strategy for the whole corridor from Oak Park Boulevard to Highway 101, the EDP was highlighted by the Council’s priorities as being focused on the stretch of corridor between Halcyon and Elm Streets. Each component is described below:
General Plan Update and Development Code Update
The General Plan lays the groundwork for the redevelopment of the corridor by establishing a vision for development of private property. The proposed Land Use Element of the General Plan update identifies the E. Grand Avenue corridor, between the western city border and US 101, as Focus Area No.1 and emphasizes infill and redevelopment that provides abundant housing and economic opportunities. A new land use designation, Corridor Mixed Use, is proposed that would allow for residential density up to 36 dwelling units per acre (from 25 dwelling units per acre) and also additional allowances for more intense non-residential development. After the adoption of the General Plan, the development standards will be updated to implement the policies and implementation programs that affect the scale and massing of the built environment within the corridor.
Item 11.e.
City Council
Study Session on Efforts to Redevelop East Grand Avenue June 9, 2026
E. Grand Overlay District and Objective Design Standards The City’s General Plan consultant is also contracted to develop an E. Grand Avenue Corridor Overlay District. Overlay districts are a zoning tool for implementing targeted regulations to achieve a particular objective, such as historic preservation, natural resource protection, or, in this case, economic development. The regulations for the overlay district will establish a purpose and intent statement for the area, identify preferred land uses and corresponding permit requirements, development standards, and objective design standards. Objective design standards are clear, measurable, verifiable, and quantifiable regulations that govern the physical appearance, architectural features, site layout, and other design elements of development projects. These standards are intended to facilitate high-quality site planning and building design and accelerate mixed-use and multi-family housing production through the clear communication of design objectives and an efficient permitting process for qualifying residential and mixed-use development projects. While this remains scoped within the General Plan update, the EDP is an opportunity to accelerate the timeline for implementation of this overlay district with design standards.
E. Grand Streetscape Project
The E. Grand Avenue Streetscape Project is another CIP identified in the FY 2025-27 biennial budget. This portion of the overall vision continues and implements the previous 2017 efforts, as it is primarily focused on the physical improvements to the corridor. The project’s purpose is to provide for safe mobility and accessibility for all users, including bicyclists, pedestrians, transit vehicles, trucks, and motorists, consistent with the Active Transportation Plan and in conjunction with the EDP. In addition to safety, the streetscape project will enhance the public right-of-way through physical improvements, including landscaping, lighting, hardscape, street furnishings, and public art. Making E. Grand Avenue more attractive and safer for all forms of transportation, especially pedestrians and bicyclists, will incentivize development and increase economic vitality by increasing foot traffic to existing and new businesses.
Collectively, the General Plan update, E. Grand Overlay District, and E. Grand Streetscape Project will allow for a revitalized built environment within the mixed-use corridor.
E. Grand Avenue EDP
The primary goal of EDP is to make recommendations that prioritize a cohesive vision for economic development, including multi-modal transportation and higher-density development, and identify commercial opportunities for under-utilized and vacant mixeduse properties. The contents of the EDP will include an evaluation of the corridor’s economic potential, identifying market challenges, and responsibly seeking to encourage and incentivize the type of development that will support existing businesses, improve the City’s economic resiliency, and seek growth that has a holistic economic benefit.
Compared to the previous effort in 2017, which primarily focused on operational efficiency
Item 11.e.
City Council
Study Session on Efforts to Redevelop East Grand Avenue June 9, 2026
regarding parking demand and supply, this is an economic development plan focused on corridor and market transformation.
At the heart of the EDP will be three components:
1) A focused market analysis that builds on the citywide market analysis that was completed as a part of the General Plan update;
2) Stakeholder and community engagement; and
3) Recommendations for attaining the vision for the corridor.
Market Analysis
The market analysis prepared for the General Plan identifies the City’s strengths and competitiveness within the region in various economic sectors. The refined analysis would build off that by focusing on the corridor and its growth opportunities. The analysis will examine undervalued community assets that quantitative data may miss, such as community coalitions, networks, and other civic structures; arts and culture, community history and collective memory; social ties; entrepreneurial spirit; and community aspirations that may influence the economic potential of the corridor. The analysis would also evaluate the economic impacts of existing, proposed, and reduced parking, pedestrian accessibility, bicycle and rolling accessibility, landscaping, public art, and other streetscape improvements.
Public and Stakeholder Outreach
In addition to the data ascertained from the market analysis, feedback from stakeholders and the general public will largely inform the EDP’s recommendations. Staff anticipates that the stakeholder and community engagement plan including various methods and formats to solicit thoughtful participation and input from various individuals and groups including business owners, business development organizations (small business development centers, chamber of commerce, district management associations, community development financial institutions, foundations, other nonprofits), anchor institutions, real estate brokers, developers, and property owners. This engagement effort would identify the stakeholders’ vision and aspirations for the area, challenges businesses and property owners are currently facing in this area, and be designed to better understand the unique needs of businesses and property owners. Public input would be compared to the consultant team’s findings, identify areas that may require further study, and invite ideas on the vision plan process and potential strategies for revitalization.
Recommendations and Implementation Strategies
The market analysis and public engagement components of the project will identify strategies and recommendations to attain the vision for the project area. The plan must include a clear definition of the corridor’s economic identity. Recommendations will include those related to small business and entrepreneurship ecosystems, placebased/neighborhood commercial revitalization, parking requirements, special projects, night-time culture and arts/culture/entertainment opportunities, marketing and
Item 11.e.
City Council
Study Session on Efforts to Redevelop East Grand Avenue June 9, 2026
communications, real estate development and reuse, strategic partnerships, and placemaking as tools for economic development. The strategies and action items will include short, medium-, and long-term time horizons, feasibility, and cost assessments, as well as an assessment of resources required for implementation, including data, software, tools, memberships, policies, partnerships, and funding.
For instance, the EDP should be a guidance document that helps answer questions such as:
What type of business are desired? Any uses the City wants to discourage? Does the City prioritize local/independent business, national/regional tenants, a mix of both?
What is the City’s role? Formation of a business district, expedite processing, facilitate land conglomeration, street closures for community events? What type of street can this be? Neighborhood-serving commercial, regional destination, mixed-use corridor, employment hub?
What programs are desirable and feasible? For example:
o Wayfinding and signage
o Outdoor dining
o Entertainment venues
o Shop/buy local programs
o Façade improvement program
o Road diet conversions
o Public plaza creation
o Public art strategy specific to corridor
o Storefront activation program (filling vacant, ground-floor spaces with temporary, pop-up, or permanent businesses, art installations, or community services)
Staff envisions the EDP to be a catalyst for redevelopment that has a multi-year action plan for implementation of some of these suggested programs, as well as a specific role in the City’s CIP. As stated earlier, the EDP is also an opportunity to accelerate the E.
Grand Overlay Corridor and objective design standards that are currently part of the General Plan update.
Council Questions
Staff has included as series of questions/prompts for the City Council to consider as part of this study session, and to guide the discussion:
1. Are the stated goals/objectives reflective of the City Council’s vision for the corridor? Should any goals/objectives be added?
Redevelopment of the E. Grand Avenue corridor
Improve economic and civic vibrancy
A focus on attracting mixed-use commercial and multi-family residential
Item 11.e.
City Council
Study Session on Efforts to Redevelop East Grand Avenue June 9, 2026
Investing in streetscape improvements
Establishing a unique sense of place
2. Does the corridor need a branding strategy/identity? For instance, is it an entertainment/dining district, arts district, family-friendly area, small business incubator, or a combination of these and others?
3. Are there specific topics or areas that the plan prioritizes, such as parking, streetscape, improving walkability, adding housing, supporting small businesses, displacement of businesses, signage, etc.)?
4. Does the public outreach effort fit the goals (i.e. stakeholder meetings with businesses, chamber of commerce, developers, owners, community groups, general public)?
5. Is an economic development plan the correct tool to meet the goals/objectives? Next Steps
The General Plan update is nearing completion, which establishes the high-level vision for the built environment within the corridor. Policies to encourage vibrant mixed-use corridors, walkable development, and community placemaking are proposed in the Land Use Element and also help establish that vision. The EDP’s recommendations and strategies to revitalize the corridor would inform and reconcile both the development code update and streetscape project to help achieve the vision of a vibrant E. Grand Ave.
Council comments will help clarify the EDP’s goals and objectives. This information will be used to refine the RFP and identify the timing of its release to solicit a consultant to assist with the development of the EDP.
ALTERNATIVES:
The following alternatives are provided for the Council’s consideration:
1. Provide direction regarding the goals and objectives of the Economic Development Plan and timing of project initiation; or
2. Provide other direction to staff.
ADVANTAGES:
The EDP will establish a strategy to revitalize the section of E. Grand Avenue between Elm Street and Halcyon Road that aligns with both the community’s and Council’s vision for the area and the City’s General Plan.
DISADVANTAGES:
The primary risks of economic development efforts involve economic displacement and operational complexity. For instance, unintentionally pricing out existing small businesses
Item 11.e.
City Council
Study Session on Efforts to Redevelop East Grand Avenue June 9, 2026
due to increased interest in the planning area. Additionally, coordinating four updates as part of an overall strategy for E. Grand Avenue puts a strain on City personnel.
ENVIRONMENTAL REVIEW:
The study session is exempt from the California Environmental Quality Act (“CEQA”) pursuant to State CEQA Guidelines sections 15060(c)(2) and 15061(b)(3) because it will not result in a direct or reasonably foreseeable physical change in the environment; and the activity is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment. The study session will inform the timing and scope of the EDP, which is not an authorization for any development or construction. Thus, it can be seen with certainty that there is no possibility that the activity may have a significant effect on the environment, the activity is not subject to CEQA.
PUBLIC NOTIFICATION AND COMMENTS:
The Agenda was posted at City Hall and on the City’s website in accordance with Government Code Section 54954.2.
ATTACHMENTS:
1. Draft Request for Proposals
City of Arroyo Grande
- 1 -
CITY OF ARROYO GRANDE
NOTICE FOR REQUEST FOR PROPOSALS
Regarding Economic Development Strategic Planning Services for the East Grand Avenue Corridor
PROJECT OVERVIEW
The City of Arroyo Grande Community Development Department is seeking proposals from qualified professional consulting firms to assist with the development of an Economic Development Strategic Plan (the “Strategic Plan”) for the E. Grand Avenue corridor (“Corridor”).
The Corridor consists of all privately owned properties with frontage on E. Grand Avenue between Elm Street and Halcyon Road.
E Grand Avenue Corridor
The Strategic Plan is aimed to establish an economic baseline, market context, and a clear vision to revitalize development within the Corridor, with a heavy emphasis on the area between Elm Street and Halcyon Road, to achieve overarching economic goals and objectives and to guide the City’s priorities, programs, and services for the foreseeable future. The Strategic Plan should:
• Define a framework that furthers a diversity of development types, including retail and service commercial, office, multi-family residential, and compatible uses; • Identify opportunities for adaptive reuse of existing buildings; and • Promote development patterns and functional urban design amenities that encourage pedestrian activity
ATTACHMENT 1
City of Arroyo Grande
- 2 -
The information below provides a project description and an outline of the proposal submittal requirements, selection process, budgets, and scope of work.
This Request for Proposals (RFP) is being distributed on _______________ and the deadline to submit a proposal is ______________, by 5:00 pm PST.
PROJECT DESCRIPTION
The City is seeking to collaborate with an experienced and enthusiastic Consultant to establish a vision and stakeholder-informed strategies to guide development that will reinvigorate the Corridor’s economic potential. The Consultant will work with staff, community stakeholders, businesses, City Council, and other applicable boards, commissions, and committees to develop a comprehensive, robust and innovative Economic Development Strategic Plan that will:
• Evaluate the Corridor’s economic potential in light of the citywide tax base to expand the economic opportunities of its businesses and residents; • Improve the economic and civic vibrancy within the Corridor; • Identify responses to market failure, responsibly develop common goods, and responsibly seek to encourage and incentivize the type of development that will support existing businesses, improve the City’s economic resiliency, and seek growth that has a holistic economic benefit; and
• Recommend goals, objectives, policies, and programs that prioritize a cohesive vision and identify commercial opportunities for under-utilized and vacant commercial properties within the Corridor that aligns with the City’s Economic Development element of the General Plan.
SCOPE OF WORK
The City, on behalf of the Community Development Department, is hereby soliciting competitive proposals for the development of the Economic Development Strategic Plan. The proposer shall perform the certain services necessary to achieve the following scope. Consultants are strongly recommended to suggest refinements and innovative methods that ultimately achieve the scope of work. The City has budgeted $250,000 for the development of the Strategic Plan. A detailed outline of the services to be provided have been defined below:
TASK 1: PROJECT MANAGEMENT
The consulting team will schedule a kickoff meeting with City staff to discuss refinements to the scope of services and schedule. The schedule will address all major stages of the project. The consulting team will facilitate regular progress meetings with City staff in person or via video conference, to ensure that the project is on time, on budget, and that any issues are quickly resolved. The consulting team will coordinate with City staff to ensure that the project remains on schedule and within budget. The team will regularly coordinate with staff, including via calls and emails, to communicate status of deliverables and budget, progress, and any information needed from City staff. Project management shall include attendance at a minimum of two public hearings.
City of Arroyo Grande
- 3 -
TASK 2: BACKGROUND EXAMINATION, MARKET ANALYSIS AND BASELINE RESEARCH This task will include visiting the project site and surroundings to observe and photo document environmental and land use conditions and reviewing the regulatory setting for the project area (including relevant ordinances and zoning provisions, City of Arroyo Grande General Plan, etc.).
Consultant will perform the necessary research, and shall be well versed in, the City’s history and current context to successfully inform the strategic planning process, including but limited to, the following aspects:
• Literature review of existing plans and program materials, City departmental plans, such as the draft Economic Development Element of the General Plan, the General Plan Existing Conditions and Trends Workbook, regional economic development strategic plans and other relevant documents.
• A refined market analysis specific to the corridor that considers the following components, among others:
o Market position analysis of the City’s strengths and competitiveness within the region.
o Cluster scan and analysis of regional growth industries. o Business density, retail mix, ownership patterns, small business, and industry composition.
o Job typologies and workforce characteristics, employer density, wage rates and patterns.
o Gap analysis of city tools, programs, and incentives. o Analysis of retail/commercial supply conditions e.g., inventory, vacancies, lease rates, industry leakage and surplus.
o Indicators of financial vulnerability and if/how they are concentrated in specific geographies and/or populations.
o Additional local and/or regional data e.g., planning/zoning, land use, parcel data, transportation networks, etc. that may influence opportunities and challenges in promoting economic equity and growth within the City.
• Examination of undervalued community assets that data may miss e.g., community coalitions, networks, and other civic structures; arts and culture, community history and collective memory; social ties; entrepreneurial spirit; community aspirations. • Examination of economic impacts of existing, proposed, and reduced parking, pedestrian accessibility, bicycle and rolling accessibility, landscaping, public art and other streetscape improvements.
• Coordinate with the E. Grand Avenue/Branch Street Corridor Streetscape Plan workplan to ensure consistency between the two documents.
TASK 3: STAKEHOLDER AND COMMUNITY ENGAGEMENT
The Consultant will engage stakeholders including the City Council, Planning Commission, City staff, businesses, and stakeholders. The Consultant will be expected to conduct in-person outreach with a hybrid virtual option for those unable to attend. The engagement effort should include, but is not limited to, the following:
City of Arroyo Grande
- 4 -
• Work closely with the Community Development Department to form a core advisory group to guide the strategic planning process; facilitate discussion and the development of a strategic vision, guiding principles, goals, and objectives. • Develop and execute a stakeholder and community engagement plan proposing various methods and formats to solicit thoughtful participation and input from various individuals and groups including business owners, business development organizations (small business development centers, chambers of commerce, district management associations, community development financial institutions, foundations, other nonprofits), anchor institutions, real estate brokers, developers, property owners, elected officials, City staff.
• Utilize in-person and digital methods, interviews, focus groups, surveys, informal discussions, events, storytelling, mapping exercises, and others; determine the best methods for meaningful participation from each stakeholder group. • In addition to promoting participation and gathering input, the consultant will leverage engagement opportunities to engender a culture of partnership, accountability, and knowledge sharing, socializing these values and planting the seeds for successful future collaborations and implementation of the agreed-upon strategies. • Design engagement activities and materials that are culturally competent and accessible to various diverse community stakeholders.
• Facilitate discussion among stakeholders to identify economic development strengths, weaknesses, opportunities, and challenges, identifying trends by stakeholder type and those shared across groups.
• The outreach and engagement effort should consider the stakeholder vision and aspirations for the Corridor area, solicit feedback from businesses and property owners on the challenges currently facing this area, better understand the unique needs of businesses and property owners, compare feedback to the Consultant Team’s findings and identify areas that may require further study, and invite ideas on the vision plan process and potential strategies for revitalization
TASK 4: STRATEGIC PLAN DELIVERABLES
The consultant will synthesize information from the background scan, market analysis, baseline research, advisory group and community engagement activities and the knowledge from its project team to deliver a streamlined strategic plan document that includes, but is not limited to, the below listed items. The consultant will also develop a communication plan including recommendations for publishing, distributing, and leveraging the plan to reinforce the strategies and actions within.
• Executive summary, acknowledgments, history and context, vision, exploration of the Corridor, vacant and underutilized commercial properties, guiding principles, goals, and objectives.
• Summary of market analysis for the Corridor with strong narrative descriptions and visual representations of key findings including maps, charts, tables, images, and other graphics. • Summary of community engagement activities and participants, with key findings specific to each stakeholder type and similarities across stakeholders.
City of Arroyo Grande
- 5 -
• Strategy recommendations. Though the planning and engagement process will bring to light priorities and areas of focus, recommended strategies should generally include those related to small business and entrepreneurship ecosystems; place based/neighborhood commercial revitalization; parking requirements; special projects; night-time culture and arts/culture/entertainment opportunities; marketing and communications; real estate development and reuse, strategic partnerships; and placemaking as tools for economic development. Consultants will work with the division and advisory group to develop high level strategies as well as recommendations for tools and actionable items to carry out the strategies. This will ensure the plan is not one that “sits on a shelf,” but one that has a strong vision as well as practical, implementable actions. The strategies and action items should include short, medium- and long-term time horizons, feasibility, and cost assessments, as well as an assessment of resources required forimplementation including data, software, tools, memberships, policies, partnerships, funding, etc. Preliminary areas of focus include:
o Entrepreneurial ecosystem mapping and building. Understand the existing support network, mapping the roles of various stakeholders, identifying redundancies and efficiencies, and building strategic partnerships. o Economic resilience. Develop strategies to prepare for, withstand and recover from economic shocks of various kinds.
o Creative funding and financing. Identify funding streams and opportunities to support implementation.
• Evaluation framework including performance metrics, methods, and tools for effectively measuring and evaluating success.
• Relevant appendices and/or standalone documents, graphics, tools, backup data. • Other components in which the consultant, division and advisory group identify as essential to a stronger plan document.
PROPOSAL CONTENTS
Each response to this RFP shall consist of the following:
1. Cover letter describing specific qualifications related to requested services
2. Project team, including organization chart and staff resumes
3. Qualifications and examples of relevant projects, including references
4. Hourly billing rate.
5. Management Plan: proposers must develop and submit a plan demonstrating how they will manage the project tasks described in the Role of Consultant section of this RFP. If City staff resources are to be utilized to assist in preparation of the Plan, the management plan should specify the anticipated amount of time and level of expertise that will be needed. The proposer shall also address quality control, project specific criteria, risks that have been identified by the RFP and additional risks that the team has identified and state how those risks will be mitigated. As part of the management plan, proposers shall include a proposed project schedule and other information in sufficient detail for the City to determine if the timelines are reasonable. If possible, include an expedited project schedule and associated costs to
City of Arroyo Grande
- 6 -
expedite the project. The management plan should be concise yet contain sufficient information for evaluation by the City.
PRELIMINARY PROJECT SCHEDULE
The following is the anticipated schedule of events for the selection of a consultant:
RFP Released
Proposal Submittal Deadline
Selection Interviews
Notification of Selection
REQUEST FOR PROPOSAL DOCUMENTS
The Request for Proposal (RFP) documents, including the submittal requirements and the selection criteria and schedule, are available in electronic format on the City’s website at http://www.arroyogrande.org. The City reserves the right to reject any or all submittals or to waive any formality or technicality in any submittal in the interest of the organization.
CONTACT INFORMATION
Except as authorized by the City representative or as otherwise stated in the RFP, communication during the selection process shall be directed to the specified City representative. In order to maintain fair and equitable treatment of everyone, proposers shall not unduly contact or offer gifts or gratuities to any official or employee of the City in an effort to influence the selection process or in a manner that gives the appearance of influencing the selection process. This prohibition applies before the RFP is issued, through selection, as the project is developed, and extends through the award of a contract. Failure to comply with this requirement may result in a disqualification in the selection process.
All communications regarding this project shall be directed to:
Andrew Perez, Planning Manager
City of Arroyo Grande
300 East Branch Street
Arroyo Grande, CA 93420
(805) 473-5425
[email protected]
QUESTIONS AND REQUESTS FOR CLARIFICATIONS
Proposers may submit questions or formal requests for clarification on the RFP in writing until 72 hours prior to the submittal date via email at the contact address noted above.
SUBMITTAL DUE DATE AND TIMES
Three (3) hard copies and one (1) electronic copy in PDF format of all required submittals must be delivered to the City, 300 East Branch Street, Arroyo Grande, California, no later than _______.
City of Arroyo Grande
- 7 -
Submittals received after the specified time will not be accepted. Please allow adequate time for delivery. If using a courier service, the submitting firm is responsible for ensuring that delivery will be made directly to the required location. PDF documents must have permissions enabled for comments and printing.
TERMS OF CONTRACT AND SELECTION.
Evaluation of the proposals will be performed by City staff who will assess the qualifications, experience and ability to perform the work of each consultant based on the criteria listed above.
An oral interview with one or more of firms may be requested after written proposals have been received and reviewed by the City. At the time of the interview, representatives of the consulting firm shall be prepared to clarify and elaborate on the details set forth in the firm’s proposal.
The City will make selection decisions on the basis of relevant experience, knowledge of Arroyo Grande, past performance, presentation skills, availability, billing rate, and the best alignment of specific skills and experience with specific project needs.
FINAL SCOPE OF WORK
The Final Scope of Work document shall be negotiated and executed prior to the start of work.
Should the City and consultant be unable to come to a negotiated agreement, the contract may be negotiated and awarded to the second highest scoring proposal.
FORM OF AGREEMENT
At the conclusion of negotiations, the selected consultant will be required to enter into a Consultant Services Agreement.
LICENSURE
The consultant shall comply with and require any subconsultants to comply with the license laws of the State of California.
From: Peter Williamson
To: City Council; Matt Downing; Jessica Matson; Bill Robeson Subject: 6/9/26 - Item 11E Public Comment
Date: Monday, June 8, 2026 9:27:58 PM
Dear Council Members:
Thank you for your leadership on moving ahead the Halcyon Complete Streets project. This project is a major step forward for Arroyo Grande. My family is excited to bike and walk this corridor once it’s complete — and that’s not something we can safely do today.
This brings us to the crossroads, "Item 11E" where we can develop a human-scale Arroyo Grande. Right now, if we want to take our kids to Fair Oaks Theater, Banner Coffee, or Golden Moon, we have to load everyone into the car and navigate ~40mph speeds to progress across five lines to our destination. If we walk, pulling a stroller up onto a degrading sidewalk corner requires a dead‑lift and both parents present. The current geometry creates too many opportunities for human error: wide lanes, long crossings, high speeds, and degrading sidewalks. It functions like a highway— fast, stressful, and unsafe — instead of a street designed for people.
Here are my thoughts for the "road" ahead:
A. Redefine the corridor as a street
Make sure it's no longer a "road!" Design a 15mph street with narrower lanes and frequent crossings. It should feel uncomfortable to drive 45 mph from the 101 to the State Beach. Let folks get to the beach from closer exits. Arroyo Grande should be the place where people slow down, stop, and enjoy our community — as a council member once said, “Arroyo Grande - now slow the heck down.”
B. Make the streetscape a safety project, not just beautification Prioritize protected bike lanes, raised crosswalks, curb extensions, and shade as safety infrastructure. These are the elements that make a corridor usable for families, seniors, and people with mobility devices.
C. Reform parking to support walkability
Evaluate opportunities to reduce minimum parking requirements, allow shared parking, and convert excess asphalt into shade, seating, or infill opportunities.
D. Use the Overlay District to require walkable urban form Objective design standards can ensure buildings meet the sidewalk, provide transparency, avoid blank walls, and create a continuous pedestrian environment.
E. Use the Economic Development Plan to justify a road diet Road diets are not just safety tools — they are economic development tools. Slower speeds
and human‑scale design increase foot traffic and support local businesses.
F. Build smarter
Where full‑size trees can’t fit, compact solar‑shade structures can provide meaningful shade while powering pedestrian‑scale lighting. Shade improves comfort during the day; solar‑powered lighting improves safety at night.
This project should also consider RRFBs and similar systems that incorporate AI‑based detection to increase or decrease flashing sequences based on user need — giving more time to a parent carrying groceries, and less to a teenager who sprints across. The same technology can also generate and analyze multimodal counts (people walking or biking and vehicles), giving the City the data it needs to evaluate performance and strengthen future projects.
G. Add transit‑supportive design and future routing flexibility As housing grows, East Grand should be designed to support future transit or microtransit service that connects to our regional bus stop.
Arroyo Grande deserves streets where families can move safely without a car and where businesses benefit from foot traffic. Thank you for guiding this project in a way that reflects these values.
Sincerely,
Peter Williamson Arroyo Grande Halcyon Resident