Del Mar City Council
June 2, 2026

IN WITNESS WHEREOF, the parties have caused this First Amendment to be effective as of the date first written above.

CITY OF DEL MAR,
a municipal corporation
By:

Ashley Jones, City Manager
CLAIMS MANAGEMENT ASSOCIATES, INC.
a California corporation
By:

Ed Garbo, President

ATTEST:

By:

Sarah Krietor, Administrative Services
Manager/City Clerk
APPROVED AS TO FORM:

By:

Christina Cameron, City Attorney
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Attachment B
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City of Del Mar
Agenda Report
________________________________________________________________________________________________________ City Council Action:

TO: Honorable Mayor and City Councilmembers
FROM: Kaitlyn Elliott-Norgrove, Special Projects & Programs Manager Via Ashley Jones, City Manager
DATE: June 2, 2026
SUBJECT: Twelve-Month Extension of Del Mar Fire Station Lease REQUESTED ACTION/RECOMMENDATION:

Staff recommends that the City Council: 1) Approve a 12-month extension of the City’s lease with the California Department of General Services and 22nd District Agricultural Association for the Del Mar Fire Station through June 30, 2027 (Attachment A); and 2) Authorize the City Manager to execute the lease extension.

BACKGROUND:

For more than 50 years, the City of Del Mar has leased facilities at the Del Mar Fairgrounds to operate the Del Mar Fire Station.

On the southern boundary of the Del Mar Fairgrounds property, the City leases two buildings from the 22nd DAA to operate the Del Mar Fire Station. A one-story wood-framed building is used as offices and living quarters for firefighters, and a one-story metal-clad vehicle storage building is used as an engine bay. The lease also includes the use of 19 associated parking spaces.

Under the terms of the current lease, the 22nd DAA is responsible for HVAC, plumbing and electrical systems, exterior, and building structural repairs. The City, as lessee, may make improvements with prior consent from the 22nd DAA and is responsible for maintaining those improvements.

DISCUSSION/ANALYSIS:

The City’s most recent lease agreement with the California Department of General Services and the 22nd District Agricultural Association (22nd DAA) was executed on October 12, 2000, and expired on June 30, 2025 (Attachment B). Last year, the City and 22nd DAA executed a 12-month extension, which ends June 30, 2026 (Attachment C).

Over the last year, the City has been working with District staff and the State Department of General Services (DGS) to negotiate the terms and conditions of a new Fire Station 1 June 2, 2026 Item 10
City Council Agenda Report
Twelve-Month Extension of Del Mar Fire Station Lease
June 2, 2026

lease. However, the District has requested that the terms and conditions of the prior lease be extended for another twelve-month period through June 30, 2027, to allow for additional time to finalize the lease terms for review by DGS and consideration by the District Board and City Council. Consistent with the existing lease terms, the annual rent payment for Fiscal Year (FY) 2026-2027 will be $142,223. At its June 9, 2026, meeting, the 22nd DAA Board of Directors will vote to authorize the CEO to sign the extension.

FISCAL IMPACT:

There is no fiscal action to be taken by the City Council associated with this item.

Sufficient funds to cover the FY 2026-2027 annual rent payment of $142,223 have been included in the proposed FY 2026-2027 Operating and Capital Budget to cover the 12- month lease extension.

ENVIRONMENTAL IMPACT:

The proposed City Council action does not constitute a “project” under the definition set forth in the California Environmental Quality Act (CEQA) Guidelines Section 15378 because it will not have the potential to result in a direct or indirect physical change in the environment and is, therefore, not subject to CEQA. No further action under CEQA is required.

ATTACHMENTS:

Attachment A – FY 2026-2027 Lease Extension
Attachment B – Executed 2000 Facility Lease
Attachment C – Executed FY 2025-2026 Lease Extension
2 June 2, 2026 Item 10

ATTACHMENT A
3 June 2, 2026 Item 10

ATTACHMENT A
4 June 2, 2026 Item 10
o o

DEPARTMENT OF GENERAL SERVICES
STATE OF CALIFORNIA REAL ESTATE SÊRVICES DIVISION
FACIL¡W LEASE
Iæase No.: L1846
Del Mar Fairgrounds
2260 Jimmy Durante Boulevard
DelMar, CA 92014-2216
LESSEE'S method of payment shall be paid directly to the above address, shall display the STATE's lease number as shown on page I of.tbis document, and shall not ipquire receipt of an invoice prior to issuance of payment. rEAsE COVÉ8|NG PRÊMISES tocArEDAl
. 22wDistrict Agricultural Association
sENcY
Department of Food and
it Nov 2 o ?ooo |TEM t1

ATTACHMENT B
5 June 2, 2026 Item 10
cr¡EsorutToR
UTIL¡flFS
TERMTN^TION
RET¡CåTION
!{oftcËs
,. O".*ing on Julv l' 20.01¿¡d eachlurttf:j::::*t thc ¡crm of this trase, rbe STATE *ili"*"å"ilcally increasJr¡iåtl"¡ rent payablc under this Lcase' The anount ofthe a¡¡uat rcntal adjustm* tiäiUtît"*#g üy mult¡tying $a0'000'00 by the p€rceût8s? *h#;i;ã;äiur', P't"ñü- (õ-ir*. q"1 iut ercccding April incrcased oysrthc;;b¡; i"rth" mont¡îö;t)*í.whicfr_shall be thc base period; ot 1o/op€r aunum, *t i.lã'i ¡' grcaær' nt ttt"'i'f renul lncrcasc sh¿ll not cxcecd l0% during thc t€ro ofthe l-cr¿se'
ln the evcntlhc above-mcntionsd Index is ôiscouti¡ued Prior to rbe expiration of tbis Lcase, tbe STATE "U"U
i*rø¡rt"f' rrquesitic iu,ctu of i¡Uor Statistics of the U'S' Dco,,'E.ent of L¡bor to supply a formula f;; ü; "*ttoioo of thç abovc-mentioncd index
to å similar i'¿'* tt*-t""¡rltii -o' *u;;;i;ilolt ttttntoforth be thc basis for computation
++U.S. Burcau of Labo¡ Statistios, u'S' Cþ-Av?ragc' Au Items Scrics A (19t2' 1984=100), "Urbsn Wagc Earners and Clerical Workers'"

6.(a)STATEshallpayallwatcrandscwer.costsorcharges.LEssEEagrcesto ntin;; tfìtí u.t, cfforts tó conservc wster agd seY/er usagc (b)LEssEEshallpaysaidrentas.hcrcinprovideil.andallclectricandgas þropane) costs or .Ë;;r:íESSee shalt'a'ls-olårespontiule for payment of all telephone installation sosts a.s w"il
"s
the telephonc '"'"ìtt aod ïcpair cols in sonnection \rith ËtGÈE( use of soi¿ Piemises during the term of ttris Lcæc' . 1. Tbe parties bereto agree tlut I+SSEE nray terminate ¡his Lcasc at ary time by giving nolice ro ù,.;îÃie-in wriring rúltoojã"ys prior ¡o ¡Ìre date ç'hen such termination shall bccorne effective. ön oiai¡tt ìlarch l' 2OO2'' STATE roay "
termir¡¿te trr¡ uasc ir thc STATE't ru*ttipi- for the Del Mar Fairgrounds requires anoùe¡ usc of the Premiscs by giving L¡ñif;enty-four !?4) months prior.wriuen notice of ¡he orrc *.fi.á¡-rioo rñ"u;;;, effeõtivc. W¡inen nodce shall bc derivored æ tistcd ¡ïÞ.i.iåp 9 (Noriccs paragraph) of ùris l-casc.

E.InlheeventsTATls,sMasterPlanfortheDelMarFairgroundsasreferencedin paragraph z ortuis ilar., ,-q"ir.r ."",b";;;; orÛ,c Pre-ises' sTATE will offer af¡ atrernate to".tion on it,eÉr"rir.r, b" "iiïy Lil*: for tbe purpose of af¡re station lease only. rlccording to the twcnty-fJ ãi;;ntf' ø91*ti¡tcn tcrmination notice required of sraTË i;;;ñll l'"it¡¡tìf.;;,úd said notice oltcrmination'LESSEE will have twelvc (12) months to complctl l-.*" it"g"¡ations. for I new fire station leæc at . .
sn alternate location. lf said n"',, L*. ì-r;;;;;nrated (as evidcnced by execution by a¡ parries oronrJ'L*.ìo"u*"nO *i,ili t.ij*'iu"-tooih period' LESSEE will havc no h¡tth"t righs undcr thi's Lease agreenent'

9. All notices herein provided to be given or which mal be given by eithcr Party to tbe othsr shall bc deemed to havc U*" n ifv eiutn *¡*1made in-writing and deposìlcil in thc unitcd states mail, certifïcd, postage pr"i'.io and addrcssed as follows:

Cþ Clerk
City of Del Mar
t050 Camino Del Ma¡
DelMar, CA 920t4
l0/l?/00 2
lL
To the LESSEE:

NOv¿0?000 IIEM tl

ATTACHMENT B
6 June 2, 2026 Item 10
NOTlcEs (coÌ{T.) To the STATE
The
changed by written notice
nothing herein
O
22nd District Agricultural Association (L-l &6)
2260 JimmY Durante Boulevard
Del Mar, C^ 92014'2216
o
Notice to sTATE shall not be considered to be given unless made to botb the Disirict aud tbe Department of General Services'
address to which notices may be mailed as aforesaid to either parly, may be (b)STATE,shatl,atitssolecostandexpense'duringthetermofthisLease furnish ùá follow¡ng maintenance and repair services:
(l) W¡th prior written authorization from STATE' LESSEE shall be reimbursedforagreeduponcostsofmajormaintenanceandpermanent improvementsperformedbyLESSEE.LESSEEshallprovideSTATEa
to the other, as Prov ided herein;'but
such notice by personal servicel0/r2l00 3
NO\/ 2 0 ?000 ITEM 15 t: M :SOLD:emP.sb'delm¡rlcase 6'doc

ATTACHMENT B
7 June 2, 2026 Item 10

REPAIRS ANI)

MATNTENANCE
(coNT.)

OWNERSIITP OF
IIìtPROVEMEÌ{TS
oo. \ilrinen itemization of prior agreed upon exPensgs wfren submining invoices for reimburs.r.nt. Reimbùrsement of said costs may be made from the following year's rent Payment'
(2) STATE shall Provide maintenance of HVAC' P
lumbing and electrical
systems. STATE shall also provide all exterior maintenance and rePairs to the structure (excluding painting), walkways, park ing area and fencing of the l-cased Premises. LESSEE shallbe responsible for all painting of the interior and with the STATE's Prior written
i i-';..r/
t0/r2lff)
n
without lirst obtáiding.STATE's p rior wri|l.el consent' ". ":
'"
':--ì'-"j':"'-i-
"
t7. During the term of this Lease all buildings, structures and improvements constructed on the Premises by LESSEE shall be vested in LESSEE" At the expiration or termination of this Lease, allúuildings, structures and improvements construçted on the premises by LESSEE shallvest ¡n Siefe,. LESSEE shall deliver said buildings, structures and improvements to STATE in the good repair and condition, reasonable wear and tear excepted, without "otp",tr"tion
to LISSEE, any subtenant or third party, free and clear of all cíaims to or against them by LESSEE, any subtenant or third Party' LESSEE-shall. defend and hotd STATE harmiess from all liabiliry arising from such claims or from ¡he exercise by STATE of its rights under this paragraph'
4 it lvl :SOLD:cnrp.sh'rJ¿lmarl¿asc ó.doc Nov 2 0 ?000 |IEM t5

ATTACHMENT B
8 June 2, 2026 Item 10
OìVNERSHIP OF
I[IPROVE}TENTS
(coNT.).
lo
In the event said buildings, structures and improvemenB arerlot delivered to STATE in good condition and ,.plir, ¡Jasonable wear and tear excepted, STATE shall make the necessary maintenancläïr.p.i6 an-d- LESSEE shall beliable to and shall reimburse 'iiliÈ ior.ny such expenditures made, plus interest at the rate of l0%'

20. In the performance of this Leasê, the LESSEE will not discriminate against any employee or application for employment because of race, color, creed, sex, national origin' ancestry, age, handicai or religion. LESSEE will take action to insure that applicants for .rptoyÁ"ñt "nd
emplly.., ur-. treated during employment without regard to their race' color, creed, sex, nationat origin, anceslry, age, handicap or religion' Such action shall include, but not be limited tolnã following:-employment, upgrading, demotion or transfer' NON.

DISCRIIIIINATION
5 /5 Nl:SOLD:cmp.sb.rlclmarlcasc ó.dr¡c Not/2o?duÖ"'" lTEful t,

ATTACHMENT B
9 June 2, 2026 Item 10
NON.

DISCRJMINATION
(coNT.)
LOSSES

DEBT LIABILTTY
D¡SCLATMER
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recruitment or recruitment advertising' layoff or terminaiion' rates of pay or other forms of compensat¡on, "n¿
,.l".iioi fo,. traini-ing,inciuãing apprenticeship' LESSEE shall post in conspicuous places available to employies anO apitiäints fgr.elnlo¡rment' notices to be provided by the SfAfE, sening fortf¡ tú" prouitiónt of this Fair Employment Practices 'Section.
[(ôovemment Code, Section I 2920' I 2994)J
Remedies for willful violations
conduct business with LESSEE.

23. The STATE will not be responsible for losses or damage to personal Proplly' equipment or mater¡als of the LESjEE and all tosses shall be reported to the STATE immediately. upon discoverY.

24. ThesTATE will not be liable for any debts or claims that arise from the operation of this l¡ase.
6 l0/12/00
NOv202000 ITEM 1,1 tÇ M:SOLD:cmP.sb'dclma¡lease 6'doc

ATTACHMENT B
10 June 2, 2026 Item 10

PARTNERSHIP
DISCI.AIMER

COMPLIANCE
rillHLAws'
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25.LEssEEandanyandallagentsandemployeesofLEsSFEshallactinan independent capacity anã not "' off'""'s o'
"nlpìoy-ees
of STATE' Nothing herein
contained shall be const¡ued as constituting the parties herein as Partners'

26. LESSEE shall, at its sole cost and expense, comply with all of the re'I'iremenis òf all municipal, state, *¿-ir¿.t f authorities nå,n in force, or which may be in force pertaining to the Premises and use of the Premises as provided by this Lease' work on the easement area
'l l0ll2l00
Nfl\l I n ?nnn 11 M:SOLD:cmP. sb.delma¡leæc 6' doc
ITF¡¡ 1 ,z

ATTACHMENT B
11 June 2, 2026 Item 10
a a

RELOCATION

IITTNERAL RIGHTS

HAZARDOUS
SUBST
,!
CANCELLAT¡ON
ENCUTìtßRANCE
.::

37. LESSEE änd STATE hereby acknowiedge'and agree that LESSEE does not intend ,o.i"u,olî;ñ;J"f "ust-lessÉe's
interest ln leased Premises, for the purpose of
construct¡ng itprou"t"its thereon. Any such encumbrance is void without prior wrinen consent from STATE.
8 t0/t2lu) tv M:SOLD:cmP.sb.rlelmarlc¿se 6'doc
Nov 2 0 2000 ITEM l',

ATTACHMENT B
12 June 2, 2026 Item 10

LESSEE'S
AUTHORI'ZÂTION
GOVERN¡NG
AUTHOR¡TY/

EXECTTTION OF
LEASE

ESSENCE OFTIIUE
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38. If LESSEE is a corPorat¡on or governmenølentitY, each individual executing this on behalf of said corPoration or governmental entity rePresents and wanants that Lease
he/she is dulY authòrized to execute and deliver this læase on behalf of said corporation or accordance with a dulY adopted resolution of the Board of Directors governmental entity in
or governing board, and that this Læase is binding uPon said corPoration or governmental entity in accordance with its tems. LESSEE shall, witbin tb¡rty (30) daYs after execution of tbis Lease' deliver to STATE a certified coPY of resolution of the Board of Directors or governing board authorizing or ratifying erecution of this Lease. r0/¡2100
, .'i i.".'."
''
q5. This Leaie and.all subsequeni lease amendmenisit'irti Ue subject to Section 4051 "f ;;;#;;;;;;ìi;r"r code, and is not deeined as'lexécuted" on behalrof the STATÊ until it h"t br*;t;t"""Jly ti. Þêþartment of Food and Agriculture and the Department of General Services'

46. Time is of the essence for each and atl of the provisions, covenants and conditions of this Lease.
9 tq M:SOLD:cnP.sb'delmarlcasc ó'doc
NOV s 0 2000 |TEM t5

ATTACHMENT B
13 June 2, 2026 Item 10
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IN WITNESS WHEREoF, this agreement has been executed by the.parties hereto as of the wrinen below.

STATE OF CALTFoRNIA
Approvat Recommended:
22Nd DISTRICT AGRICULTT'RAL

ASSOCIATION
BY:

LESSEE:

CITY OF DEL MAR
CHRIS V/AGAMAN, DePutY
EXECUTED DATE:
¡0/t2100 20 M:SOLD:emP,sb.delmarleasc ó'doc
Secretary
l0
Nov z 0 ¿000 ITEM 1,,

ATTACHMENT B
14 June 2, 2026 Item 10
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The Fire Station FacilitY
approximately 19'000
property is a Portion
appraisal report
District
EXHIBIT ¡'A''
(Pagç I of3)
Parcel
fi¡á'we$
Lease No. L-1846
consists of
ifomia. This
May 19, 1999,
the 22nd
0-01
LI No\/ 2 0 2000 ITEM 1,,

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ATTACHMENT B
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ATTACHMENT B
18 June 2, 2026 Item 10

ATTACHMENT C
19 June 2, 2026 Item 10

ATTACHMENT C
20 June 2, 2026 Item 10

ATTACHMENT C
21 June 2, 2026 Item 10

ATTACHMENT C
22 June 2, 2026 Item 10
City of Del Mar
Agenda Report
________________________________________________________________________________________________________ City Council Action:

TO: Honorable Mayor and City Councilmembers
FROM: Martin Boyd, Principal Engineer
Joe Bride, Public Works Director
Via Ashley Jones, City Manager
DATE: June 2, 2026
SUBJECT: Resolution Establishing the Date by which Properties Must be Ready to Receive Underground Service in the Underground Utility District X1A (Crest Canyon) – Work Zones 1 and 2
REQUESTED ACTION/RECOMMENDATION:

Staff recommends that the City Council conduct a public hearing to adopt a Resolution (Attachment A) establishing the date by which properties must be ready to receive underground service in the Underground Utility District X1A (Crest Canyon) – Work Zones 1 and 2 in accordance with Del Mar Municipal Code (DMMC) Section 23.54.030.

BACKGROUND:

The City of Del Mar continues to implement the Citywide Undergrounding Program (UP), which will remove utility poles and replace overhead cables for electricity and telecommunications with underground lines. A map of the planned citywide Utility Undergrounding Districts (UUDs) is included as Attachment B.

On July 12, 2021, the City Council authorized the formation of the Crest Canyon (X1A) UUD. Crest Canyon (X1A) includes 82 poles and 12,520 linear feet of overhead conversion to 19,610 linear feet of underground trench, which involves 152 properties and 114 residences. There are eighty properties requiring undergrounding of their private service lateral at the expense of the property owner. A map of Crest Canyon (X1A) is included as Exhibit A to Attachment A.

The City awarded a construction contract to TC Construction on September 8, 2025, following a public bid solicitation process in mid-2025. A notice to proceed was issued in October 2025, with an estimated construction completion date of October 2026 for the City’s activities. The City’s undergrounding construction activities are primarily for trenching and installation of conduit and substructures. The City Council approved the SDG&E cost agreement on September 22, 2025. Pole removals are anticipated to occur in Spring 2027; however, final scheduling is determined by the utility companies based on their construction schedules and remains outside the City’s direct control. The utility companies’ construction activities include installation of cables and connections, service 1 June 2, 2026 Item 11
City Council Agenda Report
Resolution Establishing the Date by which Properties Must be Ready to Receive Underground Service in Underground Utility District X1A (Crest Canyon) June 2, 2026

cutovers, and overhead wire and pole removals. A comprehensive undergrounding program update was provided to the City Council on February 17, 2026, and another update is planned for an upcoming Council meeting.

DISCUSSION/ANALYSIS:

TC Construction has substantially completed installation of conduit and substructures for Work Zone 1 and has nearly completed similar work for Work Zone 2. Property owners within these areas have been notified to proceed with the installation of service lateral conduits as required by DMMC Section 23.54.090. The project team notified property owners between January 7 and March 24, 2026 to proceed in Work Zone 1, and between April 20 and June 2, 2026 for Work Zone 2.

Many property owners within the undergrounding district have started or completed their lateral conduits. The next steps are for the utility companies to complete the installation of their wires underground, service cutovers, and then proceed with removing the utility poles. However, these activities cannot proceed until all property owners complete installation of their lateral conduits.

Pursuant to DMMC Section 23.54.030, a Council resolution is required to formally establish the date by which properties within the UUD must be ready to receive underground service. The resolution is needed in the event any property does not comply and requires enforcement per DMMC Section 23.54.100. Staff recommends establishing the following dates, which are feasible and reasonable to complete the work based on when property owners were or will be notified. A map of Crest Canyon (X1A) with the dates is included as Exhibit A to Attachment A.

1. June 3, 2026, deadline for properties within Work Zone 1. Work Zone 1 includes properties on San Dieguito Drive and Oribia Road; and

2. August 2, 2026, deadline for properties within Work Zone 2. Work Zone 2 includes properties on Avenida Primavera, Serpentine Drive, Zuni Drive, 15th Street, and Crest Road north of Via Alta; and

3. The deadline for properties within Work Zone 3 shall be set by subsequent resolution. Work Zone 3 includes properties on Crest Road south of Via Alta and Hoska Drive.

Staff will return with a subsequent resolution to establish the date by which all overhead facilities, including utility poles, overhead wires, and associated overhead structures in the UUD shall be removed pursuant to DMMC Section 23.54.030. Staff anticipates bringing this resolution to the City Council after City construction activities and private service lateral installations are completed and the utility companies are able to provide a schedule for completion.
2 June 2, 2026 Item 11
City Council Agenda Report
Resolution Establishing the Date by which Properties Must be Ready to Receive Underground Service in Underground Utility District X1A (Crest Canyon) June 2, 2026

FISCAL IMPACT:

There is no fiscal impact or action to be taken by the City Council related to this agenda item.

ENVIRONMENTAL IMPACT:

Pursuant to requirements of the California Environmental Quality Act (CEQA), a Notice of Exemption was filed for the Utility Undergrounding District X1A - Crest Canyon Undergrounding District Project (State Clearinghouse No. 2024101301). The project was adopted by Council on October 7, 2024. The SDG&E Cost Agreement being considered for construction work falls under the scope of work considered under both exemptions.

Pursuant to CEQA Guidelines Section 15162, no further environmental documentation is necessary in that there have been no substantial changes proposed involving new significant effects or an increase in the severity of previously identified effects; no substantial changes have occurred with respect to the circumstances under which the project is being adopted; and no new information has demonstrated that new significant effects will occur.

NEXUS TO CITY COUNCIL GOALS AND PRIORITIES:

Utility Undergrounding is listed as a Tier 1 City Council priority for Fiscal Years 2025-2026 and 2026-2027.

ATTACHMENTS:

Attachment A – Resolution
Exhibit A to Attachment A – UUD X1A Crest Canyon Map Dates Attachment B – Citywide Undergrounding Program Map
3 June 2, 2026 Item 11

ATTACHMENT A
RESOLUTION NO. 2026-XX

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DEL

MAR, CALIFORNIA, ESTABLISHING THE DATE BY WHICH

PROPERTIES MUST BE READY TO RECEIVE UNDERGROUND
SERVICE IN THE UNDERGROUND UTILITY DISTRICT X1A
(CREST CANYON) – WORK ZONES 1 AND 2
WHEREAS, on July 12, 2021, the City Council of the City of Del Mar adopted Resolution 2021-36 establishing District X1A (Crest Canyon) as a designated and declared Underground Utility District (“UUD”) of the City of Del Mar; and WHEREAS, the UUD is in the general public interest and includes public benefits such as an improved pedestrian and bicycle environment, increasing public access to public recreational areas, reducing the risk of fire or power outage from downed poles or lines, and improved aesthetics within the District; and
WHEREAS, the removal of all poles, overhead wires and associated overhead structures, and the underground installation of wires and facilities for supplying electric, communication, and similar or associated service within the UUD is required in order to fulfill the goal of the UUD; and
WHEREAS, the time within which property owners within the District must be ready to receive underground service, and by which all existing poles, overhead wires and associated overhead structures shall be removed, shall be set pursuant to Section

23.54.030 of the Del Mar Municipal Code; and
WHEREAS, the City will allow a reasonable amount of time for removal and underground installation, having due regard for the availability of labor, materials, and equipment necessary for such removal and for the installation of such underground facilities; and
WHEREAS, property owners within Work Zone 1 (i.e., Phase 1) of the UUD were notified between January 7, 2026, and March 24, 2026, to proceed with installation of underground service laterals between March 6, 2026, and May 26, 2026, which is a feasible and reasonable date to complete work. Work Zone 1 includes properties on San Dieguito Drive and Oribia Road; and
WHEREAS, property owners within Work Zone 2 of the UUD were notified between April 20, 2026, and June 2, 2026, to proceed with installation of underground service laterals between June 22, 2026, and August 2, 2026, which is a feasible and reasonable time period to complete work. Work Zone 2 includes properties on Avenida Primavera, Serpentine Drive, Zuni Drive, 15th Street, and Crest Road north of Via Alta; and WHEREAS, property owners within Work Zone 3 of the UUD have not yet been notified to proceed with installing underground service laterals as the City’s contractor has not yet completed the contract work for this phase. The date by which properties must be 4 June 2, 2026 Item 11
Resolution 2026-XX

ready to receive underground service in Work Zone 3 shall be set by subsequent resolution.

Work Zone 3 includes properties on Crest Road south of Via Alta and Hoska Drive; and WHEREAS, the time by which poles, overhead wires and associated overhead structures shall be removed shall be set by subsequent resolution.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Del Mar, California, that:

1. The above recitals are true and correct.

2. By Council action, June 3, 2026, is hereby established as the date by which the properties within Work Zone 1 of the District X1A (Crest Canyon) must be ready to receive underground service.

3. By Council action, August 2, 2026, is hereby established as the date by which the properties within Work Zone 2 of the District X1A (Crest Canyon) must be ready to receive underground service.

4. The City Clerk is hereby directed to notify all affected property owners as shown on the last equalized assessment rolls of the adoption of this Resolution within fifteen (15) days after the date of such adoption, and that that the work required to change the facilities on the premises so as to receive electric, communication, or community antenna television or similar or associated service provided or to be provided by the utility company shall be accomplished on or before the applicable date set forth in the Resolution, as shown in Exhibit A, in accordance with Section 23.54.070 of the Del Mar Municipal Code.

5. The City Clerk is hereby directed to record a certified copy of this Resolution with the office of the County Recorder, in accordance with Section 23.54.030 of the Del Mar Municipal Code.

PASSED, APPROVED, AND ADOPTED by the City Council of the City of Del Mar, California, at the Regular Meeting held this 2nd day of June, 2026. _____________________________________
Tracy Martinez, Mayor
City of Del Mar
5 June 2, 2026 Item 11
Resolution 2026-XX

APPROVED AS TO FORM:
________________________________
Christina Cameron, City Attorney
City of Del Mar
ATTEST AND CERTIFICATION:

STATE OF CALIFORNIA

COUNTY OF SAN DIEGO

CITY OF DEL MAR
I, SARAH KRIETOR, Administrative Services Manager/City Clerk of the City of Del Mar, California, DO HEREBY CERTIFY, that the foregoing is a true and correct copy of Resolution No. 2026-XX, adopted by the City Council of the City of Del Mar, California, at a Regular Meeting held the 2nd day of June, 2026 by the following vote:

AYES:

NOES:

RECUSE:

ABSENT:

ABSTAIN:

Sarah Krietor, Administrative Services
Manager/City Clerk
City of Del Mar
6 June 2, 2026 Item 11
7 June 2, 2026 Item 11
Exhibit A

ATTACHMENT B
8 June 2, 2026 Item 11
City of Del Mar
Agenda Report
TO: Honorable Mayor and City Council Members
FROM: Marco Camacho, Finance Manager/Treasurer
Ashley Jones, City Manager

DATE: June 2, 2026
SUBJECT: Review Fiscal Year 2025-26 Third Quarter and Proposed 2026-27 Operating and Capital Budget Update

REQUESTED ACTION/RECOMMENDATION
Staff recommends that the City Council: 1) Review and provide feedback on the proposed Fiscal year (FY) 2025-26 Third Quarter Adjustments and FY 2026-27 Budget Update Report; 2) Approve Resolution (Attachment A) amending the current FY 2025-26 Operating and Capital Budget as included in Exhibit A of Attachment A; 3) Approve Finance Committee proposed revisions to the Pension Reserve Policy (Attachment B); 4) Approve Finance Committee proposed revisions to the Investment Policy for FY 2026-27 (Attachment C); 5) Approve Resolution (Attachment D) approving the Statement of Investment Policy for FY 2026-27; and, 6) Receive the report on City employee vacancies, recruitment, and retention efforts pursuant to Assembly Bill (AB) 2561 requirements.

BACKGROUND
The purpose of this budget update is to review and make necessary changes to the second year of the FY 2025-26 and 2026-27 Operating and Capital Budget (Original Budget) that was approved by the City Council on June 16, 2025. The adopted budget provided for the continuity of high-level services to the public, and the advancement of critical capital improvement and special projects. The second year (FY 2026-27) of the two-year Original Budget was adopted with a General Fund Contingency of 19.85% (72 days of operations), and included transfers of $250,000 to the Pension Reserve, $250,000 to the Housing Reserve, and $525,000 to the Capital Reserve.

The City remains in a healthy financial position. Regular transfers to City reserves are a testament to responsible governance and fiscal discipline intended to ensure stability against unforeseen expenditures or revenue shortfalls. City reserves also provide the City a financial buffer to manage multiple competing priorities while still adhering to the Contingency Reserve Policy. A limited use of reserves is proposed in the update to the FY 2026-27 Operating and Capital Budget (Budget Update) to further advance City Council Goals and Priorities. The Budget Update also includes notable adjustments for new fire management costs to protect public safety, as well as market rate compensation adjustments to protect and retain the City’s human capital assets. Staff will continue to pursue outside funding opportunities to replace General Fund appropriations and create more opportunities for additional transfers to reserves.

DISCUSSION/ANALYSIS
This report also includes recommended adjustments to the FY 2025-26 budget based on a thorough review of current revenue and expenditure activities and trends through the third quarter of the fiscal year. Staff is recommending a total net revenue increase of $167,530 and net expenditure decrease of $1,933,150. The revised current year-end projections and analysis serve as a basis for proposed FY 2026-27 Budget Update adjustments. The Budget Update proposes a total net increase of $1,460,780 to projected FY 2026-27 revenues, and $1,560,820 in expenditures. If all adjustments are approved as listed in Exhibit A of Attachment A, the new estimated General Fund Contingency 1 June 2, 2026 Item 13
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balance on June 30, 2027 will change from $4,130,247 as approved on June 16, 2025, to $4,446,296, which represents a 19.19% contingency (70 days of operations).

Based on current year-end trends, revised revenue projections, and expenditure adjustments to further advance the Council approved City Work Plan in FY 2026-27, staff is recommending updates to the FY 2026-27 Operating and Capital Budget. Similar to the original budget General Fund Contingency (GFC) rate of 19.85% (72 days of operations), the Budget Update reflects a GFC of 19.19% (70 days of operations) and maintains the healthy financial position of the City.

The proposed adjustments provide funding for new priority Special and Capital Improvements Projects; a new fire management structure; market rate compensation adjustments; additional operating needs; and new and revised revenues. All proposed adjustments are included in Exhibit A of Attachment A.

FISCAL YEAR 2025-26 THIRD QUARTER REVIEW
As part of the FY 2026-27 Budget Update, staff reviewed current year FY 2025-26 activity through the third quarter (July 2025 – March 2026) to evaluate current year trends and to update yearend and FY 2026-27 projections to identify Budget Update adjustments. Based on this review, staff is recommending increasing General Fund revenues by $942,350 as summarized in Table A.

Revenues for parking violations and meters are trending a little higher than projected during the Mid-Year Budget due to favorable weather conditions continuing to draw more usage and activity.

Property tax and planning services are also trending higher while sales tax reflects a revised projection provided by the City’s sales tax consultant, HdL Companies (HdL). TOT is trending higher than projected during the Mid-Year Budget; however, the net adjustment reflects an additional reduction in TOT originally anticipated from permitted Short Term-Rental (STR) activity. Licenses and permits includes new revenue associated with STR permits.

The proposed adjustment for other revenues includes new revenue associated with the Furniture Donation Program, but is largely driven by an anticipated insurance reimbursement for a liability claim. The proposed Measure Q adjustment is based on revised projections from HdL and estimated interest.

The Revenue Summaries report (Exhibit A of Attachment A) includes all recommended revenue adjustments for FY 2025-26.

Table A: FY 2025-26 Third Quarter Recommended General Fund Revenue Adjustments
Revenue Source Current Budget
FY 2025-26
Recommended
Adjustment
Amended Budget
FY 2025-26
Property Tax $8,455,000 $45,000 $8,500,000
TOT 4,463,750 16,250 4,480,000
Sales Tax 2,300,000 95,000 2,395,000
Parking Violations 1,550,000 250,000 1,800,000
Parking Meters 1,700,000 150,000 1,850,000
Planning Services 490,000 110,000 600,000
Licenses & Permits 125,500 82,500 208,000
Other Revenue 5,246,150 193,600 5,439,750
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Total General Fund $24,330,400 $942,350 $25,272,750
Measure Q 8,677,380 169,620 8,847,000
Based on revised year-end projections, staff is recommending a net budget reduction of $150,380 in General Fund expenditures as summarized in Table B. General Government includes an expenditure increase related to a claim settlement which will be offset by additional revenue.

Public Works is projecting budgetary savings in city engineering services and facilities maintenance services due to re-programming some activities in FY 2026-27. A budget reduction in non-departmental programs is recommended due to anticipated expenditure savings in operating supplies and utilities. Projections for some programs are anticipated to exceed budget.

However, that will be offset by programs that are anticipated to come in under budget, which will be handled under the City Manager’s budget authority.

Table B: FY 2025-26 Third Quarter Recommended General Fund Expenditure Adjustments Program Current Budget
FY 2025-26
Recommended
Adjustment
Amended Budget
FY 2025-26
General Government $6,933,647 $27,000 $6,960,647
Public Safety 9,584,360 - 9,584,360
Public Works 1,219,368 (159,650) 1,059,718
Non-Departmental 907,910 (17,730) 890,180
Equipment Replacement 127,240 - 127,240
Total $18,772,525 ($150,380) $18,622,145
Measure Q 14,244,345 (268,475) 13,975,870
FISCAL YEAR 2026-27 REVENUE PROJECTIONS
Proposed adjustments to the FY 2026-27 General Fund revenues are based on revised projections and information. In comparison to the Original Budget adopted in June 2025, the Budget Update reflects a total increase of $1,717,590, or nearly 7%, resulting in a new General Fund revenue total of $26,309,680. A summary of significant adjustments is included in Table D and further detailed below.

Property Tax
Property tax is the City’s largest source of revenue and accounts for approximately 34% of total amended General Fund revenues. Del Mar’s property valuations have consistently increased over the years and that trend is forecasted to continue into the next fiscal year. The revised projection reflects a nominal increase over the original budget for a new total of $8,840,000. Once the estimate of locally assessed values is received from the County Assessor’s Office by the end of May, staff will re-evaluate FY 2026-27 projections and propose any necessary adjustments.

Transient Occupancy Tax (TOT)
TOT is the second largest source of revenue for the City and accounts for approximately 20% of total amended General Fund revenues. Hotel-generated TOT continues to perform well and revenues are estimated to increase 7% over the original budget amount. TOT revenue anticipated from permitted STR operations has been reduced by approximately 35%. This reduction is based on revised program data and assumptions, including a lower count of permitted STR properties (99 actual vs. 150 estimated) than assumed in the original revenue estimate. Program data will continue 3 June 2, 2026 Item 13
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to be monitored and revenue adjustments will be proposed as needed. The net TOT adjustment results in an increase of $37,000.

Sales & Use Tax
Sales tax is the City’s third largest source of revenue and accounts for 9% of the City’s total amended General Fund revenues. Based on current trends and analysis conducted by the City’s sales tax consultant, HdL, tax revenues are projected to remain fairly consistent with the original budget, but do reflect a nearly 1% decrease from the original budget. Uncertainty remains a central theme in HdL’s latest forecast influenced by tariff policies, inflation, weak consumer confidence, and ongoing geopolitical events.

Table C provides a geographic breakdown of sales tax generation. The areas include the Fairgrounds, businesses located on the East side of Camino del Mar (CDM), businesses located on the West side of CDM, and activities elsewhere in the City including the County pool. The three primary areas continue to generate roughly 75% of total sales tax revenues.

Table C: Sales Tax by Geographic Area
Geographic
Area
FY 2023-24
Actual
FY 2024-25
Actual
FY 2025-26
Amended*
FY 2026-27
Amended*
% of Total
Fairgrounds $585,029 $647,365 $656,387 $651,728 27%
East CDM 524,152 547,598 571,195 567,140 24%
West CDM 593,569 617,727 645,595 641,012 27%
Citywide 493,716 484,714 521,824 518,120 22%
Total $2,196,466 $2,297,404 $2,395,000 $2,378,000 100%
*All figures are estimates based on revised revenue projections in the FY 2026-27 Budget Update report.

Parking Violations
Parking Violations and Parking Meters reflect a combined increase of $265,000 over the original budget. These revenue sources benefit from inviting weather and community attractions that continue to draw increased activity, plus maintenance of functional meters with little downtime.

Investment Income
Revenue from investment earnings is proposed to increase by approximately 87% for a revised budget of $750,000. This increase is similar to a FY 2025-26 Mid-Year adjustment for earnings anticipated based on estimated cash balances, favorable rates of return, and good guidance from the City’s investment advisors.

Expenditure Reimbursement
Pursuant to the City Council approved Interim Cost Sharing Agreement with the City of Solana Beach for Fire Management Transition Services, the City of Del Mar will receive a partial expenditure reimbursement for budgeted costs. Consistent with the current agreement, the Budget Update includes a reimbursement for a share of the permanent and interim Fire Marshal positions, a Fire Prevention Specialist, and a Battalion Chief.

Miscellaneous
Approximately 76% of the miscellaneous revenue adjustment is reflective of an anticipated liability insurance claim reimbursement. Also included is new revenue associated with the Furniture Donation Program.
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Other Revenue
Other revenue adjustments are comprised of smaller modifications based on revised projections.

The more notable adjustments included are increases to revenues from the vehicle license fee in lieu of property tax, real property transfer tax, and rental income. These increases are partially offset by a few reductions, most notably in building services due anticipated activity in FY 2026-27.

Measure Q
Measure Q revenues include a nominal adjustment to align with revised analysis and projections provided by HdL. This transaction and use tax benefits the City by directly capturing district tax revenues on items delivered to or used within the City, including online purchases and vehicles bought elsewhere by residents.

Table D: FY 2026-27 Budget Update Recommended Revenue Adjustments Revenue Source
Original Budget
(June 2025)
FY 2026-27
Recommended
Adjustment
Amended
Budget
FY 2026-27
Property Tax $8,771,690 $68,310 $8,840,000
TOT 5,101,400 37,000 5,138,400
Sales Tax 2,400,000 (22,000) 2,378,000
Parking Violations 1,450,000 175,000 1,625,000
Parking Meters 1,585,000 90,000 1,675,000
Investment Income 400,000 350,000 750,000
Expenditure Reimbursement 35,000 418,780 453,780
Miscellaneous 26,500 486,000 512,500
Other Revenue 4,822,500 114,500 4,937,000
Total $24,592,090 $1,717,590 $26,309,680
Measure Q 3,686,120 63,880 3,750,000
Other Non-General Fund Revenue Adjustments
Included in this report is a total net decrease of $490,690 in non-General Fund revenue adjustments which is largely attributed to the reduction of Smart Growth Incentive Program grant funding that was anticipated, but not awarded, and originally budgeted for the Housing Element 6th Cycle – Affordable Housing City-Owned special project. This grant reduction is offset by new grant funding for the Shoreline/Living Levee project and the Climate Action Plan Update and Green House Gas Inventories project. An increase of $170,000 in the Water Fund is also included based on current year trends and revised projections for FY 2026-27.

OPERATING EXPENDITURES
Operational expenditures are primarily categorized as Employee Services, Maintenance and Operations, Contractual Services, and Capital Outlay. The FY 2026-27 Budget Update reflects a $2,184,230 (11.6%) increase to General Fund operational expenditures above the original budget. A summary of proposed adjustments is included in Table F and further detailed below.

Employee Services
This budget category includes costs for all salaries, benefits, workers’ compensation, and overtime pay to internal staff. In comparison to the original budget that was adopted in June 5 June 2, 2026 Item 13
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2025, this category increased by $1,276,470 (12.7%) in the General Fund. This adjustment is largely based on the following:

Cost of Living Adjustment
A 3.0% Cost of Living Adjustments (COLA) for FY2026-2027 for all employees, including Management and Professional employee group, was included in the original FY 2025-2026 and 2026-2027 Operating Budget consistent with labor agreements with the Del Mar Firefighter’s Association (DMFA) and Del Mar City Employees Association (DMCEA). This cost is not included in the Budget Update adjustment but noted here as a reminder. Also of note, a majority of cities in the County are providing an average COLA increase of 4% to their employees as of July 1, 2026, with seven cities providing a 5-6% COLA adjustment.

Market Adjustments
In addition to cost-of-living adjustments, the City routinely conducts regional salary comparisons to ensure the City’s compensation remains equitable and aligned with the San Diego County labor market. This process typically occurs through labor negotiations for represented employees or prior to opening recruitments to fill vacancies. For example, in 2024 and 2025 the City implemented market adjustments to all DMFA positions and to several DMCEA represented classifications as a result of the labor negotiation process. However, most positions in the unrepresented Management and Professional employee group have not been analyzed or received market adjustments in over 10 years.

Staff conducted a regional compensation comparison for all management positions. Based on the results of the analysis, market adjustments to the Management Analyst, IT Manager II, Administrative Services Manager, Department Director, and Assistant City Manager classifications are warranted. The data shows compensation for these positions has fallen 9%18% below the regional median and do not reflect the City Council’s compensation philosophy of maintaining salaries that are 3-5% from the regional median.

Table E below shows the proposed compensation adjustments effective July 1, 2026, for the impacted classifications, which would bring compensation for these positions within 5%-7% of the regional median to balance fiscal impact while narrowing the gap between the City’s compensation and the regional median. The proposed adjustments take into consideration the 3% COLA increase that will be in effect as of July 1.

Table E: Compensation Market Analysis
Position Proposed Compensation
Adjustment
Resulting %Below
Median
Management Analyst 4% 5%
IT Manager II 16% 5%
Administrative Services Manager 11% 5%
Department Director 12% 7%
Assistant City Manager 12% 7%
The City will implement salary increases in accordance with the City’s standard practice which will result in variable salary increases depending on an incumbent’s current step and compensation. The total fiscal impact of these market adjustments is $72,100.

Given the highly competitive and challenging market for recruiting and retaining quality personnel and a significant increase in median regional salaries, these market adjustments are intended to 6 June 2, 2026 Item 13
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decrease the disparity between Del Mar salaries and the regional median and to help the City recruit and retain high quality employees.

Department Reorganizations/Reclassifications
Following termination of the Cooperative Fire Management Services Agreement with the City of Encinitas on March 31, 2026, the cities of Del Mar and Solana Beach have partnered to jointly transition fire management services. On April 21, 2026, the Del Mar City Council approved a operationally lean seven member Fire Department organizational management structure, that included the hiring of a Fire Marshal, Battalion Chief, and a Fire Prevention Specialist by the City of Del Mar and the remaining positions to be hired by the City of Solana Beach.

The Budget Update includes $837,570 for these Del Mar positions and offsetting revenue for approximately half the cost per the current interim cost sharing agreement between the cities. This would result in an estimated net fiscal impact of $418,785 to the City of Del Mar. Final cost shares will be established in a proposed formalized cost sharing agreement that is currently under development and will be presented to the respective City Councils for consideration in the coming months.

On May 5, 2026, the City Council approved a reorganization to the Public Works Department that included consolidation of management responsibilities in operational areas under the Public Works Operations Manager and downgraded a Facilities Manager position to a Facilities Specialist. These changes resulted in savings of approximately $25,370 for FY 2026-27 across the General, Water, and Wastewater Funds.

Additionally, the City evaluated the current department needs and duties/responsibilities of the Finance Manager/Treasurer and determined that reclassifying the Finance Manager position to a Finance Director is necessary in order to accurately align the position’s current duties, complexity of work, and responsibility with the classification for the position. The estimated increase to salaries resulting from this reclassification is $27,400. If approved, the Finance Director reclassification will take effect the first pay period of FY 2026-2027. Additionally, a Finance Management Analyst position was approved by the City Council on February 3, 2026, to meet the department’s operational needs. This position has been filled and started employment with the City on May 18. The total fiscal impact of the proposed reclassification and approved new Management Analyst position is estimated to be $120,800.

AB 2561 - City Employee Vacancies, Recruitment and Retention Assembly Bill 2561 amending California Government Code Section 3502.3 (Meyers-Milias-Brown Act (MMBA)) went into effect on January 1, 2025, requiring that at least once per fiscal year prior to the adoption of a budget the City Council receive a report on the City’s vacancy rates; recruitment and retention efforts; review and identify changes to recruitment activities that may lessen or remove obstacles in the hiring process; and permit recognized employee organizations to make a presentation.

In calendar year 2025, the City had 66 authorized budgeted full-time positions, including 9 positions in the fire employee group represented by the Del Mar Firefighters Association (DMFA), 24 positions in the general employee group, the majority of which have opted for representation by the Del Mar City Employees Association (DMCEA), and 33 positions in the unrepresented management-professional employee group. Staff conducted an analysis of citywide full-time vacancies that occurred during calendar year 2025, and the average annual vacancy rates were:
0% for Fire; 2% for DMCEA; and 2.3% for the management-professional employee group. 7 June 2, 2026 Item 13
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The City employs the following strategies to ensure successful recruitment and staff retention:
using targeted online job websites and social media to attract a wider candidate pool; when appropriate, reviewing salary structures to remain market-competitive; maintaining competitive benefits; developing internal talent with training/development; utilizing City internships; facilitating internal promotions for qualifying staff; and offering longevity pay. As part of the normal course of business and in compliance with AB 2561 requirements, staff conducted a review of the policies and recruitment activities that may lead to obstacles in the hiring process and has not identified any necessary changes to current practices.

Maintenance and Operations
This budget category consists of costs related to day-to-day operations and includes items like operating supplies, utility expenses, facility and vehicle maintenance, general maintenance and supplies, and postage. A net increase of $162,460 (8.1%) to the FY 2026-27 General Fund Maintenance and Operations category is recommended by staff, which is primarily based on the following:
 $80,810 increase to replace the Del Mar fire station alerting system used to notify firefighters of emergency calls, streamline dispatch communication, and improve response time and safety.
 $20,000 increase for a fire service vehicle maintenance due to the recent and planned acquisition of additional vehicles to support the new fire service structure.  $15,300 increase for facility security measures at various City facilities.  $13,500 increase to replace the Del Mar fire station exhaust system designed to capture and remove harmful fumes, dust and other workplace pollutants effectively to protect personnel health and safety.

Contractual Services
This budget category consists of all contractual services provided by outside vendors and includes items such as law enforcement, landscaping, tree trimming, janitorial, audit, and consulting services, which is proposed to increase by $684,300 (10.0%) in FY 2026-27. This increase is primarily due to:
 $388,000 increase for legal services associated with claim litigation, of which $372,000 will be reimbursed by the City’s insurance coverage.
 $105,510 increase related to fire management cost sharing services the City of Solana Beach.
 $50,000 increase for contractual planning services to complete high-level projects, with an offsetting reduction of $30,000 for part-time salaries.  $48,000 increase for contractual financial service and fee adjustments.

The Expenditure Summaries report (Exhibit A of Attachment A) includes all recommended expenditure adjustments for FY 2026-27.

Capital Outlay
This budget category includes funding for new capital assets such as machinery, equipment, vehicles, and building improvements. The Budget Update includes a new allocation of $61,000 for the purchase of a new fire vehicle to support fire prevention personnel, and to purchase a new backup storm water pump for the 27th Street Storm Drain Pump Station. 8 June 2, 2026 Item 13
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EQUIPMENT REPLACEMENT
A total of $109,000 in equipment replacement items have been added to the FY 2026-27 Budget Update for essential infrastructure upgrades to replace equipment nearing end of life and manufacturer support. This includes wireless systems (access points and firewalls) installed in 2018 that provide employee and guest connectivity at City Hall, Town Hall, and Public Works.

Additionally, core infrastructure purchased in 2019 – two physical servers hosting the virtual environment, a data storage system (SAN), and redundant network switches – will reach end of life in FY 2026-27. Microsoft support for the server operating system will also end in January 2027.

These mission-critical systems support all virtual applications and file storage for the City’s internal network, making timely replacement essential for maintaining operations and security.

Table F: FY 2026-27 Budget Update Recommended Expenditure Adjustments Program Original Budget (June
2025) FY 2026-27
Recommended
Adjustment
Amended Budget
FY 2026-27
General Government $7,178,630 $676,040 $7,854,670
Public Safety 9,515,990 1,235,130 10,751,120
Public Works 1,201,960 260,290 1,462,250
Non-Departmental 973,290 12,770 986,060
Equipment Replacement 47,000 109,000 156,000
Total $18,916,870 $2,293,230 $21,210,100
Fire Protection Services
One of the most significant developments since the adoption of the original FY 2026-27 budget in June 2025 relates to the City’s fire management services. As Del Mar’s new biennial budget was being adopted, the City of Encinitas announced they would be leaving the Cooperative Management Agreement (COOP) with Del Mar and Solana Beach. In January 2026, the City Council approved a new Interim Cost Sharing Agreement with the City of Solana Beach for Fire Management Transition Services. This agreement has since been amended twice as a result of the ongoing assessment of recommended fire protection resources and organizational structure.

The Budget Update accounts for an estimated $1,283,085 in total annualized costs according to the terms of the current interim agreement with Solana Beach. Based on current information, total fire management and prevention resources are estimated to cost Del Mar approximately $837,570 in budgeted personnel, which is estimated to be 50% reimbursed by Solana Beach. Additionally, $445,515 in contractual costs are included to reimburse Solana Beach for shared resources directly budgeted by their agency. When crediting the total cost by the estimated reimbursement of $418,780 the net cost to Del Mar is estimated to be $864,295. When further accounting for the COOP budget already in the original FY 2026-27 budget, the new fiscal impact for Del Mar is approximately $524,295.

This additional cost provides for additional fire management and prevention personnel as previously reported and approved by the City Council, and related non-personnel resources such as vehicles, uniforms, training, equipment, and supplies. Once the City Council approves a permanent fire management services agreement, or any additional amendments to the current agreement, the budget will be revised accordingly. Attachment E includes a budget comparison table for additional reference. The difference between the FY 2026-27 Adopted Budget and the FY 2026-27 Budget Update is the combined total of all proposed adjustments described in this 9 June 2, 2026 Item 13
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report associated with the Interim Cost Sharing Agreement and other adjustments to support fire operations and maintenance activities.

CAPITAL IMPROVEMENT PROJECTS
On March 11, 2026, the City Council held a Goals and Priorities Setting Workshop, which is the basis for the annual City Work Plan and aids City staff in identifying the necessary budgetary and staffing resources to accomplish the Council established goals. Included in the Work Plan are Capital Improvement and Special Projects for FY 2026-27. Table G below reflects funds that were appropriated to FY 2026-27 capital projects during the two-year budget adoption, and an additional $2,145,000 in requested funding to support established goals.

Table G: FY 2026-27 Capital Improvement Projects
Project Name Funding
Source
Original
Budget
(June 2025)
FY 2026-27
Recommended
Adjustment
Amended
Budget
FY 2026-27
29th St. Seawall and
Beach Access
General
Fund $1,300,000 $- $1,300,000
CDM Bridge Fed/County
Grants 15,000,000 - 15,000,000
Stratford Ct Pavement
Improvements
General
Fund 862,750 - 862,750
Storm Drain
Improvements
Federal
Grant 595,000 - 595,000
Annual Pavement
Rehabilitation
General
Fund/RTCIP - 2,090,000 2,090,000
Coast Blvd Hydrology
Analysis
General
Fund - 55,000 55,000
Total $17,757,750 $2,145,000 $19,902,750
Annual Pavement Rehabilitation
During the March 11, 2026, Council Goals and Priorities Workshop discussion on City roadway conditions, the Council requested staff to return and outline additional pavement work in $1,000,000 increments that could be completed in FY 2026-27. On April 21, 2026 staff presented three expanded pavement work scenarios in increments of $1,000,000 on top of a base $3,000,000 paving budget for FY 2026-27. The planned Pavement Management Program funding totaling $3,000,000 for FY 2026-27 is the combination of the Annual Pavement Rehabilitation (Table G) and the Stratford Ct Pavement Improvements (Table G and I) projects.

The Council evaluated each of the expanded paving scenarios provided by staff, discussing project prioritization, the balance between pavement aesthetics and performance, pavement repair options, and the need for fiscal prudence in the Council’s final budget deliberation on this program funding for FY 2026-27. The proposed Annual Pavement Rehabilitation adjustment of $2,090,000 is included in the Budget Update and accounted for in the revised GFC of 19.19%.

Should the City Council decide to approve any of the additional expanded paving scenarios, each reflecting scopes of work valued at an estimated $1,000,000 pavement work, the GFC would reduce by approximately 4.3% for each additional million appropriated. Table H displays the resulting GFC rate associated with each expanded pavement scenario presented 10 June 2, 2026 Item 13
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to Council on April 21, 2026. Alternatively, should the Council decide to modify the total budget to a lesser amount, the corresponding GFC rates are also noted in the table for reference.

Table H: FY 2026-27 Pavement Management Program Funding Pavement Management Program Total Budget GFC %
Adjustment 1 2,000,000 23.49%
Adjustment 2 2,500,000 21.34%
Budget Update $3,000,000 19.19%
Expanded Pavement Scenario 1 4,000,000 14.89%
Expanded Pavement Scenario 2 5,000,000 10.59%
Expanded Pavement Scenario 3 6,000,000 6.29%
Coast Blvd Hydrology Analysis
Historically, the Coast Boulevard area from 17th Street to 22nd Street has been subject to heavy flooding. The $55,000 in proposed funding for this project would deliver a technical study with conceptual cost estimates that analyzes existing hydrologic and hydraulic conditions, summarizes environmental impacts, and develops alternatives to mitigate stormwater drainage and address flooding issues. Improving stormwater control along the Coast Boulevard area would decrease ongoing storm maintenance costs and reduce potential liability exposure to the City. This project was added to the FY 2026-27 City Work Plan by the Council as a Tier 2 item.

Measure Q
The Budget Update includes a proposed reduction of $3,571,490 to CIPs and associated debt costs funded by Measure Q. As displayed in Table I, the Crest Canyon (X1A) project reflects a reduction of $2,717,080 on account of budget savings due to construction bids coming in lower than originally estimated. The original budget for FY 2026-27 included an estimated $12 million in additional funding from an anticipated California Infrastructure Economic Development Bank (IBank) loan. Subsequent to the final budget adoption in June 2025, the City Council approved a final loan amount of $5 million to fund construction of Undergrounding Program projects Crest Canyon (X1A) and Stratford Court North (1B). The debt service adjustment is based on the final loan amount and amortization schedule.

Table I: FY 2026-27 Capital Improvement Projects – Measure Q Project Name Funding
Source
Original Budget
(June 2025)
FY 2026-27
Recommended
Adjustment
Amended
Budget
FY 2026-27
Undergrounding –
UUD X1A Crest
Canyon
Measure Q $2,717,080 ($2,717,080) $-
Undergrounding –
UUD 1B Stratford
North
Measure Q 4,632,540 - 4,632,540
Stratford Ct Pavement
Improvements Measure Q 47,250 - 47,250
Undergrounding
Project - General Measure Q 210,000 - 210,000
Total $7,606,870 ($2,717,080) $4,889,790
11 June 2, 2026 Item 13
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Fiscal Year 2025-26 Third Quarter and Fiscal Year 2026-27 Budget Update Report June 2, 2026

Debt Service
Payment Measure Q 1,442,360 (854,410) 587,950
No adjustments are proposed for Enterprise Fund CIPs. The combined capital budget remains $669,000 in FY 2026-27 for water and wastewater infrastructure improvements.

SPECIAL PROJECTS
Table J below includes a list of Special Projects that were included in the original FY 2026-27 budget and several with new budget appropriation requests. These proposed adjustments total a net reduction of $264,480 from the budget adopted in June 2025 as further detailed below. The net adjustment includes three new projects. The new fiscal impact is associated with the Housing Element Program 1E project as all other adjustments reflect a redistribution of budget across projects based on revised costs and scopes, and requests to appropriate carryover funds.

Affordable Housing Incentives
An extra $10,000 is requested to prepare additional design concepts and illustrations for the ongoing affordable Housing Overlay Zone study.

Housing Element 6th Cycle – Affordable Housing City-Owned The proposed budget reduction of $2,500,000 is the net adjustment resulting from removing $2,600,000 in anticipated Smart Growth Incentive Program (SGIP) grant funding for FY 2026-27 that was not awarded. In addition, the net adjustment includes an increase of $100,000 to facilitate feasibility and due diligence studies for the 28th Street site.

Shoreline/Living Levee
A new appropriation of $1,928,650 in FY 2026-27 is proposed for the Shoreline/Living Levee project. This request is entirely grant funded by the San Dieguito River Park JPA and federal community project funding from the National Oceanic and Atmospheric Administration (NOAA).

This funding will support ongoing work to develop living levees and trails along the north and south banks of the San Dieguito River, and is an identified mitigation strategy included in the City’s adopted Sea Level Rise Adaptation Plan.

General Plan Updates
State law requires the City to update its General Plan Open Space Element to address specified climate resilience and rewilding criteria to provide coordinated mitigation of impacts to new development. The proposed funding of $25,000 will provide for legal review support.

TSVS Ordinance Update
In a continuance of effort from the recent updates to the City’s Trees, Scenic Views, and Sunlight (TSVS) regulations, the requested $5,000 will support work on the Council directed Hedge Ordinance to evaluate the possibility of regulating and treating hedges as fences.

Update Public Tree Policy
The $50,000 appropriation is to support environmental work, consultant and legal services to advance this project intended to protect and enhance the City’s urban forest tree canopy.

Climate Action Plan (CAP) Update
This City secured Smart Growth Incentive Program (SGIP) grant funds to update the City’s 2016 Climate Action Plan, Greenhouse Gas (GHG) inventories, and mitigation strategies to 12 June 2, 2026 Item 13
City Council Agenda Report
Fiscal Year 2025-26 Third Quarter and Fiscal Year 2026-27 Budget Update Report June 2, 2026

align with other CAPs in the region and industry best practices. The $100,500 request will support consultant services in FY 2026-27, which will be entirely funded by the SGIP grant.

ADU Sample Floor Plans Update
Assembly Bill 1332 went into effect on January 1, 2025, and requires local agencies to establish a process for the pre-approval of architectural and design plans for Accessory Dwelling Units (ADU).

The $51,870 request for this project will provide for updates to the City’s existing pre-approved ADU plans to incorporate current City development standards. This new Tier 1 project was approved by the City Council on March 11, 2026 at the Goals and Priorities Workshop.

Update to CEQA Guidelines
This new Tier 2 project requests $15,000 for an update to the California Environmental Quality Act (CEQA) guidelines to identify the standard mitigation, monitoring, and reporting protocols that the City applies to development projects that are required to be processed through a ministerial permit decision process.
6th Cycle Housing Element Program 1E
This new Tier 2 project is to prepare and process amendments and a rezone of vacant land on North Bluff to create capacity for at least 54 lower income units being considered by the City Council on May 19. The $150,000 appropriation request will support legal, consultant, and meeting costs associated with the required General Plan Amendment, Zoning Code Amendment, and Local Coastal Program Amendment.

Table J: FY 2026-27 Special Projects
Project Name Funding
Source
Original Budget
(June 2025)
FY 2026-27
Recommended
Adjustment
Amended
Budget
FY 2026-27
Affordable Housing
Incentives
General
Fund $50,000 $10,000 $60,000
Housing Element 6th
Cycle: Affordable
Housing City-Owned
Housing
Reserve/
Grant
3,100,000 (2,500,000) 600,000
Fair Housing
Amendments
General
Fund/Grant 10,000 - 10,000
Shoreline/Living
Levee Grants - 1,928,650 1,928,650
Enterprise
Resource Planning
(ERP) System
Implementation
General
Fund 200,000 - 200,000
Legal Services for
Special Projects not
listed
General
Fund 30,000 - 30,000
General Plan Updates General
Fund - 25,000 25,000
TSVS Ordinance
Update
General
Fund - 5,000 5,000
Update Public Tree
Policy
General
Fund - 50,000 50,000
13 June 2, 2026 Item 13
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Fiscal Year 2025-26 Third Quarter and Fiscal Year 2026-27 Budget Update Report June 2, 2026

CAP Update Grant - 100,500 100,500
ADU Sample Floor
Plans Update
General
Fund - 51,870 51,870
Update to CEQA
Guidelines
General
Fund - 15,000 15,000
6th Housing Element
1E
General
Fund - 150,000 150,000
Total $3,390,000 ($163,980) $3,226,020

IMPACTS TO GENERAL FUND RESERVES
Year-End Transfers
The FY 2026-27 Original Budget included a transfer of $250,000 to the Pension Reserve, $250,000 to the Housing Reserve, and $525,000 to the Capital Reserve. No additional transfers are proposed in the Budget Update.

Equipment Replacement Reserve
The Equipment Replacement Reserve was established to fund the replacement of equipment and machinery. It is a best practice to have reserves available for the value of equipment to be replaced in the upcoming 5-10 years. Recently, staff reviewed high-valued equipment that will need to be replaced within the next five years. A current market value was attached to each equipment item to determine the necessary funding level. Each asset’s useful life was also evaluated to determine when full funding would be required for the individual asset. Based on current assets, including over 20 city vehicles, two fire engines, jet vacuum truck, loader, skid steer, and backhoe, the total estimated equipment replacement cost over the five-year term is approximately $2.5 million. The Equipment Replacement Reserve balance at June 30, 2027, is estimated to be $513,092 which represents approximately 21% of the total amount required to fund future assets. While no transfers are included at this time, additional transfers may be considered based on the FY 2025- 26 final financial results and the FY 2026-27 Mid-Year financial review.

Pension Reserve
Included in the original FY 2026-27 budget is the transfer of $250,000 to the Pension Reserve. As of June 30, 2025, the City has a total pension Unfunded Accrued Liability (UAL) estimated at approximately $17.80 million. When accounting for Governmental Fund and Enterprise Fund pension reserve balances of approximately $6.88 million on June 30, 2025, the adjusted unfunded pension liability is reduced to an estimated $10.92 million. Approximately 84% of the City’s total UAL is attributed to Governmental Fund salary employee benefits. After accounting for the approved FY 2025-26 and FY 2026-27 pension reserve transfers, the current Pension Reserve Policy goal of reaching 100% funded status of the Governmental Fund portion of the UAL by June 30, 2032, would require an annual contribution of approximately $1.35 million for the next five years.

On May 6, 2026, the Financial Policies and Reserves subcommittee of the Finance Committee recommended revising the current Pension Reserve Policy (Attachment B), which was subsequently unanimously supported by the Finance Committee on May 20, 2026. One significant amendment proposed is to extend the 100% funded target date from June 30, 3032 to June 30, 2037. This policy shift would revise the annual contribution from $1.35 million to approximately $475,000 for each of the next 10 years to achieve the 100% funded status target based on the current UAL estimate. Other notable amendments include clarifications that additional transfers to the Pension Reserve would be proposed as part of annual budget actions at City Council, and that transfers approved by the City Council will be transferred to the Section 115 Trust account each 14 June 2, 2026 Item 13
City Council Agenda Report
Fiscal Year 2025-26 Third Quarter and Fiscal Year 2026-27 Budget Update Report June 2, 2026

June. The reserve policy continues to allow flexibility in order to not impact the City’s ability to fund other critical or important projects. Given the high prioritization of public safety and City street paving among other competing priorities, an additional transfer to the Pension Reserve is not included in the Budget Update. Additional transfers may be recommended to this reserve based on the FY 2025-26 final financial results and the FY 2026-27 Mid-Year financial review.

Capital Project Reserve
In the spirit of the Capital Funding Plan (Finnell Plan) originally presented to Council in March 2007, the city continues to monitor the growth in Governmental operating expenditures (excluding Capital Improvements) in comparison to the growth in revenue. The plan limits expenditure growth each year to 1.4% less than the growth in revenue over the prior year original adopted budget. The growth calculation does not include one-time operating expenditures or first year program expenditures and revenues. The plan was designed to allow for the remaining revenues (1.4% growth) to be devoted to meeting the City’s long-term infrastructure needs.

The total calculated revenue growth as described above totaled 8.7%, resulting in an acceptable expenditure growth of 7.3% (8.7% - 1.4%). The reported expenditure growth for FY 2026-27, not including one-time, new program operating expenditures, is 6.2%, which is below the 7.3% acceptable operating expenditure growth based on the guidelines from the original plan.

The capital reserve practice also includes projecting revenue conservatively and transferring additional revenues or funds in excess of the 25% GFC target for capital needs. Additionally, the City prepares a cash flow summary which identifies how much of the projected revenue is allocated to operating expenditures with the remaining funds being available for capital or special projects and/or reserves.

The City utilizes current funds and available reserves to fund its capital projects. Debt has seldom been issued or used only to finance major CIPs. The Capital Reserve offers the City a secondary mechanism for saving funds for future capital needs. For years, the City’s Capital Improvements Program has been growing with projects in design and edging closer to construction. The FY 2026-27 Budget Update continues to reflect a competing demand for limited General Fund resources and the capital reserve balance.

The adopted capital budget for FY 2025-26 included $900,000 in planned CIP expenditures from the CIP Reserve for the Jimmy Durante Blvd Pavement Improvement Project. During the FY 2025-26 Mid-Year Financial Report, the City Council approved a budget reduction of $1.75 million for the CIP project. This reduction was possible due to favorable bid results that came in significantly less than originally anticipated. The approved Mid-Year action released the $900,000 back to the Capital Reserve and approved an additional transfer of $850,000 to the Capital Reserve. During the March 11, 2026 Council Goals and Priorities Workshop, the Council affirmed support for a baseline FY 2026-27 Pavement Management Program budget of $3 million. To support this Council priority, the Budget Update includes a new FY 2026-27 allocation of $900,000 from the CIP Reserve for planned pavement improvements.

Additionally, the Budget Update revises the previously approved transfer of $525,000 to the CIP Reserve by reducing it to a new transfer amount of $245,000 for an estimated balance on June 30, 2027 of $3.35 million.

In addition to allocating $3 million to the Pavement Management Program per initial Council direction, the Budget Update includes funding for the new Coast Blvd Hydrology Analysis CIP.

Additional transfers may be recommended to the Capital Reserve based on the FY 2025-26 final 15 June 2, 2026 Item 13
City Council Agenda Report
Fiscal Year 2025-26 Third Quarter and Fiscal Year 2026-27 Budget Update Report June 2, 2026

financial results and the FY 2026-27 Mid-Year financial review. Table K identifies priority projects with estimated funding gaps that may be funded from capital reserves. Once an update to the Capital Reserve Policy is complete, it will be presented to the Finance Committee and City Council for consideration.

Table K – Potential Priority CIP Funding Gaps
Project FY 2026-2027
Camino Del Mar Bridge $1,200,000
Riverpath Del Mar $465,000
Housing Reserve
The City established the Housing Reserve Fund for future housing-related Special and Capital Projects. Included in the original FY 2026-27 budget is the transfer of $250,000 to the Housing Reserve with a projected ending reserve balance of $1.98 million at June 30, 2027. In addition, the FY 2026-27 Budget Update includes the use of $600,000 of Housing Reserve funds that will be applied to the Housing Element 6th Cycle – Affordable Housing City-Owned Special Project budget.

General Fund Contingency
The adopted Contingency Reserve Policy provides an acceptable GFC rate ranging from 15% to 30%, with a targeted goal of 25% when feasible. The contingency reserve calculation, expressed as a percentage, is the comparison of the ending unreserved balance to the total of General Fund operating expenditures including General Fund transfers to support operating expenditures in other funds. For reference, the Government Finance Officers Association (GFOA) recommends that local governments maintain reserves equal to two months of operating expenditures or approximately

16.7% of annual expenditures.

Finance Committee Feedback
Staff presented a similar report to the Finance Committee on May 20, 2026. The Committee unanimously approved a motion in support of staff’s recommended budget adjustments for approval by the City Council. The Committee also unanimously recommended that the City Council not reduce the GFC below the 19.19% rate currently projected in the FY 2026-27 Budget Update, and to strive to increase the GFC to 25%. The Committee discussion emphasized the importance of the Council exercising fiscal prudence regarding Pavement Management Program funding for next year and expressed concern about current market conditions and escalating paving and related costs.

The committee also provided suggestions for improved report content which has been incorporated into this Agenda Report.

The Committee also reviewed and unanimously recommended Council approval of proposed revisions to the Pension Reserve Policy (Attachment B) and FY 2026-27 Investment Policy (Attachment C) as recommended by the Financial Policies and Reserves Subcommittee. Notable amendments to the Pension Reserve Policy are described earlier in this report. The proposed amendments to the Investment Policy are based on State legislative updates and feedback from the California Municipal Treasurer’s Association’s Investment Policy Certification Program.

NEXT STEPS
Based on Council feedback, staff will incorporate any necessary changes and bring back a final FY 2026-27 Budget Update for Council consideration and adoption on June 16, 2026. 16 June 2, 2026 Item 13
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Fiscal Year 2025-26 Third Quarter and Fiscal Year 2026-27 Budget Update Report June 2, 2026

FISCAL IMPACT:

Council approval of the recommended action for this agenda item will result in amending the Fiscal Year 2025-26 Operating and Capital Budget as included in Exhibit A of Attachment A.

ENVIRONMENTAL IMPACT:

The proposed City Council action does not constitute a “project” under the definition set forth in California Environmental Quality Act (CEQA) Guidelines Section 15378 because it will not have a potential to result in a direct or indirect physical change in the environment and is, therefore, not subject to CEQA. No further action under CEQA is required.

ATTACHMENTS:

Attachment A – Resolution Implementing FY 2025-26 Third Quarter Budget Adjustments Exhibit A – FY 2025-26 and 2026-27 Financial Summary Report Attachment B – Proposed Pension Reserve Policy Revisions Attachment C – Proposed FY 2026-27 Investment Policy Revisions Attachment D – Resolution Approving the Statement of Investment Policy for FY 2026-27 Exhibit A – FY 2026-27 Investment Policy
Attachment E – Fire Services Budget Comparison
17 June 2, 2026 Item 13
Attachment A
RESOLUTION NO. 2026-XX

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DEL
MAR, CALIFORNIA, AMENDING THE FISCAL YEAR 2025-2026

OPERATING AND CAPITAL BUDGET
WHEREAS, on June 16, 2025, the City Council of the City of Del Mar passed Resolution 2025-17, adopting the Fiscal Years 2025-2026 and 2026-2027 Operating and Capital Budget; and
WHEREAS, a comprehensive third quarter review of expenditures and revenues through March 31, 2026 has been completed; and
WHEREAS, based on the results of the review, adjustments to the Fiscal Year 2025-2026 Operating and Capital Budget are needed to account for anticipated revenues and expenditures through the end of the current fiscal year (Exhibit “A”); and WHEREAS, this budget adjustment incorporates all personnel changes approved by the City Council during Fiscal Year 2025-2026, including addition of Fire Marshal, Battalion Chief, Fire Prevention Specialist, and Finance Management Analyst positions; the reclassification of the Public Works Operations Manager to a higher pay grade; and reclassification of the Facilities Manager position to a Facilities Specialist.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Del Mar, California, that the above recitals are true and correct.

BE IT FURTHER RESOLVED that the Fiscal Year 2025-2026 Operating and Capital Budget is amended as shown in Exhibit A to the Resolution.

PASSED, APPROVED AND ADOPTED by the City Council of the City of Del Mar, California, at a Regular Meeting held on the 2nd day of June 2026. ________________________________
Tracy Martinez, Mayor
City of Del Mar
APPROVED AS TO FORM:
________________________________
Christina Cameron, City Attorney
City of Del Mar
18 June 2, 2026 Item 13
Resolution No. 2026-XX

ATTEST AND CERTIFICATION:

STATE OF CALIFORNIA

COUNTY OF SAN DIEGO

CITY OF DEL MAR
I, Sarah Krietor, Administrative Services Manager/City Clerk of the City of Del Mar, California, DO HEREBY CERTIFY that the foregoing is a true and correct copy of Resolution No. 2026-XX, adopted by the City Council of the City of Del Mar, California, at a Regular Meeting held the 2nd day of June 2026, by the following vote:

AYES:

NOES:

RECUSE:

ABSENT:

ABSTAIN:
________________________________
Sarah Krietor, Administrative Services
Manager/City Clerk
City of Del Mar
19 June 2, 2026 Item 13

BEGINNING ENDING

BALANCE O & M CIP BALANCE
JUL 1, 2025 REVENUES EXPENDITURES EXPENDITURES IN (OUT) JUN 30, 2026 ACTUAL FY 2026 FY 2026 FY 2026 FY 2026 FY 2026 ESTIMATE CONTINGENCY 30.47% 6,503,908 25,030,850 (18,345,350) - 538,494 $ (7,274,976) 6,452,926 RESTRICTED:

SELF-INSURANCE 410,216 - - - - (10,216) 400,000
DESIGNATED:

ENCUMBRANCES 67,655 - (67,655) - - - -
COASTAL PARKING REVENUE - 81,900 (81,900) - - - -
HOUSING RESERVE 1,650,000 - - - 675,000 - 2,325,000
PENSION RESERVE 4,977,684 160,000 - - 675,000 - 5,812,684 LEAVE LIABILITY 100,000 - - - - - 100,000
EQUIPMENT REPLACEMENT 796,332 - (127,240) - - - 669,092 TOTAL GENERAL FUND 14,505,795 25,272,750 (18,622,145) - 1,888,494 (7,285,192) 15,759,702 7,449,974 3,847,000 - (8,975,870) - - 2,321,104
LOAN PROCEEDS/DEBT SERVICE - 5,000,000 (5,000,000) - -
7,449,974 8,847,000 - (13,975,870) - - 2,321,104
221,777 104,560 - - - (326,337) -
19,980 119,560 (959,150) - 819,610 - -
- 651,430 (1,556,530) - 905,100 - -

DESIGNATED
ENCUMBRANCES 302,404 - - (302,404) - - -
CAPITAL IMPROVEMENT PROJECTS - 1,393,635 - (1,470,866) 77,231 - - OPEN SPACE ACQUISITION 86,388 - - - - - 86,388
TREE RESERVE 41,017 - - - - - 41,017
TOTAL OPEN SPACE FUND 429,809 2,045,065 (1,556,530) (1,773,270) 982,331 - 127,405 411 201,530 - - - (201,941) -
15,529 46,000 (61,250) - - - 279
159,775 75,000 (71,000) - - - 163,775
158,004 - (61,660) - - - 96,344

GENERAL FUND

MEASURE Q

ROAD MAINTENANCE REHABILITATION ACCT

GAS TAX FUND

OPEN SPACE FUND

SUPPLEMENTAL LAW ENFORCEMENT FUND

REGIONAL COMMUNICATIONS FUND

GRANTS FUND

HOUSING FUND

CITY OF DEL MAR

RESERVE SUMMARY REPORT
FISCAL YEAR 2025-2026

TRANSFERS
Exhibit A
20 June 2, 2026 Item 13

BEGINNING ENDING

BALANCE O & M CIP BALANCE
JUL 1, 2025 REVENUES EXPENDITURES EXPENDITURES IN (OUT) JUN 30, 2026 ACTUAL FY 2026 FY 2026 FY 2026 FY 2026 FY 2026 ESTIMATE

CITY OF DEL MAR

RESERVE SUMMARY REPORT
FISCAL YEAR 2025-2026

TRANSFERS
679,196 170,000 (47,810) - - - 801,386
8,267 37,200 (75,440) - 33,173 - 3,200
- 2,740,250 - (4,198,364) 1,458,114 - -
ENCUMBRANCES 1,166,296 (1,166,296) - - -
RESERVE FOR CAPITAL 3,150,000 - 850,000 4,000,000
DEBT SERVICE - (899,880) - 899,880 - -
TOTAL CAPITAL IMPROVEMENT FUND 4,316,296 2,740,250 (899,880) (5,364,660) 3,207,994 - 4,000,000 453,852 1,366,900 - (2,166,040) 345,288 - -
3,487 649,000 - (649,000) - - 3,487
38,130 1,000 - (36,000) - - 3,130
502,835 380,000 (361,650) - - - 521,185
NET POSITION 1,799,681 4,895,000 (4,785,290) - - (1,091,355) 818,036 RESTRICTED:

CONTRIBUTED CAPITAL 4,028,272 - - - - - 4,028,272

DESIGNATED

ENCUMBRANCES - - - - - - -
SELF-INSURANCE 50,000 - - - - - 50,000
RATE STABILIZATION 200,000 - - - - - 200,000
CAPTIAL REPLACEMENT 470,000 - - (1,036,455) 916,455 - 350,000 NET PENSION LIABILITY (1,962,119) - - - - - (1,962,119) PENSION RESERVE 1,000,000 - - - - - 1,000,000
OPERATING RESERVE 500,000 - - - 150,000 - 650,000
EQUIPMENT REPLACEMENT 200,000 - (24,900) - 24,900 - 200,000 UTILITY PLANT IN SERVICE 7,423,130 - (385,000) - - - 7,038,130 TOTAL WATER FUND 13,708,964 4,895,000 (5,195,190) (1,036,455) 1,091,355 (1,091,355) 12,372,319

CAPITAL IMPROVEMENT FUND

SPECIAL PROJECT FUND

TRANSNET FUND
RTCIP

WORKERS' COMPENSATION FUND

WATER FUND

PEG FEE FUND
AB 939 FUND
21 June 2, 2026 Item 13

BEGINNING ENDING

BALANCE O & M CIP BALANCE
JUL 1, 2025 REVENUES EXPENDITURES EXPENDITURES IN (OUT) JUN 30, 2026 ACTUAL FY 2026 FY 2026 FY 2026 FY 2026 FY 2026 ESTIMATE

CITY OF DEL MAR

RESERVE SUMMARY REPORT
FISCAL YEAR 2025-2026

TRANSFERS
NET POSITION - 612,500 (818,191) - 205,691 -
-

DESIGNATED -
UTILITY PLANT IN SERVICE 536,251 536,251
ENCUMBRANCES 515,984 (145,249) (370,735) - -
CAPITAL REPLACEMENT - 244,790 - (575,679) 330,889 -
TOTAL CLEAN WATER FUND 1,052,235 857,290 (963,440) (946,414) 536,580 - 536,251 NET POSITION 1,940,691 4,481,000 (4,442,510) - - (1,259,350) 719,831 -

RESTRICTED
IBANK RESERVE 228,828 - - - - - 228,828
CONTRIBUTED CAPITAL 650,814 - - - - - 650,814
LOAN RESERVE-STATE REVOLVING 332,979 - - - - - 332,979

DESIGNATED

ENCUMBRANCES - - - - - - -
SELF-INSURANCE 50,000 - - - - - 50,000
CAPITAL REPLACEMENT 500,000 34,960 - (1,005,080) 820,120 - 350,000 NET PENSION LIABILITY (1,962,119) - - - - - (1,962,119) PENSION RESERVE 900,000 - - - - - 900,000
OPERATING RESERVE 408,000 - - - 192,000 - 600,000
EQUIPMENT REPLACEMENT 300,000 - (347,230) - 247,230 - 200,000 UTILITY PLANT IN SERVICE 7,895,094 - (700,000) - - - 7,195,094 RATE STABILIZATION 200,000 - - - - - 200,000
TOTAL WASTEWATER FUND 11,444,287 4,515,960 (5,489,740) (1,005,080) 1,259,350 (1,259,350) 9,465,427 TOTAL ENTERPRISE FUNDS 26,205,486 10,268,250 (11,648,370) (2,987,949) 2,887,285 (2,350,705) 22,373,997 TOTAL - ALL FUNDS 55,168,603 52,324,065 (34,364,885) (26,952,789) 10,164,175 (10,164,175) 46,174,994

CLEANWATER FUND

WASTEWATER FUND
22 June 2, 2026 Item 13

BEGINNING ENDING

BALANCE O & M CIP/SP BALANCE
JUL 1, 2026 REVENUES EXPENDITURES EXPENDITURES IN (OUT) JUN 30, 2027 ESTIMATE FY 2027 FY 2027 FY 2027 FY 2027 FY 2027 ESTIMATE CONTINGENCY 19.19% 6,452,926 26,227,680 (20,937,100) - 1,932,360 $ (9,229,570) 4,446,296 RESTRICTED:

SELF-INSURANCE 400,000 - - - - (100,000) 300,000
DESIGNATED:

ENCUMBRANCES - - - - - - -
COASTAL PARKING REVENUE - 82,000 (82,000) - - - -
HOUSING RESERVE 2,325,000 - - - 250,000 (600,000) 1,975,000 PENSION RESERVE 5,812,684 - - - 250,000 - 6,062,684
LEAVE LIABILITY 100,000 - (35,000) - - - 65,000
EQUIPMENT REPLACEMENT 669,092 - (156,000) - - - 513,092 TOTAL GENERAL FUND 15,759,702 26,309,680 (21,210,100) - 2,432,360 (9,929,570) 13,362,072 2,321,104 3,750,000 - (5,477,740) - - 593,364

LOAN PROCEEDS/DEBT SERVICE - - - -
2,321,104 3,750,000 - (5,477,740) - - 593,364
- 110,860 - - - (110,860) -
- 121,380 (895,070) - 773,690 - -
- 695,900 (1,649,560) - 953,660 - -

DESIGNATED

ENCUMBRANCES - - - - - - -
CAPITAL IMPROVEMENT PROJECTS - - - (1,300,000) 1,300,000 - - OPEN SPACE ACQUISITION 86,388 - - - - - 86,388
TREE RESERVE 41,017 - - - - - 41,017
TOTAL OPEN SPACE FUND 127,405 695,900 (1,649,560) (1,300,000) 2,253,660 - 127,405 - 200,000 - - - (200,000) -
279 46,000 (36,000) - - - 10,279
163,775 75,000 (61,500) - - - 177,275

GENERAL FUND

MEASURE Q

ROAD MAINTENANCE REHABILITATION ACCT

GAS TAX FUND

OPEN SPACE FUND

SUPPLEMENTAL LAW ENFORCEMENT FUND

REGIONAL COMMUNICATIONS FUND

GRANTS FUND

CITY OF DEL MAR

RESERVE SUMMARY REPORT
FISCAL YEAR 2026-2027

TRANSFERS
23 June 2, 2026 Item 13

BEGINNING ENDING

BALANCE O & M CIP/SP BALANCE
JUL 1, 2026 REVENUES EXPENDITURES EXPENDITURES IN (OUT) JUN 30, 2027 ESTIMATE FY 2027 FY 2027 FY 2027 FY 2027 FY 2027 ESTIMATE

CITY OF DEL MAR

RESERVE SUMMARY REPORT
FISCAL YEAR 2026-2027

TRANSFERS
96,344 - (61,660) - - - 34,684
801,386 170,000 (91,780) - - - 879,606
3,200 37,200 (14,500) - - (21,500) 4,400
- 15,019,000 (898,310) (17,870,000) 3,749,310 - -

ENCUMBRANCES - - - - - - -
RESERVE FOR CAPITAL 4,000,000 245,000 (900,000) 3,345,000 TOTAL CAPITAL IMPROVEMENT FUND 4,000,000 15,019,000 (898,310) (17,870,000) 3,994,310 (900,000) 3,345,000 - 2,029,150 - (3,226,020) 1,196,870 - -
3,487 141,000 - (135,000) - - 9,487
3,130 - - (2,750) - - 380
521,185 412,830 (357,950) - - - 576,065
NET POSITION 818,036 4,965,000 (4,813,210) - 800,000 (631,500) 1,138,326 RESTRICTED:

CONTRIBUTED CAPITAL 4,028,272 - - - - - 4,028,272

DESIGNATED

ENCUMBRANCES - - - - - - -
SELF-INSURANCE 50,000 - - - - - 50,000
RATE STABILIZATION 200,000 - - - - - 200,000
CAPTIAL REPLACEMENT 350,000 - - (369,000) 369,000 - 350,000 NET PENSION LIABILITY (1,962,119) - - - - - (1,962,119) PENSION RESERVE 1,000,000 - - - - (800,000) 200,000
OPERATING RESERVE 650,000 - - - - - 650,000
EQUIPMENT REPLACEMENT 200,000 - (262,500) - 262,500 - 200,000 UTILITY PLANT IN SERVICE 7,038,130 - (385,000) - - - 6,653,130 TOTAL WATER FUND 12,372,319 4,965,000 (5,460,710) (369,000) 1,431,500 (1,431,500) 11,507,609

CAPITAL IMPROVEMENT FUND

SPECIAL PROJECT FUND

TRANSNET FUND
RTCIP

WORKERS' COMPENSATION FUND

WATER FUND

PEG FEE FUND

HOUSING FUND
AB 939 FUND
24 June 2, 2026 Item 13

BEGINNING ENDING

BALANCE O & M CIP/SP BALANCE
JUL 1, 2026 REVENUES EXPENDITURES EXPENDITURES IN (OUT) JUN 30, 2027 ESTIMATE FY 2027 FY 2027 FY 2027 FY 2027 FY 2027 ESTIMATE

CITY OF DEL MAR

RESERVE SUMMARY REPORT
FISCAL YEAR 2026-2027

TRANSFERS
NET POSITION - 612,500 (1,123,540) 511,040 -
-

DESIGNATED -
UTILITY PLANT IN SERVICE 536,251 536,251

ENCUMBRANCES - - - - -
CAPITAL REPLACEMENT - 595,000 (595,000) - -
TOTAL CLEAN WATER FUND 536,251 1,207,500 (1,123,540) (595,000) 511,040 - 536,251 NET POSITION 719,831 4,396,000 (4,451,490) - 700,000 (463,500) 900,841 -

RESTRICTED
IBANK RESERVE 228,828 - - - - - 228,828
CONTRIBUTED CAPITAL 650,814 - - - - - 650,814
LOAN RESERVE-STATE REVOLVING 332,979 - - - - - 332,979

DESIGNATED

ENCUMBRANCES - - - - - - -
SELF-INSURANCE 50,000 - - - - - 50,000
CAPITAL REPLACEMENT 350,000 85,000 - (300,000) 215,000 - 350,000 NET PENSION LIABILITY (1,962,119) - - - - - (1,962,119) PENSION RESERVE 900,000 - - - - (700,000) 200,000
OPERATING RESERVE 600,000 - - - - - 600,000
EQUIPMENT REPLACEMENT 200,000 - (248,500) - 248,500 - 200,000 UTILITY PLANT IN SERVICE 7,195,094 - (700,000) - - 6,495,094 RATE STABILIZATION 200,000 - - - - - 200,000
TOTAL WASTEWATER FUND 9,465,427 4,481,000 (5,399,990) (300,000) 1,163,500 (1,163,500) 8,246,437 TOTAL ENTERPRISE FUNDS 22,373,997 10,653,500 (11,984,240) (1,264,000) 3,106,040 (2,595,000) 20,290,297 TOTAL - ALL FUNDS 46,174,994 59,771,500 (37,260,670) (29,275,510) 13,756,930 (13,756,930) 39,410,314

CLEANWATER FUND

WASTEWATER FUND
25 June 2, 2026 Item 13
BUDGET BUDGET FY2026 vs FY2026 vs FY2027 vs FY2026 vs
ADJUSTMENT ADJUSTMENT FY2025 FY2025 FY2026 FY2027
FY 2025-2026 FY 2026-2027 BUDGET ($) BUDGET (%) PROP ($) PROP (%)

GENERAL FUND
TAXES
PROPERTY TAX 7,651,288 8,088,157 8,455,000 45,000 8,500,000 8,771,690 68,310 8,840,000 411,843 5.1% 340,000 4.0% VLF IN LIEU OF PROPERTY TAX 807,116 858,932 904,840 - 904,840 860,000 80,000 940,000 45,908 5.3% 35,160 3.9% SALES AND USE TAX 2,196,466 2,297,404 2,300,000 95,000 2,395,000 2,400,000 (22,000) 2,378,000 97,596 4.2% (17,000) -0.7% TRANSIENT OCCUPANCY TAX 3,799,038 4,084,758 4,335,000 125,000 4,460,000 4,326,400 312,000 4,638,400 375,242 9.2% 178,400 4.0% TRANSIENT OCCUPANCY TAX-STR - - 128,750 (108,750) 20,000 775,000 (275,000) 500,000 20,000 0.0% 480,000 100.0% BUSINESS LICENSE TAX 362,769 360,364 350,000 - 350,000 350,000 10,000 360,000 (10,364) -2.9% 10,000 2.9% FRANCHISE TAX 446,816 422,411 420,000 - 420,000 420,000 (15,000) 405,000 (2,411) -0.6% (15,000) -3.6% REAL PROPERTY TRANSFER TAX 178,484 171,806 150,000 23,600 173,600 150,000 30,000 180,000 1,794 1.0% 6,400 3.7% TOTAL 15,441,977 16,283,832 17,043,590 179,850 17,223,440 18,053,090 188,310 18,241,400 939,608 5.8% 1,017,960 5.9%

LICENSES & PERMITS
LICENSES & PERMITS 3,485 4,615 500 82,500 83,000 500 2,500 3,000 78,385 1698.5% (80,000) -96.4% JUNIOR LIFEGUARD 90,310 92,770 95,000 - 95,000 95,000 - 95,000 2,230 2.4% - 0.0% PARKING PERMITS 27,387 34,995 30,000 - 30,000 30,000 5,000 35,000 (4,995) -14.3% 5,000 16.7% TOTAL 121,182 132,380 125,500 82,500 208,000 125,500 7,500 133,000 75,620 57.1% (75,000) -36.1%

FINES & FORFEITURES
MOVING VIOLATIONS/VEHICLE CODE FINES 69,284 66,761 65,000 - 65,000 65,000 (5,000) 60,000 (1,761) -2.6% (5,000) -7.7% PARKING VIOLATIONS 1,395,851 1,538,560 1,550,000 250,000 1,800,000 1,450,000 175,000 1,625,000 261,440 17.0% (175,000) -9.7% PENALTIES 25,267 22,788 30,000 - 30,000 9,000 11,000 20,000 7,212 31.6% (10,000) -33.3% ADMINISTRATIVE CITATIONS 55,152 41,590 45,000 - 45,000 45,000 5,000 50,000 3,410 8.2% 5,000 11.1% RED LIGHT ENFORCEMENT 94,156 86,561 80,000 - 80,000 80,000 - 80,000 (6,561) -7.6% - 0.0% TOTAL 1,639,710 1,756,260 1,770,000 250,000 2,020,000 1,649,000 186,000 1,835,000 263,740 15.0% (185,000) -9.2%

REVENUE FROM USE OF ASSETS
INV EARN-GENERAL 925,444 892,952 790,000 - 790,000 400,000 350,000 750,000 (102,952) -11.5% (40,000) -5.1% RENTAL INCOME 240,743 256,210 272,000 - 272,000 240,000 30,000 270,000 15,790 6.2% (2,000) -0.7% PARKING METER INCOME 1,433,473 1,734,993 1,700,000 150,000 1,850,000 1,585,000 90,000 1,675,000 115,007 6.6% (175,000) -9.5% SIDEWALK CAFÉ USER FEE 12,371 7,980 4,000 - 4,000 4,000 - 4,000 (3,980) -49.9% - 0.0% TOTAL 2,612,031 2,892,135 2,766,000 150,000 2,916,000 2,229,000 470,000 2,699,000 23,865 0.8% (217,000) -7.4%

REVENUE FROM OTHER AGENCIES
MOTOR VEHICLE LICENSE FEE 4,868 6,229 4,000 - 4,000 4,000 2,000 6,000 (2,229) -35.8% 2,000 50.0% PUBLIC SAFETY AUGMENTATION FUND 107,890 109,006 100,000 - 100,000 100,000 13,000 113,000 (9,006) -8.3% 13,000 13.0% HOMEOWNER EXEMPT 34,592 34,652 30,000 - 30,000 30,000 4,000 34,000 (4,652) -13.4% 4,000 13.3% FEDERAL/STATE/LOCAL GRANTS 24,406 5,000 - - - - - - (5,000) -100.0% - 0.0% CORONAVIRUS RELIEF FUNDS - - 162,310 - 162,310 - - - 162,310 100.0% (162,310) -100.0% ON-TRACK PARIMUTUEL - - 24,340 - 24,340 - 20,000 20,000 24,340 100.0% (4,340) -17.8% OFF-TRACK PARIMUTUEL 7,465 5,726 5,000 - 5,000 5,000 - 5,000 (726) -12.7% - 0.0% SOLID WASTE 12,620 12,932 12,900 - 12,900 12,900 - 12,900 (32) -0.2% - 0.0% TOTAL 191,841 173,545 338,550 - 338,550 151,900 39,000 190,900 165,005 95.1% (147,650) -43.6%

CHARGES - PLANNING SERVICES
PLANNING SERVICES 502,183 552,483 490,000 110,000 600,000 525,000 - 525,000 47,517 8.6% (75,000) -12.5% ENGINEERING SERVICES 171,259 124,232 120,000 - 120,000 120,000 - 120,000 (4,232) -3.4% - 0.0% BUILDING SERVICES 612,862 474,017 440,000 (20,000) 420,000 500,000 (80,000) 420,000 (54,017) -11.4% - 0.0% TOTAL 1,286,304 1,150,732 1,050,000 90,000 1,140,000 1,145,000 (80,000) 1,065,000 (10,732) -0.9% (75,000) -6.6%

AMENDED

BUDGET FY
2026-2027

CITY OF DEL MAR
FISCAL YEAR 2025-2026 AND 2026-2027

OPERATING AND CAPITAL BUDGET

REVENUE SUMMARIES

CURRENT

ADOPTED
FY2025-26

ADOPTED
FY2026-27

AMENDED

BUDGET FY
2025-2026

SOURCE OF FUNDS ACTUAL
FY2023-24
ACTUAL
FY2024-25
26 June 2, 2026 Item 13
BUDGET BUDGET FY2026 vs FY2026 vs FY2027 vs FY2026 vs
ADJUSTMENT ADJUSTMENT FY2025 FY2025 FY2026 FY2027
FY 2025-2026 FY 2026-2027 BUDGET ($) BUDGET (%) PROP ($) PROP (%)

AMENDED

BUDGET FY
2026-2027

CITY OF DEL MAR
FISCAL YEAR 2025-2026 AND 2026-2027

OPERATING AND CAPITAL BUDGET

REVENUE SUMMARIES

CURRENT

ADOPTED
FY2025-26

ADOPTED
FY2026-27

AMENDED

BUDGET FY
2025-2026

SOURCE OF FUNDS ACTUAL
FY2023-24
ACTUAL
FY2024-25

OTHER REVENUE SOURCES
PARKING IN-LIEU FEE 13,764 10,372 2,500 - 2,500 2,500 2,000 4,500 (7,872) -75.9% 2,000 80.0% ADMINISTRATIVE CHARGE 937,650 965,790 994,760 - 994,760 1,024,600 - 1,024,600 28,970 3.0% 29,840 3.0% ADMINISTRATIVE CHARGE-MEASURE Q 90,528 152,731 150,000 - 150,000 150,000 - 150,000 (2,731) -1.8% - 0.0% EXPENDITURE REIMBURSEMENT 148,006 53,613 35,000 - 35,000 35,000 418,780 453,780 (18,613) -34.7% 418,780 1196.5% MISCELLANEOUS 73,722 683,836 54,500 190,000 244,500 26,500 486,000 512,500 (439,336) -64.2% 268,000 109.6% TOTAL 1,263,670 1,866,342 1,236,760 190,000 1,426,760 1,238,600 906,780 2,145,380 (439,582) -23.6% 718,620 50.4% TOTAL GENERAL FUND 22,556,715 24,255,226 24,330,400 942,350 25,272,750 24,592,090 1,717,590 26,309,680 1,017,524 4.2% 1,036,930 4.1% MEASURE Q FUND 3,780,939 3,958,543 3,677,380 169,620 3,847,000 3,686,120 63,880 3,750,000 (111,543) -2.8% (97,000) -2.5% LOAN PROCEEDS - - 5,000,000 - 5,000,000 - - - 5,000,000 100.0% (5,000,000) -100.0% 3,780,939 3,958,543 8,677,380 169,620 8,847,000 3,686,120 63,880 3,750,000 4,888,457 123.5% (5,097,000) -57.6% ROAD MAINTENANCE REHAB ACCOUNT 107,381 114,392 107,000 (2,440) 104,560 107,000 3,860 110,860 (9,832) -8.6% 6,300 6.0% GAS TAX FUND 114,641 115,990 119,560 - 119,560 119,560 1,820 121,380 3,570 3.1% 1,820 1.5%

OPEN SPACE FUND
TAXES 18,144 5,374 6,000 - 6,000 6,000 - 6,000 626 11.6% - 0.0% LICENSE & PERMITS 403,365 423,758 390,000 - 390,000 400,000 - 400,000 (33,758) -8.0% 10,000 2.6% RENTAL INCOME - 221,676 227,200 - 227,200 227,200 5,700 232,900 5,524 2.5% 5,700 2.5% FEDERAL/STATE/LOCAL GRANTS 215,672 - 1,393,635 - 1,393,635 - - - 1,393,635 100.0% (1,393,635) -100.0% ON-TRACK PARIMUTUEL - - 16,230 - 16,230 - 15,000 15,000 16,230 100.0% (1,230) -7.6% OFF-TRACK PARIMUTUEL 4,976 3,817 3,000 - 3,000 3,000 - 3,000 (817) -21.4% - 0.0% CONTRIBUTIONS 34,000 - - - - 35,000 - 35,000 - 0.0% 35,000 100.0% MISCELLANEOUS 8,952 6,302 4,000 5,000 9,000 4,000 - 4,000 2,698 42.8% (5,000) -55.6% TOTAL OPEN SPACE FUND 685,109 660,927 2,040,065 5,000 2,045,065 675,200 20,700 695,900 1,384,138 209.4% (1,349,165) -66.0% SUPPLEMENTAL LAW FUND 192,923 199,879 201,530 - 201,530 160,000 40,000 200,000 1,651 0.8% (1,530) -0.8% REGIONAL COMMUNICATION 46,159 45,165 46,000 - 46,000 46,000 - 46,000 835 1.8% - 0.0% GRANTS FUND 87,833 85,067 75,000 - 75,000 62,400 12,600 75,000 (10,067) -11.8% - 0.0% HOUSING FUND 42,364 222,137 - - - - - - (222,137) -100.0% - 0.0% AB 939 251,345 179,710 154,000 16,000 170,000 154,000 16,000 170,000 (9,710) -5.4% - 0.0% PEG FEE FUND 40,405 36,839 37,200 - 37,200 37,200 - 37,200 361 1.0% - 0.0%

CAPITAL IMPROVEMENT FUND
FEDERAL/STATE/LOCAL GRANTS 208,899 396,683 2,542,450 - 2,542,450 15,000,000 - 15,000,000 2,145,767 540.9% 12,457,550 490.0% MISCELLANEOUS 202,872 - 197,800 - 197,800 19,000 - 19,000 197,800 100.0% (178,800) -90.4% TOTAL CAPITAL IMPROVEMENT FUND 411,771 396,683 2,740,250 - 2,740,250 15,019,000 - 15,019,000 2,343,567 590.8% 12,278,750 448.1% TRANSNET FUND 228,931 191,281 649,000 - 649,000 135,000 6,000 141,000 457,719 239.3% (508,000) -78.3% RTCIP FUND 4,977 1,525 - 1,000 1,000 - - - (525) -34.4% (1,000) -100.0% 27 June 2, 2026 Item 13
BUDGET BUDGET FY2026 vs FY2026 vs FY2027 vs FY2026 vs
ADJUSTMENT ADJUSTMENT FY2025 FY2025 FY2026 FY2027
FY 2025-2026 FY 2026-2027 BUDGET ($) BUDGET (%) PROP ($) PROP (%)

AMENDED

BUDGET FY
2026-2027

CITY OF DEL MAR
FISCAL YEAR 2025-2026 AND 2026-2027

OPERATING AND CAPITAL BUDGET

REVENUE SUMMARIES

CURRENT

ADOPTED
FY2025-26

ADOPTED
FY2026-27

AMENDED

BUDGET FY
2025-2026

SOURCE OF FUNDS ACTUAL
FY2023-24
ACTUAL
FY2024-25
SPECIAL PROJECTS FUND - 177,814 2,248,900 (882,000) 1,366,900 2,600,000 (570,850) 2,029,150 1,189,086 668.7% 662,250 48.4% TOTAL GENERAL GOVERNMENTAL FUNDS 28,551,493 30,641,178 41,426,285 249,530 41,675,815 47,393,570 1,311,600 48,705,170 11,034,637 36.0% 7,029,355 16.9% WORKERS' COMPENSATION FUND 349,499 395,606 362,000 18,000 380,000 433,650 (20,820) 412,830 (15,606) -3.9% 32,830 8.6%

WATER UTILITY FUND
WATER SALES 2,365,627 2,760,874 2,900,000 (100,000) 2,800,000 2,700,000 100,000 2,800,000 39,126 1.4% - 0.0% READY TO SERVE CHARGE 1,954,206 2,021,281 2,000,000 - 2,000,000 2,000,000 30,000 2,030,000 (21,281) -1.1% 30,000 1.5% OTHER CONNECTION FEES 68,356 56,558 30,000 - 30,000 30,000 5,000 35,000 (26,558) -47.0% 5,000 16.7% MISCELLANEOUS 200,549 163,392 65,000 - 65,000 65,000 35,000 100,000 (98,392) -60.2% 35,000 53.8% TOTAL OPERATING REVENUE 4,588,738 5,002,105 4,995,000 (100,000) 4,895,000 4,795,000 170,000 4,965,000 (107,105) -2.1% 70,000 1.4%

CLEAN WATER PROGRAM
MISCELLANEOUS 10,973 7,869 282,290 - 282,290 632,500 - 632,500 274,421 3487.4% 350,210 124.1% SERVICE CHARGE 657,722 617,884 575,000 - 575,000 575,000 - 575,000 (42,884) -6.9% - 0.0% TOTAL CLEAN WATER PROGRAM 668,695 625,753 857,290 - 857,290 1,207,500 - 1,207,500 231,537 37.0% 350,210 40.9%

WASTEWATER FUND
SERVICE CHARGES 1,954,106 2,178,563 2,215,000 - 2,215,000 2,200,000 - 2,200,000 36,437 1.7% (15,000) -0.7% USAGE CHARGES 1,950,126 2,026,033 2,200,000 - 2,200,000 2,100,000 - 2,100,000 173,967 8.6% (100,000) -4.5% OTHER SEWER FEES 83,766 83,766 40,000 - 40,000 40,000 - 40,000 (43,766) -52.2% - 0.0% MISCELLANEOUS 188,378 172,208 60,960 - 60,960 141,000 - 141,000 (111,248) -64.6% 80,040 131.3% TOTAL WASTEWATER FUND 4,176,376 4,460,570 4,515,960 - 4,515,960 4,481,000 - 4,481,000 55,390 1.2% (34,960) -0.8% TOTAL ENTERPRISE FUNDS 9,433,809 10,088,428 10,368,250 (100,000) 10,268,250 10,483,500 170,000 10,653,500 179,822 1.8% 385,250 3.8% TOTAL ALL FUNDS 38,334,801 41,125,212 52,156,535 167,530 52,324,065 58,310,720 1,460,780 59,771,500 11,198,853 27.2% 7,447,435 14.2% 28 June 2, 2026 Item 13
BUDGET AMENDED BUDGET AMENDED FY2026 vs FY2026 vs FY2027 vs FY2027 vs ADJUSTMENT BUDGET ADJUSTMENT BUDGET FY2025 FY2025 FY2026 FY2026 FY 2025-26 FY 2025-26 FY 2026-27 FY 2026-27 BUDGET ($) BUDGET (%) PROP ($) PROP (%)

GENERAL FUND

GENERAL GOVERNMENT
CITY COUNCIL 41,603 48,113 78,970 (15,100) 63,870 80,270 (7,880) 72,390 15,757 32.7% 8,520 13.3% LEGAL SERVICES 700,194 634,897 600,000 - 600,000 550,000 388,000 938,000 (34,897) -5.5% 338,000 56.3% CITY MANAGER 878,774 1,002,306 1,076,350 - 1,076,350 1,124,890 37,840 1,162,730 74,044 7.4% 86,380 8.0% HUMAN RESOURCES 258,453 283,609 316,850 - 316,850 318,030 21,390 339,420 33,241 11.7% 22,570 7.1% CITY CLERK 361,529 432,525 370,080 - 370,080 429,410 2,690 432,100 (62,445) -14.4% 62,020 16.8% INFORMATION SYSTEMS 548,153 471,783 545,167 - 545,167 545,600 27,720 573,320 73,384 15.6% 28,153 5.2% FINANCE SERVICES 764,865 801,530 998,380 - 998,380 961,940 245,930 1,207,870 196,850 24.6% 209,490 21.0% RISK MANAGEMENT 368,636 804,507 498,500 150,000 648,500 654,800 (87,100) 567,700 (156,007) -19.4% (80,800) -12.5% PLANNING SERVICES 1,508,816 1,744,868 1,951,860 (88,400) 1,863,460 1,963,120 95,920 2,059,040 118,592 6.8% 195,580 10.5% CODE ENFORCEMENT 161,031 145,465 141,990 - 141,990 147,070 15,530 162,600 (3,475) -2.4% 20,610 14.5% BUILDING SERVICES 476,118 389,145 355,500 (19,500) 336,000 403,500 (64,000) 339,500 (53,145) -13.7% 3,500 1.0% TOTAL 6,068,173 6,758,748 6,933,647 27,000 6,960,647 7,178,630 676,040 7,854,670 201,899 3.0% 894,023 12.8%

PUBLIC SAFETY
LAW ENFORCEMENT 2,747,809 2,837,524 3,072,560 - 3,072,560 3,178,700 (5,370) 3,173,330 235,036 8.3% 100,770 3.3% LIFEGUARD SERVICES 1,516,815 1,664,222 1,730,100 - 1,730,100 1,802,750 49,820 1,852,570 65,878 4.0% 122,470 7.1% PARKING ENFORCEMENT 1,046,838 1,181,768 1,237,570 - 1,237,570 1,262,040 20,460 1,282,500 55,802 4.7% 44,930 3.6% FIRE PROTECTION 2,741,927 2,970,463 3,509,530 - 3,509,530 3,237,900 1,171,720 4,409,620 539,067 18.1% 900,090 25.6% HAZARDOUS WASTE MANAGEMENT 20,077 21,907 23,850 - 23,850 23,850 1,000 24,850 1,943 8.9% 1,000 4.2% SOLID WASTE 3,001 3,345 5,000 - 5,000 5,000 (2,500) 2,500 1,655 49.5% (2,500) -50.0% EMERGENCY PREPAREDNESS 3,152 2,973 5,750 - 5,750 5,750 - 5,750 2,777 93.4% - 0.0% TOTAL 8,079,619 8,682,202 9,584,360 - 9,584,360 9,515,990 1,235,130 10,751,120 902,158 10.4% 1,166,760 12.2% -

PUBLIC WORKS -
ENGINEERING SERVICES 284,858 170,231 314,750 (62,350) 252,400 314,750 - 314,750 82,169 48.3% 62,350 24.7% STORM WATER 199,913 221,939 280,440 - 280,440 379,690 (15,730) 363,960 58,501 26.4% 83,520 29.8% FACILITIES 284,889 254,698 624,178 (97,300) 526,878 507,520 276,020 783,540 272,180 106.9% 256,662 48.7% TOTAL 769,659 646,868 1,219,368 (159,650) 1,059,718 1,201,960 260,290 1,462,250 412,850 63.8% 402,532 38.0%

NON-DEPARTMENTAL
COMMUNITY SUPPORT 385,398 472,548 482,600 - 482,600 540,100 9,860 549,960 10,052 2.1% 67,360 14.0% TV STUDIO 89,375 120,488 124,950 - 124,950 128,070 3,110 131,180 4,462 3.7% 6,230 5.0% CITY MEMBERSHIPS 101,741 105,164 112,310 - 112,310 117,070 (200) 116,870 7,146 6.8% 4,560 4.1% CITY HALL - GENERAL 156,326 170,691 188,050 (17,730) 170,320 188,050 - 188,050 (371) -0.2% 17,730 10.4% TOTAL 732,840 868,891 907,910 (17,730) 890,180 973,290 12,770 986,060 21,289 2.5% 95,880 10.8%

TOTAL GENERAL FUND BEFORE
EQUIPMENT REPLACEMENT 15,650,292 16,956,709 18,645,285 (150,380) 18,494,905 18,869,870 2,184,230 21,054,100 1,538,196 9.1% 2,559,195 13.8% EQUIPMENT REPLACEMENT 270,159 118,909 127,240 - 127,240 47,000 109,000 156,000 8,331 7.0% 28,760 22.6%

TOTAL GENERAL FUND INCLUDING
EQUIPMENT REPLACEMENT 15,920,451 17,075,618 18,772,525 (150,380) 18,622,145 18,916,870 2,293,230 21,210,100 1,546,527 9.1% 2,587,955 13.9%

CITY OF DEL MAR
FISCAL YEAR 2025-2026 AND 2026-2027

OPERATING AND CAPITAL BUDGET

EXPENDITURE SUMMARIES

DEPARTMENT ACTUAL
FY2023-24
ACTUAL
FY2024-25

CURRENT

ADOPTED
FY2025-26

ADOPTED
FY2026-27
29 June 2, 2026 Item 13
BUDGET AMENDED BUDGET AMENDED FY2026 vs FY2026 vs FY2027 vs FY2027 vs ADJUSTMENT BUDGET ADJUSTMENT BUDGET FY2025 FY2025 FY2026 FY2026 FY 2025-26 FY 2025-26 FY 2026-27 FY 2026-27 BUDGET ($) BUDGET (%) PROP ($) PROP (%)

CITY OF DEL MAR
FISCAL YEAR 2025-2026 AND 2026-2027

OPERATING AND CAPITAL BUDGET

EXPENDITURE SUMMARIES

DEPARTMENT ACTUAL
FY2023-24
ACTUAL
FY2024-25

CURRENT

ADOPTED
FY2025-26

ADOPTED
FY2026-27
MEASURE Q FUND 1,174,333 6,885,074 14,244,345 (268,475) 13,975,870 9,049,230 (3,571,490) 5,477,740 7,090,796 103.0% (8,498,130) -60.8%

GAS TAX FUND
STREET MAINTENANCE 269,233 277,835 496,180 (42,760) 453,420 395,020 (46,250) 348,770 175,585 63.2% (104,650) -23.1% STREET LIGHTS/SIGNS 174,857 152,887 204,630 (23,900) 180,730 197,260 (13,810) 183,450 27,843 18.2% 2,720 1.5% STREET LANDSCAPING 314,882 277,867 325,000 - 325,000 315,320 47,530 362,850 47,133 17.0% 37,850 11.6% TOTAL GAX TAX FUND 758,972 708,589 1,025,810 (66,660) 959,150 907,600 (12,530) 895,070 250,561 35.4% (64,080) -6.7%

OPEN SPACE FUND
POWERHOUSE OPERATIONS 426,569 481,065 498,870 - 498,870 540,200 (4,690) 535,510 17,805 3.7% 36,640 7.3% BEACH MAINTENANCE 334,473 380,586 501,570 13,300 514,870 497,030 6,320 503,350 134,284 35.3% (11,520) -2.2% PARK MAINTENANCE 434,342 451,888 542,790 - 542,790 578,480 32,220 610,700 90,902 20.1% 67,910 12.5% TOTAL OPEN SPACE FUND 1,195,384 1,313,539 1,543,230 13,300 1,556,530 1,615,710 33,850 1,649,560 242,991 18.5% 93,030 6.0% REGIONAL COMMUNICATION FUND 44,521 45,168 61,250 - 61,250 36,000 - 36,000 16,082 35.6% (25,250) -41.2% GRANTS FUND 68,491 81,066 61,500 9,500 71,000 61,500 - 61,500 (10,066) -12.4% (9,500) -13.4% HOUSING FUND 45,684 57,328 61,660 - 61,660 61,660 61,660 4,332 7.6% - 0.0% AB 939 64,849 72,574 107,810 (60,000) 47,810 63,850 27,930 91,780 (24,764) -34.1% 43,970 92.0% PEG FEE FUND 10,736 31,813 75,440 - 75,440 10,700 3,800 14,500 43,627 137.1% (60,940) -80.8% TOTAL GENERAL O&M FUNDS 19,283,421 26,270,769 35,953,570 (522,715) 35,430,855 30,723,120 (1,225,210) 29,497,910 9,160,086 34.9% (5,932,945) -16.7%

CAPITAL IMPROVEMENT FUNDS
OPEN SPACE CIP 146,197 206,364 1,755,995 17,275 1,773,270 1,300,000 - 1,300,000 1,566,906 759.3% (473,270) -26.7% GENERAL FUND CIP 2,230,198 2,458,116 5,409,790 (45,130) 5,364,660 15,727,750 2,142,250 17,870,000 2,906,544 118.2% 12,505,340 233.1% DEBT SERVICE-CITY HALL 902,860 901,391 899,880 899,880 898,310 - 898,310 (1,511) -0.2% (1,570) -0.2% TRANSNET II CIP 228,756 191,159 649,000 649,000 135,000 - 135,000 457,841 239.5% (514,000) -79.2% RTCIP FUND - - 36,000 36,000 - 2,750 2,750 36,000 #DIV/0! (33,250) -92.4% TOTAL CAPITAL IMPROVEMENT FUNDS 3,508,011 3,757,030 8,750,665 (27,855) 8,722,810 18,061,060 2,145,000 20,206,060 4,965,780 132.2% 11,483,250 131.6% SPECIAL PROJECT FUND 430,060 191,058 3,224,910 (1,058,870) 2,166,040 3,390,000 (163,980) 3,226,020 1,974,982 1033.7% 1,059,980 48.9% TOTAL GENERAL GOVERNMENTAL FUNDS 23,221,492 30,218,857 47,929,145 (1,609,440) 46,319,705 52,174,180 755,810 52,929,990 16,100,848 53.3% 6,610,285 14.3% WORKERS' COMPENSATION FUND 261,612 289,382 322,750 38,900 361,650 357,950 - 357,950 72,268 25.0% (3,700) -1.0% 30 June 2, 2026 Item 13
BUDGET AMENDED BUDGET AMENDED FY2026 vs FY2026 vs FY2027 vs FY2027 vs ADJUSTMENT BUDGET ADJUSTMENT BUDGET FY2025 FY2025 FY2026 FY2026 FY 2025-26 FY 2025-26 FY 2026-27 FY 2026-27 BUDGET ($) BUDGET (%) PROP ($) PROP (%)

CITY OF DEL MAR
FISCAL YEAR 2025-2026 AND 2026-2027

OPERATING AND CAPITAL BUDGET

EXPENDITURE SUMMARIES

DEPARTMENT ACTUAL
FY2023-24
ACTUAL
FY2024-25

CURRENT

ADOPTED
FY2025-26

ADOPTED
FY2026-27

WATER FUND
GENERAL ADMINISTRATION 1,946,868 2,184,901 2,713,360 (381,800) 2,331,560 2,247,060 310,570 2,557,630 146,659 6.7% 226,070 9.7% RISK MANAGEMENT 162,220 219,864 266,750 (25,200) 241,550 316,910 - 316,910 21,686 9.9% 75,360 31.2% RAW WATER SUPPLY 1,717,992 1,939,778 2,147,150 - 2,147,150 2,097,000 - 2,097,000 207,372 10.7% (50,150) -2.3% TREATMENT/DELIVERY 374,796 355,734 474,930 - 474,930 489,170 - 489,170 119,196 33.5% 14,240 3.0% TOTAL WATER FUND O&M 4,201,876 4,700,277 5,602,190 (407,000) 5,195,190 5,150,140 310,570 5,460,710 494,913 10.5% 265,520 5.1% WATER CAP IMPROVEMENT 894,560 - 1,036,455 1,036,455 369,000 - 369,000 1,036,455 #DIV/0! (667,455) -64.4% TOTAL WATER FUND 5,096,436 4,700,277 6,638,645 (407,000) 6,231,645 5,519,140 310,570 5,829,710 1,531,368 32.6% (401,935) -6.4%

CLEAN WATER FUND
PLANNING 78,255 92,943 82,300 - 82,300 85,830 10,210 96,040 (10,643) -11.5% 13,740 16.7% CODE ENFORCEMENT 39,025 34,562 36,600 - 36,600 37,950 180 38,130 2,038 5.9% 1,530 4.2% CLEAN WATER MANAGEMENT 307,573 273,178 343,750 (22,600) 321,150 374,050 (4,150) 369,900 47,972 17.6% 48,750 15.2% PUBLIC WORKS 287,993 310,951 425,900 97,490 523,390 403,990 215,480 619,470 212,439 68.3% 96,080 18.4% TOTAL CLEAN WATER O & M 712,846 711,634 888,550 74,890 963,440 901,820 221,720 1,123,540 251,806 35.4% 160,100 16.6% CLEAN WATER CAP IMPROVEMENT 369,739 44,227 946,414 946,414 595,000 - 595,000 902,187 2039.9% (351,414) -37.1% TOTAL CLEAN WATER FUND 1,082,585 755,861 1,834,964 74,890 1,909,854 1,496,820 221,720 1,718,540 1,153,993 152.7% (191,314) -10.0%

WASTEWATER FUND
RISK MANAGEMENT 162,220 219,864 251,000 (25,200) 225,800 325,900 - 325,900 5,936 2.7% 100,100 44.3% WASTEWATER TRANSPORTATION 57,498 181,634 146,730 - 146,730 146,730 - 146,730 (34,904) -19.2% - 0.0% WASTEWATER TREATMENT 927,290 1,141,611 1,254,790 - 1,254,790 1,385,630 - 1,385,630 113,179 9.9% 130,840 10.4% DEBT SERVICE 563,446 562,673 568,300 - 568,300 567,750 - 567,750 5,627 1.0% (550) -0.1% WASTEWATER PROGRAM 2,436,518 2,567,858 3,299,420 (5,300) 3,294,120 2,701,260 272,720 2,973,980 726,262 28.3% (320,140) -9.7% TOTAL WASTEWATER FUND O&M 4,146,972 4,876,712 5,520,240 (30,500) 5,489,740 5,127,270 272,720 5,399,990 613,028 12.6% (89,750) -1.6% WASTEWATER CAPITAL IMPROVEMENT 257,223 - 1,005,080 1,005,080 300,000 - 300,000 1,005,080 #DIV/0! (705,080) -70.2% TOTAL WASTEWATER FUND 4,404,195 4,876,712 6,525,320 (30,500) 6,494,820 5,427,270 272,720 5,699,990 1,618,108 33.2% (794,830) -12.2% TOTAL ENTERPRISE FUNDS 10,583,216 10,129,778 14,998,929 (362,610) 14,636,319 12,443,230 805,010 13,248,240 4,506,541 44.5% (1,388,079) -9.5% TOTAL EXPENDITURES 34,066,320 40,638,017 63,250,824 (1,933,150) 61,317,674 64,975,360 1,560,820 66,536,180 20,679,657 50.9% 5,218,506 8.5% 31 June 2, 2026 Item 13
1 DRAFT PROPOSED REVISIONS

CITY OF DEL MAR

PENSION RESERVE POLICY
The following is the Pension Reserve Policy adopted by the Del Mar City Council on May 31, 2023 and amended on June 2, 2026.

1. Continue working toward the goal of reaching 100% funded status, based on the City’s financial statements according to GASB 68 by June 30, 203372, with the flexibility that the timeline can be extended further by the Council in order to not impact the City’s ability to fund other critical/necessary priorities and projects as initially directed by the City Council on September 3, 2013, as part of the creation of the City’s Pension Reserve Fund.

2. Focus on funding the Governmental Fund portion of the unfunded liability and not the 20% portion related to Enterprise Ffund salaries. In order to not substantially impact Water and Wastewater rates, Enterprise Ffunds will establish a reserve that will not exceed $200,000 in each fund and will continue to pay its annual required contribution related to Enterprise salaries.

The remaining unfunded liability portion related to Enterprise Fund salariesy and /benefits will not be covered by the Pension Reserve Fund in the General Fund.

2. 3. Using the reported unfunded liability (Total Net Pension Liability) amount in the most recent completed Annual Comprehensive Financial Report (ACFR), staff will calculate the remaining unfunded liability and equally divide the unfunded liability balance by the remaining years to determine the following year’s contribution. This process will be evaluated each year and reviewed by the Pension Subcommittee of the Finance Committee to determine the recommended annual contribution.

3. a.Based on the June 30, 2022 ACFR, the current unfunded liability is approximately $8.35 million. The portion related to Governmental Fund salary/benefits is approximately $6.68 million and the current pension reserve balance is $3.4 million. If the proposed updated reserve policy is approved, the recommended pension contribution for FY 2024 will be $360,000.

4. At Midyear, aAfter the prior year financial results and ACFR are available presented to the City Council, if a surplus is reported, determine next year’s pension contribution and recommendmake an additional transfers as part of the Mid-Year, Budget Update, or Proposed Budget action itfor ems before City Council consideration to help mitigatenimize large contribution Attachment B
32 June 2, 2026 Item 13
2 fluctuations and other changeslargely caused by CalPERS not meeting its investment targets for the year.

5. All pension reserve transfersfunds approved by the City Council shall currently held with the City will be considered to be transferred to athe Section 115 Trust account in June of each fiscal year unless otherwise directed byonce the City Council authorizes staff to open an account. Funds in the Section 115 Trust can only be legally used for pension related costs. a. If at any time, the City is faced with an economic crisis, the City Council may consider deferral of a pension transfer to the Section 115 Trust and may also use funds in the Trust account to pay for the current annual required contribution payment to CalPERS.

6. Once the Pension Reserve reaches 100% status, the City will stop making annual contributions to the Section 115 Trust account but continue to review the ACFR and make annual contributions as necessary to maintain as close to 100% funded status as possible.

7. If and when the Section 115 Trust balance in combination with assets held by CalPERS, reach 100% funded status and remains or exceeds 100% funded status for fivetwo consecutive years, on the sixththird year, staff may recommend to the City Council to use excess funds to pay current annual required contribution payments with funds held in the Section 115 Trust account.
33 June 2, 2026 Item 13
1 CITY OF DEL MAR

PENSION RESERVE POLICY
The following is the Pension Reserve Policy adopted by the Del Mar City Council on May 31, 2023 and amended on June 2, 2026.

1. Continue working toward the goal of reaching 100% funded status, based on the City’s financial statements according to GASB 68 by June 30, 20337, with the flexibility that the timeline can be extended further by the Council in order to not impact the City’s ability to fund other critical/necessary priorities and projects as initially directed by the City Council on September 3, 2013, as part of the creation of the City’s Pension Reserve Fund.

2. Focus on funding the Governmental Fund portion of the unfunded liability and not the portion related to Enterprise Fund salaries. In order to not substantially impact Water and Wastewater rates, Enterprise Funds will establish a reserve that will not exceed $200,000 in each fund and will continue to pay its annual required contribution related to Enterprise salaries. The remaining unfunded liability portion related to Enterprise Fund salaries and benefits will not be covered by the Pension Reserve Fund in the General Fund.

3. Using the reported unfunded liability (Total Net Pension Liability) amount in the most recent completed Annual Comprehensive Financial Report (ACFR), staff will calculate the remaining unfunded liability and equally divide the unfunded liability balance by the remaining years to determine the following year’s contribution. This process will be evaluated each year and reviewed by the Finance Committee to determine the recommended annual contribution.

4. After the prior year financial results and ACFR are available, if a surplus is reported, determine next year’s pension contribution and recommend additional transfers as part of the Mid-Year, Budget Update, or Proposed Budget action for City Council consideration to help mitigate large contribution fluctuations and other changes.

5. All pension reserve transfers approved by the City Council shall be transferred to the Section 115 Trust account in June of each fiscal year unless otherwise directed by the City Council. Funds in the Section 115 Trust can only be legally used for pension related costs.
a. If at any time, the City is faced with an economic crisis, the City Council may consider deferral of a pension transfer to the Section 115 Trust and may also use funds in the Trust account to pay for the current annual required contribution payment to CalPERS. 34 June 2, 2026 Item 13
2 6. Once the Pension Reserve reaches 100% status, the City will stop making annual contributions to the Section 115 Trust account but continue to review the ACFR and make annual contributions as necessary to maintain as close to 100% funded status as possible.

7. If and when the Section 115 Trust balance in combination with assets held by CalPERS, reach 100% funded status and remains or exceeds 100% funded status for five consecutive years, on the sixth year, staff may recommend to the City Council to use excess funds to pay current annual required contribution payments with funds held in the Section 115 Trust account. 35 June 2, 2026 Item 13

DRAFT PROPOSED REVISIONS
City of Del Mar– Investment Policy 1

CITY OF DEL MAR

INVESTMENT POLICY
Fiscal Year 20265-276
Table of Contents

1. Policy .................................................................................................................................... 2

2. Scope .................................................................................................................................... 2

3. Prudence .............................................................................................................................. 2

4. Objectives ............................................................................................................................. 2

5. Delegation of Authority ........................................................................................................ 3

6. Ethics and Conflicts of Interest ........................................................................................... 3

7. Authorized Dealers and Institutions ................................................................................... 4

8. Authorized and Suitable Investments ................................................................................. 4

9. Review of Investment Portfolio ........................................................................................... 8

10. Investment Pools / Money Market Funds ......................................................................... 8

11. Collateralization ................................................................................................................. 8

12. Safekeeping and Custody ................................................................................................. 9

13. Diversification .................................................................................................................... 9

14. Maximum Maturities ........................................................................................................... 9

15. Internal Controls ................................................................................................................ 9

16. Performance Standards ....................................................................................................10

17. Reporting ...........................................................................................................................10

18. Investment Policy Adoption .............................................................................................11

19. Glossary of Terms in this Policy ......................................................................................11

20. Glossary of General Investment Terms ...........................................................................13 Attachment C
36 June 2, 2026 Item 13

DRAFT PROPOSED REVISIONS
City of Del Mar– Investment Policy 2

1. Policy
The City of Del Mar shall invest public funds in such a manner as to comply with federal, state and local laws; ensure prudent money management; provide for daily cash flow requirements; and meet the objectives of the Policy, in priority order of Safety, Liquidity and Return on investment. In accordance with the Municipal Code of the City of Del Mar and under authority granted by the City Council, the City Manager is responsible for investing the unexpended cash in the City Treasury.

2. Scope
The investment policy applies to all investment activities and financial assets of the City of Del Mar as accounted for in the Annual Comprehensive Financial Report (ACFR). This policy is applicable, but not limited to, all funds listed below:
• General Fund;
• Capital Funds;
• Other Special Revenue Funds, Debt Service Funds, Internal Service Funds; and • Any new fund created by the City Council unless specifically exempted.

3. Prudence
The standard of prudence to be used by the designated representative shall be the “prudent investor” standard and shall be applied in the context of managing the overall portfolio. Persons authorized to make investment decisions on behalf of local agencies investing public funds are trustees and therefore fiduciaries subject to the prudent investor standard which states, “When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency”.

The City Manager, City TreasurerFinance Director, Finance Manager, or other city staff designated as investment officers assigned to manage the investment portfolio, acting within the intent and scope of the investment policy and other written procedures and exercising due diligence, shall be relieved of personal responsibility and liability for an individual security's credit risk or market price changes, provided deviations from expectations are reported in a timely manner and appropriate action is taken to control adverse developments.

4. Objectives
The City’s primary investment objectives, in order of priority, shall be:

1. Safety: Safety of principal is the foremost objective of the investment program.

Investments shall be undertaken in a manner that seeks to ensure the preservation 37 June 2, 2026 Item 13

DRAFT PROPOSED REVISIONS
City of Del Mar– Investment Policy 3
of capital in the overall portfolio. The City shall seek to preserve principal by mitigating the two types of risk: credit risk and market risk. a. Credit risk, defined as the risk of loss due to failure of the issuer of a security, shall be mitigated by investing in issuers that carry the direct or implied backing of the U.S. Government (including, but not limited to, the U.S.

Treasury, U.S. Government Agencies, and federally insured banks). The portfolio will be diversified so that the failure of any one issuer does not unduly harm the City’s capital base and cash flow.
b. Market risk, (aka “interest rate risk”) defined as market value fluctuations due to overall changes in the general level of interest rates shall be mitigated by limiting the maximum maturity of any one security to five years, structuring the portfolio based on historic and current cash flow analysis eliminating the need to sell securities prior to maturity and avoiding the purchase of long-term securities for the sole purpose of short-term speculation. Moreover, it is the City’s full intent, at the time of purchase, to hold all investments until maturity to ensure the return of all invested principal dollars. Limited exceptions will be granted for security swaps that would improve the portfolio’s yield and/or credit quality.

2. Liquidity: The City’s investment portfolio will remain sufficiently liquid to enable the City of Del Mar to meet all operating requirements which might be reasonably anticipated.

3. Return on Investments: The City’s investment portfolio shall have the objective of attaining a comparative performance measurement or an acceptable rate of return throughout budgetary and economic cycles. These measurements should be commensurate with the City’s investment risk constraints identified in this Investment Policy and the cash flow characteristics of the portfolio.

5. Delegation of Authority
The Municipal Code of the City of Del Mar and the authority granted by City Council assign the responsibility of investing unexpended cash to the City Manager. Daily management responsibility of the investment program may be delegated to the City TreasurerFinance Director or Finance Manager, who shall establish procedures for the operation consistent with this investment policy.

6. Ethics and Conflicts of Interest
Officers and employees involved in the investment process shall refrain from personal business activity that conflicts with proper execution of the investment program or impairs their ability to make impartial investment decisions. Additionally, the City Manager and the City TreasurerFinance Director or Finance Manager are required to annually file applicable financial disclosures as required by the Fair Political Practices Commission 38 June 2, 2026 Item 13

DRAFT PROPOSED REVISIONS
City of Del Mar– Investment Policy 4
(FPPC). Furthermore, Investment officials must refrain from undertaking personal investment transactions with the same individual(s) employed by the financial institution with whom business is conducted on behalf of the City.

7. Authorized Dealers and Institutions
The Finance Director or Finance Manager will maintain a list of approved financial institutions authorized to provide investment services to the public agency in the State of California. These may include “primary” dealers or regional dealers that qualify under Securities & Exchange Commission Rule 15C3-1 (uniform net capital rule). Best practices include the following: 1) A determination that all approved broker/dealer firms, and individuals covering the public agency, are reputable and trustworthy; 2) the broker/dealer firms should have the ability to meet all their financial obligations in dealing with the Public Agency; 3) the firms, and individuals covering the agency, should be knowledgeable and experienced in Public Agency investing and the investment products involved; 4) no public deposit shall be made except in a qualified public depository as established by the established state laws; 4) all financial institutions and broker/dealers who desire to conduct investment transactions with the public agency may supply the Finance Director or Finance Manager with audited financial statements, proof of FINRA certification, trading resolution, proof of State of California registration, a completed broker/dealer questionnaire, certification of having read the Public Agency’s investment policy and depository contracts.

The Finance Director or Finance Manager may conduct an annual review of the financial condition and registrations of qualified dealers & institutions.The City TreasurerFinance Director or
Finance Manager will maintain a list of approved financial institutions and broker/dealers authorized to provide investment services to the City of Del Mar. Approved broker/dealers may include primary dealers or regional dealers that qualify under Securities and Exchange Commission Rule 15C3-1 (Uniform Net Capital Rule) and are properly licensed to conduct business in the State of California.

No public deposit shall be made except in a qualified public depository as established by California state law.

Financial institutions and broker/dealers conducting investment transactions with the City shall meet the following minimum qualifications:

1. Broker/dealer firms and the individuals representing them shall be reputable and trustworthy.

2. Broker/dealer firms shall demonstrate the financial capacity to meet all financial obligations associated with transactions conducted with the City.

3. Firms and representatives shall be knowledgeable and experienced in public agency investing and the investment products authorized under this Investment Policy.
39 June 2, 2026 Item 13

DRAFT PROPOSED REVISIONS
City of Del Mar– Investment Policy 5
Financial institutions and broker/dealers wishing to conduct investment transactions with the City shall provide the City TreasurerFinance Director or Finance Manager with the following documentation, as applicable:
• Audited financial statements
• Proof of FINRA certification
• Trading resolution
• Proof of State of California registration
• A completed broker/dealer questionnaire
• Certification that the firm has received and reviewed the City’s Investment Policy • Depository or custodial agreements as required
If the City utilizes an investment advisor or investment manager, the advisor or manager shall be registered with the Securities and Exchange Commission (SEC) and shall demonstrate experience managing public agency investment portfolios. The City TreasurerFinance Director or Finance Manager will conduct an annual review of the financial condition and registrations of approved broker/dealers and financial institutions to ensure continued eligibility to conduct investment transactions with the City.

8. Authorized and Suitable Investments
Investment of City funds is governed by the California Government Code Sections 53600 et seq. Within the context of the limitations, the following investments are authorized, as further limited herein:

1. United States Treasury Bills, Bonds, and Notes or those for which the full faith and credit of the United States are pledged for payment of principal and interest. There is no percentage limitation of the portfolio that can be invested in this category, although a five-year maturity limitation is applicable.

2. Federal agency or United States government-sponsored enterprise obligations, participations, or other instruments, including those issued by or fully guaranteed as to principal and interest by federal agencies or United States governmentsponsored enterprises.

3. Local Agency Investment Fund (LAIF), which is a State of California managed investment pool, and the San Diego County Investment Pool, may be used up to the maximum permitted by California State Law. A review of the pool/fund is required when part of the list of authorized investments, with the knowledge that the pool/fund may include some investments allowed by statute but not explicitly identified in this investment policy.
40 June 2, 2026 Item 13

DRAFT PROPOSED REVISIONS
City of Del Mar– Investment Policy 6
Additionally, shares of beneficial interest issued by a joint powers authority organized pursuant to CA Code (Section 6509.7) that invests in the securities and obligations in compliance with CA Code 53601 (subsection ‘a’ to ‘r’, inclusive) are also authorized. Each share shall represent an equal proportional interest in the underlying pool of securities owned by the joint powers authority. To be eligible under this section, the joint powers authority issuing the shares shall have retained an investment adviser that meets all of the following criteria:
• The adviser is registered or exempt from registration with the Securities and Exchange Commission;.
• The adviser has not less than five years of experience investing in the securities and obligations authorized in CA Code (subsection ‘a’ to ‘r’, inclusive); and .
• The adviser has assets under management in excess of five hundred million dollars ($500,000,000).

4. Negotiable Certificates of Deposit issued by nationally or state-chartered banks (FDIC insured institutions) or state or federal savings institutions. Purchases of negotiable certificates of deposit may not exceed 30% of total portfolio. Principal and accrued interest on these investments must not exceed the $250,000 FDIC insurance limit. A maturity limitation of five years is applicable.

4. Time deposits or placement service deposits, non-negotiable and collateralized in accordance with the California Government Code, may be purchased through banks or savings and loan associations. Since time deposits are not liquid, no more than 50% of the investment portfolio may be invested in this investment type. A maturity limitation of five years is applicable. Effective January 1, 2020, no more than 50 percent of the agency’s money may be invested in deposits, including certificates of deposit, through a placement service as authorized under Section 53601.8 (excludes negotiable certificates of deposit authorized under Section 53601(i)). On January 1, 2026, the maximum percentage of the portfolio reverts back to 30 percent. Investments made pursuant to Section 53635.8 remain subject to a maximum of 30 percent of the portfolio.

5. Time deposits or placement service deposits, non-negotiable and collateralized in accordance with California Government Code § 53601.8, may be purchased through banks, savings and loan associations, or federally insured credit unions.

Deposits placed through a private-sector placement service shall not exceed fifty percent (50%) of the agency’s total investment portfolio at the time of purchase, as permitted under Government Code § 53601.8. Principal and accrued interest shall be fully insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA), or collateralized in accordance with state law. Negotiable certificates of deposit authorized under Government Code § 41 June 2, 2026 Item 13

DRAFT PROPOSED REVISIONS
City of Del Mar– Investment Policy 7
53601(i) are excluded from this limitation. This authority remains in effect through January 1, 2031, unless extended by further legislative action.

6. Various daily money market funds administered for or by trustees, paying agents and custodian banks contracted by the City of Del Mar may be purchased as allowed under the State of California Government Code. Only funds holding U.S.

Treasury or Government agency obligations can be used.

7. Medium-term notes, defined as all corporate and depository institution debt securities with a maximum remaining maturity of five years or less, issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States. 30% limit of agency's moneys; 10% limit per issuer. Rated "A" or its equivalent or better by an NRSRO.

8. Commercial paper of “prime” quality of the highest ranking or of the highest letter and number rating as provided for by a nationally recognized statistical rating organization (NRSRO). Maximum maturity of 270 397 days; 25% limit of agency's moneys, may invest no more than 10 percent of its total investment assets in the commercial paper of any single issuer.

9. Bankers’ acceptances, otherwise known as bills of exchange or time drafts, that are drawn on and accepted by a commercial bank. Maturity not to exceed 180 days; 40% limit of agency's moneys; 30% limit per bank.

10. Bonds issued by the local agency, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency or by a department, board, agency, or authority of the local agency. 30% limit of agency's moneys; 10% limit per issuer. Rated "A" or its equivalent or better by an NRSRO.

11. State warrants or treasury notes/bonds-Registered state warrants or treasury notes or bonds of this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the state or by a department, board, agency, or authority of the state. 30% limit of agency's moneys; 10% limit per issuer. Rated "A" or its equivalent or better by an NRSRO.

12. Registered treasury notes or bonds of any of the other 49 states in addition to California, including bonds payable solely out of the revenues from a revenueproducing property owned, controlled, or operated by a state or by a department, board, agency, or authority of any of the other 49 states, in addition to California. 30% limit of agency's moneys; 10% limit per issuer. Rated "A" or its equivalent or better by an NRSRO.
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City of Del Mar– Investment Policy 8

9.1. Bonds, notes, warrants, or other evidences of indebtedness of a local agency within this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency, or by a department, board, agency, or authority of the local agency. 30% limit of agency's moneys; 10% limit per issuer. Rated "A" or its equivalent or better by an NRSRO.

13. within this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency, or by a department, board, agency, or authority of the local agency. 30% limit of agency's moneys; 10% limit per issuer. Rated "A" or its equivalent or better by an NRSRO.

10.14. Repurchase Agreements, or reverse repurchase agreements or securities lending agreements of securities authorized by this section, as long as the agreements are subject to this subdivision, including the delivery requirements specified in CA government code. Term not to exceed one year; Securities must be valued at 102% or greater of the funds borrowed against those securities and the value shall be adjusted no less than quarterly.

11.15. Shares of beneficial interest (Mutual Funds) issued by diversified management companies that invest in the securities and obligations as authorized by Section 53601, subdivisions (a) to (k), inclusive, and subdivisions (m) to (q), inclusive, and that comply with the investment restrictions. No more than 10 percent of the agency’s funds may be invested in shares of beneficial interest of any one mutual fund.

12. Supranational s-United States dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, or Inter-American Development Bank, with a maximum remaining maturity of five years or less, and eligible for purchase and sale within the United States. Investments under this subdivision shall be rated in a rating category of “AA” or its equivalent or better by an NRSRO and shall not exceed 30 percent of the agency’s moneys that may be invested.
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City of Del Mar– Investment Policy 9

16. The following summary of maximum percentage limits, by instrument, are established for the City’s investment portfolio:

Authorized Investment
Type
Government
Code
Maximum
Maturity
Minimum Credit
Quality Maximum in
Portfolio
Maximum
Investment in One
Issuer
Treasury
Obligations (bills,
notes, & bonds)
53601(b) 5 Years N/A 100% N/A
US Government
Agency and Federal
Agency Securities
53601(f) 5 Years N/A 100% N/A
Local Agency
Investment Fund
(LAIF)
16429.1 Upon
Demand N/A
As permitted by
LAIF (currently $65
million per account)
N/A
San Diego County
Investment Pool 53684
Upon
Demand N/A
As permitted by
County Treasurer
(currently no limit) N/A
Joint Powers Authority
Pool 53601(p) N/A See § 8.3 (above) As permitted by each

JPA N/A
Negotiable Certificates
of Deposit 53601(i) 5 Years N/A 30% $250,000
per issuer
(FDIC
insured
limit)N/A
Placement Service
Deposits
53601.8
and
53635.8
5 Years N/A 50% N/A
Medium-term notes 53601(k) 5 Years Rated "A" or
its equivalent
or better by an
NRSRO
30% 10%
Commercial paper 53601(h) 270 397
Days
Highest
ranking or of
the highest
letter and
number rating
as provided for
by a nationally
recognized
statistical
rating
organization
(NRSRO)
25% 10%
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City of Del Mar– Investment Policy 10
Bankers’ Acceptances 53601(g) 180 Days N/A 40% 30%
Bonds issued by the local
agency
53601(a) 5 Years Rated "A" or
its equivalent
or better by an

NRSRON/A
30%N
/A
10%N/A
State warrants or treasury
notes/bonds
53601(c) 5 Years Rated "A" or
its equivalent
or better by an

NRSRON/A
30%N
/A
10%N/A
Registered treasury notes
or bonds of any of the
other 49 states, including
California
53601(d) 5 Years Rated "A" or
its equivalent
or better by an

NRSRON/A
30%N
/A
10%N/A
Bonds, notes, warrants,
or other evidences of
indebtedness of a local
agency within California
53601(e) 5 Years Rated "A" or
its equivalent
or better by an

NRSRON/A
30%N
/A
10%N/A
Repurchase Agreements 53601(j) 1 Year N/A N/A N/A
Shares of beneficial
interest (Mutual Funds /
Money Market Mutual
FundsMutual Funds)
53601(l) N/A Highest
ranking or
highest letter
and numerical
rating by not
less than two
NRSROs
20% 10%
Supranationals 53601(q) 5 Years Rated "AA" or
its equivalent
or better by an
NRSRO
30% N/A

9. Review of Investment Portfolio
The securities held by the City of Del Mar must be in compliance with Section 8.0 “Authorized and Suitable Investments” at the time of purchase. The Finance Director or Finance Manager should review the portfolio (at least annually) to identify those securities that do not comply.

The Finance Director or Finance Manager should establish procedures to report any major and critical incidences of noncompliance identified through the review of the portfolio.

The securities held by the City of Del Mar must be in compliance with Section 8.0, “Authorized and Suitable Investments,” at the time of purchase. The City TreasurerFinance Director or Finance Manager will review the investment portfolio at least quarterly to ensure compliance with this Investment Policy and to identify any securities that do not comply with the policy.
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City of Del Mar– Investment Policy 11
If a security is determined to be noncompliant due to changes in credit ratings, portfolio limits, or other factors occurring after the date of purchase, the City TreasurerFinance Director or Finance Manager will evaluate the circumstances and determine the appropriate course of action consistent with the City’s investment objectives of safety, liquidity, and return. Actions may include, but are not limited to:
• holding the investment to maturity if it is determined that the security continues to be prudent and in the best interest of the City;
• reducing exposure through the sale of the security when market conditions permit; or
• implementing other corrective measures necessary to bring the portfolio back into compliance with this Investment Policy.

The City TreasurerFinance Director or Finance Manager will establish procedures to document and report any significant or material instances of noncompliance identified during the portfolio review process.

10. Investment Pools / Money Market Funds
A thorough investigation of the investment pool/money market fund is required prior to investing, and on a continual basis. Best efforts will be made to acquire the following information:

1. A description of eligible investment securities, and a written statement of investment policy and objectives.

2. A description of interest calculations and how it is distributed, and how gains and losses are treated.

3. A description of how the securities are safeguarded (including the settlement processes), and how often the securities are priced and the program audited.

4. A description of who may invest in the program, how often, and what size deposit and withdrawal are allowed.

5. A schedule for receiving statements and portfolio listings.

6. Are reserves, retained earnings, etc. utilized by the pool/fund?

7. A fee schedule, and when and how it is assessed.

8. Is the pool/fund eligible for bond proceeds and/or will it accept such proceeds? 46 June 2, 2026 Item 13

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City of Del Mar– Investment Policy 12

11. Collateralization
Collateralization will be required on two types of investments: non-negotiable certificates of deposit and repurchase (and reverse repurchase) agreements. To anticipate market changes and provide a level of security for all funds, the collateralization level will be 110% of market value for non-negotiable certificate of deposit and 102% for reverse repurchase agreements of principal and accrued interest.

Collateral will always be held by an independent third party with whom the city entity has a current custodial agreement. A clearly marked evidence of ownership (safekeeping receipt) must be supplied to the entity and retained.

The City may waive the collateralization requirements for any portion of the deposit that is covered by Federal Deposit Insurance.

12. Safekeeping and Custody
All security transactions shall be conducted on a delivery-versus-payment (DVP) basis.

Securities will be held by a third-party custodian designated by the City TreasurerFinance Director or Finance Manager and evidenced by safekeeping receipts. Collateral requirements for repurchase and reverse repurchase agreements are addressed in Section 11 (Collateralization).

13. Diversification
The City shall diversify the investments within the portfolio to avoid incurring unreasonable risks inherent in over-investing in specific instruments, individual financial institutions, or maturities. To promote diversification, no more than 5% of the portfolio may be invested in the securities of any one issuer, regardless of security type, excluding U.S.

Treasuries, federal agencies, and pooled investments such as LAIF, money market funds, or local government investment pools.

The City shall diversify investments within the portfolio to avoid incurring unreasonable risks inherent in over-investing in specific instruments, individual financial institutions, or maturities.

To promote diversification, no more than five percent (5%) of the portfolio may be invested in the securities of any one issuer unless otherwise specified in Section

8.0 “Authorized and Suitable Investments” or the Authorized Investment Table.

Issuer limitations identified in Section 8.0 and the Authorized Investment Table shall apply to those specific investment types.

This limitation does not apply to:
• U.S. Treasury securities
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City of Del Mar– Investment Policy 13
• Federal agency securities
• Local government investment pools
• Money market mutual funds
The Local Agency Investment Fund (LAIF)
•

14. Maximum Maturities
To the extent possible, the City of Del Mar will attempt to match its investments with anticipated cash flow requirements. Unless matched to a specific cash flow, the City will not directly invest in securities maturing more than 5 years from the date of purchase.

Any investment longer than 5 years must be done with advance permission from City Council. Certain investments authorized by California Government Code, such as repurchase agreements, may be subject to shorter statutory maturity limits as identified in Section 8.0 and the Authorized Investment Table.

15. Internal Controls
The City TreasurerFinance Director or Finance Manager is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City of Del Mar are protected from loss, theft, fraud or misuse.

Separation of functions between the City TreasurerFinance Director or Finance Manager, and the Finance Officer is designed to provide an ongoing internal review to prevent the potential for converting assets or concealing transactions.

Investment decisions are made by the City TreasurerManager, executed by the thirdparty administrator and confirmed by the Finance OfficerDirector or Finance Manager. All wire transfers initiated by the City TreasurerFinance Officer must be reconfirmed by the appropriate financial institution to the City TreasurerFinance Director or Finance Manager. Proper documentation obtained from confirmation and cash disbursement wire transfers is required for each investment transaction. Timely bank reconciliation is conducted to ensure proper handling of all transactions.

The investment portfolio and all related transactions are reviewed and balanced to appropriate general ledger accounts by the Finance Officer on a monthly basis. An independent analysis by an external auditor shall be conducted annually to review and perform procedure testing on the City’s cash and investments that have a material impact on the financial statements. The City TreasurerFinance Director or Finance Manager shall review and assure compliance with investment process and procedures. 48 June 2, 2026 Item 13

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City of Del Mar– Investment Policy 14

16. Performance Standards
The investment portfolio shall be designed with the objective of obtaining a rate of return throughout budgetary and economic cycles, commensurate with the investment risk constraints and the cash flow needs.

The City intends to spread its investments relatively evenly between 0 and 5 years and hold those investments to maturity. The City will attempt to limit its authorized investments to the safest end of the investment spectrum—debt issued by the U.S.

Treasury, U.S. Government Agencies, and debt that is federally insured (see section 8.0 Authorized and Suitable Investments, above, for a complete list of authorized investments).

Therefore, an appropriate performance benchmark will be a Constant Treasury Maturity Rate consistent with the weighted average maturity of the portfolio. The City recognizes that benchmarks may change over time based on changes in market conditions or cash flow requirements.

The investment portfolio shall be designed with the objective of obtaining a rate of return throughout budgetary and economic cycles, commensurate with the investment risk constraints and the cash flow needs. The City intends to spread its investments relatively evenly between 0 and 5 years and hold those investments to maturity. Therefore, an appropriate performance benchmark will be a market-based index or blended benchmark that reflects the portfolio’s actual composition and weighted average maturity. This may include Treasury indices, government/credit indices, or other publicly available benchmarks consistent with the investment types authorized in the City’s policy. The selected benchmark shall be reviewed periodically and adjusted as needed to remain aligned with the City’s investment objectives and evolving portfolio structure.

17. Reporting
The City TreasurerFinance Director or Finance Manager shall review and render quarterly reports to the City Council that include the following information:
• Investment type (e.g. U.S. Treasury Note, U.S. Government Agency Bond) • Name of the issuer (e.g. Federal Farm Credit Bank, Federal Home Loan Bank) • Maturity date
• Yield to maturity
• Current market value and source of market value
• Par and dollar amount for each security the City has invested in • Par and dollar amount on any money held by the City (e.g. LAIF balance, Cash Balance).
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City of Del Mar– Investment Policy 15
The report shall also include a description of any of the City’s funds, investments, or programs that are under the management of contracted parties, including lending programs.

The quarterly report shall state compliance of the portfolio to the investment policy, or manner in which the portfolio is not in compliance.

The quarterly report shall include a statement denoting the ability of the City to meet its expenditure requirements for the next six months or provide an explanation as to why sufficient money shall (or may not) be available.

The quarterly reports shall be placed on the City Council meeting agenda for its review and approval no later than 45 days after the quarter ends. If there are no Council meetings within the 45-day period, the quarterly report shall be presented to the Council at the soonest possible meeting thereafter.

18. Investment Policy Adoption
The City of Del Mar investment policy shall be adopted by resolution of the City Council.

The policy shall be reviewed annually by the City Council and any modifications made thereto must be approved by the City Council.

The City TreasurerFinance Director or Finance Manager shall establish written investment policy procedures for the operation of the investment program consistent with this policy. The procedures should include reference to: safekeeping, master repurchase agreements, wire transfer agreements, banking service contracts and collateral/depository agreements. Such procedures shall include explicit delegation of authority to persons responsible for investment transactions. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the City of Del Mar.

19. Glossary of Terms in this Policy
Accrued Interest: Interest earned but not yet received.

Annual Comprehensive Financial Report (ACFR): The official annual financial report for the City. It includes five combined statements and basic financial statements for each individual fund and account group prepared in conformity with Generally Accepted Accounting Principles (GAAP).

Bankers’ Acceptances: Also known as bills of exchange or time drafts, are short-term debt instruments that are issued by a borrower (typically a business) and are guaranteed by a commercial bank. These instruments are used primarily in international trade to finance the purchase of goods or services.
50 June 2, 2026 Item 13

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City of Del Mar– Investment Policy 16
Bond: A financial obligation for which the issuer promises to pay the bondholder a specified stream of future cash flows, including periodic interest payments and a principal repayment.

Bond Swap: Selling one bond issue and buying another at the same time in order to create an advantage for the investor. Some benefits of swapping may include taxdeductible losses, increased yields, and an improved quality portfolio.

Broker: In securities, the intermediary between a buyer and a seller of securities. The broker, who usually charges a commission, must be registered with the exchange in which he or she is trading, accounting for the name registered representative.

Certificate of Deposit: A deposit insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC) at a set rate for a specified period of time.

Collateral: Securities, evidence of deposit or pledges to secure repayment of a loan. Also refers to securities pledged by a bank to secure deposit of public moneys.

Constant Maturity Treasury (CMT): An average yield of a specific Treasury maturity sector for a specific time frame. This is a market index for reference of past direction of interest rates for the given Treasury maturity range.

Custody: A banking service that provides safekeeping for the individual securities in a customer's investment portfolio under a written agreement that also calls for the bank to collect and pay out income, to buy, sell, receive and deliver securities when ordered to do so by the principal.

Delivery vs. Payment (DVP): Delivery of securities with a simultaneous exchange of money for the securities.

Diversification: Dividing investment funds among a variety of securities offering independent returns and risk profiles.

Federal Deposit Insurance Corporation (FDIC): Insurance provided to customers of a subscribing bank that guarantees deposits to a set limit (currently $250,000) per account.

Interest Rate: The annual yield earned on an investment, expressed as a percentage.

Liquidity: Refers to the ability to rapidly convert an investment into cash.

Market Value: The price at which a security is trading and could presumably be purchased or sold.

Maturity: The date upon which the principal or stated value of an investment becomes due and payable.

Portfolio: Collection of securities held by an investor. 51 June 2, 2026 Item 13

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City of Del Mar– Investment Policy 17
Primary Dealer: A group of government securities dealers that submit daily reports of market activity and security positions held to the Federal Reserve Bank of New York and are subject to its informal oversight.

Purchase Date: The date in which a security is purchased for settlement on that or a later date.

Rate of Return: The yield obtainable on a security based on its purchase price or its current market price. This may be the amortized yield to maturity on a bond or the current income return.

Risk: Degree of uncertainty of return on an asset. Safekeeping: See Custody.

Settlement Date: The date on which a trade is cleared by delivery of securities against funds.

Time Deposit: A deposit in an interest-paying account that requires the money to remain on account for a specific length of time. While withdrawals can generally be made from a passbook account at any time, other time deposits, such as certificates of deposit, are penalized for early withdrawal.

Treasury Obligations: Debt obligations of the U.S. Government that are sold by the Treasury Department in the forms of bills, notes, and bonds. Bills are short-term obligations that mature in one year or less. Notes are obligations that mature between one year and ten years. Bonds are long-term obligations that generally mature in ten years or more.

U.S. Government Agencies: Instruments issued by various US Government Agencies most of which are secured only by the credit worthiness of the particular agency.

Yield: The rate of annual income return on an investment, expressed as a percentage. It is obtained by dividing the current dollar income by the current market price of the security.

Yield to Maturity: The rate of income return on an investment, minus any premium or plus any discount, with the adjustment spread over the period from the date of purchase to the date of maturity of the bond, expressed as a percentage.

20. Glossary of General Investment Terms
Active Deposits: Funds that are immediately required for disbursement.

Amortization: An accounting practice of gradually decreasing (increasing) an asset's book value by spreading its depreciation (accretion) over a period of time.

Asked Price: The price a broker dealer offers to sell securities. Basis Point: One basis point is one hundredth of one percent (.01). Bid Price: The price a broker / dealer offers to purchase securities.
52 June 2, 2026 Item 13

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City of Del Mar– Investment Policy 18
Bond Swap: Selling one bond issue and buying another at the same time in order to create an advantage for the investor. Some benefits of swapping may include taxdeductible losses, increased yields, and an improved quality portfolio.

Book Entry Securities: Securities, such stocks held in “street name,” that are recorded in a customer’s account, but are not accompanied by a certificate. The trend is toward a certificate-free society to cut down on paperwork and to diminish investors’ concerns about the certificates themselves. All the large New York City banks, including those that handle the bulk of the transactions of the major government securities dealers, now clear most of their transactions with each other and with the Federal Reserve through the use of automated telecommunications and the “book-entry” custody system maintained by the Federal Reserve Bank of New York. These banks have deposited with the Federal Reserve Bank a major portion of their government and agency securities holdings, including securities held for the accounts of their customers or in a fiduciary capacity for the City. Virtually all transfers for the account of the banks, as well as for the government securities dealers who are their clients, are now effected solely by bookkeeping entries.

The system reduces the costs and risks of physical handling and speeds the completion of transactions.

Book Value: The value at which a debt security is shown on the holder's balance sheet.

Book value is acquisition cost less amortization of premium or accretion of discount.

Bullet Bond: See “Non-callable Bond.”
Callable Bond: A debit obligation where the bond issuer (i.e. borrower) has the option to call the bond or pay it off early (before the scheduled maturity date). For instance, a 5- year bond might be “callable quarterly”—meaning that, although the bond has a scheduled end date 5 years from now, it could end in 3 months (and every 3 months after that, until the scheduled maturity date).

Coupon: The annual rate of interest that a bond's issuer promises to pay the bondholder on the bond's face value.

Credit Analysis: A critical review and appraisal of the economic and financial conditions or of the ability to meet debt obligations.

Current Yield: The interest paid on an investment expressed as a percentage of the current price of the security.

Discount: The difference between the cost of a security and its value at maturity when quoted at lower than face value.

Duration: The weighted average maturity of a bond's cash flow stream, where the present value of the cash flows serve as the weights; the future point in time at which on average, an investor has received exactly half of the original investment, in present value 53 June 2, 2026 Item 13

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City of Del Mar– Investment Policy 19
terms; a bond's zero-coupon equivalent; the fulcrum of a bond's present value cash flow time line.

Fannie Mae: Trade name for the Federal National Mortgage Association (FNMA), a U.S. sponsored corporation.

Federal Reserve System: The central bank of the U.S. that consists of a seven- member Board of Governors, 12 regional banks and approximately 8,000 commercial banks that are members.

Fed Wire: A wire transmission service established by the Federal Reserve Bank to facilitate the transfer of funds through debits and credits of funds between participants within the Fed system.

Freddie Mac: Trade name for the Federal Home Loan Mortgage Corporation (FHLMC), a U.S. sponsored corporation.

Investment Agreements: An agreement with a financial institution to borrow public funds subject to certain negotiated terms and conditions concerning collateral, liquidity and interest rates.

Nationally Recognized Statistical Rating Organizations (NRSRO): A U.S. Securities & Exchange Commission registered agency that assesses the creditworthiness of an entity or specific security. NRSRO typically refers to Standard and Poor’s Ratings Services, Fitch Ratings, Inc. or Moody’s Investors Services.

New Issue: Term used when a security is originally "brought" to market.

Non-callable Bond: Also known as, “Bullet Bond.” A non-callable bond is a debt obligation where the bond issuer does not have the option to “call the bond” i.e.-end the bond before the scheduled maturity date.

Perfected Delivery: Refers to an investment where the actual security or collateral is held by an independent third party representing the purchasing entity.

Purchase Date: The date in which a security is purchased for settlement on that or a later date.

Repurchase Agreement (REPO): A transaction where the seller (bank) agrees to buy back from the buyer (City) the securities at an agreed upon price after a stated period of time.

Reverse Repurchase Agreement (REVERSE REPO): A transaction where the seller (City) agrees to buy back from the buyer (bank) the securities at an agreed upon price after a stated period of time.

Secondary Market: A market made for the purchase and sale of outstanding issues following the initial distribution.
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City of Del Mar– Investment Policy 20
Yield Curve: The yield on bonds, notes or bills of the same type and credit risk at a specific date for maturities up to thirty years.
55 June 2, 2026 Item 13
RESOLUTION NO. 2026-XX

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DEL

MAR, CALIFORNIA, APPROVING THE STATEMENT OF
INVESTMENT POLICY FOR FISCAL YEAR 2026-2027, AND

DELEGATING THE AUTHORITY TO INVEST CITY FUNDS TO

THE TREASURER
WHEREAS, the City Council of the City of Del Mar, California, pursuant to Title 5, Division 2, Part 1 of the Government Code of the State of California, is authorized to invest City funds more particularly set out in Section 53601 of said Code; and WHEREAS, the City Council, pursuant to Section 53607 of the Government Code is authorized to delegate said authority to the Treasurer; and WHEREAS, it is good practice for the City Council to review the Statement of Investment Policy as more particularly set out in Section 53646 of said Code.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Del Mar, California, that the above recitals are true and correct.

BE IT FURTHER RESOLVED, that the City Council of the City of Del Mar does hereby authorize the Treasurer to invest City funds and adopt the Statement of Investment Policy as attached in Exhibit “A” of this Resolution.

PASSED, APPROVED AND ADOPTED by the City Council of the City of Del Mar, California, at a Regular Meeting held this 2nd day of June 2026.

________________________________
Tracy Martinez, Mayor
City of Del Mar
APPROVED AS TO FORM:
________________________________
Christina Cameron, City Attorney
City of Del Mar
Attachment D
56 June 2, 2026 Item 13
Resolution No. 2026-XX

ATTEST AND CERTIFICATION:

STATE OF CALIFORNIA

COUNTY OF SAN DIEGO

CITY OF DEL MAR
I, Sarah Krietor, Administrative Services Manager/Clerk of the City of Del Mar, California, DO HEREBY CERTIFY that the foregoing is a true and correct copy of Resolution No. 2026-XX, adopted by the City Council of the City of Del Mar, California, at a Regular Meeting held the 2nd day of June 2026, by the following vote:

AYES:

NOES:

RECUSE:

ABSENT:

ABSTAIN:
________________________________
Sarah Krietor, Administrative Services
Manager/City Clerk
City of Del Mar
57 June 2, 2026 Item 13
City of Del Mar– Investment Policy 1

CITY OF DEL MAR

INVESTMENT POLICY
Fiscal Year 2026-27
Table of Contents

1. Policy .................................................................................................................................... 2

2. Scope .................................................................................................................................... 2

3. Prudence .............................................................................................................................. 2

4. Objectives ............................................................................................................................. 2

5. Delegation of Authority ........................................................................................................ 3

6. Ethics and Conflicts of Interest ........................................................................................... 3

7. Authorized Dealers and Institutions ................................................................................... 4

8. Authorized and Suitable Investments ................................................................................. 4

9. Review of Investment Portfolio ........................................................................................... 8

10. Investment Pools / Money Market Funds ......................................................................... 8

11. Collateralization ................................................................................................................. 8

12. Safekeeping and Custody ................................................................................................. 9

13. Diversification .................................................................................................................... 9

14. Maximum Maturities ........................................................................................................... 9

15. Internal Controls ................................................................................................................ 9

16. Performance Standards ....................................................................................................10

17. Reporting ...........................................................................................................................10

18. Investment Policy Adoption .............................................................................................11

19. Glossary of Terms in this Policy ......................................................................................11

20. Glossary of General Investment Terms ...........................................................................13 Exhibit A
58 June 2, 2026 Item 13
City of Del Mar– Investment Policy 2

1. Policy
The City of Del Mar shall invest public funds in such a manner as to comply with federal, state and local laws; ensure prudent money management; provide for daily cash flow requirements; and meet the objectives of the Policy, in priority order of Safety, Liquidity and Return on investment. In accordance with the Municipal Code of the City of Del Mar and under authority granted by the City Council, the City Manager is responsible for investing the unexpended cash in the City Treasury.

2. Scope
The investment policy applies to all investment activities and financial assets of the City of Del Mar as accounted for in the Annual Comprehensive Financial Report (ACFR). This policy is applicable, but not limited to, all funds listed below:
 General Fund;
 Capital Funds;
 Other Special Revenue Funds, Debt Service Funds, Internal Service Funds; and  Any new fund created by the City Council unless specifically exempted.

3. Prudence
The standard of prudence to be used by the designated representative shall be the “prudent investor” standard and shall be applied in the context of managing the overall portfolio. Persons authorized to make investment decisions on behalf of local agencies investing public funds are trustees and therefore fiduciaries subject to the prudent investor standard which states, “When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency”.

The City Manager, City Treasurer, or other city staff designated as investment officers assigned to manage the investment portfolio, acting within the intent and scope of the investment policy and other written procedures and exercising due diligence, shall be relieved of personal responsibility and liability for an individual security's credit risk or market price changes, provided deviations from expectations are reported in a timely manner and appropriate action is taken to control adverse developments.

4. Objectives
The City’s primary investment objectives, in order of priority, shall be:

1. Safety: Safety of principal is the foremost objective of the investment program.

Investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. The City shall seek to preserve principal by mitigating the two types of risk: credit risk and market risk. 59 June 2, 2026 Item 13
City of Del Mar– Investment Policy 3

a. Credit risk, defined as the risk of loss due to failure of the issuer of a security, shall be mitigated by investing in issuers that carry the direct or implied backing of the U.S. Government (including, but not limited to, the U.S.

Treasury, U.S. Government Agencies, and federally insured banks). The portfolio will be diversified so that the failure of any one issuer does not unduly harm the City’s capital base and cash flow.
b. Market risk, (aka “interest rate risk”) defined as market value fluctuations due to overall changes in the general level of interest rates shall be mitigated by limiting the maximum maturity of any one security to five years, structuring the portfolio based on historic and current cash flow analysis eliminating the need to sell securities prior to maturity and avoiding the purchase of long-term securities for the sole purpose of short-term speculation. Moreover, it is the City’s full intent, at the time of purchase, to hold all investments until maturity to ensure the return of all invested principal dollars. Limited exceptions will be granted for security swaps that would improve the portfolio’s yield and/or credit quality.

2. Liquidity: The City’s investment portfolio will remain sufficiently liquid to enable the City of Del Mar to meet all operating requirements which might be reasonably anticipated.

3. Return on Investments: The City’s investment portfolio shall have the objective of attaining a comparative performance measurement or an acceptable rate of return throughout budgetary and economic cycles. These measurements should be commensurate with the City’s investment risk constraints identified in this Investment Policy and the cash flow characteristics of the portfolio.

5. Delegation of Authority
The Municipal Code of the City of Del Mar and the authority granted by City Council assign the responsibility of investing unexpended cash to the City Manager. Daily management responsibility of the investment program may be delegated to the City Treasurer, who shall establish procedures for the operation consistent with this investment policy.

6. Ethics and Conflicts of Interest
Officers and employees involved in the investment process shall refrain from personal business activity that conflicts with proper execution of the investment program or impairs their ability to make impartial investment decisions. Additionally, the City Manager and the City Treasurer are required to annually file applicable financial disclosures as required by the Fair Political Practices Commission (FPPC). Furthermore, Investment officials must refrain from undertaking personal investment transactions with the same individual(s) employed by the financial institution with whom business is conducted on behalf of the City.
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City of Del Mar– Investment Policy 4

7. Authorized Dealers and Institutions
The City Treasurer will maintain a list of approved financial institutions and broker/dealers authorized to provide investment services to the City of Del Mar. Approved broker/dealers may include primary dealers or regional dealers that qualify under Securities and Exchange Commission Rule 15C3-1 (Uniform Net Capital Rule) and are properly licensed to conduct business in the State of California.

No public deposit shall be made except in a qualified public depository as established by California state law.

Financial institutions and broker/dealers conducting investment transactions with the City shall meet the following minimum qualifications:

1. Broker/dealer firms and the individuals representing them shall be reputable and trustworthy.

2. Broker/dealer firms shall demonstrate the financial capacity to meet all financial obligations associated with transactions conducted with the City.

3. Firms and representatives shall be knowledgeable and experienced in public agency investing and the investment products authorized under this Investment Policy.

Financial institutions and broker/dealers wishing to conduct investment transactions with the City shall provide the City Treasurer with the following documentation, as applicable:
 Audited financial statements
 Proof of FINRA certification
 Trading resolution
 Proof of State of California registration
 A completed broker/dealer questionnaire
 Certification that the firm has received and reviewed the City’s Investment Policy  Depository or custodial agreements as required
If the City utilizes an investment advisor or investment manager, the advisor or manager shall be registered with the Securities and Exchange Commission (SEC) and shall demonstrate experience managing public agency investment portfolios. The City Treasurer will conduct an annual review of the financial condition and registrations of approved broker/dealers and financial institutions to ensure continued eligibility to conduct investment transactions with the City.
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City of Del Mar– Investment Policy 5

8. Authorized and Suitable Investments
Investment of City funds is governed by the California Government Code Sections 53600 et seq. Within the context of the limitations, the following investments are authorized, as further limited herein:

1. United States Treasury Bills, Bonds, and Notes or those for which the full faith and credit of the United States are pledged for payment of principal and interest. There is no percentage limitation of the portfolio that can be invested in this category, although a five-year maturity limitation is applicable.

2. Federal agency or United States government-sponsored enterprise obligations, participations, or other instruments, including those issued by or fully guaranteed as to principal and interest by federal agencies or United States governmentsponsored enterprises.

3. Local Agency Investment Fund (LAIF), which is a State of California managed investment pool, and the San Diego County Investment Pool, may be used up to the maximum permitted by California State Law. A review of the pool/fund is required when part of the list of authorized investments, with the knowledge that the pool/fund may include some investments allowed by statute but not explicitly identified in this investment policy.

Additionally, shares of beneficial interest issued by a joint powers authority organized pursuant to CA Code (Section 6509.7) that invests in the securities and obligations in compliance with CA Code 53601 (subsection ‘a’ to ‘r’, inclusive) are also authorized. Each share shall represent an equal proportional interest in the underlying pool of securities owned by the joint powers authority. To be eligible under this section, the joint powers authority issuing the shares shall have retained an investment adviser that meets all of the following criteria:
 The adviser is registered or exempt from registration with the Securities and Exchange Commission;
 The adviser has not less than five years of experience investing in the securities and obligations authorized in CA Code (subsection ‘a’ to ‘r’, inclusive); and
 The adviser has assets under management in excess of five hundred million dollars ($500,000,000).

4. Negotiable Certificates of Deposit issued by nationally or state-chartered banks (FDIC insured institutions) or state or federal savings institutions. Purchases of negotiable certificates of deposit may not exceed 30% of total portfolio. Principal and accrued interest on these investments must not exceed the $250,000 FDIC insurance limit. A maturity limitation of five years is applicable. 62 June 2, 2026 Item 13
City of Del Mar– Investment Policy 6

5. Time deposits or placement service deposits, non-negotiable and collateralized in accordance with California Government Code § 53601.8, may be purchased through banks, savings and loan associations, or federally insured credit unions.

Deposits placed through a private-sector placement service shall not exceed fifty percent (50%) of the agency’s total investment portfolio at the time of purchase, as permitted under Government Code § 53601.8. Principal and accrued interest shall be fully insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA), or collateralized in accordance with state law. Negotiable certificates of deposit authorized under Government Code § 53601(i) are excluded from this limitation. This authority remains in effect through January 1, 2031, unless extended by further legislative action.

6. Various daily money market funds administered for or by trustees, paying agents and custodian banks contracted by the City of Del Mar may be purchased as allowed under the State of California Government Code. Only funds holding U.S.

Treasury or Government agency obligations can be used.

7. Medium-term notes, defined as all corporate and depository institution debt securities with a maximum remaining maturity of five years or less, issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States. 30% limit of agency's moneys; 10% limit per issuer. Rated "A" or its equivalent or better by an NRSRO.

8. Commercial paper of “prime” quality of the highest ranking or of the highest letter and number rating as provided for by a nationally recognized statistical rating organization (NRSRO). Maximum maturity of 397 days; 25% limit of agency's moneys, may invest no more than 10 percent of its total investment assets in the commercial paper of any single issuer.

9. Bankers’ acceptances, otherwise known as bills of exchange or time drafts, that are drawn on and accepted by a commercial bank. Maturity not to exceed 180 days; 40% limit of agency's moneys; 30% limit per bank.

10. Bonds issued by the local agency, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency or by a department, board, agency, or authority of the local agency. 30% limit of agency's moneys; 10% limit per issuer. Rated "A" or its equivalent or better by an NRSRO.

11. State warrants or treasury notes/bonds-Registered state warrants or treasury notes or bonds of this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the state or 63 June 2, 2026 Item 13
City of Del Mar– Investment Policy 7

by a department, board, agency, or authority of the state. 30% limit of agency's moneys; 10% limit per issuer. Rated "A" or its equivalent or better by an NRSRO.

12. Registered treasury notes or bonds of any of the other 49 states in addition to California, including bonds payable solely out of the revenues from a revenueproducing property owned, controlled, or operated by a state or by a department, board, agency, or authority of any of the other 49 states, in addition to California. 30% limit of agency's moneys; 10% limit per issuer. Rated "A" or its equivalent or better by an NRSRO.

13. Bonds, notes, warrants, or other evidences of indebtedness of a local agency within this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency, or by a department, board, agency, or authority of the local agency. 30% limit of agency's moneys; 10% limit per issuer. Rated "A" or its equivalent or better by an NRSRO.

14. Repurchase Agreements, or reverse repurchase agreements or securities lending agreements of securities authorized by this section, as long as the agreements are subject to this subdivision, including the delivery requirements specified in CA government code. Term not to exceed one year; Securities must be valued at 102% or greater of the funds borrowed against those securities and the value shall be adjusted no less than quarterly.

15. Shares of beneficial interest (Mutual Funds) issued by diversified management companies that invest in the securities and obligations as authorized by Section 53601, subdivisions (a) to (k), inclusive, and subdivisions (m) to (q), inclusive, and that comply with the investment restrictions. No more than 10 percent of the agency’s funds may be invested in shares of beneficial interest of any one mutual fund.

16. Supranational United States dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, or InterAmerican Development Bank, with a maximum remaining maturity of five years or less, and eligible for purchase and sale within the United States. Investments under this subdivision shall be rated in a rating category of “AA” or its equivalent or better by an NRSRO and shall not exceed 30 percent of the agency’s moneys that may be invested.

The following summary of maximum percentage limits, by instrument, are established for the City’s investment portfolio:
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City of Del Mar– Investment Policy 8

Authorized Investment
Type
Government
Code
Maximum
Maturity
Minimum Credit
Quality
Maximum in
Portfolio
Maximum
Investment in One
Issuer
Treasury
Obligations (bills,
notes, & bonds)
53601(b) 5 Years N/A 100% N/A
US Government
Agency and Federal
Agency Securities
53601(f) 5 Years N/A 100% N/A
Local Agency
Investment Fund
(LAIF)
16429.1 Upon
Demand N/A
As permitted by

LAIF N/A
San Diego County
Investment Pool 53684
Upon
Demand N/A
As permitted by
County Treasurer
(currently no limit) N/A
Joint Powers Authority
Pool 53601(p) N/A See § 8.3 (above) As permitted by each

JPA N/A
Negotiable Certificates
of Deposit 53601(i) 5 Years N/A 30% $250,000
per issuer
(FDIC
insured
limit)
Placement Service
Deposits
53601.8
and
53635.8
5 Years N/A 50% N/A
Medium-term notes 53601(k) 5 Years Rated "A" or
its equivalent
or better by an
NRSRO
30% 10%
Commercial paper 53601(h) 397 Days Highest
ranking or of
the highest
letter and
number rating
as provided for
by a nationally
recognized
statistical
rating
organization
(NRSRO)
25% 10%
Bankers’ Acceptances 53601(g) 180 Days N/A 40% 30%
Bonds issued by the local
agency
53601(a) 5 Years Rated "A" or
its equivalent
or better by an
NRSRO
30% 10%
State warrants or treasury
notes/bonds
53601(c) 5 Years Rated "A" or
its equivalent
or better by an
NRSRO
30% 10%
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City of Del Mar– Investment Policy 9

Registered treasury notes
or bonds of any of the
other 49 states, including
California
53601(d) 5 Years Rated "A" or
its equivalent
or better by an
NRSRO
30% 10%
Bonds, notes, warrants,
or other evidences of
indebtedness of a local
agency within California
53601(e) 5 Years Rated "A" or
its equivalent
or better by an
NRSRO
30% 10%
Repurchase Agreements 53601(j) 1 Year N/A N/A N/A
Shares of beneficial
interest (Mutual Funds /
Money Market Mutual
Funds)
53601(l) N/A Highest
ranking or
highest letter
and numerical
rating by not
less than two
NRSROs
20% 10%

Supranationals 53601(q) 5 Years Rated "AA" or
its equivalent
or better by an
NRSRO
30% N/A

9. Review of Investment Portfolio
The securities held by the City of Del Mar must be in compliance with Section 8.0, “Authorized and Suitable Investments,” at the time of purchase. The City Treasurer will review the investment portfolio at least quarterly to ensure compliance with this Investment Policy and to identify any securities that do not comply with the policy.

If a security is determined to be noncompliant due to changes in credit ratings, portfolio limits, or other factors occurring after the date of purchase, the City Treasurer will evaluate the circumstances and determine the appropriate course of action consistent with the City’s investment objectives of safety, liquidity, and return. Actions may include, but are not limited to:
 holding the investment to maturity if it is determined that the security continues to be prudent and in the best interest of the City;
 reducing exposure through the sale of the security when market conditions permit; or
 implementing other corrective measures necessary to bring the portfolio back into compliance with this Investment Policy.

The City Treasurer will establish procedures to document and report any significant or material instances of noncompliance identified during the portfolio review process. 66 June 2, 2026 Item 13
City of Del Mar– Investment Policy 10

10. Investment Pools / Money Market Funds
A thorough investigation of the investment pool/money market fund is required prior to investing, and on a continual basis. Best efforts will be made to acquire the following information:

1. A description of eligible investment securities, and a written statement of investment policy and objectives.

2. A description of interest calculations and how it is distributed, and how gains and losses are treated.

3. A description of how the securities are safeguarded (including the settlement processes), and how often the securities are priced and the program audited.

4. A description of who may invest in the program, how often, and what size deposit and withdrawal are allowed.

5. A schedule for receiving statements and portfolio listings.

6. Are reserves, retained earnings, etc. utilized by the pool/fund?

7. A fee schedule, and when and how it is assessed.

8. Is the pool/fund eligible for bond proceeds and/or will it accept such proceeds?

11. Collateralization
Collateralization will be required on two types of investments: non-negotiable certificates of deposit and repurchase (and reverse repurchase) agreements. To anticipate market changes and provide a level of security for all funds, the collateralization level will be 110% of market value for non-negotiable certificate of deposit and 102% for reverse repurchase agreements of principal and accrued interest.

Collateral will always be held by an independent third party with whom the city has a current custodial agreement. A clearly marked evidence of ownership (safekeeping receipt) must be supplied to the entity and retained.

The City may waive the collateralization requirements for any portion of the deposit that is covered by Federal Deposit Insurance.

12. Safekeeping and Custody
All security transactions shall be conducted on a delivery-versus-payment (DVP) basis.

Securities will be held by a third-party custodian designated by the City Treasurer and evidenced by safekeeping receipts. Collateral requirements for repurchase and reverse repurchase agreements are addressed in Section 11 (Collateralization). 67 June 2, 2026 Item 13
City of Del Mar– Investment Policy 11

13. Diversification
The City shall diversify investments within the portfolio to avoid incurring unreasonable risks inherent in over-investing in specific instruments, individual financial institutions, or maturities.

To promote diversification, no more than five percent (5%) of the portfolio may be invested in the securities of any one issuer unless otherwise specified in Section

8.0 “Authorized and Suitable Investments” or the Authorized Investment Table.

Issuer limitations identified in Section 8.0 and the Authorized Investment Table shall apply to those specific investment types.

This limitation does not apply to:
 U.S. Treasury securities
 Federal agency securities
 Local government investment pools
 Money market mutual funds
 The Local Agency Investment Fund (LAIF)

14. Maximum Maturities
To the extent possible, the City of Del Mar will attempt to match its investments with anticipated cash flow requirements. Unless matched to a specific cash flow, the City will not directly invest in securities maturing more than 5 years from the date of purchase.

Any investment longer than 5 years must be done with advance permission from City Council. Certain investments authorized by California Government Code, such as repurchase agreements, may be subject to shorter statutory maturity limits as identified in Section 8.0 and the Authorized Investment Table.

15. Internal Controls
The City Treasurer is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City of Del Mar are protected from loss, theft, fraud or misuse.

Separation of functions between the City Treasurer, and the Finance Officer is designed to provide an ongoing internal review to prevent the potential for converting assets or concealing transactions.

Investment decisions are made by the City Treasurer, executed by the third-party administrator and confirmed by the Finance Officer. All wire transfers initiated by the City Treasurer must be reconfirmed by the appropriate financial institution to the City Treasurer. Proper documentation obtained from confirmation and cash disbursement wire transfers is required for each investment transaction. Timely bank reconciliation is conducted to ensure proper handling of all transactions. 68 June 2, 2026 Item 13
City of Del Mar– Investment Policy 12

The investment portfolio and all related transactions are reviewed and balanced to appropriate general ledger accounts by the Finance Officer on a monthly basis. An independent analysis by an external auditor shall be conducted annually to review and perform procedure testing on the City’s cash and investments that have a material impact on the financial statements. The City Treasurer shall review and assure compliance with investment process and procedures.

16. Performance Standards
The investment portfolio shall be designed with the objective of obtaining a rate of return throughout budgetary and economic cycles, commensurate with the investment risk constraints and the cash flow needs. The City intends to spread its investments relatively evenly between 0 and 5 years and hold those investments to maturity. Therefore, an appropriate performance benchmark will be a market-based index or blended benchmark that reflects the portfolio’s actual composition and weighted average maturity. This may include Treasury indices, government/credit indices, or other publicly available benchmarks consistent with the investment types authorized in the City’s policy. The selected benchmark shall be reviewed periodically and adjusted as needed to remain aligned with the City’s investment objectives and evolving portfolio structure.

17. Reporting
The City Treasurer shall review and render quarterly reports to the City Council that include the following information:
 Investment type (e.g. U.S. Treasury Note, U.S. Government Agency Bond)  Name of the issuer (e.g. Federal Farm Credit Bank, Federal Home Loan Bank)  Maturity date
 Yield to maturity
 Current market value and source of market value
 Par and dollar amount for each security the City has invested in  Par and dollar amount on any money held by the City (e.g. LAIF balance, Cash Balance).

The report shall also include a description of any of the City’s funds, investments, or programs that are under the management of contracted parties, including lending programs.

The quarterly report shall state compliance of the portfolio to the investment policy, or manner in which the portfolio is not in compliance.

The quarterly report shall include a statement denoting the ability of the City to meet its expenditure requirements for the next six months or provide an explanation as to why sufficient money shall (or may not) be available.

The quarterly reports shall be placed on the City Council meeting agenda for its review and approval no later than 45 days after the quarter ends. If there are no Council meetings 69 June 2, 2026 Item 13
City of Del Mar– Investment Policy 13

within the 45-day period, the quarterly report shall be presented to the Council at the soonest possible meeting thereafter.

18. Investment Policy Adoption
The City of Del Mar investment policy shall be adopted by resolution of the City Council.

The policy shall be reviewed annually by the City Council and any modifications made thereto must be approved by the City Council.

The City Treasurer shall establish written investment policy procedures for the operation of the investment program consistent with this policy. The procedures should include reference to: safekeeping, master repurchase agreements, wire transfer agreements, banking service contracts and collateral/depository agreements. Such procedures shall include explicit delegation of authority to persons responsible for investment transactions.

No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the City of Del Mar.

19. Glossary of Terms in this Policy
Accrued Interest: Interest earned but not yet received.

Annual Comprehensive Financial Report (ACFR): The official annual financial report for the City. It includes five combined statements and basic financial statements for each individual fund and account group prepared in conformity with Generally Accepted Accounting Principles (GAAP).

Bankers’ Acceptances: Also known as bills of exchange or time drafts, are short-term debt instruments that are issued by a borrower (typically a business) and are guaranteed by a commercial bank. These instruments are used primarily in international trade to finance the purchase of goods or services.

Bond: A financial obligation for which the issuer promises to pay the bondholder a specified stream of future cash flows, including periodic interest payments and a principal repayment.

Broker: In securities, the intermediary between a buyer and a seller of securities. The broker, who usually charges a commission, must be registered with the exchange in which he or she is trading, accounting for the name registered representative.

Certificate of Deposit: A deposit insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC) at a set rate for a specified period of time.

Collateral: Securities, evidence of deposit or pledges to secure repayment of a loan. Also refers to securities pledged by a bank to secure deposit of public moneys.

Constant Maturity Treasury (CMT): An average yield of a specific Treasury maturity sector for a specific time frame. This is a market index for reference of past direction of interest rates for the given Treasury maturity range.
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City of Del Mar– Investment Policy 14

Custody: A banking service that provides safekeeping for the individual securities in a customer's investment portfolio under a written agreement that also calls for the bank to collect and pay out income, to buy, sell, receive and deliver securities when ordered to do so by the principal.

Delivery vs. Payment (DVP): Delivery of securities with a simultaneous exchange of money for the securities.

Diversification: Dividing investment funds among a variety of securities offering independent returns and risk profiles.

Federal Deposit Insurance Corporation (FDIC): Insurance provided to customers of a subscribing bank that guarantees deposits to a set limit (currently $250,000) per account.

Interest Rate: The annual yield earned on an investment, expressed as a percentage.

Liquidity: Refers to the ability to rapidly convert an investment into cash.

Market Value: The price at which a security is trading and could presumably be purchased or sold.

Maturity: The date upon which the principal or stated value of an investment becomes due and payable.

Portfolio: Collection of securities held by an investor.

Primary Dealer: A group of government securities dealers that submit daily reports of market activity and security positions held to the Federal Reserve Bank of New York and are subject to its informal oversight.

Rate of Return: The yield obtainable on a security based on its purchase price or its current market price. This may be the amortized yield to maturity on a bond or the current income return.

Risk: Degree of uncertainty of return on an asset. Safekeeping: See Custody.

Settlement Date: The date on which a trade is cleared by delivery of securities against funds.

Time Deposit: A deposit in an interest-paying account that requires the money to remain on account for a specific length of time. While withdrawals can generally be made from a passbook account at any time, other time deposits, such as certificates of deposit, are penalized for early withdrawal.

Treasury Obligations: Debt obligations of the U.S. Government that are sold by the Treasury Department in the forms of bills, notes, and bonds. Bills are short-term obligations that mature in one year or less. Notes are obligations that mature between one year and ten years. Bonds are long-term obligations that generally mature in ten years or more.
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City of Del Mar– Investment Policy 15

U.S. Government Agencies: Instruments issued by various US Government Agencies most of which are secured only by the credit worthiness of the particular agency.

Yield: The rate of annual income return on an investment, expressed as a percentage. It is obtained by dividing the current dollar income by the current market price of the security.

Yield to Maturity: The rate of income return on an investment, minus any premium or plus any discount, with the adjustment spread over the period from the date of purchase to the date of maturity of the bond, expressed as a percentage.

20. Glossary of General Investment Terms
Active Deposits: Funds that are immediately required for disbursement.

Amortization: An accounting practice of gradually decreasing (increasing) an asset's book value by spreading its depreciation (accretion) over a period of time.

Asked Price: The price a broker dealer offers to sell securities. Basis Point: One basis point is one hundredth of one percent (.01). Bid Price: The price a broker / dealer offers to purchase securities.

Bond Swap: Selling one bond issue and buying another at the same time in order to create an advantage for the investor. Some benefits of swapping may include taxdeductible losses, increased yields, and an improved quality portfolio.

Book Entry Securities: Securities, such stocks held in “street name,” that are recorded in a customer’s account, but are not accompanied by a certificate. The trend is toward a certificate-free society to cut down on paperwork and to diminish investors’ concerns about the certificates themselves. All the large New York City banks, including those that handle the bulk of the transactions of the major government securities dealers, now clear most of their transactions with each other and with the Federal Reserve through the use of automated telecommunications and the “book-entry” custody system maintained by the Federal Reserve Bank of New York. These banks have deposited with the Federal Reserve Bank a major portion of their government and agency securities holdings, including securities held for the accounts of their customers or in a fiduciary capacity for the City. Virtually all transfers for the account of the banks, as well as for the government securities dealers who are their clients, are now effected solely by bookkeeping entries.

The system reduces the costs and risks of physical handling and speeds the completion of transactions.

Book Value: The value at which a debt security is shown on the holder's balance sheet.

Book value is acquisition cost less amortization of premium or accretion of discount.

Bullet Bond: See “Non-callable Bond.”
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Callable Bond: A debit obligation where the bond issuer (i.e. borrower) has the option to call the bond or pay it off early (before the scheduled maturity date). For instance, a 5- year bond might be “callable quarterly”—meaning that, although the bond has a scheduled end date 5 years from now, it could end in 3 months (and every 3 months after that, until the scheduled maturity date).

Coupon: The annual rate of interest that a bond's issuer promises to pay the bondholder on the bond's face value.

Credit Analysis: A critical review and appraisal of the economic and financial conditions or of the ability to meet debt obligations.

Current Yield: The interest paid on an investment expressed as a percentage of the current price of the security.

Discount: The difference between the cost of a security and its value at maturity when quoted at lower than face value.

Duration: The weighted average maturity of a bond's cash flow stream, where the present value of the cash flows serve as the weights; the future point in time at which on average, an investor has received exactly half of the original investment, in present value terms; a bond's zero-coupon equivalent; the fulcrum of a bond's present value cash flow time line.

Fannie Mae: Trade name for the Federal National Mortgage Association (FNMA), a U.S. sponsored corporation.

Federal Reserve System: The central bank of the U.S. that consists of a seven-member Board of Governors, 12 regional banks and approximately 8,000 commercial banks that are members.

Fed Wire: A wire transmission service established by the Federal Reserve Bank to facilitate the transfer of funds through debits and credits of funds between participants within the Fed system.

Freddie Mac: Trade name for the Federal Home Loan Mortgage Corporation (FHLMC), a U.S. sponsored corporation.

Investment Agreements: An agreement with a financial institution to borrow public funds subject to certain negotiated terms and conditions concerning collateral, liquidity and interest rates.

Nationally Recognized Statistical Rating Organizations (NRSRO): A U.S. Securities & Exchange Commission registered agency that assesses the creditworthiness of an entity or specific security. NRSRO typically refers to Standard and Poor’s Ratings Services, Fitch Ratings, Inc. or Moody’s Investors Services.

New Issue: Term used when a security is originally "brought" to market. 73 June 2, 2026 Item 13
City of Del Mar– Investment Policy 17

Non-callable Bond: Also known as, “Bullet Bond.” A non-callable bond is a debt obligation where the bond issuer does not have the option to “call the bond” i.e.-end the bond before the scheduled maturity date.

Perfected Delivery: Refers to an investment where the actual security or collateral is held by an independent third party representing the purchasing entity.

Purchase Date: The date in which a security is purchased for settlement on that or a later date.

Repurchase Agreement (REPO): A transaction where the seller (bank) agrees to buy back from the buyer (City) the securities at an agreed upon price after a stated period of time.

Reverse Repurchase Agreement (REVERSE REPO): A transaction where the seller (City) agrees to buy back from the buyer (bank) the securities at an agreed upon price after a stated period of time.

Secondary Market: A market made for the purchase and sale of outstanding issues following the initial distribution.

Yield Curve: The yield on bonds, notes or bills of the same type and credit risk at a specific date for maturities up to thirty years.
74 June 2, 2026 Item 13
Description Fund Program FY 2023-24
Actual Budget
FY 2024-25
Actual Budget
FY 2025-26
Adopted Budget
FY 2025-26
Current Budget
FY 2026-27
Adopted Budget
FY 2026-27
Budget Update
Salaries & Benefits 01 5730-Fire Services 1,979,836 2,204,480 2,344,090 2,404,090 2,458,060 3,344,750 Maintenance & Operations 01 5730-Fire Services 186,414 231,062 188,130 456,130 179,150 349,335 Station Property Rental 01 5730-Fire Services 122,860 129,000 135,450 135,450 142,230 142,230 Contractual Services 01 5730-Fire Services 148,109 131,595 118,360 118,360 118,460 127,791 Coop Fire Mgmt Services 01 5730-Fire Services 304,708 335,925 330,000 330,000 340,000 - Fire Mgmt Services w/ SB - - - 65,500 - 445,510
Program Total $ 2,741,927 $ 3,032,062 $ 3,116,030 $ 3,509,530 $ 3,237,900 $ 4,409,616 Salaries & Benefits 01 5731-Hazardous Waste - - - - - - Maintenance & Operations 01 5731-Hazardous Waste 20,077 21,910 22,800 22,800 22,800 23,800 Contractual Services 01 5731-Hazardous Waste 0 1,050 1,050 1,050 1,050 1,050 Program Total 01 5731-Hazardous Waste $ 20,077 $ 22,960 $ 23,850 $ 23,850 $ 23,850 $ 24,850 Salaries & Benefits 01 5735-Emergency Preparedness - - - - Maintenance & Operations 01 5735-Emergency Preparedness 3,152 4,750 4,750 4,750 4,750 4,750 Contractual Services 01 5735-Emergency Preparedness - 1,000 1,000 1,000 1,000 1,000 Program Total $ 3,152 $ 5,750 $ 5,750 $ 5,750 $ 5,750 $ 5,750 Fire Services GF Total $ 2,765,156 $ 3,060,772 $ 3,145,630 $ 3,539,130 $ 3,267,500 $ 4,440,216 Positions (FTE) 9 9 9 12 9 12
City of Del Mar
Fire Services Budget Comparison
This budget comparison table has been prepared for additional reference. The difference between the FY 2026-27 Adopted Budget and the FY 2026-27 Budget Update is the combined total of all proposed adjustments described in the FY 2026-27 Budget Update report associated with the Interim Cost Sharing Agreement and other adjustments to support fire operations and maintenance activities.

Attachment E
75 June 2, 2026 Item 13