Fremont City Council Meeting: 06/03/25 07:00 PM
3300 Capitol Avenue Div/Dept: Finance Department
Fremont, CA 94538 Category: Budget
SCHEDULED
Sponsors:
COUNCIL STAFF REPORT (ID # 5461) DOC ID: 5461
Updated: 5/29/2025 4:31 PM by Dina Lewis Page 1
FISCAL YEAR 2025/26 OPERATING BUDGET - First Public Hearing (Published Notice) on FY 2025/26 Proposed Operating Budget
Contact Persons:
Name: Joe Fan David Persselin
Title: Management Analyst II Finance Director
Div/Dept: Finance Department Finance Department
Phone: (510) 494-4637 510-494-4631
E-Mail: [email protected] [email protected]
Executive Summary: The purpose of this report is to recommend that the City Council hold a public hearing on the FY 2025/26 Proposed Operating Budget. The second public hearing and adoption are scheduled for June 10, 2025.
BACKGROUND: The following information has been extracted from the Budget Overview section of the FY 2025/26 Proposed Operating Budget document. It sets the context for the proposed budget by describing the challenges and opportunities the City will address and the major initiatives underway.
This proposed budget addresses an anticipated slowdown in City revenue growth brought about by the federal government’s recent imposition of unusually high tariffs on imported goods. Consistent with the City Council’s foundational principal of fiscal sustainability, General Fund budgeted expenditures for the coming year of $277.8 million have been limited to fit within the projected ongoing resources without the use of the Budget Uncertainty Reserve. After adjusting for the approximately $11.9 million one-time sales tax reduction resulting from the State’s recovery of prior year overpayments in FY 2024/25, ongoing General Fund resources are projected to increase by 1.7% in FY 2025/26.
The proposed budget continues to incorporate the City Council’s and community’s highest priorities by maintaining funding for addressing and preventing homelessness, ensuring public safety, and pursuing environmental sustainability.
The following are highlighted in this overview:
• FY 2025/26 Fiscal Outlook
• Economic Update
• Key Budget Assumptions
• Discussion of Unmet Needs
• Major City Initiatives
FY 2025/26 Fiscal Outlook
Staff anticipates that the local economy will slow during FY 2025/26 and total General Fund ongoing resources (revenues and transfers in) of $278.3 million are projected to increase by just 1.7% over estimated actual ongoing resources in FY 2024/25.
Council Staff Report (ID # 5461) Meeting of June 3, 2025 Updated: 5/29/2025 4:31 PM by Dina Lewis Page 2
Property tax and sales tax are the City’s most significant revenue sources. Property tax revenues are estimated to total $146.1 million in FY 2024/25, and staff projects those revenues will increase to $152.8 million in FY 2025/26, an increase of 4.6%. Under Proposition 13, assessed values of all real property adjust with the California Consumer Price Index (CCPI), with a 2% limit, unless there is a change in ownership or new construction. The CCPI adjustment for the FY 2025/26 tax roll is an increase of 2%. The estimated increase in secured property value for FY 2025/26 from changes in ownership of
2.5% is based on property transfer tax data for calendar year 2024 and preliminary information from the County Assessor. An additional estimated increase of 0.25% for the value of new construction reflects the declining level of development activity in Warm Springs and other areas of the City.
Sales tax revenue is anticipated to total $56.6 million in FY 2024/25. However, that amount is reduced approximately $11.9 million by the State’s recovery of prior year overpayments to the City. Adjusting for that one-time reduction, projected FY 2025/26 revenue of $65.5 million shows a 4.4% drop, reflecting the estimated impact of the recently imposed tariffs on consumer and business purchases.
Business taxes are projected to yield $13.4 million in FY 2024/25, a slight increase from the prior year. The FY 2025/26 business tax estimate of $13.4 million assumes no growth based on the expected slowdown in business activity and continued high interest rates discouraging new development.
Hotel/motel occupancy tax revenues are projected to total $6.1 million in FY 2025/26, an increase of less than 1% from the prior year. After strong post-pandemic growth, occupancy rates and room rates appear to have plateaued over the last several years.
The FY 2025/26 proposed operating budget maintains the General Fund Contingency Reserve at 16.7% of budgeted expenditures and transfers out, or $46.4 million, a level consistent with City Council policy and the recommended practice of the Government Finance Officers Association of the United States and Canada. The General Fund Budget Uncertainty Reserve is projected to end FY 2024/25 at $6.7 million.
Economic Update
Growth in the national economy is expected to slow. The recent imposition of tariffs, particularly those on automobiles and goods from China, are expected to increase prices and reduce consumer and business activity. In a recent speech, Federal Reserve Chair Jerome Powell noted that:
“… the new Administration is in the process of implementing substantial policy changes in four distinct areas: trade, immigration, fiscal policy, and regulation. Those policies are still evolving, and their effects on the economy remain highly uncertain … The level of the tariff increases announced so far is significantly larger than anticipated. The same is likely to be true of the economic effects, which will include higher inflation and slower growth.”
Chair Powell went on to imply that the Federal Reserve would likely maintain the current relatively high level of interest rates to prevent runaway inflation: “Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem.” Council Staff Report (ID # 5461) Meeting of June 3, 2025 Updated: 5/29/2025 4:31 PM by Dina Lewis Page 3
The first evidence of a “tariff effect” on the economy is the recently reported 0.3% drop in gross domestic project (GDP) during the first quarter of 2025. That drop was caused by a large increase in imports as businesses rushed to increase inventory in advance of the tariffs taking effect.
The employment situation has remained stable, with the April unemployment rate of 4.2% unchanged from March and consistent with reported levels over the last year. The solid labor market, combined with inflation rates in the mid-2% range, support the Federal Reserve’s decision to delay action on interest rate cuts.
Consumers, however, are anticipating job losses and an economic slowdown. According to The Conference Board Consumer Confidence Survey, “Consumer confidence declined for a fifth consecutive month in April, falling to levels not seen since the onset of the COVID pandemic… Consumers explicitly mentioned concerns about tariffs increasing pricing and have negative impacts on the economy.” To the extent that lower consumer confidence translates into reduced purchasing, a weaker economy could become a self-fulfilling prophecy.
The City’s revenue forecast assumes that tariffs will reduce sales tax collections and stall growth in business tax and other economically sensitive revenues. Additionally, the forecast assumes that the Federal Reserve’s concerns over higher inflation will prompt them to keep interest rates higher and for a longer period than they otherwise would, resulting in a continuation of the weak local real estate market and reduced development activity.
Key Budget Assumptions
Based on the data we have at this time and economic forecasts from a range of sources, we are making the following key assumptions for the FY 2025/26 proposed budget:
1. The recently imposed tariffs on automobiles and Chinese goods will increase prices and reduce retail sales. These higher price levels will prompt the Federal Reserve Board to delay reducing its interest rate target, thereby continuing the slowdown in real estate transactions and development activity. As a result, the City’s property tax, sales tax, and business tax revenue will be adversely affected during FY 2025/26. Total General Fund ongoing resources (revenues and transfers in) are projected to increase by 1.7% over estimated actual ongoing resources in FY 2024/25 after adjusting for the State’s reallocation of sales tax during FY 2024/25.
2. As the City’s labor agreements end in FY 2024/25, compensation increases have not been included for FY 2025/26.
3. The FY 2025/26 proposed budget eliminates General Fund support for pavement maintenance and routine tree trimming, reduces funding for park and street median capital replacement, but includes continued funding for sidewalks, facilities maintenance, and capital improvements to achieve compliance with ADA standards.
4. In accordance with City Council policy, an additional pension contribution of $3.5 million to pay down the City’s unfunded liability more rapidly has been incorporated into the proposed General Fund budget.
Council Staff Report (ID # 5461) Meeting of June 3, 2025 Updated: 5/29/2025 4:31 PM by Dina Lewis Page 4
5. Total expenditures in the FY 2025/26 proposed budget include a savings assumption of $20 million (approximately 7% of total budgeted expenditures in FY 2025/26) to reflect the City’s historical experience of under-spending total allocated resources, primarily due to salary savings from vacant positions.
6. The General Fund Contingency Reserve will be maintained at 16.7% of total budgeted expenditures and transfers out, the minimum level recommended by the Government Finance Officers Association of the United States and Canada (GFOA).
7. The proposed budget does not include funding to restore the General Fund Budget Uncertainty Reserve, but reestablishing that reserve at an appropriate level will be considered a top priority. As part of the FY 2024/25 Year-End Report in Fall 2025, staff will bring forward recommendations for allocating any available ending unreserved fund balance to address one-time priority projects, programs, unfunded liabilities, or reserve augmentation.
Unmet Needs
Fremont is a great place to live, work and do business. However, like many cities throughout California, our City faces long-term fiscal challenges that impact the City’s ability to maintain quality of life services at the level residents want and deserve. Important quality of life services we must continue to protect, maintain and improve include:
• Police/Fire protection and emergency response services • Garbage and recycling services
• Maintaining public parks
• Streets/Roads repair
• Protecting the safety of drivers, bikers, and pedestrians.
We continue to grapple with increasing needs for public safety services and the growing cost of maintaining Fremont’s roads and other infrastructure. The construction of new residential units as well as commercial and industrial development throughout the City necessitates increased police and fire response to protect public safety. The majority of Fremont’s public infrastructure was constructed many years ago and now requires either an increased level or increased frequency of repairs, compounded by not having had adequate resources to spend on maintenance in the past. Moreover, as Fremont continues to grow, additional infrastructure is added that must be maintained, further stretching the City’s limited maintenance resources.
Finally, new requirements result in increased costs. Some of these requirements are voluntary, such as the City’s commitment to improving traffic and pedestrian safety and traffic congestion, and encouraging alternative forms of transportation, through implementation of the Mobility Action Plan. Components of the Mobility Action Plan, such as completion of the Safe Routes to Schools program, traffic signal modernization, and construction of major bicycle and pedestrian infrastructure are costly and will necessitate development of enhanced funding sources. Similarly, components of the Climate Action Plan including electric vehicle charging infrastructure for City vehicles and converting City buildings from gas to electric heating call for major investments. Other new requirements, which are regulatory in nature, have increased dramatically over the last few years, and have added significant costs to City operations. The City’s Americans with Disabilities Act (ADA) Transition Plan is projected to need over $100 million over the next 25 years.
Council Staff Report (ID # 5461) Meeting of June 3, 2025 Updated: 5/29/2025 4:31 PM by Dina Lewis Page 5
As the City anticipates a slowdown in revenue growth during FY 2025/26, the General Fund service enhancements included in the proposed budget are self-supporting: two additional fee-supported fire inspectors to implement a State-mandated defensible space inspection program to reduce wildfire risks and the replacement of multiple part-time staff with one full-time office specialist at the Animal Shelter to improve customer service. Outside the General Fund, proposed enhancements include an additional day of homeless encampment cleanup services each week, continuation of the Keep Fremont Housed rental assistance program for homelessness prevention, funding for the Winter Relief program that provides temporary housing for homeless residents, and an increase to full-time staffing for the assistant chef position at the Lake Elizabeth Age Well Center.
Major City Initiatives
The City of Fremont continues to support and invest in major strategic growth initiatives while navigating an operating environment characterized by everchanging conditions and macroeconomic uncertainty. These initiatives are important elements of our diversified tax base strategy to preserve and expand Fremont’s General Fund over time and position the City for sustainable economic growth and fiscal stability.
Development: Private sector investments in infill development projects provide financial resources to the City and infuse vitality into the community by creating modern places to live, work, and play. Major development projects are also often required to make offsite improvements that benefit residents and businesses in the surrounding area. Revenue contributions from development include use-dedicated impact fees to support City capital projects including parkland acquisition, affordable housing, transportation and facilities; Permit Center cost-recovery fees; and most critically, sustained increases in General Fund revenues from property tax reassessments.
Fremont’s broad geography and multiple growth areas provide a diverse array of investment and infill redevelopment opportunities. Investment in these growth areas is supported by supportive land use policies proactively implemented by the City to serve as catalysts toward generating greater investment. Most major projects fall into one of two categories:
industrial and residential/mixed-use.
There are five key development areas in Fremont that are critical to Fremont’s economic growth: Warm Springs Innovation District, Bayside Technology Park, Pacific Commons, Ardenwood Technology Park, and Downtown/City Center. Major projects are occurring in each area, which are highlighted below.
Warm Springs Innovation District
The Warm Springs Innovation District is critically important to the City because of a unique convergence of infrastructure, its central location, and an expanding employer base. This includes the Warm Springs/South Fremont BART station and adjacent Tesla Factory, which is the City’s largest employer and supports over 20,000 engineers and factory employees.
The BART station enhances intermodal access to local bike routes and provides critical connectivity to the City’s existing and future employment clusters in the greater Warm Springs area.
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In February 2022, the City celebrated the completion of the new West Access Bridge, connecting pedestrians and cyclists from the BART station to new residential and major commercial areas, including the Tesla Factory. The development of the West Access Bridge also provided an urban plaza that can be used to hold outdoor events and a trail that will eventually connect to a planned bicycle and pedestrian bridge crossing over Interstate 880.
To support marketing the commercial/employment opportunities, Warm Springs has been branded as an Innovation District. Successes in attracting advanced technology tenants to the district include Raxium, a manufacturer of holographic displays that was recently acquired by Google; Zoox, a manufacturer of autonomous vehicles; and Underwriters Laboratories (UL), a provider of advanced technology testing and certification services which has significantly expanded its Warm Springs footprint in the last few years.
The Warm Springs Community Plan originally envisioned the area as having a mix of office, R&D, and manufacturing employment, complimenting 4,000 units of new residential development, the majority of which has been completed. Office activity has not materialized due to a weak market for speculative office development; however, in juxtaposition to tepid office demand there has been significant interest in Warm Springs for new industrial development.
The proposed and approved industrial project backlog in Warm Springs now totals over 750,000 square feet. This includes the under construction 267,000 square speculative industrial project at 49000 Milmont from global developer Hines and a 22-acre advanced manufacturing campus proposed by prominent Silicon Valley development group, Sobrato, across Warm Springs Boulevard from the Warm Springs BART station that is currently under review. Once delivered and occupied, the cumulative impacts of these developments will provide for significant employment growth in the area.
Bayside Technology Park
Fremont’s Bayside Technology Park functions as the City’s marquee technology employment district. Major employers include Lam Research, Stryker, Bionova Scientific, and Delta Electronics. While employment in Bayside skews toward semiconductor and biomedical-related manufacturing, the district is also home to a growing number of battery and other cleantech companies.
Major development activity includes the Campus at Bayside, a six building, 473,250 square feet speculative advanced manufacturing campus on previously undeveloped property. The project is expected to break ground in FY 2025/26 with Phase 1 consisting of three of the six buildings. Once complete, Campus at Bayside will provide a state-of-the-art manufacturing and technology campus environment with multiple building footprints, allowing existing Fremont companies to remain and grow within the area.
Across Gateway Boulevard from the Campus at Bayside is an approximately 203,700 square feet project being pursued by Prologis, Fremont’s largest property owner. The project is under City review, with a target construction commencement in calendar year 2026. The project proposes demolition of three existing office buildings, speaking to the relative weakness of the office market compared to the strength of Fremont’s industrial base.
Pacific Commons
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Immediately north of Bayside is the Pacific Commons area, which boasts a blend of legacy industrial uses with major technology tenants. The district is anchored by Pacific Commons Shopping Center, a large regional center spanning 840 acres. In 2024, the Center was one of the most visited outdoor shopping malls nationally. The City continues to work collaboratively with the center’s management to proactively backfill larger format retail spaces that have become vacant with contemporary uses and support reinvestment in the project.
Major development activity in the area includes Pacific Commons South (PCS), an approximately 2.5 million square feet Class A industrial campus that achieved full occupancy in 2024. Major tenants include Meta, artificial intelligence server maker Quanta Computer, biomedical company Cepheid, cleantech manufacturer Bloom Energy, and Amazon. UPS also operates an 800,000 square foot state-of-the-art distribution hub.
In 2022, the City approved a General Plan Amendment and rezoning for the former Globe mall site into a new, approximately 400,000 square foot industrial campus called Fremont 880 Tech Center that completed construction in FY 2024/25. The project has already secured its first tenant, Taiwan- based data center hardware manufacturer Mitac Information Systems and is actively marketing the remaining two buildings.
The Pacific Commons district is also home to the Fremont Auto Mall, which includes 14 unique dealerships and over 20 represented auto brands. Notably, Enterprise Holdings is currently undergoing construction for a major car and commercial vehicle dealership and leasing center that is expected to be completed in early FY 2025/26. Other more recent dealerships include lifestyle vehicle dealer Rec Van and used car dealer CarMax. Along with Pacific Commons Shopping Center and Fremont’s expansive industrial areas, the Fremont Auto Mall dealerships aid in further diversifying and strengthening Fremont’s sales tax base.
Ardenwood Technology Park
Ardenwood Technology Park is located just off Highway 84 and Interstate 880, offering a shorter or reverse commute from most parts of the region compared to other employment hubs in Silicon Valley. The centrality of Ardenwood, along with competitive rents, better proximity to the bulk of the region’s workforce, and its idyllic suburban office park setting make the district a sought-after location for business expansion and relocation for businesses along the San Francisco Peninsula.
Recent business expansions include life science companies Novo Nordisk, Boehringer Ingelheim, and Alexza Pharmaceuticals, each of which have expanded or intensified their operations. Another major growth company in Ardenwood is Nextracker, a maker of solar tracking equipment that has expanded into a second facility and outdoor R&D demonstration area. Meta continues to maintain a major presence in Ardenwood, with its core campus comprised of over 1 million square feet of space.
Downtown and City Center
With its centralized, amenity-rich location, Downtown Fremont is poised to become a vibrant, mixed-use district that will serve as a gathering hub for the entire community.
Bounded by Fremont Boulevard, Mowry Avenue, Paseo Padre Parkway, and Walnut Avenue, Council Staff Report (ID # 5461) Meeting of June 3, 2025 Updated: 5/29/2025 4:31 PM by Dina Lewis Page 8
Downtown’s 110-acre district is surrounded by the broader 430-acre City Center area that includes major shopping centers like The Hub and Gateway Plaza. The City Center area is also home to Washington Healthcare, Kaiser, and Sutter medical campuses, which collectively employ thousands of skilled workers in the area.
Several City-led capital projects have formed the foundation for Downtown Fremont’s growth. This includes acquiring real property to link Capitol Avenue with Fremont Boulevard and connecting two major regional shopping centers along an inviting, pedestrian-friendly streetscape. The enhanced streetscape has laid the groundwork to establish the street as Downtown’s envisioned “retail spine,” with commercial spaces, civic activity, and open spaces activating the public realm. Downtown is punctuated by the City-owned Downtown Event Center (DTEC), which opened in October 2021 and can accommodate events of up to 1,200 attendees. The venue represents Phase 1 of a long-term Civic Center Complex plan.
Supportive land use regulations have also been put in place to promote private investment.
The first private development of Downtown Fremont, known as Locale @ Capitol Square, includes 157 for-sale condo units above approximately 21,000 square feet of ground floor retail across 11 shop spaces, and sets the tone for future Capitol Avenue development.
Initial lease-up of this first-generation retail space has been strong, with ten of the eleven commercial spaces leased to locally owned restaurants, shops, and health and wellness services. City staff work actively with commercial brokers to market Downtown for additional retail investment.
Downtown Fremont has seen exciting milestones in 2024 and 2025, including the completion of the six-story Fremont Bank headquarters, the completion of the MIG mixed-use project, The Tolman, the approved entitlements for the Kimco-led redevelopment of Gateway Plaza and the Hub. Including the two Kimco projects, the total development project pipeline for the Downtown area exceeds $1 billion in construction value. While macroeconomic conditions may impact the viability of approved but unconstructed projects, the growing backlog is a promising indicator of interest in Downtown Fremont from market participants.
To maintain community enthusiasm during the multiyear buildout of Downtown, the City continues to host events to bring people to the area. This includes contracting with community organizations like the Fremont Chamber of Commerce to organize various placemaking activities in Downtown. The Fremont Chamber helped organize a very successful Holidays at the Plaza event, drawing over 4,000 guests to enjoy holiday activities at the Downtown Event Center Plaza. Additional first-time events are planned for FY 2025/26, including a “Dog Days” of Summer, Sip-n-Stroll, and night market.
Business Attraction: The City maintains a dual focus for attracting new businesses to Fremont that includes marketing and facilitating investments from both advanced technology industries and retail. The former can provide opportunity to grow Fremont’s jobs base at scale and contribute substantial General Fund revenues to support City services while the latter contributes to Fremont’s cultural fabric and provides important amenities to Fremont residents.
Advanced Industry Sector Highlights
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Fremont continues to play an instrumental role within Silicon Valley’s ecosystem, serving as an ideal location for hardware technology and advanced manufacturing companies to scale their operations. Fremont’s biomedical sector, the largest by number of firms, remains a key growth driver. In FY 2024/25, Bionova Scientific held a ribbon cutting for its new Process Development and Pilot Plant, its fourth building in Fremont. Boehringer Ingelheim has continued to intensify its biopharmaceutical manufacturing operations at its campus in Ardenwood while nearby Novo Nordisk announced plans to build a new cell therapies development center next to its existing building.
Fremont also serves as the nation’s largest hub for cleantech manufacturing, home to over 50 companies. Over the years, the City has developed strong expertise supporting this industry, including permitting and hazardous material management, crucial for battery technology startups. Several Fremont companies have also sought to take advantage of the Inflation Reduction Act, spurring investment in EV, solar, and battery technologies. In FY 2024/25, Sony Honda Mobility signed a lease for the former Men’s Wearhouse corporate headquarters at 6100 Stevenson, which will be the Northern California home to the AFEELA EV Studio and Delivery Hub. Fremont-based Nextracker continues to see strong tailwinds from deployment of utility-scale solar while cleantech startups like Tandem PV have chosen Fremont to build out new pilot manufacturing plants.
Semiconductors and semiconductor equipment remain a key part of Fremont’s industry base, catalyzed by the exponential growth of AI programs and the CHIPS and Science Act.
Longstanding Fremont companies like Lam Research and Western Digital continue to make investments in upgrading their cleanrooms and fabs while newer companies, like Raxium, a wholly owned subsidiary of Google, and Rigetti Computing, a maker of advanced quantum computing chips, are in the process of building out extensive new fabs in Fremont. In FY 2024/25, a consortium including Fremont-based Ohlone College, the SEMI organization, and over a half dozen Fremont companies was selected as the recipient of a semiconductor manufacturing technician program that will help to address the workforce age gap to enable this industry to continue thriving in Fremont.
With AI-powered large language models like ChatGPT growing exponentially, network computing hardware manufacturers have rapidly converged in Fremont, making the City the largest server manufacturing hub in North America. This rapidly growing sector includes companies like Quanta Computer, AMAX, Penguin Solutions, and TD Synnex, each of which operate major manufacturing hubs in Fremont. In FY 2024/25, Fremont welcomed the relocations or expansions of Mitac Information Systems, Aivres, and Wistron, who are each building out major Fremont operations. As a result of these investments, the server manufacturing industry is the fastest growing technology industry in Fremont.
To strengthen a local pipeline of talent between education providers and Fremont’s advanced industries, the City’s Economic Development Department has partnered with Fremont Unified School District, Mission Valley ROP, Ohlone College, CSU East Bay and San Jose State University to coordinate workforce development initiatives including the Fremont Engineering Expo and Fremont Manufacturing Week. The Engineering Expo highlighted FUSD’s engineering students and drew nearly 1,000 participants and visitors.
Similarly for the 13th annual Fremont Manufacturing Week, 16 tours were organized at 12 Fremont companies for over 500 students aged K-12 to university-level.
Retail and Commercial Vibrancy
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Supporting retail and in particular, small business, is an essential part of the City’s economic development program. In FY 2024/25, the City hosted a Small Business Digital Marketing Bootcamp over the course of two days, welcoming over 250 small business owners to the Fremont Downtown Event Center. This workshop provided business owners many crucial digital marketing strategies to help them attract new customers and generate more frequent business from existing customers.
In FY 2024/25, the City and the Fremont Chamber also organized Fremont’s third annual Fremont Restaurant Week with 62 participating businesses, providing local restaurants with free print and digital marketing, boosting foot traffic and sales over the course of what is usually a slower time for businesses. As a result, the majority of participating restaurants have attracted new customers, increased revenue, and widened their brand awareness.
To tell the stories of the people who make up Fremont’s small businesses, the City launched the Shop Small Video Series. The series features short videos profiling individual businesses to showcase the small businesses that help make Fremont unique, highlighting the stories of the business owners behind the scenes through a monthly video series on the City’s social channels and YouTube channel. In a similar effort, the City also launched Small Business Saturday and Small Business Week campaigns, taking out full-page ads in the Tri-City Voice newspaper and posting across the City’s social channels.
The City continues to routinely field inquiries from current and prospective small businesses with questions about zoning, permitting, marketing, and expansion, which helps to promote a thriving small business community in Fremont. The City is committed to helping small businesses through the end-to-end process of opening a physical store in Fremont, assisting with site selection, zoning verification, City-issued tenant improvement permits, and approvals from external agencies including Union Sanitary District, Alameda County Health Department, and California Alcohol & Beverage Control.
To support the re-leasing of vacated spaces and attracting high quality commercial amenities to the community, the City works collaboratively with many of its shopping center owners. A center of particular focus has been Pacific Commons Shopping Center, which is one of the ten most visited outdoor shopping malls nationwide. Work to support the 840-acre, 1.2 million square foot power center has recently included identifying creative opportunities to backfill the former Kohl’s and Dick’s Sporting Goods spaces.
The City has also recognized that strategically focusing retail where it can be most successful benefits key commercial corridors while also providing opportunities for new investment in housing and industrial development. In FY 2024/25, the City Council approved the conversion of a vacant retail site to a new 70,000 square foot speculative industrial project, which is expected to commence construction this fiscal year. The City is also evaluating a proposed general plan amendment and rezoning for the former Fry’s store site into a modern advanced manufacturing campus. While Fremont’s overall retail vacancy remains historically low at 3.9%, strategically “pruning” underutilized retail sites, per the City’s General Plan, will help to ensure a healthy retail market for years to come.
Capital Projects: The City has an ongoing Capital Improvement Program (CIP) that provides investments to improve infrastructure related to the City’s transportation system, parks, and building facilities. Primary funding for these investments comes from Council Staff Report (ID # 5461) Meeting of June 3, 2025 Updated: 5/29/2025 4:31 PM by Dina Lewis Page 11
development impact fees; State gas taxes; County transportation funds; grants from federal, State, and regional sources; as well as from ongoing and one-time transfers from the General Fund. In the recent past, significant projects completed included the Downtown Event Center, the West Access Bridge and Plaza at the Warm Springs BART Station, and the new Dusterberry Neighborhood Park.
Based on the prior Capital Budget approved in 2023, work is underway on several multi - year projects and programs which include: a new Central Park Community Center; replacement of old restrooms in City parks; replacing outdated HVAC (heating, ventilation, and air conditioning) systems at City buildings; and providing charging infrastructure to support replacing City fleet vehicles with electric vehicles. Also, a parkland acquisition program is funded to purchase properties as opportunities become available.
Looking ahead, the City’s proposed five-year CIP (FY 2025/26 through FY 2029/30) includes projects and programs valued at $236 million. The highlights of the proposed CIP are as follows.
Capital Maintenance
Preservation and maintenance of existing City assets is a primary focus of the CIP. The highest level of funding in Capital Maintenance is allocated to ongoing annual projects to repave City streets, repair sidewalks, curbs and gutters in the worst condition, and build ADA curb ramps. This also includes maintenance and capital replacement funding for parks, landscaped median islands, and buildings, as well as a 50/50 grant program to assist residents with sidewalk repairs and street tree replacements.
Transportation
The proposed Transportation CIP includes investments for traffic operations and signal system improvement, bicycle and pedestrian facilities, and major projects.
• Investments in traffic operations and signal projects includes annual expenditures to maintain existing traffic signals, modernize equipment for more efficient operations, construct new traffic signals at priority locations to improve safety, and to respond to community interests/ concerns related to traffic operations. • The City receives dedicated funds from the County Measure BB program and State grants for improvements to bicycle and pedestrian facilities. This program helps deliver priority projects identified in the City’s updated Active Transportation Plan and Safe Routes to Schools program.
• A significant element of the City’s Transportation CIP is oriented toward major and regional projects. This includes the City’s support for developing the new Irvington BART Station; connecting communities with trails by building bridges over freeways in the 880/Innovation and 680/Sabercat areas; and modernizing freeway interchanges at 680/Mission and 880/Decoto. In addition, the City has been approved to receive $62 million in grant funding for multimodal transportation projects in the Dumbarton/Decoto corridor, the Peralta/Mowry corridor, and the Fremont Boulevard corridor.
Parks and Recreation
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The Parks CIP includes investments to implement the new Parks and Recreation Master Plan approved by the City Council in March 2022. Significant elements of the proposed CIP include the following:
• Central Park improvements for the outdoor areas surrounding the new Central Park Community Center.
• Supplemental funding to enable construction to start for the Centerville Community Park, Patterson Ranch Dog Park, Vallejo Mill Historic Park, Central Park Babbling Brook Bridge Renovation, and Central Park Knoll Pickleball Court Lighting. • New funding for cricket batting cages, Lake Elizabeth renovation and water quality management, Niles dock renovations, Hetch Hetchy Bike/Trail at Warm Springs, and a Central Park wayfinding signage program in support of the Age Friendly Fremont Action Plan.
Legislative Advocacy: The City continues to be proactive with its legislative advocacy efforts and has forged ahead with building partnerships at the federal, State, and regional levels to ensure the interests and concerns of Fremont and the region are preserved. The City’s Legislative Framework, approved by the City Council, establishes guiding principles and priorities, and serves as the City’s foundation for pursuing major initiatives and funding opportunities. Adopting a legislative framework enables City staff and lobbyists to actively advocate for, influence, and monitor State and federal legislation that best represents Fremont’s interests.
At its annual retreat held in February 2025, the Fremont City Council emphasized economic development as a key driver to ensuring financial stability. Additionally, the City Council renewed consensus on the need to continue to address homelessness, focus on public safety and continue implementation of the City’s Climate Action Plan this coming year.
Economic Development and Fiscal Sustainability
• Continue to balance revenues and expenditures so that the City can provide stable, consistent services to the public in the short and long term. • Continue to keep Council and the public informed and updated about the budget and financial condition of the City.
• Preserve the City’s earned reputation as a financially well managed municipality. • Focus on economic development to increase revenue, including attracting and supporting diverse businesses and industries.
• Focus resources on the Downtown Business District while also revitalizing the other business districts across the City of Fremont.
Continue to address homelessness
• Reduce overall homelessness in Fremont by continuing to realign and enhance services as outlined in the Homelessness Response Plan. • Coordinate cleanup and environmental protection actions with the City’s homelessness response activities.
• Implement recent City Council approved regulations impacting homelessness.
Focus on public safety
Council Staff Report (ID # 5461) Meeting of June 3, 2025 Updated: 5/29/2025 4:31 PM by Dina Lewis Page 13
• Recruit and retain sworn staff and dispatchers to reduce total police department vacancies.
• Increase police visibility in the community to foster a sense of community safety. • Acquire and utilize technology and equipment to enhance public safety. • Implement judicious enhancements to our response to unsafe and/or unreasonably disruptive camping sites.
• Enhance natural disaster operational readiness and preparedness. • Implement retail theft prevention and response enhancements.
Continue Implementation of the City’s Climate Action Plan
• Continue renewable energy infrastructure implementation and fleet electrification. • Encourage more clean tech industries and initiatives. • Ensure equitable tree planting and canopy maintenance across the City of Fremont. • Foster a resilient community by enhancing infrastructure to adapt to climate change and natural hazards.
Approximately 2,500 bills were introduced by State lawmakers in early 2025 during the first year of California’s 2025/26 legislative cycle. Key issues the City is keeping an eye on this session include the State’s budget, housing and homelessness, environment and climate change, health care, transportation, public safety, and changes that would negatively impact City operations. Staff’s work plan includes the process of reviewing and monitoring dozens of bills, analyzing and advocating for legislation and regulations that affect our community, partnering with local jurisdictions, and seeking funding opportunities that support these priorities, as well as other Council adopted policies and plans including but not limited to the City’s General Plan, Housing Element, Homeless Response Plan, Climate Action Plan, Mobility Action Plan, and the Parks and Recreation Master Plan.
Fremont is fortunate to work with lobbyist representatives who have been instrumental in alerting the City to funding opportunities and service programs at the State and federal level. In 2024, under the Congressional earmark process that provides local governments and nonprofits the opportunity to submit projects under Community Project Funding, the City received support from Congressman Ro Khanna in the amount of $2 million for a five-acre landscape project that would revitalize the Auto Mall Parkway center median.
Unfortunately, the passage of a clean Continuing Resolution to fund the federal government for six months stripped out any appropriation funding requests. In spring 2025, the City resubmitted the Auto Mall Pkwy project and other new funding requests through our State and federal representatives for consideration.
Over the next year, staff will continue to work with our legislative advocates to prioritize and track legislation, while continuously evaluating the legislative climate to identify new areas of opportunity, with the overarching goal of improving quality of life and creating an equitable future for all, consistent with the City’s vision, goals, and policies.
Conclusion
Fremont prides itself on being a fiscally responsible, lean organization, making the most of the resources entrusted to us. This proposed budget responds to the uncertainty in our economic environment by preserving the most essential City services while deferring certain maintenance activities. Fiscal discipline and wise stewardship over many years have made it Council Staff Report (ID # 5461) Meeting of June 3, 2025 Updated: 5/29/2025 4:31 PM by Dina Lewis Page 14
possible for us to take this balanced approach, but we recognize that more sacrifice may be necessary if the tariff- induced economic slowdown evolves into an extended recession.
To the extent additional resources become available, we will work to ensure that they are used to address the City Council’s and community’s highest priorities.
FISCAL IMPACT: The City Council is not being asked to take action tonight on the FY 2025/26 Proposed Operating Budget other than to hold a public hearing and provide comments to staff. A second public hearing and adoption of the budget are scheduled for June 10, 2025.
ENVIRONMENTAL REVIEW: Action on the proposed operating budget is an organizational, fiscal, and administrative governmental activity that will not result in physical changes in the environment. Therefore, it is not a project subject to review under the California Environmental Quality Act (CEQA) pursuant to '"CEQA Guidelines Section 15378.
LINK: The FY 2025/26 Proposed Operating Budget is posted on the City’s website at:
https://www.fremont.gov/government/departments/finance/financial-reports
RECOMMENDATIONS:
1. Hold a public hearing.
2. Provide direction to staff on issues pertaining to the FY 2025/26 Proposed Operating Budget.