Gilroy City Council
October 19, 2026

3 ii. If the donation is appropriate and to be received, the City Administrator or their designee must complete the report to be given to the Finance Department as described above.
iii. The City Administrator or designee shall determine the appropriate recognition, if the donation is accepted, for the donor(s). c. Donations of $5,000 or more.
i. If the City Administrator determines that the donation is appropriate to be received, the City Administrator or designee shall prepare the report as described above to be given to the City Council at a public Council Meeting.
ii. The City Council shall decide in its sole and absolute discretion whether or not to accept the donation, and appropriate the expenditure of any accepted monetary donation.
iii. The City Council shall determine the appropriate recognition for the donor(s) if the donation is accepted.

Donation, Sponsorship, and/or Fundraising Programs
Fundraising may only:

1. Happen after a fundraising campaign is designed and established through a donation, sponsorship, and/or fundraising program approved by either the City Administrator or City Council, depending upon the nature of the program.

2. Be for official fundraising campaigns. The City does not accept fundraising for anything other than what is authorized in an approved program.

3. Be conducted in the manner as outlined in an approved program.

All donations shall be tendered to the Finance Department. The Finance Department will defer to the City Administrator or City Council’s acceptance of each donation regarding its acceptable status.

Fundraising process

1. The Arts and Culture Commission, Parks and Recreation Commission, and/or City departments shall develop their donation, sponsorship, and/or fundraising programs in consultation with the City Administrator’s Office and the Finance Department. In its simplest form, a proposed program may consist of a memorandum to the City Administrator indicating the following:
a. Goal of the sponsorship, donation, and/or fundraising activities. b. Timeframe for the program.

4 c. Target audience and method of outreach.
d. Procedure for acceptance and reporting of activities, ensuring internal controls.
e. The types of donor or sponsor recognition that is available for specified value of donorship or sponsorship, subject to City Council approval if the value of recognition is beyond the contract authority of the City Administrator or greater than the authority provided under this policy. f. The sponsorship level or range of sponsorship levels for the naming of the City property if permitted. Sponsorship naming for parks or recreation facilities must also comply with the City of Gilroy Parks or Recreation Facilities Naming, Community and Memorial Contribution, and Gift and Sponsorship Policy, or otherwise be approved by the City Council. g. Specified or maximum sizes and identification of location(s) of any signage in recognition of the donation or sponsorship and any restrictions on the text of the recognition signage.

2. The department staff designated to oversee the department's donation, sponsorship and/or fundraising activities will ensure that the proposed donation, sponsorship and/or fundraising program does not conflict with existing City Code provisions, City policy or existing City sponsorships. Department staff shall also ensure that the City property involved is not subject to restrictions that would limit or prohibit the proposed donation or sponsorship.

3. The department staff accepting items donated to the City will ensure that the items are safe and durable, and meet any applicable City design or quality specifications, standards, and policies.

4. Where applicable, the department’s donation, sponsorship and/or fundraising program shall set forth the conditions for acceptance of funds. Conditions shall be fair, impartial and shall not discriminate on the basis of race, sex, color, age, religion, sexual orientation, actual or perceived gender identity, disability, ethnicity, national origin, or political views of the proposed donor.

5. Any department considering acceptance of a donation or sponsorship that may impact or affect other departments shall consult with those departments prior to acceptance of the proposed donation or sponsorship.

6. It shall be the goal of any departmental donation, sponsorship and/or fundraising program to find donors or sponsors providing the highest net benefit to the City, along with consideration of the quality of product or service to be received by the City.

7. All donations in cash shall be deposited and recorded with the Finance Department and deposited in a manner as stated within current policies.

5 8. Unaccepted Donations will be returned to the Donor.

Sponsorship Agreements
After the selection of a sponsor by the City Council, City Administrator or a department head, pursuant to Unsolicited Donations section 2(b) or 2(c) above, the terms of the sponsorship, including any expectation of a significant return or recognition, shall be set forth in a written sponsorship agreement approved as to form by the City Attorney.

The City Administrator may include renewals of a sponsorship agreement at the City’s option, provided that the aggregate of all the renewals is within the City Administrator’s contract authority under the City Code and City Purchasing Policy. Any renewal shall be subject to annual appropriation by the City Council if City funding is involved.

Sponsorship agreements for parks or recreation facilities shall be subject to additional requirements as outlined in the City of Gilroy Parks or Recreation Facilities Naming, Community and Memorial Contribution, and Gift and Sponsorship Policy.

Costs, Accounting and Record Keeping
Departments shall maintain records that provide an audit trail for the receipt of all sponsorships and donations. Departments shall also comply with the following requirements:

1. All donations and sponsorships and the revenue, products, and services received shall be recorded and maintained for at least the expected life of the item or service, or for a specific time frame that has been established in the donation agreement or sponsorship agreement.

2. Donations or sponsorships paid for with a monetary contribution shall not be paid to staff in cash unless approved, in advance, by the Finance Department and department director and receipt of cash is properly documented.

3. A record of all sponsorships and donations including name, type, contact name if a company, amount, and disposition of sponsorship shall be kept up-to-date and accurate.

4. Departments shall report any donations or sponsorships accepted by the department through reports to the City Administrator’s Office and the Finance Department.

5. A report shall be provided to the City Council for any donation equal to or greater than $5,000 at the time the donation is given or offered.

Other Donations or Contributions

1. Real Property
Restricted donations of real property may be offered to the City for specified purposes. The City will review the proposed conditions of the restrictive donation

6 of real property, if any, and determine in its sole and absolute discretion whether or not to accept the donation. All donations of any interest in real estate shall require City Council approval.

A donation involving real estate is more complex than cash donations and the donation agreement documenting a real estate-related donation should be prepared and approved by the City Attorney’s Office. Terms and conditions of such donations may vary from this policy’s general requirements, based on approval of the City Council on a case-by-case basis.

2. Works of Art
If a contribution is proposed related to a work of public art covered by the City's Public Art Policy, the City's review and acceptance of the proposed contribution of public art shall be conducted in accordance with the City's Public Art Policy, which shall include the review and recommendation of the City's Arts and Culture Commission to the City Council and compliance with any policies adopted regarding donations of works of public art.

DISCLAIMERS AND MISCELLANY

1. Different forms of contributions to the City present different opportunities and challenges. Therefore, it is not possible to establish blanket guidelines to cover all types of donation or sponsorship activity that the City may decide to pursue.

2. Unless expressly stated otherwise, the City does not intend to modify or change the non-public forum status of any City property by providing donor recognition or sponsorship recognition on City property.

3. The making of a donation or sponsorship to the City will not provide any extra consideration to the donating or sponsoring party in relation to any City procurement, any regulatory activities of the City, or other City business. No City employee or other City official is authorized to offer any such extra consideration to a donating party.

4. Any donation or sponsorship which, if accepted, would obligate the City to enter into a service or procurement agreement should be reviewed under the City procurement process.

5. The City encourages donations of material and equipment with the understanding that such items have a useful life, and that the City assumes no responsibility for replacement or upkeep. Once a donation is accepted, it becomes City property and the City may maintain, replace or dispose of the item unless the donation is explicitly restricted and accepted by the City as such.

6. The City cannot guarantee the tax deductibility of a donation but may provide the donating party with a letter of acknowledgement and a statement of the City's intended use. No Council Member, appointee, employee, volunteer, or agent of

7 the City may state that a donation is tax deductible. Each donor must make their own determination as to whether a donated item or monetary contribution is tax deductible.

7. City staff, elected officials, and appointees shall maintain the highest standard of ethics in fundraising activities. All donations or sponsorships must directly enhance the City’s ability to provide goods or services to the public or for another valid public purpose and may not be used for the personal financial or promotional gain of any City employee, elected official and/or appointee.

8. City employees who have primary responsibility for the procurement of services, supplies, materials and equipment or public works shall not engage in solicitation of donations or sponsorships.

9. City employees may only solicit donations or sponsorships pursuant to the individual department’s donation, sponsorship, and/or fundraising programs approved by the City Administrator. City employees working in an enforcement or regulatory City position (i.e., Police, Fire, Code Enforcement, Building Inspection) shall not solicit donations or sponsorships from the public while they are wearing a City uniform, unless they receive explicit permission from the City Administrator.

10.At any time, the City Administrator, or a department if approved by the City Administrator, may reject any donation or sponsorship offered to the City.

11.Restricted donations that land outside of an authorized fundraising plan or are restricted to a degree where staff determines that the restriction is too limiting for effective use will not be accepted and will be returned to the donor. Pass-through donations to individuals or organizations via the City shall not be accepted.

12.Where an existing, specific policy governing donations and fundraising has already been enacted and conflicts with this policy, the previously enacted specific policy shall apply.

8.1. City of Gilroy

STAFF REPORT
Agenda Item Title: Ordinance Amending Article II Chapter 16A of the Gilroy Municipal Code regarding Mobile Vending
Meeting Date: October 19, 2026
From: Matt Morley, City Administrator
Andy Faber, City Attorney
Kim Mancera, City Clerk
Department: Economic Development
Submitted by: Raissa de la Rosa, Economic Development Director Prepared by: Raissa de la Rosa, Economic Development Director STRATEGIC PLAN GOALS: Promote Economic Development Activities

RECOMMENDATION

1. Introduce an ordinance amending Article II, Chapter 16A, combining §§16A.13– 15 into a new §16A.13 establishing permanent mobile vending regulations and consolidating permit procedures, prohibited locations, and operational standards, by reading of the title only and waiving further reading.

2. Schedule the second reading and formal adoption of the ordinance for the next regular City Council meeting on November 2, 2026.

EXECUTIVE SUMMARY
The proposed ordinance amending Article II, Chapter 16A, §§16A.13–15, transitions the Mobile Vending Pilot Program outlined in Resolution No. 2026-05 to a permanent regulatory framework. It modernizes and consolidates requirements, integrating existing pilot provisions into one chapter, establishes the vending zones and no-vending areas, and streamlines permitting. Adoption will provide consistency, transparency, and improved management of mobile vending within commercial and public areas.

8.1. BACKGROUND
The City launched the Mobile Vending Pilot Program in June 2025 (Resolution 2025-26) to provide a framework to assess feasibility and public response to food trucks in various city locations, ensure compatibility with nearby land uses and businesses, evaluate impacts on traffic, parking and pedestrian flow, and support economic activity and place-making efforts. This resolution was informed by a downtown ad hoc committee, feedback from downtown businesses, comparative analysis of regional mobile vending programs, and modern standards.

In January 2026, Council extended the Pilot Program and incorporated enforcement tools such as permit suspension and revocation (Attachment 1 - Resolution 2026-05).

Section I of Resolution 2026-05 extends the Pilot Program through October 31, 2026, or until adoption of a revised Mobile Vending Ordinance, whichever comes first. Section I also allows the City Administrator to extend the Pilot Program pending final action of the City Council on a revised Mobile Vending Ordinance.

Previous Council direction supports permanently codifying the Pilot Program regulations.

ANALYSIS
The proposed ordinance establishes §16A.13 as a comprehensive framework that replaces previously distributed and outdated sections of the Municipal Code. It consolidates definitions, permit requirements, operational standards, enforcement mechanisms, and designated vending and no-vending locations into a single chapter for improved clarity.

A key modernization in the ordinance is the transition of permit authority from the Chief of Police to the Office of the City Administrator or their designee. Per the current code, mobile vending permits are to be reviewed and issued by the Police Department, with applicants required to submit forms, occupant information, and insurance documentation under §16A.14. This ordinance relocates permitting to an administrative function, aligning mobile vending with other business-related City approvals and reducing unnecessary reliance on law enforcement resources. This shift is consistent with statewide changes in sidewalk and mobile vending laws; State legislation, including SB 946 (2018) and SB 972 (2022), restricts cities from requiring police-based registration. These laws emphasize administrative permitting, time-place-manner regulation, and public health compliance.

Integrating all requirements into a single chapter simplifies administration, clarifies vendor compliance expectations, enhances transparency, and ensures that vending in designated locations aligns with public safety, ADA accessibility, sanitation standards, and neighborhood compatibility. The ordinance also ensures continuity by automatically converting existing pilot permits to new §16A.13 permits upon adoption.

8.1. As Section I of Resolution 2026-05 allows for the extension of the Pilot Program at the discretion of the City Administrator pending final action of the City Council on a revised Mobile Vending Ordinance, the provisions outlined in Resolution 2026-05 will remain in effect until the Ordinance takes effect, estimated to be December 2, 2026 (30 days after the November 2, 2026, second reading and adoption of the Ordinance).

Approved Mobile Vendors - as of October 5, 2026(Attachment 2 – Approved Mobile Vendors):
• 23 applications have been received
o 7 applications are incomplete; applicants have been contacted for additional information
o 16 applications have been approved and are permitted
▪ 9 are approved to operate at specific locations, 4 of which are located within the downtown footprint on Monterey Road between 1 st and 10th Street
▪ 7 are approved to operate but do not have a set location. They may participate in special events or on private property that meets the criteria of the Pilot Program, with explicit written permission by the property owner
Code Enforcement Activity:
• Since the pilot program began, Code Enforcement has contacted 31 mobile food vendors and issued 7 citations.
o January – October 2026 – 7 food truck vendors were contacted; 2 citations were issued.
o June – December 2025 – 24 mobile food vendors were contacted; 5 citations were issued
• All mobile food vendors were cooperative when informed they lacked required permits or were in unapproved locations. Some operators lacked official identification, making it difficult to issue citations or verify repeat contacts.

ALTERNATIVES

1. Maintain the pilot program without adopting permanent regulations. This would prolong temporary rules, create ambiguity for vendors, and delay the benefits of a unified chapter.

2. Adopt only partial revisions to existing sections. This approach would preserve inconsistent and outdated provisions scattered across multiple chapters,

8.1. increasing administrative complexity

FISCAL IMPACT/FUNDING SOURCE
Adopting the ordinance is not expected to create significant new costs for the City.

There may be some shifts in staff workload related to permit administration, but no increase in overall staffing needs is anticipated. Administrative processing, such as reviewing applications, monitoring compliance, and issuing permits, has already been absorbed by existing staff using standard business-permit workflows.

The ordinance may generate modest revenue through permit fees, which help offset administrative costs. Eliminating the Police Department’s role in permit issuance may reduce time spent on non-law-enforcement duties, providing a small operational efficiency gain. No major capital purchases or new enforcement programs are required, and existing enforcement mechanisms (such as suspensions and revocations) are handled using current City processes.

PUBLIC OUTREACH
Throughout the Pilot Program, staff has worked with downtown businesses and mobile vendors to shape the program.

NEXT STEPS
If approved, a second reading of the ordinance is required.

Attachments:

1. Reso 2026-05 - Food Truck Pilot Program Extension

2. Approved Mobile Vendor List

3. Current City Code Article II Chapter 16A §§16A.13-15

4. Mobile Vending Ordinance Update

 






 
 
  
 

 





   
 





 







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§ 16A.13. Mobile vending permit required.

A mobile vending facility, that is, any portable container, pushcart, stand, vehicle or wagon used for displaying, selling or offering for sale any food, goods or services, shall be prohibited from operating in commercial zoning districts known as C1 Neighborhood Commercial, C2 Central Commercial and C3 Shopping Center Commercial. No person shall place, maintain conduct, park or allow to stand or remain any mobile vending facility within the city limits without first obtaining a written mobile vending permit to do so, as well as any required identity permits under Article I of this chapter, from the chief of police. No mobile vending facility shall display any sign, flag, banner, whether attached or on a separate structure, except such signs as may be painted thereon in compliance with the city zoning ordinance.

The following uses shall not be considered as mobile vending facilities, and are thus not required to obtain a mobile vending permit hereunder:
(Ord. No. 97-10, § I, 11-5-1997)
§ 16A.14. Permit procedure.
(1) Vehicles or trucks used for catering or vending prepared foodstuffs and located upon private property at the invitation of the property owner, solely for the use of the owner or said owner’s tenants or employees and not for the use of the general public.
(2) Any nonmotorized pushcart or stand selling food on a paved private sidewalk (not a parking lot) in a commercial zone, provided that permanent restroom facilities (both men’s and women’s) are located on the same parcel of land, are open for public use for all hours that the pushcart or stand is open, and that the owner or operator of the pushcart or stand has written permission from the owner of the restrooms for his customers to use them. Such permission shall be produced and shown on the demand of any person solicited or of any police officer or official of the city.
(3) Temporary fireworks stands, pumpkin patches, Christmas tree lots, or such other seasonal temporary vendors as may be defined by the chief of police. No such vendor shall commence operation more than thirty (30) days in advance of the date of the applicable seasonal holiday.
(4) Temporary vending facilities owned and operated by a nonprofit or charitable organization and conducting sales for an event or occasion not to exceed three (3) consecutive days within any six-month time period.
(a) Each application for a mobile vending permit shall be on a form provided by the chief of police, shall be accompanied by an application fee established by the city council, shall be signed by the applicant, and shall include the following:
(1) The names and addresses of each person who will occupy or use the mobile vending facility for purposes of exercising said permit; (2) A certificate of insurance, stating the insurer’s name, policy terms, and City of Gilroy, CA
Downloaded from https://ecode360.com/GI4458 on 2026-09-29

(Ord. No. 97-10, § I, 11-5-1997)
§ 16A.15. Prohibited locations; prohibition against loitering.

No person required to obtain a mobile vending permit hereunder shall place, park or allow to stand the portable container, pushcart, stand, vehicle or wagon used for displaying, selling or offering for sale any food, goods or services in any of the following places within the city.

Regardless of whether on public or private property, no person required to obtain a mobile vending permit hereunder shall place, park or allow to stand the portable container, pushcart, stand, vehicle or wagon at any one place except at the request of a bona fide purchaser for a reasonable period of time, not to exceed ten (10) minutes, provided that when such person thereafter moves any such portable container, pushcart, stand, vehicle or wagon, it shall be moved a minimum distance of one hundred (100) feet before again being stopped.
(Ord. No. 97-10, § I, 11-5-1997)
principal amounts, not less than a combined single limit, established annually by the city council, of a policy of insurance against public liability, bodily injury, and property damage arising from the permitted activity. Each such policy shall be amendable only upon thirty (30) days’ advance notice to the city and shall name the city as an additional insured; and (3) Such additional information as may be required by the city administrator. (b) The chief of police shall grant a mobile vending permit, based upon the information contained in the application, public records, and the recommendations of departmental staff, if he concludes that the granting of such a permit would be in compliance with all of the provisions of this chapter and the intent of this article, and it appears that no undue traffic safety, litter, parking, or other health and safety consequences would result from exercise thereof. Any such permit may be suspended, modified, or revoked by the chief of police when he finds a violation of or noncompliance with the terms of such permit, or with other applicable laws or regulations.
(1) Upon private property, except with the written permission of the owner of the property. Such permission shall be produced and shown on the demand of any person solicited or of any police officer or official of the city. (2) In or upon any street within three hundred (300) feet of the nearest property line of any elementary or junior high school property.

City of Gilroy, CA
§ 16A.14 § 16A.15
Downloaded from https://ecode360.com/GI4458 on 2026-09-29

ORDINANCE 2026-XX

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY
OF GILROY AMENDING ARTICLE II SECTIONS 16A.13,
16A.14, AND 16A.15 OF CHAPTER 16A OF THE GILROY

MUNICIPAL CODE REGARDING MOBILE VENDING
WHEREAS, on June 2, 2025, Council adopted Resolution 2025-26 establishing a Mobile Vending Pilot Program to regulate mobile vending in designated locations while enabling staff to develop permanent code amendments, and;
WHEREAS, on January 26, 2026, Council adopted Resolution No. 2026-05 extending the pilot to October 31, 2026, adding enhanced enforcement provisions including permit suspension and revocation, and;
WHEREAS, evaluation of the pilot program has demonstrated strong community benefit, enhanced economic development, and manageable operational impacts, and; WHEREAS, the City Council now intends to permanently adopt and codify the mobile vending regulations.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF GILROY DOES HEREBY ORDAIN AS FOLLOWS:

SECTION I
The forgoing recitals are true and correct and are incorporated herein by this reference.

SECTION II
§ 16A.13 of Chapter 16A Article II of the Gilroy City Code is amended to read as follows:

SECTION 16A.13 – MOBILE VENDING
16A.13.010 – Purpose & Scope
To regulate mobile vending in the public interest, balancing health, safety, economic development, and community standards by establishing definitions, permit requirements, operational standards, and enforcement mechanisms.
16A.13.020 – Definitions
For the purposes of this chapter, the following definitions shall apply:
• Downtown Vending Zone: Designated public parking lots or zones as described in Section 16A.13.080(A).
• Mobile Vending Facility: A motorized vehicle, portable cart, or any other portable vending device from which food, beverage, or retail goods are sold or displayed. • Mobile Vending Permit: Permit as defined by the City application requirements. • No Vending Zone: Areas where vending is prohibited under Section 16A.13.090. • Special Event an event permitted by the City requiring coordination with organizers for vending activities.

Ordinance No. 2026-XX
Ordinance Amending Article II, Chapter 16A of the Gilroy Municipal Code Regarding Mobile Vending City Council Regular Meeting | October 19, 2026

• Mobile Vendor: A person who sells food or merchandise from a vending device or from one’s person and operating from a nonpermanent location. This term is inclusive of all mobile vendors, peddlers, solicitors, transient businesses, and any other traveling merchant operating in the designated locations as described in Section 16A.13.080(A). This Chapter does not apply to those Mobile Vendors regulated under Chapter 16B – Sidewalk Vending. 16A.13.030 – Permit Requirements
A Vendor shall not operate a Mobile Vending Facility without a valid City-issued Mobile Vending Permit. Requirements include:

1. City of Gilroy Business License

2. Santa Clara County Environmental Health Permit for food and beverage vendors.

3. A Certificate of Insurance identifying the insurer, policy terms, and coverage limits of not less than a combined single limit of $1 million, or as otherwise established by City Council resolution. The policy must cover public liability, bodily injury, and property damage arising from the permitted activity, name the City as an additional insured, and provide the City with at least thirty (30) days’ advance written notice prior to any amendment or cancellation.

4. Proof of restroom access for vendors operating for longer than one hour.

5. Display of a City-issued Mobile Vending Permit.

6. Payment of all applicable permit fees.

7. Such additional information as may be required by the City Administrator.

8. If vending on private property, must additionally provide:
a. Proof host business hours align with vending (6 am–12 am max). b. Confirmation of no impact on required parking.
c. Confirmation not on undeveloped/vacant parcels.
16A.13.040 – Permit Application Procedures
A. Applications, signed by the applicant, shall be submitted to the Office of the City Administrator or as designated by the City Administrator.

B. Each application shall be accompanied by an application fee established by the City Council.

C. Applications shall be reviewed for compliance with all regulatory requirements based upon the information contained in the application, public records, and the recommendations of departmental staff.

D. If granting a Mobile Vending Permit would be in compliance with all provisions of this Chapter and the intent of this Article, and it appears that no undue traffic safety, litter, parking, or other health and safety consequences would result from exercise thereof, approved Vendors shall receive a permit for display.

E. Permits may be transferred to a replacement vehicle operated by the same applicant upon inspection.

F. Any such permit may be suspended, modified, or revoked by the City should a violation of or noncompliance with the terms of such permit, or with other applicable laws or regulations be found.

G. Permits are valid for one year from issuance and must be renewed on an annual basis as outlined in this Section.

Ordinance No. 2026-XX
Ordinance Amending Article II, Chapter 16A of the Gilroy Municipal Code Regarding Mobile Vending City Council Regular Meeting | October 19, 2026

16A.13.050 – Suspension & Revocation
A. The City may suspend or revoke permits for violations including but not limited to:

1. Operating without required permits.

2. Creating public nuisances.

3. Violating any provisions of this chapter, or of any other law or ordinance relating to the business of the licensee.

B. The City may issue immediate suspensions in cases of threats to public health or safety.

C. Violations may result in suspension up to sixty days or revocation for one year.

D. Vendors shall have the right to a hearing as set forth in Article IV – Revocation and Suspension of the Gilroy City Code.
16A.13.060 – Operational Standards
A. General Requirements

1. Vendors shall not be subject to relocation rules formerly mandated under Chapter 16A Article II (relocation every 10 minutes).

2. Vendors shall maintain sanitary operations and comply with all state and local food safety laws.

3. ADA pathways shall not be obstructed.

4. Vendors are Subject to all standards in Chapter 16B (public access, sanitation, traffic, noise), and shall prevent trash accumulation and provide onsite receptacles.

5. Vendors may operate only within City-approved designated areas as outlined in 16A.13.080.

B. Hours of Operation

1. Fifth Street Public Parking Lot: Thursday – Sunday, 4:00 PM to 2:00 AM.

2. Eigleberry Street Designated Parking Areas: Daily, 2:00 PM to 10:00 PM.

3. Gourmet Alley Parking Lots: Daily, 2:00 PM to 10:00 PM.

4. Eigleberry Street from 4th-7th Street, in spaces parallel to the curb: Daily, 2:00 PM to 10:00 PM

5. Private Commercial Property: Daily, 6:00 AM to midnight, with written property owner consent.
16A.13.070 – Displays & Signage
A. One primary sign is permitted, mounted on the Mobile vending Facility, not exceeding six square feet.

B. Menu displays shall be neat and securely attached.

C. The following are prohibited: freestanding signage, balloons, sidewalk displays, and amplified noise.
16A.13.080 – Authorized Vending Locations
A. Authorized Downtown Mobile Vending Locations : Mobile Vending within the Downtown Area is permitted only in locations designated by the City. The City Administrator, or their designee, may add, remove, or modify authorized Downtown Mobile Vending Locations, including operating hours, based on operational needs, public safety, community feedback, economic development goals, or program performance. The following locations are initially designated as authorized Downtown Mobile Vending locations:

Ordinance No. 2026-XX
Ordinance Amending Article II, Chapter 16A of the Gilroy Municipal Code Regarding Mobile Vending City Council Regular Meeting | October 19, 2026

1. P3 - Fifth Street Public Parking Lot (Thursday – Sunday, 4:00 PM–2:00 AM)

2. P7 - Eigleberry Street Public Parking Lot (Daily, 2:00 PM to 10:00 PM)

3. P2 + P4 - Gourmet Alley/Paseo Parking Lots (Daily, 2:00 PM to 10:00 PM)

4. Eigleberry Street from 4th-7th Street, in spaces parallel to the curb (Daily, 2:00 PM to 10:00 PM)
B. Private Property

1. Mobile vending shall be permitted on commercially zoned private property as defined in and consistent with Chapter 30 (Zoning Ordinance) of the Gilroy City Code, with written permission of the property owner, and except as restricted in § 16A.13.090.A – Authorized Downtown Mobile Vending Locations. 16A.13.090 – No Vending Zones
Mobile vending is expressly prohibited in:

A. Areas visible from the property frontage along Monterey Road from Leavesley Road to Luchessa Avenue; and side streets between 4th Street and 7th Street between Railroad Street south to Eigleberry Street except as allowed in the Downtown Mobile Vending Locations as defined in § 16A.13.080 – Authorized Vending Locations.

B. City parks unless with exclusive concessionaire agreement or as an allowed vendor during a permitted special event.

C. Within 300 ft of a permitted farmers’ market or special event during operation.

D. Within 400 ft of a school between 7 am–4 pm on school days.

E. C-1 (Neighborhood Commercial), C-2 (Central Commercial), C-3 (Shopping Center Commercial) zones except on private property with owner permission.

F. Historic District sidewalks, and as restricted or excluded or otherwise regulated under Chapter 16B – Sidewalk Vending.

G. Any area where mobile vending is prohibited due to objective public health, safety, or welfare concerns, or as disallowed by private property owner(s), or as established by City Council Resolution.

H. Bus stops, school zones, fire lanes, or any other location prohibited by state law or as identified as prohibited locations elsewhere within the Gilroy City Code.

I. Upon private property, except with the written permission of the owner of the property.

Such permission shall be produced and shown on the demand of any person solicited or of any police officer or official of the City.
16A.13.100 – Special Event Vending
A Mobile Vending Permit authorizes a Mobile Vendor to operate at City-approved Special Events, provided the Vendor coordinates with the event organizer and complies with all event specific rules or requirements. This section applies only to vendors who already hold a valid Mobile Vending Permit.
16A.13.110 – Activities Not Considered Mobile Vending Under This Chapter The following are not regulated under this chapter and do not require a Mobile Vending Permit:

A. Farmers’ markets or street fairs permitted by the City.

B. Vendors operating entirely within licensed brick-and-mortar premises or patios or other outdoor extension of a brick-and-mortar premises.

Ordinance No. 2026-XX
Ordinance Amending Article II, Chapter 16A of the Gilroy Municipal Code Regarding Mobile Vending City Council Regular Meeting | October 19, 2026

C. Vendors operating exclusively as temporary concessions under a City issued Special Event Permit (regulated under Chapter 13A of the Gilroy City Code) and not acting as Mobile Vendors.

D. Sidewalk vending, which is regulated separately under Chapter 16B – Sidewalk Vending. 16A.13.120 – Monitoring & Reporting
The City shall:

A. Track permit issuance and compliance.

B. Collect vendor, customer, and business feedback.

C. Provide periodic reports to the City Council on program effectiveness. 16A.13.130 – Severability
If any section of this chapter is held invalid, the remaining provisions shall continue in full force and effect.
16A.13.140 – Effective Date
A. This ordinance shall take effect thirty (30) days following its adoption.

B. All valid Mobile Vending Pilot Program permits issued under Resolutions 2025-26 and 2026-05 shall automatically convert to permits issued under Chapter 16A.13 upon the effective date of this ordinance.

SECTION III
Section 16A Chapter 16A.14 - Permit Procedures of the Gilroy City Code has been updated and integrated into the new Article II Chapter 16A.13, allowing for the elimination of Chapter 16A.14.

SECTION IV
Section 16A Chapter 16A.15 - Prohibited Locations and Prohibition Against Loitering of the Gilroy City Code has been updated and integrated into the new Article II Chapter 16A.13, allowing for the elimination of Chapter 16A.15.

SECTION V
Except as set forth in this Ordinance, all other provisions of the Gilroy Charter and City Code shall remain in full force and effect.

SECTION VI
This Ordinance is not intended to and shall not be construed or given effect in a manner that imposes upon the City or any officer or employee thereof a mandatory duty of care towards persons and property within or without the City, so as to provide a basis of civil liability for damages, except as otherwise imposed by law.

Ordinance No. 2026-XX
Ordinance Amending Article II, Chapter 16A of the Gilroy Municipal Code Regarding Mobile Vending City Council Regular Meeting | October 19, 2026

SECTION VII
If any section, subsection, sentence, clause or phrase of this Ordinance is for any reason held to be invalid or unconstitutional, such decision shall not affect the validity of the remaining portions of this ordinance. The City Council of the City of Gilroy hereby declares that it would have passed and adopted this ordinance, and each section, subsection, sentence, clause or phrase hereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases may be declared invalid or unconstitutional.

SECTION VIII
This Ordinance shall take effect thirty (30) days after its adoption. The City Clerk is hereby directed to publish this Ordinance or a summary thereof pursuant to Government Code Section 36933.

PASSED AND ADOPTED by the City Council of the City of Gilroy this 2nd day of November 2026 by the following vote:

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSTAIN: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:

APPROVED:
___________________
Greg Bozzo, Mayor
ATTEST:
_______________________
Kim Mancera, City Clerk

Ordinance No. 2026-XX
Ordinance Amending Article II, Chapter 16A of the Gilroy Municipal Code Regarding Mobile Vending City Council Regular Meeting | October 19, 2026

CERTIFICATE OF THE CLERK
I, KIM MANCERA, City Clerk of the City of Gilroy, do hereby certify that the attached Ordinance No. 2026-XX is an original resolution, or true and correct copy of a City Resolution, duly adopted by the Council of the City of Gilroy at a Regular Meeting of said Council held on Monday, Date, with a quorum present.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Official Seal of the City of Gilroy this Tuesday, XXXXX
____________________________________
Kim Mancera
City Clerk of the City of Gilroy

City of Gilroy

STAFF REPORT
Agenda Item Title: Consider Extending the Urgency Interim Ordinance of a Temporary Moratorium on the Acceptance, Processing, and Approval of Applications and Entitlements for New Data
Center Facilities Citywide, for a Period of Ten (10) Months and Fifteen (15) Days
Meeting Date: October 19, 2026
From: Matt Morley, City Administrator
Department: Community Development
Submitted by: Sharon Goei, Community Development Director Prepared by: Michael Fossati, Planning Manager
STRATEGIC PLAN GOALS: Not Applicable

RECOMMENDATION

1. Determine the action is exempt from environmental review under the California Environmental Quality Act (CEQA) pursuant to Section 15061(b)(3) of the CEQA Guidelines;

2. Direct the City Clerk to read the ordinance extending the Urgency Interim Ordinance by title only and to waive further reading;

3. Adopt an extension of the Urgency Interim Ordinance to prohibit the acceptance, processing, and approval of applications and entitlements for new Data Center facilities, for an additional ten months and 15 days, with the associated findings; and

4. Review, approve, and issue the 10-day report as required by Government Code Section 65858(d) for the extension of the Urgency Interim Ordinance.

EXECUTIVE SUMMARY
On September 14, 2026, the City Council approved an urgency interim ordinance creating a temporary 45-day moratorium on accepting, processing, or approving applications and entitlements for new data center facilities. The moratorium is set to

expire on October 29, 2026. Staff recommends extending the ordinance to allow time to study and adopt Data Center-specific zoning, development, and operational standards.

BACKGROUND
The Gilroy City Code does not define “Data Center” as a distinct land use and lacks zoning, development, or operational standards for their unique impacts, such as electrical grid capacity, water consumption and cooling technology, backup generator emissions and noise, aesthetics and screening, truck traffic, and decommissioning.

Amazon Web Services (AWS) submitted Architectural and Site Review Permit Application No. AS 20-23 for a Data Center project at 8050 Camino Arroyo (APN 841- 69-044), a 56-acre site in the City’s General Industrial (M2) zoning district. Because the City Code does not classify “Data Center” as a distinct land use and Table 30.23.10(c) permits Data Centers under the generic “Data Processing Establishments” use classification, the application did not require a public hearing before the Planning Commission or City Council. The Community Development Director, on behalf of the City, approved the project administratively through the Architectural and Site Review process on July 3, 2025, following the City Code process in Gilroy.

The City has since received a pre-application from AWS for a second, Data Center facility, anticipated to be located at or near the intersection of Highway 152 and Camino Arroyo. Although the City has not yet received or begun processing a formal application, staff anticipated that one would be submitted within a reasonable time, and that additional Data Center applications from other operators may follow given increasing regional and statewide demand for Data Center facilities.

On August 17, 2026, the City Council received extensive public testimony, both in favor of and in opposition to the AWS Facility currently under construction, and directed staff to bring back objective design standards for commercial and industrial projects that address community needs, economic development, energy use, environmental impacts, public health, and neighborhood quality of life.

In response to public testimony regarding data center development and to provide staff time to evaluate and develop objective design standards before additional projects could proceed, the City Council adopted an urgency interim ordinance prohibiting Data Center application intake on September 14, 2026, pursuant to California Government Code Section 65858.

ANALYSIS
California Government Code Section 65858 authorizes the City Council to adopt, as an urgency measure, an interim ordinance prohibiting uses that may be in conflict with a contemplated general plan, specific plan, or zoning proposal that the City is

considering, studying, or intends to study within a reasonable time. Subdivision (c) further requires that the ordinance contain findings that there is a current and immediate threat to the public health, safety, or welfare, and that approval of the entitlements at issue would result in that threat. This ability was exercised by the City of Gilroy when Ordinance 2026-08 was adopted last month.

Pursuant to Government Code section 65858(d), the City must issue a written report at least 10 days before the initial 45-day temporary moratorium expires. The report must describe actions taken to address the conditions that led to the adoption of the urgency ordinance. Staff has prepared the required 10-Day Report, which is included as an attachment to this staff report.

Staff recommends extending the moratorium to allow time to conduct research, coordinate with utility and service providers, complete environmental review under the California Environmental Quality Act (CEQA), conduct public outreach, and develop objective siting, development, operational, and design standards for Data Centers. Staff will also integrate the Data Center standards into the comprehensive zoning code update. The plans include public hearings before the Planning Commission and City Council and opportunities for community input on the future of data center development.

Additional concerns include physical and legal constraints caused by data center development. Physical constraints involve impacts on electrical grid capacity and demand, water use, backup generator emissions, noise, lighting, aesthetics, potential truck traffic increases, and data center decommissioning. Legal constraints include recent federal and state mandates, such as the national data center plan (a package of bills related to data centers) proposed by Virginia U.S. Representative Suhas Subramanyam and federal lawmakers, and several California State Assembly and State Senate bills (AB 2383, SB 886, SB 1168, AB 2469, AB 2619, AB 1577, and SB 887) recently signed by Governor Newsom.

The proposed time extension is needed because of the complexity of the impacts that need to be addressed, which cannot be completed within the initial 45-day period.

While staff will strive to complete the items noted in the 10-Day Report within the extension period, staff may need to request another extension of the urgency interim ordinance prior to the September 3rd, 2027 date, for reasons and findings noted in the 10-Day Report and urgency interim ordinance, including integrating this work into the City’s comprehensive zoning code update to ensure alignment. Government Code Section 65858(a) allows two extensions of an urgency interim ordinance.

ALTERNATIVES
Allow the urgency interim ordinance to expire and resume processing new Data Center permit applications under current City regulations.

FISCAL IMPACT/FUNDING SOURCE
Studying and drafting the objective design standards will require staff time and consultant resources.

PUBLIC OUTREACH
The notice for the City Council meeting was published in the Gilroy Dispatch. Public hearing packets with this staff report are available on the City’s website for viewing.

NEXT STEPS
If approved, the new ordinance will take effect immediately. It will extend Ordinance 2026-08 by 10 months and 15 days, until September 3, 2027.

Attachments:

1. Proposed Extension of Urgency Interim Ordinance

2. 10-Day Report

ORDINANCE 2026-XX

AN EXTENSION OF AN URGENCY INTERIM

ORDINANCE OF THE CITY COUNCIL OF THE CITY OF

GILROY IMPOSING A TEMPORARY MORATORIUM ON

THE ACCEPTANCE, PROCESSING, AND APPROVAL OF

APPLICATIONS AND ENTITLEMENTS FOR NEW DATA

CENTER FACILITIES CITYWIDE, FOR A PERIOD NOT
TO EXCEED TEN (10) MONTHS AND FIFTEEN (15) DAYS
WHEREAS, the City of Gilroy (“City”) is a municipal corporation duly organized as a Charter City under the California Constitution and laws of the State of California; and WHEREAS, the City Council has broad discretion pursuant to the California Constitution Article XI, Section 5, and the general laws of the state, including, but not limited to, the California Planning and Zoning Law (Gov. Code section 65000 et seq.), to legislate for public purposes and for the general welfare, including, but not limited to, matters of public health and safety; and WHEREAS, California Government Code Section 65858 sets forth procedures for the adoption of an urgency interim ordinance to prohibit the approval of applications for additional subdivisions, use permits, variances, building permits, and other applicable entitlements for uses that may be in conflict with a contemplated specific plan or zoning proposal that the legislative body, planning commission, or the planning department is considering or studying or intends to study; and
WHEREAS, California Government Code Section 65858, subdivision (c), provides that the City Council shall not adopt or extend an interim ordinance under that section unless the ordinance contains legislative findings that there is a current and immediate threat to the public health, safety, or welfare, and that the approval of additional subdivisions, use permits, variances, building permits, or any other applicable entitlement for use which is required in order to comply with a zoning ordinance would result in that threat to the public health, safety, or welfare; and WHEREAS, for purposes of this Ordinance, “Data Center” means a facility, or any discrete portion of a facility, that is designed, constructed, or used as a stand-alone or primary use to house computer systems, servers, data storage equipment, and associated networking, cooling, electrical, and backup power infrastructure, for the storage, processing, management, or distribution of data on behalf of one or more third parties or business units, including facilities supporting cloud computing, colocation, and artificial intelligence applications, and that either (i) occupies 15,000 square feet or more of gross floor area, or (ii) has, or is designed to have, a dedicated critical information technology electrical load of one (1) megawatt or more. “Data Center” does not include a room, closet, or other space within a building that is accessory and incidental to the primary permitted use of that building and is used solely to support the on-site business, communications, or information technology operations of the occupant of that building; and
WHEREAS, the Gilroy City Code does not currently define “Data Center” as a distinct land use classification and does not contain zoning, development, or operational standards specific

Ordinance No. 2026-XX
Data Center Urgency Interim Ordinance Extension
City Council Regular Meeting | October 19, 2026

to Data Centers, including without limitation standards addressing electrical grid capacity and demand, water consumption and cooling technology, backup generator emissions and noise, aesthetics and screening, truck traffic, and decommissioning; as a result, Data Center uses may currently be processed under Gilroy City Code Chapter 30 (Zoning), Article L (Planning Department Applications), as a use subject only to administrative Architectural and Site Review approval by the Community Development Director or designee — without any public hearing before the Planning Commission or City Council — within the M2 (General Industrial) zoning district, where, pursuant to Table 30.23.10C(c) of the Gilroy City Code, Data Center uses are permitted under the generic “Data Processing Establishments” use classification, which is not tailored to, and does not contain any development or operational standards specific to, the unique scale and intensity of Data Center impacts; and although the City Council introduced an ordinance amending this same Article L Architectural and Site Review process, to enhance public outreach, on first reading at the August 17, 2026 meeting, and adopted that ordinance on second reading at the September 14, 2026 meeting, that ordinance does not add any public hearing before the Planning Commission or City Council, or any Data Center-specific development or operational standard, to the Architectural and Site Review process; and WHEREAS, the City is home to an existing Data Center facility operated by Amazon Web Services, Inc. (“AWS”), known as the AWS Data Center, located at 8050 Camino Arroyo (APN 841-69-044), for which the Final Environmental Impact Report (State Clearinghouse No. 2022110127) was certified with a Statement of Overriding Considerations pursuant to California Environmental Quality Act (CEQA) Guidelines Section 15090 and the project approved by the Community Development Director on behalf of the City on July 3, 2025 pursuant to Site and Architectural Review Permit No. AS 20-23 (the “Existing AWS Facility”); and WHEREAS, notwithstanding the conditions of approval placed on the project by City staff and the mitigation measures adopted in connection with the Existing AWS Facility, the certified Final Environmental Impact Report found that the project would result in two significant and unavoidable environmental impacts even after mitigation — (i) conversion of Prime Farmland and Farmland of Statewide Importance to non-agricultural use (Impact AG-1), and (ii) vehicle miles traveled in excess of the threshold of significance under CEQA Guidelines Section 15064.3 (Impact TRA-1); and that the Existing AWS Facility further involves up to 49 megawatts of electrical demand per data center building — up to 98 megawatts combined at full two-building build-out — backed by twenty-five 2.5-megawatt and one 600-kilowatt diesel backup generators for the first building alone, and water demand of up to approximately 7.49 million gallons (23 acre-feet) per year at full build-out, demonstrating that Data Center land uses within the City result in substantial, irreversible impacts to agricultural resources and the regional transportation network, and significant demand on electrical grid capacity, backup generator emissions and noise, and water supply and cooling infrastructure, which the City’s current regulations do not adequately address; and
WHEREAS, the City has received a pre-application from AWS for a second, expanded Data Center facility within the City (the “Proposed AWS Project”), anticipated to be located at or near the intersection of Highway 152 and Camino Arroyo and although the City has not yet

Ordinance No. 2026-XX
Data Center Urgency Interim Ordinance Extension
City Council Regular Meeting | October 19, 2026

received or begun processing a formal application for the Proposed AWS Project, City staff reasonably anticipate, based on the pre-application and related communications, that a formal application will be submitted within a reasonable time, and that additional Data Center applications from other operators may also be submitted in light of increasing regional and statewide demand for Data Center facilities; and
WHEREAS, because the Existing AWS Facility is directly comparable in use, scale, and location to the Proposed AWS Project and to other new or expanded Data Center facilities reasonably anticipated to be proposed within the City, the significant and unavoidable environmental impacts, Statement of Overriding Considerations, and infrastructure demands documented in the certified Final Environmental Impact Report for the Existing AWS Facility provide direct, City-specific, and substantial evidence that approval of additional applications and entitlements for new or expanded Data Center facilities under the City’s current regulations would result in similar significant and unavoidable impacts to agricultural resources and the transportation network, and similar substantial demands on electrical grid capacity, water supply, and cooling infrastructure; and
WHEREAS, on August 17, 2026, the City Council held a duly noticed public hearing on the Introduction and First Reading of an ordinance amending Chapter 30 (Zoning), Article L (Planning Department Applications) of the Gilroy City Code relating to the Architectural and Site Review permit process and to enhance public outreach (Agenda Item 8.1), at which the City Council received extensive public testimony, including numerous comments both in favor of and in opposition to the Existing AWS Facility; and
WHEREAS, at that same August 17, 2026 meeting, in connection with Agenda Item 8.1, the City Council provided direction to City staff to bring back objective design standards for commercial and industrial projects that consider community needs, economic development, energy use, environmental impacts, public health, and neighborhood quality of life (the “Objective Design Standards Direction”), reflecting the City Council's own determination that the City's current commercial and industrial development standards do not adequately address these considerations; and
WHEREAS, consistent with, and in furtherance of, the Objective Design Standards Direction, the City Council desires, and hereby directs the Community Development Department and Planning Commission, to study and prepare recommended amendments to the Gilroy City Code that would (i) define “Data Center” as a distinct land use and establish appropriate zoning, siting, development, and operational standards therefor, including without limitation standards addressing electrical grid capacity and demand, water consumption and cooling technology, noise and emissions from backup generators, aesthetics and screening, truck traffic, and decommissioning, and (ii) implement the Objective Design Standards Direction for Data Centers, addressing community needs, economic development, energy use, environmental impacts, public health, and neighborhood quality of life (collectively, the “Contemplated Zoning Proposal”); and

Ordinance No. 2026-XX
Data Center Urgency Interim Ordinance Extension
City Council Regular Meeting | October 19, 2026

WHEREAS, absent a temporary moratorium, the City may be required to accept, process, and approve applications and entitlements for new or expanded Data Center facilities, including the anticipated formal application for the Proposed AWS Project, under the City’s current regulations before the City has had the opportunity to study and adopt the Contemplated Zoning Proposal; and
WHEREAS, the City Council finds, based on the evidence in the record — including but not limited to the documented impacts of the Existing AWS Facility described above, the preapplication for the Proposed AWS Project, the extensive public testimony received at the August 17, 2026 public hearing on Agenda Item 8.1, and the staff report accompanying the September 14, 2026 urgency interim ordinance — that there is a current and immediate threat to the public health, safety, and welfare of the City and its residents arising from the acceptance, processing, and approval of applications and entitlements for new or expanded Data Center facilities under the City’s current regulations; and
WHEREAS, the City Council further finds that the approval of applications and entitlements for new or expanded Data Center facilities under the City’s current regulations — which, as reflected in the Objective Design Standards Direction, lack objective, enforceable development standards tailored to Data Center impacts — would result in, and exacerbate, that threat to the public health, safety, and welfare, in that such approval would result in significant and unavoidable impacts to Prime Farmland and Farmland of Statewide Importance and to the regional transportation network of the kind documented in the certified Final Environmental Impact Report for the Existing AWS Facility, further significant strain on the City’s electrical grid and water supply infrastructure beyond levels the City’s utility providers can currently support without significant capital improvements, increased ambient noise and light affecting nearby sensitive land uses, increased heavy-truck traffic on City streets not designed to accommodate such use, and a resulting alteration, in a substantial and fundamental manner, of the character and quality of life of the affected neighborhoods and the City as a whole; and WHEREAS, within a reasonable time, the City Council, Planning Commission, and/or Community Development Department is considering, studying, or intends to study, the Contemplated Zoning Proposal to address the foregoing concerns, with which new or expanded Data Center uses may be in conflict; and
WHEREAS, on September 14, 2026, the City Council adopted an urgency interim ordinance imposing a temporary moratorium on the acceptance, processing, and approval of applications and entitlements for new Data Center facilities citywide, for a period not to exceed forty-five (45) days in an effort to allow the research necessary to address a current and immediate threat to the public health, safety and welfare of the City; and WHEREAS, within the 45-day timeframe, City staff drafted a 10-Day Report, as required by California Government Code Section 65858(d), identifying key actions and findings the City must take in order to alleviate the threat to public health, welfare, and safety associated with the adverse effects of Data Center facilities, including, but not limited to, studying the Contemplated

Ordinance No. 2026-XX
Data Center Urgency Interim Ordinance Extension
City Council Regular Meeting | October 19, 2026

Zoning Proposal identified in the urgency ordinance, reviewing zoning code regulations from California cities and counties to identify best practices for regulating Data Centers, coordinating the Contemplated Zoning Proposal with the Comprehensive Zoning Ordinance Update to ensure the new Data Center definition, use classification, and objective design standards for Data Center development align with the updated zoning code, including the existing “Data Processing Establishments” use classification, and obtain data from the Final Environmental Impact Report for the existing AWS Data Center (State Clearinghouse No. 2022110127) to inform the type of information future Data Center applications may need to provide; and WHEREAS, due to the associated findings within the 10-Day Report and the complexity of the impacts that need to be addressed, which cannot be completed within the initial 45-day period, staff recommends the City Council adopt an extension of the urgency interim ordinance imposing a temporary moratorium on the acceptance, processing, and approval of applications and entitlements for new data center facilities citywide, for a period not to exceed ten (10) months and fifteen (15) days; and
WHEREAS, on October 19, 2026, in accordance with State law, the City Council provided due consideration of all evidence presented and provided in the entire administrative record and held a duly noticed public hearing and took testimony regarding this extension of an urgency interim ordinance.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF GILROY DOES HEREBY ORDAIN AS FOLLOWS:

SECTION I. Recitals.

The above recitals are true and correct and hereby adopted as the City Council’s findings.

SECTION II. Purpose and Authority.

In the interest of protecting the health, safety, and welfare of the residents of the City of Gilroy, it is the purpose and intent of the extension of the urgency interim Ordinance to place and continue a temporary moratorium on the acceptance, processing, and approval of any new application, permit, license, or other entitlement for the establishment of a new Data Center facility, citywide.

The City Council has authority to adopt this Ordinance pursuant to California Government Code Section 65858 as an urgency measure prohibiting any use that may be in conflict with the Contemplated Zoning Proposal that the City is considering or studying.

SECTION III. Findings.

The City Council hereby finds and determines that the acceptance, processing, and approval of applications and entitlements for new Data Center land uses in the City, under the City’s current regulations, constitutes a current and immediate threat to the public health, safety, and welfare.

The approval of additional entitlements for Data Center land uses, including but not limited to the anticipated formal application for the Proposed AWS Project, under the City’s current regulations would result in and exacerbate that threat to the public health, safety, and welfare. The adoption of the extension of this urgency interim Ordinance is therefore necessary for the immediate

Ordinance No. 2026-XX
Data Center Urgency Interim Ordinance Extension
City Council Regular Meeting | October 19, 2026

protection of the public health, safety, and welfare. The above recitals are incorporated herein by reference as true and correct as the Council’s findings.

SECTION IV. Definitions.

For purposes of this Ordinance, “Data Center” means a facility, or any discrete portion of a facility, that is designed, constructed, or used as a stand-alone or primary use to house computer systems, servers, data storage equipment, and associated networking, cooling, electrical, and backup power infrastructure, for the storage, processing, management, or distribution of data on behalf of one or more third parties or business units, including facilities supporting cloud computing, colocation, and artificial intelligence applications, and that either (i) occupies 15,000 square feet or more of gross floor area, or (ii) has, or is designed to have, a dedicated critical information technology electrical load of one (1) megawatt or more. “Data Center” does not include a room, closet, or other space within a building that is accessory and incidental to the primary permitted use of that building and is used solely to support the on-site business, communications, or information technology operations of the occupant of that building.

For purposes of this Ordinance, the “establishment of a new Data Center facility” means the construction, occupancy, or operation of a Data Center pursuant to an application, permit, license, or other entitlement that is not, as of the effective date of this Ordinance, an approved and effective entitlement. The “establishment of a new Data Center facility” does not include the continued construction, occupancy, operation, maintenance, or repair of a Data Center pursuant to an entitlement approved and in effect prior to the effective date of this Ordinance, including the existing AWS Data Center, which was approved in its entirety pursuant to Architectural and Site Review Permit No. AS 20-23, regardless of whether construction of any phase of the existing AWS Data Center remains ongoing or is completed after the effective date of this Ordinance.

SECTION V. Extension of Moratorium.

This Ordinance extends the temporary moratorium on the acceptance, processing, and approval of any application, permit, license, entitlement, or other approval — whether ministerial or discretionary — for the establishment of a new Data Center facility, anywhere within the City.

This temporary moratorium shall not apply to the existing AWS Data Center.

SECTION VI. Violation.

Except as otherwise permitted under the extension of this urgency interim Ordinance, the establishment of a new Data Center facility in violation of this Ordinance is declared to be a public nuisance. Violations of this urgency interim Ordinance may be enforced by any applicable laws or ordinances, including, but not limited to, injunctions or administrative or criminal penalties under the Gilroy City Code.

SECTION VII. Report.

Pursuant to California Government Code Section 65858, subdivision (d), the City Administrator, or designee, has prepared a written report describing the measures taken to alleviate the conditions which led to the adoption of the urgency interim Ordinance, for presentation to the City Council no later than ten (10) days prior to the expiration of this Ordinance or any extension thereof.

Ordinance No. 2026-XX
Data Center Urgency Interim Ordinance Extension
City Council Regular Meeting | October 19, 2026

SECTION VIII. Term of Ordinance.

The extension of the urgency interim Ordinance shall be in effect from the date of adoption for a period of ten (10) months and fifteen (15) days, unless it is extended pursuant to California Government Code Section 65858 or other applicable law, as approved by the City Council.

SECTION IX. Severability.

If any section, subsection, subdivision, sentence, clause or phrase of the extension of the urgency interim Ordinance is for any reason held to be unconstitutional or otherwise void or invalid by any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this urgency interim Ordinance. The City Council hereby declares that it would have passed this urgency interim Ordinance and each section, subsection, subdivision, sentence, clause or phrase thereof, irrespective of the fact that any one or more sections, subsections, subdivisions, sentences, clauses, or phrases may be declared unconstitutional or otherwise invalid by a court of competent jurisdiction.

SECTION X. CEQA Determination.

This extension of the urgency interim Ordinance is exempt from environmental analysis under the California Environmental Quality Act (CEQA) in accordance with CEQA Guidelines Section 15061(b)(3) because it can be seen with certainty that this Ordinance has no possibility of having a significant effect on the environment, as it merely preserves the status quo in accordance with Government Code Section 65858 in the interest of evaluating and preventing potential harms related to Data Center land uses. This Ordinance does not authorize any development, approve any land-use entitlement, or result in any physical change to the environment.

SECTION XI. Effective Date.

The extension of the urgency interim Ordinance, passed by at least a four-fifths vote of the City Council, is declared to be an urgency interim Ordinance for preserving the public health, safety, and welfare and shall take effect and be enforced immediately upon adoption pursuant to Government Code Section 36937(b).

SECTION XII. Publication.

The City Clerk shall cause this Ordinance, or summary thereof, to be published one time within fifteen (15) days upon passage and adoption in a newspaper of general circulation, such as the Gilroy Dispatch.

Ordinance No. 2026-XX
Data Center Urgency Interim Ordinance Extension
City Council Regular Meeting | October 19, 2026

PASSED AND ADOPTED by the City Council of the City of Gilroy this 19th day of October 2026 by the following roll call vote:

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSTAIN: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:

APPROVED:
___________________
Greg Bozzo, Mayor
ATTEST:
_______________________
Kim Mancera, City Clerk

Ordinance No. 2026-XX
Data Center Urgency Interim Ordinance Extension
City Council Regular Meeting | October 19, 2026

CERTIFICATE OF THE CLERK
I, KIM MANCERA, City Clerk of the City of Gilroy, do hereby certify that the attached Ordinance No. 2026-XX is an original ordinance, or true and correct copy of a City Ordinance, duly adopted by the Council of the City of Gilroy at a Regular Meeting of said Council held on Monday, October 19, 2026 with a quorum present.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Official Seal of the City of Gilroy this Tuesday, October 20, 2026.
____________________________________
Kim Mancera
City Clerk of the City of Gilroy

10-Day Report
on the City of Gilroy 45-day Urgency Interim Ordinance imposing a temporary moratorium on the acceptance, processing, and approval of applications and entitlements for new Data Center facilities citywide pending the study and development of reasonable regulations pursuant to Government Code Section 65858(d)

BACKGROUND
On September 14, 2026, pursuant to Government Code Section 65858, the City Council of the City of Gilroy adopted Ordinance No. 2026-08, a 45-day urgency interim ordinance. This ordinance addresses the immediate threat to public health, safety, and welfare posed by accepting, processing, and approving applications for new Data Center facilities under current regulations. These regulations do not define “Data Center” as a distinct land use and lack zoning, development, or operational standards for their unique impacts. These impacts include electrical grid capacity and demand, water consumption and cooling technology, backup generator emissions and noise, aesthetics and screening, truck traffic, and decommissioning.

This ordinance established a 45-day citywide moratorium on accepting, processing, and approving any application, permit, license, or entitlement, whether ministerial or discretionary, for new Data Center facilities. This moratorium is pending the study and adoption of new federal and state law requirements, zoning regulations and development standards. The moratorium does not apply to the Data Center facility previously approved under Architectural and Site Review Permit No. AS 20-23 at 8050 Camino Arroyo.

Under Government Code Section 65858(d), and consistent with Section VII of Ordinance No. 2026-08, the City is to issue a written report describing the measures taken to alleviate the conditions which led to the adoption of the moratorium at least 10 days prior to the expiration of the 45-day ordinance. Issuance of this report satisfies the requirements of Government Code Section 65858(d). The 45-day moratorium is set to expire on October 29, 2026.

Measures taken to alleviate the conditions that led to the adoption of the urgency ordinance:

1. At the City Council's direction, the Community Development Department has begun studying the “Contemplated Zoning Proposal” identified in the urgency ordinance.

This work will (i) define “Data Center” as a distinct land use and establish zoning, siting, development, and operational standards for Data Centers, and (ii) implement the City Council’s August 17, 2026, direction to bring back objective design standards for commercial and industrial projects that consider community needs, economic development, energy use, environmental impacts, public health, and neighborhood quality of life.

2. City staff has begun reviewing zoning code regulations from California cities and counties to identify best practices for regulating Data Centers. This review covers land use definitions that distinguish a Data Center from an accessory server room, permitting pathways, discretionary review thresholds based on building size and electrical load, and objective standards on electrical capacity, water use, cooling technology, backup generator emissions and noise, lighting, aesthetics and screening, truck traffic, and decommissioning.

3. Staff is coordinating the Contemplated Zoning Proposal with the City’s Comprehensive Zoning Ordinance Update to ensure the new Data Center definition, use classification, and objective design standards for Data Center development align with the updated zoning code, including the existing “Data Processing Establishments” use classification.

4. Staff is reviewing the certified Final Environmental Impact Report for the existing AWS Data Center (State Clearinghouse No. 2022110127). This includes the significant and unavoidable impacts to agricultural resources (Impact AG-1) and Vehicle Miles Traveled (Impact TRA-1), as well as the documented electrical, backup generator, and water demands. The review will inform the standards to be developed, and the type of information future Data Center applications may need to provide.

5. The Community Development Department has implemented the moratorium by not accepting, processing, or approving any application or entitlement to establish a new Data Center facility.

The above reflects actions taken during this short period. Conditions still require extending the urgency interim ordinance to give staff time to complete the analysis and research to protect the public health, safety, and welfare of all residents in the City of Gilroy.

CONTINUED NEED FOR THE MORATORIUM
Actions addressing the need for the moratorium are ongoing. At Council's direction, staff is studying and will develop reasonable regulations for Data Centers. This includes defining “Data Center” as a distinct land use; identifying zoning districts, if any, where Data Centers may be located; and the permit and review process that would apply.

Staff will establish objective siting, development, and operational standards addressing electrical grid capacity, water consumption and cooling, backup generator emissions and noise, aesthetics and screening, truck traffic, and decommissioning.

The proposed regulatory changes will require further research, coordination with utility and service providers, environmental review under the California Environmental Quality Act, public outreach, and public hearings before the Planning Commission and City

Council.

The tasks described above cannot be completed within the initial 45-day period.

Therefore, the moratorium remains necessary. Staff recommends the City Council adopt an ordinance extending the current moratorium for 10 months and 15 days, through September 3, 2027. The moratorium will automatically expire on October 29, 2026, unless the City Council extends it.

Pursuant to Government Code Section 65858(a), an extension requires a four-fifths vote of the City Council and must include the findings required by Government Code Section 65858(c). Staff intends to return to Council with code amendments either prior to or alongside the comprehensive zoning update.

OPPORTUNITY FOR PUBLIC COMMENT
Members of the public will have the opportunity to comment on the extension of the Urgency Interim Ordinance at the City Council hearing to be held on October 19, 2026.

The City will publish the required notice for this meeting pursuant to Government Code Section 65090.

9.1. City of Gilroy

STAFF REPORT
Agenda Item Title: Receive Preliminary Fiscal Year 2025-26 Year-End Financial Report, Approve the Pension and Other Post-Employment
Benefits Section 115 Trust Contributions and the Capital Infrastructure Reserve Fund Contribution, and Adopt
Resolutions Amending the Budget and Updating the Position Control List
Meeting Date: October 19, 2026
From: Matt Morley, City Administrator
Department: Finance
Submitted by: Cindy Murphy, Finance Director
Prepared by: Carina Baksa, Finance Manager
STRATEGIC PLAN GOALS: Develop a Financially Resilient Organization

RECOMMENDATION

1. Receive the preliminary Fiscal Year 2025-26 (FY26) year-end financial report.

2. Approve the Pension and Other Post-Employment Benefits (OPEB) Section 115 Trust contributions, and the Capital Infrastructure Reserve Fund contribution, pursuant to the Council adopted policies.

3. Adopt a resolution approving the updated Position Control List for Fiscal Year 2025-26 (FY26) and Fiscal Year 2026-27 (FY27).

4. Adopt a budget amendment resolution for Fiscal Year 2026-27 (FY27).

EXECUTIVE SUMMARY
This report is to inform the City Council about the City's FY26 preliminary, unaudited financial performance. The General Fund is the primary focus of this report, as it is the primary funding source for essential City services. All of the non-general funds/information is presented in aggregate in the latter part of the report.

9.1. BACKGROUND
The FY26 and FY27 budgets were adopted on June 2, 2025, as part of the City's biennial budget development process. Activities for FY26 began on July 1, 2025 and concluded on June 30, 2026. Staff provided Council with the third quarter budget update on June 15, 2026. This report provides the preliminary, unaudited, year-end financial report and includes recommended budget adjustments for FY27.

ANALYSIS
General Fund Revenues
General Fund revenues received for FY26 total $74.1 million. This is approximately 99% of the amended budget of $74.9 million. Overall, General Fund revenues for FY26 came in $0.8 million under the amended budget. The table below provides a breakdown and summary of revenues by category and a comparison of the actual revenues to the amended budget.

Sales Tax
Sales Tax is one of the General Fund’s primary sources of revenue. Sales tax revenue received for FY26 totaled $21.7 million or 106% of the amended budget of $20.4 million.

As indicated in the third quarter budget report, the City’s sales tax revenue was projected to come in above budget. The actual revenue for FY26 exceeded the amended budget by $1.3 million. Based upon the strong results for FY26, and at the recommendation of our sales tax consultant, we are anticipating that FY27 Sales Tax revenues will exceed budget, and therefore are recommending an upward budget adjustment of $1.4 million.

Property Tax
Property tax is another primary source of revenue for the General Fund. Property tax

9.1. revenue received for FY26 totaled $22.7 million or 99% of the amended budget of $22.9 million. Revenue received includes $2.6 million from the Excess Educational Revenue Augmentation Fund (ERAF). FY26 actuals continues the trend, similar to FY25, where property tax revenue outpaced sales tax revenue, which historically has been the largest tax revenue source for the City.

Utility Users Tax (UUT)
Utility taxes are assessed against the value of energy and telecommunications, such as gas, electricity, steam, cable, and phone charges. The current tax rates are 4.5% for telecommunications and 5% for gas and electricity. Revenues for FY26 totaled $6.6 million or 81% of the amended budget of $8.2 million. As expected and reported in the third quarter budget report, the Utility Users Tax revenue is trending down, and came in under budget. The FY26 and FY27 budgets were built on optimistic forecasts by our UUT consultants, however, the actual revenue trended down for the first time this year.

An adjustment was made to decrease the expected budget for FY27 by $400,000 during the third quarter report. Staff will continue to monitor UUT revenues, especially in the electricity and gas sectors, to determine if another adjustment is warranted.

Additionally, as we have expanded our outreach to ensure compliance with all potential UUT providers, we expect to see an uptick in UUT revenues associated with streaming services.

Franchise Tax
Franchise tax revenue is received from three franchise types, including gas and electric, cable TV, and garbage/refuse. Revenues for FY26 totaled $2.3 million or 86% of the amended budget of $2.6 million. The decrease was primarily in the cable TV franchise, as subscribers are transitioning away from standard cable to streaming services.

Transient Occupancy Tax (TOT)
Transient Occupancy Tax revenue comes from a 9% tax on hotel room rentals under 30 days, as well as from some of the RV parks in the City. Revenues for FY26 totaled $1.7 million or 91% of the amended budget of $1.9 million. This decreased revenue includes a one-time settlement payout of $122,000 to Santa Clara County for TOT revenue collected during the period of 2020-2021 on Project Roomkey hotel stays, which should have been exempt from the tax.

Business License
There are over 2,400 active Business Licenses in the City of Gilroy. Revenues for FY26 totaled $0.7 million or 85% of the amended budget of $0.8 million. Business license revenue has remained fairly consistent, with a slight increase in the previous year due to a discovery and collection campaign which sought to bring all businesses into compliance. Staff continues to work with our Business License consultant to assess the appropriate timing of a new discovery and compliance campaign.

Other General Fund Revenues
This category comprises departmental service charges, general administration charges,

9.1. fines and forfeitures, and other intergovernmental revenues. Revenues for FY26 totaled $18.4 million or 102% of the amended budget of $18.0 million. The $0.4 million higher than the budget is primarily due to Strike Team reimbursements to the Fire Department.

General Fund Expenditures
General Fund expenditures for FY26 total $79.2 million. This is approximately 99% of the amended budget of $79.7 million yielding a net savings of $0.5 million. While most of the departments or functions remained within their budgets, some such as Administration, Human Resources and Police were over budget. In the case of Administration and Human Resources, these departments experienced retirements and leave cash-outs that were not originally included in the budget. In the case of the Police department, there were increased overtime costs which came in above the amended budget. The table below provides a breakdown by department or function.

Non-General Fund Revenues
The City has approximately 60 non-general funds. The revenues and expenditures for these funds are presented in the table below in aggregate, by fund type, along with a brief description of what is included in these categories. Non-General Fund revenues for FY26 total $83.7 million. This is approximately 80% of the amended budget of $105.1 million.

9.1. Special Revenues
The primary source of this fund type is intergovernmental funds in the manner of tax sharing or grants from Federal, State, County, and other regional governments. For the City of Gilroy, these Special Revenues provide funding for transportation (Gas Taxes, Vehicle Registration, and Measure B), public safety (Proposition 172 sales tax, Gang Prevention, and regional task forces), and community development (CDBG and housing) among others. Special Revenues for FY26 total $8.9 million or 74% of the amended budget of $12.1 million. The primary reason for the revenue shortfall was the timing of reimbursement claims. Staff submitted $1.3 million FY26 reimbursement claims to VTA for Measure B Local Streets and Roads Program in August 2026.

Additionally, there was $1.5 million budgeted for the Lions Creek Trail grant, which is a reimbursement grant as well, but the project is still in the design phase, with the construction phase expected to begin in the spring of FY27, therefore reimbursement is expected to be received during FY27 and FY28.

Recreation
The Recreation Fund receives an annual allocation of $1.5 million from the General Fund, in addition to the revenues it generates from charges for services and grants related to recreation programs. Recreation revenue for FY26 totals $2.5 million or 94% of the amended budget of $2.6 million. The shortfall was primarily related to lower-thanbudgeted facility rental fees.

Capital/Development Impact Funds
Revenues in the Capital and Development Impact Funds are primarily generated by new development approvals and the required contributions to offset infrastructure impacts. Revenue depends on the size and impact of the development and the timing of

9.1. the projects; therefore, the timing of revenue is difficult to project. Revenue for FY26 totals $10.8 million or 35% of the amended budget of $30.7 million. This major shortfall in revenues is due to large development projects such as the Gilroy Ice Center, of which Bond Proceeds of $12.5 million did not materialize in FY26. Additionally, many of the budgeted projects are still in the early phases, such as the bidding or design phase, with the larger construction phase to take place in FY27. Staff is requesting budget adjustments to FY27 to reappropriate funds for some of the Capital projects that did not materialize in FY26.

Debt Service Funds
Debt Service funds receive their revenue from annual property tax levies and/or via interfund transfers from other funds and are typically aligned with the timing of the debt service payment. Revenue for FY26 totals $4.8 million or 95% of the amended budget of $5.1 million.

Internal Service Funds
Internal Service Funds (Information Technology, Fleet, Facilities, Equipment Outlay, Worker’s Compensation, and Liability Funds) primarily receive their revenue from charges to other departments and other funds within the City. Revenue for FY26 totals $18.2 million or 106% of the amended budget of $17.2 million. This overage is due to the receipt of $1.0 million from Amazon for the purchase of a Type 1 Fire Engine.

Sewer Fund
The Sewer Enterprise Fund generates its revenue from utility user charges. Revenue for FY26 totals $19.8 million or 102% of the amended budget of $19.5 million. The increase in revenues is primarily due to higher interest revenue received.

Water Fund
Like the Sewer Fund, the Water Fund generates its revenues from utility user charges, which fluctuate based on consumption levels. Revenue for FY26 totals $18.7 million or 105% of the amended budget of $17.9 million. The increase in revenues is primarily due to consumption and interest revenue received.

Non-General Fund Expenditures
Non-General Fund expenditures for FY26 total $83.9 million or 51% of the amended budget of $164.8 million. The table below provides a breakdown of Non-General Fund expenditures by Fund.

9.1. Special Revenues
The FY26 expenditures for Special Revenues funds totaled $13.7 million or 64% of the amended budget of $21.4 million. The primary expenditures in this fund type are for maintenance and capital improvements of roads/sidewalks, followed by grant-related expenditures for the Police and Community Development Department for housing and CDBG. The underspending was primarily in capital outlay expenditures due to approximately $4.5 million in Pavement Maintenance projects that completed the design phases, but the construction phase was delayed until FY27 as well as $1.5 million for the Lions Creek Trail project.

Recreation
The FY26 expenditures for Recreation totaled $2.1 million or 57% of the $3.8 million amended budget. The underspending was primarily due to the budgeted $1.2 million for the Las Animas Pickleball Court construction project. The contract for the courts was approved by Council on June 15, 2026. Construction will take place in FY27.

Capital/Development Impact Funds
The FY26 expenditures for Capital/Development Impact funds totaled $9.6 million (16%) of the $60.1 million amended budget. Many of the budgeted projects are still in design phase or have been placed on hold. Some of these projects include $16.5 million for the Gilroy Ice Center project, approximately $13.5 million for the Santa Teresa Fire Station, $5.0 million for Library Improvements, $4.0 million for San Ysidro Park Healthy Living Enhancements and Gateway Senior Apartments Pedestrian Crossing, $3.4 million for the McCarthy Well (Well #9), as well as other projects in the Traffic Impact Fund and Storm Drain Fund. Some of these projects will be requesting reappropriations once they are ready to issue a contract for the construction phase.

9.1. Debt Service Funds
The FY26 expenditures for Debt Service Funds totaled $4.9 million or 100% of the $4.9 million amended budget. The debt service payments typically include semiannual interest payments and an annual principal payment. These expenses are typically fully spent since they are budgeted and driven by debt service payment schedules.

Internal Service
The FY26 expenditures for Internal Service Funds totaled $16.7 million or 71% of the $23.7 million amended budget. The underspending was primarily in the capital outlay expenditures, approximately $5.0 million, which included projects such as the Seismic upgrades and remodels of Las Animas and Chestnut fire stations, GIS strategic plan, purchase of a Fire engine, as well as savings in personnel, petroleum, utilities, gas and telecommunications. As part of the year-end process, $1.3 million for the Fire engine was encumbered and rolled over to FY27.

Sewer Fund
The FY26 expenditures for the Sewer Funds totaled $18.4 million or 81% of the $22.8 million amended budget. The underspending was primarily in the capital outlay expenditures related to delays in various large projects. Department staff will include future recommended projects as part of the CIP budget.

Water Fund
The FY26 expenditures for the Water Funds totaled $18.4 million or 66% of the $28.1 million amended budget. The underspending was primarily in the capital outlay expenditures related to various large projects that were not started in FY26. Staff has reviewed these projects and is requesting reappropriation of approximately $4.9 million of FY26 unspent funds to FY27 for those projects that have begun and will continue in FY27. The budget requests are included in the resolution attached to this staff report.

Other General Fund Updates
Pension Liabilities
The City has an unfunded accrued liability (UAL) associated with its CalPERS pension plans. As of June 30, 2025, based on the latest Actuarial Valuation reports, the City’s UAL is $101 million. In July 2026, CalPERS announced a preliminary investment return of 14.8% for FY26, exceeding its assumed target investment return of 6.8%. This is expected to have a positive impact and decrease the City’s UAL to about $74 million, a reduction of $27 million from FY25. The impact of the lower UAL and the related reduction in UAL payments is expected to take effect in FY29 onwards. The City has taken prudent efforts to mitigate the impacts of rising pension costs by establishing the Section 115 Pension Trust and making annual contributions. As of August 31, 2026, the Trust has a balance of $7.9 million – earning a strong annualized investment return of

11.3%. As mentioned in the prior quarterly report, the Section 115 Pension Trust can be used strategically to help pay for a portion of the annual UAL payments and lessen the burden to the City’s General Fund.

9.1. Excess Educational Revenue Augmentation Fund (ERAF) On September 2, 2026, the Superior Court of California issued a tentative ruling in favor of the County, finding that the State cannot reduce the allocation of the Excess ERAF to cities and counties. However, the litigation remains ongoing and there is still uncertainty regarding the ultimate fiscal impact. Cities throughout Santa Clara County are taking different approaches to the treatment of Excess ERAF funds, some have been setting aside for clawback provisions, while others have programmed the funds for critical services. At this time, the City is not setting aside funds for a potential repayment and has counted on the monies to provide critical services in our community. This approach is based on the assumption that if a repayment obligation is the ultimate outcome, it would more likely be addressed through a reduction in future allocations rather than a retroactive repayment of funds previously received, and the likely outcome is that, if there is an adjustment, it would be from a point forward, rather than retroactively. The tentative ruling is favorable to the City.

Position Control Update
The Police Department has created a new specialized unit (Special Enforcement Team) and requires a Sergeant to head the new unit. The Department reviewed its structure and concluded that a Sergeant is best suited to lead the current structure, and recommends converting one of the nine existing Corporal positions to a Sergeant position. The increased cost from a Corporal to a Sergeant is approximately $10,000 annually, and the Department plans to absorb that cost with salary savings during FY27; if approved, it will include the position in the FY28 and FY29 budget process.

Budget Adjustments
The following Budget Adjustments are recommended for Fiscal Year 2027:

Community Development
The Community Development Department is requesting an increase in appropriations in the amount of $29,655 in FY27 to pay for the City's share of County billing for the Weed Abatement program from the General Fund.

Finance
As discussed in the General Fund revenue section above, Finance is recommending increasing the Sales Tax revenue projections for FY27 by an additional $1.4 million.

Pension, OPEB, and Capital Infrastructure Reserve Funding Policy The City Council has an existing Pension and OPEB Funding policy, which directs up to 25% of the General Fund's year-end budgetary savings to each of the Section 115 Trusts established to pre-fund Pension and OBEB liabilities. Additionally, Council adopted a Capital Infrastructure Reserve Funding Policy which directs up to 25% of the General Fund's year-end budgetary savings to the Capital Infrastructure Reserve Fund. The General Fund ended the year with $500,000 in budgetary savings, which will result in $125,000 recommended to be directed to each of the funds, for a total of

9.1. $375,000.

Fire
The Fire Department is requesting an increase in appropriations in the amount of $189,459 in FY27 appropriations for the purchase of a MedixSafe Controlled Substance Security system, a Tablet Command Software, and a Training Tower. • The MedixSafe Controlled Substance Security System will provide secure medication storage with authenticated individual access, which is highly recommended as an internal control measure. Initial system cost and installation is approximately $60,359 and the ongoing annual cost is approximately $5,000.
• The Tablet Command Software provides a mobile platform for incident command. The system integrates with the City's computer-aided dispatch (CAD) system for improved resource management. The initial cost for the system is $46,100 and the annual ongoing service cost is $26,800. The first year service cost is included in the initial cost.
• Fire is requesting the purchase of a three-container Training Tower in the amount of $83,000, that will expand the Department's hands-on firefighting, rescue and emergency-response training capabilities. The need for such a structure has been a priority for the Department and allows the Department to replicate the conditions and challenges encountered during actual emergencies, thereby mitigating potential hazards during live emergency operations.

Fleet
The Fleet Division is requesting the reappropriation of $95,000 in unspent FY26 funding to FY27. The Division had a contract in place for $95,000 for vehicle upfitting services that expired in FY26. Staff was working on a contract extension, but the contract was closed during the year-end process before the extension was finalized.

The contract extension is now approved and in effect in FY27 and the Division is requesting that the appropriations be reinstated.

Police Department
The Police Department is requesting the recognition of various grant revenues and appropriation of corresponding expenses as indicated in Exhibit A attached to the Budget Resolution included in this report. The Department is recommending adjustments to the existing revenue budgets due to changes in funding levels from South County Youth Task Force partners, such as decreasing the revenue contribution from the Morgan Hill Unified School District, who will stop contributing to the task force for FY27.

Utilities Department
As indicated previously in this report, there were major Capital projects budgeted in

9.1. FY26 that did not come to fruition. The Utilities Department is requesting the reappropriation of $8,398,509 in unspent FY26 Capital Improvement Program (CIP) funding to FY27. These funds were previously approved for these capital projects with construction work anticipated to occur in FY26. However, due to extended design work and review, the funds were not encumbered before the close of FY26.

Department staff has reviewed and prioritized such projects and is recommending to continue work on these projects in FY27. Details on the projects included in this total are shown in Exhibit A attached to the Budget Resolution included in this report.

ALTERNATIVES
There are no recommended alternatives to receiving the preliminary, unaudited yearend budget report for FY26. The City Council could elect not to approve any single, or all of the budget adjustments requested for FY27, however staff does not recommend this option.

FISCAL IMPACT/FUNDING SOURCE
The fiscal impacts associated with this report are discussed in the Analysis section of the report in detail and the details of the recommended budget adjustments are included in the Exhibit A to the Budget Resolution attached to this report.

PUBLIC OUTREACH
None.

NEXT STEPS
If approved by City Council, staff will update the FY27 budget appropriately.

Attachments:

1. Draft Resolution - Position Control Amended for FY26 and FY27

2. Draft Resolution - Budget Amendments for FY27

RESOLUTION NO. 2026-XX

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

GILROY AMENDING THE AUTHORIZED POSITION

CONTROL LIST FOR THE CITY OF GILROY FOR FISCAL
YEARS 2025-2026 AND 2026-2027
WHEREAS, the business operations of the City of Gilroy are conducted by hired professional staff; and
WHEREAS, the City of Gilroy is committed to delivering services to our residents; and WHEREAS, the delivery of services is effectuated by providing adequate and appropriate staffing levels to carry out the business of the City.

NOW, THEREFORE, BE IT RESOLVED that the number and classifications of regular full-time positions in which persons may be employed by the City of Gilroy during Fiscal Years 2025-2026 and 2026-2027 is hereby amended and shall be as set forth in the attached position control list, incorporated herein by reference.

BE IT FURTHER RESOLVED that a change in the position control list shall only be accomplished by resolution of the City Council of the City of Gilroy.

PASSED AND ADOPTED at a Regular Meeting of the City Council this 19th day of October 2026 by the following vote:

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSTAIN: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:

APPROVED:

Greg Bozzo, Mayor
ATTEST:
_________________________
Kim Mancera, City Clerk

Resolution No. 2026-XX
Position Control List
City Council Regular Meeting| October 19, 2026

CERTIFICATE OF THE CLERK
I, KIM MANCERA, City Clerk of the City of Gilroy, do hereby certify that the attached Resolution No. 2026-XX is an original resolution, or true and correct copy of a City Resolution, duly adopted by the Council of the City of Gilroy at a Regular Meeting of said Council held on Monday, October 19th, with a quorum present.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Official Seal of the City of Gilroy this Tuesday, October 20th.
____________________________________
Kim Mancera
City Clerk of the City of Gilroy

Resolution No. 2026-XX
Position Control List
City Council Regular Meeting| October 19, 2026

Resolution No. 2026-XX
Position Control List
City Council Regular Meeting| October 19, 2026

Resolution No. 2026-XX
Position Control List
City Council Regular Meeting| October 19, 2026

RESOLUTION NO. 2026-XX

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
GILROY AMENDING THE FISCAL YEAR 2025-26 AND 2026-27

BUDGET FOR THE CITY OF GILROY
WHEREAS, the City Administrator prepared and submitted to the City Council a budget for the City of Gilroy for Fiscal Years 2025-26 and 2026-27, and the City Council carefully examined, considered and adopted the same on June 2, 2025; and WHEREAS, City Staff has prepared and submitted to the City Council a proposed amendment to said budget for Fiscal Year 2025-26 and Fiscal Year 2026-27 for the City of Gilroy in the staff report dated October 19, 2026, for Preliminary FY2025-26 Year-end Financial Report; and
WHEREAS, the City Council has carefully examined and considered the same and is satisfied with said budget amendments.

NOW, THEREFORE, BE IT RESOLVED that appropriations to the expenditure and revenue accounts for Fiscal Year 2026-27 are hereby increased or decreased as indicated in Exhibit A, attached to this resolution in the respective funds.

PASSED AND ADOPTED this 19th day of October 2026 by the following roll call vote:

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSTAIN: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:

APPROVED:

Greg Bozzo, Mayor
ATTEST:

Kim Mancera, City Clerk

CERTIFICATE OF THE CLERK
I, KIM MANCERA, City Clerk of the City of Gilroy, do hereby certify that the attached Resolution No. 2026-XX is an original resolution, or true and correct copy of a City Resolution, duly adopted by the Council of the City of Gilroy at a Regular Meeting of said Council held on Monday, October 19th, with a quorum present.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Official Seal of the City of Gilroy this Tuesday, October 20th.
____________________________________
Kim Mancera
City Clerk of the City of Gilroy

Exhibit A
Department Description
Fiscal
Year Fund
Revenue
Adjustment
Expenditure
Adjustment
Community
Development
Increase appropriations for Gilroy share of Weed Abatement program 2027 100 - General Fund 29,655.00
Finance Increase FY27 Sales Tax Revenue 2027 100 - General Fund 1,400,000.00 Finance
Appropriate budgetary savings to Pension/OPEB Trust Funds per Council Adopted Policy 2027 100 - General Fund 250,000.00 Finance
Appropriate budgetary savings to Capital Infrastructure Trust Fund per Council Adopted Policy 2027 100 - General Fund 125,000.00 Finance
Increase revenue in the Capital Infrastructure Trust Fund per Council Adopted Policy 2027 401 - Capital Infrastructure Reserve 125,000.00 Fire Increase appropriations to purchase a training tower 2027 100 - General Fund 83,000.00 Fire
Increase appropriations to purchase MedixSafe Controlled Substance Security System 2027 100 - General Fund 60,359.00 Fire Increase appropriations to purchase Tablet Command Software 2027 620 - Information Technology 46,100.00 Fleet
Appropriate unspent FY26 appropriations for contract for Upfitting services for city vehicles 2027 600 - Fleet $ - $ 95,000.00 Police Appropriate OTS Grant remaining funding 2027 223 - OTS PD Grant 30,455.49 30,455.49 Police Appropriate Asset seizure funds received in FY26 2027 229 - Special Enforcement 3,892.94 Police Appropriate Proposition 172 Tax revenue 2027 240 - Prop 172 Sales Tax 86,000.00 Police
Decrease contribution from MHUSD for South County Youth Task Force 2027 227 - South County Youth Task Force (30,000.00) (30,000.00) Police
Increase contribution from District Attorney's Office for South County Youth Task Force 2027 227 - South County Youth Task Force 10,000.00 10,000.00 Police
Increase contribution from Santa Clara County Library for South County Youth Task Force 2027 227 - South County Youth Task Force 5,000.00 5,000.00 Police
Appropriate Santa Clara County Board of Supervisors' Grant for South County Youth Task Force's Late Night Gym program 2027 227 - South County Youth Task Force 48,730.46 Police
Appropriate Santa Clara County Board of Supervisors' Grant for South County Youth Task Force's Crisis Response program 2027 227 - South County Youth Task Force 86,930.50 Police
Appropriate Santa Clara County Board of Supervisors' Grant for South County Youth Task Force's Friday Night Lights program 2027 227 - South County Youth Task Force 46,000.00 46,000.00 Police Appropriate grant from Realtor's Association received in FY26 2027 227 - South County Youth Task Force 5,000.00 Police
Appropriate remaining Board of State and Community Corrections Grant funding from FY17 2027 227 - South County Youth Task Force 80,650.95 Police
Transfer from F225 to F227 remaining funding from Morgan Hill Unified School District from FY24 and FY25 2027 225 - PD Grants 31,434.05 Police
Transfer into F227 from F225 remaining funding from Morgan Hill Unified School District from FY24 and FY26 2027 227 - South County Youth Task Force 31,434.05 Police
Appropriate remaining funding from Morgan Hill Unified School District from FY24 and FY25 2027 227 - South County Youth Task Force 31,434.05 Police
Transfer from F225 to F227 remaining funding from Gilroy Unified School District from FY26 2027 225 - PD Grants 38,824.89 Police
Transfer into F227 from F225 remaining funding from Gilroy Unified School District from FY26 2027 227 - South County Youth Task Force 38,824.89 Police
Appropriate remaining funding from Gilroy Unified School District from FY26 2027 227 - South County Youth Task Force 38,824.89 Police
Transfer from F225 to F227 remaining funding from Santa Clara County Library from FY25 and FY26 2027 225 - PD Grants 52,042.80 Police
Transfer into F227 from F225 remaining funding from Santa Clara County Library FY25 and FY26 2027 227 - South County Youth Task Force 52,042.80 Police
Appropriate remaining funding from Santa Clara County Library from FY25 and FY26 2027 227 - South County Youth Task Force 52,042.80 Utilities
Appropriate FY26 unspent funds for continued work on Water Utility Improvement Project (CIP 801220) 2027 705 - Water 4,705,000.00 Utilities
Appropriate FY26 unspent funds for continued work on Well 8 and 8a Rehabilitation project (CIP 801060) 2027 705 - Water 176,508.94 Utilities
Appropriate FY26 unspent funds for continued work on the Meter Replacement at Saint Louise Hospital project (CIP 800670) 2027 705 - Water 65,000.00 Utilities
Appropriate FY26 unspent funds for continued work on Well 9 (McCarthy) (CIP 800050) 2027 435 - Water Development 3,452,000.00 Total $ 1,708,757.23 $ 9,704,886.76

9.2. City of Gilroy

STAFF REPORT
Agenda Item Title: Discussion and Direction Regarding Establishing a Legislative Action Committee (FAIR Memo – Council Member Ramirez)
Meeting Date: October 19, 2026
From: Matt Morley, City Administrator
Department: Administration
Submitted by: Harjot Sangha, Assistant City Administrator Prepared by: Harjot Sangha, Assistant City Administrator STRATEGIC PLAN GOALS:

RECOMMENDATION
Council discussion and directions to staff on options for establishing a Legislative Action Committee for city positions on regional, state, and federal legislation.

EXECUTIVE SUMMARY
On September 14, 2026, the City Council voted 7-0 to bring back for discussion Council Member Ramirez’s FAIR Memo requesting consideration of a Legislative Action Committee. This report presents four options for Council discussion. At Council's direction, staff will develop an implementation strategy for the selected option.

BACKGROUND
Council Member Ramirez represents Gilroy on the Cities Association of Santa Clara County Board and its Legislative Action Committee, which votes monthly on pending legislation. The FAIR Memo (Attachment 1) notes that several cities in the county have their own legislative committees (Cupertino, Campbell, and Los Altos), others use a formal advocacy policy without a committee (Santa Clara), and the remaining cities, including Gilroy, handle legislation through the Council and staff. The Memo requests that staff determine which arrangement would best serve Gilroy.

9.2. The City does not currently have an adopted policy or standing procedure for taking positions on legislation; positions are brought to the full Council ad hoc, which can be difficult under short legislative deadlines.

On September 14, 2026, City Council voted to approve bringing the item back for discussion.

ANALYSIS
Staff has identified the following possible options for Council discussion. The options may be combined.

Option 1 – Council Legislative Subcommittee: Establish a standing subcommittee of two to three Council members to review legislation and recommend positions, or take positions within a Council-adopted platform, as in Cupertino, Campbell, and Los Altos. A standing committee would be subject to the Brown Act and the Open Government Ordinance.

Option 2 – Legislative Advocacy Policy and Annual Legislative Platform: Adopt a policy and an annual platform of City priorities that guide positions taken by staff, with legislation outside the platform going to the full Council, as in Santa Clara.

Option 3 – Delegated Authority with Report-Back to Council: As in Morgan Hill (Resolution No. 20-010, Attachment 2), authorize the Mayor and/or City Administrator to communicate City positions on time-sensitive legislation, with a written report to the Council at its next meeting.

Option 4 – Expand the Open Government Commission to Include Legislative Review:

Amend Chapter 17A of the City Code to add legislative review to the Open Government Commission’s scope and revise its membership to include Council members. Council would determine the commission's makeup, legislative scope, and meeting frequency.

This is similar to option 1 and leverages an existing commission and resources, rather than standing up a new subcommittee.

Council could also provide another option, not outlined above.

ALTERNATIVES

1. Direct staff to develop one or more of the options above and return with recommendations.

2. Take no action. The City would continue to bring legislative positions to the full Council on an ad hoc basis.

9.2. FISCAL IMPACT/FUNDING SOURCE
There is no fiscal impact from receiving this report and providing direction. Staff will identify any staff time or costs associated with the option(s) selected.

PUBLIC OUTREACH
This item is included on the publicly posted agenda for this meeting.

NEXT STEPS
Based on Council direction, staff will develop the selected option(s) and return to the Council with the implementing policy, resolution, or ordinance.

Attachments:

1. September 14, 2026 Staff Report and FAIR Memo

2. Morgan Hill Resolution 20-010

8.1. City of Gilroy

STAFF REPORT
Agenda Item Title: Request to Establish a Legislative Action Committee: FAIR Memo
Meeting Date: September 14, 2026
From: Matt Morley, City Administrator
Department: Administration
Submitted by: Matt Morley, City Administrator
Prepared by: Matt Morley, City Administrator
STRATEGIC PLAN GOALS: Not Applicable

RECOMMENDATION
Council consideration of a future agenda item regarding the potential to establish a Legislative Action Committee

EXECUTIVE SUMMARY
N/A

BACKGROUND
On August 30, 2026 Councilmember Ramirez submitted the attached FAIR memo for Council consideration of establishing a Legislative Action Committee

ANALYSIS
None — this is a first step in the FAIR Memo process on whether the City Council would like to give direction for the item to be brought back to a future agenda meeting for discussion and potential action.

8.1. ALTERNATIVES
Council may approve or deny the request for a future agenda item.

FISCAL IMPACT/FUNDING SOURCE
None — this is a first step in the FAIR Memo process. A detailed fiscal impact analysis will be conducted by staff if the Council approves the topic for a future agenda.

PUBLIC OUTREACH
This item was included on the publicly posted agenda.

NEXT STEPS
If approved, staff will schedule the future agenda item at a subsequent Council meeting consistent with the Future Agenda Item Request Policy.

Attachments:

1. FAIR Memo: Establish a Legislative Action Committee

August 30, 2026
FAIR MEMO: Consideration of creating a Legislative Action Committee Submitted by Councilmember Ramirez
I currently represent Gilroy on the Cities Association Board of Directors and the Cities Association Legislative Action Committee. On a monthly basis we are asked to vote on various legislative items that are moving through the state in order for the Cities Association to take a stand on the various issues. I am aware that I am representing Gilroy, not my personal opinion, so in order to ensure that I am doing that, I work with the City Administrator before voting.

I’ve learned that many cities in the county have their own Legislative Action Committees or Legislative Review Committees for the purpose of determining their city’s position on upcoming legislature. Below is a sampling of what some of the cities have.

1. Cupertino — Legislative Review Committee
Cupertino's City Council reestablished its Legislative Review Committee (LRC) in February 2026 when it updated its Legislative Advocacy Policy. The LRC is specifically authorized to establish positions on legislation that falls within the City's adopted Legislative Platform.

Legislation outside that platform goes to the full City Council.

2. Campbell — Legislative Subcommittee
Campbell also has its own Legislative Subcommittee.

Campbell's policy says the subcommittee meets regularly during the California legislative session and may review and take positions on proposed legislation. Its stated objectives include:
• advocating Campbell's legislative position at the federal, state, regional and county levels;
• informing legislators about legislation's impact on Campbell; • working with other local governments and organizations; • tracking legislation;
• meeting with legislators and their representatives; and • informing the public of Campbell's legislative positions.

2. Los Altos – Legislative Subcommittee
Los Altos has its own Legislative Subcommittee similar to Campbell.

4. Santa Clara — somewhat different
Santa Clara does not appear to currently call its municipal body a "Legislative Action Committee." Instead, it has a formal Legislative Advocacy Position Policy and an ongoing legislative advocacy program.

The City's policy requires comprehensive review of legislation affecting the City, development of City Council positions, and communication of those positions to

legislators. It also provides for annual Legislative Action Priorities adopted by the City Council.

Santa Clara also contracts with a legislative advocacy firm to assist with its legislative program.

The important distinction
There are actually three different arrangements in Santa Clara County:

A. Cities with their own legislative committee
• Cupertino — Legislative Review Committee
• Campbell and Los Altos — Legislative Subcommittees
B. Cities with a formal legislative advocacy program/policy but no separate LAC • Santa Clara
C. Cities that primarily handle legislation through the Council/staff and appoint someone to the countywide CASCC LAC
• The remaining cities appear to fall primarily into this category, including Gilroy I propose that we direct staff to determine which arrangement would serve the community of Gilroy best.

City of Morgan Hill
Resolution No. 20-010

Section 2. Approval and Authorization. The City Council prefers, whenever possible, that determinations on whether to take a position on pending State, County, or other regional boards' legislation or action be brought before the City Council as a whole for consideration and action. However, the City Council recognizes that occasional, limited situations arise where communications indicating support or opposition on pending State, County, or other regional boards' legislation or action that could be important to City are requested from cities within timeframes that have deadlines occurring prior to the next scheduled meeting of the City Council as a whole at which the City Council could consider and determine City's position on such pending legislation. For these reasons, the City Council does further resolve, order and/or direct as follows:
a. That the Mayor and/or the City Manager is delegated authority to and is authorized to prepare, execute and transmit written or verbal communications indicating a City position on proposed pending State, County or other regional boards' legislation or action that may have impacts upon City when any of the following criteria are met:

1. The League of California Cities, or a successor or similar organization, has requested City comment or position on a piece of pending legislation or action, or the City has otherwise become aware of such pending legislation or action;

11. A public hearing and an opportunity for City to comment or take a position upon such pending legislation or action is occurring in a timeframe and with a deadline to comment or express a position that occurs prior to the next scheduled meeting of the City Council at which the City Council could consider and determine City's comment or position on such pending legislation or action; or
iii. The pending legislation or action clearly supports or clearly hinders the implementation or fulfillment of an adopted City Council Priority, Goal or Strategy in a substantial manner such that it is in the best interests of City to indicate its comment or position on such pending legislation or action. b. That the Mayor and/or City Manager is hereby directed to provide a written report to the City Council for the Council's comment and acceptance at the City Council's next possible meeting whenever the Mayor or City Manager prepares, executes and transmits a communication indicating a comment or position on pending legislation or action pursuant to the authority delegated under this Resolution, which report shall include a copy of such pending legislation or action, and the comment or position transmitted.

Section 3. This Resolution shall take effect immediately upon adoption.

9.3. City of Gilroy

STAFF REPORT
Agenda Item Title: Discussion and Direction Regarding a Free Community-Wide Infant Swimming Resource (ISR) Pilot Program (FAIR Memo – Council Member Ramirez)
Meeting Date: October 19, 2026
From: Matt Morley, City Administrator
Department: Administration
Submitted by: Harjot Sangha, Assistant City Administrator Prepared by: Harjot Sangha, Assistant City Administrator STRATEGIC PLAN GOALS:

RECOMMENDATION

1. Receive a report on options for a free community-wide Infant Swimming Resource (ISR) pilot program; and

2. Provide direction to staff on which option(s) to develop further for a potential pilot ahead of the 2027 swim season.

EXECUTIVE SUMMARY
On September 14, 2026, the City Council voted 7-0 to bring back for discussion Council Member Ramirez’s FAIR Memo requesting a free, community-wide ISR drowning prevention pilot program. This report presents four options for Council discussion.

Following Council direction, staff will develop the selected option(s), including costs, providers, and eligibility, and return for Council action.

BACKGROUND
The FAIR Memo (Attachment 1) cites drowning as the leading cause of death for children ages 1 to 4 and notes that many Gilroy families lack affordable access to swim lessons, leading some to swim in unguarded creeks and lakes. It requests that staff

9.3. determine the cost of an ISR program, either offered by the City or through volunteers with City-provided certification, include it in the Recreation Assessment, and implement a pilot before the 2027 swim season.

ISR is a self-rescue program for children 6 months to 6 years old, taught one-on-one in short daily lessons over about six weeks by instructors certified by Infant Swimming Resource. The City’s aquatics program at the Christopher High School (CHS) Aquatics Center is operated under contract by Swimming Swan, which currently offers Parent and Tot, preschool, and private lessons.

On September 14, 2026, City Council voted to bring the item back for discussion.

ANALYSIS
Staff has identified the following options for Council discussion.

Option 1 – Partner with Existing Certified ISR Instructors in the Region: Contract with certified ISR instructors who already serve South County and the region to provide Cityfunded lessons for Gilroy children, at the CHS Aquatics Center or instructors’ existing pools.

Option 2 – Incorporate into Swimming Swan’s Existing Swim Program: Explore with Swimming Swan, the City’s current aquatics operator, adding an infant and toddler selfrescue component to its existing lesson program at the CHS Aquatics Center, either by certifying its instructors or by hosting a certified ISR instructor.

Option 3 – Volunteer Instructors with City-Sponsored Certification: As proposed in the FAIR Memo, sponsor ISR instructor training for community volunteers in exchange for a commitment to provide free lessons. ISR certification is issued only by ISR and requires several weeks of training, so this would likely be a longer-term option.

In addition to selecting option(s), Council may wish to provide direction on whether a pilot should be open to all Gilroy families or prioritized by need, on a target pilot size, and whether this program should also be explored as part of the Recreation Assessment underway.

ALTERNATIVES

1. Direct staff to develop one or more of the options above and return with recommendations.

2. Take no action. The City would continue its existing aquatics programming.

9.3. FISCAL IMPACT/FUNDING SOURCE
There is no fiscal impact from receiving this report and providing direction. No funds are currently budgeted for this program. Staff will develop cost estimates for the option(s) selected and return with any necessary budget amendment.

PUBLIC OUTREACH
This item is included on the publicly posted agenda for this meeting.

NEXT STEPS
Based on Council direction, staff will develop the selected option(s) and return to the Council with recommendations, costs, and any necessary agreements.

Attachments:

1. September 14, 2026 Staff Report and FAIR Memo

8.1. City of Gilroy

STAFF REPORT
Agenda Item Title: Request to Establish Free Community-Wide Infant Swimming Resource Pilot Program: FAIR Memo
Meeting Date: September 14, 2026
From: Matt Morley, City Administrator
Department: Administration
Submitted by: Matt Morley, City Administrator
Prepared by: Matt Morley, City Administrator
STRATEGIC PLAN GOALS: Not Applicable

RECOMMENDATION
Council consideration of a future agenda item regarding the potential to establish a free community-wide infant swimming resource pilot program.

EXECUTIVE SUMMARY
N/A

BACKGROUND
On August 30, 2026 Councilmember Ramirez submitted the attached FAIR memo for Council consideration of the pilot swim program.

ANALYSIS
None — this is a first step in the FAIR Memo process on whether the City Council would like to give direction for the item to be brought back to a future agenda meeting for discussion and potential action.

8.1. ALTERNATIVES
Council may approve or deny the request for a future agenda item.

FISCAL IMPACT/FUNDING SOURCE
None — this is a first step in the FAIR Memo process. A detailed fiscal impact analysis will be conducted by staff if the Council approves the topic for a future agenda.

PUBLIC OUTREACH
This item was included on the publicly posted agenda.

NEXT STEPS
If approved, staff will schedule the future agenda item at a subsequent Council meeting consistent with the Future Agenda Item Request Policy.

Attachments:

1. FAIR Memo: Community Wide Infant Swimming Resource Pilot Program

August 30, 2026
FAIR Memo: Requesting a free community-wide ISR (Infant Swimming Resource) pilot program
Submitted by: Kelly Ramirez
According to the CDC, drowning is an especially serious risk for young children. In the United States, it is the leading cause of death for children ages 1–4. Children ages 5–14 also remain at substantial risk; drowning is the second-leading cause of unintentional injury death in that age group.

The CDC's most recent information is particularly striking: drowning deaths among children ages 1–4 increased 28% in 2022 compared with 2019.

The American Academy of Pediatrics' new 2026 policy statement specifically says toddlers have the highest drowning fatality rates and frequently drown in swimming pools after gaining unanticipated access to water.

Gilroy summers are always hot. Many of our youth cannot afford nor have access to swim lessons and/or safe swimming environments with certified lifeguards. As an alternative, oftentimes families and young children choose to swim in creeks and lakes that do not have lifeguards thus increasing the opportunity for drownings.

ISR is a drowning-prevention/self-rescue swimming program, rather than conventional recreational swim lessons.

The program is designed primarily for children about 6 months through 6 years old, with skills adjusted to the child's age and development. Lessons are generally one-on-one and individualized.

For an infant who isn't yet walking well, the central skill is:

Fall into water → turn/roll onto back → float → maintain breathing → wait for rescue.

This is called roll-back-to-float. The goal isn't for a baby to swim long distances; it's to give the child a way to get their face out of the water and breathe if they unexpectedly enter the water.

For a more mobile toddler or young child, ISR progresses toward:

Swim → roll onto back → float/breathe → turn over → swim again This is commonly called swim-float-swim. The child learns to move toward the pool wall, steps, shoreline, or another place of safety.

What the lessons are like
ISR lessons are notably different from traditional group swim lessons:
• One child and one instructor
• Usually very short lessons, often around 10 minutes
• Frequently conducted 4–5 days per week

• A typical initial program takes approximately 6 weeks, although it varies considerably by child
• Skills are taught through repetition and individualized instruction.

Some programs also deliberately have children practice in clothing, because an unexpected fall into a pool or other body of water may occur while the child is dressed.

The important distinction
"Teaching a young child what to do if they unexpectedly end up in the water." That's different from ordinary swimming instruction, whose primary objective is usually learning strokes, becoming comfortable in the water, and eventually swimming proficiently.

ISR focuses first on survival skills, and swimming ability is incorporated as the child becomes developmentally ready.

I propose directing staff to determine the cost of providing this community benefit program -either offered by the city or through a volunteer program with certification provided by the city.

Early water instruction isn't primarily about producing young swimmers. It is about giving young children progressively appropriate skills to survive an unexpected entry into water and ultimately become water competent.

This request overlaps with two City processes – the Recreation Assessment, in progress now, and the annual budget process.

With respect to the Recreation Assessment, I recommend including this program in the assessment and utilizing a pilot program to inform on the interest level in the community.

With respect to the annual budget process, it makes sense to move this pilot program forward prior to the budget process to allow for implementation ahead of the 2027 swim season, when outdoor risks are greater for infants.