Committee have discussed the proposal, and that the Town is partnering with a consultant specializing in telecommunications to assist with negotiating favorable lease terms.
Stay Interview Process
Mr. Einfalt reported that staff is conducting stay interviews and hearing directly from employees, including newer employees hired since the last round of interviews in 2023.
He noted that staff is also evaluating potential adjustments to the employee benefits package.
Security Cameras
Mr. Einfalt reported that George Lee is assisting with the installation of security cameras, some of which have already been installed. He noted that installation at Town Hall is expected to be completed by the end of the month, with installation at the Corporation Yard anticipated to begin next month, followed by the Barn.
Corporation Yard Records Filing
Mr. Einfalt reported that staff is reviewing records retention, scanning, and secure storage needs at the Corporation Yard. He stated that a proposal outlining the recommended next steps will be brought forward in the near future.
12. ADJOURN
Mayor Bhateja adjourned the Regular City Council Meeting of January 15, 2026, to January 29, 2026, at 6:00 P.M. The meeting adjourned at 11:52 PM.
TOWN OF LOS ALTOS HILLS March 19, 2025
Staff Report to the City Council
SUBJECT:
FROM:
APPROVED:
CONSIDERATION OF WAIVER OF READING AND
INTRODUCTION OF AN ORDINANCE AMENDING TITLE 10,
CHAPTER 1 OF THE MUNICIPAL CODE REGARDING THE
TOWN’S ACCESSORY DWELLING UNIT REGULATIONS
Jay Bradford Community Development Director
Cody Einfalt, Acting City Manager
RECOMMENDATION That the City Council:
Introduce an ordinance amending Title 10, Chapter 1, Article 14 related to Accessory Dwelling Unit (ADU) regulations to maintain compliance with State law (Attachment 1).
BACKGROUND
In both 2025 and 2026, new state law regulating accessory dwelling units (ADUs) and junior accessory dwelling units (JADUs) were adopted by the Legislature and went into effect.
Additionally, the Town has now adopted multi-family zoning districts, which must permit ADUs as required by state law. Finally, in January 2026, staff received direction and technical guidance from the California Department of Housing and Community Development (HCD) to update certain elements of the Town’s ADU regulations. Consequently, the Town’s ADU Ordinance under Title 10, Chapter 1, Article 14 of the Municipal Code will need to be amended to maintain consistency with state law.
Town Staff presented a summary of updates triggered by state law to the ADU Ordinance (Section 10-1.1401-1409) with the Planning Commission at the February 5th, 2026, regular meeting and followed that up with outreach to both the ADU and SB 9 Ad Hoc Committees later in February.
Staff also consulted with representatives from HCD to get further clarification to ensure that the proposed changes would preserve the Town’s compliance with current State Law.
At the March 5th, 2026 Planning Commission meeting, the Commission conducted a public hearing on the proposed ordinance amendments. The Planning Commission, by resolution, recommended that the City Council adopt the ordinance with errata. The proposed amendments to the ADU regulations were presented at a public hearing before the Planning Commission for discussion, and the Commission recommended that the ordinance be forwarded to the City Council for first reading.
Staff has prepared updates to the Town’s ADU ordinance (Sections 10-1.1401 through 10-1.1409) (Attachment 1). The proposed modifications to the ordinance are summarized as follows and are included in Exhibit A to the Draft Ordinance (Attachment 1).
ITEM 7C
Staff Report to City Council
Ordinance Amending the Town’s ADU Ordinance
March 19, 2026
Changes to the ADU Ordinance (LAHMC Title 10, Chapter 1, Article 14) The following summarizes the substantive changes to various sections of Article 14 pursuant to new state law and clarifications based on HCD direction. All of these changes are required by state law and the Town must adopt them to comply with ADU statutes. Exhibit A to the draft Ordinance contains the detailed redlines of the entire set of changes. • Section 10-1.1402 – Definitions. Primary Size. This section is being amended to clarify the definition of primary dwelling unit, as follows:
Another amendment is also being added to clarify the meaning of “livable space”, which in multifamily buildings may be converted into accessory dwelling units.
1. Section 10-1.1403. General standards and requirements. This section is being amended to clarify the number of ADUs and JADUs allowed in the R-A and multi-family zoning districts. These allowances are set by Government Code sections 66314 and 66323.
Please note that these provisions were already incorporated into the Town’s ADU Ordinance by referencing state law; these changes now proposed are to provide greater clarity and specifying the regulatory requirements and allowances.
In summary:
Under Gov. Code section 66314, the Town must allow ADUs to be either “detached from,” “attached to,” or located within the proposed or existing primary dwelling.
The Town can impose objective standards over ADUs. However, there are four types of ADUs, referred to as “state-exempt ADUs”, that the Town must allow as required by Gov. Code section 66323. The Town can only require a building permit and cannot impose any local standards, including design standards.
Based on the requirements of Sections 66314 and 66323, the Town’s Ordinance is required to allow the following:
R-A Zoning District: One converted/attached ADU, one detached ADU, and one JADU. The converted and detached ADU, if they qualify as state-exempt ADUs, do not need to meet any local development and design standards.
Staff Report to City Council
Ordinance Amending the Town’s ADU Ordinance
March 19, 2026
To qualify as state-exempt ADUs, the converted ADU must be within the proposed space of a single-family dwelling or existing space of a single-family dwelling or accessory structure. If within the existing space of an accessory structure, the accessory dwelling unit may include an expansion of not more than 150 square feet beyond the same physical dimensions as the existing accessory structure, for the purposes of accommodating ingress and egress only. In addition, there shall be exterior access from the proposed or existing single-family dwelling and side and rear setbacks sufficient for fire and safety. The detached ADU must be new construction, at most 800 square feet in livable space, not exceed 16 feet in height, and have 4-foot side and rear setbacks. Multi-Family Districts: converted ADUs within non-livable spaces of an existing multi-family building, up to 25 percent of the total number of units or 1 unit, whichever is greater. Multi-family lots are also allowed to have detached ADUson lots with an existing multi-family building, the lot is allowed up to 8 ADUs or the number of existing units on the lot, whichever is less. On lots with proposed new multi-family buildings, up to two detached ADUs are permitted. These are all considered state-exempt ADUs and the Town cannot impose any development or design standards. The detached units must meet the four-foot side and rear setbacks and applicable height requirements shown in Section #3 below (generally 18 feet).
2. Section 10-1.1403 (f)(2) – Stories & Height. This section is being amended to provide greater clarity to the height limits established in Gov. Code section 66321(b)(4) because the Town has now introduced multi-family zoning for the first time. These height limitations are set by state law.
Staff Report to City Council
Ordinance Amending the Town’s ADU Ordinance
March 19, 2026
3. Section 10-1.1405 (b) – Sprinklers. This section is being amended to state that the construction of an accessory dwelling unit shall not trigger a requirement for fire sprinklers to be installed in the existing primary dwelling. This is required by state law.
4. Sections 10-1403(h) and 10-1.1404. This section is being added/amended to specify that the state-exempt ADUs described above are not subject to local development and design standards. Again, these requirements are already incorporated into the current ordinance, but these proposed amendments aim to provide greater clarity.
5. Section 10-1.1405 Building and Construction. An accessory dwelling unit shall be designed and constructed in compliance with all applicable requirements of the California Building Standards Code and local code amendments. In addition, the following requirements shall be confirmed:
(a) An accessory dwelling unit shall include permanent provisions for living, sleeping, eating, cooking, and sanitation.
(b) An accessory dwelling unit is only required to have fire sprinklers if they are required for the primary dwelling. However, the construction of an accessory dwelling unit shall not trigger a requirement for fire sprinklers to be installed in the existing primary dwelling.
Staff Report to City Council
Ordinance Amending the Town’s ADU Ordinance
March 19, 2026
(d) All electrical and utility services to a new detached accessory dwelling unit shall be undergrounded.
(e) If the existing primary dwelling on the property has overhead electrical and utility services, and no upgrades to the overhead service are required to serve the new accessory dwelling unit, then the utility service from the power pole to the primary dwelling is not required to be undergrounded.
6. Section 10-1.1406 – Denial. This section is being amended to specify what the revision process would be if an ADU or JADU application were not approved.
7. Section 10-1.1409 – Pathway to Compliance. At the request of HCD, this section is being amended to change the December 31, 2019 date to January 1, 2020 to exactly follow state law language.
Staff Report to City Council
Ordinance Amending the Town’s ADU Ordinance
March 19, 2026
NEXT STEPS
Following introduction, the ordinance will proceed to adoption at the April City Council meeting.
Staff will also be returning to the Planning Commission in April to discuss further design standardizations to the Town’s ADU ordinance that are Town policy decisions rather then state law requirements.
CITY COUNCIL WORKPLAN
Updating the ADU Ordinance is directly related to a program within the Housing Element, which has been identified as a City Council goal for the Town.
CEAQ REVIEW
This project is exempt pursuant to Public Resources Code Section 21080.17 and 15282.1(h) of the CEQA Guidelines
FISCAL IMPACT
Adopting the proposed amendments will not result in direct fiscal impacts as it is routine maintenance of compliance with state law and is required as part of programs B-6 of the adopted 6th Cycle Housing Element.
ATTACHMENTS
1. Ordinance for ADU Amendments with text changes and redlines
ORDINANCE ______
AN ORDINANCE OF THE TOWN OF LOS ALTOS HILLS AMENDING TITLE 10 (ZONING AND SITE DEVELOPMENT) OF THE LOS ALTOS HILLS MUNICIPAL
CODE TO AMEND REGULATIONS RELATING TO ACCESSORY DWELLING UNITS
WHEREAS, a severe housing crisis exists in the State of California with the demand for housing outstripping supply; and
WHEREAS, the State Legislature has enacted a number of laws relating to streamline approvals of housing development projects; expand accessory dwelling units (“ADU”) opportunities; and to promote housing supply, growth and mobility; and WHEREAS, several state legislations in particular have gone into effect between 2016 and 2023 which, among other things, requires municipalities to ministerially approve ADUs and junior ADUs (“JADU”), and to limit local authority to impose standards such as setbacks, height, lot coverage, and architectural compatibility, parking, and utility connection and fee requirements; and
WHEREAS, the adopted and state-certified 2023-2031 Housing Element (“Housing Element”) of the Town of Los Altos Hills (“Town”) contains numerous goals, policies and programs to streamline residential development projects and promote housing opportunities and mobility, which covers, among other things, the development of ADUs; and WHEREAS, specifically, the Housing Element considers ADUs an important part of the Town’s site inventory and housing strategy and included a number of programs to remove constraints and encourage and facilitate ADU developments in Los Altos Hills, including: monitor and revise the Town’s ADU regulations under Los Altos Hills Municipal Code (“LAHMC”) Title 10, Chapter 1 (the “Zoning Ordinance”) as appropriate to incorporate state legislative amendments; create ADU survey process to reduce ADU vacancies; and providing housing resources outreach and referrals to advertise vacant dwellings to find tenants from the larger region. Housing Element Program B-6 specifies: “monitor state law on an annual basis and revise the Zoning Ordinance as appropriate. . . the Town will make any revisions to the ADU ordinance as necessary per any further State review”; and
WHEREAS, as a result of legislative changes to state ADU laws in 2025 and 2026, the Town prepared certain amendments via ordinance to the ADU regulations under Title 10, Chapter 1, Article 14 of the Los Altos Hills Municipal Code (the “Ordinance”); and WHEREAS, on March 5, 2026, the Planning Commission held a duly noticed public hearing to consider the proposed Ordinance, at which time all interested parties were provided an opportunity to give input and participate in the public process; at the hearing, the Planning Commission, by Resolution No. XXXXXX made findings and recommended the City Council adopt the proposed Ordinance as deliberated upon by the Commission during the hearing; and WHEREAS, on XXXXXX, the City Council held a duly noticed public hearing to consider the proposed Ordinance, at which time all interested parties were provided an opportunity to give input and participate in the public process; and ITEM 7C ATTACHMENT 1
WHEREAS, the proposed Ordinance is consistent with and supports the Los Altos Hills General Plan by helping to ensure the implementation of housing goals, programs and strategies in the 2023-2031 Housing Element, including but not limited to those with respect to amending regulations pertaining to ADUs; and
WHEREAS, under the California Environmental Quality Act (“CEQA”), modifications to regulations pertaining to ADUs are statutorily exempt from CEQA pursuant to Section 21080.17 of the Public Resources Code and CEQA Guidelines section 15282.1(h) because they are implementing the provisions of Government Code Section 66314 et seq.; and WHEREAS, the proposed Ordinance is intended to bring the Town’s ADU regulations in conformance with applicable State law in a way that protects and promotes public safety, community welfare, and the Town’s character and aesthetic quality.
NOW, THEREFORE, the City Council of the Town of Los Altos Hills hereby ordains as follows:
SECTION I. FINDINGS.
Based on the entirety of the record as described above, the City Council for the Town of Los Altos Hills hereby makes the following findings:
1. All of the facts and recitals above are true, correct, incorporated herein and made a part hereof.
2. Based on the entirety of the record before it, the City Council hereby finds that this Ordinance is exempt from review under the California Environmental Quality Act (CEQA) pursuant to Public Resources Code section 21080.17 and CEQA Guidelines section 15282.1(h) because they are implementing the provisions of Government Code Section 66314 et seq. relating to secondary dwellings.
3. This Ordinance was prepared, introduced, and adopted in accordance with the requirements of Planning and Zoning Law (Government Code, sections 65853-65860) and meets all of the requirements thereunder.
4. This Ordinance is consistent with and supports the Los Altos Hills General Plan by implementing housing goals, programs, and strategies in the 2023-2031 Housing Element, complying with state housing laws and ADU legislation, and promoting housing production and mobility. The amendments proposed in the Ordinance would accomplish the program goals identified in the Housing Element and continue to implement the Town’s housing strategies in compliance with state law.
SECTION II. AMENDMENT.
Article 14, Chapter 1 of the Los Altos Hills Municipal Code, is hereby amended to read as set forth in Exhibit A to this Ordinance, which is hereby incorporated as though set forth in full herein.
Item 4.3 Attachment 1
SECTION III. SEVERABILITY.
If any provision of this Ordinance or the application thereof to any person or circumstance is held invalid or unconstitutional the remainder of this Ordinance, including the application of such part or provision to other persons or circumstances shall not be affected thereby and shall continue in full force and effect. To this end, provisions of this ordinance are severable. The City Council of the Town of Los Altos Hills hereby declares that it would have passed each section, subsection, subdivision, paragraph, sentence, clause, or phrase hereof irrespective of the fact that any one or more sections, subsections, subdivisions, paragraphs, sentences, clauses, or phrases be held unconstitutional, invalid, or unenforceable.
SECTION IV. EFFECTIVE DATE AND PUBLICATION.
Pursuant to the provisions of Government Code Section 36933, a summary of this Ordinance shall be prepared by the City Attorney. At least five (5) days prior to the Council meeting at which this Ordinance is scheduled to be adopted, the City Clerk shall (1) publish the Summary, and (2) post in the City Clerk’s Office a certified copy of this Ordinance. Within fifteen (15) days after the adoption of this Ordinance, the City Clerk shall (1) publish the summary, and (2) post in the City Clerk’s Office a certified copy of the full text of this Ordinance along with the names of those City Council members voting for and against this Ordinance or otherwise voting.
This Ordinance shall become effective thirty (30) days from and after its adoption.
INTRODUCED: ______________, 2026
PASSED: _______________, 2026
AYES:
NOES:
ABSTENTIONS:
ABSENT:
BY: _________________________
Mayor
ATTEST:
_________________________
City Clerk
APPROVED AS TO FORM:
_________________________
City Attorney
EXHIBIT A
SECTION I. Revisions to Article 14, “Accessory Dwelling Units” of Chapter 1 of Title 10 Various sections of Article 14 are amended as follows, with additions in red double underline and deletions in strikethrough. Sections, subsections, paragraphs, and texts not modified by this amendment are not included below and shall remain in full force and effect. . . .
Section 10-1.1402. Definitions.
. . .
Livable space means a space in a dwelling intended for human habitation, including living, sleeping, eating, cooking, or sanitation; however, if "livable space" is defined differently in California Government Code Section 66313 or its successor statute, the latter definition shall control.
. . .
Primary dwelling unit means the single-family or multi-family residence on the property that is not created pursuant to the provisions of this article and Government Code section 66314 et seq. is the larger of the two if there is an existing accessory dwelling unit on the property. . . .
Secondary dwelling means the same as an accessory dwelling unit. . . .
Section 10-1.1403. General standards and requirements.
Accessory dwelling units are permitted on all residential properties and subject to the following general standards and requirements:
(a) Number of Units Allowed; Zoning District, Type and Unit Size. (1) Within the R-A zone, all of the following:
(i) One (1) accessory dwelling unit that is attached or connected to an existing or proposed single-family dwelling unit through sharing a wall or a structural building feature, or that is entirely within the existing space of an existing accessory structure;
(ii) One (1) accessory dwelling unit that is new construction and detached from a proposed or existing single-family dwelling; and
(iii) One (1) junior accessory dwelling unit.
(2) Within a multi-family zoning district, all of the following:
(i) Multiple accessory dwelling units within the portions of existing multifamily dwelling structures that are not used as livable space, up to twenty-five (25) percent
. . .
of the existing multi-family dwelling units, or at least one (1) unit, whichever is greater.
(ii) Multiple detached accessory dwelling units not exceeding the building height permitted under Section 10-1.1403(f), and with at least four (4) feet side and rear setbacks, subject to the following:
A. On lots with an existing multiple-family dwelling structure(s), the number of detached accessory dwelling units shall not exceed the number of existing units on the lot or eight (8), whichever is less.
B. On lots with a proposed, new construction multiple-family dwelling structure(s), no more than two (2) detached accessory dwelling units. This provision shall not apply to a lot that proposes to expand existing multiplefamily dwelling structure(s).
One (1) accessory dwelling unit and one (1) junior accessory dwelling unit are allowed on any lot with an existing or proposed single-family dwelling unit provided that the lot has adequate access to water and sewer or septic services, or as otherwise allowed per California Government Code sections 66323(a)(1) and (2). (f) Height.
(1) The maximum height of an attached accessory dwelling unit may be up to the maximum height for a primary dwelling unit pursuant to Section 10-1.504, or 25 feet, whichever is lower.
(2) The maximum height of a detached accessory dwelling unit shall be one story and sixteen (16) feet on a lot with an existing or proposed primary single-family or multi-family dwelling unit. , except as provided in subsections (3) and (4) below. (3) For detached accessory dwelling units on a lot with an existing or proposed primary single-family or multi-family dwelling that is within one-half of one mile walking distance of a major transit stop or a high-quality transit corridor as defined under Public Resources Code Section 21155, the maximum height shall be 18 feet, or 20 feet where necessary to accommodate a roof pitch on the accessory dwelling unit that is aligned with the roof pitch of the primary dwelling unit.
(4) For detached accessory dwelling units on a lot with an existing or proposed multifamily, multi-story dwelling, the maximum height shall be 18 feet. (g) Parking and access.
An accessory dwelling unit shall comply with the following parking and site access requirements:
(1) Vehicular access to an accessory dwelling unit from the nearest public or private street shall be provided by a common driveway with the primary dwelling; (2) No parking shall be required for an accessory dwelling unit or the primary dwelling unit if the accessory dwelling unit application is submitted with the application to create the primary dwelling unit, for any of the following:
i. When a garage, carport, or covered parking structure is demolished in conjunction with the construction of, or conversion to, an accessory dwelling unit;
ii. The accessory dwelling unit is located within one-half mile walking distance of public transit;
iii. The accessory dwelling unit is located within an architecturally and historically significant historic district;
iv. The accessory dwelling unit is converted from the proposed or existing floor area of the primary dwelling or an existing accessory structure; v. When on-street parking permits are required but not offered to the occupant of the accessory dwelling unit;
vi. When the accessory dwelling unit is within one block of a car share vehicle; (3) No additional on-site parking shall be required for a primary dwelling unit for the construction of a junior accessory dwelling unit.
(h) In accordance with Government Code section 66323(a)(1)-(4), the following accessory dwelling units shall not be subject to the development standards contained in subsections (b) – (g) of this Section, except for subsections (e)(2) and (f):
(1) The accessory dwelling unit or junior accessory dwelling unit is within the proposed space of a single-family dwelling or existing space of a single-family dwelling or accessory structure. If within the existing space of an accessory structure, the accessory dwelling unit may include an expansion of not more than 150 square feet beyond the same physical dimensions as the existing accessory structure, for the purposes of accommodating ingress and egress only. In addition, there shall be exterior access from the proposed or existing single-family dwelling and side and rear setbacks sufficient for fire and safety. (2) A detached accessory dwelling unit that does not exceed four-foot side and rear yard setbacks for a lot with a proposed or existing single-family dwelling, with a total floor area of not more than 800 square feet of livable space, and meeting the building height permitted under Section 10-1.1403(f), as applicable.
(3) Accessory dwelling units in multi-family zoning districts meeting the requirements of Section 10-1.1403(a)(2).
Section 10-1.1404 Design requirements.
An accessory dwelling unit shall be reviewed and approved without discretionary review or a hearing. Except for accessory dwelling units described in Section 10-1.1403(h)(1)-(3), aAs part of the planning department’s ministerial approval, the following objective design requirements shall be confirmed:
. . .
Section 10-1.1405. Building and construction.
An accessory dwelling unit shall be designed and constructed in compliance with all applicable requirements of the California Building Standards Code and local code amendments. In addition, the following requirements shall be confirmed:
(a) An accessory dwelling unit shall include permanent provisions for living, sleeping, eating, cooking, and sanitation.
(b) An accessory dwelling unit is only required to have fire sprinklers if they are required for the primary dwelling. However, the construction of an accessory dwelling unit shall not trigger a requirement for fire sprinklers to be installed in the existing primary dwelling. (c) Accessory dwelling units shall be connected to the public sanitary sewer system when such sewer is within 200 feet of the property line or when the property is subject to a sewer reimbursement agreement. However, when the elevation of the existing sewer main does not facilitate gravity flow and the parcel is not subject to a sewer reimbursement agreement, the accessory dwelling unit shall not be required to connect to the sewer system but shall be connected to a private sewage disposal system that is approved by the Santa Clara County Department of Environmental Health.
Notwithstanding the foregoing, accessory dwelling units described in Section 10-
1.1403(h)(1)-(3) shall not be required to be connected to the public sanitary sewer system unless such accessory dwelling unit is constructed with a new single family dwelling on the same lot, or upon separate conveyance of the accessory dwelling unit as permitted by Section 10-1.1403(c)(3). An accessory dwelling unit constructed with a new singlefamily dwelling on the same lot must be connected to the public sanitary sewer system or be connected to a private sewage disposal system that is deemed to be adequate by the Santa Clara County Department of Environmental Health.
. . .
§ 10-1.1406. Permit review process.
(a) Applications for an accessory dwelling unit must be submitted to the Building Department on a form and with information and materials as required adopted by the Building Official and the Planning Director Community Development Director and most recently in effect, and shall be approved or disapproved within 60 days after receiving the complete application. The applicant may request that the 60-day review period be waived. (b) If The Town denies an application for an accessory dwelling unit or junior accessory dwelling unit pursuant to subdivision (a), the Town shall, within the time period described in subdivision (a), return in writing a full set of comments to the applicant with a list of items that are defective or deficient, and a description of how the application can be remedied by the applicant.
Section 10-1.1409 Accessory dwelling unit amnesty.
Owners of existing non-permitted accessory dwelling units which were constructed or otherwise in existence prior to December 31, 2019 January 1, 2020, may apply for a building permit to legalize the unit subject to conformance with the regulations in this article, the current California building standards code in effect at the time of the application, and such rules and regulations as may be adopted by resolution of the City Council. Notwithstanding the foregoing, an application
for an accessory dwelling unitshall not be denied based on the correction of nonconforming zoning conditions, building code violations, or unpermitted structures that do not present a threat to public health and safety and are not affected by the construction of the accessory dwelling unit.
ITEM 8A
REVISED AND DISTRIBUTED 03.18.2026
TOWN OF LOS ALTOS HILLS March 19, 2026
Staff Report to the City Council
SUBJECT: RECEIVE 2025-26 MID-YEAR FINANCIAL REPORT AND ADOPT
RESOLUTION APPROVING THE MID-YEAR BUDGET AMENDMENTS
FROM: Thomas Leung, Finance Director
APPROVED: Cody Einfalt, Acting City Manager
RECOMMENDATION: That the City Council:
Receive 2025-26 Mid-Year Financial Reports and Adopt Resolution Approving the Mid-Year Budget Amendments.
BACKGROUND:
The purpose of the mid-year financial update is to review the Town’s financial health through December 31, 2025, and identify any known risks that require immediate attention.
As part of the mid-year financial analysis, Staff compared the year-to-date actual to the 2025-26 budget and reviewed line items exceeding 50% or below 30% of the annual budget to identify material variances. This review is intended to identify material deviations in revenues and expenditures that fall outside normal operating patterns.
On February 24, 2026, the Finance and Investment Committee (FIC) reviewed the 2025-26 Mid-Year Financial Report and proposed budget amendments.
DISCUSSION:
FY 2024-25 Year-End
The General Fund ended FY 2024-25 with a total fund balance of $18.4 million, including an unassigned fund balance of $4.4 million. Unassigned fund balance increased by $1.8 million from the prior year. Of this increase, approximately $0.7 million resulted from General Fund revenues exceeding expenditures and net transfers during the year. An additional $0.8 million reflects the transfer of remaining ARPA funds into the General Fund following the elimination of the ARPA fund, and approximately $0.3 million resulted from the reduction of reserve commitments approved by the City Council during the fiscal year.
The year-end unassigned fund balance represents approximately 24% of total General Fund expenditures, providing the Town with continued fiscal flexibility to manage economic uncertainty, revenue volatility, and unforeseen expenditures. The sections below summarize the primary budget-toactual drivers that contributed to the FY 2024-25 year-end results.
Staff Report to City Council Page 2
FY 2025-26 Mid-Year Report
March 19, 2026
• Property Tax
Property tax revenues slightly exceeded the amended budget. Performance reflects continued assessed valuation growth driven by residential property transfers, annual CPI adjustments, and higher property tax in-lieu of VLF revenues. Results were generally consistent with budget assumptions and continue to provide a stable foundation for General Fund revenues. • Taxes Other Than Property
Revenues exceeded budget primarily due to higher real property transfer tax receipts. This category is inherently sensitive to transaction timing and valuation and can fluctuate significantly from year to year based on individual property sales rather than underlying economic trends.
• Franchise Fees
Franchise fee revenues exceeded budget due to stronger-than-anticipated receipts from water, solid waste, and gas and electric franchises. These increases were partially offset by continued declines in cable and cellular franchise revenues, but overall franchise fee performance was favorable relative to budget.
• Licenses and Permits
Licenses and permits revenues were significantly below budget due to lower residential development activity and a shift toward smaller, lower-valuation permits, with fewer large projects advancing during the year. Building permit revenues declined as fewer large or highvaluation projects advanced, and overall permit volume was lower than assumed in the amended budget. Plan retention fees and energy-related fees also underperformed, reflecting the timing and scale of projects moving through later stages of review. This revenue category remains highly volatile and dependent on private development decisions and project sequencing. • Use of Money and Property
Revenues exceeded budget largely due to higher-than-anticipated interest earnings and favorable investment performance. Higher interest rates and the reinvestment of maturing securities at improved yields contributed to the favorable variance. • Intergovernmental Revenues
Intergovernmental revenues exceeded budget due to higher grant revenues and motor vehicle in-lieu fees received during the year, including $49,029 in December 2024. These revenues fluctuate based on reimbursement timing and grant activity and are not considered a stable ongoing revenue source.
2024-25
Adopted Budget
2024-25
Actual Year-End Variance ($) Variance (%)
GENERAL FUND REVENUES:
PROPERTY TAX 8,914,040 8,945,715 31,675 0.4%
TAXES OTHER THAN PROPERTY 610,750 705,338 94,588 15.5%
FRANCHISE FEES 589,000 695,019 106,019 18.0%
LICENSE & PERMITS 1,647,896 1,179,792 (468,104) -28.4%
USE OF MONEY AND PROPERTY 1,127,000 1,520,657 393,657 34.9% INTERGOVERNMENTAL 36,000 147,376 111,376 309.4%
CHARGES FOR SERVICES 1,036,800 1,349,706 312,906 30.2%
MISCELLANEOUS 18,000 6,559 (11,441) -63.6%
ALLOCATIONS IN 3,711,885 3,189,727 (522,158) -14.1%
REVENUES TOTAL $ 17,691,371 $ 17,739,889 $ 48,518 0.3% Page 467 of 510 Staff Report to City Council Page 3
FY 2025-26 Mid-Year Report
March 19, 2026
• Charges for Services
Charges for services exceeded budget due to increased cost-recovery activity, including planning, legal, engineering, and compliance-related charges. Activity levels in Community Development and Public Works drove higher billable charges than assumed in the amended budget.
• Fines and Forfeitures
Fines and forfeitures were slightly above budget, reflecting enforcement activity during the year.
This revenue source can vary based on case timing and is not assumed to be recurring at elevated levels.
• Allocations In
Overhead allocation revenues were below budget, reflecting lower overall expenditure activity across departments, which reduced allocable overhead costs charged back to the General Fund. • Administration
Administrative expenditures were below budget due to salary savings, unspent City Manager contingency appropriations, and lower-than-anticipated contract and operating costs. • Public Safety
Public Safety expenditures were below budget primarily due to reduced spending in other contract services including sheriff overtime and Automatic License Plate Readers (ALPRs). • Community Development
Community Development expenditures were significantly below budget. Personnel costs were lower due to vacancies in the building division. Contract and professional services spending was also below budget, reflecting reduced development activity and fewer large or complex projects requiring consultant, engineering, and extended review services. While legal and billable services occurred and were largely recovered through charges for services, overall department spending remained well below appropriations.
• Public Works
Public Works expenditures were below budget due to reduced spending in engineering, consulting, and billable contract services.
• Community Services
Community Services expenditures were below budget due to savings in personnel costs, contract services, and operations.
2024-25
Adopted Budget
2024-25
Actual Year-End Variance ($) Variance (%)
GENERAL FUND EXPENDITURES:
Administration 3,753,648 3,252,350 (501,298) -13.4%
Public Safety 3,695,061 3,288,792 (406,269) -11.0%
Community Development 5,243,641 4,442,592 (801,049) -15.3% Public Works 3,550,836 3,104,945 (445,891) -12.6%
Community Services 1,833,728 1,643,094 (190,634) -10.4% EXPENDITURES TOTAL $ 18,076,914 $ 15,731,773 $ (2,345,141) -13.0% Page 468 of 510 Staff Report to City Council Page 4
FY 2025-26 Mid-Year Report
March 19, 2026
FY 2025-26 Mid-Year
As of December 31, 2025, the Town has healthy reserves, and staff expects expenditures to remain within appropriations through fiscal year-end.
GENERAL FUND
As of mid-year, General Fund revenues total $7.1 million, representing 38% of the annual budget.
The Town’s primary revenue sources—property tax, licenses and permits, charges for services, and use of money and property—account for the majority of General Fund revenues. Property tax collections are on track to meet budget projections, use of money and property is outperforming the mid-year benchmark, while revenue from licenses and permits and charges for services are below mid-year pacing.
As of mid-year, the Building Division received $692,645 in revenue and incurred $1,019,640 in expenses, including $318,140 in overhead cost allocation. Without adjusting for overhead, the Building Division achieved a 68% cost recovery.
The Planning Division received $263,824 in revenue and incurred $1,273,074 in expenses, with $555,557 attributed to overhead cost allocation. Planning expenses have historically not achieved full cost recovery due to fluctuations in the number of project submittals received. Additionally, long range planning like the work on the housing element are not recoverable and have high costs due to the nature of the work.
2024-25
Amended Budget
2024-25
Actual YTD
through
12/31/2024 % Received
2025-26
Amended Budget
2025-26
Actual YTD
through
12/31/2025 % Received
GENERAL FUND REVENUES:
PROPERTY TAX 8,914,040 2,903,580 33% 9,483,540 3,014,776 32% TAXES OTHER THAN PROPERTY 610,750 242,751 40% 610,750 348,067 57% FRANCHISE FEES 589,000 140,626 24% 705,500 142,507 20%
LICENSE & PERMITS 1,647,892 554,039 34% 2,012,774 683,814 34% USE OF MONEY AND PROPERTY 1,127,000 645,395 57% 955,186 613,966 64% INTERGOVERNMENTAL 36,000 53,240 148% 46,001 3,870 8%
CHARGES FOR SERVICES 1,036,800 396,388 38% 1,241,925 539,267 43% MISCELLANEOUS 18,000 10,061 56% 18,000 11,327 63%
ALLOCATIONS IN 3,711,885 1,782,122 48% 3,407,530 1,703,765 50% REVENUES TOTAL $ 17,691,367 $ 6,728,202 38% $ 18,481,206 $ 7,061,358 38% GENERAL FUND EXPENDITURES:
PERSONNEL 4,900,238 2,279,139 47% 5,518,513 2,660,724 48% CONTRACT/PROFESSIONAL SERVICES 6,959,209 2,570,763 37% 6,366,063 3,008,704 47% OPERATIONS 1,683,498 884,955 53% 1,662,737 1,046,745 63% OTHER 234,000 - 0% 242,000 582 0%
ALLOCATIONS OUT 4,299,969 1,958,940 46% 4,364,056 2,182,301 50% EXPENDITURES TOTAL $ 18,076,914 $ 7,693,797 43% $ 18,153,369 $ 8,899,057 49% Page 469 of 510 Staff Report to City Council Page 5
FY 2025-26 Mid-Year Report
March 19, 2026
General Fund expenditures total $8.9 million, or 49% of the annual budget, and are projected to remain within appropriations through year end. Personnel costs are at 48% of budget, consistent with mid-year expectations. Contract and professional services are at 47% higher than the prior year but generally in line with seasonal pacing. Operating expenditures are at 63% of budget, reflecting timing differences in non-personnel costs.
Administration is 57% spent, reflecting front-loaded insurance premiums and legal services running above pace; excluding insurance, Administration is tracking at 52%. Public Safety is 49% spent, with the Sheriff contract also at 49%. Community Development is 47% spent, with personnel totals at 42% and contract personnel and plan check services below the mid-year pace. Public Works is 45% spent, with personnel totals at 45% and engineering contract services below 50%. Community Services is 43% spent, reflecting seasonal timing and tracking appropriately. The Community Services budget decreased by $559,796, or 62%, from the FY 2024-25 budget due to lower personnel costs following a staffing restructure that reduced two positions to one.
SEWER FUND
Sewer assessment revenue is received in January and June; therefore, no revenue was reflected in receipts as of December 31.
2024-25
Amended Budget
2024-25
Actual YTD
through
12/31/2024 % Spent
2025-26
Amended Budget
2025-26
Actual YTD
through
12/31/2025 % Spent
GENERAL FUND EXPENDITURES:
Non-Departmental - 44,654 - 6,620 - 0%
Administration 3,753,648 1,823,464 49% 4,126,102 2,370,389 57% Public Safety 3,695,061 1,677,429 45% 4,073,524 1,980,708 49% Community Development 5,243,641 1,937,981 37% 4,919,808 2,292,714 47% Public Works 3,550,836 1,527,885 43% 3,574,951 1,626,503 45% Parks & Rec 1,833,728 682,384 37% 1,452,365 628,743 43% EXPENDITURES TOTAL $ 18,076,914 $ 7,693,797 43% $ 18,153,370 $ 8,899,057 49% Page 470 of 510 Staff Report to City Council Page 6
FY 2025-26 Mid-Year Report
March 19, 2026
Sewer operating expenses total $1.1 million, or 22% of budget, compared to 16% at the same point last year. A $1,359,876 payment made in December 2025 to Palo Alto Regional Water Treatment for FY 2024-25 services was reversed and accrued to FY 2024-25. Invoices for the Palo Alto Treatment Plant and Regional Water Treatment are typically received in October.
Sewer capital expenses total $422,722, or 47% of budget.
Overall, the Sewer Fund is projected to meet its revenue target and remain within the adopted expenditure budget.
Sewer capital projects typically span approximately 18 months. Pre-design, design, and contract award phases occur in the first fiscal year, with construction beginning early in the following fiscal year. During the design phase, project scope is refined based on the budget authorized by the City Council.
CAPITAL IMPROVEMENT PLAN
The 2025-26 Budget includes a one-year capital appropriation and the Five-Year Capital Improvement Plan. Capital project appropriations are authorized for the life of each project and do not require re-appropriation at the end of the fiscal year. A status update on all capital improvement projects is available on Attachment 3.
BUDGET AMENDMENTS
Through reviewing the financial status, staff is recommending the following budget amendments:
Operating Adjustments
Expenditure Adjustments: Increase of $761,000
The following expenditure adjustments are proposed:
• Community Development: $498,000 increase for MEP permit fee refunds. This amount reflects refunds associated with permits for which the Town has received refund requests (96 permits totaling approximately $802,000), less the $304,000 previously received from CSG and
SEWER FUNDS
(Fund 048 and 051)
2024-25
Amended
Budget
2024-25
Actual YTD
through
12/31/2024
% Received/
Spent
2025-26
Amended
Budget
2025-26
Actual YTD
through
12/31/2025
% Received/
Spent
REVENUES:
USE OF MONEY & PROPERTY - 156,122 0% 166,116 160,208 96% MISCELLANEOUS - 2,043 0% - - 0%
SEWER CONNECTION FEES 125,660 104,767 83% 129,430 60,971 47% SEWER ASSESSMENT CHARGES 3,715,880 - 0% 4,105,898 - 0%
REVENUES TOTAL $ 3,841,540 $ 262,933 7% $ 4,401,444 $ 221,179 5% EXPENDITURES:
PERSONNEL 309,808 122,474 40% 283,190 130,827 46%
CONTRACT/PROFESSIONAL
SERVICES 3,166,621 173,119 5% 3,461,500 332,529 10%
OPERATIONS 18,600 5,620 30% 18,794 5,429 29%
ALLOCATIONS OUT 320,073 155,695 49% 469,578 234,799 50% CAPITAL EXPENSES 900,000 290,081 32% 900,000 422,722 47% EXPENDITURES TOTAL $ 4,715,102 $ 746,989 16% $ 5,133,062 $ 1,126,306 22% Page 471 of 510 Staff Report to City Council Page 7
FY 2025-26 Mid-Year Report
March 19, 2026
recorded as a liability for these refunds. These refunds relate to fees collected in prior fiscal years and represent a one-time expenditure. An additional $371,000 in potential exposure remains for permits for which refund requests have not yet been received, depending on applicant response.
• City Manager’s Office: $63,000 increase for Redwood Public Law due to higher service utilization and contract cost increases.
• City Manager’s Office: $200,000 increase for litigation attorney for Builder’s Remedy case.
The net operating impact to the General Fund is ($761,000).
This one-time deficit is manageable within current fund balance projections and does not affect the Town’s ongoing fiscal stability.
Capital Improvement Program (CIP) Adjustments
Revenue Adjustments: Increase of $335,736
• Local Road Safety Plan: $180,000 in SS4A grant funding from USDOT. • Vehicle & Equipment Replacement: $155,736 in grant funding from Silicon Valley Clean Energy.
Expenditure Adjustments: Net Increase of $135,000
• Local Road Safety Plan: Increase project budget by $25,000 to meet the required 20 percent local match.
• Town Facilities Energy Efficiency: Decrease by $210,000 to defund and delete the project. • New Project – Town Hall and Council Chambers HVAC: Add $220,000, funded from the Facilities Replacement Reserve.
• Housing Element: Increase $100,000 for additional consultant services.
The net impact to Capital Funds is a positive $200,736, driven primarily by grant revenue recognition.
ENVIRONMENTAL REVIEW:
This action does not qualify as a “Project” as defined in California Government Code Section 15378(b) of the Guidelines for California Environmental Quality Act. 2025-26 CITY COUNCIL WORK PLAN:
The report is for financial transparency and was not specified as one of the Council’s Work Plan of 2025-26.
FISCAL IMPACT:
The proposed mid-year adjustments result in:
• Total Revenue Increase (All Funds): $335,736
• Total Expenditure Increase (All Funds): $896,000
• Net Impact (All Funds): ($560,264)
The Town remains in a stable fiscal position following these adjustments. The net impact is primarily driven by one-time MEP permit fee refunds.
Staff Report to City Council Page 8
FY 2025-26 Mid-Year Report
March 19, 2026
ATTACHMENTS:
1. Resolution to Approve the Mid-Year Budget Amendment.
2. 2025-26 Mid-Year Financial Updates
3. 2025-26 Mid-Year Updates on Capital Projects Through December 31, 2025
ITEM 8A Attachment 1
REVISED AND DISTRIBUTED 03.18.2026
RESOLUTION ____-26 1 | P a g e
RESOLUTION ______
RESOLUTION AMENDING THE 2025-26 OPERATING AND CAPITAL IMPROVEMENT
PROGRAM BUDGET
WHEREAS, the City Council of the Town of Los Altos Hills adopted the 2025-26 Operating and Capital Improvement Program Budget on June 20, 2025; and
WHEREAS, the City Council approved midyear budget adjustments for revenues totaling $335,736 and expenditures of $896,000;
WHEREAS, as detailed in the accompanying Staff Report and the 2025-26 mid-year financial update, a budget adjustment is necessary to accomplish the Town’s day-to-day operations and capital projects; and
WHEREAS, the total impacts on Town funds are as follows:
Request Fund Revenue Expense
Add funds for Redwood Public Law due to
higher usage and contract increases
General Fund 63,000
Add funds for litigation attorney for Builder’s
Remedy case
General Fund 200,000
MEP Permit Refunds General Fund 498,000
Recognize $180k in SS4A grant funding from
USDOT and increase CIP/GF from $20k to
$45k for local matching funds required
CIP/General
Fund
180,000 25,000
Defund and delete this project to be replaced
with Town Hall and Council Chambers HVAC
CIP/General
Fund
(210,000)
Add new CIP project for Town Hall and
Council Chambers HVAC Improvements
funded from Facilities Replacement Reserve
Facilities
Replacement
Reserve
220,000
Recognize grant funding from Silicon Valley
Clean Energy
Vehicle &
Equipment
Replacement
155,736
Add funding for Housing Element due to
additional consultant costs
CIP/General
Fund
100,000
NOW THEREFORE, the City Council of the Town of Los Altos Hills does hereby resolve to amend the 2025-26 Operating and Capital Improvement Program Budget.
The above and foregoing Resolution was passed and adopted by the City Council of the Town of Los Altos Hills at a regular meeting held on the 19th day of March 2026 by the following vote:
See next page.
RESOLUTION ____-26 2 | P a g e
AYES:
NOES:
ABSTAIN:
ABSENT:
BY:
ATTEST: Rajiv Bhateja Mayor
Arika Birdsong-Miller, City Clerk
FY 2025-26 MID-YEAR FINANCIAL UPDATE
7/1/2025 - 12/31/2025
FIC MEETING
FEBRUARY 24, 2026
ITEM 8A Attachment 2
REVISED AND DISTRIBUTED 03.18.2026
FY 2024-25 GENERAL FUND YEAR-END SUMMARY
• Unassigned fund balance increased by $1.9M from $2.5M to $4.4M • $0.7M from revenues exceeding expenditures, driven by higher property tax and investment income
• $0.8M from ARPA fund transfer to General Fund (one-time) • $0.4M from Council-approved reduction in reserve commitments (one-time) 2 2024–25 Adopted Budget 2024-25 Actual Year-End
Beginning Unassigned Fund Balance $2.6 million $2.5 million Revenues Over (Under) Expenditures $(0.3) million $2.0 million Net Transfers $(1.9) million $(0.5) million
Reallocation to Unassigned - $0.4 million
Net Change $(2.2) million $1.9 million
Ending Unassigned Fund Balance $0.5 million $4.4 million
FY 2024-25 GENERAL FUND REVENUES
3 2024-25
Adopted Budget
2024-25
Actual Year-End Variance ($) Variance (%)
GENERAL FUND REVENUES:
PROPERTY TAX 8,914,040 8,945,715 31,675 0.4%
TAXES OTHER THAN PROPERTY 610,750 705,338 94,588 15.5%
FRANCHISE FEES 589,000 695,019 106,019 18.0%
LICENSE & PERMITS 1,647,896 1,179,792 (468,104) -28.4%
USE OF MONEY AND PROPERTY 1,127,000 1,520,657 393,657 34.9% INTERGOVERNMENTAL 36,000 147,376 111,376 309.4%
CHARGES FOR SERVICES 1,036,800 1,349,706 312,906 30.2%
MISCELLANEOUS 18,000 6,559 (11,441) -63.6%
ALLOCATIONS IN 3,711,885 3,189,727 (522,158) -14.1%
REVENUES TOTAL $ 17,691,371 $ 17,739,889 $ 48,518 0.3% Page 478 of 510 FY 2024-25 GENERAL FUND YEAR-END SUMMARY
• Revenues: $0.05M over budget
• Property tax +$0.4M (+4.9%) — property transfers, CPI adjustments, VLF in-lieu • Investment earnings +$0.35M (+35.8%) — strong cash balances and current rate environment
• Permits & licenses below budget — lower permit volume • Charges for Services — legal, engineering, geologist, and site development charge-backs came in higher than projected, as well as higher Community Services revenue • Intergovernmental — Town received one-time grant revenue of $49,029 in December 2024
• Expenditures: $2.4M under budget
• Savings from staffing vacancies, contract timing
• Transfers $1.3 million below budget due to $800K transfer in from ARPA and $500K lower transfer out due to lower CIP expenditures
4
FY 2024-25 GENERAL FUND DEPARTMENT
SPENDING
• Administration – $501,298 below budget (-13.4%): Below budget due to vacancies in Finance, unspent City Manager's contingency, and lower contract services and operating costs
• Public Safety – $406,269 below budget (-11.0%): Below budget due to reduced spending in other contract services including sheriff overtime and ALPRs • Community Development – $801,049 below budget (-15.3%): Significantly below budget due to vacancies in building, lower permit-driven operating costs, and contract timing
• Public Works – $445,891 below budget (-12.6%): Below budget due to reduced spending in engineering, consulting, and billable contract services • Community Services – $190,634 below budget (-10.4%): Below budget due to savings in personnel costs, contract services, and operations 5
FY 2024-25 GENERAL FUND EXPENDITURES
6 2024-25
Adopted Budget
2024-25
Actual Year-End Variance ($) Variance (%)
GENERAL FUND EXPENDITURES:
Administration 3,753,648 3,252,350 (501,298) -13.4%
Public Safety 3,695,061 3,288,792 (406,269) -11.0%
Community Development 5,243,641 4,442,592 (801,049) -15.3% Public Works 3,550,836 3,104,945 (445,891) -12.6%
Community Services 1,833,728 1,643,094 (190,634) -10.4% EXPENDITURES TOTAL $ 18,076,914 $ 15,731,773 $ (2,345,141) -13.0% Page 481 of 510 FY 2025-26 MID-YEAR BUDGET VS
ACTUAL (ALL FUNDS)
7
2024-25
Amended
Budget as of
12/31/2024
2024-25
Actual
through
12/31/2024
2024-25
%
Received/Spent
2025-26
Amended
Budget as of
12/31/2025
2025-26
Actual through
12/31/2025
2025-26
%
Received/Spent
GENERAL FUND
Revenues 17,691,370 6,706,582 38% 18,481,207 6,993,850 38% Expenditures 18,076,914 7,681,593 42% 18,153,369 8,899,057 49%
INTERNAL SERVICE FUND
Revenues 1,371,729 387,699 28% 1,426,106 713,053 50%
Expenditures 1,265,929 412,816 33% 1,426,106 585,248 41%
SPECIAL REVENUE FUNDS
Revenues 115,000 119,663 104% 130,974 149,816 114%
Expenditures 38,976 2,585 7% - (282) 0%
CAPITAL FUNDS
Revenues 867,080 1,663,372 192% 1,256,550 944,582 75%
Expenditures 4,384,226 4,029,829 92% 3,249,310 2,178,358 67%
SEWER FUNDS
Revenues 3,955,291 262,933 7% 4,401,444 221,179 5%
Operating Expenses 3,815,102 389,608 10% 4,226,441 1,954,753 46% Capital Expenses 900,000 357,382 40% 906,620 531,429 59% Page 483 of 510 FY 2025-26 MID-YEAR BUDGET VS ACTUAL
(GENERAL FUND)
9
FY 2025-26 GENERAL FUND MID-YEAR SUMMARY
• Revenues: 38% received year-to-date
• Property Taxes: 32% received, consistent with seasonal timing (received April, December, and June)
• Use of Money: 64% received. Interest earnings 82% received, outperforming mid-year benchmark
• Permits & Licenses: 31% received, below mid-year pacing • Expenditures: 49% spent year-to-date
• Personnel: 48% spent, tracking near mid-year benchmark. Retirement UAL paid upfront • Contract/Professional Services: 47% spent; within expected range • Operations: 63% spent; primarily driven by annual insurance premium paid upfront Excluding insurance, operations tracking at 51%
• Transfers: transfers to Capital Projects Fund to be processed at year-end 10
GENERAL FUND
11 2024-25
Amended Budget
2024-25
Actual YTD
through
12/31/2024 % Received
2025-26
Amended Budget
2025-26
Actual YTD
through
12/31/2025 % Received
GENERAL FUND REVENUES:
PROPERTY TAX 8,914,040 2,903,580 33% 9,483,540 3,014,776 32% TAXES OTHER THAN PROPERTY 610,750 242,751 40% 610,750 348,067 57% FRANCHISE FEES 589,000 140,626 24% 705,500 142,507 20%
LICENSE & PERMITS 1,647,892 554,039 34% 2,012,774 683,814 34% USE OF MONEY AND PROPERTY 1,127,000 645,395 57% 955,186 613,966 64% INTERGOVERNMENTAL 36,000 53,240 148% 46,001 3,870 8%
CHARGES FOR SERVICES 1,036,800 396,388 38% 1,241,925 539,267 43% MISCELLANEOUS 18,000 10,061 56% 18,000 11,327 63%
ALLOCATIONS IN 3,711,885 1,782,122 48% 3,407,530 1,703,765 50% REVENUES TOTAL $ 17,691,367 $ 6,728,202 38% $ 18,481,206 $ 7,061,358 38% GENERAL FUND EXPENDITURES:
PERSONNEL 4,900,238 2,279,139 47% 5,518,513 2,660,724 48% CONTRACT/PROFESSIONAL SERVICES 6,959,209 2,570,763 37% 6,366,063 3,008,704 47% OPERATIONS 1,683,498 884,955 53% 1,662,737 1,046,745 63% OTHER 234,000 - 0% 242,000 582 0%
ALLOCATIONS OUT 4,299,969 1,958,940 46% 4,364,056 2,182,301 50% EXPENDITURES TOTAL $ 18,076,914 $ 7,693,797 43% $ 18,153,369 $ 8,899,057 49% Page 486 of 510
GENERAL FUND TRANSFERS
12 2024-25
Amended Budget
2024-25
Actual YTD
through
12/31/2024
%
Received/
Spent
2025-26
Amended Budget
2025-26
Actual YTD
through
12/31/2025
%
Received/
Spent
TRANSFER IN/OUT
TRANSFER IN 38,976 - 0% - - 0%
TRANSFER OUT (1,897,362) - 0% (1,513,070) - 0%
TRANSFERS TOTAL $ (1,858,386) $ - 0% $ (1,513,070) $ - 0% Page 487 of 510
DEPARTMENT EXPENSE COMPARISON
13 2024-25
Amended Budget
2024-25
Actual YTD
through
12/31/2024 % Spent
2025-26
Amended Budget
2025-26
Actual YTD
through
12/31/2025 % Spent
GENERAL FUND EXPENDITURES:
Non-Departmental - 44,654 - 6,620 - 0%
Administration 3,753,648 1,823,464 49% 4,126,102 2,370,389 57% Public Safety 3,695,061 1,677,429 45% 4,073,524 1,980,708 49% Community Development 5,243,641 1,937,981 37% 4,919,808 2,292,714 47% Public Works 3,550,836 1,527,885 43% 3,574,951 1,626,503 45% Community Services 1,833,728 682,384 37% 1,452,365 628,743 43% EXPENDITURES TOTAL $ 18,076,914 $ 7,693,797 43% $ 18,153,370 $ 8,899,057 49% Page 488 of 510 FY 2025-26 DEPARTMENT SPENDING
• Administration – 57% spent: Insurance premiums front-loaded, legal services above pace. Excluding insurance, Administration tracking at 52% • Public Safety – 49% spent: Sheriff contract 49% spent • Community Development – 47% spent: Personnel totals at 42% spent, contract personnel and plan check services below mid-year pace
• Public Works – 45% spent: Personnel totals at 45% spent, engineering contract services below 50%
• Community Services – 43% spent: Seasonal timing; tracking appropriately.
Community Services budget decreased by $559,796 (62%) from the FY 2024-25 budget due to lower personnel costs following a staffing restructure from two positions to one.
14
INTERNAL SERVICE FUND
15 2024-25
Amended
Budget
2024-25
Actual YTD
through
12/31/2024
%
Received
/Spent
2025-26
Amended
Budget
2025-26
Actual YTD
through
12/31/2025
%
Received
/Spent
INTERNAL SERVICE FUND REVENUES:
ALLOCATIONS IN 1,371,729 387,699 28% 1,426,106 713,053 50% REVENUES TOTAL $ 1,371,729 $ 387,699 28% $ 1,426,106 $ 713,053 50% INTERNAL SERVICE FUND EXPENDITURES:
PERSONNEL 231,941 116,764 50% 378,604 237,054 63%
CONTRACT/PROFESSIONAL SERVICES 517,000 153,300 30% 419,000 221,286 53% OPERATIONS 383,850 126,135 33% 495,364 110,382 22%
OTHER 133,138 16,617 12% 133,138 16,526 12%
EXPENDITURES TOTAL $ 1,265,929 $ 412,816 33% $ 1,426,106 $ 585,248 41% Page 490 of 510
SEWER FUNDS
SEWER FUNDS
(Fund 048 and 051)
2024-25
Amended
Budget
2024-25
Actual YTD
through
12/31/2024
% Received/
Spent
2025-26
Amended
Budget
2025-26
Actual YTD
through
12/31/2025
% Received/
Spent
REVENUES:
USE OF MONEY & PROPERTY - 156,122 0% 166,116 160,208 96% MISCELLANEOUS - 2,043 0% - - 0%
SEWER CONNECTION FEES 125,660 104,767 83% 129,430 60,971 47% SEWER ASSESSMENT CHARGES 3,715,880 - 0% 4,105,898 - 0%
REVENUES TOTAL $ 3,841,540 $ 262,933 7% $ 4,401,444 $ 221,179 5% EXPENDITURES:
PERSONNEL 309,808 122,474 40% 283,190 130,827 46%
CONTRACT/PROFESSIONAL
SERVICES 3,166,621 173,119 5% 3,461,500 332,529 10%
OPERATIONS 18,600 5,620 30% 18,794 5,429 29%
ALLOCATIONS OUT 320,073 155,695 49% 469,578 234,799 50% CAPITAL EXPENSES 900,000 290,081 32% 900,000 422,722 47% EXPENDITURES TOTAL $ 4,715,102 $ 746,989 16% $ 5,133,062 $ 1,126,306 22% Page 491 of 510 FY 2025-26 MID-YEAR FUND BALANCE
Audited Unaudited
Fund No Fund Title
Fund Balance
@ 7/1/2025 Revenue Expenditure Transfers In/(Out)
Fund Balance
@ 12/31/2025
GENERAL FUND
11 General Fund
Pension Trust (Restricted) 1,341,873 - - 400,000 1,741,873 3204 Disaster Contingency Reserve 1,250,000 - - 1,250,000 3203 Pension Contribution Reserve 1,535,439 - - (400,000) 1,135,439 3206 Facilities Replacement Reserve 3,017,081 - - 3,017,081 3207 Equipment Replacement Reserve 409,000 - - 409,000
3205 Capital Projects Reserve 3,407,739 - - 3,407,739
3210 General Fund Stabilization Reserve 3,113,623 - - 3,113,623 11 Unassigned Fund Balance 4,362,389 6,993,850 (8,899,057) 2,457,182 Subtotal $ 18,437,144 $ 6,993,850 $ (8,899,057) $ 16,531,937 Internal Service Fund
61 General Service Fund 941,863 713,053 (585,248) 1,069,668 Subtotal $ 941,863 $ 713,053 $ (585,248) $ 1,069,668
Special Revenue Funds
16 Parks & Rec in-Lieu 463,490 10,780 - 474,270
19 American Rescue Plan Act (ARPA) - - - -
21 COPS Fund - 139,037 282 139,319
71 Special Donation 34,473 - - 34,473
Subtotal $ 497,963 $ 149,816 $ 282 $ 648,062
Capital Funds
41 General CIP 281,957 465,177 (1,629,462) (882,328)
42 Pathways CIP 867,320 76,612 (26,787) 917,146
43 Westwind Barn CIP 259,706 33,563 (170,403) 122,867
45 Drainage CIP 396,842 38,736 (336,306) 99,271
46 Street CIP (31,002) 330,494 (15,400) 284,092
Subtotal $ 1,774,823 $ 944,582 $ (2,178,358) $ 541,048
Sewer Funds
48 Sewer CIP ** (531,429) (531,429)
51 Sewer Ops - Exclu Depr.** 5,077,181 221,179 (1,954,753) 3,343,607 Subtotal $ 5,077,181 $ 221,179 $ (2,486,182) $ 2,812,178 Total Town-Wide $ 26,728,974 $ 9,022,480 $ (14,148,561) $ - $ 21,602,893 Year to Date Actual Thru 12/31/2025
FY 2025-26 PROPOSED MID-YEAR
ADJUSTMENTS
18
FY 2025-26 PROPOSED MID-YEAR ADJUSTMENTS –
OPERATING
Department Fund Revenue Expense Request
CMO General Fund $63,000 Add funds for Redwood Public Law due to higher usage and contract increases
CMO General Fund $200,000 Add funds for litigation attorney for Builder’s Remedy case
CDD General Fund $498,000
Add funds for MEP permit fee refunds. This amount
reflects refunds associated with permits that have
been returned to the Town (96 permits totaling
approximately $802,000), less the $304,000
previously received from CSG and recorded as a
liability for these refunds
Total $– $761,000
FY 2025-26 PROPOSED MID-YEAR ADJUSTMENTS –
CIP
CIP Project Funding
Source
Revenue Expense Request
Local Road Safety Plan CIP/General
Fund $180,000 $25,000
Recognize $180k in SS4A grant funding from
USDOT and increase CIP/GF from $20k to $45k
for 20% local matching funds required
Town Facilities Energy
Efficiency
CIP/General
Fund $(210,000) Defund and delete this project to be replaced with Town Hall and Council Chambers HVAC. (NEW) Town Hall and
Council Chambers
HVAC
Facilities
Replacement
Reserve
$220,000
Add new CIP project for Town Hall and Council
Chambers HVAC Improvements funded from
Facilities Replacement Reserve
Vehicle & Equipment
Replacement
Vehicle &
Equipment
Replacement
$155,736 Recognize grant funding from Silicon Valley
Clean Energy
Housing Element CIP/General
Fund $100,000 Add funding for Housing Element due to additional consultant costs Total $335,736 $135,000
FY 2025-26 PROPOSED MID-YEAR ADJUSTMENTS –
SUMMARY
Fund Revenues Revenue
Change
Revised
Revenues Expenditures Expenditure Change
Revised
Expenditures
Net
Operating
Impact
General Fund 18,481,207 – 18,481,207 18,153,369 761,000 18,914,369 (761,000) Internal Service
Fund 1,426,106 – 1,426,106 1,426,106 – 1,426,106 –
Special Revenue
Funds 130,974 – 130,974 – – – –
Capital Funds 1,256,550 335,736 1,592,286 3,249,310 135,000 3,384,310 200,736 Sewer Funds* 4,401,444 – 4,401,444 5,133,061 – 5,133,061 – Total $25,696,281 $335,736 $26,032,017 $27,961,846 $896,000 $28,857,846 $(560,264) 21
FY 2025-26 MID-YEAR SUMMARY
• Revenues
• 38% received
• Interest earnings outperforming
• Property tax timing seasonal
• Expenditures
• 49% spent
• Insurance & UAL paid upfront
• Departments pacing 43–57%
• Proposed Adjustments
• General Fund net operating impact: ($761,000)
• Adjustments reflect one-time MEP permit fee refunds and operational adjustments 22
Questions?
Thank You!
Town of Los Altos Hills
Mid-Year Capital Project Update (Through 12/31/2025)
Project # Project Name
Fund
Source Project Status
Carryover
Budget
FY 2025-26 CIP
Budget
FY 2025-26
Total Budget
FY 2025-26 Through
12/31/2025
Expenditures
Project Budget
Remaining
GENERAL CAPITAL PROJECTS:
419300 Broadband 041 Fiber Broadband Agreement with LAHCF approved by Council in October 2024. For the Fremont Road segment, LAHCF started the field work in September 2025.
Underground fiber has been installed and is waiting for PG&E power connection to the new cabinet. For the Stonebrook/Prospect/La Loma segment, LAHCF has completed installing underground conduits for fiber. Awaiting fiber to be pulled in early 2026.
726,357 - 726,357 403,006 323,351
TR4169-26 Byrne Preserve Restoration 041 Project ongoing. Grassroots Ecology contract extended to June 30, 2027. (422) 101,310 100,888 42,556 58,333 410209-26 Cable System 041 No residents have submitted cost-sharing applications this year. - 50,000 50,000 50,000 410230 Corp Yard Locker Room 041 Phase 1 of the project to construct a new restroom/locker room on the first floor and install new mini-split heat pumps was accepted by Council as completed on December 9, 2025. Phase 2 to construct a full locker room on the second floor deferred to a future year, pending needs and budget.
284,061 - 284,061 195,577 88,484
041-Other 656,522 - 656,522 628,592 27,930
041 295,329 - 295,329 64,598 230,731
410220 Housing Element-CEQA 041 - Other 041 HE was completed in Q3 2023 . The implementation programs and the CEQA work - - are both underway. Implementation Program completion dates will vary over the next two years. The CEQA process is projected to be completed by Q1 2026. 231,214 53,000 284,214 242,800 41,415
410225 Purissima Park Improvement
Program (Field & Facility
Improvements)
041 Fence for Baseball Field 3 repaired/replaced in June 2023, and Field 2 fence repaired/replaced in January 2025. Field 1 fence planned for June 2026. 56,301 30,000 86,301 - 86,301
410226 Street Sign Replacement 041 On-going. Street name signs all replaced in 2025. Staff working on replacing regulator traffic signs (STOP, SPEED LIMIT, etc.).
9,136 25,000 34,136 5,528 28,609
410227-26 Technology Miscellaneous 041 The Town's 3-year I.T. Strategic Plan informs the usage for this CIP. The budget for FY24-25 went over by $26,355, which has been absorbed by the FY25-26 budget.
The Town is ontrack to stay within budget for the remainding time for FY25-26 (26,355) 80,000 53,645 16,957 36,688
410233 Traffic Signal Improvement 041 Electrical power shutoff for El Monte/Foothill College traffic signal installed in 2025. 30,821 20,000 50,821 4,860 45,961 410228 Water Well Purissima Park 041 Staff to propose deferring this project to a future year. 35,013 200,000 235,013 - 235,013 410234 Corp Yard Improvements 041 One conex box installed for storage and replaced five (5) garage doors with motorized openers. Remaining work items for the project include removing the existing propane tank, purchasing one more conex box for storage, motorizing the second vehicular gate, sealing the yard asphalt, and adding EV charges. 91,513 - 91,513 38,000 53,513
410235 Security Camera Upgrade 041 Thanks to the generous donation from Town resident George Lee, this CIP has come in significantly under budget. All the cameras will be donated to the Town. The only cost will be for installation, which for Town Hall is estimated not to exceed $12,000.
Town staff will continue with the installation for the Corp Yard and Barn next. 100,000 100,000 200,000 - 200,000
410236 Town Facility-Energy Efficiency 041 For FY25/26 mid-year budget adjustment, staff plan to propose replacing this project with the Town Hall and Council Chamber HVAC Improvements project. 60,000 150,000 210,000 - 210,000
410237 Parks & Recreation Center
Renovation
041 In 2025, Town Hall CDD plan room cleared, copy room relocated to the plan room, and two (2) new work stations installed in the copy room. This work was part of the Parks and Recreation Center Renovation Project to modify Town Hall to accommodate staffing. In January 2026, staff to seek further Council direction on the scope and design of the Parks and Recreation building renovation. - 200,000 200,000 15,984 184,016
Subtotal 2,549,490 1,009,310 3,558,800 1,658,455 1,900,345 410216 El Monte Fire Station
Undergrounding Project
410224 Heritage House Renovation Construction in progress. The project team encountered delays, and construction is now anticipated to be completed by February 2026.
Council accepted the Rule 20A joint trench work by Phoenix Electric on December 9, 2025. Undergrounding of all utilities for the project is anticipated by mid-January 2026.
ITEM 8A Attachment 3
Project # Project Name
Fund
Source Project Status
Carryover
Budget
FY 2025-26 CIP
Budget
FY 2025-26
Total Budget
FY 2025-26 Through
12/31/2024
Expenditures
Project Budget
Remaining
PATHWAY CAPITAL PROJECTS:
042 - 50,000 50,000 8,112 41,888
TDA 45,136 - 45,136 - 45,136
427914 Magdalena Avenue Pathway 042 Staff developing the design for the Magdalena Avenue Pathway Project. The construction is anticipated to start by summer or fall 2026. - 315,000 315,000 16,928 298,072
427915 Maple Leaf-Middle Fork Lane
Pathway
042 New - 100,000 100,000 - 100,000
042 372,260 100,000 472,260 - 472,260
Subtotal 417,396 565,000 982,396 25,040 957,356
WESTWIND BARN CAPITAL PROJECTS:
043 324,274 50,000 374,274 170,403 203,871
041 - - -
Subtotal 324,274 50,000 374,274 170,403 203,871
STORM DRAINAGE CAPITAL PROJECTS:
045 365,467 - 365,467 341,156 24,311
041 514,500 514,500 - 514,500
457202 Storm Drain Improvement
045 In progress. 77,757 - 77,757 - 77,757
Subtotal 957,725 - 957,725 341,156 616,569
STREET CAPITAL PROJECTS:
046 - 1,375,000 1,375,000 15,400 1,359,600
041 86,791 - 86,791 - 86,791
467228 Measure B Bike/Pedestrian
Education & Encourgement
Program
046 On-going. 48,845 10,000 58,845 5,750 53,095
046 - 60,000 60,000 - 60,000
041 - 20,000 20,000 - 20,000
467230 Road Safety and Traffic Calming 046 Traffic engineer hired for traffic safety improvements at seven (7) curved roadway segments. Traffic engineer recommened signage and striping improvements to be implemented in 2026.
- 60,000 60,000 - 60,000
Subtotal 135,636 1,525,000 1,660,636 21,150 1,639,486
SEWER CAPITAL PROJECTS:
487918-25-26 Annual Sewer Rehabilitation
Program
048 As of December 2025, the 2025 Sewer Rehabilitation Project is almost completed.
The design for the 2026 Sewer Rehabilitation Project began in late 2025 and is expected to be completed by spring 2026.
- 900,000 900,000 502,222 397,778
Subtotal - 900,000 900,000 502,222 397,778
Totals 4,384,520 4,049,310 8,433,830 2,718,426 5,715,404 In FY25/26 and FY26/27, staff planning to build pathways along Altamont Road between Moody and Corbetta and fill in pathway gaps along Fremont Road between Arastradero and St. Francis Road.
467229 Local Road Safety Plan
In December 2025, staff received news from the U.S. Department of Transportation that the Town has been approved for $180,000 in Safe Street and Roads for All (SS4A) grant to prepare a transportation safety plan. SS4A grants have a 20% local match requirement. The grant funds will be added to the project during the mid-year budget adjustment. A grant agreement will need to be executed before starting work.
427902 Summerhill Pathway Project Working with the County for the encroachment permit. The latest comment from the County is to make the path ADA-compliant, unless technically infeasible.
Furthermore, a pathway easement is still needed from one private property.
Construction is now anticipated for summer 2027.
427913-25-26 Misc Pathway
467226-25-26 Annual Road Rehabilitation Program The plans and specifications for the FY25/26 Pavement Rehabilitation project to be finalized by January 2026 for Council authorization to advertise for formal bid.
Construction is anticipated to start in spring 2026 and be completed by summer. 467209 Matadero Creek Erosion Offsite mitigation work at Byrne Preserve completed. Construction for the creek restoration to take place in 2025.
437307-26 Westwind Community Barn
Improvement
Lower area fence and footing to be repaired in 2025.
Overview of Potential
“Green Sheets” Initiative
Measure
Steve Mattas, City Attorney | March 19, 2026
Background
3/19/2026 2
What are the “Green Sheets”?
• Arguments for incorporation
• Blueprint for type of community being sought, such as:
o Sun, air, quiet community, and space and right to keep animals o Roads suitable for residential traffic
o At least one acre of land and space between homes
o No highspeed roads, industries and commerce, or dense subdivisions
Either the public or the City Council may place an initiative measure on the ballot:
3/19/26 3
How to Bring an Initiative Measure
Initiative by the Public Initiative by the Council
Starts with a petition to the City Council and requires signatures from 10% registered voters in LAH
Council may do by formal action of the Council on its
own volition; no signatures or petition needed
Council must place petition on the ballot or the
proposed initiative measure as presented.
Council may directly place on ballot through
resolution or ordinance
No CEQA analysis required. Must comply with CEQA
Cities have the “police power” to adopt land use and zoning regulations, but with limitations:
• Must have “substantial relation” to public health, safety, and welfare • Cannot be arbitrary or discriminatory
• Must be consistent with state and federal law
• Examples: Housing Element Law, Housing Accountability Act, Density Bonus Law, ADU law, SB 330, SB 9, SB 35, SB 79
• Zoning regulations must be consistent with General Plan including the Housing Element
3/19/26 4
Legal Considerations
Additional limitations on Initiative Measures
• Must be sufficiently certain and not vague
• Must be workable to implement
• Individuals reviewing the text won’t have to guess its meaning • Cannot direct the Council to perform an action
• Must provide specific laws to be enacted
• Not permitted to only declare policies, or direct Council to take actions based on “concepts”
3/19/26 5
Legal Considerations
3/19/26 6
Citizen Initiated Measure Timeline Council Initiated Measure Timeline Date Action Description Date Action Description
April 1, 2026 Proponents of the initiative file notice of intention with the City Clerk.
April 16, 2026 Council meeting agenda item to discuss
contents of proposed ballot measure.
April 8, 2026* City Attorney prepares a ballot title and summary for the initiative; City Clerk
returns the same to proponents.
May 21, 2026 Council consideration of draft ballot measure language incorporating prior direction from
City Council.
April 13, 2026 Proponents must publish or post (or both) the notice of intention, ballot title, and
summary.
April 17, 2026
through
July 9, 2026
Time for CEQA compliance, if necessary, for
proposed initiative measure (i.e., potential
CEQA exemption or negative declaration).
April 14, 2026* Proponents must file with City Clerk a
copy of the notice, ballot title, and
summary as published with affidavit made
by a representative of the newspaper
where the notice was published.
May 22, 2026
through
July 9, 2026
Time for review of draft initiative measure by
Commissions and Committees if directed by
City Council (this is not a legal required
action).
3/19/26 7
Citizen Initiated Measure Timeline Council Initiated Measure Timeline Date Action Description Date Action Description
April 15, 2026
through
May 29, 2026*
Proponents circulate the petition among
registered voters for signatures.
July 16, 2026 Last regular City Council meeting prior to initiative measure submission date.
May 29, 2026* Proponents file all parts of the petition with the City Clerk. City Clerk conducts
prima facie review of petition and accepts
filing if petition is sufficient.
August 6, 2026 Last day that City Council may act to place a Council sponsored initiative measure on the
November 3, 2026 ballot.
June 1, 2026
through
July 16, 2026*
City Clerk works with County elections
office to determine if there are sufficient
number of valid signatures on the petition.
November 3,
2026*
Initiative will be on the ballot at the
November 3, 2026 general election.
July 16, 2026
(Next regular
meeting of the
Council)
If the petition is found sufficient, City Clerk
shall certify results of the examination to
the City Council at its next regular
meeting. The next regular Council
meeting prior to August 6, 2026, would be
July 16, 2026.
3/19/26 8
Citizen Initiated Measure Timeline Council Initiated Measure Timeline Date Action Description Date Action Description
July 16, 2026 Council adopts the measure as proposed or submits the initiative, without alteration, to
the voters at a special or general election.
[Council may instead request a “9212 report”
that discusses the initiative’s impact on a range
of municipal matters, which shall be presented
to Council within 30 days of Council’s request.
Council has 10 days after receiving the report
to submit the initiative to voters.] If Council
requests such a report, it would have to act to
either adopt the initiative measure as
proposed or place it on the ballot no later than
August 6, 2026.
November 3,
2026*
Initiative will be on the ballot at the November
3, 2026 general election.
3/19/2026 9
Questions?
Redwood Public Law, LLP
Direction:
300 Frank Ogawa Plaza, Unit 430
Oakland, California 94612
Contact:
(510) 877-5800
[email protected]