Los Gatos City Council
April 22, 2025

IMPORTANT NOTICE
This is a hybrid meeting that will be held in person at the Emergency Operations Center, Police Operations Building, 15900 Los Gatos Blvd, and virtually through Zoom Webinar (log-in information provided below). Members of the public may provide public comments for agenda items in person or virtually through Zoom Webinar by following the instructions listed below.

The live stream of the meeting may be viewed on television and/or online at www.LosGatosCA.gov/TownYouTube.

This meeting will be teleconferenced pursuant to Government Code Section 54953(b)(3).

Council Member Rob Rennie will be participating via teleconference from a location at Via Fillungo, 143 - 55100 LUCCA, Italy; and Council Member Ristow will be participating via teleconference from a location at 150 E. Schiller Street, Elmhurst, IL, 60126. The teleconference locations shall be accessible to the public and the agenda will be posted at the teleconference location 24 hours before the meeting.

HOW TO PARTICIPATE
The public is welcome to provide oral comments in real-time during the meeting in three ways:
 Zoom Webinar (Online): Join from a PC, Mac, iPad, iPhone or Android device. Please click this URL to join: https://losgatoscagov.zoom.us/j/83911327574?pwd=zz1uCbFXUpRacoTBe04CT8S5cNnmIC.1 Passcode: 472234 You can also type in 839 1132 7574 in the “Join a Meeting” page on the Zoom website at zoom.us and use passcode 472234.
o When the Mayor announces the item for which you wish to speak, click the “raise hand” feature in Zoom. If you are participating by phone on the Zoom app, press *9 on your telephone keypad to raise your hand.
 Telephone: Please dial (877) 336-1839 for US Toll-free or (636) 651-0008 for US Toll. (Conference code: 1052180)
o If you are participating by calling in, press #2 on your telephone keypad to raise your hand.
 In-Person: Please complete a “speaker’s card” located on the back of the chamber benches and return it to the Town Clerk before the meeting or when the Mayor announces the item for which you wish to speak.

NOTES: (1) Comments will be limited to three (3) minutes or less at the Mayor’s discretion. (2) If you are unable to participate in real-time, you may email [email protected] with the subject line “Public Comment Item #__ ” (insert the item number relevant to your comment). (3) Deadlines to submit written comments are:
11:00 a.m. the business day before the Council meeting for inclusion in an addendum. 11:00 a.m. on the day of the Council meeting for inclusion in a desk item.

TOWN OF LOS GATOS
SPECIAL MEETING OF THE TOWN COUNCIL: STUDY SESSION AGENDA APRIL 22, 2025

POLICE OPERATIONS BUILDING
15900 LOS GATOS BLVD
7:00 PM
Matthew Hudes, Mayor
Rob Moore, Vice Mayor
Mary Badame, Council Member
Rob Rennie, Council Member
Maria Ristow, Council Member

CALL MEETING TO ORDER

ROLL CALL
APPROVE REMOTE PARTICIPATION (This item is listed on the agenda in the event there is an emergency circumstance requiring a Council Member to participate remotely under AB 2449 (Government Code 54953)).

VERBAL COMMUNICATIONS (Members of the public are welcome to address the Council only on matters listed on the agenda. Each speaker is limited to three minutes or such time as authorized by the Mayor.)
OTHER BUSINESS (Up to three minutes may be allotted to each speaker on any of the following items.)

1. Discussion and Consideration of Direction for the 2025-26 Budget Including Budget Balancing Approaches.

2. Receive the Proposed Fiscal Year 2025-26 through 2029-30 Capital Improvement Program Budget and Provide Direction

3. Consider Proposed Changes to the Community Grant Program and Provide Direction ADJOURNMENT (Council policy is to adjourn no later than midnight unless a majority of Council votes for an extension of time).

ADA NOTICE In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the Clerk’s Office at (408) 354-6834.

Notification at least two (2) business days prior to the meeting date will enable the Town to make reasonable arrangements to ensure accessibility to this meeting [28 CFR §35.102-35.104].

NOTICE REGARDING SUPPLEMENTAL MATERIALS Materials related to an item on this agenda submitted to the Town Council after initial distribution of the agenda packets are available for public inspection in the Clerk’s Office at Town Hall, 110 E. Main Street, Los Gatos and on the Town’s website at www.losgatosca.gov. Town Council agendas and related materials can be viewed online at https://losgatos-ca.municodemeetings.com/.

PREPARED BY: Chris Constantin
Town Manager
Reviewed by: Town Manager, Assistant Town Manager, Town Attorney, and Finance Director 110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832 www.losgatosca.gov

TOWN OF LOS GATOS

COUNCIL AGENDA REPORT
MEETING DATE: 04/22/2025
ITEM NO: 1
DATE: April 22, 2025
TO: Mayor and Town Council
FROM: Chris Constantin, Town Manager
SUBJECT: Discussion and Consideration of Direction for the 2025-26 Budget Including Budget Balancing Approaches
RECOMMENDATION:

Staff recommends the Town Council
 Discuss and provide input to staff in developing the budget, and  Provide direction to the Finance Commission in their review of the 2025-26 budget.

STRATEGIC PRIORITIES:

The item relates to all six core goals and all strategic priorities.

FISCAL IMPACT:

None. The discussion is intended to set direction for budget development and does not in itself result in a fiscal impact.

BACKGROUND:

Each year, between January and June, the Town undertakes an extensive process to prepare the fiscal year budget, effective July 1. This comprehensive budget development effort includes evaluating and determining several key components
• Budget Guidelines and Timeline: Establish initial guidance and expectations for departments along with a structured calendar of budget development and approval activities.
• Revenue Projections: Forecast anticipated revenues utilizing historical data trends, economic indicators, and consultations with external revenue consultants. • Personnel Costs: Project salary, wage adjustments, benefits, and pension obligations for current and proposed staffing levels.

ITEM NO. 1.

PAGE 2 OF 15
SUBJECT: Pre-Budget Discussion and Direction
DATE: April 22, 2025
• Setting Strategic Priorities: Identify and reaffirm strategic priorities, providing foundational guidance to shape budget formulation and resource allocation. • Operating and Capital Expenditures: Assess and prioritize operational necessities and capital improvement projects, balancing immediate needs and long-term investments. • Budget Balancing and Deficit Reduction: Develop strategies to align expenditures with available resources, actively addressing any structural budget deficits through targeted reductions or revenue enhancements.
• Public Input: Engage the community through transparent outreach efforts to gather and incorporate public feedback into the budget development process. • Budget Approval: Finalize and present the recommended budget for Town Council consideration and adoption.

In February 2025, the Town Council set high-level strategic priorities for the period of 2025- 2027. This included prioritizing emergency preparedness, particularly with regard to wildfire risks, ensuring prudent financial management, and preserving the unique small-town charm of the community.

Also in February 2025, the Finance Commission reviewed the Town’s initial Five-Year Financial Forecast, discussing projected financial conditions and emerging fiscal challenges.

Subsequently, in April 2025, the Finance Commission provided input into the development of a Request for Proposal (RFP) aimed at conducting an external Five-Year Forecast and a comprehensive Fiscal Impact Analysis. These efforts are designed to enhance the Town’s strategic approach to understanding current financial condition, addressing ongoing structural budget deficits, and projecting the revenue and expenditure needs from future development.

For the upcoming 2025-26 fiscal year, the Town faces a projected operational deficit of approximately $3.7 million. To effectively address this challenge, Town staff seeks specific direction from the Town Council regarding:
 Perspective on expenditure reduction measures outlined in progressively impactful tiers,
 Exploration and adoption of potential new or adjusted revenue-generating initiatives,  Identification of preferred strategies for achieving a balanced budget that aligns with established strategic priorities and community expectations.

Council’s guidance on these key decisions will significantly inform the preparation of the final 2025-26 budget, ensuring a sustainable financial path forward.

DISCUSSION:

The purpose of this special meeting is to provide directions to staff on the approach and considerations for preparing a balanced budget. In two other agenda items presented today, staff also are looking to present a new tiered framework for capital improvement programs and presenting options in how the Town proceeds with community organization funding.

ITEM NO. 1.

PAGE 3 OF 15
SUBJECT: Pre-Budget Discussion and Direction
DATE: April 22, 2025

Approach and Considerations to Balancing the Budget

As is the case with other communities, the Town budgets revenue and expenditures conservatively. For the capital improvement program, the capital budget appropriates funding for all projects in the fiscal year that may be undertaken regardless of staff capacity consideration.

Personnel Vacancy Factor of 4.6%

In 2024-25, the Town introduced a vacancy factor of 4.6% as part of its approach to balance the budget recognizing vacancies and personnel changes during the year resulted in avoided personnel expenditures.

The vacancy factor approach allowed the Town to capture these avoided expenditures up front in the year instead of the end. However, the approach also increased the risk the Town could still fill all its positions without restriction or see a different change in personnel expenditure (i.e. impacts of increases in total compensation) and if it comes to pass, the Town will experience the actual deficit it was intending to avoid.

The Government Finance Officers Association (GFOA) best practice in effective budgeting of salary and wages encourages every government to consider forecasting procedures that would result in more accurate expenditure projections, especially as they relate to personnel. However, the best practice is focused solely on determining more precise expenditure projections.

In a 2020 article published by the GFOA called “Balancing the Budget in Bad Times”, the GFOA recommends governments institute good control systems to stay on track with financial plans and forecasts. Specifically around position control, the article recommends the government maintain head count within limits and not fill vacancies unless it is affordable. Other areas speak to monitoring the budget to actual expenditures, purchasing controls, capital project controls, and evaluating impact of performance versus the cost of that performance.

ITEM NO. 1.

PAGE 4 OF 15
SUBJECT: Pre-Budget Discussion and Direction
DATE: April 22, 2025
Moving forward for 2025-26

The Town’s 2025-2027 top strategic priority includes proper financial management to result in a structurally balanced forecast over the future years. To this end, I am recommending the following approaches for the 2025-26 budget.

 Year 1 – Balancing Reserve Fund Use with Operational Reductions – to ensure the Town does not overly reduce operations only to find its conservative projections and reductions lead to significant surpluses, this approach allows the Town to leverage some of its reserve balances to give time for other measures to facilitate closing the gap.
o Council Direction – determine to what extent the Town budget will use reserves to cover the deficit and what level of reductions and revenue enhancements should be considered in 2025-26.
 Year 1 – Capital Improvement Planning – as will be discussed in the Capital Improvement Program budget discussion, move to a three tier program that only appropriates funding for those projects that have staff capacity to perform while leaving remaining funding unallocated.
o Council Direction – to be given during discussion of the next agenda item.
 Additional Controls on Expenditure Controls – implement more top-level controls to monitor budget performance and balance operations with cost containment. No formal action is needed, but internal measures are moving forward.
o Position Control – while no vacancy freeze is proposed currently, the Town Manager has implemented a robust evaluation process for filling vacant positions which balances operations, financial condition, strategic priorities, and service levels.
o Expenditure Control – additional controls are being considered to include vehicle replacement evaluation, budget control at a lower level in departments, and additional budget monitoring mechanisms.

Moving into the fiscal year, the Town will need to continue fiscal prudence and planning for how to address the structural nature of the deficit. This may include evaluating how resources are deployed across functions, determining what sustainable service levels are, engaging in more robust public input in what the public desires from the Town, evaluating how major cost drivers can be brought into alignment with available revenue, and identifying other strategies for bringing the Town back into balance. These efforts will be challenging in ways not experienced by the Town, but we are a strong, smart, and resilient community who are up to the task.

ITEM NO. 1.

PAGE 5 OF 15
SUBJECT: Pre-Budget Discussion and Direction
DATE: April 22, 2025
Town’s Five-Year Forecast
The Five-Year Financial Forecast (FY 2026-27 through FY 2030-31) serves as a key component of the Town’s annual budget development process, enabling an informed evaluation of the Town’s fiscal outlook to guide policy decisions and programmatic planning. This forecast follows the best practices recommended by the Government Finance Officers Association (GFOA) and incorporates assumptions and estimates based on the FY 2024-25 Mid-Year Review and updated projections from the FY 2025-26 Proposed Budget development (see Attachments 1 and 2).

The Forecast projects ongoing deficits beginning at approximately $3.7 million in FY 2025-26, driven primarily by salary increases (already negotiated through FY 2026-27 and assumed at 2% annually thereafter), pension obligations, and general cost escalation. To manage the immediate deficit, short-term strategies include expenditure controls and utilizing $3.7 million from the Unassigned Fund Balance. However, with revenues not keeping pace with rising costs, the Town must evaluate its long-term revenue capacity to sustain current service levels.

ITEM NO. 1.

PAGE 6 OF 15
SUBJECT: Pre-Budget Discussion and Direction
DATE: April 22, 2025

ITEM NO. 1.

PAGE 7 OF 15
SUBJECT: Pre-Budget Discussion and Direction
DATE: April 22, 2025
Operating Revenue Trends
The Town’s financial health significantly depends on four primary revenue sources—property tax, sales tax, business license tax, and transient occupancy tax (TOT)—which together account for 67.5% of the forecasted General Fund revenues. Revenue assumptions for the Forecast period reflect input from key economic consultants, including MuniServices (sales tax), HdL Coren and Cone (property tax), and local industry representatives (TOT) (see Attachment 1).

The forecast assumes all Measure G Sales Tax and Excess Education Revenue Augmentation Fund (ERAF) revenues are allocated fully to General Fund operations.

Operating Expenditure Trends
Operating expenditures are primarily influenced by cost escalation and new or enhanced service programs approved annually. Key cost drivers include inflation, negotiated labor agreements, healthcare, and mandated CalPERS pension contributions (detailed in Attachment 2).

Personnel costs constitute approximately 65.6% of the FY 2025-26 General Fund expenditures.

To manage rising labor costs, the Town has maintained lower staffing levels. Pension and Other Post-Employment Benefits (OPEB) obligations continue to escalate due to historical underperformance in CalPERS investments and changes in demographic and actuarial assumptions. Despite proactive measures such as closing Tier 1 pensions, adopting the Public Employees’ Pension Reform Act (PEPRA), and prefunding OPEB liabilities (now holding $28.1 million in assets), pension costs remain a major financial pressure.

General Fund Reserves are projected at $25.9 million by June 30, 2026, reflecting previous significant transfers to pension/OPEB obligations and Capital Improvement Programs (CIP).

Historical transfers ranged from $1.1 million (FY 2024-25) to $5.7 million (FY 2019-20). No CIP transfer is proposed in FY 2025-26. Significant pension-related transfers include the CalPERS side-fund payoff ($4.5 million, 2014) and additional discretionary payments totaling $10.5 million from FY 2019-20 to FY 2020-21. The FY 2025-26 Proposed Budget achieves balance through the utilization of $3.7 million of the Unassigned Fund Balance.

The following two charts show the historical breakdown of the General Fund reserve balances.

ITEM NO. 1.

PAGE 8 OF 15
SUBJECT: Pre-Budget Discussion and Direction
DATE: April 22, 2025
6/30/2016
Actual
6/30/2017
Actual
6/30/2018
Actual
6/30/2019
Actual
6/30/2020
Actual
6/30/2021
Actual
6/30/2022
Actual
6/30/2023
Actual
6/30/2024
Actual
6/30/2025
Estimated
6/30/2026
Proposed
Restricted for:

Pension $ - $ - $ - $ 5,015,316 $ 669,978 $ - $ 690,000 $ 1,400,163 $ 2,188,659 $ 2,878,659 $ 3,268,659 Property Held for Resale 44,338 344,338 - -
Commited to:

Budget Stabilization $ 6,621,808 $ 4,969,847 $ 5,037,243 $ 5,419,222 $ 5,427,603 $ 5,460,485 $ 5,991,566 $ 6,129,774 $ 6,736,781 $ 7,991,544 $ 7,991,544 Catastrophic 4,637,406 4,969,847 5,037,243 5,419,222 5,427,603 $ 5,460,485 $ 5,991,566 6,129,775 6,736,781 7,991,544 7,991,544 Pension/OPEB 300,000 3,388,913 2,878,913 4,232,500 4,532,500 300,000 300,000 300,000 300,000 1,000,000 1,000,000 Almond Grove 8,459,973 1,801,318 - - - - - - - -
Measure G District Sales Tax - Operating - - - - - - - 590,581 590,581 - - Assigned to:

Open Space $ 562,000 $ 562,000 $ 562,000 $ 562,000 $ 410,000 $ 410,000 $ 410,000 $ 410,000 $ 410,000 $ 410,000 $ 410,000 Sustainability 140,553 140,553 140,553 140,553 140,553 140,553 140,553 140,553 140,553 140,553 140,553 Strategy 2,600,000 2,600,000 129,090 - - - - - - - -
Capital / Special Projects 4,222,405 8,332,953 14,421,203 13,262,303 8,787,958 6,965,356 11,071,231 10,359,577 8,651,056 1,264,639 1,264,639 Authorized Carryforward 99,284 34,852 99,927 413,729 - - 33,145 37,698 85,861 85,861 85,861 Compensated Absences - 350,329 2,122,512 1,232,653 1,539,408 1,649,917 1,519,147 1,580,623 1,555,478 1,555,478 1,555,478 To Workers' Compensation - - - 1,232,654 - - - - - - -
Measure G District Sales Tax - Op/Cap - - - - 1,181,162 1,730,490 590,581 - - - - Stores & Veh. Maint. Residual - - - 1,040,375 - - - - - - - Market Fluctuations - - - - 1,218,732 438,333 - - 1,712,246 1,712,246 1,712,246 Surplus Property - - - - - 1,200,000 - - - - -
ERAF Risk Reserve - - - - - - - 689,608 1,430,054 - -
Council Priorities - Economic Recovery - - - - - - - 1,556,614 20,684 - - Other - - - - - 159,000 159,000 159,000 159,000 159,000 159,000 Un assigned Fund Balance 4,000,000 341,785
Total General Fund Reserve $ 27,643,429 $ 27,150,612 $ 30,428,684 $ 37,970,527 $ 29,335,497 $ 23,914,619 $ 26,896,789 $ 29,528,304 $ 31,062,072 $ 29,189,524 $ 25,921,309 General Fund Reserve

ITEM NO. 1.

PAGE 9 OF 15
SUBJECT: Pre-Budget Discussion and Direction
DATE: April 22, 2025
Expenditure and Deficit Reduction Options
The Town’s Executive Team came together to thoughtfully consider options to address the deficit. This exercise resulted in four groups of reduction considerations that will be referred to as tiers for the purposes of this report. Each tier progressively increases the types of reductions considered and the associated impacts, totaling to a potential savings of $5 million. None of the four tiers include the elimination of filled full-time positions and all core services will continue in some fashion, albeit some would experience a decreased level of service as described in more detail in each tier.

As the Council reviews the tiers, it would be helpful for the Council to provide feedback on anything they would be interested in potentially pursuing and anything they would prefer staff did not pursue further. Staff recommend implementing Tier 1 and potentially portions of Tier 2 if there are items the Council finds tenable, with the remainder of the deficit addressed with revenue solutions as described in the next section, or with reserves. The more expenditure reductions or revenue options that are implemented, the less the Town will need to rely on reserves. It is also important to note that the more expenditure reductions that are implemented now preserves the use of reserves for the future, allowing more flexibility and time to address the deficit.

Tier 1 (Estimated $500,000 savings):

In Tier 1, the team focused on efficiency and reprioritizing time and resources to align with core service delivery and strategic priorities. In this tier, the team was intentional in preserving staff hours and only reduced where part-time positions were either unfilled or currently filled by retired annuitants providing extra help. The reductions may mean that staff may not have funding available to address unusual or unexpected circumstances.

Of note, Tier 1 includes the removal of the $2,500 Commission Budgets, many of which were first added in May 2023, while the Youth Commission and Parks and Sustainability Commission had some funds prior. This would save approximately $17,500 annually as well as save staff time in clarifying the appropriate use of the funding. As the funding is primarily for supplies and materials to support commission activities, such as giveaway items at events, the Town plans to bulk purchase giveaway items for commission and staff to use at events and other activities as appropriate. This will save on costs as well as provide consistency. Staff will continue to support commissions in supplying printer materials and other needs within reason.

Tier 1 results in an estimated saving of $500,000 ($430,000 annually, $70,000 one-time). Some of these savings have already been proactively included in the Proposed FY 25-26 Budget. As a result, if Tier 1 is implemented, it would reduce the Proposed Budget expenditures by an estimated $300,000.

ITEM NO. 1.

PAGE 10 OF 15
SUBJECT: Pre-Budget Discussion and Direction
DATE: April 22, 2025
Tier 2 (Additional estimated $1M savings):

Tier 2 contemplates deeper reductions, yet without significantly impacting core service or reducing staff hours. Some strategic priority related funding begins to be impacted in this tier.
 Strategic Priority Impacts
o In Tier 2, funding related to the unhoused would be reduced by approximately $26,000, removing the portable restroom and reducing the amount of funding for the Hotel Program. It is important to note that the Hotel Program is still expected to have enough funding to operate appropriately given a typical winter. With increased inclement weather, the budget may be tight but would likely be offset by the reduced number of hotels participating due to redevelopment.
o Additionally, given the addition of the full-time Emergency Manager position, this tier reduces the number of part-time emergency coordinator hours, saving approximately $18,000. This would result in fewer hours for the Emergency Manager to spend on expanding the program and strategic action items, but would still allow some part-time hours to continue to support the work. This tier also includes defunding $500,000 of the $1,000,000 one-time emergency management funding Council allocated in January 2025.  Other Service Delivery Impacts
o Reduces in outside legal services of approximately $110,000, resulting in delays in Town Attorney response times, possibly by two to four weeks. o Removes power washing and decorative tree wrap lighting downtown, saving approximately $100,000.
o Turns off the fountains at Civic Center and Plaza Park, saving approximately $20,000.
o Removes doggie bags in parks as they often are taken by some members of the public in large quantities for personal use. This would save approximately $10,000.
o Reduces Library offerings including film, audiobook, and streaming media; e-resource databases and e-magazines; physical newspaper subscriptions; printed quarterly programs/brochures; and the number of media and book additions and replacements in the Library’s collection. These efforts would save approximately $84,000. o Reduces the amount the Town contributes toward utility payments on behalf of third parties.
o Involves further reductions in staff training and memberships that may cause staff to fall behind in the latest concerns and issues in their fields, potentially impacting service to the public over time.

Tier 2 results in an additional estimated savings of $1M ($0.5M annually, $0.5M one-time).

ITEM NO. 1.

PAGE 11 OF 15
SUBJECT: Pre-Budget Discussion and Direction
DATE: April 22, 2025
Tier 3 (Additional estimated $1.1M savings):

Tier 3 includes reductions with more significant impacts, including part-time staff hour reductions, vacant full-time positions, and noticeable service reductions.  Reorganizing Functions
o Reorganizes the process for Community Police Complaints from the Town Attorney’s Office to the Town Manager’s Office, saving approximately $60,000. This still allows oversight and vetting of the process by the Town Manager, but does not require the Town Attorney’s time, resulting in more Town Attorney time for activity currently being contracted out.  Strategic Priority Impacts
o Reimagines the Town’s transportation demand management functions to deliver services more cost effectively, such as through contracting services, saving approximately $200,000. This will potentially result in lower levels of service and a reduction in the Town’s relationships with funding partners like VTA and MTC, which may impact the Town’s ability to secure grant funding for significant transportation projects.
o Further reduces the number of part-time emergency coordinator hours, saving approximately an additional $18,000. This would result in fewer hours for the Emergency Manager to spend on expanding the program and strategic action items but would still allow limited part-time hours should an urgent or pressing need arise.
o Eliminates approximately $75,000 in funding, including vehicle costs, for volunteer programs such as the Volunteer in Policing Program, Police Explorer Program, Disaster Assistance Response Team (DART), Community Emergency Response Team (CERT), and the Community Police Academy. This has the potential to weaken emergency response readiness; however, some of this could be supplemented by leadership within the volunteer emergency-related volunteer groups. The reduction in Police volunteer programs would lower community participation in crime prevention and safety programs and reduce youth engagement with law enforcement. o Tier 3 includes the removal of the remaining funding for the Town’s unhoused initiatives, approximately $34,000. This would remove funding for the Hotel Program and the food pantry and shower programs. o Tier 3 contemplates reenvisioning contracts for the visitor center and destination marketing services to reduce costs and focus on the most beneficial deliverables for the businesses and community.  Other Part-Time Hour Impacts
o Beyond what has already been mentioned, this tier involves other parttime hour reductions, saving approximately $300,000. This would result in

ITEM NO. 1.

PAGE 12 OF 15
SUBJECT: Pre-Budget Discussion and Direction
DATE: April 22, 2025
fewer hours across several functions and potentially delayed service delivery.

As it pertains to the Library, this reduction will translate to the public as a reduction in program offerings, events, and auxiliary services.  Reductions in Service
o Further reduces the addition and replacement of Library books and media, saving approximately $27,000. Including the reductions in Tier 2, this reflects a 30% total reduction, and the public would likely experience increased wait times for popular materials and would see a decrease in the Library collection size over time.
o Reduces block pruning and tree management by 50%, saving approximately $100,000. At the current funding of $200,000, there is difficulty in keeping up with demand. This reduction would result in fewer trees being pruned and requests for service from the public remaining unmet, which could lead to frustration unless expectations are reset. o Tier 3 includes the reimagining of Town’s events, saving approximately $13,000. Most notably, a restructuring of the Town’s 4th of July event so that it would not fall on the actual holiday every year, which drastically increases costs. For example, it could occur on a Sunday in July to kick off the Music in the Park concert series, reducing the number of years in which the celebration falls on the actual holiday.
o Tier 3 contemplates that Leadership Los Gatos would be staggered to occur every other year, effectively resulting in a savings of approximately $5,000 a year (or $10,000 every other year).
o Tier 3 includes further reductions in staff training and memberships that may cause staff to fall behind in the latest concerns and issues in their fields, potentially impacting service to the public over time. In addition, it includes reductions or delays in technology replacements.

Tier 3 results in an additional estimated savings of 1.1M ($1M annually, $0.1M one-time).

Tier 4 (Estimated $2.4+ savings):

Subsequent tiers beyond Tier 3 would have more significant staffing impacts. If Tier 4 is selected, staff will return with more specifics regarding staffing implications after working with the bargaining units.

In addition, Tier 4 would begin to significantly impact core community services. For example, it would include contemplation of reduction of Library operating hours and Town public counter hours. As Tier 4 considers reductions in these core services, reducing Community Grant funding is included as well. Removing the Leadership Los Gatos program is also considered in this tier, saving approximately $20,000 annually. In addition, it contemplates removing approximately $130,000 in Police Department and Parks and Public Works overtime hours to support Town

ITEM NO. 1.

PAGE 13 OF 15
SUBJECT: Pre-Budget Discussion and Direction
DATE: April 22, 2025
hosted events, the Holiday Parade, and the Halloween road closures, impacting the types of events the Town can support. If this were to occur, funding for the Halloween and Holiday Parade road closures would also be removed, saving approximately $54,000. Other potential options include reducing the $50,000 in crossing guard funding, approximately $50,000 allocated for ALPR cameras, and the number of cable-broadcast Town Council or Planning Commission meetings.

Tier 4 results in an additional estimated savings of $2.4M annually.

Revenue Options
Cities typically seek revenue sources to fund essential services, often aiming for full-cost recovery. However, fee studies frequently reveal that actual service costs significantly exceed existing fees, making large increases difficult to implement due to public resistance. As a result, cities adopt strategies to soften the impact of these necessary increases. Common approaches include gradually phasing in fee increases over several years or intentionally setting fees below full-cost recovery levels to lessen opposition. While these measures may reduce immediate pushback, they inevitably result in lower overall revenue.

The same outcome occurs when cities hesitate to introduce new revenue programs, such as revenue recovery measures that did not previously exist. Though these gradual, partial, or new approaches initially appear politically manageable and mitigate short-term resistance, they can inadvertently shift fiscal pressures to future budgets.

Over time, the increased costs of providing programs and services plus the cumulative impact of consistently under-recovering costs or delaying necessary revenue increases creates structural deficits. These deficits progressively intensify fiscal pressures, eventually requiring more drastic actions in future budgets when available resources become insufficient to sustain existing services and operations.

Los Gatos faces similar challenges as other cities regarding revenue generation and cost recovery. Given the projected deficits and the need for potential expenditure reductions, exploring options to increase revenue becomes critical for balancing the Town’s ability to provide essential services. Revenue-generating options differ significantly based on implementation timelines. For instance, economic development initiatives designed to attract visitors and increase hotel occupancy could require upfront investment and years to yield substantial returns. In contrast, updating a fee schedule or renegotiating agreements may offer quicker financial benefits but face greater immediate opposition.

To facilitate consideration and decision-making, the following table categorizes revenuegenerating options into short-term (one year) and medium-term (two or more years) horizons, highlighting their potential revenue impact. This categorization clearly illustrates how each measure could help address the financial deficit, emphasizing the importance of balancing

ITEM NO. 1.

PAGE 14 OF 15
SUBJECT: Pre-Budget Discussion and Direction
DATE: April 22, 2025
immediate affordability concerns against the imperative of long-term financial sustainability.

Some of the short-term revenue measures are already factored into the proposed 2025-26 budget such as the recent police services agreement with Monte Sereno—while others illustrate potential avenues like revenue audits, subsidy reductions, and the introduction of entirely new revenue streams.

Short-term Medium-term Grand Total[1]
Revenue Audit $ 150,000 $ 150,000
Business License Compliance Audit $ 60,000 $ 60,000
Business License Delinquency Services $ 50,000 $ 50,000 Hotel Transient Occupancy Tax Audit $ 20,000 $ 20,000
Property Tax Recovery Services $ 20,000 $ 20,000
Reduce Subsidy $ 581,313 $ 225,000 $ 806,313
Adjusted Fee – Field Use Team 1 $ 59,973 $ 59,973
Adjusted Fee – Field Use Team 2 $ 13,145 $ 13,145
Adjusted Fee – Field Use Team 3 $ 1,890 $ 1,890
Application fee increase $ 50,000 $ 50,000
Enhanced Cost Recovery for DUI & Special Enforcement Operations $ 75,000 $ 75,000 Increase Fees for Services and Facility Rentals $ 100,000 $ 100,000 Increased and Added Event Fees $ 4,500 $ 4,500
New fee – Library meeting room rental $ 12,000 $ 12,000 Residential Alarm Registration & False Alarm Fee Implementation $ 150,000 $ 150,000 Subsidized rent for Vendor 1
Subsidized rent for Vendor 2 $ 50,000 $ 50,000
Updated Law Enforcement Services Contract for Monte Sereno $ 289,805 $ 289,805 New Revenue $ 859,000 $ 3,084,874 $ 3,943,874
Charge for License Agreements $ 5,000 $ 5,000
Charge for Parklets $ 100,000 $ 100,000
Contract Adjustment – Charging Stations Vendor 1 $ 28,000 $ 28,000 Contract Adjustment – Charging Stations Vendor 2 $ 22,000 $ 22,000 Contract HR Services for other entity $ 14,000 $ 14,000 Encroachment Fee from Garbage Haulers $ 688,000 $ 688,000 New Fee – Downtown Paid Parking (Option 3B) $ 1,984,874 $ 1,984,874 New Fee – Oak Meadow Park Parking $ 90,000 $ 90,000
Reduce Current Lessee Leased Premises and Rent to Another Entity $ 12,000 $ 12,000 Sales Tax or Parcel Tax $ 1,000,000 $ 1,000,000
Grand Total $ 1,590,313 $ 3,309,874 $ 4,900,187
[1] Note: Savings are estimates and the list is intended to provide examples for consideration. Some options are already included in the preliminary draft budget.

As the Town Council discusses what direction to provide staff, additional revenue is a bucket that can reduce the structural components of the deficit.

ITEM NO. 1.

PAGE 15 OF 15
SUBJECT: Pre-Budget Discussion and Direction
DATE: April 22, 2025
ALTERNATIVES:

Not Applicable. Agenda item is a discussion to provide directions to staff.

COORDINATION:

Deficit Reduction and revenue items were coordinated with all department heads, Town Manager, and Town Attorney.

ENVIRONMENTAL ASSESSMENT:

This action does not constitute a project as defined under the California Environmental Quality Act (CEQA), pursuant to CEQA Guidelines Section 15378(b), which states that a project does not include continuing administrative or maintenance activities, general policy and procedure making, or other governmental fiscal activities which do not involve a commitment to any specific project. The recommended action involves only discussion, informational updates, administrative direction, or preliminary policy review, without committing the City to a specific activity or physical change to the environment.

Attachments:

1. Five-Year Financial Revenue Assumptions

2. Five-Year Financial Expenditure Assumptions

ITEM NO. 1.
1 ATTACHMENT 1

FORECAST ASSUMPTIONS

REVENUE BASELINE AND PROJECTION FACTORS
Type of
Revenue Base
Line Estimate
FY 2025-26
Budget
FY 2026-27
Forecast
FY 2027-28
Forecast
FY 2028-29
Forecast
FY 2029-30
Forecast
FY 2030-31
Forecast
Property Tax
SCC Assessor
Office
February 2025
Report and
HdL Coren and
Cone April
2025
Forecast

5.29%
Net Taxable
Value Change

5.42%
Net Taxable
Value Change

4.89%
Net Taxable
Value Change

4.89%
Net Taxable
Value Change

4.89%
Net Taxable
Value Change

4.89%
Net Taxable
Value Change
VLF Backfill
HdL Coren and
Cone April
2025
Forecast

5.25%
Net Taxable
Value Change

5.41%
Net Taxable
Value Change

4.90%
Net Taxable
Value Change

4.90%
Net Taxable
Value Change

4.89%
Net Taxable
Value Change

4.89%
Net Taxable
Value Change
Other
Property Tax
SCC Assessor
Office
February 2025
Report

3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
ERAF
SCC Assessor
Office March
2025
Notification
$3,220,000
Including
30% to
Reserve
$3,220,000 $3,220,000 $3,220,000 $3,220,000 $3,220,000
Sales Tax
MuniServices
January
2025
Most Likely
Estimates
MuniServices
January
2025
Most Likely
Estimates
MuniServices
January
2025
Most Likely
Estimates
MuniServices
January
2025
Most Likely
Estimates
MuniServices
January
2025
Most Likely
Estimates
MuniServices
January
2025
Most Likely
Estimates
Sales Tax -
Measure G
MuniServices
January
2025
Most Likely
Estimates
MuniServices
January
2025
Most Likely
Estimates
MuniServices
January
2025
Most Likely
Estimates
MuniServices
January
2025
Most Likely
Estimates
MuniServices
January
2025
Most Likely
Estimates
MuniServices
January
2025
Most Likely
Estimates
Franchise Fee
Current
baseline set by
FY 2024-25
Current
baseline set
by FY 2024-25
3% 3% 3% 3% 3%

ITEM NO. 1.
2 ATTACHMENT 1
Type of
Revenue Base
Line Estimate
FY 2025-26
Budget
FY 2026-27
Forecast
FY 2027-28
Forecast
FY 2028-29
Forecast
FY 2029-30
Forecast
FY 2030-31
Forecast
Year-End
Estimates
Year-End
Estimates

FORECAST ASSUMPTIONS

REVENUE BASELINE AND PROJECTION FACTORS
Type of
Revenue Base
Line Estimates
FY 2025-26
Budget
FY 2026-27
Forecast
FY 2027-28
Forecast
FY 2028-29
Forecast
FY 2029-30
Forecast
FY 2030-31
Forecast
Transient
Occupancy Tax
Current baseline
set by FY 2024-
25 Year-End
Estimates
3% 3% 0% 0% 0% 0%
Business License
Tax
Current baseline
set by FY 2024-
25 Year-End
Estimates
2% 2% 2% 2% 2% 2%
License &
Permits
Current baseline
set by FY 2024-
25 Year-End
Estimates
3% 3% 3% 3% 3% 3%
Town Services
Current baseline
set by FY 2024-
25 Year-End
Estimates
3% 3% 0% 3% 3% 3%
Fine &
Forfeitures
Current baseline
set by FY 2024-
25 Year-End
Estimates
1% Varies Varies Varies Varies Varies

ITEM NO. 1.
3 ATTACHMENT 1
Type of
Revenue Base
Line Estimates
FY 2025-26
Budget
FY 2026-27
Forecast
FY 2027-28
Forecast
FY 2028-29
Forecast
FY 2029-30
Forecast
FY 2030-31
Forecast
Interest
Varies, based on
Portfolio
Weighted
Portfolio Yield

3.64%
Weighted
Portfolio Yield

3.56%
Weighted
Portfolio Yield

3.45%
Weighted
Portfolio Yield

3.36%
Weighted
Portfolio Yield

3.30%
Weighted
Portfolio Yield

3.30%
Other Sources
Current baseline
set by FY 2024-
25 Year-End
Estimates
Varies Varies Varies Varies Varies Varies

ITEM NO. 1.
1 ATTACHMENT 2

FORECAST ASSUMPTIONS

EXPENDITURE BASELINE AND PROJECTION FACTORS
Beginning in FY 2020-21, the Town is budgeting salaries at the actual salary plus a one-step increase. 68% of the workforce is already at top step or one step below top step. In the Five-Year Forecast, positions are forecasted at the actual rate of pay including salaries and benefits as of March 1, 2025 and rate is increasing in the actual anniversary date. The FY 2025-26 Budget and the FY 2026-27 – FY 30-31 Forecast includes 4.6% vacancy savings.

Type of
Expenditure
FY 2025-26
Budget
FY 2026-27
Forecast
FY 2027-28
Forecast
FY 2028-29
Forecast
FY 2029-30
Forecast
FY 2030-31
Forecast
Salaries (TEA,
Conf, Temp)* 3% 3% 2% 2% 2% 2%
Salaries (POA)* 5% 4% 2% 2% 2% 2%
Salaries
(AFSCME)*
4% 4% 2% 2% 2% 2%
Salaries
(Management)*
3% 3% 2% 2% 2% 2%
Benefit -
Medical** 7% 7% 7% 7% 7% 7%
Vacancy Savings 4.6% 4.6% 4.6% 4.6% 4.6% 4.6%
Operating
Expenditures*** Varies 3% 3% 3% 3% 3%
Grants & Awards 0% 0% 0% 0% 0% 0%
Utilities*** Varies 3% 3% 3% 3% 3%
Internal Service
Charges***
Based on
operating
cost and
scheduled
replacement
Based on
operating
cost and
scheduled
replacement
Based on
operating
cost and
scheduled
replacement
Based on
operating
cost and
scheduled
replacement
Based on
operating
cost and
scheduled
replacement
Based on
operating
cost and
scheduled
replacement
Debt Service Debt Service Schedules
*Salary increases are based on actual step increases and approved Memoranda of Understanding with the bargaining units
**Benefit increase estimates are provided by CalPERS/Public Employees’ Medical and Hospital Care Act (PEMHCA).
***Based on historical trends.

ITEM NO. 1.
2 ATTACHMENT 2

FORECAST ASSUMPTIONS
The Town’s required employer contribution rate estimates were developed using data provided by each plan’s most recent CalPERS actuarial valuation. The employer contribution rates reflect percentages of covered payroll. Forecasted rates for FY 2055-26 and subsequent years are based on the most recent CalPERS actuarial valuation Reports as adjusted by the impact related to the FY 2022-23 CalPERS 5.8% investment return and forecasted payroll.

Type of
Expenditure
FY 2025-26
Budget
FY 2026-27
Forecast
FY 2027-28
Forecast
FY 2028-29
Forecast
FY 2029-30
Forecast
FY 2030-31
Forecast
Safety
POA
109.09% 109.92% 112.95% 121.16% 121.75% 124.52%
Safety
Management
POA
112.09% 112.92% 115.95% 124.16% 124.75% 127.52%
Safety

POA - PEPRA

15.84% 14.96% 20.99% 21.74% 22.04% 25.76%
Miscellaneous
TEA/Confidential/
Management

30.02% 30.52% 30.82% 31.78% 31.92% 32.21%
Miscellaneous
TEA/Confidential/
Management
PEPRA
Separate PEPRA
rate for
Miscellaneous has
not been
established yet by
CalPERS.

30.62% 29.65% 31.01% 32.28% 33.81% 34.49%
*Safety Classic Rate reflects 3% decrease in employer's contribution rate to reflect 3% contribution as negotiated with the Town's POA during the collective bargaining process effective FY 2019-20.

ITEM NO. 1.

PREPARED BY: Nicolle Burnham
Parks and Public Works Director
Reviewed by: Town Manager, Assistant Town Manager, Town Attorney, and Finance Director 110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832 www.losgatosca.gov

TOWN OF LOS GATOS

COUNCIL AGENDA REPORT
MEETING DATE: 04/22/2025
ITEM NO: 2
DATE: April 17, 2025
TO: Mayor and Town Council
FROM: Chris Constantin, Town Manager
SUBJECT: Receive the Proposed Fiscal Year 2025-26 through 2029-30 Capital Improvement Program Budget and Provide Direction
RECOMMENDATION:

Staff recommends that the Town Council receive the proposed Capital Improvement Program (CIP) Budget and provide direction to the Finance Commission for their review of the proposed plan.

STRATEGIC PRIORITIES:

This item supports the Core Goals of:
 Good Governance and Fiscal Stability.

This item supports the Strategic Priority of:
 Ensure prudent financial management to result in structurally balanced five-year forecasts and fully funded five-year Capital Improvement Plan…Define and implement cohesive deferred capital improvement programs for Town facilities and lifecycle assets.

FISCAL IMPACT:

The proposed five-year CIP reflects $1.8 million in ongoing annual Gas Tax dedicated sources to help fund the proposed FY 2025-26 $6.7 million capital improvements. The balance of CIP funding of $4.9 million is funded by one–time appropriations from the General Fund Appropriated Reserve (GFAR), Utility Undergrounding Funds, Traffic Mitigation Funds, Grant Funds, and Storm Drain Funds.

ITEM NO. 2.

PAGE 2 OF 10
SUBJECT: Receive the Fiscal Year 2025-26 through 2029-30 Capital Improvement Program Budget and Provide Direction for Finance Commission Review DATE: April 17, 2025
The proposed CIP consists primarily of carry-forward projects from the prior year ($16.0 million) as part of the multi-year programming of $40.1 million. Approximately $36.8 million (91.8%) is allocated to the streets, sidewalks, and curbs category; $1.4 million (3.4%) is allocated to parks and trails projects; and $1.9 million (4.8%) is allocated to public facility projects.

BACKGROUND:

Introduction
Town staff develops a five-year CIP each year for review and adoption by Town Council each year. The CIP document defines projects that were closed in the prior fiscal year, proposes new projects as needed, and allocates funding across various projects and programs.

Town-owned assets with improvements funded through the CIP include 17 park and open space areas that total 223 acres, nine miles of trail, 113 miles of roadways (236 lane miles), 576,000 linear feet of sidewalks, 31 traffic signals, 2,100 streetlights, 12 public buildings totaling 139,373 square feet, and 23 surface parking lots (including lots in parks), and one underground parking structure. These major assets are supported by ancillary assets like restroom buildings (five total), storm drainage systems, retaining walls, and traffic signs.

In considering funding priorities for the CIP, staff follows the guidance provided by various Town documents, including: Council Strategic Priorities, General Plan, Bicycle and Pedestrian Master Plan, Pavement Management Program, Stormwater Master Plan, Facilities Condition Assessments, the ADA Transition Plan, and legislative mandates. Project ideas and needs are also identified from field observations by Town staff, input from residents, and ideas from Town Commissions.

Capital Projects are allocated by Programs and Project Types as noted in Table 1.

Table 1. List of CIP Programs and Project Types
Program Name Project Type
Streets Street Reconstruction and Resurfacing
Street Repairs, Maintenance and Safety
Street Improvements
Bridges
Parks and Trails Parks
Trails
Public Facilities Town Infrastructure
Equipment

ITEM NO. 2.

PAGE 3 OF 10
SUBJECT: Receive the Fiscal Year 2025-26 through 2029-30 Capital Improvement Program Budget and Provide Direction for Finance Commission Review DATE: April 17, 2025
In preparing the CIP, consideration is given to the amount of funding available and/or anticipated from a variety of various funding sources – Measure G, Construction Impact Fees, Gas Tax, Utility Undergrounding Fees, Refuse Vehicle Impact Fees, Measure B, Traffic Mitigation Fees, Storm Drainage Fees, Grant Funds and, when available, the General Fund Special/Capital Projects Reserve. The availability of funding from these sources varies from year to year. Many of these have specific dedicated uses and so must be applied to specific projects (e.g., roadway resurfacing or storm drainage improvements).

Projects to be Closed by End of FY 2024-25
The following 14 projects are slated to be completed or consolidated, and closed before the end of the 2024-25 fiscal year:
 Utility Undergrounding Improvements (813-0225)
 Traffic Signal Modernization (813-0227)
 Winchester Class IV Bikeway (813-0240)
 Overlook Road Tree Replacement (813-0244)
 Retaining Wall Repairs (815-9930)
 333 University Inlet Capacity Improvements (816-0424)  Parking Lot 4 Repair/Waterproofing (817-0708)
 TMO Roof Repairs (821-2121)
 Building Replacement at Corporation Yard (821-2302)
 Engineering Counter Modification (821-2310)
 ADA Upgrade for Public Restrooms - Adult Recreation Building (821-2601)  Charter Oaks Trail Improvement (832-4503)
 Trailhead Connector (832-4505)
 Town-Wide Document Imaging Project (841-6003)
The remaining funds in each project were sent to the respective funding source’s fund balance.

Changes to the CIP Funding and Document Format for FY 2025-26 through 2029-30 With this proposed CIP budget, significant changes to funding and project priorities are proposed. These changes are made in recognition of the large carryforward that has existed in prior fiscal years and the limited staffing resources available to deliver capital projects.

Regarding funding, the Measure G transfer to the General Fund Appropriated Reserve (GFAR) was eliminated in this project budget. All Measure G funds were retained in the General Fund to support General Fund operations.

ITEM NO. 2.

PAGE 4 OF 10
SUBJECT: Receive the Fiscal Year 2025-26 through 2029-30 Capital Improvement Program Budget and Provide Direction for Finance Commission Review DATE: April 17, 2025
As noted above, staff closed and consolidated projects where possible. Details of these projects are provided in the Introduction section of the CIP document. The remaining projects were then categorized as Tier 1 or Tier 2 (Attachment 1). Tier 1 projects are those that are fully funded, include funding with a grant deadline, are ready for construction or are legally required. These projects will be a staff priority for delivery in FY 2025-26. Tier 2 projects are other projects that have had CIP funding in prior years, but are either not fully funded, cannot be supported with current staffing, or both. By taking this action, this CIP presents a more realistic picture of project priorities and of projected capital expenses in the next fiscal year.

If staff resources allow a Tier 2 project to move forward, then Town Council action will be sought to release the required funding to continue the project. Other capital needs that have been identified but not funded are presented in Attachment 2 of this staff report and are included as an appendix to the CIP document. These are called Tier 3 projects, and no funding or staff have been allocated to these at this time.

Within the document, pages for project have been updated to reflect the Tier 1 or Tier 2 status and each project has been identified by its Core Goal of the Town Council.

DISCUSSION:

As in prior budgets, CIP projects represent either ongoing work that is funded annually, or onetime projects that achieve specific goals of the Town.

One-Time Capital Projects
The current capital plan includes 47 one-time projects, 26 of which are classified as Tier 1 for priority in FY 2025-26. While these one-time projects may span numerous years, the project is still considered one-time in that it has a specific starting and ending point. Table 2 is the Tier 1, one-time projects for this CIP. A complete list of Tier 1 and Tier 2 projects is in Attachment 1.

ITEM NO. 2.

PAGE 5 OF 10
SUBJECT: Receive the Fiscal Year 2025-26 through 2029-30 Capital Improvement Program Budget and Provide Direction for Finance Commission Review DATE: April 17, 2025
Table 2. One-Time Tier 1 Capital Improvement Projects Funded in the FY 2025-26 CIP Project
Number
Program Project Name Strategic Priority
811-0008 Street Safety &
Maintenance
Shannon Road Repair Public Safety / Quality
Public Infrastructure
811-0010 Street Safety &
Maintenance
Blossom Hill Road – Union to Camden Public Safety / Quality Public Infrastructure
812-0133 Street Safety &
Maintenance
VMT Mitigation Program Fiscal Stability
813-0218 Street Improvement Shannon Road Pedestrian and Bikeway Improvements
Quality Public
Infrastructure
813-0242 Street Improvement Parking Program Implementation Quality Public Infrastructure
816-0418 Street Improvement Vasona Oaks Drainage Failure Repair Public Safety 816-0421 Street Improvement Loma Street Drainage Quality Public Infrastructure
816-0423 Street Improvement 709 University Avenue Drainage System Replacement
Quality Public
Infrastructure
816-0425 Street Improvement Storm Drainage Mapping Good Governance 817-0705 Street Improvement Downtown Parking Lots Seal Coat & Restriping
Quality Public
Infrastructure
818-0803 Bridge Highway 17 Bicycle & Pedestrian Bridge - Design
Public Safety / Quality
Public Infrastructure
831-4007 Parks Oak Meadow Bandstand Area Improvements Quality Public Infrastructure
831-4611 Parks Sport Court Resurfacing Quality Public
Infrastructure
821-2009 Town Infrastructure Public Art Gateway Project Civic Engagement 821-2012 Town Infrastructure Emergency Preparedness Public Safety 821-2117 Town Infrastructure Civic Center HR Offices Quality Public Infrastructure
821-2120 Town Infrastructure Civic Center Plumbing Repair and HVAC Repairs
Quality Public
Infrastructure
821-2311 Town Infrastructure Fleet Service Outdoor Work Area (Design Phase)
Quality Public
Infrastructure
821-2404 Town Infrastructure POB Space Study Public Safety / Quality Public Infrastructure
821-2505 Town Infrastructure Battery Power Supply Library Community Character 841-6101 Equipment Enterprise Resource Planning (ERP) Upgrade Good Governance / Fiscal Stability
841-6103 Equipment EOC Communication Upgrade Public Safety 841-6104 Equipment IT Disaster Recovery Improvements Public Safety

ITEM NO. 2.

PAGE 6 OF 10
SUBJECT: Receive the Fiscal Year 2025-26 through 2029-30 Capital Improvement Program Budget and Provide Direction for Finance Commission Review DATE: April 17, 2025
Table 2. One-Time Tier 1 Capital Improvement Projects Funded in the FY 2025-26 CIP Project
Number
Program Project Name Strategic Priority
841-6105 Equipment IT Disaster Resiliency Project Public Safety 821-2312 Equipment Auto Gate Replacements – PPW and POB Public Safety 821-2313 Equipment EV Chargers at 41 Miles Avenue Community Character / Legal Requirement
Tier 2 Projects
As discussed above, certain projects presented in past CIP documents were moved to Tier 2 status in recognition of not having adequate staff resources to deliver the project, not having adequate funding, or both. In addition, certain new projects were added with Tier 2 status. The new projects fall into two categories: 1) work that will support the development of a cohesive deferred capital improvement plan for Town facilities and lifecycle assets (Fiscal Stability Strategic Priority); and 2) work required to meet a regulatory requirement or mitigate a risk associated with lack of regulatory compliance (e.g., Village Lane Trash Enclosures). The following new projects were added to the CIP as Tier 2 and detail sheets describing the proposed work are included in the document:
 Traffic / Travel Demand Model
 Village Lane Trash Enclosure
 Parks and Trails Master Plan
 Condition Assessment of Civic Center
In the CIP document funding for all Tier 2 projects is shown in Year 5 (FY 2029-30). Projects will be released as staff resources and funding permit. Staff has divided the Tier 2 projects into four “classes” to provide an indication of what order the work may be released (See Attachment 1).

In general, projects that pertain to public safety, fiscal stability, or that have regulatory or grant implications were identified in higher classes than those related to civic engagement or quality infrastructure.

Ongoing and Annually Funded Projects
Each of the ongoing projects noted in Table 3 support various identified strategic initiatives of the Town, such as quality public infrastructure, safety for all modes of travel (motorist, cyclist, and pedestrian), and playground safety. Staff is recommending that these project categories continue to be funded annually.

ITEM NO. 2.

PAGE 7 OF 10
SUBJECT: Receive the Fiscal Year 2025-26 through 2029-30 Capital Improvement Program Budget and Provide Direction for Finance Commission Review DATE: April 17, 2025
The only change to this list from prior years pertains to the Parks Playground Fibar Project, which funds the replacement of engineered safety surface material (which appears to look like wood chips when installed at playgrounds). In prior budgets this was funded with $20,000 every other year, but the work must be performed annually at a cost of approximately $19,000. With this proposed CIP budget staff recommends converting this to annual funding of $15,000 per year, leaving this project slightly underfunded. Staff recommends that in future years consideration be given to converting this expense to the Operating Budget and closing the associated capital project.

Table 3. Ongoing and Annually Funded Projects in the FY 2025-26 CIP Project
Number
Program Project Name FY2025-26
Tier Status
Strategic Priority
811-9901 Street
Reconstruction and
Resurfacing
Street Repair & Resurfacing 1 Public Safety / Quality
Public Infrastructure
811-9902 Street Safety &
Maintenance
Annual Street Restriping 1 Public Safety / Quality
Public Infrastructure
811-9904 Street Safety &
Maintenance
Unanticipated Repairs –
Annual
1 Quality Public
Infrastructure
812-0130 Street Safety &
Maintenance
Roadside Fire Fuel Reduction 1 Public Safety
812-0134 Street Safety &
Maintenance
Measure B Education &
Encouragement
1 Public Safety
813-9921 Street
Improvement
Curb, Gutter & Sidewalk
Maintenance
1 Public Safety
816-0414 Street
Improvement
Stormwater System –
Pollution Prevention
Compliance
1 Community Character
/ Good Governance
816-0420 Street
Improvement
Annual Storm Drain
Improvement Project
1 Quality Public
Infrastructure
831-4605 Parks Parks Playground Fibar
Project
1 Public Safety
832-4508 Trails Vegetation Management –
Town-wide
1 Public Safety
821-2013 Town
Infrastructure
Annual ADA Compliance
Work
1 Quality Public
Infrastructure
Note that with this proposed budget the Town Beautification Project, which funds the Forbes Mill Pedestrian Bridge Art project has been moved to Tier 2 status.

ITEM NO. 2.

PAGE 8 OF 10
SUBJECT: Receive the Fiscal Year 2025-26 through 2029-30 Capital Improvement Program Budget and Provide Direction for Finance Commission Review DATE: April 17, 2025
Project Specific Highlights
With this proposed CIP staff recommended the following changes to projects:
 Storm Drainage Mapping (816-0425). Past funding for this Tier 1 project was not sufficient to map all storm drainage assets in the Town. Additional funding was added from the Storm Drainage funds and will allow for completion of the project.  Shannon Road Repair (811-0008). Construction bidding of this Tier 1 project is scheduled for late April and staff plans to award the construction contract in June. Staff anticipates that construction bids may come in higher than the engineer’s estimate and proposed to reallocate all of the Retaining Wall Repair (815-9930) funds to this project. Additional required funding will be brought forward after construction bids are opened.  Roadside Fire Fuel Reduction (812-0130) and Vegetation Management – Townwide (832-4508). Both of these Tier 1 projects continue to have $100,000 per year allocated to support ongoing wildfire management.
 Sport Court Resurfacing (831-4611). This Tier 1 project has been redefined to fund resurfacing and restriping of the tennis and pickleball court at LaRinconada Court, and to add sound barrier protection at this court.
 Vasona Oaks Drainage Improvement (816-0418). This is a new Tier 1 project funded through the Storm Basin funds to correct the failure of a culvert under University Avenue and through Vasona Park.
 IT Disaster Resiliency (841-6105). This new Tier 1 project will support necessary and vital upgrades to provide system redundancy.
 Auto Gate Replacements POB and PPW (821-2312). The new Tier 1 project will provide funding to replace the automobile access gates at the Police Operations Building and the Parks and Town Corporation Yard at 41 Miles Avenue.  EV Chargers at 41 Miles Avenue (821-2313). This Tier 1 project was created in March 2025 when the Town accepted a grant from Silicon Valley Clean Energy. Installation of these chargers is required to meet the regulatory mandate for certain vehicles to be zero emission.

Deferred Capital Improvements and Lifecyle Costs
Consistent with the Town Council Strategic Priority of Fiscal Stability, staff has been working to develop “a cohesive, deferred capital improvement program for Town Facilities and lifecycle assets.” Table 4 is a summary table of known needs as it was presented to Town Council during a CIP study session on November 19, 2024.

Staff continues to build on this past work while simultaneously delivering on projects within the deferred list. For example, the Vasona Drainage project was included in the storm drainage plan

ITEM NO. 2.

PAGE 9 OF 10
SUBJECT: Receive the Fiscal Year 2025-26 through 2029-30 Capital Improvement Program Budget and Provide Direction for Finance Commission Review DATE: April 17, 2025
completed in 2019 and its cost is still reflected in Table 4; however, due to imminent failure of the system, the work will be completed in 2025.

Staff has also proposed certain projects that will help develop a more cohesive CIP. These include the Traffic / Travel Demand Model (813-0245), Parks and Trails Master Plan (841-4612) and a Condition Assessment of Civic Center (821-2123). Each of these will need to be completed to provide a holistic assessment of Town assets and complete robust lifecycle and capital improvement planning. These are proposed as Tier 2 projects.

Table 4. Summary of Current Known Capital and Maintenance Needs Items / Need Current Opinion of
Potential Costs (2024 $)
Town Owned Buildings – Maintenance $ 20,278,913
Town Owned Buildings – Capital Needs $ 1,490,000
Parks1 $ 28,189,000
Storm Drainage $ 23,126,500
Streets and Roads $ 166,037,000
IT Needs $ 310,000
TOTAL $239,431,413
Notes:

1. Cost does not include restoration plans for Ross Creek and Los Gatos Creek as recommended in General Plan 2040.

CONCLUSION:

Staff is pleased to present this CIP for consideration by the Town Council. The proposed plan seeks to balance the important and ever-changing needs of the Town with the limitations presented by funding and staffing levels.

COORDINATION:

This CIP has been coordinated with the Town Manager, Finance Director, and the Town Attorney.

ENVIRONMENTAL ASSESSMENT:

This action does not constitute a "project" under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15378(b)(5) because it involves an administrative activity of government that will not result in direct or indirect physical changes in the environment.

ITEM NO. 2.

PAGE 10 OF 10
SUBJECT: Receive the Fiscal Year 2025-26 through 2029-30 Capital Improvement Program Budget and Provide Direction for Finance Commission Review DATE: April 17, 2025
Attachments:

1. Tier 1 / Tier 2 Projects

2. Tier 3 Projects

ITEM NO. 2.

Project Number Program Project Name
FY2025/26
Tier Status Strategic Priority
Annual / One‐
Time
Tier 2 Priority
Class
811‐9901 Street Reconstruction and Resurfacing Street Repair & Resurfacing 1 Public Safety / Quality Public Infrastructure Annual811‐9902 Street Safety & Maintenance Annual Street Restriping 1 Public Safety / Quality Public Infrastructure Annual 811‐9904 Street Safety & Maintenance Unanticipated Repairs – Annual 1 Quality Public Infrastructure Annual 811‐0008 Street Safety & Maintenance Shannon Road Repair 1 Public Safety / Quality Public Infrastructure One‐Time 811‐0010 Street Safety & Maintenance Blossom Hill Road – Union to Camden 1 Public Safety / Quality Public Infrastructure One‐Time 812‐0130 Street Safety & Maintenance Roadside Fire Fuel Reduction 1 Public Safety Annual 812‐0133 Street Safety & Maintenance VMT Mitigation Program 1 Fiscal Stability One‐Time 812‐0134 Street Safety & Maintenance Measure B Education & Encouragement 1 Public Safety Annual 813‐9921 Street Improvement Curb, Gutter & Sidewalk Maintenance 1 Public Safety Annual813‐0218 Street Improvement Shannon Road Pedestrian and Bikeway Improvements 1 Quality Public Infrastructure One‐Time 813‐0242 Street Improvement Parking Program Implementation 1 Quality Public Infrastructure One‐Time816‐0414 Street Improvement Stormwater System – Pollution Prevention Compliance 1 Community Character / Good Governance Annual 816‐0418 Street Improvement Vasona Oaks Drainage Failure Repair 1 Public Safety One‐Time 816‐0420 Street Improvement Annual Storm Drain Improvement Project 1 Quality Public Infrastructure Annual 816‐0421 Street Improvement Loma Street Drainage 1 Quality Public Infrastructure One‐Time 816‐0423 Street Improvement 709 University Avenue Drainage System Replacement 1 Quality Public Infrastructure One‐Time 816‐0425 Street Improvement Storm Drainage Mapping 1 Good Governance One‐Time 817‐0705 Street Improvement Downtown Parking Lots Seal Coat & Restriping 1 Quality Public Infrastructure One‐Time 818‐0803 Bridge Highway 17 Bicycle & Pedestrian Bridge ‐ Design 1 Public Safety / Quality Public Infrastructure One‐Time 831‐4007 Parks Oak Meadow Bandstand Area Improvements 1 Quality Public Infrastructure One‐Time 831‐4605 Parks Parks Playground Fibar Project 1 Public Safety Annual 831‐4611 Parks Sport Court Resurfacing 1 Quality Public Infrastructure One‐Time 832‐4508 Trails Vegetation Management – Town‐wide 1 Public Safety Annual821‐2009 Town Infrastructure Public Art Gateway Project 1 Civic Engagement One‐Time 821‐2012 Town Infrastructure Emergency Preparedness 1 Public Safety One‐Time821‐2013 Town Infrastructure Annual ADA Compliance Work 1 Quality Public Infrastructure Annual821‐2117 Town Infrastructure Civic Center HR Offices 1 Quality Public Infrastructure One‐Time 821‐2120 Town Infrastructure Civic Center Plumbing Repair and HVAC Repairs 1 Quality Public Infrastructure One‐Time 821‐2311 Town Infrastructure Fleet Service Outdoor Work Area (Design Phase) 1 Quality Public Infrastructure One‐Time 821‐2404 Town Infrastructure POB Space Study 1 Public Safety / Quality Public Infrastructure One‐Time 821‐2505 Town Infrastructure Battery Power Supply Library 1 Community Character One‐Time 821‐2312 Town Infrastructure Auto Gate Replacements – PPW and POB 1 Public Safety One‐Time821‐2313 Town Infrastructure EV Chargers at 41 Miles Avenue 1 Community Character / Legal Requirement One‐Time 841‐6101 Equipment Enterprise Resource Planning (ERP) Upgrade 1 Good Governance / Fiscal Stability One‐Time 841‐6103 Equipment EOC Communication Upgrade 1 Public Safety One‐Time841‐6104 Equipment IT Disaster Recovery Improvements 1 Public Safety One‐Time 841‐6105 Equipment IT Disaster Resiliency Project 1 Public Safety One‐Time 813‐0245 Street Improvement Traffic / Travel Demand Model 2 Fiscal Stability / Quality Public Infrastructure One‐Time 1 813‐0246 Street Improvement Village Lane Trash Enclosure 2 Community Character / Good Governance One‐Time 1 841‐4612 Parks Parks and Trails Master Plan 2 Fiscal Stability / Quality Public Infrastructure One‐Time 1 832‐4510 Trails Lynn Ave Pedestrian Path Design 2 Civic Engagement / Public Safety One‐Time 1 821‐2123 Town Infrastructure Condition Assessment of Civic Center 2 Fiscal Stability / Quality Public Infrastructure One‐Time 1 821‐2504 Town Infrastructure Library Improvements 2 Civic Engagement One‐Time 1 Fiscal Year 25/26 Capital Improvement Projects
April 17, 2025

ITEM NO. 2.

Project Number Program Project Name
FY2025/26
Tier Status Strategic Priority
Annual / One‐
Time
Tier 2 Priority
Class
Fiscal Year 25/26 Capital Improvement Projects
812‐0131 Street Safety & Maintenance East Main Street Crosswalk Improvements 2 Quality Public Infrastructure One‐Time 2 812‐0135 Street Safety & Maintenance Town‐wide Speed Studies 2 Good Governance One‐Time 2 813‐0241 Street Improvement Kennedy Sidewalk & Bike Lanes – LGB to Englewood 2 Quality Public Infrastructure One‐Time 2 818‐0804 Bridge Timber Bridge Inspection 2 Quality Public Infrastructure One‐Time 2 831‐4404 Parks Creekside Turf Replacement 2 Quality Public Infrastructure One‐Time 2 832‐4504 Trails Open Space Trail Upgrades 2 Public Safety / Civic Engagement One‐Time 2 813‐0235 Street Improvement
Downtown Streetscape Revitalization / Economic Recovery Efforts (Montebello Bollards) 2 Civic Engagement One‐Time 3 816‐0422 Street Improvement Harwood/Belridge Drainage Study 2 Quality Public Infrastructure One‐Time 3 831‐4008 Parks Oak Meadow Park Plane Recoating 2 Quality Public Infrastructure One‐Time 3 831‐4610 Parks Pinehurst Community Garden 2 Civic Engagement One‐Time 3 821‐2002 Town Infrastructure Town Beautification 2 Civic Engagement Annual 3 821‐2122 Town Infrastructure Civic Center Monument Sign 2 Community Character One‐Time 3 813‐0237 Street Improvement State Route 17 Corridor Congestion Relief Project 2 Quality Public Infrastructure One‐Time 4 818‐0801 Bridge Quito Road ‐ Bridge Replacement 2 Quality Public Infrastructure One‐Time 4 831‐4202 Parks Town Plaza Turf Repairs 2 Community Character One‐Time 4 821‐2208 Town Infrastructure ARC Interim Community Center 2 Community Character One‐Time 4 April 17, 2025

ITEM NO. 2.

Location/Building Project/System Type Project Name FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 TOTALS Civic Center Parking Lots/Sidewalks Replace exposed aggregate walkway $ 110,000 $ 110,000 Civic Center Parking Lots/Sidewalks Pavement maintenance / restriping $ 16,000 $ 16,000 Civic Center Building Envelope Replace sealant between plaza deck and police $ 30,000 $ 30,000 Civic Center Building Envelope Annual sealant maintenance $ 4,000 $ 4,000 $ 4,000 $ 4,000 $ 4,000 $ 20,000 Civic Center Building Envelope Plaza deck and fountain waterproofing 1,800,000$ $ 1,800,000 Civic Center Roof Systems Annual maintenance $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ 12,500 Civic Center Mechanical Systems
Replace terminal units and valves, piping, and abate asbestos insulation 1,680,000$ $ 1,680,000
Civic Center Mechanical Systems Replace police dispatch AHU $ 60,000 $ 60,000 Civic Center Mechanical Systems Replace chiller and cooling tower $ ‐ Civic Center Mechanical Systems Replace Building controls $ 225,000 $ 225,000 Civic Center Mechanical Systems Replace unit 2 in Council Chamber IT room $ 15,000 $ 15,000 Civic Center Mechanical Systems Insulate boiler room piping $ 7,500 $ 7,500 Civic Center Electrical Systems Replace original electrical equipment $ 475,000 $ 475,000 Civic Center Plumbing Systems Replace sanitary sewer line in police dispatch $ 160,000 $ 160,000 Civic Center Fire/Life Safety Systems Replace fire sprinker heads $ 10,000 $ 10,000 Civic Center Interiors Replace carpet $ 180,000 $ 180,000 Civic Center Interiors Paint Interior Walls $ 24,000 $ 24,000 Civic Center Interiors Replace interior door closers $ 96,000 $ 96,000 Civic Center Conveyance Systems Overhaul staff elevator in NUMU $ 160,000 $ 160,000 Civic Center Accessibility Issues DAC Accessibility Compliance $ 109,871 $ 109,871 $ 109,871 $ 109,871 $ 109,871 $ 1,208,582Adult Recreation Center Parking Lots/Sidewalks Parking lot reconstruction / correct slope / correct entrance $ 550,000 $ 550,000 Adult Recreation Center Building Envelope Paint exterior $ 65,000 $ 65,000Adult Recreation Center Building Envelope Replace single pane windows $ 220,000 $ 220,000 Adult Recreation Center Roof Systems Roof replacement $ ‐ Adult Recreation Center Roof Systems Roof Maintenance $ 5,000 $ 5,000 $ 10,000 Adult Recreation Center Mechanical Systems Replace AHU's in mechanical room $ ‐ Adult Recreation Center Mechanical Systems Replace roof mounted air handler $ ‐ Adult Recreation Center Mechanical Systems Replace kitchen exhaust fan $ ‐ Adult Recreation Center Electrical Systems Overhaul electrical system $ 200,000 $ 200,000 Adult Recreation Center Fire/Life Safety Systems Replace fire sprinkler monitoring system $ 25,000 $ 25,000 Adult Recreation Center Accessibility Issues DAC Accessibility Compliance $ 39,337 $ 39,337 $ 39,337 $ 39,337 $ 39,337 $ 432,711 Library Parking Lot/Sidewalks Parking lot maintenance $ 8,500 $ 8,500 Library Parking Lot/Sidewalks Bioswale maintenance $ 10,000 $ 10,000 Library Roof Systems Roof maintenance $ 5,000 $ 5,000
Library Mechanical systems Replace rooftop Unit RTU‐1 $ ‐ Library Mechanical systems Replace EF‐1 $ ‐
Tier 3 ‐ Town of Los Gatos Facility Needs Projection
April 9, 2025Page 1
ATTACHMENT 2

ITEM NO. 2.

Location/Building Project/System Type Project Name FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 TOTALS Tier 3 ‐ Town of Los Gatos Facility Needs Projection
Library Mechanical systems Replace boiler B‐1 $ ‐
Library Mechanical systems Replace VRV heat pump system HP‐1 $ ‐ Library Mechanical systems Replace fan powered terminal units $ ‐ Library Electrical Systems Replace Lutron Lighting Controls $ 400,000 $ 400,000 Library Electrical Systems Replace "saucer‐style" LED lights $ 18,000 $ 18,000 Library Electrical Systems Test and Certify Main Electric Panel $ 50,000 $ 50,000 Library Electrical Systems Replace PV Inverters $ 40,000 $ 40,000Library Fire/Life Safety Systems Replace/Upgrade fire alarm system $ ‐ Library Interiors Replace floor coverings (carpet) $ 60,000 $ 80,000 $ 140,000 Library Interiors Replace interior door closers $ ‐Library Accessibility Issues DAC Accessibility Compliance $ 19,059 $ 19,059 $ 19,059 $ 19,059 $ 19,059 $ 209,650 Library Conveyance Systems Elevators $ ‐
Youth Recreation Center Parking Lot/Sidewalks Parking lot maintenance $ 6,500 $ 6,500 Youth Recreation Center Building Envelope Paint exterior $ 15,000 $ 15,000 Youth Recreation Center Building Envelope Replace single pane windows $ ‐ Youth Recreation Center Mechanical Systems Replace 5‐ton split system and furnace $ 24,000 $ 24,000 Youth Recreation Center Mechanical Systems Replace 4‐ton split system and furnace $ ‐ Youth Recreation Center Plumbing System Replace 40‐Gal, 40‐MBH domestic water heater $ ‐ Youth Recreation Center Electrical Systems Overhaul electrical system $ ‐ Youth Recreation Center Interiors Test vinyl tile for asbestos and replace $ ‐ Youth Recreation Center Interiors Paint interiors $ 12,000 $ 12,000 Youth Recreation Center Accessibility Issues DAC Accessibility Compliance $ 17,539 $ 17,539 $ 17,539 $ 17,539 $ 17,539 $ 192,926 Police Operations Building Parking Lots/Sidewalks Parking lot maintenance $ 12,000 $ 12,000 Police Operations Building Parking Lots/Sidewalks Replace/Maintain electric gates $ 50,000 $ 2,000 $ 52,000 Police Operations Building Building Envelope Paint exterior $ 55,000 $ 55,000 Police Operations Building Building Envelope Repair expansion joint gap between original building and addition $ 55,000 $ 55,000 Police Operations Building Roof Systems Replace roof $ 510,000 $ 510,000 Police Operations Building Roof Systems Roof Maintenance $ 4,000 $ 4,000 Police Operations Building Mechanical Systems Replace packaged rooftop units $ 335,000 $ 335,000 Police Operations Building Mechanical Systems Replace two split systems $ 30,000 $ 30,000 Police Operations Building Electrical Systems Replace automatic transfer switch $ ‐ Police Operations Building Plumbing Systems Replace 120‐Gal, 300 MBH domestic water heater $ 35,000 $ 35,000 Police Operations Building Fire/Life Safety Systems Replace fire alarm control panel and initiation devices $ 20,000 $ 20,000 Police Operations Building Interiors Paint interior walls $ 18,000 $ 18,000 Police Operations Building Interiors Replace carpet/vinyl flooring $ 50,000 $ 50,000 Police Operations Building Accessibility Issues DAC Accessibility Compliance $ 9,078 $ 9,078 $ 9,078 $ 9,078 $ 9,078 $ 99,854 PPW ‐ Equipment Building Parking Lots/Sidewalks Mill and overlay parking lot $ 190,000 $ 190,000 PPW ‐ Equipment Building Building Envelope Paint exterior $ 20,000 $ 20,000 PPW ‐ Equipment Building Mechanical Systems Replace 1.5‐ton split system $ ‐ April 9, 2025

ITEM NO. 2.

Location/Building Project/System Type Project Name FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 TOTALS Tier 3 ‐ Town of Los Gatos Facility Needs Projection
PPW ‐ Equipment Building Mechanical Systems Replace 4‐ton packaged unit $ ‐PPW ‐ Equipment Building Mechanical Systems Replace suspended unit heaters $ ‐PPW ‐ Equipment Building Mechanical Systems Replace exhaust fans $ ‐ PPW ‐ Equipment Building Electrical Systems Replace exterior fused disconnect and panel board $ 10,000 $ 10,000 PPW ‐ Equipment Building Electrical Systems Replace automatic transfer switch $ ‐PPW ‐ Equipment Building Electrical Systems Allowance for replacing 60 KW emergency generator with 200 KW $ ‐ PPW ‐ Equipment Building Plumbing Systems Replace water heater $ 10,000 $ 10,000PPW ‐ Equipment Building Interiors Paint interiors $ 12,000 $ 12,000 PPW ‐ Equipment Building Interiors Replace vinyl tile and repaint floors $ ‐ PPW ‐ Equipment Building Accessibility Issues DAC Accessibility Compliance $ 8,732 $ 8,732 $ 8,732 $ 8,732 $ 8,732 $ 96,053 PPW ‐ Engineering Building Building Envelope Paint exterior $ 9,000 $ 9,000PPW ‐ Engineering Building Plumbing Systems Plumbing ‐ renovated 2022 $ 25,000 $ 25,000 PPW ‐ Engineering Building Interiors Paint interiors $ ‐PPW ‐ Engineering Building Accessibility Issues DAC Accessibility Compliance $ 4,790 $ 4,790 $ 4,790 $ 4,790 $ 4,790 $ 52,685 PPW ‐ Corp Yard White House Parking Lots/Sidewalks Maintenace $ 7,000 $ 7,000 PPW ‐ Corp Yard White House Mechanical Systems Replace upstairs HVAC system $ ‐ PPW ‐ Corp Yard White House Mechanical Systems Replace downstairs HVAC system $ ‐ PPW ‐ Corp Yard White House Electrical Systems Replace 200‐amp main electrical panel $ ‐ PPW ‐ Corp Yard White House Plumbing Systems Replace 40‐MBH, 30‐Gal domestic water heater $ 6,000 $ 6,000 PPW ‐ Corp Yard White House Interiors Paint interiors $ 15,000 $ 15,000 PPW ‐ Corp Yard White House Interiors Refinish wood floors and replace carpet $ 44,000 $ 44,000 PPW ‐ Corp Yard White House Accessibility Issues DAC Accessibility Compliance $ 21,612 $ 21,612 $ 21,612 $ 21,612 $ 21,612 $ 237,730 PPW ‐ Corp Yard Parking Lots/Sidewalks Paint Carport $ 25,000 $ 25,000 Forbes Mill Museum Parking Lots/Sidewalks Parking lot maintenance $ 6,500 $ 6,500 Forbes Mill Museum Building Envelope Repoint external masonry walls $ ‐ Forbes Mill Museum Building Envelope Refurbish historic barn door and replace broken windows $ 4,500 $ 4,500 Forbes Mill Museum Roof Systems Roof replacement $ 92,000 $ 92,000 Forbes Mill Museum Roof Systems Roof maintenance $ 5,000 $ 5,000 Forbes Mill Museum Mechanical Systems Replace HVAC system $ 50,000 $ 50,000 Forbes Mill Museum Mechanical Systems Replace exhaust fans $ 2,000 $ 2,000Forbes Mill Museum Electrical Systems Overhaul electrical system $ 50,000 $ 50,000 Forbes Mill Museum Plumbing Systems Replace 2‐KW, 6‐Gal domestic water heater $ 1,500 $ 1,500 Forbes Mill Museum Plumbing Systems Replace 'private' restroom fixtures $ 4,000 $ 4,000 Forbes Mill Museum Fire/Life Safety Systems Replace security system $ ‐ Forbes Mill Museum Interiors Repair trip hazard $ 500 $ 500 Forbes Mill Museum Interiors Replace flooring $ 7,500 $ 7,500 Forbes Mill Museum Interiors Paint interiors $ 22,000 $ 22,000 Forbes Mill Museum Accessibility Issues DAC Accessibility Compliance $ 13,900 $ 13,900 $ 13,900 $ 13,900 $ 13,900 $ 152,900 Tait Museum Parking Lots/Sidewalks Ramp and railing repainting $ 2,500 $ 2,500 Tait Museum Parking Lots/Sidewalks Mill and overlay parking lot $ 10,500 $ 10,500 April 9, 2025

ITEM NO. 2.

Location/Building Project/System Type Project Name FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 TOTALS Tier 3 ‐ Town of Los Gatos Facility Needs Projection
Tait Museum Building envelope Patch stucco walls $ 2,500 $ 2,500 Tait Museum Building envelope Paint exterior $ 15,000 $ 15,000 Tait Museum Building envelope Replace/refinish exterior doors $ 10,500 $ 10,500 Tait Museum Building envelope Replace windows while retaining historic glass $ 30,000 $ 30,000 Tait Museum Roof Systems Roof (2) maintenance & (1) replacement $ 2,000 $ 2,000 Tait Museum Mechanical Systems Replace 120‐MBH Furnace and 5‐ton split system $ 20,000 $ 20,000 Tait Museum Plumbing Systems Replace or install water heater $ ‐ Tait Museum Plumbing Systems Replace galvanized piping $ 10,000 $ 10,000 Tait Museum Plumbing Systems Replace kitchen sink $ 2,000 $ 2,000 Tait Museum Fire/Life Safety Systems Replace security system $ ‐ Tait Museum Interiors Paint interiors $ 15,000 $ 15,000 Tait Museum Interiors Modernize kitchen $ 20,000 $ 20,000 Tait Museum Accessibility Issues DAC Accessibility Compliance $ 14,690 $ 14,690 $ 14,690 $ 14,690 $ 14,690 $ 161,585 Los Gatos Theatre Site/Parking Lots/Sidewalks Asphalt and drainage improvements $ ‐ Los Gatos Theatre Site/Parking Lots/Sidewalks Curbing repair $ ‐Los Gatos Theatre Site/Parking Lots/Sidewalks Gate latch repair $ ‐ Los Gatos Theatre Building Envelope Window replacement $ ‐ Los Gatos Theatre Building Envelope Doors replacement $ ‐ Los Gatos Theatre Building Envelope Entrance door operator $ ‐ Los Gatos Theatre Building Envelope Balcony and entrance terazzo $ 150,000 $ 150,000 Los Gatos Theatre Building Envelope Marquee maintenance $ ‐ Los Gatos Theatre Building Envelope Paint exterior $ ‐
Los Gatos Theatre Roof Systems Downspout maintenance $ ‐ Los Gatos Theatre Roof Systems Leakage repair $ 1,500 $ 1,500 Los Gatos Theatre Roof Systems Roof replacement $ ‐
Los Gatos Theatre Mechanical Systems Interior lighting controls $ ‐ Los Gatos Theatre Mechanical Systems HVAC system improvements $ ‐ Los Gatos Theatre Electrical Systems Overhaul electrical system $ ‐ Los Gatos Theatre Fire/Life Safety Systems Phone line ‐ Fire alarm $ 50,000 $ 50,000 Los Gatos Theatre Fire/Life Safety Systems Large equipment bracing $ 20,000 $ 20,000 Los Gatos Theatre Interiors Paint interior $ ‐
Los Gatos Theatre Interiors Baseboard repair $ ‐
Los Gatos Theatre Interiors Flooring replacement $ ‐
Los Gatos Theatre Interiors Main theatre seating $ ‐
Los Gatos Theatre Interiors Replacement lighting fixtures $ ‐Los Gatos Theatre Interiors Concessions equipment $ ‐ Los Gatos Theatre Interiors PA system $ 5,000 $ 5,000
Los Gatos Theatre Accessibility Issues DAC Accessibility Compliance $ 36,071 $ 36,071 $ 36,071 $ 36,071 $ 36,071 $ 396,784 Los Gatos Theatre Conveyance Systems Phone line ‐ Elevator $ 50,000 $ 50,000 Underground Parking Garage Parking Lots/Sidewalks Lot restriping $ ‐ Underground Parking Garage Electrical Systems Refinish pole lights $ 45,000 $ 45,000 April 9, 2025

ITEM NO. 2.

Location/Building Project/System Type Project Name FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 TOTALS Tier 3 ‐ Town of Los Gatos Facility Needs Projection
Underground Parking Garage Fire/Life Safety Systems Replace sprinkler system $ ‐ Underground Parking Garage Fire/Life Safety Systems Replace sprinkler monitoring system $ 10,000 $ 10,000 Underground Parking Garage Accessibility Issues DAC Accessibility Compliance ‐ Parking Lot 4 $ 7,025 $ 7,025 $ 7,025 $ 7,025 $ 7,025 $ 77,277 Balzer Field (Restrooms Bldg.) Parking Lots/Sidewalks Parking lot maintenance $ 7,000 $ 7,000 Balzer Field (Restrooms Bldg.) Building Envelope Paint exterior $ 8,000 $ 8,000 Balzer Field (Restrooms Bldg.) Roof Systems Roof replacement $ ‐ Balzer Field (Restrooms Bldg.) Mechanical Systems Replace ceiling mounted exhaust fans $ 2,000 $ 2,000 Balzer Field (Restrooms Bldg.) Plumbing Systems Replace 5‐Gal electric domestic water heater $ 2,000 $ 2,000 Balzer Field (Restrooms Bldg.) Interiors Paint interiors $ 3,000 $ 3,000 Balzer Field (Restrooms Bldg.) Accessibility Issues DAC Accessibility Compliance $ 2,420 $ 2,420 $ 2,420 $ 2,420 $ 2,420 $ 26,621 Belgatos Park (Restrooms Bldg.) Parking Lots/Sidewalks Parking lot maintenance $ 6,000 $ 6,000 Belgatos Park (Restrooms Bldg.) Building Envelope Paint exterior $ 4,500 $ 4,500 Belgatos Park (Restrooms Bldg.) Roof Systems Replace roof $ ‐ Belgatos Park (Restrooms Bldg.) Mechanical Systems Replace exhaust fans $ 2,000 $ 2,000 Belgatos Park (Restrooms Bldg.) Electrical Systems Replace 225‐amp main electrical panel $ 5,000 $ 5,000 Belgatos Park (Restrooms Bldg.) Electrical Systems Replace 10‐hp motor controller $ 4,000 $ 4,000 Belgatos Park (Restrooms Bldg.) Plumbing Systems Replace restroom fixtures $ 8,000 $ 8,000 Belgatos Park (Restrooms Bldg.) Interiors Paint interiors $ ‐ Belgatos Park (Restrooms Bldg.) Accessibility Issues DAC Accessibility Compliance $ 2,089 $ 2,089 $ 2,089 $ 2,089 $ 2,089 $ 22,976 Blossom Hill Park (Restrooms
Bldg.) Building Envelope Paint exterior $ 4,500 $ 4,500 Blossom Hill Park (Restrooms
Bldg.) Roof Systems Replace roof $ ‐Blossom Hill Park (Restrooms Bldg.) Electrical Systems Upgrade 200‐amp main electrical panel $ 10,000 $ 10,000 Blossom Hill Park (Restrooms
Bldg.) Electrical Systems Replace tennis court time clocks $ 14,000 $ 14,000 Blossom Hill Park (Restrooms
Bldg.) Plumbing Systems Replace 20‐Gal electric domestic water heater $ 2,000 $ 2,000 Blossom Hill Park (Restrooms
Bldg.) Interiors Paint interiors, including walls, floors, and celings $ 7,500 $ 7,500 Blossom Hill Park (Restrooms
Bldg.) Accessibility Issues DAC Accessibility Compliance $ 3,218 $ 3,218 $ 3,218 $ 3,218 $ 3,218 $ 35,401 Creekside Sports Park Parking Lots/Sidewalks Parking lot maintenance $ 10,500 $ 10,500 Creekside Sports Park Building Envelope Paint Exterior $ 4,500 $ 4,500 Creekside Sports Park Building Envelope Replace and paint wood fascia boards $ 30,000 $ 30,000 Creekside Sports Park Mechanical Systems Replace exhaust fan $ 3,000 $ 3,000 Creekside Sports Park Plumbing Systems Replace 20‐Gal, 4.5 KW domestic water heater $ 4,000 $ 4,000 Creekside Sports Park Plumbing Systems Replace diaphram pressure booster system $ 10,000 $ 10,000 Creekside Sports Park Interiors Paint interiors $ 6,500 $ 6,500Creekside Sports Park Accessibility Issues DAC Accessibility Compliance $ 830 $ 830 $ 830 $ 830 $ 830 $ 9,127 April 9, 2025

ITEM NO. 2.

Location/Building Project/System Type Project Name FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 TOTALS Tier 3 ‐ Town of Los Gatos Facility Needs Projection
Oak Meadow Park Restrooms Parking Lots/Sidewalks Parking lot maintenance (including ADA markings) $ 15,000 $ 15,000 Oak Meadow Park Restrooms Building Envelope Paint exterior privacy fence $ 2,000 $ 2,000 Oak Meadow Park Restrooms Roof Systems Roof replacement $ ‐ Oak Meadow Park Restrooms Mechanical Systems Replace direct drive propeller exhaust fans $ ‐ Oak Meadow Park Restrooms Interiors Paint Interiors $ 7,000 $ 7,000 Oak Meadow Park Restrooms Accessibility Issues DAC Accessibility Compliance $ 3,285 $ 3,285 $ 3,285 $ 3,285 $ 3,285 $ 36,133 Annual Total 2022 Dollars2 $ 2,665,545 $ 3,058,545 $ 1,872,045 $ 1,732,545 $ 1,567,045 $ 12,776,995 $ 2,998,376 $ 3,578,065 $ 2,277,629 $ 2,192,222 $ 2,062,124 $ 13,108,416 Notes:1. Projections are based on information developed by Facility Engineering Associates in Fiscal Year 2021/22, informtation developed by Disability Access Consultants in 2022 and staff recommendations

2. Annual totals are on 2022 dollars. 2024 escalation provided for discussion. Future development of this projection will escalate all costs to year of projected expense.

Annual Total Escalated to Fiscal Year Dollars at 4%
April 9, 2025

ITEM NO. 2.

Funding Program Project Location Project
Preliminary
Opinion of
Potential Costs
(2024$)
Safety
Equity
Quality of Life
Regulatory
Mandate
Park Improvement All Parks Town‐wide drinking fountain to hydration station $ 50,000 xx Park Improvement All Parks ADA Compliance Work $ 1,750,000 xxx x Park Improvement Blossom Hill Park Turf Rehabilitation $ 200,000 xx Park Improvement Civic Center Lawn Irrigation System Replacement $ 200,000 x Park Improvement LaRinconada Park Playground Replacement $ 300,000 xx Park Improvement LaRinconada Park Irrigation System, Furniture and General Upgrades $ 50,000 xPark Improvement LaRinconada Park Turf Renovation + Irrigation system upgrades $ 200,000 xPark Improvement Live Oak Manor Turf Rehabilitation $ 200,000 x Park Improvement Los Gatos Creek Develop Los Gatos Creek Restoration Plan (per General Plan 2024) TBD Park Improvement Oak Hill Play Lot Play Structure Replacement / Hardscape Upgrades $ 350,000 xx Park Improvement Oak Meadow Park Playground Replacement $ 500,000 xxPark Improvement Oak Meadow Park Bocce Courts Reconstruction $ 50,000 xx Park Improvement Oak Meadow Park Fencing Replacement $ 75,000 xx Park Improvement Oak Meadow Park General Improvements and Upkeep $ 250,000 xxx Park Improvement Oak Meadow Park Parking Kiosk to reinstate paid parking $ 25,000 Park Improvement Oak Meadow Park Oak Meadow Park Restroom Expansion $ 750,000 xx Park Improvement Plaza Park Event Lighting $ 50,000 x
Street Improvement
Roberts Road at Los Gatos CreekTrail
New trail access from Blossom Hill Road (to support Highway Overcrossing) $ 125,000 xx
Park Improvement Townwide Townwide Park Master Plan $ 250,000 xxPark Improvement / Trail Along Highway 17 Add Trail along Highway 17 from Los Gatos Creek Trail to Lodge (from BPMP) $ 1,189,000
Park Improvement / Trail Farley Road
New Highway 17 Overcrossing from Farley Road to Los Gatos CreekTrail though Vasona Park (from BPMP) $ 8,400,000 Park Improvement / Trail Guadalupe River Trail Guadalupe River Trail near Hicks Road $ 6,600,000 xx Park Improvement / Trail Highway 85 Rail Trail Southern Pacific Rail Trail (Hwy 85 Corridor) $ 5,840,000 xxPark Improvement / Trail Los Gatos Creek Trail Trail Pavement Rehab $ 580,000 xx Park Improvement / Trail Los Gatos Creek Trail Trail Access, Signage and Wayfinding (per General Plan 2040) $ 10,000 xx Park Improvement / Trail Los Gatos Creek Trail Lighting at Undercrossings; BHR and Hwy 85 $ 175,000 x Park Improvement / Trail Los Gatos Creek Trail LGCT repair wooden bridge on LG Creek Trail $ 20,000 xx Park Improvement / Trail Ross Creek Develop a Ross Creek Restoration Plan (per General Plan 2040) TBD Storm Drainage Ashler Avenue
Add drainage structures and piping to eliminate dead end systems (2019 Study) $ 4,774,000 xx
Storm Drainage Bachman at Massol Replace trash rack and improve culvert inlet (2019 Study) $ 84,000 xx Tier 3 Projects ‐ Streets, Parks and Other Needs
April 9, 2025Page 1 Tier 3 Projects

ITEM NO. 2.

Funding Program Project Location Project
Preliminary
Opinion of
Potential Costs
(2024$)
Safety
Equity
Quality of Life
Regulatory
Mandate
Tier 3 Projects ‐ Streets, Parks and Other Needs
Storm Drainage
Bayview Court / Bayview Avenue
@ Main; Penn Ave at Peralta /
Fairview
Upgrade trash rack and culvert ; add parallel drainage pipe along Main Street, install drainage in Fairview Plaza; replace concrete channel along Pennsylvania with pipe (2019 Study) $ 3,542,000 xx Storm Drainage Euclid Avenue
Upgrade and extend system to convey 10% annual chance event (2019 Study) $ 1,386,000 xx
Storm Drainage Foster Road Add inlets and or curb (2019 Study) $ 282,800 xx Storm Drainage
Kennedy between Englewood
and LGB
Extend drainage system on Kennedy from Vista del Monte to Gem Avenue (2019 Study) $ 1,044,400 xx
Storm Drainage Los Gatos ‐Almaden Road
Install drainage on Los Gatos Almaden Road near Gardenia and Longwood; upsize pipes from Camino del Cerro to south of Escobar Ave; connect system from Cherry Blossom / Lester to south system; requires construction on private property (2019 Study) $ 7,302,400 xx Storm Drainage
Los Gatos Creek Trail at Forbes
Mill Correct deficiencies in two systems (2019 Study) $ 316,400 xx Storm Drainage
Replace Frames and Grates onstructures Replace frames and grates on structures throughout Town $ 49,500 x Storm Drainage
Replace Manholes of Blossom Hill
Road Replace Manholes of Blossom Hill Road $ 169,200 x
Storm Drainage Shannon Road at Short Road
Extend drainage on Shannon Road to provide inlets; excavate Short Creek Channel to reduce drain back up when creek is full.(2019 Study) $ 455,000 xx Storm Drainage Roberts Road / University
Add drainage on University Ave from Roberts Road to Blossom Hill Road HR + 150' east on BHR to connect to existing system(2019 Study) $ 2,340,800 xx Storm Drainage 195 Jackson Repair failing drainage pipe on private property $ 200,000 xx Storm Drainage Kennedy Meadows Eliminate misaligned pipe and replace with open channel $ 220,000 xx Storm Drainage Overlook Road Drainage Add inlets and piping $ 960,000 xx Street Improvement Blossom Hill Road Highway 17 Overcrossing Grant Match $ 1,400,000 xxx Street Improvement Downtown Replace Tree Wrap Lights and Upgrade Electrical $ 150,000 xx Street Improvement Grays Lane Traffic Bollards to protect pedestrian space $ 35,000 xx Street Improvement
North and South Santa Cruz from
Highway 9 to Broadway Streetscape Project $ 980,000 xx
Street Improvement
North Santa Cruz from Blossom
Hill Road to Highway 9 Pavement Rehabilitation $ 910,000 xx April 9, 2025Page 2 Tier 3 Projects

ITEM NO. 2.

Funding Program Project Location Project
Preliminary
Opinion of
Potential Costs
(2024$)
Safety
Equity
Quality of Life
Regulatory
Mandate
Tier 3 Projects ‐ Streets, Parks and Other Needs
Street Improvement Pollard Road
Compelete Streets Improvements from Knowles Drive to Quito Road (per BPMP) $ 2,900,000
Street Improvement Townwide Comprehensive Bike Rack Installations $ 17,000 x Street Improvement Townwide Town‐wide Traffic Study Model $ 250,000 xx Street Improvement Winchester Blvd
Complete Streets Improvements from Knowles Drive to Blossom Hill Road (per BPMP) $ 74,000,000
Street Repair/ Maintenance / Safety
Blossom Hill Road at Cherry
Blossom Traffic signal replacement and intersection improvement $ 4,970,000 xx Street Repair/ Maintenance / Safety
Blossom Hill Road at Francis Oaks
Way Evaluate hillside for potential stabilization $ 35,000 x Street Repair/ Maintenance / Safety
Blossom Hill Road from Union to
Meadowbrook Sidewalk gap closure $ 3,550,000 xxx
Street Repair/ Maintenance / Safety Dittos Lane Slope Assessment Assess slope stability and recommend potential modifications $ 100,000 Street Repair/ Maintenance / Safety Downtown Upgrade street lights to LED's $ 350,000 Street Repair/ Maintenance / Safety Downtown Sign Management Project $ 50,000 x Street Repair/ Maintenance / Safety
Wildfire ‐ Assess and Improve
WUI Access (LG.FR.1) Assess WUI Roads and create passing areas where possible Street Repair/ Maintenance / Safety Fisher Avenue Sidewalk gap closure (from BPMP) $ 600,000 xx Street Repair/ Maintenance / Safety Heritage Grove Area Replace asphalt sidewalks $ 80,000 xxx Street Repair/ Maintenance / Safety Highway 17 at Route 9 Interchange Reconstruction ‐ Town cost share is 10% $ 11,000,000 Street Repair/ Maintenance / Safety Los Gatos Almaden Road Sidewalk gap closure along Los Gatos Almaden Road: Peach Blossom Lane to Camine del Cerro (from BPMP) $ 9,100,000 xxx
Street Repair/ Maintenance / Safety Public Parking Lots Pavement Repair $ 500,000 xx Street Repair/ Maintenance / Safety Quito Road at Bicknell Repair eroding stream embankment $ 400,000 x Street Repair/ Maintenance / Safety Townwide
Identify evacuation routes for wildfire zones and design for pull offs to ensure emergency access (from General Plan 2040 and CWPP) $ 200,000 xxx Street Repair/ Maintenance / Safety Townwide Green Infrastructure Improvements TBD x Street Repair/ Maintenance / Safety Townwide Townwide Traffic Signal Replacements $ 30,450,000 x Street Repair/ Maintenance / Safety Townwide ADA Compliance Work $ 20,330,000 xxx x Street Repair/ Maintenance / Safety Townwide Townwide Traffic Signal Safety Upgrades $ 660,000 x Street Repair/ Maintenance / Safety
Union Avenue Blossom Hill to
Lynn Avenue Sidewalk gap filling, add bike lanes $ 2,500,000 xxx April 9, 2025Page 3 Tier 3 Projects

ITEM NO. 2.

Funding Program Project Location Project
Preliminary
Opinion of
Potential Costs
(2024$)
Safety
Equity
Quality of Life
Regulatory
Mandate
Tier 3 Projects ‐ Streets, Parks and Other Needs
Town Infrastructure and Facilities Corp Yard Replace Switch Gear and Generator $ 500,000 xx Town Infrastructure and Facilities Corp Yard CNG station decommissioning $ 200,000 x Town Infrastructure and Facilities Corp Yard Charging Station for Town Vehicles $ 250,000 x Town Infrastructure and Facilities Downtown New restroom design and construction $ 500,000 xx Town Infrastructure and Facilities Police Operations Building Charging Stations (2) (employee use) $ 40,000 x Information Technology Police Operations Building Secondary Backup Replication System $ 70,000 Notes:1. BPMP = Bicycle and Pedestrian Master Plan

2. CWPP = Community Wildfire Protection Plan

3. 2019 Study = Drainage Assessment complete for critical areas April 9, 2025Page 4 Tier 3 Projects

ITEM NO. 2.

PREPARED BY: Ryan Baker
Library Director
Reviewed by: Town Manager, Assistant Town Manager, Town Attorney, and Finance Director 110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832 www.losgatosca.gov

TOWN OF LOS GATOS

COUNCIL AGENDA REPORT
MEETING DATE: 04/22/2025
ITEM NO: 3
DATE: April 22, 2025
TO: Mayor and Town Council
FROM: Chris Constantin, Town Manager
SUBJECT: Consider Proposed Changes to the Community Grant Program and Provide Direction
RECOMMENDATION:

Staff recommends that the Council:

A) Retain the current Sustaining Grant portion of the Community Grants program supporting select human services non-profits that align with Council Priorities; AND, B) Confirm the organizations listed as Sustaining Grant recipients in this report, and their listed allocations, match Council’s intentions; AND,
C) Sunset the One-Time Competitive Grants portion of the Community Grants program and redirect a portion of that funding to bolster the efficacy of the Sustaining Grants; OR
D) Maintain status quo for both the Sustaining Grant and One-Time Competitive Grants portion of the Community Grants program; AND,
E) Assign a dollar amount from the general fund to be added to the draft FY 2025-26 budget to fund One-Time Competitive Grants.

Staff additionally recommends that Council:

F) Direct staff to draft a resolution (with language conforming to the selected recommendation above) that establishes limitations on considerations of additional grants or gifts of public funds outside of the Community Grant process.

OR
G) Consider other options implementing the Town Council’s vision.

ITEM NO. 3.

PAGE 2 OF 6
SUBJECT: Review the Community Grants Program
DATE: April 22, 2025
STRATEGIC PRIORITIES:

The discussion pertains to Fiscal Stability. The Community Grants as a program addresses additional Core Goals or Strategic Priorities based on the specific nature of the grant. These are expressed in context within the report when appropriate.

FISCAL IMPACT:

Recommendations A, B, and C would reallocate $43,000 from Competitive One-time Grants and $13,800 from Unhoused Initiatives to increasing Sustaining Grants from $73,800 to $126,800.

Ending the Competitive One-time Grants would save $173,200 from the FY 2024-25 budget and approximately 112 staff hours valued at $20,600. The budget will be updated based on Council direction.

BACKGROUND:

The Town of Los Gatos has been awarding grants since 1992. Prior to 2011, the program funding was provided using Federal Community Development Block Grant (CDBG) funds.

Beginning in FY 2011-12, those funds were redirected to the County of Santa Clara’s Housing and Community Development Advisory Committee, and the Town’s Community Grants became funded entirely by general fund dollars.

In 2020, the Town Council revised the program and established three classes of grants:
 Sustaining Grants are operational grants to select human services non-profits with long partnership histories with the Town and strong alignment to Town priorities, and are given with the express purpose of sustaining the core service or operations of the nonprofit recipient. Non-profits that are invited to apply resubmit an application every two years.
 Competitive One-time Grants are open to all classes of non-profits, only fund one-time projects, and no organization is ever guaranteed their application will rank high enough to receive funding. Scoring favors project proposals that are for the introduction of a new service or idea. By default, they do not impact the operating budget of any organization for their existing services, as these funds were never intended or structured to serve that purpose.
 Innovation Grants for students and community members. This program was discontinued in 2024.

In addition, the Town has also given grants of public funds for projects or support of non-profit organizations outside of the Community Grant process. These include grants given directly by Council at the explicit request of a non-profit organization, and also as line items captured in other departments ($15,000 given annually from CDD’s budget for rental assistance programs, and $13,800 from the TMO’s budget for services to the unhoused).

ITEM NO. 3.

PAGE 3 OF 6
SUBJECT: Review the Community Grants Program
DATE: April 22, 2025
This staff report recognizes the changing nature of needs for non-profits as well as the administrative impact of managing the program. Town Council direction will be reflected in the final budget for 2025-26.

DISCUSSION:

Overview
The table below illustrates the total general fund direct dollar amounts given by the Town in the last four years:

Fiscal Year One-time
competitive
grants
Sustaining
grants
Innovation
grants
(program
ended 2024)
Grants from
other budget
line items
Other onetime general
fund direct
dollar grants
Total
FY2021-22 $78,013 $57,000 $4,500 $15,000 $0 $154,513
FY2022-23 $81,100 $62,000 $6,000 $15,000 $0 $264,100
FY2023-24 $229,000 $66,000 $6,000 $15,000 $100,000 $316,000 FY2024-25 $230,000 $73,800 $0 $28,800 $100,000 $432,600 The total general fund dollars given over the last four years were $1,167,213. This table does not include an additional $500,000 of grants that were backfilled with ARPA replacement funding, which would raise the total amount of giving to $1,667,213 over four years.

Staff is recommending continuing the Town’s Sustaining Grants program, while sunsetting the Town’s Competitive One-time Grants and directing $43,000 of those funds to enhancing support of the Sustaining Grant program. Additionally, grant funds in the amount of $13,800 will be shifted from Unhoused Initiatives to Sustaining Grants.

Continuation of the Sustaining Grant Program
The Sustaining Grant program funds operational needs and core services for human service non-profits. Staff believes it is beneficial to continue our Sustaining Grants to organizations that address Council’s core priorities in specialized areas that the town would not be able to replicate internally. Within the draft budget for FY 2025-26, staff has earmarked $126,800 for Sustaining Grants which includes $20,000 transferred from the Competitive One-time Grants related to rental assistance, $23,000 transferred from the Competitive One-time Grants related to Live Oak Nutrition, and $13,800 shifted from the Unhoused Initiatives in the Town Manager’s Office budget. This amount assumes continuation of additional funding for nutrition service and rental assistance as initiated by Council in FY2024-25, which staff recommends including in the Sustaining Grant category for reasons described below. The organizations proposed to receive Sustaining Grants will continue to be the four that the Town has supported annually on a continuous basis for operational needs since 2014, as well as two additional that were in the

ITEM NO. 3.

PAGE 4 OF 6
SUBJECT: Review the Community Grants Program
DATE: April 22, 2025
past supported under the Unhoused Initiatives Town Manager’s Office budget but will be included here going forward for consistency and ease of financial tracking. The organizations are:
 Live Oak Senior Nutrition at $48,000 for hot meal and nutrition services under Council priorities “Continue to engage community service providers to meet the needs of older adults”; “Continue to engage community service providers to meet the needs of unhoused residents”; and, “Ensure all residents and visitors feel a sense of belonging in Los Gatos (etc)”.
 West Valley Community Services at $20,000 for human services support under Council priorities “Continue to engage community service providers to meet the needs of unhoused residents” and “Ensure all residents and visitors feel a sense of belonging in Los Gatos (etc)”.
 West Valley Community Services at $20,000 for rental assistance programs. This is in addition to another $15,000 received by West Valley Community Services from CDD for the same program (for a total Town contribution to rental assistance of $35,000). In FY 2024-25, grant funds for rental assistance were administered as a competitive application process, with the result that three separate organizations ended up providing this service with smaller/divided grant amounts. Committing to a single organization would be substantially more efficient to manage for Town staff. This item has a nexus to Council priority “Continue to engage community service providers to meet the needs of unhoused residents”, as it is intended to proactively prevent residents from becoming unhoused.
 Counseling and Support Services for Youth (CASSY) at $12,500 for mental health and crisis support for students under a nexus to Council priority “Ensure all residents and visitors feel a sense of belonging in Los Gatos (etc)”.  Next Door Solutions to Domestic Violence at $12,500 for support of domestic abuse victims in our community under a nexus to Council priority “Ensure all residents and visitors feel a sense of belonging in Los Gatos (etc)”.  St. Luke’s Episcopal Church $6,000 for their Pantry Program under Council Priority “Continue to engage community service providers to meet the needs of unhoused residents”. Note that this program serves as core function for how the eligibility list of unhoused community members are determined as it pertains the Town’s Hotel Program for temporary shelter and was listed under the Unhoused Initiatives line item in FY2024-

25.  Los Gatos Methodist Church at $7,800 for their Shower Program under Council Priority “Continue to engage community service providers to meet the needs of unhoused residents”. Note that this program also serves as core function for how the eligibility list of unhoused community members are determined as it pertains the Town’s Hotel Program for temporary shelter and was listed under the Unhoused Initiatives line item in FY 2024-25.

ITEM NO. 3.

PAGE 5 OF 6
SUBJECT: Review the Community Grants Program
DATE: April 22, 2025
Sunsetting the Competitive One-time Community Grants Program Grant programs allow the Town to invest in specific activities which further a Town policy interest; however, the resources and staff time committed to grant programs are a tradeoff against other core Town activities. Thus, as part of this budget process, it is beneficial to facilitate the conversation and consideration of a more efficient process that takes these impacts into account.

Based on the spending precedent for FY 2024-25, the direct dollar savings associated with sunsetting the Competitive One-time Grants in FY 2025-26 would be $173,200. The indirect savings is approximately 112 hours of staff time at an estimated value of $20,600. In making this recommendation, staff considered the following:
 The direct dollar amount saved in one year is the equivalent of 1.3 FTE.  The Competitive One-time Grants are labor intensive to administer. The process annually involves approximately 60 hours from the Library Director, 30 hours of time from Library support staff, 5 hours of time from the Town Attorney, 12 hours of time from the Finance Department, and 5 hours of time from the Clerk’s office, totaling approximately 112 staff hours for an indirect dollar amount calculated at $20,600.  As stated before, Competitive One-Time grants only fund one-time projects of organizations, and no organization is ever guaranteed their application will rank high enough to receive funding. As such, the loss of opportunity to apply for one-time project grants would not impact the operating budget of any organization, as these funds were never intended, or structured, to serve that purpose.

Maintaining the Status Quo for both Sustaining Grants and Competitive One-time Grants Staff recognizes that Council may not yet be ready to sunset the Competitive One-time Grants.

Should Council wish to continue this aspect of the program, Council will need to determine the funding level for both type of grants as an allocation from the General Fund.

Given the workload of administering the Competitive One-time Grants, should the Council wish to continue with the program, staff may seek to outsource the administrative work to a foundation that specializes in grant-making services.

Consider a Resolution Limiting Consideration of Direct Dollar Grants Outside of the Community Grant Process
Staff notes that evaluating funding requests from nonprofit organizations outside of the established Community Grant processes places additional strain on limited Town resources, complicates budget management, and diminishes the effectiveness and fairness of the Community Grant program. Given the current budget constraints, it is prudent to uphold a clear and consistent process.

ITEM NO. 3.

PAGE 6 OF 6
SUBJECT: Review the Community Grants Program
DATE: April 22, 2025
To reinforce this principle, staff recommends Council consider adopting a resolution formally limiting consideration of funding requests that fall outside the established Community Grant process. If the Council concurs, staff will return with a resolution aligned with Council’s direction at the next regular meeting.

ENVIRONMENTAL ASSESSMENT:

This is not a project defined under CEQA, and no further action is required.

ITEM NO. 3.