Agenda packet — Milpitas City Council, November 19, 2024 (part 5 of 5)

2 Resolution No. ____
total contract value, to allow staff to respond swiftly to unanticipated conditions and to limit potential claims or risk to the City.

NOW, THEREFORE, the City Council of the City of Milpitas hereby finds, determines, and resolves as follows:

1. The City Council has duly considered the full record before it, which may include but is not limited to such things as the City staff report, testimony by staff and the public, and other materials and evidence submitted or provided to it. Furthermore, the recitals set forth above are found to be true and correct and are incorporated herein by reference.

2. The project entails the operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities, mechanical equipment, or topographical features, involving negligible or no expansion of existing or former use and is exempt from CEQA pursuant to Cal. Code Regs., tit. 14, § 15301. The project also entails replacement or reconstruction of existing infrastructure where the new infrastructure will be located on the same site as the infrastructure replaced and will have substantially the same purpose and capacity as the infrastructure replaced and is exempt from CEQA pursuant to Cal. Code Regs., tit. 14, § 15302.

3. The City Council hereby approves the sole source purchase of one (1) and rebuild of one (1) JWC Environmental Channel Monster Model CDD6020 grinders, including installation and tax for a combined total not to exceed amount of $308,088.57.

4. The City Manager is hereby authorized to negotiate and execute a contract for the purchase of one (1) and rebuild of one (1) JWC Environmental Channel Monster Model CDD6020 grinders, including installation and tax for a combined total not to exceed amount of $308,088.57.

5. The Public Works Director is hereby authorized to negotiate and execute contract change order(s) in an aggregate amount not to exceed $30,809 for this Project.

PASSED AND ADOPTED this day of , 2024, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

ATTEST: APPROVED:

Suzanne Guzzetta, City Clerk Carmen Montano, Mayor
APPROVED AS TO FORM:

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3 Resolution No. ____
Michael Mutalipassi, City Attorney

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CITY OF MILPITAS

AGENDA REPORT
(AR)
Item Title: Authorize the City Manager to Negotiate and Execute Necessary Documents to Effectuate the Purchase of Fleet Vehicles (Staff Contact: Luz Cofresí-Howe, Finance Director, 408-586-3111; and Christian Di Renzo, Public Works Director, 408-586-2602)
Category: Consent Calendar-Community Services and Sustainable Infrastructure Meeting Date: 11/19/2024
Recommendation: (1) Approve a one-time waiver of the City of Milpitas Municipal Code Section I-2-3.01 – Selection of Solicitation Method Procurements; and
(2) Authorize the City Manager to engage with local dealerships and execute any documents necessary to effectuate the purchase of approved replacement fleet vehicles in an amount not-to-exceed $822,500.

BACKGROUND:

The City fleet consists of 302 units, including sedans, work trucks, patrol vehicles, fire engines, and specialized trucks to support City operations. In recent years, the automotive industry has seen shortages in microchips and materials, reducing the available inventory. Manufacturers such as Ford also have restricted the number of units any government agency can order in a year due to reduced production numbers. Additionally, manufacturer ordering bank dates have been opened randomly with very little notice to place an order. The combination of these issues has constrained the City ability to procure the necessary vehicles.

Many of the City fleet vehicles have reached the end of useful life and need to be replaced for optimal operational and emergency response. Based on industry standards, municipal fleet replacement is every 10-12 years and/or 100,000 miles. This replacement criteria ensures operational continuity while helping to reduce maintenance costs. Public Works and Finance is currently working on a Fleet Replacement Plan and Policy to address the aging fleet. Due to necessity, the City has retained and continues to operate legacy vehicles that no longer have replacement funds. Replacement of these vehicles has reached a critical inflection point.

On August 15, 2023, City Council approved a sole source with Mission Valley Ford San José and authorized the City Manager to execute blanket purchase orders with Mission Valley Ford San José and National Auto Fleet Group, for a not-to-exceed $1.2 million. This enabled the City to order five (5) Ford Superduty F-250s and eight (8) Ford Mavericks from National Auto Fleet Group. While the order for the five (5) Ford Superduty F250's was fulfilled, the eight (8) Ford Mavericks order was cancelled by Ford. Consequently, the funding for vehicles that could not be purchased in FY2023-24 was re-appropriated to FY2024-25, increasing the number of vehicles planned for purchasing this fiscal year.

In previous years, the City successfully acquired vehicles through a Sourcewell cooperative purchasing contract with National Auto Fleet Group. However, due to the City budget appropriation process not aligning with manufacturer ordering bank timelines and restricted ordering banks, staff recommends engaging local car dealerships for direct purchases to meet vehicle replacement schedules. Given the uncertainty of vehicle stock at each dealership, the City will likely need to source from multiple dealerships. This recommended approach will allow the City to act swiftly to meet its vehicle replacement needs.

As noted above, the replacement criteria for trucks and vans is ideally around 10-12 years and/or 100,000 miles to reduce increased maintenance costs. The table below is a detail of the Vehicle Replacement schedule including mileage.

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Table 1. Vehicle Replacement Schedule
Budgeted FY Department Vehicle # Year Make/Model Mileage FY2023/24 Engineering 118D 1999 Ford/Ranger 70,781
FY2023/24 Engineering 117D 1999 Ford/Ranger 94,085
FY2023/24 Engineering 173T 1998 Ford/Ranger 71,033
FY2023/24 Engineering 282N 1998 Ford/Ranger 103,372
FY2023/24 Building 293N 2001 Ford/Ranger 80,584
FY2023/24 Building 292N 2001 Ford/Ranger 57,910
FY2023/24 Recreation 104J 2002 Ford/E-450 Van 124,188
FY2024/25 Public Works
Utilities 284U 1999 Ford/F-250 121,386
FY2024/25 Police Unmarked 2016 Unmarked 31,045
The table below summarizes the vehicles approved and budgeted for purchasing in FY2024-25, along with previously approved vehicles from FY2022-23 and FY2023-24 that were requested in conjunction with newly approved positions. Vehicle brands and model types vary based on the respective Department operations and may be altered based on available inventory; however, Ford is the standard for most of the City fleet.

Table 2. Vehicles to be Purchased
New or
Replacement Make/Model Department/Functions Approved Budget Replacement Ford/Maverick* Public Works - Engineering $38,895 Replacement Ford/Maverick* Public Works - Engineering $38,895 Replacement Ford/Maverick* Public Works - Engineering $38,895 Replacement Ford/Maverick* Public Works - Engineering $38,895 Replacement Ford/Maverick* City Manager – Office of Building $36,588 Replacement Ford/Maverick* City Manager – Office of Building $33,412 Replacement Toyota/Sienna (Paratransit)* Recreation – Senior Services $75,000 Replacement Ford/Superduty (F-250) Public Works – Utilities $66,908 Replacement Unmarked Vehicle Police Department $48,752
New Ford/Superduty (F-250) Public Works – Utilities $66,908 New Ford/Superduty (F-250) Public Works – Utilities $66,908 New Ford/Maverick* Public Works – Parks $37,680
New Ford/Maverick** Public Works – Parks $30,000
New Ford/Maverick** Public Works – Parks $30,000
New Ford/Maverick* Public Works – Trees & Landscape $37,680 Total Vehicle Replacement Budget $685,416
* Vehicles approved in FY2023-24 budget and not procured due to supply chain inventory shortages. ** Vehicles approved in FY2022-23 budget and not procured due to supply chain inventory shortages.

The budgeted amounts for each vehicle were estimates based on past government pricing through cooperative purchase agreements. Staff anticipates encountering higher pricing from local car dealerships and/or may need to consider alternative vehicles due to availability and is therefore recommending the City Council to approve a 20% contingency for a total not-to-exceed amount of $822,500.

ANALYSIS:

There is an urgent need to purchase the vehicles listed in the table above, which cannot be procured through the standard competitive bidding process due to market scarcity. Typically, vehicle and major equipment acquisitions valued at more than $50,000 follow formal bidding procedures as outlined in the City’s Municipal Code Section I-2-3.01(e). The requests for quotes process is used for vehicle and major equipment purchases valued at more than $10,000 but less than $50,000 as outline in Municipal Code Section I-2-3.01(b). However, under Section I-2-3.03(d), the City is not required to engage in traditional competitive procurement models when the City Council, in the best interest of the City, authorizes staff to do so.

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Staff is requesting the City Council approve a one-time waiver to Municipal Code Section I-2-3.01- Selection of Solicitation Method Procurements, as the City Council may authorize such a waiver under Municipal Code Section I-2-3.03(d) - Procurements where competitive methods are not practicable, and authorize the City Manager to engage with local dealerships and execute any documents necessary to effectuate the purchase of approved fleet vehicles in an amount not-to-exceed $822,500.The Purchasing Agent will negotiate terms, pricing, and delivery as needed. Furthermore, to the extent at any time of purchase only one viable source exists for the required vehicles, the Purchasing Agent consistent with Municipal Code Section I-2-3.06 – Sole Source Procurement will provide a written justification for each dealership’s sole source determination that will be kept in the contract file and reported to the City Council during the annual sole source report. Based on fleet inventory, the Purchasing Agent may decide to sole source with multiple dealerships to meet the City purchasing needs.

The City plans to engage with the following local dealerships:
- Mission Valley Ford San José
- Capitol Ford San José
- Frontier Ford Santa Clara
- Sunnyvale Ford
- Fremont Ford
- Livermore Ford
- The Ford Store Morgan Hill
- The Ford Store San Leandro
- Tracy Ford
POLICY ALTERNATIVE(S):

Alternative 1: Choose to not approve the authorization of the vehicle and equipment purchases.

Pros: Cost savings
Cons: Reduced responsiveness of Public Works crews and increased repair costs for aging/end-of-life vehicles.

Reason to not recommended: Capital outlay requests were vetted during the FY2024-25 Adopted Operating Budget process. Funds have been set aside for the vehicles requested in both the Equipment Replacement Fund and individual Department operating budgets. Additionally, keeping vehicles longer than its useful life results in higher maintenance costs, excessive downtimes, and may contribute to higher greenhouse gas emissions.

FISCAL IMPACT:

The total cost for replacement has been budgeted in the FY2024-25 budget in the amount of $822,500 through various department budgets.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA):

The action has no potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment and is not a project pursuant to Pub. Resources Code, § 21065 and Cal. Code Regs., tit. 14, § 15378. The action also is a continuing administrative or maintenance activity related to the purchase and replacement of vehicles for an existing vehicle fleet and is not a project pursuant to Cal. Code Regs., tit. 14, § 15378.

RECOMMENDATION:
(1) Approve a one-time waiver of the City of Milpitas Municipal Code Section I-2-3.01 – Selection of Solicitation Method Procurements.
(2) Authorize the City Manager to engage with local dealerships and execute any documents necessary to effectuate the purchase of approved replacement fleet vehicles in an amount not-to-exceed $822,500.

ATTACHMENT(S):
(a) Resolution

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RESOLUTION NO. ______

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MILPITAS APPROVING A ONE-TIME WAIVER TO MUNICIPAL CODE SECTION I-2-3.01 AND AUTHORIZING THE

CITY MANAGER TO NEGOTIATE AND EXECUTE ANY DOCUMENTS NECESSARY TO

EFFECTUATE THE PURCHASE OF APPROVED FLEET VEHICLES
WHEREAS, the Purchasing Agent has determined that there is an urgent need to purchase vehicles for the City fleet which cannot be procured through the standard competitive bidding process due to market scarcity; and
WHEREAS, under Municipal Code Section I-2-3.03(d) – Procurements, the City Council may approve a one-time waiver of traditional competitive procurement models identified in Municipal Code Section I-2-3.01 - Selection of Solicitation Method Procurements where it is in the best interests of the City to do so, including where, as here, competitive methods are not practical, there is an urgent need for the equipment being procured, and the City has diligently attempted through usual competitive procurement to obtain this equipment without success due to conditions outside the City’s control; and WHEREAS, the City Council authorizes the City Manager to engage with local dealerships and execute any documents necessary to effectuate the purchase of approved fleet vehicles in an amount notto-exceed $822,500 to provide necessary flexibility to meet the vehicle replacement schedule; and WHEREAS, the Purchasing Agent will negotiate terms, pricing, and delivery as needed, and; WHEREAS, Milpitas Municipal Code Section I-2-3.06 - Sole Source Procurement authorizes the City Council to award contracts without competition when the Purchasing Agent determines in writing, after conducting a good faith review of available sources, that only one viable source exists for the required supplies, material, equipment, or general service, or that there is a compelling reason for using only one source; and
WHEREAS, based on inventory, the Purchasing Agent may decide to sole source with multiple dealerships to meet the City’s purchasing needs, and will keep a written justification for any dealership’s sole source determination in the contract file.

NOW, THEREFORE, the City Council of the City of Milpitas hereby finds, determines, and resolves as follows:

2. This action has no potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment and is not a project pursuant to Pub. Resources Code, § 21065 and Cal. Code Regs., tit. 14, § 15378. This action also is a continuing administrative or maintenance activity related to the purchase and replacement of vehicles for an existing vehicle fleet and is not a project pursuant to Cal. Code Regs., tit. 14, § 15378.

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2 Resolution No. ____

3. The City Council, in the best interests of the City, authorizes a one-time waiver to Municipal Code Section I-2-3.01 - Selection of Solicitation Method Procurements for the purchase of the vehicles identified in the staff report.

4. The City Council authorizes the City Manager to negotiate and execute any documents necessary to effectuate the purchase of approved replacement fleet vehicles in an amount not-to-exceed $822,500 to provide necessary flexibility to meet the vehicle replacement schedule.

PASSED AND ADOPTED this day of , 2024, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

ATTEST: APPROVED:

Suzanne Guzzetta, City Clerk Carmen Montano, Mayor
APPROVED AS TO FORM:

Michael Multalipassi, City Attorney

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CITY OF MILPITAS

AGENDA REPORT
(AR)
Item Title: Receive an Update on the Security Improvements at the McCarthy Ranch Sewer Lift Station (Main Lift) and Determine that the Condition Continues to Constitute an Emergency (Staff Contact: Christian Di Renzo, Public Works Director, 408-586-2602)
Category: Consent Calendar-Community Services and Sustainable Infrastructure Meeting Date: 11/19/2024
Recommendation: (1) Receive an update on the security improvements at the McCarthy Ranch Sewer Lift Station; and (2) Determine by a four-fifths vote that the condition continues to constitute an emergency.

BACKGROUND:

Pursuant to Public Contract Code section 22050 and the attached Council Resolution No. 9134, the Director of Public Works, in the case of emergency, may authorize a repair of a public facility and procure the work without giving notice for bids. An emergency is defined as “a sudden, unexpected occurrence that poses a clear and imminent danger, requiring immediate action to prevent or mitigate the loss or impairment of life, health, property, or essential public services.” Additionally, State law requires the Public Works Director, as the City official with delegated authority to take emergency action, to report any emergency authorization and the reason(s) for the authorization to the City Council not later than seven days after the action, or at its next regularly scheduled meeting if that meeting will occur not later than 14 days after the action. Further, the Public Works Director is required to report why the emergency would not permit a delay resulting from a competitive solicitation for bids and the City Council is required to review the emergency action at every regularly scheduled meeting thereafter until the emergency repair is completed. The City Council shall continue to review the emergency action at every regularly scheduled meeting thereafter until the action is terminated. At each review, the City Council shall determine, by a four-fifths vote, whether there is a need to continue the action.

Consistent with applicable State law and Council Resolution, on July 30, 2024, the Public Works Director declared an emergency and authorized the City to contract with Trofholz Technologies and Diamond Fencing to implement various security and access control improvements to the McCarthy Ranch Sewer Lift Station (Main Lift). Further, within the required timeframe the Public Works Director informed the City Council via Information Memorandum on July 30, 2024, regarding the emergency authorization, the reasons for the authorization, and the cost for repair in a not to exceed amount of $700,000.

PROJECT/STATUS UPDATE:

The installation of security enhancements by Trofholz Technologies, Inc. has been completed. The materials, hardware, and network connections necessary to operate security cameras, card readers, and motion sensors at the Main Lift facility are now installed and operational as of November 5, 2024.

Diamond Fence Co., Inc. will demolish and properly dispose of the existing fence, and install approximately 1,760 linear feet of new, code-compliant fencing using ClearVU reinforced panels topped with ribbon wire, integrated into the current gate structure. Materials have been ordered and are anticipated for arrival late November. The estimated project completion date is December 14, 2024.

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FISCAL IMPACT:

Funding for these repairs is available in the City’s Capital Improvement Program (CIP) budget. CIP Project 6124 – Sewer Pump Station Rehabilitation Project will fund the installation of security cameras, card readers, and motion sensors. The funding source of this CIP project is Sewer Infrastructure Fund. The available balance as of 11/05/2024 is $1,588,577. CIP 6130 – Main Lift Odor Emission Control Project will fund the removal and replacement of the perimeter fencing. The funding source of this CIP Project are Sewer Infrastructure Fund, and Sewer Treatment Fund. The available balance as of 11/05/2024 is $24,012.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA):

The emergency repair work is exempt from CEQA, per CEQA Guidelines Section 15301, Existing Facilities and 15302, Replacement or Reconstruction.

RECOMMENDATION:

1. Receive an update on the security improvements at the McCarthy Ranch Sewer Lift Station.

2. Determine by a four-fifths vote that the condition continues to constitute an emergency.

ATTACHMENT(S):

None.

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CITY OF MILPITAS

AGENDA REPORT
(AR)
Item Title: Approve Milpitas Arts and Culture Grant Request for Sunnyhills Neighborhood Association Juneteenth Event (Staff Contact: Renee Lorentzen, Recreation and Community Services Director, 408-586-3409)
Category: Consent Calendar-Community Services and Sustainable Infrastructure Meeting Date: 11/19/2024
Recommendation: Approve a Milpitas Arts and Culture in-kind grant request from Sunnyhills Neighborhood Association for the use of Sunnyhills Albert Augustine Jr. Memorial Park for a Juneteenth Celebration on June 21, 2025.

BACKGROUND:

The Milpitas Arts and Culture Grant (formerly the Cultural Arts Support Program) was introduced in 2001 as a way for the City of Milpitas to support enriching and free or low-cost cultural arts programming for the community. In recent years the program has functioned as an in-kind space grant, where Cultural Arts groups (nonprofit organizations, schools, clubs) and individuals may request free use of City of Milpitas rentable indoor or outdoor space to offer programming or, in the case of performing arts, to rehearse for free and low-cost programming to be offered in Milpitas. Groups are limited to two events per year, each event no more than two consecutive days. The cumulative total of event hours, including set up and break down, is limited to 40 hours per organization per year or an in-kind grant value of $10,000; whichever comes first.

Per changes made to the Milpitas Arts and Culture Grant (MACG) program last year, the Arts Commission reviews and recommends grants, and City Council approves or denies the requests.

The Arts Commission has received and reviewed one request for a Milpitas Arts and Culture Grant for Summer 2025, which it unanimously voted to recommend for approval.

The Sunnyhills Neighborhood Association has requested use of Sunnyhills Albert Augustine Jr. Memorial Park for a Juneteenth celebration on June 21, 2025. This would be the group’s third year producing this celebration of Black culture in Milpitas’ Sunnyhills neighborhood, historically recognized as the first planned racially integrated neighborhood in California.

ANALYSIS:

On September 23, 2024, the Arts Commission reviewed and unanimously recommended approval of a MACG In-Kind Grant Application from the Sunnyhills Neighborhood Association, requesting to use open space at Sunnyhills Albert Augustine Jr. Memorial Park for its second annual Juneteenth celebration on June 21, 2025.

The grant applicant previously received a Milpitas Arts and Culture In-Kind Grant in 2023 and 2024 to use Sunnyhills Albert Augustine Jr. Memorial Park for a Juneteenth event, which includes stage performances, a resource fair, and food trucks. The event has drawn about 200 attendees both years.

For 2025, they hope to attract 300 guests and add African-American cultural vendors, in addition to food vendors.

The grant application requests the following allowable in-kind services and/or resources:
1) City Park/open space for event (identified as Sunnyhills Albert Augustine Jr. Memorial Park) 2) Inclusion of the event in City marketing channels (Activity Guide, City website, Recreation and Community Services social media pages, and e-blast to the Recreation customer list)

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The value of Sunnyhills Neighborhood Association’s MACG In-kind grant application, should it be approved, is $1,069. All required security deposits, liability insurance, and/or permits from the City or outside agency, i.e.

County of Santa Clara for this type of event are still required. As proposed, the event would require both a City of Milpitas Special Event Permit and Santa Clara County Event Organizer Permit. The cost for both these permits is the responsibility of the host organization and is not covered by this grant.

The award of MACG in-kind grant is not a guarantee that the City special event permit or County event organizer permit will be granted. Should the Sunnyhills Neighborhood Association not be able to secure all the required permits, their event would need to be either scaled back, postponed, or cancelled.

POLICY ALTERNATIVE(S):

Alternative 1: Do not approve Sunnyhills Neighborhood Association’s grant request to use Sunnyhills Albert Augustine Jr. Memorial Park for its Juneteenth celebration.

Pros: If the request is not approved, the park remains open for rentals and other uses. The City could generate rental income should Sunnyhills Neighborhood Association choose to rent open space for its event or if picnic customers rent picnic areas.

Cons: Not approving the request may make it cost-prohibitive for Sunnyhills Neighborhood Association to host a Juneteenth event.

Reason for Not Recommending: Sunnyhills Neighborhood Association has had successful Juneteenth celebrations in 2023 and 2024, networking to involve many Milpitas residents and businesses in celebrating Black culture. This proposal allows Milpitas residents to learn about and celebrate Black culture. This enriches and adds to the City’s own efforts to celebrate diversity.

FISCAL IMPACT:

There is no impact to the General Fund. The value of Sunnyhills Neighborhood Association’s grant request is $1,069, the combined value of the resident nonprofit organization rate for an open space rental and the application fee.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA):

The action is a fiscal activity of the City government or an action to create a City government funding mechanism that does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment and is not a project pursuant to Cal. Code of Regs., tit. 14, § 15378.

RECOMMENDATION:

Approve a Milpitas Arts and Culture in-kind grant request from Sunnyhills Neighborhood Association for the use of Sunnyhills Albert Augustine Jr. Memorial Park on for a Juneteenth Celebration on June 21, 2025.

ATTACHMENT(S):
(a) Sunnyhills Neighborhood Association Grant Application

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CITY OF MILPITAS

AGENDA REPORT
(AR)
Item Title: Approve Parks and Recreation and Community Services Programs Donation for a Memorial Bench in Honor of David Volberg (Staff Contact: Renee Lorentzen, Recreation and Community Services Director, 408-586-3409) Category: Consent Calendar-Community Services and Sustainable Infrastructure Meeting Date: 11/19/2024
Recommendation: Approve the Parks and Recreation donation for a memorial bench for David Volberg at Sunnyhills Albert Augustine Jr. Memorial Park.

BACKGROUND:

The City of Milpitas Council adopted revisions to the Donation for City Park and Recreation and Community Services Programs City Council Policy (Policy) on October 4, 2022. The policy establishes the guidelines, criteria, and processes for donations for City parks and Recreation and Community Services Department programs, including memorials to City-owned parks and recreation areas throughout the City of Milpitas. This Policy is consistent with Council-approved Budget Guidelines to provide process and procedure on the acceptance of financial donations.

On November 4, 2024, the Parks, Recreation and Cultural Resources Commission (PRCRC) voted to recommend City Council approval of the Parks and Recreation Donation Application submitted by Deborah Pagnotta for the installation of a Memorial Bench at Sunnyhills Albert Augustine Jr. Memorial Park for David Volberg.

ANALYSIS:

The Policy outlines ways for businesses, community groups, or individuals to donate through:
1) Monetary Donations
2) Memorial Donations
3) Anonymous Donations
4) Non-Financial Donations
Donations that require ongoing maintenance and/or future replacement costs are first reviewed by the PRCRC for review and recommendation to the Milpitas City Council for final consideration.

PRCRC reviewed the submitted donation application at their November 4, 2024, meeting. The application describes the following:

David Volberg, a member of the United Auto Workers (UAW) union and a worker on the Ford Auto line in Milpitas, was instrumental in the development of Sunnyhills housing community in 1954. It was Mr.

Volberg who blew the whistle on the UAW local union when they quietly insisted on segregated housing, despite the development having been designed to be integrated. When Mr. Volberg discovered this conflict as he himself was applying to buy a house at the union hall, it angered him, and he immediately contacted UAW representative Arthur Collins who contacted Walther Reuther, the president of the UAW and a civil rights activist. Mr. Reuther sent a team to investigate, and Mr. Volberg signed an affidavit attesting to what he'd been told, that he "didn't have to live next to a Negro family." Those members of the local UAW who were trying to interfere with the development of this first planned racially integrated community in the U.S. were removed. Donnie Eiland and David Mosqueda included an interview with David Volberg from 2020 in their Sunnyhills documentary: “ '54: The Story of the First Planned Integrated Community in the Country”. The City of Milpitas gave Mr. Volberg a key to the City on October 19, 2021, one month before he passed away.

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As outlined in the Policy “Memorial Donations” sections 2.6.3.1 and 2.6.3.4 respectively:
- Memorial Donations allow for individuals to contribute funds “in memory of” a family member who has passed away or retired and moved out of the area.
- Donation in memory of an individual must be appropriate and relevant to the Milpitas community, (i.e., past resident, business-person or other person having contributed to the good of the Milpitas community).

The PRCRC unanimously voted in favor of recommending the City Council’s final approval of the memorial bench donation.

POLICY ALTERNATIVE(S):

Alternative 1: Not approve the donation of a Memorial Bench in Honor of David Volberg Pros: City Staff will not have to work on the Memorial Bench Donation and will continue to work on currently assigned tasks.

Cons: The proposed memorial donation meets the Policy requirements.

Reason for Not Recommending: The proposed memorial donation meets the City Council Donation for City Parks and Recreation and Community Services Programs
FISCAL IMPACT:

Per the Donations to Parks and Recreation Programs Policy, the Volberg family accepts all financial responsibility of the donation which includes the bench and plaque procurement and installation. Ongoing maintenance costs and future replacement costs will be incorporated into a future Public Works operating budget.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA):

By the definition provided in the California Environmental Quality Act (CEQA) Guidelines Section 15378, this action does not qualify as a “project” for the purpose of CEQA.

RECOMMENDATION:

Approve the Parks and Recreation donation for a memorial bench for David Volberg at Sunnyhills Albert Augustine Jr. Memorial Park.

ATTACHMENT(S):
(a) Donation for City Parks and Recreation and Community Services Programs Policy (b) Parks, Recreation and Cultural Resources Financial Donation Form (c) PRCRC Minutes – November 4, 2024

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CITY OF MILPITAS Revision Date
Original 03/19/2013
Revised 10/4/2022

CITY COUNCIL POLICY

Page 1 of 3 ends

1. PURPOSE

1.1. This Policy establishes the guidelines, criteria, and processes for donations for City parks and Recreation and Community Services Department programs.

1.2. This Policy is consistent with the Council approved Budget Guidelines which state in part that the City Manager is authorized to accept grants or donations up to and including $100,000, increase department revenues and appropriations accordingly, and execute related agreements as long as no matching funds are required, and departments do not require additional funding for ongoing maintenance costs or future replacement costs

2. POLICY

2.1. The City shall have the sole authority and the City Council shall have the final authority to approve donations except for monetary donations up to and including $100,000 that do not require any matching funds, additional funding for ongoing maintenance costs or future replacement costs.

2.2. The City reserves the right to recognize donors, or, for memorial gifts, the named individual, in any other manner the City so chooses. No outside donor shall have the right to apply, control, or dictate the City’s manner of recognition.

2.3. In the event the City chooses to recognize a donor, or for memorial gifts, the named individual, the manner of recognition shall be construed as the City’s own speech under the government speech doctrine and no open forum shall be created by the City’s exercise of its sole decision to recognize a donor or named individual at a certain location or in a certain manner.

2.4. Final review and action to accept or decline a donation, and recognition of the donor for accepted donations on behalf of the City of Milpitas is determined by the Milpitas City Council except for monetary donations up to and including $100,000 that do not require any matching funds, additional funding for ongoing maintenance costs or future replacement costs. For these monetary donations, the final review and action rests with the City Manager.

2.5. The Parks, Recreation and Cultural Resources Commission (PRCRC) shall evaluate appropriate donations to City Parks or Recreation and Community Services programs and shall make recommendations to the City Council.

2.6. Financial Donations

2.6.1. Donors may earmark monies for the purchase of specific materials, supplies, equipment, furnishings, and other items to the extent practical.

Policy No:

Click or tap here to enter
text.

DONATIONS FOR CITY PARKS AND

RECREATION AND COMMUNITY

SERVICES PROGRAMS
Effective Date:
10/4/2022
Revision No:
1 Policy Administrator:

Recreation and Community Services
Next Review Due:

As needed
Related Policies and
Procedures:

Incorporates and
replaces Original
Approved by:

Click or tap here to enter text.

Council meeting date, agenda item #, and
vote
Date Approved:
10/4/2022

Page 522 of 557 ends

CITY OF MILPITAS Revision Date
Original 03/19/2013

DONATION FOR CITY PARKS AND RECREATION AND COMMUNITY SERVICES PROGRAMS/ POLICY #

Page 2 of 3 ends

2.6.2. City staff will apply the funds as requested by the donor. Should additional or alternate uses for the funds be identified, staff will consult with the donor and receive written permission to apply funds differently.

2.6.3. Memorial Donations

2.6.3.1 Memorial Donations allow for individuals to contribute funds “in memory of” a family member who has passed away or retired and moved out of the area.

2.6.3.2 Memorial donations may not be contributed in memory of pets, or livestock.

2.6.3.3 Individuals may name the City of Milpitas or Recreation and Community Services as a beneficiary in their wills, trusts, or other estate planning document. The will might stipulate that the funds (or interest from part of an estate) be used to purchase particular items or materials in certain service areas or support certain programs.

2.6.3.4 Donation in memory of an individual must be appropriate and relevant to the Milpitas community, (i.e., past resident, business-person or other person having contributed to the good of the Milpitas community).

2.6.4. Anonymous Donations

2.6.4.1 Donations with the request to remain anonymous will not be acknowledged in any donor listings.

2.6.5. Non-financial Donations

2.6.5.1 In the event a donor desires to give materials, personal property, real property, fixtures and other things, non-monetary in nature, to the City, the proposed gift shall be presented to the Director of Recreation and Community Services in writing.

2.6.5.2 All such non-monetary donations shall be subject to the City Manager or designee’s determination of probable value and viability for acceptance and placement.

2.6.5.3 If determined by staff to be a viable donation, the Parks, Recreation and Cultural Resources Commission shall make a recommendation to the City Council for a final decision, except for monetary donations up to and including $100,000, in which the final review and action rests with the City Manager.

3. PROCEDURE

3.1. Accepting Monetary Donation Requests

3.1.1. All inquiries about monetary donations shall be directed to the Recreation and Community Services Director.

3.1.2. If deemed a viable donation, potential donors shall be provided a copy of the Parks, Recreation and Cultural Resources Donation Form.

3.1.3. Upon receipt of this completed form by the Director, the proposed donation shall be placed on the next appropriate PRCRC agenda.

3.1.4. For monetary donations up to and including $100,000 that do not require any matching funds, additional funding for ongoing maintenance costs or future replacement costs, staff will provide an informational item to the PRCRC for information purposes only. The donation will be accepted administratively. The

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CITY OF MILPITAS
Revision Date
Original 03/19/2013

DONATION FOR CITY PARKS AND RECREATION AND COMMUNITY SERVICES PROGRAMS/ POLICY #

Page 3 of 3 ends

Director of Finance will report quarterly the acceptance of any grants and donations as part of the quarterly financial status report.

3.1.5. For any monetary donation, that requires any matching funds, additional funding for ongoing maintenance costs, future replacement costs, or any monetary donation over $100,000, the PRCRC shall review the proposed donations and provide a recommendation for either accepting or declining the donation to the Milpitas City Council.

3.2. Accepting Non-financial Donation Requests

3.2.1. All inquiries about non-financial donations shall be directed to the Recreation and Community Services Director.

3.2.2. Recreation and Community Services Director will coordinate the review of any non-financial donations with other City Departments affected by the donation, including but not limited to the Office of the City Attorney, Finance and Public Works.

3.2.3. If deemed a viable donation, potential donors shall be provided a copy of the Parks, Recreation and Cultural Resources Donation Form.

3.2.4. Upon receipt of this completed form by the Director, the proposed donation shall be accepted by the City Manager or their designee if there are no ongoing maintenance or future replacement costs. Otherwise, the donation shall come to the PRCRC for approval with an estimated value of up to and including $25,000 and to the PRCRC for recommendation for City Council approval with an estimated value greater than $25,000.

3.2.5. The PRCRC shall receive a quarterly report on received non-financial donations received for up to and including $25,000 at a regularly scheduled meeting.

Page 524 of 557 ends

CITY OF MILPITAS
Parks, Recreation & Cultural Resources Commission
November 4, 2024 Parks, Recreation & Cultural Resources Commission Minutes

Page 1 ends

MEETING MINUTES
7:00 PM
Monday, November 4, 2024

MILPITAS CITY HALL
455 E. CALAVERAS BLVD.

COMMITTEE CONFERENCE ROOM
MILPITAS, CA 95035
CALL TO ORDER Chair Strauss called the meeting to order at 7:00 PM.

ROLL CALL PRESENT: Commissioners Davis, Ehardt, Jackson, Strauss, Thomas ABSENT: Commissioners Ashby, Gomez, Reddy
City Council Liaison: Councilmember Hon Lien
City Staff: Renee Lorentzen – Director of Recreation and Community Services Amanda Ingua – Public Services Assistant
PLEDGE of ALLEGIANCE Chair Strauss led the Pledge of Allegiance.

ALTERNATE SEATING None.

APPROVAL OF AGENDA Motion to approve the agenda for November 4, 2024.

Motion/Second: Davis/Jackson
Motion carried by a vote of AYES: All NOES: 0
APPROVAL OF MINUTES Motion to approve the minutes for September 9, 2024.

Motion/Second: Davis/Thomas
Motion carried by a vote of AYES: All NOES: 0
PUBLIC FORUM None.

ANNOUNCEMENTS Vice Chair Davis announced the VTA will offer free rides to vote on November 5, 2024.

BUSINESS ITEMS a. Memorial Bench Donations – City Staff Director of Recreation and Community Services, Renee Lorentzen briefed the Commission on receiving two memorial bench donation applications.

1. Paul Michael Schooss (Murphy Park)

2. David Volberg (Sunnyhills Albert Augustine Jr. Memorial Park)

Page 525 of 557 ends

November 4, 2024 Parks, Recreation & Cultural Resources Commission Minutes

Page 2 ends

Milpitas residents, Henry Nichols and David Mosqueda spoke on behalf of David Volberg and the positive impact he had on Milpitas and the Sunnyhills Community as being the first interracial community in Milpitas.

Motion to move forward with both memorial bench proposals for City Council final approval.

Motion/Second: Davis/Thomas
Motion carried by a vote of AYES: All NOES: 0
b. June Meeting Tour Site – City Staff
The Commission discussed options for their Monday, June 2, 2025, Park Tour Sites. The Community Gardens and Hall Memorial Park were suggestions for the park tour.

CITY LIAISON REPORTS a. Councilmember Lien provided updates on City Council items. b. City Staff provided updates on Recreation programs/services and upcoming events.

FUTURE AGENDA ITEMS a. New Bike & Trails Map Review
b. Group Gardening Pilot Program Update
ADJOURNMENT With there being no further business, Chair Strauss adjourned the meeting at 7:28 PM to the next scheduled meeting held on December 2, 2024.

Page 526 of 557 ends

CITY OF MILPITAS

AGENDA REPORT
(AR)
Item Title: Approve Parks and Recreation and Community Services Programs Donation for a Memorial Bench in Honor of Paul Michael Schooss (Staff Contact: Renee Lorentzen, Recreation and Community Services Director, 408-586-3409) Category: Consent Calendar-Community Services and Sustainable Infrastructure Meeting Date: 11/19/2024
Recommendation: Approve the Parks and Recreation donation for a memorial bench for Paul Michael Schooss at Murphy Park.

BACKGROUND:

Milpitas City Council adopted revisions to the Donation for City Park and Recreation and Community Services Programs City Council Policy (Policy) on October 4, 2022. The Policy establishes the guidelines, criteria, and processes for donations to City Parks and Recreation and Community Services Department programs, including memorials to City-owned parks and recreation areas throughout the City of Milpitas. This Policy is consistent with Council-approved Budget Guidelines to provide process and procedure on the acceptance of financial donations.

On November 4, 2024, the Parks, Recreation and Cultural Resources Commission (PRCRC) voted to recommend City Council approval of the Parks and Recreation Donation Application submitted by Robin Schooss for the installation of a Memorial Bench at the Murphy Park for Paul Michael Schooss.

ANALYSIS:

PRCRC reviewed the submitted donation application at their November 4, 2024, meeting. As described in the application, Paul Michael Schooss, lived in Milpitas for 25 years, from 1982 – 2007. Mr. Schooss passed away on March 21, 2022. As submitted with the Memorial Donation Application, Paul's childhood was filled with memories of family, as his Grandma and Auntie and several cousins also lived in Milpitas. Summers were filled with BBQs, baseball games, and water balloon fights at his Grandma's house on Albany Court. His best friend lived only a few blocks away, making Murphy Park their favorite meetup spot. Paul was also on the Milpitas Knights for several years, carrying on a great tradition of youth team sports in Milpitas. It was so much fun for Paul’s family to watch him practice at the fields near Rancho and play his games at the Milpitas Sports Complex. Milpitas was a huge part of his life, so having a bench to memorialize him in his childhood park will mean the world to those who loved him.

As outlined in the Policy “Memorial Donations” sections 2.6.3.1 and 2.6.3.4 respectively:
- Memorial Donations allow for individuals to contribute funds “in memory of” a family member who has passed away or retired and moved out of the area.
- Donation in memory of an individual must be appropriate and relevant to the Milpitas community, (i.e., past resident, businessperson or other person having contributed to the good of the Milpitas community).

Page 527 of 557 ends

The PRCRC unanimously voted in favor of recommending the City Council’s final approval of the memorial bench donation.

POLICY ALTERNATIVE(S):

Alternative 1: Not approve the donation of a Memorial Bench in Honor of Paul Michael Schooss Pros: City Staff will not have to work on the Memorial Bench Donation and will continue to work on currently assigned tasks.

Cons: The proposed memorial donation meets the Policy requirements.

Reason for Not Recommending: The proposed memorial donation meets the City Council Donation for City Parks and Recreation and Community Services Programs
FISCAL IMPACT:

Per the Donation for City Parks and Recreation and Community Services Programs Policy, the Schooss family accepts all financial responsibility of the donation, which includes the bench and plaque procurement and installation. Ongoing maintenance costs and future replacement costs will be incorporated into a future Public Works operating budget.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA):

By the definition provided in the California Environmental Quality Act (CEQA) Guidelines Section 15378, this action does not qualify as a “project” for the purpose of CEQA.

RECOMMENDATION:

Approve the Parks and Recreation donation for a memorial bench for Paul Michael Schooss at Murphy Park.

Page 528 of 557 ends

CITY OF MILPITAS Revision Date
Original 03/19/2013
Revised 10/4/2022

CITY COUNCIL POLICY

Page 1 of 3 ends

1. PURPOSE

1.1. This Policy establishes the guidelines, criteria, and processes for donations for City parks and Recreation and Community Services Department programs.

2. POLICY

2.6. Financial Donations

2.6.1. Donors may earmark monies for the purchase of specific materials, supplies, equipment, furnishings, and other items to the extent practical.

Policy No:

Click or tap here to enter
text.

DONATIONS FOR CITY PARKS AND

RECREATION AND COMMUNITY

SERVICES PROGRAMS
Effective Date:
10/4/2022
Revision No:
1 Policy Administrator:

Recreation and Community Services
Next Review Due:

As needed
Related Policies and
Procedures:

Incorporates and
replaces Original
Approved by:

Click or tap here to enter text.

Council meeting date, agenda item #, and
vote
Date Approved:
10/4/2022

Page 529 of 557 ends

CITY OF MILPITAS Revision Date
Original 03/19/2013

DONATION FOR CITY PARKS AND RECREATION AND COMMUNITY SERVICES PROGRAMS/ POLICY #

Page 2 of 3 ends

2.6.3. Memorial Donations

2.6.3.1 Memorial Donations allow for individuals to contribute funds “in memory of” a family member who has passed away or retired and moved out of the area.

2.6.3.2 Memorial donations may not be contributed in memory of pets, or livestock.

2.6.4. Anonymous Donations

2.6.4.1 Donations with the request to remain anonymous will not be acknowledged in any donor listings.

2.6.5. Non-financial Donations

2.6.5.2 All such non-monetary donations shall be subject to the City Manager or designee’s determination of probable value and viability for acceptance and placement.

3. PROCEDURE

3.1. Accepting Monetary Donation Requests

3.1.1. All inquiries about monetary donations shall be directed to the Recreation and Community Services Director.

3.1.2. If deemed a viable donation, potential donors shall be provided a copy of the Parks, Recreation and Cultural Resources Donation Form.

3.1.3. Upon receipt of this completed form by the Director, the proposed donation shall be placed on the next appropriate PRCRC agenda.

Page 530 of 557 ends

CITY OF MILPITAS
Revision Date
Original 03/19/2013

DONATION FOR CITY PARKS AND RECREATION AND COMMUNITY SERVICES PROGRAMS/ POLICY #

Page 3 of 3 ends

Director of Finance will report quarterly the acceptance of any grants and donations as part of the quarterly financial status report.

3.2. Accepting Non-financial Donation Requests

3.2.1. All inquiries about non-financial donations shall be directed to the Recreation and Community Services Director.

3.2.3. If deemed a viable donation, potential donors shall be provided a copy of the Parks, Recreation and Cultural Resources Donation Form.

3.2.5. The PRCRC shall receive a quarterly report on received non-financial donations received for up to and including $25,000 at a regularly scheduled meeting.

Page 531 of 557 ends

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Page 534 of 557 ends

CITY OF MILPITAS
Parks, Recreation & Cultural Resources Commission
November 4, 2024 Parks, Recreation & Cultural Resources Commission Minutes

Page 1 ends

MEETING MINUTES
7:00 PM
Monday, November 4, 2024

MILPITAS CITY HALL
455 E. CALAVERAS BLVD.

COMMITTEE CONFERENCE ROOM
MILPITAS, CA 95035
CALL TO ORDER Chair Strauss called the meeting to order at 7:00 PM.

ALTERNATE SEATING None.

APPROVAL OF AGENDA Motion to approve the agenda for November 4, 2024.

Motion/Second: Davis/Jackson
Motion carried by a vote of AYES: All NOES: 0
APPROVAL OF MINUTES Motion to approve the minutes for September 9, 2024.

Motion/Second: Davis/Thomas
Motion carried by a vote of AYES: All NOES: 0
PUBLIC FORUM None.

ANNOUNCEMENTS Vice Chair Davis announced the VTA will offer free rides to vote on November 5, 2024.

BUSINESS ITEMS a. Memorial Bench Donations – City Staff Director of Recreation and Community Services, Renee Lorentzen briefed the Commission on receiving two memorial bench donation applications.

1. Paul Michael Schooss (Murphy Park)

2. David Volberg (Sunnyhills Albert Augustine Jr. Memorial Park)

Page 535 of 557 ends

November 4, 2024 Parks, Recreation & Cultural Resources Commission Minutes

Page 2 ends

Motion to move forward with both memorial bench proposals for City Council final approval.

CITY LIAISON REPORTS a. Councilmember Lien provided updates on City Council items. b. City Staff provided updates on Recreation programs/services and upcoming events.

Page 536 of 557 ends

CITY OF MILPITAS

AGENDA REPORT
(AR)
Item Title: Consider One Donation Request from the Knights of Columbus (Staff Contact:

Renee Lorentzen, Recreation and Community Services Director, 408-586-3409) Category: Consent Calendar-Community Services and Sustainable Infrastructure Meeting Date: 11/19/2024
Recommendation: Approve a donation request of $500 for the Knights of Columbus Annual Thanksgiving Dinner and Food Distribution event on November 28, 2024.

BACKGROUND:

On November 4, 2024, staff received a Donation and Fee Waiver/Reduction Policy request from the Knights of Columbus for their annual Thanksgiving Dinner and Food Distribution event on Thursday, November 28, 2024.

The request is for a $500 donation for costs associated with hosting the dinner and food distribution, which provides a traditional Thanksgiving dinner to those in need in Milpitas and surrounding communities.

ANALYSIS:

The Recreation and Community Services Department received one (1) Donation and Fee Waiver/Reduction Policy request application.

Donation
Knights of Columbus submitted their required application and documentation for their annual Thanksgiving Dinner and Food Distribution events:
- City Council Donation and Fee Waiver/Reduction Policy request - Non-profit status letter
Milpitas City Council adopted an updated City Council Donation and Fee Waiver/Reduction Policy (Policy) on June 21, 2022. Per the Policy, eligible organizations can request City fees to be waived up to $1,500 or a donation amount up to $500 to be granted upon request. Eligible organizations are defined as “a non-profit organization as described by the Internal Revenue Section such as 501(c)(3) or an intergovernmental agency; Non-discriminatory, and non-political in nature.” Fee Waiver or Donation requests for events must provide a community benefit within the City of Milpitas proper. Applying organizations must provide proof of non-profit status from the federal Internal Revenue Service or the State Franchise Tax Board.

Knights of Columbus is requesting the City Council donate $500 to offset the costs associated with hosting the dinner and food distribution.

As required, Knights of Columbus provided a copy of their respective determination letters from the Internal Revenue Service stating they are a tax-exempt organization. The applicant meets the requirements as outlined in the Council-adopted Donation and Fee Waiver/Reduction Policy.

POLICY ALTERNATIVE(S):

Alternative: Do not approve the donation application as requested.

Pros: The City’s General Fund will not incur the costs of the fees waived.

Con: Denial of the request may cause the non-profit organization to not hold their event.

Reason not recommended: This request is consistent with the Council-approved Policy.

Page 537 of 557 ends

FISCAL IMPACT:
$25,000 was approved and included in the FY 2023-24 City budget for the City Council’s Unallocated Community Promotions with a current balance of $21,504.73. If the City Council approves this request, then $21,004.73 would remain for the current year’s budget.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA):

RECOMMENDATION:

Approve a donation request of $500 for the Knights of Columbus Annual Thanksgiving Dinner and Food Distribution event on November 28, 2024.

ATTACHMENT(S):
(a) Knights of Columbus Application
(b) Knights of Columbus Entity Status Letter

Page 538 of 557 ends

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Page 542 of 557 ends

CITY OF MILPITAS

AGENDA REPORT
(AR)
Item Title: Adopt a Resolution Certifying Election Results and Adding the Properties Located at 470, 480, 490 and 500 Wool Drive into Community Facilities District No. 2005-1 (Annexation No. 24) (Staff Contact: Christian di Renzo, Public Works Director, 408-586-2602; and Michael Silveira, City Engineer, 408-586-3303) Category: Public Hearings-Community Development
Meeting Date: 11/19/2024
Recommendation: Following receipt of election results from the City Clerk, adopt a resolution certifying election results and adding the properties located at 470, 480, 490 and 500 Wool Drive into Community Facilities District No. 2005-1 (Annexation No. 24).

BACKGROUND:

On January 25, 2024, the Zoning Administrator approved four Site Development Permit Nos. SD23-0006, SD23-0007, SD23-0008 and SD23-0009 to develop four detached, two-story single-family residences with attached garage on a separate 0.2 acre existing lots in the R2 Zoning District located at 470, 480, 490 and 500 Wool Drive by Mission Peak Homes, Inc. (Developer).

ANALYSIS:

The Project is comprised of real property in the City of Milpitas, County of Santa Clara, State of California, described as follows:
• Lots 177, 178, 179, and 180 as shown on that certain map entitled, Tract no. 4549, which map was filed for record in the office of the recorder of the County of Santa Clara, State of California, on April 4, 1969, in book 251 of maps, pages 17 and 18.

The Project is subject to annexation into the Community Facilities District No. 2005-1 (CFD 2005-1). The City has on file a Certificate of Registrar of Voters from the County of Santa Clara certifying that there are no active registered voters within the boundaries of the proposed CFD 2005-1 - Annexation No. 24 for this development.

On November 19, 2024 the property owner was scheduled to vote on agreeing to the proposed Annexation No.

24. The resolution attached hereto, depending on the results of the election to be determined at the hearing, documents the results of the election on annexation into CFD 2005-1 which is subject to the provisions of the Mello-Roos Community Facilities Act of 1982, commencing with Section 53311 of the Government Code.

While the Act has a number of requirements for annexation and imposition of the special tax, the Developer (as the sole landowner within the annexation territory) has agreed to waive many of the formalities. A copy of the waiver executed by the Developer is on file with the City Clerk.

POLICY ALTERNATIVE(S):

Alternative 1:

Deny Annexation of Project to CFD 2005-1
Pros: None
Cons: Denying the Annexation of Project into the CFD No. 2005-1 would prevent the City from funding necessary public services through levying special taxes on these parcels.

Reason for Not Recommending: Staff recommends to adequately fund the perpetual maintenance of improvements and services within CFD No. 2005-1.

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FISCAL IMPACT:

Staff recommends adoption of a resolution certifying election results and adding Project to CFD 2005-1 to adequately fund the perpetual maintenance of improvements and service within Annexation No. 24.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA):

On January 25, 2024, The Planning Administrator concluded that the Project’s proposed development of the project site (APN 029-10-081, 029-10-082, 029-10-083 & 029-10-084) is categorically exempt from environmental review under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15303 (New Construction or Conversion of Small Structures), Section 15332 (In-fill Development Projects) and, as a separate and independent basis, Section 15183 (Projects Consistent with a Community Plan, General Plan, or Zoning).

RECOMMENDATION:

Following receipt of election results from the City Clerk, adopt a resolution certifying election results and adding 470, 480, 490 and 500 Wool Drive to Community Facilities District No. 2005-1 (Annexation No. 24).

ATTACHMENT(S):
(a) Resolution

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RESOLUTION NO. ______ -

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MILPITAS, CALIFORNIA,

CERTIFYING THE RESULTS OF AN ELECTION AND ADDING TERRITORY TO COMMUNITY FACILITIES DISTRICT NO. 2005-1 (PUBLIC SERVICES) (Annexation No. 24)
WHEREAS, the City Council of the City of Milpitas, California (the “City Council”) has previously formed Community Facilities District No. 2005-1 (Public Services) (“CFD No. 2005-1”) pursuant to the Mello-Roos Community Facilities Act of 1982 (the “Act”), as amended, for the purpose of financing certain Public Services; and WHEREAS, acting pursuant to the Act, the City Council also authorized by the adoption of Resolution No. 7521 the annexation in the future of territory to CFD No. 2005-1, such territory designated as Future Annexation Area, Community Facilities District No. 2005-1 (the “Future Annexation Area”); and WHEREAS, at this time the unanimous consent to the annexation of certain territory located within the Future Annexation Area to CFD No. 2005-1 has been received from the property owner of such territory, and such territory has been designated as Annexation No. 24 (the "Territory"); and
WHEREAS, less than twelve (12) registered voters have resided within the Territory for each of the ninety (90) days preceding the election date established for the Territory, therefore, pursuant to the Act the qualified elector of the Territory shall be the "landowner," as such term is defined in Government Code Section 53317(f), of such Territory and such landowner who is the owner of record as of the applicable election date, or the authorized representative thereof, shall have one vote for each acre or portion of an acre of the parcel of land that landowner owns within such Territory; and WHEREAS, the time limit specified by the Act for conducting an election to submit the levy of the special taxes on the Territory to the qualified elector thereof and the requirements for impartial analysis and ballot arguments have been waived with the unanimous consent of the qualified elector of the Territory; and WHEREAS, the City Clerk of the City of Milpitas has caused a ballot to be distributed to the qualified elector of the Territory, has received and canvassed such ballot and made a report to the City Council regarding the results of such canvass, a copy of which is attached as Exhibit A hereto and incorporated herein by this reference; and
WHEREAS, at this time the measure voted upon and such measure did receive the favorable vote of the qualified elector of the Territory, and the City Council desires to declare the results of the election; and
WHEREAS, a map showing the Territory and designated as Annexation Map No. 24 (the "Annexation Map"), a copy of which is attached as Exhibit B hereto and incorporated herein by this reference, has been submitted to this legislative body.

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2 Resolution No. ____
NOW, THEREFORE, IT IS HEREBY RESOLVED by the City Council of the City of Milpitas, California, acting as the legislative body of Community Facilities District No. 2005-1, as follows:

Section 1. Recitals. The above recitals are true and correct.

Section 2. Findings. This legislative body does hereby further determine as follows:

A. The unanimous consent as described in the recitals hereto to the annexation of the Territory to CFD No. 2005-1 has been given by the owner of the Territory and such consent shall be kept on file in the Office of the City Clerk of the City of Milpitas.

B. Less than twelve (12) registered voters have resided within the Territory for each of the ninety (90) days preceding the election date established for the each of the parcels located within the Territory, therefore, pursuant to the Act the qualified elector for the Territory shall be the "landowner" of the Territory as such term is defined in Government Code Section 53317(f).

C. The qualified elector of the Territory has voted in favor of the levy of special taxes on the Territory upon its annexation to CFD No. 2005-1.

Section 3. Territory. The boundaries and parcels of property within the Territory and on which special taxes will be levied in order to pay for the costs and expenses of authorized Public Services are shown on the Annexation Map as submitted to and hereby approved by this legislative body.

Section 4. Declaration of Annexation. This legislative body does hereby determine and declare that the Territory, and each parcel therein, is now added to and becomes a part of CFD No. 2005-1. The City Council, acting as the legislative body of CFD No. 2005-1, is hereby empowered to levy the authorized special tax within the Territory.

Section 5. Notice. Immediately upon adoption of this Resolution, notice shall be given as follows:

A. A copy of the Annexation Map as approved shall be filed in the Office of the County Recorder no later than fifteen (15) days after the date of adoption of this Resolution.

B. An Amendment to the Notice of Special Tax Lien (Notice of Annexation) shall be recorded in the Office of the County Recorder no later than fifteen (15) days after the date of adoption of this Resolution.

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3 Resolution No. ____
Section 6. Effective Date. This Resolution shall become effective upon its adoption.

ADOPTED by the City Council of the City of Milpitas, California, at a Regular Meeting thereof held this __________ day of ___________, 20__, by the following roll call vote to wit:

AYES:

NOES:

ABSENT:

ABSTAIN:

ATTEST:

Suzanne Guzzetta, City Clerk
APPROVED:

Carmen Montano, Mayor
APPROVED AS TO FORM:
__________________________________
Michael Mutalipassi, City Attorney

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A - 1
38077.00180\29372866.1
EXHIBIT “A”

CERTIFICATE OF ELECTION OFFICIAL

AND STATEMENT OF VOTES CAST

STATE OF CALIFORNIA )
) ss.

COUNTY OF SANTA CLARA )
The undersigned, ELECTION OFFICIAL OF THE CITY OF MILPITAS, COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, DOES HEREBY CERTIFY that pursuant to the provisions of Section 53326 of the Government Code and Division 12, commencing with Section 17000 of the Elections Code of the State of California, I did canvass the returns of the votes cast at the

CITY OF MILPITAS
COMMUNITY FACILITIES DISTRICT NO. 2005-1
(PUBLIC SERVICES)

SPECIAL ELECTION
ANNEXATION NO. 24
held on the election date established for each parcel located within the territory included in Annexation No. 24.

I FURTHER CERTIFY that this Statement of Votes Cast shows the whole number of votes cast in the area proposed to be annexed to Community Facilities District No. 2005-1 for or against the Measure are full, true and correct.

VOTES CAST ON PROPOSITION 1: YES
NO
WITNESS my hand this day of , 20__.

SUZANNE GUZZETTA

CITY CLERK

CITY OF MILPITAS

OF THE STATE OF CALIFORNIA

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B - 1
38077.00180\29372866.1
Exhibit B
Annexation Map

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CITY OF MILPITAS

AGENDA REPORT
(AR)
Item Title: Economic Development Strategy and Economic Indicators Update (Staff Contact:

Alex Andrade, Economic Development & Strategic Initiatives Director, 408-586- 3046)
Category: Community Development
Meeting Date: 11/19/2024
Recommendation: Receive economic development strategy and economic indicators update.

BACKGROUND:

One of the City Council priorities is Economic Development and Job Growth, which focuses on strengthening Milpitas’ economic foundations that support community prosperity and opportunity while ensuring a sustainable and livable city. In support of this City Council priority, the Office of Economic Development’s (OED) mission is to provide services and resources to the business and development communities with the purpose of attracting, retaining, and expanding business and employment opportunities for area residents, stimulating the local economy, and enhancing local retail sales, transient occupancy, and commercial property tax bases while maintaining a positive balance between growth, social equity, and the economic vitality of Milpitas. The City Council adopted the Economic Development Strategy (EDS) on May 5, 2020. The EDS is a policy document that has guided OED activities since 2020, serving as a five-year road map to grow and diversify the local economy.

The OED leverages an array of key economic indicators to inform its work. Economic indicators are defined as statistics that measure economic activity to assess the health of the economy. It includes metrics on interest rates and inflation, business activity, real estate, and revenues. Economic Development staff use these indicators to ensure its approach and programming meets the needs of the Milpitas community.

Aside from adhering to the EDS’ implementation actions, the OED abides by the General Plan 2040’s Economic Development Element. The General Plan’s Action ED-1b, states that OED staff shall “regularly monitor and track economic development trends including business recruitment and retention efforts initiated by the City. Report economic development trends to the Economic Development and Trade Commission and City Council annually.” This Agenda Report serves to update the City Council on the EDS and the state of the local economy through economic Indicators.

During the June 4, 2024 discussion of the Proposed Operating Budget for Fiscal Year 2024-2025, the City Council requested that staff present further details on potential City revenue sources at the beginning of the Fiscal Year 2025-2026 budget process. This Agenda Report and accompanying presentation serve as the foundation for an in-depth discussion on revenue sources, initiating public dialogue regarding the FY 2025-2026 budget process.

ANALYSIS:

The information below consists of an EDS update with goals, topic areas, and a list of accomplishments since the 2020 adoption. Moreover, the Agenda Report includes an overview of specific key macro- and micro-level economic indicators. Macroeconomic indicators are metrics used to assess the economy’s overall performance; for this Agenda Report, inflation, interest rates, consumer spending, and unemployment are discussed. In contrast, microeconomic indicators focus on economic data at the local level. The analysis provides the City Council with an overview of the Milpitas economy to set the context for the Fiscal Year 2024-2025 budget process.

Economic Development Strategy

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The EDS is a policy document meant to stimulate and maximize economic growth. While the current EDS was adopted by the City Council on May 5, 2020, there was a fifteen-year gap from the previously adopted strategy on February 7, 2006. The current EDS sunsets in May 2025. The EDS is based on the following goals:

1. Cultivate a strong stable and diverse local economy;

2. Achieve fiscal sustainability and maintain adequate revenues to provide quality and essential public services;

3. Encourage new development in key opportunity areas that provide high-quality work environments and competitive business locations;

4. Pursue economic development opportunities that foster and improve quality of life; and

5. Increase community workforce preparedness and cultivate an entrepreneurial environment that fosters innovation.

The EDS addresses seven topic areas based on challenges and opportunities identified through community and business outreach and data analysis in 2019 and early 2020:
• Small Business, Entrepreneurship, and Displacement Prevention Strategies • Retail and Restaurant Strategies
• Workforce Development and Education Resources
• High Tech and Advanced Manufacturing Sector Strategies • Light Industrial, Manufacturing, and Warehouse Distribution • Innovation District and Real Estate Development Opportunities • City Marketing and Processes
The EDS was adopted during an unprecedented period of economic uncertainty due to the COVID-19 pandemic.

Notwithstanding, the OED immediately embarked on business resiliency and recovery. Over the past four years, staff has completed 75% (48) of the EDS’ 64 implementation actions, with another 14% (9) currently in progress, and 11% (7) of actions not started yet. The following represents some key accomplishments since 2020, but is not an exhaustive list:
• Business attraction - Apple, BD Biosciences, Corsair Gaming, Amazon, Tarana Wireless, Trace3, Virtusa, NVZN, Commonwealth Fusion Systems, Selene Photonics, and Smart Modular; • Launched the Innovation District as a business attraction strategy; • Completed the Fiscal Benefits of Employment Lands Study; • American Rescue Plan Act (ARPA)/Community Development Block Grant (CDBG) - disbursed over $1.8M in grant funding through ARPA and CDBG to over 400 businesses, initiated the Storefront Improvement Grant Program, issued 13 hotel grants, and provided 8 workforce development grants; • COVID-19 Business Resources -
o Developed a business resiliency and recovery resources webpage; o Launched Milpitas MyPlan Career Accelerator Workforce Development Program; o Instituted the Constant Contact messaging platform for business advocacy (6,000+ subscribers); o Served as staff liaison to the City Council’s Small Business Assistance Subcommittee; o Implemented an Emergency Ordinance to protect restaurants and consumers through a thirdparty food delivery fee cap; o Promoted 15 businesses via the Small Business Spotlight video marketing campaign; • Led Silicon Valley Hotel & Travel Industries Reconnecting Silicon Valley Study resulting in Excellence in Economic Development Bronze Award from the International Economic Development Council (IEDC); • Real estate activities - purchased two properties (1700 Sango Ct. and 1841 Tarob Ct.), leased temporary Fire Station #2 building, and leased property for construction staging resulting in $160,000 in net revenue.

In Fiscal Year 2023-2024 alone, staff participated in 256 business engagements and 89 permit assistance projects. Recently, a Permit Navigator was hired to assist with permit facilitation for projects with significant job creation and revenue generation potential.

The following information examines trends in macro and microeconomics including inflation, interest rates, consumer spending, unemployment, Milpitas’ role in Silicon Valley, business attraction, expansion, and retention, industrial workforce trends, real estate, and revenue trends. Understanding these dynamics is essential for informed decision-making that supports the City’s long-term fiscal sustainability.

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Macroeconomics Indicators
Inflation and Interest Rates
According to the Federal Reserve Bank of Cleveland, the Federal Reserve aims to control inflation by changing interest rates if they are too high to slow down the economy and lower inflation. Conversely, to lower inflation, the Federal Reserve typically raises interest rates to slow the economy. The goal is to stabilize the economy. The inflation rate is typically around 2% to keep the economy on track.

The COVID-19 pandemic created one of the highest inflationary periods in over 40 years. In response to the supply chain disruptions and unemployment at the outset of the pandemic, the Federal Reserve took certain monetary policy steps to stimulate the economy. The monetary policy saved the economy at the time, but subsequently contributed profoundly to inflation. Interest rates held close to 0% in 2020 and 2021, but peaked in June 2022, with the average annual inflation at approximately 8%. Interest rates held close to 0% in 2020 and 2021. The Federal Reserve increased interest rates eleven times between 2022 and 2023. The Federal Reserve cut interest rates on September 18, 2024, by 50 basis points, and on November 7, 2024, implemented an additional reduction of 25 basis points . Economists expect continued rate cuts in 2025.

Consumer Spending
The Bureau of Economic Analysis (BEA) defines consumer spending as personal consumption expenditures (PCE), which is the value of goods and services purchased. Consumer spending is important to monitor because it represents approximately two-thirds of the United States’ gross domestic product (GDP) and gauges consumer spending health. Consumer spending at the national level remains strong. Per the Bureau of Economic Analysis, there have been increases in personal income, disposal current income, personal outlays, and personal interest and current transfer payments. Contributing factors to a strong consumer spending environment may be due to income increases, price stabilization, and lower interest rates. When consumer confidence improves, it typically results in buying more durable goods such as vehicles and appliances. This Agenda Report includes a section on revenues associated with property tax, sales tax, and hotel tax, which is an important economic indicator of the health of the local economy and the City of Milpitas’ long-term fiscal health.

Unemployment Rate
The unemployment rate estimates the share of job-seeking people who are not currently employed. The unemployment rate is a key indicator of the health of the economy. According to the Bureau of Labor Statistics, the national unemployment rate in October 2024 was 4.1%, the same as in September 2024. That means that approximately 7 million people were unemployed in the United States.

Microeconomics Indicators
Milpitas’ Role in Silicon Valley
Milpitas is situated in one of the most innovative regions in the world, Silicon Valley. Milpitas’ strength lies in its diversity and is known as a rapidly growing community. WalletHub named Milpitas the 4th fastest-growing city in the United States in 2020. Silicon Valley holds the title for most patents awarded overall, and Milpitas plays a major role in that accomplishment. According to the Silicon Valley Institute for Regional Studies, in 2016 Milpitas ranked in the top twenty cities in California for generating patents. Per the Harrity website (https://harrityllp.com/patent300/), 9 Milpitas businesses made the top 100 of the Top 300 2024 Patent List.

Milpitas businesses in ranked order: Taiwan Semiconductor Manufacturing (#5), Johnson and Johnson (#20), Siemens Industry (#37), Cisco (#39), Western Digital (#59), TDK (#68), Corning Optical (#74), BD Biosciences (#87,) and Hewlett Packard Enterprise (#89). These and other local technology and advanced manufacturing businesses are major drivers of economic performance.

Milpitas is a vital location for innovative businesses seeking a talented and creative workforce. Preserving and protecting valuable employment lands in Milpitas is critical because it allows businesses to operate successfully, which creates a multiplier effect in attracting new investment, enhancing job opportunities, and increasing revenues in property and sales tax. Companies operating on employment lands generate tax revenue that helps to fund essential public safety and services, and infrastructure development.

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Business Attraction, Expansion, and Retention
The EDS centers on attracting and retaining all businesses. However, technology and advanced manufacturing businesses are principal contributors to the City’s tax base and job creators, so there is a focus on these sectors.

Business attraction is important because it diversifies the local economy and stimulates investment. It frequently translates into new, high-quality employment opportunities. Staff has successfully attracted several large-cap companies including Apple, BD Biosciences, and Amazon, despite the obstacles posed by the pandemic.

Additionally, several key businesses have continued to expand their presence in Milpitas, including the secondlargest employer, KLA into the former FireEye site and creating 500 new jobs. Earlier this year, Western Digital announced it would spin off SanDisk Technologies as an independent company. Rather than relocating, SanDisk has chosen to expand its presence in Milpitas, upgrading several of its facilities to accommodate an increase in staff. Milpitas will now serve as the global headquarters for SanDisk’s research and development efforts and corporate operations. Tarana Wireless is another example of a local business expanding its Milpitas headquarters. In August 2024, Tarana Wireless was ranked #24 on Inc. 5,000 list of fastest growing United States companies and ranked #1 in the telecommunications category.

Land use and zoning are key tools used by the OED to attract and retain businesses. On June 18, 2024, the City Council approved an update to the zoning code, which established the Business Park/Research and Development District (BP/RD). This new zoning designation highlights two geographic areas – the Southwestern Employment Area and the Innovation District – as prime locations for business parks, advanced manufacturing, and light industrial uses. Specifically, the Innovation District outlined in the Milpitas Metro Specific Plan encourages the development of modern office and R&D facilities, intending to attract the artificial intelligence, automotive technology, and bioscience business sectors.

The United States Department of Commerce defines Foreign Direct Investment (FDI) as “investments made by foreign companies or individuals in the United States.” As of 2023, Milpitas ranks 11th in California in FDI, which is an increase from its rank of 17th in 2022. This is a testament to Milpitas’ key role in Silicon Valley and the City’s business-friendly environment. The top sources of FDI include Japan, United Kingdom, Singapore, Taiwan, and Germany, with investment concentrated in the metal manufacturing and professional and scientific services industries. The OED has participated in Governor Gavin Newson’s California delegation visit to Washington D.C. for the SelectUSA Economic Summit to attract FDI to the state and Milpitas in 2022, 2023, and 2024.

In addition to business attraction and expansion, retaining businesses is an important strategy because it is less costly and less resource-intensive compared to recruiting new businesses. The OED’s business retention efforts have played a key role in stabilizing the pandemic’s economic impacts. According to data from the City Finance Department, there are currently 6,066 active business licenses in Milpitas, a slight increase from 6,047 in 2020.

This growth reflects a continued spirit of entrepreneurship and confidence in doing business within Milpitas. The International Economic Development Council (IEDC) estimates that approximately 80% of new business investment and job creation stems from businesses already located in our respective backyards.

Industrial Sector and Workforce Trends
The industrial sector continues to be a major contributor to the Milpitas economy, with a concentration of technology and advanced manufacturing firms, particularly in electronics components, biotechnology, and research sectors. Business-to-business (B2B) sales from this sector are a dominant driver of the local economy and have provided stability to the City’s tax revenue generation during broader pandemic instability. Per the City’s sales tax consultant analysis, in 2Q2024, 770 businesses generated almost $2M in sales tax revenues.

This is a 13.7% increase compared to 2Q2023. The B2B category represents the largest sales tax revenue group at 27% of all sales tax revenues to the City. The OED strongly adheres to the General Plan 2040’s Economic Development Element policy ED 1-3 to “strengthen the City’s position as a premier regional location for technology and advanced manufacturing uses in Silicon Valley.” Milpitas has a concentration of the highly educated and skilled workforce that drives Silicon Valley. Census data shows that 61% of Milpitas residents have at least a bachelor’s degree and 28% have a graduate or professional degree. Top employers include Analog Devices, Cisco, Flextronics International, KLA, and Western Digital.

Employment in Milpitas is clustered in the manufacturing and professional, scientific, and technical services industries. These are broad industry categories that encompass a wide array of business types. The industries are defined according to the Federal Office of Management and Budgets’ NAICS code system. As of Quarter 1

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2024, Milpitas hosts 13,902 jobs in manufacturing and 8,021 jobs in professional, scientific, and technical services. Available statistics on specific occupations are tracked separately and are categorized through the Bureau of Labor Statistics’ Standard Occupation Classification system. This means that occupations such as Software Developers may be employed by different industries. The top three occupations by number of jobs are Software and Web Developers at 2,902 with an average salary of $198,800, followed by Laborers and Materials Movers at 1,755 with an average salary of $48,900, and Electrical, Electronics, and Electromechanical Assemblers at 1,357 with an average salary of $55,900.

The technology sector has been contracting since 2022. As such, Milpitas’ workforce has experienced multiple layoffs over the past two years. Between 1Q2023 and 4Q2024, Cisco laid off 666 employees through four rounds of downsizing. Western Digital laid off 357 employees through three rounds and Flex laid off 227 employees over four rounds during the same period. Staff continues to partner with NOVAworks and the California Employment Development Department on layoff assistance information sessions to assist recently laid-off individuals with a job search or career transition assistance.

Unemployment in Milpitas reached an average high of 8.2% in 2020, but in April 2020 the unemployment rate skyrocketed to 13%. There was a recovery to pre-pandemic levels when the average decreased to 2.5% unemployment in 2022. The most recent unemployment rate in Milpitas is 4.4%.

Real Estate
Real estate activity is measured by the OED through quarterly data, CoStar Group, and importantly, mutually beneficial relationships with the real estate brokerage and development communities.

Business activity, investment, construction, employment, consumer spending and confidence, and the supply chain are important real estate activities affecting local economic vitality. The availability of retail, office, research and development (R&D), and industrial inventory are primary contributors to Milpitas’ identity as a strategic Silicon Valley location. Milpitas’ commercial real estate inventory breaks down as follows: Retail (18%), Office (17%), R&D (33%), and Industrial (32%). The following table illustrates the commercial vacancy rate and price in each real estate category:

Retail Office
Research and
Development (R&D) Industrial
Vacancy Rate 3.7% 14.1% 14.2% 4.9%
Price p/square foot $3.08 $3.42 $1.96 $1.52
A 3% to 7% commercial vacancy rate is reasonable to allow for movement within the real estate arena. As the economy continues to improve, Milpitas is well-positioned to capture companies that are in growth mode due to a combination of its competitive pricing and strategic location. However, much of Milpitas’ commercial real estate is several decades old resulting in most of the commercial stock being Class B and C products. To attract modern technology and advanced manufacturing tenants, the City should work to accommodate new development of Class A products through permitting and entitlements.

It is imperative to stand by the General Plan 2040’s Economic Development Element Action ED 1-2 to “Promote and support innovative and emerging technologies for 21st century business and community needs.” Nonindustrial uses locating in industrial-zoned areas may pose one of the greatest challenges to Milpitas’ competitiveness and long-term fiscal sustainability. Industrial areas are fertile ground for small businesses and entrepreneurs to grow and expand as they transition to full production of products and services. While the City planned for the loss of 400 acres of industrial land through the Transit Area Specific Plan (TASP), the transition to residential development was strategically planned due to the goal of creating a transit-oriented district focused on residents, a new multi-modal transit center, Great Mall, circulation, connectivity, etc. due to a growing population. Notwithstanding, instances of spot zoning are negatively affecting local employment lands. The City of Milpitas has an obligation to ensure there is an adequate supply of land for existing businesses to operate and employ Milpitas residents to enhance the City’s ability to foster growth and a balanced jobs and housing ratio.

The City Council may want to explore creating a policy to formally protect land for employment and revenueproducing activities.

Revenue Trends & Analysis

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The City of Milpitas provides various essential municipal services to both residents and businesses. These services include public safety (Police/Fire Services), parks and recreation, roads, flood protection, sewers, water, refuse disposal, recycling, and other utilities. Since the City of Milpitas is not a for-profit making center, it relies on a variety of revenue sources to pay for services and community facilities, among other expenses. The OED collaborates with the Finance Department to monitor property, sales, and hotel tax revenues because they serve as major sources of funding affecting residents, visitors, and businesses.

Property Tax
Property tax has been the most significant and stable revenue source for the City of Milpitas. This is driven by a combination of consistent increases in median home prices and continued resilience in the pricing of the commercial real estate market. Property tax revenues are based on property values. In Silicon Valley and Milpitas, property values have historically increased as opposed to real estate markets nationally. Between Fiscal Year 2019 and Fiscal Year 2024, property tax revenues increased by 69% to $48.7M. This trend is expected to continue into 2025. Of the current top 10 property taxpayers, six are industrial landowners (Cisco, KLA, Headway Technologies, McCarthy Center Holdings, Washington Holdings Silicon Valley, and Western Digital) and one is a commercial landowner (Milpitas Mills LP). This provides evidence of the importance of the City's industrial and commercial sectors.

Sales Tax
Sales tax is charged to businesses for selling products in the state. In turn, businesses usually pass the sales tax to the consumer as a percentage of the amount of the product purchased. Sales tax revenues may also be significant but volatile resulting from market shifts. Sales tax revenues in 2Q24 fared better than 1Q2024.

Business-to-business (B2B) sales are the dominant driver of sales tax revenues. The top sales tax categories include electrical equipment, which saw a 61% year-over-year increase in Quarter 1 and a 39% year-over-year increase in Quarter 2 to $858,000. Heavy industrial receipts increased by 83% in Quarter 2 as well. Consumer spending has slightly declined in some key sectors, namely in automotive sales. Consumer spending and tax revenues in this category are likely to improve as interest rates are reduced.

As of 2Q2024, four employment land areas generate almost 60% of the City’s sales tax revenues: Milpitas Metro Specific Plan (18.8%), Gateway/Main Street Specific Plan (15%), Southwestern Employment Area (14.7%), and the Central Manufacturing Area (10.1%). In 2Q 2024, 913 businesses generated approximately $3.5M is sales tax revenues for the City, which is employed for essential public services, community facilities, and infrastructure.

Sales tax revenues account for 30% of the City’s entire revenues. Below is information on the geographic area, number of businesses located in the area producing sales tax revenues, amount of sales tax revenues in 2Q2024, and the associated color-coded map.

Top Sales Tax Generating Geographic Areas

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Based on the adopted Fiscal Year 2024-2025 budget,
sales tax revenues are expected to equal $29.6M. The
importance of shopping local and B2B transactions
benefits the Milpitas community considerably
Transit Occupancy Tax
Milpitas visitors who stay for 30 days (or fewer) in
hotels, motels, and similar lodgings must pay a
transient occupancy tax (TOT) or hotel bed tax. The
City of Milpitas currently has a 14% TOT rate. Similar
to sales tax revenues, TOT can generate a
considerable amount of revenues, but is a volatile
revenue source due to the market and people opting to
travel. TOT continues to lag compared to other tax
revenue categories and currently lies at approximately 80% of pre-pandemic levels. In Fiscal Year 2023-2024, the City collected $11.5M in TOT revenue. Based on the adopted Fiscal Year 2024-2025 budget, TOT tax revenues are expected to equal $13M. Hospitality trend experts are predicting a full recovery to 2019 levels by 2026.

Silicon Valley and Milpitas’ hotel sector has historically been driven by business travel. Recovery from the COVID-19 pandemic in this market segment has been more affected than in other categories due to remote work. The ubiquitous use of communication tools like Zoom and Microsoft Teams has reduced the need for companies to send representatives to the area for business purposes. However, the volume of hotel stays is expected to improve as companies return to an in-person work culture. The OED is strategizing on how to capitalize on the 2026 Super Bowl and World Cup games as major catalysts for the Milpitas hospitality sector due to Levi’s Stadium’s proximity.

Conclusion
In summary, this economic analysis underscores Milpitas' resilient and dynamic landscape as it navigates fiscal sustainability challenges. The reduction in interest rates is cause for optimism in 2025. Continued growth in property tax revenues from the commercial real estate inventory highlights the importance of maintaining a balanced approach to land use and economic development. Protecting employment lands is crucial, not only for supporting existing industries, but for accommodating future growth and investment. In addition, on November 5, 2024, 80% of Milpitas voters voted for Measure J, the Public Services Reauthorization Measure which continues the existing voter-approved 1/4-cent sales for 8 additional years to maintain Milpitas’ local services and quality of life.

The current Economic Development Strategy has proven invaluable in assisting staff in successfully navigating the COVID-19 pandemic. As the City continues to recover from the pandemic and enters a new economic cycle, it is essential to develop an updated Economic Development Strategy for the next five years that accounts for the structural shifts that have taken place. The City Council’s continued commitment to ensuring that Milpitas remains competitive in the ever-evolving economic landscape of Silicon Valley is vital.

FISCAL IMPACT:

This is an informational item for Council direction. No fiscal impact.

Map
Color
Geographic
Area
# of
Businesses
2Q2024
Milpitas Metro
Specific Plan 325 $1,122,999
Gateway/Main
Street Specific
Plan
259 $889,767
Southwestern
Employment
Area
140 $878,189
Central
Manufacturing
Area
189 $602,490
Totals 913 $3,493,445

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CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA):

The action has no potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment and is not a project pursuant to Pub. Resources Code, § 21065 and Cal. Code Regs., tit. 14, § 15378. The action is at most a continuing administrative or maintenance activity that does not commit the City to any project that has a potential to result in either director or indirect physical change in the environment and is not a project pursuant to Cal. Code Regs., tit. 14, § 15378.

RECOMMENDATION:

Receive economic development strategy and economic indicators update.

ATTACHMENT(S):

None

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Milpitas City CouncilNovember 19, 2024

Milpitas City Council
November 19, 2024