Agenda packet — Milpitas City Council, December 16, 2025 (part 1 of 3)

December 16, 2025 Milpitas City Council Agenda Page 1

REGULAR MEETING OF THE MILPITAS

CITY COUNCIL

AGENDA
TUESDAY, DECEMBER 16, 2025
CITY COUNCIL CHAMBER, 455 E. CALAVERAS BLVD, MILPITAS, CA 6:00 PM (CLOSED SESSION)
7:00 PM (PUBLIC BUSINESS)

For assistance in the following languages, you may call:

Đối với Việt Nam, gọi 408-586-2400
Para sa Tagalog, tumawag sa 408-586-3051
Para español, llame 408-586-3072

* To access written translation during the meeting, scan the QR Code.

The City Council meeting is held in the City Council Chamber at City Hall, 455 E. Calaveras Blvd., Milpitas and via teleconference/Zoom webinar.

You may watch the Council meeting without providing public comment by accessing it via links here.

Meeting shall be livestreamed - Go to:

Facebook: https://www.facebook.com/CityofMilpitas/
YouTube: https://www.milpitas.gov/youtube
Web Streaming: https://www.milpitas.gov/webstreaming

PUBLIC COMMENT INSTRUCTIONS
Oral public comments may only be provided live during the City Council meeting in person, unless the City Council approves remote public comment. All comments provided shall be limited to three minutes or less as determined by the Mayor. All members of the public will be limited to one comment per agenda item, and one comment for non-agenda items. Members of the public may submit written comments by email to [email protected]
The meeting will be streamed via Zoom for viewing purposes only unless the City Council approves remote public comment. To watch via Zoom, please register at:
https://ci-milpitas-ca-gov.zoom.us/webinar/register/WN_9n36sb9fTPW3CSHFYhiWRA NOTE: If a member of the public wishes to share any presentation materials for Council consideration, they must be submitted to the Clerk’s Office by email to [email protected] by 12:00 p.m. on the day of the meeting. No presentations will be accepted in person in the Council Chambers.

MILPITAS CITY COUNCIL CODE OF CONDUCT
• Be respectful and courteous (words, tone, and body language). • Model civility.
• Avoid surprises.
• Praise publicly and criticize privately.
• Focus on the issue, not the person.
• Use electronic devices appropriately while on the Council dais. • Disclose conflicts of interest and affiliations related to agenda items. • Separate governing from campaigning.
• The Council speaks with one voice after making policy on issues. • Respect the line between policy and administration.
• Council will hold one another accountable to comply with this Code of Conduct.

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December 16, 2025 Milpitas City Council Agenda Page 2

CALL MEETING TO ORDER by Mayor and ROLL CALL by City Clerk (6:00 PM)

ADJOURN TO CLOSED SESSION
(a) PUBLIC EMPLOYEE APPOINTMENT AND HIRING
Pursuant to Government Code Section 54957(b)(1)
Employee Position: City Manager
(b) PUBLIC EMPLOYEE APPOINTMENT AND HIRING
Pursuant to Government Code Section 54957(b)(1)
Employee Position: City Attorney
CLOSED SESSION ANNOUNCEMENT:

Report on action taken in Closed Session, if required per Government Code Section 54957.1, including the vote or abstention of each member present.

PLEDGE OF ALLEGIANCE
INVOCATION (Mayor Montano)

PRESENTATIONS

PUBLIC FORUM
Members of the public are invited to speak on any item that does not appear on today’s agenda. Comments will be limited to three minutes or less at the Mayor’s discretion. When called to speak, you are encouraged to state your name for the record.

As an item not listed on the agenda, no action can be taken, however the City Council may instruct the City Manager to place the item on a future meeting agenda.

ANNOUNCEMENT OF CONFLICT OF INTEREST AND CAMPAIGN CONTRIBUTIONS

READING OF THE CITY COUNCIL CODE OF CONDUCT

APPROVAL OF AGENDA

CONSENT CALENDAR
Consent calendar items are considered to be routine and will be considered for adoption by one motion. There will be no separate discussion of these items unless a City Councilmember, member of the audience or staff requests the Council to remove an item from (or be added to) the consent calendar. Any person desiring to speak on any item on the consent calendar should ask to have that item removed from the consent calendar.

C1. Receive City Council Calendar of Meetings (Staff Contact: Suzanne Guzzetta, City Clerk, 408- 586-3001)
Recommendation: Receive City Council Calendar of Meetings for December 2025 and January 2026.

C2. Approve City Council Meeting Minutes (Staff Contact: Suzanne Guzzetta, City Clerk, 408-586- 3001)
Recommendation: Approve City Council Meeting minutes of November 18 and December 2, 2025 C3. Receive the Preview List of Anticipated Items for the Next Regular City Council Meeting (Staff Contact: Suzanne Guzzetta, City Clerk, 408-586-3001)

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December 16, 2025 Milpitas City Council Agenda Page 3

Recommendation: Receive the list of anticipated agenda items for the next regular City Council meeting.

C4. Receive and Review the List of Agenda Items Requested by City Councilmembers (Staff Contact: Suzanne Guzzetta, City Clerk, 408-586-3001)
Recommendation: Receive the list of items that have been requested by City Councilmembers and received consensus in previous meetings to date.

C5. Consider Recommendations from Mayor Montano for Appointments to Rent Review Board (Staff Contact: Suzanne Guzzetta, City Clerk, 408-586-3001) Recommendation: Receive Mayor Montano's recommendations and approve and confirm recommendations for appointments to the Rent Review Board C6. Authorize and Approve Request from Mayor Carmen Montano to Present a Key to the City to the Mayor of Mexico City, Alcaldesa/Mayor Clara Brugada (Staff Contact: Matt Cano, Assistant City Manager, 408-586-3012)
Recommendation: Authorize and approve request from Mayor Carmen Montano to present a Key to the City to the Mayor of Mexico City, Alcaldesa/Mayor Clara Brugada.

C7. Authorize and Approve Travel Request for Councilmember Lam to Sacramento, CA for the League of California Cities Mayors and Council Members Academy (Staff Contact: Matt Cano, Assistant City Manager, 408-586-3012)
Recommendation: Authorize and approve the travel to Sacramento, CA, for Councilmember William Lam to attend the League of California Cities Mayors and Council Members Academy to be held on January 21–23, 2026, for a combined estimated total not-to-exceed amount of $1,600 budgeted under the Individual Elected Official allocation for Conferences/Meetings/Trainings.

C8. Authorize the City Manager, or Designee, to Execute a Purchase Order with CDW Government LLC for Desktops and Laptops (Staff Contact: Luz Cofresí-Howe, Finance Director, 408-586- 3111; and Daniel Nam, Information Technology Director, 408-586-2712) Recommendation: Authorize the City Manager, or designee, to execute a purchase order with CDW Government LLC for the purchase of desktops and laptops for a total amount not to exceed $292,866, inclusive of applicable sales tax and recycling fees.

C9. Adopt a Resolution Delegating Authority to the City’s Personnel Officer or Designee to Notify Recognized Employee Organizations of Specified Procurements and Contracts as Required by California Assembly Bill 339 (Staff Contact: Kelli Parmley, Human Resources Director, 408-586- 3086; Luz Cofresí-Howe, Finance Director, 408-586-3111) Recommendation: Adopt a resolution delegating authority to the City’s Personnel Officer, or their designee, to notify recognized employee organizations of specific procurements and contracts that may materially affect represented positions pursuant to California Assembly Bill 339 beginning January 1, 2026.

C10. Adopt a Resolution Authorizing the City Manager, or Designee, to Accept Grant Funds from Santa Clara Valley Transportation Authority, Negotiate and Execute Necessary Agreements, and Appropriate Related Funds for the Continuation and Expansion of the Milpitas SMART Program (Staff Contact: Jay Lee, Planning Director, 408-586-3077; and Luz Cofresí-Howe, Finance Director, 408-586-3111)

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December 16, 2025 Milpitas City Council Agenda Page 4

Recommendation: Adopt a resolution authorizing the City Manager, or designee, to: (1) Accept $2,766,144 in grant funds from the Santa Clara Valley Transportation Authority (VTA) for the continuation and expansion of the Milpitas SMART (Simple, Mobile, Access to Reliable Transit) program; (2) Negotiate and execute all necessary instruments, including a grant funding agreement with VTA, for disbursement and/or expenditure of these grant funds; (3) Approve the related budget appropriation actions in the amount of $2,856,144 in the General Fund to the Intergovernmental Revenue and the Planning Department budgets; and $243,486 in the General Government Fund to the Planning Department; and to the Intergovernmental Revenue estimate and Planning Department budget; and (4) Negotiate and execute a related amendment to the Agreement with RideCo US Inc. to add $3,099,630, extend the term through June 30, 2027, and add scope of services as required by this grant, including for trip planning and data sharing features.

PUBLIC HEARINGS
Members of the public may be allotted up to three (3) minutes or less at the Mayor’s discretion, to comment on any public hearing item. Applicants/Appellants and their representatives may be allotted up to a total of ten (10) minutes for opening statements and up to a total of five (5) minutes maximum for closing statements. Items requested/recommended for continuance are subject to Council’s consent at the meeting.

11. Adopt a Resolution Reviewing and Accepting the Annual Development Impact Fee Report for the Calaveras Boulevard Widening Traffic Impact Fee, the Transit Area Specific Plan (TASP) Impact Fee, and the Storm Drainage Improvement Fee for the Fiscal Year Ended June 30, 2025 (Staff Contact: Luz Cofresí-Howe, Finance Director, 408-586-3111) Recommendation: (1) Review and accept the Development Impact Fee Annual consistent with the Mitigation Fee Act for the Calaveras Boulevard Widening Traffic Impact Fee, Transit Area Specific Plan (TASP) Impact Fee, and Storm Drainage Improvement Fee for the fiscal year ended June 30, 2025; (2) Adopt a Resolution making all findings required by the Mitigation Fee Act.

12. Accept the City’s Annual Comprehensive Financial Report and Other Related Annual Audited Reports for the Fiscal Year Ended June 30, 2025 (Staff Contact: Luz Cofresí-Howe, Finance Director, 408-586-3111)
Recommendation: Review and accept the City’s Annual Comprehensive Financial Report and other related Annual Audited Reports for the Fiscal Year Ended June 30, 2025.

13. Adopt a Resolution Approving the Fiscal Year 2025-26 User and Regulatory Fee Schedule (Staff Contact: Luz Cofresí-Howe, Finance Director, 408-586-3111) Recommendation: Adopt a resolution approving the Fiscal Year 2025-26 User and Regulatory Fee Schedule.

COMMUNITY DEVELOPMENT

14. Receive a Presentation on the Work Completed on the Innovation District Parks and Trails Master Plan and Provide Feedback (Staff Contact: Jay Lee, Planning Director, 408-586-3077) Recommendation: Receive progress report on the work completed regarding the Innovation District Parks and Trails Master Plan and provide comments on the preferred park and trail design.

LEADERSHIP AND SUPPORT SERVICES

15. Consider Appropriating Unassigned Fund Balances or Reserves Based on the November 4, 2025 Prioritization Vote (Staff Contact: Matt Cano, Assistant City Manager, 408-586-3012)

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December 16, 2025 Milpitas City Council Agenda Page 5

Recommendation: Adopt a resolution to appropriate unassigned fund balances or reserves for approved one-time funded priorities based on the November 4, 2025 prioritization vote.

ANNOUNCEMENTS AND FUTURE AGENDA ITEMS
Members of the City Council or City Manager may make brief announcements at this time. Members of the City Council may also suggest future agenda items. For future agenda items, the City Council shall not debate the topic or engage in discussion but shall simply state a “yes” or “no” as whether to move the item forward. If a majority of the City Council agrees to move the item forward, the City Manager shall place the item on a future agenda.

ADJOURNMENT

KNOW YOUR RIGHTS UNDER THE OPEN GOVERNMENT ORDINANCE
Government’s duty is to serve the public, reaching its decisions in full view of the public. Commissions and other City agencies exist to conduct the people’s business. This ordinance assures that deliberations are conducted before the people and City operations are open to the people’s review. For more information on your rights under the Open Government Ordinance or to report a violation, contact the City Attorney’s office at Milpitas City Hall, 455 E. Calaveras Blvd., Milpitas, CA 95035 e-mail: [email protected] / Phone: 408-586-3040

The Open Government Ordinance is codified in the Milpitas Municipal Code as Title I Chapter 310 and is available online at the City’s website www.milpitas.gov by selecting the Milpitas Municipal Code link.

Materials related to an item on this agenda submitted to the City Council after initial distribution of the agenda packet are available for public inspection at the City Clerk’s office at Milpitas City Hall, 3rd floor 455 E. Calaveras Blvd., Milpitas and on City website. City Council agendas and related materials can be viewed online: www.milpitas.gov/government/council/agenda_minutes.asp (select meeting date)

APPLY TO SERVE ON A CITY COMMISSION
Commission application forms are available online at www.milpitas.gov or at Milpitas City Hall.

Contact the City Clerk’s Office at 408-586-3001 for more information.

If you need assistance, per the Americans with Disabilities Act, for any City of Milpitas public meeting, please call the City Clerk at 408-586-3001 or send an e-mail to [email protected] prior to the meeting. You may request a larger font agenda.

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Milpitas City Council Calendar
December 2025

Sunday Monday Tuesday Wednesday Thursday Friday Saturday

1 7:00 PM-Parks, Recreation & Cultural
Resources Commission (EC)

2 5:00 PM-Closed Session
7:00 PM-City Council

3 2:00 PM-Santa Clara VTA Monthly
Briefing - Northeast Group (CM)
(Santa Clara)
5:30 PM-Veterans Commission (GB)
7:00 PM-Community Housing
Commission (EC)

4 5:30 PM-Milpitas Chamber of
Commerce Board (GB)
5:30 PM-Santa Clara VTA Board of
Directors (CM)

5 6

7 8

9 10
4:30 PM-City Council Finance
Subcommittee (CM/EC)
7:00 PM-Silicon Valley Clean Energy
Board of Directors (GB) (Cupertino)
7:00 PM-Planning Commission -

CANCELLED

11 4:00 PM-Treatment Plant Advisory
Committee (CM) (San Jose)
4:00 PM-Santa Clara VTA Policy
Advisory Committee (EC)
6:00 PM-Youth Advisory Commission
(HL)
7:00 PM-Cities Assoc of SCC (CM)

12 13

14 15
7:00 PM-Science, Technology, and
Innovation Commission (WL) -

CANCELLED

16 6:00 PM-Closed Session
7:00 PM-City Council

17 6:00 PM-Energy and Environmental
Sustainability Commission (EC)

18 19

20 21

22 23

24 25 26

City Hall and City Facilities Closed (Fire and Police are not affected)

27 28

29 30 31

City Hall and City Facilities Closed (Fire and Police are not affected)

November 2025

S M T W T F S
1 2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 January 2026

S M T W T F S
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31

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Milpitas City Council Calendar
January 2026

Sunday Monday Tuesday Wednesday Thursday Friday Saturday

1 CITY OBSERVED HOLIDAY

CITY OFFICES CLOSED

2 3

4 5
7:00 PM-Parks, Recreation & Cultural
Resources Commission (EC)

6 7
2:00 PM-Santa Clara VTA Monthly
Briefing - Northeast Group (CM)
(Santa Clara)
7:00 PM-Community Housing
Commission (EC)

8 4:00 PM-Santa Clara VTA Policy
Advisory Committee (EC)
4:00 PM-Treatment Plant Advisory
Committee (CM) (San Jose)
6:00 PM-Youth Advisory Commission
(HL)
7:00 PM-Cities Assoc of SCC (CM)

9 10

11 12
7:00 PM- Library and Education
Advisory Commission (HL)
13 5:30 PM-Special City Council
14 4:30 PM-City Council Finance
Subcommittee (CM/EC)
4:30 PM-Economic Development and
Trade Commission (WL)
7:00 PM-Planning Commission
7:00 PM-Silicon Valley Clean Energy
Board of Directors (GB) (Sunnyvale)

15 6:30 PM-Bay Area Water Supply
Conserv Agency (CM) (Oak Room -
San Mateo Main Library)

16 17

18 19

MARTIN LUTHER KING JR.

BIRTHDAY

CITY OFFICES CLOSED

20 6:00 PM-Closed Session
7:00 PM-City Council

21 6:00 PM-Energy and Environmental
Sustainability Commission (EC)
7:30 PM-Science, Technology and
Innovation Commission (WL)

22 4:00 PM-Silicon Valley Regional
Interoperability Authority (SVRIA)
(GB)

23 24

25 26
7:00 PM-Arts Commission (CM)

27 28
7:00 PM-Planning Commission

29 12:00 PM-Santa Clara County Library
JPA Board Meeting (CM) (Campbell,
CA)

30 31

December 2025

S M T W T F S
1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31

February 2026

S M T W T F S
1 2 3 4 5 6 7
8 9 10 11 12 13 14
15 16 17 18 19 20 21
22 23 24 25 26 27 28

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November 18, 2025 Milpitas City Council Minutes Page 1

REGULAR MEETING OF THE MILPITAS

CITY COUNCIL

MINUTES
TUESDAY, NOVEMBER 18, 2025

The City Council of the City of Milpitas convened in a Regular Meeting of the Milpitas City Council on November 18, 2025, in the City Council Chamber, 455 E. Calaveras Blvd, Milpitas, CA, and via teleconference/Zoom webinar.

CALL MEETING TO ORDER by Mayor and ROLL CALL by City Clerk Mayor Montano called the Regular City Council meeting to order at 6:00 PM. Roll Call was taken by City Clerk Guzzetta.

PRESENT: Mayor Montano, Councilmember Chua, Councilmember Lam, Councilmember Lien ABSENT: Vice Mayor Barbadillo

ADJOURN TO CLOSED SESSION
Acting City Attorney Creech briefed the public on the closed session item. No public comment was received.

The Council adjourned to closed session at 6:02 PM.
(a) PUBLIC EMPLOYEE APPOINTMENT AND HIRING
Pursuant to Government Code Section 54957(b)(1)
Employee Position: City Attorney
CLOSED SESSION ANNOUNCEMENT:

Upon reconvening at 7:15 PM, Acting City Attorney Creech reported that there was nothing to report out of closed session.

PLEDGE OF ALLEGIANCE
Councilmember Chua led the Pledge of Allegiance.

INVOCATION
Mayor Montano provided the invocation.

PRESENTATIONS
Mayor Montano, joined by the Milpitas City Council, presented the Key to the City and Proclamation to the Dagupan, Philippines Sister City delegation.

PUBLIC FORUM
There were the following public speakers:

1. Alex Li

2. Sergio Jimenez

3. Gwan Alisantosa

4. Kevin Sandhu

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November 18, 2025 Milpitas City Council Minutes Page 2

5. Govinda Karempudi

6. Andres Minlo

7. Loreto Quevedo Diamaandal

8. Kaveri Rangaraj

9. Nikunj Vaidya

10. HIlary Davidson

11. Priti

12. Manoj

13. Voltaire Montemayor

14. Member of the public

ANNOUNCEMENT OF CONFLICT OF INTEREST AND CAMPAIGN CONTRIBUTIONS Acting City Attorney Creech asked the Mayor and City Councilmembers if they had any personal conflicts of interest. By roll call, there were no conflicts of interest (Absent: Barbadillo). Acting City Attorney Creech asked the Mayor and City Councilmembers if they had any reportable campaign contributions. By roll call, there were no reportable campaign contributions (Absent: Barbadillo).

READING OF THE CITY COUNCIL CODE OF CONDUCT
Councilmember Chua read the City Council Code of Conduct.

APPROVAL OF AGENDA
Councilmember Lien made a motion: to approve the agenda. Councilmember Chua seconded the motion amending it by adding a proposal to reschedule Item 11. Councilmember Lien did not accept the amendment to the motion. With no second, the motion failed.

After discussion, motion: to approve the agenda, rescheduling Item 11 to a later date.

Motion/Second: Councilmember Chua / Councilmember Lam
Motion carried by the following:

AYES: Mayor Montano, Councilmember Chua, Councilmember Lam, Councilmember Lien NOES: None
ABSENT: Vice Mayor Barbadillo

CONSENT CALENDAR
There were the following public speakers:

1. Marvin Serber

After discussion, motion: to approve the Consent Calendar.

Motion/Second: Councilmember Lien / Councilmember Chua
Motion carried by the following:

AYES: Mayor Montano, Councilmember Chua, Councilmember Lam, Councilmember Lien NOES: None
ABSENT: Vice Mayor Barbadillo

1. Receive City Council Calendar of Meetings (Staff Contact: Suzanne Guzzetta, City Clerk, 408- 586-3001)

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November 18, 2025 Milpitas City Council Minutes Page 3

Received City Council Calendar of Meetings for November and December 2025.

2. Approve City Council Meeting Minutes (Staff Contact: Suzanne Guzzetta, City Clerk, 408-586- 3001)
Approved City Council Meeting minutes of October 28 and November 4, 2025.

3. Receive the Preview List of Anticipated Items for the Next Regular City Council Meeting (Staff Contact: Suzanne Guzzetta, City Clerk, 408-586-3001)
Received the list of anticipated agenda items for the next regular City Council meeting.

4. Receive and Review the List of Agenda Items Requested by City Councilmembers (Staff Contact: Suzanne Guzzetta, City Clerk, 408-586-3001)
Received the list of items that have been requested by City Councilmembers and received consensus in previous meetings to date.

5. Adopt Ordinance No. 38.859 Approving Zoning Text and Zoning Map Amendment ZA25-0002 for the Gateway-Main Street Specific Plan (Staff Contact: Jay Lee, Planning Director, 408-586-3077) (1) Determined that the Subsequent Environmental Impact Report (EIR) adequately analyzes the potential environmental impacts associated with the proposed Zoning Amendments and is in compliance pursuant to CEQA Guidelines Section 15162; and (2) Waived the second reading and adopted Ordinance No. 38.859 approving Zoning Text and Map Amendment No. ZA25-0002 for the Gateway-Main Street Specific Plan.

6. Approve and Authorize the City Manager, or Designee, to Execute a Fee Reimbursement Agreement with Toll West Coast, LLC for the City’s Share Cost of Sango Court Road Extension (Staff Contact: Christian Di Renzo, Public Works Director, 408-586-2602; Michael Silveira, City Engineer, 408-586-3303)
Approved and authorized the City Manager, or designee, to execute a Fee Reimbursement Agreement with Toll West Coast, LLC, in an amount not to exceed $1,110,530, for the City’s share of the cost of the Sango Court Road extension.

7. Approve and Authorize the City Manager, or Designee, to Execute the Improvement Agreement with Duke Realty Limited Partnership for a New Industrial Building at 475-525 Sycamore Drive (Staff Contact: Christian Di Renzo, Public Works Director, 408-586-2602; and Michael Silveira, City Engineer, 408-586-3303)
Approved and authorized the City Manager, or designee, to execute the Improvement Agreement between the City of Milpitas and Duke Realty Limited Partnership with a value of $929,000 for a new industrial building at 475-525 Sycamore Drive to be completed within one (1) year from the date of the Improvement Agreement.

8. Authorize the City Manager, or Designee, to Negotiate and Execute an Agreement with Paladin Drones, Inc., for the Purchase of an Additional Drone Docking Station and Renew the Annual Subscription Fee (Staff Contact: Luz Cofresí-Howe, Finance Director, 408-586-3111; and Jared Hernandez, Chief of Police, 408-586-2406)
(1) Authorized the City Manager, or designee, to negotiate and execute a purchase order agreement with Paladin Drones Inc. for the purchase of an additional drone docking station and renew annual subscription fee for a 1-year term for a not-to-exceed amount of $91,875, subject to the appropriation

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November 18, 2025 Milpitas City Council Minutes Page 4

of funds; and (2) Authorized the City Manager, or designee, to amend the agreement to extend it for up to one (1) additional twelve (12) month term and add additional compensation as required, subject to the appropriation of funds.

9. Consider Donation Request from Knights of Columbus St. John Council (Staff Contact: Renée Lorentzen, Recreation and Community Services Director, 408-586-3409) Approved a Donation request of $500 for the Knights of Columbus St. John Council Annual Free Thanksgiving Dinner.

10. Approve Milpitas Arts and Culture Grant Request for a Cultural Menorah Lighting Event (Staff Contact: Renee Lorentzen, Recreation and Community Services Director, 408-586-3409) Approved a Milpitas Arts and Culture in-kind grant request from Dina and Marvin Serber for a Cultural Menorah Lighting Event on December 21, 2025.

COMMUNITY DEVELOPMENT

11. Adopt a Resolution Accepting Metropolitan Transportation Commission’s Transit-Oriented Communities Planning and Implementation Projects Grants (Staff Contact: Jay Lee, Planning Director, 408-586-3077)
The item was rescheduled.

COMMUNITY SERVICES AND SUSTAINABLE INFRASTRUCTURE

12. Receive Presentation on Considering an Increase to Milpitas Assistance Program Water Utilities Bill Subsidy Amount (Staff Contact: Renee Lorentzen, Recreation and Community Services Director, 408-586-3409)
Due to technical issues, the Council took a short recess at 8:15 PM. Reconvened at 8:28 PM.

Received presentation on Increasing the Milpitas Assistance MAP Water Utilities Bill Subsidy and provided feedback to staff. Direction was provided to staff to prepare a full MAP program update that:

1. Includes tiered subsidy increase options, including Tier 3.

2. Provides multiple scenarios (flat vs. tiered vs. hybrid).

3. Shows financial impacts across participation levels.

4. Addresses fund sustainability and admin cost recovery.

5. Presents an outreach and communications plan tied to increased participation.

6. Returns to Council at a future meeting with clear, actionable recommendations.

Councilmember Lam requested clarification about sewer fee variations and tier-structure logic. Director Lorentzen explained the differences between single-family, multifamily, duplex, and mobile-home billing structures, and noted that Tier 3 receives a temporary hardship benefit because their need is acute but time-limited.

There were the following public speakers:

1. Voltaire Montemayor

Following public comment, Councilmember Lam introduced a detailed subsidy proposal. He recommended a three-tier structure he described as the “50/30/20 plan,” consisting of:

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November 18, 2025 Milpitas City Council Minutes Page 5

• Tier 1: 50% discount on meter fee, 50% on sewer fee, plus $50 off water consumption (estimated $139.82 per bimonthly bill).
• Tier 2: 30% discount on meter fee, 30% on sewer fee, plus $30 off water consumption (estimated $83.89 per bimonthly bill).
• Tier 3: 20% discount on meter fee, 20% on sewer fee, plus $20 off water consumption under temporary hardship (estimated $55.93 per bimonthly bill).

He stated that using estimated MAP participation levels, the proposal would cost roughly $165,000 annually and emphasized that MAP participants make up only 1.6% of the city's population.

Mayor Montano then asked Lam clarifying questions about the total discount amounts and how the tiers aligned with income designations (very low, low, and temporary hardship). Director Lorentzen explained how HUD income thresholds determine tier assignment and provided examples using family- size A MI limits.

Councilmember Lien spoke next, asking how Lam’s plan would support Tier 3 households given that the temporary hardship category represents residents in their most vulnerable period. She also asked how residents become aware of the program and whether current participation reflects full community need. Director Lorentzen described the City’s outreach efforts, including PG&E CARE bill inserts, water bill inserts, e-mail lists, social media, the Resource Center, and event tabling. She noted there is no way to know precisely how many eligible households are not enrolled, but increased subsidies would likely increase participation.

The City Manager added that additional discussion would occur after receiving full council direction and stressed that staff would need to evaluate how to implement the proposed structure within the City’s billing software prior to returning to council with a final recommended program.

ANNOUNCEMENTS AND FUTURE AGENDA ITEMS
Council Member Chua commended the Recreation team for the Milpitas Community Choir, which held its first session and is preparing for a performance at the December tree lighting.

Council Member Lien proposed revising the Council policy to require members to state reasons when abstaining from votes. The proposal did not receive consensus (Noes: Chua, Lam. Absent: Barbadillo)

Mayor Montano requested a community forum on the Crown Castle small cell towers within the next couple weeks, which received consensus. (Absent Barbadillo)

Mayor Montano also requested staff to research how public funds could be used to advertise local restaurants during the upcoming Super Bowl, which received consensus. Interim City Manager Santana noted that funds for Super Bowl and FIFA promotion had been deferred since October, limiting the timeframe for Super Bowl promotion. (Absent: Barbadillo)

Mayor Montano requested staff look into establishing a Friendship City relationship, which received consensus. (Absent: Barbadillo)

Council Member Chua proposed reviewing the Council prioritization process, which received consensus (Noes: Lien. Absent: Barbadillo)

Mayor Montano requested a review of commission names, particularly considering renaming the Science and Technology Commission to better reflect its telecommunications focus, which received consensus. (Absent:

Barbadillo)

ADJOURNMENT

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November 18, 2025 Milpitas City Council Minutes Page 6

Mayor Montano adjourned the meeting at 9:35 PM.

Draft meeting minutes submitted by City Clerk, Suzanne Guzzetta

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December 2, 2025 Milpitas City Council Minutes Page 1

JOINT MEETING OF THE MILPITAS

CITY COUNCIL AND HOUSING AUTHORITY

MINUTES
TUESDAY, DECEMBER 2, 2025

The City Council of the City of Milpitas convened in a Joint Meeting of the Milpitas City Council and Housing Authority on December 2, 2025, in the City Council Chamber, 455 E. Calaveras Blvd, Milpitas, CA, and via teleconference/Zoom webinar.

CALL MEETING TO ORDER by Mayor and ROLL CALL by City Clerk Mayor Montano called the Regular City Council meeting to order at 5:00 PM. Roll Call was taken by City Clerk Guzzetta.

PRESENT: Mayor Montano, Vice Mayor Barbadillo, Councilmember Chua, Councilmember Lam, Councilmember Lien
ABSENT: None

ADJOURN TO CLOSED SESSION
Acting City Attorney Creech briefed the City Council on the Closed Session items.

There were no public comments.

The City Council adjourned to Closed Session at 5:02 PM. (a) CONFERENCE WITH LABOR NEGOTIATOR
Pursuant to Government Code Section 54957.6
Agency’s Designated Representative(s): Rick Bolanos, Liebert Cassidy Whitmore Employee Organization(s): Professional and Technical Employees, Mid-Management and Confidential Employees, Milpitas Employees Association, Unrepresented Employees (b) PUBLIC EMPLOYEE APPOINTMENT AND HIRING
Pursuant to Government Code Section 54957(b)(1)
Employee Position: City Manager
(c) PUBLIC EMPLOYEE APPOINTMENT AND HIRING
Pursuant to Government Code Section 54957(b)(1)
Employee Position: City Attorney
CLOSED SESSION ANNOUNCEMENT:

The City Council reconvened at 7:15 PM.

Acting City Attorney Creech had nothing to report from Closed Session.

PLEDGE OF ALLEGIANCE
Milpitas Rotary Club Scout Troop 163 presented the colors and led the Pledge of Allegiance.

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December 2, 2025 Milpitas City Council Minutes Page 2

INVOCATION
Mayor Montano provided the invocation.

PRESENTATIONS
Economic Development Coordinator Thomas spoke about Manufacturing Day and presented a video from the event. Mayor Montano and the City Council presented commendations in recognition of Manufacturing Day participants.

PUBLIC FORUM
There were the following public speakers:

1. Dale Scott

2. Lili

3. Chwinn Cosgrove

4. Adele Wang

5. Ed Ackerman

6. Jay West

7. Ju Young

8. Alex

9. Voltaire Montemayor

ANNOUNCEMENT OF CONFLICT OF INTEREST AND CAMPAIGN CONTRIBUTIONS Acting City Attorney Creech asked the Mayor and City Councilmembers if they had any personal conflicts of interest. By roll call, there were no conflicts of interest. Acting City Attorney Creech asked the Mayor and City Councilmembers if they had any reportable campaign contributions. By roll call, there were no reportable campaign contributions.

READING OF THE CITY COUNCIL CODE OF CONDUCT
Vice Mayor Barbadillo read the City Council Code of Conduct.

APPROVAL OF AGENDA
Interim City Manager Santana requested that item C6 regarding the Rent Review Board be deferred until December 16th

After discussion, motion: to approve the agenda with Item C6 deferred to December 16..

Motion/Second: Vice Mayor Barbadillo / Councilmember Chua by the following:

AYES: Mayor Montano, Vice Mayor Barbadillo, Councilmember Chua, Councilmember Lam, Councilmember Lien
NOES: None

CONSENT CALENDAR
Councilmember Chua requested to pull item C9 (Hammond Way Streetlight Project), and Councilmember Lien requested to pull item C10 (Kiwanis Crab Feed).

There were no public speakers.

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December 2, 2025 Milpitas City Council Minutes Page 3

After discussion, motion: to pull Items C9 and C10 and approve the Consent Calendar.

Motion/Second: Councilmember Chua / Councilmember Lien
Motion carried by the following:

AYES: Mayor Montano, Vice Mayor Barbadillo, Councilmember Chua, Councilmember Lam, Councilmember Lien
NOES: None

1. Receive City Council Calendar of Meetings (Staff Contact: Suzanne Guzzetta, City Clerk, 408- 586-3001)
Received City Council Calendar of Meetings for December 2025.

2. Approve City Council Meeting Minutes (Staff Contact: Suzanne Guzzetta, City Clerk, 408-586- 3001)
Approved City Council Meeting minutes of October 21 and 24, 2025.

5. Approve City Council Meeting Schedule for 2026 (Staff Contact: Suzanne Guzzetta, City Clerk, 408-586-3001)
Approved the 2026 Milpitas City Council meeting schedule, with any changes requested at the City Council meeting.

6. Consider Recommendations from Mayor Montano for Appointments to Rent Review Board (Staff Contact: Suzanne Guzzetta, City Clerk, 408-586-3001) Deferred to December 16, 2025 City Council Meeting.

7. Adopt a Resolution Delegating Authority to the City Manager or Designee to Approve and Execute Project-Related Documents and Urgent Administrative Items during the City Council Winter Recess (Staff Contact: Matt Cano, Assistant City Manager, 408-586-3012) Adopted Resolution No. 9458 delegating authority to the City Manager, or their designee, to approve and execute project-related documents, including contract documents, and urgent administrative items during the City Council and City of Milpitas Housing Authority winter recess from after the last City Council meeting held on December 16, 2025 through January 13, 2026.

8. Adopt a Resolution Approving the Extension of the Memorandum of Understanding between the City of Milpitas and the Milpitas Mid-Management and Confidential Unit (Mid-Con) Covering the Period of July 1, 2025 through June 30, 2026 (Staff Contact: Kelli Parmley, Human Resources Director, 408-586-3086; Luz Cofresí-Howe, Finance Director, 408-586-3111)

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December 2, 2025 Milpitas City Council Minutes Page 4

Adopted Resolution No. 9459 to: (1) approve the extension of the Memorandum of Understanding between the City of Milpitas and the Milpitas Mid-Management and Confidential Unit (Mid-Con) covering the period of July 1, 2025 through June 30, 2026; (2) amend the Classification Plan; and (3) amend the adopted, amended FY 2025-26 Operating Budget by authorizing necessary financial and personnel actions to implement the Mid-Con Memorandum of Understanding extension.

9. Adopt a Resolution to Conduct a Solar Streetlight Pilot Project, Approve a Cooperative Purchase Agreement with Fonroche Lighting America, and Approve Budget Appropriation for Hammond Way Streetlight Project, CIP No. 4301 (Staff: Christian Di Renzo, Public Works Director, 408-586-2602; and Michael Silveira, City Engineer, 408-586-3303) Item Pulled from Consent Calendar.

11. Approve the Parks and Recreation and Community Services Programs Donation for a Memorial Bench in Honor of Segundo Cacao (Staff Contact: Renee Lorentzen, Recreation and Community Services Director, 408-586-3409)
Approved the Parks and Recreation Donation for a Memorial Bench for Segundo Cacao at Strickroth Park.

PUBLIC HEARINGS

12. Hold a Public Hearing on an Appeal of the Planning Commission’s Decision to Approve Associated Planning Entitlements for a New Industrial Building at 1000 Gibraltar Drive (Staff Contact: Jay Lee, Planning Department, 408-586-3077)
Planning Director Lee introduced the item and Senior Planner Phung presented the staff report.

Mayor Montano opened the public hearing.

Grace Holbrook, representing the appellant, provided a presentation detailing the basis of the appeal.

There was the following public speakers:

1. Doug Chesshire

2. Luis Arguello

3. Alejandro Martinez

4. Jose Mexicano

5. Bryan Shields

6. Manny Zendejas

7. Estevan Ornelas

8. Anthony Cao

9. Danny Mangan

10. Frank Austin

11. Doug Bloch

12. Matthew Martinez

13. Jose Arriaga

14. Voltaire Montemayor

15. Enrique Arguello

16. Oscar Jimenez

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December 2, 2025 Milpitas City Council Minutes Page 5

Alex Merritt and Liz Class spoke on behalf of the applicant, along with Steve Beauchamp from Panattoni Development Company, applicant, responded to the appeal.

Both the appellant and applicant presented closing remarks.

Mayor Montano closed the public hearing.

Councilmember Chua disclosed meeting with the applicant then asked for clarification about the impervious surface increase and stormwater management plans. Staff confirmed that modern requirements would result in better site conditions than currently exist.

Mayor Montano expressed support for the project, emphasizing the benefits of job creation, the reduction of homelessness in the area, and potential sales tax revenue that could enhance public infrastructure.

Vice Mayor Barbadillo raised questions about the concerns of the appeal.

After discussion, motion: to (1) Determine that the Addendum to the 1000 Gibraltar Drive Final Environmental Impact Report (State Clearinghouse No. 2020069024) adequately analyzes the potential environmental impacts associated with the amended project, and that the Addendum is in compliance pursuant to CEQA Guidelines §15162 and §15164; and (2) Adopt Resolution No. 9461 denying the appeal and upholding the Planning Commission’s decision to approve Site Development Permit No. SD24-0006, Environmental Assessment No. EA24-0002, and Tree Removal Permit No. TR25-0021 to remove and replace 25-ordinance sized trees, demolish all existing structures on the site including four industrial/office buildings, surface parking lots, and associated improvements, and develop a new, one-story, 487,564-square foot tilt-up concrete industrial building with office space and associated site improvements on an approximately 28.96-acre site in the M2 (Heavy Industrial) Zoning District located at 1000 Gibraltar Drive (also known as 1001 S. Milpitas Blvd).

Motion/Second: Vice Mayor Barbadillo / Mayor Montano
Motion carried by the following:

AYES: Mayor Montano, Vice Mayor Barbadillo, Councilmember Chua, Councilmember Lam, Councilmember Lien
NOES: None

LEADERSHIP AND SUPPORT SERVICES

13. Consider Appropriating Unassigned Fund Balances or Reserves Based on the November 4, 2025 Prioritization Vote (Staff Contact: Matt Cano, Assistant City Manager, 408-586-3012) Interim City Manager Santana introduced the item and Assistant City Manager Cano presented the report.

Councilmember Lam began by raising the Council Special Events Fund, supporting the idea and asking why it appeared on the list. After brief comment by Mayor Montano, Councilmember Lam attempted to make a motion. Acting City Attorney Creech advised that since multiple funding decisions were expected, the Council should avoid several separate motions and instead take one consolidated motion after determining which items had Council support. Assistant City Manager Cano added that he was tracking all Councilmember recommendations for later summary.

To facilitate this process, City Clerk Guzzetta suggested the Council take consensus votes on each individual item, followed by one final consolidated motion. The Council agreed, and the City Clerk conducted a consensus roll call on the $10,000 Council Special Events Fund with unanimous support.

Discussion moved to the SMART shuttle expansion request, with Councilmember Chua clarifying the two suggested directions for expansion and explaining that the cost would depend on which route the Council selected. Councilmember Lam added additional context about mileage. Staff confirmed that

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December 2, 2025 Milpitas City Council Minutes Page 6

the actual cost would depend on the route and operational details and noted that Council could return to the matter at mid-year if preferred.

Councilmember Lam suggested modifying the Ring Doorbell Neighborhood Initiative to be brand- neutral and structured as a reimbursement model rather than a citywide giveaway. Councilmember Chua agreed the initiative need not be limited to specific branded products. Acting City Attorney Creech clarified that while program design changes could be explored later, the Council’s action at this meeting was limited to deciding whether to allocate one-time funding and in what amount. Interim City Manager Santana cautioned that a reimbursement program would create significant administrative workload and that staff would need to return with updated cost estimates and staffing impacts if the scope were changed. Councilmember Barbadillo added that device standards may be needed to ensure usefulness for investigative purposes, and staff indicated they would bring back a revised proposal for further Council consideration if directed.

With unanimous consensus votes, the City Council allocated funding as follows:
• $10,000 to the Council Special Event Fund
• $60,000 to the Doorbell Camera Initiative (reduced from $120,000) • $310,000 for the Main Street Police Substation
• $200,000 to the Strategic Land Acquisition Reserve
• $100,000 for the Storefront Crime Prevention Business Assistance (without funds from the Storefront Initiative Program)
• $65,000 for FIFA Special Events (removing $10,000 for Super Bowl) • $100,000 for Main Street Revitalization
• $100,000 to expand the Emergency Motel Stay Program
There were the following public speakers:

1. Voltaire Montemayor

After discussion, motion: to Adopt Resolution No. 9462 to appropriate unassigned fund balances or reserves for approved one-time funded priorities based on the November 4, 2025 prioritization vote.

Motion/Second: Councilmember Chua / Councilmember Lien
Motion carried by the following:

AYES: Mayor Montano, Vice Mayor Barbadillo, Councilmember Chua, Councilmember Lam, Councilmember Lien
NOES: None

The City Council also directed staff to bring the item back at the next City Council meeting to discuss and allocate the remaining funds.

ITEMS PULLED FROM CONSENT CALENDAR

There were the following public speakers:

1. Voltaire Montemayor

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December 2, 2025 Milpitas City Council Minutes Page 7

After discussion, motion: to Adopt Resolution No. 9460 to (1) Conduct a solar streetlight pilot project; (2) Approve and authorize the City Manager, or designee, to execute a cooperative purchase agreement with Fonroche Lighting America through a cooperative procurement contract solicited by Sourcewell, in an amount not-to-exceed $100,712; (3) Approve a budget appropriation in the amount of $110,000 from the Streetlight, Signage, Traffic Signal Improvements, CIP No. 3440; and (4) Authorize the Public Works Director, or designee, to negotiate and execute contract change order(s) in an aggregate amount not-to-exceed $25,000 for Hammond Way Streetlight Project, CIP No. 4301.

Motion/Second: Councilmember Chua / Councilmember Lien
Motion carried by the following:

AYES: Mayor Montano, Vice Mayor Barbadillo, Councilmember Chua, Councilmember Lam, Councilmember Lien
NOES: None

10. Consider Fee Waiver Request from Kiwanis Club of Milpitas for the 22nd Annual Crab Feed (Staff Contact: Renee Lorentzen, Recreation and Community Services Director, 408-586-3409) Councilmember Lien, noting her membership in Kiwanis for transparency, recused herself and left the room during this item's discussion. She explained that this is the 22nd annual Kiwanis and MUSD crab feed, where football players serve crabs, and encouraged council members to buy tickets.

There were the following public speakers:

1. Voltaire Montemayor

After discussion, motion: to approve a Fee Waiver of $763 for the 22nd Annual Kiwanis MUSD Crab Feed and Auction at the Milpitas Community Center Auditorium on February 6, 2026.

Motion/Second: Councilmember Chua / Vice Mayor Barbadillo Motion carried by the following:

AYES: Mayor Montano, Vice Mayor Barbadillo, Councilmember Chua, Councilmember Lam NOES: None
ABSTAIN: Councilmember Lien

ANNOUNCEMENTS AND FUTURE AGENDA ITEMS
Interim City Manager Santana provided a reminder about the City Council requested Town Hall meeting for Small Cell Antennas scheduled on December 9th from 6-8 PM at the Milpitas Community Center.

Councilmember Chua invited the public to the tree lighting ceremony on December 5th, featuring the first performance by the Milpitas Community Choir.

ADJOURNMENT
Mayor Montano adjourned the meeting at 10:32 PM.

Draft meeting minutes submitted by City Clerk, Suzanne Guzzetta

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TENTATIVE CITY COUNCIL AGENDA ITEM LIST
as of 12/12/2025

January 13, 2026 – Special Meeting (5:30 PM)

CLOSED SESSION

INVOCATION (Mayor Montano)

PRESENTATION
• Martin Luther King, Jr. Day (Proclamation)

CONSENT CALENDAR

1. Receive City Council calendar for January 2026 (City Clerk)

2. Approve City Council Meeting minutes of December 9 and 16, 2025 (City Clerk)

3. Preview list of items for January 20, 2026 (City Clerk)

4. Councilmember Request List (City Clerk)

5. Commission Appointments (City Clerk)

6. KB Homes BMR Unit Purchase (Housing)

7. Authority to Proceed with State Disability Insurance for ProTech Members (Human Resources)

8. Initial Acceptance for the Holiday Inn and Springhill Suites Project (Public Works / Engineering)

Page 21 of 391 ends

MILPITAS CITY COUNCIL

AGENDA ITEM REQUESTS

OPEN ITEMS
Request
No. Topic Submitted by:

Date
Requested
STATUS and/or DATE scheduled on City
Council meeting agenda:
1 Conduct a review of commission names to better
reflect their focus Montano 11/18/2025
An update on this item will be included in the
next quarterly prioritization update.
2 Review the Council prioritization process Chua 11/18/2025 An update on this item will be included in the
next quarterly prioritization update.
3 Look into the process of establishing a Friendship
City relationship Montano 11/18/2025
An update on this item will be included in the
next quarterly prioritization update.
4 Research how public funds could be used to
advertise local restaurants during the upcoming
Super Bowl Montano 11/18/2025
An update on this item will be included in the
next quarterly prioritization update.
5 Have a community forum on the Crown Castle
Small Cell towers. Montano 11/18/2025
An update on this item will be included in the
next quarterly prioritization update.
6 Install debrillators on city properties Barbadillo 10/28/2025 An update will be provided to the City
Council on this item in November 2025
7 Place a billboard at the Sport Center to inform the
community about events and activities Montano 10/21/2025 An update on this item will be included in the
next quarterly prioritization update.
8 Explore the creation of small parks in
neighborhoods without them Montano 10/21/2025
An update on this item will be included in the
next quarterly prioritization update.

ACTIVE ITEMS
Request
No. Topic Submitted by:

Date
Requested
STATUS and/or DATE scheduled on City
Council meeting agenda:
9 Increase the amount of funding for the ADU Permit
Subsidy Council 11/4/2025
An update on this item will be included in the
next quarterly prioritization update.
10 Council Special Events Fund to provide funding for
City Councilmembers to attend local, non-political,
events where their attendance is beneficial for the
City of Milpitas Montano/Chua 11/4/2025
An update on this item will be included in the
next quarterly prioritization update.
11 Add to the existing Strategic Land Acquisition
Revenue Reserve Council 11/4/2025
An update on this item will be included in the
next quarterly prioritization update.
12 Storefront and Crime Prevention Initiative by
making funding available for businesses to focus
on public safety related physical improvements to
their storefronts. Montano 11/4/2025
An update on this item will be included in the
next quarterly prioritization update.
13 Revisit the mural selection committee process to
make it more inclusive by involving all
commissioners in the Arts Commission Montano 8/19/2025
An update on this item will be included in the
next quarterly prioritization update.
14 Expand the Milpitas SMART program to include
service to the San Jose Airport Lam 8/12/2025
An update on this item will be included in the
next quarterly prioritization update.
15 Staff explore a program similar to San Leandro’s,
which provides Ring doorbell cameras to residents Chua 8/12/2025 An update on this item will be included in the
next quarterly prioritization update.
16 Develop a project management informational
memo. Barbadillo 4/1/2025
An update on this item will be included in the
next quarterly prioritization update.
17 Look into adding an entertainment zone to Main
Street. Montano 3/4/2025
An update on this item will be included in the
next quarterly prioritization update.
18 Staff provide a detailed analysis of overtime
expenditures by department. Barbadillo 3/4/2025
An update on this item will be included in the
next quarterly prioritization update.
19 Look into a policy to require a Super Majority vote
by Council for any deductions to budget reserves. Chua 2/18/2025 An update on this item will be included in the
next quarterly prioritization update.
20 Bring back a discussion regarding fentanyl-related
issues Barbadillo 2/18/2025
An update on this item will be included in the
next quarterly prioritization update.
21 Feasibility study regarding a police satellite office. Montano 2/18/2025 An update on this item will be included in the
next quarterly prioritization update.
22 Staff organize a job fair for City job openings Chua 11/19/2024 An update on this item will be included in the
next quarterly prioritization update.
23 Bring back a study or analysis of the permit
process Chua 11/19/2024
An update on this item will be included in the
next quarterly prioritization update.

NOTE: Deferred and Completed Items are not listed

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MILPITAS CITY COUNCIL

AGENDA ITEM REQUESTS
24 Explore updating the city's business tax rate
schedule Chua 10/1/2024
An update on this item will be included in the
next quarterly prioritization update.
25 Explore funding options for new signage following
the decision to rename the Milpitas Library to the
Milpitas Jose Esteves Library Barbadillo 9/3/2024
An update on this item will be included in the
next quarterly prioritization update.
26 Look into adopting an ordinance similar to San
Jose allowing ADUs (Accessory Dwelling Units) to
have a separate title and be sold separately. Chua 8/13/2024 An update on this item will be included in the
next quarterly prioritization update.
27 Conduct a traffic study on Escuela Parkway to
address circulation concerns Montano 5/7/2024
An update on this item will be included in the
next quarterly prioritization update.
28 Explore the possibility of augmenting the Planning
Commission stipend Barbadillo 4/16/2024
An update on this item will be included in the
next quarterly prioritization update.
29 Consideration of the 20% Low Income Below
Market Rate Housing Montano 12/5/2023
An update on this item will be included in the
next quarterly prioritization update.
30 Referral for utility infrastructure cost on Main Street from Carlo to Corning Streets Montano 10/17/2023
An update on this item will be included in the
next quarterly prioritization update.
31 Main Street International Festival Lien 10/3/2023
An update on this item will be included in the
next quarterly prioritization update.
32 Pickleball Pilot Project Chua 2/28/2023
An update on this item will be included in the
next quarterly prioritization update.
33 Main Street Infrastructure Projects Montano 2/28/2023 An update on this item will be included in the
next quarterly prioritization update.
34 Main Street Flooding at Library Chua 2/28/2023
An update on this item will be included in the
next quarterly prioritization update.
35 Have the City look into the possibility of a Citywide Senior Discount Barbadillo 2/7/2023
An update on this item will be included in the
next quarterly prioritization update.
36 Quarterly or Monthly crime statistics on Homekey
Project Chua 6/7/2022
An update on this item will be included in the
next quarterly prioritization update.
37 Evaluate reopening the childcare center with a non-
profit organization running the center Montano 2/1/2022 An update on this item will be included in the
next quarterly prioritization update.
38 Staff to look into mural Art on Great Mall Parkway
on the VTA owned Light rail pillars Montano 11/16/2021
An update on this item will be included in the
next quarterly prioritization update.
39 Consider Community Museum and Park on Main
St. Phan 8/20/2019
Discussions with the property owner of this
site are ongoing and staff is tracking
returning to council by June 2025 with an
update.

ACTIVE ITEMS
Request
No. Topic Submitted by:

Date
Requested
STATUS and/or DATE scheduled on City
Council meeting agenda:

NOTE: Deferred and Completed Items are not listed

Page 23 of 391 ends

CITY OF MILPITAS

AGENDA REPORT
(AR)

Item Title: Consider Recommendations from Mayor Montano for Appointments to Rent Review Board (Contact: Suzanne Guzzetta, City Clerk, 408-586-3001) Category: Consent Calendar-Leadership and Support Services Meeting Date: 12/16/2025
Recommendation: Receive Mayor Montano's recommendations and approve and confirm recommendations for appointments to the Rent Review Board

BACKGROUND:

On October 15, 2019, the City of Milpitas adopted Chapters 2 and 3 of Title XII of the Milpitas Municipal Code related to the adoption of a rent review program and tenant protections. In particular, the ordinance outlines a process for landlords to notify tenants of rent increases and the establishment of a Rent Review Board that would hold a hearing on the potential rent increase, upon request, if the mediation process between the tenant and the landlord is not successful, per Section XII-2-9.01 of the Municipal Code,

The Rent Review Board's decision is non-binding on the parties and the rent increase shall be effective as provided in the notice of rent increase but subject to subsection XII-2-7.06 (a landlord's failure to appear renders the increase void), unless the parties enter into an agreement pursuant to subsection XII-2-9.00 of this Chapter.

On November 3, 2025, the City received a request for a Rent Review Board hearing from a tenant. Per the Municipal Code, a Rent Review Board hearing must be held within 45 days of this request (by December 19, 2025). Since the adoption of the rent review program ordinance in 2019, staff is not aware of a prior request for review that has been made to the Rent Review Board, and the seats of the Rent Review Board are not currently filled.

Per Section XII-2-5.00 of the Milpitas Municipal Code, the Board must consist of five (5) members and one (1) alternative as follows:
• Two members shall be landlord representatives who own rental units in the City of Milpitas; • Two members shall be tenant representatives who are residents of the City of Milpitas; and • One member and one alternate shall be a neutral third party who is a resident of the City of Milpitas and is neither a landlord nor a tenant;
• The Rent Review Board members shall have a demonstrated interest in the issues considered by the Rent Review Board and will be selected based on their relevant experience.

Per Section XII-2-5.01 of the Municipal Code, the Rent Review Board is intended to evaluate the reasonableness of proposed rent increases at the request of either a landlord or tenant pursuant to the rent review program set forth in the Municipal Code.

Per Section XII-2-5.02 of the Municipal Code, members of the Rent Review Board generally serve four (4) year terms, with one of the landlord seats and one of the tenant seats serving an original two (2 year term such that term of appointment for members are staggered.

Per Government Code 40605, in a general law city where the office of Mayor is an elective office, the Mayor, with the approval of the City Council, shall make all appointments to boards, commissions, and committees unless otherwise specifically provided by statute.

The Milpitas Commissioner Handbook states that all Commissioners are expected to attend all regular meetings. Commissioners absent from three or more meetings in a year may be subject to removal from the Commission.

Page 24 of 391 ends

ANALYSIS:

The Mayor is expected to transmit their recommended appointments to the Rental Review Board prior to the City Council meeting. Due to timing, final names may not be available by the distribution of this agenda packet.

If not, they will distributed separately prior to the meeting. Appointments will include:

• Landlord Representatives:
• Tenant Representatives:
• Neutral Third Pary Representative:
• Neutral Third Pary Representative (alternate):

FISCAL IMPACT:

There is no fiscal impact associated with this item.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA):

ATTACHMENTS:

None

Page 25 of 391 ends

CITY OF MILPITAS

AGENDA REPORT
(AR)

Item Title: Authorize and Approve Request from Mayor Carmen Montano to Present a Key to the City to the Mayor of Mexico City, Alcaldesa/Mayor Clara Brugada (Staff Contact: Matt Cano, Assistant City Manager, 408-586-3012) Category: Consent Calendar-Leadership and Support Services Meeting Date: 12/16/2025
Recommendation: Authorize and Approve Request from Mayor Carmen Montano to present a Key to the City to the Mayor of Mexico City, Alcaldesa/Mayor Clara Brugada.

BACKGROUND:

Mayor Carmen Montano is requesting approval to present a Key to the City to the Mayor of Mexico City, Alcaldesa/Mayor Clara Brugada.

ANALYSIS:

The Milpitas City Council Handbook states that,

Keys to the City of Milpitas are only to be issued upon majority approval by the Mayor and City Council. … Any City Councilmember may request that consideration for issuance of a key to the City be added to a future City Council agenda. The request must define the significant and/or extraordinary achievement or contribution that the recipient (person, group or organization) has made to the City of Milpitas to justify the presentation of the key to the City.

The key is being proposed to be presented to the Mayor of Mexico City due to the extraordinary impact that the relationship between Mexico and the United States has had on the history of our City of Milpitas.

POLICY ALTERNATIVE(S):

Not Applicable

FISCAL IMPACT:

The City Council Community Promotions budget line item is sufficient to cover the estimated not-to-exceed cost of $60, which includes shipping, to produce a Key to the City, leaving a balance of $6,880 if this action is taken by City Council.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA):

ATTACHMENT(S):

None

Page 26 of 391 ends

CITY OF MILPITAS

AGENDA REPORT
(AR)

Item Title: Authorize and Approve Travel Request for Councilmember Lam to Sacramento, CA for the League of California Cities Mayors and Council Members Academy (Staff Contact: Matt Cano, Assistant City Manager, 408-586-3012) Category: Consent Calendar-Leadership and Support Services Meeting Date: 12/16/2025
Recommendation: Authorize and approve the travel to Sacramento, CA, for Councilmember William Lam to attend the League of California Cities Mayors and Council Members Academy to be held on January 21–23, 2026, for a combined estimated total amount of $1,600 budgeted under the Individual Elected Official allocation for Conferences/Meetings/ Trainings.

BACKGROUND:

The League of California Cities holds its Annual Mayors and Council Members Academy (Academy) in various California cities. This year, the Academy will be held in Sacramento and is scheduled for January 21– 23, 2026. This academy covers the legal, financial, and practical fundamentals of the mayor and councilmembers roles as an elected city official. Additionally, Councilmember Lam’s attendance at this academy will foster relationships with his peers. The sessions include an update on key legislative issues and an overview of the League of California Cities services. Included in this agenda packet is the preliminary agenda for this academy as Attachment A.

ANALYSIS:

The City of Milpitas Travel and Expense Policy requires the City Council to approve travel for the elected officials and City Manager. Council approval of the Sacramento travel request will allow Councilmember William Lam to gain additional knowledge from other California policymakers and bring it back to share with his colleagues. Continued conference participation and attendance also ensure that the Milpitas community is fully represented at the regional, state, and national levels.

POLICY ALTERNATIVE(S):

Not Applicable

FISCAL IMPACT:

The estimated individual expense for the Sacramento, CA League of CA Cities Mayors and Council Members Academy, including the registration fee, lodging, meals, mileage, and incidental reimbursements, are $1,600.

Fiscal year to date, Councilmember William Lam has spent $2,803.25 from his Individual Elected Official allocation of $10,000 for Conferences/Meetings/Memberships. With the additional estimated $1,600 expenses, he will have an estimated remaining balance of $5,596.75 for the fiscal year.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA):

ATTACHMENT(S):
(a) League of California Cities Mayors and Council Members Academy Draft Agenda (b) Council Conferences Budget Tracking

Page 27 of 391 ends

Attachment A

Page 28 of 391 ends

ATTACHMENT B

Council Conferences/Trainings FY 25-26 Budget Tracking Sheet

Mayor Montano
Total Remaining Balance Training/Travel Event FY25-26 Amount Expended/Estimates $5,800.52 $4,199.48
1 Mission College Gala $150.00
2 Cal Cities 2025 Annual Conference Long Beach – Oct 7 –10, 2025 $2,593.32 3 2025 NALEO Conference July 20-24, 2025 $2,687.20

Vice Mayor Barbadillo
Total Remaining Balance Training/Travel Event FY25-26 Amount Expended/Estimates $2,537.89 $7,462.11
1 Cal Cities 2025 Annual Conference Long Beach – Oct 7-10,2025 $2,537.89

Councilmember Chua
Total Remaining Balance Training/Travel Event FY25-26 Amount Expended/Estimates $0 $10,000.00
1 Councilmember Lien
Total Remaining Balance Training/Travel Event FY25-26 Amount Expended/Estimates $2,662.33 $7,337.67
1 Cal Cities 2025 Annual Conference Long Beach Oct 7-10, 2025 $2,662.33

Councilmember Lam
Total Remaining Balance
after January 2026
travel
Training/Travel Event FY25-26 Amount
Expended/Estimates
$4,403.35 $5,596.75
1 Cal Cities 2025 Annual Conference Long Beach Oct 7-10, 2025 $2,803.25 2 Mayor and Councilmember Academy – Jan 21-23, 2026 $1,600 Estimate only

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CITY OF MILPITAS

AGENDA REPORT
(AR)

Item Title: Authorize the City Manager, or Designee, to Execute a Purchase Order with CDW Government LLC for Desktops and Laptops (Staff Contact: Luz Cofresí- Howe, Finance Director, 408-586-3111; and Daniel Nam, Information Technology Director, 408-586-2712)
Category: Consent Calendar-Public Safety
Meeting Date: 12/16/2025
Recommendation: Authorize the City Manager, or designee, to execute a purchase order with CDW Government LLC for the purchase of desktops and laptops for a total amount not to exceed $292,866, inclusive of applicable sales tax and recycling fees.

BACKGROUND:

Technology is powers and supports every aspect of City operations, enabling staff to deliver essential services to the community efficiently and effectively. Historically, the City has replaced computers on an ad-hoc, as- needed basis, many times after the computer has stopped functioning properly, thereby hindering the employee’s ability to perform their job. Over the past five years, the number of laptops deployed to support hybrid work and leverage technological advancements has increased, replacing desktops for most City employees. Laptop computers typically experience higher levels of wear and tear and require more frequent replacement than desktop computers. The recommended asset life for laptops is three to five years, and desktops are recommended for replacement every four to six years.

To proactively replace computers and ensure City employees have modern technology to perform their work, while also improving accessibility, reliability, and security for the City, the Information Technology Department requested, and City Council approved, a Fiscal Year 2025-26 budget through CIP 3473 for the purchase of 191 replacement laptops and desktops. As part of ongoing efforts to optimize City technology systems and achieve best value, staff evaluated current usage, identified opportunities to reduce the total number of devices, and refined performance specifications to better align with needs. Through this analysis, staff reduced the number of desktop computers scheduled for replacement in the current year from 191 to 170 by consolidating workstations where appropriate and eliminating underutilized devices. Additional funding requests over the next four fiscal years, if approved by the City Council, will replace approximately 141 computers per year.

Staff will continue to evaluate and reduce overall device count where operationally feasible.

Staff estimated computer replacements using the upper end of the recommended replacement lifecycles, i.e., laptop replacements on a five-year cycle and desktop replacements on a six-year cycle. Currently, average cost for a desktop computer is $1,200, and a laptop computer is $1,600 on average. Ruggedized laptop devices supporting field operations cost approximately $3,500.

ANALYSIS:

For this initial purchase under CIP 3473, staff obtained quotes from three separate vendors through available cooperative purchasing programs in accordance with City Municipal Code Section I-2-3.07. Quotes were obtained for 110 laptops and 60 desktops, as well as any required accessories such as docking stations. The lowest priced quote was submitted by CDW Government LLC based on Sourcewell Contract 121923-CDWG.

The total not to exceed is $292,866, which includes recycling fees and applicable sales tax.

Pursuant to City Municipal Code Section I-4-2.01, contracts over $100,000 must be approved by the City Council.

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POLICY ALTERNATIVE(S):

Alternative 1: Do not authorize the City Manager, or designee, to execute a purchase order with CDW Government LLC for this purchase.

Pros: The City would not incur the costs.

Cons: Many City employees will most likely experience problems with their current City-issued computers over the next year, thereby hindering productivity and ability to deliver services.

Reason for Not Recommending: Replacement of dated laptops and desktops is imperative to ensure City employees have optimal technology to perform their work and continue to deliver services to the community.

FISCAL IMPACT:

Funding in the amount of $290,000 is included in the Fiscal Year 2025-26 which was appropriated through the City Council action adopting the Proposed Operating Budget and Proposed Capital Improvement Program Budget on June 3, 2025. The remaining balance of $2,866 will be covered by the Information Technology Operating Budget which has sufficient funds. Funding for future fiscal years will be submitted to Council through the annual budget process.

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. Even if a project, the action is exempt from further CEQA review pursuant to Cal. Code Regs., tit. 14, § 15061(b)(3) as it can be seen with certainty that there is no possibility that the activity in question may have significant effect on the environment. The action is an organizational or administrative activity of the City government that will not result in direct or indirect physical changes in the environment and is not a project pursuant to Cal. Code of Regs., tit. 14, § 15378.

ATTACHMENT(S):

None.

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CITY OF MILPITAS

AGENDA REPORT
(AR)

Item Title: Adopt a Resolution Delegating Authority to the City’s Personnel Officer or Designee to Notify Recognized Employee Organizations of Specified Procurements and Contracts as Required by California Assembly Bill 339 (Staff Contact: Kelli Parmley, Human Resources Director, 408-586-3086; Luz Cofresí- Howe, Finance Director, 408-586-3111)
Category: Consent Calendar-Leadership and Support Services Meeting Date: 12/16/2025
Recommendation: Adopt a resolution delegating authority to the City’s Personnel Officer, or their designee, to notify recognized employee organizations of specific procurements and contracts that may materially affect represented positions pursuant to California Assembly Bill 339 beginning January 1, 2026.

BACKGROUND:

California Assembly Bill 339 (AB 339) was signed into law on October 13, 2025, and takes effect on January 1, 2026. AB 339 requires the governing body of a public agency provide 45-days written notification to affected employee organizations before issuing solicitations, such as requests for proposals, requests for quotes, or executing contract renewals and extensions for services, that fall within the scope of work of job classifications represented by those organizations.

The written notice must identify the anticipated contract term, scope of work, estimated cost, the draft solicitation (or if not drafted, the information that would normally be included in the solicitation), and the reason for the contract. The Bill exempts Public Works projects and related services. Purchases made under exigent and emergency circumstances are also exempt from the 45-day notification requirement, but public agencies are required to provide as much advanced notice as is practicable in these instances.

ANALYSIS:

Under California Government Code Section 3504.5, the governing body must provide notice to recognized employee organizations when adopting ordinances, resolutions, rules, and regulations affecting terms and conditions of employment. AB 339 applies the same definition of “governing body.” The City Council has long delegated the administrative responsibility for providing labor-related notices through City Municipal Code Section VI-101-2.01 and Personnel Rules, which authorizes the City Manager as the ex-officio Personnel Officer, or their designee, to administer all provisions of the Personnel Rules “not specifically reserved to the Council.” Delegating AB 339 notification authority to the Personnel Officer is therefore consistent with the City’s established framework and practices. Although a formal resolution is not strictly required, adopting one provides clear documentation of the City’s intention to comply with the law and helps ensure that noticing is made to employee organizations as expediently as possible.

POLICY ALTERNATIVE(S):

Alternative 1: Do not adopt a resolution to authorize the City’s Personnel Officer, or designee, to provide required notices under AB 339.

Pros: None.

Cons: Notifications will have to be provided by City Council for each applicable solicitation or contract for the City comply with AB 339.

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Reason for Not Recommending: Given the additional 45-day noticing period now required for certain procurements, waiting for City Council to approve each notification will add several more weeks to an already increased timeline before the Purchasing Division of Finance can complete customer requests.

FISCAL IMPACT:

While there is no fiscal impact for the recommended delegation of authority approval in this Agenda Report, the extra procedural steps AB 339 imposes will require staff resources in the originating Department, Finance and Human Resources to collaborate on the notification process. The implementation of AB 339 will almost certainly extend procurement timelines, which may result in undefined opportunity costs.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA):

ATTACHMENT(S):
(a) Resolution Designating Personnel Officer Authority

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RESOLUTION NO. ______

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MILPITAS

AUTHORIZING THE PERSONNEL OFFICER, OR DESIGNEE, TO PROVIDE NOTICE AS SPECIFIED BY ASSEMBLY BILL 339
WHEREAS, effective January 1, 2026, the California Legislature enacted Assembly Bill 339 (2025) (“AB 339), which adds Section 3504.1 to the California Government Code and requires the governing body of a public agency to give employee organizations recognized under the Meyers-Milias-Brown Act no less than 45 days’ written notice before issuing a request for proposals, request for quotes, or renewing or extending an existing contract to perform services that are within the scope of work of the job classifications represented by a recognized employee organization; and
WHEREAS, pursuant to Section VI-101-2.01 of the Milpitas Municipal Code (“MMC”), the City Manager is the ex-officio Personnel Officer for the City of Milpitas and has authority, among other things, to administer all personnel rules not specifically reserved to the Milpitas City Council; and WHEREAS, the notice newly required by AB 339 is not a function specifically reserved to the Milpitas City Council; and
WHEREAS, pursuant to Section VI-101-2.01 of the MMC, the City Manager has delegated Personnel Officer duties not specifically reserved to the City Council or the City Manager to the Human Resources Director, including authority to provide similar notices to employee organizations as required by Section 3504.5 of the California Government Code for any ordinance, rule, resolution, or regulation directly relating to matters within the scope of representation; and
WHEREAS, for the avoidance of doubt, the City Council wishes to confirm the authority of the Personnel Officer to provide notices as required by AB 339, which similar to Section 3504.5 of the Government Code shall be provided as currently delegated by the Human Resources Director.

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

1. The City Council has considered the full record before it, which may include but is not limited to such things as the 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 City Council confirms the authority of the Personnel Officer, or designee, to provide notice to employee organizations recognized under the Meyers-Milias-Brown Act as required beginning January 1, 2026, by AB 339 and as codified in Section 3504.1 of the California Government Code, including as may be amended hereafter from time to time.

PASSED AND ADOPTED this day of 2025, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

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Resolution No. ____
ATTEST: APPROVED:

Suzanne Guzzetta, City Clerk Carmen Montano, Mayor

APPROVED AS TO FORM:

Christopher Creech, Acting City Attorney

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CITY OF MILPITAS

AGENDA REPORT
(AR)

Item Title: Adopt a Resolution Authorizing the City Manager, or Designee, to Accept Grant Funds from Santa Clara Valley Transportation Authority, Negotiate and Execute Necessary Agreements, and Appropriate Related Funds for the Continuation and Expansion of the Milpitas SMART Program (Staff Contact: Jay Lee, Planning Director, 408-586-3077; and Luz Cofresí-Howe, Finance Director, 408- 586-3111)
Category: Consent Calendar-Community Development
Meeting Date: 12/16/2025
Recommendation: Adopt a resolution authorizing the City Manager, or designee, to:
(1) Accept $2,766,114 in grant funds from the Santa Clara Valley Transportation Authority for the continuation and expansion of the Milpitas SMART (Simple, Mobile, Access to Reliable Transit) program;
(2) Negotiate and execute all necessary instruments, including a grant funding agreement with Santa Clara Valley Transportation Authority, for disbursement and expenditure of these grant funds;
(3) Approve the related budget appropriation actions as follows: in the General Fund, $2,766,114 to Intergovernmental Revenue, $90,000 to Other Revenue, and $2,856,114 to Planning Department Contractual Services; and in the General Government Fund, $243,486 to Planning Department Contractual Services funded by a draw from Fund Balance – Restricted for CIP; and (4) Negotiate and execute an amendment to the agreement with RideCo US Inc. to add $3,099,600 for a revised not-to-exceed of $6,355,516; extend the term through June 30, 2027; and expand the scope of services as required by this grant, including trip planning and data sharing features

BACKGROUND:

In November 2016, Santa Clara County voters approved Measure B, a 30-year half-cent sales tax for transit improvements. The Santa Clara Valley Transportation Authority (VTA) launched the Innovative Transit Service Models Program for grant funding. The City of Milpitas partnered with RideCo US Inc. (RideCo) to apply for a grant to develop Milpitas SMART, a 12-month pilot program for first/last-mile transit solutions. On March 4, 2022, the VTA Board approved the program and awarded Milpitas a grant of $1,084,732. On April 5, 2022, City Council authorized a funding agreement with VTA and a subscription and services agreement with RideCo to provide SMART transit services for $1,355,916. The Agreement with RideCo was executed May 26, 2022.

Milpitas SMART began on September 12, 2022, but ridership was low. In response to community feedback, the service model shifted from hub-and-spoke to point-to-point in February 2023. City Council approved amendments to the agreements with VTA and RideCo on August 8, 2023, and accepted $1,600,000 in State funding on September 5, 2023. On June 11, 2024, the subscription agreement with RideCo was amended to reflect the State funding, followed by further amendments to update various aspects of the program related to the service provider and operational requirements.

Since Milpitas SMART launched in September 2022, updates have included allowing rides between virtual stops (i.e., unmarked stops where users can enter and exit vehicles), changing service providers, extending service hours, and converting to hybrid vehicles. These efforts, along with collaborative outreach with VTA, have significantly increased ridership. In 2024, monthly ridership ranged between 3,242 to 4,258 passengers, peaking at 7,807 in March 2025 during a VTA workers' strike. The average monthly ridership for 2025, excluding March, is 5,282, a 33% increase over 2024 and a 180% increase over 2023. SMART serves a significant portion of Milpitas disadvantaged and transit-dependent populations. In October 2025, 75% of

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SMART rides (4,258 out of 5,875) were used by disadvantaged and transit-dependent populations, including youth, seniors, low-income individuals, and disabled persons.

On December 16, 2024, VTA announced the 2016 Measure B Innovative Transit Service Models Competitive Grant Program Cycle 2 call-for-projects. On February 4, 2025, City Council adopted a resolution expressing support for the City 2016 Measure B grant application to VTA to continue operating Milpitas SMART. On February 24, 2025, the City submitted its 2016 Measure B grant application to VTA. On June 17, 2025, City Council approved bridge funds of $300,000 to continue SMART until grant awards were made by VTA in the fall of 2025. The Agreement with RideCo was subsequently amended to add the bridge funds and extend the term of the Agreement through December 31, 2025.

The current contract amendment retains the $300,000 bridge funds within the agreement scope, and staff will bring forward a comprehensive discussion of the SMART program and funding structure during the FY 2026- 27 budget process.

ANALYSIS:

On September 4, 2025, the City was awarded a $2.77 million grant from VTA to support the continuation and expansion of the Milpitas SMART program. With this additional funding, SMART will incorporate multimodal trip planning into its mobile app, enabling users to view various transit options, including those from VTA and other agencies. This feature will improve connections to destinations both within Milpitas and beyond, positioning SMART as a viable first/last-mile solution. Additionally, the City, through RideCo and its subconsultant, plans to add autonomous vehicles (AVs) to increase service capacity and reduce operational costs. These AVs, powered by Artificial Intelligence (AI) for navigation, will serve high-demand areas, decrease wait times, and minimize long-term expenses by eliminating the need for human drivers. Last, staff will enhance outreach efforts targeting local employers and businesses and collaborate with the Milpitas Unified School District (MUSD) to develop strategies for improving services for students to boost ridership. To optimize the grant application score, the City included a provision for a 20 percent local match ($691,529), to be achieved through a combination of cash and in-kind contributions from staff.

With acceptance of the additional grant funds, staff requests to amend the current Agreement with RideCo to extend it through June 30, 2027, add $3,099,600 for a revised not-to-exceed of $6,355,516, and update the scope of services to add trip planning and data sharing features. Additionally, staff requests authority to execute an amendment to the current Agreement or execute a new agreement to add AV services to SMART once more complete implementation details are determined.

POLICY ALTERNATIVE(S):

Alternative 1: Do not adopt a resolution to acceptance of the funds and amendment to the RideCo Agreement.

Pros: The City would not continue operating SMART so would thereby save staff resources currently deployed to operate SMART beyond the current contract end date of December 31, 2025. The City would also not have to pay the local match required to receive 2016 Measure B funds from VTA. These funds could be used for other City services.

Cons: In not accepting the 2016 Measure B grant and failing to amend the Agreement with RideCo, the City would be unable to continue operating SMART, which would lead to an interruption or termination in service. If the City then seeks to restart service, additional staff time and resources would be required to procure a new funding source and a new provider. If service is terminated, many of the Milpitas’ disadvantaged and transit- dependent population who rely on the service would lose an important transportation option and be negatively affected.

Reason for Not Recommending: Accepting VTA’s 2016 Measure B grant would provide an opportunity for the City to continue operating Milpitas SMART, which provides a valuable and much-needed service to Milpitas’

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residents, employees, and visitors. Furthermore, the General Plan includes several policies to promote alternative modes of transportation, first/last-mile solutions, and public transit improvements to support the City’s circulation goals. The continuation of Milpitas SMART supports these General Plan policies and goals.

The amendment to the Agreement is also necessary to continue operating Milpitas SMART with a provider that has been efficiently and effectively operating SMART.

BUDGET REFERENCE:

The table below identifies the fund and appropriation accounts to fund the actions recommended in this Agenda Report.

Fund Function Appropriations Account Revenue/Reserve Expense Intergovernmental Revenue $2,766,114
Other Revenue (Fares) $90,000 100 – General
Fund
512 -
Planning Planning – Contractual Services $2,856,114 $2,856,114 $2,856,114

Fund Balance – Restricted for CIP ($243,486) 330 – General Government
512 -
Planning Planning – Contractual Services $243,486
($243,486) $243,486

FISCAL IMPACT:

If the City accepts the grant, the City would have to commit to a local match of $691,529, which can be achieved through a combination of cash and in-kind services. Based on the estimated in-kind staff time of $358,043 and fare revenue of $90,000 over the 18-month program duration to be funded by the grant, approximately $243,486 is expected to come from the General Government Fund.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA):

The acceptance of grant funding for an existing public transportation service previously determined to be exempt, and the associated update of contractual programmatic terms that do not materially change the environmental effects of the original program, do not constitute a project requiring further environmental review in accordance with Pub. Resources Code, § 21065 and Cal. Code Regs., tit. 14, § 15378. 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. Even if a project, the action is exempt from further CEQA review pursuant to Cal.

Code Regs., tit. 14, § 15061(b)(3) as it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment. The program, which proposes no physical changes and would support transit ridership, thereby reducing greenhouse gas emissions, would have no or only a de minimis impact on the environment. In the alternative, the selection and contractual arrangement of consultant services is exempt from further review under CEQA Guidelines Sections 15301 and 15308 as 1) it could indirectly result in the operation or permitting of existing public facilities involving negligible or no expansion of existing or former use and 2) consists of actions taken by the City to assure the maintenance, restoration, enhancement, or protection of the environment.

ATTACHMENT(S):
(a) Resolution for Acceptance of VTA Grant, Execution of Funding Agreement with VTA, and Amendments to (or new) Agreement with RideCo.

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Page 1 of 4 ends

RESOLUTION NO. _____

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MILPITAS AUTHORIZING THE CITY MANAGER, OR DESIGNEE, TO ACCEPT $2,766,144 IN

GRANT FUNDS FROM AND NEGOTIATE AND EXECUTE AGREEMENTS WITH

SANTA CLARA VALLEY TRANSPORTATION AUTHORITY (VTA) FOR THE CONTINUATION AND EXPANSION OF THE MILPITAS SMART PROGRAM; AMEND THE AGREEMENT WITH RIDECO US INC. TO ADD $3,099,600, EXTEND THE TERM THROUGH JUNE 30, 2027, AND ADD SCOPE OF SERVICES; AND APPROVE A

RELATED BUDGET APPROPRIATION

WHEREAS, the City of Milpitas, California (the “City”) is a municipal corporation, duly organized under the constitution and laws of the State of California; and

WHEREAS, in November 2016, Santa Clara County voters approved the 2016 Measure B ballot measure, a 30-year half-cent countywide sales tax to enhance transit, highways, expressways and active transportation programs for bicycles and pedestrians; and

WHEREAS, the Valley Transportation Authority (VTA) established the 2016 Measure B Program and adopted Program categories and guidelines for Innovative Transit Service Models; and

WHEREAS, the goal of the Innovative Transit Service Models Program is to support affordable new innovative transit service models to address first/last-mile connections to transit, serving the vulnerable, underserved, and transit-dependent population; and

WHEREAS, the Innovative Transit Service Models Program provides funding to eligible cities through a competitive grant application process; and

WHEREAS, City staff focused on partnering with a transportation consulting firm that could deliver a transit service model that meets the grant program guidelines and requirements for an innovative service model; and

WHEREAS, City staff, in partnership with RideCo US Inc. (“RideCo”), a transportation consulting firm that provides on-demand transit solutions, submitted a grant application for funding through the Innovative Transit Service Models Program to develop and implement Milpitas OnDemand, an 18-month pilot program to provide a flexible, convenient first/last-mile transit solution with connections to VTA light rail and the Milpitas Transit Center; and

WHEREAS, on March 4 th, 2021, the VTA Board of Directors approved the recommended projects, including Milpitas OnDemand, and authorized the General Manager to execute the necessary agreements; and

WHEREAS, after conducting a good faith review of the available sources and pursuant to Milpitas Municipal Code section I-2-3.06 (Sole Source Procurement), the City’s Purchasing Agent determined that RideCo is the only source for the implementation and operation of Milpitas OnDemand; and

WHEREAS, Milpitas Municipal Code section I-2-3.03(d) authorizes the City to make procurements without a formal competitive process when authorized by the City Council to be in the best interests of the City; and

WHEREAS, on April 5, 2022, the City Council authorized the City Manager to execute a funding agreement with VTA for the 2016 Measure B Innovative Transit Service Models Program and a professional services agreement with RideCo for consultant services related to Milpitas SMART; and

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Page 2 of 4 ends

WHEREAS, Milpitas SMART has been an important service for the Milpitas community, especially for youth, seniors, and low-income persons; and

WHEREAS, the ridership for Milpitas SMART has continued to increase since program launch; and

WHEREAS, on December 16, 2024, VTA announced the Call-for-Projects for the 2016 Measure B Innovative Transit Service Models Competitive Grant Program for the funding cycle fiscal year 2025; and

WHEREAS, on February 24, 2025, the City submitted an application to VTA for the 2016 Measure B Innovative Transit Service Models Competitive Grant Program; and

WHEREAS, Milpitas SMART implements the following 2040 General Plan policies and actions:

• Policy CIR 1-4: Coordinate development of safe, inclusive and health-promoting transportation infrastructure with local, county, regional, and state agencies to optimize efficiency of the transportation network for all users, and increase opportunities for physical activity for all types of users. • Policy CIR 3-2: Coordinate transit planning and provision of transit-supportive infrastructure with Caltrans, VTA, BART, and other service providers to provide seamless service for users across transit modes and to facilitate transfers.
• Action CIR-3c: Coordinate with transit agencies and local stakeholders to pursue development of feeder services and/or a local circulator to carry commuters to transit stations, such as shuttle connections from businesses, residences, attractions, and schools to bus and rail services. • Policy CIR 4-3: Encourage walking, biking and transit use by prioritizing and implementing “first-mile/last mile” improvements, wayfinding and educational efforts in the vicinity of the Great mall transit center, light rail stations, the BART station, and heavily used bus stops. • Policy CIR 5-3: Encourage existing employers to adopt strategies to implement programs to reduce employee vehicle trips, including purchasing passes through VTA’s annual transit pass program; providing facilities such as secure bike parking, lockers, changing rooms, and showers; telework, and flexible work schedules.
• Policy CIR 6-2: Support development of healthier communities through the use of lower- or non-polluting modes of transportation to reduce GHG vehicle emissions and local air pollution levels. • Policy CIR 6-4: Prioritize transportation improvements in part based on consideration of benefits to disadvantaged communities.
• Policy CIR 7-1: Proactively position the City to be competitive in pursuing grant funding for planning, design, and construction of transportation improvements. • Policy CIR 7-3: Seek opportunities to develop public/private partnerships to provide transportation infrastructure services.
• Policy CIR 7-5: Monitor the development of new and emerging transportation technologies – such as autonomous vehicles – to enable the City to prepare for their incorporation into the transportation system if safe and appropriate.
• Action CIR-7f: Actively pursue grant funds for planning, design, and construction of transportation-related capital improvement projects.
• Policy LU 3-1: Support regional efforts that promote higher densities near major transit and travel facilities and reduce regional vehicle miles traveled by supporting active modes of transportation including walking, biking, and public transit. Support local and regional land use decisions that promote safe access to and the use of alternatives to auto transit.
• Policy CON 7-12: Encourage and prioritize infrastructure investments and improvements that promote safe walking, bicycling and increased transit ridership.
• Policy UCS 8-22: Encourage services and programs that meet the unique needs of seniors within Milpitas, including the establishment of medical facilities, transportation options for seniors and people with mobility disabilities, senior centers, and programs that provide for in-home care and aging-in-place.

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Page 3 of 4 ends

WHEREAS, on September 4, 2025, the VTA Board of Directors authorized the funding of the project at its Board of Directors meeting; and

WHEREAS, staff recommended the City Council (1) accept $2,766,144 in grant funds from and negotiate and execute agreements with VTA for the continuation and expansion of the Milpitas SMART program, (2) amend the agreement with RideCo US Inc. to add $3,099,600, extend the term through June 30, 2027, and add scope of services as required by the grant, and (3) appropriate the amount of $2,856,144 in the General Fund to the Intergovernmental revenue estimate Other Revenue estimate, and the Planning Department budget; and $243,486 in the General Government Fund to the Planning Department budget.

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

SECTION 1. Recitals

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 publish, and other materials and evidence submitted or provided to the City Council. Furthermore, the recitals set forth above are found to be true and correct and incorporated herein by reference.

SECTION 2. City Council Approval
The City Council hereby accepts $2,766,144 in grant funds from the Santa Clara Valley Transportation Authority for the continuation and expansion of the Milpitas SMART program; and authorizes the City Manager, or designee to, negotiate and execute all necessary instruments, including a grant funding agreement with Santa Clara Valley Transportation Authority, for disbursement and expenditure of these grant funds; approves the related budget appropriation actions as follows: in the General Fund, $2,766,144 to Intergovernmental Revenue, $90,000 to Other Revenue, and $2,856,144 to Planning Department Contractual Services; and in the General Government Fund, $243,486 to Planning Department Contractual Services funded by a draw from Fund Balance – Restricted for CIP; and; negotiate and execute an amendment to the agreement with RideCo US Inc. to add $3,099,630 for a revised not-to-exceed of $6,355,546; extend the term through June 30, 2027; and expand the scope of services as required by this grant, including trip planning and data sharing features.

PASSED AND ADOPTED this 16th day of December 2025, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

ATTEST:

___________________________
Suzanne Guzzetta, City Clerk
APPROVED:

Carmen Montano, Mayor

APPROVED AS TO FORM:

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Page 4 of 4 ends

Christopher Creech, Acting City Attorney

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CITY OF MILPITAS

AGENDA REPORT
(AR)

Item Title: Review and Accept the Development Impact Fee Annual and Five-Year Reports for the Calaveras Boulevard Widening Traffic Impact Fee, Transit Area Specific Plan Impact Fee, and Storm Drainage Improvement Fee (Staff Contact: Luz Cofresí-Howe, Finance Director, 408-586-3111)
Category: Public Hearings-Leadership and Support Services

Meeting Date: 12/16/2025
Recommendation: (1) Review and accept the Development Impact Fee Annual consistent with the Mitigation Fee Act for the Calaveras Boulevard Widening Traffic Impact Fee, Transit Area Specific Plan (TASP) Impact Fee, and Storm Drainage Improvement Fee for the fiscal year ended June 30, 2025; (2) Adopt a Resolution making all findings required by the Mitigation Fee Act.

BACKGROUND:

California Government Code Section 66000 et seq. (Mitigation Fee Act) requires local agencies to provide an accounting of fees charged for development projects. The City has an accounting and reporting responsibility under Government Code Section 66006(b)(1) which provides that each local agency is required on an annual basis, within 180 days after fiscal year end, for each separate account, to make available to the public the following information:

1. Brief description of the type of fee in the account;

2. The amount of the fee;

3. The account’s beginning and ending balance;

4. The amount of fees collected, and the interest earned;

5. A description of the improvements on which the funds were expended and the amount expended on each improvement including the percentage of the improvement funded with development fees;

6. An approximate date by which the construction of a public improvement will begin if the local agency determines that sufficient funds have been collected to complete financing on the incomplete improvement;
a. For any financed public improvement identified in a previous report, identification of if construction began on the date previously reported and, if it did not, an explanation for the delay together with a revised commencement of construction approximation.

7. A description of each inter-fund transfer or loan made from the account; and

8. The amount of any refunds or allocations made pursuant to Code Section 66001.

The City deposits impact fees subject to the above disclosure in the Calaveras Boulevard Widening Traffic Impact Fee Fund, Transit Area Specific Plan (TASP) Impact Fee Fund, and Storm Drain Development Fund to track these development related fees. Interest income is allocated to these funds based on their respective monthly cash balances. Expenditures from these funds were in the form of capital improvement projects to either renovate existing facilities or maintain the existing level of service, consistent with the General Plan and approved Capital Improvement Plan, due to increased demand related to the development projects.

ANALYSIS:

Annual reports summarize the Fiscal Year 2024-2025 fund activity for Calaveras Boulevard Widening Traffic Impact Fee (Exhibit 1); Transit Area Specific Plan (TASP) Impact Fee (Exhibit 2); and Storm Drainage Improvement Fee (Exhibit 3). The reports show the amount of fees collected in FY 2024-2025, interest income, a brief description of the projects funded, the percentage of the projects funded by the development fees, and the beginning and ending balance of the funds. The table below shows the beginning fund balance, revenues

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received, expenditures and ending fund balance for each impact fee for FY 2024-2025. The plan to expend the funds available in ending fund balances for the various fees is outlined in the attached reports.

FY 2024-25
Calaveras Blvd Widening
Traffic Impact Fee TASP Impact Fee
Storm Drainage
Improvement Fee1
Beginning Fund Balance $ 86,653 $ 49,576,379 $ 1,799,843 Revenues 52,120 7,760,080 284,035
Expenditures 0 (930,348) (500,000)
Ending Fund Balance $ 138,773 $ 56,406,111 $ 1,583,878
1 Annual reporting for the Storm Drainage Improvement Fee is subject to Government Code Section 66013; however, those reporting requirements are substantially similar to the annual reporting requirements under Government Code Section 66006 and are referred to collectively here for convenience.

POLICY ALTERNATIVE(S):

Alternative 1: Do not adopt the resolution and accept the annual development impact fee disclosure information.

Pros: None.

Cons: Not adopting the resolution and accepting the annual development impact fee disclosure information will place the City in violation of the Mitigation Fee Act, which will require that those fees are refunded to the property owners.

Reason not recommended: None
FISCAL IMPACT:

Not applicable.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA):

The action is an organizational or administrative activity of the City government that will not result in direct or indirect physical changes in the environment and is not a project pursuant to Cal. Code of Regs., tit. 14, § 15378. 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. Even if a project, the action is exempt from further CEQA review pursuant to Cal. Code Regs., tit. 14, § 15061(b)(3) as it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment. The action consists of annual reporting and accounting that does not involve the commitment to any new project that may have a potentially significant impact upon the environment. Environmental review for public improvements to be financed by these fees will be considered prior to approval of those projects once sufficient information is available to adequately consider and study those impacts.

ATTACHMENT(S):
(a) Annual Report (Exhibits 1-3)
(b) Resolution

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CITY OF MILPITAS

ANNUAL REPORT OF DEVELOPMENT FEES AND EXPENDITURES FOR THE FISCAL YEAR ENDED JUNE 30, 2025
EXHIBIT 1

CALAVERAS BOULEVARD WIDENING TRAFFIC IMPACT FEE

Description:

To implement the goals and objectives of the City of Milpitas General Plan and to mitigate the traffic impacts caused by new development in the City of Milpitas, certain roadways such as Calaveras Boulevard must be widened.

Fee:

The amount of the fee as of June 30, 2025 was as follows:

Activity Description FY 24/25 Fee Unit

1. Residential 5 or more units 287.97$ Per unit

2. Retail Development of 1,000 or more square fee 1,226.45$ Per square Foot

3. Office Development of 1,000 or more square feet 609.08$ Per square Foot

4. Other Uses To Be Determined

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CITY OF MILPITAS

ANNUAL REPORT OF DEVELOPMENT FEES AND EXPENDITURES FOR THE FISCAL YEAR ENDED JUNE 30, 2025
EXHIBIT 1

CALAVERAS BOULEVARD WIDENING TRAFFIC IMPACT FEE

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES Fees Collected And Interest Earned:

Revenues
Traffic Fee
Interest
$ 48,316
$ 3,804
Total Revenues $ 52,120

Excess/(Deficiency) Of Revenues Over/(Under) Expenditures $ 52,120

Beginning and Ending Balance:

Fund Balance, Beginning Of Year $ 86,653
Fund Balance, End Of Year $ 138,773

Inter-Fund Transfer Or Loan Made Description None
Refunds Made From Surplus Fees And Amount Of Any Allocations Made None

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CITY OF MILPITAS

ANNUAL REPORT OF DEVELOPMENT FEES AND EXPENDITURES FOR THE FISCAL YEAR ENDED JUNE 30, 2025
EXHIBIT 2

TRANSIT AREA SPECIFIC PLAN (TASP) IMPACT FEE

Description:

Based on Resolution No. 8344, Transit Area Development Impact Fee Update Report Exhibit A prepared by Economic & Planning Systems, Inc., dated February 2014, the purpose of the Transit Area Specific Plan (TASP) Impact fee is to fund the planning and development (as described in the Report) of an approximately 437-acre area in the southern portion of the City near the Great Mall shopping center to support more residents and workers with appropriately scaled utilities, parks, community facilities, and roadways.

Fee:

The amount of the fee as of June 30, 2025 was as follows:

Activity Description FY 24/25 Fee Unit

1. Residential 51,850.84$ Per unit

2. Commercial 33.92$ Per square Foot

3. Office 58.30$ Per square Foot

4. Hotel -$ per room

5. Other Uses To Be Determined
* Fee applies Citywide except TASP Fees for Calaveras Boulevard Widening

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CITY OF MILPITAS

ANNUAL REPORT OF DEVELOPMENT FEES AND EXPENDITURES FOR THE FISCAL YEAR ENDED JUNE 30, 2025
EXHIBIT 2

TRANSIT AREA SPECIFIC PLAN (TASP) IMPACT FEE

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES Fees Collected And Interest Earned:

Revenues
TASP Impact Fees $ 5,574,477
Interest 2,185,603
Total Revenues $ 7,760,080

Fees expended on public improvement (See table for % of cost funded with fees)
CP 2005 – Delano Manongs Pedestrian Bridge $ 600,000
CP 2010 – Land/Right-of-Way Value Determination 9,000
CP 3490 – Capital Improvement Program Administration 144,000 Recycled Water Distribution System (DB21) 172,854
TASP Plan Administration Expenses 4,494
Total Expenditures $ 930,348

Excess/(Deficiency) Of Revenues Over/(Under) Expenditures $ 6,829,732

Beginning and Ending Balance:

Fund Balance, Beginning Of Year $ 49,576,379
Fund Balance, End Of Year $ 56,406,111

Inter-Fund Transfer Or Loan Made Description None
Refunds Made From Surplus Fees And Amount Of Any Allocations Made None

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CITY OF MILPITAS

ANNUAL REPORT OF DEVELOPMENT FEES AND EXPENDITURES FOR THE FISCAL YEAR ENDED JUNE 30, 2025
EXHIBIT 2

TRANSIT AREA SPECIFIC PLAN (TASP) IMPACT FEE

CIP Item Number
and Title Project Description
% Funded with
Development
Fees
Construction
Commencement
Date Project Status
CP 2005 –
Delano
Manongs
Pedestrian
Bridge
This project provides for
the design and
construction of a new
pedestrian bridge over
Lower Penitencia Channel.

The bridge will connect
Santa Clara Valley Water
District’s (SCVWD) multi-
use trail along Centre
Pointe residential
development to the Delano
Manongs Park.

65%

Project is
anticipated to
start in spring
of 2026,
pending
permitting and
joint use
agreement
with Valley
Water

Nearing the
end of Design
Phase
CP 2010 -
Land/Right-of-
Way Value
Determination
This project provides for
the annual evaluation and
determination of land and
right-of-way fair market
values within the City for
the purpose of updating
development fee
calculations such as the
park-in-lieu fee.

100%

No
Construction

Completed;
Report is
provided in
May, annually

CP 3490 -
Capital
Improvement
Program
Administration
This project provides for
the annual preparation and
administration of the
Capital Improvement
Program. Work includes
program administration,
printing, and software
programming assistance.

20%

No
Construction

Completed;
Annual
administration
of CIP budget
related to
TASP projects
Recycled Water
Distribution
System (DB21)
Reimbursement to the
Developer on 2001 Tarob
Ct. For the water main
replacement located in the
TASP area

100%

Completed in
2023

Completed
TASP Plan Administration
Expense
100% No
Construction
Completed

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CITY OF MILPITAS

ANNUAL REPORT OF DEVELOPMENT FEES AND EXPENDITURES FOR THE FISCAL YEAR ENDED JUNE 30, 2025
EXHIBIT 3

STORM DRAINAGE IMPROVEMENT IMPACT FEE

Description:

Each Developer shall install all storm drains necessary to serve his development, sized in accordance with the City’s current Storm Master Plan. In addition, the Developer is required to pay all storm-related fees including connection fees as set forth in ordinance 239.8.

Fee:

The amount of the fee as of June 30, 2025 was as follows:

Activity Description FY 24/25 Fee Unit

1. Milpitas Metro Specific Plan Area per runoff acre
Milpitas Metro Specific Plan Area Per 100 sf of runoff surface

2. Gateway-Main Street Specific Plan Area 50,517.00$ per runoff acre Gateway-Main Street Specific Plan Area 116.00$ Per 100 sf of runoff surface

3. Remaining Urban Service Area 248,606.00$ per runoff acre Remaining Urban Service Area 571.00$ Per 100 sf of runoff surface

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CITY OF MILPITAS

ANNUAL REPORT OF DEVELOPMENT FEES AND EXPENDITURES FOR THE FISCAL YEAR ENDED JUNE 30, 2025
EXHIBIT 3

STORM DRAINAGE IMPROVEMENT IMPACT FEE

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES Fees Collected And Interest Earned:

Revenues
Connection Fees $ 139,439
Interest 144,596
Total Revenues $ 284,035

Fees expended on public improvement (See table for % of cost funded with fees)
CP 3724 – Main Street Flood Study $ 500,000
Total Expenditures $ 500,000

Excess/(Deficiency) Of Revenues Over/(Under) Expenditures $ (215,965)

Beginning and Ending Balance:

Fund Balance, Beginning Of Year $ 1,799,843
Fund Balance, End Of Year $ 1,583,878

Inter-Fund Transfer Or Loan Made Description None
Refunds Made From Surplus Fees And Amount Of Any Allocations Made None

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CITY OF MILPITAS

ANNUAL REPORT OF DEVELOPMENT FEES AND EXPENDITURES FOR THE FISCAL YEAR ENDED JUNE 30, 2025
EXHIBIT 3

STORM DRAINAGE IMPROVEMENT IMPACT FEE

CIP Item Number
and Title Project Description
% Funded with
Development
Fees
Construction
Commencement
Date
Project
Status
CP 3724-Main
Street Flood Study
The project provides for
assessment of the flooding that
occurs on main Street under 237
overpass due to Wrigley Ford
Creek.
100% No construction Completed

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RESOLUTION NO. ____

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MILPITAS REVIEWING

AND ACCEPTING ANNUAL DEVELOPMENT IMPACT FEE DISCLOSURE

INFORMATION FOR THE CALAVERAS BOULEVARD WIDENING TRAFFIC

IMPACT FEE, THE TRANSIT AREA SPECIFIC PLAN IMPACT FEE AND THE STORM DRAIN FEE PURSUANT TO CALIFORNIA GOVERNMENT CODE SECTIONS 66006 AND 66013

WHEREAS, the Mitigation Fee Act, Government Code Section 66000 et seq., authorizes the City of Milpitas (“City”) to impose, collect, and expend mitigation fees to offset the impacts of development within the City; and

WHEREAS, pursuant to its authority under the Mitigation Fee Act (Government Code §§ 66000 et seq.) the City Council established, adopted, and imposed a Calaveras Boulevard Traffic Impact Fee, a Transit Area Specific Plan (“TASP”) Impact Fee and a Storm Drain Fee (collectively, the “Fees”); and

WHEREAS, the City has deposited all Fees in separate non-commingled funds (“Funds”) established for such a purpose; and

WHEREAS, the City has made available to the public within one hundred eighty (180) days following the last day of the fiscal year the annual accounting information (“Annual Report”) required by the Mitigation Fee Act related to each of the Fees; and

WHEREAS, the City has mailed notice at least fifteen (15) days prior to this meeting to all interested parties who have requested notice of any meeting relative to the City’s imposition of the Fees and has held a duly noticed, regularly scheduled public meeting at which oral and written testimony was received regarding the Annual Reports at least fifteen (15) days after the City made this information publicly available.

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

2. In accordance with Government Code Section 66006(b) and Section 66013, the City Council has reviewed and approves the Annual Reports for each of the Fees, which are attached to this Resolution as Exhibits 1-3, and are also placed on file with the City Clerk. The Council, based upon the information contained in the Annual Report and the remaining need for the unexpended funds, finds as follows:

a. That each of the Annual Reports describe the types of Fees contained in each of the Funds, including the amount of the fees, the beginning and ending balance of the Funds, as well as the amount of fees collected, and the interest earned thereon.

b. That each of the Annual Reports identifies each public improvement on which the Fees were expended, the amount of the expenditures on each improvement, including the total percentage of the cost of the public improvement that was funded with the Fees.

c. That there were interfund transfers or loans made from the Funds, as noted.

d. That sufficient funds have not been collected to complete the financing of any incomplete public improvement, unless identified in Exhibits 1-3, and that there were no refunds or allocations made of the Fees.

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3. Pursuant to these findings, and at this time, there shall not be a refund of any unexpended Fees.

PASSED AND ADOPTED this __________day of ___________, 2025, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

ATTEST: APPROVED:

______________________________ ______________________
Suzanne Guzzetta, City Clerk Carmen Montano, Mayor

APPROVED AS TO FORM:

_______________________________
Christopher Creech, Acting City Attorney

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CITY OF MILPITAS

AGENDA REPORT
(AR)

Item Title: Accept the City’s Annual Comprehensive Financial Report and Other Related Annual Audited Reports for the Fiscal Year Ended June 30, 2025 (Staff Contact:

Luz Cofresí-Howe, Finance Director, 408-586-3111)
Category: Leadership and Support Services
Meeting Date: 12/16/2025
Recommendation: Review and accept the City’s Annual Comprehensive Financial Report and other related Annual Audited Reports for the Fiscal Year Ended June 30, 2025.

BACKGROUND:

Annually, the City independent external financial auditor audits the City books and staff prepares the Annual Comprehensive Financial Report (ACFR) of the City of Milpitas. The ACFR presents the operations and financial activity of all City funds, including the General Fund. In conjunction with the ACFR for the fiscal year ended June 30, 2025, this Agenda Report presents a Memorandum on Internal Control (MOIC), Required Communications Letter, and an Agreed Upon Procedures Report on Compliance with the Appropriations Limit Increment for the City Council for review and accept.

In summary, the City of Milpitas achieved strong financial results in FY 2024-25, with total net position increasing $31.2 million to $716.4 million. The General Fund added $4.2 million to reserves, ending the year with $89.5 million in fund balance. Both Water and Sewer utilities maintained healthy operating margins. The independent audit resulted in an unqualified ("clean") opinion from Maze and Associates, the City independent external financial auditor, with no material weaknesses in internal controls.

ANALYSIS:

As noted above, Maze & Associates issued an unqualified opinion on the City's financial statements, dated November 17, 2025. An unqualified audit opinion is the highest level of assurance an independent auditor can provide. The unqualified opinion certifies the City financial statements are accurate, complete, comply with Generally Accepted Accounting Principles (GAAP) and Governmental Accounting Standards Board (GASB) rules, fairly present the City's true financial position, and are free from material misstatements or undisclosed problems.

The audited ACFR satisfies the City debt-related reporting obligations under California Government Code §53891 debt transparency requirements, fulfills continuing disclosure requirements to bondholders and investors under outstanding bond covenants, and ensures comprehensive transparency regarding all long-term liabilities.

The City also received the Government Finance Officers Association (GFOA) Certificate of Achievement for Excellence in Financial Reporting Award for its FY 2023-24 ACFR. The City has won this GFOA award for 36 years and has already submitted its FY 2024-25 ACFR for GFOA award consideration.

Highlights and items to note from the ACFR for the fiscal year ended June 30, 2025 are detailed below:

• In Fiscal Year 2025, City revenues continued recovering gradually since the onset of the COVID-19 Pandemic (Pandemic) over five years ago. The unemployment rate in the San José-Sunnyvale-Santa Clara metropolitan area rose to 4.7%, up slightly from 4.2% in Fiscal Year 2024. General Fund revenues had a slight increase compared to the previous year. There are revenue increases in Fiscal Year 2025 particularly in property tax, sales tax, Hotel/Motel taxes, and Licenses/Permits revenues; however, the

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increases are offset by a decrease in other taxes and intergovernmental revenue due to the reallocation of the American Rescue Plan Act Fund in FY 2023-24.

• Property tax revenue increased $2.5M to $51.2M in FY 2024-25, driven by ongoing growth in secured and supplemental property tax from higher valuations, supplemented by non-recurring receipts that are not expected to continue into future assessment periods. Hotel and motel tax revenues continued their post- Pandemic recovery, though they have not yet reached pre-Pandemic levels.

• While the local economy continues to recover from COVID-19 impacts, several factors create uncertainty for future revenue projections, including tech sector volatility, evolving commercial real estate dynamics, and structural changes in consumer behavior such as increased remote work and online shopping.

Encouragingly, FY 2024-25 demonstrated strong revenue performance with property tax growing 5.1%, sales tax increasing 6.7%, and hotel tax revenues continuing their recovery trajectory. The City maintains conservative revenue projections and prudent reserves to address potential economic volatility.

Financial Position Overview
Net Position Growth:

Category FY 2024-25 FY 2023-24 Change
Governmental Activities $457.6M $439.0M +$18.6M
Business-type Activities $258.9M $246.3M +$12.6M
Total Net Position $716.4M $685.2M +$31.2M

The $31.2 million increase reflects strong operational performance, revenue growth across major tax categories, positive investment returns of $3.2 million and improved actuarial positions for pension and other post-employment benefits (OPEB) liabilities. Cash and investments grew $23.4 million to $450.8 million, demonstrating strong liquidity. Capital assets increased $6.1 million through continued infrastructure investment, while the net pension liability decreased $7.5 million due to strong CalPERS investment returns.

General Fund Performance, Waterfall and Balances
The General Fund ended FY 2024-25 with a fund balance of $89.5 million, an increase of $4.2 million from FY 2023-24. Following the City’s established reserve policy waterfall methodology (Resolution No. 9333, dated June 4, 2024), the FY 2024-25 net surplus of $6.2 million, after recognizing $0.1 million in net surplus and $6.1 million in use of reserves, was allocated across the first three policy tiers of the waterfall. The allocation prioritized Part I reserves, with $2.8 million allocated to the General Fund Contingency Reserve (increasing it from $20.6 million to $23.4 million) and $2.8 million to the General Fund Budget Stabilization Reserve (increasing it from $20.6 million to $23.4 million). The remaining $0.6 million was allocated to the Part II PERS Rate Stabilization Reserve, increasing it from $6.7 million to $7.3 million. This allocation ensures all policy- required reserves are fully funded, with both Part I reserves reaching their respective individual City-Council approved target levels of at least 16.67% of General Fund operating expenditures, and the PERS Rate Stabilization Reserve strengthened to address potential future pension contribution volatility.

Classification FY 2024-
25 Purpose
Nonspendable $5.2M Prepaid items, property held for resale Committed $12.7M PERS stabilization ($7.3M), facilities, technology, turf replacement
Assigned $7.5M Uninsured claims, encumbrances
Unassigned $64.1M Contingency Reserve ($23.4M), Budget Stabilization ($23.4M), other

The Contingency Reserve and Budget Stabilization Reserve in the Unassigned Classification total $46.8 million, representing four months of operating expenditures – twice what is recommended by the GFOA. This reserve level provides fiscal flexibility to address economic uncertainties, fund strategic initiatives, and maintain service levels during revenue fluctuations.

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Revenue Analysis
Total governmental revenues increased $14.3 million (9.0%) to $173.3 million, driven by growth in major tax categories:

Major Revenue Sources:

Revenue Source FY 2024-25 Change from FY 2023-24 % Change Property Taxes $51.2M +$2.5M +5.1%
Sales & Use Taxes $38.1M +$2.4M +6.7%
Hotel/Motel Taxes $13.4M +$0.6M +4.7%

Property tax growth was driven by ongoing increases in secured and supplemental property tax from higher valuations, supplemented by non-recurring receipts that are not expected to continue in future years. Sales tax revenue demonstrated strong post-pandemic recovery, though future growth may be tempered by tech sector volatility and continued shifts to online shopping. Hotel and motel tax revenues continued their recovery trajectory as business travel resumed, though they remain below pre-pandemic levels. A $2.3 million decrease in intergovernmental revenue reflects the sunset of American Rescue Plan Act (ARPA) federal pandemic relief funds that were recognized from deferred revenue in FY 2023-24. This represents a return to normalized baseline revenue rather than a negative trend.

Enterprise Fund Performance
Both Water and Sewer utilities maintained strong financial positions with healthy operating margins:

Water Utility:
• Operating revenues of $39.5 million (up $3.4M from 6% rate increase) • Operating expenses of $35.2 million (up $5.8M due to wholesale water cost increases) • Net position of $108.5 million (up $3.6M)
• Rate stabilization reserves cushioning wholesale cost impacts Sewer Utility:
• Operating revenues of $26.5 million (up $1.4M from 4% rate increase) • Operating expenses of $17.6 million (up $0.9M)
• Net position of $150.4 million (up $9.1M)
• Healthy 33.6% operating margin
Both utilities demonstrate excellent debt service coverage ratios and maintain restricted reserves per City Council policy. Wholesale water cost pressures may necessitate future rate adjustments for the Water Fund, while the Sewer Fund strong margins support continued capital investment.

Long-Term Liabilities
Pension Liability (CalPERS): The net pension liability decreased $7.5 million to $247.4 million, reflecting strong CalPERS investment returns and the City's ongoing contribution strategy. This positive trend demonstrates improved funded status, though the liability remains substantial at 92% of General Fund revenues. The City maintains a $7.3 million PERS Rate Stabilization Reserve to cushion against potential future contribution rate volatility, as well as the Section 115 Trust (Pension) investment portfolio with a balance of approximately $40.2 million as of June 30, 2025.

OPEB Liability: The net OPEB liability decreased $1.4 million to $13.0 million, a positive trend indicating effective management of these obligations.

Long-Term Debt: Total outstanding debt decreased $1.8 million to $70.4 million, with governmental debt at $19.4 million and business-type debt at $51.0 million. Enterprise funds demonstrate excellent debt service coverage ratios exceeding 10:1. The City low debt burden (9.8% of net position) provides substantial additional borrowing capacity if needed for future capital projects.

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Capital Assets & Infrastructure
Total net capital assets across governmental and business-type activities reached $580.4 million. The City added $18.7 million in governmental capital assets (primarily street improvements) and $7.2 million in business-type assets during FY 2024-25. Construction in progress totals $126.6 million, reflecting an active capital improvement program. The continued investment in the City's $580 million infrastructure asset base remains essential to prevent deferred maintenance accumulation.

Cash & Investments
The City's investment portfolios are professionally managed by Chandler Asset Management (General Portfolio) and PFM Asset Management, LLC (Section 115 Trust Portfolio). Investment earnings totaled $3.2 million with an unrealized gain of $1.8 million, demonstrating market recovery from prior year losses. Portfolio diversification and quality positioning provides both safety and adequate returns, meeting the requirements of the City Council-approved Investment Policy.

Memorandum on Internal Control (MOIC)
This memorandum presents the auditor's assessment of the City's internal control over financial reporting. The report explicitly states that no material weaknesses or significant deficiencies were identified during the audit.

Two minor operational findings are presented as "other matters" for management consideration: (1) the quarterly investment report for December 31, 2024 was submitted beyond the 45-day requirement due to coordination of new Section 115 Pension Trust reporting, and (2) a short-term rental permit fee was charged at an incorrect rate. Both findings have been satisfactorily addressed by management and do not indicate systemic control weaknesses.

The memorandum also includes information on new GASB pronouncements effective for FY26, including GASB 103 (Financial Reporting Model Improvements) and GASB 104 (Disclosure of Certain Capital Assets).

Required Communications Letter
This letter fulfills professional auditing standards requiring auditors to communicate specific matters to those charged with governance. The letter confirms the audit was conducted without difficulties, disagreements with management, or significant issues. It describes the auditors' responsibilities, discusses qualitative aspects of the City accounting practices, and confirms that management has corrected all identified misstatements. The letter also discusses the City's significant accounting estimates including fair value of investments, pension liabilities, and OPEB obligations. The auditors confirm they received all requested management representations and that no consultations with other accountants occurred during the audit period.

Agreed Upon Procedures Report on Compliance with the Appropriations Limit Increment This agreed-upon procedures report confirms City compliance with State of California constitutional appropriations limit under Proposition 111. Maze & Associates verified that the City FY 2024-25 Appropriations Limit of $140,254,073 was properly calculated and adopted by City Council resolution, and that the population and inflation adjustment factors were correctly applied per California State Department of Finance data. The report confirms all required procedures were completed with no exceptions. This annual compliance report is required by California Government Code and demonstrates the City's adherence to state constitutional spending limitations.

POLICY ALTERNATIVE(S):

N/A

FISCAL IMPACT:

There is no fiscal impact by the City Council accepting the Agenda Report.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA):

The action is a fiscal, organizational, and/or administrative activity of the City government 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.

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ATTACHMENT(S):
(a) Annual Comprehensive Financial Report for FY 2024-25 (b) Memorandum on Internal Control for FY 2024-25
(c) Required Communications for FY 2024-25
(d) Agreed Upon Procedures Report on Compliance with the Appropriations Limit Increment FY 2024-25

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CITY OF MILPITAS, CALIFORNIA

ANNUAL COMPREHENSIVE FINANCIAL REPORT

FOR THE YEAR ENDED JUNE 30, 2025

Prepared by

THE CITY OF MILPITAS

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INTRODUCTORY SECTION

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CITY OF MILPITAS
Annual Comprehensive Financial Report
for the Year Ended June 30, 2025
Page

INTRODUCTORY SECTION:

Table of Contents ...................................................................................................................................................... i Letter of Transmittal ................................................................................................................................................. v Directory of C
ity Officials ..................................................................................................................................... xii Map of City’s Location ......................................................................................................................................... xiii Organization Chart ................................................................................................................................................ xiv GFOA Certificate of Achievement ........................................................................................................................ xv FINANCIAL SECTION:

Independent Auditor’s Report ................................................................................................................................. 1 Management’s Discussion and Analysis
................................................................................................................ 5 Basic Financial Statements:

Government-wide Financial Statements:

Statement of Net Position ..................................................................................................................... 27 Statement of Activities .......................................................................................................................... 28 Fund Financial Statements:

Governmental Funds:

Balanc e Sheet .................................................................................................................................... 34 Statement of Revenues, Expenditures, and Changes in Fund Balances ........................................... 36 Reconciliation of the Net Change in Fund Balances – Total Governmental Funds with th e Statement of Activities ................................................................................... 38 Statements of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual ( N o n - G A A P L e g a l B a s i s ) :

General Fund ............................................................................................................................. 39 Hous ing Authority ..................................................................................................................... 40 i

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CITY OF MILPITAS
Annual Comprehensive Financial Report
for the Year Ended June 30, 2025
Page

FINANCIAL SECTION: (Continued)

Proprietary Funds:

Statement of Net Position ................................................................................................................. 43

Statement of Revenue, Expenses and Changes in Fund Net Position .............................................. 44

Statement of Cash Flows .................................................................................................................. 45

Fiduciary Funds:

Statement of Fi duciary Net Position ................................................................................................. 49

Statement of Changes in Fiduciary Net Position .............................................................................. 50

Notes to Basic Fina ncial Statements ............................................................................................................ 53

Required Supplementary Information:

Retiree Medical Benefits (OPEB) Plan - Sche dule of Changes in the Net OPEB Liability and Relate d Ratios ................................................................................................................................. 125

Retiree Medical Benefits (OPEB) Pl an - Schedule of Contributions ........................................................ 126

Schedule of Changes in the Total OP EB Liability and Related Ratios – (Dependent Fund) (OPEB) Plan .......................................................................................................... 127

Schedule of Contributions (Dep endent Fund) (OPEB) Plan ..................................................................... 128

Schedule of Changes in the Net Pension Liabil ity and Related Ratios (Miscellaneous Plan) .................. 130

Schedule of Contributions (Miscellaneous Plan) ............................................................................... ....... 132

Schedule of Changes in the Net Pension Li ability and Related Ratios (Safety Plan) ............................... 134

Schedule of Contribu tions (Safety Plan) ................................................................................................... 136

Supplemental Information:

Non-major Governmental Funds:

Combining Ba lance Sheets .................................................................................................................. 142

Combining Statements of Reve nues, Expenditures and Changes in F und Balances ........................................................................................................................... 144

Combining Schedule of Revenue s, Expenditures and Changes in Fund Balances - Budget and Ac tual (Non-GAAP Legal Basis) .................................................... 146

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CITY OF MILPITAS
Annual Comprehensive Financial Report
for the Year Ended June 30, 2025
Page

FINANCIAL SECTION: (Continued)

Internal Service Funds:

Combining Statements of Net Position ................................................................................................ 155

Combining Statements of Reve nues, Expenditures and Changes in Fund Net Position ..................................................................................................................... 156

Combining Statemen ts of Cash Flows ................................................................................................. 157

STATISTICAL SECTION:

Net Position – Last Ten Fiscal Years ................................................................................................... 161

Changes in Net Position – Last Ten Fiscal Years ................................................................................ 162

Fund Balances, Governmental F unds – Last Ten Fiscal Years ........................................................... 167

Changes in Fund Balances, Government al Funds – Last Ten Fiscal Years ........................................ 168

Assessed Value and Actual Value of Taxa ble Property – Last Ten Fiscal Years ............................... 170

Direct and Overlapping Property Ta x Rates – Last Ten Fiscal Years ................................................. 171

Principal Property Taxpayers – Fiscal Years 2024-2025 and 2015-2016 ........................................... 172

Property Tax Levies and Collect ions – Last Ten Fiscal Years ............................................................ 173

Taxable Sales by Category – Last Ten Calendar Years ....................................................................... 174

Direct and Overlapping Sales Tax Rates – Last Ten Fiscal Years ...................................................... 175

Principal Sales Taxpayers – Fiscal Years 2024- 2025 and 2015-2016 ................................................ 176

Ratios of Outstanding Debt by Type – Last Ten Fiscal Years ............................................................ 177

Bonded Debt Pledged Revenue Coverage Redevelopment Agency Tax Allocation Bonds – Last Ten Fiscal Years .............................................................................. 178

Computation of Direct and Overlapping Debt ..................................................................................... 179

Legal Debt Margin Informati on – Last Ten Fiscal Years .................................................................... 180

Installment Payment Coverage, Sewer Certificates of Participation and Wastewater Revenue Refunding Bonds – Last Ten Fiscal Years .................................................. 181

Installment Payment Coverage,
Water Revenue Funds – Last Ten Fiscal Years .............................................................................. 182

iii

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CITY OF MILPITAS
Annual Comprehensive Financial Report
for the Year Ended June 30, 2025
Page

STATISTICAL SECTION: (Continued)
Bimonthly Sewer Rates by Customer Class – Last Ten Fiscal Years ................................................. 183 Bimonthly Water Rates by Customer Class – Last Ten Fiscal Years ................................................. 184 Demographic and Economic Statistics – Last Ten Calendar Years .................................................... 185 Principal Employers – Fiscal Year 2024-2025 and 2015-2016 ........................................................... 186 Authorized Full-Time Equivalent Employees by Function/Program – Last Ten Fiscal Years ..................................................................................................................... 187 Operating Indicators by Function/Program – Last Ten Fiscal Years .................................................. 188 Capital Asset Statistics by Function/Program – Last Ten Fiscal Years .............................................. 190 OTHER AUDIT REPORT:

Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ...................................................... 195 iv

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455 EAST CALAVERAS BOULEVARD , MILPITAS , CALIFORNIA 95035-5479 PHONE: 408-586-3000, WWW .MILPITAS .GOV
November 17, 2025
Honorable Mayor, Members of the City Council, and Residents of the City of Milpitas:

Submitted herewith is the Annual Comprehensive Financial Report (ACFR) of the City of Milpitas (Cit y)
for the fiscal year ended June 30, 2025 as prepared by the City Finance Department with support from other City departments. This report is consistent with generally accepted accounting principles. Responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the City. The data, as presented, is accurate in all material aspects, and is presented in a manner designed to fairly set forth the financia l position and results of operations of the City as measured by the financial activity of its various funds. All disclosures necessary to enable the reader to gain the maximum understanding of the City financial affairs have been included. The organization of the financial report follows the guidelines set forth by the Government Finance Officers' Association of the United States and Canada.

The Reporting Entity and its Services
This report combines the financial statements of the City, the Milpitas Public Financing Authority (MPFA), Milpitas Housing Authority (Housing Authority), th e Milpitas Municipal Fina ncing Authority (MMFA) and the Terrace Gardens Inc. (Terrace Gardens) to constitute a single reporting entity. The MPFA, Housing Authority, MMFA and Terrace Gardens are individual legal entities separate from the City and controlled by the City. The MPFA, Housing Authority and MMFA have the same governing board as the City and the City also has control of the Terrace Gardens’ govern ing board. However, Terrace Gardens issues its own component unit financial statements. The purpose an d authority of the MPFA, Housing Authority, the MMFA and Terrace Gardens are described in Note 1 of this ACFR.

Milpitas is a general law city of the State of California. The City was incorpor ated in 1954 and operates under a Council-Manager form of government. The City's political and legislative body is the City Council and is empowered by the general laws of the State of California to formulate Citywide policy, including a fiscal program, City services, and appointment of the City Manager and City Attorney. There are four City Council members who are elected at-l arge for staggered four-year terms, and the Mayor is selected every two years in a separate citywide election.

The City provides a full range of municipal services to the community through its departments such as Building Safety and Housing, Planning, Fire, Po lice, Public Works, and Recreation and Community Services. These departments are supported by internal service departments which include the City

Manager’s Office, City Attorney’s Office, Finance, Human Resources, and Information Technology.

Community members of the City desiring to assist the City Council in forming government policy may do so by serving on a City commission or committee (com
missions). The commission s act in an advisory
capacity to the City Council. They are the Arts Commission; Community Housing Commission; Economic Development and Trade Commission; Energy and Environmental Sustainability Commission; Library and Education Advisory Commission; Parks, Recrea tion and Cultural Resources Commission; Planning Commission; Public Safety and Emergency Prepar edness Commission; Science, Technology, and Innovation Commission; Senior Advisory Commis sion; Veterans Commission; Youth Advisory Commission, and Measure F Oversight Committee.

C ITY OF M ILPITAS
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Economic Condition, Outlook and Activity

Milpitas is situated within the Silicon Valley regi on, known throughout the world as the home of high technology, innovation and research. Milpitas is considered the “Crossroads of Silicon Valley,” with most of its 13.6 square miles of land situated betwee n two major freeways, I-6 80 and I-880. Milpitas has experienced tremendous growth since its incorporati on in 1954. Over the past 70 years, population has increased from 26,561 in 1970 to nearly 81,915 based on the latest Department of Finance data in 2025.

The economy has experienced a slightly higher unemployment in August at the state and federal levels with State of California unemployment at 5.5% and national unemployment rate at 4.3% compared to 5.3% and

4.1% in the prior fiscal year, respectively. The California Employment Development Department (EDD) reported that between August 2024 and August 2025 for San José-S unnyvale-Santa Clara metropolitan statistical area, in which Milpitas is included, employment decreased by 200 jobs. At the City level, the unemployment rate remained at 4.8% as compared to the prior year’s unemployment in the same month of August.

Several global and national factors are contributing to economic uncertainty, including the war in Ukraine, Middle East tensions, high interest rates, inflation, rising housing costs, income inequality, and unclear federal policies. U.S. credit rating downgrades and b udget cuts from the HR-1 bill, which are affecting services like public health and housing, further complic ate the landscape. Locally, Milpitas is affected by tech sector layoffs in Silicon Valley, which followed a pandemic-era hiring boom. From 2023 – 2024, the Bay Area lost 80,000 tech jobs. Companies are now pr ioritizing efficiency and investing in artificial intelligence (AI) and automation. General inflation rema ins above the Fed’s 2% target rate (2.9% as of August 2025), and certain sectors like healthcare and education continue to see increases at an even higher inflation rate. Ecommerce now makes up 22.7% of U.S. retail sales, reflecting a lasting shift in consumer behavior since the pandemic. Remote work and redu ced in-person commerce continue to affect local revenues, particularly from sales and hotel taxes. While there are signs of recovery, hotel tax revenue may take years to fully rebound.

The national GDP (Gross Domestic Product, the value of goods and services less the value of the goods and services used up in production, the most popular indicator of the nation’s overall economic health) increased at an annual rate of 3.8 percent in the second quarter of 2025 from the previous quarter according to the Bureau of Economic Analysis (BEA) advance estimate. As of September 2025, the Federal Reserve Board projected change in median GDP growth is positive 1.8 percent for 2026 and positive 1.9 percent for 2027.

The CPI (Consumer Price Index) is us ed by the U.S. Bureau of Labor St atistics to measure inflation. The August 2025 CPI-U (Consumer Price index for all Urban Consumers) increased 2.9 percent over the last 12 months. Core CPI (CPI less food and energy) is 3.1 percent in August 2025 compared to 3.3 percent in September 2024. Core CPI represents a more accurate pi cture of underlying inflation trends since volatile food and energy products are excluded. When compar ed to San Francisco area, the August 2025 CPI-U increased 2.5 percent over the last 12 months and the Core CPI increas ed 2.4 percent. While the global economic activity remains uncertain, the U.S. Bureau of Labor Statistics Employment Projections for 2024- 2025 shows a projected growth from 174.6 million to 175.2 million over the 2024-34 decade.

Although median home prices have risen year over year, the slowdown in de velopment activity and the downturn in the commercial real estate market are troubling trends that could soon impact residential valuations negatively. Single family residential co nstruction starts decreased 10% year-over-year while multi-family construction (5 units or more) starts in creased 51% year-over-year. The median sale price of a single-family residential home in Milpitas was $1.8 million as of August 2025, up approximately 5.9 percent from last year. Year-over-year price increases have ramped up in Santa Clara County. Santa Clara County had a 1.6 percent decrease in median sale pric e compared to 11.2 percent increase last year. The section below entitled “Major Development Activities in the City” will discuss some of the development

activities occurring in Milpitas.

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Consumer Confidence Level

Consumer confidence is an indicator designed to measure the degree of optimism that consumers feel about the overall state of the economy and their personal fi nancial situation. The Co nference Board Consumer Confidence Index decreased to 94.2 in September 2 025 from 97.8 in August 2025 and has continued to decline since then. Since consumer spending accounts for more than two-thirds of the U.S. Gross Domestic Product, this index is a good indicator that when consumers’ confidence is on a potential downward trend, consumers would be less likely to make purchases, thus lowering overall consumption. Employment drives consumer spending, which in turn affects the economy. Nonfarm payroll employment increased by 22,000 in August 2025, and the national une mployment rate increased slightly to 4.3 percent in August 2025 compared to August 2024.

Source: The Conference Board

80 85
90 95
100
105
110
115
120Index
Consumer Confidence
vii

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Top Eight Sales Tax Generators by Economic Segment
Financial markets continue to rema in volatile and inflationary tren ds in the economy remain high.

According to Urban-Brookings Tax Policy Center, total state tax revenue collections rose 3.7 percent in nominal terms in the first three quarters of 2025, comp ared to the year prior. The chart below provides a snapshot of the City sales tax revenue by major industry groups. Total amount of sales tax revenue for the major industry groups generated about $37.2 million. By and large, the sales tax revenue generated from major industry groups such as Fuel and Service Stations, Restaurants and Hotels, General Consumer Goods, Food and Drugs, and Autos and Transportation did not change significantly comp ared to the composition over a year ago.

City Sales Tax Revenue ($37.2 Million)
Major Industry Groups

Source: HDL FY2025 Major Business Categories

Major Development Activities in the City

General Plan Update – Considered the blueprint for future development, the General Plan (Plan) defines a long-term vision for future growth, traffic circulation, economic development, health, housing and resource conservation. The Milpitas 2040 General Plan was unanimously adopted by the City Council on March 9, 2021; this policy document will guide City decision-making and priorities over the next 20 years. The Plan identifies opportunity sites where changes to land use and development patterns are likely to occur and prioritizes housing and economic growth in areas serv ed by high-quality transit. The Plan also includes policies aimed at preserving the character of existing neighborhoods and protecting the City’s hillsides and other natural resources. The City continues to implement General Pl an policies and actions, which are summarized in annual progress reports to the Ca lifornia Department of Housing and Community Development.

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Milpitas Metro Specific Plan – The City adopted the Milpitas Metro Specific Plan (and the associated Environmental Impact Report) in February 2023 with updated policies and programs to further enhance existing neighborhoods and provide new opportunities for future housing, retail, office, and hotel uses in the planning area. The new Metro Plan envisions a network of landscaped open space, parks, and trails that connect housing and jobs to high-quality transit and provide opportunities for active and passive recreation as well as social interaction. The new Plan also envisions devel opment of an employment-oriented Innovation District near the Milpitas Transit Center to foster economic development based on the City’s excellent access to regional bus, light rail, and BART connections. The Office of Economic Development is currently partnering with a local public relations firm on the Innovation District Branding Initiative. The City is currently updating the Transit Area Development Impact Fee to fund the new public improvements identified in the new Plan.

Residential Development – The City continues to leverage public and private resources to support planning and development of new affordable housing. The City is recognized for its award-winning online resources and interactive tools that help residents navigate the development review pro cess and find ADU designs that fit their property and needs. The City won an American Planning Association award at the regional and state levels in 2022 for Best Prac tices. For more information, visit www.milpitas.gov/adu/. The City also continues to host the popular Accessory Dwelling Units (ADU) “ADU Mondays” program which unites staff from various departments to provide direct assistance to residents who wish to pursue an ADU on their property. City staff has presented information about these programs in regional and statewide forums.

In FY 2024-25, the Planning Commission and City Council approved permits for new housing developments, including a 75-unit affordable apartm ent building within the previously approved multifamily residential project at 1355 California Ci rcle, 38 new apartment un its within a previously approved mixed-use apartment building, and a new hillside home. The City adopted Housing Opportunity to streamlining the review process for affordable housing, create new by-right housing regulations, and incentivize mixed-use redevelopment in Milpitas’ aging shopping centers. In addition, the City received a $500,000 Priority Development Area (PDA) grant from Association of Bay Area Governments (ABAG) to help fund the preparation of the Gateway/Main Street Specific Plan. The City also received $142,700 from ABAG’s Regional Early Action Planning (REAP) grant program to help fund the preparation of the 2023- 2031 Housing Element. Most recently, the City received an additional $600,000 in funding through ABAG’s PDA grant program to prepare the Main Street Sense of Place Plan and Innovation District Parks and Trails Master Plan.

Non-residential Development – FY2024-25 was anothe r busy year for commer cial redevelopment and expansion. The Planning Commission approved a time extension for a preschool at 1000 Jacklin Road and a new banquet facility and food truck park at 200 Serra Way. In addition, conditional use permits have been granted for Altitude Trampoline Park, an indoor recreational facility, at the Great Mall, and The Little Gym, a children’s gymnastics facility, at 139 Ranch Drive. Furthermore, the City Zoning Administrator approved several commercial and industrial building remodels, alcohol sales at several existing businesses, and a new massage establishment.

Accounting System and Budgetary Control

In developing and evaluating the C ity's accounting system, consideration is given to the adequacy of internal accounting controls. Internal accounting co ntrols are designed to provide reasonable, but not absolute, assurances regarding (1) the safeguarding of assets against loss from unauthorized use or disposition; and (2) the reliability of financial record s for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the evaluati on of costs and benefits requires estimates and judgments by management.

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All internal control evaluations occur within the above framework. The Finance Department staff remains committed to improving the City accounting system; to maintain the City's internal accounting controls to adequately safeguard assets; and to provide reasonab le assurances of proper recording of financial transactions. Budgetary control is directed by the C ity Council by resolution when the budget is adopted each year. Expenditures may not legally exceed appropri ations at the department level by fund. The City utilizes the encumbrance system as a management contro l technique to assist in controlling expenditures.

The City Manager has limited budget appropriation authority to transfer appropriations among departments and projects within any one fund, provided that the amount of the amended appropriation is $100,000 or less. Quarterly reports of revenue and expense are prep ared and distributed to the City Council and City departments to monitor spending in relation to the adopted budget. At fiscal year-end, open encumbrances are reported under the “Assigned” fund balance classification. The City accounting records are organized and operated on a "fund" basis, which is the basic fiscal and accounting entity in governmental accounting.

Each fund is classified by category and fund type:

Category and Fund Type

Governmental Funds: General Fund, Special Reve nue Funds, Debt Service Funds, and Capital Projects Funds

Proprietary Funds: Enterprise Funds and Internal Service Fund

Fiduciary Funds: Private-Purpose Trust Fund and Agency Funds

Governmental Funds: The basic financial statements n ecessary to fairly present the financial position and operating results from major governmental funds ar e the balance sheet, and the statement of revenues, expenditures and changes in fund balance. These funds are maintained using the modified accrual basis of accounting, which is more thoroughly explained in the Notes to the Financial Statements.

Proprietary Funds: Generally accepted accounting principles applicable to private commercial business are applicable to proprietary funds of a government agency. The basic financial statements required to present the financial position and operating results from major proprietary funds are the statement of net position, statement of revenues, expenses, and changes in fund net position, and the statement of cash flows. The accrual basis of accounting is utilized as explained in the Notes to the Financial Statements.

Fiduciary Funds: Fiduciary funds are used to account for assets held by a government agency acting as a trustee or agent for individuals, assessment districts, organizations, other governmental units or other funds of the same entity. These funds are also identified in this report as a Private-Purpose Trust Fund and Custodial Funds. The full accrual basis of accounting is used as explained in the Notes to the Financial Statements.

Financial Analysis

Generally Accepted Accounting Principles (GAAP ) require that management provide a narrative introduction, overview, and analys is to accompany the basic financ ial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it.

Long Term Financial Planning

Each year the City adopts a balanced budget by June 30. The City has fiscal policies that include the use of one-time revenues for one-time expenditures, includi ng capital outlay and reserves. The City also has adopted reserve policies that requires unassigned fund balance which is made up of the Contingency x

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Reserve to be at least 16.67% of the annual operating expenditures and the Budget Stabilization Reserve with a reserve target of 16.67% of the annual operating expenditures in the General Fund. Additional reserves are included in Note 12.

The City developed a five-year Capital Improvement Plan detailing specific budgeted capital projects. Each of the projects is consistent with the budget priorities of the City. The fiscal year 2024-25 Adopted Capital Improvement Program (CIP) Budget totaled $ 33.2 million. The CIP included improvements to City infrastructure which includes community improvements, parks, streets, water, sewer and storm drain utilities.

In addition, the City produces an annual ten-year General Fund Forecast. The General Fund Forecast allows the City Council and the community to assess the financial sustainability of City services in the long term.

The projection also identifies the type of commitments and resource demands in the next ten years as known and points out areas of both opportunity and risk as the City navigates through fiscal cycles. This long-term forecast provides an invaluable planning tool and is an indication of sound fiscal planning and strategy.

Independent Audit

Each year the City requires an independent annual audit of the City's financial records, the results of its operations, and cash flows. This report includes the opinion of the City's independent auditors, Maze & Associates, for the basic financial statements of the City. In addition, the ACFR report also contains the auditors' report on Internal Control over Financial Reporting and on compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards.

Awards

The Government Finance Officers' Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its Annual Comprehensive Financial Report for the fiscal year ended June 30, 20 24. The Certificate of Achievement is the highest form of recognition for excellence in state and local government financial reporting. The City has received this award for the last thirty-six years.

Acknowledgments

We extend our appreciation to the entire staff of the Finance Department and other City departments who assisted in the process of compiling the information for this report. In addition, we extend a special "thank you" to our external auditors who contributed to make this document possible. Their efforts and continued dedication are greatly appreciated. We sincerely thank the Mayor and members of the City Council for their support, interest, and integrity in directing the financial affairs of the City in a responsible and prudent manner.

Respectfully submitted,

Deanna J. Santana Luz Cofresí- Howe
Interim City Manager Finance Director
Docusign Envelope ID: C2F7883A-E570-4CE5-81E7-193CCCC1ACF3 xi

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DIRECTORY OF OFFICIALS
June 30, 2025
City Council
Mayor Carmen Montano
Vice-Mayor
Councilmember
Garry Barbadillo

Councilmember Hon Lien
Councilmember Evelyn Chua
Interim City Manager
Deanna Santana
Assistant City Manager
Matt Cano

Acting City Attorney
Christopher Creech
City Clerk
Suzanne Guzzetta
Public Information Officer
Charmaine Angelo
Building Official
Bill Tott
Housing Official
Vacant
Finance Director
Luz Cofresí-Howe

Human Resources Director
Kelli Parmley
Economic Development &
Strategic Initiatives Director
Alex Andrade
Recreation & Community
Services Director
Renee Lorentzen
Fire Chief
Jason Schoonover

Police Chief
Jared Hernandez
Public Works Director
Christian Di Renzo

Information Technology Director
Daniel Nam
Planning Director
Jay Lee
William
Lam
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The City of Milpitas is located near the southern tip of San Francisco Bay, forty-five miles south of San Francisco.

Milpitas is often called the “Crossroads of Silicon Valley” with most of its 13.6 square miles of land situated between two major freeways (I-880 and I-680), State Route 237, and a county expressway. The light rail line opened for service in 2004 and an extension of BART, with a major multi-modal station, is in the planning stages. xiii

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City Profile
City of Milpitas 1xiv

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Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Milpitas
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2024
Executive Director/CEO
xv

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FINANCIAL SECTION

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INDEPENDENT AUDITOR’S REPORT

To the Honorable Members of the City Council
City of Milpitas, California

Report on the Audit of the Financial Statements

Opinions

We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Milpitas (City), California, as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the Table of Contents.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of June 30, 2025, and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgetary comparisons listed in the Table of Contents as part of the basic financial statements for the year then ended in accordance with accounting principles generally accepted in the United States of America.

We did not audit the financial statements of the discretely presented component unit fina ncial statements of Terrace Gardens, Inc. as of and for the year ended December 31, 2024, which represent 0.98%, 1.43%, and 2.12% of the assets, net position, and revenues, respectively, of the primary government. The financial statements of the Terrace Gardens, Inc. were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for the City, is based solely on the report of the other auditors.

Basis for Opinions

We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is requi red to evaluate whether there are conditions or events, considered in the aggregate, that rais e substantial doubt about th e City’s ability to continue as a going concern for twelve months beyond the financial statement date, in cluding any currently known in formation that may raise substantial doubt shortly thereafter.

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Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions.

Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with ge nerally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered mate rial if there is substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we:

• Exercise professional judgment and maintain professional skepticism throughout the audit.

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures resp onsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingl y, no such opinion is expressed.

• Evaluate the appropriateness of acco unting policies used and the reason ableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

• Conclude whether, in our judgment, there are conditions or events, consid ered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis and other Required Supplementary Information as listed in the Table of Contents be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements.

We do not expres s an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

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Supplementary Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The accompanying Supplementary Information, as listed in the Table of Contents, is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The informa tion has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlyi ng accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Supplementary Information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Information

Management is responsible for the other information included in the annual report. The other information comprises the Introductory Section and Statistical Section listed in the Table of Contents but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon.

In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exits, we are required to describe it in our report.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our repo rt dated November 17, 2025, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, cont racts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

Pleasant Hill, California
November 17, 2025

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MANAGEMENT’S DISCUSSION AND ANALYSIS
The following discussion provides readers of the City of Milpitas (City) financial statements with a narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2025. Please read this document in conjunction with the accompanying Transmittal Letter and Basic Financial Statements.

FISCAL YEAR 2025 FINANCIAL HIGHLIGHTS
During Fiscal Year 2025, City revenues continued recovering gradually since the onset of the COVID-19 Pandemic (Pandemic) over five years ago. The unemployment rate in the San José-Sunnyvale-Santa Clara metropolitan area rose to 4.7%, up slightly from 4.2% in Fiscal Year 2024. General Fund revenues have slight increases compared to the previous year. There are revenue increases in Fiscal Year 2025 particularly in property tax, sales tax, Hotel/Motel taxes, and Licenses/Permits revenues. However, the increases are offset by a decrease in other taxes and intergovernmental revenue due to the reallocation of American Rescue Plan Act Fund in Fiscal Year 2024.

The rise in property taxes can be attributed to ongoing increases in secured and supplemental property tax, driven by higher property valuations. As travel has resumed following the Pandemic, hotel and motel tax revenues have shown signs of recovery, though they have not yet reached pre-Pandemic levels.

The economic impact of the COVID-19 pandemic remains uncertain and is influenced by factors such as the ongoing war in Ukraine, escalating conflict in the Middle East, a challenging real estate market, political uncertainty after the recent national elections, increasing income inequality, and continued layoffs in the tech sector. The pandemic's lasting effects on society continue to be felt, including reduced in-person commerce, a rise in online shopping, the normalization of remote work, and fewer conferences and leisure services. Although there are encouraging signs in the recovery of sales tax and transient occupancy (hotel) tax, we acknowledge that full recovery of these two sources of tax revenue may take several years.

Fiscal 2025 financial highlights include the following:

City-wide:
 The City’s total net position was $716.4 million on June 30, 2025. Of this total, $457.6 million was Governmental and $258.9 million was business-type, a net increase of total $31.2 million from the prior year total of $685.2 million primarily due to an increase in cash and investments of $23.4 million.

City-wide revenues include program revenues of $125.40 million, general revenues and transfers of $121.7 million, totaling $247.1 million, an increase of $19.4 million from the prior year total of $227.7 million, primarily due to an increase in Capital Grants and Contributions, and general revenues.
 Total City-wide expenses were $215.9 million, an increase of $10 million from the prior year’s $205.9 million, primarily due to increases in governmental expenditures related to public safety and public works personnel costs and adjustments and business-type expenses related to water utility.

Fund Level:
 Governmental Fund balances were $283.3 million, a net increase of $18.9 million from Fiscal Year 2023-24, primarily due to revenues exceeding expenditures by $6.6 million in the Other Government Funds, $5.8 million in the Transit Area Impact Fee fund and $4.3 million in General Fund.
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 Governmental Fund revenues were $173.3 million in FY 2024-25, up $14.3 million from the prior year’s $159 million, primarily due increase collection in impact fee in Transit Area Impact Fee and developer contributions in Other Governmental Funds.  Governmental Fund expenditures were $162.4 million compared to $145.7 million in Fiscal Year 2023-24 primarily due to an increase in General Fund expenditures in personnel and cost adjustments, which is aligned with budget projections.
 General Fund revenues of $134.5 million represented an increase of $0.4 million from Fiscal Year 2023-24 revenues of $134.1 million. This increase in property taxes, sales and use tax, Hotel taxes are offset by the decrease in intergovernmental revenue with the one time revenue recognition of American Rescue Plan Act (ARPA) from deferred revenue in Fiscal Year 2023-

24.  Net other financing uses of the General Fund were $4.5 million in Fiscal Year 2024-25 while Fiscal Year 2023-24 had a total of other financing uses of $(0.4) million. The variance was primarily due to less transfers out activities in General Fund when compared between Fiscal Year 2024-25 and Fiscal Year 2023-24.
 The General Fund balance of $89.5 million at Fiscal Year 2024-25 was $4.2 million more than the fund balance at Fiscal Year 2023-24.

OVERVIEW OF THE ANNUAL COMPREHENSIVE FINANCIAL REPORT
This Annual Comprehensive Financial Report consists of eight parts:
1) Introductory section, which includes the Transmittal Letter and general information; 2) Management’s Discussion and Analysis (this part);
3) The Basic Financial Statements, which include the Government-wide and the Fund financial statements, along with the Notes to these financial statements; 4) Required Supplementary Information;
5) Supplementary Information;
6) Combining statements for Non-major Governmental Funds and Fiduciary Funds; 7) Statistical information; and
8) Other report.

The Basic Financial Statements
The Basic Financial Statements comprise the City-wide Financial Statements and the Fund Financial Statements. These two sets of financial statements provide two different views of the City’s financial activities and financial position – long- and short-term.

The City-wide Financial Statements provide a longer-term view of City activities as a whole and are comprised of the Statement of Net Position and the Statement of Activities. The Statement of Net Position provides information about the financial position of the City, including all its capital assets and long-term liabilities on a full accrual basis like that used by corporations. The Statement of Activities provides information about all City revenues and expenses, also on a full accrual basis, with the emphasis on measuring net revenues or expenses of each of the City programs. The Statement of Activities explains in detail the change in net position for the year.

The Fund Financial Statements report City operations in more detail than the City-wide statements and focus primarily on the short-term activities of the City General Fund and other Major Funds. The Fund Financial Statements measure only current revenues and expenditures, current assets, liabilities, deferred inflows/outflows of resources and fund balances, but exclude capital assets, long-term debt, and other long- term amounts.
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Major Funds account for the major financial activities of the City and are presented individually, while the activities of Non-major funds are presented in summary, with subordinate schedules presenting the detail for each of these Non-major funds. Major Funds are explained further below.

The City is the Successor Agency of the Milpitas Redevelopment Agency. It holds funds to make payments according to the enforceable obligations schedules and eventually dispose of other assets and properties of the former Redevelopment Agency for the benefits of the taxing agencies. The City is also the depository agent for Local Improvement Districts and certain other entities. The fiduciary statements provide information about the cash balances and activities of the Successor Agency, Local Improvement Districts, and other entities. These statements are separate from City financial statements and their balances are excluded from City fund balances.

Together, all these statements are called the Basic Financial Statements.

The City-wide Financial Statements
All of the City’s basic services are considered to be governmental activities, including general government, building safety and inspection, public safety, public works maintenance, recreation, public improvements, planning and zoning, and general administration services. These services are supported by general City revenues such as taxes, and by specific program revenues such as fees. The City-wide financial statements can be found on pages 25-26 of this report.

All of the City’s business-type activities include water and sewer, which are also reported in the basic financial statements. Unlike governmental services, these activities are supported by charges paid by users based on the amount of their service consumption.

The City’s financial statements include the activities of four other separate legal entities, the Milpitas Public Financing Authority (MPFA), the Milpitas Housing Authority (Housing Authority), the Milpitas Municipal Financing Authority (MMFA) and Terrace Gardens, Inc., because the City is either financially accountable for these entities or has control of these entities’ governing boards.

Citywide financial statements are prepared on an accrual basis, which means revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place.

Fund Financial Statements
Governmental Fund financial statements are prepared on a modified accrual basis, which means they measure only current financial resources and uses. Capital assets and other long-lived assets, along with long-term liabilities, are presented only in the Citywide financial statements.

Enterprise and internal service fund financial statements are prepared on a full accrual basis and include all these funds’ assets and liabilities, both current and long-term.

The Fund financial statements provide detailed information about each of the City’s most significant funds, called Major Funds. Each Major Fund is presented individually, with all Non-major Funds summarized and presented in a single column. Subordinate schedules present the detail of these Non-major funds. Major Funds present the major activities of the City for the year. The General Fund is always a Major Fund, but other funds may change categorization of “Major Fund” from year to year, depending on City’s activities. 7

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The City has four other Major Governmental Funds in fiscal 2025 in addition to the General Fund. These are the Housing Authority Fund, the Street Improvement Fund, the Transit Area Impact Fee Fund, and the General Government Capital Projects Fund, each of which is discussed in detail below.

Both of the City’s Enterprise Funds (Water Fund and Sewer Fund) are reported as Major Funds.

Comparisons of Budget and Actual financial information are presented only for the General Fund and other major governmental funds that are Special Revenue Funds. The City has one major Special Revenue Fund, the Housing Authority Fund.

Fiduciary Statements
The City is the Successor Agency of the former Redevelopment Agency and the agent for certain local improvement districts (Districts). The City holds property tax revenue distributed from the Redevelopment Property Tax Trust Fund (RPTTF) to pay outstanding recognized obligations for the Successor Agency.

The City also holds amounts collected from property owners which await transfer to the Districts’ bond trustees. These activities are excluded from the City’s other financial statements because the City cannot use these assets to finance its own operations. The City’s fiduciary activities are reported in the separate Statement of Fiduciary Net Position, Statement of Changes in Fiduciary Net Position and the custodial Funds Statement of Changes in Assets and Liabilities.
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CITYWIDE FINANCIAL ANALYSIS
This analysis focuses on the net position and changes in net position of the City as a whole.

Comparisons of the current year’s net position and activities with fiscal year 2024 are presented in table form. Any significant changes are analyzed and discussed.

Governmental Activities
Table 1
Governmental Net Position at June 30
(in Millions)
Governmental Activities
2025 2024
Cash and investments $299.8 $276.4
Restricted cash and investments 0.1 0.1
Other assets 73.5 75.0
Capital assets 390.7 387.4
Total assets $764.1 $738.9
Deferred Outflows of Resources
–Related to pensions and OPEB 64.7 82.4
Net Pension liabilities 247.4 254.9
Net OPEB liability 13.0 14.4
Total OPEB liability 30.9 29.3
Long-term debt outstanding 19.4 20.1
Other liabilities1 40.3 39.4
Total liabilities 351.0 358.1
Deferred Inflows of Resources
_Related to leases
–Related to pensions and
OPEB2

12.0 8.3

12.5 11.7
Net position:

Net investment in capital assets 370.0 367.0
Restricted 205.8 188.0
Unrestricted (118.2) (116.0)
Total net position $ 457.6 $ 439.0

1 Other liabilities include Accounts Payable, Accrued Payroll, Unearned Revenues and Compensated Absences incurred as of June 30, 2025
2 Deferred Inflows of Resources – Related to pensions and OPEB refers to unrecognized liability changes due to plan experience which differs from what was assumed in the prior measurement period. 9

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The City’s governmental net position was $457.6 million on June 30, 2025, an increase of $18.6 million from 2024. This increase is reflected as Change in Net Position in the Governmental Activities column of the Statement of Activities and is also shown in Table 2 of this analysis:
• Cash and investments increased $23.4 million principally due to the positive net operating result and net market gains from the City’s investment portfolio. • Other assets decreased $1.5 million from last year due to the net activity between receivables and decrease in prepaids, materials, supplies and deposits. • Capital assets increased $3.3 million from last year, resulting from $14.7 million of depreciation ,offset by $18.7 million in asset additions, net of retirements in fiscal 2025. The most significant increases were from street improvement projects. • Deferred outflows of resources related to pension and Other Post-Employment Benefits (OPEB )decreased $17.7 million from last year due to changes in actuarial results.

Fiscal Year 2025
Governmental Activities

As the Sources of Revenue Chart above shows, $51.1 million or 29.5% came from property taxes, while $37.0 million or 21.4% came from sales and use taxes. The remainder came from a variety of sources, including charges for services, grants and contributions, franchise fees, transient occupancy taxes, and building fees.

Public Works

13.7%
Franchise fees

4.1%
Transient
Occupancy Tax

7.7%
General
Government

6.7%
Sales and use
taxes

21.4%
Property taxes

29.5%
Planning

1.3%
Fire & Police

7.3%
Recreation &
Community
Services

4.8%
Miscellaneous

3.5%

SOURCES OF REVENUE
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The Functional Expenses Chart above includes only current year expenses, which are discussed in detail below. It does not include capital outlays, which are added to the City’s capital assets. The composition of fiscal 2025 capital assets is shown in detail in Table 8.

The Statement of Activities presents program revenues and expenses and general revenues in detail. All these are elements in the Changes in Governmental Net Position as summarized below.

General
Government

19.5%
Public Works

21.9%
Engineering &
Planning

2.3%
Recreation &
Community Services

5.3%
Police

27.8%
Fire

22.4%
Interest on long term debt

0.8%

FUNCTIONAL EXPENSE
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Table 2

Changes in Governmental Net Position
(in Millions)
Governmental Activities
2025 2024
Expenses

General G
overnment $31.3 $28.3
Buil
ding, Safety and Housing 8.4
Recreation and Community Services 8.6 8.5
Public Wo
rks 35.2 31.7
Planning

3.6 2.5
Police

44.7 46.1
Fire 36.1 31.8
Inter
est on long term debt 1.3 0.7
Total e
xpenses 160.8 158.0
Revenues
Program
revenues:

Charges for services 20.5 17.7
Opera
ting contributions and grants 16.2 21.6
Capital
Grants 22.0 12.3
Total Pro
gram Revenues 58.7 51.6
General r
evenues:

Taxes:

Property taxes 51.1 48.6
Sales and
use taxes 37.0 34.6
Transie
nt Occupancy taxes 13.4 11.5
Other ta
xes 0.6 0.8
Franchis
e fees 7.1 7.1
Invest
ment earnings 4.8 5.6
Miscell
aneous 0.8 1.4
Total Gene
ral Revenues 114.9 109.6
Total Reven
ues 173.6 161.2
Surplus
(Deficit) before transfers 12.8 3.2
Transfe
rs in/(out), net 6.0 5.4
Gain (loss) on sale of Capital Assets (0.2) 0.0
Changes
in net position 18.6 8.7
Beginning n
et position 439.0 430.3
Ending n
et position $457.6 $439.0
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Table 2 compares fiscal 2025 expenses and revenues with those of fiscal 2024. Expenses increased by $2.8 million in fiscal 2025 due to increased personal cost and contractual cost in Fire and Public Works.

Table 2 shows total governmental revenues increased $12.4 million in fiscal 2025. Program revenues increased $7.1 million, and general revenues increased $5.3 million. The increase in program revenues was primarily due to increase in property taxes, sales and use taxes, and capital grants.

General revenue increased $5.3 million from fiscal 2024, primarily due to an increase in property taxes and sales and use taxes. Property taxes increased $2.5 million and sales and use taxes increased $2.4 million.

Table 3 presents the net cost of each of the City’s largest programs – general government, recreation and community services, public works, planning, police, and fire. Net cost is defined as total program cost less the revenues generated by those specific activities. The net cost of providing such programs in Fiscal Year 2024-25 was $102.1 million.

Table 3
Governmental Activities
(in Millions)
Net (Expenses) Revenue
From Services
2025 2024
General Government $(19.7) $(16.8)
Recreation and Community
Services
(0.2) (5.4)
Public Works (11.4) (14.7)
Planning (1.4) (0.9)
Police (37.2) (38.7)
Fire (30.9) (29.2)
Interest on long term debt (1.3) (0.7)
Totals $(102.1) $(106.4)
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Business-type Activities
Table 4
Business-Type Net Position at June 30
(in Millions)
Business-Type Activities
2025 2024
Cash and investments $128.1 $118.8
Other assets 6.2 6.0
Capital assets 189.6 186.9
Total assets 323.9 311.7
Deferred Outflows of
Resources – Related to
Pensions and OPEB

2.0 2.5
Other liabilities 6.2 5.0
Net pension liabilities 4.8 4.9
Net OPEB liability 4.2 4.2
Long-term Debt 51.0 52.8
Total liabilities 66.2 66.9
Deferred Inflows of Resources
– Related to Pensions and
OPEB

0.8 1.0
Net position:

Net investment in capital assets 138.6 135.0
Restricted 100.1 83.6
Unrestricted 20.2 27.6
Total net position $258.9 $246.2

The net position of business-type activities was $258.9 million in fiscal 2025, an increase of $12.7 million from fiscal 2024. The increase in net position was due to an increase in total assets of $12.2 million. The increase in total assets is primarily comprised of an increase of $2.7 million in capital assets and $9.3 million in cash & investments.
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Table 5
Changes in Business-Type Net Position
(in Millions)
Business-Type Activities
2025 2024
Expenses
Water Utility $36.0 $30.0
Sewer Utility 19.1 17.8
Total expenses 55.1 47.8
Revenues
Program revenues:

Charges for services 66.0 61.2
Operating grants 0.1 0.1
Capital grants 0.7 0.2
Total program revenues 66.7 61.4
General revenues:

Investment earnings 7.1 5.1
Total general revenues 7.1 5.1
Total Revenues 73.8 66.5
Excess before transfers 18.7 18.7
Net Transfers (6.0) (5.4)
Changes in net position 12.7 13.3
Beginning net position 246.2 232.9
Ending net position $258.9 $246.2
Table 5 compares fiscal 2025 expenses and revenues with those of fiscal year 2024. Total expenses increased by $7.3 million in fiscal 2025 primarily due to an increase in water service and supplies. Total program revenues increased by $5.3 million primarily due to an increase in charges for services. Total general revenue increased $2.0 million from interest earnings primarily due to positive market returns on investment as of June 30, 2025. The net transfers represent reimbursements of administration costs to the General Fund.
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FINANCIAL ANALYSIS OF THE CITY’S FUNDS
Table 6 below summarizes activities and balances of the governmental funds at the fund level:

Table 6
Financial Highlights of Governmental Funds at Fund Level at June 30 (in Millions)
2025 2024
Total assets $316.9 $298.9
Total liabilities 21.6 22.0
Total deferred inflow of resources 12 12.5
Total fund balances 283.3 264.4
Total revenues 173.3 159.0
Total expenditures 162.4 145.7
Total other financing sources 7.9 5.1
At June 30, 2025, the City governmental funds reported combined fund balances of $283.3 million, an increase of $18.9 million from last year. The fund balances of Housing Authority, Street Improvement, Transit Area Impact Fee, and General Government, and other governmental funds increased $0.7 million, $0.7 million, $5.8 million, $0.8 million and $6.6 million respectively. The General Fund increased $4.3 million due to increase in cash and investment due to positive result in investment market and City’s portfolio.

Revenues at the fund level totaled $173.3 million, a net increase of $14.3 million. Revenues received in Other Governmental Funds, Transit Area Impact Fee Fund, General Government Capital Project Fund, Street Improvement Fund, and General Fund increased $6.4 million, $4.7 million, $1.7 million, $1.1 million and $0.4 million respectively.

Expenditures net increased $16.7 million this year to $162.4 million from last year’s $145.7 million. The expenditures of the General Fund, Transit Area Impact Fee Fund, Street Improvement Fund, Other Government Funds, and Housing Authority Fund increased $12.8 million, $3.4 million, $0.9 million, $0.4 million and $0.1 million respectively, while General Government Capital projects fund decreased $0.9 million.

Analyses of Major Governmental Funds
General Fund
General Fund revenues (excluding transfers) increased to $134.5 million this fiscal year, up $0.4 million from the prior fiscal year. Intergovernmental Revenues were decreased by $7.8 million from $10.8 million in fiscal year 2024 to $3.0 million in fiscal year 2025 due to revenue recognition of American Rescue Plan Act (ARPA) from deferred revenue in fiscal year 2024. Property tax revenue was increased by $2.5 million from $48.7 million in fiscal year 2024 to $51.2 million in fiscal year 2025. Sales tax revenue was increased by $2.3 million from $35.8 million in fiscal year 2024 to $38.1 million in fiscal year 2025.

General Fund expenditures (excluding transfers) increased to $134.8 million without encumbrance this fiscal year, up $12.8 million from the prior fiscal year. The increase is due primarily to anticipated increases in personnel cost and contractual services.
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Total Other Financing Sources is 4.5 million net in fiscal 2025. Net Other Financing Sources increased by $4.9 million compared to fiscal year 2024 Net Other Financing Sources of (0.4) million. Transfers out were approximately $4 million in fiscal year 2025, as compared to Transfers out of $8.6 million in fiscal 2024.

For the
Ci
ty’s Ge
neral Fu
nd, ac
tual re
venues of $13

4.5 mi
llion we
re $6.
3 mi
llion mo
re th
an the
fi
nal
budgeted revenues of $128.2 million. Use of money and property, Sales taxes and Property taxes exceeded budget by $3.5 million, $1.2 million and $1.1 million respectively, primarily due to higher investment yield and property tax related to Educational Revenue Augmentation Fund (ERAF) which is subject to audit and litigation and may be adjusted in future periods. At the end of the year, actual General Fund expenditures were $136.6 million including encumbrance, $3.5 million less than the final budget of $140.1 million.

In summary, the General Fund's fiscal year 2025 results showed strong budget performance, with revenues exceeding budget by $6.3 million (4.9%) and expenditures coming in $3.5 million (2.5%) under budget.

This combined favorable variance of $9.8 million was a key driver of the fund balance increase during the year.

Housing Authority
This Fund accounts for the housing activities, assumed from the former Redevelopment Agency, designed to increase the amount of low and moderate-income housing available in the City. Total revenues were $1 million
in
fi
scal 2025, co
mprised of
in
terest, re
ntal in
come, and re
payment of
hous
ing loa
ns. Tot
al
expenditures we
re $0.3 mi
llion fo
r ad
ministration an
d ma
nagement of co
mmercial pro
perty wi
th ei
ght
tenants.

Street Improvement Capital Project
This Street Improvement Capital Project Fund accounts for the majority of the street capital projects activity in the City. The Fund’s revenues were $3.1 million in fiscal 2025, an increase of $1.1 million from fiscal 2024. Fund expenditures were $5.4 million in fiscal 2025, an increase of $0.9 million from fiscal 2024, due to increase in public works and capital outlay. Net transfers were $3.1 million in fiscal 2025, an increase of $0.8 million from fiscal 2024 due to no monies transfers out activities in fiscal 2025.

Transit Area Impact Fee
The
Tr
ansit Are
a Im
pact Fe
e Fund wa
s es
tablished in fi
scal 2009 to
ac
count for im
pact fe
es re
venue
collected from developers and related capital expenditures in the Transit Area. In fiscal 2025, fund revenues were
$9.5 mi
llion, pri
marily fr
om fe
es col
lected fro
m de
velopers. Expe
nditures we
re $3.
5 mi
llion,
primarily consisting of capital improvement projects. The Fund also transferred out $0.1 million in fiscal year 2025 to the General Government Fund for Capital Improvement Program (CIP) projects.

General Government Capital Projects
The
Ge
neral Go
vernment Ca
pital Pr
ojects Fund
ac
counts fo
r cons
truction and
ma
intenance of
ge
neral
government projects and assets in the City. In fiscal 2025, CIP project expenditures totaled $11.3 million.

The tr
ansfers in of
$9.9 mi
llion we
re pri
marily fr
om th
e Ge
neral Fund,
Equi
pment Ma
nagement
International Se
rvice Fund
, Ga
s Ta
x Fu
nd. Ge
neral Gove
rnment Ca
pital Pr
ojects fun
ds al
so re
ceived
funding from Public Art Fund, Transit Area Fund, Light & Landscape Maintenance Fund, Water Utility Enterprise Fund, Sewer Utility Enterprise Fund and Park Improvement Fund in an amount of approximately $1.8 million. The transfers out of $1.7 million were to the Street Improvement Capital Project Fund and Storm Drain Development Capital Projects Fund.
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Other Governmental Funds
These funds are not presented separately in the Basic Financial Statements but are individually presented as Supplemental Information.

Fund Balance Classifications
Fund balances are classified in five categories: nonspendable, restricted, committed, assigned and unassigned based on a hierarchy of constraints. Further details on fund balance classifications can be found in Note 12.

Table 7 shows the classification of the fund balances of the major governmental funds.

Table 7
Fund Balances at June 30 – Major Governmental Funds
(in Millions)
2025 2024
General Fund
Non-spendable $5.2 $5.0
Committed 12.7 16.5
Assigned 7.5 7.5
Unassigned 64.1 56.3
Total $89.5 $85.3
Housing Authority Fund
Restricted $41.5 $40.8
Street Improvement Fund
Restricted $5.5 $4.8
Transit Area Impact Fee Fund
Restricted $71.6 $65.8
General Government Project
Fund
Assigned $28.3 $27.5
Restricted $0.0 $0.0
$28.3 $27.5
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On June 30, 2025, the fund balance of the General Fund was $89.5 million. $5.2 million was classified as nonspendable, comprised of $1.0 million for prepaid materials and supplies, and $4.2 million of property held for resale. $12.7 million was classified as committed, comprised of $7.3 million for PERS Rate Stabilization, $1.9 million for Artificial turf replacement, $0.4 million for Technology replacement and $3.2 million for Facilities replacement. $7.5 million was classified as Assigned, comprised of $3.4 million for uninsured claims, $2.3 million for other assigned and $1.8 million for encumbrances. $64.1 million was classified as unassigned, comprised of $23.4 million of contingency reserve, $23.4 million of budget stabilization reserve, $0.9 million of future deficit reserve, $3.6 million in ERAF reserve, $0.7 million in Strategic Property Acquisition Revenue, $2.0 million in Community Investment Programs and $10.1 million of unassigned.

The fund balance of the General Government Capital Project Fund was $28.3 million, classified as assigned due to Council’s reserve policy.

Fund balances of the Housing Authority Fund, Street Improvement Fund and the Transit Area Impact Fee Fund were also classified as restricted because the amounts are restricted for specific purposes.

Analyses of Major Proprietary Funds
Total operating revenues of major proprietary funds increased $4.8 million from last year, while operating expenses increased $6.7 million. Total operating revenues and total operating expenses were $66.0 million and $52.8 million, respectively. Total non-operating revenues were $4.8 million in fiscal 2025, an increase of $1.4 million from the prior year. Capital contributions increased by $0.5 million and net transfers out decreased by $0.6 million.

Water Utility
Water Utility Fund revenues were $39.5 million in fiscal 2025, an increase of $3.4 million from prior year.

The increase in revenues was primarily due to a 6% rate increase. Expenses were $35.2 million in fiscal 2025, an increase of $5.8 million from prior year, primarily due to an increase in wholesale water purchase rate. Net position of the Water Utility Fund increased $3.6 million in the current year to a total of $108.5 million. The increase is comprised of $39.5 million of operating revenues and $25.2 million of operating expenses, which resulted in $4.2 million operating income before accounting for unrealized market loss and transfer out expenses. The Water Utility Fund also received $0.1 million of grants, $0.2 million of capital contributions, net of interest income of $2.8 million and transfers of ($3.7) million, resulting in an increase in net position of $3.6 million. The net increase has been allocated per policy to infrastructure funding, rate stabilization, pension reserves and operating reserves.

The Water Utility Fund’s Net Position includes $53.1 million invested in capital assets, $41.0 million in restricted net position, and $14.4 million in unrestricted net position allocated per Council policy.

Sewer Utility
Sewer Utility Fund revenues were $26.5 million in fiscal 2025, up $1.4 million from the prior year. The increase in revenues was primarily due to a 4% rate increase. Expenses were $17.6 million in fiscal 2025, an increase of $0.9 million from the prior year. Non-operating revenues and expenses in fiscal year 2025 consisted of $2.0 million interest income. There was $26.5 million of operating revenues for the current year, $17.6 million of operating expenses, which resulted in $8.9 million operating income before accounting for unrealized market loss and transfer out expenses. The Sewer Utility Fund also received $3.5 million in interest income, net of interest expense of $1.5 million, $0.5 million of capital contributions and net of transfers of ($2.3) million.
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The Sewer Utility Fund’s Net Position includes $85.5 million invested in capital assets, $59.1 million in restricted net position, and $5.8 million in unrestricted net position, totaling $150.4 million in fiscal year 2025, allocated per Council policy.

CAPITAL ASSETS
The City records the cost of all its infrastructure assets such as roads, bridges, signals, and similar assets used by the general population, and computes the amount of accumulated depreciation for these assets based on their original acquisition dates. At the end of fiscal 2025, the cost of infrastructure and other capital assets recorded on the City’s financial statements was as shown in Table 8 below:

Table 8
Capital Assets at Year-end
(in Millions)
2025 2024
Governmental Activities:

Land $97.4 $97.4
Construction in progress 83.2 77.4
Buildings and improvements 174.7 173.4
Other improvements 39.7 39.7
Machinery and equipment 52.9 53.2
Landscape system 31.4 31.3
Storm system 75.8 75.6
Street system 340.8 335.4
Traffic system 23.2 22.2
Intangible Right-to-use
subscription asset
Less accumulated depreciation

1.9 (531.1)

0.8 (518.9)
Totals $390.7 $387.4
Business-type Activities:

Land $1.1 $1.1
Construction in progress 43.4 36.6
Distribution facilities 81.2 81.2
Water Service lines 18.4 18.4
Sewer lines 88.5 88.5
Capacity rights 129.3 126.6
Intangible Right-To use
subscription assets

0.2 0.0
Less accumulated depreciation (172.4) (165.5)
Totals $189.7 $186.9
The primary additions in fiscal 2025 were due to land and street improvement projects.

The City depreciates all its capital assets over their estimated useful lives. The purpose of depreciation is to spread the cost of a capital asset over the years of its useful life so an allocable portion of the cost of the 20

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Federal Agency
Obligations

3.3%
Medium Term
Corporate Notes

16.3%
U.S. Treasury
Notes

34.3%
LAIF & Money
Market

32.8%
Suprantational

4.3%
Asset Backed
Securities

8.4%
Municipal Securities
and Municipal
Treasury Notes or
Bonds

0.6%
INVESTMENT PORTFOLIO BY TYPE AS OF JUNE 30, 2025

asse
t is borne by all users. Additional information on depreciable lives and current year activities may be found in Note 8.

CASH AND INVESTMENTS
The City outsourced the management of the City’s general investment pools to Chandler Asset Management effective June 1, 2020
, an
d he
ld in a cus
todial ac
count wi
th The Ba
nk of Ne
w Yor
k. The Ci
ty al
so
established a Section 115 trust managed by PFM Asset Management. The managed portfolio consists of securities invested in accordance with respective City investment policies and California Government Code.

Total cash and investments increased $33.5 million from $394.4 million to $427.9 million. This increase was due to positive investment returns compared to the prior year’s unrealized market loss.

Total investment earnings for fiscal year 2025 was $3.2 million. The change in fair value for the portfolio for the fiscal year ending June 30, 2025 was an unrealized gain on investments of $1.8 million.

The following graphs depict the investment portfolio of $377.6 million cash and investments at June 30, 2025.
21

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DEBT ADMINISTRATION
The City has issued debt in prior fiscal periods to finance several City CIP projects include Sewer infrastructure, Water infrastructure, energy improvement projects and the replacement of Fire Station No. 2.

In fiscal 2018, the City refunded the 2006 Sewer Bonds with the 2017 Wastewater Revenue Refunding Bonds to reduce all-in interest costs over the life of the bonds. The 2017 Bonds are supported by pledges of net revenues from the City sewer system. In fiscal 2020, the Milpitas Municipal Financing Authority issued Wastewater Revenue Bonds, Series 2019 in an amount of $29.8 million to fund certain improvements to the City wastewater system. The City also issued Water Revenue Bonds, Series 2019 in an amount of $17.1 million fund for Water system improvement projects.

In fiscal 2021, Milpitas Municipal Financing Authority issued a Lease Revenue Bonds in an amount of $18.4 million to provide funds to finance a portion of Fire Station No. 2 Replacement project and variety of energy improvement projects. Each of the City’s debt issues are discussed in detail in Note 9 to the financial statements. At June 30, 2025 the City’s debt is comprised of:

Table 9
Outstanding Debt
(in Millions)
BalanceBa
lance
June 30, 2024June 30, 2025
Governmental Activity Debt:
2020 General Fund Lease Revenue Bond

4.0% due June 1, 2041 16.6 17.1
Plus: Unamortized bond premium 2.8 3.0
Total Governmental-type Activity Debt $19.4 $20.1
Business-type Activity Debt:

Wastewater Revenue Refunding Bonds, 2017
Series

1.22.0% - 5.0%, due November 1, 2026 1.8

0.1Pl us: Unamortized bond premium 0.2
Wastewater Revenue Bonds, 2019 Series

4.0% - 5.0%, due November 1, 2049 27.3 27.9

4.4Pl us: Unamortized bond premium 4.6
Water Revenue, 2019 Series

4.0% - 5.0%, due June 1, 2049 15.5 15.8

2.5Pl us: Unamortized bond premium 2.5
$51.0Total Business-type Activity Debt $52.8
22

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In
addition to bonded debt, the City has significant long-term obligations for pension and other post- employment benefits. Pension Obligations: The City participates in the California Public Employees' Retirement System (CalPERS). As of June 30, 2024 (measurement date), the City's net pension liability was $252.2 million. The City made pension contributions of $16.7 million during fiscal year 2025. The funded status of the pension plans is approximately 67%, and the City continues to make its full actuarially determined contribution each year. OPEB Obligations: The City provides post-employment health benefits to eligible retirees. As of June 30, 2025, the City's net OPEB liability was $14.5 million, with an additional total OPEB liability of $33.5 million for dependents. The City has established a Section 115 trust to pre-fund a portion of this obligation. Further information on the City's long-term obligations can be found in Notes 9, 13, and 14 to the financial statements.

ECONOMIC OUTLOOK AND MAJOR INITIATIVES
The
ec
onomy of the Ci
ty and it
s ma
jor ini
tiatives fo
r the co
ming ye
ar ar
e disc
ussed in det
ail in the
a
ccompanying Transmittal Letter.

CONTACTING THE CITY’S FINANCIAL MANAGEMENT
This Annual Comprehensive Financial Report is intended to provide citizens, taxpayers, investors, and creditors with a general overview of the City’s finances. Questions about this Report should be directed to the Finance Department, at 455 East Calaveras Boulevard, Milpitas, CA 95035-5479, email us at [email protected]
or
at the City’s website at www.milpitas.gov.

NG-TERM OBLIGATIONS
23

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STATEMENT OF NET POSITION AND

STATEMENT OF ACTIVITIES
The Statement of Net Position reports the difference betw een the City’s total assets and deferred outflows of resources and the City’s total liabilities and deferred inflows of resources, including all the City’s capital assets and all its long-term debt. The Statement of Net Position focuses the reader on the composition of the City’s net position by subtracting total liabilities and deferred inflows of resources from total assets and deferred outflows of resources.

The Statement of Net Position summarizes the financial position of the City’s Governmental Activities in a single column, and the financial position of all the City’s Business-type Activities in a single column; these columns are followed by a Total column that presents the financial position of the primary government. This column is followed by a column that displays the discretely presented component unit.

The City’s Governmental Activities include the activities of its General Fund, along with all its Special Revenue, Capital Projects and Debt Service Fund s. Since the City’s Internal Serv ice Funds service these Funds, their activities are consolidated with Govern mental Activities, after eliminating in ter-fund transactions and balances.

The City’s Business-type Activities include all its Enterprise Fund activities.

The Statement of Activities reports increas es and decreases in the City’s net pos ition. It is prepared on the full accrual basis, which means it includes all the City’s revenues and all its expenses, regardless of when cash changes hands. This differs from the “modified accrual” basis used in the Fund fina ncial statements, which reflect only current assets, current liabilities, deferred inflows/outf lows of resources, available revenues and measurable expenditures.

The Statement of Activities presents the City’s expenses first, listed by the program, and follows these with the expenses of its Business-type Activities. Program revenues – that is, revenues which are generated directly by these programs – are then deducted from program expenses to arrive at the net expens e of each governmental and business-type program. The City’s general revenues are then listed in the Governmental Activities, Business-type Activities or discretely presented component unit column, as appropriate, and the Change in Net Position is computed and reconciled with the Statement of Net Position.

Both of these Statements include the financial activities of the City and the blended component units: the Milpitas Public Financing Authority (MPFA), the Milpitas Economic Development Corporation (EDC), the City of Milpitas Housing Authority (Housing Authority) and the Milpitas Municipal Financing Authority (MMFA). The Financing Authorities and Housing Authority are legally separate component units of the City, because they are controlled by the City and the City is financially accountable for their activities. The EDC is a California nonprofit public benefit Corporation that is also a legally separate component unit of the City because it is governed by a board consisting of the members of the City Council. The EDC became inactive as of June 30, 2015. The balances and the activitie s
of the discretely presented component unit of Terrace Gardens, Inc. are includ ed in these statements as separate columns.

These financial statements along with the fund financial statements and footnotes are called Basic Financial Statements.

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CITY OF MILPITAS

STATEMENT OF NET POSITION
JUNE 30, 2025
Component
Primary Government Unit
Terrace
Gardens Inc.

Governmental Business-Type (As of
Activities Activities Total December 31, 2024)
ASSETS
Cash and investments available for operations (Note 3) $299,831,054 $128,027,915 $427,858,969 $66,170
Restricted cash and investments (Note 3) 101,523 73,242 174,765 3,656,956 Receivables:

Accounts 2,191,918 4,889,349 7,081,267 200,341
Due from other governments 9,569,373 131,986 9,701,359
Interest 1,758,199 871,478 2,629,677
Loans receivable (Note 5) 39,858,064 39,858,064
Prepaids, materials, supplies and deposits (Note 1E) 1,092,224 266,247 1,358,471 112,919 Property held for resale (Note 6) 6,000,000 6,000,000
Leases receivable (Note 10) 13,037,476 13,037,476
Capital assets and capacity rights (Note 8):

Land and construction in progress 180,665,741 44,498,058 225,163,799 1,565,277 Depreciable capital assets, net 209,989,967 145,143,031 355,132,998 5,035,458 Total assets 764,095,539 323,901,306 1,087,996,845 10,637,121

DEFERRED OUTFLOWS OF RESOURCES
Related to pensions (Note 13D) 50,827,866 926,328 51,754,194 Related to OPEB (Note 14E) 13,914,310 1,072,186 14,986,496 Total deferred outflows of resources 64,742,176 1,998,514 66,740,690

LIABILITIES
Accounts payable 4,360,160 4,582,897 8,943,057 289,774
Accrued payroll 6,041,215 408,223 6,449,438 21,308
Accrued expenses
Interest payable 55,367 552,058 607,425
Refundable deposits 4,454,444 131,804 4,586,248 76,200
Unearned revenue 7,150,315 6,922 7,157,237 5,694
Uninsured claims payable (Note 15):

Due within one year 1,949,115 1,949,115
Due in more than one year 5,379,775 5,379,775
Accrued vacation (Note 14F):

Due within one year 3,193,367 303,110 3,496,477 17,743
Due in more than one year 4,249,923 62,031 4,311,954
Sick leave payable (Note 14F):

Due within one year 1,947,678 1,947,678
Due in more than one year 71,364 112,482 183,846
Leases payable (Note 10):

Due within one year 110,860 110,860
Due in more than one year 481,032 481,032
Subscription liability (Note 11):

Due within one year 518,467 89,856 608,323
Due in more than one year 321,717 321,717
Net pension liabilities (Note 13C):

Due in more than one year 247,379,750 4,806,598 252,186,348 Net OPEB liability (Note 14C):

Due in more than one year 13,020,543 1,542,351 14,562,894 Total OPEB liability (Note 14D)
Due within one year 1,186,118 79,198 1,265,316
Due in more than one year 29,691,253 2,568,281 32,259,534 Long term debt (Note 9):

Due within one year 625,000 1,530,000 2,155,000
Due in more than one year 18,763,813 49,457,788 68,221,601 Total liabilities 350,951,276 66,233,599 417,184,875 410,719

DEFERRED INFLOWS OF RESOURCES
Related to leases (Note 10) 11,986,496 11,986,496
Related to OPEB (Note 14E) 8,349,406 815,673 9,165,079
Total deferred inflows of resources 20,335,902 815,673 21,151,575 NET POSITION (Note 12)
Net investment in capital assets and capacity rights 369,936,342 138,636,687 508,573,029 6,600,735 Restricted for:

Capital projects 110,521,913 100,062,614 210,584,527
Redevelopment and community development activities 53,403,751 53,403,751 Pension expenses 40,230,585 40,230,585
Other programs 1,636,999 1,636,999
Total restricted net position 205,793,248 100,062,614 305,855,862 Unrestricted (118,179,053) 20,151,247 (98,027,806) 3,625,667 Total net position $457,550,537 $258,850,548 $716,401,085 $10,226,402 See accompanying notes to financial statements
27

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CITY OF MILPITAS

STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2025
Net (Expense) Revenue and
Changes in Net Position
Program Revenues Primary Government
Operating Capital
Charges for Grants and Grants and Governmental Business-type Functions/Programs Expenses Services Contributions Contributions Activities Activities Primary Government:

Governmental Activities:

General Government $31,295,637 $8,054,237 $3,366,995 $212,507 ($19,661,898) Recreation and Community Services 8,554,613 3,909,576 516,285 3,921,520 (207,232) Public Works 35,183,475 3,708,364 2,501,627 17,600,340 (11,373,144) Planning 3,628,302 488,766 1,448,886 298,230 (1,392,420) Police 44,724,903 1,596,100 5,944,991 (37,183,812)
Fire 36,077,028 2,737,391 2,374,047 (30,965,590)
Interest on long term debt 1,292,755 (1,292,755)
Total Governmental Activities 160,756,713 20,494,434 16,152,831 22,032,597 (102,076,851) Business-type Activities:

Water Utility 35,999,290 39,541,125 52,465 201,903 $3,796,203 Sewer Utility 19,113,198 26,475,246 470,034 7,832,082
Total Business-type Activities 55,112,488 66,016,371 52,465 671,937 11,628,285 Total Primary Government $215,869,201 $86,510,805 $16,205,296 $22,704,534 (102,076,851) 11,628,285 Component Unit:

Terrace Gardens Inc. $2,629,733 $2,434,528 $199,939
General revenues:

Taxes:

Property taxes 51,076,492
Sales and use taxes 36,992,273
Hotel/Motel taxes 13,398,674
Other taxes 622,671
Franchise fees, unrestricted 7,102,298
Motor vehicle in-lieu, unrestricted 128,932
Investment earnings 4,751,986 7,024,119
Miscellaneous 826,519
Gain(loss) on sale of Capital Assets (231,758)
Transfers (Note 4) 5,995,656 (5,995,656)
120,663,743 1,028,463
Change in Net Position 18,586,892 12,656,748
438,963,645 246,193,800
Net position-Ending $457,550,537 $258,850,548
See accompanying notes to financial statements
Total general revenues and transfers
Net position-Beginning
28

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Net (Expense) Revenue and
Changes in Net Position
Primary Government Component Unit
Terrace
Gardens Inc.
(year ended
Total December 31, 2024)
($19,661,898)
(207,232)
(11,373,144)
(1,392,420)
(37,183,812)
(30,965,590)
(1,292,755)
(102,076,851)
3,796,203
7,832,082
11,628,285
(90,448,566)
$4,734
51,076,492
36,992,273
13,398,674
622,671
7,102,298
128,932
11,776,105 128,423
826,519
(231,758)
121,692,206 128,423
31,243,640 133,157
685,157,445 10,093,245
$716,401,085 $10,226,402
29

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FUND FINANCIAL STATEMENTS
The Fund Financial Statements present individual major f unds, while non-major funds are combined in a single column. Major funds are defined genera lly as having significant activities or balances in the current year. No distinction is made between Fund types.

MAJOR GOVERNMENTAL FUNDS
The funds described below were determined to be Major Funds by the City. Individual non-major funds may be found in the Supplemental section.

GENERAL FUND
The General Fund is used for all the general revenues of the City not specifically levied or collected for other City funds and the related expenditures. The general fund accounts for all financial resources of a governmental unit, which are not accounted for in another fund.

HOUSING AUTHORITY FUND
Established to plan and address the housing needs of the C ity and to act as the Housi ng Successor Agency for the former Redevelopment Agency. The main source of the revenue for this fund is the repayment of loans restricted for housing activities.

STREET IMPROVEMENT FUND
Established to account for the construction and maintenance of the street system in Milpitas. Financing may be provided through state and federal grants.

TRANSIT AREA IMPACT FEE FUND
Established to account for capital proj ects
in the transit area. A special transit area impact fee is imposed on developments to provide financing.

GENERAL GOVERNMENT CAPITAL PROJECT FUND
Established to account for the construction and maintenanc e of general government projects. Financing provided by the General Fund.

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Housing Stree t Transit Area
General Authority Improvemen t Impact Fee
ASSETS
Cash and investments available for operations (Note 3) $89,270,767 $3,058,388 $5,846,335 $71,404,398 Restricted cash and investments (Note 3) 101,523
Receivables:

Accounts 2,185,131
Due from other governments 7,722,972 63,262 89,333
Interest 588,389 20,463 36,296 481,708
Loans receivable, net (Note 5) 36,686,320
Prepaids, materials, supplies and deposits (Note 1E) 950,516 Property held for resale (Note 6) 4,200,000 1,800,000
Leases receivable (Note 10) 13,037,476
Total Assets $118,056,774 $41,565,171 $5,945,893 $71,975,439

LIABILITIES
Accounts payable $1,882,588 $19,711 $434,614 $321,747
Accrued payroll 5,671,634 9,495 35,009
Refundable deposits 4,424,473 11,100
Unearned revenue 4,640,197 18
Total Liabilities 16,618,892 30,829 444,109 356,756

DEFERRED INFLOWS OF RESOURCES
Leases related (Note 10) 11,986,496
Total Deferred Inflows of Resources 11,986,496

FUND BALANCES
Fund balances (Note 12):

Nonspendable 5,150,516
Restricted 41,534,342 5,501,784 71,618,683
Committed 12,730,974
Assigned 7,478,213
Unassigned 64,091,683
TOTAL FUND BALANCES 89,451,386 41,534,342 5,501,784 71,618,683 Total Liabilities, Deferred Inflows of Resources and Fund Balances $118,056,774 $41,565,171 $5,945,893 $71,975,439 Amounts reported for Governmental Activities in the Statement of Net Position are different from those reported in the Governmental Funds above because of the following:

CAPITAL ASSETS

ALLOCATION OF INTERNAL SERVICE FUND NET POSITION
Internal service funds are not governmental funds. However, they are used by management to charge the costs of certain activities, such as insurance and central services and maintenance, to individual governmental funds. The net current assets of the Internal Service Funds are therefore included in Governmental Activities in the Statement of Net Position.

LONG-TERM ASSETS AND LIABILITIES
Long-term debt
Leases liability
Subscription liability
OPEB liability and related deferred outflows/inflows of resources

NET POSITION OF GOVERNMENTAL ACTIVITIES
See accompanying notes to financial statements

CITY OF MILPITAS

GOVERNMENTAL FUNDS

BALANCE SHEET
JUNE 30, 2025
Non-current portion of uninsured claims payable
The assets and liabilities below are not due and payable in the current period and therefore are not reported in the Funds:

Net pension liability and pension-related deferred outflows/inflows of resources Non-current portion of accrued vacation and sick leave
Capital assets used in Governmental Activities are not current assets or financial resources and therefore are not reported in the Governmental Funds. 34

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General
Government Othe r Total
Capital Governmental Governmental
Projects Funds Funds
$28,805,246 $45,158,922 $243,544,056
101,523
6,787 2,191,918
304,075 1,389,731 9,569,373
191,568 330,987 1,649,411
3,171,744 39,858,064
30,615 981,131
6,000,000
13,037,476
$29,307,676 $50,081,999 $316,932,952
$976,489 $454,521 $4,089,670
68,994 190,665 5,975,797
18,859 4,454,432
2,510,100 7,150,315
1,045,483 3,174,145 21,670,214
11,986,496
11,986,496
30,615 5,181,131
45,564,728 164,219,537
12,730,974
28,262,193 1,312,511 37,052,917
64,091,683
28,262,193 46,907,854 283,276,242
$29,307,676 $50,081,999
379,801,701
66,941,922
(19,444,180)
(591,892)
(840,184)
(196,551,884)
(38,333,010)
(9,379,288)
(7,328,890)
$457,550,537
35

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Housing Street Transit Area
General Authority Improvement Impact Fee

REVENUES
Property taxes $51,181,370
Sales taxes 38,101,357
Hotel /Motel taxes 13,379,253
Franchise fees 6,179,373
Other taxes 1,007,266
Licenses and fines 8,920,936
Use of money and property 4,632,616 $1,006,013 $284,683 $3,800,242 Intergovernmental 3,032,608 2,779,529 89,333
Charges for services 7,450,514
Developer contributions 48,316 5,574,477
Other 574,362
Total Revenues 134,459,655 1,006,013 3,112,528 9,464,052

EXPENDITURES
Current:

General Government 30,108,077 290,385 221
Recreation and Community Services 7,125,959
Public Works 15,446,619 411,572 4,274
Planning 3,094,214
Police 41,971,325
Fire 35,223,955
Capital outlay 5,028,676 3,475,536
Debt service:

Principal 1,069,560
Interest and fees 710,771
Total Expenditures 134,750,480 290,385 5,440,248 3,480,031

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (290,825) 715,628 (2,327,720) 5,984,021

OTHER FINANCING SOURCES (USES)
Proceeds from sale of property 5,135
Transfers in (Note 4A) 8,478,722 3,072,724
Transfers (out) (Note 4A) (3,991,706) (144,000)
Total Other Financing Sources (Uses) 4,492,151 3,072,724 (144,000) NET CHANGE IN FUND BALANCES 4,201,326 715,628 745,004 5,840,021 Fund balances at beginning of year 85,250,060 40,818,714 4,756,780 65,778,662 FUND BALANCES AT END OF YEAR $89,451,386 $41,534,342 $5,501,784 $71,618,683 See accompanying notes to financial statements

CITY OF MILPITAS

GOVERNMENTAL FUNDS

STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2025
36

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General
Government Other Total
Capital Governmental Governmental
Projects Funds Funds
$51,181,370
38,101,357
13,379,253
$922,925 7,102,298
6,240,381 7,247,647
8,920,936
$2,380,926 1,836,330 13,940,810
1,333,179 6,981,771 14,216,420
71,198 295,121 7,816,833
4,850,337 10,473,130
343,066 917,428
3,785,303 21,469,931 173,297,482
2,598,013 32,996,696
20,346 7,146,305
4,668,805 3,000,674 23,531,944
462,551 3,556,765
464,435 42,435,760
35,223,955
6,389,085 577,428 15,470,725
1,069,560
258,000 968,771
11,315,890 7,123,447 162,400,481
(7,530,587) 14,346,484 10,897,001
5,135
9,957,886 895,645 22,404,977
(1,699,565) (8,628,475) (14,463,746)
8,258,321 (7,732,830) 7,946,366
727,734 6,613,654 18,843,367
27,534,459 40,294,200 264,432,875
$28,262,193 $46,907,854 $283,276,242
37

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CITY OF MILPITAS
Reconciliation of the

NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS
with the

STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2025
The schedule below reconciles the Net Changes in Fund Balances reported on the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance, which measures only changes in current assets and current liabilities on the modified accrual basis, with the Change in Net Position of Governmental Activities reported in the Statement of Activities, which is prepared on the full accrual basis.

NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS $18,843,367 Amounts reported for governmental activities in the Statement of Activities are different because of the following:

CAPITAL ASSETS TRANSACTIONS
Governmental Funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is capitalized and allocated over their estimated useful lives and reported as depreciation expense.

The capital expenditures are therefore added back to fund balance (Internal service fund additions of $2,139,230 have already been added to capital assets) 16,483,057 Retirements of capital assets are deducted from fund balance (Internal service fund retirements of $365,582 have already been deducted from capital assets) (236,893)
Depreciation expense is deducted from the fund balance
(Depreciation expense is net of internal service fund depreciation of $1,289,220 which has already been allocated to serviced funds.)" (13,245,841)

LONG-TERM DEBT PROCEED AND PAYMENTS
Lease proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the Statement of Net Position. Repayment of lease principal is an expenditure in the governmental funds, but in the Statement of Net Position the repayment reduces long-term liabilities.

Proceeds from issuance of capital lease
repayment of debt principal and SBITA liabilities are added back to fund balance 743,676

ACCRUAL OF NON-CURRENT ITEMS
The amounts below included in the Statement of Activities do not provide or (require) the use of current financial resources and therefore are not reported as revenue or expenditures in governmental funds (net change):

Interest payable 1,900
Non-current portion of accrued vacation and sick leave (907,805) Non-current portion of uninsured claims payable 831,330 Lease payable (591,892)
Subscription liability (427,058)
Net pension liabilities and pension-related deferred outflows/inflows of resources (7,539,912) Net OPEB liabilities and OPEB-related deferred outflows/inflows of resources 645,887

ALLOCATION OF INTERNAL SERVICE FUND ACTIVITY
Internal Service Funds are used by management to charge the costs of certain activities, such as equipment acquisition, maintenance, and insurance to individual funds.

The portion of the net revenue (expense) of these Internal Service Funds arising out of their transactions with governmental funds is reported with governmental activities, because they service those activities.

Change in Net Position - All Internal Service Funds 3,987,076 CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES $18,586,892 See accompanying notes to financial statements
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CITY OF MILPITAS

GENERAL FUND

STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCE

BUDGET AND ACTUAL (NON-GAAP LEGAL BASIS)
FOR THE YEAR ENDED JUNE 30, 2025
Variance with
Budgeted Amounts Budget Final
Actual Amounts Positive
Original Final Budgetary Basis (Negative)
Revenues
Property taxes $50,091,338 $50,091,338 $51,181,370 $1,090,032 Sales taxes 36,902,855 36,902,855 38,101,357 1,198,502
Hotel /Motel taxes 13,032,550 13,032,550 13,379,253 346,703 Franchise fees 5,990,422 5,990,422 6,179,373 188,951
Other taxes 1,135,518 1,135,518 1,007,266 (128,252)
Licenses and fines 9,231,118 9,231,118 8,920,936 (310,182) Use of money and property 1,179,198 1,179,198 4,632,616 3,453,418 Intergovernmental 399,201 2,280,961 3,032,608 751,647
Charges for services 7,957,721 8,053,571 7,450,514 (603,057) Other 288,309 288,309 574,362 286,053
Total Revenues 126,208,230 128,185,840 134,459,655 6,273,815 Expenditures
Current:

General Government:

City Manager 10,217,614 10,407,078 10,098,172 308,906
City Attorney 1,214,142 1,192,719 1,193,199 (480)
Finance 5,205,109 5,242,914 5,017,861 225,053
Human Resources 2,348,798 2,351,123 2,214,939 136,184
Information Services 5,135,405 5,266,266 4,263,436 1,002,830 Non-departmental 5,714,306 9,509,944 8,557,986 951,958
Recreation and Community Services 6,981,057 7,054,105 7,219,197 (165,092) Public Works 16,430,917 16,589,196 15,840,252 748,944
Planning 3,346,853 3,377,605 3,100,327 277,278
Police 45,836,039 42,564,425 41,996,039 568,386
Fire 31,442,612 35,289,923 35,289,153 770
Debt service:

Principal 570,000 570,000 1,069,560 (499,560)
Interest 687,200 687,200 710,771 (23,571)
Total Expenditures 135,130,052 140,102,498 136,570,892 3,531,606

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (8,921,822) (11,916,658) (2,111,237) 9,805,421

OTHER FINANCING SOURCES (USES)
Proceeds from sale of property 5,135 5,135
Proceeds from issuance of long term debt
Transfers in 8,478,722 8,478,722 8,478,722
Transfers (out) (3,345,645) (3,991,706) (3,991,706)
Total Other Financing Sources (Uses) 5,133,077 4,487,016 4,492,151 5,135 NET CHANGE IN FUND BALANCE ($3,788,745) ($7,429,642) 2,380,914 $9,810,556 Adjustments to budgetary basis:

Encumbrance expenditures 1,820,412
Fund balance at beginning of year 85,250,060
FUND BALANCE AT END OF YEAR $89,451,386
See accompanying notes to financial statements
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CITY OF MILPITAS

HOUSING AUTHORITY

STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCE

BUDGET AND ACTUAL (NON-GAAP LEGAL BASIS)
FOR THE YEAR ENDED JUNE 30, 2025
Variance with
Budgeted Amounts Budget
Actual Amounts Positive
Original Final Budgetary Basis (Negative)
Revenues
Use of money and property $117,241 $117,241 $1,006,013 $888,772 Total Revenues 117,241 117,241 1,006,013 888,772
Expenditures
Current:

General Government:

General Government 233,100 389,698 248,971 140,727
City Attorney 8,240 8,240 8,240
Non-departmental 83,447 124,447 41,414 83,033
Total Expenditures 324,787 522,385 290,385 232,000

OTHER FINANCING SOURCES (USES)
Proceeds from sale of property
NET CHANGE IN FUND BALANCE ($207,546) ($405,144) 715,628 $1,120,772 Fund balances at beginning of year 40,818,714
FUND BALANCE AT END OF YEAR $41,534,342
See accompanying notes to financial statements
40

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MAJOR PROPRIETARY FUNDS
Proprietary funds account for City operations financed and operated in a manner similar to a private business enterprise. The intent of the City is that the cost of providing goods and services be financed primarily through user charges.

The concept of major funds extends to Proprietary Funds. The City has identified the funds below as major proprietary funds.

Financial reporting standards do not provide for the disclosure of budget vs. actual comparisons regarding proprietary funds that are major funds.

WATER UTILITY FUND
Accounts for the provision of water services to residents and businesses of the City. All activities necessary to provide such services are accounted for in this fund, includi ng, but not limited to, administration, operations, capital improvements, maintenance, billing and collection.

SEWER UTILITY FUND
Accounts for the provision of sewer services to residents and businesses of the City. All activities necessary to provide such services are accounted for in this fund, includi ng, but not limited to, admini stration, operations, capital improvements, maintenance, financing, billing and collection.

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CITY OF MILPITAS

PROPRIETARY FUNDS

STATEMENT OF NET POSITION
JUNE 30, 2025
Business-type Activities-Enterprise Funds Governmental
Activities-
Sewer Internal Service
Water Utility Utility Totals Funds
ASSETS
Current Assets
Cash and investments
available for operations (Note 3) $60,884,886 $67,143,029 $128,027,915 $56,286,998 Restricted cash and investments (Note 3) 2,161 71,081 73,242 Receivables:

Accounts 2,942,979 1,946,370 4,889,349
Due from other governments 77,639 54,347 131,986
Interest 412,470 459,008 871,478 108,788
Prepaids, materials, supplies and deposits (Note 1E) 230,152 36,095 266,247 111,093 Total current assets 64,550,287 69,709,930 134,260,217 56,506,879 Noncurrent assets:

Capital assets and capacity rights (Note 8):

Land and construction in progress 40,369,256 4,128,802 44,498,058 Depreciable capital assets, net 30,737,840 114,405,191 145,143,031 10,854,007 Total noncurrent assets 71,107,096 118,533,993 189,641,089 10,854,007 Total assets 135,657,383 188,243,923 323,901,306 67,360,886

DEFERRED OUTFLOWS OF RESOURCES
Related to pensions (Note 13D) 538,525 387,803 926,328
Related to OPEB (Note 14E) 594,833 477,353 1,072,186
Total deferred outflows of resources 1,133,358 865,156 1,998,514

LIABILITIES
Current liabilities:

Accounts payable 4,175,017 407,880 4,582,897 270,490
Accrued payroll 257,431 150,792 408,223 65,418
Interest payable 116,325 435,733 552,058
Refundable deposits 131,804 131,804 12
Unearned revenue 3,461 3,461 6,922
Accrued vacation (Note 14F) 151,555 151,555 303,110 24,235 Sick leave payable (Note 14F)
SBITA liability (Note 11) 44,926 44,930 89,856
Total OPEB liability (Note 14D) 47,072 32,126 79,198
Revenue Bonds (Note 9) 355,000 1,175,000 1,530,000
Total current liabilities 5,282,591 2,401,477 7,684,068 360,155 Non-current liabilities:

Accrued vacation (Note 14F) 42,349 19,682 62,031 33,863 Sick leave payable (Note 14F) 56,602 55,880 112,482 24,946 Net pension liabilities (Note 13C) 2,794,337 2,012,261 4,806,598 Net OPEB liability (Note 14C) 766,741 775,610 1,542,351 Total OPEB liability (Note 14D) 1,380,927 1,187,354 2,568,281 Revenue Bonds (Note 9) 17,579,706 31,878,082 49,457,788 Total non-current liabilities 22,620,662 35,928,869 58,549,531 58,809 Total liabilities 27,903,253 38,330,346 66,233,599 418,964

DEFERRED INFLOWS OF RESOURCES
Related to OPEB (Note 14E) 425,892 389,781 815,673
Total deferred inflows of resources 425,892 389,781 815,673 NET POSITION (Note 12)
Net investment in capital assets and capacity rights 53,129,625 85,507,062 138,636,687 10,854,007 Restricted for capital projects 40,974,930 59,087,684 100,062,614 Restricted for pension expenses 40,230,585
Unrestricted 14,357,041 5,794,206 20,151,247 15,857,330 Total net position $108,461,596 $150,388,952 $258,850,548 $66,941,922 See accompanying notes to financial statements
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CITY OF MILPITAS

PROPRIETARY FUNDS

STATEMENT OF REVENUE, EXPENSES

AND CHANGES IN FUND NET POSITION
FOR THE YEAR ENDED JUNE 30, 2025
Business-type Activities-Enterprise Funds Governmental
Activities-
Sewer Internal Service
Water Utility Utility Totals Funds

OPERATING REVENUES
Charges for services $39,237,728 $26,221,208 $65,458,936 $4,993,125 Other operating revenue 303,397 254,038 557,435 3,213,822 Total Operating Revenues 39,541,125 26,475,246 66,016,371 8,206,947

OPERATING EXPENSES
Purchased water 25,356,752 25,356,752
Sewer treatment services 7,363,556 7,363,556
Personnel services 4,676,174 2,823,386 7,499,560 1,179,078 Services and supplies 3,377,315 1,966,834 5,344,149 1,649,231 Depreciation 1,624,411 5,277,544 6,901,955 1,415,133
Repairs and maintenance 200,734 159,970 360,704 665,837 Total Operating Expenses 35,235,386 17,591,290 52,826,676 4,909,279 Operating Income (Loss) 4,305,739 8,883,956 13,189,695 3,297,668

NONOPERATING REVENUES (EXPENSES)
Interest income(loss) 3,494,680 3,529,439 7,024,119 2,019,686 Interest expense (763,904) (1,521,908) (2,285,812)
Subventions and grants 52,465 52,465
Gain (Loss) on disposal of property 126,150
Total Nonoperating Revenues (Expenses) 2,783,241 2,007,531 4,790,772 2,145,836 Income (Loss) Before Contributions and Transfers 7,088,980 10,891,487 17,980,467 5,443,504 Capital contributions 489,147
Capital contributions - connection fees 201,903 470,034 671,937 Transfers in (Note 4A) 929,850
Transfers (out) (Note 4A) (3,725,508) (2,270,148) (5,995,656) (2,875,425) Change in net position 3,565,375 9,091,373 12,656,748 3,987,076 Net position-beginning 104,896,221 141,297,579 246,193,800 62,954,846 Net position-ending $108,461,596 $150,388,952 $258,850,548 $66,941,922 See accompanying notes to financial statements
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CITY OF MILPITAS

PROPRIETARY FUNDS

STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2025
Business-type Activities-Enterprise Funds Governmental
Activities-
Sewer Internal Service
Water Utility Utility Totals Funds

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $39,402,906 $26,537,088 $65,939,994 $8,206,947 Payments to suppliers (28,442,739) (9,309,598) (37,752,337) (1,198,771) Payments to employees for salaries and benefits (4,408,664) (2,765,804) (7,174,468) (1,128,295) Net cash provided by operating activities 6,551,503 14,461,686 21,013,189 5,879,881

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES
Subventions and grants 52,465 52,465
Transfers in 929,850
Transfers (out) (3,725,508) (2,270,148) (5,995,656) (2,875,425) Cash Flows from Noncapital Financing Activities (3,673,043) (2,270,148) (5,943,191) (1,945,575)

CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES
Principal paid on long-term debt (340,000) (1,120,000) (1,460,000) Interest paid (808,521) (1,472,890) (2,281,411)
Acquisition of capital assets (5,494,668) (4,108,230) (9,602,898) (1,160,176) Proceeds from sale of assets 126,150
Capital contributions - connection fees 201,903 470,034 671,937 Cash Flows from Capital and Related
Financing Activities (6,441,286) (6,231,086) (12,672,372) (1,034,026)

CASH FLOWS FROM INVESTING ACTIVITIES
Interest received 3,450,096 3,423,915 6,874,011 2,002,407 Cash Flows from Investing Activities 3,450,096 3,423,915 6,874,011 2,002,407 Net increase (decrease) in cash and cash equivalents (112,730) 9,384,367 9,271,637 4,902,687 Cash and investments at beginning of period 60,999,777 57,829,743 118,829,520 51,384,311 Cash and investments at end of period $60,887,047 $67,214,110 $128,101,157 $56,286,998 Reconciliation of operating income to net cash provided by operating activities:

Operating income (loss) $4,305,739 $8,883,956 $13,189,695 $3,297,668 Adjustments to reconcile operating income (loss) to net cash provide d
by operating activities:

Depreciation 1,624,411 5,277,544 6,901,955 1,415,133
Change in assets and liabilities:

Receivables, net (138,375) 61,842 (76,533)
Materials, supplies and deposits 13,912 (11,533) 2,379 970,749 Accrued payroll 150,807 80,321 231,128
Accounts and other payables 432,870 124,554 557,424 196,331 Due to retirement system 187,771 62,495 250,266
Due to OPEB (25,632) (17,493) (43,125)
Net cash provided by operating activities $6,551,503 $14,461,686 $21,013,189 $5,879,881 NONCASH TRANSACTIONS:

Contributions and transfers of capital assets $489,147
See accompanying notes to financial statements
45

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FIDUCIARY FUNDS

FIDUCIARY FUNDS
These funds are used to account for asse ts held by the City as an agent for individuals, private organizations, and other governments. The financial activities of these funds are excluded from the Government-wide financial statements, but are presented in separate Fiduciary Fund financial statements.

SUCCESSOR AGENCY TO THE MILPITAS RE DEVELOPMENT AGENCY PRIVATE-PURPOSE

TRUST FUND
The Successor Agency to the Milpit as Redevelopment Agency Private-Pu rpose Trust Fund accounts for the accumulation of resources to be used to make payments that are on the Recognized Obligation Payment Schedule and to dispose of assets and property of the former Redevelopment Agency for the benefit of the taxing agencies.

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CITY OF MILPITAS

FIDUCIARY FUNDS

STATEMENT OF FIDUCIARY NET POSITION
JUNE 30, 2025
Successor Agency
to the Milpitas
Redevelopment Agency
Private-purpose
Trust Fund
ASSETS
Cash and investments (Note 3) $19,046,473
Restricted cash and investments (Note 3) 1,684
Total Assets 19,048,157

LIABILITIES
Accounts payable 10,672
Interest payable 2,005,250
Long-term obligations (Note 17C):

Due in one year 9,025,000
Due in more than one year 55,965,708
Total Liabilities 67,006,630

NET POSITION (DEFICIT)
Restricted for:

Held in trust for other governments ($47,958,473)
See accompanying notes to financial statements
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CITY OF MILPITAS

FIDUCIARY FUND

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FOR THE YEAR ENDED JUNE 30, 2025
Successor Agency
to the Milpitas
Redevelopment Agency
Private-purpose
Trust Fund
Additions:

Property taxes $14,846,033
Use of money and property 510,183
Total additions 15,356,216
Deductions:

General and administrative 2,021,028
Debt service:

Interest and fees 2,747,913
Total deductions 4,768,941
Net change in net position 10,587,275
Net position (deficit) - beginning (58,545,748)
Net position (deficit) - ending ($47,958,473)
See accompanying notes to financial statements
50

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NOTES TO FINANCIAL STATEMENTS

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CITY OF MILPITAS
Notes to Basic Financial Statements
for the Year Ended June 30, 2025

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The City of Milpitas was incorporated as a general law city on January 26, 1954. The City operates under the Council-Manager form of government and provides the following services: public safety; fire and building inspection; engineering; public work s; water; sewer; sanitation; recr eation services; building and safety; planning and zoning; general administration services and economic development.

The financial statements and accounting policies of the City conform with generally accepted accounting principles applicable to governments. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for governmental accounting and financial reporting principles. Significant accounting policies are summarized below:

A. Reporting Entity

The accompanying basic financial statements present the financial activity of the City, which is the primary government presented, along with the financial activities of its component units, which are entities for which the City is financially accountable. Although they are separate legal entities, blended component units are in substance part of the City’s operations and are reported as an integral part of the City’s financial statements.

Each discretely presented component unit, on the other hand, is reported in a separate column in the basic financial statements to emphasize it is legally separate from the government.

PRIMARY GOVERNMENT

The financial statements of the primary government of the City of Milpitas include the activities of the City as well as the Milpitas Public Financing Authority, the Milpitas Economic Development Corporation, the City of Milpitas Housing Authority and the Milpitas Municipal Financing Authority, all of which are controlled by and dependent on the City. While these are separate legal entities, their financial activities are integral to those of the City. Their financial activities have been aggregated and merged (termed “blended”) with those of the primary government of the City in the accompanying financial statements.

Blended Component Units

The Milpitas Public Financing Authority is a separate government entity whose purpose is to assist with the financing or refinancing of certain public capital improvements within the City. The Authority has the power to purchase bonds issued by any local agency at public or negotiated sale and may sell such bonds to public or private purchasers at public or nego tiated sale. The Authority is controlled by the City and has the same governing body as the City, which also performs all accounting and administrative functions for the Authority.

The financial activities of the Authority are included in the Sewer Utility Enterprise Fund.

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CITY OF MILPITAS
Notes to Basic Financial Statements
for the Year Ended June 30, 2025

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The Milpitas Economic Development Corporation, (Corporation) formed in February 2011, is a California nonprofit public benefit Corporation formed by the City and the former Milpitas Redevelopment Agency under the laws of the State of California. As di scussed in Note 17, the Redevelopment Agency was dissolved effective January 31, 2012. The Corporatio n was organized for the purpose of encouraging and facilitating the City’s economic development, affo rdable housing and other community programs. The Corporation is governed by a board of directors consis ting of the members of the City Council. Under an operating agreement with the Redevelopment Agency , the Corporation received funding from the Agency and will use the funds for redevelopment purpose s consistent with the California Community Redevelopment Law, Health and Safety Code S ection 33000 and to implement and carry out the Redevelopment Plans. The Corporation also entered into a Service Agreement with the City under which the City will perform the necessary services on an independent contractor basis to eliminate blight, provide affordable housing, improve the public realm, facilitate public and private developments, stimulate economic development, and create jobs. The Corporation is contro lled by the City and has the same governing body as the City, which also performs all accounting and administrative functions for the Corporation. The Corporation became inactive as of June 30, 2015.

The City of Milpitas Housing Authority, formed in February 2011, is a separate government entity whose purpose is to assist with housing City low and moderate income residents. The Housing Authority is controlled by the City and has the same governing body as the City, which also performs all accounting and administrative functions for the Housing Authority.

The Financial activities of the Housing Authority are included in the Housing Authority Special Revenue Fund.

The Milpitas Municipal Financing Authority, formed in March 2016, is a separate government entity whose purpose is to assist with the financing and refinancing of public programs, projects and capital improvements for the benefit of the City and the Housing Authority. The Municipal Financing Authority has the power to purchase bonds issued by any local agency at public or negotiated sale and may sell such bonds to public or private purchasers at public or negotiated sale. The Municipal Financing Authority is controlled by the City and the Housing Authority and has the same governing body as the City, which also performs all accounting and administrative functions for the Municipal Financing Authority. The Financial activities of the Municipal Financing Authority are included in the General Government Capital Projects Fund.

Separate financial statements are not issued for the Milpitas Public Financing Authority, Milpitas Economic Development Corporation, City of Milpitas Housing Authority and Milpitas Municipal Financing Authority.

Discretely Presented Component Unit

Terrace Gardens, Inc. is a non-profit public benefit corporation organized in September 1986 for the purpose of developing and managing the operations of a re sidential complex known as Terrace Gardens, which is located in the City of Milpitas and dedicated to the needs of elderl y persons. The former Milpitas Redevelopment Agency funded the construction of Te rrace Gardens. City Council can appoint a voting majority of the governing board and approves the annu al budget. The City Council exercises control over the Board of Terrace Gardens. Therefore, the financia l activities of Terrace Gardens, Inc. as of and for the year ended December 31, 2023, are discretely presented in the Terrace Gardens Inc. Component Unit column of the Statement of Net Position and the Statement of Activities.

Financial statements for Terrace Gardens, Inc. may be obtained from Terrace Gardens, Inc., 186 Beresford Court, Milpitas, CA 95035.

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CITY OF MILPITAS
Notes to Basic Financial Statements
for the Year Ended June 30, 2025

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

B. Basis of Presentation

The City’s Basic Financial Statements are prepared in conformity with accounti ng principles generally accepted in the United States of America. Th e Government Accounting Standards Board is the acknowledged standard setting body for establishing accounting and financial reporting standards followed by governmental entities in the United States of America.

These Standards require that the financial statements described below be presented.

Government-wide Statements: The Statement of Net Position and the Statement of Activities display information about the primary government, the City and its blended an d discretely presented component units. These statements include the financial activities of the overall City government, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities, except for interfund services provided and used, which are not e liminated in the process of consolidation. These statements distinguish between the governmental and business-type activities of the City. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties.

The Statement of Activities presents a comparison between direct expenses and program revenues for each segment of the business-type activities of the City and for each function of the City’s governmental activities.

Direct expenses are those that are specifically associ ated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include (a) charges paid by the recipients of goods or services offered by the pr ograms, (b) grants and contributions that are restricted to meeting the operational needs of a particular program and (c) fees, grants and contributions that are restricted to financing the acquisition or construc tion of capital assets. Revenues that are not classified as program revenues, including franchise fees that are based on gross receipts and all taxes, are presented as general revenues.

Fund Financial Statements: The fund financial statements provide information about the City’s funds, including fiduciary funds and blended component un its. Separate statements for each fund category- governmental, proprietary, and fiduciary-are presented. The emphasis of fund financial statements is on major individual governmental and enterprise funds, each of which is displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds.

Proprietary fund operating revenues and expenses, such as charges for services and the related costs, result from exchange transactions associated with the princi pal activity of the fund. Ex change transactions are those in which each party receives a nd gives up essentially equal values. Nonoperating revenues and expenses, such as subsidies, investment earnings and any related costs, result from nonexchange transactions or ancillary activities.

C. Major Funds

Major funds are defined as funds that have either a ssets and deferred outflows of resources, liabilities and deferred inflows of resources, revenues or expenditures/expenses equal to ten percent of their fund-type total and five percent of the grand total. The General Fund is always a major fund. The City may also select other funds it believes should be presented as major funds.

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CITY OF MILPITAS
Notes to Basic Financial Statements
for the Year Ended June 30, 2025

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The City reported the following major governmental funds in the accompanying financial statements:

General Fund - The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. The major revenue sources for this Fund are sales taxes, property taxes, hotel taxes, unrestricted revenues from the State, fines and forfeitures and interest income. Expenditures are incurred for public safety, public works, recreation services and the other governmental services described above.

Housing Authority Fund – Established to plan and address the housing needs of the City and to act as the Housing Successor of the former Redevelopment Agency. The main source of the revenue for this fund is the repayment of loans restricted for housing activities.

Street Improvement Fund – Established to account for the construction and maintenance of the street system in Milpitas. Financing is provid ed through State and Federal grants.

Transit Area Impact Fee Fund – Established to account for the capital projects in the transit area. A special transit area impact fee is imposed on developments to provide financing.

General Government Capital Projects Fund – Established to account for the construction and maintenance of general government projects. Financing is provided by the General Fund.

The City reported all its enterprise funds as ma jor funds in the accompanying financial statements:

Water Utility Fund – Accounts for the provision of water services to residents and businesses of the City. All activities necessary to provide such services are accounted for in this fund, including, but not limited to, administration, operations, capital improvements, maintenance, billing and collection.

Sewer Utility Fund – Accounts for the provision of sewer services to residents and businesses of the City. All activities necessary to provide such services are accounted for in this fund, including, but not limited to, administration, operations, capital improvements, maintenance, financing, and billing and collection.

The City also reports the following fund types:

Internal Service Funds – The Equipment Management Internal Service Fund is used to finance and account for the replacement of equipment used by City departments and the maintenance of the online permit development system on a cost reimbursement basis. The Pension Section 115 Internal Service Fund is used to accumulate funds to pay down the City CalPERS Unfunded Accrued Liability.

Fiduciary Funds – Trust funds account for assets held by the City as an agent for various functions. The Successor Agency to the Milpitas Redevelopment Agency Private-Purpose Trust Fund accounts for the accumulation of resources to be used for payments at appropriate amounts and times in the future. This fund accounts for winding down the affairs of the former Milpitas Redevelopment Agency and makes payments on the Enforceable Obligation Schedule and disposes of assets and prop erty of the former Redevelopment Agency for the benefit of taxing agencies. The financ ial activities of this fund are excluded from the City- wide financial statements but is presented in separate Fiduciary Fund financial statements.

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CITY OF MILPITAS
Notes to Basic Financial Statements
for the Year Ended June 30, 2025

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

D. Basis of Accounting

The government-wide, proprietary, and fiduciary fund financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place.

Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this me thod, revenues are recognized when measurable and available.

The City considers all revenues reported in the gove rnmental funds to be available if the revenues are collected within sixty days after y ear-end. Expenditures are recorded when the related fund liability is incurred, except for principal and inte rest on general long-term debt, including lease liabilities, claims and judgments, and accumulated unpaid vacation, sick pay and other employee benefit amounts, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions, including entering into contracts giving the City the right to use leased assets, are reported as expenditures in governmental funds. Proceeds of general long-term debt, financing through leases and acquisitions under leases are reported as other financing sources.

Non-exchange transactions, in whic h the City gives or receives value wi thout directly receiving or giving equal value in exchange, include property taxes, gr ants, entitlements, and donations. On the accrual basis, revenue from taxes is recognized in the fiscal year for which the taxes are levied or assessed. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.

Other revenues susceptible to accrual are sales taxes, significant building permit fees, and interest revenue.

Forfeitures, licenses, other permits and miscellaneous revenue are not susceptible to accrual because they are not measurable until received in cas h. Grant funding received in adva nce of the related expenditure is accounted for as unearned revenue.

Grant revenues are recognized in the fiscal year in which all eligibility requirements are met. Under the terms of grant agreements, the City may fund certain programs with a combination of cost-reimbursement grants, categorical block grants, and general revenues. Thus, both restricted and unrestricted net position may be available to finance program expenditures. The City’s policy is to first apply restricted grant resources to such programs, followed by unrestricted resources if necessary.

E. Prepaids, Materials, Supplies and Deposits

Certain payments to vendors reflect costs applicable to future fiscal years and are recorded as prepaid items in both government-wide and fund financial statem ents. The cost of prepaid items is recorded as expenditures/expenses when consumed, rather than when purchased.

Materials and supplies are valued at cost on a first-in first-out basis. Supplies in the enterprise and internal funds consist principally of materials and supplies for utility and internal operations. Materials and supplies of the governmental funds consist of expendable supplie s and materials held for co nsumption. The cost is recorded as an expense or expenditure in the funds at the time individual inventory items are consumed.

Prepaids, materials, supplies and deposits in govern mental funds are equally o ffset by nonspendable fund balance which indicates that they do not constitute available spendable resources even though they are a component of net current assets.
57

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CITY OF MILPITAS
Notes to Basic Financial Statements
for the Year Ended June 30, 2025

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

F. Deferred Inflows and Deferred Outflows of Resources

In addition to assets, the statement of net position or balance sheet reports a separate section for deferred outflows of resources. This separate net statement elem ent, deferred outflows of resources, represents a consumption of net assets or fund balance that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City has pension-related deferred outflows of resources arising from certain changes in the collective net pension liability.

In addition to liabilities, the statement of net position or balance sheet reports a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets or fund balance that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City has deferred inflows of resources arising from certain changes in the collective net pensio n liability. These amounts are deferre d and recognized as an inflow of resources in the period that the amounts become available. In the government‐wide financial statements the City reports deferred amounts related to leases and deferred amounts related to pension and OPEB.

G. Property Tax

Santa Clara County assesses properties and bills, collect s, and distributes property taxes to the City. The County remits the entire amount levied and handles all delinquencies, retaini ng interest and penalties.

Secured and unsecured property taxes are levied on January 1.

Secured property tax is due in two installments, on November 1 and March 1, and becomes a lien on those dates. It becomes delinquent on December 10 and April 10, respectively. Unsecured property tax is due on July 1, and becomes delinquent on August 31. Collection of delinquent accounts is the responsibility of the County, which retains all penalties.

The term “unsecured” refers to taxes on personal property other than real estate, land and buildings. These taxes are secured by liens on the property being taxed. Property tax revenues are recognized by the City in the fiscal year they are assessed, provided they become available as defined above.

H. Revenue Recognition for Water Utility and Sewer Utility

Revenues are recognized based on cycle billings rendered to customers. Revenues for services provided but not billed at the end of a fiscal period are not material and are not accrued.

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CITY OF MILPITAS
Notes to Basic Financial Statements
for the Year Ended June 30, 2025

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

I. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The City categorizes its fair value measurements within the fair value hierarchy establ ished by generally accepted accounting principles. The fair value hierarchy categorizes the inputs to valuation techniques used to measure fair value into three levels based on the extent to which inputs used in measuring fair value are observable in the market.

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 inputs are inputs – other than quoted prices included within level 1 – that are observable for an asset or liability, either directly or indirectly.

Level 3 inputs are unobservable inputs for an asset or liability.

If the fair value of an asset or liab ility is measured using inputs from more than one level of the fair value hierarchy, the measurement is considered to be based on the lowest priority level input that is significant to the entire measurement.

J. Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make esti mates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liab ilities at the date of the fi nancial statements and the reported amounts of revenues and expenses during th e reporting period. Actual results could differ from those estimates.

K. Subscription-Based Information Techno logy Arrangements (SBITAs) Accounting

A Subscription-Based Information Technology Arrangem ent (SBITA) is a contract that conveys control of the right to use another party’s (a SBITA vendor’s) information technology (IT) software, alone or in combination with tangible capital assets (the underlying IT assets), as specified in the contract for a period of time in an exchange or exchange-like transaction.

At the commencement of a SBITA, the City initially measures the subscription liability at the present value of payments expected to be made during the contract term. Subsequently, the subscription liability is reduced by the principal portion of payments made. The subscription asset is initially measured as the initial amount of the subscription liability, adjusted for payments made at or before the SBITA commencement date, plus certain initial direct costs. Subsequently, th e subscription asset is amortized on a straight ‐line basis over shorter of the subscription term or the useful life of the underlying IT assets. The City recognizes SBITA liabilities with an initial, individual value of $500,000 or more for all funds, except for Capital Project Funds which the threshold is set lower at $300,000, based on the future SBITA payments remaining at the start of the contract.

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CITY OF MILPITAS
Notes to Basic Financial Statements
for the Year Ended June 30, 2025
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Key estimates and judgments related to SBITAs include how the City determines (1) the discount rate it uses to discount the expected subscription payments to present value, (2) subscription term, and (3) subscription payments as follows:
• The City uses the interest rate charged by the IT ve ndor as the discount rate. When the interest rate charged by the IT vendor is not provided, the City uses its estimated incremental borrowing rate as the discount rate for subscription liabilities.
• The subscription term includes the noncancellable period of the subscription. • Subscription payments included in the measurement of the subscription liability are composed of fixed payments and purchase option price that the City is reasonably certain to exercise.

The City monitors changes in circumstances that would require a remeasurement of its subscription and will remeasure the subscription asset and liability if certain changes occur that are expected to significantly affect
the amount of the subscription liability.

Subscription assets are reported with other capital assets and subscription liabilities are reported with liabilities on the statement of net position.

NOTE 2 – BUDGETS AND BUDGETARY ACCOUNTING
A. Budgets and Budgetary Accounting
The City adopts an annual operating
budget on or before June 30 of the previous fiscal year, except for the General Government Projects, the Street Improvement, the Park Improvement, the Transit Area Impact Fee and Storm Drain Capital Projects Funds which are budget ed on a project basis. The operating budget takes the form of a one-year financial plan which is adopted in its entirety by the City Council by resolution. As Milpitas is a general law city, it is not subject to a budgetary process prescribed by statute or charter.

The operating budget is subject to supplemental appropri ations throughout its term to provide flexibility to meet changing needs and conditions. The City Manager’s budget control remains at the level of department and/or project within any one fund. The City Mana ger may approve supplemental appropriations in the General Fund providing the total increase does not exceed 1% of the original total General Fund expenditure budget subject to the following: All additional approp riations that require the use of reserves must be approved by City Council. Expenditures cannot exceed the appropriated budget at the department level within each fund without City Council approval.

The City Manager is authorized to amend appropriations within the various departments and projects within a fund, provided that the amount of the amended appr opriation is $100,000 or le ss. Interfund transfers or transfers of an appropriation amount within a fund in which any single instan ce exceeds $100,000 require prior approval of the City Council.

Budgeted amounts are as originally adopted, or as amended by the City Counc il. Individual amendments were not material in relation to the original appropriations which were amended. 60

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CITY OF MILPITAS
Notes to Basic Financial Statements
for the Year Ended June 30, 2025

NOTE 2 – BUDGETS AND BUDGETARY ACCOUNTING (Continued)

B. Adjustments to GAAP Basis from Budgetary Basis

The City Manager budget control remains at the level of department and/or project within any one fund. The City Manager has discretion over an unanticipated reserve (approximately 1% of the General Fund operating budget), adopted by Council during the budget process. All additional appropriations that require the use of reserves must be approved by City Council. Expendi tures cannot exceed the appropriated budget at the department level within each fund without City Council approval.

The City Manager is authorized to amend appropriations within the various departments and projects within a fund, provided the amount of the amended appropriation is $100,000 or less and does not affect the overall appropriations of a fund. Interfund transfers or transfers of an appropriation amount within a fund in which any single instance exceeds $100,000 require prior approval of the City Council.

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CITY OF MILPITAS
Notes to Basic Financial Statements
for the Year Ended June 30, 2025

NOTE 3 – CASH AND INVESTMENTS

The City pools cash from all sources and all funds except Cash and Investments held by Trustees, so that it can be invested at the maximum yield consistent with safety and liquidity, while individual funds can make expenditures at any time.

A. Policies

The City invests in individual investments, money market mutual funds, and in investment pools.

Individual investments are evidenced by specific identifiable securities instruments, or by an electronic entry registering the owner in the records of the institution issuing the security, called the book entry system. To increase security, the City employs the Trust and Custody Department of a bank as the custodian of certain City managed investments, regardless of their form.

California Law requires banks and savings and loan ins titutions to pledge government securities with a fair value of 110% of the City’s cash on deposit, or first trust deed mortgage notes with a fair value of 150% of the deposit, as collateral for thes e deposits. Under California Law this collateral is held in a separate investment pool by another institution in the City’s name and places the City ahea d of general creditors of the institution.

The City investments are carried at fair value, as required by generally accepted accounting principles. The City adjusts the carrying value of its investments to reflect their fair value at each fiscal year end, and it includes the effects of these adjustments in income for that fiscal year.

B. Classification

Cash and investments are classified in the financial statements as shown below, based on whether their use is restricted under the terms of City debt instruments or other agreements.

Cash and investments available for operations $427,858,969 Restricted Cash and Investments 174,765
Total Primary Government cash and investments 428,033,734 Cash and investments available for operations 66,170
Restricted Cash 3,656,956
Total Component Unit cash and investments 3,723,126
Cash and investments in Fiduciary Funds (separate statement) 19,046,473 Restricted Cash and Investments in Fiduciary Funds (separate account) 1,684 Total Fiduciary cash and investments 19,048,157
Total cash and investments $450,805,017

Cash and Investments Available for Operations is used in preparing proprietary fund statements of cash flows because these assets are highly liquid and are expended to liquidate liabilities arising during the year.

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CITY OF MILPITAS
Notes to Basic Financial Statements
for the Year Ended June 30, 2025
NOTE 3 – CASH AND INVESTMENTS (Continued)
C. Investments Authorized by the California Go vernment Code and the City’s Investment Policy The Califor
nia Government Code and the City’s Investment Policy, adopted in September 2024 and updated on an annual basis, and the California allow the City to invest in the following, provided the credit ratings of the issuers are acceptable to the City; and approved pe rcentages and maturities are not exceeded. The table below also identifies certain provisions of the California Government Code or the City’s Investment Policy where it is more restrictive:

Authorized Investment Type
Maximum
Maturity
Minimum
Credit
Quality*
Maximum
Percentage
of Portfolio
Maximum
Investment
In One Issuer
U. S. Treasury Bonds, Notes and Bills 5
Years 100% No Limit
Federal Agency Obligations 5 Years 100% 30%
Bankers Acceptances 180 Days 40% 5%
Commercial Paper – Pooled Funds
Commercial Paper – Non-Pooled Funds
270 Days
270 Days
A
A
40%
25%
(A)
(A)
Negotiable Certificates of Deposit 5 Years 30% 5%
Repurchase Agreements 1 Year 100% No Limit
Time Certificates of Deposit – Banks
or Savings and Loans (Non- negotiable) 5 Years 100% No Limit Medium-Term Corporate Notes 5 Years A 30% 5%
State of California Local Agency
Investment Fund (LAIF Pool)
Upon
Demand
100% No Limit
Money Market Funds of
Government Securities
Upon
Demand
Top
Rating
Category
20% 10%
Municipal Securities and Municipal
Treasury Notes or Bonds
Mortgage Pass-Through and Asset
Backed Securities
Collateralized Bank Deposits
5 Years
5 Years
Upon
Demand
A
AA
30%
20%
100%
5%
5%
No Limit
Supranational Securities 5 Years AA 30% 10%
(A) Eligible Commercial Paper may not represent more than 5% of outstanding paper of an issuing corporation.
*At time of purchase
63

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CITY OF MILPITAS
Notes to Basic Financial Statements
for the Year Ended June 30, 2025

NOTE 3 – CASH AND INVESTMENTS (Continued)

D. Investments Authorized by Debt Agreements and Trust Agreements

The City must maintain required amounts of cash and in vestments with trustees or fiscal agents under the terms of certain debt issues. These funds are unexpe nded bond proceeds or are pledged reserves to be used if the City fails to meet its obligations under these debt issues. The California Government Code requires these funds to be invested in accordance with City resolutions, bond indentures or State statutes. The table below identifies the investment types that are authorized for investments held by fiscal agents. The table also identifies certain provisions of these debt agreements:

Authorized Investment Type

Maximum
Maturity
Minimum
Credit
Quality*
Maximum
Percentage
of Portfolio
Maximum
Investment
In One Issuer

U. S. Treasury Bonds, Notes and Bills 5 Years 100% No Limit Federal Agency Obligations 5 Years 100% 30%
Time Certificates of Deposit – Banks
or Savings and Loans
5 Years 100% No Limit
Bankers Acceptances 180 Days A 20% 5%
Commercial Paper – Pooled Funds
Commercial Paper – Non-Pooled
Funds
270 Days
270 Days
A
A
40%
25%
(A)
(A)
Negotiable Certificates of Deposit 5 Years 30% No Limit Repurchase Agreements 1 Year 100% No Limit
Medium-Term Corporate Notes 5 Years AA 30% 5%
State of California Local Agency
Investment Fund (LAIF Pool)
Upon
Demand
No Limit No Limit
Money Market and Mutual Funds Upon
Demand
Aaa/AAm 20% 10%

(A) The combined total of commercial paper may not represent more than 10% of the outstanding paper and notes of an issuing corporation.

*At time of purchase

During the fiscal year ended June 30, 2022, the City also implemented investment guidelines for its Section 115 Pension Trust, which authorize investments in a diversified portfolio, including equities and mutual funds, to achieve a 3% to 6% investment earnings goal during the next 5 to 10 years.

E. Investments Authorized for Terrace Gardens Inc.

Terrace Gardens, Inc. investments conform with the California Government Code. 64

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Milpitas City CouncilDecember 16, 2025

Milpitas City Council
December 16, 2025