Agenda packet — Modesto City Council, June 2, 2026 (part 1 of 4)

- 1 -
6/2/2026 5:30:00 PM

MODESTO CITY COUNCIL
www.modestogov.com
AGENDA
City of Modesto

CITY COUNCIL MEETING
Chambers, Basement Level
Tenth Street Place, 1010 10th Street
Modesto, California
Tuesday, June 02, 2026 at 5:30 PM
Roll Call - Councilmembers Alvarez, Bavaro, Escutia-Braaton, Ricci, Williams, Wright, Mayor Zwahlen
* Public Comment will only be in-person. Members of the public who wish to address the Council, by providing public comment, during the meeting must do so in-person in the Council Chambers.

As an alternative, members of the public may also provide written public comment submitted via email as indicated in the Submitting Comments by Email instructions on this agenda. Zoom will still be available for viewing and Wordly translation.
*Members of the public will be allowed to provide public comment through Zoom if a Councilmember is participating remotely pursuant to the provisions of California Government Code section 54953.8.3.
*If a technical issue arises with Zoom or the phone dial-in option, the Council meeting will continue unless the meeting is being held pursuant to the provisions of Senate Bill 707, California Government Code section 54953.8.3. Alternative viewing options are listed below, and the meeting is physically open to the public.
“Wordly” can translate into 25+ different languages! To access written translation during the meeting, please scan the QR Code or click this link https://attend.wordly.ai/join/RJDY-6364.
"Wordly" puede traducir a más de 25 idiomas diferentes! Para acceder a la traducción durante la reunión, por favor escanee el código QR o haga clic en el enlace https://attend.wordly.ai/join/RJDY-6364.
- 1 -
6/2/2026
- 2 -
6/2/2026 5:30:00 PM
You may observe a livestream of the meeting at http://media.modestogov.com. You may also view or listen to the meeting as indicated below.

THE MEETING CAN BE VIEWED BY ZOOM VIDEO

CONFERENCING OR TELEPHONE
Joining the City Council meeting via Zoom
The City of Modesto is now offering the ability to view Council meetings via telephonic conferencing via “Zoom” video conferencing computer technology. The meeting may be accessed through the use of Zoom using the following options:
• Enter the following link into an Internet Browser
https://us02web.zoom.us/j/95895497651
• Enter the following link into an Internet Browser https://zoom.us/ and using the Webinar ID: 958 9549 7651
• Passcode: 84326
To use Zoom, please visit: https://zoom.us/ and either sign-up for a free Zoom account or continue as a guest. Once you have downloaded the app onto your mobile device, joined from your web browser, or downloaded the Zoom software on your computer you will be ready for the upcoming Council meeting.

Joining the City Council meeting via Telephone
If you don’t have a smart phone or computer to access the meeting via Zoom, you can listen by phone, by calling 1-877-853-5257 (Toll Free) or 1-888-475-4499 (Toll Free) and enter the Webinar ID: 958 9549 7651 Passcode: 84326

SUBMITTING COMMENTS BY E-MAIL
Written comments may be submitted via email to: [email protected] (include Agenda Item Number in the subject line). All comments will be shared with the Councilmembers and placed in the record but will not be read aloud during the meeting. Written comments must be received two hours before the meeting.

This Agenda is on file in the City Clerk’s Office, Sixth Floor, 10th Street Place, Posting Board at entry of 10th Street Place, and is available on the City’s Web site at www.modestogov.com.

Materials related to an item on this Agenda submitted to the Council after distribution of the agenda packet are available for public inspection in the Clerk’s office during normal business hours. Such documents are also available online, subject to staff’s ability to post the documents before the meeting, at the following website https://www.modestogov.com/council-meetings In accordance with the requirements of Title II of the Americans with Disabilities Act (“ADA”) of 1990, the Fair Employment & Housing Act (“FEHA”), the Rehabilitation Act of 1973 (as amended), Government Code section 11135 and other applicable codes, the City of Modesto (“City”) will not discriminate against individuals on the basis of disability in the City’s services, programs, or activities. For more information, please visit the City of Modesto website at https://www.modestogov.com/865/Americans-with-Disabilities-Act-ADA - 2 -
6/2/2026
- 3 -
6/2/2026 5:30:00 PM
In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the City Clerk (209) 577-5396. Notification 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting.

Pledge of Allegiance to the Flag
Invocation
City Clerk’s Announcements
Declaration of Conflicts of Interest
Reports from Closed Session

ACKNOWLEDGEMENTS AND PRESENTATIONS

1. Proclamation declaring June 2026 as LGBTQ+ Month. (Funding Source: Not Applicable)
CITY COUNCIL; Breanna Griffin, 209-577-5421, [email protected]

MISCELLANEOUS
Legislation, Appointments, Other

2. Consider accepting the resignation of Elizabeth Buenrostro from the Entertainment Commission. (Funding Source: Not Applicable)
Staff Recommendation:
• Resolution accepting the resignation of Elizabeth Buenrostro from the Entertainment Commission.

CED; Amber Abruzzo, 209-577-5244, [email protected]

3. Consider approving the retroactive reappointment of Amanda Heitlinger and Maria Apodaca to the Downtown Improvement District Board of Directors for a four-year term ending December 31, 2029. (Funding Source: Not Applicable) Staff Recommendation:
• Resolution approving the retroactive reappointment of Amanda Heitlinger and Maria Apodaca to the Downtown Improvement District Advisory Board for a four-year term ending December 31, 2029.

CED; Eric Bonander, 209-577-5276, [email protected],

PUBLIC COMMENT PERIOD
Three-minute time limit per speaker.

Only interested persons in the audience may present these matters. Under State law, Councilmembers may respond to matters being presented under this item only as follows:
- 3 -
6/2/2026
- 4 -
6/2/2026 5:30:00 PM
a. Briefly respond to statements made or questions raised. b. Ask a question for clarification.
c. Provide a reference to staff or other resources for factual information. d. Request staff to report back at a subsequent meeting. e. Finally, a Councilmember or the Council itself may take action to direct staff to place a matter of business on a future agenda.

CONSENT ITEMS – ROLL CALL VOTE REQUIRED
Information concerning the consent items listed below has been forwarded to each Councilmember prior to this meeting for study. Unless some member of the audience or Councilmember has a question concerning an item and asks that it be withdrawn from the consent list, the Council approves the items at one time. The action taken by the Council in approving consent items is set forth in the explanation of this individual item.

CONSENT
An item may be removed from consent and discussed at the request of an audience member or Council member.

Consent

4. Consider approving the Minutes for the May 12, 2026 Council Meeting. (Funding Source: Not Applicable)
Staff Recommendation:
• Motion approving the Minutes for the May 12, 2026 Council Meeting.

CITY CLERK; Diane Nayares-Perez, 209-577-5396, [email protected] Consent

5. Consider approving Final Adoption of Ordinance 3814-C.S. amending Sections 2-1.24 “Compensation of Mayor,” and 2-1.26 “Compensation of City Councilmembers,” of Chapter 1, “City Council Organization and Procedure,” of Title 2, “Administration,” of the Modesto Municipal Code, to increase the salaries of the Mayor and City Councilmembers pursuant to Charter Section 703 and the recommendations of the Citizen’s Salary Setting Commission of 2026. (Funding Source: Not Applicable) Staff Recommendation:
• Motion approving Final Adoption of Ordinance 3814-C.S. amending Sections 2-1.24 “Compensation of Mayor,” and 2-1.26 “Compensation of City Councilmembers,” of Chapter 1, “City Council Organization and Procedure,” of Title 2, “Administration,” of the Modesto Municipal Code, to increase the salaries of the Mayor and City Councilmembers pursuant to Charter Section 703 and the recommendations of the Citizen’s Salary Setting Commission of 2026.

CITY CLERK; Diane Nayares-Perez, 209-577-5396, [email protected] Consent

6. Consider receiving the 2026 Local Agency Biennial Notice and directing staff to conduct a review of the City’s Conflict-of-Interest Code, and the Code of the City’s Boards, Commissions, and Committees and the filing of a Biennial Notice with the - 4 -
6/2/2026
- 5 -
6/2/2026 5:30:00 PM
City Clerk regarding such review, as required by the Political Reform Act. (Funding Source: Not Applicable)
Staff Recommendation:
• Motion directing staff to make a formal review of the City’s Conflict of Interest Code, and the Code of the City’s Boards, Commissions, and Committees pursuant to the Political Reform Act, and if necessary, at the appropriate time thereafter, prepare a resolution to be adopted by the City Council to approve any required amendments.

CITY CLERK; Diane Nayares-Perez, 209-577-5396, [email protected] Consent

7. Consider approving the recommended budget adjustments to Fiscal Year 2025-26 Annual Operating and Capital Improvement Program Budgets. (Funding Source:

Various Funds)
Staff Recommendation:
• Resolution amending Fiscal Year 2025-26 Annual Operating and Capital Improvement Project Fund Budgets and authorizing the City Manager, to take the necessary steps to implement the provisions of this Resolution.

BUDGET; Kaceey Culbertson, 209-571-5855, [email protected] Consent

8. Consider accepting Fiscal Year 2026-27 Engineer’s Report and setting a Public Hearing on June 23, 2026, for the levy and collection of assessments for landscape maintenance in the public right-of-way, street medians, and areas adjacent to the access control walls in Dry Creek Meadows Subdivisions Nos. 1-6. (Funding Source:

Landscape Maintenance Assessment District No. 1)
Staff Recommendation:
• Resolution accepting Fiscal Year 2026-27 Engineer’s Annual Report for Landscape Maintenance Assessment District No. 1 for Dry Creek Meadows Subdivisions Nos. 1-6; Issuing a Notice of Intention to Levy and Collect Assessments and setting a Public Hearing on June 23, 2026 to consider the Fiscal Year 2026-27 Levy and Collection of Assessments within the District.

CED; Edgar Garcia, 209-577-5211, [email protected] Consent

9. Consider accepting the Fiscal Year 2026-27 Engineer’s Annual Report for Landscape Maintenance Assessment District No. 2; Issuing a Notice of Intention to Levy and Collect Assessments and setting a Public Hearing on June 23, 2026 for the levy and collection of assessment for Landscape Maintenance in the public right-of-way, street medians, and areas adjacent to the access control walls in Dry Creek Meadows Subdivisions Nos. 7-10, Creekwood Meadows Subdivision, and Yosemite Meadows Subdivisions Units 1 and 2. (Funding Source: Landscape Maintenance Assessment District No. 2)
Staff Recommendation:
• Resolution accepting the Fiscal Year 2026-27 Engineer’s Annual Report for Landscape Maintenance Assessment District No. 2 for Dry Creek Meadows - 5 -
6/2/2026
- 6 -
6/2/2026 5:30:00 PM
Subdivisions Nos. 7-10, Creekwood Meadows Subdivision, and Yosemite Meadows Subdivisions Units 1 and 2; Issuing a Notice of Intention to Levy and Collect Assessments and setting a Public Hearing on June 23, 2026 to consider the Fiscal Year 2026-27 Levy and Collection of Assessments within the District.

CED; Edgar Garcia, 209-577-5211, [email protected] Consent

10. Consider accepting the Fiscal Year 2026-27 Engineer’s Annual Report for the Shackelford Landscape and Lighting District; Issuing a Notice of Intention to Levy and Collect Assessments and setting a Public Hearing on June 23, 2026, to consider the Fiscal Year 2026-27 Levy and Collection of Assessments within the District. (Funding Source: Shackelford Landscape and Lighting District)
Staff Recommendation:
• Resolution accepting the Fiscal Year 2026-27 Engineer’s Annual Report for the Shackelford Landscape and Lighting District; Issuing a Notice of Intention to Levy and Collect Assessments and setting a Public Hearing on June 23, 2026, to consider the Fiscal Year 2026-27 Levy and Collection of Assessments within the District.

CED; Edgar Garcia, 209-577-5211, [email protected] Consent

11. Consider approving a Memorandum of Understanding (MOU) with Stanislaus Council of Governments for suballocation of Regional Early Action Planning Grant of 2021 program funds (REAP 2.0) in the amount of $839,492. (Funding Source: REAP 2.0 Grant Funds through Stanislaus Council of Governments)
Staff Recommendation:
• Resolution approving a Memorandum of Understanding with Stanislaus Council of Governments for suballocation of Regional Early Action Planning Grant Program of 2021 funds totaling $839,432; and authorizing the City Manager, or his designee to sign the Memorandum of Understanding. • Resolution establishing the Fiscal Year 2025-26 non-capital project revenue, expenditure, and any necessary transfer budgets in the amount of $839,492 to recognize the Regional Early Action Planning Grant of 2021 (REAP 2.0) and fund housing-related work and authorizing the City Manager, or his designee, to implement the provisions of this resolution.

CED; Leslie Danhoff, 209-577-5429, [email protected] Consent

12. Consider approving the updates to the City’s Investment Policy. (Funding Source: Not Applicable)
Staff Recommendation:
• Resolution approving the updates to the City’s Investment Policy.

FINANCE DEPARTMENT; Calogero Maniscalco, 209-577-5219,
[email protected]
- 6 -
6/2/2026
- 7 -
6/2/2026 5:30:00 PM
Consent

13. Consider approving the updates to the City’s Debt Management Policy. (Funding Source: Not Applicable)
Staff Recommendation:
• Resolution approving the updates to the City’s Debt Management Policy.

FINANCE DEPARTMENT; Calogero Maniscalco, 209-577-5219,
[email protected]
Consent

14. Consider accepting an Informational Report on the March and April 2026 Grant Applications and Awards. (Funding Source: Not Applicable) Staff Recommendation:
• Motion accepting an Informational Report for March and April 2026, Grant Applications and Awards.

FINANCE DEPARTMENT; Maria Garnica, 209-577-5249,
[email protected]
Consent

15. Consider approving the Fiscal Year 2026-2027 Appropriation Limit, which is an annual spending limit calculation that identifies the maximum amount of appropriations for publicly funded programs. (Funding Source: Not Applicable) Staff Recommendation:
• Resolution establishing the appropriation limit for the Fiscal Year 2026-2027 annual budget.

FINANCE DEPARTMENT; Maria Garnica, 209-577-5249,
[email protected]
Consent

16. Consider approving the purchase for three Fleet Additions and ten Fleet Replacements in a total amount not to exceed $1,435,294. (Funding Source: Various Funds) Staff Recommendation:
• Resolution approving the Competitive Bidding Process from Sourcewell through State of Minnesota to Rush Truck Centers, Ceres, CA for the purchase of three Ford F250, one Ford Transit 350 Van, four Ford F550 Trucks and five Ford F350 Trucks for an amount not to exceed $1,435,294; and authorizing the Director of Finance, or her designee, to issue the Purchase Order; and authorizing the Director of Finance or her designee to execute any Change Orders not to exceed 15% of the total purchase price.

FINANCE DEPARTMENT; Dianne Love, 209-571-5164, [email protected] Consent

17. Consider approving payment of various Equipment Maintenance Agreements for Fiscal Year 2026-2027 with multiple equipment manufacturers for all City Departments, for an annual amount not to exceed $932,343. (Funding Source: Various Funds) Staff Recommendation:
• Resolution approving payment of various Equipment Maintenance Agreements - 7 -
6/2/2026
- 8 -
6/2/2026 5:30:00 PM
for Fiscal Year 2026-2027 with multiple equipment manufacturers for all City Departments, for an annual amount not to exceed $932,343; and authorizing the City Manager, or his designee, to execute Equipment Maintenance Agreements associated with the items in Exhibit A and Exhibit B.

FINANCE DEPARTMENT; Dianne Love, 209-571-5164, [email protected] Consent

18. Consider approving a Letter of Agreement with Modesto Confidential and Management Association for polygraph services. (Funding Source: General Fund) Staff Recommendation:
• Resolution approving a Letter of Agreement between the City of Modesto and Confidential and Management Association (MCMA) for polygraph examinations and authorizing the City Manager or his designee to take the necessary administrative action to implement the agreement.

HUMAN RESOURCES; Christina Alger, 209-571-5126, [email protected] Consent

19. Consider approving the payment of Software Maintenance Support Agreements for Fiscal Year 2026-2027 in a total amount not to exceed $11,750,176. (Funding Source:

Various Funds)
Staff Recommendation:
• Resolution approving the payment of Software Maintenance Support Agreements for Fiscal Year 2026-2027 in a total amount not to exceed $11,750,176, and authorizing the City Manager, or designee, to execute routine renewal agreements associated with Exhibits A and B.

IT; Dameon Booker, 209-447-1088, [email protected] Consent

20. Consider adoption of the 2026-2028 City of Modesto Smart City Strategy. (Funding Source: Not Applicable)
Staff Recommendation:
• Resolution adopting the 2026-2028 City of Modesto Smart City Strategy.

IT; Dameon Booker, 209-447-1088, [email protected] Consent

21. Consider approving Co-Sponsorships for designated City Partners’ Events and Programs with direct contributions of $114,500 and in-kind support with an estimated value of $261,022 for Fiscal Year 2026-2027. (Funding Source: General Fund) Staff Recommendation:
• Resolution approving Co-Sponsorships for designated City Partners’ Events and Programs with direct contributions of $114,500 and in-kind support with an estimated value of $261,022 for Fiscal Year 2026-2027.

PRN; Jeremy Rogers, 209-577-5347, [email protected] Consent

22. Consider approving an Agreement for On-Call Roll-Up Door Maintenance & Repair - 8 -
6/2/2026
- 9 -
6/2/2026 5:30:00 PM
Services to West Coast Door and Gate, Modesto, CA and Barton Overhead Door, Inc.

Modesto, CA for a total combined amount not to exceed $348,510 over five years. (Funding Source: Various Funds)
Staff Recommendation:
• Resolution approving the Award of Bid and Agreements for On-Call Roll-Up Door Maintenance & Repair Services to West Coast Door and Gate, Modesto, CA and Barton Overhead Door, Inc. Modesto, CA for a two-year Agreement with three one-year extension options, for a combined estimated annual amount of $69,702, and a combined total amount not to exceed $348,510 over five years between the two agreements; and authorizing the Director of Finance, or her designee to adjust agreement totals between vendors based on contractor’s availability and department’s needs, ensuring the combined total amount does not change; and authorizing the City Manager, or his designee, to execute the Agreements.

PUBLIC WORKS; Gabe DaSilva, 209-652-2579, [email protected] Consent

23. Consider approving a First Amendment to the Agreement with The BGR Group, Inc., Santa Clara, CA for Fire Safety System Services, increasing the Agreement amount by $584,576 through the duration of the Agreement. (Funding Source: Various Funds) Staff Recommendation:
• Resolution approving the First Amendment to the Agreement with The BGR Group, Inc., Santa Clara, CA for Fire Safety System Services, increasing the Agreement amount by $584,576 for a new estimated annual amount of $781,051, and a new total amount not to exceed $1,608,667 through the term of the agreement, and authorizing the City Manager, or his designee, to execute the Amendment.

PUBLIC WORKS; Gabe DaSilva, 209-652-2579, [email protected] Consent

24. Consider approving a list of projects to be funded with Road Repair and Accountability Act tax proceeds for Fiscal Year 2026-2027. (Funding Source: Senate Bill 1 Funds) Staff Recommendation:
• Resolution approving the list of projects to be funded with Road Repair and Accountability Act tax proceeds for Fiscal Year 2026-2027 in an amount up to $6,166,282, and authorizing the City Manager, or his designee, to approve the projects.

PUBLIC WORKS; John Sphar, 209-342-2235, [email protected]

COUNCIL COMMENTS & REPORTS

CITY MANAGER COMMENTS & REPORTS
- 9 -
6/2/2026
- 10 -
6/2/2026 5:30:00 PM

HEARINGS
Published in the Modesto Bee on May 22, 2026.

25. Hearing to consider and approve the Final Proposed Fiscal Year 2026-27 Operating and Multi-Year Non-Capital Budgets and Capital Improvement Program for the City and related Resolutions. (Funding Source: Various Funds) Staff Recommendation:
• Resolution approving the adoption of the Fiscal Year 2026-27 Annual and Multi-Year Non-Capital Operating Budgets and the 2026-27 Capital Improvement Program for the City of Modesto and the related Inter-Fund Transfers.
• Resolution approving the Budget Principles, and the Operating Budget Policy as Outlined in the Fiscal Year 2026-27 Final Proposed Budget. • Resolution amending the Position Classification Plan for the City of Modesto to create new classifications and amend existing classifications. • Resolution amending the Position Allocation for Fiscal Year 2026-27 as adopted in the Operating Budget.

BUDGET; Kaceey Culbertson, 209-571-5855, [email protected]

MATTERS TOO LATE FOR THE AGENDA
These may be presented by members of the City Council and staff upon determination by a majority vote that an emergency exists, as defined by State law, or by a 2/3 vote that (1) there is a need to take immediate action, and (2) that the need for action came to the City’s attention after the agenda was posted.

ADJOURNMENT
Posted pursuant to Government Code Section 54954.2 on the bulletin board at Tenth Street Place on
at by
date time signature
- 10 -
6/2/2026

CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

June 2, 2026
Date: April 22, 2026
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: Jessica Hill, Director of Community & Economic Development SUBJECT: Accepting resignation of Elizabeth Buenrostro from the Entertainment Commission
CONTACT: Amber Abruzzo, Administrative Office Assistant III [email protected], 209-577-5244
DESCRIPTION:

Consider accepting the resignation of Elizabeth Buenrostro from the Entertainment Commission. (Funding Source: Not Applicable)
STRATEGIC PLAN ELEMENT:

This item supports the City of Modesto’s 2025-2026 Strategic Plan, Goal I: Promote trust and engagement between the community and the City by enhancing responsiveness, communicating broadly about City opportunities and challenges and increasing participation in municipal affairs.

BACKGROUND:

The Entertainment Commission was established to oversee the entertainment permit process, including dance and processing of special event requests within the City of Modesto. The Commission’s purpose is to encourage the development of new entertainment businesses as well as assist the organizers and operators to plan and coordinate City services for major events. This will allow the business or event to flourish while meeting the City’s public health, safety and welfare needs.

DISCUSSION:

On January 1, 2025, by Resolution No 2025-018, Elizabeth Buenrostro was appointed to the Entertainment Commission with a term expiration date of December 31, 2028. On April 14, 2026, Elizabeth Buenrostro formally resigned from the Entertainment Commission.
#2..
- 11 -
City Council, June 2, 2026
Accepting resignation of Elizabeth Buenrostro from the Entertainment Commission

Page 2 of 2 ends

FISCAL IMPACT:

Appointing members to a committee is administrative in nature, therefore, does not have a fiscal impact on the General Fund.

COMMITTEE RECOMMENDATION:

This item is for a resignation which goes straight to council for approval.

CEQA/NEPA REQUIREMENTS:

This item does not constitute a “project” within the meaning of California Environmental Quality Act (CEQA) Guidelines Section 15378 and requires no environmental review.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution accepting the resignation of Elizabeth Buenrostro from the Entertainment Commission.

Approved by:

Jessica Hill, Director of Community &
Economic Development
Joseph P. Lopez, City Manager
Attachments:

1. Resolution

2. Elizabeth Buenrostro Resignation Redacted
#2..
- 12 -
06/2/2026/CED/AAbruzzo/Item X 1 2026-XX

MODESTO CITY COUNCIL
RESOLUTION NO. 2026-XX

RESOLUTION ACCEPTING THE RESIGNATION OF ELIZABETH

BUENROSTRO FROM THE ENTERTAINMENT COMMISSION
WHEREAS, on January 1, 2025, by Resolution No 2025-018, Elizabeth Buenrostro was appointed to the Entertainment Commission with a term expiration date of December 31, 2028; and
WHEREAS, on April 14, 2026, Elizabeth Buenrostro formally resigned from the Entertainment Commission.

NOW, THEREFORE, BE IT RESOLVED that the Council of the City of Modesto hereby accepts the resignation of Elizabeth Buenrostro from the Entertainment Commission with regret.
#2..
- 13 -
06/2/2026/CED/AAbruzzo/Item X 2 2026-XX
The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 2nd day of June, 2026, by , who moved its adoption, which motion being duly seconded by , was upon roll call carried and the resolution adopted by the following vote:

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ATTEST: ______________________________

DIANE NAYARES-PEREZ,
City Clerk
(SEAL)
APPROVED AS TO FORM:

BY: ____________________________________
JOSE M. SANCHEZ, City Attorney
#2..
- 14 -
Citizen's Advisory Group Letter of Resignation Submittal 04/14/2026 10:05 AM (PDT)
Citizen Advisory Group Letter of Resignation
Title II Compliance
In accordance with the requirements of Title II of the Americans with Disabilities Act (“ADA”) of 1990, the Fair Employment & Housing Act (“FEHA”), the Rehabilitation Act of 1973 (as amended), Government Code section 11135 and other applicable codes, the City of Modesto (“City”) will not discriminate against individuals on the basis of disability in the City’s services, programs, or activities. For more information, please visit the City of Modesto website.

Name Elizabeth Buenrostro
Phone Number
Email Address
Mailing Address
City Modesto
State CA
Zip Code
Which Citizen Advisory Group are
you resigning from?
Entertainment Commission
Why do you want to resign from
this Citizen Advisory Group?
It conflicts with my current schedule.

Signature
Thank you for providing this information. After clicking ‘Submit’ you will receive a Submission ID number that can be retained for future reference.

You will be updated by our staff, if necessary, as your resignation form is processed.

Have a great day!
Submission ID: 0327b511-cac1-44c7-93c5-923a4d8f0cbf Page 1/1 #2..
- 15 -

CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

June 2, 2026
Date: May 5, 2026
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: Jessica Hill, Director of Community and Economic Development SUBJECT: Downtown Improvement District Board Appointment CONTACT: Eric Bonander, Business Analyst,
[email protected], 209-577-5276
DESCRIPTION:

Consider approving the retroactive reappointment of Amanda Heitlinger and Maria Apodaca to the Downtown Improvement District Board of Directors for a four-year term ending December 31, 2029. (Funding Source: Not Applicable) STRATEGIC PLAN ELEMENT:

This action supports the City of Modesto 2025-2026 Strategic Plan focus on Governance and Service Delivery under Goal I: Promote trust and engagement between the community and the City by enhancing responsiveness, communicating broadly about City opportunities and challenges, and increasing public participation in municipal affairs.

BACKGROUND:

The Downtown Improvement District (DID) Advisory Board consists of nine (9) members that make recommendations on how and when the DID mill tax should be spent. Each year DID executes a small number of high-impact projects that are strategic for downtown businesses and the overall downtown. Modesto Downtown Improvement District promotes a positive atmosphere in the downtown by caring for physical space. Their mission also includes attracting and retaining business, employees, residents, and visitors to Downtown Modesto.

Generally, appointments to citizen advisory groups are brought forward to the Appointments Committee initially for consideration and an overall recommendation to the City Council for approval and each member may serve a maximum of two (2) terms. #3..
- 16 -
City Council, November 12, 2024
Downtown Improvement District Board Appointment

Page 2 of 3 ends

However, pursuant to section 6-3.11 of the Modesto Municipal Code1, the DID advisory board shall consist of nine (9) members to be appointed by the Mayor with the concurrence of the Council, and the members are required to be persons who have businesses within the business improvement area subject to an additional levy of license tax.

On February 28, 2014, by Resolution No. 2014-56, Council approved a policy revision for City Council policy 1.008 Citizen Advisory Group Appointments which eliminated term limits for the members of the DID Advisory Board due to the inherent limited candidate pool. The same Council policy also states that appointments to the DID Advisory Board are taken directly to council in accordance with section 6-3.11 of the Modesto Municipal Code.

DISCUSSION:

DID is currently seeking to retroactively fill two vacancies following the expiration of Amanda Heitlinger and Maria Apodoca term on January 1, 2026, and Ms. Heitlinger and Ms. Apodoca have continued their service to the DID Advisory Board since their term expired. Ms. Heitlinger and Ms. Apodoca both qualify for these positions as business owners within the DID boundaries, which pays an additional levy of license tax as provided for by Municipal Code Chapter 6-3.11 Advisory Board.

FISCAL IMPACT:

There is no fiscal impact related to this action.

CEQA/NEPA REQUIREMENTS:

This item does not constitute a “project” within the meaning of California Environmental Quality Act (CEQA) Guidelines Section 15378 and requires no environmental review.

COMMITTEE RECOMMENDATION:

This item is not required to be reviewed by Council Committee due to provisions of Council Policy 1.008 which allows for the appointments of DID Advisory Board members to be taken directly to Council for approval.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution approving the retroactive reappointment of Amanda Heitlinger and Maria Apodaca to the Downtown Improvement District Advisory Board for a four-year term ending December 31, 2029.
1 https://library.municode.com/ca/modesto/codes/code_of_ordinances?nodeId=TIT6BUPRTR_CH3BUIMARA_6-3.11ADBO #3..
- 17 -
City Council, November 12, 2024
Downtown Improvement District Board Appointment

Page 3 of 3 ends

Approved by:

Jessica Hill,
Director of Community and Economic
Development
Joseph P. Lopez, City Manager
Attachments:

1. Resolution

2. DID ByLaws

3. Maria Apodaca_Application_Redacted

4. Amanda Heitlinger_Application_Redacted

5. Council Policy Catalog 1.008 Citizen Advisory Groups #3..
- 18 -
05/06/2026/CED/Bonander 1 2026-

MODESTO CITY COUNCIL
RESOLUTION NO. 2026-

RESOLUTION APPROVING THE RETROACTIVE REAPPOINTMENT OF

AMANDA HEITLINGER AND MARIA APODACA TO THE DOWNTOWN

IMPROVEMENT DISTRICT BOARD OF DIRECTORS FOR A FOUR-YEAR TERM ENDING DECEMBER 31, 2029
WHEREAS, Section 1102 of the Charter of the City of Modesto authorizes the City Council to appoint members to various Boards and Commissions; and WHEREAS, Downtown Improvement District Board Committee is currently seeking to retroactively fill two vacancies following the expiration of Amanda Heitlinger and Maria Apodoca term on January 1, 2026, and WHEREAS, Ms. Heitlinger and Ms. Apodoca have continued their service to the DID Advisory Board since their term expired; and WHEREAS, Ms. Heitlinger and Ms. Apodoca both qualify for these positions as a business owner within the DID boundaries which pays an additional levy of license tax as provided for by Municipal Code Chapter 6-3.11 Advisory Board.

NOW, THEREFORE, BE IT HEREBY RESOLVED by the Council of the City of Modesto that it herby approves the retroactive reappointment of Amanda Heitlinger and Maria Apodaca to the Downtown Improvement District Advisory Board for a four-year term ending December 31, 2029.
#3..
- 19 -
05/06/2026/CED/Bonander 2 2026-
The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 2nd of June, 2026 by Councilmember , who moved its adoption, which motion being duly seconded by Councilmember , was upon roll call carried and the resolution adopted by the following vote:

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ATTEST: ___________________________
DIANE NAYARES-PEREZ, CMC City
Clerk
(SEAL)
APPROVED AS TO FORM:

BY: ____________________________________
JOSE M. SANCHEZ, City Attorney
#3..
- 20 -
BYLAWS
MODESTO DOWNTOWN IMPROVEMENT DISTRICT, INC.

ARTICLE ONE
NAME
The name other than Business Improvement Area A of the City of Modesto, shall be the Modesto Downtown Improvement District which is subject to limitations and exceptions provided for in the city ordinance number 777 - c.s. '

ARTICLE TWO
OFFICE
The principal office ofthe corporation shall be located at 1003 Tenth Street, Sulte A, Modesto, California 95354. The corporation may have such other offices, either within or without California, as the board of directors may determine from time to time.

ARTICLE THREE

BOARD OF DIRECTORS
A. General Powers. The affairs of the corporation shall be managed by the Executive Committee and/or its Board of Directors.

B. Number and Appointment. The number of directors shall be nine (9). Directors shall be appointed by the Mayor with the concurrence of the Council.

C. Purpose/Mission. Each year, the Modesto D.I.D. will execute a small number of high-impact projects that are strategic for downtown businesses and the overall downtown.

Additionally; the board and executive director will hold a fundraiser once per year. The fundraiser and high-impact projects will be determined at the board's annual offsite . strategic planning session. The executive director shall be formally evaluated at the offsite session, with primary consideration given to the director's success in implementing the prior year's projects.

D. Duties. Each member is expected to make recommendations on how and when the funds from the Mill Tax should be spent. The members need to be enthusiastic, reliable, have excellent judgment, and be extremely conscientious. They must be willing to attend all meetings. These members will be looking out for the interest of all people involved in the district. They must be aware that their decisions and recommendations and the completion of plans and projects will affect the downtown area.

E. Quorum. A majority of the board of directors shall constitute a quorum for the transaction at any meeting of the board; but if less than a majority of the directors are present at any #3..
- 21 -
meeting, a majority of the directors present may adjourn the meeting from time-to-time without further notice.

F. Board Decisions. The act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors unless the act of a greater number is required by law of by these bylaws.

G. Vacancies. Any vacancy occurring in the board of directors, and any directorship to be filled by reason of an increase in the number of directors, shall be filled by the board of directors.

A director appointed to fill a vacancy shall serve for the unexpired terms of his or her predecessor in office.

H. Removal. The board of directors may suspend or expel a board member for cause, and, by a majority vote of the board at any regularly constituted meeting.

I. Resignation. Any board member may resign by filing a written resignation with the Executive Director.

J. Reinstatement. On written request signed by a former board member and filed with the Executive Director, the board of directors, by the affirmative vote of two thirds of the members of the board, may reinstate such former board member.

K. Regular Meetings. A regular meeting of the board of directors shall be held up to once a quarter. The board of directors may provide, by resolution, the time and place for holding additional regular meetings.

L. Special Meetings. Special meetings of the board of directors may be called by or at the request of the president or any officers or directors, and, shall be held at the principal office of the corporation or at such other place as the directors may determine.

M. Notice. Notification of regular board meetings or special board meetings will be given in accordance with the Ralph M. Brown Act,
N. Compensation. Directors as such shall not receive any stated salaries for their services, but . by resolution of the board of directors, a fixed sum and expenses of attendance, if any, may be allowed for attendance at any regular or special meeting of the board. Nothing in these bylaws contained shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation for such service.

ARTICLE FOUR

OFFICERS
A. Officers. The officers of the corporation shall be a Chairperson, a Vice-Chairperson and such other officers as may be elected in accordance with the provisions of this article.

B. Election and Term of Office. The officers of the corporation shall be elected annually by the board of directors. If the election of officers is not held at such meeting, such election shall #3..
- 22 -
be held as soon as is convenient. New offices may be created and filled by any meeting of the board of directors. Each officer shall hold office until his or her successor has been duly elected and qualifies.

C. Removal. Any officer elected or appointed by the board of directors may be removed by the board of directors whenever in its judgment the best interests of the corporation would be served by such removal, but such removal shall be without prejudice to the contract rights, if any, of the office so removed.

D. Vacancies. A vacancy in any office because of the death, resignation, removal, disqualification, or otherwise, may be filled by the board of directors for the unexpired portion of the term.

E. Powers and Duties. The several officers shall have such powers and shall perform such duties as may from time to time be specified in the resolutions or other dir~ctives of the board of directors. In the absence of such specifications, each officer shall have the powers and authority and shall perform and discharge the duties of officers of the same title serving in nonprofit corporations having the same or similar general purposes and objectives as this corporation.

ARTICLE FIVE

COMMITTEES
A. Executive Committee. The Executive Committee shall consist of three (3) members of the nine (9) person board. The Chairperson shall head this committee and the Vice Chairperson will be the second member. The one remaining position will be appointed by the Chairperson, and at any time thereafter the Chairperson may replace any member on this committee for good cause. The duties of this committee shall be to attend to administrative matters of the Downtown Improvement District. The Executive Committee may meet as often as the Chairperson deems necessary.

B. Special Committees. At such time there is a need of a special committee to handle projects out of the range of the already appointed committees, the Chairperson shall select the individuals and the size of committee that he/she deems necessary to carry out the program.

ARTICLE SIX

MEETINGS
A. Board Meetings. The board shall meet at least once a quarter.

B. Attendance. All board members shall do their utmost to attend all meetings, keeping in mind that this is a working board. Three (3) consecutive missed meetings without an excused absence could result in a recommendation from the Board for dismissal by the appointing authority.
#3..
- 23 -
C. Special Meeting of the Board. A special meeting of the board may be called by or at the request of the Chairperson, stating purpose of meeting, if not less than 72 hours prior to a meeting.

ARTICLE SEVEN

CONTRACTS, CHECKS, DEPOSITS AND GIFTS
A. Contracts. The board of directors may authorize any officers or offers or agent or agents of the corporation, in addition to the officers so authorized by these bylaws, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or may be confined to specific instances.

B. Checks, Drafts, or Orders. All checks, drafts, or orders for the payment of money, notes, or other evidences of indebtedness issues in the name of the corporation, shall be signed by such officer or officers or agent or agents of the corporation, and in such manner as shall from time to time be determined by resolution of the board of directors. In the absence of such determination by the board of directors, such instruments, shall be signed by the treasurer or an assistant treasurer and countersigned by the president or vice president of the corporation.

C. Deposits. All funds of the corporation shall be deposited from time to time to the credit of the corporation in such banks, trust companies, or other depositaries as the board of directors may select.

D. Gifts. The board of directors may accept on behalf of the corporation any contribution, gift, bequest, or devise for any purpose of the corporation.

ARTICLE EIGHT

BOOKS AND RECORDS
The corporation shall keep correct books and records of account and shall also keep minutes of the proceedings of its board of directors, executive committee and any committees having and exercising any of the authority of the board of directors. All books and records of the corporation may be inspected by any member, or his or her agent or attorney, for any proper purpose at any reasonable time.

ARTICLE NINE

FISCAL YEAR
The fiscal year of the corporation shall end on June 30 of each year. #3..
- 24 -

ARTICLE TEN

WAIVER OF NOTICE
Whenever any notice is required to be given under the provisions of the Articles of Incorporation or the bylaws of the corporation, a waiver of such notice in writing signed by the person or persons entitled to such notice, whether before or after the time stated in the same, shall be deemed equivalent to giving of such notice.

ARTICLE ELEVEN

AMENDMENT OF BYLAWS
These bylaws may be altered, amended, or repealed, and new bylaws may be adopted by a majority of the directors present at any regular meeting or at any special meeting, if at least 30 days' written notice is given of intention to alter, amend, or repeal or to adopt, new bylaws at such meeting, or by vote of the members at any regular special meeting.

ARTICLE TWELVE

EXECUTIVE DIRECTOR
A. Executive Director. The Executive Director shall be selected by a designated committee, with the final approval needed from the nine (9) person board. That person shall be an employee of the corporation.

B. Duties of Executive Director:

A. operate the office of the Modesto Downtown Improvement District, maintaining accurate records of the proceedings of the corporation, the Board of Directors and all committees.

B. send out meeting minutes with agendas and necessary information for upcoming meetings.

C. oversee all committees and do what is necessary to see that they function properly.

D. conduct marketing and promotion efforts for the downtown and downtown businesses.

E. work in coordination with Downtown Modesto Partnership in the interests of the downtown.

F. work as liaison to the City of Modesto on issues that involve the downtown, including parking, buildings, beautification, promotion, etc.

G. work with all members in the boundaries of the district, helping in any way for a wellrounded program.

H. travel out of the Modesto area to collect information that may be useful to the downtown.

I. maintain liaison with various groups and committees concerned with development of downtown.

J. report to the Board of Directors.
#3..
- 25 -
These by-laws are adopted and approved on the date set for below.

DATED:

Executive Director: Board of Directors:

Bart Barringer
Charles Doll
• ' • • -•, . _,,.-
Thomas Lopes
#3..
- 26 -
Boards, Commissions and Committees Application
12/10/2025 10:13 AM (PST)
Advisory Boards and Commissions Application
City of Modesto

In accordance with the requirements of Title II of the Americans with Disabilities Act (“ADA”) of 1990, the Fair Employment & Housing Act (“FEHA”), the Rehabilitation Act of 1973 (as amended), Government Code section 11135 and other applicable codes, the City of Modesto (“City”) will not discriminate against individuals on the basis of disability in the City’s services, programs, or activities. For more information, please visit the City of Modesto website.

Downtown Improvement District Advisory Board
The Downtown Improvement District (DID) Advisory Board formulates recommendations to downtown issues, including the use of revenues raised through a special business license tax, promotion, parking, and alley improvements.

The DID Advisory Board is comprised of 9 Directors which are approved by the standing Advisory Board and appointed by the Mayor with the concurrence of Council. Directors shall operate a business within the DID boundaries and pay the special business license tax.

Read full ByLaws, membership requirements and view current members and vacancies.

Yes

Downtown Improvement District Advisory Board
01/01/2022
01/01/2026
Submission ID: d272573b-0ef7-46db-9d3a-b0bbc992b873 Page 1/6 #3..
- 27 -
Applicant Information & Background
Maria
Apodaca
owner- Mocha Magic Cafe & Bakeshop
Modesto
California
Beyer High School grad 1989
MJC grad 1992
Document Uploads
You may upload a cover letter and resume to outline your educational, work and community service experiences.

Submission ID: d272573b-0ef7-46db-9d3a-b0bbc992b873 Page 2/6 #3..
- 28 -
#3..
- 29 -
Qualifications

current board member, current business owner in Downtown Modesto

current DID board member
Stanislaus County Latino Chamber of Commerce
Modesto Chamber of Commerce
current member, would like to continue to serve my community

Lifelong resident with many business, and family ties to the community. Very involved in local events, enjoy keeping other business owners engaged in Downtown, my business is a great gathering place for community members and leaders which provides me access to feedback from the community, positive and negative.

Submission ID: d272573b-0ef7-46db-9d3a-b0bbc992b873 Page 4/6 #3..
- 30 -
Questionnaire

Other (Please specify)
approached by previous DID director Heidi Savage
Submission ID: d272573b-0ef7-46db-9d3a-b0bbc992b873 Page 5/6 #3..
- 31 -
Signature Agreement
12/10/2025
Application Disclosure
Members of the City Advisory Groups must disclose financial interests, including investments, businesses, and rental properties. Members are required to file Statements of Economic Interest when they assume office, annually, and upon leaving office.

Please confirm that you acknowledge the above responsibilities and understand that your application is a public document and may be disclosed.

Yes, I confirm and acknowledge the above responsibilities and understand that my application is a public document and may be disclosed upon request.

Thank you for providing this information. After clicking ‘Submit’ you will receive a Submission ID number that can be retained for future reference.

You will be updated by our staff as your submission is processed.

Have a great day!
Submission ID: d272573b-0ef7-46db-9d3a-b0bbc992b873 Page 6/6 #3..
- 32 -
Boards, Commissions and Committees Application
12/30/2025 9:12 AM (PST)
Advisory Boards and Commissions Application
City of Modesto

Read full ByLaws, membership requirements and view current members and vacancies. renewing seat
Yes

Yes

Downtown Improvement District Advisory Board
05/10/2022
01/01/2026
Submission ID: 0275d1d1-92a6-43ae-9bd8-cfb378f4b253 Page 1/6 #3..
- 33 -
#3..
- 34 -
#3..
- 35 -
Qualifications

Swingle, Van Egmond & Heitlinger, APC, Modesto, California Shareholder/Litigation Attorney (September 2010-present) Admitted to practice law in California
Admitted to the practice law in the United Stated District Court, Eastern District of California
State Bar of California, Member
Stanislaus County Bar Association, Member

renewing application

Chairperson of the City of Modesto Downtown Improvement District, 2025-present Director of the City of Modesto Downtown Improvement District, 2022-present Board Member of the Modesto Children’s Museum, 2023-present Attorney Coach for the Constitutional Rights Foundation California Mock Trial Competition
Coach & Judge for Stanislaus County Youth Court
As a business owner in downtown, I am heavily invested in the management, development and future of our downtown.

Legal perspective, statute and contract interpretation.

Submission ID: 0275d1d1-92a6-43ae-9bd8-cfb378f4b253 Page 4/6 #3..
- 36 -
Questionnaire

Other (Please specify)
direct referral
Submission ID: 0275d1d1-92a6-43ae-9bd8-cfb378f4b253 Page 5/6 #3..
- 37 -
Signature Agreement
12/30/2025
Application Disclosure
Members of the City Advisory Groups must disclose financial interests, including investments, businesses, and rental properties. Members are required to file Statements of Economic Interest when they assume office, annually, and upon leaving office.

Please confirm that you acknowledge the above responsibilities and understand that your application is a public document and may be disclosed.

Yes, I confirm and acknowledge the above responsibilities and understand that my application is a public document and may be disclosed upon request.

Thank you for providing this information. After clicking ‘Submit’ you will receive a Submission ID number that can be retained for future reference.

You will be updated by our staff as your submission is processed.

Have a great day!
Submission ID: 0275d1d1-92a6-43ae-9bd8-cfb378f4b253 Page 6/6 #3..
- 38 -
Legislative History: Po licy No. 1.008
Motion (234/68), 81-298, Motion 3/17/87, Reso 2009-486, Ord 3598-C.S., Reso 2014-56, Reso 2014-275

CITY OF MODESTO

CITY COUNCIL POLICY
ORIGINAL EFFECTIVE DATE: 07/24/1979
POLICY NUMBER: 1.008
CITY DEPARTMENT: City Manager
SUBJECT: Citizen Advisory Group Appointments
PURPOSE:

It is the duty of the City Council to appoint persons to the various Citizen Advisory Groups (CAG) of the City of Modesto. This policy establishes procedures for appointing persons to the City’s Citizen Advisory Groups.

BACKGROUND:
10/13/2009 updated policy for Boards, Commissions & Committees (now referred to as Citizen Advisory Groups). 01/28/2014 final adoption of Ordinance 3598-C.S. adding Appointments Committee to review and recommend appointments to City Boards, Commissions and Committees. 2/25/2014 eliminated term limits for Downtown Improvement District.

POLICY:

The City Council's Appointments Committee has been charged with evaluating existing advisory groups, making recommendations for dissolution / consolidation / reorganization of groups, and reviewing and making recommendations regarding the appointment or reappointment to all CAGs except the Entertainment Commission which is the responsibility of the Safety and Communities Committee. A listing of all Citizen Advisory Groups is attached as Exhibit 1.

It is the intent of the Appointments Committee to interview all candidates for the Planning Commission and the Board of Zoning Adjustment, including both new applicants and those seeking reappointment. In most other cases, Appointments Committee members will review the applications and make appointments without formal interviews.

PROCESS:

Citizen Advisory Group appointments and reappointments are managed by the Executive Assistant to the Mayor and Council in conjunction with the departmental staff liaisons to the various groups.

CAG members covered by this Policy may complete a maximum of two four-year terms*. A partial term of three or more years is considered a full term. Applications for appointment are kept on file for one year.
#3..
- 39 -
LEGISLATIVE HISTORY: POLICY NO. 1.008
Motion (234/68), 81-298, Motion 3/17/87, Reso 2009-486, Ord 3598-C.S., Reso 2014-56, Reso 2014-275 * Members of the Downtown Improvement District board of Directors have no term limits; however, the selection and appointment of these board members are still subject to the process outlined below. (per MMC Section 6-3.11, Downtown Improvement District Advisory Board appointments go directly to Council for approval.

WHEN VACANCY OCCURS: Responsibility
City Clerk and the Council’s Executive Assistant are provided with an electronic copy of the resignation letter and a Resolution accepting the resignation. Staff Liaison
Post resignation on the agenda for Council acceptance. City Clerk Once Council action is taken to accept the resignation, a letter is prepared from the Mayor thanking the member for their service.

Council Executive
Assistant
Master List of Citizens Advisory Groups and City website updated to reflect vacancy.

Council Executive
Assistant
Applications are submitted and acknowledgements sent as applications come in.

Council Executive
Assistant
MAKING A CAG APPOINTMENT:

Council Executive Assistant is advised of need for appointment. Staff Liaison Committee is scheduled to review and recommend appointments.

Council Executive
Assistant
Notifications are sent to candidates advising of eligibility, opportunity and interview time.

Council Executive
Assistant
Committee convenes and reviews resumes and conducts interviews (Interviews held with Planning Commission/BZA are required, all others are optional). Selection made at next meeting if necessary.

Staff Liaison,
Council Executive
Assistant,
Appointments
Committee
Appointments Committee makes recommendation to Council for appointment.

Appointments
Committee
Council agenda is prepared seeking Council acceptance of Appointments Committee recommendation. Staff Liaison
Letter to applicants from Appointments Committee Chair informing them of the Appointments Committee recommendations and when the City Council will consider the recommendations.

Council Executive
Assistant
Council action taken on Appointments Committee recommendation. City Council Letter to new CAG member prepared for Mayor’s signature and sent to staff liaison along with copy of member’s application.

Council Executive
Assistant
Council resolution, letter from mayor, and other pertinent documents provided to new CAG member. Staff Liaison
#3..
- 40 -
Legislative History: Po licy No. 1.008
Motion (234/68), 81-298, Motion 3/17/87, Reso 2009-486, Ord 3598-C.S., Reso 2014-56, Reso 2014-275 EXHIBIT 1
Citizen Advisory Group Names
Airport Advisory Committee
Board of Building Appeals
Board of Zoning Adjustment
Charter Review Committee
Citizens Advisory Committee on Recycling
Citizens Districting Commission
Citizens Housing & Community Development Committee
Citizen's Salary Setting Commission
City of Modesto Blue Ribbon Commission on Homelessness
Culture Commission
Disabled Access Appeals Board
Downtown Improvement District Advisory Board
Entertainment Commission
Equal Opportunity/Disability Commission
Golf Courses Advisory Committee
Housing Rehabilitation Loan Committee
Human Relations Commission
Landmark Preservation Commission
Local Cable Programming Committee
Planning Commission
Tuolumne River Regional Park Citizens Advisory Committee Youth Commission
#3..
- 41 -
- 1 -
5/12/2026 5:30:00 PM

MODESTO CITY COUNCIL
www.modestogov.com

MINUTES
City of Modesto

CITY COUNCIL MEETING
Chambers, Basement Level
Tenth Street Place, 1010 10th Street
Modesto, California
Tuesday, May 12, 2026 at 5:30 PM
Special City Council – Closed Session Meeting 4:30 p.m.

Roll Call: Present: Councilmembers Alvarez (Arrived at 4:35 p.m.), Escutia-Braaton, Ricci, Williams, Wright, Mayor Zwahlen

Absent: Councilmember Bavaro
Regular City Council Meeting 5:30 p.m.

Roll Call: Present: Councilmembers Alvarez, Escutia-Braaton, Ricci, Williams, Wright, Mayor Zwahlen

Absent: Councilmember Bavaro
Pledge of Allegiance to the Flag
Invocation: Mike Gunnarson, City Ministry Network
City Clerk’s Announcements: None
Declaration of Conflicts of Interest: None
Reports from Closed Session: No reportable action
#4..
- 42 -
- 2 -
5/12/2026 5:30:00 PM

ACKNOWLEDGEMENTS AND PRESENTATIONS

1. Proclamation declaring May 2026 as National Historic Preservation Month. (Funding Source: Not Applicable)
CITY COUNCIL; Breanna Griffin, 209-577-5421, [email protected] ACTION: Mayor Zwahlen presented the proclamation declaring May 2026 as National Historic Preservation Month.

MISCELLANEOUS

2. Consider approving the appointments of Shammy Karim with a partial term ending December 31, 2027 and Christian Simon with a partial term ending December 31, 2028 to the City of Modesto Citizens’ Housing and Community Development Committee. (Funding Source: Not Applicable)
Staff Recommendation:
• Resolution approving the appointments of Shammy Karim with a partial term ending December 31, 2027 and Christian Simon with a partial term ending December 31, 2028 to the City of Modesto Citizens’ Housing and Community Development Committee.

CED; Edgar Garcia, 209-577-5211, [email protected] ACTION: (Escutia-Braaton/Wright; 6/0) Resolution 2026-142 approving the appointments of Shammy Karim with a partial term ending December 31, 2027 and Christian Simon with a partial term ending December 31, 2028 to the City of Modesto Citizens’ Housing and Community Development Committee.

PUBLIC COMMENT PERIOD
• Elizabeth and Joel Sandoval recently learned of a planned cell tower at 1535 Ohio Avenue and objected due to lack of notice and the owner not living on-site. They raised concerns about proximity to homes and potential radio frequency exposure and requested review and action from officials.
• Erica Guerrero stated that she supports the Sandoval family, who oppose the proposed 5G tower near their property due to concerns about its impact on their environment and lifestyle. She noted they did not receive notice of the project and requested that city officials review the situation and work with residents to address their concerns.

City Manager Joe Lopez clarified that the matter regarding the 5G cell tower falls under County jurisdiction rather than the City. He stated the City would forward the information to the appropriate County agencies for follow-up.
• Kevin McClarty reported that a “no left turn” sign on J Street near Needham is poorly positioned and confusing for drivers. He requested review of the signage and suggested a left-turn signal as a possible solution.
#4..
- 43 -
- 3 -
5/12/2026 5:30:00 PM
• Adriana, a resident near the proposed 5G tower on Ohio Avenue, stated she recently became aware of the project and expressed concerns about potential health impacts.

She emphasized the need for community involvement in the decision, noting the property owner does not live on-site.
• Joel Sandoval reported frequent speeding on his street, with cars and motorcycles driving at high speeds. He requested consideration of traffic control measures such as signage, stop controls, or speed bumps to improve safety.

CONSENT ITEMS – ROLL CALL VOTE REQUIRED
ACTION CONSENT ITEMS: 3-20 (Wright/Ricci; 6/0)

CONSENT
Consent

3. Consider approving the Minutes for the May 5, 2026 Council Meeting. (Funding Source: Not Applicable)
• Motion approving the Minutes for the May 5, 2026 Council Meeting.

CITY CLERK; Diane Nayares-Perez, 209-577-5396, [email protected] ACTION: (Wright/Ricci; 6/0) Motion approving the Minutes for the May 5, 2026 Council Meeting.

Consent

4. Consider approving Final Adoption of Ordinance 3813-C.S. approving the Modesto Police Department’s Military Equipment Use Policy (Policy 710) in accordance with CA Assembly Bill 481, and approving the purchase of additional equipment that qualifies as “Military Equipment” in Fiscal Year 2026-2027 and rescinding Ordinance No. 3794-C.S. (Funding Source: Not Applicable)
• Motion approving Final Adoption of Ordinance 3813-C.S. approving the Modesto Police Department’s Military Equipment Use Policy (Policy 710) in accordance with CA Assembly Bill 481, and approving the purchase of additional equipment that qualifies as “Military Equipment” in Fiscal Year 2026-2027 and rescinding Ordinance No. 3794-C.S.

CITY CLERK; Diane Nayares-Perez, 209-577-5396, [email protected] ACTION: (Wright/Ricci; 6/0) Motion approving Final Adoption of Ordinance 3813- C.S. approving the Modesto Police Department’s Military Equipment Use Policy (Policy 710) in accordance with CA Assembly Bill 481, and approving the purchase of additional equipment that qualifies as “Military Equipment” in Fiscal Year 2026-2027 and rescinding Ordinance No. 3794-C.S.

Consent

5. Consider the Draft Budget as submitted by the City Manager with the Mayor’s Final Budget Modifications and combining the documents into the Proposed Budget for #4..
- 44 -
- 4 -
5/12/2026 5:30:00 PM
Fiscal Year 2026-27 and noticing a public hearing to be held on June 2, 2026, for Council’s consideration and adoption of the Fiscal Year 2026-27 Proposed Budget and related actions. (Funding Source: Various Funds)
• Resolution combining the City Manager’s Draft Budget and the Mayor’s Final Budget Modifications into the Proposed Budget for Fiscal Year 2026-27 and noticing a public hearing to be held on June 2, 2026, for Council’s consideration and adoption of the Fiscal Year 2026-27 Proposed Budget and related actions.

BUDGET; Stephan Christensen, 209-577-5390, [email protected] ACTION: (Wright/Ricci; 6/0) Resolution 2026-143 combining the City Manager’s Draft Budget and the Mayor’s Final Budget Modifications into the Proposed Budget for Fiscal Year 2026-27 and noticing a public hearing to be held on June 2, 2026, for Council’s consideration and adoption of the Fiscal Year 2026-27 Proposed Budget and related actions.

Consent

6. Consider accepting the Community Cleanup and Employment Pathway (CCEP) grant in the amount of $575,000 to expand the Modesto Mo’Beautiful Initiative. (Funding Source: Clean California Funds)
• Resolution accepting the Community Cleanup and Employment Pathway (CCEP) grant in the amount of $575,000 to expand the Modesto Mo’Beautiful Initiative, and authorizing the City Manager, or his designee, to execute the agreement.
• Resolution amending the Fiscal Year 2025-26 Annual Operating and NonCapital Project fund budgets to establish a project as well as the necessary revenue, expenditures, and transfers in the amount of $575,000 to appropriate funds for the Community Cleanup and Employment Pathway (CCEP) Grant, and authorizing the City Manager, to take the necessary steps to implement the provisions of this resolution.

CED; Edgar Garcia, 209-571-5101, [email protected] ACTION: (Wright/Ricci; 6/0) Resolution 2026-144 accepting the Community Cleanup and Employment Pathway (CCEP) grant in the amount of $575,000 to expand the Modesto Mo’Beautiful Initiative, and authorizing the City Manager, or his designee, to execute the agreement.

ACTION: (Wright/Ricci; 6/0) Resolution 2026-145 amending the Fiscal Year 2025- 26 Annual Operating and Non-Capital Project fund budgets to establish a project as well as the necessary revenue, expenditures, and transfers in the amount of $575,000 to appropriate funds for the Community Cleanup and Employment Pathway (CCEP) Grant, and authorizing the City Manager, to take the necessary steps to implement the provisions of this resolution.

Consent
#4..
- 45 -
- 5 -
5/12/2026 5:30:00 PM

7. Consider accepting the Regional Water Recycling Facility – Jennings Campus Corrosion Control Measures Project as complete, releasing securities, releasing payments totaling $3,938,967 to TCB Industrial Inc., of Modesto, CA, and authorizing the City Clerk to file a Notice of Completion. (Funding Source: Wastewater Fund) • Resolution accepting the Regional Water Recycling Facility – Jennings Campus Corrosion Control Measures Project as complete, releasing securities, releasing payments totaling $3,938,967 to TCB Industrial Inc., of Modesto, CA, and authorizing the City Clerk to file a Notice of Completion.

ENGINEERING SERVICES; Peter Kambel, 209-577-5444, [email protected] ACTION: (Wright/Ricci; 6/0) Resolution 2026-146 accepting the Regional Water Recycling Facility – Jennings Campus Corrosion Control Measures Project as complete, releasing securities, releasing payments totaling $3,938,967 to TCB Industrial Inc., of Modesto, CA, and authorizing the City Clerk to file a Notice of Completion.

Consent

8. Consider accepting the Sisk Road Signal Coordination CML 5059 (264) Project as complete, releasing securities, releasing payments totaling $769,144 to Bear Electrical Solutions, LLC., of Alviso, CA, and authorizing the City Clerk to file a Notice of Completion. (Funding Source: Congestion Mitigation and Air Quality and Measure L Funds)
• Resolution accepting the Sisk Road Signal Coordination CML 5059 (264) Project as complete, releasing securities, releasing payments totaling $769,144 to Bear Electrical Solutions, LLC., of Alviso, CA, and authorizing the City Clerk to file a Notice of Completion.

ENGINEERING SERVICES; Peter Kambel, 209-577-5444, [email protected] ACTION: (Wright/Ricci; 6/0) Resolution 2026-147 accepting the Sisk Road Signal Coordination CML 5059 (264) Project as complete, releasing securities, releasing payments totaling $769,144 to Bear Electrical Solutions, LLC., of Alviso, CA, and authorizing the City Clerk to file a Notice of Completion.

Consent

9. Consider accepting the Rebid Carpenter Road Area Soccer Complex - Phase 2 Project as complete, releasing securities, releasing payments totaling $1,294,183 to Frontline General Engineering Construction, Inc. of Tracy, CA, and authorizing the City Clerk to file a Notice of Completion. (Funding Source: Various Funds) • Resolution accepting Rebid Carpenter Road Area Soccer Complex - Phase 2 Project as complete, releasing securities, releasing payments totaling $1,294,183 to Frontline General Engineering Construction, Inc. of Tracy, CA, and authorizing the City Clerk to file a Notice of Completion.

ENGINEERING SERVICES; Peter Kambel, 209-577-5444, [email protected] ACTION: (Wright/Ricci; 6/0) Resolution 2026-148 accepting Rebid Carpenter Road Area Soccer Complex - Phase 2 Project as complete, releasing securities, releasing #4..
- 46 -
- 6 -
5/12/2026 5:30:00 PM
payments totaling $1,294,183 to Frontline General Engineering Construction, Inc. of Tracy, CA, and authorizing the City Clerk to file a Notice of Completion.

Consent

10. Consider approving a Sixth Amendment to the Agreement with Property Specialists, Inc., dba CPSI, now known as Interwest Consulting Group, Inc., for additional rightof-way services for the State Route 132 West Freeway/Expressway - Phase 1 Project, increasing the agreement amount by $199,801, plus $19,980 additional services, if needed, for a total increase of $219,781 and a total not to exceed amount of $4,178,975. (Funding Source: Streets Capital Facility Fees) • Resolution approving a Sixth Amendment to the Agreement with Property Specialists, Inc., dba CPSI, now known as Interwest Consulting Group, Inc., for additional right-of-way services for the State Route 132 West Freeway/Expressway - Phase 1 Project, increasing the agreement amount by $199,801, plus $19,980 additional services, if needed, for a total increase of $219,781 from $3,959,194 for a total amount not to exceed $4,178,975, and authorizing the City Manager, or his designee to execute the Sixth Amendment to Agreement.

ENGINEERING SERVICES; Toby Wells, 209-571-5542, [email protected] ACTION: (Wright/Ricci; 6/0) Resolution 2026-149 approving a Sixth Amendment to the Agreement with Property Specialists, Inc., dba CPSI, now known as Interwest Consulting Group, Inc., for additional right-of-way services for the State Route 132 West Freeway/Expressway - Phase 1 Project, increasing the agreement amount by $199,801, plus $19,980 additional services, if needed, for a total increase of $219,781 from $3,959,194 for a total amount not to exceed $4,178,975, and authorizing the City Manager, or his designee to execute the Sixth Amendment to Agreement.

Consent

11. Consider approving the Auditors’ Reports and Schedule of Measure L Program Revenues and Expenditures for Fiscal Year Ended June 30, 2025. (Funding Source:

Not Applicable)
• Resolution approving the Fiscal Year 2024-2025 Auditor’s Report on Compliance of the Measure L: Local Roads First Transportation Funding Measure.

FINANCE DEPARTMENT; Maria Garnica, 209-577-5249,
[email protected]
ACTION: (Wright/Ricci; 6/0) Resolution 2026-150 approving the Fiscal Year 2024- 2025 Auditor’s Report on Compliance of the Measure L: Local Roads First Transportation Funding Measure.

Consent

12. Consider approving Agreements for the furnishing of Commercial Cannabis Inspection and Financial Audit Services to Hinderliter, De Llamas and Associates (HdL) Companies, Brea, CA and Booth Management Consulting, LLC, Columbia, MD for a #4..
- 47 -
- 7 -
5/12/2026 5:30:00 PM
total combined amount not to exceed $924,475 over five years. (Funding Source:

Cannabis Permit Fee)
• Resolution approving the Award of Proposal and Agreements for the furnishing of Commercial Cannabis Inspection and Financial Audit Services to Hinderliter, De Llamas and Associates (HdL) Companies and Booth Management Consulting, LLC for a two-year agreement with three one-year extension options, for an estimated combined annual amount of $184,895, and a total combined amount not to exceed $924,475 over five years; authorizing the Director of Finance to adjust agreement totals between vendors based on consultant’s availability and department’s needs; and authorizing the City Manager, or his designee, to execute the Agreements.

FINANCE DEPARTMENT; Dianne Love, 209-571-5164, [email protected] ACTION: (Wright/Ricci; 6/0) Resolution 2026-151 approving the Award of Proposal and Agreements for the furnishing of Commercial Cannabis Inspection and Financial Audit Services to Hinderliter, De Llamas and Associates (HdL) Companies and Booth Management Consulting, LLC for a two-year agreement with three one-year extension options, for an estimated combined annual amount of $184,895, and a total combined amount not to exceed $924,475 over five years; authorizing the Director of Finance to adjust agreement totals between vendors based on consultant’s availability and department’s needs; and authorizing the City Manager, or his designee, to execute the Agreements.

Consent

13. Consider approving an Agreement for the furnishing of Document Storage Services to Pacific Storage Company, Modesto, CA for a total amount not to exceed $330,805 over five years. (Funding Source: Various Funds)
• Resolution approving the Award of Bid and Agreement for the furnishing of Document Storage Services to Pacific Storage Company, Modesto, CA for two year agreement with three one-year extension options, for an estimated annual amount of $66,161 and a total amount not to exceed $330,805 over five years; and authorizing the City Manager, or his designee, to execute the Agreement.

FINANCE DEPARTMENT; Dianne Love, 209-571-5164, [email protected] ACTION: (Wright/Ricci; 6/0) Resolution 2026-152 approving the Award of Bid and Agreement for the furnishing of Document Storage Services to Pacific Storage Company, Modesto, CA for two year agreement with three one-year extension options, for an estimated annual amount of $66,161 and a total amount not to exceed $330,805 over five years; and authorizing the City Manager, or his designee, to execute the Agreement.

Consent

14. Consider approving the purchase for six Fleet Additions and six Fleet Replacements in a total amount not to exceed $3,924,616. (Funding Source: Measure H and Fleet Replacement Fund)
#4..
- 48 -
- 8 -
5/12/2026 5:30:00 PM
• Resolution approving the Competitive Bidding Process from Sourcewell through State of Minnesota to Nixon-Egli Equipment Company, Tracy, CA for the purchase of one Link Belt Crane for an amount not to exceed $1,826,033; and authorizing the Director of Finance, or her designee, to issue the Purchase Order; and authorizing the Director of Finance or her designee to execute any Change Orders not to exceed 15% of the total purchase price. • Resolution approving the Competitive Bidding Process from Sourcewell through State of Minnesota to Altec Industries, Birmingham, AL for the purchase four Articulating Telescopic Aerial Devices for an amount not to exceed $1,254,341; and authorizing the Director of Finance, or her designee, to issue the Purchase Order; and authorizing the Director of Finance or her designee to execute any Change Orders not to exceed 15% of the total purchase price.
• Resolution approving the Competitive Bidding Process from Sourcewell through State of Minnesota to Versa Lift a Time Manufacturing Company, Waco, TX for the purchase of one Telescopic Aerial Platform Lift Truck for an amount not to exceed $211,427 plus $16,770 in taxes and fees to be paid directly to the State; and authorizing the Director of Finance, or her designee, to issue the Purchase Order; and authorizing the Director of Finance, or her designee to execute any Change Orders not to exceed 15% of the total purchase price.
• Resolution approving the Competitive Bidding Process from the State of California to Winner Chevrolet, Sacramento, CA for the purchase for six Chevrolet Silverado 3500 Regular Cab 4x2 Trucks for an amount not to exceed $616,045; and authorizing the Director of Finance, or her designee, to issue the Purchase Order; and authorizing the Director of Finance or her designee to execute any Change Orders not to exceed 15% of the total purchase price.

FINANCE DEPARTMENT; Dianne Love, 209-571-5164, [email protected] ACTION: (Wright/Ricci; 6/0) Resolution 2026-153 approving the Competitive Bidding Process from Sourcewell through State of Minnesota to Nixon-Egli Equipment Company, Tracy, CA for the purchase of one Link Belt Crane for an amount not to exceed $1,826,033; and authorizing the Director of Finance, or her designee, to issue the Purchase Order; and authorizing the Director of Finance or her designee to execute any Change Orders not to exceed 15% of the total purchase price.

ACTION: (Wright/Ricci; 6/0) Resolution 2026-154 approving the Competitive Bidding Process from Sourcewell through State of Minnesota to Altec Industries, Birmingham, AL for the purchase four Articulating Telescopic Aerial Devices for an amount not to exceed $1,254,341; and authorizing the Director of Finance, or her designee, to issue the Purchase Order; and authorizing the Director of Finance or her designee to execute any Change Orders not to exceed 15% of the total purchase price.

ACTION: (Wright/Ricci; 6/0) Resolution 2026-155 approving the Competitive Bidding Process from Sourcewell through State of Minnesota to Versa Lift a Time Manufacturing Company, Waco, TX for the purchase of one Telescopic Aerial #4..
- 49 -
- 9 -
5/12/2026 5:30:00 PM
Platform Lift Truck for an amount not to exceed $211,427 plus $16,770 in taxes and fees to be paid directly to the State; and authorizing the Director of Finance, or her designee, to issue the Purchase Order; and authorizing the Director of Finance, or her designee to execute any Change Orders not to exceed 15% of the total purchase price.

ACTION: (Wright/Ricci; 6/0) Resolution 2026-156 approving the Competitive Bidding Process from the State of California to Winner Chevrolet, Sacramento, CA for the purchase for six Chevrolet Silverado 3500 Regular Cab 4x2 Trucks for an amount not to exceed $616,045; and authorizing the Director of Finance, or her designee, to issue the Purchase Order; and authorizing the Director of Finance or her designee to execute any Change Orders not to exceed 15% of the total purchase price.

Consent

15. Consider approving an Addendum to the Memorandum of Understanding (MOU) with Yosemite Community College District (YCCD) for oversight of the Fire and Emergency Medical Services (EMS) Public Safety Program, to support YCCD’s establishment of a Paramedic Program (Program) and include the provision of a Paramedic Subject Matter Expert to assist in the development and implementation of the Program. (Funding Source: General Fund)
• Resolution approving an Addendum to the Memorandum of Understanding (MOU) with Yosemite Community College District (YCCD) for oversight of the Fire and Emergency Medical Services (EMS) Public Safety Program, to support YCCD’s establishment of a Paramedic Program (Program) and include the provision of a Paramedic Subject Matter Expert to assist in the development and implementation of the Program, and authorizing the City Manager, or his designee, to execute the Addendum.

FIRE DEPARTMENT; Shanon Evans, 209-572-9590, [email protected] ACTION: (Wright/Ricci; 6/0) Resolution 2026-157 approving an Addendum to the Memorandum of Understanding (MOU) with Yosemite Community College District (YCCD) for oversight of the Fire and Emergency Medical Services (EMS) Public Safety Program, to support YCCD’s establishment of a Paramedic Program (Program) and include the provision of a Paramedic Subject Matter Expert to assist in the development and implementation of the Program, and authorizing the City Manager, or his designee, to execute the Addendum.

Consent

16. Consider approving a First Amendment to the Agreement with Final Cut Media, Modesto, CA for Education and Government Broadcast Production Services increasing the Agreement amount by $124,001 through the duration of the Agreement and extending the term of the Agreement from June 30, 2026, to June 30, 2027. (Funding Source: Education and Government Cable Fund)
• Resolution approving a First Amendment to the Agreement with Final Cut Media, Modesto, CA for Educational and Government Broadcast Production Services increasing by $124,001, to a new estimated annual amount of $233,097, and a new total amount not to exceed $1,708,702 through the term of #4..
- 50 -
- 10 -
5/12/2026 5:30:00 PM
the Agreement, and extending the term of the Agreement from June 30,2026, to June 30, 2027; and authorizing the City Manager, or his designee, to execute the Amendment to the Agreement.

IT; Dameon Booker, 209-447-1088, [email protected] ACTION: (Wright/Ricci; 6/0) Resolution 2026-158 approving a First Amendment to the Agreement with Final Cut Media, Modesto, CA for Educational and Government Broadcast Production Services increasing by $124,001, to a new estimated annual amount of $233,097, and a new total amount not to exceed $1,708,702 through the term of the Agreement, and extending the term of the Agreement from June 30,2026, to June 30, 2027; and authorizing the City Manager, or his designee, to execute the Amendment to the Agreement.

Consent

17. Consider approving the Resolution of Intent to consider Franchise Agreements with Gilton Solid Waste and Bertolotti Modesto Disposal for Solid Waste Collection Services, and setting a public hearing on June 9, 2026, at 5:30 p.m. (Funding Source:

Not Applicable)
• Resolution approving Intent to consider Franchise Agreements with Gilton Solid Waste and Bertolotti Modesto Disposal for Solid Waste Collection Services, and setting a public hearing on June 9, 2026, at 5:30 p.m.

PUBLIC WORKS; Jody Strait, 209-577-6416, [email protected] ACTION: (Wright/Ricci; 6/0) Resolution 2026-159 approving Intent to consider Franchise Agreements with Gilton Solid Waste and Bertolotti Modesto Disposal for Solid Waste Collection Services, and setting a public hearing on June 9, 2026, at 5:30 p.m.

Consent

18. Consider approving the Agreement for Rock Well Rejuvenation Services to Fox Loomis, Inc., Sacramento, CA, for a total amount not to exceed $2,871,991 over five years. (Funding Source: Storm Drain Fund)
• Resolution approving the Award of Bid and Agreement for Rock Well Rejuvenation services to Fox Loomis, Inc., Sacramento, CA, for a two year Agreement with three one-year extension options, for an estimated annual amount of $574,398 and a total amount not to exceed $2,871,991 over five years; and authorizing the City Manager, or his designee, to execute the Agreement.

UTILITIES; Jeff Daniels, 209-577-6255, [email protected] ACTION: (Wright/Ricci; 6/0) Resolution 2026-160 approving the Award of Bid and Agreement for Rock Well Rejuvenation services to Fox Loomis, Inc., Sacramento, CA, for a two year Agreement with three one-year extension options, for an estimated annual amount of $574,398 and a total amount not to exceed $2,871,991 over five years; and authorizing the City Manager, or his designee, to execute the Agreement. #4..
- 51 -
- 11 -
5/12/2026 5:30:00 PM
Consent

19. Consider approving the Agreement for Sewer Root Control Services to Duke’s Root Control, Inc., Syracuse, NY, for a total amount not to exceed $747,601 over five years. (Funding Source: Sewer Operations Fund)
• Resolution approving the Award of Bid and Agreement for Sewer Root Control services to Duke’s Root Control, Inc., Syracuse, NY, for a two year agreement with three one-year extension options, for an estimated annual amount of $149,521 and a total amount not to exceed $747,601 over five years; and authorizing the City Manager, or his designee, to execute the Agreement.

UTILITIES; Jeff Daniels, 209-577-6255, [email protected] ACTION: (Wright/Ricci; 6/0) Resolution 2026-161 approving the Award of Bid and Agreement for Sewer Root Control services to Duke’s Root Control, Inc., Syracuse, NY, for a two year agreement with three one-year extension options, for an estimated annual amount of $149,521 and a total amount not to exceed $747,601 over five years; and authorizing the City Manager, or his designee, to execute the Agreement.

Consent

20. Consider approving an Engineering Services Agreement with Woodard & Curran, of Sacramento, CA, for the preparation of the Groundwater Recharge and Storage Feasibility Study - Phase II, in the amount of $142,040, plus $7,110 in Additional Services, if needed, for an Agreement total not to exceed $149,150. (Funding Source:

Water Fund)
• Resolution approving an Engineering Services Agreement with Woodard & Curran, of Sacramento, CA, for the preparation of the Groundwater Recharge and Storage Feasibility Study - Phase II, in the amount of $142,040, plus $7,110 in Additional Services, if needed, for an Agreement total not to exceed $149,150 and authorizing the City Manager, or his designee, to execute the Agreement.

UTILITIES; Jim Alves, 209-571-5557, [email protected] ACTION: (Wright/Ricci; 6/0) Resolution 2026-162 approving an Engineering Services Agreement with Woodard & Curran, of Sacramento, CA, for the preparation of the Groundwater Recharge and Storage Feasibility Study - Phase II, in the amount of $142,040, plus $7,110 in Additional Services, if needed, for an Agreement total not to exceed $149,150 and authorizing the City Manager, or his designee, to execute the Agreement.

COUNCIL COMMENTS & REPORTS
• Councilmember Alvarez acknowledged public concerns about the proposed cell tower and noted it is under County jurisdiction. He offered to help connect residents with County Supervisor Terry Withrow to address the issue.
• Vice-Mayor Williams shared updates on recent community events, including a graduation program for students, Kids Day fundraising for the Salvation Army, a green #4..
- 52 -
- 12 -
5/12/2026 5:30:00 PM
business ribbon cutting, Peace Officers Memorial, and Public Service Day activities recognizing City employees. He also noted the recent passing of community member Ron Immerson and extended condolences to his family.
• Councilmember Ricci highlighted the upcoming Modesto Roadsters baseball exhibition game and opening day, noting low ticket prices and reduced concession costs. He also called for a stronger and better-funded spay and neuter program through Stanislaus Animal Services to address the local animal population issue. He concluded by praising the Parks Department for recent park improvements and ongoing recreation projects across the city.
• Councilmember Escutia-Braaton reported returning from an international medical mission trip with her family. She also recognized her husband on their anniversary and thanked her family for their support of her public service work. • Councilmember Alvarez clarified his participation in the Improve Your Tomorrow graduation ceremony, a nonprofit supporting college and career pathways for Black and Brown students in the Central Valley. He noted that approximately 40 students from Modesto City Schools participated and acknowledged the organization’s work and strong family turnout.
• Mayor Zwahlen welcomed families and children attending the meeting and encouraged continued civic participation. She reported on collaboration meetings between the City and Modesto City Schools, as well as a tour of the Police Department’s real-time crime center and Fire Station 1 with Congressman Adam Gray, noting related federal funding support. She also highlighted a “Drive the Vote” event reenacting a historic suffrageera journey supporting the 19th Amendment. She shared remarks about the event’s lead participant, a retired police chief, and emphasized the importance of youth engagement and community service.

CITY MANAGER COMMENTS & REPORTS
None

UNFINISHED BUSINESS

21. Consider approving the acceptance of the Homekey+ Program award amount of $18,689,375, the Stanislaus County Community Services Agency (CSA) award amount of $922,837 in Homeless Housing Assistance and Prevention (HHAP), the Behavioral Health and Recovery Services (BHRS) award amount of $500,000 and the approval of the grant agreements and a Community Development Block Grant (CDBG) loan amount of $3,007,163 to El Capitan Homekey LP. (Funding Source: Various Sources) • Resolution accepting the Homekey+ award in the amount of $18,689,375 and approving the Homekey Regulatory Agreement authorizing the City Manager or his designee to negotiate and execute an agreement with El Capitan Homekey LP for the development of 1121 Needham Street.
#4..
- 53 -
- 13 -
5/12/2026 5:30:00 PM
• Resolution approving a Community Development Block Grant loan to El Capitan Homekey LP for a total not to exceed $3,007,163, and $350,000 in activity delivery, and authorizing the City Manager or his designee to negotiate and execute an agreement with El Capitan Homekey LP for the development of 1121 Needham Street.
• Resolution approving an agreement with Stanislaus County Community Services Agency (CSA) for the acceptance of Homeless Housing Assistance and Prevention Program (HHAP) funding in the amount of $922,837 and to issue a grant the amount of $922,837 to El Capitan Homekey LP and authorizing the city manager or his designee to negotiate and execute an agreement with El Capitan Homekey LP for the development of the 1121 Needham Street.
• Resolution approving an agreement with Stanislaus County Behavioral Health and Recovery Services (BHRS) for the acceptance of funding in the amount of $500,000 and to issue a grant the amount of $500,000 to El Capitan Homekey LP and authorizing the City Manager or his designee to negotiate and execute an agreement with El Capitan Homekey LP for the development of 1121 Needham Street.
• Resolution amending the Fiscal Year 2025-26 annual operating and non-capital project fund budgets to establish the revenue, expenditures, and transfers for project #101644, fund 1346 in the amount of $23,119,375 to appropriate the Community Development Block Grant, Homeless Housing Assistance and Prevention Program (HHAP), and Behavioral Health and Recovery Services (BHRS) funds for the development of the 1121 Needham Street, and authorizing the City Manager or his designee to take the necessary steps to implement the provisions of this Resolution.

CED; Patty Estrada, 209-577-5527, [email protected] ACTION: (Wright/Alvarez; 6/0) Resolution 2026-163 accepting the Homekey+ award in the amount of $18,689,375 and approving the Homekey Regulatory Agreement authorizing the City Manager or his designee to negotiate and execute an agreement with El Capitan Homekey LP for the development of 1121 Needham Street.

ACTION: (Wright/Alvarez; 6/0) Resolution 2026-164 approving a Community Development Block Grant loan to El Capitan Homekey LP for a total not to exceed $3,007,163, and $350,000 in activity delivery, and authorizing the City Manager or his designee to negotiate and execute an agreement with El Capitan Homekey LP for the development of 1121 Needham Street.

ACTION: (Wright/Alvarez; 6/0) Resolution 2026-165 approving an agreement with Stanislaus County Community Services Agency (CSA) for the acceptance of Homeless Housing Assistance and Prevention Program (HHAP) funding in the amount of $922,837 and to issue a grant the amount of $922,837 to El Capitan Homekey LP and authorizing the city manager or his designee to negotiate and execute an agreement with El Capitan Homekey LP for the development of the 1121 Needham Street. #4..
- 54 -
- 14 -
5/12/2026 5:30:00 PM
ACTION: (Wright/Alvarez; 6/0) Resolution 2026-166 approving an agreement with Stanislaus County Behavioral Health and Recovery Services (BHRS) for the acceptance of funding in the amount of $500,000 and to issue a grant the amount of $500,000 to El Capitan Homekey LP and authorizing the City Manager or his designee to negotiate and execute an agreement with El Capitan Homekey LP for the development of 1121 Needham Street.

ACTION: (Wright/Alvarez; 6/0) Resolution 2026-167 amending the Fiscal Year 2025-26 annual operating and non-capital project fund budgets to establish the revenue, expenditures, and transfers for project #101644, fund 1346 in the amount of $23,119,375 to appropriate the Community Development Block Grant, Homeless Housing Assistance and Prevention Program (HHAP), and Behavioral Health and Recovery Services (BHRS) funds for the development of the 1121 Needham Street, and authorizing the City Manager or his designee to take the necessary steps to implement the provisions of this Resolution.

HEARINGS
Published in the Modesto Bee on April 19, 2026.

22. Hearing to consider an Ordinance amending Compensation for the Mayor and Councilmembers’ Salaries pursuant to the Citizens’ Salary Setting Commission’s Final Recommendations pursuant to Modesto Charter Section 703. (Funding Source: General Fund)
• Motion Introducing and waiving the first reading of an Ordinance amending Sections 2-1.24 “Compensation of Mayor,” and 2-1.26 “Compensation of City Councilmembers,” of Chapter 1, “City Council Organization and Procedure,” of Title 2, “Administration,” of the Modesto Municipal Code, to increase the salaries of the Mayor and City Councilmembers pursuant to Charter Section 703 and the recommendations of the Citizen’s Salary Setting Commission of 2026.

CITY ATTORNEY; Jose Sanchez, 209-577-5284, [email protected] ACTION: (Wright/Alvarez; 6/0) Motion introducing and waiving the first reading of an Ordinance 3814-C.S. amending Sections 2-1.24 “Compensation of Mayor,” and 2-

1.26 “Compensation of City Councilmembers,” of Chapter 1, “City Council Organization and Procedure,” of Title 2, “Administration,” of the Modesto Municipal Code, to increase the salaries of the Mayor and City Councilmembers pursuant to Charter Section 703 and the recommendations of the Citizen’s Salary Setting Commission of 2026.

Published in the Modesto Bee on April 17, 2026 and April 24, 2026.

23. Hearing to consider approving Final Adoption of Ordinances repealing and replacing Chapters 1, 2, 3, 7, and 11 of Title 9 of the Modesto Municipal Code to adopt by reference, the 2025 California Building, Plumbing, Electrical, Mechanical, and Existing Building Codes. (Funding Source: General Fund, Building Permit Fees) #4..
- 55 -
- 15 -
5/12/2026 5:30:00 PM
• Motion approving final adoption of Ordinance 3808-C.S. repealing and replacing Chapter 1 ”Building Code” of Title 9, “Building Regulations” of the Modesto Municipal Code to adopt by reference the 2025 California Building Code.
• Motion approving final adoption of Ordinance 3809-C.S. repealing and replacing Chapter 2 “Plumbing Code” of Title 9 “Building Regulations” of the Modesto Municipal Code to adopt by reference the 2025 California Plumbing Code.
• Motion approving final adoption of Ordinance 3810-C.S. repealing and replacing Chapter 3 “Electrical Code” of Title 9 “Building Regulations” of the Modesto Municipal Code to adopt by reference the 2025 California Electrical Code.
• Motion approving final adoption of Ordinance 3811-C.S. repealing and replacing Chapter 7 “Mechanical Code” of Title 9 “Building Regulations” of the Modesto Municipal Code to adopt by reference the 2025 California Mechanical Code.
• Motion approving final adoption of Ordinance 3812-C.S. repealing and replacing Chapter 11 “Existing Building Code” of Title 9 “Building Regulations” of the Modesto Municipal Code to adopt by reference the 2025 California Existing Building Code.

CED; Oscar Diaz, 209-571-5885, [email protected]
ACTION: (Williams/Escutia-Braaton; 6/0) Motion approving final adoption of Ordinance 3808-C.S. repealing and replacing Chapter 1 ”Building Code” of Title 9, “Building Regulations” of the Modesto Municipal Code to adopt by reference the 2025 California Building Code.

ACTION: (Wright/Williams; 6/0) Motion approving final adoption of Ordinance 3809-C.S. repealing and replacing Chapter 2 “Plumbing Code” of Title 9 “Building Regulations” of the Modesto Municipal Code to adopt by reference the 2025 California Plumbing Code.

ACTION: (Wright/Williams; 6/0) Motion approving final adoption of Ordinance 3810-C.S. repealing and replacing Chapter 3 “Electrical Code” of Title 9 “Building Regulations” of the Modesto Municipal Code to adopt by reference the 2025 California Electrical Code.

ACTION: (Wright/Williams; 6/0) Motion approving final adoption of Ordinance 3811-C.S. repealing and replacing Chapter 7 “Mechanical Code” of Title 9 “Building Regulations” of the Modesto Municipal Code to adopt by reference the 2025 California Mechanical Code.

ACTION: (Wright/Williams; 6/0) Motion approving final adoption of Ordinance 3812-C.S. repealing and replacing Chapter 11 “Existing Building Code” of Title 9 “Building Regulations” of the Modesto Municipal Code to adopt by reference the 2025 California Existing Building Code.
#4..
- 56 -
- 16 -
5/12/2026 5:30:00 PM
Published in the Modesto Bee on April 8, 2026.

24. Hearing to consider approving the 2026-2027 Annual Action Plan and the acceptance of the 2026-2027 Annual HUD Allocation in the amount of $2,816,391. (Funding Source: HUD Entitlement Funding)
• Resolution approving the Program Year 2026-2027 Annual Action Plan, accepting U.S. Department of Housing and Urban Development (HUD) program funds awarded through the Program Year 2026-2027 Annual Action Plan as required by HUD and authorizing the City Manager, or his designee, to negotiate and execute any related program agreements, contracts, or other documentation required for implementation.

CED; Meggan Clifford, 209-577-5311, [email protected] ACTION: (Escutia-Braaton/Wright; 6/0) Resolution 2026-168 approving the Program Year 2026-2027 Annual Action Plan, accepting U.S. Department of Housing and Urban Development (HUD) program funds awarded through the Program Year 2026-2027 Annual Action Plan as required by HUD and authorizing the City Manager, or his designee, to negotiate and execute any related program agreements, contracts, or other documentation required for implementation.

Published in the Modesto Bee on May 1, 2026.

25. Hearing to consider receiving an Informational Report of vacancies, recruitment, and retention efforts to comply with Assembly Bill 2561. (Funding Source: Not Applicable)
• Motion accepting the Informational Report on vacancy rates, recruitment, and retention efforts to comply with Assembly Bill 2561.

HUMAN RESOURCES; Christina Alger, 209-571-5126, [email protected] ACTION: (Wright/Ricci; 6/0) Motion accepting the Informational Report on vacancy rates, recruitment, and retention efforts to comply with Assembly Bill 2561.

MATTERS TOO LATE FOR THE AGENDA
None

ADJOURNMENT
This meeting adjourned at 7:14 p.m.

Attest:____________________________
Diane Nayares-Perez, City Clerk
#4..
- 57 -
- 1 - ORDINANCE NO. 3814-C.S.

EFFECTIVE DATE: July 2, 2026
ORDINANCE NO. 3814-C.S.

ORDINANCE AMENDING SECTIONS 2-1.24 “COMPENSATION OF MAYOR,” AND 2-1.26 “COMPENSATION OF CITY COUNCILMEMBERS,” OF
CHAPTER 1, “CITY COUNCIL ORGANIZATION AND PROCEDURE,” OF TITLE 2, “ADMINISTRATION,” OF THE MODESTO MUNICIPAL CODE, TO

INCREASE THE SALARIES OF THE MAYOR AND CITY COUNCILMEMBERS PURSUANT TO CHARTER SECTION 703 AND THE RECOMMENDATIONS OF THE CITIZEN’S SALARY SETTING COMMISSION OF 2026
WHEREAS, on February 5, 2008, voters approved Measures M, titled “Accountability in City Hall,” which amended Modesto City Chater Section 703; and WHEREAS, Charter Section 703 sets out the processes for establishing the salaries for the Mayor and Councilmembers. Section 703(b) requires the formation of a Citizens’ Salary Setting Commission (“Commission”) whose function is to recommend the compensation for the Mayor and Members of the Council; and
WHEREAS, according to the Charter, the Commission shall meet between March 1st and April 30th of every even-numbered year and make any salary recommendation to the Council by April 30th; and
WHEREAS, compensation for the Mayor and Councilmembers was last adjusted on May 14th, 2024 by Ordinance No. 3781-C.S.; and WHEREAS, pursuant to Charter Section 703(b), the Council appointed five members to serve on the Commission; and
WHEREAS, the Commission held eight (8) public meetings during the months of March and April, which included two (2) noticed public hearings on April 6, 2026 and April 13, 2026 to discuss possible salary recommendations for the Mayor and Councilmembers. All Commission meetings were open to the public; and
#5..
- 58 -
- 2 - ORDINANCE NO. 3814-C.S.

EFFECTIVE DATE: July 2, 2026
WHEREAS, the Commission reviewed information related to the duties of the Mayor and Councilmembers, compensation data from other cities, including cities in the surrounding area, and received comments from the public; and WHEREAS, Charter Section 703(c) establishes salary limitations for Mayor and Councilmember salaries. The Charter Section limits the salary of the Mayor as follows: “The salary of the Mayor shall not be more than 50 percent (50%) of the amount of the salary of a Judge of the Superior Court of Stanislaus County.” The salary of a Stanislaus County Superior Court Judge is currently $248,368; 50% of that amount is $124,184; and
WHEREAS, Charter Section 703(c) establishes the following Councilmember salary limitation: “The salary of a Councilmember shall not be more than 50 percent (50%) of the median family income for the Modesto Metropolitan Statistical Area as reported by the United States Census Bureau.

The salary of each Councilmember shall be the same.” The median family income for the Modesto Metropolitan Statistical Area is $79,891; 50% of that amount is $39,945; and
WHEREAS, at the April 28, 2026 Council meeting, the Commission presented their final recommendation, including reasons for the recommendation, to Council for acceptance. Pursuant to Charter Section 703(d), “[w]hen such final recommendation has been submitted to the Council, it shall not thereafter be amended by the Commission;” and
WHEREAS, the recommendation was to increase the compensation for the Mayor from fifty-four thousand dollars ($54,000) to fifty-seven thousand #5..
- 59 -
- 3 - ORDINANCE NO. 3814-C.S.

EFFECTIVE DATE: July 2, 2026
three-hundred forty-eight dollars ($57,348) annually and increase the compensation for Councilmembers from thirty thousand dollars ($30,000) to thirty-one thousand eight-hundred sixty dollars ($31,860) annually; and WHEREAS, pursuant to Charter Section 703(d), “[u]pon receiving the final recommendation from the Commission, the Council may adopt the compensation as recommended by the Commission or may adopt compensation in some lower amount, but in no case may adopt compensation in some higher amount;” and WHEREAS, on April 28, 2026, Council accepted the Commission’s recommendation and directed staff to set a public hearing on May 12, 2026, to consider the recommended compensation increases by the Commission; and WHEREAS, pursuant to Charter Section 703(d), a 20-day public hearing notice was published in the Modesto Bee on April 19, 2026; and WHEREAS, the Council may only adopt changes to compensation by ordinance. Pursuant to Charter Section 703(d), “[s]alaries established by ordinance adopted pursuant to the provisions of this Section shall remain in effect until amended by a subsequent ordinance adopted pursuant to the provisions of this Section.”
NOW, THEREFORE, the City Council of the City of Modesto does ordain as follows:

SECTION 1. “COMPENSATION OF MAYOR” - AMENDMENT.

The City of Modesto Municipal Code Section 2-1.24, titled “Compensation of Mayor,” of Chapter 1, “City Council Organization and Procedure,” of Title 2, “Administration” is hereby amended to read as follows:
#5..
- 60 -
- 4 - ORDINANCE NO. 3814-C.S.

EFFECTIVE DATE: July 2, 2026
“2-1.24 Compensation of Mayor.

The annual salary of the Mayor shall be fifty-seven thousand three-hundred forty-eight dollars ($57,348), pursuant to the recommendation of the Citizens Salary Setting Commission. In accordance with Section 703 of the Charter, the Mayor's compensation and appropriate benefits shall be reviewed by the Citizens Salary Setting Commission biannually, and a recommendation made to the City Council as to the appropriate compensation. The annual salary shall be payable from and after the operative date of the ordinance at the same time and in the same manner as the salaries are paid to other officers and employees of the City.”
SECTION 2. “COMPENSATION OF COUNCILMEMBERS” – AMENDMENT.

The City of Modesto Municipal Code Section 2-1.26, titled “Compensation of City Councilmember,” of Chapter 1, “City Council Organization and Procedure,” of Title 2, “Administration” is hereby amended to read as follows:
“2-1.26 Compensation of City Councilmembers.

The annual salary of each member of the City Council, except the Mayor, shall be thirty-one thousand eight-hundred sixty dollars ($31,860). In accordance with Section 703 of the Charter, the Councilmember's compensation and appropriate benefits shall be reviewed by the Citizens Salary Setting Commission biannually, and a recommendation made to the City Council as to the appropriate compensation. The annual salary shall be payable from and after the operative date of the ordinance at the same time and in the same manner as the salaries are paid to other officers and employees of the City.”
#5..
- 61 -
- 5 - ORDINANCE NO. 3814-C.S.

EFFECTIVE DATE: July 2, 2026
SECTION 3. SEVERABILITY.

If any portion of this Ordinance, or its application to any person or circumstance, is for any reason held to be invalid, unenforceable, or unconstitutional, by a court of competent jurisdiction, that portion shall be deemed severable, and such invalidity, unenforceability or unconstitutionality shall not affect the validity or enforceability of the remaining portions of the Ordinance, or its application any other person or circumstance. The City Council or the City of Modesto hereby declares that it would have adopted each section, sentence, clause, or phrase of this Ordinance, irrespective of the fact that any one or more other sections, sentences, clauses, or phrases of this Ordinance be declared invalid, unenforceable or unconstitutional.

SECTION 4. CALIFORNIA ENVIRONMENTAL QUALITY ACT (“CEQA”) The City Council hereby finds that the adoption of this Ordinance is exempt from CEQA pursuant to CEQA Guidelines section 15061(b)(3) of the State CEQA Guidelines. Specifically, this Ordinance will not result in a direct or reasonably foreseeable indirect physical change in the environment because it does not authorize the construction of any new structures or other physical changes to the environment.

SECTION 5. EFFECTIVE DATE.

This Ordinance shall go into effect and be in full force and operation from and after thirty (30) days after its final passage and adoption.

SECTION 6. PUBLICATION.
#5..
- 62 -
- 6 - ORDINANCE NO. 3814-C.S.

EFFECTIVE DATE: July 2, 2026
At least two (2) days prior to its final adoption, copies of this Ordinance shall be posted in at least three (3) prominent and distinct locations in the City; and a notice shall be published once in the Modesto Bee, the official newspaper of the City of Modesto, setting forth the title of this Ordinance, the date of its introduction and the places where this ordinance is posted.

The foregoing Ordinance was introduced at a regular meeting of the Council of the City of Modesto held on the 12th day of MAY, 2026, by Councilmember Wright, who moved its introduction and passage to print, which motion being duly seconded by Councilmember Alvarez, was upon roll call carried and ordered printed and published by the following vote:

AYES: Councilmembers: Alvarez, Escutia-Braaton, Ricci, Williams, Wright, Mayor Zwahlen
NOES: Councilmembers: None
ABSENT: Councilmembers: Bavaro
APPROVED:
_____________________________
SUE ZWAHLEN, Mayor
ATTEST:

By: _________________________________
DIANE NAYERES-PEREZ, City Clerk
(SEAL)
APPROVED AS TO FORM:
#5..
- 63 -
- 7 - ORDINANCE NO. 3814-C.S.

EFFECTIVE DATE: July 2, 2026
By: _________________________________
JOSE M. SANCHEZ, City Attorney
#5..
- 64 -
- 8 - ORDINANCE NO. 3814-C.S.

EFFECTIVE DATE: July 2, 2026

FINAL ADOPTION CLAUSE
The foregoing ordinance, having been published as required by the Charter of the City of Modesto, and coming on for final consideration at the regular meeting of the Council of the City of Modesto held on the 2nd day of JUNE, 2026, Councilmember ?? moved its final adoption, which motion being duly seconded by Councilmember ??, was upon roll call carried and the ordinance adopted by the following vote:

AYES: Councilmembers: Alvarez, Bavaro, Escutia-Braaton, Ricci, Williams, Wright, Mayor Zwahlen
NOES: Councilmembers: None
ABSENT: Councilmembers: None
APPROVED: ________________________

SUE ZWAHLEN, MAYOR
ATTEST: ___________________________________
DIANE NAYARES-PEREZ, City Clerk
Effective Date: July 2, 2026
#5..
- 65 -

CITY OF MODESTO
ORDINANCE NO. 3814-C.S.

The following Ordinance was introduced by the City Council of the City of Modesto at the meeting of May 12, 2026:

INCREASE THE SALARIES OF THE MAYOR AND CITY COUNCILMEMBERS PURSUANT TO CHARTER SECTION 703 AND THE RECOMMENDATIONS OF THE CITIZEN’S SALARY SETTING COMMISSION OF 2026
Copies of the above-mentioned ordinance are posted at the following locations:
• Tenth Street Place, 1010 10th Street
• Neighborhood Center at Marshall Park, 420 Chicago Ave. • Senior Citizen Center, 211 Bodem Street
Diane Nayares-Perez
City Clerk
#5..
- 66 -

CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

June 2, 2026
Date: May 8, 2026
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: Diane Nayares-Perez, City Clerk
SUBJECT: 2026 Local Agency Biennial Notice for the Review of the Conflict-ofInterest Code Pursuant to the Political Reform Act CONTACT: Diane Nayares-Perez, City Clerk, [email protected] , 209-577-5396
DESCRIPTION:

Consider receiving the 2026 Local Agency Biennial Notice and directing staff to conduct a review of the City’s Conflict-of-Interest Code, and the Code of the City’s Boards, Commissions, and Committees and the filing of a Biennial Notice with the City Clerk regarding such review, as required by the Political Reform Act. (Funding Source: Not Applicable)
STRATEGIC PLAN ELEMENT:

This item supports the 2025 – 2026 Strategic Plan, Governance and Service Delivery - build community trust in City government through responsive, transparent and efficient service delivery.

BACKGROUND:

The Political Reform Act of 1974, Government Code Section 81000 et seq. (the “Act”), requires all public agencies to adopt and maintain a Conflict-of-Interest code. The primary effect of the code is to establish disclosure requirements for various government positions involved in the requisite level of decision-making as set forth in the Act. The Act requires each city to adopt a local conflict of interest code designating city positions not otherwise designated in the Act itself, that are involved in making or participating in the making of city decisions at all levels of city government. #6..
- 67 -
City Council, June 2, 2026
2026 Local Agency Biennial Notice for the Review of the Conflict-of-Interest Code Pursuant to the Political Reform Act

Page 2 of 3 ends

The Act further requires that agencies, including cities, regularly review and update their codes as necessary as directed by their code-reviewing bodies or when change is necessitated by changed circumstances. (Gov. Code §§ 87306, 87306.5). The City Council is the code reviewing body for the City’s Code and must direct the biennial review of its Conflict-of-Interest Code (“Code”). The Act also requires that the City Manager file a statement regarding the results of the review no later than October 1 of the same year. If a change in the Code is necessitated by this review, it must be submitted to the City Council for approval within ninety (90) days of the filing of the Local Agency Biennial Notice with the City Clerk. (Gov. Code § 87303, 87306.5) DISCUSSION:

The City Council is the code reviewing body for the City. Therefore, no later than July 1, 2026, the City Council must notify staff to review its code and submit a biennial notice.

No later than October 1st of each even-numbered year, staff must submit to the code reviewing body, a notice indicating whether or not an amendment is necessary.

The City Council is also the code reviewing body for local City Boards, Commissions and Committees whose jurisdictions are solely within the City of Modesto. Therefore, Council must adopt any amendments to the codes for these boards, commissions, and committees. The City Boards, Commissions and Committees are as follows:
• Audit Committee
• Blight Abatement Advisory Committee
• Board of Building Appeals
• Board of Zoning Adjustment
• Charter Review Committee
• Citizens’ Districting Commission
• Citizens’ Housing and Community Development Committee • Citizens’ Salary Setting
• Community Police Review Board
• Culture Commission
• Disabled Access Appeals Board
• Entertainment Commission
• Equity Commission
• Golf Courses Advisory Committee
• Housing Rehabilitation Loan Committee
• Landmark Preservation Committee
• Measure H Oversight Board
• Measure L Citizens' Transportation Sales Tax Commission Conflict-of-Interest Codes are not required for City Council and Planning Commission members as they are mandated by State law to file full disclosure statements of economic interests directly with the Fair Political Practices Commission. #6..
- 68 -
City Council, June 2, 2026
2026 Local Agency Biennial Notice for the Review of the Conflict-of-Interest Code Pursuant to the Political Reform Act

Page 3 of 3 ends

The City Clerk will coordinate the review of the Conflict-of-Interest codes, and the City Attorney will conduct the legal review of any changes to the codes.

FISCAL IMPACT:

There is no fiscal impact related to the action requested in this item.

COMMITTEE RECOMMENDATION:

Due to the nature of the item, this item is not required to be presented to Committee.

CEQA/NEPA REQUIREMENTS:

This item does not constitute a “project” within the meaning of California Environmental Quality Act (CEQA) Guidelines Section 15378 and requires no environmental review.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Motion directing staff to make a formal review of the City’s Conflict of Interest Code, and the Code of the City’s Boards, Commissions, and Committees pursuant to the Political Reform Act, and if necessary, at the appropriate time thereafter, prepare a resolution to be adopted by the City Council to approve any required amendments.

Approved by:

Diane Nayares-Perez, CMC, City Clerk
Joseph P. Lopez, City Manager
Attachments:

1. 2026 FPPC Local Agency Biennial Notice

2. Biennial Notice Instructions for Local Agencies
#6..
- 69 -
www.fppc.ca.gov
FPPC Advice: [email protected] (866.275.3772)

Page 1 of 1 ends

2026 Local Agency Biennial Notice
Name of Agency:

Mailing Address:

Contact Person: Phone No.

Email: Alternate Email:

Accurate disclosure is essential to monitor whether officials have conflicts of interest and to help ensure public trust in government. The biennial review examines current programs to ensure that the agency’s code includes disclosure by those agency officials who make or participate in making governmental decisions.

This agency has reviewed its conflict of interest code and has determined that (check one BOX):

An amendment is required. The following amendments are necessary:
(Check all that apply.)
Include new positions
Revise disclosure categories
Revise the titles of existing positions
Delete titles of positions that have been abolished and/or positions that no longer make or participate in making governmental decisions
Other (describe)
The code is currently under review by the code reviewing body.

No amendment is required. (If your code is over five years old, amendments may be necessary.)
Verification (to be completed if no amendment is required) This agency’s code accurately designates all positions that make or participate in the making of governmental decisions. The disclosure assigned to those positions accurately requires that all investments, business positions, interests in real property, and sources of income that may foreseeably be affected materially by the decisions made by those holding designated positions are reported. The code includes all other provisions required by Government Code Section 87302.
__________________________________________ _________________________ Signature of Chief Executive Officer Date
All agencies must complete and return this notice regardless of how recently your code was approved or amended. Please return this notice no later than October 1, 2026, or by the date specified by your agency, if earlier, to:
(PLACE RETURN ADDRESS OF CODE REVIEWING BODY HERE)
PLEASE DO NOT RETURN THIS FORM TO THE FPPC.
#6..
- 70 -
[email protected] 1.866.275.3772 or 916.322.5660
www.fppc.ca.gov FPPC • 076-04.2026 • Page 1 of 1

FAIR POLITICAL PRACTICES COMMISSION
2026 Conflict of Interest Code
Biennial Notice Instructions for Local Agencies
The Political Reform Act requires every local government agency to review its conflict of interest code biennially. A conflict of interest code tells public officials, governmental employees, and consultants what financial interests they must disclose on their Statement of Economic Interests (Form 700).

By July 1, 2026: The code reviewing body must notify agencies and special districts within its jurisdiction to review their conflict of interest codes.

By October 1, 2026: The biennial notice must be filed with the agency’s code reviewing body.

The FPPC has prepared a 2026 Local Agency Biennial Notice form for local agencies to complete or send to agencies within its jurisdiction to complete before submitting to the code reviewing body. The City Council is the code reviewing body for city agencies. The County Board of Supervisors is the code reviewing body for county agencies and any other local government agency whose jurisdiction is determined to be solely within the county (e.g., school districts, including certain charter schools). The FPPC is the code reviewing body for any agency with jurisdiction in more than one county and will contact them.

The Local Agency Biennial Notice is not forwarded to the FPPC.

If amendments to an agency’s conflict of interest code are necessary, the amended code must be forwarded to the code reviewing body for approval within 90 days. An agency’s amended code is not effective until it has been approved by the code reviewing body.

If you answer yes, to any of the questions below, your agency’s code probably needs to be amended.
• Is the current code more than five years old?
• Have there been any substantial changes to the agency’s organizational structure since the last code was approved?
• Have any positions been eliminated or re-named since the last code was approved? • Have any new positions been added since the last code was approved? • Have there been any substantial changes in duties or responsibilities for any positions since the last code was approved?
If you have any questions or are still not sure if you should amend your agency’s conflict of interest code, please contact the FPPC. Additional information including an online webinar regarding how to amend a conflict of interest code is available on FPPC’s website. #6..
- 71 -

CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

June 2, 2026
Date: May 13, 2026
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: Stephan Christensen, Office of Performance Management and Budget Director
SUBJECT: Monthly Budget Adjustment Report – May 2026
CONTACT: Kaceey Culbertson, Budget Manager, [email protected], 209-571-5855
DESCRIPTION:

Consider approving the recommended budget adjustments to Fiscal Year 2025- 26 Annual Operating and Capital Improvement Program Budgets. (Funding Source: Various Funds)
STRATEGIC PLAN ELEMENT:

This item supports the City of Modesto 2025-2026 Strategic Plan focus on Governance and Service Delivery under Goal H: Achieve Long-Term Financial Sustainability.

BACKGROUND:

Each month, City staff presents a variety of budget adjustments requiring the approval of the City Council. These changes are submitted to the Finance Committee for review prior to submission to Council and include an explanation and justification for each transaction.

This report includes a number of adjustments that have been identified by monitoring department budgets. Due to the number of adjustments, they have been included as an attachment to this report (Exhibit A). As in past reports, adjustments are separated by fund and department as appropriate. The adjustments are reflected in a more summarized version and supporting documentation is available for review upon request. #7..
- 72 -
City Council, June 2, 2026
Monthly Budget Adjustment Report – May 2026

Page 2 of 3 ends

Also included in this report as an attachment (Exhibit B) is a summary of the budget adjustments approved by the City Manager and/or the Office of Performance Management and Budget Director consistent with the authority levels that were approved by Council with the passing of the Fiscal Year 2025-26 Operating Budget via Resolution No. 2025-187.

DISCUSSION:

The monthly budget adjustments attached as Exhibit A in this item include adjustments across various departments. These adjustments are explained in further detail within Exhibit A.

FISCAL IMPACT:

The fiscal impact of each item is noted in the attachments to this report. The adjustments are for Fiscal Year 2025-26.

CEQA/NEPA REQUIREMENTS:

This item does not constitute a “project” within the meaning of California Environmental Quality Act (CEQA) Guidelines Section 15378 and requires no environmental review.

COMMITTEE RECOMMENDATION:

This item was presented to the Finance Committee on May 18, 2026, and the Committee recommended forwarding the item to Council for approval. It must be noted that since the recommendation of the Finance Committee the following addition has been made.

Under the Measure H section, a new item was added to reallocation funding. The language is as follows:
• A budget adjustment is necessary in the amount of $150,000 to reallocate funding from Project 101632 – Forestry Reforestation to a newly created Measure H project for arborist inspection services and amend the Fiscal Year 2025-26 Measure H spending plan. There is sufficient budget available in the current project to reallocate.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution amending Fiscal Year 2025-26 Annual Operating and Capital Improvement Project Fund Budgets and authorizing the City Manager, to take the necessary steps to implement the provisions of this Resolution.

Approved by:

Stephan Christensen, Office of Performance
Management and Budget Director
#7..
- 73 -
City Council, June 2, 2026
Monthly Budget Adjustment Report – May 2026

Page 3 of 3 ends

Joseph P. Lopez, City Manager
Attachments:

1. Resolution

2. Exhibit A – Budget Adjustments Requiring Council Approval

3. Exhibit B - Staff Approved Budget Adjustments
#7..
- 74 -
06/02/2026/OPMB/SChristensen/Item X 1 2026-XX

MODESTO CITY COUNCIL
RESOLUTION NO. 2026-
RESOLUTION AMENDING THE FISCAL YEAR 2025-26 ANNUAL

OPERATING AND CAPITAL IMPROVEMENT FUND BUDGETS AND

AUTHORIZING THE CITY MANAGER, TO TAKE THE NECESSARY

STEPS TO IMPLEMENT THE PROVISIONS OF THIS RESOLUTION
WHEREAS, a financial analysis has been completed and it has been determined that a budget adjustment is required to the Annual and Capital Improvement Budgets of the City of Modesto for Fiscal Year 2025-26.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby approves amending the Fiscal Year 2025-26 Annual Operating and Capital Improvement budget as shown in Exhibit A, which is attached hereto and incorporated by reference herein.

BE IT FURTHER RESOLVED that the City Manager, or his designee, is hereby authorized to take the necessary steps to implement the provisions of this resolution.
#7..
- 75 -
06/02/2026/OPMB/SChristensen/Item X 2 2026-XX
The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 2nd day of June 2026, by Councilmember _________, who moved its adoption, which motion being duly seconded by Councilmember ______, was upon roll call carried and the resolution adopted by the following votes:

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ATTEST: _____________________________

DIANE NAYARES-PEREZ, CMC,
City Clerk
(SEAL)
APPROVED AS TO FORM:

BY: _____________________________________
JOSE M. SANCHEZ, City Attorney
#7..
- 76 -
City Council, June 2, 2026
Monthly Budget Adjustment Report

EXHIBIT A
FISCAL YEAR 2025-26

HUMAN RESOURCES
• A budget adjustment is necessary in various Human Resources Insurance funds to account for additional expenses related to claims that came in higher than anticipated in the Fiscal Year. The increase will come from the respective funds Reserves.

Fund Fund Name
Increase
Expenditure
5350 Dental Insurance Fund 186,064
5360 Health Insurance Fund 2,802,882
5370 Disability Insurance Fund 20,000
5510 Employee Benefits Fund 25,000

MEASURE H
• A budget adjustment is necessary in the amount of $322,209 in the Fiscal Year 2023/2024 Measure H spending plan to re-appropriate Transfer-In revenue in the 23/24 Preventative Maintenance Project 101518 to the 23/24 Deferred Maintenance Project 101517 to award a contract with Platinum General Engineering LLC for construction on bathrooms at various City parks. There are sufficient funds available due to the completion of other renovation projects and the overall Measure H spending plan allocation is not changing. The expenditures were previously amended in the like amount in March 2025 per Council Resolution 2025-87.
• A budget adjustment is necessary in the amount of $150,000 to reallocate funding from Project 101632 – Forestry Reforestation to a newly created Measure H project for arborist inspection services and amend the Fiscal Year 2025-26 Measure H spending plan. There is sufficient budget available for the current project to reallocate.

PUBLIC WORKS
• A budget adjustment is necessary in the amount of $900,000 in the Fleet Replacement Fund (Fund 5409). The increase in budget is needed to account for the anticipated fleet replacement purchases in the fiscal year. All equipment and vehicle purchases are made from the Fleet Replacement Fund and transfers are completed from the designated fleet replacement sub-funds. #7..
- 77 -
City Council, June 2, 2026
Monthly Budget Adjustment Report

Page 2 of 2 ends

UTILITIES
• A budget adjustment in the amount of $1,215,300 is necessary in the Wastewater Bond Issuance 2025 (Fund 4242) to establish the transfer-in from the Wastewater Fund (Fund 4210) for the annual bond and interest re-payment.

FINANCE
• A budget adjustment in the amount of $416,829 is needed in the Grants Reimbursement Fund (1341) for Project 101731 – FEMA 2023 January. The adjustment will recognize disaster relief revenue and establish discretionary expenditure accounts. The Federal Emergency Management Agency (FEMA) will be reimbursing in the amount of $416,829 the City of Modesto for expenses related to storms from January 2023 which were declared a local emergency. #7..
- 78 -
Department Director/Director of Office Performance and Budget (OPMB)/City Manager Approved Budget Adjustments EXHIBIT B For FY2025/26
AT #
Approved
by CM,
Director
OPMB or
DD
Fund Fund Name Cost Ctr/Project Name Account Name Rev/Exp/TI/TO Account
Current
Budget
Increase
(Decrease)
Revised
Budget Description
AT-096 OPMB 0100 General Fund 33150 - Aquatic Services 51570 - Employee Leave Reimbursement Exp $ (969) $ 1,165 $ 196
A budget adjustment is necessary to adjust for errors found on the Employee Leave ISF template for cost center 33150. This adjustment will correct the expense in cc33150 and the revenue in Employee Benefits Mgmt. Fund (5510).

Total Changes for Fund 0100 $ (969) $ 1,165 $ 196
AT-098 CM 1341 Grants - Op Grants Reimbursed 101729 - City County Payment Program FY 25/26 Intergov - State/CalRecycle Rev $ - $ 54,382 $ 54,382 AT-098 CM 1341 Grants - Op Grants Reimbursed 101729 - City County Payment Program FY 25/26 AuC - Advertising Exp $ - $ 2,500 $ 2,500 AT-098 CM 1341 Grants - Op Grants Reimbursed 101729 - City County Payment Program FY 25/26 AuC - Litter Clean-up Exp $ - $ 2,000 $ 2,000 AT-098 CM 1341 Grants - Op Grants Reimbursed 101729 - City County Payment Program FY 25/26 AuC - Beverage Container Collection Exp $ - $ 27,382 $ 27,382 AT-098 CM 1341 Grants - Op Grants Reimbursed 101729 - City County Payment Program FY 25/26 AuC - Recycling Education Exp $ - $ 5,000 $ 5,000 AT-098 CM 1341 Grants - Op Grants Reimbursed 101729 - City County Payment Program FY 25/26 AuC - Svcs City Forces Exp $ - $ 17,500 $ 17,500 AT-102 OPMB 1341
Grants - Operation Grants
Reimbursed
101599 - Beverage Container Recycling City/County Payment Program FY 24 Interest Revenue on Bank Account Rev $ - $ 4,178 $ 4,178 AT-102 OPMB 1341
Grants - Operation Grants
Reimbursed
101599 - Beverage Container Recycling City/County Payment Program FY 24 AuC - Beverage Container Collection Exp $ 30,034 $ 4,178 $ 34,212 AT-103 OPMB 1341
Grants - Operation Grants
Reimbursed 101275 - FEMA COVID-19 Intergov - State-CalEMA/CalOES Rev $ 42,422 $ 37,571 $ 79,993 AT-103 OPMB 1341
Grants - Operation Grants
Reimbursed 101275 - FEMA COVID-19 AuC - Business Expenses Exp $ 29,362 $ 37,571 $ 66,933 AT-108 CM 1341 Grants - Op Grants Reimbursed 101733 - Used Oil Payment Program (UOPP16) Intergov -State/CalRecycle Rev $ - $ 29,678 $ 29,678 AT-108 CM 1341 Grants - Op Grants Reimbursed 101733 - Used Oil Payment Program (UOPP16) AuC - Svcs City Forces Exp $ - $ 8,678 $ 8,678 AT-108 CM 1341 Grants - Op Grants Reimbursed 101733 - Used Oil Payment Program (UOPP16) AuC - Advertising Exp $ - $ 12,000 $ 12,000 AT-108 CM 1341 Grants - Op Grants Reimbursed 101733 - Used Oil Payment Program (UOPP16) AuC - Professional Services Exp $ - $ 9,000 $ 9,000 Total Changes for Fund 1341 $ 101,818 $ 251,618 $ 353,436 AT-099 OPMB 1342 Police Grants
101424 - 22/23 Supplemental Law Enforcement Services Fund (SLESF) Appr Unit A Exp $ 50,000 $ (1,973) $ 48,027
AT-099 OPMB 1342 Police Grants
101424 - 22/23 Supplemental Law Enforcement Services Fund (SLESF) Appr Unit C Exp $ 676,703 $ 1,974 $ 678,677
AT-099 OPMB 1342 Police Grants
101424 - 22/23 Supplemental Law Enforcement Services Fund (SLESF) 48010 - Interest Revenue Rev $ 43,794 $ 1 $ 43,795 Total Changes for Fund 1342 $ 770,497 $ 2 $ 770,499
AT-107 OPMB 1380
Non-Capital Parks Fund - Non
Grant 100906 - Earth Day in the Park Misc. Donation/Contribution - Non-Intergov Rev $ 182,750 $ 25,000 $ 207,750 AT-107 OPMB 1380
Non-Capital Parks Fund - Non
Grant 100906 - Earth Day in the Park AuC - Services City Forces - Interfund Exp $ - $ 3,000 $ 3,000 AT-107 OPMB 1380
Non-Capital Parks Fund - Non
Grant 100906 - Earth Day in the Park AuC - Professional Services Exp $ - $ 9,000 $ 9,000 AT-107 OPMB 1380
Non-Capital Parks Fund - Non
Grant 100906 - Earth Day in the Park AuC - Advertising Exp $ - $ 8,000 $ 8,000 AT-107 OPMB 1380
Non-Capital Parks Fund - Non
Grant 100906 - Earth Day in the Park AuC - Promotional Expenses Exp $ - $ 5,000 $ 5,000 Total Changes for Fund 1380 $ - $ 50,000 $ 5,000
AT-111 OPMB 1800
Economic Development/Strategic
Plan Fund
101732 - Founders Point East Vesting Tentative Subdivision Map project CS-CD Time and Materials Rev $ - $ 25,000
$ 25,000
AT-111 OPMB 1800
Economic Development/Strategic
Plan Fund
101732 - Founders Point East Vesting Tentative Subdivision Map project AuC - Professional Services Exp $ - $ 17,500
$ 17,500
AT-111 OPMB 1800
Economic Development/Strategic
Plan Fund
101732 - Founders Point East Vesting Tentative Subdivision Map project AuC - Services City Forces - Interfund
Exp
$ - $ 7,500
$ 7,500
Total Changes for Fund 1800 $ - $ 50,000 $ 50,000
AT-100 OPMB 3160
Capital Grants - Streets CIP
Projects 101119 - SR 132 West Expressway CON-ML - Construction Exp $ 14,517,714 $ (550,000) $ 13,967,714 AT-100 OPMB 3160
Capital Grants - Streets CIP
Projects 101119 - SR 132 West Expressway CON-SUPML - Construction Exp $ 1,020,000 $ (300,000) $ 720,000 AT-100 OPMB 3160
Capital Grants - Streets CIP
Projects 101119 - SR 132 West Expressway CASTAFFML - Construction Admin Exp $ 1,800,000 $ 640,000 $ 2,440,000 AT-100 OPMB 3160
Capital Grants - Streets CIP
Projects 101119 - SR 132 West Expressway CTGY-PROJECTML - Construction Exp $ 1,197,340 $ 210,000 $ 1,407,340 AT-104 OPMB 3160
Capital Grants - Street CIP
Projects 101362 - Install Signal Heads at 70 Int CON - Construction Exp $ 1,534,050 $ (96,861) $ 1,437,189 AT-104 OPMB 3160
Capital Grants - Street CIP
Projects 101362 - Install Signal Heads at 70 Int CON - Construction Exp $ 1,437,189 $ (100,634) $ 1,336,555 AT-104 OPMB 3160
Capital Grants - Street CIP
Projects 101333 - Install RRFB at 10 Locations CON - Construction Exp $ 695,880 $ (24,048) $ 671,832 AT-104 OPMB 3160
Capital Grants - Street CIP
Projects 101333 - Install RRFB at 10 Locations CON - Construction Exp $ 671,832 $ (96,613) $ 575,219 AT-104 OPMB 3160
Capital Grants - Street CIP
Projects 101362 - Install Signal Heads at 70 Int CTGY - Contingency Exp $ 170,450 $ 96,861 $ 267,311 AT-104 OPMB 3160
Capital Grants - Street CIP
Projects 101362 - Install Signal Heads at 70 Int CA - Construction Admin Exp $ - $ 100,634 $ 100,634 AT-104 OPMB 3160
Capital Grants - Street CIP
Projects 101333 - Install RRFB at 10 Locations CTGY - Contingency Exp $ 77,320 $ 24,048 $ 101,368 AT-104 OPMB 3160
Capital Grants - Street CIP
Projects 101333 - Install RRFB at 10 Locations CA - Construction Admin Exp $ - $ 96,613 $ 96,613 Total Changes for Fund 3160 $ 23,121,775 $ - $ 23,121,775 AT-097 CM 4210 Wastewater Fund 101728 - Jennings Membrane Upgrade EDA-Engineering/Design/Administration Exp $ - $ 50,000 $ 50,000 A budget adjustment is necessary to establish the initial budget of $50,000 for Capital Project 101728 - Jennings Membrane Upgrade.

A budget adjustment of $25,000 is necessary to create a new line for FY26 Earth Day in the Park event. Fees are collected from vendors and sponsorships collected from community supporters to fund the event.

A budget adjustment in the amount of $25,000 is necessary to establish a project budget for the Time and Materials for the Founders Point East Vesting Tentative Subdivision Map project. Developer funded.

The City of Modesto received grant funding in the amount of $54,382 from the City/County Payment Program through CalRecycle. These funds will be utilized to enhance the current recycling program and expand our efforts through education and outreach, advertising and collection programs. In addition, allocated funds will support a designated staff member.

A budget adjustment is necessary to reallocate the budget between tasks to alleviate the negative availability for Project closure. An additional adjustment of $1 is necessary to recognize additional Interest Revenue thus needing to increase Appr Unit C in a like amount to keep the Project Budget in balance.

A budget adjustment is necessary to reallocate $850,000 in expenses within project 101119 to resolve an insufficient funds issue. Currently CA-STAFFML task is
overbudget by approximately $611,469 and CTGY-PROJECTML task is over by $117,551. This adjustment will cleanup those tasks using savings from the CON-ML
and CON-SUPML tasks.

The City of Modesto has received a grant from the State of California for the Used Oil Payment Program. This grant will provide funding for staff time, program collection, and public education for the curbside used oil collection program.

The City of Modesto received grant funding in the amount of #54,534 from the City/County Payment Program through CalRecycle. This adjustment is for the interest earned over the course of the project.

A budget adjustment of $37,571 is necessary to increase the Revenue and Expense amount to $79,993 since FEMA is reimbursing the City at 100% of total cost.

A budget adjustment is necessary to reallocate $318,156 within Projects 101362 and 101333 to balance the tasks to match the results of the bid opening. $197,495 is being reallocated in Project 101362 and $120,661 is being reallocated in Project 101333. No additional funds are being added. #7..
- 79 -
Department Director/Director of Office Performance and Budget (OPMB)/City Manager Approved Budget Adjustments EXHIBIT B For FY2025/26
AT #
Approved
by CM,
Director
OPMB or
DD
Fund Fund Name Cost Ctr/Project Name Account Name Rev/Exp/TI/TO Account
Current
Budget
Increase
(Decrease)
Revised
Budget Description
Total Changes for Fund 4210 $ - $ 50,000 $ 50,000
AT-110 OPMV 4242
4242 - 2025 Wastewater Revenue
Bonds 12171 - 2025 Wastewater Revenue Bonds 59010 - Professional Services Debt Exp $ 410,000 $ 25,000 $ 435,000
A budget adjustment in the amount of $25,000 is necessary to increase the Professional Services Debt account in Fund 4242 - Wastewater Bond Issuance 2025 for a one-time procurement of State and Local Government Series (SLGS) securities for the project fund related to the 2025 Bond Issuance.

Total Changes for Fund 4242 $ 410,000 $ 25,000 $ 435,000 AT-096 OPMB 5510 Employee Benefits Mgmt. Fund 17145 - City-wide EB Leave Usage 45006 - Interfund Charges - EBF Leave
Accrual Rev $ 494,334 $ 1,165
$ 495,499
A budget adjustment is necessary to adjust for errors found on the Employee Leave ISF template for cost center 33150. This adjustment will correct the expense in cc33150 and the revenue in Employee Benefits Mgmt. Fund (5510).

Total Changes for Fund 5510 $ 494,334 $ 1,165 $ 495,499 AT-105 OPMB 6100 JPA - Industrial Fire 80040 - Industrial Fire JPA Property Taxes - Delinquent Rev $ 24,815 $ (10,423) $ 14,392 AT-105 OPMB 6100 JPA - Industrial Fire 80040 - Industrial Fire JPA Property Taxes - Suppl Roll Rev $ 7,342 $ (2,404) $ 4,938 AT-105 OPMB 6100 JPA - Industrial Fire 80040 - Industrial Fire JPA Property Taxes - Delinquent Unsecured Rev $ 383 $ 214 $ 597 AT-105 OPMB 6100 JPA - Industrial Fire 80040 - Industrial Fire JPA Property Taxes - In Lieu Rev $ 77 $ 77 $ 154 AT-105 OPMB 6100 JPA - Industrial Fire 80040 - Industrial Fire JPA Property Taxes - RPTTF Allocation Rev $ 232,956 $ 13,766 $ 246,722 AT-105 OPMB 6100 JPA - Industrial Fire 80040 - Industrial Fire JPA Interest Revenue on Bank Accounts Rev $ 7,761 $ 2,280 $ 10,041 AT-105 OPMB 6100 JPA - Industrial Fire 80040 - Industrial Fire JPA Professional Services Exp $ 6,000 $ (798) $ 5,202 AT-105 OPMB 6100 JPA - Industrial Fire 80040 - Industrial Fire JPA Insurance Premiums Exp $ 2,500 $ (759) $ 1,741 AT-105 OPMB 6100 JPA - Industrial Fire 80040 - Industrial Fire JPA Intergovernmental Services - Other
(Modesto) Exp $ 446,292 $ 2,120 $ 448,412
AT-105 OPMB 6100 JPA - Industrial Fire 80040 - Industrial Fire JPA Intergovernmental Services - Ceres Exp $ 357,114 $ 1,696 $ 358,810 AT-105 OPMB 6100 JPA - Industrial Fire 80040 - Industrial Fire JPA Property Tax Collections Exp $ 3,000 $ 350 $ 3,350 AT-105 OPMB 6100 JPA - Industrial Fire 80040 - Industrial Fire JPA Services City Forces - Interfund Exp $ 5,000 $ 901 $ 5,901 Total Changes for Fund 6100 $ 1,093,240 $ 7,020 $ 1,100,260 AT-101 OPMB 6710 JPA-TRRP Special Revenue Fund 101109 - TRRP River Overlook CON-Construction Exp $ 515,937 $ (20,000) $ 495,937 AT-101 OPMB 6710 JPA-TRRP Special Revenue Fund 101109 - TRRP River Overlook EDA-Eng/Design/Admin Exp $ 389,802 $ 20,000 $ 409,802 Total Changes for Fund 6710 $ 905,739 $ - $ 905,739
A budget adjustment is necessary to reallocate $20,000 in expenses within project 101109 from CON task to EDA task to cover additional design time.

A budget adjustment is necessary to amend the Industrial Fire District budget as approved in Fund 6100, JPAIndustrial Fire Funds, by the Industrial Fire Board in December 2025. The revenues are being increased by $3,510, which offset by an increase to the expenses of the final disbursements to the JPA members by $3,510. #7..
- 80 -

CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

June 2, 2026
Date: April 28, 2026
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: Jessica Hill, Director of Community and Economic Development SUBJECT: Fiscal Year 2026-27 Engineer’s Annual Report for Landscape Maintenance Assessment District No. 1 (Dry Creek Meadows Subdivisions Nos. 1-6) CONTACT: Edgar Garcia, Community Development Manager
[email protected], 209-577-5211
DESCRIPTION:

Consider accepting Fiscal Year 2026-27 Engineer’s Report and setting a Public Hearing on June 23, 2026, for the levy and collection of assessments for landscape maintenance in the public right-of-way, street medians, and areas adjacent to the access control walls in Dry Creek Meadows Subdivisions Nos. 1-6. (Funding Source:

Landscape Maintenance Assessment District No. 1)
STRATEGIC PLAN ELEMENT:

The recommended action supports the City of Modesto’s 2025-2026 Strategic Plan, Goal D: Provide safe, efficient, and reliable infrastructure through proactive community investment, maintenance, and sustainability efforts.

BACKGROUND:

On December 13, 1988, the City formed Landscape Maintenance Assessment District No. 1 (LMAD No. 1). LMAD No. 1 provides funding for the landscape maintenance in the public right-of-way, street medians, and areas adjacent to the access control walls in Dry Creek Meadows Subdivisions Nos. 1 through 6. LMAD No. 1 is comprised of 749 single-family residential lots and three (3) public agency owned parcels located east of North McClure Road at the southwest corner of Claus Road and MID Lateral No. 2. A copy of the boundary map is provided as Attachment 2.
#8..
- 81 -
City Council, June 2, 2026
Fiscal Year 2026-27 Engineer’s Annual Report
for Landscape Maintenance Assessment District No. 1 (Dry Creek Meadows Subdivisions Nos. 1-6)

Page 2 of 3 ends

LMAD No. 1 was formed in accordance with the Streets and Highways Code Sections 22500 through 226791, more commonly known as the Landscape and Lighting Act of 1972 (the Act). Section 226242 et seq. of the Act requires the legislative body (the City Council) to adopt a resolution of intention and to take the following actions prior to August 10th of each year:

1. Adopt a resolution which generally describes any proposed new improvements or any substantial changes in existing improvements and orders the preparation and filing of the Engineer’s Annual Report.

2. Adopt a resolution approving the Engineer’s Annual Report as submitted or as modified by the City Council.

3. Adopt a resolution of intention to levy and collect assessments within LMAD No. 2 for the fiscal year.

4. Conduct a public hearing.

5. Adopt a resolution confirming the diagram and assessment as originally proposed or as changed by the City Council.

DISCUSSION:

When LMAD No. 1 was formed, no annual escalator was adopted; therefore, the annual assessment for LMAD No. 1 has remained the same since 1996. Staff does not anticipate any new improvements or substantial changes to existing improvements. On March 3, 2026, by Resolution No. 2026-56, the Council directed staff to prepare and file the Fiscal Year 2026-27 Engineer’s Annual Report for LMAD No. 1.

Staff recommends the 2026-27 Engineer’s Annual Report for LMAD No. 1, included as Attachment 3, be accepted and filed with the City Clerk, as Attachment 3, and that a public hearing be scheduled for June 23, 2026. The levy amount of $19,474 has not increased since 1996, while projected costs of $24,527 for Fiscal Year 2025–26 are expected to exceed the levy amount, reducing the overall fund balance.

FISCAL IMPACT:

In Fiscal Year 2025-26, $19,474 (749 parcels at $26per parcel) was levied within LMAD No. 1 while its projected expenses are $24,527. Expenses include contracted maintenance expenses, utility service charges, and City staff time associated with administration and maintenance. The projected expenses for Fiscal Year 2026-27 are $19,216. The proposed budget for Fiscal Year 2026-27 is based on the revenue that can be generated within LMAD No.1 and fund balance.

The Stanislaus County Auditor-Controller’s Office, Property Taxes and Assessments Division, collects a $0.20 fee per assessment and per parcel. This fee is assessed 1 Landscape and Lighting Act of 1972
2 Section 22624 of the Landscape and Lighting Act of 1972 #8..
- 82 -
City Council, June 2, 2026
Fiscal Year 2026-27 Engineer’s Annual Report
for Landscape Maintenance Assessment District No. 1 (Dry Creek Meadows Subdivisions Nos. 1-6)

Page 3 of 3 ends

directly from Stanislaus County and is in addition to the annual assessment being levied for LMAD No. 1.

It is the expectation that all expenses for LMAD No. 1 will be paid by the assessments levied on properties within LMAD No. 1. Costs in excess of the tax levy will be paid from the fund balance. At such time when the fund balance is depleted, service levels will need to be adjusted unless the property owners approve a Proposition 218 vote to increase the tax levy amount to a level sufficient to maintain or increase service levels.

COMMITTEE RECOMMENDATION:

Per Section 22620-22631 of the Landscaping and Lighting Act of 19723, this item is an annual report and not required to be presented to a Council Committee.

CEQA/NEPA REQUIREMENTS:

This item does not constitute a “project” within the meaning of California Environmental Quality Act (CEQA) Guidelines Section 15378 and requires no environmental review.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution accepting Fiscal Year 2026-27 Engineer’s Annual Report for Landscape Maintenance Assessment District No. 1 for Dry Creek Meadows Subdivisions Nos. 1-6; Issuing a Notice of Intention to Levy and Collect Assessments and setting a Public Hearing on June 23, 2026 to consider the Fiscal Year 2026-27 Levy and Collection of Assessments within the District.

Approved by:

Jessica Hill, Director of Community
and Economic Development
Joseph P. Lopez, City Manager
Attachments:

1. Resolution

2. LMAD No. 1 Boundary Map

3. LMAD No. 1 2026-2027 Engineer’s Annual Report
3 Section 22620-22631 of Landscaping and Lighting Act of 1972 #8..
- 83 -
6/2/2026/CEDD/EGarcia/Item # 1 2026-xxx

MODESTO CITY COUNCIL
RESOLUTION NO. 2026-XX
RESOLUTION ACCEPTING FISCAL YEAR 2026-27 ENGINEER’S ANNUAL REPORT FOR LANDSCAPE MAINTENANCE ASSESSMENT DISTRICT NO. 1 FOR DRY CREEK MEADOWS SUBDIVISIONS NOS. 1–6; ISSUING A NOTICE

OF INTENTION TO LEVY AND COLLECT ASSESSMENTS AND SETTING A PUBLIC HEARING ON JUNE 23, 2026 TO CONSIDER THE FISCAL YEAR 2026-27 LEVY AND COLLECTION OF ASSESSMENTS WITHIN THE

DISTRICT
WHEREAS, by Resolution No. 88-935, adopted by the Council of the City of Modesto on December 13, 1988, initiated proceedings for the formation of Landscape Maintenance Assessment District No. 1 for the purpose of funding the maintenance of landscaping in the public right-of-way within the street medians and adjacent to the access control walls in Dry Creek Meadows Subdivisions Nos. 1-6; and
WHEREAS, Landscape Maintenance Assessment District No. 1 is comprised of 749 single-family residential lots and three (3) public agency owned parcels located east of North McClure Road at the southwest corner of Claus Road and MID Lateral No. 2; and
WHEREAS, said assessment district was formed in accordance with the Landscape and Lighting Act of 1972, (California Streets and Highways Code Sections 22500 through 22679); and
WHEREAS, Section 22623 of the California Streets and Highways Code requires the City Engineer, the person designated by this Council as Engineer of Work for the Landscape Maintenance Assessment District No. 1, to prepare and file an annual report; and
#8..
- 84 -
6/2/2026/CEDD/EGarcia/Item # 2 2026-xxx
WHEREAS, the Engineer of Work has prepared and filed said annual report with the City Clerk; and
WHEREAS, California Streets and Highways Code Section 22624 requires the legislative body (the City Council) to take the following actions prior to August 10th of each year:
a. Declare the intention of the legislative body to levy and collect assessments within the assessment district for the fiscal year stated therein.
b. Generally describe the existing and proposed improvements and any substantial changes proposed to be made in
existing improvements.
c. Refer to the assessment district by its distinctive designation and indicate the general location of the district.
d. Refer to the report of the engineer, on file with the clerk, for a full and detailed description of the improvements, the
boundaries of the assessment district and any zones therein, and the proposed assessments upon assessable lots and
parcels of land within the district.
d. Give notice of the time, as fixed by Section 22625, and the place for hearing by the legislative body on the levy of the proposed assessment.
e. State whether the assessment is proposed to increase from the previous year; and
#8..
- 85 -
6/2/2026/CEDD/EGarcia/Item # 3 2026-xxx
WHEREAS, no annual escalator was adopted when Landscape Maintenance Assessment District No. 1 was formed, therefore, the annual assessment for LMAD No. 1 has remained the same since 1996.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto hereby accepts the Fiscal Year 2026-27 Engineer’s Annual Report for Landscape Maintenance Assessment District No. 1 for Dry Creek Meadows Subdivisions Nos. 1 through 6, which is attached hereto and incorporated by reference herein.

BE IT FURTHER RESOLVED, that the Council of the City of Modesto hereby finds as follows:

1. The City Council intends to levy and collect assessments within Landscape Maintenance Assessment District No. 1
during the Fiscal Year 2026-27. The amount of the proposed assessment for 2026-27 is the same as the assessment for Fiscal Year 2025-26.

2. There are no proposed new improvements or any substantial changes in existing improvements in Landscape
Maintenance Assessment District No. 1 and that the existing improvements to be made in said assessment district are generally described as follows: The City shall provide
maintenance of landscaping and any and all improvements required for such maintenance including, but not limited to, landscape irrigation systems in the following locations:
a. Street medians in Creekwood Drive
#8..
- 86 -
6/2/2026/CEDD/EGarcia/Item # 4 2026-xxx
b. Areas adjacent to the access control walls along
Creekwood Drive
c. Areas adjacent to the access control walls along
Claus Road

3. Landscape Maintenance Assessment District No. 1 is
located in the County of Stanislaus, within the city limits of the City of Modesto and is more specifically located on the west side of Claus Road, between Modesto Irrigation District Lateral No. 2 and State Route 132 (Yosemite Boulevard).

4. Said annual report filed with the City Clerk and approved by the Council does provide a full and detailed description of the improvements, the boundaries of the assessment district and any zones therein, and the proposed assessments upon
assessable lots and parcels of land within Landscape
Maintenance Assessment District No. 1.

5. On Tuesday, the 23rd day of June, 2026, at the hour of 5:30 p.m., the City Council will conduct a public hearing on the question of the levy of the proposed annual assessment. The hearing will be held at the meeting place of the City Council located in Tenth Street Place Chambers located at 1010 10th Street, Modesto, California.

6. The City Clerk is authorized and directed to give the notice of hearing required by the Landscape and Lighting Act of 1972. #8..
- 87 -
6/2/2026/CEDD/EGarcia/Item # 5 2026-xxx

7. The levy and collection of assessments as set forth in this resolution are exempt from the procedural and substantive requirements of Proposition 218 pursuant to Article XIII, Section 5(a) of the California Constitution.

The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 2nd day of June, 2026, by Councilmember _____, who moved its adoption, which motion being duly seconded by Councilmember ______, was upon roll call carried and the resolution adopted by the following vote:

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ATTEST: _____________________________

DIANE NAYARES-PEREZ, CMC,
City Clerk
(SEAL)
APPROVED AS TO FORM:

BY: ______________________________
JOSE M. SANCHEZ, City Attorney
#8..
- 88 -
#8..
- 89 -
#8..
- 90 -
#8..
- 91 -
#8..
- 92 -
#8..
- 93 -
#8..
- 94 -
#8..
- 95 -
#8..
- 96 -
#8..
- 97 -
#8..
- 98 -
#8..
- 99 -
#8..
- 100 -
#8..
- 101 -
#8..
- 102 -
#8..
- 103 -
#8..
- 104 -
#8..
- 105 -
#8..
- 106 -
#8..
- 107 -
#8..
- 108 -
#8..
- 109 -
#8..
- 110 -
#8..
- 111 -
#8..
- 112 -

CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

June 2, 2026
Date: April 28, 2026
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: Jessica Hill, Director of Community and Economic Development SUBJECT: Fiscal Year 2026-27 Engineer’s Annual Report for Landscape Maintenance Assessment District No. 2
CONTACT: Edgar Garcia, Community Development Manager
[email protected], 209-577-5211
DESCRIPTION:

Consider accepting the Fiscal Year 2026-27 Engineer’s Annual Report for Landscape Maintenance Assessment District No. 2; Issuing a Notice of Intention to Levy and Collect Assessments and setting a Public Hearing on June 23, 2026 for the levy and collection of assessment for Landscape Maintenance in the public right-of-way, street medians, and areas adjacent to the access control walls in Dry Creek Meadows Subdivisions Nos. 7-10, Creekwood Meadows Subdivision, and Yosemite Meadows Subdivisions Units 1 and 2. (Funding Source: Landscape Maintenance Assessment District No. 2)
STRATEGIC PLAN ELEMENT:

The recommended action supports the City of Modesto’s 2025-2026 Strategic Plan Initiatives: Provide safe, efficient, and reliable infrastructure through proactive community investment, maintenance, and sustainability efforts.

BACKGROUND:

On April 4, 1989, by Resolution No. 89-460, the City formed Landscape Maintenance District No. 2 (LMAD No. 2). LMAD No. 2 provides funding for the landscape maintenance in the public right-of-way, street medians, and areas adjacent to the concrete block walls in Dry Creek Meadows Subdivisions Nos. 7-10, Creekwood Meadows Subdivision, and Yosemite Meadows Subdivisions Units 1 and 2. LMAD No. 2 is located on the northeast corner of Yosemite Boulevard and North McClure Road and is bounded by Yosemite Boulevard on the south, North McClure Road on the west, #9..
- 113 -
City Council, June 2, 2026
Fiscal Year 2026-27 Engineer’s Annual Report
for Landscape Maintenance Assessment District No. 2

Page 2 of 4 ends

Yosemite Meadows Drive on the east, and Mechalys Way on the north. A copy of the boundary map is provided as Attachment 2.

In June 2000, staff successfully completed a Proposition 218 ballot measure which increased the annual assessment and added an annual inflator based on the Building Cost Index (BCI).

LMAD No. 2 was formed in accordance with the Streets and Highways Code Sections 22500 through 226791, more commonly known as the Landscape and Lighting Act of 1972 (the Act). Section 226202 et. seq. of the Act requires the legislative body (the City Council) to take the following actions prior to August 10th of each year:

2. Adopt a resolution approving the Engineer’s Annual Report as submitted or as modified by the City Council.

3. Adopt a resolution of intention to levy and collect assessments within LMAD No. 2 for the fiscal year.

4. Conduct a public hearing.

5. Adopt a resolution confirming the diagram and assessment as originally proposed or as changed by the City Council.

DISCUSSION:

In accordance with Section 22620 of the Act, on March 3, 2026, by Resolution No. 2026-57, the Council directed staff to prepare and file the Fiscal Year 2026-27 Engineer’s Annual Report for LMAD No. 2.

The annual assessment is to be adjusted annually according to the BCI for the San Francisco Bay Area (SF BCI), as reported in the Engineer News Record the second week of February. The inflationary adjustment is applied when the district has minimal or negative reserves to offset the total cost estimates for the upcoming fiscal year. Each parcel receives equal benefits from LMAD No. 2. The annual assessment per acre levied is calculated by dividing the total annual assessment by the total number of assessable acres. The single-family residential properties are levied on a flat rate, which is calculated by multiplying the total assessment per acre by the number of residential acres and subsequently dividing by the total number of residential parcels.

Commercial properties are levied based on actual acreage.

The inflator for Fiscal Year 2026-2027 is 1.80208 %3. The proposed assessment for LMAD No. 2 for Fiscal Year 2026-27 is $34,820.85 ($259.52 per acre for commercial properties and $51.06 each residential property).
1 Landscape and Lighting Act of 1972
2 Sections 22620-22631 of the Landscape and Lighting Act of 1972 #9..
- 114 -
City Council, June 2, 2026
Fiscal Year 2026-27 Engineer’s Annual Report
for Landscape Maintenance Assessment District No. 2

Page 3 of 4 ends

FISCAL IMPACT:

In Fiscal Year 2025-26, $34,204.54 ($254.93 per acre for commercial properties and $50.16 for each residential property) was levied within LMAD No. 2, while its projected expenses are $46,635.30. Expenses include contracted maintenance expenses, utility service charges, and City staff time associated with administration and maintenance.

The Stanislaus County Auditor-Controller’s Office, Property Taxes and Assessments Division, collects a $0.20 fee per assessment and per parcel. This fee is assessed directly from Stanislaus County and is in addition to the annual assessment being levied for LMAD No. 2.

The estimated expenses for Fiscal Year 2026-27 are $50,405, while the projected revenue is $34,820.85. It is the expectation that all expenses for LMAD No. 2 will be paid by the assessments levied on properties within LMAD No. 2.

COMMITTEE RECOMMENDATION:

Per Section 22620-22631 of the Landscaping and Lighting Act of 19724. This item is an annual report and not required to be presented to a Council Committee.

CEQA/NEPA REQUIREMENTS:

This item does not constitute a “project” within the meaning of California Environmental Quality Act (CEQA) Guidelines Section 15378 and requires no environmental review.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution accepting the Fiscal Year 2026-27 Engineer’s Annual Report for Landscape Maintenance Assessment District No. 2 for Dry Creek Meadows Subdivisions Nos. 7- 10, Creekwood Meadows Subdivision, and Yosemite Meadows Subdivisions Units 1 and 2; Issuing a Notice of Intention to Levy and Collect Assessments and setting a Public Hearing on June 23, 2026 to consider the Fiscal Year 2026-27 Levy and Collection of Assessments within the District.
3 (The percentage difference between the February 8/15, 2025 SF BCI, 10720.93, and the February 8/15, 2026 SF BCI, 10914.13, divided by the February 8/15, 2025 SF BCI, 10720.93).
4 Section 22620-22631 of Landscaping and Lighting Act of 1972 #9..
- 115 -
City Council, June 2, 2026
Fiscal Year 2026-27 Engineer’s Annual Report
for Landscape Maintenance Assessment District No. 2

Page 4 of 4 ends

Approved by:

Jessica Hill, Director of Community
and Economic Development
Joseph P. Lopez, City Manager
Attachments:

1. Resolution

2. LMAD No. 2 Boundary Map

3. LMAD No. 2 2026-27 Engineer’s Annual Report
#9..
- 116 -
6/2/2026/CEDD/EGarcia/Item # 1 2026-xxx

MODESTO CITY COUNCIL
RESOLUTION NO. 2026-XX
RESOLUTION ACCEPTING THE FISCAL YEAR 2026-27 ENGINEER’S

ANNUAL REPORT FOR LANDSCAPE MAINTENANCE ASSESSMENT
DISTRICT NO. 2 FOR DRY CREEK MEADOWS SUBDIVISIONS NOS. 7-10,

CREEKWOOD MEADOWS SUBDIVISION, AND YOSEMITE MEADOWS
SUBDIVISIONS UNITS 1 AND 2; ISSUING A NOTICE OF INTENTION TO

LEVY AND COLLECT ASSESSMENTS AND SETTING A PUBLIC HEARING ON JUNE 23, 2026 TO CONSIDER THE FISCAL YEAR 2026-27 LEVY AND

COLLECTION OF ASSESSMENTS WITHIN THE DISTRICT
WHEREAS, Resolution No. 89-460, adopted by the Council of the City of Modesto on April 4, 1989, initiated proceedings for the formation of Landscape Maintenance Assessment District No. 2 for the purpose of administering the maintenance of landscaping in the public right of way within the street medians and adjacent to the access control walls in Dry Creek Meadows Subdivisions Nos. 7-10, Creekwood Meadows Subdivision and Yosemite Meadows Subdivision Units Nos. 1 and 2; and
WHEREAS, said assessment district was formed in accordance with the Landscaping and Lighting Act of 1972, (California Streets and Highways Code Sections 22500 through 22679); and
WHEREAS, in June 2000, staff successfully completed a Proposition 218 ballot measure which increased the annual assessment and added an annual inflator based on the Building Cost Index; and
WHEREAS, Section 22623 of the California Streets and Highways Code requires the City Engineer, the person designated by the Council as Engineer of Work for Assessment District No. 2, to prepare and file an annual report; and #9..
- 117 -
6/2/2026/CEDD/EGarcia/Item # 2 2026-xxx
WHEREAS, in accordance with Section 22620 of the Act, on March 3, 2026, by Resolution No. 2026-57, the Council directed staff to prepare and file the Fiscal Year 2026-27 Engineer’s Annual Report for LMAD No. 2; and WHEREAS, the City Engineer, said Engineer of Work, has prepared and filed said annual report with the City Clerk; and
WHEREAS, California Streets and Highways Code Section 22624 requires the Council to adopt a resolution of intention which shall include the following:
a. Declaration of intention of the Council to levy and collect assessments within the assessment district for the fiscal year stated in said annual report.
b. General description of the existing improvements and proposed improvements and any substantial changes
proposed to be made in the existing improvements.
c. Reference to the assessment district by its distinctive designation and indication of the general location of the district.
d. Reference to said annual report, on file with the City Clerk, for a full and detailed description of the improvements, the boundaries of the assessment district and any zones therein, and the proposed assessments upon assessable lots and
parcels of land within the district.
#9..
- 118 -
6/2/2026/CEDD/EGarcia/Item # 3 2026-xxx
e. Notice of the time, as fixed by California Streets and Highways Code Section 22625, and the place for hearing by the Council on the levy of the proposed assessment.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby accepts the Fiscal Year 2026-2027 Engineer’s Annual Report for Landscape Maintenance Assessment District No. 2 for Dry Creek Meadows Subdivisions Nos. 7-10, Creekwood Meadows Subdivision and Yosemite Subdivisions Units 1 and 2.

BE IT FURTHER RESOLVED, that the Council hereby finds as follows:

1. The City Council intends to levy and collect assessments within Landscape Maintenance Assessment District No. 2
during the Fiscal Year 2026-2027. The amount of the
proposed assessment for 2026-2027 will be $34,820.85
($259.52per acre for commercia properties and $51.06 per each residential property).

2. There are no proposed new improvements or any substantial changes in the existing improvements within the existing Landscape Maintenance Assessment District No. 2, and the existing improvements to be made in said assessment
district are generally described as follows:

The City shall provide maintenance, in perpetuity, of
landscaping and any and all improvements required for such #9..
- 119 -
6/2/2026/CEDD/EGarcia/Item # 4 2026-xxx
maintenance including, but not limited to, landscape irrigation systems in the following locations:
a. Street medians in Creekwood Drive
b. Areas adjacent to the access control walls along
Creekwood Drive
c. Areas adjacent to the access control walls along
Claus Road

3. Landscape Maintenance Assessment District No. 2 is
located in the County of Stanislaus, within the City limits of the City of Modesto, and is more specifically located on the northeast corner of Yosemite Boulevard and North McClure Road and is bounded by Yosemite Boulevard on the south, North McClure Road on the west, Yosemite Meadows Drive
on the east, and Mechalys Way on the north.

5. On Tuesday, the 23rd day of June, 2026, at the hour of 5:30 p.m., the City Council will conduct a public hearing on the question of the levy of the proposed annual assessment. The hearing will be held at the meeting place of the City Council #9..
- 120 -
6/2/2026/CEDD/EGarcia/Item # 5 2026-xxx
located in the Tenth Street Place Chambers located at 1010 10th Street, Modesto, California.

6. The City Clerk is authorized and directed to give the notice of hearing required by the Landscaping and Lighting Act of 1972.

7. The levy and collection of assessments as set forth in this resolution shall follow the procedural and substantive
requirements of Proposition 218 pursuant to Article 13D, Section 5(a) of the California Constitution.
#9..
- 121 -
6/2/2026/CEDD/EGarcia/Item # 6 2026-xxx
The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 2nd day of June, 2026, by _____ , who moved its adoption, which motion being duly seconded by ______ , was upon roll call carried and the resolution adopted by the following vote:

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ATTEST: _____________________________

DIANE NAYARES-PEREZ, CMC,
City Clerk
(SEAL)
APPROVED AS TO FORM:

BY: ________________________________
JOSE M. SANCHEZ, City Attorney
#9..
- 122 -
#9..
- 123 -
#9..
- 124 -
#9..
- 125 -
#9..
- 126 -
#9..
- 127 -
#9..
- 128 -
#9..
- 129 -
#9..
- 130 -
#9..
- 131 -
#9..
- 132 -
#9..
- 133 -
#9..
- 134 -
#9..
- 135 -
#9..
- 136 -
#9..
- 137 -
#9..
- 138 -
#9..
- 139 -
#9..
- 140 -
#9..
- 141 -
#9..
- 142 -
#9..
- 143 -
#9..
- 144 -
#9..
- 145 -
#9..
- 146 -

CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

June 2, 2026
Date: April 26, 2026
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: Jessica Hill, Director of Community and Economic Development SUBJECT: Fiscal Year 2026-27 Engineer’s Annual Report for the Shackelford Landscape and Lighting District
CONTACT: Edgar Garcia, Community Development Manager
[email protected], 209-577-5211
DESCRIPTION:

Consider accepting the Fiscal Year 2026-27 Engineer’s Annual Report for the Shackelford Landscape and Lighting District; Issuing a Notice of Intention to Levy and Collect Assessments and setting a Public Hearing on June 23, 2026, to consider the Fiscal Year 2026-27 Levy and Collection of Assessments within the District. (Funding Source: Shackelford Landscape and Lighting District)
STRATEGIC PLAN ELEMENT:

BACKGROUND:

On June 29, 1999, the County of Stanislaus formed the Shackelford Landscape and Lighting District (Shackelford LLD). The Shackelford LLD was formed in accordance with the Streets and Highways Code Sections 22500 through 226791, more commonly known as the Landscape and Lighting Act of 1972 (the Act). The Shackelford LLD provides funding for the maintenance and service of seventy-seven (77) streetlights located within its boundaries. The annual assessment levied is calculated by dividing the total cost estimate by the total number of parcels within the Shackelford LLD. 1 Landscape and Lighting Act of 1972
#10..
- 147 -
City Council, June 2, 2026
Fiscal Year 2026-27 Engineer’s Annual Report for the
Shackelford Landscape and Lighting District

Page 2 of 4 ends

On April 24, 2012, by Resolution 2012-142, the Council of the City of Modesto approved the jurisdictional transfer of the Shackelford LLD from the County of Stanislaus to the City of Modesto which assumed full responsibility of the Shackelford LLD on July 1, 2012. The Act requires that the legislative body (the City Council) take the following actions prior to August 10th of each year:

2. Adopt a resolution approving the Engineer’s Annual Report as submitted or as modified by the City Council.

3. Adopt a resolution of intention to levy and collect assessments within Shackelford LLD for the fiscal year.

4. Adopt a resolution confirming the diagram and assessment as originally proposed or as changed by the City Council.

5. Conduct a public hearing.

DISCUSSION:

All costs for Shackelford LLD are paid by the assessments levied on each property within the assessment area. The assessments to be levied are intended to provide a revenue source for all the maintenance and servicing of the Shackelford LLD’s improvements including, but not limited to, maintenance of and utility bills for seventyseven streetlights, materials, equipment, labor, and administrative expenses. The assessments are not intended to fund reconstruction or major renovations of the improvements or facilities.

The annual assessment levied that is established each year is calculated by dividing the total cost estimate for maintenance and services by the total number of levying parcels within the Shackelford LLD. Therefore the levy is always based on the actual usage, and there is no annual inflationary adjustment. There are 494 parcels within the district with four (4) owned by Modesto City Schools and three (3) owned by the City of Modesto. Pursuant to California Streets and Highways Code Section 226632, these seven (7) parcels will not be levied for Fiscal Year 2026-27. The total number of parcels to be levied for Fiscal Year 2026-27 is 487. On March 3, 2026, by Resolution No. 2026- 58, the Council directed staff to prepare and file the Fiscal Year 2026-27 Engineer’s Annual Report for the City of Modesto Shackelford Lighting and Landscape District.

FISCAL IMPACT:

In Fiscal Year 2025-26, the total assessment levied was $17,785.24 while its projected expenses were $35,720. Expenses include maintenance of and utility bills for seventyseven streetlights as well as City staff time. Each year levies are based on the current fiscal year expenses and fund balance. A $1.50 administration charge is added to the 2 CA Streets and Highways Code Section 22663
#10..
- 148 -
City Council, June 2, 2026
Fiscal Year 2026-27 Engineer’s Annual Report for the
Shackelford Landscape and Lighting District

Page 3 of 4 ends

per parcel assessment amount and multiplying the per assessment amount by the number of assessable parcels to arrive at the total assessment amount.

The Stanislaus County Auditor-Controller’s Office, Property Taxes and Assessments Division, collects a $0.20 fee per assessment and per parcel. This fee is directly assessed by Stanislaus County and is assessed in addition to the annual assessment being levied for the Shackelford LLD.

The projected expenses for Fiscal Year 2026-27 are $30,182. Due to the fund balance carried over from the previous fiscal year, the proposed annual assessment for Fiscal Year 2026–27 will remain unchanged at $17,785.24. The per parcel fee from Fiscal Year 2025-26 will remain unchanged for Fiscal Year 2026-27 (487 parcels at $36.52 per parcel).

COMMITTEE RECOMMENDATION:

Per Section 22620-22631 of the Landscaping and Lighting Act of 19723, this item is an annual report and not required to be presented to a Council Committee.

CEQA/NEPA REQUIREMENTS:

This item does not constitute a “project” within the meaning of California Environmental Quality Act (CEQA) Guidelines Section 15378 and requires no environmental review.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution accepting the Fiscal Year 2026-27 Engineer’s Annual Report for the Shackelford Landscape and Lighting District; Issuing a Notice of Intention to Levy and Collect Assessments and setting a Public Hearing on June 23, 2026, to consider the Fiscal Year 2026-27 Levy and Collection of Assessments within the District.

Approved by:

Jessica Hill, Director of Community
and Economic Development
Joseph P. Lopez, City Manager
3 Section 22620-22631 of Landscaping and Lighting Act of 1972 #10..
- 149 -
City Council, June 2, 2026
Fiscal Year 2026-27 Engineer’s Annual Report for the
Shackelford Landscape and Lighting District

Page 4 of 4 ends

Attachments:

1. Resolution

2. Shackelford LLD Boundary Map

3. Shackelford LLD 2026-27 Engineer’s Annual Report
#10..
- 150 -
6/2/2026/CEDD/EGarcia/Item # 1 2026-xxx

MODESTO CITY COUNCIL
RESOLUTION NO. 2026-XX
RESOLUTION ACCEPTING THE FISCAL YEAR 2026-27 ENGINEER’S

ANNUAL REPORT FOR THE SHACKELFORD LANDSCAPE AND LIGHTING DISTRICT; ISSUING A NOTICE OF INTENTION TO LEVY AND COLLECT ASSESSMENTS AND SETTING A PUBLIC HEARING ON JUNE 23, 2026 TO CONSIDER THE FISCAL YEAR 2026-27 LEVY AND COLLECTION OF

ASSESSMENTS WITHIN THE DISTRICT
WHEREAS, on June 29, 1999, the County of Stanislaus (“County”) formed the Shackelford Landscape and Lighting District (“Shackelford LLD”) for the purpose of administering the maintenance of seventy-seven (77) 200-watt highpressure sodium streetlights; and WHEREAS, the Shackelford LLD was formed in accordance with the Landscaping and Lighting Act of 1972 (Streets and Highways Code Sections 22500 through 22679); and
WHEREAS, the Shackelford LLD is comprised of approximately 153 acres, includes 494 lots with both residential and commercial development, and is bounded by Crows Landing Road on the west, E. Hatch Road on the south, Union Pacific Railroad on the east, and State Route 99 on the north; and WHEREAS, on February 22, 2012, by LAFCO Resolution No. 2012-05, the Stanislaus County Local Agency Formation Commission (“LAFCO”) approved the annexation of the Shackelford Area to the City of Modesto (“City”); and WHEREAS, on April 24, 2012, the City Council approved the Shackelford Landscape and Lighting District Transfer Agreement between the County and City; and
#10..
- 151 -
6/2/2026/CEDD/EGarcia/Item # 2 2026-xxx
WHEREAS, the City assumed full responsibility and administration of the Shackelford LLD on July 1, 2012; and
WHEREAS, Section 22623 of the California Streets and Highways Code requires the City Engineer, the person designated by this Council as Engineer of Work for the Shackelford LLD, to prepare and file an annual report; and WHEREAS, on March 3, 2026, by Resolution No. 2026-58, Council directed staff to prepare and file the Fiscal Year 2026-27 Engineer’s Annual Report for the City of Modesto Shackelford Lighting and Landscape District; and WHEREAS, the Engineer of Work has prepared and filed said annual report with the City Clerk; and
WHEREAS, the Fiscal Year 2026-27 assessment will remain unchanged from the prior fiscal year; and
WHEREAS, each year levies are calculated by dividing the total cost estimate for maintenance and services by the total number of levying parcels within the Shackelford LLD; and
WHEREAS, there is no inflationary adjustment, each year the levy is calculated by estimating the total costs; and
WHEREAS, California Streets and Highways Code Section 22623 requires the legislative body, the Council of the City of Modesto, to adopt a resolution of intention which shall include the following:
a. Declaration of intention of the legislative body to levy and collect assessments within the Shackelford LLD for the fiscal year stated in the annual report.
#10..
- 152 -
6/2/2026/CEDD/EGarcia/Item # 3 2026-xxx
b. General description of the existing improvements and proposed improvements and any substantial changes proposed to be made in the existing improvements.
c. Reference to the assessment district by its distinctive designation and indication of the general location of the Shackelford LLD.
d. Reference to said annual report, on file with the City Clerk, for a full and detailed description of the improvements, the
boundaries of the Shackelford LLD and any zones therein, and the proposed assessments upon assessable lots and parcels of land within the Shackelford LLD.
e. Notice of the time, as fixed by the California Streets and Highways Code Section 22625, and the place for hearing by the legislative body on the levy of the proposed assessment.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby accepts the Fiscal Year 2026-27 Engineer’s Annual Report for the Shackelford Landscape and Lighting District.

BE IT FURTHER RESOLVED that the City Council hereby finds the following:

1. The City Council intends to levy and collect assessments within the Shackelford LLD during the Fiscal Year 2026-27.

2. Due to the fund balance carried over from the previous fiscal year, the proposed 2026-27 annual assessment for all
parcels will remain unchanged from last fiscal year at $36.52 #10..
- 153 -
6/2/2026/CEDD/EGarcia/Item # 4 2026-xxx
per parcel. The total levy for Fiscal Year 2026-2027 will remain unchanged at $17,785.24.

3. There are no proposed new improvements or any substantial changes in the existing improvements in the Shackelford LLD and the existing improvements to be made in the
Shackelford LLD are generally described as follows:
a. The City shall provide maintenance, operation and
servicing, in perpetuity, of streetlights and all
improvements required for such maintenance
including, but not limited to:
b. Payment to local utility company for monthly power
costs of energizing street lights in the Shackelford
LLD.
c. Payment to local utility company for maintenance of
street lights in the Shackelford LLD that the utility
company owns (usually those lights that are mounted
on wooden poles).
d. Maintenance provided by the City of Modesto for
street lights in the Shackelford LLD that are owned by
the City of Modesto (usually those lights that are
mounted on steel poles).

4. The Shackelford LLD is located in the County of Stanislaus, within the City Limits of the City of Modesto and is more #10..
- 154 -
6/2/2026/CEDD/EGarcia/Item # 5 2026-xxx
specifically located North of Hatch Road, South of State Highway 99, and East of Crows Landing Road.

5. Said annual report filed with the City Clerk and approved by the Council by motion does provide a full and detailed
description of the improvements, the boundaries of the
Shackelford LLD and any zones therein, and the proposed assessments upon assessable lots and parcels of land within the Shackelford LLD.

6. On Tuesday, the 23rd day of June, 2026, at the hour of 5:30 p.m., the City Council will conduct a public hearing on the questions of the levy of the proposed annual assessment.

The hearing will be held at the meeting place of the City Council located in the Tenth Street Place Chambers located at 1010 10th Street, Modesto, California.

7. The City Clerk is authorized and directed to give the notice of hearing required by the Landscape and Lighting Act of 1972.

8. The levy and collection of assessments as set forth in this resolution are exempt from the procedural and substantive requirements of Proposition 218 pursuant to Article XIII, Section 5(a) of the California Constitution.
.
#10..
- 155 -
6/2/2026/CEDD/EGarcia/Item # 6 2026-xxx
The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 2nd day of June, 2026, by Councilmember _____, who moved its adoption, which motion being duly seconded by Councilmember ______, was upon roll call carried and the resolution adopted by the following vote:

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ATTEST: _____________________________

DIANE NAYARES-PEREZ, CMC,
City Clerk
(SEAL)
APPROVED AS TO FORM:

BY: ________________________________
JOSE M. SANCHEZ, City Attorney
#10..
- 156 -
#10..
- 157 -
#10..
- 158 -
#10..
- 159 -
#10..
- 160 -
#10..
- 161 -
#10..
- 162 -
#10..
- 163 -
#10..
- 164 -
#10..
- 165 -
#10..
- 166 -
#10..
- 167 -
#10..
- 168 -
#10..
- 169 -
#10..
- 170 -
#10..
- 171 -
#10..
- 172 -
#10..
- 173 -
#10..
- 174 -
#10..
- 175 -

CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

June 2, 2026
Date: April 16, 2026
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: Jessica Hill, Director of Community and Economic Development SUBJECT: Regional Early Action Planning 2.0 funding
CONTACT: Leslie Danhoff, Administrative Analyst,
[email protected], 209-577-5429
DESCRIPTION:

Consider approving a Memorandum of Understanding (MOU) with Stanislaus Council of Governments for suballocation of Regional Early Action Planning Grant of 2021 program funds (REAP 2.0) in the amount of $839,492. (Funding Source: (REAP 2.0 Grant Funds through Stanislaus Council of Governments)
STRATEGIC PLAN ELEMENT:

The recommended action supports the City’s 2025-2026 Strategic Plan Initiatives Goal C: In partnership with public agencies and other key stakeholders, develop and implement a comprehensive housing and homelessness action plan and Goal H: Achieve long-term financial sustainability by partnering with the region’s Metropolitan Planning Organization Stanislaus Council of Governments (StanCOG) to receive funding through the State of California Department of Housing and Community Development (HCD) and provide funding for key housing and planning initiatives.

BACKGROUND:

The State of California Department of Housing and Community Development (HCD) issued a Notice of Funding Availability (NOFA) for the Regional Early Action Planning Grant of 2021 (REAP 2.0) on July 26, 2022. The REAP Grant Program is intended to fund Housing Element updates and any other eligible housing-related planning activities.

Eligible applicants under the grant program include Councils of Governments (COG), who can suballocate grant awards to local agencies.1 The total REAP funding amount to be 1 https://www.hcd.ca.gov/funding/reap2021
#11..
- 176 -
City Council, June 2, 2026
REAP 2.0 Funding

Page 2 of 3 ends

suballocated to Modesto from the Stanislaus Council of Governments (StanCOG) is $839,492.

DISCUSSION:

The State of California is allocating $600 million from the State General Fund for the REAP 2.0 Grant Program. REAP 2.0 builds on the 2019 REAP Program for which the City received $577,284.

REAP 2.0 expands the focus of the 2019 REAP program by integrating housing and climate goals, the region’s Sustainable Communities Strategy (SCS) and allows for broader planning and implementation investments, including infrastructure investments that support future housing development. REAP 2.0 funds also facilitate the implementation of the sixth cycle Housing Element, adopted by this Council on December 5, 2023 by Resolution No. 2023-532.

In addition to the goal of accelerating housing production, facilitating compliance with the sixth cycle of the Housing Element, and supporting the region’s SCS, REAP 2.0 is intended to meet specific objectives related to infill development, housing for all incomes, Vehicle Miles Traveled (VMT) reduction, and Affirmatively Fair Housing (AFFH). These objectives and goals are intended to lead to transformative policy outcomes.

Staff prepared a REAP 2.0 application to fund key City initiatives that meet REAP 2.0’s goals and objectives. The City was awarded funding by the HCD on March 25, 2026 in the amount of $839,492. City initiatives that received funding include $186,274.65 for the reimbursement for the Consolidated Plan Update, completed in May 2025, $174,025.13 for the reimbursement for the Programmatic Environmental Impact Report, completed in June 2025, $453,977.22 for the General Plan Update, $23,000 for updates to the Preapproved Accessory Dwelling Unit (ADU) Plans, and $2,215 for the development of a Prohousing Designation application. Funds can be reimbursed retroactively from July 1, 2021 through December 30, 2026.

The attached MOU (Attachment 3) describes details associated with REAP 2.0 grant funding suballocation.

FISCAL IMPACT:

The REAP 2.0 grant revenue and eligible expenditures will be housed in a new project.

There is no impact to the City’s General Fund associated with this effort.

City staff will invoice StanCOG consistent with the applicable provisions of the MOU, in order to be reimbursed for project work up to the $839,492 grant amount.

Program Funding Received
Consolidated Plan Update Reimbursement $186,274.65
Programmatic Environmental Impact Report Reimbursement $174,025.13 General Plan Update $453,977.22
#11..
- 177 -
City Council, June 2, 2026
REAP 2.0 Funding

Page 3 of 3 ends

Preapproved ADU Plans Updates $23,000.00
Prohousing Designation Application $2,215.00
TOTAL $839,492.00
COMMITTEE RECOMMENDATION:

Due to the time constraints with this acceptance, we are bringing this item directly to Council
CEQA/NEPA REQUIREMENTS:

This item does not constitute a “project” within the meaning of California Environmental Quality Act (CEQA) Guidelines Section 15378 and requires no environmental review.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution approving a Memorandum of Understanding with Stanislaus Council of Governments for suballocation of Regional Early Action Planning Grant Program of 2021 funds totaling $839,432; and authorizing the City Manager, or his designee to sign the Memorandum of Understanding.

Resolution establishing the Fiscal Year 2025-26 non-capital project revenue, expenditure, and any necessary transfer budgets in the amount of $839,492 to recognize the Regional Early Action Planning Grant of 2021 (REAP 2.0) and fund housing-related work and authorizing the City Manager, or his designee, to implement the provisions of this resolution.

Approved by:

Jessica Hill, Director of Community
and Economic Development
Joseph P. Lopez, City Manager
Attachments:

1. Resolution

2. Budget Resolution

3. MOU Between City of Modesto and StanCOG REAP 2.0 DRAFT #11..
- 178 -
06/02/2026/CED/JHill/Item# 1 2026-XX

MODESTO CITY COUNCIL
RESOLUTION NO. 2026-XX

RESOLUTION APPROVING A MEMORANDUM OF UNDERSTANDING WITH

STANISLAUS COUNCIL OF GOVERNMENTS FOR SUBALLOCATION OF
REGIONAL EARLY ACTION PLANNING GRANT PROGRAM OF 2021 FUNDS TOTALING $839,492 AND AUTHORIZING THE CITY MANAGER, OR HIS

DESIGNEE, TO SIGN THE MEMORANDUM OF UNDERSTANDING
WHEREAS, the Stanislaus Council of Governments (StanCOG) is the Metropolitan Planning Organization (MPO) for the Stanislaus Region, pursuant to State and Federal designation; and
WHEREAS, on July 26, 2022, the State of California Department of Housing and Community Development (HCD) released a Notice of Funding Availability (NOFA) for the Regional Early Action Planning Grant of 2021 (REAP

2.0) to councils of governments and other regional entities; and WHEREAS, the City prepared a REAP 2.0 application to fund key City initiatives and was notified of the award on March 25, 2026; and WHEREAS, the total REAP 2.0 funding amount to be sub allocated to Modesto is $839,492; and
WHEREAS, the funding will support the Consolidated Plan Update, Programmatic Environmental Impact Report, General Plan Update, Updated Preapproved Accessory Dwelling Unit (ADU) Plans, and Prohousing Designation Application; and
WHERAS, StanCOG has prepared a Memorandum of Understanding (MOU) to document the process whereby the City of Modesto will be reimbursed for eligible grant-funded housing-related work; and
WHEREAS, the proposed MOU between City of Modesto and StanCOG to #11..
- 179 -
06/02/2026/CED/JHill/Item# 2 2026-XX
document the REAP 2.0 program funding suballocation and paymentreimbursement process details is included as an attachment to the staff report accompanying this Resolution.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby approves a Memorandum of Understanding with Stanislaus Council of Governments for suballocation of the Regional Early Action Planning Grant of 2021 (REAP 2.0) grant funds totaling $839,492.

BE IT FURTHER RESOLVED that the City Manager, or his designee, is hereby authorized to sign the Memorandum of Understanding, in a form approved by the City Attorney.

The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 2nd day of June, 2026, by Councilmember __________, who moved its adoption, which motion being duly seconded by Councilmember __________, was upon roll call carried and the resolution adopted by the following vote:

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ATTEST: _____________________________

DIANE NAYARES-PEREZ, CMC,
City Clerk
(SEAL)
APPROVED AS TO FORM:

BY: ________________________________
JOSE M. SANCHEZ, City Attorney
#11..
- 180 -
06/02/2026/CED/JHill/Item# 1 2026-XX

MODESTO CITY COUNCIL
RESOLUTION NO. 2026-XX
RESOLUTION ESTABLISHING THE FISCAL YEAR 2025-26 NON-CAPITAL

PROJECT REVENUE, EXPENDITURE AND ANY NECESSARY TRANSFER BUDGETS IN THE AMOUNT OF $839,492 TO RECOGNIZE THE REGIONAL EARLY ACTION PLANNING GRANT OF 2021 (REAP 2.0) AND FUND

HOUSING-RELATED WORK AND AUTHORIZING THE CITY MANAGER, OR

HIS DESIGNEE, TO IMPLEMENT THE PROVISIONS OF THIS RESOLUTION WHEREAS, the State of California Department of Housing and Community Development issued a Notice of Funding Availability for the Regional Early Action Planning Grant of 2021 (REAP 2.0) program on July 26, 2022; and WHEREAS, the City prepared a REAP 2.0 application to fund key City initiatives and was notified of the award on March 25, 2026; and WHEREAS, the total REAP 2.0 funding amount to be sub allocated to Modesto is $839,492; and
WHERAS, the grant award is to be sub allocated by Stanislaus Council of Governments (StanCOG) by mutual agreement of a Memorandum of Understanding (MOU); and
WHEREAS, a new non-capital project and budget must be established to recognize grant revenue, expenditures and necessary transfers for the award amount of $839,492; and
WHEREAS, the City will invoice StanCOG consistent with the applicable provisions of the MOU in order to be reimbursed for project work up to the $839,492 grant amount.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby approves establishing the Fiscal Year 2025-2026 noncapital project revenue, expenditure, and any necessary transfer budgets, in the #11..
- 181 -
06/02/2026/CED/JHill/Item# 2 2026-XX
total amount of $839,492 to recognize the Regional Early Action Planning Grant of 2021 (REAP 2.0) and fund eligible housing-related work.

BE IT FURTHER RESOLVED that the City Manager, or his designee, is hereby authorized to take the necessary steps to implement the provisions of this resolution.

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ATTEST: _____________________________

DIANE NAYARES-PEREZ, CMC,
City Clerk
(SEAL)
APPROVED AS TO FORM:

BY: ________________________________
JOSE M. SANCHEZ, City Attorney
#11..
- 182 -
1 | P age
REAP 2.0 MOU StanCOG – Modesto (041526)

MEMORANDUM OF UNDERSTANDING
between

STANISLAUS COUNCIL OF GOVERNMENTS
and

CITY OF MODESTO
for

SUBALLOCATION OF REGIONAL EARLY ACTION PLANNING GRANT FUNDS OF 2021 (REAP 2.0)
This Memorandum of Understanding is made and entered into between the Stanislaus Council of Governments (StanCOG) and the City of Modesto, the “Sub- Recipient”, and is dated April 15, 2026, for reference purposes.

Recitals
A. WHEREAS, StanCOG is a council of city and county governments in Stanislaus County, established by a joint powers agreement in 1971, to address regional transportation issues and is the designated metropolitan planning organization for the Stanislaus region; B. WHEREAS, StanCOG is the recipient of funds from the California Department of Housing and Community Development (“HCD”) for administration of the Regional Early Action Planning Grant Program of 2021 (REAP 2.0);
C. WHEREAS, StanCOG issued a non-competitive call for projects under the Transformative Funding Suballocation Program, making funds available to all jurisdictions in Stanislaus County for eligible planning and implementation activities consistent with the goals of the REAP 2.0 program;
D. WHEREAS, the City of Modesto applied for, and has been deemed eligible to receive, funding to carry out such planning and implementation activities (the “Project”); E. WHEREAS, the City of Modesto agrees to implement the Project and collaborate with StanCOG to further the goals of promoting affordable infill housing opportunities, expanding multimodal transportation options, and reducing vehicle miles travelled withing the region.

NOW, THEREFORE, in consideration of the mutual promises, covenants, terms, and conditions hereinafter contained, the parties hereto agree as follows:
#11..
- 183 -
2 | P age
REAP 2.0 MOU StanCOG – Modesto (041526)

AGREEMENT

1. Recitals, and Funding Agreement between HCD and StanCOG The recitals above are hereby incorporated in this Agreement. The funding agreement between HCD and StanCOG is attached to this Agreement as Exhibit “A” and all applicable provisions of said agreement shall apply to the Sub-Recipient, in addition to the Agreement terms set forth below. The key guidance and requirements of the REAP 2.0 program applicable to all the SubRecipients are presented in the Notice of Funding Availability and Final Guidelines – Metropolitan Planning Organization Allocation Regional Early Action Planning Grant (REAP

2.0) attached to this Agreement as Exhibit “B”.

2. Funding Amount:

The amount to be paid to Sub-Recipient under this MOU will not exceed eight hundred thirty nine thousand, and four hundred and ninety two dollars, $839,492.00, which represents SubRecipients allocation. In no instance will StanCOG be liable for any payments or costs for work in excess of this amount, nor for any unauthorized or ineligible costs. Nor shall StanCOG be liable for any amounts if HCD fails to allocate or distribute REAP 2.0 funding to StanCOG.

3. Term/Timeline:

The term of this MOU shall begin on the “Effective Date” of this MOU, which shall be the last date of execution of the MOU by the parties hereto. All work identified in the Scope of Work must be completed by December 31, 2026, unless terminated earlier as provided herein. No extensions will be granted to complete the Scope of Work unless authorized by HCD. All final reporting and invoicing, set forth in Section 9 of this Agreement, is due to StanCOG by January 31, 2027.

4. Project Management and Notices:

The StanCOG point of contact for all communication regarding invoicing, reporting and noticing shall be:

Michael Sigala
Stanislaus Council of Governments,
1111 “I” Street Suite 308
Modesto, CA 95354
Telephone: (209) 525-4600
Email: [email protected]
The Subrecipient Project Manager for all communication, invoicing, reporting and noticing shall be:

Vanessa Castro
Senior Planner
#11..
- 184 -
3 | P age
REAP 2.0 MOU StanCOG – Modesto (041526)
City of Modesto
1010 10th Street
Modesto, CA 95354
Telephone: (209) 577-5267
Email:[email protected]

5. Scope of Work:

The scope of work for the Project (“Scope of Work”) is set forth in Sub-Recipient’s REAP 2.0 Application for the StanCOG’s Transformative Suballocation Program, attached to this Agreement as Exhibit “C”.

The Sub-Recipient shall use the Funds in accordance with the scope of work as contained in the grant application approved by HCD. Sub-Recipient request for amendments or modifications in scope must be made in consultation with, and with the prior approval of, StanCOG. If deemed appropriate by StanCOG, StanCOG will seek prior approval from HCD regarding proposed changes in task budget or scope/approach to ensure that any changes to the scope of work as proposed in the grant application are acceptable to HCD.

6. Compliance
By entering into this Agreement and thereby accepting the Funds, the Grantee agrees to comply with the terms and conditions set forth in Exhibit “A”, Exhibit “B”, Exhibit “C”, and this Memorandum of Understanding.

Sub-Recipient will, also, comply with all applicable Federal, State, and local laws, codes, ordinances, regulations, orders, circulars, and directives, including, without limitation, all State regulatory requirements associated with the REAP 2.0 funding provided to SubRecipient hereunder, including all reporting requirements set forth in the REAP 2.0 Guidelines and reporting requirements in the funding agreements between StanCOG and HCD.

Further, Sub-Recipient will require the appropriate debarment certification form from all Sub-Recipient contractors and Sub-Recipient certifies that it will not knowingly enter into any transaction with a contractor, subcontractor, material supplier, or vendor who is debarred, suspended, declared ineligible, or voluntarily excluded from covered transactions by any Federal or State agency.

7. Independent Contractor:

Sub-Recipient, and the agents and employees of the Sub-Recipient, in the performance of this Agreement, will act as and be independent contractors and not officers or employees or agents of StanCOG. Sub-Recipient, its officers, employees, agents, and subcontractors, if any, will have no power to bind or commit StanCOG to any decision or course of action, and will not represent to any person or business that they have such power. Sub-Recipient has and will retain the right to exercise full control of the supervision of the work and over the employment, direction, compensation and discharge of all persons assisting Sub-Recipient in #11..
- 185 -
4 | P age
REAP 2.0 MOU StanCOG – Modesto (041526)
the performance of work funded by this Agreement. Sub-Recipient will be solely responsible for all matters relating to the payment of its employees and contractors including, but not limited to, compliance with all laws, statutes, and regulations governing such matters.

8. Accounting Records:
a. Sub-Recipient, its staff, contractors and subcontractors shall establish and maintain an accounting system and reports that properly accumulate incurred project costs by line. The accounting system shall conform to Generally Accepted Accounting Principles (GAAP), enable the determination of incurred costs at interim points of completion, and provide support for reimbursement payment voucher or invoices. b. Sub-Recipient shall establish a separate ledger account for receipts and expenditure of the Funds and maintain expenditure details in accordance with the scope of work, project timeline and budget.
c. Sub-Recipient shall maintain documentation of its normal procurement policy and competitive bid process (including the use of sole source purchasing), and financial records of expenditures incurred during the course of the project in accordance with GAAP.
d. Sub-Recipient agrees that StanCOG, HCD and the State of California and/or their designated representative(s) shall have the right to review and to copy any records and supporting documentation pertaining to the performance of this Agreement.

9. Reporting and Payment:
a. On a quarterly basis, Sub-Recipient will provide StanCOG with both (1) a written report on the progress made on the Scope of Work; and (2) an invoice for reimbursement containing attached back up documentation, including itemized receipts clearly showing the amount requested for reimbursement, including vendor name, purchase date, and a description of the items, services procured, or Sub-Recipient staff time billed to the Project; statement of reason to provide a clear explanation of why the expense was incurred, such as a copy of a meeting invitation, event flyer, or a written explanation outlining the business purpose of the expense; and proof of payment. If no receipt is available, a proof of payment (e.g., a canceled check or credit card statement) may be required). Sub-Recipient shall submit the quarterly reports within 30 days of the end of the reporting period. The quarterly report shall be provided by e-mail to StanCOG. SubRecipient’s written progress report shall be completed as required by StanCOG, and shall be for the periods ending March, June, September and December of each year. StanCOG may provide a reporting template for the Quarterly Report, and the Sub-Recipient shall report all required information on the template provided. Sub-recipient’s failure to submit timely, accurate, and complete Quarterly Reports and invoices consistent with the approved Scope of Work and budget (and the REAP grant agreement) may result in payment delay, non-payment, or other actions deemed necessary to ensure compliance with the REAP program reporting requirements. In addition, StanCOG reserves the right to withhold future reimbursements or funding distributions, and to disallow expenses not #11..
- 186 -
5 | P age
REAP 2.0 MOU StanCOG – Modesto (041526)
properly and timely invoiced or lacking the required reporting information. b. Sub-Recipient shall annually report to StanCOG by January 31st for the previous calendar year of the Agreement: (1) detailed status of the Project overall, including subtasks (2) status of the uses and expenditures, including subtasks, (3) an explanation and quantification, where appropriate, of the progress achieved toward all of the objectives of the REAP 2.0 program, barriers and solutions for the proposed activities including (a) corresponding impact and measurable outcomes for accelerating infill housing development, (b) reductions in vehicle miles traveled per capita, (c) actions for affirmatively furthering fair housing (d) location of investment, (e) socioeconomic statistics about the impacted geography, and (f) regional impact explanation. Additional information on indicators, outcomes and anticipated changes and other reporting requirements deemed necessary by StanCOG may be required in the Annual Report.

StanCOG may provide a reporting template for the Annual Report, and the Sub-Recipient shall report all required information on the template provided. c. Payments to Sub-Recipient hereunder will be made in arrears. d. Invoices for expenditures incurred prior the Effective Date of this MOU will not be reimbursed.
e. Sub-Recipient shall not be entitled to reimbursement of indirect costs unless a copy of an applicable, approved indirect cost plan has been received by StanCOG prior to submittal of the first invoice from the Sub-Recipient. Indirect cost rates shall be submitted annually in accordance with StanCOG requirements.
f. Sub-Recipient will be notified within ten (10) business days following receipt of its invoice by StanCOG of any circumstances or data identified by StanCOG in SubRecipient’s invoice that would cause withholding of approval and subsequent payment.

10. Audit, Retention and Inspection of Records:
a. StanCOG or its designee, including but not limited to any State or Federal agency, will have the right to review, obtain, copy, and audit all books, records, computer records, accounts, documentation and any other materials (collectively “Records”) pertaining to performance of this Agreement, including any Records in the possession of any contractors or subcontractors. Such Records shall include all records of employment, employment advertisements, employment application forms, and other pertinent employment data, as well as any records pertaining to compliance with Public Contract Code Sections 10115, et seq. and Title 21, California Code of Regulations, Chapter 21, Section 2500, et seq. (when applicable) and other matters connected with the performance of the contract pursuant to Government Code Section 8546.7.
b. Sub-Recipient agrees to provide StanCOG or its designee, the State, the California State Auditor or any duly authorized representative of the State or Federal government, with any relevant information requested and will permit StanCOG or its designees access to its premises, upon reasonable notice, during normal business hours, for the purpose of #11..
- 187 -
6 | P age
REAP 2.0 MOU StanCOG – Modesto (041526)
interviewing employees and inspecting and copying such Records for the purpose of determining compliance with any applicable Federal and State laws and regulations. SubRecipient further agrees to maintain such Records for a period of three (3) years after final payment under the Agreement or three (3) years from the conclusion or resolution of any and all audits or litigation relevant to this Agreement and any amendments, whichever is later. If any litigation, claim, negotiation, audit, monitoring, inspection or other action has been started before the expiration of the three (3) years after final payment under this Contract, all records must be retained by Sub-Recipient, its contractors and subcontractors until completion of the action and resolution of all issues which arise from it. Records related to any and all audits or litigation relevant to this Agreement shall be retained for five (5) years after the conclusion or resolution of the matter. c. In addition to any other remedies available to StanCOG in law or equity for breach of this Agreement, StanCOG, may at its discretion, exercise a variety of remedies, including, but not limited to, requiring repayment of the Funds disbursed and expended under this Agreement.

11. Third Party Contracts:
a. All procurements related to the expenditure of the Funds must be conducted using a fair and competitive procurement process. Sub-Recipient may use its own procurement procedures as long as the procedures comply with all City/County laws, rules and ordinances governing procurement, HCD’s REAP 2.0 Guidelines, and all applicable provisions of California law.
b. Any contract entered into as a result of this MOU shall contain all the provisions stipulated in this MOU and shall be applicable to Sub-Recipient’s contractors and subcontractors.

Copies of all agreements with contractors and subcontractors shall be submitted to StanCOG’s project manager.
c. Sub-Recipient shall be responsible for monitoring and enforcement of all agreements with contractors and subcontractors to ensure compliance with the terms of this MOU.

12. Assignment:

Sub-Recipient shall not assign or subcontract its duties under this MOU. No subcontract, whether existing or later entered into as set forth herein, under any circumstances shall relieve the Sub-Recipient of its liability and obligation under this contract, and all transactions with StanCOG must be through the Sub-Recipient.

13. Indemnity:

Sub-Recipient specifically agrees to indemnify, defend, and hold harmless StanCOG, its directors, officers, members, boards, committees, agents, and employees (collectively the “Indemnitees”) from and against any and all actions, claims, demands, losses, costs, expenses, including reasonable attorneys’ fees and costs, damages, and liabilities (collectively “Losses”) arising out of or in any way connected with the performance of this #11..
- 188 -
7 | P age
REAP 2.0 MOU StanCOG – Modesto (041526)
MOU. Sub-Recipient shall pay all costs and expenses that may be incurred by StanCOG in enforcing this indemnity, including reasonable attorneys’ fees. The provisions of this Section shall survive the expiration, termination, or assignment of this MOU.

14. Amendments:

If HCD, StanCOG or any other State agency having jurisdiction, requires a change to the terms of this MOU, the parties will amend this MOU as necessary, or will terminate it immediately. No alteration or variation of the terms of this MOU will be valid unless made in writing and signed by the parties hereto, and no oral understanding or agreement not incorporated herein, will be binding on any of the parties hereto.

15. Termination:
a. Either party may terminate this MOU for any reason, with or without cause, at any time, by giving the other party fifteen (15) days written notice. If either party issues a notice of termination, StanCOG will reimburse Sub-Recipient for work actually performed up to the effective date of the notice of termination.
b. Sub-Recipient will have the right to terminate this MOU in the event StanCOG is unable to make required payments, including, without limitation, a failure of HCD to appropriate funds. StanCOG has the right to terminate this agreement should Sub-Recipient fail to perform the Scope of Work in a complete and timely manner or should Sub-Recipient fail to meet the Quarterly, Annual or other reporting requirements deemed necessary by StanCOG provided Sub-Recipient shall have thirty (30) calendar days in which to cure its reporting non-compliance.

This MOU may be executed in any number of counterparts with the same effect as if the parties had all signed the same document, and which together shall constitute one and the same instrument.

Each party agrees that this MOU and any other documents to be delivered in connection herewith may be electronically signed, and that any electronic signatures appearing on this MOU or such other documents are the same as handwritten signatures for the purposes of validity, enforceability, and admissibility.

IN WITNESS WHEREOF, this MOU has been executed by the parties hereto and shall be effective when executed by both parties.
#11..
- 189 -
8 | P age
REAP 2.0 MOU StanCOG – Modesto (041526)
Stanislaus Council of Governments, a Joint
Powers Agency
By: _________________________________

Interim Executive Director
Date: ________________________________
City of Modesto
By: _________________________________
{Name}
{Title of Authorized Signatory}
Date: ________________________________
APPROVED AS TO FORM:

By: _________________________________
Monica Streeter
General Counsel
APPROVED AS TO FORM:

By: __________________________________
{Name}
{Title of Authorized Legal Counsel}
#11..
- 190 -
9 | P age
REAP 2.0 MOU StanCOG – Modesto (041526)

EXHIBIT A

FUNDING AGREEMENT BETWEEN HCD AND STANCOG
#11..
- 191 -
10 | P
age
REAP 2.0 MOU StanCOG – Modesto (041526)

EXHIBIT B
NOTICE OF FUNDING AVAILABILITY AND FINAL GUIDELINES – METROPOLITAN

PLANNING ORGANIZATION ALLOCATION REGIONAL EARLY ACTION PLANNING GRANT (REAP 2.0)
#11..
- 192 -
11 | P
age
REAP 2.0 MOU StanCOG – Modesto (041526)

EXHIBIT C
SUB-RECIPIENTS REAP 2.0 APPLICATION FOR THE STANCOG TRANSFORMATIVE

SUBALLOCATION PROGRAM
#11..
- 193 -

CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

June 2, 2026
Date: May 6, 2026
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: DeAnna Christensen, Director of Finance
SUBJECT: Investment Policy Updates
CONTACT: Calogero Maniscalco, Senior Financial Analyst, [email protected], 209-577-5219
DESCRIPTION:

Consider approving the updates to the City’s Investment Policy. (Funding Source: Not Applicable)
STRATEGIC PLAN ELEMENT:

This item supports the City of Modesto 2025-2026 Strategic Plan focus of Governance and Service Delivery under Goal H: Achieve Financial Sustainability.

BACKGROUND:

The Finance Department deposits and invests funds in accordance with the principles of sound treasury management and applicable laws. City staff believes that it is important to keep the City Council informed on all the City’s investment activity and continues to present monthly investment reports to Council. The Finance Department also evaluates the City’s Investment Policy on an annual basis and will bring it to Council for review and approval when updates are required.

DISCUSSION:

PFM Asset Management LLC (“PFMAM”), the City’s investment advisor, provides investment management, research, and supervision of the City’s Managed Funds.

PFMAM completed their annual review of the City’s Investment Policy and is recommending changes to the Policy to be consistent with changes in the sections of the California Government Code 53560 et seq. (the “Code”) that govern the investment of public funds, and to better align Policy language with Code language. PFMAM’s recommended changes are discussed below, and incorporated in the attached Policy documents:
#12..
- 194 -
City Council, June 2, 2026
Investment Policy Updates

Page 2 of 2 ends

• Increase the maximum maturity of Commercial Paper held in the investment portfolio from 270 days to 397 days. This aligns with the updates to the Code from SB 858.
• Increase the maximum allocation of Commercial Paper held in the investment portfolio from 25% to 40%. This aligns with the updates to the Code from SB 858 and sunsets on January 1, 2031.

A copy of the proposed Investment Policy is attached (Attachment 2), with revisions indicated/underlined. An additional copy is attached (Attachment 3), with the same revisions accepted and integrated in the body of the text (a “clean” copy of the updated Policy).

Changes to the Policy are subject to approval by the City Council at a legally noticed public meeting.

FISCAL IMPACT:

There is no direct fiscal impact associated with this action.

COMMITTEE RECOMENTATION:

The Finance Committee approved the Debt Management Policy updates at their May 18, 2026, meeting, and the Committee recommended forwarding this item to Council for approval.

CEQA/NEPA REQUIREMENTS:

This item does not constitute a “project” within the meaning of California Environmental Quality Act (CEQA) Guidelines Section 15378 and requires no environmental review.

RECOMMENDED COMMITTEE ACTION:

Staff Recommendations:

Resolution approving the updates to the City’s Investment Policy.

Approved by:

DeAnna Christensen, Director of Finance
_________
Joseph P. Lopez, City Manager
Attachments:

1. Resolution

2. Investment Policy (FY27 With Edits)

3. Investment Policy (FY27 Clean Copy)
#12..
- 195 -
06/02/2026/Finance/CManiscalco/Item X 1 2026-XX

MODESTO CITY COUNCIL
RESOLUTION NO. 2026-XX
RESOLUTION APPROVING THE UPDATES TO THE CITY’S INVESTMENT POLICY
WHEREAS, pursuant to the City of Modesto Investment Policy, last adopted on June 10, 2025 the Investment Policy shall be reviewed at least annually to ensure its consistency with the overall objectives of preservation of principal, liquidity and yield, and its relevance to current law and financial and economic trends; and
WHEREAS, staff has identified the need to update the City’s Investment Policy in order to continue to effectively invest funds in accordance with the principles of sound treasury management and applicable laws; and WHEREAS, the City desires to adopt the Investment Policy.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto, that it hereby approved the updated to the City’s Investment Policy, attached hereto.

BE IT FURTHER RESOLVED that City staff is hereby authorized and directed to proceed with any and all actions deemed necessary or advisable, following the adopted policy guidelines pursuant to this Resolution, in connection with the future investments of funds, for future consideration by this City Council. #12..
- 196 -
06/02/2026/Finance/CManiscalco/Item X 2 2026-XX
The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 2nd day of June, 2026 by Councilmember ?, who moved its adoption, which motion being duly seconded by Councilmember ?, was upon roll call carried and the resolution adopted by the following vote:

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ATTEST: _____________________________

DIANE NAYARES-PEREZ, CMC,
City Clerk
(SEAL)
APPROVED AS TO FORM:

BY: ____________________________________
JOSE M. SANCHEZ, City Attorney
#12..
- 197 -
1 CITY OF MODESTO

CITY COUNCIL POLICY
LATEST REVISION DATE: 06/10/2025
POLICY NUMBER: 1.019
CITY DEPARTMENT: Finance
SUBJECT: Investment Policy
PURPOSE:

The purpose of this document is to identify various policies and procedures that enhance opportunities for a prudent and systematic investment policy and to organize and formalize investment-related activities.

SCOPE:

The Investment Policy applies to all funds and investment activities of the City except the investment of bond proceeds, which are governed by the appropriate bond documents, and any pension or other post-employment benefit funds held in a trust.

BACKGROUND:

Under Section 2-3.401 of the Municipal Code, it is the function of the Finance Department to deposit and invest funds in accordance with sound treasury management. As a charter city, Modesto operates its pooled idle cash investment under the “prudent investor” rule which states that:
“When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with the care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency.”
The City is also governed by Sections 53600 et seq. of the California Government Code. This affords the City a broad spectrum of investment opportunities, so long as the investment is deemed prudent and allowable under current legislation of the State of California and the charter of the City of Modesto.

On an annual basis, the Finance Director/Treasurer will render to the City Council the statement of investment policy. The report will be considered, with any changes, by the City Council at a public meeting.
#12..
- 198 -
2 ETHICS AND CONFLICTS OF INTEREST
Officers and employees involved in the investment process will refrain from personal business activities that could conflict with proper execution of the investment program, or which could impair their ability to make impartial decisions.

INVESTMENT REPORT
The Finance Director/Treasurer shall provide the City Council with a monthly report of investment transactions. The report shall contain the following:

1. The type of investment, issuer, purchase date, date of maturity, credit rating, overall portfolio yield based on cost, total par and dollar amount invested on all securities, investments and monies.

2. The weighted average maturity of the portfolio.

3. A description of any funds, investments or programs that are under management of contracted parties, including lending programs. Funds and investments held by contracted parties shall be reported at market value and the source of valuation shall be reported.

4. The market value as of the date of the report, and the source of the valuation.

5. A statement of compliance with the investment policy or manner in which the portfolio is not in compliance.

6. A statement denoting the City’s ability to meet its expenditure requirements for the next six months or provide an explanation as to why sufficient money shall, or may, not be available.

INVESTMENT CRITERIA
Public funds are invested in the following manner in order of priority:

1. Safety of Principal
The duty of the Finance Director/Treasurer is to protect, preserve and maintain cash and investments on behalf of the citizens of the community. To guard against loss of principal, only prudent and safe investments will be considered.

2. Liquidity
The receipt of revenues and maturities of investments should be scheduled so that adequate cash will be available to meet disbursements. An adequate portion of the portfolio should be maintained in liquid short-term instruments which can be readily converted to cash if necessary.

3. Return on Investment
The investment portfolio of the City shall be designed with the objective of attaining a market rate of return on its investments consistent with the constraints imposed by its safety objective and cash flow considerations. Return becomes a consideration only after the basic requirements of safety and liquidity have been met.
#12..
- 199 -
3 SAFEKEEPING AND CUSTODY
All security transactions entered into by the City shall be conducted on a delivery-versus payment basis. Securities will be held by third party custodian designated by the Finance Director/Treasurer and evidenced by safekeeping receipts.

The only exception to the foregoing are Local Agency Investment Pools, Certificates of Deposit, and money market funds since the purchased securities are not deliverable. In all cases, purchased securities shall be held in the City’s name.

AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS
The Finance Director/Treasurer will maintain a list of financial dealers and institutions qualified and authorized to transact business with the City.

The purchase by the City of any investment other than those purchased directly from the issuer, will be purchased either from an institution licensed by the State as a broker-dealer, as defined in Section 25004 of the Corporations Code, which is a member of the Financial Industry Regulatory Authority (FINRA), or a member of a federally regulated securities exchange, a national or state chartered bank, a federal or state association (as defined by Section 5102 of the Financial Code), or a brokerage firm designated as a Primary Government Dealer by the Federal Reserve Bank.

The Finance Director/Treasurer will investigate all institutions that wish to do business with the City, to determine if they are adequately capitalized, make markets in securities appropriate for the City’s needs, and agree to abide by the conditions set forth in the City’s Investment Policy and any other guidelines that may be provided. This will be done annually by having the financial institutions:

1. Provide written notification that they have read, and will abide by, the City’s Investment Policy.

2. Submit their most recent audited Financial Statement within 120 days of the institution’s fiscal year end.

If the City has an investment advisor, the investment advisor may use its own list of authorized broker/dealers to conduct transactions on behalf of the City.

Purchase and sale of securities will be made on the basis of competitive bids and offers with a minimum of three quotes being obtained.

PERFORMANCE STANDARDS
The investment portfolio shall be designed with the objective of obtaining a rate of return throughout budgetary and economic cycles, commensurate with the investment risk constraints and the cash flow needs. The City will measure the portfolio’s performance against a market benchmark that is commensurate with the City’s investment risk constraints and the cash flow characteristics of the portfolio.

AUTHORIZED INVESTMENTS
Credit criteria and maximum percentages listed in this section refer to the credit of the issuing organization at the time the security is purchased. The City may from time to time be invested in a #12..
- 200 -
4 security whose rating is downgraded subsequent to the date of purchase. In the event a rating drops below the minimum allowed rating category for that given investment type, the investment advisor shall notify the Finance Director and/or Designee and recommend a plan of action. The City will limit investments in any one non-government issuer, except investment pools, to no more than 5% regardless of security type. A security purchased in accordance with this section shall not have a forward settlement date exceeding 45 days from the time of investment. Commencing with Section 53600 of Article 1, Chapter 4 of the Government Code of the State of California, surplus money may be invested in the following:

INVESTMENT INSTRUMENT SUMMARY
Security Type
Maximum
Maturity
Min Credit
Quality
Authorized
Investment
Limit
Per Issuer
Limit
A. City Issued Bonds 5 Years None None None
B. US Treasury Notes/ Bills 5 Years None None None
C. State of California Securities 5 Years “A” None None D. California Municipal Securities 5 Years “A” None None E. Other 49 State Municipal Securities 5 Years “A” None None F. Federal Agencies 5 Years None None None
G. Banker’s Acceptance (BA) 180 days “A-1” 40% 5%
H. Commercial Paper 397270 days “A-1”/ “A” 40% 5%
I. Certificates of Deposit 1 Year FDIC Insured or
Collateralized 20% 5%
J. Negotiable Certificates of Deposit 5 Years “A” 30% 5% K. Repurchase Agreements 90 Days None None 20%
L. Reverse Repurchase Agreements 92 Days None 20% 5%
M. Medium Term Notes (MTN) 5 Years “A” 30% 5%
N. Money Market Fund None “AAAm” 20% 10%
O. LAIF None None None None
P. Mortgage and Asset-Backed
Securities 5 Year “AA” 20% 5%
Q. CAMP None None None None
R. Supranationals 5 Years “AA” 30% 5%
A. City of Modesto bonds. Bonds issued by the City.

B. U.S. Treasury securities. United States Treasury notes, bonds, bills or certificates of indebtedness or those for which the faith and credit of the United States are pledged for the principal and interest.

C. State of California securities. Registered State of California warrants, treasury notes or bonds, provided that the securities are rated in a rating category of “A” or its equivalent or higher by a nationally recognized statistical rating agency.

D. California municipal securities. Bonds, notes, warrants or other evidence of indebtedness of any local agency within California provided that the securities are rated in a rating category of “A” or its equivalent or higher by a nationally recognized statistical rating agency.

E. Other 49 State municipal securities. Registered treasury notes or bonds of any of the other 49 states in addition to California, including bonds payable solely out of the revenues from a #12..
- 201 -
5 revenue-producing property owned, controlled, or operated by a state, or by a department, board, agency, or authority of any of these states that are rated in a rating category of “A” or its equivalent or higher by a nationally recognized statistical rating agency.

F. Federal Agency securities. Federal agency or United States government-sponsored enterprise obligations, participations, or other instruments, including those issued by or fully guaranteed as to principal and interest by federal agencies or United States governmentsponsored enterprises.

G. Bankers’ Acceptances. Bankers' Acceptances issued by domestic or foreign banks, which are eligible for purchase by the Federal Reserve System, the short-term paper of which is rated in the highest category by a nationally recognized statistical rating agency.

Purchases of Bankers’ Acceptances may not exceed 180 days maturity or 40 percent of the City's surplus money.

H. Commercial Paper. Commercial paper of "prime" quality of the highest ranking or of the highest letter and number rating as provided for by a nationally recognized statistical rating organization. The entity that, issues the commercial paper shall meet all of the following conditions in either paragraph (1) or paragraph (2):
(1) The entity meets the following criteria: (a) is organized and operating within the United States as a general corporation. (b) Has total assets in excess of $500 million. (c) Has debt other than commercial paper, if any, that is rated in a rating category of “A” or its equivalent or higher by a nationally recognized statistical-rating organization (NRSRO). (2) The entity meets the following criteria: (a) is organized within the United States as a special purpose corporation, trust, or limited liability company. (b) Has program wide credit enhancements including, but not limited to, over collateralization, letters of credit, or surety bond, (c) Has commercial paper that is rated “A-1” or its equivalent or higher by an NRSRO.

Effective until January 1, 2026, investments in commercial paper are limited to a maximum of 40 percent of the City’s portfolio. After As of January 1, 2026, investments in commercial paper are limited to a maximum of 4025 percent of the portfolio until January 1, 2031, then it reverts back to a maximum of 25 percent. The maximum investment maturity is restricted to 397270 days.

I. Certificates of Deposit. FDIC insured or fully collateralized time certificates of deposit in financial institutions located in California. Eligible investments are restricted to those issuing institutions that have been in business at least five years. The maximum term for deposits shall be one year. Investments in certificates of deposit are further limited to 20 percent of surplus funds. All time deposits must be collateralized in accordance with California Government Code section 53561. The City, at its discretion, may waive the collateralization requirements for any portion of the deposit that is covered by federal insurance.

J. Negotiable Certificates of Deposit. Negotiable certificates of deposit issued by a nationallyor state-chartered bank, a savings association or a federal association, a state or federal credit union, or by a federally-licensed or state-licensed branch of a foreign bank; provided that the senior debt obligations of the issuing institution are rated in a rating category of “A” or its #12..
- 202 -
6 equivalent or better by a NRSRO. Investments in negotiable certificates of deposit are limited to 30 percent of the portfolio.

K. Repurchase Agreements. Repurchase Agreements used solely as short-term investments not to exceed 90 days.

The following collateral restrictions will be observed: Only U.S. Treasury securities or Federal Agency securities as described in 1 and 2 will be acceptable collateral. All securities underlying Repurchase Agreements must be delivered to the City's custodian bank versus payment or be handled under a tri-party repurchase agreement. The total of all collateral for each Repurchase Agreement must equal or exceed, on the basis of market value plus accrued interest, 102 percent of the total dollar value of the money invested by the City for the term of the investment. For any Repurchase Agreement with a term of more than one day, the value of the underlying securities must be reviewed on a regular basis.

Market value must be calculated each time there is a substitution of collateral.

The City or its trustee shall have a perfected first security interest under the Uniform Commercial Code in all securities subject to Repurchase Agreement.

The City may enter into Repurchase Agreements with (1) primary dealers in U.S. Government securities who are eligible to transact business with, and who report to, the Federal Reserve Bank of New York, and (2) California and non-California banking institutions having assets in excess of $1 billion and in the highest short-term rating category as provided by Moody's Investors Service, Inc. or S&P Global’s Corporation.

The City will have specific written agreements with each firm with which it enters into Repurchase Agreements.

L. Reverse Repurchase Agreements. The City may invest in reverse repurchase agreements only with "primary dealers" with which the City has entered into a master repurchase agreement contract. The City may invest in reverse repurchase agreements with the following conditions:

The City may only use reverse repurchase agreements to (1) cover a temporary cash shortage, or (2) augment earnings. Reverse repurchase agreements may not be used to leverage the portfolio.

In addition, if a reverse repurchase agreement is authorized, it may be utilized only if the security to be sold on reverse repurchase agreement has been owned and fully paid for by the City for a minimum of 30 days prior to the sale; the total of all reverse repurchase agreements on investments owned by the City does not exceed 20 percent of the portfolio; and the agreement does not exceed a term of 92 days, unless the agreement includes a written codicil guaranteeing a minimum earning or spread for the entire period between the sale of the security using a reverse repurchase agreement and the final maturity date of the same security. The proceeds of the reverse repurchase agreement may not be invested in securities whose maturity exceeds the term of the Reverse Repurchase Agreement.

M. Medium-term corporate notes. Medium-term corporate notes defined as all corporate and depository institution debt securities with a maximum remaining maturity of five years or less, issued by corporations organized and operating within the United States or by depository #12..
- 203 -
7 institutions licensed by the U.S. or any state and operating within the U.S. Medium-term notes shall be rated in a rating category “A” or its equivalent or better by a nationally recognized rating service. Purchase of medium-term corporate notes may not exceed 30 percent of the City's investment portfolio.

N. Money market funds. Shares of beneficial interest issued by diversified management companies that are money market funds registered with the Securities and Exchange Commission under the Investment Company Act of 1940 (money market funds). Money market funds may not exceed 20 percent of the City’s investment portfolio and shall have attained the highest ranking or the highest letter and numerical rating provided by not less than two NRSROs.

O. State of California Local Agency Investment Fund (LAIF). The maximum amount invested in LAIF must not exceed the amount permitted by the State Treasurer.

P. Mortgage and asset-backed securities. Any mortgage pass-through security, collateralized mortgage obligation, mortgage- backed or other pay-through bond, equipment lease-back certificate, consumer receivable pass- through certificate, or consumer receivable-backed bond. For securities eligible for investment not issued or guaranteed by federal agencies and government sponsored enterprises, the following limitations apply:

A. The security must be rated, by a nationally recognized rating service, in one of the two highest rating categories (i.e. rating category of “AA” or its equivalent or higher) and have a maximum remaining maturity of five years or less.

B. Purchase of securities authorized by this paragraph shall not exceed 20 percent of the Group's surplus funds that may be invested pursuant to this section.

Q. California Asset Management Program (CAMP).

R. Supranationals. United States dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development (IBRD), International Finance Corporation (IFC), or Inter-American Development Bank (IADB), with a maximum remaining maturity of five years or less, and eligible for purchase and sale within the United States. Investments under this subdivision shall be rated in a rating category of “AA”, its equivalent, or better by at least one NRSRO. Purchases of supranational securities should not exceed 30 percent of the City’s investment portfolio.

INVESTMENT POOLS/MUTUAL FUNDS
A thorough investigation of pools and funds is required prior to investing, and on a continual basis.

MAXIMUM MATURITY
Investment maturities shall be based on a review of cash flow forecasts. Maturities will be scheduled so as to permit the City to meet all projected obligations.

Maximum maturity of an authorized investment is limited to five years. For purposes of compliance with this Policy, an investment’s term or remaining maturity shall be measured from the settlement date to final maturity.
#12..
- 204 -
8 Proceeds of sales or funds set aside for the repayment of any notes (e.g., Tax and Revenue Anticipation Notes) shall not be invested for a term that exceeds the term of the notes.

INELIGIBLE INVESTMENTS
Any security type or structure not specifically approved by this policy is hereby specifically prohibited. Security types which are thereby prohibited include, but are not limited to:

Investment in inverse floaters, range notes, or interest only strips that are derived from a pool of mortgages is prohibited.

RESTRICTIONS SET BY THE FINANCE DIRECTOR/TREASURER
A. Prior approval of the Finance Director/Treasurer is required for the following transactions, unless the City utilizes the services of an investment advisor registered with the Securities and Exchange Commission in a fiduciary relationship as outlined in this policy.

Sale of securities
Swaps and trades
Purchase of collateralized mortgage obligations (CMO)
Purchase of mortgage-backed obligations
Purchase of corporate notes
Purchase transaction in excess of $3 million
B. The following investments are not deemed appropriate for the City and will not be utilized:

Futures and options
Small Business Administration notes

COLLATERALIZATION
Collateralization will be required on two types of investments: certificates of deposit and repurchase (and reverse repurchase) agreements. In order to anticipate market changes and provide a level of security for all funds, the collateralization level will be 102% of market value of principal and accrued interest for repurchase agreements. All time deposits must be collateralized in accordance with California Government Code section 53561.

INTERNAL CONTROLS
The Finance Director/Treasurer is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft, fraud and misuse.

AUTHORIZED INVESTMENT PERSONNEL
Pursuant to the Government Code, the City Council delegates the authority to invest or to reinvest funds, or to sell or exchange securities so purchased, to the Finance Director/Treasurer for a oneyear period. The Finance Director/Treasurer is charged with the responsibility for carrying out the policies of the City Council and shall assume full responsibility for investment transactions until the delegation of authority is revoked or expires.
#12..
- 205 -
9 Idle cash management and investment transactions are the responsibility of the Finance Department, which is under the control of the Finance Director/Treasurer. The Finance Director/Treasurer may designate an individual(s) [“Designee”] to be responsible for the daily management of the City’s portfolio of treasury investments. The Designee may also be directed to monitor and forecast the City’s cash flows, and prepare periodic investment reports that are submitted to the City Council. The Accounting Division of the Finance Department monitors all treasury transactions and prepares accounting records of all investment transactions as to type of investment, amount, yield, and maturity. No other person has authority to make investment transactions without the written authority of the Finance Director/Treasurer. Pursuant to Government Code chapter 53600, all persons investing monies are trustees and therefore fiduciaries subject to the prudent investor standard. Financial market security transactions will be executed by delivery versus payment and the securities will be held by a third party custodian.

Subject to required procurement procedures, the City may engage the support services of outside professionals in regard to its financial program, so long as it can be demonstrated or anticipated that these services produce a net financial advantage or necessary financial protection of the City’s resources.

POLICY REVIEW
The investment policy shall be adopted by resolution of the City Council when there are any changes to policy, to ensure its consistency with the overall objectives of preservation of principal, liquidity and yield, and its relevance to current law and financial and economic trends. Any amendments to the policy shall be forwarded to City Council for approval.

This policy and the internal controls related to the investment of City funds will be reviewed by the City’s independent external auditors as part of their annual audit of the City’s financial statements. #12..
- 206 -
10 APPENDIX A - GLOSSARY
Bankers Acceptances (BAs)
Bankers Acceptance is a time bill of exchange drawn on and accepted by a commercial bank to1 finance the exchange of goods. When a bank “accepts” such a bill, the time draft becomes, in effect, a predated certified check payable to the bearer at some future specified date. Little risk is involved for the investor because the commercial bank assumes primary liability once the draft is accepted.

California Asset Management Program (CAMP)
CAMP is a Joint Powers Authority (“JPA”) designed to assist public agencies with their investment needs through the use of the Cash Reserve Portfolio (“Pool”), which is rated “AAAm” by S&P Global, its highest rating category. The Pool seeks to attain a high level of current income consistent with the preservation of principal.

Certificates of Deposit (CDS)
A certificate of deposit is issued against funds deposited in a commercial bank for a definite period of time and earning a specified rate of return. They are issued in two forms, negotiable and nonnegotiable:

A negotiable certificate of deposit may be sold by one holder to another prior to maturity.

This is possible because the issuing bank agrees to pay the amount of the deposit, plus earned interest, to the Bearer of the certificate at maturity.

A non-negotiable certificate of deposit is collateralized and is not a money market instrument since it cannot be traded in the secondary market. It is issued on a fixed maturity basis and often pays a higher interest rate than is permissible on other savings or time deposit accounts.

Collateralized Mortgage Obligation (CMO)
A CMO is a pool of mortgages sold as a single investment with interest paid monthly, quarterly, or semi-annually. Mortgage securities pay a higher rate than U.S. Treasury securities due to risk of prepayment and default.

Commercial Paper (CP)
This is a short-term promissory note issued by a corporation to raise working capital. The interest rates tend to be higher than other investments of similar liquidity.

Derivatives
A financial instrument with a value derived from the value of one or more underlying assets or indexes of asset values. The term “derivative products” refers to instruments or features such as collateralized mortgage obligations (CMOs), interest-only (IOs) and principal-only (POs), forwards, futures, currency and interest rate swaps, options, floaters/inverse floaters, and caps/floors/collars.

Federal Agency Securities
Certain agencies created by Congress and sponsored by the federal government issue debt that is considered to be of prime quality and have a very high standing in the bond market. The major federal agencies are described as follows:
#12..
- 207 -
11 Federal National Mortgage Association (FNMA, “Fannie Mae”) provides funds to the mortgage market primarily by purchasing loans from local lenders.

Federal Home Loan Mortgage Corporation (FHLMC, “Freddie Mac”) purchases conventional mortgages and sells mortgage-backed securities.

Student Loan Marketing Association (SLMA, “Sallie Mae”) facilitates that flow of private capital into various federally-guaranteed student loan programs maintained through banks, S&Ls, educational institutions and other participating lenders.

Federal Farm Credit System (FFCB) sells securities to provide mortgage loans and shortterm and intermediate-term credit to farmers, ranchers, and agricultural cooperatives.

Federal Home Loan Bank (FHLB) acts as a credit reserve system for the thrift industry to stabilize the flow of funds to member savings and loan and savings banks.

Futures
Exchange traded contracts specifying a future date of delivery or receipt of a specific product (physical commodity or financial instrument). Futures are used by business as a hedge against unfavorable price changes, and by speculators who hope to profit from such changes.

Local Agency Investment Fund (LAIF)
State of California LAIF is designed to provide a convenient and safe means of investing temporarily idle monies by the State Treasurer. LAJF provides high liquidity and generally pays higher yields than can be realized by individual local agencies (for similar maturities) due to economies of scale.

Medium-Term Notes
Issued by corporations (in the form of secured or unsecured debt) for the purpose of raising working capital and purchasing capital assets.

Options
A right to buy (call) or sell (put) a fixed amount of a given stock at a specified price within a limited period of time. The purchaser hopes that the stock’s price will go up (if he bought a call) or down (if he bought a put) by an amount sufficient to provide a profit when he sells the option. If the price is static or moves in the opposite direction, the price paid for the option is lost entirely.

Repurchase Agreement
As authorized in Government Code Section 5360i (1), these investment vehicles are (generally short-term) agreements between the local agency and seller for the purchase of Government securities to be resold at a specific date and for a specific amount.

Reverse Repurchase Agreement
This transaction is the opposite of a repurchase agreement. The dealer buys securities with a contractual agreement to sell them back at a prearranged date. The local agency pays the dealer interest for the use of the funds. The money “borrowed” on a “reverse repo” can be reinvested in higher yielding instruments.
#12..
- 208 -
12 Supranational entities
Entities formed by two or more central governments with the purpose of promoting economic development for the member countries. Supranational institutions finance their activities by issuing debt, such as supranational bonds. Examples of supranational institutions include the European Investment Bank and the World Bank. Similarly to the government bonds, the bonds issued by these institutions are considered direct obligations of the issuing nations and have a high credit rating.

U.S. Treasury Securities
The highest quality, most liquid debt investments available in the fixed income market-place, unconditionally backed by the “full faith and credit” of the U.S. Government. Treasury bills are short-term instruments (maturity of three months to one year); Treasury notes and bonds are currently issued with maturities of two to ten years.
#12..
- 209 -
1 CITY OF MODESTO

CITY COUNCIL POLICY
LATEST REVISION DATE: 06/10/2025
POLICY NUMBER: 1.019
CITY DEPARTMENT: Finance
SUBJECT: Investment Policy
PURPOSE:

SCOPE:

BACKGROUND:

On an annual basis, the Finance Director/Treasurer will render to the City Council the statement of investment policy. The report will be considered, with any changes, by the City Council at a public meeting.
#12..
- 210 -
2 ETHICS AND CONFLICTS OF INTEREST
Officers and employees involved in the investment process will refrain from personal business activities that could conflict with proper execution of the investment program, or which could impair their ability to make impartial decisions.

INVESTMENT REPORT
The Finance Director/Treasurer shall provide the City Council with a monthly report of investment transactions. The report shall contain the following:

2. The weighted average maturity of the portfolio.

4. The market value as of the date of the report, and the source of the valuation.

5. A statement of compliance with the investment policy or manner in which the portfolio is not in compliance.

6. A statement denoting the City’s ability to meet its expenditure requirements for the next six months or provide an explanation as to why sufficient money shall, or may, not be available.

INVESTMENT CRITERIA
Public funds are invested in the following manner in order of priority:

3. Return on Investment
The investment portfolio of the City shall be designed with the objective of attaining a market rate of return on its investments consistent with the constraints imposed by its safety objective and cash flow considerations. Return becomes a consideration only after the basic requirements of safety and liquidity have been met.
#12..
- 211 -
3 SAFEKEEPING AND CUSTODY
All security transactions entered into by the City shall be conducted on a delivery-versus payment basis. Securities will be held by third party custodian designated by the Finance Director/Treasurer and evidenced by safekeeping receipts.

AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS
The Finance Director/Treasurer will maintain a list of financial dealers and institutions qualified and authorized to transact business with the City.

1. Provide written notification that they have read, and will abide by, the City’s Investment Policy.

2. Submit their most recent audited Financial Statement within 120 days of the institution’s fiscal year end.

If the City has an investment advisor, the investment advisor may use its own list of authorized broker/dealers to conduct transactions on behalf of the City.

Purchase and sale of securities will be made on the basis of competitive bids and offers with a minimum of three quotes being obtained.

AUTHORIZED INVESTMENTS
Credit criteria and maximum percentages listed in this section refer to the credit of the issuing organization at the time the security is purchased. The City may from time to time be invested in a #12..
- 212 -
4 security whose rating is downgraded subsequent to the date of purchase. In the event a rating drops below the minimum allowed rating category for that given investment type, the investment advisor shall notify the Finance Director and/or Designee and recommend a plan of action. The City will limit investments in any one non-government issuer, except investment pools, to no more than 5% regardless of security type. A security purchased in accordance with this section shall not have a forward settlement date exceeding 45 days from the time of investment. Commencing with Section 53600 of Article 1, Chapter 4 of the Government Code of the State of California, surplus money may be invested in the following:

INVESTMENT INSTRUMENT SUMMARY
Security Type
Maximum
Maturity
Min Credit
Quality
Authorized
Investment
Limit
Per Issuer
Limit
A. City Issued Bonds 5 Years None None None
B. US Treasury Notes/ Bills 5 Years None None None
C. State of California Securities 5 Years “A” None None D. California Municipal Securities 5 Years “A” None None E. Other 49 State Municipal Securities 5 Years “A” None None F. Federal Agencies 5 Years None None None
G. Banker’s Acceptance (BA) 180 days “A-1” 40% 5%
H. Commercial Paper 397 days “A-1”/ “A” 40% 5%
I. Certificates of Deposit 1 Year FDIC Insured or
Collateralized 20% 5%
J. Negotiable Certificates of Deposit 5 Years “A” 30% 5% K. Repurchase Agreements 90 Days None None 20%
L. Reverse Repurchase Agreements 92 Days None 20% 5%
M. Medium Term Notes (MTN) 5 Years “A” 30% 5%
N. Money Market Fund None “AAAm” 20% 10%
O. LAIF None None None None
P. Mortgage and Asset-Backed
Securities 5 Year “AA” 20% 5%
Q. CAMP None None None None
R. Supranationals 5 Years “AA” 30% 5%
A. City of Modesto bonds. Bonds issued by the City.

E. Other 49 State municipal securities. Registered treasury notes or bonds of any of the other 49 states in addition to California, including bonds payable solely out of the revenues from a #12..
- 213 -
5 revenue-producing property owned, controlled, or operated by a state, or by a department, board, agency, or authority of any of these states that are rated in a rating category of “A” or its equivalent or higher by a nationally recognized statistical rating agency.

Purchases of Bankers’ Acceptances may not exceed 180 days maturity or 40 percent of the City's surplus money.

As ofJanuary 1, 2026, investments in commercial paper are limited to a maximum of 40 percent of the portfolio until January 1, 2031, then it reverts back to a maximum of 25 percent. The maximum investment maturity is restricted to 397 days.

J. Negotiable Certificates of Deposit. Negotiable certificates of deposit issued by a nationallyor state-chartered bank, a savings association or a federal association, a state or federal credit union, or by a federally-licensed or state-licensed branch of a foreign bank; provided that the senior debt obligations of the issuing institution are rated in a rating category of “A” or its equivalent or better by a NRSRO. Investments in negotiable certificates of deposit are limited to #12..
- 214 -
6 30 percent of the portfolio.

K. Repurchase Agreements. Repurchase Agreements used solely as short-term investments not to exceed 90 days.

Market value must be calculated each time there is a substitution of collateral.

The City or its trustee shall have a perfected first security interest under the Uniform Commercial Code in all securities subject to Repurchase Agreement.

The City will have specific written agreements with each firm with which it enters into Repurchase Agreements.

The City may only use reverse repurchase agreements to (1) cover a temporary cash shortage, or (2) augment earnings. Reverse repurchase agreements may not be used to leverage the portfolio.

M. Medium-term corporate notes. Medium-term corporate notes defined as all corporate and depository institution debt securities with a maximum remaining maturity of five years or less, issued by corporations organized and operating within the United States or by depository institutions licensed by the U.S. or any state and operating within the U.S. Medium-term notes #12..
- 215 -
7 shall be rated in a rating category “A” or its equivalent or better by a nationally recognized rating service. Purchase of medium-term corporate notes may not exceed 30 percent of the City's investment portfolio.

O. State of California Local Agency Investment Fund (LAIF). The maximum amount invested in LAIF must not exceed the amount permitted by the State Treasurer.

B. Purchase of securities authorized by this paragraph shall not exceed 20 percent of the Group's surplus funds that may be invested pursuant to this section.

Q. California Asset Management Program (CAMP).

INVESTMENT POOLS/MUTUAL FUNDS
A thorough investigation of pools and funds is required prior to investing, and on a continual basis.

MAXIMUM MATURITY
Investment maturities shall be based on a review of cash flow forecasts. Maturities will be scheduled so as to permit the City to meet all projected obligations.

Proceeds of sales or funds set aside for the repayment of any notes (e.g., Tax and Revenue #12..
- 216 -
8 Anticipation Notes) shall not be invested for a term that exceeds the term of the notes.

Investment in inverse floaters, range notes, or interest only strips that are derived from a pool of mortgages is prohibited.

Futures and options
Small Business Administration notes

Idle cash management and investment transactions are the responsibility of the Finance #12..
- 217 -
9 Department, which is under the control of the Finance Director/Treasurer. The Finance Director/Treasurer may designate an individual(s) [“Designee”] to be responsible for the daily management of the City’s portfolio of treasury investments. The Designee may also be directed to monitor and forecast the City’s cash flows, and prepare periodic investment reports that are submitted to the City Council. The Accounting Division of the Finance Department monitors all treasury transactions and prepares accounting records of all investment transactions as to type of investment, amount, yield, and maturity. No other person has authority to make investment transactions without the written authority of the Finance Director/Treasurer. Pursuant to Government Code chapter 53600, all persons investing monies are trustees and therefore fiduciaries subject to the prudent investor standard. Financial market security transactions will be executed by delivery versus payment and the securities will be held by a third party custodian.

This policy and the internal controls related to the investment of City funds will be reviewed by the City’s independent external auditors as part of their annual audit of the City’s financial statements. #12..
- 218 -
10 APPENDIX A - GLOSSARY
Bankers Acceptances (BAs)
Bankers Acceptance is a time bill of exchange drawn on and accepted by a commercial bank to1 finance the exchange of goods. When a bank “accepts” such a bill, the time draft becomes, in effect, a predated certified check payable to the bearer at some future specified date. Little risk is involved for the investor because the commercial bank assumes primary liability once the draft is accepted.

A negotiable certificate of deposit may be sold by one holder to another prior to maturity.

This is possible because the issuing bank agrees to pay the amount of the deposit, plus earned interest, to the Bearer of the certificate at maturity.

Commercial Paper (CP)
This is a short-term promissory note issued by a corporation to raise working capital. The interest rates tend to be higher than other investments of similar liquidity.

Federal Agency Securities
Certain agencies created by Congress and sponsored by the federal government issue debt that is considered to be of prime quality and have a very high standing in the bond market. The major federal agencies are described as follows:
#12..
- 219 -
11 Federal National Mortgage Association (FNMA, “Fannie Mae”) provides funds to the mortgage market primarily by purchasing loans from local lenders.

Federal Home Loan Mortgage Corporation (FHLMC, “Freddie Mac”) purchases conventional mortgages and sells mortgage-backed securities.

Federal Farm Credit System (FFCB) sells securities to provide mortgage loans and shortterm and intermediate-term credit to farmers, ranchers, and agricultural cooperatives.

Federal Home Loan Bank (FHLB) acts as a credit reserve system for the thrift industry to stabilize the flow of funds to member savings and loan and savings banks.

Medium-Term Notes
Issued by corporations (in the form of secured or unsecured debt) for the purpose of raising working capital and purchasing capital assets.

Reverse Repurchase Agreement
This transaction is the opposite of a repurchase agreement. The dealer buys securities with a contractual agreement to sell them back at a prearranged date. The local agency pays the dealer interest for the use of the funds. The money “borrowed” on a “reverse repo” can be reinvested in higher yielding instruments.
#12..
- 220 -
12 Supranational entities
Entities formed by two or more central governments with the purpose of promoting economic development for the member countries. Supranational institutions finance their activities by issuing debt, such as supranational bonds. Examples of supranational institutions include the European Investment Bank and the World Bank. Similarly to the government bonds, the bonds issued by these institutions are considered direct obligations of the issuing nations and have a high credit rating.

CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

June 2, 2026
Date: May 6, 2026
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: DeAnna Christensen, Director of Finance
SUBJECT: Debt Management Policy Updates
CONTACT: Calogero Maniscalco, Senior Financial Analyst, [email protected], 209-577-5219
DESCRIPTION:

Consider approving the updates to the City’s Debt Management Policy. (Funding Source: Not Applicable)
STRATEGIC PLAN ELEMENT:

This item supports the City of Modesto 2025-26 Strategic Plan focus of Governance and Service Delivery under Goal H: Achieve Financial Sustainability.

BACKGROUND:

On August 2, 2006, the City Council adopted Resolution 2006-487 approving a Debt Management Policy (Policy) for the City of Modesto. The purpose of this Policy is to organize and formalize debt issuance-related policies and procedures for the City. The primary objectives of the City’s debt and financing-related activities are to maintain costeffective access to the capital markets through prudent yet flexible policies; moderate debt principal and debt service payments through effective planning and project cash management; achieve the lowest cost of borrowing; and achieve the highest practical credit ratings.

DISCUSSION:

This Policy is to be reviewed and updated annually as required. Public Financial Management, Inc. (PFM), the City’s municipal advisor, and Norton Rose Fulbright, the City’s bond counsel, have reviewed and proposed updates and changes to the Debt Management Policy. The recommended changes are discussed below, and incorporated in the attached Policy documents:
#13..
- 222 -
City Council, June 2, 2026
Debt Management Policy Updates

Page 2 of 3 ends

• In the Terms and Conditions of Bonds section, language was added to expand on the permissible uses of bond proceeds and the suitability of investing proceeds.
• In the Credit Enhancements section, language was added to highlight the benefits of investing bond proceeds.
• In the Refinancing Outstanding Debt section, language was added to clarify the approach to establishing the 3% savings threshold.
• In the Methods of Issuance section, language was added to clarify the appropriateness of Private Placement debt
A copy of the proposed Debt Management Policy is attached (Attachment 1), with revisions indicated/underlined. An additional copy is attached (Attachment 2), with the same revisions accepted and integrated in the body of the text (a “clean” copy of the updated Policy).

Changes to the Debt Management Policy are subject to approval by the City Council at a legally noticed public meeting.

FISCAL IMPACT:

There is no immediate fiscal impact associated with this particular action.

COMMITTEE RECOMENTATION:

The Finance Committee approved the Debt Management Policy updates at their May 18, 2026 meeting, and the Committee recommended forwarding this item to Council for approval.

CEQA/NEPA REQUIREMENTS:

This item does not constitute a “project” within the meaning of California Environmental Quality Act (CEQA) Guidelines Section 15378 and requires no environmental review.

RECOMMENDED COMMITTEE ACTION:

Staff Recommendations:

Resolution approving the updates to the City’s Debt Management Policy.

Approved by:

DeAnna Christensen, Director of Finance
Joseph P. Lopez, City Manager
#13..
- 223 -
City Council, June 2, 2026
Debt Management Policy Updates

Page 3 of 3 ends

Attachments:

1. Resolution

2. Debt Management Policy (FY27 With Edits)

3. Debt Management Policy (FY27 Clean Copy)

4. Debt Management Policy Finance Committee Presentation FY27 #13..
- 224 -
06/02/2026/Finance/CManiscalco/Item X 1 2026-XX

MODESTO CITY COUNCIL
RESOLUTION NO. 2026-XX
RESOLUTION APPROVING THE UPDATES TO THE CITY’S DEBT

MANAGEMENT POLICY
WHEREAS, pursuant to the City of Modesto Debt Management Policy, last adopted on June 10, 2025 the City of Modesto is required to periodically review and update its Debt Management Policy to address changes to the primary objectives related to the City’s debt and financing related activities; and WHEREAS, staff has identified the need to update the City’s Debt Management Policy in order to continue to maintain cost-effective access to the capital markets through prudent yet flexible policies; moderate principal and debt service payments through effective planning and project cash management; achieve the lowest cost of borrowing; and achieve the highest practical credit ratings.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto, that it hereby approves the updates to the City’s Debt Management Policy, attached hereto.

BE IT FURTHER RESOLVED that City staff is hereby authorized and directed to proceed with any and all actions deemed necessary or advisable, following the adopted policy guidelines pursuant to this Resolution, in connection with the future issuances of the City Debt, for future consideration by this City Council.
#13..
- 225 -
06/02/2026/Finance/CManiscalco/Item X 2 2026-XX
The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 2nd day of June, 2026 by Councilmember ?, who moved its adoption, which motion being duly seconded by Councilmember ?, was upon roll call carried and the resolution adopted by the following vote:

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ATTEST: _______________________________

DIANE NAYARES-PEREZ, CMC,
City Clerk
(SEAL)
APPROVED AS TO FORM:

BY: ____________________________________
JOSE M. SANCHEZ, City Attorney
#13..
- 226 -
1 I. INTRODUCTION
The purpose of this Policy is to organize and formalize debt issuance-related policies and procedures for the City of Modesto (the “City”) and to establish a systematic debt policy (the “Debt Policy” or the “Policy”). The debt policies and practices of the City are, in every case, subject to and limited by applicable provisions of state and federal law and prudent debt management principles.

II. DEBT POLICY OBJECTIVE
The primary objectives of the City’s debt and financing related activities are to maintain cost-effective access to the capital markets and other financing venues through prudent yet flexible policies.

Financial objectives include:
 Moderate principal and debt service payments through effective planning and projected cash management;
 Achieve the lowest cost of borrowing; and
 Achieve the highest practical credit ratings.

Other objectives include:
 Establishing clear criteria for decision making with regards to debt issuance, debt structuring and debt management
 Foster consistency in debt management practices over time with staff and Council turnover  Ensure industry best practices are adopted and maintained III. SCOPE AND DELEGATION OF CITY
This Debt Policy shall govern, except as otherwise covered by the City of Modesto Investment Policy and the City of Modesto Interest Rate Swap Policy, the issuance and management of all debt funded through the capital markets and private placements, including the selection and management of related financial and advisory services and products, and the investment of bond proceeds.

This Policy shall be reviewed and updated periodically as required. Any changes to the Policy are subject to approval by the City Council at a legally noticed and conducted public meeting. Overall policy direction of this Debt Policy shall be provided by the City Council.

Responsibility for implementation of the Debt Policy, and day-to-day responsibility for structuring,

CITY OF MODESTO

CITY COUNCIL POLICY
LATEST REVISION DATE: May 20, 2024
June 10, 2025
POLICY NUMBER: 1.036
CITY DEPARTMENT: Finance
SUBJECT: Debt Management Policy

#13..
- 227 -
2 implementing, and managing the City’s debt and finance program, shall lie with the Director of Finance.

The City Council’s adoption of the City Annual Budget does not, in and of itself, constitute authorization for debt issuance for any reason. This Debt Policy requires that the City Council specifically authorize each debt financing. Each financing shall be presented to the City Council, subject to City Council agenda review and approval (debt financings cannot be approved on a consent calendar).

While adherence to this Policy is required in applicable circumstances, the City recognizes that changes in the capital markets, agency programs and other unforeseen circumstances may from time to time produce situations that are not covered by the Policy and will require modifications or exceptions to achieve policy goals. In these cases, management flexibility is appropriate, provided specific authorization from the City Council is obtained.

IV. ETHICS AND CONFLICTS OF INTEREST
Officers and employees of the City involved in the execution and management of the Debt Policy will not engage in any personal business activities that could conflict with proper and lawful execution and management of the Debt Policy, or which could impair their ability to make impartial decisions.

V. CAPITAL IMPROVEMENT PROGRAM INTEGRATION
The City’s multi-year Capital Improvement Program (“CIP”), which identifies the projects and the appropriate funding mechanisms to pay for them, shall be used in combination with the CIP Financial and Budget Policies and this Debt Policy to ensure the proper allocation and financing of eligible projects. The CIP and its related policies set priorities and strategies for allocating and tracking funding, while the Debt Policy provides policy direction and limitations for proposed financings. Debt issuance for capital projects shall not be recommended for City Council approval unless such issuance has been incorporated into the CIP.

VI. STANDARDS FOR USE OF DEBT FINANCING
The City’s Debt Policy will promote debt issuance only in those cases where public policy, equity and economic efficiency favor debt over cash (pay-as-you-go) financing. Long-term debt financing shall not be used to fund operating costs.

A. Credit Quality
Credit quality is an overriding consideration. All City debt management activities for new debt issuances will be conducted in a manner conducive to receiving the highest credit ratings possible consistent with the City’s debt management objectives, and to maintaining or improving the current credit ratings assigned to the City's outstanding debt by the major credit rating agencies.

B. Term of Financing
Debt can be used to provide funding for long-term capital projects. The debt repayment period should relate to the expected useful life for the facilities or equipment being financed, and should, as a general matter, be concurrent with the stream of benefits from these facilities. When the City finances capital projects by issuing bonds, the debt repayment period generally should not exceed #13..
- 228 -
3 the average useful life of the equipment, software and/or facilities being acquired or constructed, but in no case will the financing exceed 120% of the useful life of the project being financed.

Inherent in its long-term debt policies, the City recognizes that future taxpayers and/or ratepayers will benefit from the capital investment and that it is appropriate that they pay a share of the asset cost.

C. Debt Financing Mechanism
The City will evaluate the use of all financial alternatives available, including, but not limited to:
long-term debt, short-term debt, commercial paper, tax revenue and grant anticipation notes, private placement and inter-fund borrowing. The City will utilize the most cost advantageous financing alternative available while limiting the City’s risk exposure.

D. Ongoing Debt Administration and Internal Controls
The City shall maintain all debt-related records for as long as the associated debt is outstanding plus a term of three years. At a minimum, this repository will include all official statements, bid documents, ordinances, indentures, records relating to the expenditure of proceeds and the use of the project, records related to the investment of the proceeds of the bonds and the sources of payment, all returns filed with the IRS, trustee reports, etc. for all City debt. To the extent that official transcripts incorporate these documents, possession of a transcript will suffice (transcripts may be hard copy, stored on CD-ROM or other forms of electronic record). The City will collect all available documentation for outstanding debt and will develop a standard procedure for archiving transcripts for any new debt. The City will establish internal controls to ensure compliance with the Debt Policy, all debt covenants and any applicable requirements of the State and Federal Government Codes.

E. Rebate Policy and System
The City will accurately account for all interest earnings in debt-related funds. These records will be designed to ensure that the City is in compliance with all debt covenants, and with State and Federal laws. The City will maximize the interest earnings on all funds within the investment parameters set forth in each respective indenture, and as permitted by the City Investment Policy, subject to applicable limitations. The City will develop a system of reporting interest earnings that relates to and complies with Internal Revenue Code rebate requirements, yield limits and arbitrage.

F. Minimum Reserve Requirements for Water and Wastewater Funds The Water and Wastewater Funds are to maintain a working capital reserve equal to not less than 25% of their operating expenses plus one annual debt service payment on any State Revolving Fund (“SRF”) loans. This reserve is meant to ensure that adequate cash is on hand to meet current obligations of the funds as well as respond to unanticipated demands, such as unplanned repairs or renovations of the systems. This reserve is consistent with reserves established by other utilities for similar purposes.

G. Minimum Debt Service Coverage Ratio for Water and Wastewater Funds The City will seek to maintain debt service coverage on its senior lien Water and Wastewater revenue bonds at a level not less than one and a half times (1.5x) the maximum annual debt service #13..
- 229 -
4 for the aggregate outstanding senior lien bonds of the respective system, including the debt service for any new issuance, unless a different debt service coverage amount is allowed by existing bond covenants.

VII. DEBT FINANCING
A. Purpose of Debt
When the City determines that the use of debt is appropriate, the following criteria will be utilized to evaluate the type of debt to be issued:

1. New Money Financing
New money issues are financings that generate funding for capital projects, equipment or enterprise software systems. Eligible capital projects for allocation of City funds include land and building acquisition, construction, capital improvements or major rehabilitation of capital assets.

2. Refunding Financing
Refunding bonds are issued to retire all or a portion of an outstanding debt issue. Refunding issuances can be used to achieve present-value savings on debt service or to restructure the payment schedule, type of debt instrument used, or covenants of existing debt. The City must analyze the refunding issue on a present-value basis to identify economic effects before approval, as is further described in Section X. Refinancing Outstanding Debt below.

3. Interim Financing
Interim financing in the form of commercial paper, revolving line of credit, or short-term debt may be issued to bridge cashflow needs. It is used to defer the issuance of more expensive long-term debt or provide interim funds while waiting for reimbursement from other sources such as grants.

B. Type of Debt
When the City determines that the use of debt is appropriate, the following criteria will be utilized to evaluate the type of debt to be issued:

1. Long-Term Debt
The City may issue long-term debt when equipment, project, or software costs cannot be financed from current revenues. The proceeds derived from long-term borrowing will not be used to finance current operations or normal/current maintenance. Long-term debt will be structured such that the obligations generally do not exceed the average useful life of that which is being financed or the sunset date of any current, pledged revenues. And at no time will the financing exceed 120% of the expected average useful life of the asset being financed.
 Current Interest Bonds are bonds that pay interest periodically and principal at maturity. They may be used for both new money and refunding transactions. Bond features may be adjusted to accommodate the market conditions at the time of sale, #13..
- 230 -
5 including changing dollar amounts for principal maturities, offering discount and premium bond pricing, modifying call provisions, utilizing bond insurance, as well as determining whether and how to fund a debt service reserve fund.  Zero Coupon and Capital Appreciation Bonds pay interest only when principal matures. Interest continues to accrue on the unpaid interest, therefore representing a more expensive funding option. In the case of zero-coupon bonds, principal and interest, at one coupon rate, is repaid at maturity. In the case of Capital Appreciation Bonds, the value of the bond accretes until maturity. These types of bonds should be used only when no other bond structure is available to address a certain structuring problem. If used, these bonds should mature no later than 20 years from issuance and should be callable.
 Taxable Debt is debt whose interest payments are taxable for federal income tax purposes to bondholders. The City will consider the issuance of taxable debt when it is necessary for federal tax reasons or if these bonds would lower the overall cost of the financing or help the City achieve refunding savings that could not otherwise be achieved with the issuance of tax-exempt debt (e.g., advance refundings).

2. Short-Term Debt
Short-term borrowing may be utilized for the temporary funding of operational cash flow deficits or anticipated revenues, where anticipated revenues are defined as an assured revenue source with the anticipated amount based on conservative estimates, or until the structure of the take-out financing is finalized. The City will determine and utilize the least costly method for short-term borrowing. The City may issue short-term debt when there is a defined repayment source or amortization of principal, subject to the following policies:
 Commercial Paper Notes may be issued as an alternative to fixed rate debt, particularly when the timing of funding requirements is uncertain. The City may maintain an ongoing commercial paper program to ensure flexibility and immediate access to capital funding when needed. The retirement of commercial paper notes is most commonly a result of the issuance of long-term bonds but they may also be retired with available cash.
 Grant Anticipation Notes (“GAN”) are short-term notes that are repaid with the proceeds of State or Federal grants of any type. The City shall generally issue GANs only when there is no other viable source of funding for the project.  Bond Anticipation Notes (“BAN”) are short-term notes issued prior to the issuance of long-term debt. BANs are most commonly retired, or taken-out, with long-term debt.

3. Variable Rate Debt
To maintain a predictable debt service burden, the City may give preference to debt that carries a fixed interest rate. An alternative to the use of fixed rate debt is floating or variable rate debt. It may be appropriate to issue short-term or long-term variable rate debt to diversify the City’s debt portfolio, reduce interest costs, provide interim funding for capital projects and improve the match of assets to liabilities. Variable rate debt typically has a lower cost of borrowing than fixed rate financing and shorter interest rate reset periods in the range of 1 to 35 days. Under no circumstances will the City issue variable rate debt solely for the purpose of earning arbitrage. The City, however, may consider variable rate debt in certain instances.

A) Variable Rate Debt Capacity. The City will maintain a conservative level of outstanding variable rate debt in consideration of general rating agency guidelines recommending a maximum of 20% variable rate exposure, in addition to maintaining adequate safeguards against risk and managing the variable revenue stream, both as described below:
(1) Adequate Safeguards Against Risk. Financing structure and budgetary safeguards are in place to prevent adverse impacts from interest rate shifts; such structures could include, but are not limited to, interest rate swaps, interest rate caps and the matching of assets and liabilities. See Section VII. B. 4. Financial Derivative Products below. See also the Interest Rate Swap Policy addendum.
(2) Variable Revenue Stream. The revenue stream for repayment is variable, and is anticipated to move in the same direction as market-generated variable interest rates, or the dedication of revenues allows capacity for variability. (3) As a Component to Synthetic Fixed Rate Debt. Variable rate bonds may be used in conjunction with a financial strategy which results in synthetic fixed rate debt. Prior to using synthetic fixed rate debt, the City shall certify that the expected interest cost is at least 10 basis points (0.10%) lower than traditional fixed rate debt (including any ongoing fees in such calculation) as well as giving due consideration to other risks associated with such a structure that may raise the ultimate costs of a synthetic fixed rate structure. See Section VII. B. 4. Financial Derivative Products below. See also the Interest Rate Swap Policy addendum.

4. Financial Derivative Products
Financial Derivative Products will be considered appropriate in the issuance or management of debt only in instances where it has been demonstrated that the derivative product will either provide a hedge that is expected to reduce the risk of fluctuations in expense or revenue, or alternatively where the derivative product is expected to reduce total project cost.

The City shall maintain an Interest Rate Swap Policy (see attached) governing the use of derivative products. For derivatives other than interest rate swaps, the City will undertake an analysis of early termination costs and other conditional terms given certain financing and marketing assumptions. Such analysis will document the risks and benefits associated with the use of a particular derivative product. Derivative products will only be utilized with prior approval from the City Council.
#13..
- 232 -
7 VIII. TERMS AND CONDITIONS OF BONDS
The City shall establish all terms and conditions relating to the issuance of bonds, and will control, manage, and invest all bond proceeds. Unless otherwise authorized by the City, the following shall serve as bond requirements.

A. Term
All capital improvements financed through the issuance of debt will be financed for a period generally not to exceed the average useful life of that which is being financed. At no time will the financing exceed 120% of the expected average useful life of the assets being financed, and in no event should the final maturity exceed the lesser of thirty (30) years or when the revenue source is projected to sunset.

B. Capitalized Interest
The nature of the City’s revenue stream is such that funds are generally continuously available and the use of capitalized interest should not normally be necessary. However, certain types of financings may require the use of capitalized interest from the issuance date until the City has constructive use/benefit of the financed project. Unless otherwise required, the City will avoid the use of capitalized interest to obviate unnecessarily increasing the bond size. Interest shall not be funded (capitalized) beyond three (3) years or a shorter period when based upon project needs or if further restricted by statute. The City will strive to invest proceeds in a capitalized interest account in order to minimize the “negative carry” on such bond proceeds. Interest earnings may, at the City's discretion, be applied to extend the term of capitalized interest but in no event beyond 3 years, or less, if restricted by law.

C. Lien Levels
Senior and Junior Liens for each revenue source will be utilized in a manner that will maximize the most critical constraint, typically either cost or capacity, thus allowing for the most beneficial use of the revenue source securing the bond. Projects chosen for priority financing, based on funding availability and proposed timing, will generally be financed on the most senior lien of the relevant credit. The City may use lower liens for specific needs such as interim financing or commercial paper.

D. Debt Service Coverage
For any new debt issuance secured by Water or Wastewater revenues, the City will seek to maintain pledged net revenues at a level no less than one and a half times (1.50x) the Maximum Annual Debt Service for the aggregate outstanding senior lien bonds, including the debt service for the new issuance, unless a different debt service coverage amount is allowed by existing bond covenants. For other types of debt incurred by the City, the City will determine the appropriate minimum debt service coverage levels based upon the nature of the pledged revenues, rating considerations, and other relevant factors.

E. Debt Service Structure
Debt issuance shall be planned to achieve relatively rapid repayment of debt while still matching #13..
- 233 -
8 debt service to the useful life of facilities. The City will amortize its debt within each lien to achieve overall level debt service or may utilize more accelerated repayment schedules after giving consideration to bonding capacity constraints. The City shall avoid the use of bullet or balloon maturities except in those instances where these maturities achieve one of the City’s stated goals, such as minimizing annual debt service or leveling annual existing debt service, among others.

F. Call Provisions
In general, the City’s securities, including taxable debt, will include a call feature, which is no later than ten (10) years from the date of delivery of the bonds. In addition to par call, the City may also consider including a make-whole-call option. The City will avoid the sale of non-callable bonds absent careful evaluation by the City with respect to the value of the call option.

G. Original Issue Discount & Deep Discount Bonds
An original issue discount and deep discount bonds will be permitted only if the City determines that such discount results in a lower true interest cost on the bonds and that the use of an original issue discount or deep discount bonds will not materially reduce the value of the bonds’ call provisions nor adversely affect the project identified by the bond documents. When evaluating the coupon structure for a bond issuance, the City should factor in investor preference, the yield-tocall, the yield-to-maturity and the potential to refund the bonds for debt service savings in the future.

H. Maximum Repayment Ratio
The maximum repayment ratio, defined as total future debt service payments divided by the principal amount of the bonds issued, shall be no more than three to one (3:1) for each series of bonds.

I. Bond Proceeds Investment
If bond proceeds are expected to be unutilized for a period of time the City will consider investing the proceeds to minimize the “negative carry” on the debt. Interest cost on debt is unavoidable but it can be offset in part with interest earnings thereby reducing the “negative carry” of debt.

The City will consider investing bond proceeds and reviewing opportunities to earn interest income to offset interest cost, to the extent permitted by arbitrage and rebate rules.  A project fund funded with bond proceeds may be strategically invested to match the draw schedule. While such investment is typically yield restricted, positive arbitrage may be retained under certain circumstances if spend-down rules are met.  If a capitalized interest account is funded with bond proceeds, it too may be invested. The City may even “net fund” it which will lower the amount of debt required to fund the account.
 Lastly the City may also invest any reserve funds such as the debt service reserve fund and interest income may be used to offset a portion of the debt service payment.

IX. CREDIT ENHANCEMENTS
The City will consider the use of credit enhancement on a case-by-case basis, evaluating the economic benefit versus cost for each case. Only when a clearly demonstrable savings can be shown shall Commented [SH1]: Might read better if this is the first paragraph under the new caption.
#13..
- 234 -
9 enhancement be considered. The City will consider each of the following enhancements as alternatives by evaluating the cost and benefit of such enhancement. As noted below, the use of credit enhancements may result in additional continuing disclosure requirements described below (see Section XV. F.

Continuing Disclosure below).

A. Bond Insurance
The City may purchase bond insurance when such purchase is deemed prudent and advantageous.

The predominant determination shall be based on such insurance being less costly than the present value of the difference in the interest on insured bonds versus uninsured bonds. Bond insurance may be purchased for the entire amount of an issue or for specific maturities based on a recommendation from the financial advisor or senior underwriter.

B. Debt Service Reserves
When required, a reserve fund equal to the lesser of 10% of the original principal amount of the bonds, maximum annual debt service, or 125% of average annual debt service, and if permitted, 10% of par value of bonds outstanding, (the “Reserve Requirement”) shall be funded from the proceeds of each series of bonds, subject to federal tax regulations and in accordance with the requirements of credit enhancement providers and/or rating agencies. The City may purchase a reserve equivalent (e.g., a reserve fund surety policy) when such purchase is deemed prudent and advantageous. Such equivalents shall be evaluated in comparison to cash funding of reserves on a net present value basis, while also taking into account the creditworthiness of the surety provider and market acceptance. Lastly, the reserve may be invested and the income utilized to offset annual debt service costs.

C. Letters of Credit
The City may enter into a letter of credit agreement when such an agreement is required by the market (e.g., in the case of variable rate demand bonds) or is deemed prudent and advantageous.

Only those financial institutions with long-term ratings greater than or equal to that of the City, and minimum short-term ratings of P-1, A-1, F1, by Moody’s Investors Service, S&P Global Ratings and Fitch Ratings, respectively, may participate in City letter of credit agreements unless there are no other practicable options for the City.

X. REFINANCING OUTSTANDING DEBT
The City shall have the responsibility to analyze outstanding bond issues for refunding opportunities that may be presented by underwriting and/or municipal advisory firms. The City will consider the following issues when analyzing possible refunding opportunities:

A. Debt Service Savings
The City has established a minimum net present value savings threshold goal of 3% of the refunded bond principal, unless there are other compelling reasons for defeasance. The 3% savings threshold generally applies to the aggregate the . The City should also evaluate savings on a maturity-by-maturity basis in order to inform the refunding decision. The present value savings will be net of all costs related to the refinancing. If the debt to be refinanced is not currently callable (i.e., in the case of forward delivery refundings, advance refundings, etc.) the City will #13..
- 235 -
10 make a comparison to the projected savings it could achieve if it waited until the debt becomes eligible for a current refunding. The decision to defease debt that is not currently callable or to take savings on an upfront or deferred basis must be expressly described in the staff report presented to the City Council
B. Restructuring
The City will refund debt when in its best interest to do so. Refundings will include restructuring to meet unanticipated revenue expectations, terminate swaps, achieve cost savings, mitigate irregular debt service payments, release reserve funds or remove unduly restrictive bond covenants. The decision to restructure debt must be expressly described in the staff report presented to the City Council
C. Term of Refunding Issues
The City will refund bonds within the term of the originally issued debt. However, the City may consider maturity extension, when necessary to achieve a desired outcome, provided that such extension is legally permissible. The City may also consider shortening the term of the originally issued debt to realize greater savings. The remaining useful life of the financed facility and the concept of intergenerational equity should guide this decision.

D. Escrow Structuring
The City shall utilize the least costly permitted securities available in structuring refunding escrows. The City will examine the viability of an economic versus legal defeasance on a net present value basis. Generally, the City should look to purchase State and Local Government Series (“SLGS”) securities from the federal treasury when structuring refunding escrows. The City may review the purchase of Open Market Securities (“OMS”) to fund a refunding escrow. In such a case, a certificate from a third-party agent, who is not a broker-dealer, is required stating that the securities were procured through an arms-length, competitive bid process (in the case of OMS), that such securities were more cost effective than SLGS, and that the price paid for the securities was reasonable within federal guidelines. Under no circumstances shall an underwriter, agent, municipal advisor or financial advisor sell escrow securities to the City from its own account.

E. Arbitrage
The City shall take all necessary steps to optimize refunding escrows and to avoid negative arbitrage. Any resulting positive arbitrage will be rebated as necessary according to federal guidelines.

XI. METHODS OF ISSUANCE
The City will determine, on a case-by-case basis, whether to sell its bonds competitively or through negotiation. The City shall evaluate the comparative costs of each method of issuance on a net present value basis, using the City’s investment rate as the appropriate measure of the discount rate. It should be noted, however, that cost may be only one of a number of factors considered in determining the most advantageous method of sale.
#13..
- 236 -
11 A. Competitive Sale
In a competitive sale, the City’s bonds shall be awarded to the bidder providing the lowest true interest cost as long as the bid adheres to the requirements set forth in the official notice of sale.

Conditions under which a competitive sale would be preferred are as follows:
 Bond prices are stable and/or demand is strong.
 Market timing and interest rate sensitivity are not critical to the pricing. There are no complex explanations required during marketing regarding issuer’s projects, media coverage, political structure, political support, and funding or credit quality.  The bond type and structure are conventional.
 Bond insurance is not needed, is included or pre-qualified (available).  Transaction size is modest, generally larger than $10 million but lower than $100 million.  The City (or the issuing City enterprise) has strong credit ratings.  The City (or the issuing City enterprise) is well known to investors.

B. Negotiated Sale
The City recognizes that some securities are best sold through negotiation. Conditions under which a negotiated sale would be preferred are as follows:
 Interest rates are volatile.
 Demand is weak or supply of competing bonds is high.
 Market timing is important, such as for refundings.
 The City (or the issuing City enterprise) has lower or weakening credit rating.  The issuing City enterprise is not well known to investors.  Sale and marketing of the bonds will require complex explanations about the issuer’s projects, media coverage, political structure, political support, funding, or credit quality.  The bond type and/or structural features are non-standard, such as for a forward delivery bond sale, issuance of taxable or variable rate bonds, or where there is the use of derivative products.
 Bond insurance is not available or not offered.
 Early structuring, investor outreach and other market participation by underwriters are desired.
 The par amount for the transaction is significantly larger than normal (generally over $100 million).
 Demand for the bonds by retail investors is expected to be high.  Participation from Disadvantaged Business Enterprise (“DBE”) firms is required or desired.

C. Private Placement
From time to time the City may elect to privately place its debt. Such placement shall be considered if this method is demonstrated to result in cost savings to the City or other benefits relative to other methods of debt issuance. Private placements may be well-suited for weaker credits where a rating either cannot be obtained or would likely be below-investment grade. Private placements may also be useful for time-sensitive funding needs as the process is more expedient #13..
- 237 -
12 compared to a market sale. As noted below, private placements may require compliance with disclosure requirements (see Section XV. F. Continuing Disclosure below).

D. Feasibility Analysis
Issuance of revenue bonds may be accompanied by a finding that demonstrates the projected revenue stream’s ability to meet future debt service payments and bond covenants.

XII. MARKET RELATIONSHIPS
A. Rating Agencies and Investors
The Director of Finance shall be responsible for maintaining the City’s relationships with Moody’s Investors Service, S&P Global Ratings, Fitch Ratings and any other major rating agency. The City may, from time to time, choose to seek ratings from only one or two of these agencies as circumstances dictate. In addition to general communication, the Director of Finance shall meet with credit analysts prior to each rated competitive or negotiated sale and/or offer conference calls with agency analysts in connection with the planned sale as needed. The Director of Finance shall monitor and comply with periodic data requests from rating analysts for their rating surveillance process.

B. Other Jurisdictions/Conduit Financing
From time to time, the City may issue bonds on behalf of other public entities. While the City will make every effort to facilitate the desires of these entities, the Director of Finance will ensure that the highest quality financings are done and that the City is insulated from all manageable risks.

The City may issue bonds through another issuing entity such as a Joint Powers Authority (“JPA”).

The City may issue debt in this manner if it would result in the least costly method to issue debt (e.g. reduced costs of issuance). The City will evaluate the timing of such issuance.

C. Fees
When appropriate, the City will charge an administrative fee equal to direct costs to reimburse its administrative costs incurred in debt issuance and ongoing reporting costs.

XIII. CONSULTANTS
Periodically, the City may create an approved pool of qualified financing team members, such as municipal advisors or underwriters.

A. Selection of Financing Team Members
The Director of Finance will make recommendations to the City Manager for all financing team members, with the City Council providing final approval.

B. Municipal Advisor
The City shall utilize a municipal advisor to assist in its debt issuance and debt administration processes as prudent. The municipal advisor must be registered as a Municipal Advisor with the Securities and Exchange Commission (“SEC”) and Municipal Securities Rulemaking Board (“MSRB”). Selection of the City’s municipal advisor(s) shall be based on, but not limited to, the #13..
- 238 -
13 following criteria:
 Prior knowledge and experience with the City.
 Experience in providing consulting services to complex issuers.  Knowledge and experience in structuring and analyzing complex issues.  Experience and reputation of assigned personnel.
 Fees and expenses.

Municipal advisory services provided to the City shall include, but shall not be limited to the following:
 Evaluation of risks and opportunities associated with debt issuance.  Monitoring market conditions and opportunities.
 Evaluation of proposals submitted to the City by investment banking firms.  Structuring and pricing of debt and related negotiations.  Preparation of request for proposals for other financial services such as trustee and paying agent services, printing, credit facilities, remarketing agent services, and related negations etc.
 Advice, assistance and preparation for presentations with rating agencies, credit providers and investors.
 Assisting in preparation of official statements and other financing documents.  Be available for other projects whenever needed.

The City also expects that its municipal advisor will provide the City with objective advice and analysis, maintain the confidentiality of City financial plans, and be free from any conflicts of interest.

C. Bond Counsel
City debt will include a written opinion by legal counsel affirming that the City is authorized to issue the proposed debt, that the City has met all constitutional and statutory requirements necessary for issuance, and a determination of the proposed debt’s federal income tax status. The approving opinion and other documents relating to the issuance of debt will be prepared by counsel with extensive experience in public finance and tax issues. The counsel will be selected by the City Attorney and subject to City Council approval.

The services of bond counsel may include, but are not limited to:
 Rendering a legal opinion with respect to authorization and valid issuance of debt obligations including whether the interest paid on the debt is tax exempt under federal and State of California law;
 Preparing all necessary legal documents in connection with authorization, sale, issuance and delivery of bonds and other obligations;
 Unless this task is assigned to disclosure counsel, as selected by the City separately from bond counsel, preparing the preliminary and final official statements and commercial paper memoranda;
#13..
- 239 -
14  Participating in discussions with potential investors, insurers and credit rating agencies, if requested;
 Providing continuing advice, as requested, on the proper use and administration of bond proceeds under applicable laws and the indenture, particularly arbitrage tracking and rebate requirements;
D. Disclosure Counsel
The City may utilize a separate firm to serve as disclosure counsel as it deems necessary. If cost effective, bond counsel may also serve as disclosure counsel.

XIV. UNDERWRITER SELECTION
A. Senior Manager Selection
The City shall have the right to select a senior manager for a proposed negotiated sale. The criteria shall include but not be limited to the following:
 The firm’s ability and experience in managing similar and/or complex transactions.  Demonstrated ability to structure debt issues efficiently and effectively.  Prior knowledge and experience with the City.
 The firm’s willingness to risk capital and demonstration of such.  The firm’s ability to reach a wide network of investors.  The firm’s ability to sell bonds at the lowest market interest rates.  Quality and experience of personnel assigned to the City’s engagement.  Financing and marketing plans presented.

B. Co-Manager Selection
Co-managers may be selected on the same basis as the senior manager. In addition to their qualifications, co-managers appointed to specific transactions will be a function of transaction size and the necessity to ensure maximum distribution of the City’s bonds.

C. Selling Groups
The City may establish selling groups in certain transactions. To the extent that selling groups are used, the City may make appointments to selling groups from within an existing pre-qualified pool of underwriters or through another process, as the transaction dictates.

D. Underwriter’s Counsel
In any negotiated sale of City debt in which legal counsel is required to represent the underwriter, the lead underwriter will make the appointment subject to the City’s right to object to any such appointment.

The goal of low takedowns should be balanced with adequately incentivizing the banks to market/sell the bonds or underwrite without rate adjustments, if required. If there are multiple underwriters in the transaction, the City will determine the allocation of fees with respect to the takedown and management fee (if any). The determination of the size and allocation of the management fee will be based upon participation in the structuring phase of the transaction.

Generally, the City will not pay for risk in its underwriter’s discount. All fees and allocation of the management fee will be determined prior to the sale date; a cap on management fee, expenses and underwriter’s counsel will be established and communicated to all parties by the City. The senior manager shall submit an itemized list of expenses charged to members of the underwriting group.

Any additional expenses must be substantiated.

F. Evaluation of Financing Team Performance
The City will evaluate each bond sale after its completion to assess the following: costs of issuance including underwriters’ compensation, pricing of the bonds in terms of the overall interest cost and on a maturity-by-maturity basis, and the distribution of bonds and sales credits. Following each sale, the municipal advisor shall provide a post-sale evaluation on the results of the sale to the City Council.

G. Syndicate Policies
For each negotiated transaction, the Director of Finance will review and approve syndicate policies that will describe the designation policies governing the upcoming sale. The Director of Finance shall ensure receipt of each member’s acknowledgement of the syndicate policies for the upcoming sale prior to the sale date.

H. Designation Policies
To encourage the pre-marketing efforts of each member of the underwriting team, orders for the City’s bonds will be net designated, unless otherwise expressly stated. The City shall require the senior manager to:
 Equitably allocate bonds to other managers and the selling group.  Comply with MSRB regulations governing the priority of orders, compliance with retail order requirements and allocations.
 Within 10 working days after the sale date, submit to the Director of Finance a detail of orders, allocations and other relevant information pertaining to the City’s sale.

I. Disclosure by Financing Team Members
All financing team members will be required to provide full and complete disclosure relative to agreements with other financing team members and outside parties. The extent of disclosure may vary depending on the nature of the transaction and for underwriters and municipal advisors shall, at a minimum, comply with applicable SEC and MSRB requirements. For firms acting as the City’s bond counsel, disclosure counsel, or municipal advisor, no agreements shall be permitted which could compromise the firm’s ability to provide independent advice which is solely in the City’s best interests or which could reasonably be perceived as a prohibited conflict of interest. All other conflicts must be disclosed to the City in accordance with applicable regulatory #13..
- 241 -
16 requirements. For legal counsel such conflicts disclosure shall, at a minimum, comply with applicable conflicts disclosure requirements for attorneys in the state.

XV. POST-ISSUANCE COMPLIANCE
A. General
In conjunction with the issuance of a tax-advantaged obligation, bond counsel issues an opinion that is in part based on the reasonable expectation that the issuer will comply with federal tax law requirements to preserve the tax-advantaged status of the obligation. The issuer agrees to comply with these requirements through representations it makes in the tax compliance certificate. The purpose of this Post-Issuance Compliance section is to establish policies and procedures in connection with the issuance of obligations, so as to (a) maximize the likelihood that the City satisfies all applicable post-issuance requirements of federal income tax law needed to preserve the tax exempt status of bonds, (b) ensure that the City will take any appropriate remedial actions on a timely basis if a future event occurs that could affect the tax-exempt status of bonds, and (c) maximize the likelihood that the City complies with applicable federal securities laws, including any contractual obligations arising thereunder. The City reserves the right to use its discretion as necessary and appropriate to make exceptions or request additional provisions as circumstances warrant. The City also reserves the right to change these policies and procedures from time to time.

Issuers and borrowers are also required to disclose, on a periodic basis, financial information and certain other information that may impact their ability to service their debt. This ongoing reporting requirement is known as continuing disclosure. The requirements of continuing disclosures are directly applicable to underwriters and are set forth in Securities and Exchange Commission (“SEC”) Rule 15c2-12. The issuer makes representations in its official statements and other bond documents regarding its intent to comply as a matter of contract with the requirements of Rule 15c2-12.

B. Designation of Post-Issuance Compliance Officer
The City has established a Disclosure Working Group (“DWG”) consisting of the City’s Manager and Director of Finance. The DWG will establish appropriate written policies and procedures, which this document provides, and periodic training regarding continuing disclosure obligations to effect compliance with the federal securities laws. In connection with each primary offering subject to Rule 15c2-12, as well as annually and periodically when necessary in connection with its continuing disclosure filings required by contractual undertakings delivered in accordance with Rule 15c2-12, the DWG will notify its dissemination agent and others, as and when appropriate when developments and events affect the City that may give rise to a contractual obligation to provide additional disclosure or that may provide an opportunity for voluntary disclosure.

The Director of Finance, or his or her designee, shall be the Post-Issuance Compliance Officer (the “Compliance Officer”) for the City’s debt issuances (the “Bonds”). The Compliance Officer, if City staff, may designate such other personnel as may be necessary to assist in determining continuing compliance with all relevant law and regulations applicable to the continued favorable tax treatment of such indebtedness, and to comply with the record-keeping responsibilities outlined herein. At such time as the initial Compliance Officer is replaced or a new Compliance Officer is #13..
- 242 -
17 designated, the departing Compliance Officer will ensure that such successor is fully briefed as to the status of the City’s outstanding indebtedness and the location of records relating to such indebtedness, and that such successor receives training and consultation(s) with bond or disclosure counsel as to his or her duties as Compliance Officer under this Debt Policy.

C. External Advisors
The City shall consult with bond counsel and other legal counsel and advisors, as needed, so long as any Bonds remain outstanding, to identify requirements and to establish procedures necessary or appropriate so that tax-exempt interest on the Bonds will continue to be excludable from gross income for federal income tax purposes. Those requirements and procedures shall include future compliance with applicable private activity bond tests, arbitrage rebate requirements and all other applicable post-issuance requirements of federal tax law throughout (and in some cases beyond) the term of bonds. The Compliance Officer shall conduct periodic reviews, at least annually, or more often as may be necessary, to determine that the City remains in compliance with all laws and regulations, including, without limitation, the matters set forth herein. The Compliance Officer annual review shall include matters that relate to the tax status of the Bonds, continuing compliance with covenants that relate to the tax status of the Bonds, and any new matters or public finance developments that relate to the tax status of the Bonds or continuing compliance with such requirements. The City may consult with bond counsel in conducting its review and may engage expert advisors (each a “Rebate Analyst”) to assist in the calculation of arbitrage rebate payable in respect of the investment of Bond proceeds in the manner more fully set forth in the Tax Certificate.

D. Uses and Investments of Funds and Accounts
Various funds and accounts are established as security for the Bonds. The Compliance Officer shall prepare regular, periodic statements regarding the investments and transactions involving bond proceeds, which shall comprise part of the records required to be kept. The Compliance Officer will also review the disbursement of bond proceeds from Trustee records or City records, as applicable, to ensure that bond proceeds are expended in accordance with their intended purpose. The Compliance Officer shall report to the Finance Director (if the officer is a designee of the Finance Director) and the City Manager any expenditure which violates the provisions of any ballot measure, authorizing resolution, or trust document. If any Debt Service Fund ever contains any balance after the principal payment of the Bonds is made each year, except for a reasonable carryover amount which is less than the greater of the earnings on the Debt Service Fund for the immediately preceding year ending on such principal payment date (a “Bond Year”), or 1/12 of the principal and interest payments on the Bonds for the immediately preceding Bond Year, then the Compliance Officer will contact bond counsel to ensure that such facts will not cause the Bonds to become arbitrage bonds, to formulate a plan to remediate such condition, if necessary, and to determine an allowable use for such excess moneys and/or to determine if any yield restrictions apply. If any Debt Service Reserve Fund is ever funded (i) in an amount more or less than the required balance but declining in future years as detailed in the Tax Certificate, or (ii) is invested at a yield that is higher than the yield of the Bonds, then the Compliance Officer will contact bond counsel to ensure that such facts will not cause the Bonds to become arbitrage bonds, to formulate a plan to remediate such condition and/or to determine if any yield restrictions apply. Generally, if the Debt Service Reserve Fund ever contains a higher balance than required (either through the accrual of interest, investment gains, maturity of securities, or reduction in the Reserve #13..
- 243 -
18 Requirement) then the excess moneys should be dealt with as directed by the documents and approved by bond counsel. If any Construction Fund ever is invested at a yield higher than the yield of the Bonds or if moneys in the Construction Fund are not fully expended by three years after the original delivery date of the Bonds, then the Compliance Officer will contact bond counsel to ensure that such facts will not cause the Bonds to become arbitrage bonds, to formulate a plan for the investment and application of the remaining unexpended Bond Proceeds, which plan may include the redemption or defeasance of Bonds, and/or to determine if any yield restrictions apply.

E. Rebate Reporting
The use of bond proceeds and their investments must be monitored to ensure compliance with arbitrage restrictions. The City will cause arbitrage rebate calculations to be completed, or cause to be completed by an experienced firm the City has retained for this purpose related to any bond issues, with any positive rebate paid every five years and as otherwise required by applicable provisions of the Internal Revenue Code and regulations. Therefore, the Director of Finance shall ensure that proceeds and investments are tracked in a manner that facilitates accurate, complete calculation, and timely rebates, if necessary.

F. Continuing Disclosure
Appointment. Unless otherwise provided in any Continuing Disclosure Agreement executed in connection with Bonds pursuant to SEC Rule 15c2-12 (the “Continuing Disclosure Agreement”), the Compliance Officer shall also be the Dissemination Agent under such Continuing Disclosure Agreement. The Compliance Officer shall be responsible for and take all reasonable steps to ensure compliance with said Continuing Disclosure Agreement and shall monitor the operations of the Issuer for occurrence of any listed event (as set forth therein). For any Bonds for which it is designated to serve in such capacity, should the Compliance Officer no longer serve as Dissemination Agent, the City shall select an internal or external Dissemination Agent.

Responsibilities. The Dissemination Agent is responsible for the following (the “Continuing Disclosure Policies”):
 Serving as a “point person” for personnel to communicate issues or information that should be or may need to be included in any Continuing Disclosure Agreement;  Identifying the officers and employees of the City who are most likely to first obtain knowledge of the occurrence of events that would require event filings;  Monitoring compliance by the City with the Continuing Disclosure Policies, including timely dissemination of the annual report and event filings as described below;  Recommending changes to the Continuing Disclosure Policies to the City as necessary or appropriate;
 Following up with others to make sure that assigned tasks have been completed on a timely basis and making sure that the continuing disclosure annual report is filed on a timely basis; and
 Maintaining records documenting the City’s compliance with the Continuing Disclosure Policies and the Continuing Disclosure Agreement.
#13..
- 244 -
19 Filing Requirements. The City is required to file an annual report with the MSRB’s Electronic Municipal Market Access (“EMMA”) system each year. Such annual reports are required to include certain updated financial and operating information and audited financial statements. The Dissemination Agent will establish or cause to be established a calendar reminder of the city’s continuing disclosure obligations on July 1 each year. The City is also required to file notices of certain events with the MSRB’s EMMA system. Upon the identification of the occurrence of a material event, the Dissemination Agent shall, in consultation with bond counsel, prepare, or cause to be prepared, a draft of the necessary notice (including compiling any materials or documents to be included with such notice) and shall notify such parties of the date by which such notice is to be filed. If it is not clear if the occurrence of an event constitutes an event that requires notification, then the Dissemination Agent shall consult with bond counsel to determine whether the City is required to file a notice concerning such event.

For any public debt issues (subject to contractual obligations under SEC Rule 15c2-12) issued on or after February 27, 2019, the City is required to commit to make additional disclosure with respect to private loans or financing leases (not sold through an official statement) or derivatives or credit support agreements (collectively “financial obligations”). The additional events will need to be provided to the City’s Dissemination Agent, for further filing with EMMA, within ten (10) business days of their occurrence:
 Incurrence of a financial obligation of the City (and any obligated person, where applicable), if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the City (and any obligated person, where applicable), any of which affect security holders, if material;  Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the City (and any obligated person, where applicable), any of which reflect financial difficulties.

In addition, the Dissemination Agent will be responsible for providing notice, in a timely manner, of a failure to provide any of the City’s required annual financial information by the date specified in the continuing disclosure undertaking. The inability to make timely filings must be disclosed and is a negative reflection. While there is reliance on timely audit and preparation of the City’s annual report, the Director of Finance will ensure the City’s timely filing of its annual report on EMMA as soon as it is available.

G. Voluntary Disclosure Requirements
In addition to preparing annual reports and event notices, the City may wish to keep investors informed by providing information that is not required to be provided under Rule 15c2-12 or its continuing disclosure undertakings. Examples of such types of information are investments, interim financial information, capital improvement plans, fund balance policies, etc. and financial forecasts. Because providing this information is voluntary, the Compliance Officer will monitor for events which may materially affect the financial condition or operations of the City, so that a determination can be made if the event should be disclosed. The below list is comprised of events and financial disclosure which the MSRB has suggested issuers may wish to voluntarily disclose. #13..
- 245 -
20 Some of these are not applicable to the City’s public debt issues and financial obligations, but the City may wish to consider providing some of these to the City’s Dissemination Agent for further filing with EMMA:
 Amendment to continuing disclosure undertaking;
 Change in obligated person (i.e., a person guaranteeing or supporting City debt);  Notice to investors pursuant to bond documents;
 Certain communications from the Internal Revenue Service;  Secondary market purchases;
 Capital or other financing plan;
 Litigation/enforcement action;
 Change of tender agent, remarketing agent, or other ongoing party;  Change in fiscal year/timing of annual disclosure or accounting standard;  Interim/additional financial information/operating data, budget;  Investment/debt/financial policy changes;
 Information provided to rating agency, credit/liquidity provider or other third party; and  Consultant reports.

Also, if the City maintains an Investor Relations website, or routinely posts City information packages, including interim financial information, capital improvement plans, etc. on its website, the City’s Compliance Officer should review and, in some cases, the Compliance Officer should reissue the posted material with an explanatory note (e.g., the interim financial information is presented on a cash, as opposed to accrual basis).

Currently, the City is not required to file interim financial information. In the future, if such filings are required in continuing disclosure undertakings, the City’s Compliance Officer will notify the Dissemination Agent for assistance when these filings become necessary.

H. Coordinating Continuing Disclosure with Primary Disclosure It is expected that the DWG will be responsible for collecting and reviewing information set forth in official statements prepared in connection with new bond offerings. Any Management’s Discussion and Analysis (“MD&A”) from the prior year’s audited financial statements will be reviewed to ensure that the unaudited information which was provided in that portion of the financial statements is updated to include added public debt and material financial obligations.

Coordination with the City’s auditors will be essential, as well as careful review of the long-term debt notes in the financial statements and the checking of all bond ratings before each EMMA filing is made. Measures should be taken to assure information publicly available to investors is accurate. Further coordination between the DWG and the City’s website manager is essential before posting any financial information.

I. Website Disclosure
It is expected that the Compliance Officer will be responsible for monitoring website content and reviewing the information set forth on such website. Appropriate disclaimer language on the website will be considered in order to educate the viewer that specific information intended for investors can be found on the City’s EMMA page as well as the investor’s acknowledgement of #13..
- 246 -
21 the limitations of such reliance. Coordination between the DWG and City officials will occur before the release of any public statements about any financial condition of the City.

J. Training for Employees and Issuer Officials
For City officials, compliance with federal securities law should be considered as important as compliance with local public meetings and records laws. To further this goal, the Compliance Officer shall call a meeting for an annual review or, if necessary, an interim review, of the continuing disclosure policies of the City, which all members of the DWG and additional invited officials and employees are expected to attend. The Compliance Officer shall be responsible for keeping a record of attendance. Furthermore, the members of the DWG and such invited officials and employees are expected to attend training sessions, at least annually, called by the Compliance Officer. Applicable policies and procedures will be updated by the City to reflect required changes on an as-needed basis.
#13..
- 247 -
22 GLOSSARY

Arbitrage- The difference between the interest paid on the tax-exempt securities and the interest earned by investing the security proceeds in higher-yielding securities. IRS regulations govern arbitrage on the proceeds from issuance of municipal securities.

Balloon Maturity- A later maturity within an issue of bonds that contains a disproportionately large percentage of the principal amount of the original issue.

Bond Allocation Policies- Outline as to how an investor’s order is filled when a maturity in an underwriting syndicate is oversubscribed. The senior managing underwriter and issuer decide how the bonds will be allocated among the syndicate. There are three primary classifications of orders, which form the designation policy. The highest priority is given to Net Designated orders; the next priority is given to Group Net orders and Member orders are given the lowest priority (unless the Member orders are retail orders in which case it would be given the highest priority).

Bullet Maturity- Maturity for which there are no sinking fund payments prior to the stated maturity date.

Call Provisions- The terms of the bond contract giving the issuer the right to redeem all or a portion of an outstanding issue of bonds prior to their stated dates of maturity at a specific price, usually at or above par.

Capitalized Interest- A portion of the proceeds of an issue that is set aside to pay interest on the securities for a specific period of time. Interest is commonly capitalized for the construction period of the project.

Commercial Paper- Very short-term, unsecured promissory notes issued in either registered or bearer form, and usually backed by a line of credit with a bank.

Competitive Sale- A sale of securities by an issuer in which underwriters or syndicates of underwriters submit sealed bids to purchase the securities in contrast to a negotiated sale.

Continuing Disclosure- The principle that accurate and complete information material to the transaction which potential investors would be likely to consider material in making investment decisions with respect to the securities be made available on an ongoing basis.

Credit Enhancement- Credit support purchased by the issuer to raise the credit rating of the issue. The most common credit enhancements consist of bond insurance, direct or standby letters of credit, and lines of credit.

Debt Service Reserve Fund- The fund in which moneys are placed which may be used to pay debt service if pledged revenues are insufficient to satisfy the debt service requirements.

Deep Discount Bonds- Bonds that are priced for sale at a substantial discount from their face or par #13..
- 248 -
23 value.

Derivatives- A financial product whose value is derived from some underlying asset value.

Designation Policies- Concerning a negotiated sale of bonds, the rules regarding how the takedown (sales commission) is allocated among the underwriters for each order put in for the bonds.

Direct Purchase Loan- A source of financing where the loan is purchased by a financial institution instead of being offered to the general public for purchase. The loan can bear interest at a fixed rate or on a variable rate tied to market index (i.e. the Secured Overnight Financing Rate (“SOFR”) or Securities Industry and Financial Markets Association (“SIFMA”) Index). This form of financing does not require a remarketing agent to set the variable rate. As such, a Direct Purchase Loan can be used to replace traditional forms of variable-rate debt.

Escrow- A fund established to hold moneys pledged and to be used to pay debt service on an outstanding issue.

Expenses- Compensates senior managers for out-of-pocket expenses including: underwriters counsel, DTC charges, travel, syndicate expenses, dealer fees, overtime expenses, communication expenses, computer time and postage.

Floating Rate Notes (“FRN”)- A note with a variable interest rate sold either in the public market or directly to financial institutions. The adjustments to the interest rate are typically tied to a certain index like SOFR or SIFMA and are made periodically. The rate would continue to reset in the same manner through maturity. The SOFR-based floating rate note market typically does not require bank support and as a result, offers issuers an alternative to traditional floating rate debt.

Grant Anticipation Notes (“GAN”)- Short term notes issued by the government unit, usually for capital projects, which are paid from the proceeds of State or Federal grants of any type.

Letters of Credit- A bank credit facility wherein the bank agrees to lend a specified amount of funds for a limited term.

Management Fee- The fixed percentage of the gross underwriter’s spread which is usually only paid to the managing underwriter for the structuring phase of a transaction.

Members- Underwriters in a syndicate other than the senior underwriter.

Moody’s Median- Key financial, debt, economic and tax base statistics with median values for each statistic presented. Moody’s uses audits for both rated and unrated agencies to ensure that the medians presented are representative of all agencies.

Negotiated Sale- A method of sale in which the issuer chooses one underwriter to negotiate terms pursuant to which such underwriter will purchase and market the bonds.

Original Issue Discount- The amount by which the original par amount of an issue exceeds its public #13..
- 249 -
24 offering price at the time it is originally offered to an investor.

Pay-As-You-Go- An issuer elects to finance a project with existing cash flow as opposed to issuing debt obligations.

Present Value- The current value of a future cash flow when discounted to the present at a specific annual rate.

Private Placement- The original placement of an issue with one or more investors or financial institutions as opposed to being publicly offered or sold.

Rebate- A requirement imposed by the Tax Reform Act of 1986 whereby the issuer of the bonds must pay the IRS an amount equal to its profit earned from investment of bond proceeds at a yield above the bond yield calculated pursuant to the IRS code together with all income earned on the accumulated profit pending payment.

Tax and Revenue Anticipation Notes (“TRAN”)- Short-term notes issued by a government unit, usually for capital projects, which are paid from the proceeds of sales tax or other revenue sources.

Selling Groups- The group of securities dealers who participate in an offering not as underwriters but rather as those who receive securities less the selling concession from the managing underwriter for distribution at the public offering price.

Syndicate Policies- The contractual obligations placed on the underwriting group relating to distribution, price limitations and market transactions.

Underwriter- A dealer that purchases new issues of municipal securities from the Issuer and resells them to investors.

Underwriter’s Discount- The difference between the price at which the Underwriter buys bonds from the Issuer and the price at which they are reoffered to investors.

Variable Rate Debt- An interest rate on a security which changes at intervals according to an index or a formula or other standard of measurement as stated in the bond contract. #13..
- 250 -
25 1. City of Modesto Philosophy Regarding Use of Interest Rate Swaps A. Introduction Interest rate exchange agreements or interest rate swaps (“Swaps”) and related financial instruments and derivatives may be appropriate interest rate management tools in certain circumstances. Properly used, Swaps can increase the City of Modesto’s (the “City”) financial flexibility and provide opportunities for interest rate savings. This policy (“Swap Policy”) shall be followed in conjunction with the City’s related debt issuance-related policies and procedures (the “Debt Policy”).

Swaps are appropriate to use when they achieve a specific financial objective consistent with the City’s overall Swap Policy and Debt Policy. Swaps may be used, for example, to lock-in a current market fixed rate or create additional variable rate exposure. Swaps may be used to produce interest rate savings or alter the pattern of debt service payments.

Swaps may be used to cap, limit or hedge variable rate payments. Options granting the right to commence or cancel an underlying Swap are permitted to the extent the Swap itself is otherwise consistent with this Swap Policy.

The authorized Swaps contemplated in this Swap Policy are intended to reduce the amount or duration of interest rate risk, or produce a lower cost of borrowing when used in combination with the issuance of bonds.

B. Rationales for Utilizing Interest Rate Swaps
The use of Swaps and related financial instruments should balance the City’s primary objectives of reducing the cost of capital, minimizing the City’s exposure to interest rate volatility, and gaining flexibility in structuring and managing its debt portfolio over time with the risks associated with these tools and instruments. Examples of how the City’s debt management objectives can be achieved through the use of Swaps and other financial instruments are described below:  Reduce borrowing costs at the time of issuance Create synthetic fixed rate debt through a floating-to-fixed Swap.  Actively manage interest rate risk Lock-in current market rates through (forward starting) floating-to-fixed Swap.  Balance financial risk Purchase of an interest rate cap.

CITY OF MODESTO

CITY COUNCIL POLICY
Latest Revision Date: April 2023
ADDENDUM: Interest Rate Swap Policy

#13..
- 251 -
26  Achieve appropriate asset/liability match
Create variable rate exposure through fixed-to-floating Swap.

Under no circumstances will Swaps be used for speculative purposes, e.g., to realize trading gains.

2. Authority for Entering into Swap Agreements
The purpose of this Swap Policy is to integrate the use of Swaps into the City’s overall Debt Policy, and other funds of the City where particular debt strategies, both long-term and shortterm, factor into these decisions. Swaps will not be used for speculation. The City Manager, in conjunction with the Director of Finance, shall be responsible for determining if and when it is in the City’s overall best financial interests to enter into a Swap or related financial instruments covered by this Swap Policy.

The City shall comply with all applicable laws. The City must receive an opinion acceptable to the financial market from a nationally recognized law firm that the swap contract is a legal, valid, and binding obligation of the City and that entering into such a contract complies with applicable provisions of the City Charter and State statutes.

3. Permitted Instruments
The City may utilize financial instruments that (i) lower its interest expense, (ii) manage its financial risk or (iii) improve its financial condition.

The City shall not use financial instruments that (i) create substantial leverage or financial risk, (ii) lack adequate liquidity to terminate at market, (iii) provide insufficient price transparency to allow reasonable valuation on an ongoing basis, or (iv) are primarily speculative in nature.

The use of Swaps and other hedging products should produce a result not otherwise available in the cash market (i.e., lack of advance refunding, non-callable debt), or provide a higher level of net savings compared to conventional financing methods.

The City may expressly utilize the following financial instruments, after identifying the financial objective(s) to be realized and assessing the attendant risks:
 Current or forward starting floating-to-fixed rate swaps Designed to reduce a fixed interest rate below that which would otherwise be available through the use of traditional fixed rate debt.  Current or forward starting fixed-to-floating rate swaps Designed to create additional variable interest rate exposure.  Rate Locks
Cash-settled forward contracts based on indices such as the MMD™ 1“AAA”

1. MMD™ is a trademark of Municipal Market Data, a Thompson Financial company. #13..
- 252 -
27 scale or the Bloomberg Valuation Service (“BVAL”) AAA Muni Callable Curve.  Interest Rate Caps, Floors or Collars
Financial contracts that limit exposure to interest rate volatility.  Options on Variable Rate Indices
Indices could include the Securities Industry and Financial Markets Association (“SIFMA”) Index2, Secured Overnight Financing Rate (“SOFR”)3, etc.  Options on Swaps (“Swaptions”)
Methods used to control the commencement or cancellation of interest rate swaps.  Basis Swaps
Floating-to-floating rate swaps using different variable-rate indices, such as a swap from the SIFMA Index to a percentage of SOFR.

4. Swap Risk Analysis
The City shall require for each proposed financing an evaluation of all financial products with respect to the unique risks that they bear. A specific determination must be made that the proposed or expected benefits exceed the identified risks by an adequate margin over those available in the traditional cash market. At a minimum, the City shall perform an evaluation of the risks and what steps have been taken to mitigate any risks. The City shall retain a municipal/swap advisor to assist in assessing these risks. Questions that may arise include the following:
 Market or Interest Rate Risk
Does the transaction hedge (i.e., decrease or eliminate) or increase interest rate volatility?
 Tax Risk
How is the transaction or its benefits affected by a future change in federal income tax policy?
 Termination Risk
Under what circumstances might the transaction be terminated? At what value?  Risk of Uncommitted Funding (Put Risk)
Does the transaction create additional financing dependent upon third-party participation (such as requiring a letter of credit, grant or other anticipation funding, etc.)?
 Rollover Risk
Is the term of the Swap shorter than the term of the underlying hedged debt or financial instrument? Does the City anticipate entering into another Swap when the first Swap terminates?
 Legal Risk
Is the transaction expressly legally authorized?
 Counterparty Risk
What is the creditworthiness of the counterparty?

2. The SIFMA Index is an index of more than 500 high-grade, tax-exempt, weekly reset Variable Rate Demand Obligation issues.

3. SOFR is a taxable rate which is a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities, published daily by the Federal Reserve Bank.
#13..
- 253 -
28  Rating Agency Risk
Is the proposed transaction consistent with the City’s current ratings and ratings objectives?
 Basis Risk
Is it anticipated that the projected Swap payments the City will receive closely match the debt service payments it will make?
 Index Risk
Does the transaction include provisions acceptable to the City regarding any change in indices used to calculate payments or obligations?  Subsequent Business Conditions
Does the transaction or its benefits depend upon the continuation, or realization, of specific industry business conditions (e.g., unusual demand for state-specific variable rate debt)?
 Operational Risk
Does the City have adequate systems, policies, and practices in place to monitor and manage the transaction over its term?

5. Swap Procurement and Execution
A. Procurement
The City will not have a fixed policy with respect to the procurement of Swaps and other financial instruments authorized by this Swap Policy. On a product-by-product basis, the City will have the authority to negotiate or competitively bid the procurement of financial instruments that have customized or specific attributes designed on its behalf. The Director of Finance will be responsible for determining the method of procurement for Swaps and related financial instruments. A municipal/swap advisor shall be retained to assist the Director of Finance in evaluating the proposed pricing of Swaps or related financial instruments.

B. Swap Execution
The Director of Finance may recommend the use of financial derivative products if they:

1. Provide a specific benefit not otherwise available;

2. Produce greater expected interest rate savings than cash market alternatives;

3. Do not create substantial leverage or financial risk;

4. Result in an improved capital structure or better asset/liability match; and

5. Reasonably pass the Swap Risk Analysis required by Section 4. Swap Risk Analysis of this Swap Policy.

C. Credit Rating Designations
For purposes of this Swap Policy, references to credit ratings will be based on those ratings issued by Moody’s Investors Service, and/or S&P Global Ratings, and/or Fitch Ratings. The credit ratings will reflect the designations assigned by each of these rating agencies utilized for comparable credit and will be listed for each rating agency utilized in the order shown in the preceding sentence.
#13..
- 254 -
29 6. Swap Documentation
The City will use a standard International Swap and Derivatives Association, Inc. (“ISDA”) Master Agreement, including the Counterparty Schedule to the Master Agreement and a Credit Support Annex (utilizing such versions thereof as the Director of Finance shall determine), as supplemented and amended in accordance with the recommendations of the City’s financial/swap advisor and legal counsel. Each Swap entered into by the City shall include payment, term, security, collateral, default, remedy, termination and other terms, conditions and provisions as the Director of Finance may deem necessary or desirable.

A. Terms and Notional Amount of Swap Agreement
The City shall determine the appropriate term for Swaps on a case-by-case basis. The slope of the swap curve, the marginal change in swap rates from time to time along the swap curve, and the impact that the term of the Swap will have on the City’s overall financial (e.g., interest rate, market value, counterparty, etc.) exposure shall be considered in determining the appropriate term of any Swap agreement. In connection with the issuance or carrying of bonds, the term of the Swap agreement between the City and qualified swap counterparty shall not extend beyond the final maturity date of existing City debt, or in the case of a refunding transaction, beyond the final maturity of the refunding bonds. At no time shall the total net notional amount of all Swaps, excluding any offsetting Swaps, exceed the total amount of outstanding applicable bonds. Variable rate debt exposure created through the use of Swaps will be consistent with the limitations set forth in the City’s adopted Debt Policy. Terms and conditions of any Swap shall be negotiated by the Director of Finance in the best interests of the City subject to the applicable legal provisions and this Swap Policy. The Swap agreements entered into between the City and each counterparty shall include payment, term, security collateral, default, remedy, termination, and other terms, conditions and provisions as the Director of Finance, in consultation with City legal counsel and its swap advisor, deems necessary or desirable.

Subject to the provisions contained herein, the City’s swap documentation and terms should include the following:
 The City will be able to terminate the swap without cause subject to market termination costs.
 The swap counterparty will only be able to terminate the swap if the City’s credit ratings fall below a certain pre-determined threshold and/or the City fails to perform, as required by the swap contract.
 Governing law for Swaps will be New York, but should reflect California authorization provisions.
 The specified indebtedness related to credit events in the Master Agreement should be narrowly drafted and refer only to specific debt of the issuing fund.  Eligible collateral should be limited to Treasuries, Federal Agencies and any other securities which, in the City’s sole discretion, shall be deemed reasonable and creditworthy.
 Collateral thresholds should be set on a sliding scale reflective of credit ratings. #13..
- 255 -
30  Termination value should be set by “market quotation” methodology.  Whenever possible use a Credit Support Annex to document swap termination value collateralization procedures.
 Ratings downgrade triggers.

7. Policy on Swap Counterparties
The City shall only do business with highly rated counterparties, and will structure swap agreements to protect itself from credit deterioration. All Swap transactions shall contain provisions granting the City the right to optionally terminate a swap agreement at-market at any time over the term of the agreement.

A. Qualified Swap Counterparties
The City should not have an immutable credit standard. However, the City shall attempt to do business with highly rated counterparties the long-term ratings of which at the date of execution are at least “Aa” or “AA” by one or more Nationally Recognized Statistical Ratings Organizations (“NRSRO”) and no less than “A2” or “A” by one or more NRSRO.

For lower rated counterparties, the City should seek credit enhancement in the form of:

1. Contingent swap counterparty providing support;

2. Collateral;

3. Ratings downgrade triggers; and,

4. Minimum rating threshold of “Baa3/BBB-/BBB-,” below which provisions will allow an assignment or trigger an additional termination event, with the counterparty as the affected party (i.e., the counterparty would pay market-based transaction costs).

In addition, the counterparty must have a demonstrated record of successfully executing swap transactions as well as creating and implementing innovative ideas in the swap market. The City shall be authorized to enter into interest rate swap transactions only with qualified swap counterparties.

8. Limitations on Counterparty Exposure
In order to diversify the City’s counterparty credit risk, and to limit the City’s credit exposure to any one counterparty, limits will be established for each counterparty based upon both the credit rating of the counterparty as well as the relative level of risk associated with each existing and proposed swap transaction. The guidelines shown in the following table provide general termination exposure guidelines with respect to whether the City should enter into an additional transaction with an existing counterparty. The City may make exceptions to the guidelines at any time to the extent that the execution of a swap achieves one or more of the goals outlined in these guidelines or provides other benefits to the City. In general, the maximum net termination exposure to any single counterparty should be set so that it does not exceed a prudent level as measured against the gross revenues, available assets or other financial resources of the City.
#13..
- 256 -
31 For example, if the City has two Swaps with one counterparty, and if the first Swap’s market value is positive $10 million and the second Swap’s market value is negative $20 million, then the City’s total net exposure to the counterparty is negative $10 million.

Such guidelines will also not mandate or otherwise force automatic termination by the City or the counterparty. Maximum net termination exposure is not intended to impose retroactively any terms and conditions on existing transactions. Such provisions will only act as guidelines in making a determination as to whether or not a proposed transaction should be executed given certain levels of existing and projected net termination exposure to a specific counterparty. Collateral posting guidelines are described in the collateral section below. The calculation of net termination exposure per counterparty will take into consideration multiple transactions, some of which may offset the overall exposure to the City.

Under this approach, the City will set limits on individual counterparty exposure based on existing as well as new or proposed transactions. The sum of the current market value and the projected exposure shall constitute the maximum net termination exposure. For outstanding transactions, current exposure will be based on the market value as of a recently completed swap valuation report provided by the City’s swap advisor. Projected exposure shall be calculated based on the swap’s potential termination value taking into account possible adverse changes in interest rates as implied by historical or projected measures of potential rate changes applied over the remaining term of the swap. For purposes of this calculation, the City shall include all existing and projected transactions of an individual counterparty and all transactions will be analyzed in aggregate such that the maximum exposure will be additive.

The exposure thresholds, which will be reviewed periodically by the City to ensure that they remain appropriate, will also be tied to long-term credit ratings of the counterparties and whether or not collateral has been posted as shown in the table below. If a counterparty has more than one rating, the lowest rating will govern for purposes of the calculating the level of exposure. If contingent swap counterparty or swap insurance is used to provide financial support for the primary counterparty, the rating of the support entity shall be used. A summary table is provided below:

Credit Ratings
Maximum
Collateralized Net
Termination Value
Maximum
Uncollateralized
Net Termination Value
Maximum Net
Termination
Exposure
AAA N/A $30.0 million N/A
AA Category $30.0 million $20.0 million $30.0 million
A Category $20.0 million $10.0 million $20.0 million
Below A Category $10.0 million $5.0 million $15.0 million If the exposure limit is exceeded by counterparty, the City shall conduct a review of the exposure limit per counterparty. The City, in consultation with its bond counsel and swap advisor, shall explore remedial strategies to mitigate this exposure. #13..
- 257 -
32 9. Benefit Expectation
Financial transactions, using Swaps or other derivative products, intended to produce the effect of a synthetic advance refunding, must generate at least 25% greater savings than the benefit threshold then in effect for fixed-rate bonds as determined by the City’s Director of Finance. (See Debt Management Policy Section X.A. Debt Service Savings). The higher savings target reflects the greater complexity and higher risk of derivative financial instruments.

In calculating the prospective savings against the target for implementing a fixed-to-variable swap, the cost of remarketing, in addition to the cost of credit and liquidity fees must be added to the variable rate representing the ten-year average of comparable variable rate securities.

10. Termination Provisions
All swap transactions shall contain provisions granting the City the right to optionally terminate a swap agreement at market at any time over the term of the agreement, but shall NOT grant this right to the counterparty. In general, exercising the right to terminate an agreement produces a benefit to the City, either through the receipt of a payment from a termination, or if the termination payment is made by the City, in conjunction with a conversion to a more beneficial (desirable) City debt obligation, as determined by the City.

11. Collateral
As part of any swap agreement, the City shall require collateralization or other credit enhancements to secure any or all swap payment obligations. As appropriate, the City, in consultation with its bond counsel and swap advisor, may require collateral or other credit enhancements to be posted by each swap counterparty under the following circumstances:
 Each counterparty to the City may be required to post collateral if the highest credit rating of the counterparty or parent falls below the “Aa/AA” category. Additional collateral for further decreases in credit ratings of each counterparty shall be posted by each counterparty in accordance with the provisions contained in the collateral support agreement to each counterparty with the City.
 Collateral shall be deposited with a third-party trustee, or as mutually agreed upon between the City and the counterparty.
 A list of acceptable securities that may be posted as collateral and the valuation of such collateral will be determined and mutually agreed upon during negotiation of the swap agreement with each swap counterparty.
 The market value of the collateral shall be determined on at least a weekly basis.  The City shall determine the reasonable threshold limits for the initial deposit and for increments of collateral posting thereafter.
 The City shall determine on a case-by-case basis whether other forms of credit enhancement, such as swap insurance, are more beneficial in lieu of the posting of additional collateral.
#13..
- 258 -
33  The City shall evaluate the performance of the swap relative to the rate on the bonds.  The City shall compute the effective cost of borrowing inclusive of all fees and costs associated with the underlying financing.

12. Conformance with Dodd-Frank
It is the intent of the City to conform this Swap Policy to the requirements relating to legislation and regulations for over-the-counter derivatives transactions under Title VII of the Wall Street Transparency and Accountability Act of 2010, as supplemented and amended from time to time (herein collectively referred to as “Dodd-Frank”). Pursuant to such intent, it is the policy of the City that: (i) each swap advisor engaged or to be engaged by the City will function as the designated Qualified Investment Representative of the City, sometimes referred to as the “Designated QIR”; (ii) each swap advisor agrees to meet and meets the requirements specified in Commodity Futures Trading Commission Regulation 23.450(b)(1) or any successor regulation thereto (herein referred to as the “Representative Regulation”) (iii) each swap advisor provides a written certification to the City to the effect that such swap advisor agrees to meet and meets the requirements specified in the Representative Regulation; and (iv) the City relies on the advice of its swap advisor with respect to transactions authorized pursuant to this Swap Policy and not rely on recommendations, if any, presented by any counterparty with respect to transactions authorized pursuant to this Swap Policy.

13. Monitoring and Reporting
At least once per year, normally as part of the City’s Annual Comprehensive Financial Report (“Annual Report”), or as requested by the City Council, the Director of Finance shall prepare information describing the various Swaps and financial arrangements entered into by the City pursuant to this Swap Policy that are in effect as of the date of the report’s publication. The report shall include the following information:

1. A summary of key terms of the agreements, including notional amounts, interest rates, maturity and method of procurement.

2. The mark-to-market value of each agreement.

3. The full name, description, and credit ratings of each counterparty or the applicable guarantor.

4. The amounts that were required to be paid and received and any amounts that were actually paid and received.

5. A listing of any credit enhancement, liquidity facility, or reserves and an accounting of all costs and expenses associated with the credit enhancement, liquidity facility, or reserves.

6. The aggregate mark-to-market value and potential termination value for each swap by counterparty.

7. A discussion of other risks associated with each transaction.

At the end of each fiscal year, the Director of Finance shall provide to the City Council all information required for financial reporting under Government Accounting Standards Board #13..
- 259 -
34 (“GASB”) requirements as well as any other reporting or disclosure requirements. The City shall adhere to California Government Code Section 5922 and applicable GASB guidelines for reporting and disclosure guidelines for derivative products. #13..
- 260 -
1 I. INTRODUCTION
The purpose of this Policy is to organize and formalize debt issuance-related policies and procedures for the City of Modesto (the “City”) and to establish a systematic debt policy (the “Debt Policy” or the “Policy”). The debt policies and practices of the City are, in every case, subject to and limited by applicable provisions of state and federal law and prudent debt management principles.

Financial objectives include:
 Moderate principal and debt service payments through effective planning and projected cash management.
 Achieve the lowest cost of borrowing; and
 Achieve the highest practical credit ratings.

Responsibility for implementation of the Debt Policy, and day-to-day responsibility for structuring, implementing, and managing the City’s debt and finance program, shall lie with the Director of Finance.

CITY OF MODESTO

CITY COUNCIL POLICY
LATEST REVISION DATE: June 10, 2025
POLICY NUMBER: 1.036
CITY DEPARTMENT: Finance
SUBJECT: Debt Management Policy

#13..
- 261 -
2 The City Council’s adoption of the City Annual Budget does not, in and of itself, constitute authorization for debt issuance for any reason. This Debt Policy requires that the City Council specifically authorize each debt financing. Each financing shall be presented to the City Council, subject to City Council agenda review and approval (debt financings cannot be approved on a consent calendar).

B. Term of Financing
Debt can be used to provide funding for long-term capital projects. The debt repayment period should relate to the expected useful life for the facilities or equipment being financed, and should, as a general matter, be concurrent with the stream of benefits from these facilities. When the City finances capital projects by issuing bonds, the debt repayment period generally should not exceed the average useful life of the equipment, software and/or facilities being acquired or constructed, #13..
- 262 -
3 but in no case will the financing exceed 120% of the useful life of the project being financed.

C. Debt Financing Mechanism
The City will evaluate the use of all financial alternatives available, including, but not limited to long-term debt, short-term debt, commercial paper, tax revenue and grant anticipation notes, private placement and inter-fund borrowing. The City will utilize the most cost advantageous financing alternative available while limiting the City’s risk exposure.

G. Minimum Debt Service Coverage Ratio for Water and Wastewater Funds The City will seek to maintain debt service coverage on its senior lien Water and Wastewater revenue bonds at a level not less than one and a half times (1.5x) the maximum annual debt service for the aggregate outstanding senior lien bonds of the respective system, including the debt service #13..
- 263 -
4 for any new issuance, unless a different debt service coverage amount is allowed by existing bond covenants.

VII. DEBT FINANCING
A. Purpose of Debt
When the City determines that the use of debt is appropriate, the following criteria will be utilized to evaluate the type of debt to be issued:

B. Type of Debt
When the City determines that the use of debt is appropriate, the following criteria will be utilized to evaluate the type of debt to be issued:

1. Long-Term Debt
The City may issue long-term debt when equipment, project, or software costs cannot be financed from current revenues. The proceeds derived from long-term borrowing will not be used to finance current operations or normal/current maintenance. Long-term debt will be structured such that the obligations generally do not exceed the average useful life of that which is being financed or the sunset date of any current, pledged revenues. And at no time will the financing exceed 120% of the expected average useful life of the asset being financed.
 Current Interest Bonds are bonds that pay interest periodically and principal at maturity. They may be used for both new money and refunding transactions. Bond features may be adjusted to accommodate the market conditions at the time of sale, including changing dollar amounts for principal maturities, offering discount and #13..
- 264 -
5 premium bond pricing, modifying call provisions, utilizing bond insurance, as well as determining whether and how to fund a debt service reserve fund.  Zero Coupon and Capital Appreciation Bonds pay interest only when principal matures. Interest continues to accrue on the unpaid interest, therefore representing a more expensive funding option. In the case of zero-coupon bonds, principal and interest, at one coupon rate, is repaid at maturity. In the case of Capital Appreciation Bonds, the value of the bond accretes until maturity. These types of bonds should be used only when no other bond structure is available to address a certain structuring problem. If used, these bonds should mature no later than 20 years from issuance and should be callable.
 Taxable Debt is debt whose interest payments are taxable for federal income tax purposes to bondholders. The City will consider the issuance of taxable debt when it is necessary for federal tax reasons or if these bonds would lower the overall cost of the financing or help the City achieve refunding savings that could not otherwise be achieved with the issuance of tax-exempt debt (e.g., advance refundings).

BANs will be issued only when there is no better alternative to reduce the overall cost of a financing program.
 Tax and Revenue Anticipation Notes (“TRAN”) shall be issued only to address a timing mismatch between operating revenues and operating expenditures and the sizing of the issue shall fully conform to Internal Revenue Code requirements and limitations.
 Lines of Credit shall be considered as an alternative to other short-term borrowing options. The lines of credit shall be structured to limit concerns as to Internal Revenue Code compliance.
 Other short-term debt may also be considered and utilized when appropriate such as a Direct Purchase Loan from a bank or Floating Rate Notes. #13..
- 265 -
6 3. Variable Rate Debt
To maintain a predictable debt service burden, the City may give preference to debt that carries a fixed interest rate. An alternative to the use of fixed rate debt is floating or variable rate debt. It may be appropriate to issue short-term or long-term variable rate debt to diversify the City’s debt portfolio, reduce interest costs, provide interim funding for capital projects and improve the match of assets to liabilities. Variable rate debt typically has a lower cost of borrowing than fixed rate financing and shorter interest rate reset periods in the range of 1 to 35 days. Under no circumstances will the City issue variable rate debt solely for the purpose of earning arbitrage. The City, however, may consider variable rate debt in certain instances.

A) Variable Rate Debt Capacity. The City will maintain a conservative level of outstanding variable rate debt in consideration of general rating agency guidelines recommending a maximum of 20% variable rate exposure, in addition to maintaining adequate safeguards against risk and managing the variable revenue stream, both as described below:
(1) Adequate Safeguards Against Risk. Financing structure and budgetary safeguards are in place to prevent adverse impacts from interest rate shifts; such structures could include, but are not limited to, interest rate swaps, interest rate caps and the matching of assets and liabilities. See Section VII. B. 4. Financial Derivative Products below. See also the Interest Rate Swap Policy addendum.
(2) Variable Revenue Stream. The revenue stream for repayment is variable and is anticipated to move in the same direction as market-generated variable interest rates, or the dedication of revenues allows capacity for variability. (3) As a Component to Synthetic Fixed Rate Debt. Variable rate bonds may be used in conjunction with a financial strategy which results in synthetic fixed rate debt. Prior to using synthetic fixed rate debt, the City shall certify that the expected interest cost is at least 10 basis points (0.10%) lower than traditional fixed rate debt (including any ongoing fees in such calculation) as well as giving due consideration to other risks associated with such a structure that may raise the ultimate costs of a synthetic fixed rate structure. See Section VII. B. 4. Financial Derivative Products below. See also the Interest Rate Swap Policy addendum.

The City shall maintain an Interest Rate Swap Policy (see attached) governing the use of derivative products. For derivatives other than interest rate swaps, the City will undertake an analysis of early termination costs and other conditional terms given certain financing and marketing assumptions. Such analysis will document the risks and benefits associated with the use of a particular derivative product. Derivative products will only be utilized with prior approval from the City Council.
#13..
- 266 -
7 VIII. TERMS AND CONDITIONS OF BONDS
The City shall establish all terms and conditions relating to the issuance of bonds, and will control, manage, and invest all bond proceeds. Unless otherwise authorized by the City, the following shall serve as bond requirements.

E. Debt Service Structure
Debt issuance shall be planned to achieve relatively rapid repayment of debt while still matching debt service to the useful life of facilities. The City will amortize its debt within each lien to achieve overall level debt service or may utilize more accelerated repayment schedules after giving #13..
- 267 -
8 consideration to bonding capacity constraints. The City shall avoid the use of bullet or balloon maturities except in those instances where these maturities achieve one of the City’s stated goals, such as minimizing annual debt service or leveling annual existing debt service, among others.

IX. CREDIT ENHANCEMENTS
The City will consider the use of credit enhancement on a case-by-case basis, evaluating the economic benefit versus cost for each case. Only when a clearly demonstrable savings can be shown shall enhancement be considered. The City will consider each of the following enhancements as alternatives by evaluating the cost and benefit of such enhancement. As noted below, the use of credit enhancements #13..
- 268 -
9 may result in additional continuing disclosure requirements described below (see Section XV. F.

Continuing Disclosure below).

A. Bond Insurance
The City may purchase bond insurance when such purchase is deemed prudent and advantageous.

A. Debt Service Savings
The City has established a minimum net present value savings threshold goal of 3% of the refunded bond principal, unless there are other compelling reasons for defeasance. The 3% savings threshold generally applies to the aggregate. The City should also evaluate savings on a maturityby-maturity basis in order to inform the refunding decision. The present value savings will be net of all costs related to the refinancing. If the debt to be refinanced is not currently callable (i.e., in the case of forward delivery refundings, advance refundings, etc.) the City will make a comparison to the projected savings it could achieve if it waited until the debt becomes eligible for a current refunding. The decision to defease debt that is not currently callable or to take savings on an #13..
- 269 -
10 upfront or deferred basis must be expressly described in the staff report presented to the City Council
B. Restructuring
The City will refund debt when in its best interest to do so. Refundings will include restructuring to meet unanticipated revenue expectations, terminate swaps, achieve cost savings, mitigate irregular debt service payments, release reserve funds or remove unduly restrictive bond covenants. The decision to restructure debt must be expressly described in the staff report presented to the City Council
C. Term of Refunding Issues
The City will refund bonds within the term of the originally issued debt. However, the City may consider maturity extension, when necessary to achieve a desired outcome, provided that such extension is legally permissible. The City may also consider shortening the term of the originally issued debt to realize greater savings. The remaining useful life of the financed facility and the concept of intergenerational equity should guide this decision.

A. Competitive Sale
In a competitive sale, the City’s bonds shall be awarded to the bidder providing the lowest true #13..
- 270 -
11 interest cost as long as the bid adheres to the requirements set forth in the official notice of sale.

C. Private Placement
From time to time the City may elect to privately place its debt. Such placement shall be considered if this method is demonstrated to result in cost savings to the City or other benefits relative to other methods of debt issuance. Private placements may be well-suited for weaker credits where a rating either cannot be obtained or would likely be below-investment grade. Private placements may also be useful for time-sensitive funding needs as the process is more expedient compared to a market sale. As noted below, private placements may require compliance with disclosure requirements (see Section XV. F. Continuing Disclosure below). #13..
- 271 -
12 D. Feasibility Analysis
Issuance of revenue bonds may be accompanied by a finding that demonstrates the projected revenue stream’s ability to meet future debt service payments and bond covenants.

The City may issue bonds through another issuing entity such as a Joint Powers Authority (“JPA”).

The City may issue debt in this manner if it would result in the least costly method to issue debt (e.g. reduced costs of issuance). The City will evaluate the timing of such issuance.

C. Fees
When appropriate, the City will charge an administrative fee equal to direct costs to reimburse its administrative costs incurred in debt issuance and ongoing reporting costs.

XIII. CONSULTANTS
Periodically, the City may create an approved pool of qualified financing team members, such as municipal advisors or underwriters.

A. Selection of Financing Team Members
The Director of Finance will make recommendations to the City Manager for all financing team members, with the City Council providing final approval.

B. Municipal Advisor
The City shall utilize a municipal advisor to assist in its debt issuance and debt administration processes as prudent. The municipal advisor must be registered as a Municipal Advisor with the Securities and Exchange Commission (“SEC”) and Municipal Securities Rulemaking Board (“MSRB”). Selection of the City’s municipal advisor(s) shall be based on, but not limited to, the following criteria:
#13..
- 272 -
13  Prior knowledge and experience with the City.
 Experience in providing consulting services to complex issuers.  Knowledge and experience in structuring and analyzing complex issues.  Experience and reputation of assigned personnel.
 Fees and expenses.

The services of bond counsel may include, but are not limited to:
 Rendering a legal opinion with respect to authorization and valid issuance of debt obligations including whether the interest paid on the debt is tax exempt under federal and State of California law;
 Preparing all necessary legal documents in connection with authorization, sale, issuance and delivery of bonds and other obligations;
 Unless this task is assigned to disclosure counsel, as selected by the City separately from bond counsel, preparing the preliminary and final official statements and commercial paper memoranda;
 Participating in discussions with potential investors, insurers and credit rating #13..
- 273 -
14 agencies, if requested;
 Providing continuing advice, as requested, on the proper use and administration of bond proceeds under applicable laws and the indenture, particularly arbitrage tracking and rebate requirements;
D. Disclosure Counsel
The City may utilize a separate firm to serve as disclosure counsel as it deems necessary. If cost effective, bond counsel may also serve as disclosure counsel.

E. Underwriter’s Discount
The City will evaluate the proposed underwriter’s discount against comparable issues in the market with input from the municipal advisor or pricing advisor. The City will strive to reasonably minimize the underwriter’s takedown by means of a competitive selection process like an RFP. #13..
- 274 -
15 The goal of low takedowns should be balanced with adequately incentivizing the banks to market/sell the bonds or underwrite without rate adjustments, if required. If there are multiple underwriters in the transaction, the City will determine the allocation of fees with respect to the takedown and management fee (if any). The determination of the size and allocation of the management fee will be based upon participation in the structuring phase of the transaction.

Any additional expenses must be substantiated.

I. Disclosure by Financing Team Members
All financing team members will be required to provide full and complete disclosure relative to agreements with other financing team members and outside parties. The extent of disclosure may vary depending on the nature of the transaction and for underwriters and municipal advisors shall, at a minimum, comply with applicable SEC and MSRB requirements. For firms acting as the City’s bond counsel, disclosure counsel, or municipal advisor, no agreements shall be permitted which could compromise the firm’s ability to provide independent advice which is solely in the City’s best interests, or which could reasonably be perceived as a prohibited conflict of interest.

All other conflicts must be disclosed to the City in accordance with applicable regulatory requirements. For legal counsel such conflicts disclosure shall, at a minimum, comply with #13..
- 275 -
16 applicable conflicts disclosure requirements for attorneys in the state.

The Director of Finance, or his or her designee, shall be the Post-Issuance Compliance Officer (the “Compliance Officer”) for the City’s debt issuances (the “Bonds”). The Compliance Officer, if City staff, may designate such other personnel as may be necessary to assist in determining continuing compliance with all relevant law and regulations applicable to the continued favorable tax treatment of such indebtedness, and to comply with the record-keeping responsibilities outlined herein. At such time as the initial Compliance Officer is replaced or a new Compliance Officer is designated, the departing Compliance Officer will ensure that such successor is fully briefed as to #13..
- 276 -
17 the status of the City’s outstanding indebtedness and the location of records relating to such indebtedness, and that such successor receives training and consultation(s) with bond or disclosure counsel as to his or her duties as Compliance Officer under this Debt Policy.

D. Uses and Investments of Funds and Accounts
Various funds and accounts are established as security for the Bonds. The Compliance Officer shall prepare regular, periodic statements regarding the investments and transactions involving bond proceeds, which shall comprise part of the records required to be kept. The Compliance Officer will also review the disbursement of bond proceeds from Trustee records or City records, as applicable, to ensure that bond proceeds are expended in accordance with their intended purpose. The Compliance Officer shall report to the Finance Director (if the officer is a designee of the Finance Director) and the City Manager any expenditure which violates the provisions of any ballot measure, authorizing resolution, or trust document. If any Debt Service Fund ever contains any balance after the principal payment of the Bonds is made each year, except for a reasonable carryover amount which is less than the greater of the earnings on the Debt Service Fund for the immediately preceding year ending on such principal payment date (a “Bond Year”), or 1/12 of the principal and interest payments on the Bonds for the immediately preceding Bond Year, then the Compliance Officer will contact bond counsel to ensure that such facts will not cause the Bonds to become arbitrage bonds, to formulate a plan to remediate such condition, if necessary, and to determine an allowable use for such excess moneys and/or to determine if any yield restrictions apply. If any Debt Service Reserve Fund is ever funded (i) in an amount more or less than the required balance but declining in future years as detailed in the Tax Certificate, or (ii) is invested at a yield that is higher than the yield of the Bonds, then the Compliance Officer will contact bond counsel to ensure that such facts will not cause the Bonds to become arbitrage bonds, to formulate a plan to remediate such condition and/or to determine if any yield restrictions apply. Generally, if the Debt Service Reserve Fund ever contains a higher balance than required (either through the accrual of interest, investment gains, maturity of securities, or reduction in the Reserve Requirement) then the excess moneys should be dealt with as directed by the documents and #13..
- 277 -
18 approved by bond counsel. If any Construction Fund ever is invested at a yield higher than the yield of the Bonds or if moneys in the Construction Fund are not fully expended by three years after the original delivery date of the Bonds, then the Compliance Officer will contact bond counsel to ensure that such facts will not cause the Bonds to become arbitrage bonds, to formulate a plan for the investment and application of the remaining unexpended Bond Proceeds, which plan may include the redemption or defeasance of Bonds, and/or to determine if any yield restrictions apply.

Responsibilities. The Dissemination Agent is responsible for the following (the “Continuing Disclosure Policies”):
 Serving as a “point person” for personnel to communicate issues or information that should be or may need to be included in any Continuing Disclosure Agreement;  Identifying the officers and employees of the City who are most likely to first obtain knowledge of the occurrence of events that would require event filings;  Monitoring compliance by the City with the Continuing Disclosure Policies, including timely dissemination of the annual report and event filings as described below;  Recommending changes to the Continuing Disclosure Policies to the City as necessary or appropriate;
 Following up with others to make sure that assigned tasks have been completed on a timely basis and making sure that the continuing disclosure annual report is filed on a timely basis; and
 Maintaining records documenting the City’s compliance with the Continuing Disclosure Policies and the Continuing Disclosure Agreement.
#13..
- 278 -
19 Filing Requirements. The City is required to file an annual report with the MSRB’s Electronic Municipal Market Access (“EMMA”) system each year. Such annual reports are required to include certain updated financial and operating information and audited financial statements. The Dissemination Agent will establish or cause to be established a calendar reminder of the city’s continuing disclosure obligations on July 1 each year. The City is also required to file notices of certain events with the MSRB’s EMMA system. Upon the identification of the occurrence of a material event, the Dissemination Agent shall, in consultation with bond counsel, prepare, or cause to be prepared, a draft of the necessary notice (including compiling any materials or documents to be included with such notice) and shall notify such parties of the date by which such notice is to be filed. If it is not clear if the occurrence of an event constitutes an event that requires notification, then the Dissemination Agent shall consult with bond counsel to determine whether the City is required to file a notice concerning such event.

Some of these are not applicable to the City’s public debt issues and financial obligations, but the #13..
- 279 -
20 City may wish to consider providing some of these to the City’s Dissemination Agent for further filing with EMMA:
 Amendment to continuing disclosure undertaking;
 Change in obligated person (i.e., a person guaranteeing or supporting City debt);  Notice to investors pursuant to bond documents;
 Certain communications from the Internal Revenue Service;  Secondary market purchases;
 Capital or other financing plan;
 Litigation/enforcement action;
 Change of tender agent, remarketing agent, or other ongoing party;  Change in fiscal year/timing of annual disclosure or accounting standard;  Interim/additional financial information/operating data, budget;  Investment/debt/financial policy changes;
 Information provided to rating agency, credit/liquidity provider or other third party; and  Consultant reports.

I. Website Disclosure
It is expected that the Compliance Officer will be responsible for monitoring website content and reviewing the information set forth on such website. Appropriate disclaimer language on the website will be considered in order to educate the viewer that specific information intended for investors can be found on the City’s EMMA page as well as the investor’s acknowledgement of the limitations of such reliance. Coordination between the DWG and City officials will occur #13..
- 280 -
21 before the release of any public statements about any financial condition of the City.

Balloon Maturity- A later maturity within an issue of bonds that contains a disproportionately large percentage of the principal amount of the original issue.

Bullet Maturity- Maturity for which there are no sinking fund payments prior to the stated maturity date.

Commercial Paper- Very short-term, unsecured promissory notes issued in either registered or bearer form, and usually backed by a line of credit with a bank.

Competitive Sale- A sale of securities by an issuer in which underwriters or syndicates of underwriters submit sealed bids to purchase the securities in contrast to a negotiated sale.

Debt Service Reserve Fund- The fund in which moneys are placed which may be used to pay debt service if pledged revenues are insufficient to satisfy the debt service requirements.

Deep Discount Bonds- Bonds that are priced for sale at a substantial discount from their face or par #13..
- 282 -
23 value.

Derivatives- A financial product whose value is derived from some underlying asset value.

Designation Policies- Concerning a negotiated sale of bonds, the rules regarding how the takedown (sales commission) is allocated among the underwriters for each order put in for the bonds.

Escrow- A fund established to hold moneys pledged and to be used to pay debt service on an outstanding issue.

Expenses- Compensates senior managers for out-of-pocket expenses including underwriters counsel, DTC charges, travel, syndicate expenses, dealer fees, overtime expenses, communication expenses, computer time and postage.

Grant Anticipation Notes (“GAN”)- Short term notes issued by the government unit, usually for capital projects, which are paid from the proceeds of State or Federal grants of any type.

Letters of Credit- A bank credit facility wherein the bank agrees to lend a specified amount of funds for a limited term.

Management Fee- The fixed percentage of the gross underwriter’s spread which is usually only paid to the managing underwriter for the structuring phase of a transaction.

Members- Underwriters in a syndicate other than the senior underwriter.

Negotiated Sale- A method of sale in which the issuer chooses one underwriter to negotiate terms pursuant to which such underwriter will purchase and market the bonds.

Original Issue Discount- The amount by which the original par amount of an issue exceeds its public #13..
- 283 -
24 offering price at the time it is originally offered to an investor.

Pay-As-You-Go- An issuer elects to finance a project with existing cash flow as opposed to issuing debt obligations.

Present Value- The current value of a future cash flow when discounted to the present at a specific annual rate.

Private Placement- The original placement of an issue with one or more investors or financial institutions as opposed to being publicly offered or sold.

Tax and Revenue Anticipation Notes (“TRAN”)- Short-term notes issued by a government unit, usually for capital projects, which are paid from the proceeds of sales tax or other revenue sources.

Syndicate Policies- The contractual obligations placed on the underwriting group relating to distribution, price limitations and market transactions.

Underwriter- A dealer that purchases new issues of municipal securities from the Issuer and resells them to investors.

Underwriter’s Discount- The difference between the price at which the Underwriter buys bonds from the Issuer and the price at which they are reoffered to investors.

Variable Rate Debt- An interest rate on a security which changes at intervals according to an index or a formula or other standard of measurement as stated in the bond contract. #13..
- 284 -
25 1. City of Modesto Philosophy Regarding Use of Interest Rate Swaps A. Introduction
Interest rate exchange agreements or interest rate swaps (“Swaps”) and related financial instruments and derivatives may be appropriate interest rate management tools in certain circumstances. Properly used, Swaps can increase the City of Modesto’s (the “City”) financial flexibility and provide opportunities for interest rate savings. This policy (“Swap Policy”) shall be followed in conjunction with the City’s related debt issuance-related policies and procedures (the “Debt Policy”).

The authorized Swaps contemplated in this Swap Policy are intended to reduce the amount or duration of interest rate risk or produce a lower cost of borrowing when used in combination with the issuance of bonds.

B. Rationales for Utilizing Interest Rate Swaps
The use of Swaps and related financial instruments should balance the City’s primary objectives of reducing the cost of capital, minimizing the City’s exposure to interest rate volatility, and gaining flexibility in structuring and managing its debt portfolio over time with the risks associated with these tools and instruments. Examples of how the City’s debt management objectives can be achieved through the use of Swaps and other financial instruments are described below:
 Reduce borrowing costs at the time of issuance
Create synthetic fixed rate debt through a floating-to-fixed Swap.  Actively manage interest rate risk
Lock-in current market rates through (forward starting) floating-to-fixed Swap.  Balance financial risk
Purchase of an interest rate cap.

CITY OF MODESTO

CITY COUNCIL POLICY
Latest Revision Date: April 2023
ADDENDUM: Interest Rate Swap Policy

#13..
- 285 -
26  Achieve appropriate asset/liability match
Create variable rate exposure through fixed-to-floating Swap.

Under no circumstances will Swaps be used for speculative purposes, e.g., to realize trading gains.

3. Permitted Instruments
The City may utilize financial instruments that (i) lower its interest expense, (ii) manage its financial risk or (iii) improve its financial condition.

1. MMD™ is a trademark of Municipal Market Data, a Thompson Financial company. #13..
- 286 -
27 scale or the Bloomberg Valuation Service (“BVAL”) AAA Muni Callable Curve.  Interest Rate Caps, Floors or Collars
Financial contracts that limit exposure to interest rate volatility.  Options on Variable Rate Indices
Indices could include the Securities Industry and Financial Markets Association (“SIFMA”) Index2, Secured Overnight Financing Rate (“SOFR”)3, etc.  Options on Swaps (“Swaptions”)
Methods used to control the commencement or cancellation of interest rate swaps.  Basis Swaps
Floating-to-floating rate swaps using different variable-rate indices, such as a swap from the SIFMA Index to a percentage of SOFR.

2. The SIFMA Index is an index of more than 500 high-grade, tax-exempt, weekly reset Variable Rate Demand Obligation issues.

3. SOFR is a taxable rate which is a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities, published daily by the Federal Reserve Bank.
#13..
- 287 -
28  Rating Agency Risk
Is the proposed transaction consistent with the City’s current ratings and ratings objectives?
 Basis Risk
Is it anticipated that the projected Swap payments the City will receive closely match the debt service payments it will make?
 Index Risk
Does the transaction include provisions acceptable to the City regarding any change in indices used to calculate payments or obligations?  Subsequent Business Conditions
Does the transaction or its benefits depend upon the continuation, or realization, of specific industry business conditions (e.g., unusual demand for state-specific variable rate debt)?
 Operational Risk
Does the City have adequate systems, policies, and practices in place to monitor and manage the transaction over its term?

B. Swap Execution
The Director of Finance may recommend the use of financial derivative products if they:

1. Provide a specific benefit not otherwise available;

2. Produce greater expected interest rate savings than cash market alternatives;

3. Do not create substantial leverage or financial risk;

4. Result in an improved capital structure or better asset/liability match; and

5. Reasonably pass the Swap Risk Analysis required by Section 4. Swap Risk Analysis of this Swap Policy.

C. Credit Rating Designations
For purposes of this Swap Policy, references to credit ratings will be based on those ratings issued by Moody’s Investors Service, and/or S&P Global Ratings, and/or Fitch Ratings. The credit ratings will reflect the designations assigned by each of these rating agencies utilized for comparable credit and will be listed for each rating agency utilized in the order shown in the preceding sentence.
#13..
- 288 -
29 6. Swap Documentation
The City will use a standard International Swap and Derivatives Association, Inc. (“ISDA”) Master Agreement, including the Counterparty Schedule to the Master Agreement and a Credit Support Annex (utilizing such versions thereof as the Director of Finance shall determine), as supplemented and amended in accordance with the recommendations of the City’s financial/swap advisor and legal counsel. Each Swap entered into by the City shall include payment, term, security, collateral, default, remedy, termination and other terms, conditions and provisions as the Director of Finance may deem necessary or desirable.

Subject to the provisions contained herein, the City’s swap documentation and terms should include the following:
 The City will be able to terminate the swap without cause subject to market termination costs.
 The swap counterparty will only be able to terminate the swap if the City’s credit ratings fall below a certain pre-determined threshold and/or the City fails to perform, as required by the swap contract.
 Governing law for Swaps will be New York, but should reflect California authorization provisions.
 The specified indebtedness related to credit events in the Master Agreement should be narrowly drafted and refer only to specific debt of the issuing fund.  Eligible collateral should be limited to Treasuries, Federal Agencies and any other securities which, in the City’s sole discretion, shall be deemed reasonable and creditworthy.
 Collateral thresholds should be set on a sliding scale reflective of credit ratings. #13..
- 289 -
30  Termination value should be set by “market quotation” methodology.  Whenever possible use a Credit Support Annex to document swap termination value collateralization procedures.
 Ratings downgrade triggers.

For lower rated counterparties, the City should seek credit enhancement in the form of:

1. Contingent swap counterparty providing support;

2. Collateral;

3. Ratings downgrade triggers; and,

8. Limitations on Counterparty Exposure
In order to diversify the City’s counterparty credit risk, and to limit the City’s credit exposure to any one counterparty, limits will be established for each counterparty based upon both the credit rating of the counterparty as well as the relative level of risk associated with each existing and proposed swap transaction. The guidelines shown in the following table provide general termination exposure guidelines with respect to whether the City should enter into an additional transaction with an existing counterparty. The City may make exceptions to the guidelines at any time to the extent that the execution of a swap achieves one or more of the goals outlined in these guidelines or provides other benefits to the City. In general, the maximum net termination exposure to any single counterparty should be set so that it does not exceed a prudent level as measured against the gross revenues, available assets or other financial resources of the City.
#13..
- 290 -
31 For example, if the City has two Swaps with one counterparty, and if the first Swap’s market value is positive $10 million and the second Swap’s market value is negative $20 million, then the City’s total net exposure to the counterparty is negative $10 million.

Credit Ratings
Maximum
Collateralized Net
Termination Value
Maximum
Uncollateralized
Net Termination Value
Maximum Net
Termination
Exposure
AAA N/A $30.0 million N/A
AA Category $30.0 million $20.0 million $30.0 million
A Category $20.0 million $10.0 million $20.0 million
Below A Category $10.0 million $5.0 million $15.0 million If the exposure limit is exceeded by counterparty, the City shall conduct a review of the exposure limit per counterparty. The City, in consultation with its bond counsel and swap advisor, shall explore remedial strategies to mitigate this exposure. #13..
- 291 -
32 9. Benefit Expectation
Financial transactions, using Swaps or other derivative products, intended to produce the effect of a synthetic advance refunding, must generate at least 25% greater savings than the benefit threshold then in effect for fixed-rate bonds as determined by the City’s Director of Finance. (See Debt Management Policy Section X.A. Debt Service Savings). The higher savings target reflects the greater complexity and higher risk of derivative financial instruments.

10. Termination Provisions
All swap transactions shall contain provisions granting the City the right to optionally terminate a swap agreement at market at any time over the term of the agreement but shall NOT grant this right to the counterparty. In general, exercising the right to terminate an agreement produces a benefit to the City, either through the receipt of a payment from a termination, or if the termination payment is made by the City, in conjunction with a conversion to a more beneficial (desirable) City debt obligation, as determined by the City.

11. Collateral
As part of any swap agreement, the City shall require collateralization or other credit enhancements to secure any or all swap payment obligations. As appropriate, the City, in consultation with its bond counsel and swap advisor, may require collateral or other credit enhancements to be posted by each swap counterparty under the following circumstances:
 Each counterparty to the City may be required to post collateral if the highest credit rating of the counterparty or parent falls below the “Aa/AA” category. Additional collateral for further decreases in credit ratings of each counterparty shall be posted by each counterparty in accordance with the provisions contained in the collateral support agreement to each counterparty with the City.
 Collateral shall be deposited with a third-party trustee, or as mutually agreed upon between the City and the counterparty.
 A list of acceptable securities that may be posted as collateral and the valuation of such collateral will be determined and mutually agreed upon during negotiation of the swap agreement with each swap counterparty.
 The market value of the collateral shall be determined on at least a weekly basis.  The City shall determine the reasonable threshold limits for the initial deposit and for increments of collateral posting thereafter.
 The City shall determine on a case-by-case basis whether other forms of credit enhancement, such as swap insurance, are more beneficial in lieu of the posting of additional collateral.
#13..
- 292 -
33  The City shall evaluate the performance of the swap relative to the rate on the bonds.  The City shall compute the effective cost of borrowing inclusive of all fees and costs associated with the underlying financing.

1. A summary of key terms of the agreements, including notional amounts, interest rates, maturity and method of procurement.

2. The mark-to-market value of each agreement.

3. The full name, description, and credit ratings of each counterparty or the applicable guarantor.

4. The amounts that were required to be paid and received and any amounts that were actually paid and received.

5. A listing of any credit enhancement, liquidity facility, or reserves and an accounting of all costs and expenses associated with the credit enhancement, liquidity facility, or reserves.

6. The aggregate mark-to-market value and potential termination value for each swap by counterparty.

7. A discussion of other risks associated with each transaction.

BACKGROUND
• The purpose of this Policy is to organize and formalize debt issuance-related policies and procedures for the City.
• The primary objectives of the City’s debt and financingrelated activities are to maintain cost-effective access to the capital markets through the following:
• Prudent yet flexible policies.
• Moderate debt principal and debt service payments
through effective planning and project cash management. • Achieve the lowest cost of borrowing.
• Achieve the highest practical credit ratings.
2 #13..
- 296 -

DEBT POLICY
• Edits made to Section VIII. TERMS AND CONDITIONS OF
BONDS
• Language was added to expand on the investment
potential of bond proceeds.
• “The City will consider investing bond proceeds and
reviewing opportunities to earn interest income to offset interest cost, to the extent permitted by arbitrage and rebate rules“
3 #13..
- 297 -

DEBT FINANCING
• Edits made to Section IX. CREDIT ENHANCEMENTS
• Language was added to highlight the benefits of investing bond proceeds held in a debt service reserve fund.
• “…the reserve may be invested and the income utilized to offset annual debt service costs“
4 #13..
- 298 -

TERMS AND CONDITIONS OF BONDS
• Edits made to Section X. REFINANCING OUTSTANDING DEBT • Language was added to clarify the approach to
establishing the 3% savings threshold.
• “The 3% savings threshold generally applies to the
aggregate the City should also evaluate savings on a
maturity-by-maturity basis in order to inform the refunding decision“
5 #13..
- 299 -

TERMS AND CONDITIONS OF BONDS CONT
• Edits made to Section XI. METHODS OF ISSUANCE
• Language was added to clarify the appropriateness of
Private Placement debt.
• “Private placements may be well-suited for weaker credits where a rating either cannot be obtained or would likely be below-investment grade. Private placements may also be
useful for time-sensitive funding needs as the process is more expedient compared to a market sale”
6 #13..
- 300 -

STAFF RECOMMENDATION
• Motion accepting the updates to the City’s Debt
Management Policy and forwarding to Council for
approval.
7 #13..
- 301 -
#13..
- 302 -

CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

June 2, 2026
Date: May 7, 2026
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: DeAnna Christensen, Director of Finance
SUBJECT: March and April 2026 Grant Application and Awards CONTACT: Maria Garnica, Accounting Manager, [email protected] 209-577-5249
DESCRIPTION:

Consider accepting an Informational Report on the March and April 2026 Grant Applications and Awards. (Funding Source: Not Applicable) STRATEGIC PLAN ELEMENT:

This item supports the City of Modesto 2025-2026 Strategic Plan focus of Governance and Service Delivery under Goal H: Develop a Strategy for Long-Term Financial Sustainability.

BACKGROUND:

The Finance Department coordinated with California Consulting to update the Administrative Directive 7.2, “Grant Management.” The revised directive was updated on November 04, 2024, to streamline the grant management process and to establish better controls on local match requirements, including potential future costs which could be required as part of a grant agreement.

This directive has eliminated the requirement to go to Council for the application and acceptance of grant awards if the grant does not require local match contributions exceeding $100,000. Grant applications and awards that require a local match contribution which exceeds $100,000 must be approved by City Council after the Director of Finance and City Manager’s approval. City Manager is authorized to approve all grant applications and awards which exceed $25,000 and those which require local match contribution under $100,000. The Director of Finance is authorized to approve grant applications and awards under $25,000 with no local funding requirements. All grant applications and awards require the approval of the Director of Finance. Departments #14..
- 303 -
City Council, June 2, 2026
March and April 2026 Grant Application and Awards

Page 2 of 4 ends

Modesto City CouncilJune 2, 2026

Modesto City Council
June 2, 2026