Agenda packet — Monterey City Council, October 13, 2025

Council Chamber,
580 Pacific St.

Monterey, California

CITY COUNCIL AGENDA
Special Joint Meeting of City
Council and NCIP Committee
Monday, October 13, 2025
6:00 PM
Mayor
Tyller Williamson
Councilmembers
Kim Barber, District 1
Ed Smith, District 2
Jean Rasch, District 3
Gino Garcia, District 4
City Manager
Hans Uslar
City Attorney
M. Christine Davi
HOW TO PARTICIPATE IN THIS MEETING:
 In-Person: At the meeting location listed above.
 Remotely via ZoomGov webinar:
o On a computer or smartphone: https://monterey-org.zoomgov.com/j/1616037682 Zoom software must be up-to-date. For help, please use our Zoom Meeting Instructions. o By telephone dial 833-568-8864 (Toll Free), 669-254-5252 (CA) or 646-828-7666 (NY). If one number doesn’t work, please try another. Enter Webinar ID: 161 603 7682 # If asked for participant ID, press #. To raise your hand (or lower it), dial *9. Once called upon, dial *6 to unmute.
 This meeting will also stream live for viewing only on youtube.com/cityofmonterey (~10 second delay) and on Comcast Channel 25 (up to 90 second delay).  Written comment: Emailed comments to [email protected] sent no later than ½ hour before the start of the meeting (sooner preferred) are not read aloud but are made available to the Council and public at monterey.gov/submitted-comments.

PUBLIC COMMENT PROCEDURES AND TIME LIMITS:

The total amount of time allocated for public comment on a particular issue and for each individual speaker is generally as follows:

1. Up to three minutes per speaker.

2. For regular City Council meetings, there are two 15-minute public comment periods, one in the afternoon and one in the evening. Speakers may only comment during one session.

3. The total time allocated for public comment:
a. 30 minutes per item – Public Appearance and Public Hearing items b. 15 minutes per item – All other items (including, but not limited to, Consent, Closed Session, Presentations, and Requests to Agendize)
At the time an item is considered, the Mayor will ask those attending the meeting in person to line up at the podium or raise their hands, and for remote participants to use *9 on the telephone or the “raise hand” function in Zoom, if they wish to address the City Council. The maximum amount of time for each person to speak and the total amount of time allotted for each item will be determined based on the number of people indicating an interest in speaking and the amount of business to be conducted on the agenda. In exceptional circumstances and when necessary to ensure a full opportunity for public input, the Mayor may, with the legislative body’s consent, adjust the amount of time allowed for public input and/or the time allotted for each speaker.

CAMPAIGN CONTRIBUTION DISCLOSURE: Pursuant to the Levine Act (Govt. Code §84308), any party to a permit, license, contract, or other entitlement before the Council is required to disclose on the record any contribution, including aggregated contributions, of more than $500 made by the party or the party's agents within the preceding 12 months to any City official. Participants and agents are requested to make this disclosure as well. The disclosure must include the name of the party, participant, or agent, and any other person making the contribution; the name of the recipient, the amount of the contribution, and the date the contribution was made. 10/13/2025 6:00:00 PM
2 EVENING SESSION AGENDA: 6 p.m.

Call to Order
Pledge of Allegiance
Convene Joint Meeting of the City Council and Neighborhood and Community Improvement Program (NCIP) Committee, and Establish a Quorum of the NCIP Committee
NCIP Committee Members:

Aguajito Oaks: AJ Purdy (Rep), Dean Bobrowski (Alt)
Alta Mesa: Amy Stocker (Rep), Holly Ochoa (Alt)
Casanova Oak Knoll: Shelly Schmidt (Rep), Chelsea Lenowska (Alt) Deer Flats: Vacant (Rep), Dave Overton (Alt)
Del Monte Beach: Jayme Fields (Rep), Vacant (Alt)
Del Monte Grove-Laguna Grande: Scott Hanson (Rep), Joseph Hill (Alt) Downtown: William Curtis Tipton (Rep), Bella Lofaso (Alt) Fisherman Flats: Gary Baker (Rep), Vacant (Alt)
Glenwood: Lee Whitney (Rep), Amanda Preece (Alt)
Monterey Vista: Hans Jannasch (Rep), Gina Sessions (Alt) New Monterey: Chinyere Ogbonna (Rep), Natalia Tjandra (Alt) Oak Grove: Luz Adam (Rep), Vacant (Alt)
Old Town: Susan Ricketson (Rep), Rosemary Robert (Alt)
Skyline: Dennis Duke (Rep), Vacant (Alt)
Villa Del Monte: Jil Johnson (Rep), Tammy Jennings (Alt) Evening Session Items
Public Appearance (Evening)
Public Appearance items are on non-routine issues that might stimulate public interest and comments.

1. Joint Meeting of the City Council and Neighborhood and Community Improvement Program Committee (NCIP) to Discuss Potential Appropriation of NCIP Funds into the General Fund to Address the City’s $10 Million Structural Deficit in the Next Fiscal Year’s Budget (Not a Project under CEQA per Article 20, Section 15378 and under General Rule Article 5, Section 15061)
Recess
Reconvene
Adjourn to City Council Special Meeting

2. Determine a Range on the Dollar Amount of Neighborhood and Community Improvement Project (NCIP) Funds to Appropriate into the General Fund to Assist the NCIP with Developing its Recommendation to the City Council on Which NCIP Projects to Defund/Put on Hold to Address the City’s $10 Million Structural Deficit in the Next Fiscal Year’s Budget (Not a Project under CEQA per Article 20, Section 15378 and under General Rule Article 5, Section 15061) (Not a Project under CEQA per Article 20, Section 15378 and under General Rule Article 5, Section 15061) 10/13/2025 6:00:00 PM
3 Adjournment
Writings distributed for discussion or consideration on these matters within 72 hours prior to the meeting, pursuant to Government Code § 54957.5, are available at: monterey.gov/submitted-comments and in the City Manager’s Office at 580 Pacific St., Room 1, Monterey, CA 93940 during regular business hours. All comments and materials provided to the Council become part of the public record. Members of the public who comment in any fashion on an agenda item may be subject to the Levine Act which requires disclosure of campaign contributions of more than $500 to an officer of the City within the preceding 12 months.

INTERPRETATION: The Monterey City Council invites and encourages public participation at its meetings.

Requests for language interpretation may be made by contacting the City Clerk at [email protected] or 831-646-3935. The City Clerk will make every effort to accommodate requests for interpreter assistance.

Requests should be made as soon as possible in advance of any meeting of the City Council. The City is committed to addressing language interpretation requests swiftly in order to maximize public participation.

ACCESSIBILITY: The City of Monterey is committed to including people with disabilities in all of its services, programs and activities. In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, including to coordinate the use of a hearing device, please contact [email protected] or (831) 646-3935. Notification 30+ hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting [28 CFR 35.102-

35.104 ADA Title II]. Later requests will be accommodated to the extent feasible. For communication-related assistance, dial 711 to use the California Relay Service (CRS) to speak to City offices. CRS offers free text-tospeech, speech-to-speech, and Spanish-language services 24 hours a day, 7 days a week.

CITY OF MONTEREY 24-HOUR SUGGESTION HOTLINES: (831) 646-3799 or [email protected] Upcoming city meetings are listed at monterey.gov/agendas For more information, call (831) 646-3935 Council
Agenda Report
№11/25
FROM: Hans Uslar, City Manager
Nat Rojanasathira, Assistant City Manager
SUBJECT: Joint Meeting of the City Council and Neighborhood and Community Improvement Program Committee (NCIP) to Discuss Potential Appropriation of NCIP Funds into the General Fund to Address the City’s $10 Million Structural Deficit in the Next Fiscal Year’s Budget (Not a Project under CEQA per Article 20, Section 15378 and under General Rule Article 5, Section 15061) RECOMMENDATION:

Joint Meeting of the City Council and Neighborhood and
Community Improvement Program Committee to
discuss potential appropriation of NCIP funds into the
General Fund to address the City’s $10 million structural deficit for fiscal year 2026/27.

VALUE DRIVERS:

In collaboration with our community partners, work to
improve the quality of life of all of our community
members by fostering diversity, equity, and inclusion;
championing equitable access to affordable housing;
and maintaining a safe environment.

Serve as stewards of the City’s financial resources
through sound economic vitality efforts, streamlining
operations, reasonable revenue enhancements,
visionary long-term planning, fiscal transparency, and
community partnerships.

Foster a local government that is transparent and
collaborative; and solicits, welcomes and appreciates
input from all.

POLICY IMPLICATIONS:

The City Council appropriates a portion (16%) of the
Transient Occupancy Tax (TOT) estimated to be
collected during the fiscal year to be expended on
neighborhood and community improvements. This
action is consistent with past Council practice to meet with members of the NCIP committee to collaborate and
discuss the use of NCIP funding.

Agenda Report Highlights
 The City of Monterey faces a $10
million structural deficit for FY
2026/27, requiring immediate
funding solutions.
 NCIP funds, sourced from 16% of
Transient Occupancy Tax revenue,
are being considered to address the
deficit while balancing critical
infrastructure needs.
 Alternatives include maintaining
current projects, freezing/defunding
select projects, skipping a funding
cycle, or a hybrid approach
combining partial re-appropriation
and project freezing.
 The NCIP backlog includes 86
approved projects totaling $17
million, with limited staff capacity to
complete them.
 Collaboration between the City
Council and NCIP Committee aims
to prioritize public safety and
infrastructure projects while
addressing financial challenges.

Date: 10/13/2025
Item No.: 1.

Council Special Meeting, 10/13/2025, Item No. 1., Item Page 1, Packet Page 4 №11/25
CAMPAIGN DISCLOSURE REQUIREMENT (LEVINE ACT) APPLIES: No.

FISCAL IMPLICATIONS:

The Monterey City Charter establishes the Neighborhood and Community Improvement Program (NCIP), which is funded by 16% of Transient Occupancy Tax (TOT) Revenue. One primary advantage of NCIP is that it provides dedicated funding for projects recommended by the NCIP Committee and considered/approved by the City Council.

The City’s structural ongoing budget deficit is estimated to be $10 million. The City Council is considering solutions to address the City’s budget deficit. However, many of these solutions will not generate sufficient revenue for FY 2026-27.

As part of the process of exploring all possible funding opportunities to bridge the fiscal gap of $10M, Council has asked for a joint meeting with the NCIP to explore potential areas of collaboration.

City Council has approved 105 NCIP projects with a combined budget of $22 million over the last three City Council budget cycles (2022/23 through 2024/25). In the last three years, City staff have completed 40 of those projects. As of October 2025, there are 34 NCIP projects inprogress with a budget balance of approximately $7.8 million. There are also 37 NCIP projects that have not started and five (5) inactive projects with a combined budget balance of approximately $8,574,276. Due to limited staffing resources, City staff on average are only able to complete approximately one project per month, or 13 projects per year, while roughly 35 projects per year are added to the NCIP Project List.

Project Category Number of Projects Balance
Contingency &
Unappropriated Funds
2 $616,841
In-Progress Projects 34 $7,848,009
Projects Not Yet Started 37 $7,540,196
Inactive Projects 5 $1,034,062
Projects in Close-out Phase 10 $289,042
In addition: The Neighborhood and Community Improvement Program will have $6.18 million available for project funding in Fiscal Year (FY) 2026 as shown in the table below.

Funding Sources/Accounts (Current Balances) Funds
Transient Occupancy Tax Revenue for NCIP (16%
of TOT), FY25
$ 6,000,000
Ending Balance Account (31nunap) $ 561,740
Contingency Balance Account (31ncont) $ 69,514
Less Program Expenses $ (450,000)
NCIP Available Funding $ 6,181,254
Council Special Meeting, 10/13/2025, Item No. 1., Item Page 2, Packet Page 5 №11/25
Current Structural Deficit: $10 million for FY 25-26
Available NCIP Funding (FY 25/26): $6.18 million
Current NCIP Project Status: $17 million (86 projects)
The specific fiscal impact will depend on Council's preferred choice. It is recommended that the City Council identify the appropriate dollar amount for project defunding and Staff can work with the NCIP Committee to identify projects that will remain approved, but may be unfunded by the estimated dollar amount suggested by the City Council. There is no direct fiscal impact from the discussion item.

Budget/Process Basics:
 Special Tax Revenue from Transient Occupancy Tax (16%) goes to the NCIP fund.  NCIP recommends projects to the City Council.
 City Council approves/budgets NCIP projects by a majority vote and appropriates NCIP funds for the approved projects.
 Just like other legislative/budgetary decisions, the City Council may, by a majority vote, defund, close, or freeze previously approved projects. Funds from NCIP projects that are no longer active/approved are returned to the NCIP fund.  To appropriate NCIP funds to the General Fund to cover ordinary and necessary services of the City, a 4/5 vote of the City Council is required. When that occurs, the special tax limitations no longer apply.

ENVIRONMENTAL DETERMINATION:

The City of Monterey determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA)(CCR, Title 14, Chapter 3 (“CEQA Guidelines), Article 20, Section 15378). In addition, CEQA Guidelines Section 15061 includes the general rule that CEQA applies only to activities which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Because the proposed action and this matter have no potential to cause any effect on the environment, or because it falls within a category of activities excluded as projects pursuant to CEQA Guidelines section 15378, this matter is not a project. Because the matter does not cause a direct or any reasonably foreseeable indirect physical change on or in the environment, this matter is not a project. Any subsequent discretionary projects resulting from this action will be assessed for CEQA applicability.

ALTERNATIVES CONSIDERED:

The City Council and/or the NCIP Committee could choose not to move forward with the proposed discussion and direction. However, this is not recommended as the NCIP committee is seeking direction from City Council and would like to discuss any appropriation of NCIP funds to the General Fund to address the FY26/27 budget’s structural deficit.

DISCUSSION:

The Neighborhood Community Improvement Program (NCIP) directs tourist-generated dollars directly back into the City's residential neighborhoods. Pursuant to the City’s Charter, at least 16 percent of the money collected through hotel taxes (Transient Occupancy Tax) is allocated to neighborhood and community improvements. Every fiscal year, a committee consisting of Monterey residents representing 15 City neighborhoods consider all nominated projects and Council Special Meeting, 10/13/2025, Item No. 1., Item Page 3, Packet Page 6 №11/25
recommend to the City Council projects for funding. Several public meetings are held to discuss the nominated projects before projects are voted and ranked by the NCIP committee. The NCIP committee recommendation is subsequently reviewed by Council and Council approves or denies the funding for the NCIP recommended projects.

The last joint meeting between City Council and the NCIP committee took place on August 19, 2025, where City Council expressed a desire to prioritize public safety-related projects such as fuel reduction to mitigate fire risk, repairs at fire stations, speeding issues in neighborhoods, and improvements consistent with the Americans with Disabilities Act ("ADA") Transition Plan. Also, the Council expressed an interest in reducing the backlog through reducing the number of new projects approved, and that if a project were not feasible - that it should be removed from the backlog which is something the NCIP committee is addressing.

During this last joint meeting, it was also stated that the NCIP Committee understood the City's financial challenges and was working to reduce the number of small projects that were added to the program.

Current NCIP program status:
 Over the past 3 years, 105 projects were funded ($22 million)*  40 projects were completed in the last three years
 Average completion rate: 13 per year
 Average new projects added: 35 per year
 New project nominations for FY 25/26 cycle: 73 projects  86 current approved NCIP projects ($17 million)
o 34 NCIP projects in progress ($7.8M)
o 37 Projects that have not been started and 5 that are inactive ($8.5M) o 10 projects nearing close out
 Current FY 25/26 cycle funding available: $6.18 million *On 4/21/2020, NCIP projects were defunded with the exception of projects that were in progress. All of these projects approved prior to 2020 have been completed with the exception of Casa Verde and Del Monte Intersection Improvements.

The backlog of NCIP projects is not a new trend and it is something that has been a challenge over the course of the program. The current staffing shortage experienced by the Engineering Division has also diminished the capacity to deliver projects. Staff has procured consultants, interns, and advertised extensively to fill vacant positions.

During the August 27th Special City Council meeting, the Finance Director and staff presented information on the rising costs of expenses outpacing the growth in revenue that has resulted in an ongoing structural deficit of $10 million annually. The current Fiscal Year (FY25/26) was balanced by utilizing one-time solutions including restructuring commitments to other funds, reducing contributions to select reserve accounts by 50% for the 24-25 and 25-26 fiscal years, reducing projected O&M costs for by 7%, closing spending for FY24-25 in O&M six weeks early, increasing the projected rate of salary savings, freezing (chilling) and not funding positions from current vacancies, and reducing the appropriation to CIP projects.

Council Special Meeting, 10/13/2025, Item No. 1., Item Page 4, Packet Page 7 №11/25
At the September 16th City Council meeting, various revenue-generating strategies were discussed to reduce the City’s $10 million structural budget deficit. While the City Council identified a few solutions, many of them, including a potential sales tax increase on the June 2026 ballot, would not generate sufficient revenue to address the structural deficit in FY 2026-

27. Staff has limited options to bridge this gap with immediate strategies. A City Council decision on how to address the deficit in FY 2026-27 will help planning efforts as budget preparations for the new fiscal year will begin in January 2026.

It was acknowledged that most solutions are longer-term, and that the potential appropriation of NCIP funds would likely be needed to address the budget deficit at least in the upcoming fiscal year to pay for ordinary and necessary expenses of the City. The City Council requested that a joint meeting be held with the NCIP committee to address this strategy collaboratively with the committee.

The October 13, 2025, joint meeting provides an opportunity for the City Council and the NCIP Committee to collaboratively discuss how NCIP funding could address both the structural deficit and critical infrastructure needs for FY 26/27. Given the lack of General Fund dollars allocated for the Capital Improvement Program (CIP), the City Council could also provide direction to NCIP on the types of priority projects the Council would like NCIP to consider. However, the City’s current main fiscal challenge remains funding the on-going operational costs for services across all Departments.

Immediately following the joint City Council and NCIP Committee meeting, the City Council will convene to provide guidance on the range of NCIP funding needed to address the $10 million deficit, as well as how the Council would prefer projects to be prioritized. The City Council is convening separately because the City Council is the sole fiscal authority for the City’s budget, including NCIP funds.

The alternatives to address part of the City’s budget structural deficit with NCIP funding are as follows:

Alternative 1: (Status Quo)
Maintain Current Cycle Funding and Current Projects
This alternative would proceed with the FY25/26 cycle as planned, funding projects from the $6.18 million available and continuing work on existing projects ($17 million).

Considerations:
 Does not address the FY 26/27 structural deficit
 Will result in service and personnel cuts (e.g., police, fire, parks, recreation, library, other services) in order to balance the budget  Staff does not recommend this alternative
Alternative 2: (Freeze Select Projects)
Maintain Current Cycle and "Freeze" (Defund But Remain as an Approved Project) Specific Dollar Amount in Current Projects
This alternative would proceed with the FY25/26 NCIP cycle while strategically "freezing" (defunding but not closing) a specific dollar amount of current backlog projects that do not address failing infrastructure. Frozen/defunded projects would be deferred to future budget years for consideration once other mid-term deficit reduction strategies are implemented and Council Special Meeting, 10/13/2025, Item No. 1., Item Page 5, Packet Page 8 №11/25
staff are available to complete the projects. Currently, there are 37 Projects that have not been started and 5 that are inactive totaling $8.5 million. The total approved project amount is approximately $17 million.

Considerations:
 Provides deficit reduction impact
 Allows critical infrastructure projects to move forward in the process (e.g., Hilltop, Fire Station 13, ADA improvements, restroom rehabilitations, Library repairs, Lighthouse Curve Recreation Trail retaining wall, Central Public Safety Facility alternatives)  Preserves the many hours of planning work invested in approved projects  Aligns with Council's stated priorities regarding infrastructure and public safety  The only pathway to funding infrastructure projects since no General Fund is available this fiscal year for infrastructure, these projects were submitted by staff in collaboration with NCIP representatives.
 Represents a collaborative approach between Council and Committee priorities  Staff recommends this alternative as the best compromise between preserving critical projects and investing in infrastructure
Alternative 3: (Skip a Cycle) Maintain Current Approved Projects and Re-Appropriate FY 25/26 NCIP Funding to General Fund
This alternative would continue work on the existing 86 projects (totaling $17 million) but would redirect the entire $6.18 million in FY 25/26 cycle funding to the General Fund.

Considerations:
 Provides deficit reduction impact
 No funding available for critical facility infrastructure needs since no General Fund available for CIP this fiscal year
 Results in further deterioration of City facilities and deferred ADA improvements  Does not fund projects that address Council's public safety priorities this year  Staff does not recommend this alternative due to lack of infrastructure investment for this fiscal year
Alternative 4: (Hybrid)
Combination of Partial Re-Appropriation of Current Cycle Funding and Project "Freezing" This alternative would redirect a portion of the $6.18 million in current cycle funding to the General Fund while freezing selected backlog projects that do not address infrastructure, current approved project amount is $17 million.

Considerations:
 Provides some deficit reduction while funding only a few  Would only fund few projects addressing failed or needed infrastructure  Similar outcomes to Alternative 2 but with reduced immediate and critical infrastructure investment
Council Special Meeting, 10/13/2025, Item No. 1., Item Page 6, Packet Page 9 №11/25
The NCIP Committee has demonstrated an understanding of the City's financial challenges and has been working to reduce the number of recommended projects to address the backlog. This next step is an extension of that same collaborative spirit. By focusing available funds on critical infrastructure, the City ensures that NCIP dollars make the most strategic impact during a difficult period. NCIP has consistently supported both city facility improvements and right-of-way projects that deliver broad community benefits.

NCIP representatives and residents spend a significant amount of time on nominating and collaborating on projects. The NCIP Chair mentioned at the last joint meeting how this equated to a quilt and labor of love. In that spirit, “freezing/defunding” a project would mean deferring the project to a future year with priority funding once other direct strategies to address the structural deficit are in place. This preserves the work and effort and safeguards the projects. Through this strategy, we are not unraveling the quilt but are rather carefully folding it for safekeeping.

As stated earlier, following the joint Council/NCIP Committee meeting, the City Council will convene to provide guidance on the range of NCIP funding needed to address the $10 million deficit, as well as how the Council would prefer projects to be prioritized.

NR
Writings distributed for discussion or consideration on this matter within 72 hours prior to the meeting, pursuant to Government Code § 54957.5, will be made available at the following link:
https://monterey.gov/Submitted-Comments
Council Special Meeting, 10/13/2025, Item No. 1., Item Page 7, Packet Page 10 Council
Agenda Report
№11/25
FROM: Hans Uslar, City Manager
Nat Rojanasathira, Assistant City Manager
Rafaela King, Finance Director
SUBJECT: Determine a Range on the Dollar Amount of Neighborhood and Community Improvement Project (NCIP) Funds to Appropriate into the General Fund to Assist the NCIP with Developing its Recommendation to the City Council on Which NCIP Projects to Defund/Put on Hold to Address the City’s $10 Million Structural Deficit in the Next Fiscal Year’s Budget (Not a Project under CEQA per Article 20, Section 15378 and under General Rule Article 5, Section 15061) RECOMMENDATION:

That the City council determine a range on the dollar
amount of NCIP funds to appropriate into the general fund to assist the NCIP with developing its recommendation to the City Council on which NCIP projects to defund/put on hold to address the City’s $10 million structural deficit in the next fiscal year’s budget.

VALUE DRIVERS:

In collaboration with our community partners, work to
improve the quality of life of all of our community members by fostering diversity, equity, and inclusion; championing equitable access to affordable housing; and maintaining a safe environment.

Serve as stewards of the City’s financial resources
through sound economic vitality efforts, streamlining
operations, reasonable revenue enhancements, visionary
long-term planning, fiscal transparency, and community
partnerships.

Foster a local government that is transparent and
collaborative; and solicits, welcomes and appreciates
input from all.

POLICY IMPLICATIONS:

The City Council appropriates a portion (16%) of the
Transient Occupancy Tax (TOT) estimated to be collected during the fiscal year to be expended on neighborhood
and community improvements. The determination of the
Agenda Report Highlights
 The City of Monterey faces a $10
million structural budget deficit for
FY 2026/27, requiring immediate
strategies to address the shortfall.
 The City Council is considering
determining a range on the dollar
amount of NCIP funds to
appropriate into the General Fund,
with alternatives ranging from
maintaining current funding to
freezing or redirecting funds.
 A joint meeting between the City
Council and NCIP Committee will
discuss feedback and potential
actions regarding NCIP fund
reallocation.
 Alternatives include maintaining
current projects, freezing select
projects, skipping a funding cycle, or
a hybrid approach combining partial
reallocation and project freezing.

Date: 10/13/2025
Item No.: 2.

Council Special Meeting, 10/13/2025, Item No. 2., Item Page 1, Packet Page 11 №11/25
projects, priorities and expenditures shall be within the sound discretion of the City Council. (City Charter Section 6.6(e).).

CAMPAIGN DISCLOSURE REQUIREMENT (LEVINE ACT) APPLIES: No.

FISCAL IMPLICATIONS:

The City’s structural (ongoing) budget deficit starting in FY 2026-27 is estimated to be $10 million. The City Council is considering solutions to address the City’s budget deficit. However, many of these solutions will not generate sufficient revenue for FY 2026-27. Appropriating a portion of NCIP funds to General Fund Operations will decrease this budgetary deficit. The specific fiscal impact will depend on Council's direction regarding the preferred alternative and target amounts for NCIP for project freezing or funding re-appropriation and will require subsequent Council action at a future meeting.

ENVIRONMENTAL DETERMINATION:

ALTERNATIVES CONSIDERED:

The City Council could choose not to provide an estimate on the amount of NCIP funds to appropriate to the General Fund to assist the NCIP in its review of projects to put on hold/temporarily defund. However, this alternative is not recommended as preparatory work for to develop the FY 2026/27 budget begins in January, and there are limited immediate strategies to balance the next fiscal year’s budget.

DISCUSSION:

The City Council requested a joint meeting of the Council and NCIP Committee in order to gather feedback from NCIP on the potential appropriation of NCIP funds to balance the budget for FY 2026/27.

Council Special Meeting, 10/13/2025, Item No. 2., Item Page 2, Packet Page 12 №11/25
This discussion will take place on October 13. The Council and NCIP Committee will convene jointly for a discussion, followed by a separate agenda item (the agenda item for this report) where the City Council will consider this action separately.

The following alternatives will be presented to the Council and NCIP committee during the joint meeting for discussion, and for the City Council to consider action separately:

Alternative 2: (Freeze Select Projects)
Maintain Current Cycle and "Freeze" (Defund But Remain as an Approved Project) Specific Dollar Amount in Current Projects
This alternative would proceed with the FY25/26 NCIP cycle while strategically "freezing" (defunding but not closing) a specific dollar amount of current backlog projects that do not address failing infrastructure. Frozen projects would be deferred to future years with funding consideration once other mid-term deficit reduction strategies are implemented.

Alternative 3: (Skip a Cycle)
Maintain Current Approved Projects and Re-Appropriate FY 25/26 NCIP Funding to General Fund
This alternative would continue work on the existing 86 backlog projects but redirect the entire $6.18 million in FY 25/26 cycle funding to the General Fund.

Alternative 4: (Hybrid)
Combination of Partial Re-Appropriation of Current Cycle Funding and Project "Freezing" This alternative would redirect a portion of the $6.18 million in current cycle funding to the General Fund while freezing/defunding selected backlog projects that do not address infrastructure.

This item follows the discussion held during the joint meeting and seeks Council direction on:

1. The preferred alternative to addressing any appropriation of NCIP funds to the General Fund for operations

2. The amount of NCIP funding to be re-appropriated to the General Fund to address the FY 26/27 structural deficit, and

3. Guidance on project types and priorities for the remaining NCIP funds given current General Fund constraints.

Recommendation
The projected budgetary deficit remains at around $10m. Aside from using funds set aside for unforeseen economic challenges caused by natural disasters, pandemics or imminent economic crises such as a recession, the City possess the means to bridge the next fiscal year using existing funding to pay for on-going services in the General Fund, plus allocating funds aside for future CIPs and reserves.

Council Special Meeting, 10/13/2025, Item No. 2., Item Page 3, Packet Page 13 №11/25
Staff recommend the City Council encourage the NCIP Committee to consider coming up with a range of $8m to $10m in funding for next fiscal year. This sum will include potential funding for additional CIP projects.

Alternatively, and considering the potential of salary savings, the City Could provide a range of $7.1m to $8m in funding, but that would require the City to begin the use of attrition of positions and implement a hiring freeze. Once the potential budget enhancement measures kick in during FY 26/27 (the most impactful solutions will require voter approval), the City Council then can elect to return to a more normal budget process for FY 27/28. In other words: we know what we can do today, yet, we should not count on voter approved tax measures until the measures are approved, placed on the ballot and approved by voters.

Writings distributed for discussion or consideration on this matter within 72 hours prior to the meeting, pursuant to Government Code § 54957.5, will be made available at the following link:
https://monterey.gov/Submitted-Comments
Council Special Meeting, 10/13/2025, Item No. 2., Item Page 4, Packet Page 14

Monterey City CouncilOctober 13, 2025

Monterey City Council
October 13, 2025