SUPPLEMENTAL MATERIAL
1 Responses to City Council Agenda Items – February 17, 2026
Regular Meeting
Agenda Item #5: Accept the FY 2025/26 Mid-Year Budget Update report including a presentation on the General Fund forecast, and adopt a resolution approving FY 2025/26 budget amendments
1. I’d like to make sure I understand the current activity in the Rainy Day / Capital Reserve account
a. From the 11/2025 report, we had that surplus, and I believe we were able to fully restore the budgeted draw on the account by putting $3.08M back into the account. Council discussed using these funds to offset / delay the Draw on the FAS 115 account/fund ($1M in FY26, $2M in FY27).
A. Please see the response below in section 1b.
b. It appears we now are offsetting the FAS 115 draw, but not from the $3.08M, as now FY26 operations are sufficient to cover it / stave off the 115 draw?
A. We are no longer needing to draw $1.00M from the Section 115 Pension Trust Fund in FY 2025/26 based on the combination of two actions: 1) the recommended mid-year adjustments to reduce the overall General Fund expenditure budget by just over $0.57M, and 2) increasing the transfer from the Capital Reserve Fund to the General Fund by $0.50M, going from $1.00M in the adopted budget to the $1.50M with the recommended mid-year adjustment.
With the Council-approved action at the November 18, 2025, meeting to not transfer $3.08M from the Capital Reserve Fund to the General Fund, the Capital Reserve Fund ended FY 2024/25 with $6.62M. With the recommended $1.50M transfer, there will be $5.12M remaining in the Capital Reserve Fund at the end of the current fiscal year. c. It appears on Exhibit A that there is a $1M budget transfer on the Rainy Day / Capital Reserve account (+ the $500k which was discussed in the staff report). Can you help me understand what this $1M is? It appears there are several potential areas for it, is it going to the Sewer Enterprise? A. The adopted budgeted amount of $1.00M transfer from the Capital Reserve Fund to the General Fund, which will become $1.50M based on the recommended mid-year adjustment, is not necessarily earmarked specifically for one or multiple funds, but it has been used
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2 to meet the General Fund’s annual contribution to one or more capital funds.
The adopted FY 2025/26 General Fund budget includes $5.22M contribution to the Miscellaneous CIP Fund for deferred maintenance funding needs, as well as $1.00M in annual contribution for the capital improvement program. This amount will remain the same, but now $1.50M of $6.22M will come from the Capital Reserve Fund, with the remaining $4.72M coming from the General Fund.
d. With these staff recommended changes, what is the current balance on the Rainy Day / Capital Reserve account, what is the revised budgeted activity for this account now (in the FY25-27 budget)?
A. For FY 2025/26, after the $1.50M transfer to the General Fund, the remaining balance in the Capital Reserve Fund will be $5.12M.
For FY 2026/27, the adopted budget includes an additional $2.00M transfer to the General Fund, bringing down the ending fund balance to $3.12M.
e. What is the budgeted CIP Allocation from the General Fund (in the FY25- 27 budget) compared to the prior budget?
A. Please reference the table below that breaks down the actual and budgeted transfers to various capital funds and repair & replacement funds. These amounts do not include annual contributions from the General Fund to the repair & replacement funds.
2. Does PG&E (a utility) pay Property Tax?
A. Yes, they do. The State Board of Equalization assesses utilities. The City receives its share of the Alameda County’s share of the statewide collection of all the utilities located in the county.
General Fund Transfer Out to Capital and
Repair & Replacement Funds
Actual
FY 2023/24
Actual
FY 2024/25
Modified
FY 2025/26
Budgeted
FY 2026/27
CIP & CIPR ($2,000,000) ($5,871,578) ($6,221,000) ($8,791,000) Facilities Renovation Fund ($1,400,000) - ($2,000,000) - LED CEC Loan Repayment ($190,628) - - - Park CIP Fund ($3,100) - - - Streets CIP Fund ($83,527) - - - Capital Reserve Fund ($2,000,000) - - - IT Repair & Replacement Fund ($1,000,000) - - - Park Median Replacement Fund ($500,000) - - - Traffic Signal Repair & Replacement Fund ($200,000) - - - Library and Recreation Facilities & Equipment Fund - ($61,502) Total Transfers ($7,377,255) ($5,933,080) ($8,221,000) ($8,791,000)
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3 3. Do we know of other commercial properties at risk of Property Tax reassessment? (I’d think we would). And just confirming, that ‘risk’ is baked into the consultant’s estimates and our analysis?
A. The numbers from the consultant reflect reassessments and appeals that were granted and are likely to be reflected in FY 2026/27. Based on pending cases, some projections were made on how much impact the additional reassessments stemming from appeals will have on the City’s Property Tax revenue. However, it is difficult to estimate how many appeals will be successful and which appeals will be heard each year.
4. Are we still anticipating the pension cost peak in ~7 years? A. Based on the latest information received from the CalPERS actuary, the City’s overall unfunded pension liability estimates are projected to decrease starting in FY 2029/30. It should be noted that CalPERS achieved investment returns higher than its target of 6.8 percent over the past two fiscal years.
Unfunded pension liability estimates are highly dependent on annual investment returns and can fluctuate from year to year.
5. On the 10-yr Forecast, Use of Reserves ($349k in FY26, and $2M in FY27), can you please help me understand what account this is coming from? I presume Rainy Day / Capital Reserve account and not the Unallocated GF Reserve account?
A. The Use of Reserves line represents the use of restricted program reserves and/or the Section 115 Pension Trust. For FY 2025/26, the adopted budget includes $0.35M from program reserves and $1.00M from the pension trust.
The $0.35M in program reserves includes $0.29M from the COVID Response & Recovery Reserve and $0.06M from the Strategic Plan Implementation Reserve. With the recommended mid-year adjustment to no longer utilize $1.00M from the pension trust, we are left with $0.35M in program reserves.
For FY 2026/27, $2.00M represents the use of the pension trust.
Funds coming from the Capital Reserve Fund are reflected under the “Transfer- In” line item.
6. Vacancy rate 2->3%, risks? What has been our actual experience? Does this lend to hiring risk?
A. Increasing the vacancy rate from 2.0% to 3.0% should not affect the city’s hiring based on the staff’s analysis of budgeted versus actual personnel costs over the past two years. The City’s personnel budget had 2.9% savings in FY 2024/25 and 4.1% in FY 2023/24.
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4 7. On the mid-year budget agenda item, under "Capital Funds," there is this statement: "3) increasing expenditure by $0.49 million in the Measure B Bike and Pedestrian Fund to ensure all remaining funds are spent by the end of this fiscal year.” I understand that Measure B has technically expired (June 2022). I would have expected a three-year grace period to spend the funds (they are pass- through, so we received the funds, but we have to return any unused money).
Measure BB is different. Does the grace period actually extend to June 2026 or when?
A. The Alameda County Transportation Commission is responsible for the distribution of Measure B funds. They adopted a Timely Use of Funds Policy in 2022 that requires all Measure B funds to be fully expended by June 30, 2026.
The City of Pleasanton’s 2021 CIP fully allocated the remaining Measure B funds (Fund 163). The funds were allocated to two CIP projects: the West Las Positas Bicycle and Pedestrian Improvements (CIP #17567, later changed to West Las Positas Multimodal Reconstruction Project CIP #11514) and the Annual Bicycle and Pedestrian Improvement Program (CIP # 22543).
The 2023 CIP continued the assumed use of the Measure B funds on the two projects, transferring Fund 163 expenditures to the newly named West Las Positas Multimodal Reconstruction Project CIP 11514, and the Annual Bicycle and Pedestrian Improvements Program CIP #24543. The Annual Bicycle and Pedestrian Program only spent around $80,000 on projects, due to delays in the all-way stop improvements on Valley Avenue. The project was delayed pending the completion of the Pleasanton Transportation Safety Action Plan.
The $80,000 in expenditures was not coded to fund 163, as that was not entered as a valid fund source when the CIP was created in the finance software.
For the 2025 CIP, all of the available Fund 163 money was moved to CIP #11514, the West Las Positas Multimodal Reconstruction Project, and is flagged to ensure that Fund 163 is used first.
The additional $49,200 is interest earned from the unexpended Measure B funds that were not previously allocated to a CIP project. Please note in the body of the staff report, this number was erroneously indicated as $490,000.
Exhibit A to the Resolution, which lists all recommended budget adjustments, shows $49,200 in Fund 163.
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5 8. Were you presented with a list of projects/programs recently? If you did, do you believe that the bike community agreed with the list?
A. The Pedestrian, Bicycle, and Trails Committee reviewed the proposed use of Measure B and BB funds in the Spring of 2025, prior to the June 2025 CIP and Budget being presented to the City Council.
Alameda CTC requires that Measure B, Measure BB and Vehicle Registration Fee funds receive governing board approval prior to the jurisdiction expending the DLD funding on the project/program. This approval allows the public to provide input on planning for bicycle and pedestrian safety. The Alameda CTC provides a list of areas where projects may be identified. This list includes the following:
1) List of projects on which to specifically spend Measure B/BB funds 2) Local Bicycle and/or Pedestrian Master Plan with priority projects 3) Capital Improvement Program
4) A resolution, such as to submit a grant application
All Measure B funding is included in the 2025 CIP, adopted in June 2025.
Agenda Item #6: Receive the financial plan analysis for the 2026 sewer rate study and approve Implementation Scenario 1 - Maintain
9. I don’t have record that we’ve ever seen the Sewer Rate Inputs presentation from 01/30/2026, can you confirm this is the first time we’re seeing it?
A. Yes, this is the first time the City Council is being presented with information on the sewer rate study. The Sewer Rate Study follows the same process as the Water Rate Study. There are three main steps that were presented at the November 4, 2025 City Council meeting when the City Council approved the Sewer System Management Capital Improvement Plan. Staff is now presenting Step 2-Financial Analysis and Plan. Staff is projected to present Step 3-Sewer Rate Study and Cost-Of-Service Analysis to Council in April 2026 to share preliminary results, returning in June 2026 for final approval.
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6 10. Did we connect with a resident advisory group (like the WAG)?
A. The City did not form a resident advisory group like the WAG with the sewer rate study. During the Water Rate Study, the City utilized a more robust outreach strategy, including a Water Advisory Group (WAG), due to the scale of the proposed rate adjustments, the visibility of water rates to customers, and the anticipated level of community interest.
The City has developed a robust communication and outreach plan for the sewer rate process that includes social media, e-newsletter articles in both the Pleasanton Pipeline and the city’s monthly newsletter, participation in multiple community outreach events, website updates, press releases, and the development of graphics and materials that simplify how our sewer system works.
11. Please help me understand the CPI assumption input (pg 109/144) of 2.7% effective 1/1/26 and then 3% effective 7/1/26. Are these compounding or simply a ‘slide’ from 2.7 -> 3%. As rates are typically published as an annual number, this isn’t clear to me how we’re intending this to be read and how the actual math was applied. Note - on page 118/144 it doesn’t do a mid-year CPI adjustment for Expenses?
A. No, there is no mid-year CPI adjustment for expenses. Expenses are inflated annually based on the FY 2026 budget. The mid-year CPI adjustment applies to the currently adopted City sewer collection rates only.
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7 12. Please confirm if there has been a capital outlay planned for 2028 in the adopted plan that is requiring the debt taken out on the Sewer plan / program? A. That is correct. Council approved the Long-Term Sewer Capital Improvement Plan (CIP) on November 4, 2025. There were three preliminary scenarios presented in the council meeting that were finalized in the sewer financial plan study: Scenario 1 – Maintain, Scenario 2 – Prioritize, and Scenario 3 – Defer. The financial plan calculated the required revenue increases and debt required to support these CIP scenarios as well as recommendations to support the City’s overall sewer program identified in its 2025 Sewer System Management Plan.
13. Rates to customers wasn’t within the write up staff report, so I’m trying to understand the impact to our residents / sewer users for each of the 3 plans, I see the Adopted Rates on page 110/144, but is this what we currently have or the staff recommended adopted rates? Please clarify the rate impacts to our users for each of the scenarios, the presentation appears to be more based upon the enterprise fund’s health (understandable), but I’d like to also understand impacts to rate payers.
A. Staff is currently at the financial plan study step of the process. Based on the City Council’s decision regarding which scenario to proceed with, staff will then perform detailed sewer rate calculations based on the scenario selected.
Staff is projected to present Step 3-Sewer Rate Study and Cost-Of-Service Analysis to Council in April 2026 the share preliminary results, returning in June 2026 for final approval.