Agenda packet — San Luis Obispo City Council, January 13, 2026 (part 4 of 4)

Effective End State Local City LRM Combined
Date Date Jurisdiction Transportation Fund Rate (Note 4 & 6) Rate 8/1/1933 6/30/1935 (Note 2) 2.50% 2.50%
7/1/1935 6/30/1943 3.00% 3.00%
7/1/1943 6/30/1949 2.50% 2.50%
7/1/1949 12/31/1961 3.00% 3.00%
1/1/1962 7/31/1967 3.00% 1.00% 4.00%
8/1/1967 6/30/1972 4.00% 1.00% 5.00%
7/1/1972 6/30/1973 3.75% 0.25% 1.00% 5.00%
7/1/1973 9/30/1973 4.75% 0.25% 1.00% 6.00%
10/1/1973 3/31/1974 3.75% 0.25% 1.00% 5.00%
4/1/1974 11/30/1989 4.75% 0.25% 1.00% 6.00%
12/1/1989 12/31/1990 5.00% 0.25% 1.00% 6.25%
1/1/1991 7/14/1991 4.75% 0.25% 1.00% 6.00%
7/15/1991 12/31/2000 6.00% 0.25% 1.00% 7.25%
1/1/2001 12/31/2001 5.75% 0.25% 1.00% 7.00%
1/1/2002 6/30/2004 6.00% 0.25% 1.00% 7.25%
7/1/2004 3/31/2007 (Note 3) 6.25% 0.25% 0.75% (Note 3) 7.25% 4/1/2007 3/31/2009 6.25% 0.25% 0.75% 0.50% 7.75%
4/1/2009 6/30/2011 7.25% 0.25% 0.75% 0.50% 8.75%
7/1/2011 12/31/2012 6.25% 0.25% 0.75% 0.50% 7.75%
1/1/2013 12/31/2016 6.50% 0.25% 0.75% (Note 5) 0.50% 8.00% 1/1/2017 3/31/2021 6.00% 0.25% 1.00% 0.50% 7.75%
4/1/2021 current 6.00% 0.25% 1.00% (Note 6) 1.50% 8.75% Notes:

1. The Bradley-Burns Uniform Local Sales and Use Tax Law was enacted in 1955. The law authorizes cities and counties to impose a sales and use tax.

Effective January 1, 1962, all cities and counties have adopted ordinances for the State Board of Equalization to collect the local tax.

2. Sales tax only. The use tax was enacted effective July 1, 1935.

3. In March 2004, a State ballot measure was passed issuing deficit reduction bonds for State purposes. Funding was provided effective July 1, 2004 by repealing 25% of the local 1% sales tax and then adopting a new 1/4-cent sales tax dedicated to repayment of the deficit reduction bonds. Cities and counties would then be "made whole" by the State from increased property tax allocations via reduced contributions to ERAF. This "triple flip" is theoretically revenue-neutral, and as such, the effective rate for revenue purposes remains at 1%.

4. In November 2006, voters in San Luis Obispo approved a local revenue measure (LRM) increasing the City tax rate by 1/2%, which became effective April 1, 2007. The sales tax measure has a sunset provision of 8 years. The local Sales Tax was extended as Measure G in the November 2014 election for 8 years.

5. Proposition 30, The Schools and Local Public Safety Protection Act of 2012 , was approved by California voters in November 2012 to temporarily increase the sales and use tax by 0.25%. The sales and use tax imposed by Proposition 30 expired December 31, 2016.

6. In November 2020, voters in San Luis Obispo approved a local revenue measure (LRM) increasing the local sales tax to 1.5% with an effective date of April 1, 2021. The local sales tax measure has no sunset provision and replaced the 2014 Measure G.

Source: State Board of Equalization, State of California Schedule 12
City of San Luis Obispo, California
Historical Sales and Use Tax Rates
225

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No. of No. of
Certificates Percent Certificates Percent
Construction 1,046 11.8% 1,070 11.8%
Manufacturing 128 1.4% 133 1.5%
Transportation/Utilities 41 0.5% 76 0.8%
Wholesale 123 1.4% 124 1.4%
Retail 1,208 13.7% 1,307 14.5%
Professional 1,185 13.4% 1,148 12.7%
Residential Rental 2,714 30.7% 2,699 29.8%
Commercial Rental 288 3.3% 292 3.2%
Services 2,111 23.9% 2,195 24.3%
Total business certificates issued 8,844 100% 9,044 100% Home occupations 694 7.8% 712 7.9%
Located outside City limits 2,065 23.3% 2,257 25.0%
Located in Downtown Business Improvement District 552 6.2% 572 6.3% Source: City of San Luis Obispo Finance Department - Revenue Division Fiscal Years Ended June 30, 2025 and 2024
Schedule of Business Tax Certificates Issued
City of San Luis Obispo, California
Schedule 13
2025 2024

11.8%

1.4%

0.5% 1.4%

13.7%

13.4%

30.7%

3.3%

23.9%
Business Tax Types for Fiscal Year End 2025
Construction
Manufacturing
Transportation/Utilities
Wholesale
Retail
Professional
Residential Rental
Commercial Rental
Services
226

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Percentage of
Fiscal Lease Purchase Lease SBITA Installment SBITA Total Primary Per Gross Assessed Year Bonds Financing Loans Liability Liability Bonds Sales Agreement Loans Liability Government Capita Value 2015-16 27,762,893 1,374,773 679,314 - - 25,323,405 7,932,327 17,647,622 - 80,720,334 1,741 1.16% 2016-17 26,328,540 1,898,652 591,647 - - 24,072,708 7,366,468 16,709,160 - 76,967,175 1,660 0.99% 2017-18 23,484,450 1,599,769 503,101 - - 21,815,204 6,783,114 15,743,808 - 69,929,446 1,497 0.88% 2018-19 22,171,441 1,413,937 413,667 - - 19,542,657 6,181,902 14,750,783 - 64,474,387 1,385 0.79% 2019-20 21,084,777 1,381,486 323,380 - - 18,185,089 5,562,462 26,133,837 - 72,671,031 1,583 0.76% 2020-21 20,038,779 734,673 232,111 - - 16,772,171 4,919,407 56,229,546 - 98,926,687 2,102 0.97% 2021-22 18,954,856 390,420 139,961 125,003 172,229 15,307,178 4,257,343 99,918,648 - 139,265,638 2,922 1.29% 2022-23 17,829,558 36,245 46,887 570,922 407,465 13,795,824 3,575,863 120,213,508 50,596 156,526,868 3,275 1.33% 2023-24 16,560,495 - - 429,171 321,349 60,137,512 2,869,551 138,064,103 25,637 218,407,818 4,486 1.79% 2024-25 15,366,181 - - 276,446 74,712 58,416,528 2,327,976 152,880,499 - 229,342,342 4,630 1.76% Source: City of San Luis Obispo Finance Department
Schedule 14
City of San Luis Obispo, California
Per Capita Outstanding Debt By Type
Last Ten Fiscal Years
Governmental Activities Business-Type Activities
$-
$40,000,000
$80,000,000
$120,000,000
$160,000,000
$200,000,000
$240,000,000
2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Outstanding Debt Per Capita
Governmental Activities Business-Type Activities
227

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Service Ratio of Net
Total Taxable General Payable from Net Bonded Debt Net Bonded Assessed Bonded Enterprise Bonded to Assessed Debt per
Fiscal Year Population Value Debt Revenues Debt Value Capita 2015-16 46,117 7,488,160,228 0 0 0 0.0% 0
2016-17 46,724 7,938,176,014 0 0 0 0.0% 0
2017-18 46,548 8,179,683,454 0 0 0 0.0% 0
2018-19 46,802 9,052,361,899 0 0 0 0.0% 0
2019-20 45,920 9,521,174,265 0 0 0 0.0% 0
2020-21 47,063 10,249,056,144 0 0 0 0.0% 0
2021-22 47,653 10,822,583,714 0 0 0 0.0% 0
2022-23 47,788 11,770,822,169 0 0 0 0.0% 0
2023-24 48,684 12,183,458,692 0 0 0 0.0% 0
2024-25 49,534 13,009,605,735 0 0 0 0.0% 0
Notes:

1. Valuations are established by the County Assessor of the County of San Luis Obispo, except for property owned by private utility companies, which is valued by the State of California.

2. See Schedule of Demographic and Economic Statistics for population data.

3. Personal income information is not available. Net Bonded Debt is expressed as a ratio to Assessed Value.

Source: HdL, Coren & Cone ACFR 2024-25 report - Demographic and Economic Statistics table Demographics changed from FY to Calendar Year
Schedule 15
City of San Luis Obispo, California
Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt per Capital Last Ten Fiscal Years
228

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Amount Applicable
Percent Applicable to the City of
to the City of San Luis Obispo
San Luis Obispo as of June 30, 2025
Overlapping tax and assessment debt:

San Luis Obispo Community College District $ 192,585,000 17.05% $ 33,373,055 San Luis Coastal Unified School District 310,676,000 53.28% 165,531,280 City of San Luis Obispo Community Facilities District No. 2019-1 19,380,000 100.00% 19,380,000 California Statewide Communities Development Authority
Community Facilities District No. 2024-07 2,835,000 100.00% 2,835,000 California Statewide Communities Development Authority
Assessment District No. 2024-1 1,205,000 100.00% 1,205,000 Total overlapping tax and assessment debt 222,324,335
Overlapping General Fund long-term debt:

San Luis Obispo County General Fund Obligations $ 77,618,932 17.40% $ 13,501,813 San Luis Obispo County Pension Obligations 19,244,051 17.40% 3,347,503 16,849,316
Direct long-term debt:

City of San Luis Obispo 2001 IBank Loan - Parking 100.00% $ 2,537,059 City of San Luis Obispo 2009 IBank Loan - Sewer 100.00% 5,627,721 City of San Luis Obispo 2014 LOVR Lease Revenue Bonds 100.00% 5,885,000 City of San Luis Obispo 2018 Clean Water State Revolving - Sewer 100.00% 134,230,838 City of San Luis Obispo 2018 Lease Revenue Bonds 100.00% 10,495,000 City of San Luis Obispo 2018 Water Revenue Refunding Bonds 100.00% 6,845,000 City of San Luis Obispo 2020 IBank Loan - Water 100.00% 10,484,882 City of San Luis Obispo 2023 Lease Revenue Refunding Bonds 100.00% 44,860,000 City of San Luis Obispo Lease Liability 100.00% 276,446 City of San Luis Obispo Subscription based IT agreements liability 100.00% 74,712 City of San Luis Obispo Unamortized bond premium Governmental Activities 100.00% 966,956 City of San Luis Obispo Unamortized bond premium Business-Type Activities 100.00% 4,730,753 Less self-supporting issues:

City of San Luis Obispo obligations supported by enterprise revenues (211,297,027) Total direct debt 15,717,339
Total direct and overlapping long-term debt $ 254,890,990 Ratio of long-term debt to assessed valuation and population Gross Assessed Valuation $ 13,009,605,735
Population 49,534
Percent of Gross Per Capita
Amount Assessed Valuation Long-Term Debt
Direct and Overlapping Debt:

Gross $ 466,188,017 3.6% $9,411.48
Net 254,890,990 2.0% 5,146
Direct Debt:

Gross $ 227,014,366 1.7% $4,583.00
Net 15,717,339 0.1% 317
Source: California Municipal Statistics, Inc., HdL, Coren & Cone ACFR 2024-25 report - Demographic and Economic Statistics table Schedule 16
City of San Luis Obispo, California
Direct and Overlapping Long-Term Debt
Fiscal Year Ended June 30, 2025
The percentage of overlapping debt applicable to the city is estimated using taxable assessed property value. Applicable percentages were estimated by determining the portion of the overlapping district's assessed value that is within the boundaries of the city divided by the district's total taxable assessed value. 229

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2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Legal debt limit $ 272,833 $ 288,836 $ 306,738 $ 339,464 $ 357,044 $ 384,339 $ 405,847 $ 441,406 $ 456,880 $ 487,860 Total debt applicable to limit
Legal debt margin 272,833 288,836 306,738 339,464 357,044 384,339 405,847 441,406 456,880 487,860 Total debt applicable to the limit
as a percentage of debt limit 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Legal Debt Margin Calculation for Fiscal Year 2023-24
Gross Assessed Valuation $ 13,009,605,735
Legal Debt Limit - 3.75% of Gross Assessed Valuation $ 487,860,215 Long-term Debt:

Revenue Bonds Secured by Capital Leases $ 61,240,000
Water Revenue Bonds 6,845,000
68,085,000
Less deductions allowed by law:

Revenue Bonds Secured by Capital Leases 61,240,000
Water Revenue Bonds 6,845,000
68,085,000
Total debt applicable to computed limit $0
Legal debt margin $ 487,860,215
Note: The California Government Code provides for a legal debt limit of 15% of gross assessed valuation based on 25% of market value, or a legal debt limit of 3.75%.

The City's debt management policy, however, sets a more restrictive debt limit of 2% of assessed valuation.

Schedule 17
City of San Luis Obispo, California
Computation of Legal Debt Margin
Last Ten Fiscal Years
(Amounts Expressed in Thousands)
230

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Less Operating & Net Revenue Coverage
Fiscal Operating Development Other Maintenance Available for With Year Revenues Impact Fees Revenues Expenses Bond Debt Service Principal Interest Total Coverage Impact Fees 2015-16 20,137,422 (1,543,268) 53,731 (14,056,603) 4,591,282 1,245,486 881,318 2,126,804 216% 288% 2016-17 19,873,517 (1,266,674) 410,484 (14,754,114) 4,263,213 1,290,748 837,657 2,128,405 200% 260% 2017-18 21,997,054 (2,131,345) 325,268 (16,250,751) 3,940,226 1,336,267 792,337 2,128,604 185% 285% 2018-19 23,992,758 (3,745,666) 948,324 (15,995,459) 5,199,957 2,281,739 858,471 3,140,210 166% 285% 2019-20 25,666,777 (3,723,460) 663,838 (19,485,472) 3,121,683 1,367,920 637,348 2,005,268 156% 341% 2020-21 28,340,076 (4,744,361) 65,386 (17,765,625) 5,895,476 960,390 527,682 1,488,072 396% 715% 2021-22 29,671,678 (5,160,020) 222,451 (17,296,355) 7,437,754 1,001,055 489,266 1,490,321 499% 845% 2022-23 27,472,542 (3,616,307) 248,134 (18,530,525) 5,573,844 1,036,530 449,224 1,485,754 375% 619% 2023-24 31,141,045 (4,686,719) 253,917 (21,703,368) 5,004,875 512,290 403,063 915,353 547% 1059% 2024-25 34,129,107 (4,843,919) 227,320 (24,116,719) 5,395,789 537,955 377,622 915,577 589% 1118% Notes:

1. Operating revenues exclude depreciation and amortization.

2. Net revenues available for debt service exclude development impact fees.

3. The City refinanced its 2005 Refunding Lease Revenue Bonds, 2006 Lease Revenue Bonds, and 2009 Lease Revenue Bonds into the 2018 Lease Revenue Bonds.

4. Starting in 2021, principal and interest amounts do not include 2004 state revolving loan as it was retired.

5. The City refinanced its 2012 Lease Revenue Bonds into the 2023 Lease Revenue Bonds which was allocated to the Parking Fund.

6. Current year debt service requirements include 2018 Lease Refunding Revenue Bonds and 2018 Water Refunding Revenue Bonds.

Source: City of San Luis Obispo Utilities Department
FY 2024-25 Debt Schedule for 2025-27 Financial Plan
Schedule 18
City of San Luis Obispo, California
Revenue Bond Coverage - Water Fund
Last Ten Fiscal Years
Bonded Debt Service Requirements
231

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Net Revenue
Fiscal Gross Operating Available for
Year Revenues Expenses Bond Debt Service Principal Interest Total Coverage 2015-16 4,606,249 (2,757,299) 1,848,950 466,185 501,631 967,816 191% 2016-17 4,659,562 (2,671,028) 1,988,534 481,981 487,407 969,388 205% 2017-18 6,651,038 (2,998,555) 3,652,483 498,058 469,314 967,372 378% 2018-19 5,443,038 (3,100,113) 2,342,925 381,250 226,931 608,181 385% 2019-20 3,840,059 (3,080,588) 759,471 237,900 201,866 439,766 173% 2020-21 2,768,419 (3,093,183) (324,764) 247,050 192,350 439,400 (74%) 2021-22 4,890,317 (3,552,603) 1,337,714 257,725 182,468 440,193 304% 2022-23 6,022,372 (4,148,805) 1,873,567 265,350 172,159 437,509 428% 2023-24 9,663,683 (5,937,228) 3,726,455 277,550 161,545 439,095 849% 2024-25 8,307,559 (5,641,890) 2,665,669 928,225 1,246,943 2,175,168 123% Notes:

1. Operating expenses exclude depreciation.

2. In 1994 the Capital Improvement Lease Revenue Bonds were refinanced resulting in new debt of $11,780,000, of which $7,421,400 is designated for the Parking Fund. In 2004 the 1994 bonds were refinanced with a maturity date of 2014. In 2006 Lease Revenue Bonds were issued resulting in new debt of $16,160,000, of which $8,726,400 is allocated to the Parking Fund.

4. The City refinanced its 2012 Refunding Revenue Bond into the 2023 Lease Revenue Bond. Resulting in new debt of $45,780,000, of which $1,920,000 is allocated to the Parking Fund.

Source: City of San Luis Obispo Finance Department.

FY 2024-25 Debt Schedule for 2025-27 Financial Plan
Schedule 19
City of San Luis Obispo, California
Revenue Bond Coverage - Parking Fund
Last Ten Fiscal Years

3. The City refinanced its 2005 Refunding Lease Revenue Bonds, 2006 Lease Revenue Bonds, and 2009 Lease Revenue Bonds into the 2018 Lease Revenue Bonds. Resulting in new debt of $16,905,000, of which $5,156,025 is allocated to the Parking Fund.

Bonded Debt Service Requirements
232

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Personal Public Elementary and Cuesta College
Calendar Income Median Secondary School Full Time Enrollment Unemployment Year Population (1) in 000's (1) Age (1) Enrollment (2) SLO Campus (3) Rate (1) 2015 46,117 1,211 25.0 7,638 5,401 4.9%
2016 46,724 1,270 25.4 7,718 4,757 4.5%
2017 46,548 1,300 26.1 7,755 4,987 3.2%
2018 46,802 1,398 26.5 7,813 4,515 2.5%
2019 45,920 1,505 26.2 7,801 4,687 2.4%
2020 47,063 1,625 26.7 7,491 1,114 7.7%
2021 47,653 1,717 26.7 7,537 2,173 5.0%
2022 47,788 1,865 26.0 7,717 3,011 2.6%
2023 48,684 1,984 25.2 7,741 3,240 3.1%
2024 49,534 2,183 26.2 7,800 3,298 3.5%
Sources:

1. HdL, Coren & Cone ACFR 2024-25 report - Demographic and Economic Statistics table

3. https://www.cuesta.edu/about/depts/research/Enrollment_Management.html Post Term FTES Dashboard, 320 Year Reported by academic year start date Schedule 20
City of San Luis Obispo, California
Demographic and Economic Statistics
For The Last Ten Calendar Years

2. CA Dept of Education DataQuest: Enrollment Reports for San Luis Coastal Unified, by Academic Year start date; https://www.cde.ca.gov/sdprofile/details.aspx?cds=40688090000000 233

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Percentage Percentage
Number of Total City Number of Total City
Employer Employees Rank Employment Employees Rank Employment *Cal Poly State University 3,177 11.85% 3,055 1 10.70%
*County of San Luis Obispo 2,956 11.03% 2,800 2 8.80%
Cal Poly Corporation (Foundation) 2,787 10.40% 1,400 5 4.90% Pacific Gas & Electric Company 1,824 6.81% 1,900 3 6.70% *California Men's Colony 1,350 5.04% 1,540 4 5.40%
San Luis Coastal Unified School District 1,070 3.99% 902 6 3.20% Sierra Vista Regional Medical Center 779 2.91% 700 7
*Cuesta Community College 773 2.88% 440 10 1.50%
French Hospital Medical Center 688 2.57%
City of San Luis Obispo 654 2.44%
Mindbody 650 8 2.30%
California Department of Transportation 544 9 1.90%
Total 16,058 59.92% 13,931 45.40%
San Luis Obispo City - Labor Force at 6/30/2025 26,800
*Although not directly in City limits, these are still major employers within the City Source for the 2024-25 employers information is the Major Employers in San Luis Obispo County from State of California Employment Development Department's website;
https://labormarketinfo.edd.ca.gov/majorer/countymajorer.asp?CountyCode=000079. 2015-16 data is from the City's ACFR.
2024-25 2015-16
Schedule 21
City of San Luis Obispo, California
Principal Employers
Current Year and Nine Years Ago

59.92%

40.08%
City Wide Employers for 2024-25
Top 10 Employers All Other Employers

11.85%

11.03%

10.40%

6.81%

5.04%

3.99%

2.91%

2.88%

2.57%

2.44%
Top Ten Employers for 2024-25
*Cal Poly State University *County of San Luis Obispo
Cal Poly Corporation (Foundation) Pacific Gas & Electric Company *California Men's Colony San Luis Coastal Unified School District Sierra Vista Regional Medical Center *Cuesta Community College French Hospital Medical Center City of San Luis Obispo
234

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Function 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Public Safety
Police
Sworn 61.0 61.0 61.5 61.5 64.5 65.0 64.0 64.0 67.0 70.0 Non-sworn 25.5 25.5 24.0 24.0 24.0 25.5 27.0 27.0 28.0 27.0 Fire
Sworn 50.0 47.0 47.0 47.0 47.0 47.0 47.0 47.0 48.0 49.0 Non-sworn 4.0 10.0 10.0 10.0 10.0 9.5 10.5 10.5 12.5 12.0 Public Utilities 67.1 69.1 69.1 69.1 69.1 69.9 70.6 70.6 80.1 80.0 Transportation 36.8 36.8 36.8 36.8 36.8 37.1 43.3 44.3 40.2 42.7 Culture and recreation 35.0 35.0 35.0 35.0 34.0 33.0 43.0 43.0 47.0 48.0 Community Development 51.0 51.0 47.4 47.9 47.5 47.5 54.5 54.5 58.0 61.3 General Government 57.0 61.0 61.0 62.3 64.8 72.3 87.8 87.8 92.7 99.5 Total 387.4 396.4 391.8 393.6 397.7 406.8 447.7 448.7 473.5 489.5 Ratio of Sworn Police Personnel per 1,000 Population:* 1.33 1.31 1.44 1.31 1.34 1.44 1.34 1.34 1.38 1.44 Ratio of Sworn Fire Personnel per 1,000 Population:* 1.06 1.01 1.01 1.00 1.02 1.01 0.99 0.98 0.99 1.01 *Population numbers may not include Cal Poly students or faculty that live on campus and are served by City personnel.

Note: See Schedule of Demographic and Economic Statistics for population data.

Source: City of San Luis Obispo Finance Department
Schedule 22
City of San Luis Obispo, California
Regular Authorized Positions
Last Ten Fiscal Years
235

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2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Function/Program:

Police:

Calls for police/fire service 38,300 39,620 39,103 37,825 37,335 40,907 44,183 43,104 41,683 35,550 Incident numbers issued 32,542 33,360 32,730 31,471 31,472 35,695 38,290 36,474 35,084 35,952 Police reports written 8,852 8,675 7,735 6,999 6,297 5,852 6,637 6,137 6,708 6,304 Violations cited 7,673 7,649 7,524 5,874 4,020 3,445 3,735 4,851 5,126 8,455 Citations issued 7,038 7,030 6,752 5,287 3,660 3,056 3,349 4,531 4,719 7,907 Collision reports 587 608 609 623 481 419 483 487 533 554 Violent crimes:* 173 177 178 191 187 201 225 266 245 210 Willful homicide* - - - 1 - 1 2 - - -
Forcible rape* 29 38 44 55 39 37 25 37 31 30
Robbery* 13 21 23 33 34 24 33 37 44 41
Aggravated assault* 131 118 111 103 114 139 165 192 170 139 Property crimes:* 637 731 644 728 728 793 885 985 667 668 Burglary** 225 251 172 244 277 284 272 254 183 163
Motor vehicle theft* 87 95 94 74 74 117 174 119 90 77
Larceny-theft:* 1,335 1,730 1,516 1,493 1,387 1,219 1,398 1,372 1,010 1,126 Over $400* 325 385 378 410 377 392 439 612 394 428
$400 and under* 1,010 1,345 1,138 1,083 1,010 827 959 760 616 698 Fire:

Medical responses (Note 1) 3,540 4,538 4,248 3,715 3,884 3,544 3,857 4,675 4,482 4,494 Fire suppression responses (Note 1) 151 143 163 122 127 133 136 146 198 173 Hazardous materials responses (Note 1 and 3) 22 21 17 25 29 98 133 153 108 72 Other responses (Note 1) 2,158 1,799 1,785 2,100 2,140 1,745 2,097 2,417 2,331 2,575 Total service responses 5,871 6,501 6,213 5,962 6,180 5,520 6,223 7,391 7,119 7,314 Fire Suppression Training Hours 6,714 6,348 7,719 8,410 10,835 11,033 16,015 20,814 19,531 19,620 Fire and life-safety inspections (Note 4) 2,516 3,756 3,738 2,002 3,128 1,871 2,092 1,790 1,809 1,546 Arson investigations (Note 2) 44 8 12 24 21 13 5 17 5 173 Education activities (# of people) 23,680 23,575 23,540 2,690 2,700 2,031 2,000 3,500 3,000 3,500 Public Utilities:

Water/Sewer customer accounts 15,167 15,188 15,505 15,555 15,672 15,958 16,256 16,703 17,015 17,133 Miles of sewerline 138 138 143 143 146 148 148 148 148 148 Miles of waterline 191 197 187 190 191 191 191 191 191 191 Water service line repairs and renewals (incl. recycled water) 50 50 57 38 48 35 47 53 55 59 Sewer main stoppages - 11 4 10 8 11 14 12 1 1
Acre feet of water delivered - Nacimiento 3,574 3,817 3,753 3,484 1,470 2,449 4,460 2,096 - - Acre feet of water delivered - Salinas 8 273 853 790 2,165 1,337 650 949 1,251 2,385 Acre feet of water delivered - Whale Rock 1,375 949 924 800 1,556 1,641 399 2,118 4,027 3,094 Continued
Schedule 23
City of San Luis Obispo, California
Operating Indicators and Capital Asset Statistics by Function Last Ten Fiscal Years
236

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Schedule 23
City of San Luis Obispo, California
Operating Indicators and Capital Asset Statistics by Function Last Ten Fiscal Years
2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Function/Program:

Transportation:

Signals and lights:

Intersections with traffic signals 70 70 70 70 70 72 73 73 73 73 Traffic signal service requests 85 90 60 71 59 93 145 188 197 192 Streetlights operated & maintained 2,300 2,300 2,280 2,280 2,280 2,400 2,477 2,531 2,531 2,531 Streetlight service requests 45 50 13 8 11 33 47 61 69 94 Roadways:

Estimated miles of paved streets 133 133 134 134 134 134 135 143 143 143 Pavement condition index 71 71 70 73 70 73 70 76 73 74
Traffic collisions 531 482 501 431 441 259 361 388 384 466 Parking spaces provided (lot, garage & street) 2,953 2,892 2,871 2,865 2,865 2,765 2,817 2,607 2,740 2,790 Parking citations written 24,213 23,348 21,647 24,415 21,240 17,748 39,254 44,439 26,427 32,286 Total transit passengers 1,209,708 1,131,716 945,288 981,995 715,380 179,456 528,000 515,007 575,255 660,056 Leisure, Cultural and Social Services (Note 5):

Open space acres maintained 3,510 3,510 3,775 4,040 4,040 4,040 4,040 4,040 4,040 4,040 Open space easement acres 3,200 3,200 3,200 3,500 3,500 3,500 3,500 3,500 3,500 3,500 Trail mileage 52 52 55 55 56 62 65 65 67 69
Total golf rounds played 30,572 28,196 35,670 24,662 16,428 24,222 17,991 16,392 20,858 24,494 Acres of park landscape maintained 157 157 500 570 530 106 106 107 115 116 City Maintained Trees 20,000 20,000 20,000 20,000 20,000 12,970 12,970 12,976 13,414 13,431 Children's services program enrollment totals 2,115 2,115 1,950 2,050 1,775 1,483 1,611 1,834 2,015 1,889 Triathlon:
participants, spectators, and volunteers
Annual Senior Center Membership 265 331 350 315 192 248 325 315 460 Facility permits processed 1,305 1,073 864 909 650 298 455 714 813 515 Annual aquatics attendance (total) 68,403 96,687 97,701 87,690 55,202 51,235 62,224 66,621 75,418 76,905 Adult athletic teams registered 325 325 362 292 184 112 168 167 151 147 Youth athletic participants registered 1,300 1,150 1,115 1,140 618 611 1,083 1,180 1,368 2,322 Special event applications processed 77 101 88 95 40 2 37 45 72 57 Banner permits processed 87 56 45 81 78 48 26 80 70 41
Instructional class enrollments 1,151 1,724 1,439 1,118 595 626 1,212 900 755 1,356 Continued
Continued
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Community Development (Note 6):

Housing characteristics:

Single family units (annually cumulative) 11,230 11,306 11,413 11,510 11,693 11,853 12,072 12,169 12,336 12,427 2-4 units (annually cumulative) 2,695 2,789 2,851 2,865 2,869 2,888 2,928 2,977 2,983 2,987 5 or more unit structures (annually cumulative) 5,804 6,038 6,097 6,148 6,209 6,309 6,524 6,678 6,808 6,949 Mobile homes (annually cumulative) 1,482 1,482 1,482 1,482 1,483 1,483 1,483 1,448 1,448 1,448 Total (annually cumulative) 21,211 21,615 21,843 22,005 22,254 22,533 23,007 23,272 23,575 23,811 Building permits issued (Note 7): 584 584 623 **202 556 721 662 605 678 687 Residential:

Single family residential incl. condos 97 62 125 159 171 253 202 157 203 126 Multi-family residential (includes second units & ADUs) 5 13 18 19 17 33 16 24 8 1 Non-residential 13 14 10 15 12 2 3 11 10 6
Other permits:

Additions, alterations, demolitions 522 545 502 381 510 371 366 415 409 360 Other improvements (motel rooms) - - - 1 - - - 60 69 77 Total 637 634 655 575 710 659 587 667 699 570
Approximate value of building permits (in thousands)
Residential:

Single family residential $ 26,441 $ 15,024 $ 19,707 $ 24,300 $ 28,026 $ 50,758 $ 35,824 $ 31,058 $ 50,717 $ 40,504 Multi-family residential $ 13,500 $ 8,172 $ 17,249 $ 21,162 $ 33,606 $ 10,545 $ 56,085 $ 20,985 $ 71,330 $ 900 Non-residential $ 11,484 $ 51,110 $ 6,248 $ 20,430 $ 16,981 $ 17,475 $ 22,665 $ 44,601 $ 54,261 $ 11,440 Other permits:

Additions, alternations, demolitions (incl. swimming pools) $ 30,230 $ 27,711 $ 14,928 $ 34,596 $ 60,812 $ 78,780 $ 29,207 $ 58,766 $ 34,062 $ 45,211 Total $ 81,655 $ 102,017 $ 58,132 $ 100,488 $ 139,425 $ 157,558 $ 143,783 $ 155,410 $ 210,370 $ 27,469 Building inspections conducted 7,195 10,745 9,974 7,537 8,670 7,959 10,470 10,423 9,948 7,523 Home occupation permits processed/applied for 163 144 112 112 131 133 140 101 117 95 Development permit applications received 253 236 215 215 338 269 282 244 109 140 Continued
Continued
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General Government:

Business tax certificates issued:

Located outside City limits 2,018 1,699 1,872 1,948 1,839 1,913 1,932 2,057 2,257 1,896 Total certificates issued 7,597 8,118 8,230 8,205 7,675 7,732 8,371 8,531 9,044 8,796 Citywide recruitments (total) 103 103 97 99 86 90 155 142 143 116 Fleet vehicles maintained
City-wide fleet & equipment assets 318 323 339 338 340 345 347 365 361 367 Replaces prior category
Telephone lines managed 1,005 998 907 971 963 1,071 1,101 1,101 1,099 1,099 Cell phones & modems supported 453 476 492 481 487 464 538 595 593 590 IT users supported 515 467 471 488 475 487 511 560 575 582 * Data from California Department of Justice based on calendar year ** Data only reflects the second half of the Fiscal Year Notes: Some workload indicators are projections.

1. In Fiscal year 2010-11, numbers reported used observed code from Spillman rather than condition code.

2. Police Department Conducts Arson Investigations, Fire Department Conducts Cause and Origin Investigations. Reported number is Cause and Origin Investigations

5. Leisure, Culture and Social Services Indicators for FY 19-20 were lower compared to previous years due to COVID-19 program closures and capacity restrictions.

7. Excludes special permits such as plumbing, mechanical, electrical, signs, and grading as well as plan check permits.

Source: City of San Luis Obispo Departments

4. Beginning in 2020, the fire department began utilizing new mobile inspection software that uses a different inspection methodology counting the building rather than the number of individual units within the building.

6. Beginning in 2016-17, building permit data reported in terms of calendar years, in alignment with State-mandated reporting requirements. Beginning in 2019-20 all Community Development Indicators are reported by calendar year.

3. Beginning in 2020-21, the Fire Department includes all "Hazardous Condition" calls for service as categorized by the National Fire Incident Reporting System (NFIRS).

Previously only chemical or flammible liquid spills were captured under this function. Moving forward this function also includes electrical and biological hazards among Continued
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Fiscal Historic Increase/ Sales Increase/ Deliveries Increase/ Year Connections (Decrease) Revenues (Decrease) In Acre Feet (Decrease) 2015-16 15,167 1.40% 17,939,024 2.33% 4,957 (7%)
2016-17 15,357 1.25% 18,196,937 1.44% 5,039 2%
2017-18 15,505 0.96% 19,159,169 5.29% 5,530 10%
2018-19 15,555 0.32% 19,577,182 2.18% 5,074 (8%)
2019-20 15,672 0.75% 21,519,632 9.92% 5,191 2%
2020-21 15,958 1.82% 22,757,325 5.75% 5,602 8%
2021-22 16,256 1.87% 24,129,231 6.03% 5,732 2%
2022-23 16,703 2.75% 23,297,077 -3.45% 5,130 (11%)
2023-24 17,015 1.87% 26,088,324 11.98% 4,678 (9%)
2024-25 17,127 0.66% 28,958,623 11.00% 5,029 8%
Source: City of San Luis Obispo Utilities Department.

Schedule 24
City of San Luis Obispo, California
Water System
Statistical Data
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
Sales Revenues
-5.00%

0.00%

5.00%

10.00%

15.00%
2015-162016-172017-182018-192019-202020-212021-222022-232023-242024-25 Revenue Increase/Decrease
240

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As of Monthly Multi-family Single family
June 30 of Each Year Consumption Price per hcf* dwelling Commercial Landscape dwelling Multi-family dwelling Commercial 2016 Base Fee $ 9.98 $8.32 min. charge per $8.32 min. charge per $8.32 min. charge per Base Fee Drought Surcharge 0.74 dwelling unit dwelling unit dwelling unit 1-8 hcf 6.92 $9.17/unit volume charge** $9.17/unit volume charge** $9.17/unit volume charge Drought Surcharge 1.10
9 + hcf 8.65
Drought Surcharge 1.37
2017 Base Fee $ 9.98 $8.57 min. charge per $8.57 min. charge per $8.57 min. charge per Base Fee Drought Surcharge 0.74 dwelling unit dwelling unit dwelling unit 1-8 hcf 6.92 $9.44/unit volume charge** $9.44/unit volume charge** $9.44/unit volume charge Drought Surcharge 1.10
9 + hcf 8.65
Drought Surcharge 1.37
2018 Base Fee $ 12.33 $8.57 min. charge per $8.57 min. charge per $8.57 min. charge per 1-8 hcf 7.27 dwelling unit dwelling unit dwelling unit
9 + hcf 9.08 $9.44/unit volume charge** $9.44/unit volume charge** $9.44/unit volume charge 2019*** Residential SFR Base Fee $ 20.61 Base fee determined Base fee determined Base fee determined Base fee determined Base fee determined Base fee determined 1-5 hcf 5.90 by meter size**** by meter size**** by meter size**** by meter size **** by meter size **** by meter size **** 6-12 hcf 6.87 $6.73/unit volume charge $8.17/unit volume charge $10.02/unit volume charge $7.85/unit volume charge** $7.85/unit volume charge** $7.85/unit volume charge** 13 + 12.59
2020 Residential SFR Base Fee $ 21.74 Base fee determined Base fee determined Base fee determined Base fee determined Base fee determined Base fee determined 1-5 hcf 6.22 by meter size**** by meter size**** by meter size**** by meter size **** by meter size **** by meter size **** 6-12 hcf 7.25 $7.10/unit volume charge $8.62/unit volume charge $10.57/unit volume charge $8.28/unit volume charge** $8.28/unit volume charge** $8.28/unit volume charge** 13 + 13.28
2021***** Residential SFR Base Fee $ 22.52 Base fee determined Base fee determined Base fee determined Base fee determined Base fee determined Base fee determined 1-5 hcf 6.44 by meter size**** by meter size**** by meter size**** by meter size **** by meter size **** by meter size **** 6-12 hcf 7.51 $7.36/unit volume charge $8.93/unit volume charge $10.95/unit volume charge $8.58/unit volume charge $8.58/unit volume charge $8.58/unit volume charge 13 + 13.76
2022 Residential SFR Base Fee $ 23.31 Base fee determined Base fee determined Base fee determined Base fee determined Base fee determined Base fee determined 1-5 hcf 6.67 by meter size**** by meter size**** by meter size**** by meter size **** by meter size **** by meter size **** 6-12 hcf 7.77 $7.62/unit volume charge $9.24/unit volume charge $11.33/unit volume charge $8.88/unit volume charge $8.88/unit volume charge $8.88/unit volume charge 2023 Residential SFR Base Fee 24.12 Base fee determined Base fee determined Base fee determined Base fee determined Base fee determined Base fee determined 1-5 hcf 6.9 by meter size**** by meter size**** by meter size**** by meter size **** by meter size **** by meter size **** 6-12 hcf 8.04 $7.88/unit volume charge $9.57/unit volume charge $11.73/unit volume charge $9.19/unit volume charge $9.19/unit volume charge $9.19/unit volume charge 13 + 14.74
2024 Residential SFR Base Fee 28.15 Base fee determined Base fee determined Base fee determined Base fee determined Base fee determined Base fee determined 1-5 hcf 7.94 by meter size**** by meter size**** by meter size**** by meter size **** by meter size **** by meter size **** 6-12 hcf 9.16 $8.91/unit volume charge $9.43/unit volume charge $9.63/unit volume charge $9.44/unit volume charge $9.44/unit volume charge $9.88/unit volume charge 13 + 15.79
Continued
Schedule 25
City of San Luis Obispo, California
Water and Sewer Rates
Last Ten Fiscal Years
Water Rates (Note 1) Sewer Rates (Monthly)
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Schedule 25
City of San Luis Obispo, California
Water and Sewer Rates
Last Ten Fiscal Years
As of Monthly Multi-family Single family
June 30 of Each Year Consumption Price per hcf* dwelling Commercial Landscape dwelling Multi-family dwelling Commercial 2025 Residential SFR Base Fee 30.25 Base fee determined Base fee determined Base fee determined Base fee determined Base fee determined Base fee determined 1-5 hcf 8.54 by meter size**** by meter size**** by meter size**** by meter size **** by meter size **** by meter size **** 6-12 hcf 9.84 $9.58/unit volume charge $10.14/unit volume charge $10.35/unit volume charge $9.82/unit volume charge** $9.82/unit volume charge** $10.27/unit volume charge 13 + 16.97
*hcf = 100 cubic feet
** Total monthly volume charge capped based on average winter water consumption. *** Beginning FY 18-19, different rate structures for SFR, Multi-Family, Commercial, and Landscape ****See table below
*****2020-21 rate increase deferred to February 1, 2021 due to COVID-19 Notes:

1. Rates are for services inside the City, outside the City rates are double.

2. Third tier applies only to single-family residential customers.

Source: City of San Luis Obispo Utilities Department
As of Water Sewer As of Water Sewer
June 30 of Each Year Base charge Base Charge June 30 of Each Year Base charge Base Charge 2022 3/4 inch or less $ 23.31 $ 21.15 2023 3/4 inch or less $24.12 $21.89 1-inch 38.92 35.31 1-inch 40.28 36.55

1.5-inch 77.67 70.40 1.5-inch 80.38 72.86
2-inch 124.26 112.69 2-inch 128.61 116.63
3-inch 233.15 211.43 3-inch 241.31 218.83
4-inch 388.64 352.45 4-inch 402.24 364.78
6-inch 777.10 704.68 6-inch 804.3 729.34
8-inch 1,243.40 1,127.53 8-inch 1,286.92 1,166.99
10-inch - 1,620.99 10-inch - 1,677.72
2024 3/4 inch or less $28.15 $23.58 2025 3/4 inch or less $30.25 $24.52 1-inch 47 39.37 1-inch 50.5 40.95

1.5-inch 93.75 78.51 1.5-inch 100.8 81.65
2-inch 150.05 125.67 2-inch 161.3 130.7
3-inch 281.5 235.78 3-inch 302.6 245.21
4-inch 469.25 393.04 4-inch 504.45 408.76
6-inch 938.25 785.85 6-inch 1008.6 817.28
8-inch 1,501.25 1,257.40 8-inch 1,613.85 1,307.70
10-inch - 1,807.71 10-inch - 1,880.02
Meter Size
Base fee charges for Multi-Family, Non-Residential, Irrigation Meter Size
Water Rates (Note 1) Sewer Rates (Monthly)
Continued
Base fee charges for Multi-Family, Non-Residential, Irrigation 242

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Service Water Use Percent of
Name Type (acre-feet) Total
City of San Luis Obispo Parks & Golf Landscape 57.85 1.2% Silver City Mobile Home Park Mobile Homes 56.86 1.1%
ELL-CAP 97-Laguna Lake Mobile Homes 56.44 1.1%
Adventist Health System/West Care Facilities 42.86 0.9% CAP VIII - Mustang Village LLC Apartments 40.34 0.8%
Creekside Community Mobile Homes 32.65 0.6%
Dignity Health #366 Care Facilities 31.43 0.6%
SLO Coastal Unified School 24.41 0.5%
Embassy Suites Hotel 22.02 0.4%
State of California Landscape 18.31 0.4%
All Other 92.4%
Total 383.16 100.00%
2023-24
Source: City of San Luis Obispo - Utilities Department
Schedule 26
City of San Luis Obispo, California
Water System - Ten Largest Water Users
Fiscal Year Ended June 30, 2025

1.2%

1.1%

0.9%

0.8%

0.6%

0.5%

0.4% 0.4%
Ten Largest Water Users
City of San Luis Obispo Parks & Golf
Silver City Mobile Home Park
ELL-CAP 97-Laguna Lake
Adventist Health System/West
CAP VIII - Mustang Village LLC
Creekside Community
Dignity Health #366
SLO Coastal Unified
Embassy Suites
State of California

92.4%

7.6%
Ten Largest Water Users vs All
Other Water Users
All Other
Top 10
243

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City of San Luis
Obispo
San Luis Obispo, California
Single Audit Reports
For the year ended June 30, 2025

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City of San Luis Obispo
Single Audit Reports
For the year ended June 30, 2025
Table of Contents
Page
Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards .................................................................................. 1 Report on Compliance for Each Major Federal Program and on Internal Control over Compliance in Accordance with the Uniform Guidance And on the Schedule of Expenditures of Federal Awards .............................................................................................. 3 Schedule of Expenditures of Federal Awards ................................................................................................................. 7 Notes to the Schedule of Expenditures of Federal Awards .......................................................................................... 9 Schedule of Findings and Questioned Costs ................................................................................................................. 10

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REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND

OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN

ACCORDANCE WITH

GOVERNMENT AUDITING STANDARDS
Independent Auditor’s Report
To the Honorable Mayor and Members of City Council
of the City of San Luis Obispo
San Luis Obispo, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of San Luis Obispo, California (City), as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements and have issued our report thereon dated December 16 , 2025.

Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.

Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified. However, as described in the accompanying schedule of findings and responses, we identified certain deficiencies in internal control that we consider to be material weaknesses and significant deficiencies.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiencies described in the accompanying schedule of findings and questioned costs as item 2025-001 to be material weaknesses.

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To the Honorable Mayor and Members of City Council
of the City of San Luis Obispo
San Luis Obispo, California

Page 2 ends

A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiencies described in the accompany schedule of findings and questioned costs as item 2025-002 to be significant deficiencies.

Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

City of San Luis Obispo’s Response to Findings
Government Auditing Standards requires the auditor to perform limited procedures on the City’s response to the findings identified in our engagement and described in the accompanying schedule of findings and questioned costs. City’s response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response.

Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Badawi & Associates, CPAs
Emeryville, California
December 16, 2025
2

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REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL

OVER COMPLIANCE IN ACCORDANCE WITH THE UNIFORM GUIDANCE AND ON THE

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Independent Auditor’s Report
To the Honorable Mayor and Members of City Council
of the City of San Luis Obispo
San Luis Obispo, California
Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited the City of San Luis Obispo, California’s (City) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the City’s major federal programs for the year ended June 30, 2025. The City’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.

In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2025.

Basis for Opinion on Each Major Federal Program
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America (GAAS) ; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States(Government Auditing Standards); and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report.

We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of the City’s compliance with the compliance requirements referred to above.
3

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To the Honorable Mayor and Members of City Council
of the City of San Luis Obispo
San Luis Obispo, California

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Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to the City’s federal programs.

Auditor’s Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City’s compliance with the requirements of each major federal program as a whole.

In performing an audit in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the City’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances. • Obtain an understanding of the City’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over compliance. Accordingly, no such opinion is expressed.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit. 4

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To the Honorable Mayor and Members of City Council
of the City of San Luis Obispo
San Luis Obispo, California

Page 3 ends

Report on Internal Control over Compliance
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified.

Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.

Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements. We issued our report thereon dated December 16, 2025, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used 5

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To the Honorable Mayor and Members of City Council
of the City of San Luis Obispo
San Luis Obispo, California

Page 4 ends

to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole.

Badawi & Associates, CPAs
Emeryville, California
December 16, 2025
6

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City of San Luis Obispo
Schedule of Expenditures of Federal Awards
For the year ended June 30, 2025
Assistance
Listing Pass-through Program Subrecipient
Grantor Agency and Grant Title Number Number Expenditures Payments U.S. Department of Housing and Urban Development
CDBG-Entitlement Grants Cluster
Passed Through the County of San Luis Obispo
Community Development Block Grants/Entitlement Grants 14.218 B-23-UC-06-0508 $ 33,367 $ - Total CDBG-Entitlement Grants Cluster 33,367 -
Total U.S. Department of Housing and Urban Development 33,367 - U.S. Department of Justice
Direct awards:

Bulletproof Vest Partnership Program 16.607 7,227 -
Edward Byrne Memorial Justice Assistance Grant Program 16.738 14,730 - Total U.S. Department of Justice 21,957 -
U.S. Department of Transportation
Direct award:

Federal Transit Formula Grants 20.507 9,106,262 -
Total Federal Transit Cluster 9,106,262 -
Passed Through the National Highway Traffic Association State and Community Highway Safety 20.600 EM25009 130,331 - Total Highway Safety Cluster 130,331 -
Passed Through the California department of transportation Highway Planning and Construction 20.205 STPLR-7500(291) 27,867 - Total U.S. Department of Transportation 9,264,460 -
Department of the Treasury
Direct award:

Coronavirus State and Local Fiscal Recovery Funds 21.027 497,423 - Total Department of the Treasury 497,423 -
U.S. Department of Energy
Direct award:

Energy Efficiency and Conservation Block Grant 81.128 76,790 - Total U.S. Department of Energy 76,790 -
U.S. Department of Homeland Security
Direct awards:

Disaster Grants - Public Assistance (Presidentially Declared Disasters) 97.036 966,938 - Assistance to Firefighters Grant 97.044 82,871 -
Passed Through the California 's Office of Emergency Management Hazard Mitigation Grant - California Office of Emergency Management 97.039 FEMA-4344-DR-CA/ FEMA-4308-DR-CA
1,008,192 -
Total U.S. Department of Homeland Security 2,058,001 -
Total Expenditures of Federal Awards $ 11,951,998 $ -
See accompanying Notes to Schedule of Expenditures of Federal Awards. 7

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8

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City of San Luis Obispo
Notes to the Schedule of Expenditures of Federal Awards For the year ended June 30, 2025
A. Reporting Entity
The City is a California charter city. It was incorporated on February 19, 1856 and chartered on May 1, 1876. It is organized in accordance with the Council-Mayor-City Manager form of government. With a population of approximately 47,788, the City provides a broad range of municipal services, including police and fire protection, parks and recreation, water and sewer utilities, street maintenance, public transportation, parking, planning, and building and safety.

B. Basis of Accounting
Funds received under the various grant programs have been recorded within the special revenue funds of the City. The City utilizes the modified accrual method of accounting for the special revenue funds.

Modified accrual accounting recognizes revenues when they become available and measurable and, with a few exceptions, recognizes expenditures when liabilities are incurred. The accompanying Schedule of Expenditures of Federal Awards (Schedule) has been prepared on the modified accrual basis of accounting.

C. Relationship of Schedule of Expenditures of Federal Awards to Financial Statements The accompanying Schedule presents the activity of all federal financial assistance programs of the City.

Federal financial assistance received directly from federal agencies as well as federal financial assistance passed through the State of California is included in the Schedule.

The Schedule was prepared only from the accounts of various grant programs and, therefore, does not present the financial position or results of operations of the City.

D. Pass-Through Entities’ Identifying Number
When federal awards were received from a pass-through entity, the Schedule shows, if available, the identifying number assigned by the pass-through entity. When no identifying number is shown, the City determined that no identifying number is assigned for the program or the City was unable to obtain an identifying number from the pass-through entity.

E. Indirect Costs
The City did not elect to use the 10% de minimis indirect cost rate. 9

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City of San Luis Obispo
Single Audit Reports
Schedule of Findings and Questioned Costs
For the year ended June 30, 2025
Section I - Summary of Auditor’s Results
Financial Statements
Types of auditor’s report issued: Unmodified
Internal control over financial reporting:
 Material weakness(es) identified? Yes
 Significant deficiency(ies) identified? Yes
Any noncompliance material to the financial statements noted? No Federal Awards
Internal control over major programs:
 Material weakness(es) identified? No
 Significant deficiency(ies) identified? None noted
Type of auditor’s report issued on compliance for major programs Unmodified Any audit findings disclosed that are required to be reported in Accordance with section 200.516(a) No
Identification of major programs:

Assistance Listing Number(s) Name of Federal Program or Cluster Expenditures

20.507 Federal Transit Formula Grants $ 9,106,262

97.036 Disaster Grants - Public Assistance (Presidentially Declared Disasters) 966,938 Total Expenditures of All Major Federal Programs $ 10,073,200 Total Expenditures of Federal Awards $ 11,951,998
Percentage of Total Expenditures of Federal Awards 84.3% Dollar threshold used to distinguish between type A and type B program $750,000 Auditee qualified as low-risk auditee under
section 200.520? No
10

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City of San Luis Obispo
Single Audit Reports
Schedule of Findings and Questioned Costs
For the year ended June 30, 2025
Section II – Current Year Findings
A. Financial Statement Audit Finding
2025-001 Journal Entries Posting (Material Weakness)
Criteria: The access to post journal entries in the general ledger should be restricted. Journal entries should be independently prepared, reviewed before being posted to the general ledger.

Condition: During the review of the City’s journal entry approval matrix and JE testing, we noted the posting from the subledger to GL do not require approvals at the general ledger level nor at the subledger level. Considering the number of employees who can post entries through subledger without review and the fact that corrections to payroll, payable, revenue/receivables, cash management, capital assets all can be posted through subledger and do not require approval, it increased the risk of unauthorized or incorrect journals getting posted into general ledger.

Cause: The City didn’t have control in place to ensure all journal entries are properly reviewed before posting.

Effect:. Journal entries recorded in the City’s accounting system may be inaccurate, unapproved, or unsupported.

Recommendation: We recommend that the City limit the number of employees who can post journal entries in the subledger and general ledger, and implement system control to ensure all journal entries are reviewed before posting.

Management’s response:

City management agrees with the recommendation and continues working with the internal IT team and consultants to explore modifications to the Oracle ERP system’s workflow to include approval for system-generated adjusting entries, which are currently posted automatically.

Approval for manually generated journal entries was implemented in FY 2021-22 and remains in place.

While the City has approval controls for manual entries, a solution for system-generated adjustments is still in progress. In the interim, the City has limited the number of employees that can post journal entries and has developed reports that are generated each week to detect changes or adjustments to payables transactions. These reports, along with procedural changes are intended to mitigate risk of inaccurate, unapproved or unsupported entries posting to the general ledger until a system solution is identified. This goal is considered partially implemented by the City. 11

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City of San Luis Obispo
Single Audit Reports
Schedule of Findings and Questioned Costs
For the year ended June 30, 2025
Section II – Current Year Findings, continued
A. Financial Statement Audit Finding, continued
2025-002 Payroll Module Implementation (Significant Deficiency) Criteria: An effectively implemented payroll system should process the payroll accurately, and an effective internal control system over payroll requires timely and accurate payroll processing.

Condition: During the performance of the audit, we noted that – • The Oracle payroll module has overtime configuration implemented incorrectly, and the City has to manually track the payroll in a spreadsheet and correct the error as it occurs since the implementation.
• The configuration of payroll journal entries posting was implemented incorrectly which caused the variance between the bank record and the City’s general ledger.

Cause: The Oracle payroll module has not been implemented correctly.

Effect: Errors and fraud can go undetected in payroll processing with a large volume of manual corrections needed.

Recommendation: We recommend the City to work with the third-party vendor to correct the implementation of payroll module.

Management’s Response:

City Management agrees with the finding and has engaged a consultant to reconfigure the payroll module to correct overtime calculations. Significant progress has been made in identifying and testing solutions as of June 30, 2025, with full implementation occurring in October 2025. Manual intervention in the calculation of overtime is no longer required as of the implementation.

In the interim, the City continued to monitor payroll, manually correcting overtime issues each pay period. To enhance accuracy, staff has delivered comprehensive training on time card entry and created Oracle Guided Learnings (OGLs) for real-time payroll module training. Additionally, the City has implemented the mandatory "Redwood" Oracle user interface upgrade, improving usability and timetracking accuracy.

Configuration of the payroll journal entries was a one-time occurrence that has since been corrected. 12

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City of San Luis Obispo
Single Audit Reports
Schedule of Findings and Questioned Costs
For the year ended June 30, 2025
Section II – Current Year Findings, continued
B. Federal Award Program Audit Finding
No findings or questioned costs were noted in the current year. 13

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City of San Luis Obispo
Single Audit Reports
Schedule of Findings and Questioned Costs
For the year ended June 30, 2025
Section III – Prior Year Findings
A. Financial Statement Audit Finding
2024-001 Journal Entries Posting (Material Weakness)
Criteria: The access to post journal entries in the general ledger should be restricted. Journal entries should be independently prepared, reviewed before being posted to the general ledger.

Cause: The City didn’t have control in place to ensure all journal entries are properly reviewed before posting.

Effect:. Journal entries recorded in the City’s accounting system may be inaccurate, unapproved, or unsupported.

Status: Not implemented. See current year finding 2025-001. 14

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City of San Luis Obispo
Single Audit Reports
Schedule of Findings and Questioned Costs
For the year ended June 30, 2025
Section III – Prior Year Findings, continued
A. Financial Statement Audit Finding, continued
2024-002 Payroll Module Implementation (Significant Deficiency) Criteria: An effectively implemented payroll system should process the payroll accurately, and an effective internal control system over payroll requires timely and accurate payroll processing.

Cause: The Oracle payroll module has not been implemented correctly.

Effect: Errors and fraud can go undetected in payroll processing with a large volume of manual corrections needed.

Recommendation: We recommend the City to work with the third-party vendor to correct the implementation of payroll module.

Status: Not Implemented. See current year finding 2025-002.

B. Federal Award Audit Finding
No findings or questioned costs were noted in the prior year. 15

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City of San Luis Obispo
Transportation
Development Act Funds
Financial Statements
Years Ended
June 30, 2025 and 2024

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City of San Luis Obispo, California
Transportation Development Act Funds
Financial Statements
Years Ended June 30, 2025 and 2024

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City of San Luis Obispo,
California
Transportation Development
Act Funds Report and
Financial Statements
Year Ended June 30, 2025 and 2024
Table of Contents
Page
Independent Auditor’s Report.................................................................................................................................................. 1 Balance Sheets ........................................................................................................................................................................ 5 Statements of Revenues, Expenditures and Changes in Fund Balance – Years Ended June 30, 2025 and 2024 ...................................................................................................................................... 6 Statements of Fund Net Position.............................................................................................................................................. 7 Statements of Revenues, Expenses and Changes in Fund Net Position – Years Ended June 30, 2025 and 2024 ...................................................................................................................................... 8 Statements of Cash Flows ....................................................................................................................................................... 9 Notes to Financial Statements................................................................................................................................................ 11 TDA Fund Supplementary Information
Schedule of Revenues and Expenditures – Budget and Actual – Years Ended June 30, 2025 and 2024 .................................................................................................................................... 21 Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in accordance with Government Auditing Standards .................................................... 23 Report on Compliance and on Internal Control over Compliance for Transportation Development Act Funds................................................................................................................................ 25

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INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor and Members of the City Council
of the City of San Luis Obispo
San Luis Obispo, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the Transportation Development Act (TDA) Fund and the Transit Fund of the City of San Luis Obispo, California, as of and for the year ended June 30, 2025 and 2024, and the related notes to the financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements present fairly, in all material respects, the respective financial position of the TDA Fund and the Transit Fund, as of June 30, 2025 and 2024, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America.

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

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

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the TDA fund and the Transit Fund’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.

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To the Honorable Mayor and Members of the City Council
of the City of San Luis Obispo
San Luis Obispo, California

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Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS, we:
 Exercise professional judgment and maintain professional skepticism throughout the audit.  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
 Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the TDA fund and the Transit Fund’s internal control.

Accordingly, no such opinion is expressed.
 Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
 Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the TDA fund and the Transit Fund’s ability to continue as a going concern for a reasonable period of time.

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

Emphasis of Matter
As discussed in Note 1, the financial statements present only the TDA Fund and the Transit Fund and do not purport to, and do not, present fairly the financial position of the City, as of June 30, 2025 and 2024, and the changes in its financial position or where applicable, its cash flows for the years ended in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.
2

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To the Honorable Mayor and Members of the City Council
of the City of San Luis Obispo
San Luis Obispo, California

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Required Supplementary Information
Management has omitted management’s discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinions on the basic financial statements are not affected by this missing information.

Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Transportation Development Act (TDA) Fund and the Transit Fund’s financial statements. The budgetary comparison schedule is presented for purposes of additional analysis and is not a required part of the financial statements.

The budgetary comparison schedule on page 21 is the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the budgetary comparison schedule is fairly stated in all material respects in relation to the financial statements as a whole.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 16, 2025 on our consideration of the TDA fund and the Transit Fund’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the TDA fund and the Transit Fund’s internal control over financial reporting and compliance.

Badawi & Associates, CPAs
Emeryville, California
December 16, 2025
3

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2025 2024
Assets
Cash and investments $ 10,050 $ 33,132
Total assets $ 10,050 $ 33,132
Liabilities and Fund Balance
Liabilities
Unearned revenue $ - $ -
Total liabilities - -
Fund balances:

Unassigned 10,050 33,132
Total liabilities and fund balance $ 10,050 $ 33,132
City of San Luis Obispo, California
Transportation Development Act (TDA) Fund
Balance Sheets
June 30, 2025 and 2024
The accompanying notes are an integral part of these financial statements. 5

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2025 2024
Revenues - intergovernmental allocations $ 66,918 $ 69,451 Other financing uses - operating transfers to City of San Luis Obispo (90,000) (45,000) Excess of revenues over other financing uses (23,082) 24,451 Fund balance - beginning of year 33,132 8,681
Fund balance - end of year $ 10,050 $ 33,132
City of San Luis Obispo, California
Transportation Development Act (TDA) Fund
Statements of Revenues, Expenditures and Changes in Fund Balance June 30, 2025 and 2024
The accompanying notes are an integral part of these financial statements. 6

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2025 2024
Assets
Current assets:

Cash and investment $ 7,609,119 $ 8,850,539
Interest receivable 46,685 40,580
Due from other governments 6,396,968 2,397,142
Total current assets 14,052,772 11,288,261
Capital assets:

Infrastructure 110,972 110,972
Buildings and improvements 5,212,278 5,212,278
Transit operating equipment 13,205,125 10,558,191
Construction in progress 6,189,900 2,522,125
Total capital assets 24,718,275 18,403,566
Less accumulated depreciation (11,285,382) (10,810,219) Total capital assets, net of accumulated depreciation 13,432,893 7,593,347 Total assets 27,485,665 18,881,608
Deferred Outflows of Resources
Pension related 189,397 222,768
Other post‐employment benefits related 23,563 19,436
Total deferred outflows of resources 212,960 242,204
Liabilities
Current liabilities:

Accounts payable 1,779,374 639,534
Accrued salaries and compensated absences 64,154 62,067 Unearned revenues 10,058,588 8,466,347
Total current liabilities 11,902,116 9,167,948
Noncurrent liabilities:

Compensated absences, net of current portion 12,574 13,847 Net pension liability 797,275 791,956
Net other post‐employment benefits liability 21,955 25,947 Total noncurrent liabilities 831,804 831,750
Total liabilities 12,733,920 9,999,698
Deferred Inflows of Resources
Pension related - 815
Other post‐employment benefits related 18,083 21,807
Total deferred inflows of resources 18,083 22,622
Net Position
Net investment in capital assets 13,432,893 7,593,347
Restricted 1,513,729 1,508,145
Total net position $ 14,946,622 $ 9,101,492
City of San Luis Obispo, California
Transit Fund
Statements of Fund Net Position
June 30, 2025 and 2024
The accompanying notes are an integral part of these financial statements. 7

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2025 2024
Operating revenues:

Passenger fares $ 234,855 $ 250,790
Special transit fares 750,000 750,000
Other revenue 5,883 2,326
Total operating revenues 990,738 1,003,116
Operating expenses:

Purchased transportation 3,912,353 3,006,116
Other transportation services 587,851 587,497
Fuel and lubricants 461,073 406,007
Other materials and supplies 41,804 42,037
Salaries and wages 256,219 275,338
Fringe benefits 163,245 135,434
General and administrative 460,609 463,491
Depreciation 475,162 436,460
Total operating expenses 6,358,316 5,352,380
Operating loss (5,367,578) (4,349,264)
Nonoperating revenues:

Transportation Development Act operating grants 226,556 733,905 Transportation Development Act capital grants - 479,938 Federal Transit Administration operating grants 2,364,895 2,802,275 Federal Transit Administration capital and planning grants 958,938 684,498 Low Carbon Operation Revenue Grant 376,368 -
Federal Stimulus Grants 1,570,203 -
Air Pollution Control District Grant 498,473 -
State of Good Repair (SGR) Grant 9,943 394,054
Interest 494,453 377,325
Total nonoperating revenues 6,499,829 5,471,995
Income (loss) before transfers and capital contribution 1,132,251 1,122,731 Capital Contribution 4,712,879 -
Change in net position 5,845,130 1,122,731
Net position - beginning of year 9,101,492 7,978,761
Net position - beginning of year, as restated 9,101,492 7,978,761 Net position - end of year $ 14,946,622 $ 9,101,492
City of San Luis Obispo, California
Transit Fund
Statements of Revenues, Expenses and Changes in Net Position Years Ended June 30, 2025 and 2024
The accompanying notes are an integral part of these financial statements. 8

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2025 2024
Cash flows from operating activities:

Cash received from customers $ (1,416,847) $ 2,211,862
Cash payments to suppliers for goods and services (3,863,241) (4,317,891) Cash payments to General Fund for interfund services (460,609) (463,491) Cash payments to employees for services (392,618) (353,413) Net cash used in operating activities (6,133,315) (2,922,933) Cash flows from noncapital financing activities:

Operating grants received 6,005,377 5,094,670
Net cash provided by noncapital financing activities 6,005,377 5,094,670 Cash flows from capital and related financing activities:

Capital grants received 4,712,879 -
Acquisition and construction of capital assets (6,314,709) (1,665,372) Net cash used in capital and related financing activities (1,601,830) (1,665,372) Cash flows from investing activities:

Interest on investments 488,348 363,741
Net cash provided by (used in) investing activities 488,348 363,741 Net increase (decrease) in cash and cash equivalents and investments (1,241,420) 870,106 Cash and cash equivalents and investments - beginning of year 8,850,539 7,980,433 Cash and cash equivalents and investments - end of year $ 7,609,119 $ 8,850,539 City of San Luis Obispo, California
Transit Fund
Statements of Cash Flows
Years Ended June 30, 2025 and 2024
The accompanying notes are an integral part of these financial statements. 9

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2025 2024
Reconciliation of operating loss to net cash used in operating activities:

Operating loss $ (5,367,578) $ (4,349,264)
Adjustments to reconcile operating loss to net cash used in operating activities:

Depreciation 475,162 436,460
Changes in operating assets, deferred outflows, liabilities, and deferred inflows:

Accounts receivable (3,999,826) (248,306)
Accounts payable 1,139,840 (276,234)
Unearned revenue 1,592,241 1,457,052
Accrued salaries and compensated absences 814 38,807
Pension related deferred outflows and inflows and net pension liability 37,875 19,815 OPEB related deferred outflows and inflows and net OPEB liability (11,843) (1,263) Net cash used in operating activities $ (6,133,315) $ (2,922,933) Reconciliation of cash and cash equivalents and investments to the statement of fund net position:

Cash and investment $ 7,609,119 $ 8,850,539
Total cash and cash equivalents and investments $ 7,609,119 $ 8,850,539 Statements of Cash Flows, Continued
Years Ended June 30, 2025 and 2024
City of San Luis Obispo, California
Transit Fund
The accompanying notes are an integral part of these financial statements. 10

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City of San Luis Obispo, California
Transportation Development Act (TDA) Fund and Transit Fund Notes to the Financial Statements
June 30, 2025 and 2024
Note 1 - THE REPORTING ENTITY
The City of San Luis Obispo (the City) operates a fixed route public transportation system within the City limits and to the California Polytechnic State University (Cal Poly). Vehicle operations and vehicle maintenance are provided under contract by a private transportation company. Nonvehicle-related support and administrative services are provided by City staff.

The Transportation Development Act (TDA) Fund (the Fund) of the City of San Luis Obispo, California (the City) is a special revenue fund created by resolution of the City Council to account for the revenues received pursuant to the TDA. Such revenues allocated under specific state statutes are legally restricted to financial expenditures made of the development and construction of local streets and roads, including pedestrian and bicycle facilities.

The Transit Fund is an enterprise fund of the City created by resolution of the City Council to account for the revenues received pursuant to the Transportation Development Act (TDA), Federal Transit Authority (FTA) and the revenues received from the transit operations described above. Such revenues are allocated under specific statutes and are legally restricted to finance expenditures made for transit operations, the development of public transportation systems and transportation planning. When both restricted and unrestricted resources are available for the same purpose, it is the City’s policy to use restricted funds first.

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Measurement Focus, Basis of Accounting and Basis of Presentation The Transportation Development Act (TDA) Fund’s financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when measurable and available.

Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay the liabilities of the current period. For this purpose, the City considers interest and grant revenues earned but not received as susceptible to accrual under this method. Expenditures are generally recognized at the time liabilities are incurred.

The Transit Fund’s financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized when incurred regardless of the timing of related cash flows. The Fund distinguishes operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services in connection with the Fund’s principal ongoing operations. The principal operating revenues of the Fund are charges to customers for transit services. Operating expenses for the Fund include cost of services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses, including non-exchange transactions such as TDA and FTA grants.

Non-exchange transactions, in which the Transit Fund receives value without directly giving equal value in return, include grants.

Revenue from grants is recognized in the fiscal year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the fiscal year when the resources are to be used or the fiscal year when use is first permitted; matching requirements, in which the Transit Fund must provide local resources to be used for a specific purpose; and expenditures requirements, in which the resources are provided to the Transit Fund on a reimbursement basis. 11

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City of San Luis Obispo, California
Transportation Development Act (TDA) Fund and Transit Fund Notes to the Financial Statements
June 30, 2025 and 2024

Page 2 ends

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Annual Financial Statements
The financial statements of the Transportation Development Act (TDA) Fund and the Transit Fund are intended to reflect the financial position; results of operations and cash flows where applicable in conformity with generally accepted accounting principles and are not intended to present the financial position, results of operations, or cash flows of the City of San Luis Obispo, California.

Measurement Focus, Basis of Accounting and Basis of Presentation Special Revenue Fund – Transportation Development Act Fund This fund is used to account for the City’s share of Transportation Development Act (TDA) Article 3 funds that are legally restricted for the improvement and maintenance of street systems including pedestrian and bicycle facilities. Under the City's Financial Plan policies, all TDA Article 3 revenues are allocated for alternative transportation purposes. The purpose of this fund is to account for these revenues.

Enterprise Fund - Transit
This fund is used to account for the operation and maintenance of the City’s transit system. TDA Article 4 and FTA allocations for transit operations are accounted for in this fund.

Cash, Cash Equivalents, and Investments
Cash and cash equivalents consist of cash on hand, cash balances in checking and money market accounts and short- term investments, with an original maturity of three months or less. Investments which are in the City’s internal investment pool are also treated as cash equivalents for the purposes of the statement of cash flows.

Amounts Due from Other Governments
Generally, amounts due from other governments are recorded as revenues when earned. However, when the use of funds is the prime factor for determining eligibility for grants, revenue is accrued when the related expenses have been made on an approved grant.

Capital Assets
Capital assets are recorded at cost and depreciated using the straight-line method over their estimated useful lives, ranging from 5 to 20 years. Capital assets are defined by the City as assets with an initial, individual cost of more than $25,000. Detailed capital assets can be found in Note 5.
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City of San Luis Obispo, California
Transportation Development Act (TDA) Fund and Transit Fund Notes to the Financial Statements
June 30, 2025 and 2024

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Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Net Pension Liability, Deferred Outflows and Deferred Inflows The City recognizes a net pension liability, which represents the City’s excess of the total pension liability over the fiduciary net position of the pension reflected in the actuarial reports provided by the California Public Employees’ Retirement System (CalPERS) plans (Plans). The City has allocated a proportionate share of the net pension liability, deferred outflows, deferred inflows and pension expense to the Transit Fund. The net pension liability is measured as of the City’s prior fiscal year-end.

Changes in the net pension liability are recorded, in the period incurred, as pension expense or as deferred inflows of resources or deferred outflows of resources depending on the nature of the change. The changes in the net pension liability that are recorded as deferred inflows of resources or deferred outflows of resources (that arise from changes in actuarial assumptions or other inputs and differences between expected or actual experience) are amortized over the weighted average remaining service life of all participants in the respective pension plan and are recorded as a component of pension expense beginning with the period in which they are incurred.

For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City’s CalPERS Plans and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Projected earnings on pension investments are recognized as a component of pension expense.

Other Post-Employment Benefits (OPEB) Liability, Deferred Outflows and Deferred Inflows For purposes of measuring net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the City’s plan (OPEB Plan), and additions to or deductions from the OPEB Plan’s fiduciary net position, have been determined on the same basis as they are reported by the California Employer’s Retiree Benefit Trust Program (CERBT). For this purpose, benefit payments (including refunds of employee contributions) are recognized when currently due and payable in accordance with benefit terms. Investments are reported at fair value.

Generally accepted accounting principles require that the reported OPEB results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used:

Valuation Date June 30, 2023 and 2021
Measurement Dates June 30, 2024 and 2023
Measurement Periods July 1, 2023 to June 30, 2024,
and July 1, 2022 to June 30, 2023
Fund Balance
The TDA Fund’s financial statements report fund balance in classifications that comprise a hierarchy based primarily on the extent to which the City is bound to honor constraints on the specific purpose for which amounts in the funds can be spent. The Fund does not have a fund balance in the current fiscal year; therefore classification is not necessary. However, GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, identifies five components of fund balance – nonspendable, restricted, committed, assigned and unassigned.

Nonspendable - This component includes amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact. 13

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City of San Luis Obispo, California
Transportation Development Act (TDA) Fund and Transit Fund Notes to the Financial Statements
June 30, 2025 and 2024

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Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Fund Balance (Continued)
Restricted - This component consists of amounts that have constraints placed on them either externally by third parties (creditors, grantors, contributors, or laws or regulations of other governments) or by law through constitutional provisions or enabling legislation. Enabling legislation authorizes the City to assess, levy, charge or otherwise mandate payment of resources (from external resource providers) and includes legally enforceable requirements (compelled by external parties) that those resources be used only for the specific purposes stipulated in the legislation.

Committed - This component consists of amounts that can only be used for specific purposes pursuant to constraints imposed by minute order authorized by the City Council. Also included in this component are encumbrances which represent legal and binding obligations for the acquisition of future goods and services. Those committed amounts established by minute order cannot be used for any other purpose unless the City Council adopts a new minute order so directing. With respect to encumbered amounts, the City may take steps to cancel the order for goods or services and thereby terminate the obligation.

Assigned - This component consists of amounts that are constrained by the City’s intent to be used for specific purposes but are neither restricted nor committed. The City Manager or Director of Finance are authorized to assign amounts to a specific purpose.

Constraints imposed on the use of assigned amounts can be removed with no formal Council actions.

Unassigned - This classification represents amounts that have not been restricted, committed, or assigned to specific purposes.

Fund Balance Spending Policy
The City follows a practice in which restricted, committed, assigned, and unassigned fund balances are spent when more than one amount is available for a specific purpose. When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, then unrestricted resources (committed, assigned and unassigned) as they are needed. When unrestricted resources (committed, assigned and unassigned) are available for use, it is the City’s policy to use committed resources first, then assigned, and then unassigned as they are needed.

Budgets and Budgetary Accounting
The City has received national recognition for its use of a two-year Financial Plan and budgetary process that emphasizes longrange planning and effective program management. Significant features of the City’s two-year Financial Plan include the integration of Council goal setting into the budgetary process and the extensive use of formal policies and measurable objectives.

The Financial Plan includes operating budgets for two years and a capital improvement plan (CIP) for five years.

Under this multi-year approach, appropriations continue to be made annually; however, the Financial Plan is the foundation for preparing the budget for the second year. Additionally, unexpended operating appropriations from the first year may be carried over for specific purposes into the second year with the approval of the City Manager.

Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures.

Accordingly, actual results could differ from those estimates. 14

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City of San Luis Obispo, California
Transportation Development Act (TDA) Fund and Transit Fund Notes to the Financial Statements
June 30, 2025 and 2024

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Note 3 - CASH AND CASH EQUIVALENTS AND INVESTMENTS
Transportation Act Development (TDA) Fund and Transit Fund are pooled with the City’s cash and investments in order to generate optimum interest income. The City pools its available cash for investment purposes. Cash and cash equivalents are combined with investments and displayed as Cash and Investments.

At June 30, 2025 and 2024, cash and investments consisted of the following:

Investment Fair Value Measurements
The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. Investment securities classified in Level 1 of the fair value hierarchy are valued using prices quoted in active markets for those securities. Investment securities classified in Level 2 of the fair value hierarchy are valued using matrix pricing or market corroborated pricing. Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted prices.

Custodial Credit Risk – Deposits
Custodial credit risk is the risk that in the event of a bank failure, the City’s deposits may not be returned to it. Cash balances held in banks are insured up to $250,000 by the Federal Depository Insurance Corporation. For custodial credit risk associated with deposits, the City follows California Government Code, which requires California financial institutions to secure the City’s deposits by pledging government securities as collateral. The market value of the pledged securities must equal 110% of the City’s deposits. California law also allows financial institutions to secure the City’s deposits by pledging first trust deed mortgage notes equal to 150% of the City’s deposits. All deposits held by financial institutions are fully insured or collateralized with securities, held by the pledging financial institutions’ trust departments in the City’s name.

The City follows the practice of pooling cash and investments for all funds under its direct daily control. Funds held by outside fiscal agents under provisions of bond indentures are maintained separately.

Interest earned on pooled cash and investments is allocated quarterly to the various funds based on the respective fund’s average quarterly cash balance. Interest earned from cash and investments with fiscal agents is credited directly to such funds.

Interest Rate Risk
This is the risk that the market value of securities in the portfolio will fall due to changes in general interest rates. In accordance with its policies in the Investment Management Plan, the City mitigates interest rate risk by:
 Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market before maturity.  Investing operating funds primarily in shorter-term securities.

The City’s investment policy also includes portfolio maturity targets. A minimum of 20% of the portfolio will be invested in securities maturing in one year or less. Up to 80% of the portfolio can be invested in securities with a maturity over one year, with no more than 10% of the portfolio invested in securities with a maturity over five years. 2025 2024
Cash and investment $ 7,619,169 $ 8,883,671
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City of San Luis Obispo, California
Transportation Development Act (TDA) Fund and Transit Fund Notes to the Financial Statements
June 30, 2025 and 2024

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Note 3 - CASH AND CASH EQUIVALENTS AND INVESTMENTS, Continued Credit Risk
This is the risk of loss due to the failure of the security issuer or backer. The City’s policies to mitigate credit risk include:
 Limiting investments to the safest types of securities. The California Government Code limits the investment vehicles available to local agencies. The credit risk of these securities is measured by the assignment of a rating by a nationally recognized statistical rating organization.
 Pre-qualifying the financial institutions, broker/dealers, intermediaries and advisors with which the City will do business.

Concentration of Credit Risk
The City’s policies contained in the Investment Management Plan provide guidelines (by type of investment that limits either the dollar amount, the percent of the portfolio or the maturity term) for diversifying the investment portfolio so that potential losses on individual securities will be minimized.

The City’s Investment Management Plan outlines the following criteria related to portfolio diversification:
 No more than 5% of the City’s portfolio (exclusive of government agency issues or LAIF) shall be placed with any financial institution.
 No more than 25% of the City’s portfolio shall be invested in collateralized certificates of deposit issued by financial institutions.
 Certificates of deposit (negotiable and collateralized) placed by the City shall not constitute more than 15% of the total assets of the institution; and negotiable certificates of deposit will only be placed with institutions with total assets in excess of $200 million and that maintain a ratio of equity to total assets of at least 5%.

Additional Cash and Investment Disclosures
See the City of San Luis Obispo June 30, 2025 and 2024 Annual Comprehensive Financial Reports for additional cash and investment disclosures.

Note 4 - DUE FROM OTHER GOVERNMENTS
At June 30, 2025 and 2024 the amounts due from other governments were as follows:
2025 2024
Federal Transit Administration - capital and operating grants $ 6,396,968 $ 2,397,142 Total $ 6,396,968 $ 2,397,142
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City of San Luis Obispo, California
Transportation Development Act (TDA) Fund and Transit Fund Notes to the Financial Statements
June 30, 2025 and 2024

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Note 5 - CAPITAL ASSETS
Capital Assets activity for the fiscal year ended June 30, 2025, was as follows:

Capital Assets activity for the fiscal year ended June 30, 2024, was as follows:

Balance Deletions/ Balance
June 30, 2024 Additions Transfers/Adjustment June 30, 2025 Capital assets not being depreciated:

Construction in progress $ 2,522,125 $ 6,314,709 $ (2,646,934) $ 6,189,900 Capital assets being depreciated:

Infrastructure 110,972 - - 110,972
Buildings and improvements 5,212,278 - - 5,212,278
Transit operating equipment 10,558,191 - 2,646,934 13,205,125 Total capital assets being depreciated 15,881,441 - 2,646,934 18,528,375 Less accumulated depreciation (10,810,219) (475,163) - (11,285,382) Total capital assets, net of accumulated depreciation $ 7,593,347 $ 5,839,546 $ - $ 13,432,893 Balance Deletions/ Balance
June 30, 2023 Additions Transters June 30, 2024
Capital assets not being depreciated:

Construction in progress $ 2,408,227 $ 1,665,372 $ (1,551,474) $ 2,522,125 Capital assets being depreciated:

Infrastructure 110,972 - - 110,972
Buildings and improvements 5,212,278 - - 5,212,278
Transit operating equipment 9,006,717 - 1,551,474 10,558,191 Total capital assets being depreciated 14,329,967 - - 15,881,441 Less accumulated depreciation (10,373,759) (436,460) - (10,810,219) Total capital assets, net of accumulated depreciation $ 6,364,435 $ 1,228,912 $ 1,551,474 $ 7,593,347 17

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City of San Luis Obispo, California
Transportation Development Act (TDA) Fund and Transit Fund Notes to the Financial Statements
June 30, 2025 and 2024

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Note 6 - INTERGOVERNMENTAL ALLOCATIONS
The City has been allocated the following funds from the State Transit Assistance Fund (STAF), Local Transportation Fund (LTF) and State of Good Repair (SGR) for the years ended June 30, 2025 and 2024. The amounts have been and will be used for both operating expenses and capital assets.

For the years ended June 30, 2025 and 2024, the City also directly allocated $1,237,660 and $1,275,654, respectively, of LTF Article 4.0, Section 99260 funds to San Luis Obispo Regional Transit Authority (SLORTA). These funds are not shown in the accompanying financial statements.

In addition to TDA allocations for the year ended June 30, 2025, the City received a Low-Carbon Transit Operations Program (LCTOP) allocation of $376,378 to be spent toward the purchase of one electric bus and vehicle charging infrastructure. As of June 30, 2025, the vehicle and infrastructure had not been placed in service and they are reflected as construction in progress.

Note 7 - FARE REVENUE RATIOS
For the years ended June 30, 2025 and 2024 the City had fare revenue ratios of 228%, and 121%, respectively, computed as follows:

Article Section 2025 2024
LTF 3.0 99233.3 $ 66,981 $ 69,451
LTF 4.0 99260 1,957,532 1,953,245
STAF 6.5 99313 542,448 648,214
STAF 6.5 99314 66,458 69,436
SGR 6.5 99314 9,943 9,054
SGR 6.5 99313 - 385,000
$ 2,643,362 $ 3,134,400
Applicable
Allocating TDA Statute Amount
2025 2024
Operating revenues - fares $ 984,855 $ 1,000,790
Other local support - federal grants 8,859,273 3,486,773 (a) Net Operating revenues 9,844,128 4,487,563
(b) Net operating costs, net of depreciation and vehicle lease costs $ 5,883,154 $ 4,915,920 Exclude capital expenses under uniform system of accounts for purposes of calculating fare revenue ratios but
treated as operating expenses for financial statements (1,564,941) (1,202,446) (b) Adjusted operating costs for purposes of calculating fare revenue ratios $ 4,318,213 $ 3,713,474 (c) Fare revenue ratio [(a) / (b)] 228% 121%
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City of San Luis Obispo, California
Transportation Development Act (TDA) Fund and Transit Fund Notes to the Financial Statements
June 30, 2025 and 2024

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Note 7 - FARE REVENUE RATIOS, Continued
Due to the global pandemic, the California legislature passed AB 90 and AB 149. AB 90 prohibits the imposition of a penalty on an operator that does not maintain the required ratio of fare revenues to operating cost during the 2021–22, 2022–23, and 2023-24 fiscal years. AB 149 extends the penalty exemption through the fiscal year 2024-25 as well as authorizes transit operators to include federal grant funds as local funds for the purpose of computing fare revenue ratios.

TDA regulations require a minimum ratio of 20% for a municipality the size of the City. The City is in compliance with the applicable TDA regulations for the year ended June 30, 2025 and June 30, 2024.

Note 8 - PENSIONS
The City contributes to the California Public Employees’ Retirement System (CalPERS) for its employees and participates in an agent-multiple employer plan (Miscellaneous Plan) for its miscellaneous employees. The City has allocated a portion of the Miscellaneous Plan that relates to the Transit Fund. The portion of the net pension liability allocated to the Transit Fund for the years ended June 30, 2025 and 2024 were $797,275 and $791,956, respectively. The portion of the deferred outflows of resources allocated to the Transit Fund for the years ended June 30, 2025 and 2024 were $189,397 and $222,768, respectively. The portion of the deferred inflows of resources allocated to the Transit Fund for the years ended June 30, 2025 and 2024 were $0 and $815 respectively. The portion of the pension expense allocated to the Transit Fund for the years ended June 30, 2025 and 2024 were $131,104 and $19,815 respectively, and is shown as a part of total fringe benefits in the related fiscal year.

Additional Pension Disclosures
See the City of San Luis Obispo June 30, 2025 and 2024 Annual Comprehensive Financial Reports for additional pension disclosures as well as required supplementary information.

Note 9 - OTHER POST-EMPLOYMENT BENEFITS (OPEB)
The City’s primary other post-employment benefits (OPEB) cost obligation is for retiree health benefits under its election to participate in the CalPERS Health Benefit Program, an agent multiple-employer defined benefit OPEB plan, under the “unequal contribution option.” The City has allocated a portion of the plan that relates to the Transit Fund. The portion of the net OPEB liability allocated to the Transit Fund for the years ended June 30, 2025 and 2024 were $21,955 and $25,947, respectively. The portion of the deferred outflows of resources allocated to the Transit Fund for the years ended June 30, 2025 and 2024 were $23,563 and $19,436, respectively. The portion of the deferred inflows of resources allocated to the Transit Fund for the years ended June 30, 2025 and 2024 were $18,083 and $21,807 respectively. The portion of the OPEB expense allocated to the Transit Fund for the years ended June 30, 2025 and 2024 were $1,785 and $1,064, respectively, and is shown as a part of total fringe benefits in the related fiscal year.

Additional OPEB Disclosures
See the City of San Luis Obispo June 30, 2025 and 2024 Annual Comprehensive Financial Reports for additional OPEB disclosures as well as required supplementary information.

Operating Transfers
The City expends all amounts for alternate transportation projects in its General Fund or Capital Outlay Fund. LTF monies received by the City are initially deposited in the Transportation Development Act (TDA) Fund and subsequently transferred to the General Fund, where such funds are expended or transferred to the Capital Outlay Fund to be expended on designated transportation projects.
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City of San Luis Obispo, California
Transportation Development Act (TDA) Fund and Transit Fund Notes to the Financial Statements
June 30, 2025 and 2024

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Note 10 - COMMITMENTS AND CONTINGENCIES
Regional Transit Authority Pension Expense
The City is presently a member agency of the San Luis Obispo Regional Transit Authority (see ACFR Note 10), a duly established Joint Powers Authority (JPA) comprised of all local cities and the County of San Luis Obispo. The City’s contractual contribution to that entity is approximately 18% of the total expense. The City was advised that the Regional Transit Authority was working with CalPERS to determine whether it is required to enroll certain previously unenrolled transit employees in the CalPERS pension system and whether the entity may be liable for obligations related to the failure to enroll those employees and make contributions on their behalf. On December 10, 2019 the County Board of Supervisors approved a contract for participation of the JPA in the San Luis Obispo County Pension Trust and the Employees Retirement Plan. The current amount of potential CalPERS unfunded liability for the JPA may reach as high as $4 million. It is not anticipated that the City’s annual payment to the JPA will increase to satisfy this unfunded liability.

Note 11 - SUBSEQUENT EVENTS
Events subsequent to June 30, 2025 have been evaluated through December 16, 2025, which is the date the financial statements were available to be issued. Management did not identify subsequent events that required disclosure. 20

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2025 Original Final Actal
Revenues - intergovernmental allocations $ 90,000 $ 90,000 $ 66,918 $ (23,082) Other financing uses - operating transfers
to City of San Luis Obispo (90,000) (90,000) (90,000) - Excess of revenues over other financing uses $ - $ - $ (23,082) $ (23,082) 2024 Original Final Actal
Revenues - intergovernmental allocations $ 45,000 $ 45,000 $ 69,451 $ 24,451 Other financing uses - operating transfers
to City of San Luis Obispo (45,000) (45,000) (45,000) - Excess of revenues over other financing uses $ - $ - $ 24,451 $ 24,451 Budget Variance with
Final Budget
Positive
City of San Luis Obispo, California
Transportation Development Act (TDA) Fund
Supplementary Information
Schedules of Revenues and Expenditures - Budget and Actual June 30, 2025 and 2024
Variance with
Final Budget
Positive
(Negative)
Budget
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REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE

AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED

IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Independent Auditor’s Report
To the Honorable Mayor and Members of the City Council
of the City of San Luis Obispo
San Luis Obispo, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the Transportation Development Act (TDA) Fund and the Transit Fund (TDA Program) of the City of San Luis Obispo, California (City), as of and for the year ended June 30, 2025, and the related notes to the financial statements, and have issued our report thereon dated December 16, 2025.

Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control.

Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified.

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To the Honorable Mayor and Members of the City Council
of the City of San Luis Obispo
San Luis Obispo, California
Page Two
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the TDA Program’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Badawi & Associates, CPAs
Emeryville, California
December 16, 2025
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REPORT ON COMPLIANCE AND ON INTERNAL CONTROL

OVER COMPLIANCE FOR TRANSPORTATION DEVELOPMENT ACT FUNDS Independent Auditor’s Report
To the Honorable Mayor and Members of City Council
of the City of San Luis Obispo
San Luis Obispo, California
Report on Compliance
Opinions
We have audited the City of San Luis Obispo’s (City) compliance with the types of compliance requirements described in Section 6666 and 6667 of the Rules and Regulations of the California Administrative Code in the Transportation Development Act Statutes and Administrative Code for 1987 (the Act) and the allocation instructions and resolutions of the San Luis Obispo Council of Governments applicable to the City’s Transportation Development Act Article 3, 4 and 6.5 Program (TDA Program) for the years ended June 30, 2025 and 2024.

In our opinion, the City complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on its TDA Program for the years ended June 30, 2025 and 2024.

Basis for Opinion
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America (GAAS); the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States; and Section 6666 and 6667 of the rules and regulations of the California Administrative Code in the Transportation Development Act Statutes and Administrative Code for 1987 (the Act); and the allocation instructions and resolutions of the San Luis Obispo Council of Governments. Our responsibilities under those standards and the Act are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report.

We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for the City’s TDA Program. Our audit does not provide a legal determination of the City’s compliance with the compliance requirements referred to above.

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To the Honorable Mayor and Members of City Council
of the City of San Luis Obispo
San Luis Obispo, California

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Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules and provisions of contracts or grant agreements applicable to the City’s TDA Program.

Auditors’ Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS, Government Auditing Standards, and the Section 6666 and 6667 of the Rules and Regulations of the California Administrative Code in the Transportation Development Act Statutes and Administrative Code for 1987 (the Act) and the allocation instructions and resolutions of the San Luis Obispo Council of Governments will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City’s compliance with the requirements of the TDA Program as a whole.

In performing an audit in accordance with GAAS, Government Auditing Standards, and the Section 6666 and 6667 of the Rules and Regulations of the California Administrative Code in the Transportation Development Act Statutes and Administrative Code for 1987 (the Act) and the allocation instructions and resolutions of the San Luis Obispo Council of Governments, we:
 Exercise professional judgment and maintain professional skepticism throughout the audit.  Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the City’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances.
 Obtain an understanding of the City’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Section 6666 and 6667 of the Rules and Regulations of the California Administrative Code in the Transportation Development Act Statutes and Administrative Code for 1987 (the Act) and the allocation instructions and resolutions of the San Luis Obispo Council of Governments, but not for the purpose of expressing an opinion on the effectiveness of City’s internal control over compliance. Accordingly, no such opinion is expressed.
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To the Honorable Mayor and Members of City Council
of the City of San Luis Obispo
San Luis Obispo, California

Page 3 ends

Report on Internal Control Over Compliance
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of the Section 6666 and 6667 of the Rules and Regulations of the California Administrative Code in the Transportation Development Act Statutes and Administrative Code for 1987 (the Act) and the allocation instructions and resolutions of the San Luis Obispo Council of Governments on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of the Section 6666 and 6667 of the Rules and Regulations of the California Administrative Code in the Transportation Development Act Statutes and Administrative Code for 1987 (the Act) and the allocation instructions and resolutions of the San Luis Obispo Council of Governments will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of the Section 6666 and 6667 of the Rules and Regulations of the California Administrative Code in the Transportation Development Act Statutes and Administrative Code for 1987 (the Act) and the allocation instructions and resolutions of the San Luis Obispo Council of Governments that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined below. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified.

Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed. 27

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To the Honorable Mayor and Members of City Council
of the City of San Luis Obispo
San Luis Obispo, California

Page 4 ends

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Section 6666 and 6667 of the Rules and Regulations of the California Administrative Code in the Transportation Development Act Statutes and Administrative Code for 1987 (the Act), and the allocation instructions and resolutions of the San Luis Obispo Council of Governments. Accordingly, this report is not suitable for any other purpose.

Badawi & Associates, CPAs
Emeryville, California
December 16, 2025
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City of San Luis Obispo, Council Memorandum
City of San Luis Obispo
Council Agenda Correspondence
DATE: January 13, 2026
TO: Mayor and Council
FROM: Christine Dietrick, City Attorney
Prepared By: Sarah Zion, Legal Assistant
VIA: Whitney McDonald, City Manager
SUBJECT: ITEM 7b – INTRODUCE AN ORDINANCE ESTABLISHING CITYWIDE SINGLE VOTE FOR COUNCIL ELECTIONS IN 2026 AND SUBSEQUENT

ELECTIONS
Because the ordinance includes both procedural and implementation details, out of an abundance of caution, staff are recommending the standard timeline for introduction and adoption be followed. To that end, the attached legislative draft has been changed to reflect introduction January 13, 2026, and final adoption January 20, 2026.

Also, staff received questions related to this agenda item. A legislative draft of the recommended resolution reflecting corrections referenced below is attached and additional responses are below:

1. On page 504, there is reference to a presentation with the Latino Outreach Council explaining the new voting process. Where can that presentation be found?
Link to webpage: https://www.slocity.org/government/municipal-elections Direct link to video: https://youtu.be/0PvaMtv21ag?si=CdMWYQSX2ulJFm_H

2. On page 505, it explains that $120,000 has been set aside in the current financial plan for community outreach and engagement ($90,000 in Fiscal Year 2025-26 and $30,000 in Fiscal Year 2026-27). How much of the $90,000 for this year has been spent and for what activities?
Approximately $10,000 has been paid to Tripepi Smith to develop a comprehensive communications and outreach plan, which will be implemented inhouse from January through October 2026. Staff will present an overview of the plan at the City Council meeting on January 20th and share how the remaining $110,000 allocated to this effort is expected to be spent.

Additionally, staff also identified the following errors to be corrected:

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Insert Report Title Page 2
Paragraph 1e of Findings in Section 1 should be corrected to read as follows (also see legislative draft ordinance):
“The regulations adopted herein are intended to be and shall be applied and interpreted, as directed by the City Council of the City of San Luis Obispo, by the City Clerk/Elections Official, the County Registrar of Voters/County Elections Official (to the extent authorized by the County Board of Supervisors pursuant to Elections Code Section 10002), and/or any other elections official or personnel administering City of San Luis Obispo Council elections by or on behalf of the City of San Luis Obispo.”
In Section 2.38.010 “Purpose”, there is an extra space after the word “time” and should be corrected to:
“…as it currently exists or may hereafter be amended from time to time, referred to as “Stipulated Judgment”, herein).” (emphasis added) In Section 2.38.060, “Liberal Construction and Severability”, the word “a” should be removed, and the sentence should be corrected to:
“…No error, omission or irregularity shall invalidate an election if there has been substantial compliance with this chapter as determined by the City Council….” (emphasis added)

ATTACHMENT
A – Revised Draft Ordinance adopting Citywide Single VOte

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O ______
ORDINANCE NO. _____ (2026 SERIES)

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, ADDING CHAPTER 2.38, TITLED “CITYWIDE SINGLE VOTE METHOD OF ELECTING CITY COUNCILMEMBERS” TO

THE SAN LUIS OBISPO MUNICIPAL CODE, IMPLEMENTING A NEW

METHOD FOR ELECTIONS OF CITY COUNCILMEMBERS AND

ADOPTING REGULATIONS PROVIDING FOR THE ADMINISTRATION

OF CITY COUNCIL ELECTIONS BY CITYWIDE SINGLE VOTE
BEGINNING IN NOVEMBER 2026
WHEREAS, the City of San Luis Obispo is a charter city duly established by the voters of the City of San Luis Obispo pursuant to Article XI of the Constitution of the State of California, and governed by its duly adopted Charter, including Article III (“Elections”) and Article IV (“The Council”); and
WHEREAS, pursuant to the California Constitution, Charter cities have broad plenary powers to make and enforce all ordinances and regulations regarding municipal affairs, which supersede any conflicting state laws that may otherwise apply to municipal affairs; and
WHEREAS, the California Constitution, Article XI, Section 5(b) expressly and specifically establishes “conduct of city elections” as a municipal affair over which the City has plenary constitutional authority to regulate “…the manner in which, the method by which, the times at which, and the terms for which the several municipal officers and employees whose compensation is paid by the city shall be elected or appointed”; and WHEREAS, the San Luis Obispo City Charter, Section 402 provides that “The Council Members shall be elected at the general municipal election from the City at large, two being selected biennially”; and
WHEREAS, on February 17, 2023, the Southwest Voter Registration Education Project (“SVREP”) served the City with a letter asserting that the City’s existing at-large election system may violate the California Voting Rights Act (CVRA), Elections Code sections 14025 et. seq. and demanding that the City transition to district elections, which are not provided by the City Charter; and
WHEREAS, following settlement negotiations, the City and SVREP entered into Pre-Litigation settlement agreement and a Stipulated Judgment in San Luis Obispo County Superior Court, Case No. 24CV-0797, requiring the City to transition to a new election method known as “Citywide Single Vote”, which is consistent with the City Charter and within the remedial authority of the superior court pursuant to California Elections Code Section 14029 (see Pico Neighborhood Assn. v. City of Santa Monica (2023) 15 Cal.5th 292); and

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Ordinance No. _____ (2026 Series) Page 2
O ______
WHEREAS, pursuant to the Stipulated Judgment, beginning with the November 2026 election, the City shall implement a new method for the election of City Councilmembers utilizing Citywide Single Vote, whereby each voter in the 2026 City Council election, in order to elect the two City Council seats, will cast a single vote for City Council, and the two candidates receiving the highest number of single votes will be elected; and
WHEREAS, the City Council has determined it to be necessary and efficient to adopt an ordinance formally providing for the establishment and implementation of Citywide Single Vote.

NOW, THEREFORE, BE IT ORDAINED by the Council of the City of San Luis Obispo as follows:

SECTION 1. Findings. The recitals set forth hereinabove are hereby adopted as the findings of the City Council and the City Council makes the following additional findings of fact, and interpretations of City Charter and Municipal Code, in support of its adoption of this Ordinance:
a) Implementation of the Citywide Single Vote method of elections for San Luis Obispo City Councilmembers is consistent with the City Charter’s requirement that Councilmembers be elected “at-large” and does not require a Charter amendment.
b) San Luis Obispo City Charter Section 301 provides that, “Unless otherwise provided by ordinance hereafter enacted, all elections shall be held in accordance with the provisions of the Elections Code of the State of California, as the same now exists or may hereafter be amended” (emphasis added); c) San Luis Obispo Charter Section 301, and the California Constitution, expressly authorize the City Council to adopt ordinances providing for the conduct of its local municipal elections in a manner and pursuant to regulations that differ from otherwise applicable provisions of the California Elections Code. d) Adopting an ordinance providing for the implementation and administration of Citywide Single Vote and codifying this ordinance in the Municipal Code advances public transparency, compliance with the Stipulated Judgment, and clarity for voters, candidates, and election officials as to the manner and method of election of San Luis Obispo City Councilmembers and the direction of the Council as to applicable regulations for the conduct of elections for San Luis Obispo City Councilmembers under the Citywide Single Vote election method.
e) The regulations adopted herein are intended to be and shall be applied and interpreted, as directed by the City Council of the City of San Luis Obispo, by the City Clerk/Elections Official, the County Registrar of Voters/County

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Ordinance No. _____ (2026 Series) Page 3
O ______
Elections Official (to the extent authorized by the County Board of Supervisors pursuant to Elections Code Section 10002), and/or any other elections official or personnel administering City of San Luis Obispo Council elections by or on behalf of the City of San Luis Obispo.

SECTION 2. Addition to Municipal Code. Chapter 2.38, “CITYWIDE SINGLE VOTE METHOD OF ELECTING CITY COUNCIL MEMBERS” is hereby added to the San Luis Obispo Municipal Code to read as follows:

Chapter 2.38

CITYWIDE SINGLE VOTE METHOD OF ELECTING CITY COUNCIL

MEMBERS
Section. 2.38.010 - Purpose
Section. 2.38.020 - City Council Elections by Citywide Single Vote Established Section. 2.38.030 - Mayor to Remain Separately Elected
Section 2.38.040 - Ballot Format and Instructions to Voters Section 2.38.050 - Authority as a Charter City
Section 2.38.060 - Liberal Construction and Severability Section 2.38.070 City Council Clarification or Technical Modification Section. 2.38.010 Purpose.

The purpose of this chapter is to establish and provide the means and methods for administration for the Citywide Single Vote election method for the election of City Councilmembers, consistent with the California Constitution, Article XI, the City Charter Articles III and IV, the California Voting Rights Act (Elections Code §§ 14025 et seq.), and the Stipulated Judgment entered in Southwest Voter Registration Education Project v. City of San Luis Obispo (San Luis Obispo Superior Court Case No. 24CV-0797, as it currently exists or may hereafter be amended from time to time, referred to as “Stipulated Judgment”, herein).

Section. 2.38.020 City Council Elections by Citywide Single Vote Established.

A. Notwithstanding any law to the contrary, beginning with the November 2026 general municipal election, and for all subsequent elections, unless subsequently modified by Charter amendment, court order, or Council action pursuant to this chapter and the Stipulated Judgment, elections for City Councilmembers shall be conducted using Citywide Single Vote, as set forth in this section.

B. The method of election for City Councilmembers shall be Citywide Single Vote as follows:

1. Each qualified voter in the City shall be entitled to cast one vote for one candidate from the group of qualified candidates for City Council.

2. The two candidates receiving the highest number of votes shall be elected.

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Ordinance No. _____ (2026 Series) Page 4
O ______
Section. 2.38.030 Mayor to Remain Separately Elected.

There shall be no changes to the manner and method of election of the Mayor. Pursuant to City Charter Sections 402 and 404, the Mayor shall continue to be elected at-large by all City voters every two years, for a two-year term, and each qualified voter shall be entitled to cast one vote for Mayor.

Section 2.38.040 Ballot Format and Instructions to Voters.

A. Notwithstanding any law to the contrary, for City Council elections, the ballots shall be printed as follows:

1. The group of candidates to be voted on shall be preceded by the designation of office for which they seek election, stated as “San Luis Obispo City Council Member”

2. Following the designation of office to be voted on, but preceding the group of candidates for the office, the ballot shall include the instruction “vote for only one”

3. Under the group of candidates shall be printed one blank space, defined by a light line, so as to permit one write-in candidate as an alternative to selecting a candidate from the group listed on the ballot.

B. The City shall prepare materials for the official voter information guide to be presented to the elections official responsible for administration of the City Council election, whether separate or consolidated, that explain the Citywide Single Vote method of voting, including the limitation to vote for one candidate, that the two candidates receiving the most single votes will be elected, and that voting for more than one candidate will result in an “overvote” and will preclude the ballot with an overvote from being counted.

Section 2.38.050 Authority as a Charter City.

Pursuant to its authority as a Charter City, this Chapter is intended to and shall govern the presentation of candidates and voter instructions for San Luis Obispo City Council municipal elections, notwithstanding Elections Code Section 13210 or any other elections statute or regulation that would otherwise govern the subject matter of a City Council election, or that may conflict with this Chapter or otherwise interfere with or preclude the conduct of the Citywide Single Vote method of electing City Councilmembers as provided by this Chapter.

Section 2.38.060 Liberal Construction and Severability.

This chapter shall be liberally construed to promote its objects and the intention and direction of the City Council to implement and support the administration of its City

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Ordinance No. _____ (2026 Series) Page 5
O ______
Council elections by the Citywide Single Vote method of election. No error, omission or irregularity shall invalidate an election if there has been substantial compliance with this chapter as determined by the City Council. If any section, subsection, sentence, or clause of this ordinance is for any reason held invalid, such decision shall not affect the validity of the remaining portions of this ordinance.

Section 2.38.070 City Council Clarification or Technical Modification.

The City Council may, by ordinance or resolution, provide such clarification, technical or procedural modification, or minor wording changes as may be deemed necessary or convenient to support and facilitate the administration of the Citywide Single Vote method of City Council elections, in consultation with the elections official administering City Council elections.

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Ordinance No. _____ (2026 Series) Page 6
O ______
SECTION 4. A summary of this ordinance, together with the names of Council members voting for and against, shall be published at least five (5) days prior to its final passage, in The New Times, a newspaper published and circulated in this City. This ordinance shall go into effect at the expiration of thirty (30) days after its final passage.

INTRODUCED on the 13th day of January, 2026, AND FINALLY ADOPTED by the Council of the City of San Luis Obispo on the 20th day of January, 2026, on the following vote:

AYES:

NOES:

ABSENT:
__________________________
Mayor Erica A. Stewart
ATTEST:
_______________________
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
_______________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, on ______________________. ___________________________
Teresa Purrington
City Clerk

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7 Item 7b
Department: City Attorney
Cost Center: 1500
For Agenda of: 1/13/2025
Placement: Public Hearing
Estimated Time: 60 minutes
FROM: Christine Dietrick, City Attorney
SUBJECT: INTRODUCE AN ORDINANCE ESTABLISHING CITYWIDE SINGLE VOTE FOR COUNCIL ELECTIONS IN 2026 AND SUBSEQUENT

ELECTIONS

RECOMMENDATION
Adopt an ordinance adding chapter 2.38, entitled “Citywide Single Vote Method of Electing City Councilmembers” to the San Luis Obispo Municipal Code, implementing a new method for elections of City Councilmembers and adopting regulations providing for the administration of City Council elections by Citywide Single Vote beginning in November 2026

POLICY CONTEXT
In November 2024, the City Council approved a settlement of a California Voting Rights Act (“CVRA”) demand letter served on the City by attorney Kevin Shenkman on behalf of his client Southwest Voter Registration Education Project on February 17, 2023. Part of the settlement was agreement to a Stipulated Judgement under which the parties agreed that the City would transition to a “Citywide Single Vote” model for electing Councilmembers, beginning in the 2026 election cycle.

The recommended action implements the settlement agreement and the Stipulated Judgement, ensuring the City’s compliance with its contractual and legal obligations. The ordinance is also consistent with the San Luis Obispo City Charter because it maintains an at-large system of electing Councilmembers, as required by the City’s Charter, Section 402. The transition to Citywide Single Vote is also consistent with the City’s Diversity, Equity and Inclusion Major City Goal, in that it advances voter equity and reduces the potential for unlawful minority vote dilution that otherwise may be associated with standard at-large elections systems.

Finally, the recommended action also seeks to ensure that the County Registrar of Voters will be able to administer the new elections model as part of a consolidated election, consistent with historical practices to consolidate the administration of City elections with state and federal elections, which is considerably less expensive, more convenient for voters, and more efficient than the City running its own separate municipal elections. As

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Item 7b
such, the recommended action is consistent with the City’s Cultural Vitality, Economic Resiliency and Fiscal Sustainability Major City Goal.

DISCUSSION
Background
The Council authorized staff to enter into settlement negotiations throughout 2023 and 2024 to reach a mutually beneficial settlement of the CVRA demand. Council ultimately approved the settlement that is the basis of the currently recommended action in November of 2024. The staff report and more substantial background discussion can be reviewed here. The San Luis Superior Court approved the Stipulated Judgement that was part of the settlement on January 27, 2025.

The recommended ordinance adoption is the next step in the implementation of the settlement agreement and Stipulated Judgement and ensuring a smooth transition and implementation of the Citywide Single Vote. In short, the recommended ordinance formally establishes Citywide Single Vote as the method of electing City Councilmembers in 2026 and subsequent elections. The ordinance would codify the local legal structure for the City to move from the current “vote-for-two candidates to elect two Councilmembers” model, to a “vote-for-one candidate to elect two Councilmembers” model, whereby the top two candidates receiving the most single votes are elected to Council.

The ordinance also includes ballot instructions to ensure clear direction to voters and adds clarity for the elections official administering City Council elections regarding implementation of the Citywide Single Vote system. The ordinance clarifies and resolves inconsistencies between the generally applicable Elections Code ballot language and the specific ballot language necessary to implement the new system.

Pursuant to the California Government Code Section 36937 and California Elections Code Section 9235, elections ordinances take effect immediately upon adoption and do not require the 30-day waiting period generally applicable to ordinance adoption.

Public Engagement
Since approval of the settlement and Stipulated Judgement by the City Council and the Superior Court, respectively, staff has been working to develop a robust public outreach, education and engagement plan. Voter education is already underway and will continue, expanding significantly as the 2026 election nears.

City staff will present an overview of the outreach plan at a City Council meeting on January 20, 2026.

In November 2025, staff presented and recorded a significant Candidate Education Forum in collaboration with the Latino Outreach Council to ensure that current and prospective voters and prospective Council candidates are aware of and have access to information and resources about the new elections system well in advance of the 2026

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Item 7b
election. That presentation recording and other information and resources can be accessed here www.slocity.org/SingleVote.

CONCURRENCE
The City Clerk concurs with the recommendation.

ENVIRONMENTAL REVIEW
The adoption of the recommended ordinance is a policy measure and does not have any foreseeable impact on the environment and is therefore exempt from environmental review.

FISCAL IMPACT
Budgeted: Yes Budget Year: 2025-26, 2026-2027
Funding Identified: Yes
Fiscal Analysis:

Funding
Sources
Total Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund $ $90,000 $0 $0
State
Federal
Fees
Other:

Total $ $90,000 $0 $0
As a part of the adoption of the 2025-27 Financial Plan, Council approved a total of $120,000 to support community outreach and engagement for the transition to Citywide Single Vote system with $90,000 in the 2025-26 Fiscal Year and $30,000 in the 2026-27 Fiscal Year. As noted, an overview of the plan will be presented at the January 20, 2026 City Council meeting.

ALTERNATIVES
The recommended ordinance adoption is a necessary step to implement the settlement agreement and stipulated judgement to which the City previously agreed, so there is not a realistic alternative to adoption, although Council may direct modifications to clarify or amplify provisions of the ordinance consistent with prior commitments.

ATTACHMENTS
A - Draft Ordinance adopting adding Chapter 2.38 to the Municipal Code to implement and provide regulations for administration of Citywide Single Vote B - Prior staff report regarding the settlement recommendation and related actions here

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O ______
ORDINANCE NO. _____ (2026 SERIES)

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, ADDING CHAPTER 2.38, TITLED “CITYWIDE SINGLE VOTE METHOD OF ELECTING CITY COUNCILMEMBERS” TO

THE SAN LUIS OBISPO MUNICIPAL CODE, IMPLEMENTING A NEW

METHOD FOR ELECTIONS OF CITY COUNCILMEMBERS AND

ADOPTING REGULATIONS PROVIDING FOR THE ADMINISTRATION

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NOW, THEREFORE, BE IT ORDAINED by the Council of the City of San Luis Obispo as follows:

SECTION 1. Findings. The recitals set forth hereinabove are hereby adopted as the findings of the City Council and the City Council makes the following additional findings of fact, and interpretations of City Charter and Municipal Code, in support of its adoption of this Ordinance:
a) Implementation of the Citywide Single Vote method of elections for San Luis Obispo City Councilmembers is consistent with the City Charter’s requirement that Councilmembers be elected “at-large” and does not require a Charter amendment.
b) San Luis Obispo City Charter Section 301 provides that, “Unless otherwise provided by ordinance hereafter enacted, all elections shall be held in accordance with the provisions of the Elections Code of the State of California, as the same now exists or may hereafter be amended” (emphasis added); c) San Luis Obispo Charter Section 301, and the California Constitution, expressly authorize the City Council to adopt ordinances providing for the conduct of its local municipal elections in a manner and pursuant to regulations that differ from otherwise applicable provisions of the California Elections Code. d) Adopting an ordinance providing for the implementation and administration of Citywide Single Vote and codifying this ordinance in the Municipal Code advances public transparency, compliance with the Stipulated Judgment, and clarity for voters, candidates, and election officials as to the manner and method of election of San Luis Obispo City Councilmembers and the direction of the Council as to applicable regulations for the conduct of elections for San Luis Obispo City Councilmembers under the Citywide Single Vote election method.
e) The regulations adopted herein are intended to be and shall be applied and interpreted as the direction of the City Council of the City of San Luis Obispo to the City Clerk/Elections Official, County Registrar of Voters/County Elections

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Ordinance No. _____ (2026 Series) Page 3
O ______
Official, to the extent authorized by law and/or judicial decree, and/or to any other elections official or personnel administering City of San Luis Obispo Council elections by or on behalf of the City of San Luis Obispo.

SECTION 2. Addition to Municipal Code. Chapter 2.38, “CITYWIDE SINGLE VOTE METHOD OF ELECTING CITY COUNCIL MEMBERS” is hereby added to the San Luis Obispo Municipal Code to read as follows:

Chapter 2.38

CITYWIDE SINGLE VOTE METHOD OF ELECTING CITY COUNCIL

The purpose of this chapter is to establish and provide the means and methods for administration for the Citywide Single Vote election method for the election of City Councilmembers, consistent with the California Constitution, Article XI, the City Charter Articles III and IV, the California Voting Rights Act (Elections Code §§ 14025 et seq.), and the Stipulated Judgment entered in Southwest Voter Registration Education Project v. City of San Luis Obispo (San Luis Obispo Superior Court Case No. 24CV-0797, as it currently exists or may hereafter be amended from time to time , referred to as “Stipulated Judgment”, herein).

Section. 2.38.020 City Council Elections by Citywide Single Vote Established.

B. The method of election for City Councilmembers shall be Citywide Single Vote as follows:

1. Each qualified voter in the City shall be entitled to cast one vote for one candidate from the group of qualified candidates for City Council.

2. The two candidates receiving the highest number of votes shall be elected.

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Ordinance No. _____ (2026 Series) Page 4
O ______
Section. 2.38.030 Mayor to Remain Separately Elected.

Section 2.38.040 Ballot Format and Instructions to Voters.

A. Notwithstanding any law to the contrary, for City Council elections, the ballots shall be printed as follows:

1. The group of candidates to be voted on shall be preceded by the designation of office for which they seek election, stated as “San Luis Obispo City Council Member”

2. Following the designation of office to be voted on, but preceding the group of candidates for the office, the ballot shall include the instruction “vote for only one”

Section 2.38.050 Authority as a Charter City.

Section 2.38.060 Liberal Construction and Severability.

This chapter shall be liberally construed to promote its objects and the intention and direction of the City Council to implement and support the administration of its City

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Ordinance No. _____ (2026 Series) Page 5
O ______
Council elections by the Citywide Single Vote method of election. No error, omission or irregularity shall invalidate an election if there has been a substantial compliance with this chapter as determined by the City Council. If any section, subsection, sentence, or clause of this ordinance is for any reason held invalid, such decision shall not affect the validity of the remaining portions of this ordinance.

Section 2.38.070 City Council Clarification or Technical Modification.

SECTION 4. A summary of this ordinance, together with the names of Council members voting for and against, shall be published at least five (5) days prior to its final passage, in The New Times, a newspaper published and circulated in this City. This ordinance shall go into effect at the expiration of thirty (30) days after its final passage.

INTRODUCED AND FINALLY ADOPTED by the Council of the City of San Luis Obispo on the 13th day of January, 2026, on the following vote:

AYES:

NOES:

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City of San Luis Obispo, Council Memorandum
City of San Luis Obispo
Council Agenda Correspondence
DATE: January 13, 2026
TO: Mayor and Council
FROM: Greg Hermann, Deputy City Manager
Prepared By: Teresa Purrington, City Clerk
VIA: Whitney McDonald, City Manager
SUBJECT: ITEM 7c – 2026 Council Compensation Committee Recommendation Staff received the following questions from Council, with staff’s response shown in italics:

1. The staff report seems fairly clear about the methodology proposed by the committee for increasing council compensation based on the revised median city income. However, can you please provide more information about how the committee arrived at the new proposed amounts for “reimbursable professional expenses”?
The Committee’s recommendation for the revised reimbursable professional expense amounts was based on both historical spending data and inflationary trends. Staff presented the Committee with a detailed list of professional development items and associated costs that Council Members utilized during fiscal years 2021–22 through 2024–25. This review demonstrated that the cost of commonly reimbursed items increased by approximately $337 over the three-year period. In addition, staff provided data showing that the Consumer Price Index (CPI) increased by approximately 35%, or $945, between 2016 (when that amount was last increased) and 2025. After considering both the actual cost increases reflected in recent spending patterns and the broader impact of inflation, the committee determined that a proposed increase of $600 annually per Council Member and $800 annually for the Mayor represents a reasonable midpoint between observed cost growth and CPI-based inflation.

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ITEM # 7c – 2026 Council Compensation Committee Recommendation Page 2

2. I’m curious about the potential unintended consequences of the pilot project to pay advisory body members $25 per meeting, should they choose to voluntarily accept the payment. Does this pose significant workload for staff, or extra requirements (employee required training, etc.) for the individuals? If it’s a pilot project, what would the period of the proposed pilot be and what would be the criteria for deciding to end the pilot? Was this discussed? The Committee discussed and considered these questions during its meetings.

Members recognized the importance of understanding any potential unintended consequences of implementing a pilot program that would provide a voluntary $25 per-meeting stipend to advisory body members, including possible impacts on staff workload, administrative processes, and any training or compliance requirements for participating individuals.

Because these issues require additional analysis and input from staff, the Committee decided to recommend staff further explore these questions and report back to the Council with findings and recommendations. This includes evaluating administrative impacts, clarifying whether additional requirements would be triggered, and developing options for the structure of a pilot program, such as the pilot period, evaluation criteria, and conditions under which the pilot program could be modified or discontinued.

3. On page 521 of the packet, the following table appears:

Can you please explain the calculations for the highlighted amounts?

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ITEM # 7c – 2026 Council Compensation Committee Recommendation Page 3 Reimbursable Professional Expenses
Because the proposed increases do not take effect until January 2027, the FY 2026– 27 amounts reflect a half-year impact. For that fiscal year, the increase is $300 per Council Member, resulting in a total of $1,200 for four Council Members.

The FY 2027–28 (ongoing) column reflects the full-year impact of the $600 increase, totaling $2,400 for four Council Members.

Statewide Board or Policy Travel Reimbursement
For both fiscal years shown, staff assumed that three Council Members (including the Mayor) would hold appointments to Statewide Boards or Policy Committees.

In FY 2026–27, the travel reimbursement amount is calculated at $500 per appointed Council Member, for a total of $1,500 ($500 × 3 = $1,500), which is the prorated amount for half a year.

Beginning in FY 2027–28 and continuing in each fiscal year thereafter, any Council Member appointed to a Statewide Board or Policy Committee would receive $1,000 annually for travel expenses related to attending statewide meetings.

4. What is the rationale for recommending use of the city median income as the basis for the City Council salary?
The Committee reviewed and discussed multiple options for establishing an appropriate basis for City Council compensation. After evaluating the available information, the Committee ultimately recommended using the same approach adopted by the 2020 Council Compensation Committee, basing Council salary on the current Median Household Income as reported by the U.S. Census. The Committee felt this methodology most closely aligns Council compensation with the economic realities of the community and reflects the income levels of the City’s constituents.

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Item 7c
Department: Administration
Cost Center: 1021
For Agenda of: 1/13/2026
Placement: Business
Estimated Time: 60 minutes
FROM: Greg Hermann, Deputy City Manager
Prepared By: Teresa Purrington, City Clerk
SUBJECT: 2026 COUNCIL COMPENSATION COMMITTEE RECOMMENDATIONS

RECOMMENDATION
As recommended by the Council Compensation Committee:

1. Adopt a Resolution entitled “A Resolution of the City Council of the City of San Luis Obispo, California, setting new salaries for the Mayor and Council Members and reaffirming compensation for Planning Commission and Architectural Review Commission and amending Council’s Policies and Procedures,” (Attachment A) increasing the monthly compensation for the Mayor from $2,923 to $4,169 per month and Council Member from $2,319 to $2,780 per month, and provide a $160 per month stipend for any Council Member or Mayor who is appointed to a statewide board or policy committee for the duration of their appointed term, effective the first full pay period in January 2027; and renaming Professional Development funding to Reimbursable Professional Expenses funding; and

2. Increase the Reimbursable Professional Expenses funding amount for Mayor from $3,600 to $4,400 annually and for Council Members from $2,700 to $3,300 annually. Also, automatically roll over any remaining Reimbursable Professional Expenses funds from the first year of a Financial Plan to the second year; and

3. Establish an annual $1,000 reimbursement allowance for any Council Member or Mayor who is appointed to a statewide board or policy committee for travel expenses related to statewide meetings; and

4. Direct staff to explore the feasibility of an "opt-in" pilot-program to provide $25 per meeting for all City Advisory Bodies, not including the Architectural Review Commission (ARC) and Planning Commission (PC), with a cap of three meetings a month, totaling $75 per month. The ARC and PC compensation would remain at the same amount of $86 per meeting with a cap of $344 per month.

POLICY CONTEXT
Section 410 of the City’s Charter addresses Council compensation and states:

Compensation for Mayor and Council Members shall be reviewed biennially in even numbered years. When warranted, said compensation may be adjusted by Council resolution, to be effective the first full pay period in January of the year following the review. The compensation rate may be revised by the electorate by initiative.

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Item 7c
Chapter 2 of the Council Policies and Procedures further describes the Council Compensation Committee and outlines the membership and review responsibilities.

Under this Chapter, Council is to select at least one previously elected official, one Personnel Board member, and one citizen-at-large. In addition, five additional nominees should be appointed to complete the seven-member committee.

Resolution No. 10516, adopted May 20, 2014, mandates that compensation for Planning Commission and Architectural Review Commission members be reviewed in conjunction with Council compensation.

DISCUSSION
Background
At the May 20, 2025 Council meeting, the City Council unanimously voted to establish a Council Compensation Committee. The committee was tasked with reviewing the full Council compensation package and Planning Commission and Architectural Review Commission stipends to make recommendations to the City Council no later than May 1, 2026. Council also directed the committee to evaluate and make a recommendation on whether additional Advisory Bodies should receive stipends.

On July 15, 2025, Council appointed previously elected official Andy Pease, Personnel Board representative Jill LeMieux, and citizens-at-large Erin Foote, Kari Howell, Trent Johnson, Barry Price, and Joyce Tseng to serve on the committee.

Committee Meetings and Review
The Committee held five meetings in 2025 on September 4, September 30, October 22, November 13, and December 16. The agenda packets and minutes of the meetings are available online.

The Committee reviewed the current Council compensation package, including salary, benefits, expense reimbursement, professional development allowances and other compensation provided. In addition, the Committee compared the Council’s compensation package with that of other Mayors and Council Members in 9 other cities (Charter and General Law).

The Committee also requested staff survey current and previous City Council members and Advisory Body members. Completed surveys were received from seven current or previous City Council members and 53 from current or previous Advisory Body members.

The survey questions and response summaries (in italics) are provided below:

Mayor/Council Member Survey Questions

1. On average how many hours per month did they spend on city business (reading staff reports or background materials, attending Council meetings, liaison assignments or regional board meetings, meeting and communicating with residents, constituents r

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organizations, and representing the city in other ways such as attending special city events.

The responses regarding average number of hours spent on city business were 39 hours per week for Mayor and 21 hours per week for Council Members.

2. Were you able to continue you occupation in the same capacity after joining Council? More than half of those who responded indicated there was a change in the hours worked in their current occupation after joining Council.

3. On a scale of one to ten is the current compensation package appropriate for the time and expertise necessary to serve on Council.

The average response was 4.86.

4. Is there anything you would change in regard to the current compensation package? The Mayor and Council Member roles require significant, often full-time commitment, and current compensation, while generous in benefits, can still limit who is able to serve. The variable and demanding schedule makes it difficult to hold another job unless it is highly flexible. While some view Council service as largely volunteer and do not expect professional level pay, there is concern about equity and accessibility.

A modest salary increase could help address the high cost of living in SLO and move compensation closer to a living wage without fully professionalizing the role.

5. Were there events/conferences that you didn’t attend based on the professional development funding provided?
The responses were split regarding this question with some indicating that they didn’t attend conferences or trainings that would have been helpful to learn from other communities with the same priorities as San Luis Obispo.

6. Do you have additional comments that you feel the Council Compensation Committee should consider?
Council Members can often balance service with full-time work, but the Mayor’s role is far more demanding and inflexible due to required public appearances and obligations. Increasing pay could change the type of candidates and leadership the City attracts, and higher market-rate salaries might discourage some qualified people from running if they assume they must leave their current careers with no job to return to. At the same time, current compensation is not a livable wage for most residents in SLO, limiting service to those with flexible schedules or independent income. While the community expects a great deal from its elected officials in a high-cost city, budget constraints make pay increases difficult to justify now. The key challenge is finding compensation low enough to avoid over-professionalizing the role, yet sufficient to reduce financial barriers and allow a broader range of people to serve.

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Advisory Body Members Survey Questions

1. On average how many hours per month did you spend on attending meetings, reading staff reports or background materials and attending special City events? While the responses varied widely depending on the Commission or Committee the average was 8.5 hours per month.

2. Do you have additional comments regarding amount of time spent performing Advisory Body duties?
Most respondents reported no major issues or had nothing additional to note. Time demands can range from minimal to intensive especially for chairs, subcommittee members, or during grant review periods. Compensation was generally not a motivating factor, though reimbursement for mileage, public transit and parking were mentioned.

3. Based on your experience do you feel the current stipend or lack of stipend is appropriate for the Advisory Body you serve(d) on. Scale from 1-10, 1 being not appropriate and 10 being very appropriate.

The average of all responses was 6.2 out of 10.

4. Please explain your answer to the previous questions.

The overall consensus is that Advisory Body service is primarily viewed as volunteer public service, not a job, and most respondents do not personally expect or require compensation. Many emphasize that they serve out of civic duty, enjoyment, or commitment to the community, and several would decline a stipend even if offered.

There is also a theme around equity and access. While current volunteers may be financially able to serve without pay, many acknowledge that lack of compensation can exclude students, lower-income residents, professionals, or those who must take time off work to serve. For this reason, respondents generally support modest, carefully designed compensation as a way to broaden participation.

With the intent of finding out if compensation would affect whether community members would apply to be on an advisory body, the Committee also approved a three-question survey for Open City Hall. The survey was posted from October 13, 2025, until October 24, 2025, and 305 individuals responded to the following questions:

Community Survey

1. Would you consider, or have you considered applying for one of the City’s Advisory Bodies?
49 responded No and 255 responded Yes.

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2. How would compensation for advisory body members affect your decision to apply? Consensus comments indicate that compensation is not a deciding factor for most, but a minority say it would positively influence participation, especially when it is a cost offset such as parking, gas or meals. Several comments noted compensation could enable participation from those with limited income or work conflicts, increasing diversity and access.

3. Are there any barriers that might prevent you from applying to serve on an Advisory Body?
There were 130 responses that there were no barriers to applying to serve. Of the remaining 174 responses, the barriers are summarized as follows:
 Time and Scheduling: Many people said that balancing work, family, and other commitments is the biggest challenge. Meeting times—especially evenings—can make participation difficult.
 Residency and Eligibility: Some interested individuals live outside City limits but work in SLO or own property here. Current rules often limit eligibility.  Childcare and Family Responsibilities: Parents noted that childcare and family schedules can be a barrier, especially for evening meetings.  Selection Process: A few respondents expressed concerns about the application process feeling slow or exclusive.
 Transportation and Parking: Parking availability and public transit schedules were mentioned as practical hurdles.
 Financial and Accessibility Considerations: Some said compensation or cost offsets (parking, childcare, transportation) would help. Others noted age, mobility, or vision needs.

The Committee used the responses from all three surveys to guide their recommendations.

After considering all the information presented, the Committee voted 6-0-1 (Member Price absent) to recommend to the City Council the following:

Council Compensation
 Compensation for Council Members and Mayor should align with the most current Median Household Income from the U.S. Census for the City of San Luis Obispo of $66,711 prorated to 20 hours per week for Council Members and 30 hours per week for Mayor. The Committee recommended increasing the hours per week for the Mayor to 30 hours from the 25-hour recommendation in 2020 based on survey responses and Committee discussion. As an alternative, the Committee also discussed and recommended a salary for the Mayor prorated to 35 hours a week. Median Household Income was also used by the previous Council Compensation Committee as a means for determining Mayor and Council Member compensation.

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Table 1 – Council Compensation Committee Recommendation Annual Hourly
Median Household Income for
the City of San Luis Obispo
(U.S. Census) -
$ 66,711 $ 32.07
Current
Monthly
Salary
Current
Annual
Salary
Est.

Weekly
Worked
Hours
Proposed
Monthly
Salary
Proposed
Annual
Salary
Annual
Increase
from
Current
Annual
Percent
Increase
Council
Member $ 2,319 $ 27,828 20 $ 2,780 $ 33,356 $ 5,528 19.9% Mayor $ 2,923 $ 35,076 30 $ 4,169 $ 50,033 $ 14,957 42.6% Alternative
- Mayor $ 2,923 $ 35,076 35 $ 4,864 $ 58,372 $ 23,296 66.4%  Any Council Member or Mayor who is appointed to a statewide board or policy committee shall be provided with a stipend for the duration of their statewide appointed term. The stipend shall be equal to 5 hours per month based on the hourly rate of the Median Household Income. This change is recommended to recognize the additional commitment associated with participation in a statewide board or committee and the value to the City for that involvement.

Table 2 – Monthly Stipend for Statewide Board or Policy Committee Appointment Monthly Statewide
Seat Stipend
Annual Statewide
Seat Stipend
Council
Member or
Mayor
$ 160.36 $ 1,924.36
Professional Development
 “Professional Development” funding be retitled to "Reimbursable Professional Expenses" funding to also include expenses related to representing the City in an official capacity including expenses incurred within the County. Corresponding changes to Section 2.3 of Council Policies and Procedure have been included in the draft Resolution (Attachment A).
 Increase annual funding to $3,300 for Council Members and $4,400 for Mayor. Any funds not used in the first year of a Financial Plan will automatically roll over to the second year. This amount was last modified in 2016, and the recommended change is to account for the increased cost of related expenses since that time.  Establish an annual $1,000 per person reimbursement allowance for any Council Member or Mayor who is appointed to a statewide board or policy committee for travel expenses related to attendance at a statewide board or policy committee meeting.

Participation in these meetings is often in person and out of the area which incurs associated travel expenses.

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Table 3 – Professional Development (Renamed to Reimbursable Professional Expenses) Current
Annual
Professional
Development
Recommended
Reimbursable
Professional
Expenses
%
Increase
from
Current
Annual Total Increase
from Current
Council Member $ 2,700 $ 3,300 22% $600
Mayor $ 3,600 $ 4,400 22% $ 800
Travel Expense
Allowance for
Board or Policy
meetings
$1,000
Advisory Body Member Stipend
The Committee recommends that Council direct staff to explore the feasibility of, and provide a report back to Council on, an "opt-in" pilot program that would provide $25 per meeting for all Advisory Body members, not including the ARC and PC, not to exceed $75 per month. The ARC and PRC compensation would remain the same amount of $86 per meeting with a cap of $344 per month. This change is recommended to improve accessibility of Advisory Body participation to community members and offset potential costs associated with attendance. The table below shows the estimated cost at scenarios of 100% or 80% of the Advisory Body members choosing to opt-in.

Table 4 – Estimated Cost of Providing Stipend to Advisory Body Members Average
Number of
Meetings
Per Year1
Number of
Advisory
Body
Members
Recommended
Amount Paid
Annually
(100%
participation)
Recommended
Amount Paid
Annually (80%
participation)
Active Transportation Committee 7 7 $ 1,225 $ 1050
Administrative Review Board 2 3 $ 150 $ 100
Construction Board of Appeals 3 7 $ 525 $ 450
Cultural Heritage Committee 6 7 $ 1,050 $ 900
Human Relations Commission 11 7 $ 1,925 $ 1,540
Investment Oversight Committee 4 1 $100 n/a
Mass Transportation Committee 5 8 $ 1,000 $ 750
Parks & Recreation Commission 9 7 $ 1,575 $ 1,350
Personnel Board 3 5 $ 375 $ 300
Promotional Coordinating
Committee 11 7 $ 1,925 $ 1,650
Revenue Enhancement Oversight
Committee 3 5 $ 375 $ 300
Tourism Business Improvement
District 14 7 $ 2,450 $ 2,100
Tree Committee 9 7 $ 1,575 $ 1,350
Total $ 14,250 $11,840

1 The figure represents the average number of meetings per year based on the total meetings held in 2023, 2024 and 2025.

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Should Council direct staff to move forward with this recommendation, staff would return to Council with the adoption of the Supplemental Budget with additional information on the feasibility of a pilot program, including the associated administrative impacts on payroll, management of trainings required for those receiving compensation, and other potential impacts to those who decide to opt-in to the pilot program.

Public Engagement
All the meetings of the Council Compensation Committee were published per the Council adopted noticing guidelines. The Open City Hall survey was available for a three-week period. Public comment on this item can be provided to the City Council through written correspondence prior to the meeting and through public testimony at the meeting.

ENVIRONMENTAL REVIEW
The California Environmental Quality Act does not apply to the recommended action in this report, because the action does not constitute a “Project” under CEQA Guidelines sec. 15378.

FISCAL IMPACT
Budgeted: No Budget Year: 2026-27
Funding Identified:

Fiscal Analysis:

Should Council move forward with all of the Committee’s recommendations, the additional cost for the 2026-27 Fiscal Year would be $28,690 as increases would begin in January 2027 and $57,381 annually ongoing. Any increases would be included as a part of the development of the 2026-27 budget and future budgets. This does not include the costs of a potential “opt-in” pilot program for Advisory Body members which would continue to be developed if staff is directed to explore the feasibility of a program.

Funding
Sources
Total Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund $ $28,690 $ $57,381
State
Federal
Fees
Other:

Total $ $28,690 $ $57,381
The monthly salaries of the Mayor and Council Members would be increased from $2,923 to $4,169 and $2,319 to $2,780 per month, respectively, beginning in January 2027. The amounts for reimbursable professional expenses Mayor and Council Members would increase from $3,600 to $4,400 and $2,700 to $3,300, respectively. Council’s other

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benefits would remain unchanged. This increase to salaries and reimbursable professional expenses would increase as follows:

Current
Annual
Salary
Proposed
Annual
Salary
Annual
Increase
from
Current
FY 26-27
(6 months)
FY27-28
(ongoing)
City Member $ 27,828 $ 33,356 $ 5,528 $ 11,056 $ 22,112 Mayor $ 35,076 $ 50,033 $ 14,957 $ 7,479 $ 14,957
Alternative - Mayor $ 35,076 $ 58,372 $ 23,296 $11,648 $ 23,296 Monthly Stipend for
Statewide Board or
Policy Committee
Appointment
(assumption Mayor and
2 Council Members)
$ 2,886 $ 5,773
Reimbursable
Professional Expenses
Current
Annual
Amount
Proposed
Annual
Amount
Annual
Increase
FY 26-27
(6 months)
FY27-28
(ongoing)
Council Member $ 2,700 $ 3,300 $ 600 $ 1,200 $ 2,400
Mayor $ 3,600 $ 4,400 $ 800 $ 400 $ 800
Board or Policy
Committee Travel
Reimbursement
$ 1,500 $ 3,000

ALTERNATIVES

1. The Council could decide not to approve the salary increase for Mayor and Council Members as recommended by the Council Compensation Committee. Should Council pursue this option, Council could decide to increase the salaries of Mayor and Council Members by the Consumer Price Index (CPI) amount for the last two years; this would be a 5.8% increase, increasing Mayor to $3,093 and Council Members to $2,454 per month.

2. The Council could decide not to approve the recommendations regarding Professional Development funding. Should Council pursue this option, Council could apply a CPI catch up from 2016, which was the last time professional development amounts had been adjusted. This would be a 35% increase to the Professional Development amounts; City Council would increase to $3,645 and Mayor would increase to $4,860 annually.

3. The Council could decide not to direct staff to explore the feasibility of providing a stipend of $25 per meeting for all Advisory Body members. Should Council pursue this option, the PC and ARC would remain the only Advisory Bodies whose members receive a stipend.

ATTACHMENT
A – Draft Resolution 2026 setting new salaries for Council

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RESOLUTION NO. XXXX (2026 SERIES)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS

OBISPO, CALIFORNIA, SETTING NEW SALARIES FOR THE MAYOR,

COUNCIL MEMBERS, PLANNING COMMISSIONERS, AND

ARCHITECTURAL REVIEW COMMISSIONERS AND AMENDING
COUNCIL’S POLICIES AND PROCEDURES
WHEREAS, Charter Section 410 provides for compensation and reimbursement of expenses for the Mayor and Council Members and establishes a procedure for a biennial review by a Council Compensation Committee; and WHEREAS, on April 19, 2022, Council amended their Policies & Procedures Manual to add Section 2.1.1, Consumer Price Index Increases, which allows biennial Consumer Price Index increases to be applied to Council, Planning Commission, and Architectural Review Commission salaries, effective the first full pay period in January, without convening a Council Compensation Committee; and WHEREAS, on May 20, 2025, Council unanimously voted to begin the formation of a Council Compensation Committee to review the full Council compensation package and Planning Commission and Architectural Review Commission stipends in lieu of the CPI increases; and
WHEREAS, Council also directed the Committee to evaluate and make a recommendation on whether additional Advisory Bodies should receive stipends; and WHEREAS, on July 15, 2025, Council appointed a seven-member Committee made up of one previously elected official, one Personnel Board Member and five at large community members. The Committee has met and reviewed Mayor and Council Member compensation in accordance with the procedures provided by the Charter; and WHEREAS, the Council Compensation Committee has determined that the present criteria for compensation remain valid. However, an adjustment is now appropriate particularly in light of the increase in the Area Median Income and the official duties of the Mayor and Council.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows:

SECTION 1. Section 2.1 of the Council Policies and Procedures shall be amended to read as follows:

Effective the first full pay period in January 2027, compensation for services rendered in an official capacity shall be provided as follows:

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Resolution No. XXXXX (2026 Series) Page 2
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 The Mayor shall receive a monthly salary of $4,169 and each City Council Member shall receive a monthly salary of $2,780.
 Any Council Member or Mayor who is appointed to a statewide board or policy committee shall receive an additional five hours per month stipend for the duration of the term of their appointment.

SECTION 2. Section 2.3 of Council Policies and Procedures shall be amended to read as follows:

2.3 PROFESSIONAL DEVELOPMENT REIMBURSABLE PROFESSIONAL

EXPENSES
Allowances shall be budgeted for the Mayor and each Council Member as follows:

2.3.1 PROFESSIONAL DEVELOPMENT REIMBURSABLE

PROFESSIONAL EXPENSES - INCLUDING TRIPS AND MEETINGS
For expenses related to representing the City and costs of professional development and educational conferences designed to improve understanding of and proficiency in municipal affairs. Said allowance shall be used for out-of-county expenses only and shall be reimbursed in accordance with accepted City Travel Guidelines.

Establish an annual travel allowance of $1000 per Council Member and/or Mayor who is appointed to a statewide board or policy committee to be used for travel expenses related to statewide attending policy meetings.

SECTION 3. Stipend of Planning Commission and Architectural Review Commission will remain at $86 per meeting not to exceed $344 per month.

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Resolution No. XXXXX (2026 Series) Page 3
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SECTION 42. Resolution Number 11482 (2024 Series) is hereby repealed and superseded to the extent inconsistent herewith.

Upon motion of XXXX, seconded by XXXXX, and on the following roll call vote:

AYES:

NOES:

ABSENT:

The foregoing resolution was adopted this XX day of January 2026. ___________________________
Mayor Erica A. Stewart
ATTEST:
______________________
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
______________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, on ______________________. ___________________________
Teresa Purrington
City Clerk

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San Luis Obispo City CouncilJanuary 13, 2026

San Luis Obispo City Council
January 13, 2026