CITY OF SAN MATEO
City Council Special Meeting
April 21, 2025
5:30 PM
City Hall Council Chamber
Entrance is on O’Farrell Street
COUNCIL MEMBERS
Robert Newsom Jr.
Adam Loraine
Nicole Fernandez
Danielle Cwirko-Godycki
Lisa Diaz Nash
AGENDA
THIS MEETING CAN BE ATTENDED IN PERSON OR REMOTE BY JOINING ZOOM – SEE CODES BELOW.
PUBLIC COMMENTS WILL BE ACCEPTED BOTH IN PERSON AND REMOTEL Y.
SEE END OF AGENDA FOR OPTIONS AND INSTRUCTIONS ON HOW TO PARTICIPATE IN THE MEETING.
To join via Zoom – click here:
April 21, 2025
To join via telephone: (408) 638-0968
Webinar ID: 870 3702 8811 Passcode: 312278
CALL TO ORDER
Roll Call
AB 2449 Requests and Consideration for Meeting Participation by Teleconference due to Just Cause or Emergency Circumstances
STUDY SESSION
The public will have an opportunity to comment during the consideration of these items.
1. General Fund 2025-26 Operating Budget – Preview
Receive the General Fund 2024-25 operating budget preview.
CEQA: This report is not a project subject to CEQA, because it is a government fiscal activity which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. (CEQA Guidelines Section 15378(b)(4).)
2. 2025-30 Capital Improvement Program Plan Preview
Receive a preview and provide feedback on the 2025-30 Capital Improvement Plan.
CEQA: This budget preview is not a project subject to CEQA, because it is a government fiscal activity which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. (CEQA Guidelines Section 15378(b)(4).)
ADJOURNMENT
----------------------------------------------------------------------------------------------------------------------------- AGENDAS:
Agendas and material are posted on the City’s website on the Friday preceding each Council Meeting and can be viewed on the City's website at
www.cityofsanmateo.org
. Any supplemental material distributed to the Council after the posting of the agenda will be made part of the official record.
WATCHING A MEETING ON TV:
City Council meetings are broadcast live on Comcast/channel 27, Wave/channel 26, or AT&T/channel 99.
For transmission problems during the broadcast, please call (650) 522-7099. For all other broadcast comments, call (650) 522-7040, Monday-Friday, 8 a.m. - 5 p.m.
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WATCHING A MEETING ON A COMPUTER:
There are three ways to stream.
1) Public Meeting Portal
www.cityofsanmateo.org/publicmeetings
2) City YouTube channel and stream it on YouTube:
http://youtube.com/CityofSanMateo
3) Watch TV live stream:
https://www.cityofsanmateo.org/193/Channel-San-Mateo-Live-Stream
PUBLIC COMMENTS/REQUEST TO SPEAK
Prior to the Meeting
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[email protected]
until 4 p.m. the day of the meeting.
During the meeting
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By telephone:
Call (408) 638-0968 and enter the conference ID found at the top of the meeting agenda. When the item of interest is open for consideration, select *9 to raise your hand. When called upon, press *6 to unmute, state your name and provide your comments.
In Person:
At the meeting complete a “Request to Speak” form, submit a request at the speaker kiosk or scan the QR code.
ACCESSIBILITY:
In compliance with the Americans with Disabilities Act, those with disabilities requiring special accommodations to participate in this meeting may contact the City Clerk’s Office at (650) 522-7040 or [email protected]
. Notification 48 hours prior to the meeting will
enable the City to make reasonable arrangements to ensure accessibility to this meeting.
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3 CITY OF SAN MATEO
Agenda Report
City Hall
330 W. 20th Avenue
San Mateo CA 94403
www.cityofsanmateo.org
Agenda Number: 1 Section Name: STUDY SESSION File ID: 25-9773 TO: City Council
FROM: Alex Khojikian, City Manager
PREPARED BY: Finance Department
MEETING DATE: April 21, 2025
SUBJECT:
General Fund 2025-26 Operating Budget – Preview
RECOMMENDATION:
Receive the General Fund 2024-25 operating budget preview.
BACKGROUND:
On February 18, 2025, staff presented a mid-year budget update to Council on the City’s financial status. The General Fund budget deficit for fiscal year (FY) 2024-25 is projected at $6.4 million, an improvement from the original $10.6 million shortfall. This reflects better-than-expected investment earnings and charge for services, as well as budget savings from vacancies. Despite the projected deficit, the General Fund balance is expected to remain strong at year-end, with an estimated $112 million.
On April 7, 2025, Council reviewed the existing General Fund Reserve Policy. Staff proposed revisions to clarify reserve usage, establish replenishment requirements, and adjust reserve targets to align with best practice and the City’s unique fiscal needs. Under Council direction, the revised policy will be incorporated into the FY 2025-26 proposed budget. The policy framework will keep roughly $77 million in General Fund reserves and $10 million in unassigned fund balance at the end the current fiscal year, and set aside $25 million in a Capital Investment Reserve for critical infrastructure projects.
The 2025-26 budget is being developed to align with Council priorities, meet operational needs, and support City’s commitment to fiscal sustainability. While staff continue to finalize the proposed operating budget, this report provides the Council with an early preview of the General Fund budget outlook.
Two key concerns continue to shape the City’s budget planning:
•Elevated interest rates, which have cooled the housing market and slowed growth in both property tax and real property transfer tax revenues in recent years.
•Property Tax In-Lieu of Vehicle License Fee (VLF) shortfalls, which remain a long-term financial risk.
Added to these challenges is the uncertainty in the broader economy. Rapid shifts in U.S. trade policies have contributed to market volatility and raised concerns of a potential economic downturn. The sections that follow provide an overview of current economic conditions and staff’s budget forecast for FY 2025-26 General Fund revenue and expenditures.
General Economic Conditions
•Economic Growth: U.S. real GDP grew 2.8% in 2024 (Chart 1). Early data from January and February 2025 showed continued solid performance. However, in March and April, significant shifts in U.S. trade policy and escalating trade conflicts have raised concerns about a potential economic slowdown. Many forecasters now revised their 2025 GDP growth projections downward to a range of 0.3% to 1.6%, with some forecasting negative growth. This wide range
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3 reflects a high degree of uncertainty we face. It is becoming increasingly difficult to navigate the current environment, as the situation continues to evolve, and the duration and severity of this potential downturn remain unclear. •Inflation: Inflation showed encouraging signs early in the year, with the Personal Consumption Expenditure (PCE) Price Index dropping to 2.4%, close to the Federal Reserve (Fed)’s long-term target of 2%. That said, recent developments, including broad-based tariffs, are expected to put pressure on prices. As of this report's preparation, the administration has implemented a 25% tariff on all imported steel and aluminum products, a 25% tariff on all imported cars and auto parts scheduled to begin on May 3, 2025, and 10% tariff on other imported goods with some exceptions.
While the full impact may not be felt immediately, some forecasts estimate inflation could rise to 3% ~ 4% over the next 12 months. These projections are subject to change due to the evolving situation. Elevated inflation is expected to affect the City’s budget by increasing personnel costs, capital project costs, and the funds required for vehicle and major equipment replacements. Staff will continue to monitor economic conditions and adjust forecasts as necessary.
Chart 1 – U.S. Real GDP Growth
Data Source: historical data per BEA.gov / various forecasters Chart 2 – Inflation – PCE Index
•Interest Rates: The Fed kept interest rates unchanged at its March 2025 meeting, emphasizing that it is well- positioned to adjust rates in either direction. While markets are expecting two rate cuts this year, the Fed has maintained a cautious “wait-and-see” stance. Policymakers have indicated they will closely monitor both hard and soft economic data and may delay rate cuts until gaining clearer economic signals. •Labor Market: The labor market remains stable, with the national unemployment rate at 4.2%, slightly above the prior year’s 4.0%. California’s unemployment rate is higher at 5.4%, while San Mateo County continues to outperform both the state and national averages, maintaining a low rate at 3.7% (Charts 3 and 4). Amid all this, there are growing concerns about a weakening labor market, particularly in more vulnerable sectors. However, the Bay Area is positioned as a talent hub for technology and innovation and is expected to support a more stable local job market.
Chart 3 – National Unemployment Rate Chart 4 – State and Local Unemployment Rates
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3 Data Source: BEA.gov
Data source: EDD
•Consumer Confidence: Consumer sentiment has declined sharply in recent months. According to preliminary April 2025 data, the University of Michigan’s Consumer Sentiment Index declined to 50.8, a 30% drop from 74 in December 2024 and the lowest since June 2022. This decline reflects consumers’ growing concerns about the economic outlook. •Business and Investor Sentiment: Business and investor confidence has weakened in response to recent policy and market developments. Many companies are pausing long-term investment decisions and re-assessing hiring plans.
Small businesses tied to global trade have been particularly impacted. In April, financial markets experienced unusual volatility, marked by simultaneous sell-offs in both equity and bond markets -- a rare occurrence that underscores elevated uncertainty and declining investor confidence.
These broader economic indicators, especially those related to interest rates, inflation, the labor market, and consumer and investor sentiment, have direct implications for the City’s revenue projections and fiscal outlook. Due to the degree of uncertainty, staff have taken a conservative approach in developing the FY 2025-26 budget.
General Fund Budget Preview
The FY 2025-26 General Fund budget preview reflects a cautious approach in response to both external economic conditions and internal operational needs. Budget assumptions were thoroughly reviewed and updated to reflect the best estimates available. These assumptions are summarized in Attachment 1 for Council review.
General Fund Revenues
General Fund revenues for FY 2025-26 are projected to be $172.4 million, a decrease of $1.5 million (0.9%) from the FY 2024-25 mid-year projections. The decrease is primarily due to a projected reduction in real property transfer tax (RPTT), which will be budgeted at its baseline level for FY 2025-26. RPTT is highly volatile and closely tied to real estate market activity. In 2024-25, the City benefited from strong Measure CC revenues driven by several major commercial property sales – many were one-time revenues. Reflecting a conservative approach, RPTT is budgeted at a more modest level for the upcoming year. All other major revenues are expected to remain relatively flat.
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3 Property Tax
Property Tax is the largest revenue source for the General Fund, accounting for approximately 50% of total revenues. For FY 2025-26, property tax revenue is projected at $86 million, an increase of $2 million (2.4%) compared to the 2024-25 mid-year projection. Currently, the local real estate market remains relatively stable. Unlike during the 2008 Great Recession, the housing market is more resilient due to regulatory changes, limited supply, and mortgage refinancing that allowed many homeowners to lock in historically low interest rates.
Secured property taxes, which make up over 60% of total property tax revenues, are anticipated to increase 4.0% based on the County Assessor’s Office estimated tax roll. Approximately 75% of San Mateo’s secured property tax base is residential. As shown in Charts 5 and 6, despite declining sales volume in recent years, home prices in San Mateo remain steady.
Chart 5 – City of San Mateo
Single Family Residential Full Value Sales (2010 - 2024) Data Source: HdL Coren and Cone / San Mateo County Recorder Chart 6 – Single Family Residential
Data Source: San Mateo County Association of Realtors
(Note: The Federal Reserve began increasing interest rates in March 2022.) Two main risk factors continue to impact property tax growth:
(1)Elevated interest rates - From FY 2012 through FY 2024, assessed values (AV) grew on average 6.7% annually. Due to high interest rates, AV growth has slowed down in recent years. FY 2023-24 AV growth dropped to 5.5% and followed by 4.8% in FY 2024-25. For FY 2025-26, AV growth is projected to be 4.0%. Despite this slowdown, San
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3 Mateo’s central location on the Bay Area peninsula continues to make it a highly desirable place to live and work.
Once interest rates begin to ease, market activity is expected to rebound. (2)Property tax in-lieu of Vehicle License Fee (VLF) Shortfalls - As explained in Attachment 2, San Mateo County’s VLF shortfalls continue to grow as more school districts are shifting from non-basic-aid to basic-aid status. In FY 2025-26, the City’s VLF entitlement is projected to be $17.0 million, of which $7.1 million lacks a funding source, resulting in a projected VLF shortfall. If the State commits to funding its obligations to backfill the shortfall, the City will typically receive this VLF shortfall funding two years later in FY 2027-28 – that’s the best-case scenario.
San Mateo County and its cities are actively advocating for the State to backfill the FY 2023-24 VLF shortfalls, of which the City’s share is $6.6 million. Due to federal funding cuts and ongoing economic uncertainty, it is becoming less clear the State will backfill the VLF shortfalls. Given this uncertainty, staff has conservatively included 50% of the FY 2023-24 shortfall -- $3.3 million out of the City’s $6.6 million shortfall -- in the FY 2025-26 budget. Staff will continue to monitor VLF developments and adjust projections as needed.
Sales Tax
Sales tax is projected to remain flat at $27.9 million, comprising of $20.5 million from the local 1% Bradley-Burns sales tax, $0.4 million from Proposition 172, and $7.0 million from the local ¼% Measure S transaction and use tax. Ongoing inflation, high interest rates, and trade conflicts continue to weigh on consumer spending. While tariffs may trigger a short-term spending surge, the long-term outlook remains uncertain.
San Mateo's sales tax base is relatively diversified, reducing the City’s exposure to high-volatility sectors such as auto sales.
While the City does not experience rapid growth in sales tax revenue during economic booms, unlike cities with major auto dealership or retail hubs, the City’s sales tax tends to be more stable during a downturn.
Real Property Transfer Tax (RPTT)
San Mateo’s RPTT is set at 0.5% on sale or transfer value of any property within the City. Voters-approved Measure CC increases the rate to 1.5% on properties sales or transfers of property with a value of $10 million or more. For FY 2025-26, RPTT is projected to be $8.6 million, including $8 million baseline budget and an estimated $0.6 million from Measure CC.
In summary, given the ongoing economic uncertainty, General Fund revenues are expected to remain flat or experience a certain degree of slowing down. The good news is that San Mateo’s revenue remains resilient, supported by stable property tax. This provides the City with certain insulation during economic downturns. In addition, the City’s strong General Fund reserves place us in a solid position, providing a runway to address the structural deficit.
General Fund Expenditures
Total General Fund expenditures for FY 2025-26 are expected to reach $187.6 million, an increase of $7.2 million (4.0%) compared to the prior year’s adopted budget.
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3 Personnel Costs
Personnel costs are projected at $94.7 million, consisting of salaries, benefits, and pension unfunded liability payments.
This reflects a 2.3% increase over the prior year and accounts for approximately half of the General Fund budget. When including SMC Fire’s personnel and legacy costs, total personnel-related costs represent 70% of the General Fund budget.
For FY 2025-26, staff adopted a conservative approach to planning the personnel budget. In addition to incorporating salary adjustments based on negotiated labor contracts and scheduled step increases, staff applied tailored vacancy assumptions to support a leaner budget model. Other budget-balancing measures include reducing the set-aside for the City’s self-insured Workers’ Compensation Program by $1.5 million, drawing down on excess fund balance from the Workers’ Compensation Fund, and monitoring CIP staff time chargebacks to reduce General Fund burden by $1 million.
Without these measures, the General Fund personnel budget would have shown close to 5.0% increase instead.
Recent market volatility also affected the investment performance of the CalPERS pension system. As of April 11, 2025, preliminary data showed CalPERS’ year-to-date investment return at 2.9%, raising concerns that it may fall short of its long-term return rate of 6.8%. If CalPERS misses its earnings target, the City’s unfunded pension liabilities will increase, along with future annual pension contribution requirements. This will not affect the FY 2025-26 pension costs, but it could place additional pressure on the City’s long-term financial outlook.
Other Operating Expenditures
•Non-personnel operating expenditure is projected to be $43.0 million, increased by $2.9 million (7.2%). This reflects preliminary baseline budget projections, with inflation adjustments, and increases in insurance premiums. •Transfers out, anticipated to be $11.2 million, comprising of $7.7 million contributions to Capital Project Funds for CIP projects, $3.0 million for debt service, and $0.4 million annual contribution to the Equipment and Vehicle Replacement Fund for major building component replacement.
Budget Deficit and Financial Sustainability Plan
With projected revenues at $172.4 million and expenditures at $187.6 million, General Fund is facing a $15.2 million budget deficit in FY 2025-26.
To address this gap, staff are actively working on a Financial Sustainability Plan with measurable actions to reduce the deficit and improve the City’s long-term financial health. The following are actions that have been implemented or are underway as part of the initial phase of the Financial Sustainability Plan:
•Grant Funding Strategy: Engaged a citywide grant writing consultant and established a cross-departmental grant management team to proactively pursue and manage grant funding opportunities. •Reserve Policy Review: Completed a comprehensive review of the General Fund Reserve Policy to improve structure, better align with best practices, and create a dedicated Capital Investment Reserve for future infrastructure needs.
•Cost Recovery Enhancements:
oCompleted a cost recovery study for the Recreation Division and updated the Parks & Recreation fee schedule, effective FY 2025-26.
oMonitored capital project (CIP) staff time chargebacks, aiming to reduce General Fund burden by an estimated $1 million in FY 2025-26.
•Use Excess Set-Aside Fund for Budget Stabilization: The City is self-insured for its Workers’ Compensation Insurance Program. A recent review of the Workers’ Comp Fund identified approximately $6 million in excess reserves. These funds are being used to temporarily reduce internal charge to city operating funds over the next three years, resulting in an estimated $1.5 million savings for the General Fund in FY 2025-26. This is a short-term strategy to support budget stability but does not address the underlying structural deficit issue. •Economic Development Work Plan/Action Plan: A new Economic Development Work Plan/Action Plan is in
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3 development and will be presented to Council soon in late summer or fall. This plan is to attract and retain businesses and build a strong economic base for San Mateo. •Contingency Planning: Staff are working on a contingency plan -- initial steps include reducing non-essential discretionary spending and implementing a hiring freeze on non-essential positions. The goal is to minimize disruption to city services. If conditions worsen, further actions such as service level reductions and deferring capital projects may be needed.
•Exploration of 2026 Revenue Measure options: To fund city services at the current levels and continue investing in infrastructures and city facilities, the City will need to explore potential 2026 revenue measure options. A sustainable and reliable revenue source will be critical to support the City’s ongoing service delivery.
While General Fund reserves remain strong, long-term forecasts show that costs, particularly staffing costs and capital improvement needs, are rising faster than revenues. To address funding issues, the City will need to find ways to grow its revenues and continue making thoughtful spending decisions to sustain services and maintain the City’s long-term financial health.
NEXT STEP:
Any feedback and direction received from the Council as a result of this report and supporting presentation will be incorporated into the FY 2025-26 proposed budget and corresponding long-term financial plan. Staff anticipate delivering the budget to the City Council with a public hearing and budget adoption in June.
BUDGET IMPACT:
There is no direct budgetary impact resulting from this report. The financial status of the General Fund will continue to be monitored. Updated final estimates will be incorporated into the proposed 2025-26 operating budget.
ENVIRONMENTAL DETERMINATION:
This report is not a project subject to CEQA, because it is a government fiscal activity which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. (CEQA Guidelines Section 15378(b)(4).)
NOTICE PROVIDED
All meeting noticing requirements were met.
ATTACHMENTS
Att 1 – FY 2025-26 General Fund Budget Assumptions
Att 2 – Conceptual Overview of the VLF shortfall in San Mateo County
STAFF CONTACT
Karen Huang, Finance Director
[email protected]
(650) 522-7110
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Attachment 1
FY 2025-26 General Fund Budget Assumptions
Revenue Assumptions
Revenue Description FY 2025-26
Budget Assumption
Explanatory Comments
Secured Property Tax
4% growth
Based on January 1 valuation (Tax Lien
Date) established by the County Assessor
and adjusted to reflect the outcome of any
assessment appeals.
Property Tax
Property Tax in-lieu of
Vehicle License Fee (VLF)
4% growth; includes
$7.1 million shortfall and
receipt of $3.3 million
(50% of 2023-24
shortfall).
VLF revenues face long-term uncertainty.
VLF shortfall is projected to worsen over
the next 5-7 years as more school districts
switch from non-basic-aid to basis-aid
status. Without State backfill, the City will
face significant revenue loss.
Sales Tax Flat Based on recent economic development,
the latest sales tax data, and long-term
forecast from the City’s sales tax
consultant (HdL).
Measure S revenue assumed to follow the
same trend.
Real Property Transfer Tax
(RPTT)
$8 million baseline and
$0.6 million from
Measure CC revenue
RPTT is highly volatile and difficult to
forecast. The base tax rate is 0.5% of
property sales value. Measure CC imposes
a 1.5% rate on sales or transfer of any
property valued at $10 million or more.
Transient Occupancy Tax
(TOT)
$4 million baseline Baseline adjusted from $7 million to $4 million due to the closure of San Mateo
Marriott hotel.
Other Taxes 0 – 2% growth Other taxes include franchise tax and business tax. Franchise tax is projected to
stay flat. Business tax is expected to
remain stable at $8 million.
Charges for Services,
and Fees Revenues
2%-3% growth Based on CPI.
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Attachment 1
Expenditure Assumptions
Expenditure Description Explanatory Comments
Personnel Costs Salaries & Wages:
Reflect current labor contracts, including cost of living (COLA), merit step increases, and equity adjustments.
Benefits:
Health care costs are projected to increase 6.5% for 2026*; Pension cost reflects normal cost and unfunded pension (UAL) payments based on the latest report from CalPERS;
Other benefits are projected to grow by 3% annually.
Note*: Kaiser is the benchmark for healthcare costs. Kaiser’s monthly premium effective January 1, 2025 went up 9% compared to 2024. The proposed 2025-26 budget assumes a 6.5% rate increase as of January 1, 2026, based on healthcare premium assumptions from the City's other post-employment benefits (OPEB) actuarial valuation.
Non-Personnel Operating Exp. A 3% growth rate is assumed based on CPI and utility rate projections.
General liability insurance premiums have gone up 20%-30% each year over the last five years. The 2025-26 projection is based the latest estimates from the insurance pool plan.
Indirect Costs 3-4% growth based on inflation and adjustments to internal service charges.
Transfers In (Out) •$4.25 million from General Fund to CIP; •$2 ~ $3 million from Measure S to CIP;
•$3 million to Debt Service Funds; and
•$410,000 to the Equipment Replacement Fund for building maintenance set-aside.
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IMPORTANT NOTE: This slide presentation was prepared by the County Executive’s Office with input from the County Attorney’s Office. The purpose of this slide presentation is to provide a conceptual overview of the VLF shortfall in San Mateo County. Local school funding, Prop. 98, the administration of the local property tax system, and the calculation and funding of VLF are all complex processes based on detailed legal and fiscal frameworks, a comprehensive description and explanation of which are beyond the scope of this slide presentation. All examples and figures have been simplified for explanatory purposes.
Specific data on the distribution of local property taxes among taxing jurisdictions in San Mateo County can be reviewed in the annual Property Tax Highlights for San Mateo County, published by the San Mateo County Controller’s Office and available at https://www.smcgov.org/controller/property-tax-highlights.
The explanatory text contained in this presentation describe the specific graphics and examples depicted in these slides. The text and notes of the slides are not intended as independent explanations of concepts separate from the the specific graphics and slides to which they are attached and should not be cited or quoted as such. 1 Overview of the Vehicle License Fee Shortfall
in San Mateo County
Attachment 2
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• Under Prop. 13 and its implementing legislation, the 1% general tax levy is divided among all local taxing jurisdictions.
• On a countywide basis in San Mateo County, local school districts in FY22-23 were apportioned approximately 52% of the general levy, with the rest divided among the cities, special districts, County, and RDA successor agencies. To simplify the discussion, this graphic shows a 50/50 split between school districts, on one hand, and cities, special districts, and the County, on the other .
2 • County
• Cities
• Special Districts
School Districts
1% General Levy
Local Property Tax Apportionment
Attachment 2
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• Because the funding mechanism of VLF is intertwined with the manner of local school district funding, it’s important to start with an overview of how local K-12 school districts get funded. [Note: community college districts and county offices of education are subject to a similar funding framework, but the focus of this presentation is on K-12 schools].
• Historically, school district funding was driven primarily by the amount of local property taxes apportioned to each local district, as represented by the blue bars of varying heights on this slide.
3 School District B
School District C
School District D
K-12 School District Funding
School District A
Attachment 2
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• In 1988, Prop. 98 obligated the State to guarantee that every district receives a minimum amount of per-student funding. This minimum funding guarantee was previously known as the “revenue limit” but is now known as the Local Control Funding Formula or LCFF .
• When a local school district’s local property tax revenues are equal to or exceed the LCFF (represented by School District D in this graphic), it is known as a Basic Aid school district. The State has no obligation to provide additional funding to this school district to meet its minimum funding guarantee other than the constitutionally required minimum funding, or “basic aid,” which is approximately $120/student. 4 LCFF (Local Control Funding Formula)
Non-Basic Aid Districts Basic Aid Districts
School District B
School District C
School District D
K-12 School District Funding
School District A
Attachment 2
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• School districts that do not receive sufficient local property tax revenue to meet the LCFF (represented by school districts A, B, and C in this graphic) are known as Non-Basic - Aid Districts (non-BA districts). For these districts, the State is obligated under Prop. 98 to provide the additional funding needed by each district to fill the gap (represented by the red bracket in this graphic) between the minimum funding guarantee, or LCFF , and the amount of local property tax revenue received by each district. 5 LCFF (Local Control Funding Formula)
Non-Basic Aid Districts Basic Aid Districts
School District B
School District C
School District D
K-12 School District Funding
School District A
Attachment 2
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• As part of efforts to address the State’s budget crisis in the early 1990s, the State created the Educational Revenue Augmentation Fund, or ERAF , as an additional source of local funding for school districts to help meet the State’s minimum funding obligation. • To understand how this funding mechanism works, we return to the graphic of the allocation of the 1% general tax levy among local jurisdictions. 6 • County
• Cities
• Special Districts
School Districts
1% General Levy
ERAF (Education Revenue Augmentation Fund)
Attachment 2
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• The ERAF framework involves a complex set of calculations and processes, but at a conceptual level, it shifts of a certain amount of local property taxes from the cities, County, and special districts, and makes those funds available to satisfy the State’s Prop. 98 guarantee to fund non-BA districts up to their LCFF . 7 • County
• Cities
• Special Districts
School Districts
1% General Levy
ERAF (Education Revenue Augmentation Fund)
ERAF
Attachment 2
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• Let’s return to the graphic depicting school district funding prior to the creation of ERAF to show the impact of ERAF .
• The State’s obligation to fill the gap between each non-BA district’s local property tax revenue and the minimum funding guarantee is represented by the red brackets. 8 LCFF (Local Control Funding Formula)
Non-Basic Aid Districts Basic Aid Districts
School District B
School District C
School District D
School District
K-12 School District Funding - ERAF
School District A
Attachment 2
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• Under the ERAF framework, each non-BA school district now receives an ERAF entitlement, represented by the orange block.
• The State is still obligated under Prop. 98 to provide any additional funding needed for each non-BA district to meet the LCFF , but because of the ERAF allocation to non-BA school districts, the gap that the State must fill is now reduced (represented by School Districts A & B in this example) or even eliminated (School District C). • While this graphic represents only a theoretical example of a mix of four school districts in a county, it approximates the funding landscape in the vast majority (~52) of counties in the State: while there may be some basic aid districts, most districts are non-BA, and even after ERAF is distributed to non-BA districts, the State must still provide additional funding to non-BA districts to fill them up to their LCFF . • In San Mateo County, the ERAF entitlement is sufficient to fill each non-BA district to its LCFF . In other words, all school districts in San Mateo County as of 2023-24 fall into the situation generally represented by either School District C or D in this graphic. 9 LCFF (Local Control Funding Formula)
Non-Basic Aid Districts Basic Aid Districts
School District
School District
School District D
School District
K-12 School District Funding - ERAF
School District A
School District C
School District B
ERAF
ERAF
ERAF
Attachment 2
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• Let’s return to the basic K-12 school funding model. The school district funding environment is dynamic, and multiple factors may cause the gap between the amount of local property taxes received by a non-BA school district and the LCFF to shrink or even be eliminated, causing a non-BA district to “turn basic aid” (the reverse also occurs but is not the primary focus of this presentation).
• There are two key factors that contribute to a district turning basic aid. 10 LCFF (Local Control
Funding Formula)
Non-Basic Aid Districts Basic Aid Districts
School District
School District
School District D
Key Factors for a School District Turning Basic Aid
School District A
School District C
ERAF
ERAF
School District B
Attachment 2
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• First, a school district’s local property tax revenues might grow relatively faster than the LCFF . This is depicted in this graphic by a relatively higher blue bar for School District C. 11 LCFF (Local Control
Funding Formula)
Non-Basic Aid Districts Basic Aid Districts
School District
School District
School District D
Key Factors for a School District Turning Basic Aid
School District A
School District C
ERAF
ERAF
School District B
Attachment 2
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• Second, the minimum funding guarantee (calculated on a per-student basis) for a school district could become relatively lower, for example, due to lower enrollment caused by local demographic changes or disenrollment from the public school district. This would have the effect, as depicted here, of a lower LCFF for School District C. 12 LCFF (Local Control
Funding Formula)
Non-Basic Aid Districts Basic Aid Districts
School District
School District
School District D
Key Factors for a School District Turning Basic Aid
School District A
School District C
ERAF
ERAF
School District B
Attachment 2
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• What is the result when these sorts of dynamics play out across all non-BA districts? • School District C now receives sufficient local property tax revenues to exceed the LCFF . It has now “turned basic aid,” and the State no longer has any obligation to provide additional funding to meet the minimum funding guarantee.
13 LCFF (Local Control
Funding Formula)
Non-Basic Aid Districts Basic Aid Districts
School District
School District
School District D
Key Factors for a School District Turning Basic Aid
School District A
School District C
ERAF
ERAF
School District B
Attachment 2
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• School District A is still non-BA, but with just its ERAF entitlement, it now has sufficient funding to meet its minimum funding guarantee. The State does not have to provide any additional funding to this district despite the fact that it is still non-BA. [Note: this is the case for all non-BA districts in San Mateo County.]
• School District B still requires additional State funding to meet its minimum funding guarantee, but the gap that the State must fill is reduced. • Because of the change in dynamics with School Districts A and C, the full ERAF entitlement is no longer needed to fund these districts to their LCFF. By law, after funding non-basic aid schools to their LCFF (as well as certain special education costs), the unneeded portion of ERAF (termed “excess ERAF” under the statute) must be returned to the contributing jurisdictions from which that revenue was originally shifted. In other words, that portion of ERAF must be returned to the cities, special districts, and County. For this reason, locally we call this “Returned ERAF”. • Note: ERAF is returned to the contributing taxing agencies only after all school districts are funded to at least their LCFF amount. School districts that meet their LCFF level through their own property tax apportionment (i.e., basic aid districts) cannot receive ERAF by law, and those funds must be returned to the contributing agencies.
14 LCFF (Local Control
Funding Formula)
Non-Basic Aid Districts Basic Aid Districts
School District
School District
School District D
Key Factors for a School District Turning Basic Aid
School District A
School District C
ERAF
ERAF
ERAF
School District B
ERAF
Attachment 2
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• The VLF (annual amount paid to register a vehicle in California) has been a long-standing traditional source of funding for local government. As a key component of local jurisdictions’ general fund budgets, it funds core local services including public safety, health, housing, and other critical local services.
• The 2004 State budget compromise involved a complex set of measures and tradeoffs both at the State and local levels needed to address the State budget deficit, the full scope of which is beyond the focus of this presentation. Significantly, the 2004 budget compromise included the VLF swap statute, which fundamentally revised the VLF framework.
• Key components for our purposes:
• The statute de-coupled the VLF revenues for local jurisdictions from the actual amounts received by the State for vehicle registration. • The funding obligation to local governments became known as the “in-lieu” VLF payment. It is payable to local jurisdictions from the property tax and ERAF entitlements of non-BA school districts (who are in turn, backfilled by the State).
This statutory funding mechanism is described in the next slides. • The statute expressly provides that the VLF swap shall not reduce Returned (Excess) ERAF .
• The growth of the in-lieu VLF payment was tied to the growth rate of local assessed values.
15 School District
In-Lieu Vehicle License Fee (VLF)
• Part of budget compromise of 2004
• Created State’s In-lieu VLF payment obligation to counties and cities (VLF no longer tied to vehicle registration
collected by State)
• VLF growth tied to local assessed value growth
Attachment 2
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• This graphic depicts how the State meets its in-lieu VLF funding obligation through the funding for local school districts.
• We start with the basic model of K-12 local school funding, where non-BA districts receive their property tax apportionments, ERAF entitlements, and the State additional funding to meet their LCFF .
16 LCFF (Local Control Funding Formula)
Non-Basic Aid Districts Basic Aid Districts
School District
School District
School District D
School District
In-Lieu VLF Funding Sources
School District A
School District C
School District B
ERAF
ERAF
ERAFERAF
Attachment 2
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• Under the VLF statute, the local auditor-controller, who administers the local property tax system, uses the property taxes and ERAF entitlements that would otherwise go to non-BA districts to pay the State’s in-lieu VLF obligation to the cities and county (green bracket in this graphic).
17 LCFF (Local Control Funding Formula)
Non-Basic Aid Districts Basic Aid Districts
School District
School District
School District D
School District
In-Lieu VLF Funding Sources
School District A
School District C
School District B
ERAF
ERAF
ERAFERAF
VLF In-Lieu
VLF In-Lieu
VLF In-Lieu
Attachment 2
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• The State then backfills those districts dollar-for-dollar up to their LCFF (red brackets). • NOTE: the non-BA school districts are held harmless in this process. Both before and after the VLF swap statute, those districts receive their full LCFF amount as guaranteed by the State under Prop. 98. They receive their minimum per-student funding guarantee in both scenarios.
• Further NOTE: Even though the VLF framework calls for the State’s In-lieu VLF funding obligation to be paid in the first instance from non-BA districts’ ERAF and property taxes, the State still effectively pays the full in-lieu VLF amount to cities and counties because the State backfills the non-BA schools for every dollar of their property taxes and ERAF that is used to pay the in-lieu VLF obligation.
18 LCFF (Local Control Funding Formula)
Non-Basic Aid Districts Basic Aid Districts
School District
School District
School District D
School District
In-Lieu VLF Funding Sources
School District A
School District C
School District B
ERAF
ERAF
ERAFERAF
VLF In-Lieu
VLF In-Lieu
VLF In-Lieu
Attachment 2
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• In San Mateo County and 2 other counties, there is a shortfall created when the available funding sources in the VLF swap statute are insufficient to fully cover the State’s in-lieu VLF payment obligation to cities and counties. This is due in part to the phenomenon of districts turning basic aid. Two examples will demonstrate conceptually how this works.
• In example 1, the in-lieu VLF obligation of $110M is paid through the property taxes and ERAF of non-BA districts (A, B, and C), which are more than sufficient to satisfy the obligation.
19 Non-Basic Aid Districts Basic Aid Districts
School District
School District
School District D
School District
Vehicle License Fee Shortfall
School District A
School District C
School District B
ERAF
ERAF
ERAFERAF
School District C
4010
30 10
20 10 VLF Funding Example 1:
VLF Obligation – $110M
Available Sources -$120M
Attachment 2
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• In example 2, School District C has turned basic aid through the dynamics described earlier in this presentation.
20 Non-Basic Aid Districts Basic Aid Districts
School District
School District
School District D
Vehicle License Fee Shortfall
School District A
School District C
School District B
ERAF
ERAF
ERAFERAF
School District C
Attachment 2
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• Now, because School District C’s property taxes and ERAF are no longer available to fund the VLF obligation, in example 2 there is only $70M in available sources under the VLF framework, resulting in a $40M shortfall.
• NOTE: While VLF and excess ERAF are two distinct sources of revenue to which counties and cities are entitled, both are impacted by a school district turning basic aid. However, as this graphic shows, the loss in available revenue sources to fund the VLF obligation caused by a district turning basic aid (in this example, $50M) is greater than any impact on excess ERAF (here, $10M).
21 Non-Basic Aid Districts Basic Aid Districts
School District
School District D
Vehicle License Fee Shortfall
School District A
School District C
School District B
ERAF
ERAF
ERAF
School District C
VLF In-Lieu
VLF In-Lieu
School District C
School District C
ERAF
4010
30 10
20 10
VLF Funding Example 2:
VLF Obligation - $110M
Available Sources - $70M
Shortfall: $40M
Attachment 2
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22 What Happens When There Is a VLF Shortfall?
• The VLF Swap Statute does not specify how the State funds its in-lieu VLF obligation when the specified funding sources are insufficient to fully satisfy amounts owed to the cities and county. • If there is a shortfall, the county auditor controller files a claim with the State/DOF requesting payme nt to county and cities
• Statewide, only 3 counties (and cities within) experience VLF shortfalls: San Mateo, Alpine and Mono • All other 55 counties (and cities within) receive their full annual VLF revenue amounts from the State through the funding mechanism specified in the VLF Swap Statute
• Historically, the State has always made counties and cities whole by reimbursing any in-lieu VLF shortfalls through a special appropriation in the State budget. • In years when the State has failed to include VLF shortfall amounts in the proposed budget, the counties and cities have relied on their state delegations to advocate for the inclusion of the reimbursement in the enacted State budget.
Attachment 2
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CITY OF SAN MATEO
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CITY OF SAN MATEO
Agenda Report
City Hall
330 W. 20th Avenue
San Mateo CA 94403
www.cityofsanmateo.org
Agenda Number: 2 Section Name: STUDY SESSION Account Number: 10-4651 File ID: 25-9841 TO: City Council
FROM: Alex Khojikian, City Manager
PREPARED BY: Public Works Department
MEETING DATE: April 21, 2025
SUBJECT:
2025-30 Capital Improvement Program Plan Preview
RECOMMENDATION:
Receive a preview and provide feedback on the 2025-30 Capital Improvement Plan.
BACKGROUND:
As part of the Capital Improvement Program (CIP) budget development process, City departments prepare funding requests that capture five-year capital project needs. Total project costs are developed and matched with appropriate funding sources, such as the General Fund or Measure S that can be used for any purpose, special revenues such as those restricted for transportation purposes, or enterprise funds such as the Sewer and Storm funds. New and ongoing capital project requests are prioritized and recommended for funding through review and analysis by the City Manager, Assistant City Manager, Public Works Director, Parks and Recreation Director, and Finance Director. The prioritization process includes evaluating the criticality of a project with regard to public health and safety, maintaining the viability of a City asset or facility, whether projects are already underway with existing investments, and/or whether a project can be phased to spread costs over a longer period of time.
A primary focus of the five-year CIP budget development process is balancing available General Fund and Measure S funding with project budget needs, while determining if future deficits require additional revenue sources. Annually, capital project contributions from the General Fund and Measure S typically total $4.25 million and $2.0-3.0 million, respectively, for a total available contribution of $6.25-7.25 million. In 2025-26, the anticipated contribution totals $4.25 million from the General Fund, $2.6 million from Measure S, and $0.9 million from Measure CC for an overall total contribution of $7.7 million. Preliminary General Fund CIP project budget requests, including Measures S and CC, total $8.5 million for 2025-26, with a proposed $6.0 million requested for existing projects and $2.6 million for new projects. This results in a funding gap of $0.8 million, which will be covered by the Capital Projects Fund reserve, composed of unspent funds from completed CIP projects.
With the typical available funding, the five-year CIP projects a total funding of $32.4 million from the General Fund, Measure S, and Measure CC for Capital Projects. Staff works to balance project budget requests to match available funding over the five-year period, recognizing that needs and funding source become less certain further out in the five-year plan.
When looking at projected needs, staff estimates a total of $33.2 million in project budget requests, with funding deficits in 2025-26 and 2029-30. As explained earlier, to balance the 2025-26 CIP budget, available funding from the Capital Projects Fund reserve is proposed to be allocated to align funding contributions with project budget requests, totaling approximately $0.8 million.
Special revenue and restricted funding, including Gas Tax (state gas taxes), Measures A and W (countywide transportation-
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CITY OF SAN MATEO
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focused sales taxes), Measure M (countywide vehicle license fee), and Road Maintenance and Rehabilitation Account (SB-1 state gas tax) funds, are restricted for specific purposes. For example, use of Gas Tax revenues is generally limited to public streets and highways, while Measure A is typically the City’s sole non-General Fund grant matching fund source for transportation projects. The average annual revenue allocated to Capital Projects from these funding sources totals $8.7 million. The proposed project budget requests funded from these special revenue and restricted funding sources total $9.02 million for 2025-26, with $8.99 requested for existing projects and $0.03 million for new projects. The five-year CIP projects a total revenue of $43.4 million from special revenue and restricted funding and a total of $42.4 million in transportation-related project budget requests.
The City also has restricted sewer and storm funding, via ongoing sewer rates and the Community Flood and Storm Protection Fee, imposed this year after property owners voted to approve the new fee. For the sanitary sewer system, the CIP includes significant sewer system improvement projects, primarily all part of the 10-year, $1 billion Clean Water Program. Sewer CIP projects are fully funded from the rate revenue, with $29.6 million proposed for 2025-26. Of the estimated $4.0 million annual revenue from the new Community Flood and Storm Protection Fee, staff is planning for $3.5 million to be available for capital stormwater needs. Staff continues updating the City’s Storm Drain Master Plan, which will provide a prioritized capital improvement program later in FY 2025-26 that will need to be incorporated into future Council discussions and budgets. For 2025-26, $3.4 million from the Community Flood and Storm Protection Fee revenue will be used to fund stormwater CIP projects.
Parks and Recreation fees, including parks and recreation tax, park impact fees, and park in-lieu fees, are utilized to fund parks and recreation related projects through a transfer to the Capital Project Fund. The estimated contribution to capital projects is $4.5 million in 2025-26 and $2.7 million in subsequent years of the five-year CIP. The proposed project budget requests funded from this funding source total $2.3 million for 2025-26, with $1.9 million requested for existing projects and $0.4 million for new projects. The five-year CIP projects a total revenue of $15.3 million from Parks and Recreation Fees funding and a total of $12.9 million in project budget requests.
The following table details the five-year CIP needs, with $60.7 million proposed for 2025-26 and a total of $267.2 million in project needs over the entire five-year CIP Plan. By project type, the total five-year CIP needs can generally be broken down into $152.3 million (57.00%) for sewer-related projects, including the Clean Water Program (funded by sewer enterprise funds), $61.8 million (23.11%) for transportation projects including street rehabilitation and bicycle/pedestrian improvements (primarily transportation-focused special revenue and restricted funding), $22.1 million (8.28%) for building- and facility-related projects (primarily General Fund and Measure S), $19.9 million (7.45%) for parks-related projects (primarily General Fund, Measure S, and Parks and Recreation fees), $8.3 million (3.10%) for miscellaneous/other project types, $2.6 million (0.97%) for storm-related projects, $0.2 million (0.08%) for bridge improvements. Specific projects included in the proposed five-year CIP are shown in Attachment 1.
Project Budget requests by Project Type (All Funding Sources) Project Type 2025-26
Proposed
2026-27
Need
2027-28
Need
2028-29
Need
2029-30
Need
5-year
Total
Sewer 29,089,000 28,996,805 37,544,930 25,384,035 31,311,652 152,326,422 Streets/Transportation 15,364,293 15,931,636 10,928,000 10,118,000 9,418,000 61,759,929 Buildings/Facilities 5,878,742 4,110,000 2,460,000 3,110,000 6,575,000 22,133,742 Parks & Recreation 6,391,822 2,695,000 6,345,000 1,845,000 2,625,000 19,901,822 Miscellaneous 4,492,000 1,002,000 927,000 927,000 927,000 8,275,000 Stormwater (550,000) 1,050,000 700,000 700,000 700,000 2,600,000 Bridges 75,000 75,000 75,000 - - 225,000
TOTAL 60,740,857 53,860,441 58,979,930 42,084,035 51,556,652 267,221,915 In addition to the proposed five-year CIP, there are many projects City staff has identified that are not included due to insufficient funds, as shown in Attachment 2. These projects have high-level cost estimates that would need to be further refined at the point of becoming a funded project. Notable projects from the unfunded list include Central Park
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CITY OF SAN MATEO
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Improvements Phases 2-4, renovation of the King Resiliency Center, a new Fire Station #27, Central Park Parking Garage, Corporation Yard, improvements to the Lakeshore Community Center, a Class IV bike lane at Fashion Island, and over 30 projects from the Bike Master Plan.
Staff is also in the process of implementing or developing a number of planning studies that are expected to identify new capital project needs in addition to the known project needs. These efforts include:
•Comprehensive Facilities Assessment: Currently underway, staff is evaluating all City facilities and preliminary needs for improvements are well over $100 million (in 2030 dollars). Staff anticipates a Council study session to present the findings in the fall.
•Storm Drain Master Plan: Currently underway and will provide a comprehensive, prioritized CIP for the City’s storm drainage/flood control infrastructure by the end of the calendar year. Total need is still to be determined. •Citywide Bridge Assessment: Currently in early planning stages to review deficiencies in the City’s existing bridge inventory and will make recommendations to improve the overall condition through maintenance, repairs, and/or replacement of critical structures. The study should be complete within 6-12 months and the current preliminary estimate for potential replacement or repairs is up to $20 million. There are grant funding programs for these types of CIP projects through the Caltrans Bridge Program. •Parks Amenities and Condition Assessment: This evaluation will assess and document the physical conditions, amenities, structures, features, and maintenance requirements of all City parks. This process will help the Parks and Recreation Department objectively plan future maintenance needs and replacement priorities. Potential CIP needs are currently unknown.
•Sewer Collection System Flow Study and Hydraulic Model Updates: With the 10-year, $1 billion Clean Water Program closing out in 2027, updated flow studies and hydraulic models reflecting all the various improvements will be developed to 1) determine if any additional capacity improvements are needed within the sanitary sewer collection system and 2) calibrate the sewer hydraulic model so the City has an accurate picture of system performance which supports development and planning. Potential CIP needs are currently unknown. •Sewer Pump Station and Forcemain Condition Assessment: This future study will identify mechanical and electrical equipment, structural, architectural, and civil improvements required to ensure reliable pump station operations and evaluate the physical condition of forcemains to determine if repairs are needed to ensure reliability and proper operation. Potential CIP needs are currently unknown. •Wastewater Treatment Plant Biogas and Biosolids Evaluation: Currently underway, this study will assess ways to improve the operation and maintenance of the City’s two digesters, beneficial use biogas energy, explore potential options for producing Class A biosolids, and analyze their impact on overall energy production and costs.
Additionally, it will evaluate needed upgrades to the digestion infrastructure. Potential CIP needs are currently unknown.
BUDGET IMPACT:
There is no direct budgetary impact resulting from this report. The 2025-30 CIP Preview identifies $267.2 million in capital improvement needs, predominantly reflecting sewer, building/facilities, and streets and transportation projects. Any feedback and/or direction received from the Council as a result of this report and supporting presentation will be incorporated into the FY 2025-26 Proposed CIP Budget and 2025-30 five-year CIP Plan.
ENVIRONMENTAL DETERMINATION:
This budget preview is not a project subject to CEQA, because it is a government fiscal activity which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. (CEQA Guidelines Section 15378(b)(4).)
NOTICE PROVIDED
All meeting noticing requirements were met.
ATTACHMENTS
Att 1 - 2025-30 CIP Preview by Project Type
Att 2 - Unfunded Project Needs
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CITY OF SAN MATEO
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STAFF CONTACT
Matt Fabry, Public Works Director
[email protected]
650-522-7309
Jamie Perez, Business Manager
[email protected]
650-522-7242
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Att 1 - 2025-30 CIP Project Needs by Project Type
Preliminary for Budget Discussion Purposes Only
Project 2025-26
Proposed
2026-27
Project
Needs
2027-28
Project
Needs
2028-29
Project
Needs
2029-30
Project
Needs
5-Year Total
Bridges
CITYWIDE BRIDGE MAINTENANCE - 75,000 75,000 - - 150,000 GATEWAY PARK PEDESTRIAN BRIDGE IMPROVEMENTS 75,000 - - - - 75,000 Bridges Total 75,000 75,000 75,000 - - 225,000 Buildings/Facilities
ADA COMPLIANCE AND TRANSITION PLANNING 250,000 35,000 35,000 35,000 - 355,000 ADA ENTRY COMPLIANCE - BERESFORD 18,766 - - - - 18,766 CHILDCARE FACILITY IMPROVEMENTS 150,000 - - 250,000 - 400,000 CITY HALL IMPROVEMENTS - (200,000) (900,000) (900,000) - (2,000,000) CITYWIDE FACILITY INTERIOR IMPROVEMENTS 400,000 400,000 800,000 800,000 2,400,000 CITYWIDE FACILITY ROOF REPLACEMENTS 1,000,000 800,000 100,000 100,000 1,000,000 3,000,000 CITYWIDE FACILITY WATERPROOFING IMPROVEMENTS 475,000 1,000,000 1,000,000 1,000,000 1,000,000 4,475,000 CITYWIDE FENCE IMPROVEMENTS 100,000 100,000 100,000 100,000 100,000 500,000 CITYWIDE FIRE - INTRSN ALARM SYSTM UPGRADE 250,000 250,000 250,000 250,000 250,000 1,250,000 CITYWIDE PICNIC AREA IMPROVEMENTS 50,000 50,000 50,000 50,000 50,000 250,000 CITYWIDE PLAY COURT RESURFACING 350,000 350,000 350,000 350,000 350,000 1,750,000 CORP YARD MISCELLANEOUS IMPROVEMENTS 100,000 100,000 100,000 100,000 100,000 500,000 CORPORATION YARD PAVING 500,000 500,000 - - - 1,000,000 DISPATCH FACILITY IMPROVEMENT - - - 500,000 - 500,000 DOWNTOWN PARKING IMPROVEMENTS 100,000 100,000 100,000 100,000 100,000 500,000 DOWNTOWN RESTROOMS 25,000 25,000 25,000 25,000 25,000 125,000 EXTERNAL RADIO INFRASTRUCTURE (200,000) - - - - (200,000) FIRE STATION 24 SHOWER REMODEL (144,000) - - - - (144,000) KING CENTER KITCHENS REMODEL 158 - - - - 158 LAURELWOOD PARK RETAINING WALL REPAIR 150,000 - - - 2,000,000 2,150,000 MAIN LIBRARY IMPROVEMENTS 100,000 100,000
MARINA LIBRARY STRUCTURAL IMPROVEMENTS 2,250,000 250,000 - - - 2,500,000 OLD FIRE STATION 25 RENOVATION - - - - 800,000 800,000 PARKING LOT RESURFACING (SHORELINE/LAKESHORE/LOS PRADOS/BERESFORD) 300,000 300,000 300,000 300,000 - 1,200,000 POLICE DEPARTMENT ROOF DRAINAGE IMPROVEMENTS 3,818 - - - - 3,818 POLICE JAIL RETROFIT - - 500,000 - - 500,000 RECREATION CENTER BACKUP GENERATOR CONNECTION 50,000 50,000 50,000 50,000 - 200,000 Buildings/Facilities Total 5,878,742 4,110,000 2,460,000 3,110,000 6,575,000 22,133,742 Miscellaneous
CDBG COMMUNITY FACILITIES 40,000 40,000 40,000 40,000 40,000 200,000 CDD OFFICE REMODEL 140,000 140,000
CDD SERVICE IMPROVEMENT - ELECTRONIC & DIGITAL 250,000 250,000 250,000 250,000 250,000 1,250,000 CHILD CARE FACILITIES 450,000 450,000 450,000 450,000 450,000 2,250,000 HOUSING REHABILITATION 60,000 60,000 60,000 60,000 60,000 300,000 LANDFILL MAINTENANCE 1,000,000 - - - - 1,000,000 MINOR HOME REPAIR 127,000 127,000 127,000 127,000 127,000 635,000 PEG PROJECT (PUBLIC, EDUCATIONAL, AND GOVERNMENTAL ACCESS CHANNELS) 750,000 - - - - 750,000 POLICE FACILITY INTERNET EXPANSION 200,000 - - - - 200,000 POLICE STATION: UPS REPLACEMENT 400,000 - - - - 400,000 TRAIN QUIET ZONE 1,075,000 75,000 - - - 1,150,000 Miscellaneous Total 4,492,000 1,002,000 927,000 927,000 927,000 8,275,000 Parks & Recreation
BOREL PARK DEVELOPMENT (801,185) (801,185)
CENTRAL PARK 750,000 - - - - 750,000 CITYWIDE EMERGENCY FIELD LIGHTING 120,000 120,000 120,000 120,000 - 480,000 CITYWIDE PARK PLAY AREA UPGRADE 500,000 100,000 2,000,000 100,000 2,000,000 4,700,000 CITYWIDE PLAYGROUND EQUIPMENT REPLACEMENT 450,000 450,000 450,000 450,000 450,000 2,250,000 DOWNTOWN DOG PARK - 500,000 500,000 - - 1,000,000 GOLF BUNKERS - - 850,000 - - 850,000 GOLF IRRIGATION CONTROLLERS & MAINLINE - - 50,000 1,000,000 - 1,050,000 JAPANESE GARDEN REPAIRS 350,000 650,000 - - - 1,000,000 JOINVILLE POOL ASSESSMENT & IMPROVEMENTS 2,650,000 - 2,650,000 KING & JOINVILLE CHANGING ROOM IMPROVEMENTS (103,670) - - - - (103,670)
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Project 2025-26
Proposed
2026-27
Project
Needs
2027-28
Project
Needs
2028-29
Project
Needs
2029-30
Project
Needs
5-Year Total
Parks & Recreation (continued)
LAURELWOOD PARK PLAYGROUND - - 2,200,000 - - 2,200,000 LOS PRADOS COURT LIGHTING IMPROVEMENT 300,000 - - - - 300,000 PARK RESTROOM PHASE V (55,539) - - - - (55,539) PARK RESTROOM REFURBISHMENT PHASE IV 164,601 - - - - 164,601 PARKS AMENITIES ASSESEMENT - 600,000 - - - 600,000 PARKSIDE AQUATIC PLAY AREA 600,000 - - - - 600,000 RYDER PARK WATER FEATURE FILTRATION SYSTEM 50,000 100,000 - - - 150,000 SEAL POINT PARK POND H2S INVESTIGATION AND REMEDIATION 120,000 - - - - 120,000 SPORTS FIELDS CONVERSION: SYNTHETIC TURF (400,000) (400,000) SYNTHETIC FIELD REPLACEMENT 1,500,000 - - - - 1,500,000 TREE PLANTING - PARKS DIVISION 175,000 175,000 175,000 175,000 175,000 875,000 WASHINGTON PARK BASKETBALL COURT 22,615 - - - - 22,615 Parks & Recreation Total 6,391,822 2,695,000 6,345,000 1,845,000 2,625,000 19,901,822 Sewer
ANNUAL SANITARY SEWER REHABILITATION - 7,120,000 10,350,000 8,500,000 8,755,000 34,725,000 COLLECTION SYSTEM ODOR CONTROL 200,000 200,000 200,000 200,000 200,000 1,000,000 CWP ANNUAL CITYWIDE SANITARY SEWER REHAB (5,331,000) - - - - (5,331,000) CWP CCTV INSPECTION PROGRAM 409,000 - - - - 409,000 CWP SEWER FLOW MONITORING & REPORTING (172,000) - - - - (172,000) CWP WWTP ANNUAL MAJOR COMPONENTS 5,487,000 5,365,000 - - - 10,852,000 EAST SAN MATEO LIFT STATION 1,563,000 - - - - 1,563,000 PROGRAM MANAGEMENT - SEWER PROJECTS (874,000) - - - - (874,000) ROOT FOAMING 450,000 450,000 450,000 450,000 450,000 2,250,000 SANITARY SEWER CCTV INSPECTION PROGRAM - 900,000 800,000 900,000 1,200,000 3,800,000 SANITARY SEWER FLOW MONITORING & REPORTING - 125,000 125,000 125,000 125,000 500,000 SANITARY SEWER PUMP STATION UPGRADES - 5,257,000 5,420,000 5,588,000 5,755,000 22,020,000 TMDL ENHANCED PLANNING & INFRASTRUCTURE IMPROVEMENTS 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 12,500,000 WWTP & FLOW MANAGEMENT UPGRADE & EXPANSION 24,957,000 - - - - 24,957,000 WWTP ANNUAL REPAIRS - 7,079,805 17,699,930 7,121,035 12,326,652 44,227,422 WWTP PAVING (100,000) - - - - (100,000) Sewer Total 29,089,000 28,996,805 37,544,930 25,384,035 31,311,652 152,326,422 Stormwater
CITYWIDE SOIL STABILIZATION PROGRAM 400,000 150,000 150,000 150,000 150,000 1,000,000 COLUMBIA/CRYSTAL SPRINGS STORM DRAIN CHA (2,000,000) - - - - (2,000,000) COYOTE PARK/POPLAR PUMP STATION 50,000 - - - - 50,000 GREEN STORMWATER INFRASTRUCTURE PROGRAM 500,000 500,000 200,000 200,000 200,000 1,600,000 MARINA LAGOON DREDGING DESIGN/PERMITTING 150,000 50,000 - - - 200,000 STORM SYSTEM DREDGING 1,100,000 - - - - 1,100,000 STORM SYSTEM MINOR REPAIR 250,000 250,000 250,000 250,000 250,000 1,250,000 STORMWATER SYSTEM MANAGEMENT IMPROVEMENT PROGRAM 550,000 100,000 100,000 100,000 100,000 950,000 TRASH CAPTURE AT POPLAR AND MONTE DIABLO (750,000) - - - - (750,000) WET WEATHER PREPARATION ACTIVITIES (800,000) - - - - (800,000) Stormwater Total (550,000) 1,050,000 700,000 700,000 700,000 2,600,000 Streets/Transportation
101/92 MULTI-MODAL (FASHION ISLAND CLASS IV BIKE LANE) 831,819 3,988,636 - - - 4,820,455 ALAMEDA DE LAS PULGAS & BARNESON INTERSECTION SAFETY 7 OPTIMIZATION 200,000 - 700,000 - 900,000 BIKE SAN MATEO PROGRAM 902,000 700,000 700,000 - - 2,302,000 CDBG PROJECTS 450,000 450,000 450,000 450,000 450,000 2,250,000 CITYWIDE BICYCLE PARKING 10,000 10,000 - - 20,000 CITYWIDE SAFE ROUTES TO SCHOOL PROGRAM 200,000 200,000 200,000 200,000 200,000 1,000,000 CITYWIDE SIDEWALK REPAIR PROGRAM 115,000 115,000 115,000 115,000 115,000 575,000 CITYWIDE SIGN INVENTORY AND REPLACEMENT 150,000 150,000 150,000 150,000 600,000 CITYWIDE STREET RECONSTRUCTION FY18-19 (570,501) - - - - (570,501) CITYWIDE STREET RECONSTRUCTION PACKAGE 1 275,000 - - - - 275,000 CITYWIDE STREET RECONSTRUCTION PACKAGE 2 174,473 - - - - 174,473 CITYWIDE STREET RECONSTRUCTION PACKAGE 3 870,501 - - - - 870,501 CITYWIDE STREET REHABILITATION FY18-19 (160,000) - - - - (160,000) CITYWIDE STREET REHABILITATION PACKAGE 1 (303,000) - - - - (303,000) CITYWIDE STREET REHABILITATION PACKAGE 2 (600,000) - - - - (600,000)
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Project 2025-26
Proposed
2026-27
Project
Needs
2027-28
Project
Needs
2028-29
Project
Needs
2029-30
Project
Needs
5-Year Total
Streets/Transportation (continued)
CITYWIDE STREET REHABILITATION PACKAGE 3 (205,117) - - - - (205,117) CITYWIDE STREET REHABILITATION PROGRAM 9,284,117 8,468,000 8,853,000 8,053,000 8,053,000 42,711,117 CITYWIDE TRAFFIC CALMING 150,000 150,000 150,000 150,000 150,000 750,000 CITYWIDE TRAFFIC SIGNAL RETIMING 25,000 25,000 25,000 25,000 100,000 COMPLETE STREETS NORTH CENTRAL 150,000 - - - - 150,000 COMPLETES STREETS PLAN 100,000 - - - - 100,000 DELAWARE SAFE ROUTES TO SCHOOL CORRIDOR 1,500,000 - - - - 1,500,000 GRAMMERCY DRIVE RETAINING WALL 50,000 50,000 50,000 50,000 50,000 250,000 HIGH VOLTAGE STREET LIGHT CONVERSION 700,000 1,000,000 - - - 1,700,000 HILLSDALE/ALAMEDA DE LAS PULGAS SIGNAL 450,000 - - - - 450,000 LOCAL ROADWAY SAFETY PLAN IMPLEMENTATION PLAN - 200,000 - - - 200,000 NEIGHBORHOOD TRAFFIC MANAGMENT - 100,000 100,000 100,000 100,000 400,000 PENINSULA CORRIDOR COMPLETE STREETS 225,000 225,000 PENINSULA/DELAWARE INTERSECTION SAFETY IMPROVEMENT 650,000 650,000 QUICK BUILD MOBILITY PROGRAM 100,000 100,000 100,000 100,000 100,000 500,000 REGIONAL AND CITYWIDE TRANSPORTATION PROGRAM MANAGEMENT 25,000 25,000 25,000 25,000 25,000 125,000 TRANSIT-ORIENTED DEVELOPMENT PEDESTRIAN ACCESS STUDY 1 - - - - 1 Streets/Transportation Total 15,364,293 15,931,636 10,928,000 10,118,000 9,418,000 61,759,929 Grand Total 60,740,857 53,860,441 58,979,930 42,084,035 51,556,652 267,221,915
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Att 2 - Unfunded Project Needs
Preliminary for Budget Discussion Purposes Only
Project Total Est
Cost
CENTRAL PARK (PHASE 2-4) 50,000,000
HILLSDALE BOULEVARD/US 101 BRIDGE OVERCROSSING 50,000,000 NEW CENTRAL PARK PARKING GARAGE 32,000,000
NEW CORPORATION YARD FACILITY 26,000,000
CITYWIDE BRIDGE MAINTENANCE 22,000,000
2ND & EL CAMINO REAL GARAGE LONG-TERM IMPROVEMENTS 20,000,000 KING RESILIENCY CENTER 20,000,000
COYOTE POINT DRAINAGE AREA 17,050,000
19TH AVENUE DRAINAGE AREA 11,972,000
NEW FIRE STATION #27 11,000,000
LAUREL CREEK DRAINAGE AREA 9,567,000
16TH AVENUE DRAINAGE AREA 9,521,000
LAURELWOOD / SUGARLOAF OPEN SPACE 8,215,000
DETROIT DRIVE DRAINAGE AREA 5,728,000
CITYWIDE PARK SIGNS 5,000,000
SHORELINE PARKS 5,000,000
PARKING FACILITY STRUCTURAL REPAIRS 4,000,000
MARINER'S ISLAND BRIDGE APPROACH STABILIZATION 3,760,000 MONTE DIABLO AVENUE PEDESTRIAN SCALE LIGHTING 3,300,000 PALM AVENUE PEDESTRIAN SCALE LIGHTING 3,300,000
MAIN LIBRARY IMPROVEMENTS 3,183,575
SAN MATEO CREEK DRAINAGE AREA 2,620,000
28TH AVE GAP CLOSURE CONSTRUCTION 2,310,000
PASADENA ROADWAY RECONSTRUCTION 2,250,000
CITYWIDE ELEVATOR MODERNIZATION 1,500,000
PAINT EXTERIOR & INTERIOR MAIN STREET GARAGE 1,500,000
BMP-L PROJECT 10 1,450,000
BMP-ML PROJECT 2 1,264,000
PARK RENOVATION SHOREVIEW PARK MASTER PLAN AND IMPLEMENTATION 1,200,000 BMP-ML PROJECT 1 1,051,000
PARK RESTROOM REFURBISHMENT - PHASE VI 1,000,000
LAKESHORE COMMUNITY CENTER IMPROVEMENTS 1,000,000
BMP-ML PROJECT 4 944,000
BMP-ML PROJECT 5 878,000
BMP-ML PROJECT 7 878,000
RYDER CREEK BRIDGE PAINTING 750,000
BMP-L PROJECT 17 692,000
FIRE STATION #27 IMPROVEMETNS 660,000
BMP-L PROJECT 8 625,000
BAY MEADOWS COMMUNITY PARK PLANNING 500,000
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Project Total Est
Cost
BMP-ML PROJECT 14 439,000
BMP-ML PROJECT 6 426,000
BMP-ML PROJECT 8 426,000
CITYWIDE ASSISTIVE LISTENING DEVICES 400,000
BMP-L PROJECT 2 399,000
PATHWAY REPAIRS AT VARIOUS PARKS 375,000
BMP-L PROJECT 5 372,000
3RD AVENUE/NORFOLK INTERSECTION PED/BIKE ACCESS IMPROVEMENT 370,000 BMP-ML PROJECT 11 359,000
PLANNING PARK DEVELOPMENT AT DALE AVE & ANCHOR RD 350,000 REST ROOM BUILDING REPLACEMENT TRINTA 350,000
BMP-ML PROJECT 9 319,000
BMP-ML PROJECT 13 306,000
CITY HALL IMPROVEMENTS 300,000
POLICE DEPARTMENT EXTERIOR - REPAINT DECK FENCING 300,000 BMP-L PROJECT 7 266,000
BMP-L PROJECT 3 253,000
PENINSULA AVENUE BIKE CORRIDOR 237,000
BMP-ML PROJECT 3 226,000
EAST 5TH AVENUE PEDESTRIAN SCALE LIGHTING 220,000
BMP-L PROJECT 1 200,000
STREETLIGHT MASTER PLAN 200,000
BMP-ML PROJECT 10 186,000
REFURBISH NORTH END OF KOI POND 180,000
BMP-L PROJECT 4 173,000
BMP-L PROJECT 14 160,000
POLICE DEPARTMENT INTERIOR WORK REORGANIZATION 150,000
BMP-L PROJECT 15 146,000
BMP-L PROJECT 16 146,000
BMP-L PROJECT 13 133,000
BMP-ML PROJECT 12 133,000
INSTALL SECURITY CAMERAS AT SELECTED PARKS 120,000
BMP-L PROJECT 6 106,000
BMP-L PROJECT 9 80,000
BMP-L PROJECT 12 53,000
BMP-L PROJECT 11 40,000
Grand Total 352,567,575
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